[Title 45 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 2008 Edition]
[From the U.S. Government Printing Office]



[[Page 1]]

          
          
          45


          Parts 200 to 499

                         Revised as of October 1, 2008


          Public Welfare
          
          


________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of October 1, 2008
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

[[Page ii]]

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 45:
    Subtitle B--Regulations Relating to Public Welfare
          Chapter I [Reserved]
          Chapter II--Office of Family Assistance (Assistance 
          Programs), Administration for Children and Families, 
          Department of Health and Human Services                    5
          Chapter III--Office of Child Support Enforcement 
          (Child Support Enforcement Program), Administration 
          for Children and Families, Department of Health and 
          Human Services                                           219
          Chapter IV--Office of Refugee Resettlement, 
          Administration for Children and Families, Department 
          of Health and Human Services                             347
  Finding Aids:
      Table of CFR Titles and Chapters........................     401
      Alphabetical List of Agencies Appearing in the CFR......     421
      List of CFR Sections Affected...........................     431

[[Page iv]]





                     ----------------------------

                     Cite this Code: CFR
                      To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 45 CFR 201.0 refers 
                       to title 45, part 201, 
                       section 0.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, October 1, 2008), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
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instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
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This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
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20408, or call 202-741-6010.

CFR INDEXES AND TABULAR GUIDES

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and Finding Aids. This volume contains the Parallel Table of Statutory 
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also included in this volume.
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that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

[[Page vii]]


REPUBLICATION OF MATERIAL

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    Raymond A. Mosley,
    Director,
    Office of the Federal Register.
    October 1, 2008.







[[Page ix]]



                               THIS TITLE

    Title 45--Public Welfare is composed of four volumes. The parts in 
these volumes are arranged in the following order: Parts 1-199, 200-499, 
500-1199, and 1200 to end. Volume one (parts 1-199) contains all current 
regulations issued under subtitle A--Department of Health and Human 
Services. Volume two (parts 200-499) contains all current regulations 
issued under subtitle B--Regulations Relating to Public Welfare, chapter 
II--Office of Family Assistance (Assistance Programs), Administration 
for Children and Families, Department of Health and Human Services, 
chapter III--Office of Child Support Enforcement (Child Support 
Enforcement Program), Administration for Children and Families, 
Department of Health and Human Services, and chapter IV--Office of 
Refugee Resettlement, Administration for Children and Families, 
Department of Health and Human Services. Volume three (parts 500-1199) 
contains all current regulations issued under chapter V--Foreign Claims 
Settlement Commission of the United States, Department of Justice, 
chapter VI--National Science Foundation, chapter VII--Commission on 
Civil Rights, chapter VIII--Office of Personnel Management, chapter X--
Office of Community Services, Administration for Children and Families, 
Department of Health and Human Services, and chapter XI--National 
Foundation on the Arts and the Humanities. Volume four (part 1200 to 
end) contains all current regulations issued under chapter XII--
Corporation for National and Community Service, chapter XIII--Office of 
Human Development Services, Department of Health and Human Services, 
chapter XVI--Legal Services Corporation, chapter XVII--National 
Commission on Libraries and Information Science, chapter XVIII--Harry S 
Truman Scholarship Foundation, chapter XXI--Commission of Fine Arts, 
chapter XXIII--Artic Research Commission, chapter XXIV--James Madison 
Memorial Fellowship Foundation, and chapter XXV--Corporation for 
National and Community Service. The contents of these volumes represent 
all of the current regulations codified under this title of the CFR as 
of October 1, 2008.

    For this volume, Jonn V. Lilyea was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Michael L. White, assisted by Ann Worley.

[[Page 1]]



                        TITLE 45--PUBLIC WELFARE




                  (This book contains parts 200 to 499)

  --------------------------------------------------------------------
                                                                    Part

           SUBTITLE B--Regulations Relating to Public Welfare

chapter i [Reserved]

chapter ii--Office of Family Assistance (Assistance 
  Programs), Administration for Children and Families, 
  Department of Health and Human Services...................         201

chapter iii--Office of Child Support Enforcement (Child 
  Support Enforcement Program), Administration for Children 
  and Families, Department of Health and Human Services.....         301

chapter iv--Office of Refugee Resettlement, Administration 
  for Children and Families, Department of Health and Human 
  Services..................................................         400

[[Page 3]]

           Subtitle B--Regulations Relating to Public Welfare



                          CHAPTER I [RESERVED]




[[Page 5]]



     CHAPTER II--OFFICE OF FAMILY ASSISTANCE (ASSISTANCE PROGRAMS), 
ADMINISTRATION FOR CHILDREN AND FAMILIES, DEPARTMENT OF HEALTH AND HUMAN 
                                SERVICES




  --------------------------------------------------------------------


  Editorial Note: Nomenclature changes to chapter II appear at 66 FR 
39452, July 31, 2001.
Part                                                                Page
200

[Reserved]

201             Grants to States for public assistance 
                    programs................................           7
204             General Administration--State plans and 
                    grant appeals...........................          18
205             General administration--public assistance 
                    programs................................          19
206             Application, determination of eligibility 
                    and furnishing assistance--public 
                    assistance programs.....................          39
211             Care and treatment of mentally ill nationals 
                    of the United States, returned from 
                    foreign countries.......................          42
212             Assistance for United States citizens 
                    returned from foreign countries.........          47
213             Practice and procedure for hearings to 
                    States on conformity of public 
                    assistance plans to Federal requirements          50
225             Training and use of subprofessionals and 
                    volunteers..............................          55
233             Coverage and conditions of eligibility in 
                    financial assistance programs...........          56
234             Financial assistance to individuals.........         103
235             Administration of financial assistance 
                    programs................................         111
237             Fiscal administration of financial 
                    assistance programs.....................         116
260             General temporary assistance for needy 
                    families (TANF) provisions..............         117
261             Ensuring that recipients work...............         129
262             Accountability provisions--general..........         147
263             Expenditure of State and Federal TANF funds.         151
264             Other accountability provisions.............         157

[[Page 6]]

265             Data collection and reporting requirements..         164
270             High performance bonus awards...............         170
282

[Reserved]

283             Implementation of section 403(A)(2) of the 
                    Social Security Act bonus to reward 
                    decrease in illegitimacy ratio..........         177
284             Methodology for determining whether an 
                    increase in a State or territory's child 
                    poverty rate is the result of the TANF 
                    Program.................................         181
285

[Reserved]

286             Tribal TANF provisions......................         185
287             The Native American Works (NEW) Program.....         210
288-299

[Reserved]

[[Page 7]]

                           PART 200 [RESERVED]



PART 201_GRANTS TO STATES FOR PUBLIC ASSISTANCE PROGRAMS--Table of Contents




Sec.
201.0 Scope and applicability.
201.1 General definitions.

      Subpart A_Approval of State Plans and Certification of Grants

201.2 General.
201.3 Approval of State plans and amendments.
201.4 Administrative review of certain administrative decisions.
201.5 Grants.
201.6 Withholding of payment; reduction of Federal financial 
          participation in the costs of social services and training.
201.7 Judicial review.

                       Subpart B_Review and Audits

201.10 Review of State and local administration.
201.11 Personnel merit system review.
201.12 Public assistance audits.
201.13 Action on audit and review findings.
201.14 Reconsideration under section 1116(d) of the Act.
201.15 Deferral of claims for Federal financial participation.
201.66 Repayment of Federal funds by installments.
201.67 Treatment of uncashed or cancelled checks.
201.70 Treatment of replacement checks.

    Authority: 42 U.S.C. 303, 603, 1203, 1301, 1302, 1316, 1353 and 1383 
(note).

    Source: 35 FR 12180, July 29, 1970, unless otherwise noted.



Sec.  201.0  Scope and applicability.

    Titles I, X, XIV and XVI (as in effect without regard to section 301 
of the Social Security Amendments of 1972) shall continue to apply to 
Puerto Rico, the Virgin Islands, and Guam. The term State as used in 
such titles means Puerto Rico, the Virgin Islands, and Guam.

[39 FR 8326, Mar. 5, 1974]



Sec.  201.1  General definitions.

    When used in this chapter, unless the context otherwise indicates:
    (a) Act means the Social Security Act, and titles referred to are 
titles of that Act;
    (b) Department means the Department of Health and Human Services;
    (c) Administrator means the Administrator, Family Support 
Administration;
    (d) Secretary means the Secretary of Health and Human Services;
    (e) Administration means the Family Support Administration;
    (f) Regional Administrator means the Regional Administrator of the 
Family Support Administration;
    (g) State means the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American 
Samoa. The term ``State'' with respect to American Samoa applies to the 
programs set forth in title IV-A and IV-F of the Act;
    (h) State agency means the State agency administering or supervising 
the administration of the State plan or plans under title I, IV-A, IV-F, 
X, or XVI (AABD) of the Act;
    (i) The terms regional office and central office refer to the 
regional offices and the central office of the Family Support 
Administration, respectively.

[35 FR 12180, July 29, 1970, as amended at 39 FR 34543, Sept. 26, 1974; 
53 FR 36578, Sept. 21, 1988; 57 FR 30425, July 9, 1992]



      Subpart A_Approval of State Plans and Certification of Grants



Sec.  201.2  General.

    The State plan is a comprehensive statement submitted by the State 
agency describing the nature and scope of its program and giving 
assurance that it will be administered in conformity with the specific 
requirements stipulated in the pertinent title of the Act, the 
regulations in subtitle A and this chapter of this title, and other 
applicable official issuances of the Department. The State plan contains 
all information necessary for the Administration to determine whether 
the plan can be approved, as a basis for Federal financial participation 
in the State program.

[35 FR 12180, July 29, 1970, as amended at 53 FR 36578, Sept. 21, 1988]

[[Page 8]]



Sec.  201.3  Approval of State plans and amendments.

    The State plan consists of written documents furnished by the State 
to cover each of its programs under the Act: Old-age assistance (title 
I); aid and services to needy families with children (part A of title 
IV); aid to the blind (title X); aid to the permanently and totally 
disabled (title XIV); or aid to the aged, blind or disabled (title XVI). 
The State may submit the common material on more than one program as an 
integrated plan. However, it must identify the provisions pertinent to 
each title since a separate plan must be approved for each public 
assistance title. A plan submitted under title XVI encompasses, under a 
single plan, the programs otherwise covered by three separate plans 
under titles I, X, and XIV. After approval of the original plan by the 
Administration, all relevant changes, required by new statutes, rules, 
regulations, interpretations, and court decisions, are required to be 
submitted currently so that the Administration may determine whether the 
plan continues to meet Federal requirements and policies.
    (a) Submittal. State plans and revisions of the plans are submitted 
first to the State governor or his designee for review in accordance 
with Sec.  204.1 of this chapter, and then to the regional office. The 
States are encouraged to obtain consultation of the regional staff when 
a plan is in process of preparation or revision.
    (b) Review. Staff in the regional offices are responsible for review 
of State plans and amendments. They also initiate discussion with the 
State agency on clarification of significant aspects of the plan which 
come to their attention in the course of this review. State plan 
material on which the regional staff has questions concerning the 
application of Federal policy is referred with recommendations as 
required to the central office for technical assistance. Comments and 
suggestions, including those of consultants in specified areas, may be 
prepared by the central office for use by the regional staff in 
negotiations with the State agency.
    (c) Action. The Regional Administrator, exercised delegated 
authority to take affirmative action on State plans and amendments 
thereto on the basis of policy statements or precedents previously 
approved by the Administrator. The Administrator retains authority for 
determining that proposed plan material is not approvable, or that a 
previously approved plan no longer meets the requirements for approval, 
except that a final determination of disapproval may not be made without 
prior consultation and discussion by the Administrator with the 
Secretary. The Regional Administrator, or the Administrator formally 
notifies the State agency of the actions taken on State plans or 
revisions.
    (d) Basis for approval. Determinations as to whether State plans 
(including plan amendments and administrative practice under the plans) 
originally meet or continue to meet, the requirements for approval are 
based on relevant Federal statutes and regulations. Guidelines are 
furnished to assist in the interpretation of the regulations.
    (e) Prompt approval of State plans. Pursuant to section 1116 of the 
Act, the determination as to whether a State plan submitted for approval 
conforms to the requirements for approval under the Act and regulations 
issued pursuant thereto shall be made promptly and not later than the 
90th day following the date on which the plan submittal is received in 
the regional office, unless the Regional Administrator, has secured from 
the State agency a written agreement to extend that period.
    (f) Prompt approval of plan amendments. Any amendment of an approved 
State plan may, at the option of the State, be considered as a 
submission of a new State plan. If the State requests that such 
amendment be so considered the determination as to its conformity with 
the requirements for approval shall be made promptly and not later than 
the 90th day following the date on which such a request is received in 
the regional office with respect to an amendment that has been received 
in such office, unless the Regional Administrator, has secured from the 
State agency a written agreement to extend that period. In absence of 
request by a State that an amendment of an approved State plan shall be 
considered as a submission of a new State plan,

[[Page 9]]

the procedures under Sec.  201.6 (a) and (b) shall be applicable.
    (g) Effective date. The effective date of a new plan may not be 
earlier than the first day of the calendar quarter in which an 
approvable plan is submitted, and with respect to expenditures for 
assistance under such plan, may not be earlier than the first day on 
which the plan is in operation on a statewide basis. The same applies 
with respect to plan amendments that provide additional assistance or 
services to persons eligible under the approved plan or that make new 
groups eligible for assistance or services provided under the approved 
plan. For other plan amendments the effective date shall be as specified 
in other sections of this chapter.

[35 FR 12180, July 29, 1970, as amended at 39 FR 34542, Sept. 26, 1974; 
42 FR 43977, Sept. 1, 1977; 53 FR 36579, Sept. 21, 1988]



Sec.  201.4  Administrative review of certain administrative decisions.

    Pursuant to section 1116 of the Act, any State dissatisfied with a 
determination of the Administrator pursuant to Sec.  201.3 (e) or (f) 
with respect to any plan or amendment may, within 60 days after the date 
of receipt of notification of such determination, file a petition with 
the Regional Administrator, asking the Administrator for reconsideration 
of the issue of whether such plan or amendment conforms to the 
requirements for approval under the Act and pertinent Federal 
requirements. Within 30 days after receipt of such a petition, the 
Administrator shall notify the State of the time and place at which the 
hearing for the purpose of reconsidering such issue will be held. Such 
hearing shall be held not less than 30 days nor more than 60 days after 
the date notice of such hearing is furnished to the State, unless the 
Administrator and the State agree in writing on another time. For 
hearing procedures, see part 213 of this chapter. A determination 
affirming, modifying, or reversing the Administrator's original decision 
will be made within 60 days of the conclusion of the hearing. Action 
pursuant to an initial determination by the Administrator described in 
such Sec.  201.3 (e) or (f) that a plan or amendment is not approvable 
shall not be stayed pending the reconsideration, but in the event that 
the Administrator subsequently determines that his original decision was 
incorrect he shall certify restitution forthwith in a lump sum of any 
funds incorrectly withheld or otherwise denied.

[35 FR 12180, July 29, 1970, as amended at 42 FR 43977, Sept. 1, 1977; 
53 FR 36579, Sept. 21, 1988]



Sec.  201.5  Grants.

    To States with approved plans, grants are made each quarter for 
expenditures under the plan for assistance, services, training and 
administration. The determination as to the amount of a grant to be made 
to a State is based upon documents submitted by the State agency 
containing information required under the Act and such other pertinent 
facts, including title IV-A the appropriate Federal share of child 
support collections made by the State, as may be found necessary.
    (a) Form and manner of submittal. (1) Time and place: The estimates 
for public assistance grants for each quarterly period must be forwarded 
to the regional office 45 days prior to the period of the estimate. They 
include a certification of State funds available and a justification 
statement in support of the estimates. A statement of quarterly 
expenditures and any necessary supporting schedules must be forwarded to 
the Department of Health and Human Services, Family Support 
Administration, not later than 30 days after the end of the quarter.
    (2) Description of forms: ``State Agency Expenditure Projection--
Quarterly Projection by Program'' represents the State agency's estimate 
of the total amount and the Federal share of expenditures for 
assistance, services, training, and administration to be made during the 
quarter for each of the public assistance programs under the Act. From 
these estimates the State and Federal shares of the total expenditures 
are computed. The State's computed share of total estimated expenditures 
is the amount of State and local funds necessary for the quarter. The 
Federal share is the basis for the funds to be advanced for the quarter. 
The

[[Page 10]]

State agency must also certify, on this form or otherwise, the amount of 
State funds (exclusive of any balance of advances received from the 
Federal Government) actually on hand and available for expenditure; this 
certification must be signed by the executive officer of the State 
agency submitting the estimate or a person officially designated by him, 
or by a fiscal officer of the State if required by State law or 
regulation. (A form ``Certificate of Availability of State Funds for 
Assistance and Administration during Quarter'' is available for 
submitting this information, but its use is optional.) If the amount of 
State funds (or State and local funds if localities participate in the 
program), shown as available for expenditures is not sufficient to cover 
the State's proportionate share of the amount estimated to be expended, 
the certification must contain a statement showing the source from which 
the amount of the deficiency is expected to be derived and the time when 
this amount is expected to be made available.
    (3) The State agency must also submit a quarterly statement of 
expenditures for each of the public assistance programs under the Act. 
This is an accounting statement of the disposition of the Federal funds 
granted for past periods and provides the basis for making the 
adjustments necessary when the State's estimate for any prior quarter 
was greater or less than the amount the State actually expended in that 
quarter. The statement of expenditures also shows the share of the 
Federal Government in any recoupment, from whatever source, including 
for title IV-A the appropriate share of child support collections made 
by the State, of expenditures claimed in a prior period, and also in 
expenditures not properly subject to Federal financial participation 
which are acknowledged by the State agency, including the share of the 
Federal Government for uncashed and cancelled checks as described at 45 
CFR 201.67 and replacement checks as described at 45 CFR 201.70 in this 
part, or which have been revealed in the course of an audit.
    (b) Review. The State's estimates are analyzed by the regional 
office staff and are forwarded with recommendations as required to the 
central office. The central office reviews the State's estimate, other 
relevant information, and any adjustments to be made for prior periods, 
and computes the grant.
    (c) Grant award. The grant award computation form shows, by program, 
the amount of the estimate for the ensuing quarter, and the amounts by 
which the estimate is reduced or increased because of over- or under-
estimate for the prior quarter and for other adjustments. This form is 
transmitted to the State agency to draw the amount of the grant award, 
as needed, to meet the Federal share of disbursements. The draw is 
through a commercial bank and the Federal Reserve system against a 
continuing letter of credit certified to the Secretary of the Treasury 
in favor of the State payee. A copy of the grant award notice is sent to 
the State Central Information Reception Agency in accord with section 
201 of the Intergovernmental Cooperation Act of 1968.
    (d) Letter of credit payment system. The letter of credit system for 
payment of advances of Federal funds was established pursuant to 
Treasury Department regulations (Circular No. 1075), published in the 
Federal Register on July 11, 1967 (32 FR 10201). The HEW ``Instructions 
to Recipient Organizations for Use of Letter of Credit'' was transmitted 
to all grantees by memorandum from the Assistant Secretary-Comptroller 
on January 15, 1968.
    (e) General administrative requirements. With the following 
exceptions, the provisions of part 74 of this title, establishing 
uniform administrative requirements and cost principles, shall apply to 
all grants made to States under this part:

                             45 CFR Part 74

Subpart G--Matching and Cost Sharing.
Subpart I--Financial Reporting Requirements.

[35 FR 12180, July 29, 1970, as amended at 38 FR 26320, Sept. 19, 1973; 
46 FR 48003, Sept. 30, 1981; 53 FR 24269, June 28, 1988; 53 FR 36579, 
Sept. 21, 1988]

[[Page 11]]



Sec.  201.6  Withholding of payment; reduction of Federal financial participation in the costs of social services and training.

    (a) When withheld. Further payments to a State are withheld in whole 
or in part if the Administrator, after reasonable notice and opportunity 
for hearing to the State agency administering or supervising the 
administration of an approved plan, finds:
    (1) That the plan no longer complies with the provisions of section 
2, 402, 1002, 1402, or 1602 of the Act; or
    (2) That in the administration of the plan there is failure to 
comply substantially with any such provision.
    A question of noncompliance of a State plan may arise from an 
unapprovable change in the approved State plan, the failure of the State 
to change its approved plan to conform to a new Federal requirement for 
approval of State plans, or the failure of the State in practice to 
comply with a Federal requirement, whether or not its State plan has 
been amended to conform to such requirement.
    (b) When the rate of Federal financial participation is reduced. 
Under title I, X, XIV, or XVI (AABD) of the Act, Federal financial 
participation in the costs of social services and training approved at 
the rate of 75 per centum is reduced to 50 per centum if the 
Administrator, after reasonable notice and opportunity for a hearing to 
the State agency, finds:
    (1) That the plan provision under such title for prescribed services 
no longer complies with the Federal requirements with respect to such 
prescribed services; or
    (2) That in the administration of the plan there is a failure to 
comply substantially with such plan provision.
    (c) Information discussions. Hearings with respect to matters under 
paragraph (a) or (b) of this section are generally not called, however, 
until after reasonable effort has been made by the Administration to 
resolve the questions involved by conference and discussion with State 
officials. Formal notification of the date and place of hearing does not 
foreclose further negotiations with State officials.
    (d) Conduct of hearings. For hearing procedures, see part 213 of 
this chapter.
    (e) Notification of withholding. If the Administrator makes a 
finding of noncompliance with respect to a matter under paragraph (a) of 
this section, the State agency is notified that further payments will 
not be made to the State (or, in his discretion, that payments will be 
limited to categories under or parts of the plan not affected by such 
failure), until the Administrator is satisfied that there will no longer 
be any such failure to comply. Until he is so satisfied, no further 
payments will be made to the State (or will be limited to categories 
under or parts of the plan not affected by such failure).
    (f) Notification of reduction in the rate of Federal financial 
participation. If the Administrator makes a finding of noncompliance 
with respect to a matter under paragraph (b) of this section, the State 
agency is notified that further payments will be made to the State at 
the rate of 50 per centum of the costs of services and training, until 
the Administrator is satisfied that there will no longer be any failure 
to comply.

[35 FR 12180, July 29, 1970, as amended at 39 FR 34542, Sept. 26, 1974; 
53 FR 36579, Sept. 21, 1988]



Sec.  201.7  Judicial review.

    Any State dissatisfied with a final determination of the Secretary 
pursuant to Sec.  201.4 or Sec.  201.6(a) may, within 60 days after it 
has been notified of such determination, file with the U.S. Court of 
Appeals for the circuit in which such State is located a petition for 
review of such determination. After a copy of the petition is 
transmitted by the clerk of the court to the Secretary, the Secretary 
thereupon shall file in the court the record of proceedings upon which 
such determination was based as provided in section 2112 of title 28, 
United States Code. The court is bound by the Secretary's findings of 
fact, if supported by substantial evidence. The court has jurisdiction 
to affirm the Secretary's decision, or set it aside in whole or in part, 
or, for good cause, to remand the case for additional evidence. If the 
case is remanded, the Secretary may thereupon make new or modified 
findings of fact, and may modify his previous determination. The 
Secretary shall certify to the court the transcript and record of the 
further

[[Page 12]]

proceedings. The judgment of the court is subject to review by the 
Supreme Court of the United States upon certiorari or certification as 
provided in 28 U.S.C. 1254.



                       Subpart B_Review and Audits



Sec.  201.10  Review of State and local administration.

    (a) In order to provide a basis for determining that State agencies 
are adhering to Federal requirements and to the substantive legal and 
administrative provisions of their approved plans, the Administration 
conducts a review of State and local public assistance administration. 
This review includes analysis of procedures and policies of State and 
local agencies and examination of case records of individual recipients.
    (b) Each State agency is required to carry out a continuing quality 
control program primarily covering determination of eligibility in 
statistically selected samples of individual cases. The Service conducts 
a continuing observation of these State systems.
    (c) Adherence to other Federal requirements set forth in the 
pertinent titles of the Act and the regulations in this title is 
evaluated through review of selected case records and aspects of agency 
operations.

[35 FR 12180, July 29, 1970, as amended at 53 FR 36579, Sept. 21, 1988]



Sec.  201.11  Personnel merit system review.

    A personnel merit system review is carried out by the Office of 
State Merit Systems of the Office of the Assistant Secretary for 
Administration of the Department. The purpose of the review is to 
evaluate the effectiveness of the State merit system relating to the 
public assistance programs and to determine whether there is compliance 
with Federal requirements in the administration of the merit system 
plan. See part 70 of this title.



Sec.  201.12  Public assistance audits.

    (a) Annually, or at such frequencies as are considered necessary and 
appropriate, the operations of the State agency are audited by 
representatives of the Audit Agency of the Department. Such audits are 
made to determine whether the State agency is being operated in a manner 
that:
    (1) Encourages prudent use of program funds, and
    (2) Provides a reasonable degree of assurance that funds are being 
properly expended, and for the purposes for which appropriated and 
provided for under the related Act and State plan, including State laws 
and regulations.
    (b) Reports of these audits are released by the Audit Agency 
simultaneously to program officials of the Department, and to the 
cognizant State officials. These audit reports relate the opinion of the 
Audit Agency on the practices reviewed and the allowability of costs 
audited at the State agency. Final determinations as to actions required 
on all matters reported are made by cognizant officials of the 
Department.



Sec.  201.13  Action on audit and review findings.

    (a) If the audit results in no exceptions, the State agency is 
advised by letter of this result. The general course for the disposition 
of proposed exceptions resulting from audits involves the submittal of 
details of these exceptions to the State agency which then has an 
opportunity to concur in the proposed exceptions or to assemble and 
submit additional facts for purposes of clearance. Provision is made for 
the State agency to appeal proposed audit exceptions in which it has not 
concurred and which have not been deleted on the basis of clearance 
material. After consideration of a State agency's appeal by the 
Administrator, the Administration advises the State agency of any 
expenditures in which the Federal Government may not participate and 
requests it to include the amount as adjustments in a subsequent 
statement of expenditures. Expenditures in which it is found the Federal 
Government may not participate and which are not properly adjusted 
through the State's claim will be deducted from subsequent grants made 
to the State agency.
    (b) If the Federal or State reviews reveal serious problems with 
respect to compliance with any Federal requirement, the State agency is 
required to

[[Page 13]]

correct its practice so that there will be no recurrence of the problem 
in the future.

[35 FR 12180, July 29, 1970, as amended at 53 FR 36579, Sept. 21, 1988]



Sec.  201.14  Reconsideration under section 1116(d) of the Act.

    (a) Applicability. This section applies to any disallowance of any 
item or class of items for which FFP is claimed under title I, IV, X, 
XIV, XVI(AABD), or XX of the Act, with respect to which reconsideration 
was requested prior to March 6, 1978, unless the State by filing a 
written notice to that effect with the Executive Secretary, Departmental 
Grant Appeals Board (with proof of service on the head of the 
constituent agency), within 30 days after mailing of the confirmation of 
the disallowance by the agency head, elects to have the reconsideration 
governed by 45 CFR part 16.
    (1) Reduction of the Federal share of assistance payments under 
title IV-A, for failure to certify WIN registrants (section 402(e) of 
the Act);
    (2) Reduction by one per centum of the quarterly amount payable to a 
State for all expenditures under title IV-A for failure, in certain 
cases, to carry out the provisions of section 402(a)(15) of the Act 
which require the offering of and arrangement for the provision of 
family planning services (section 402(f) of the Act);
    (3)-(5) [Reserved]
    (6) Any other decision pursuant to sections 3, 403, 422, 455, 1003, 
1403, 1603, or 2003, of the Act.
    (b) Notice of disallowance determination. (1) When the Regional 
Administrator, determines that a State claim for FFP in expenditures for 
a particular item or class of items is not allowable, he shall promptly 
issue a disallowance letter to the State.
    (2) This disallowance letter shall include where appropriate:
    (i) The date or dates on which the State's claim for FFP was made;
    (ii) The time period during which the expenditures in question were 
made or claimed to have been made;
    (iii) The date and amount of any payment or notice of deferral;
    (iv) A statement of the amount of FFP claimed, allowed, and 
disallowed and the manner in which these amounts were calculated;
    (v) Findings of fact on which the disallowance determination is 
based or a reference to other documents previously or contemporaneously 
furnished to the State (such as a report of a financial review or audit) 
which contain the findings of fact on which the disallowance 
determination is based;
    (vi) Pertinent citations to the law, regulations, guides and 
instructions supporting the action taken; and
    (vii) Notice of the State's right to request reconsideration of the 
disallowance under this section and the time within such request must be 
made.
    (c) Request for reconsideration. (1) To obtain reconsideration of a 
disallowance of an item or class of items for FFP, a State shall, within 
30 days of the date of the disallowance letter, request reconsideration 
by the Administrator, with copy to the Regional Administrator, and 
enclose a copy of the disallowance letter.
    (2) The request for reconsideration must be accompanied by a brief 
statement of the issues in dispute, including an explanation of the 
State's position with respect to each issue.
    (d) Reconsideration procedures. (1) The Administrator will promptly 
acknowledge receipt of a State's request for reconsideration.
    (2) Upon receipt of a copy of the request for reconsideration, the 
Regional Administrator, shall, within 30 days of the request, provide to 
the Administrator a complete record of all material which he believes to 
have a bearing on the reconsideration, including any reports of audit or 
review which were the basis for his decision.
    (3) The Administrator shall promptly forward to the State a list of 
all items currently in the record, including those received from the 
Regional Administrator, or with respect to the medical assistance 
program under title XIX, Regional Medicaid Director and make available 
for examination, inspection and copying any such items not previously 
received by the State.
    (4) Within 60 days from the date of the Administrator's transmittal 
to the State under paragraph (d)(3) of this

[[Page 14]]

section, the State shall submit in writing to the Administrator any new 
relevant evidence, documentation, or argument and shall simultaneously 
submit a copy thereof to the Regional Administrator, or with respect to 
the medical assistance program under title XIX, Regional Medicaid 
Director.
    (5) The Regional Administrator, or with respect to the medical 
assistance program under title XIX, Regional Medicaid Director shall, 
within 60 days of submittal by the State, submit to the Administrator 
(with a copy to the State) an analysis of the issues relevant to the 
disallowance including:
    (i) A restatement of the findings on which the disallowance was 
based;
    (ii) A response to each issue raised by the State with respect to 
such findings;
    (iii) A response to any other issues raised by the State, providing 
additional documentation when necessary; and
    (iv) Any additional documentation which he deems relevant.
    (6) The State may respond to the material submitted by the Regional 
Administrator, or with respect to the medical assistance program under 
title XIX, Regional Medicaid Director by submitting to the Administrator 
within 15 days any supplemental material the State wishes to have 
entered into the record.
    (7) At the time of submitting any additional material pursuant to 
paragraph (d)(4), the State may obtain, upon request to him, a 
conference with the Administrator, during which it may discuss with the 
Administrator its position on the issues. The State may, at its own 
expense, have such conference transcribed; the transcript shall become 
part of the administrative record.
    (8) In reconsidering the disallowance, the Administrator may request 
any additional information or documents necessary to his decision.
    (9) New relevant evidence received into the record by the 
Administrator pursuant to paragraph (d)(8) of this section which is not 
received from, or previously otherwise made available to, the State 
shall promptly be made available to the State for examination, 
inspection, and copying and the State will be given appropriate 
additional time for comment.
    (10) All documents, reports, correspondence, and other materials 
considered by the Administrator in reaching his decision shall 
constitute the record of the reconsideration proceedings.
    (11) After consideration of such record and the laws and regulations 
pertinent to the issues in question, the Administrator shall issue a 
written decision, based on the administrative record, which summarizes 
the facts and cites the regulations or statutes that support the 
decision. The decision shall constitute final administrative action on 
the matter and shall be promptly mailed to the head of the State agency.
    (12) Either the state or the Regional Administrator, or with respect 
to the medical assistance program under title XIX, Regional Medicaid 
Director may request from the Administrator, for good cause, an 
extension of any of the time limits specified in this section.
    (13) No section of this regulation shall be interpreted as waiving 
the Department's right to assert any provision or exemption in the 
Freedom of Information Act.
    (e) Implementation of the decision. If the decision requires an 
adjustment in the Federal share, either upward or downward, this will be 
reflected in subsequent grant awards.
    (f) For purposes of this section, the Administrator includes the 
Deputy Administrator, except that whichever official conducts the 
conference requested pursuant to paragraph (d)(7) of this section will 
also issue the final administrative decision pursuant to paragraph 
(d)(11) of this section.

Appendix--Reconsideration of Disallowances Under Section 1116 (d) of the 
                           Social Security Act

                          transfer of functions

    Under the authority of Reorganization Plan No. 1 of 1953, and 
pursuant to the authorities vested in me as Secretary of Health amd 
Human Services, I hereby order that, with respect to reconsiderations of 
disallowances imposed under titles I, IV, VI, X, XIV, XVI (AABD), XIX 
and XX of the Social Security Act, 42 U.S.C. 301 et seq., 601 et

[[Page 15]]

seq., 801 et seq., 1201 et seq., 1351 et seq., 1381 et seq. (AABD), 1396 
et seq. and 1397 et seq., all references to ``Administrator'' appearing 
in 45 CFR 201.14 shall be deemed to read ``Chairman, Departmental Grant 
Appeals Board'' and all references to ``Deputy Administrator'' appearing 
therein shall be deemed to refer to one or more members of the 
Departmental Grant Appeals Board, designated by the Chairman to decide a 
reconsideration. States which have previously had or requested a 
conference pursuant to 45 CFR 201.14(d)(7) will be entitled to a 
conference with the Chairman of the Departmental Grant Appeals Board 
acting (as provided above) as successor to the Administrator of the 
Social and Rehabilitation Service (SRS), or with a member or members of 
the Board designated by the Chairman to decide the matter, acting as 
successor to the Deputy Administrator of SRS. The Chairman may, at his 
option, utilize a Grant Appeals Panel, designated pursuant to 45 CFR 
516.4(b), to decide the matter, and may supplement the Sec.  201.14 
procedures by utilizing the procedures of 45 CFR part 16 including the 
authority provided in 45 CFR 16.51 to waive or modify any procedural 
provision upon a determination that no party will be prejudiced and that 
the ends of justice will be served.

[40 FR 34592, Aug. 18, 1975; 40 FR 44326, Sept. 26, 1975, as amended at 
41 FR 42205, Sept. 27, 1976; 42 FR 43977, Sept. 1, 1977; 42 FR 51583, 
Sept. 29, 1977; 43 FR 9266, Mar. 6, 1978; 51 FR 9202, Mar. 18, 1986; 53 
FR 36579, Sept. 21, 1988]



Sec.  201.15  Deferral of claims for Federal financial participation.

    (a) Scope. Except as otherwise provided, this section applies to all 
claims for Federal financial participation submitted by States pursuant 
to titles I, IV, X, XIV, XVI (AABD), of the Social Security Act.
    (b) Definitions. (1) Deferral Action means the process of suspending 
payment with respect to a claim within the scope of paragraph (a) of 
this section, pending the receipt and analysis of further information 
relating to the allowability of the claim, under the procedures 
specified in this section.
    (2) Deferred claim means a claim within the scope of paragraph (a) 
of this section upon which a deferral action has been taken.
    (c) Procedures. (1) A claim or any portion of a claim for 
reimbursement for expenditures reported on the Quarterly Statement of 
Expenditures shall be deferred only when the Regional Administrator 
believes the claim or a specific portion of the claim is of questionable 
allowability. The deferral action will be taken within 60 days after 
receipt of a Quarterly Statement of Expenditures prepared in accordance 
with instructions issued by the Administration.
    (2) When deferral action is taken on a claim, the Regional 
Administrator or the Administrator will within 15 days send written 
notice to the State identifying the type and amount of the claim and the 
reason for deferral. In the written notice of the deferral action, the 
Regional Administrator or the Administrator will request the State to 
make available for inspection all documents and materials which the 
Regional office then believes necessary to determine the allowability of 
the claim.
    (3) Within 60 days of receipt of the notice of deferral action 
described in paragraph (c)(2) of this section the State shall make 
available to the Regional office, in readily reviewable form, all 
requested documents and materials, or when necessary, shall identify 
those documents and items of information which are not available. If the 
State requires additional time to make the documents and material 
available, it shall upon request be given an additional 60 days.
    (4) The Regional office will normally initiate the review within 30 
days of the date that materials become available for review.
    (5) If the Regional Administrator finds that the documents and 
materials are not in readily reviewable form or that supplemental 
information is required, he will promptly notify the State. The State 
will have 15 days from the date of notification to complete the action 
requested. If the Regional Commissioner or the Administrator finds that 
the documents necessary to determine the allowability of the claim

[[Page 16]]

are not made available within the allowed time limits, or that the 
documents are not made available in readily reviewable form, he shall 
promptly disallow the claim.
    (6) The Regional Administrator or the Administrator will have 90 
days after all documentation is available in readily reviewable form to 
determine the allowability of the deferred claim. If he is unable to 
complete the review within the time period the claim will be paid 
subject to a later determination of allowability.
    (7) It is the responsibility of the State agency to establish the 
allowability of a deferred claim.
    (8) The Regional Office or the Administrator will notify the State 
in writing of the decision on the allowability of the deferred claim.
    (9) If a deferred claim is disallowed, the Regional Administrator or 
the Administrator shall advise the State of its right to reconsideration 
pursuant to Sec.  201.14.
    (10) A decision to pay a deferred claim shall not preclude a 
subsequent disallowance as a result of an audit exception or financial 
management review. If a subsequent disallowance should occur, the State, 
upon request shall be granted reconsideration pursuant to Sec.  201.14.

[41 FR 7104, Feb. 17, 1976, as amended at 42 FR 51583, Sept. 29, 1977; 
47 FR 7669, Feb. 22, 1982; 53 FR 36579, Sept. 21, 1988]



Sec.  201.66  Repayment of Federal funds by installments.

    (a) Basic Conditions. When a State has been reimbursed Federal funds 
for expenditures claimed under titles I, IV-A, X, XIV, XVI (AABD) which 
are later determined to be unallowable for Federal financial 
participation, the State may make repayment of such Federal funds in 
installments provided:
    (1) The amount of the repayment exceeds 2\1/2\ percent of the 
estimated annual State share for the program in which the unallowable 
expenditure occurred as set forth in paragraph (b) of this section; and
    (2) The State has notified the Regional Administrator in writing of 
its intent to make installment repayments. Such notice must be given 
prior to the time repayment of the total was otherwise due.
    (b) Criteria governing installment repayments. (1) The number of 
quarters over which the repayment of the total unallowable expenditures 
will be made will be determined by the percentage the total of such 
repayment is of the estimated State share of the annual expenditures for 
the specific program against which the recovery is made, as follows:

------------------------------------------------------------------------
                                                               Number of
   Total repayment amount as percentage of State share of      quarters
        annual expenditures for the specific program            to make
                                                               repayment
------------------------------------------------------------------------
2.5 pct. or less............................................           1
Greater than 2.5, but not greater than 5....................           2
Greater than 5, but not greater than 7.5....................           3
Greater than 7.5, but not greater than 10...................           4
Greater than 10, but not greater than 15....................           5
Greater than 15, but not greater than 20....................           6
Greater than 20 but not greater than 25.....................           7
Greater than 25, but not greater than 30....................           8
Greater than 30, but not greater than 47.5..................           9
Greater than 47.5, but not greater than 65..................          10
Greater than 65, but not greater than 82.5..................          11
Greater than 82.5, but not greater than 100.................          12
------------------------------------------------------------------------


The quarterly repayment amounts for each of the quarters in the 
repayment schedule shall not be less than the following percentages of 
the estimated State share of the annual expenditures for the program 
against which the recovery is made.

------------------------------------------------------------------------
                                                              Repayment
                                                             installment
                                                              may not be
             For each of the following quarters               less than
                                                                these
                                                             percentages
------------------------------------------------------------------------
1 to 4.....................................................          2.5
5 to 8.....................................................          5.0
9 to 12....................................................         17.5
------------------------------------------------------------------------


If the State chooses to repay amounts representing higher percentages 
during the early quarters, any corresponding reduction in required 
minimum percentages would be applied first to the last scheduled 
payment, then to the next to the last payment, and so forth as 
necessary.
    (2) The latest State Agency Statement of Financial Plan for AFDC 
submitted by the State shall be used to estimate the State's share of 
annual expenditures for the specific program in which the unallowable 
expenditures occurred. That estimated share shall be

[[Page 17]]

the sum of the State's share of the estimates (as shown on the latest 
State Agency Statement of Financial Plan for AFDC) for four quarters, 
beginning with the quarter in which the first installment is to be paid.
    (3) In the case of a program terminated by law or by the State, the 
actual State share--rather than the estimate--shall be used for 
determining whether the amount of the repayment exceeds 2\1/2\% of the 
annual State share for the program. The annual State share in these 
cases will be determined using payments computable for Federal funding 
as reported for the program by the State on its Quarterly Statement of 
Expenditures reports submitted for the last four quarters preceding the 
date on which the program was terminated.
    (4) Repayment shall be accomplished through adjustment in the 
quarterly grants over the period covered by the repayment schedule.
    (5) The amount of the repayment for purpose of paragraphs (a) and 
(b) of this section may not include any amount previously approved for 
installment repayment.
    (6) The repayment schedule may be extended beyond 12 quarterly 
installments if the total repayment amount exceeds 100% of the estimated 
State share of annual expenditures. In these circumstances, the criteria 
in paragraphs (b) (1) and (2) or (3) of this section, as appropriate, 
shall be followed for repayment of the amount equal to 100% of the 
annual State share. The remaining amount of the repayment shall be in 
quarterly amounts not less than those for the 9th through 12th quarters.
    (7) The amount of a retroactive claim to be paid a State will be 
offset against any amounts to be, or already being, repaid by the State 
in installments, under the same title of the Social Security Act. Under 
this provision the State may choose to:
    (i) Suspend payments until the retroactive claim due the State has, 
in fact, been offset; or
    (ii) Continue payments until the reduced amount of its debt 
(remaining after the offset), has been paid in full. This second option 
would result in a shorter payment period. A retroactive claim for the 
purpose of this regulation is a claim applicable to any period ending 12 
months or more prior to the beginning of the quarter in which the 
payment is to be made by the Administration.

[42 FR 28884, June 6, 1977, as amended at 47 FR 7669, Feb. 22, 1982; 52 
FR 273, Jan. 5, 1987; 53 FR 36579, Sept. 21, 1988]



Sec.  201.67  Treatment of uncashed or cancelled checks.

    (a) Purpose. This section provides the rules to ensure that States 
refund the Federal portion of uncashed or cancelled (voided) checks 
under titles I, IV-A, X, XIV, and XVI (AABD).
    (b) Definitions. As used in this section--Check means a check or 
warrant that the State or local agency uses to make a payment.
    Cancelled (voided) check means a check issued by the State agency or 
local agency which prior to its being cashed is cancelled (voided) by 
State or local agency action, thus preventing disbursement of funds.
    Uncashed check means a check issued by the State agency or local 
agency which has not been cashed by the payee.
    (c) Refund of Federal financial participation (FFP) for uncashed 
checks--(1) General provisions. If a check remains uncashed beyond a 
period of 180 days from the date it was issued, i.e., the date of the 
check, it will no longer be regarded as an amount expended because no 
funds have actually been disbursed. If the State agency has claimed and 
received FFP for the amount of the uncashed check, it must refund the 
amount of FFP received.
    (2) Report of refund. At the end of each calendar quarter, the State 
agency must identify those checks which remain uncashed beyond a period 
of 180 days after issuance. The State agency must report on the 
Quarterly Statement of Expenditures for that quarter all FFP that it 
received for uncashed checks. Once reported on the Quarterly Statement 
of Expenditures for a quarter, an uncashed check is not to be reported 
on a subsequent Quarterly Statement of Expenditures. If an uncashed 
check is cashed after the refund is made, the State agency may submit a 
new claim for FFP.

[[Page 18]]

    (d) Refund of FFP for cancelled (voided) checks--(1) General 
provisions. If the State agency has claimed and received FFP for the 
amount of a cancelled (voided) check, it must refund the amount of FFP 
received.
    (2) Report of refund. At the end of each calendar quarter, the State 
agency must identify those checks which were cancelled (voided). The 
State agency must report on the Quarterly Statement of Expenditures for 
that quarter all FFP received by the State agency for these checks. Once 
reported on the Quarterly Statement of Expenditures for a quarter, a 
cancelled (voided) check is not to be reported on a subsequent Quarterly 
Statement of Expenditures.

[50 FR 37661, Sept. 17, 1985]



Sec.  201.70  Treatment of replacement checks.

    (a) Purpose. This section provides the rules to ensure States do not 
claim Federal financial participation (FFP) for replacement checks under 
titles I, VI-A, X, XIV, XVI (AABD) except under the circumstances 
specified in paragraph (c) of this section.
    (b) Definitions. As used in this section--
    Check means a check or warrant that the State or local agency uses 
to make a payment.
    Replacement check means a check issued by the State or local agency 
to replace an earlier check.
    (c) Claiming of FFP for replacement checks. The State agency may not 
claim FFP for the amount of a replacement check unless:
    (1) It makes no claim for FFP for the earlier check;
    (2) The earlier check has been cancelled (voided) and FFP refunded, 
where claimed, pursuant to 45 CFR 201.67(d); or
    (3) The earlier check has been cashed and FFP has been refunded.
    The State agency shall report the amount of the refund of FFP for 
the earlier check on the Quarterly Statement of Expenditures for the 
quarter no later than the quarter in which the replacement check is 
issued.

[53 FR 24269, June 28, 1988]



PART 204_GENERAL ADMINISTRATION_STATE PLANS AND GRANT APPEALS--Table of Contents




Sec.
204.1 Submittal of State plans for Governor's review.
204.2 State plans--format.
204.3 Responsibilities of the State.
204.4 Grant appeals.

    Authority: 42 U.S.C. 602(a)(44) and 1302 and sections 1, 5, 6, and 7 
of Reorganization Plan No. 1 of 1953, 67 Stat. 631.



Sec.  204.1  Submittal of State plans for Governor's review.

    A State plan under title I, IV-A, IV-B, X, XIV, XVI(AABD) of the 
Social Security Act, section 101 of the Rehabilitation Act of 1973, or 
title I of the Mental Retardation Facilities and Community Mental Health 
Centers Construction Act, must be submitted to the State Governor for 
his review and comments, and the State plan must provide that the 
Governor will be given opportunity to review State plan amendments and 
long-range program planning projections or other periodic reports 
thereon. This requirement does not apply to periodic statistical or 
budget and other fiscal reports. Under this requirement, the Office of 
the Governor will be afforded a specified period in which to review the 
material. Any comments made will be transmitted to the Family Support 
Administration with the documents.

(Sec. 1102, 49 Stat. 647 (42 U.S.C. 1302))

[39 FR 34542, Sept. 26, 1974, as amended at 53 FR 36579, Sept. 21, 1988]



Sec.  204.2  State plans--format.

    State plans for Federally-assisted programs for which the Family 
Support Administration has responsibility must be submitted to the 
Administration in the format and containing the information prescribed 
by the Administration, and within time limits set in implementing 
instructions issued by the Administration. Such time limits will be 
adequate for proper preparation of plans and submittal in accordance

[[Page 19]]

with the requirements for State Governors' review (see Sec.  204.1 of 
this chapter).

(Sec. 1102, 49 Stat. 647, 42 U.S.C. 1302; sec. 7(b), 68 Stat. 658, 29 
U.S.C. 37(b); sec. 139, 84 Stat. 1323, 42 U.S.C. 2677(b))

[38 FR 16872, June 27, 1973, as amended at 53 FR 36579, Sept. 21, 1988]



Sec.  204.3  Responsibilities of the State.

    The State agency shall be responsible for assuring that the benefits 
and services available under titles IV-A, IV-D, and IV-F are furnished 
in an integrated manner.

[57 FR 30425, July 9, 1992]



Sec.  204.4  Grant appeals.

    (a) Scope. This section applies to certain determinations (as set 
forth in part 16, appendix A, section C of this title), made with 
respect to direct, discretionary project grants awarded by the Family 
Support Administration, and such other grants or grant programs as the 
Administrator, with the approval of the Secretary, may designate. The 
statutory authority for current grant programs to which this section 
applies appears in the appendix to this section. This section is also 
applicable to determinations with respect to grants which were made 
under authority which has expired or been repealed since the grants were 
made, even though such authority does not appear in the appendix.
    (b) Submission. (1) A grantee who has received notification, as 
described in Sec.  16.3 (b) and (c) of this title, of a determination 
described in part 16, appendix A, section C of this title, may request 
reconsideration by informing the Grants Appeals Officer as identified in 
the final adverse determination or otherwise designated by the 
Administrator, Family Support Administration, Washington, DC 20201 of 
the grantee's intent to contest the determination. The grantee's request 
for reconsideration must be postmarked no later than 30 days after the 
postmark date of the written notification of such determination, except 
when the Grant Appeals Officer grants an extension of time for good 
cause.
    (2) Although the request need not follow any prescribed form, it 
shall clearly identify the question or questions in dispute and contain 
a full statement of the grantee's position with respect to such question 
or questions, and the pertinent facts and reasons in support of such 
position. The grantee shall attach to his submission a copy of the 
agency notification specified in Sec.  16.3(b) of this title.
    (c) Action by the Administration on requests for reconsideration. 
(1) Upon receipt of such an application the Grant Appeals Officer will 
inform the grantee that:
    (i) His request is under review, and
    (ii) If no decision is received within 90 days of the postmark date 
of the grantee's request for reconsideration, the determination may be 
appealed to the Departmental Grant Appeals Board.
    (2) The Grant Appeals Officer will reconsider the determination 
appealed from, considering any material submitted by the grantee and any 
other material necessary.
    (3) If the response to the grantee is adverse to the grantee's 
position, the response will include notification of the grantee's right 
to appeal to the Departmental Grant Appeals Board.

                                Appendix

    This section is issued under sections 1, 5, 6, and 7 of 
Reorganization Plan No. 1 of 1953, 18 FR 2053, 67 Stat. 631 and is 
applicable to programs carried out under the following authorities:
    (1) Section 222(a) and (b) of the Social Security Amendments of 1972 
(Pub. L. 92-603).
    (2) Section 426 of the Social Security Act (42 U.S.C. 262).
    (3) Section 707 of the Social Security Act (42 U.S.C. 907).
    (4) Section 1110 of the Social Security Act (42 U.S.C. 1310).
    (5) Section 1115 of the Social Security Act (42 U.S.C. 1315).

(Secs. 1, 5, 6, 7 Reorganization Plan No. 1 of 1953, 67 Stat. 631)

[40 FR 51443, Nov. 5, 1975, as amended at 53 FR 36579, Sept. 21, 1988]



PART 205_GENERAL ADMINISTRATION_PUBLIC ASSISTANCE PROGRAMS--Table of Contents




Sec.
205.5 Plan amendments.
205.10 Hearings.

[[Page 20]]

205.25 Eligibility of supplemental security income beneficiaries for 
          food stamps or surplus commodities.
205.30 Methods of administration.
205.32 Procedures for issuance of replacement checks.
205.35 Mechanized claims processing and information retrieval systems; 
          definitions.
205.36 State plan requirements.
205.37 Responsibilities of the Administration for Children and Families 
          (ACF).
205.38 Federal financial participation (FFP) for establishing a 
          statewide mechanized system.
205.44 [Reserved]
205.45 Federal financial participation in relation to State emergency 
          welfare preparedness.
205.50 Safeguarding information for the financial assistance programs.
205.51 Income and eligibility verification requirements.
205.52 Furnishing of social security numbers.
205.55 Requirements for requesting and furnishing eligibility and income 
          information.
205.56 Requirements governing the use of income and eligibility 
          information.
205.57 Maintenance of a machine readable file; requests for income and 
          eligibility information.
205.58 Income and eligibility information; specific agreements required 
          between the State agency and the agency supplying the 
          information.
205.60 Reports and maintenance of records.
205.70 Availability of agency program manuals.
205.100 Single State agency.
205.101 Organization for administration.
205.120 Statewide operation.
205.130 State financial participation.
205.150 Cost allocation.
205.160 Equipment--Federal financial participation.
205.170 State standards for office space, equipment, and facilities.
205.190 Standard-setting authority for institutions.

    Authority: 42 U.S.C. 602, 603, 606, 607, 1302, 1306(a), and 1320b-7: 
42 U.S.C. 1973gg-5.



Sec.  205.5  Plan amendments.

    (a) State plan requirements. A State plan under title I, IV-A, X, 
XIV, or XVI (AABD) of the Social Security Act must provide that the plan 
will be amended whenever necessary to reflect new or revised Federal 
statutes or regulations, or material change in any phase of State law, 
organization, policy or State agency operation.
    (b) Federal financial participation. Except where otherwise 
provided, Federal financial participation is available in the additional 
expenditures resulting from an amended provision of the State plan as of 
the first day of the calendar quarter in which an approvable amendment 
is submitted or the date on which the amended provision becomes 
effective in the State, whichever is later.

[39 FR 34542, Dec. 26, 1974, as amended at 53 FR 36579, Sept. 21, 1988]



Sec.  205.10  Hearings.

    (a) State plan requirements. A State plan under title I, IV-A, X, 
XIV, or XVI(AABD) of the Social Security Act shall provide for a system 
of hearings under which:
    (1) The single State agency responsible for the program shall be 
responsible for fulfillment of hearing provisions which shall provide 
for:
    (i) A hearing before the State agency, or
    (ii) An evidentiary hearing at the local level with a right of 
appeal to a State agency hearing. Where a State agency adopts a system 
of evidentiary hearings with an appeal to a State agency hearing, it 
may, in some political subdivisions, permit local evidentiary hearings, 
and in others, provide for a single hearing before the State agency. 
Under this requirement hearings shall meet the due process standards set 
forth in the U.S. Supreme Court decision in Goldberg v. Kelly, 397 U.S. 
254 (1970) and the standards set forth in this section.
    (2) Hearing procedures shall be issued and publicized by the State 
agency. Such procedures shall provide for a face-to-face hearing or, at 
State option, a hearing by telephone when the applicant or recipient 
also agrees. Under this provision, the State shall assure that the 
applicant or recipient is afforded all rights as specified in this 
section, whether the hearing is face-to-face or by telephone;
    (3) Every applicant or recipient shall be informed in writing at the 
time of application and at the time of any action affecting his claim:
    (i) Of his right to a hearing, as provided in paragraph (a)(5) of 
this section;
    (ii) Of the method by which he may obtain a hearing;

[[Page 21]]

    (iii) That he may be represented by an authorized representative, 
such as legal counsel, relative, friend, or other spokesman, or he may 
represent himself.
    (4) In cases of intended action to discontinue, terminate, suspend 
or reduce assistance or to change the manner or form of payment to a 
protective, vendor, or two-party payment under Sec.  234.60:
    (i) The State or local agency shall give timely and adequate notice, 
except as provided for in paragraphs (a)(4) (ii), (iii), or (iv) of this 
section. Under this requirement:
    (A) Timely means that the notice is mailed at least 10 days before 
the date of action, that is, the date upon which the action would become 
effective;
    (B) Adequate means a written notice that includes a statement of 
what action the agency intends to take, the reasons for the intended 
agency action, the specific regulations supporting such action, 
explanation of the individual's right to request an evidentiary hearing 
(if provided) and a State agency hearing, the circumstances under which 
assistance is continued if a hearing is requested, and if the agency 
action is upheld, that such assistance must be repaid under title IV-A, 
and must also be repaid under titles I, X, XIV or XVI (AABD) if the 
State plan provides for recovery of such payments.
    (ii) The agency may dispense with timely notice but shall send 
adequate notice not later than the date of action when:
    (A) The agency has factual information confirming the death of a 
recipient or of the AFDC payee when there is no relative available to 
serve as new payee;
    (B) The agency receives a clear written statement signed by a 
recipient that he no longer wishes assistance, or that gives information 
which requires termination or reduction of assistance, and the recipient 
has indicated, in writing, that he understands that this must be the 
consequence of supplying such information;
    (C) The recipient has been admitted or committed to an institution, 
and further payments to that individual do not qualify for Federal 
financial participation under the State plan;
    (D) The recipient has been placed in skilled nursing care, 
intermediate care or long-term hospitalization;
    (E) The claimant's whereabouts are unknown and agency mail directed 
to him has been returned by the post office indicating no known 
forwarding address. The claimant's check must, however, be made 
available to him if his whereabouts become known during the payment 
period covered by a returned check;
    (F) A recipient has been accepted for assistance in a new 
jurisdiction and that fact has been established by the jurisdiction 
previously providing assistance;
    (G) An AFDC child is removed from the home as a result of a judicial 
determination, or voluntarily placed in foster care by his legal 
guardian;
    (H) For AFDC, the agency takes action because of information the 
recipient furnished in a monthly report or because the recipient has 
failed to submit a complete or a timely monthly report without good 
cause. (See Sec.  233.37);
    (I) A special allowance granted for a specific period is terminated 
and the recipient has been informed in writing at the time of initiation 
that the allowance shall automatically terminate at the end of the 
specified period;
    (J) The agency has made a presumption of mismanagement as a result 
of a recipient's nonpayment of rent and provides for post hearings in 
such circumstances;
    (K) An individual's payment is suspended or reduced for failure to 
meet a payment after performance obligation as set forth at Sec.  
233.101(b)(2)(iv) (B) or (C) of this chapter. In addition to the 
contents set forth in paragraph (a)(4)(i)(B) of this section, the 
adequate notice must advise the individual of the right to have 
assistance immediately reinstated retroactive to the date of action at 
the previous month's level pending the hearing decision if he or she 
makes a request for a hearing and reinstatement within 10 days after the 
date of the notice.
    (iii) When changes in either State or Federal law require automatic 
grant adjustments for classes of recipients,

[[Page 22]]

timely notice of such grant adjustments shall be given which shall be 
``adequate'' if it includes a statement of the intended action, the 
reasons for such intended action, a statement of the specific change in 
law requiring such action and a statement of the circumstances under 
which a hearing may be obtained and assistance continued.
    (iv) When the agency obtains facts indicating that assistance should 
be discontinued, suspended, terminated, or reduced because of the 
probable fraud of the recipient, and, where possible, such facts have 
been verified through collateral sources, notice of such grant 
adjustment shall be timely if mailed at least five (5) days before 
action would become effective.
    (5) An opportunity for a hearing shall be granted to any applicant 
who requests a hearing because his or her claim for financial assistance 
(including a request for supplemental payments under Sec. Sec.  233.23 
and 233.27) is denied, or is not acted upon with reasonable promptness, 
and to any recipient who is aggrieved by any agency action resulting in 
suspension, reduction, discontinuance, or termination of assistance, or 
determination that a protective, vendor, or two-party payment should be 
made or continued. A hearing need not be granted when either State or 
Federal law requires automatic grant adjustments for classes of 
recipients unless the reason for an individual appeal is incorrect grant 
computation.
    (i) A request for a hearing is defined as a clear expression by the 
claimant (or his authorized representative acting for him), to the 
effect that he wants the opportunity to present his case to higher 
authority. The State may require that such request be in written form in 
order to be effective;
    (ii) The freedom to make such a request shall not be limited or 
interfered with in any way. The agency may assist the claimant to submit 
and process his request;
    (iii) The claimant shall be provided reasonable time, not to exceed 
90 days, in which to appeal an agency action;
    (iv) Agencies may respond to a series of individual requests for 
hearing by conducting a single group hearing. Agencies may consolidate 
only cases in which the sole issue involved is one of State or Federal 
law or policy or changes in State or Federal law. In all group hearings, 
the policies governing hearings must be followed. Thus, each individual 
claimant shall be permitted to present his own case or be represented by 
his authorized representative;
    (v) The agency may deny or dismiss a request for a hearing where it 
has been withdrawn by the claimant in writing, where the sole issue is 
one of State or Federal law requiring automatic grant adjustments for 
classes of recipients, where a decision has been rendered after a WIN 
hearing before the manpower agency that a participant has, without good 
cause, refused to accept employment or participate in the WIN program, 
or has failed to request such a hearing after notice of intended action 
for such refusal, or where it is abandoned. Abandonment may be deemed to 
have occurred if the claimant, without good cause therefor, fails to 
appear by himself or by authorized representative at the hearing 
scheduled for such claimant.
    (6) If the recipient requests a hearing within the timely notice 
period:
    (i) Assistance shall not be suspended, reduced, discontinued or 
terminated (but is subject to recovery by the agency if its action is 
sustained), until a decision is rendered after a hearing, unless:
    (A) A determination is made at the hearing that the sole issue is 
one of State or Federal law or policy, or change in State or Federal law 
and not one of incorrect grant computation;
    (B) A change affecting the recipient's grant occurs while the 
hearing decision is pending and the recipient fails to request a hearing 
after notice of the change;
    (C) The recipient specifically requests that he or she not receive 
continued assistance pending a hearing decision; or
    (D) The agency has made a presumption of mismanagement as a result 
of a recipient's nonpayment of rent and provides for the opportunity for 
a hearing after the manner or form of payment has been changed for such 
cases in accordance with Sec.  234.60 (a)(2) and (a)(11).

[[Page 23]]

    (ii) The agency shall promptly inform the claimant in writing if 
assistance is to be discontinued pending the hearing decision; and
    (iii) In any case where the decision of an evidentiary hearing is 
adverse to the claimant, he shall be informed of and afforded the right 
to make a written request, within 15 days of the mailing of the 
notification of such adverse decision, for a State agency hearing and of 
his right to request a de novo hearing. Unless a de novo hearing is 
specifically requested by the appellant, the State agency hearing may 
consist of a review by the State agency hearing officer of the record of 
the evidentiary hearing to determine whether the decision of the 
evidentiary hearing officer was supported by substantial evidence in the 
record. Assistance shall not be continued after an adverse decision to 
the claimant at the evidentiary hearing.
    (7) A State may provide that a hearing request made after the date 
of action (but during a period not in excess of 10 days following such 
date) shall result in reinstatement of assistance to be continued until 
the hearing decision, unless (i) the recipient specifically requests 
that continued assistance not be paid pending the hearing decision; or 
(ii) at the hearing it is determined that the sole issue is one of State 
or Federal law or policy. In any case where action was taken without 
timely notice, if the recipient requests a hearing within 10 days of the 
mailing of the notice of the action, and the agency determines that the 
action resulted from other than the application of State or Federal law 
or policy or a change in State or Federal law, assistance shall be 
reinstated and continued until a decision is rendered after the hearing, 
unless the recipient specifically requests that continued assistance not 
be paid pending the hearing decision.
    (8) The hearing shall be conducted at a reasonable time, date, and 
place, and adequate preliminary written notice shall be given.
    (9) Hearings shall be conducted by an impartial official (officials) 
or designee of the agency. Under this requirement, the hearing official 
(officials) or designee shall not have been directly involved in the 
initial determination of the action in question.
    (10) When the hearing involves medical issues such as those 
concerning a diagnosis, an examining physician's report, or a medical 
review team's decision, a medical assessment other than that of the 
person or persons involved in making the original decision shall be 
obtained at agency expense and made part of the record if the hearing 
officer considers it necessary.
    (11) In respect to title IV-C, when the appeal has been taken on the 
basis of a disputed WIN registration requirement, exemption 
determination or finding of failure to appear for an appraisal 
interview, a representative of the local WIN manpower agency shall, 
where appropriate, participate in the conduct of the hearing.
    (12) The hearing shall include consideration of:
    (i) An agency action, or failure to act with reasonable promptness, 
on a claim for financial assistance, which includes undue delay in 
reaching a decision on eligibility or in making a payment, refusal to 
consider a request for or undue delay in making an adjustment in 
payment, and discontinuance, termination or reduction of such 
assistance;
    (ii) Agency decision regarding:
    (A) Eligibility for financial assistance in both initial and 
subsequent determinations,
    (B) Amount of financial assistance or change in payments,
    (C) The manner or form of payment, including restricted or 
protective payments, even though no Federal financial participation is 
claimed.
    (13) The claimant, or his representative, shall have adequate 
opportunity:
    (i) To examine the contents of his case file and all documents and 
records to be used by the agency at the hearing at a reasonable time 
before the date of the hearing as well as during the hearing;
    (ii) At his option, to present his case himself or with the aid of 
an authorized representative;
    (iii) To bring witnesses;
    (iv) To establish all pertinent facts and circumstances;
    (v) To advance any arguments without undue interference;

[[Page 24]]

    (vi) To question or refute any testimony or evidence, including 
opportunity to confront and cross-examine adverse witnesses.
    (14) Recommendations or decisions of the hearing officer or panel 
shall be based exclusively on evidence and other material introduced at 
the hearing. The transcript or recording of testimony and exhibits, or 
an official report containing the substance of what transpired at the 
hearing, together with all papers and requests filed in the proceeding, 
and the recommendation or decision of the hearing officer or panel shall 
constitute the exclusive record and shall be available to the claimant 
at a place accessible to him or his representative at a reasonable time.
    (15) Decisions by the hearing authority shall:
    (i) In the event of an evidentiary hearing, consist of a memorandum 
decision summarizing the facts and identifying the regulations 
supporting the decision;
    (ii) In the event of a State agency de novo hearing, specify the 
reasons for the decision and identify the supporting evidence and 
regulations.

Under this requirement no persons who participated in the local decision 
being appealed shall participate in a final administrative decision on 
such a case.
    (16) Prompt, definitive, and final administrative action shall be 
taken within 90 days from the date of the request for a hearing.
    (17) The claimant shall be notified of the decision in writing and, 
to the extent it is available to him, of his right to appeal to State 
agency hearing or judicial review.
    (18) When the hearing decision is favorable to the claimant, or when 
the agency decides in favor of the claimant prior to the hearing, the 
agency shall promptly make corrective payments retroactively to the date 
the incorrect action was taken.
    (19) All State agency hearing decisions shall be accessible to the 
public (subject to provisions of safeguarding public assistance 
information).
    (b) Federal financial participation. Federal financial participation 
is available for the following items:
    (1) Payments of assistance continued pending a hearing decision.
    (2) Payments of assistance made to carry out hearing decisions, or 
to take corrective action after an appeal but prior to hearing, or to 
extend the benefit of a hearing decision or court order to others in the 
same situation as those directly affected by the decision or order. Such 
payments may be retroactive in accordance with applicable Federal 
policies on corrective payments.
    (3) Payments of assistance within the scope of Federally aided 
public assistance programs made in accordance with a court order.
    (4) Administrative costs incurred by the agency for:
    (i) Providing transportation for the claimant, his representative 
and witnesses to and from the place of the hearing;
    (ii) Meeting other expenditures incurred by the claimant in 
connection with the hearing;
    (iii) Carrying out the hearing procedures, including expenses of 
obtaining an additional medical assessment.

[38 FR 22007, Aug. 15, 1973, as amended at 44 FR 17941, Mar. 23, 1979; 
45 FR 20480, Mar. 28, 1980; 47 FR 5673, Feb. 5, 1982; 47 FR 47827, Oct. 
28, 1982; 51 FR 9202, Mar. 18, 1986; 53 FR 36579, Sept. 21, 1988; 57 FR 
30425, July 9, 1992]



Sec.  205.25  Eligibility of supplemental security income beneficiaries for food stamps or surplus commodities.

    (a) In respect to any individual who is receiving supplemental 
security income benefits under title XVI of the Social Security Act, the 
State agency shall make the following determinations:
    (1) The amount of assistance such individual would have been 
entitled to receive for any month under the appropriate State plan in 
effect for December 1973, under title I, X, XIV, or XVI, and for such 
purpose such individual shall be deemed to be aged, blind, or 
permanently and totally disabled, as the case may be, under the 
provisions of such plan.
    (2) The bonus value of the food stamps (according to the Food Stamp 
Schedule effective for July 1973) such individual would have been 
entitled to receive for such month, assuming the

[[Page 25]]

individual were receiving the assistance determined under paragraph 
(a)(1) of this section.
    (3) The amount of benefits such individual is receiving for such 
month under Title XVI, plus supplementary payments as defined in section 
1616(a) of the Social Security Act and payments pursuant to section 212 
of Pub. L. 93-66, if any.
    (b) If the amount determined in paragraph (a)(1) of this section 
plus the amount determined in paragraph (a)(2) of this section exceeds 
the amount determined in paragraph (a)(3) of this section, such 
individual shall be eligible to participate in the food stamp program 
established by the Food Stamp Act of 1964 or surplus commodities 
distribution programs established by the Secretary of Agriculture 
pursuant to section 416 of the Agricultural Act of 1949, section 32 of 
Pub. L. 74-320, or any other law, in accordance with regulations and 
procedures established by the Secretary of Agriculture.
    (c) For purposes of paragraph (a)(3) of this section, the State 
agency shall obtain the amount of the title XVI payment and the amount 
of any Federally administered State supplementary payment from the 
Social Security Administration.
    (d) The State agency shall redetermine the eligibility of 
individuals to participate in the food stamp or surplus commodities 
distribution programs hereunder at such times as the Secretary of 
Agriculture requires re-certification for such stamps or commodities.

[38 FR 34324, Dec. 13, 1973]



Sec.  205.30  Methods of administration.

    State plan requirements: A State plan for financial assistance under 
title I, IV-A, X, XIV or XVI (AABD) of the Social Security Act must 
provide for such methods of administration as are found by the Secretary 
to be necessary for the proper and efficient operation of the plan.

[45 FR 56684, Aug. 25, 1980]



Sec.  205.32  Procedures for issuance of replacement checks.

    (a) State plan requirements. A State plan under title IV-A of the 
Social Security Act shall provide that (1) procedures are in effect to 
ensure that no undue delays occur in issuing a replacement check; and 
(2) when applicable, prior to the issuance of a replacement check, the 
State agency must:
    (i) Issue a stop payment order on the original AFDC check through 
appropriate banking procedures; and
    (ii) Require recipients to execute a signed statement attesting to 
the nonreceipt, loss, or theft of the original FDC check. However, if 
obtaining such a statement from the recipient will cause the issuance of 
the check to be unduly delayed, the statement may be obtained within a 
reasonable time after the check is issued.
    (b) State option. A State plan may provide that as a condition for 
issuance of a replacement check, a recipient is required to report a 
lost or stolen AFDC check to the police or other appropriate 
authorities. Under this provision, the State agency may require that the 
recipient verify that a report was made to the police or other 
appropriate authorities and, if so, the agency will establish procedures 
for such verification.

[51 FR 9203, Mar. 18, 1986]



Sec.  205.35  Mechanized claims processing and information retrieval systems; definitions.

    Section 205.35 through 205.38 contain State plan requirements for an 
automated statewide management information system, conditions for FFP 
and responsibilities of the Administration for Children and Families 
(ACF). For purposes of Sec. Sec.  205.35 through 205.38:
    (a) A mechanized claims processing and information retrieval system, 
hereafter referred to as an automated application processing and 
information retrieval system (APIRS), or the system, means a system of 
software and hardware used:
    (1) To introduce, control and account for data items in providing 
public assistance under the Aid to Families with Dependent Children 
(AFDC) State plan; and
    (2) To retrieve and produce utilization and management information 
about such aid and services as required by the single State agency and 
Federal government for program administration and audit purposes.

[[Page 26]]

    (b) Planning means:
    (1) The preliminary project activity to determine the requirements 
necessitating the project, the activities to be undertaken, and the 
resources required to complete the project;
    (2) The preparation of an APD;
    (3) The preparation of a detailed project plan describing when and 
how the computer system will be designed and developed; and
    (4) The preparation of a detailed implementation plan describing 
specific training, testing, and conversion plans to install the computer 
system.
    (c) The following terms are defined at 45 CFR part 95, subpart F, 
Sec.  95.605:

    Annually updated advance automatic data processing planning 
document;
    Design or System Design;
    Development;
    Initial advance automatic data processing planning document;
    Installation;
    Operation; and
    Software.

[51 FR 45330, Dec. 18, 1986, as amended at 53 FR 36579, Sept. 21, 1988; 
55 FR 4379, Feb. 7, 1990; 59 FR 30708, June 15, 1994]



Sec.  205.36  State plan requirements.

    A State plan under title IV-A of the Social Security Act shall, at 
the option of the State, provide for the establishment and operation, in 
accordance with an (initial and annually updated) advance automated data 
processing planning document approved by SSA, of an automated statewide 
management information system designed effectively and efficiently, to 
assist management in the administration of an approved AFDC State plan. 
The submission process to amend the State plan is explained in Sec.  
201.3. This system must be designed:
    (a) To automatically control and account for--
    (1) All the factors in the total eligibility determination process 
under the plan for aid, including but not limited to:
    (i) Identifiable correlation factors (such as social security 
numbers, names, dates of birth, home addresses, and mailing addresses 
(including postal ZIP codes), of all applicants and recipients of AFDC 
and the relative with whom any child who is an applicant or recipient is 
living).
    (A) To assure sufficient compatibility among the systems of 
different jurisdictions, and
    (B) To permit periodic screening to determine whether an individual 
is or has been receiving benefits from more than one jurisdiction.
    (ii) Checking records of applicants and recipients of such aid on a 
periodic basis with other agencies, both intra and inter-state, for 
eligibility determination, verification and payment as required by other 
provisions of the Social Security Act.
    (2) The costs, quality, and delivery of funds and services furnished 
to applicants for and recipients of such aid.
    (b) To notify the appropriate State officials of child support, food 
stamp, social service, and medical assistance programs approved under 
title XIX whenever a case/recipient for aid and services becomes 
ineligible or the amount of aid or services is changed.
    (c) To electronically refer and exchange information with programs 
under titles IV-D and IV-F for purposes of assuring that benefits and 
services are provided in an integrated manner.
    (d) To provide for security against unauthorized access to, or use 
of, the data in the system.

[51 FR 13006, Apr. 17, 1986, as amended at 57 FR 47002, Oct. 14, 1992]



Sec.  205.37  Responsibilities of the Administration for Children and Families (ACF).

    (a) ACF shall not approve the initial and annually updated advance 
automatic data processing planning document unless the document, when 
implemented, will carry out the requirements of the law and the 
objectives of title IV-A (AFDC) Automated Application Processing and 
Information Retrieval System Guide. The initial advance automatic data 
processing planning document must include:
    (1) A requirements analysis, including consideration of the program 
mission, functions, organization, services, constraints and current 
support relating to such system;
    (2) A description of the proposed statewide management system, 
including the description of information flows, input data formats, 
output reports and uses;

[[Page 27]]

    (3) The security and interface requirements to be employed in such 
statewide management system;
    (4) A description of the projected resource requirements including 
staff and other needs; and the resources available or expected to be 
available to meet these requirements;
    (5) A cost benefit analysis of alternative systems designs, data 
processing services and equipment in terms of qualitative and 
quantitative measures. The alternative systems considered should include 
the advantages of the proposed system over the alternatives and should 
indicate the period of time the system will be operated to justify the 
funds invested. ACF certified systems that are already in place in other 
States must be included in the alternatives to be considered and 
evaluated;
    (6) A plan for distribution of costs, containing the basis for 
rates, both direct and indirect, to be in effect under such a statewide 
management system;
    (7) An implementation plan with charts of development events, 
testing description, proposed acceptance criteria, and backup and 
fallback procedures to handle possible failure of a system; and
    (8) Evidence that the State's system will be compatible with those 
of the FSA to facilitate the exchange of data between the State and 
Federal system.
    (b) ACF shall on a continuing basis, review, assess, and inspect the 
planning, design, and operation of, statewide management information 
systems, with a view to determining whether, and to what extent, these 
systems meet and continue to meet the requirements under these 
regulations.
    (c) If ACF finds that any statewide management information system 
referred to in Sec.  205.38 fails to comply substantially with criteria, 
requirements, and other undertakings prescribed by the approved advance 
automatic data processing planning document, approval of such document 
shall be suspended. The State will be given written notice of the 
suspension. The notice of suspension will state the reason for the 
suspension, whether the suspended system complies with the criteria for 
50 percent FFP under 45 CFR part 95, the actions required for future 
Federal funding, and the effective date of the suspension. The 
suspension shall be effective as of the date that the system failed to 
comply substantially with the approved APD. The suspension shall remain 
in effect until ACF makes a determination that such system complies with 
prescribed criteria, requirements, and other undertakings for future 
Federal funding. Should a State cease development of their approved 
system, either by voluntary withdrawal or as a result of Federal 
suspension, all Federal incentive funds invested to date that exceed the 
normal administrative FFP rate (50 percent) will be subject to 
recoupment.
    (d) ACF shall provide technical assistance to States as is deemed 
necessary to assist States to plan, design, develop, or install and 
provide for the security of the management information systems.
    (e) Approvals of the systems by ACF under the provisions of this 
section will be undertaken only as a result of State applications for 
increased matching. The requirements of 45 CFR part 95, subpart E and 
subpart F apply.

[51 FR 13006, Apr. 17, 1986, as amended at 53 FR 36579, Sept. 21, 1988; 
55 FR 4379, Feb. 7, 1990; 56 FR 1493, Jan. 15, 1991; 59 FR 30709, June 
15, 1994]



Sec.  205.38  Federal financial participation (FFP) for establishing a statewide mechanized system.

    (a) Effective July 1, 1981 through March 31, 1994, FFP is available 
at 90 percent of expenditures incurred for planning, design, development 
or installation of a statewide automated application processing and 
information retrieval system which are consistent with an approved ADP. 
(Beginning April 1, 1994 the match rate available for development of 
title IV-A automated systems is 50 percent.) The 90 percent FFP includes 
the purchase or rental of computer equipment and software directly 
required for and used in the operation of this system.
    (b) ACF will approve the system provided the following conditions 
are met--
    (1) ACF determines that the system is likely to provide more 
efficient, economical, and effective administration of the AFDC program.

[[Page 28]]

    (2) The system is compatible with the claims processing and 
information retrieval systems used in the administration of State plans 
approved under title XIX, and State programs where there is FFP under 
title XX.
    (3) The system meets the requirements referred to in Sec.  205.36.
    (4) The system meets criteria established in the title IV-A (AFDC) 
Automated Application Processing and Information Retrieval System Guide 
issued by ACF and which provides specific standard requirements for 
major functions, such as automated eligibility determination, grant 
computation, verification, referral, management control, compability, 
and data security.
    (5) The State agency certifies that--
    (i) The State will have all ownership rights in software or 
modifications thereof and associated documentation designed or developed 
with 90 percent FFP under this section, except that the Department of 
Health and Human Services reserves a royalty-free, nonexclusive, and 
irrevocable license to reproduce, publish, or otherwise use, and to 
authorize others to use for Federal government purposes, such software, 
modifications, and documentation;
    (ii) Methods and procedures for properly charging the cost of all 
systems whether acquired from public or private sources shall be in 
accordance with Federal regulations in part 74 of this title and the 
applicable ACF title IV-A (AFDC) Automated Application Processing and 
Information Retrieval System Guide;
    (iii) The complete system planned, designed, developed, installed, 
and hardware acquired, with FFP under these regulations will be used for 
a period of time which is consistent with the advance planning document 
as approved, or which ACF determines is sufficient to justify the 
Federal funds invested;
    (iv) Information in the system will be safeguarded in accordance 
with applicable Federal law; and
    (v) Access to the system in all of its aspects, including design, 
development, and operation, including work performed by any source, and 
including cost records of contractors and subcontractors, shall be made 
available to the Federal Government by the State at intervals deemed 
necessary by ACF to determine whether the conditions for approval are 
being met and to determine its efficiency, economy and effectiveness.
    (c) If ACF suspends approval, as described in Sec.  205.37, of the 
advance automated data processing planning document and/or system, FFP 
at the higher matching rate shall not be allowed for any costs incurred, 
until such time as the conditions for approval are met. Should the State 
fail to correct the deficiencies which led to the suspension within 90 
days of the date of notification of suspension or within a longer period 
of time agreed to by both the State and ACF, all Federal incentive funds 
invested to date that exceed the normal administrative FFP rate (50 
percent) will be disallowed.
    (d) Should a State voluntarily withdraw its approved APD and cease 
development of the approved system, all Federal incentive funds invested 
to date that exceed the normal administrative FFP rate (50 percent) will 
be disallowed.
    (e) Once a State is certified as having met the requirements 
referred to in Sec.  205.36 incentive funding will not be allowable for 
enhancements or other modifications unless these modifications are 
authorized by the Administation for Children and Families as a result of 
Federal legislative or regulatory change.

[51 FR 13007, Apr. 17, 1986, as amended at 53 FR 36579, Sept. 21, 1988; 
59 FR 30709, June 15, 1994]



Sec.  205.44  [Reserved]



Sec.  205.45  Federal financial participation in relation to State emergency welfare preparedness.

    (a) Under title IV-A, Federal financial participation is available 
at the rate of 50 percent in expenditures for development and planning 
activities for emergency welfare preparedness. Such activities must 
relate to emergency welfare situations resulting from natural disasters, 
civil disorders, and enemy caused disasters, as prescribed in 
``Guidelines for the Preparation of State Emergency Welfare Services

[[Page 29]]

Plan'' issued by Social and Rehabilitation Service, DHHS publication No. 
(SRS) 72-23004. These activities include:
    (1) Safekeeping essential documents and records;
    (2) Planning and developing emergency operating capability for 
providing food, lodging, clothing, and welfare registration and inquiry;
    (3) Assuring that qualified individuals are responsible for the 
planning and operation of each welfare function essential under 
emergency conditions for care and services for public assistance 
recipients and potential recipients;
    (4) Coordinating with other government and voluntary welfare 
agencies, and welfare-related business and professional organizations 
and associations, in developing emergency operating plans and attaining 
operational readiness;
    (5) Preparing and maintaining data on kinds, numbers, and locations 
of essential welfare resources, including manpower;
    (6) Developing ability to assess emergency welfare resources and 
determining requirements necessary to care for public assistance cases 
in the event of disaster or attack;
    (7) Preparing plans for claiming and distributing the above 
resources;
    (8) Developing mutual aid agreements at State and local levels with 
neighboring welfare organizations;
    (9) Preparing and distributing written emergency operations plans 
for public assistance agencies and operating units;
    (10) Participating in preparedness exercises for the purpose of 
testing plans and determining the role of public assistance programs in 
relation to the overall preparedness program; and
    (11) Travel incidental to any of the above activities.
    (b) Federal financial participation is available at 50 percent under 
title IV-A for providing training in emergency welfare preparedness for 
all staff and for volunteers.
    (c) In Guam, Puerto Rico, and the Virgin Islands, Federal financial 
participation is available at the rate of 75 percent in expenditures for 
emergency welfare preparedness under titles I, X, XIV, XVI (AABD) of the 
Social Security Act.
    (d) The cost of these activities must be allocated to all programs 
benefited in accordance with part 74, subtitle A of title 45 of the Code 
of Federal Regulations.

[41 FR 23387, June 10, 1976, as amended at 51 FR 9203, Mar. 18, 1986]



Sec.  205.50  Safeguarding information for the financial assistance programs.

    (a) State plan requirements. A State plan for financial assistance 
under title IV-A of the Social Security Act, must provide that:
    (1) Pursuant to State statute which imposes legal sanctions:
    (i) The use or disclosure of information concerning applicants and 
recipients will be limited to purposes directly connected with:
    (A) The administration of the plan of the State approved under title 
IV-A, the plan or program of the State under title IV-B, IV-D, IV-E, or 
IV-F or under title I, X, XIV, XVI (AABD), XIX, XX, or the Supplemental 
Security Income (SSI) program established by title XVI. Such purposes 
include establishing eligibility, determining the amount of assistance, 
and providing services for applicants and recipients.
    (B) Any investigation, prosecution, or criminal or civil proceeding 
conducted in connection with the administration of any such plans or 
programs.
    (C) The administration of any other Federal or federally assisted 
program which provides assistance, in cash or in kind, or services, 
directly to individuals on the basis of need.
    (D) The verification to the Employment Security Agency, or other 
certifying agency that an individual has been an AFDC recipient for at 
least 90 days or is a WIN or WIN Demonstration participant pursuant to 
Pub. L. 97-34, the Economic Recovery Tax Act of 1981.
    (E) Any audit or similar activity, e.g., review of expenditure 
reports or financial review, conducted in connection with the 
administration of any such plan or program by any governmental entity 
which is authorized by law to conduct such audit or activity.
    (F) The administration of a State unemployment compensation program.

[[Page 30]]

    (G) The reporting to the appropriate agency or official of 
information on known or suspected instances of physical or mental 
injury, sexual abuse or exploitation, or negligent treatment or 
maltreatment of a child receiving aid under circumstances which indicate 
that the child's health or welfare is threatened.
    (ii) The State agency has authority to implement and enforce the 
provisions for safeguarding information about applicants and recipients:
    (iii) Disclosure of any information that identifies by name or 
address any applicant or recipient to any Federal, State, or local 
committee or legislative body other than in connection with any activity 
under paragraph (a)(1)(i)(E) of this section is prohibited.
    (iv) Publication of lists or names of applicants and recipients will 
be prohibited. Exception. In respect to a State plan for financial 
assistance under title I, IVA, X, XIV, or XVI (AABD) of the Social 
Security Act, an exception to this restriction may be made by reason of 
the enactment or enforcement of State legislation, prescribing any 
conditions under which public access may be had to records of the 
disbursement of funds or payments under such titles within the State, if 
such legislation prohibits the use of any list or names obtained through 
such access to such records for commercial or political purposes.
    (v) The State or local agency responsible for the administration of 
the State plan has authority to disclose the current address of a 
recipient to a State or local law enforcement officer at his or her 
request. Such information is disclosed only to law enforcement officers 
who provide the name and Social Security number of the recipient and 
satisfactorily demonstrate that:
    (A) The recipient is a fugitive felon (as defined by the State);
    (B) The location or apprehension of such felon is within the law 
officer's official duties; and
    (C) The request is made in the proper exercise of those duties.
    (2) The agency will have clearly defined criteria which govern the 
types of information that are safeguarded and the conditions under which 
such information may be released or used. Under this requirement:
    (i) Types of information to be safeguarded include but are not 
limited to:
    (A) The names and addresses of applicants and recipients and amounts 
of assistance provided (unless excepted under paragraph (a)(1)(iv) of 
this section);
    (B) Information related to the social and economic conditions or 
circumstances of a particular individual including information obtained 
from any agency pursuant to Sec.  205.55; information obtained from the 
Internal Revenue Service (IRS) and the Social Security Administration 
(SSA) must be safeguarded in accordance with procedures set forth by 
those agencies;
    (C) Agency evaluation of information about a particular individual;
    (D) Medical data, including diagnosis and past history of disease or 
disability, concerning a particular individual.
    (ii) The release or use of information concerning individuals 
applying for or receiving financial assistance is restricted to persons 
or agency representatives who are subject to standards of 
confidentiality which are comparable to those of the agency 
administering the financial assistance programs.
    (iii) Except in the case of information requested pursuant to 
Sec. Sec.  205.55 and 205.56, or in the case of an emergency situation 
when the individual's prior consent for the release of information 
cannot be obtained, the family or individual is informed whenever 
possible of a request for information from an outside source, and 
permission is obtained to meet the request. In an emergency situation 
when the individual's consent for the release of information cannot be 
obtained, the individual will be notified immediately.
    (iv) In the event of the issuance of a subpoena for the case record 
or for any agency representative to testify concerning an applicant or 
recipient, the court's attention is called, through proper channels to 
the statutory provisions and the policies or rules and regulations 
against disclosure of information.

[[Page 31]]

    (v) The same policies are applied to requests for information from a 
governmental authority, the courts, or a law enforcement officer (except 
as provided for under paragraph (a)(1)(v) with respect to fugitive 
felons) as from any other outside source.
    (3)(i) The agency will publicize provisions governing the 
confidential nature of information about applicants and recipients, 
including the legal sanctions imposed for improper disclosure and use, 
and will make these provisions available to applicants and recipients 
and to other persons and agencies to whom information is disclosed.
    (ii) All information obtained pursuant to the income and eligibility 
verification requirements at Sec. Sec.  205.55 and 205.56 will be stored 
and processed so that no unauthorized personnel can acquire or retrieve 
the information by any means.
    (iii) All persons with access to information obtained pursuant to 
the income and eligibility verification requirements under Sec. Sec.  
205.55 and 205.56 will be advised of the circumstances under which 
access is permitted and the sanctions imposed for illegal use or 
disclosure of the information.
    (4) All materials sent or distributed to applicants, recipients, or 
medical vendors, including material enclosed in envelopes containing 
checks, will be limited to those which are directly related to the 
administration of the program and will not have political implications 
except to the extent required to implement the National Voter 
Registration Act of 1993 (NVRA), Pub. L. 103-31. Under this requirement:
    (i) Specifically excluded from mailing or distribution are materials 
such as ``holiday'' greetings, general public announcements, alien 
registration notices, and partisan voting information.
    (ii) Not prohibited from such mailing or distribution are materials 
in the immediate interest of the health and welfare of applicants and 
recipients, such as announcements of free medical examinations, 
availability of surplus food, and consumer protection information;
    (iii) Only the names of persons directly connected with the 
administration of the program are contained in material sent or 
distributed to applicants, recipients, and vendors, and such persons are 
identified only in their official capacity with the State or local 
agency.
    (iv) Under NVRA, the agency must distribute voter information and 
registration materials as specified in NVRA.
    (b) Voluntary voter registration activities. For States that are 
exempt from the requirements of NVRA, voter registration may be a 
voluntary activity so long as the provisions of section 7(a)(5) of NVRA 
are observed.
    (c) State plan requirements for programs of financial assistance in 
Puerto Rico, the Virgin Islands, and Guam. A State plan under title I, 
X, XIV, or XVI (AABD) of the Social Security Act must meet all the 
requirements of paragraph (a) of this section, with the exception of 
paragraphs (a)(1)(i) (D) and (E), of this section, and also provide for 
disclosure of information concerning applicants and recipients for use 
by public officials who require such information in connection with 
their official duties. Under this requirement, such information shall be 
available only to public officials who certify in writing that:
    (1) They are public officials as defined by State or Federal law of 
general applicability; and
    (2) The information to be disclosed and used is required in 
connection with their official duties.

[45 FR 56684, Aug. 25, 1980, as amended at 47 FR 46506, Oct. 19, 1982; 
49 FR 35599, Sept. 10, 1984; 51 FR 7214, Feb. 28, 1986; 51 FR 9203, Mar. 
18, 1986; 54 FR 42243, Oct. 13, 1989; 57 FR 30157, July 8, 1992; 58 FR 
49220, Sept. 22, 1993; 59 FR 26142, May 19, 1994; 61 FR 58143, Nov. 13, 
1996]



Sec.  205.51  Income and eligibility verification requirements.

    (a) A State plan under title I, IV-A, X, XIV or XVI (AABD) of the 
Social Security Act must provide that there be an Income and Eligibility 
Verification System in the State. Income and Eligibility Verification 
System (IEVS) means a system through which the State agency:
    (1) Co-ordinates data exchanges with other Federally-assisted 
benefit programs covered by section 1137(b) of the Act;

[[Page 32]]

    (2) Requests and uses income and benefit information as specified in 
section 1137(a)(2) of the Act and Sec. Sec.  205.55 and 205.56; and
    (3) Adheres to standardized formats and procedures in exchanging 
information with the other programs and agencies and in providing such 
information as may be useful to assist Federal, State and local agencies 
in the administration of the child support program and the Social 
Security Administration in the administration of the title II and title 
XVI (SSI) programs. The State agency (UC) information from the State 
Wage Information Collection Agency, described in paragraph (b) of this 
section; from the agency administering the State's unemployment 
compensation program (UC) under section 3304 of the Internal Revenue 
Code; from agencies in other States cited in Sec.  205.55(a)(5), as set 
forth by the Secretary; from SSA, as set forth by the Commissioner of 
Social Security; and from IRS, as set forth by the Commissioner of 
Internal Revenue.
    (b) A State plan under title I, IV-A, X, XIV or XVI (AABD) of the 
Social Security Act must provide that, as part of its Income and 
Eligibility Verification System, there be a State Wage Information 
Collection Agency in the State. State Wage Information Collection Agency 
(SWICA) means the State agency receiving quarterly wage reports from 
employers in the State (which may be the agency administering the 
State's unemployment compensation program), or an alternative system 
which has been determined by the Secretary of Labor, in consultation 
with the Secretary of Agriculture and the Secretary of Health and Human 
Services, to be as effective and timely in providing employment related 
income and eligibility information.
    (c) Wage information maintained by a SWICA which receives quarterly 
wage reports from employers but does not use these reports for 
computation of employment compensation shall:
    (1) Contain the social security number, first and last name and 
middle initial, wages earned for the period of the report, and an 
identifier of the employer (such as name and address) for each employee;
    (2) Include all employers covered by the State's UC law and require 
such employers to report wage information (as specified above) for each 
employee within 30 days from the end of each calendar quarter;
    (3) Accumulate earnings reported by employers for periods no longer 
than calendar quarters;
    (4) Be machine readable; i.e., maintained in a fashion that permits 
automated processing; and
    (5) Be available to other agencies in the State, to agencies in 
other States, and to Social Security Administration for establishing or 
verifying eligibility and benefit amounts under titles II and XVI of the 
Social Security Act, pursuant to agreements as required in Sec.  205.58.
    (d) A State shall obtain prior written approval from the Department, 
where appropriate, in accordance with 45 CFR 95.611, for any new 
developmental costs for automatic data processing equipment and services 
incurred in meeting IEVS requirements.

[51 FR 7214, Feb. 28, 1986]



Sec.  205.52  Furnishing of social security numbers.

    The State plan under title I, IV-A, X, XIV, or CVI (AABD) of the 
Social Security Act must provide that:
    (a) As a condition of eligibility, each applicant for or recipient 
of aid will be required:
    (1) To furnish to the State or local agency a social security 
account number, hereinafter referred to as the SSN (or numbers, if more 
than one has been issued); and
    (2) If he cannot furnish a SSN (either because such SSN has not been 
issued or is not known), to apply for such number through procedures 
adopted by the State or local agency with the Social Security 
Administration. If such procedures are not in effect, the applicant or 
recipient shall apply directly for such number, submit verification of 
such application, and provide the number upon its receipt.
    (b) The State or local agency will assist the applicant or recipient 
in making applications for SSNs and will comply with the procedures and 
requirements established by the Social Security Administration for 
application,

[[Page 33]]

issuance, and verification of social security account numbers.
    (c) The State or local agency will not deny, delay, or discontinue 
assistance pending the issuance or verfication of such numbers if the 
applicant or recipient has complied with the requirements of paragraph 
(a) of this section.
    (d) The State or local agency will use such account numbers, in 
addition to any other means of identification it may determine to 
employ, in the administration of the plan.
    (e) ``Applicant'' and ``recipient'' include for the purposes of this 
section the individuals seeking or receiving assistance and any other 
individual whose needs are considered in determining the amount of 
assistance.
    (f) The State or local agency shall notify the applicant or 
recipient that the furnishing of the SSN is a condition of eligibility 
for assistance required by section 1137 of the Social Security Act and 
that the SSN will be utilized in the administration of the program.
    (g) The State agency will submit all unverified social security 
numbers to the Social Security Administration (SSA) for verification. 
The State agency may accept as verified a social security number 
provided directly to the State agency by SSA or by another Federal or 
federally-assisted benefit program which has received the number from 
SSA or has submitted it to SSA for verification.

[51 FR 7217, Feb. 28, 1986]



Sec.  205.55  Requirements for requesting and furnishing eligibility and income information.

    A State plan under title I, IV-A, X, XIV, or XVI (AABD) of the 
Social Security Act must provide that:
    (a) Except as provided in paragraph (b), the State agency will 
request through the IEVS:
    (1) Wage information from the SWICA for all applicants at the first 
opportunity following receipt of the application and for all recipients 
on a quarterly basis.
    (2) Unemployment compensation information from the agency 
administering the State's unemployment compensation program under 
section 3304 of the Internal Revenue Code of 1954 and section 303 of the 
Act as follows:
    (i) For applicants at the first opportunity following receipt of the 
application and in each of the first three months in which the 
individual is receiving aid, unless the individual is found to be 
receiving unemployment compensation, in which case the information will 
be requested until benefits are exhausted; and
    (ii) In each of the first three months following any recipient-
reported loss of employment, unless the individual is found to be 
receiving unemployment compensation, in which case the information will 
be requested until the benefits are exhausted.
    (3) All available information maintained by the Social Security 
Administration for all applicants at the first opportunity following 
receipt of the application in the manner set forth by the Commissioner 
of Social Security. The State agency will also request such information 
for all recipients as of the effective date of this provision for whom 
such information has not previously been requested.
    (4) Unearned income information from the Internal Revenue Service 
available under section 6103 (l)(7)(B) of the Internal Revenue Code of 
1954, for all applicants at the first opportunity following receipt of 
the application for all recipients on a yearly basis. The request shall 
be made at the time and in the manner set forth by the Commissioner of 
Internal Revenue.
    (5) As necessary, any income or other information affecting 
eligibility available from agencies in the State or other States 
administering:
    (i) An AFDC program (in another State) under title IV-A of the 
Social Security Act;
    (ii) A Medicaid program under title XIX of the Social Security Act;
    (iii) An unemployment compensation program (in another State) under 
section 3304 of the Internal Revenue Code of 1954;
    (iv) A Food Stamp program under the Food Stamp Act of 1977, as 
amended;
    (v) Any State program administered under plan approved under title 
I, X, XIV, or XVI (AABD) of the Social Security Act; and
    (vi) A SWICA (in another State).

[[Page 34]]

    (b)(1) With respect to individuals who cannot furnish an SSN at 
application, information specified in paragraph (a) will be requested at 
the first opportunity provided by each source after the State agency is 
provided with the SSN.
    (2) For the purposes of this section, applicants and recipients 
shall also include any other individuals whose income or resources are 
considered in determining the amount of assistance, if the State agency 
has obtained the SSN of such individuals.
    (c) The State agency must furnish, when requested, income, 
eligibility and benefit information to:
    (1) Agencies in the State or other States administering the programs 
cited in paragraph (a)(5) of this section, in accordance with specific 
agreements as described in Sec.  205.58;
    (2) The agency in the State or other States administering a program 
under title IV-D of the Social Security Act; and
    (3) The Social Security Administration for purposes of establishing 
or verifying eligibility or benefit amounts under title II and XVI (SSI) 
of the Social Security Act.
    (d) The Secretary may, based upon application from a State, permit a 
State to obtain and use income and eligibility information from an 
alternate source or sources in order to meet any requirement of 
paragraph (a) of this section. The State agency must demonstrate to the 
Secretary that the alternate source or sources is as timely, complete 
and useful for verifying eligibility and benefit amounts. The Secretary 
will consult with the Secretary of Agriculture and the Secretary of 
Labor prior to approval of a request. The State must continue to meet 
the requirements of this section unless the Secretary has approved the 
request.
    (e) The State agency must, upon request, reimburse another agency 
for reasonable costs incurred in furnishing income and eligibility 
information as prescribed in this section, including new developmental 
costs associated with furnishing such information, in accordance with 
specific agreements as described in Sec.  205.58.

[51 FR 7215, Feb. 28, 1986]



Sec.  205.56  Requirements governing the use of income and eligibility information.

    A State plan under title I, IV-A, X, XIV, or XVI (AABD) of the 
Social Security Act must provide that:
    (a) The State agency will use the information obtained under Sec.  
205.55, in conjunction with other information, for:
    (1) Determining individuals' eligibility for assistance under the 
State plan and determining the amount of assistance. States wishing to 
exclude categories of information items from follow-up must submit for 
the Secretary's approval a follow-up plan describing the categories of 
information items which it proposes to exclude. For each category, the 
State must provide a reasonable justification that follow-up is not 
cost-effective. A formal cost-benefit analysis is not required. A State 
may exclude information items from the following data sources without 
written justification if followed up previously from another source: 
Unemployment compensation information received from the Internal Revenue 
Service, and earnings information received from the Social Security 
Administration. Information items in these categories which are not 
duplicative, but provide new leads, may not be excluded without written 
justification. A State may submit a follow-up plan or alter its plan at 
any time by notifying the Secretary and submitting the necessary 
justification. The Secretary will approve or disapprove categories of 
information items to be excluded under the plan within 60 days of its 
submission. Those categories approved by the Secretary will constitute 
an approved State follow-up plan for IEVS. For those information items 
not excluded from follow-up,
    (i) The State agency shall review and compare the information 
obtained from each data exchange against information contained in the 
case record to determine whether it affects the applicant's or the 
recipient's eligibility or the amount of assistance.
    (ii) The State agency shall verify that the information is accurate 
and applicable to case circumstances either through the applicant or 
recipient or through a third party, if such

[[Page 35]]

verification is determined appropriate based on agency experience or is 
required under paragraph (b) of this section.
    (iii) For applicants, if the information is received during the 
application period, the State agency shall use such information, to the 
extent possible, in making the eligibility determination.
    (iv) For individuals who are recipients when the information is 
received or for whom a decision could not be made prior to authorization 
of benefits, the State agency shall within forty-five (45) days of its 
receipt, initiate a notice of case action or an entry in the case record 
that no case action is necessary, except that: Completion of action may 
be delayed beyond forty-five (45) days on no more than twenty (20) 
percent of the information items targeted for follow-up, if:
    (A) The reason that the action cannot be completed within forty-five 
(45) days is the nonreceipt of requested third-party verification; and
    (B) Action is completed promptly, when third party verification is 
received or at the next time eligibility is redetermined, whichever is 
earlier. If action is completed when eligibility is redetermined and 
third party verification has not been received, the State agency shall 
make its decision based on information provided by the recipient and any 
other information in its possession.
    (v) The State agency shall use appropriate procedures to monitor the 
timeliness requirements specified in this subparagraph;
    (2) Investigations to determine whether recipients received 
assistance under the State plan to which they were not entitled; and
    (3) Criminal or civil prosecutions based on receipt of assistance 
under the State plan to which recipients were not entitled.
    (b)(1) State agencies shall not take any adverse action to 
terminate, deny, suspend or reduce benefits to an applicant or 
recipient, based on information produced by a Federal computer matching 
program that is subject to the requirements in the Computer Matching and 
Privacy Protection Act (CMPPA) unless (i) The information has been 
independently verified in accordance with the independent verification 
requirements set out in the State agency's written agreement as required 
by Sec.  205.58 or (ii) The independent verification requirement has 
been waived by the Department's Data Integrity Board.
    (2) The CMPPA defines a matching program as any computerized 
comparison of (i) Two or more automated systems of records or a system 
of records with non-Federal records for the purpose of (A) Establishing 
or verifying the eligibility of, or continuing compliance with statutory 
and regulatory requirements by, applicants for, recipients or 
beneficiaries of, participants in, or providers of services with respect 
to, cash or in-kind assistance or payments under Federal benefit 
programs, or (B) Recouping payments or delinquent debts under such 
Federal benefit programs, or (ii) Two or more automated Federal 
personnel or payroll system of records or a system of Federal personnel 
or payroll record with non-Federal records.
    (c) If the agency intends to reduce, suspend, terminate or deny 
benefits as a result of the actions taken pursuant to this section, the 
agency must provide notice and the opportunity for a fair hearing in 
accordance with Sec.  205.10(a).

[51 FR 7215, Feb. 28, 1986, as amended at 53 FR 52712, Dec. 29, 1988; 57 
FR 53859, Nov. 13, 1992]



Sec.  205.57  Maintenance of a machine readable file; requests for income and eligibility information.

    A State plan under title I, IV--A, X, XIV, or XVI (AABD) of the 
Social Security Act must provide that:
    (a) The State agency will maintain a file which is machine readable, 
i.e., which is maintained in a fashion that permits automated 
processing, and which contains the first and last name and verified 
social security number of each person applying for or receiving 
assistance under the plan.
    (b) The State agency will use this file to exchange data with other 
agencies pursuant to Sec.  205.55.

[51 FR 7216, Feb. 28, 1986]

[[Page 36]]



Sec.  205.58  Income and eligibility information; specific agreements required between the State agency and the agency supplying the information.

    (a) A State plan under title I, IV-A, X, XIV, or XVI (AABD) of the 
Social Security Act must provide that, in carrying out the requirements 
of Sec. Sec.  205.55 and 205.56, the State agency will enter into 
specific written agreements as described in paragraph (b) of this 
section with those agencies providing income and eligibility 
information. Agreements with Federal agencies are subject to the 
approval by the appropriate Federal Data Integrity Boards. The 
agreements will contain the procedure to be used in requesting and 
providing information.
    (b) These agreements will include, but need not be limited to, the 
following:
    (1) Purpose of the request;
    (2) Identification of all agency officials, by position with 
authority to request information;
    (3) Methods and timing of the requests for information, including 
the machine readable format to be used, the period of time needed to 
furnish the requested information and the basis for establishing this 
period. Agreements with the SWICA and the agency administering the 
Unemployment Compensation program in the State must provide that the 
State agency shall obtain information no less frequently than twice 
monthly;
    (4) The type of information and reporting periods for which 
information will be provided and the verification methodologies to be 
used;
    (5) Safeguards limiting release or redisclosure as required by 
Federal or State law or regulation, including the requirements of Sec.  
205.50 and as may be required by guidelines issued by the Secretary; and
    (6) Reimbursement, if any, for the costs of furnishing the 
information requested by the State agency, including new developmental 
costs associated with furnishing such information.

[51 FR 7216, Feb. 28, 1986, as amended at 57 FR 53860, Nov. 13, 1992]



Sec.  205.60  Reports and maintenance of records.

    A State plan under title I, IV--A, X, XIV, or XVI (AABD) of the 
Social Security Act must provide that:
    (a) The State agency will maintain or supervise the maintenance of 
records necessary for the proper and efficient operation of the plan, 
including records regarding applications, determination of eligibility, 
the provision of financial assistance, and the use of any information 
obtained under Sec.  205.55, with respect to individual applications 
denied, recipients whose benefits have been terminated, recipients whose 
benefits have been modified, and the dollar value of these denials, 
terminations and modifications. Under this requirement, the agency will 
keep individual records which contain pertinent facts about each 
applicant and recipient. The records will include information concerning 
the date of application and the date and basis of its disposition; facts 
essential to the determination of initial and continuing eligibility 
(including the individual's social security number, need for, and 
provision of financial assistance); and the basis for discontinuing 
assistance.
    (b) The agency shall report as the Secretary prescribes for the 
purpose of determining compliance with the requirements of Sec. Sec.  
205.55 and 205.56 and for evaluating the effectiveness of the Income and 
Eligibility Verification System.

[51 FR 7216, Feb. 28, 1986]



Sec.  205.70  Availability of agency program manuals.

    State plan requirements. A State plan for financial assistance under 
title I, IV-A, IV-B, X, XIV, or XVI (AABD) of the Social Security Act 
must provide that:
    (a) Program manuals and other policy issuances which affect the 
public, including the State agency's rules and regulations governing 
eligibility, need and amount of assistance, and recipient rights and 
responsibilities will be maintained in the State office and in each 
local and district office for examination on regular workdays during 
regular office hours by individuals,

[[Page 37]]

upon request for review, study, or reproduction by the individual.
    (b)(1) A current copy of such material will be made available 
without charge or at a charge related to the cost of reproduction for 
access by the public through custodians who (i) request the material for 
this purpose, (ii) are centrally located and publicly accessible to a 
substantial number of the recipient population they serve, and (iii) 
agree to accept responsibility for filing all amendments and changes 
forwarded by the agency.
    (2) Under this requirement the material, if requested, must be made 
available without charge or at a charge related to the cost of 
reproduction to public or university libraries, the local or district 
offices of the Bureau of Indian Affairs, and welfare or legal services 
offices or organizations. The material may also be made available, with 
or without charge, to other groups and to individuals. Wide availability 
of agency policy materials is recommended.
    (c) Upon request, the agency will reproduce without charge or at a 
charge related to the cost of reproduction the specific policy materials 
necessary for an applicant or recipient, or his representative, to 
determine whether a fair hearing should be requested or to prepare for a 
fair hearing; and will establish policies for reproducing policy 
materials without charge, or at a charge related to cost, for any 
individual who requests such material for other purposes.

[38 FR 26378, Sept. 20, 1973, as amended at 44 FR 17941, Mar. 23, 1979; 
45 FR 56685, Aug. 25, 1980]



Sec.  205.100  Single State agency.

    (a)(1) State plan requirements. A State plan for financial 
assistance under title I, IV-A, X, XIV, or XVI (AABD) of the Social 
Security Act must:
    (i) Provide for the establishment or designation of a single State 
agency with authority to administer or supervise the administration of 
the plan.
    (ii) Include a certification by the attorney general of the State 
identifying the single State agency and citing the legal authority under 
which such agency administers, or supervises the administration of, the 
plan on a statewide basis including the authority to make rules and 
regulations governing the administration of the plan by such agency or 
rules and regulations that are binding on the political subdivisions, if 
the plan is administered by them.
    (2) [Reserved]
    (b) Conditions for implementing the requirements of paragraph (a) of 
this section. (1) The State agency will not delegate to other than its 
own officials its authority for exercising administrative discretion in 
the administration or supervision of the plan including the issuance of 
policies, rules, and regulations on program matters.
    (2) In the event that any rules and regulations or decisions of the 
single State agency are subject to review, clearance, or other action by 
other offices or agencies of the State government, the requisite 
authority of the single State agency will not be impaired.
    (3) In the event that any services are performed for the single 
State agency by other State or local agencies or offices, such agencies 
and offices must not have authority to review, change, or disapprove any 
administrative decision of the single State agency, or otherwise 
substitute their judgment for that of the agency as to the application 
of policies, rules, and regulations promulgated by the State agency.

[45 FR 56685, Aug. 25, 1980]



Sec.  205.101  Organization for administration.

    (a) A State plan for financial assistance under title I, IV-A, X, 
XIV, or XVI (AABD) of the Social Security Act shall include a 
description of the organization and functions of the single State agency 
and an organizational chart of the agency.
    (b) Where applicable, a State plan for financial assistance under 
title I, IV-A, X, XIV, or XVI (AABD) of the act shall identify the 
organizational unit within the State agency which is responsible for 
operation of the plan and shall include a description of its 
organization and functions and an organizational chart of the unit.

[45 FR 56685, Aug. 25, 1980]

[[Page 38]]



Sec.  205.120  Statewide operation.

    (a) State plan requirements. A State plan for financial assistance 
under title I, IV-A, X, XIV, or XVI (AABD) of the Social Security Act 
must provide that:
    (1) It shall be in operation, through a system of local offices, on 
a statewide basis in accordance with equitable standards for assistance 
and administration that are mandatory throughout the State;
    (2) If administered by political subdivisions of the State, the plan 
will be mandatory on such political subdivisions;
    (3) The State agency will assure that the plan is continuously in 
operation in all local offices or agencies through:
    (i) Methods for informing staff of State policies, standards, 
procedures and instructions; and
    (ii) Regular planned examination and evaluation of operations in 
local offices by regularly assigned State staff, including regular 
visits by such staff; and through reports, controls, or other necessary 
methods.
    (b) [Reserved]

[39 FR 16971, May 10, 1974, as amended at 44 FR 17942, Mar. 23, 1979; 45 
FR 56686, Aug. 25, 1980]



Sec.  205.130  State financial participation.

    State plan requirements:
    (a) A State plan for financial assistance under title I, IV-A, X, 
XIV, or XVI (AABD) of the Social Security Act must provide that:
    (1) State (as distinguished from local) funds will be used in both 
assistance and administration; and
    (2) State and Federal funds will be apportioned among the political 
subdivisions of the State on a basis consistent with equitable treatment 
of individuals in similar circumstances throughout the State.
    (b) A State plan under title I, IV-A, X, XIV, or XVI (AABD) of the 
Act must provide further that State funds will be used to pay a 
substantial part of the total costs of the assistance programs.

[45 FR 56686, Aug. 25, 1980]



Sec.  205.150  Cost allocation.

    A State plan under title I, IV-A, X, XIV, or XVI (AABD) of the 
Social Security Act must provide that the State agency will have an 
approved cost allocation plan on file with the Department in accordance 
with the requirements contained in subpart E of 45 CFR part 95. Subpart 
E also sets forth the effect on FFP if the requirements contained in 
that subpart are not met.

[47 FR 17508, Apr. 23, 1982]



Sec.  205.160  Equipment--Federal financial participation.

    Claims for Federal financial participation in the cost of equipment 
for the cash assistance programs under titles I, IV-A, X, XIV, XVI 
[AABD] and for the separate administrative unit established under 
section 402(a)(19)(G) of the Social Security Act are to be determined in 
accordance with subpart G or 45 CFR part 95. Requirements concerning the 
management and disposition of equipment under these titles are also 
prescribed in subpart G of 45 CFR part 95.

[47 FR 41576, Sept. 21, 1982]



Sec.  205.170  State standards for office space, equipment, and facilities.

    State plan requirements: A State plan for financial assistance under 
title I, IV-A, X, XIV, or XVI(AABD) of the Social Security Act must 
provide that:
    (a) The State agency will establish and maintain standards for 
office space, equipment, and facilities that will adequately and 
effectively meet program and staff needs. Under this requirement, 
offices must be well marked and clearly identifiable in the community as 
a public service.
    (b) The State agency will assure that the standards are continuously 
in effect in all State and local offices or agencies, including agency 
suboffices, and special centers through:
    (1) Making information about the standards available to State and 
local staff and other appropriate persons;
    (2) Regular planned evaluation of housing and facilities by 
regularly assigned staff through visits, reports, controls and other 
necessary methods;
    (3) Methods for enforcement when necessary to secure compliance with 
State standards.

[36 FR 3862, Feb. 27, 1971, as amended at 45 FR 56686, Aug. 25, 1980]

[[Page 39]]



Sec.  205.190  Standard-setting authority for institutions.

    (a) State plan requirements. If a State plan for financial 
assistance under title I, X, XIV, or XVI(AABD) of the Social Security 
Act includes aid or assistance to individuals in institutions as defined 
in Sec.  233.60(b) (1) and (2) of this chapter the plan must:
    (1) Provide for the designation of a State authority or authorities 
which shall be responsible for establishing and maintaining standards 
for such institutions;
    (2) Provide that the State agency will keep on file and make 
available to FSA, OFA upon request:
    (i) A listing of the types or kinds of institutions in which an 
individual may receive financial assistance;
    (ii) A record naming the State authority(ies) responsible for 
establishing and maintaining standards for such types of institutions;
    (iii) The standards to be utilized by such State authority(ies) for 
approval or licensing of institutions including, to the extent 
applicable, standards related to the following factors:
    (a) Health (dietary standards and accident prevention);
    (b) Humane treatment;
    (c) Sanitation;
    (d) Types of construction;
    (e) Physical facilities, including space and accommodations per 
person;
    (f) Fire and safety,
    (g) Staffing, in number and qualifications, related to the purposes 
and scope of services of the institution;
    (h) Resident records;
    (i) Admission procedures;
    (j) Administrative and fiscal records;
    (k) The control by the individual, or his guardian or protective 
payee, of the individual's personal affairs.
    (3) Provide for cooperative arrangements with the standard-setting 
authority(ies) in the development of standards directed toward assuring 
adequate quality of care; in upgrading of institutional programs and 
practice; in actions necessary to close institutions that mistreat or 
are hazardous to the safety of the patients; and in planning so that 
institutions may be geographically located in accordance with need.
    (b) Federal financial participation. (1) Federal financial 
participation is available in staff and related costs of the State or 
local agency that are necessary to discharge the responsibilities of the 
State agency under this section, including such costs for staff:
    (i) Participating with other agencies and community groups in 
activities to set up the authority(ies) and to advise on the formulation 
of policy for the establishment and maintenance of standards;
    (ii) On loan for a time limited period to work with the standard-
setting authority(ies) in upgrading institutional care;
    (iii) Engaged in the function of coordination in States where there 
is more than one authority; and
    (iv) Engaged in adjusting complaints and making reports and 
recommendations to the standard-setting authority(ies) on conditions 
which appear to be in violation of such standards.
    (2) Federal financial participation is not available in the costs 
incurred by the standard-setting authority(ies) in establishing and 
maintaining standards for institutions.

[36 FR 3862, Feb. 27, 1971, as amended at 45 FR 56686, Aug. 25, 1980; 53 
FR 36580, Sept. 21, 1988]



PART 206_APPLICATION, DETERMINATION OF ELIGIBILITY AND FURNISHING ASSISTANCE_PUBLIC ASSISTANCE PROGRAMS--Table of Contents




    Authority: Sections 402 and 1102 of the Social Security Act (42 
U.S.C. 602 and 1302) and Pub. L. No. 97-248, 96 Stat. 324, and Pub. L. 
No. 99-603, 100 Stat. 3359.



Sec.  206.10  Application, determination of eligibility and furnishing of assistance.

    (a) State plan requirements. A State plan under title I, IV-A, X, 
XIV, or XVI(AABD), of that Social Security Act shall provide that:
    (1) Each individual wishing to do so shall have the opportunity to 
apply for assistance under the plan without delay. Under this 
requirement:
    (i) Each individual may apply under whichever of the State plan 
plans he chooses;

[[Page 40]]

    (ii) The agency shall require a written application, signed under a 
penalty of perjury, on a form prescribed by the State agency, from the 
applicant himself, or his authorized representative, or, where the 
applicant is incompetent or incapacitated, someone acting responsibly 
for him. When an individual is required to be included in an existing 
assistance unit pursuant to paragraph (a)(1)(vii), such individual will 
be considered to be included in the application, as of the date he is 
required to be included in the assistance unit;
    (iii) An applicant may be assisted, if he so desires, by an 
individual(s) of his choice (who need not be a lawyer) in the various 
aspects of the application process and the redetermination of 
eligibility and may be accompanied by such individual(s) in contacts 
with the agency and when so accompanied may also be represented by them.
    (iv)-(v) [Reserved]
    (vi) Every recipient in a State which provides a supplemental 
payment under Sec.  233.27 of this chapter shall have an opportunity to 
request that payment without delay.
    (vii) For AFDC only, in order for the family to be eligible, an 
application with respect to a dependent child must also include, if 
living in the same household and otherwise eligible for assistance:
    (A) Any natural or adoptive parent, or stepparent (in the case of 
States with laws of general applicability); and
    (B) Any blood-related or adoptive brother or sister; Exception: 
needs and income of disqualified alien siblings, pursuant to Sec.  
233.50(c), are not considered in determining the eligibility and payment 
of an otherwise eligible dependent child.
    (2)(i) Applicants shall be informed about the eligibility 
requirements and their rights and obligations under the program. Under 
this requirement individuals are given information in written form, and 
orally as appropriate, about coverage, conditions of eligibility, scope 
of the program, and related services available, and the rights and 
responsibilities of applicants for and recipients of assistance. 
Specifically developed bulletins or pamphlets explaining the rules 
regarding eligibility and appeals in simple, understandable terms are 
publicized and available in quantity.
    (ii) Procedures shall be adopted which are designed to assure that 
recipients make timely and accurate reports of any change in 
circumstances which may affect their eligibility or the amount of 
assistance.
    (iii) All applicants for and recipients of assistance shall be 
notified in writing at the time of application and on redetermination 
that eligibility and income information will be regularly requested from 
agencies specified in Sec.  205.55 and will be used to aid in 
determining their eligibility for assistance.
    (3) A decision shall be made promptly on applications, pursuant to 
reasonable State-established time standards not in excess of:
    (i) 45 days for OAA, AFDC, AB, AABD (for aged and blind); and
    (ii) 60 days for APTD, AABD (for disabled). Under this requirement, 
the applicant is informed of the agency's time standard in acting on 
applications which covers the time from date of application under the 
State plan to the date that the assistance check, or notification of 
denial of assistance or change of award is mailed to the applicant or 
recipient. The State's time standards apply except in unusual 
circumstances (e.g., where the agency cannot reach a decision because of 
failure or delay on the part of the applicant or an examining physician, 
or because of some administrative or other emergency that could not be 
controlled by the agency), in which instances the case record shows the 
cause for the delay. The agency's standards of promptness for acting on 
applications or redetermining eligibility shall not be used as a waiting 
period before granting aid, or as a basis for denial of an application 
or for terminating assistance.
    (4) Adequate notice shall be sent to applicants and recipients to 
indicate that assistance has been authorized (including the amount of 
financial assistance) or that it has been denied or terminated. Under 
this requirement, adequate notice means a written notice that contains a 
statement of the action taken, and the reasons for and specific 
regulations supporting such action,

[[Page 41]]

and an explanation of the individual's right to request a hearing.
    (5)(i) Financial assistance and medical care and services included 
in the plan shall be furnished promptly to eligible individuals without 
any delay attributable to the agency's administrative process, and shall 
be continued regularly to all eligible individuals until they are found 
to be ineligible. Under this requirement there must be arrangements to 
assist applicants and recipients in obtaining medical care and services 
in emergency situations on a 24-hour basis, 7 days a week.
    (ii) Assistance will not be denied, delayed, or discontinued pending 
receipt of income or other information requested under Sec.  205.55, if 
other evidence establishes the individual's eligibility for assistance.
    (6) Assistance shall begin as specified in the State plan, which:
    (i) For financial assistance.
    (A) Must be no later than:
    (1) The date of authorization of payment, or
    (2) Thirty days in OAA, AFDC, AB, and AABD (as to the aged and 
blind), and 60 days in APTD and AABD (as to the disabled), from the date 
of receipt of a signed and completed application form, whichever is 
earlier: Provided, That the individuals then met all the eligibility 
conditions, and
    (B) For purposes of Federal financial participation in OAA, AB, 
APTD, and AABD, may be as early as the first of the month in which an 
application has been received and the individual meets all the 
eligibility conditions; and
    (C) In AFDC, for purposes of Federal financial participation, may be 
as early as the date of application provided that the assistance unit 
meets all the eligibility conditions; and
    (D) In AFDC, States that pay for the month of application must 
prorate the payment for that month by multiplying the amount payable if 
payment were made for the entire month including special needs in 
accordance with Sec.  233.34 by the ratio of the days in the month 
including and following the date of application (or, at State option, 
the date of authorization of payment) to the total number of days in 
such month. The State plan may provide for using a standard 30-day month 
to determine the prorated amount.
    (7) In cases of proposed action to terminate, discontinue, suspend 
or reduce assistance, the agency shall give timely and adequate notice. 
Such notice shall comply with the provisions of Sec.  205.10 of this 
chapter.
    (8) Each decision regarding eligibility or ineligibility will be 
supported by facts in the applicant's or recipient's case record. Under 
this requirement each application is disposed of by a finding of 
eligibility or ineligibility unless:
    (i) The applicant voluntarily withdraws his application, and there 
is an entry in the case record that a notice has been sent to confirm 
the applicant's notification to the agency that he does not desire to 
pursue his application; or
    (ii) There is an entry in the case record that the application has 
been disposed of because the applicant died or could not be located.
    (9) Where an individual has been determined to be eligible, 
eligibility will be reconsidered or redetermined:
    (i) When required on the basis of information the agency has 
obtained previously about anticipated changes in the individual's 
situation;
    (ii) Promptly, after a report is obtained which indicates changes in 
the individual's circumstances that may affect the amount of assistance 
to which he is entitled or may make him ineligible; and
    (iii) Periodically, within agency established time standards, but 
not less frequently than every 12 months in OAA, AB, APTD, and AABD, on 
eligibility factors subject to change. For recipients of AFDC, all 
factors of eligibility will be redetermined at least every 6 months 
except in the case of monthly reporting cases or cases covered by an 
approved error-prone profiling system as specified in paragraph 
(a)(9)(iv) of this section. Under the AFDC program, at least one face-
to-face redetermination must be conducted in each case once in every 12 
months.
    (iv) In accordance with paragraph (a)(9)(iii) of this section, under 
an alternative redetermination plan based on error-prone profiling, 
which has

[[Page 42]]

been approved by the Secretary, and includes:
    (A) A description of the statistical methodology used to develop the 
error-prone profile system upon which the redetermination schedule is 
based;
    (B) The criteria to be used to vary the scope of review and to 
assign different types of cases; and
    (C) A detailed outline of the evaluation system, including 
provisions for necessary changes in the error-prone output, such as 
types of cases, types of errors, frequencies of redeterminations and 
corrective action.
    (10) Standards and methods for determination of eligibility shall be 
consistent with the objectives of the programs, and will respect the 
rights of individuals under the United States Constitution, the Social 
Security Act, title VI of the Civil Rights Act of 1964, and all other 
relevant provisions of Federal and State laws.
    (11) [Reserved]
    (12) The State agency shall establish and maintain methods by which 
it shall be kept currently informed about local agencies' adherence to 
the State plan provisions and to the State agency's procedural 
requirements for determining eligibility, and it shall take corrective 
action when necessary.
    (b) Definitions. For purposes of this section:
    (1) Applicant is a person who has, directly, or through his 
authorized representative, or where incompetent or incapacitated, 
through someone acting responsibly for him, made application for public 
assistance from the agency administering the program, and whose 
application has not been terminated.
    (2) Application is the action by which an individual indicates in 
writing to the agency administering public assistance (on a form 
prescribed by the State agency) his desire to receive assistance. The 
relative with whom a child is living or will live ordinarily makes 
application for the child for AFDC. An application is distinguished from 
an inquiry, which is simply a request for information about eligibility 
requirements for public assistance. Such inquiry may be followed by an 
application. When an individual is required to be included in an 
existing assistance unit pursuant to paragraph (a)(1)(vii), such 
individual will be considered to be included in the application, as of 
the date he is required to be included in the assistance unit.
    (3) Date of Application is the date on which the action described in 
paragraph (b)(2) of this section occurs.
    (4) Redetermination is a review of factors affecting AFDC 
eligibility and payment amount; e.g. continued absence, income 
(including child and spousal support), etc.
    (5) Assistance Unit is the group of individuals whose income, 
resources and needs are considered as a unit for purposes of determining 
eligibility and the amount of payment.

[48 FR 28407, June 21, 1983 as amended at 49 FR 35599, Sept. 10, 1984; 
51 FR 7217, Feb. 28, 1986; 51 FR 9203, Mar. 18, 1986; 52 FR 48689, Dec. 
24, 1987; 53 FR 30433, Aug. 12, 1988; 57 FR 30157, July 8, 1992]



PART 211_CARE AND TREATMENT OF MENTALLY ILL NATIONALS OF THE UNITED STATES, RETURNED FROM FOREIGN COUNTRIES--Table of Contents




Sec.
211.1 General definitions.
211.2 General.
211.3 Certificates.
211.4 Notification to legal guardian, spouse, next of kin, or interested 
          persons.
211.5 Action under State law; appointment of guardian.
211.6 Reception; temporary care, treatment, and assistance.
211.7 Transfer and release of eligible person.
211.8 Continuing hospitalization.
211.9 Examination and reexamination.
211.10 Termination of hospitalization.
211.11 Request for release from hospitalization.
211.12 Federal payments.
211.13 Financial responsibility of the eligible person; collections, 
          compromise, or waiver of payment.
211.14 Disclosure of information.
211.15 Nondiscrimination.

    Authority: Secs. 1-11, 74 Stat. 308-310; 24 U.S.C. 321-329.

    Source: 39 FR 26546, July 19, 1974, unless otherwise noted.



Sec.  211.1  General definitions.

    When used in this part:

[[Page 43]]

    (a) Act means Pub. L. 86-571, approved July 5, 1960, 74 Stat. 308, 
entitled ``An Act to provide for the hospitalization, at Saint 
Elizabeths Hospital in the District of Columbia or elsewhere, of certain 
nationals of the United States adjudged insane or otherwise found 
mentally ill in foreign countries, and for other purposes'';
    (b) The term Secretary means the Secretary of Health and Human 
Services;
    (c) The term Department means the Department of Health and Human 
Services;
    (d) The term Administrator means the Administrator, Family Support 
Administration, Department of Health and Human Services;
    (e) The term eligible person means an individual with respect to 
whom the certificates referred to in Sec.  211.3 are furnished to the 
Administrator in connection with the reception of an individual arriving 
from a foreign country;
    (f) The term Public Health Service means the Public Health Service 
in the Department of Health and Human Services;
    (g) The term agency means an appropriate State or local public or 
nonprofit agency with which the Administrator has entered into 
arrangements for the provision of care, treatment, and assistance 
pursuant to the Act;
    (h) The term State includes the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, and Guam;
    (i) The term residence means residence as determined under the 
applicable law or regulations of a State or political subdivision for 
the purpose of determining the eligibility of an individual for 
hospitalization in a public mental hospital;
    (j) The term legal guardian means a guardian, appointed by a court, 
whose powers, duties, and responsibilities include the powers, duties, 
and responsibilities of guardianship of the person.

[39 FR 26546, July 19, 1974, as amended at 53 FR 36580, Sept. 21, 1988]



Sec.  211.2  General.

    The Administrator shall make suitable arrangements with agencies to 
the end that any eligible person will be received, upon request of the 
Secretary of State, at the port of entry or debarkation upon arrival in 
the United States from a foreign country and be provided, to the extent 
necessary, with temporary care, treatment, and assistance, pending 
transfer and release or hospitalization pursuant to the Act. The 
Administrator shall also make suitable arrangements with appropriate 
divisions of the Public Health Service, with Saint Elizabeths Hospital 
in the District of Columbia, with Federal hospitals outside of the 
Department, or with other public or private hospitals to provide the 
eligible person with care and treatment in a hospital. The Administrator 
shall maintain a roster setting forth the name and address of each 
eligible person currently receiving care and treatment, or assistance, 
pursuant to the Act.



Sec.  211.3  Certificates.

    The following certificates are necessary to establish that an 
individual is an eligible person:
    (a) Certificates as to nationality. A certificate issued by an 
authorized official of the Department of State, stating that the 
individual is a national of the United States.
    (b) Certificate as to mental condition. Either (1) a certificate 
obtained or transmitted by an authorized official of the Department of 
State that the individual has been legally adjudged insane in a named 
foreign country; or (2) a certificate of an appropriate authority or 
person stating that at the time of such certification the individual was 
in a named foreign country and was in need of care and treatment in a 
mental hospital. A statement shall, if possible, be incorporated into or 
attached to the certificate furnished under this paragraph setting forth 
all available medical and other pertinent information concerning the 
individual.
    (c) Appropriate authority or person. For the purpose of paragraph 
(b)(2) of this section a medical officer of the Public Health Service or 
of another agency of the United States, or a medical practitioner 
legally authorized to provide care or treatment of mentally ill persons 
in the foreign country, is an ``appropriate authority or person,'' and 
shall be so identified in his execution of the certificate. If such a 
medical officer or practitioner is unavailable, an

[[Page 44]]

authorized official of the Department of State may serve as an 
``appropriate authority or person,'' and shall, in the execution of the 
certificate, identify himself as serving as such person due to the 
unavailability of a suitable medical officer or practitioner.



Sec.  211.4  Notification to legal guardian, spouse, next of kin, or interested persons.

    (a) Whenever an eligible person arrives in the United States from a 
foreign country, or when such person is transferred from one State to 
another, the Administrator shall, upon such arrival or transfer (or in 
advance thereof, if possible), provide for notification of his legal 
guardian, or in the absence of such a guardian, of his spouse or next of 
kin, or in the absence of any of these, of one or more interested 
persons, if known.
    (b) Whenever an eligible person is admitted to a hospital pursuant 
to the Act, the Administrator shall provide for immediate notification 
of his legal guardian, spouse, or next of kin, if known.



Sec.  211.5  Action under State law; appointment of guardian.

    Whenever an eligible person is incapable of giving his consent to 
care and treatment in a hospital, either because of his mental condition 
or because he is a minor, the agency will take appropriate action under 
State law, including, if necessary, procuring the appointment of a legal 
guardian, to ensure the proper planning for and provision of such care 
and treatment.



Sec.  211.6  Reception; temporary care, treatment, and assistance.

    (a) Reception. The agency will meet the eligible person at the port 
of entry or debarkation, will arrange for appropriate medical 
examination, and will plan with him, in cooperation with his legal 
guardian, or, in the absence of such a guardian, with other interested 
persons, if any, for needed temporary care and treatment.
    (b) Temporary care, treatment, and assistance. The agency will 
provide for temporary care, treatment, and assistance, as reasonably 
required for the health and welfare of the eligible person. Such care, 
treatment, and assistance may be provided in the form of hospitalization 
and other medical and remedial care (including services of necessary 
attendants), food and lodging, money, payments, transportation, or other 
goods and services. The agency will utilize the Public Health Service 
General Hospital nearest to the port of entry or debarkation or any 
other suitable public or private hospital, in providing hospitalization 
and medical care, including diagnostic service as needed, pending other 
appropriate arrangements for serving the eligible person.



Sec.  211.7  Transfer and release of eligible person.

    (a) Transfer and release to relative. If at the time of arrival from 
a foreign country or any time during temporary or continuing care and 
treatment the Administrator finds that the best interests of the 
eligible person will be served thereby, and a relative, having been 
fully informed of his condition, agrees in writing to assume 
responsibility for his care and treatment, the Administrator shall 
transfer and release him to such relative. In determining whether his 
best interest will be served by such transfer and release, due weight 
shall be given to the relationship of the individuals involved, the 
financial ability of the relative to provide for such person, and the 
accessibility to necessary medical facilities.
    (b) Transfer and release to appropriate State authorities, or agency 
of the United States. If appropriate arrangements cannot be accomplished 
under paragraph (a) of this section, and if no other agency of the 
United States is responsible for the care and treatment of the eligible 
person, the Administrator shall endeavor to arrange with the appropriate 
State mental health authorities of the eligible person's State of 
residence or legal domicile, if any, for the assumption of 
responsibility for the care and treatment of the eligible person by such 
authorities and shall, upon the making of such arrangements in writing, 
transfer and release him to such authorities. If any other agency of the 
United States is responsible for the

[[Page 45]]

care and treatment of the eligible person, the Administrator shall make 
arrangements for his transfer and release to that agency.



Sec.  211.8  Continuing hospitalization.

    (a) Authorization and arrangements. In the event that appropriate 
arrangements for an eligible person in need of continuing care and 
treatment in a hospital cannot be accomplished under Sec.  211.7, or 
until such arrangements can be made, care and treatment shall be 
provided by the Administrator in Saint Elizabeths Hospital in the 
District of Columbia, in an appropriate Public Health Service Hospital, 
or in such other suitable public or private hospital as the 
Administrator determines is in the best interests of such person.
    (b) Transfer to other hospital. At any time during continuing 
hospitalization, when the Administrator deems it to be in the interest 
of the eligible person or of the hospital affected, the Administrator 
shall authorize the transfer of such person from one hospital to another 
and, where necessary to that end, the Administrator shall authorize the 
initiation of judicial proceedings for the purpose of obtaining a 
commitment of such person to the Secretary.
    (c) Place of hospitalization. In determining the placement or 
transfer of an eligible person for purposes of hospitalization, due 
weight shall be given to such factors as the location of the eligible 
person's legal guardian or family, the character of his illness and the 
probable duration thereof, and the facilities of the hospital to provide 
care and treatment for the particular health needs of such person.



Sec.  211.9  Examination and reexamination.

    Following admission of an eligible person to a hospital for 
temporary or continuing care and treatment, he shall be examined by 
qualified members of the medical staff as soon as practicable, but not 
later than the fifth day after his admission. Each such person shall be 
reexamined at least once within each six month period beginning with the 
month following the month in which he was first examined.



Sec.  211.10  Termination of hospitalization.

    (a) Discharge or conditional release. If, following an examination, 
the head of the hospital finds that the eligible person hospitalized for 
mental illness (whether or not pursuant to a judicial commitment) is not 
in need of such hospitalization, he shall be discharged. In the case 
where hospitalization was pursuant to a judicial commitment, the head of 
the hospital may, in accordance with laws governing hospitalization for 
mental illness as may be in force and generally applicable in the State 
in which the hospital is located, conditionally release him if he finds 
that this is in his best interests.
    (b) Notification to committing court. In the case of any person 
hospitalized under Sec.  211.8 who has been judicially committed to the 
custody of the Secretary, the Secretary will notify the committing court 
in writing of the discharge or conditional release of such person under 
this section or of his transfer and release under Sec.  211.7.



Sec.  211.11  Request for release from hospitalization.

    If an eligible person who is hospitalized pursuant to the Act, or 
his legal guardian, spouse, or adult next of kin, requests his release, 
such request shall be granted by the Administrator if his best interests 
will be served thereby, or by the head of the hospital if he is found 
not to be in need of hospitalization by reason of mental illness. The 
right of the administrator or the head of the hospital, to refuse such 
request and to detain him for care and treatment shall be determined in 
accordance with laws governing the detention, for care and treatment, of 
persons alleged to be mentally ill as may be in force and applicable 
generally in the State in which such hospital is located, but in no 
event shall the patient be detained more than forty-eight hours 
(excluding any period of time falling on a Sunday or a legal holiday 
observed by the courts of the State in which such hospital is located) 
after the receipt of such request unless within such time (a) judicial 
proceedings for such hospitalization are commenced or (b) a judicial 
extension of such time is obtained, for a period of not more than

[[Page 46]]

five days, for the commencement of such proceedings.



Sec.  211.12  Federal payments.

    The arrangements made by the Administrator with an agency or 
hospital for carrying out the purposes of the Act shall provide for 
payments to such agency or hospital, either in advance or by way of 
reimbursement, of the costs of reception, temporary care, treatment, and 
assistance, continuing care and treatment, and transportation, pursuant 
to the Act, and payments for other expenditures necessarily and 
reasonably related to providing the same. Such arrangements shall 
include the methods and procedures for determining the amounts of the 
advances or reimbursements, and for remittance and adjustment thereof.



Sec.  211.13  Financial responsibility of the eligible person; collections, compromise, or waiver of payment.

    (a) For temporary care and treatment. If an eligible person 
receiving temporary care, treatment, and assistance, pursuant to the 
Act, has financial resources available to pay all or part of the costs 
of such care, the Administrator shall require him to pay for such costs, 
either in advance or by way of reimbursement, unless in his judgment it 
would be inequitable or impracticable to require such payment.
    (b) For continuing care and treatment. Any eligible person receiving 
continuing care and treatment in a hospital, or his estate, shall be 
liable to pay or contribute toward the payment of the costs or charges 
therefor, to the same extent as such person would, if a resident of the 
District of Columbia, be liable to pay, under the laws of the District 
of Columbia, for his care and maintenance in a hospital for the mentally 
ill in that jurisdiction.
    (c) Collections, compromise, or waiver of payment. The Administrator 
may, in his discretion, where in his judgment substantial justice will 
be best served thereby or the probable recovery will not warrant the 
expense of collection, compromise, or waive the whole or any portion of, 
any claim for continuing care and treatment, and assistance, and in the 
process of arriving at such decision, the Administrator may make or 
cause to be made such investigations as may be necessary to determine 
the ability of the patient to pay or contribute toward the cost of his 
continuing care and treatment in a hospital.



Sec.  211.14  Disclosure of information.

    (a) No disclosure of any information of a personal and private 
nature with respect to an individual obtained at any time by any person, 
organization, or institution in the course of discharging the duties of 
the Secretary under the Act shall be made except insofar:
    (1) As the individual or his legal guardian, if any (or, if he is a 
minor, his parent or legal guardian), shall consent;
    (2) As disclosure may be necessary to carry out any functions of the 
Secretary under the Act;
    (3) As disclosure may be directed by the order of a court of 
competent jurisdiction;
    (4) As disclosure may be necessary to carry out any functions of any 
agency of the United States which are related to the return of the 
individual from a foreign country, or his entry into the United States; 
or
    (5) As expressly authorized by the Administrator.
    (b) An agreement made with an agency or hospital for care, 
treatment, and assistance pursuant to the Act shall provide that no 
disclosure will be made of any information of a personal and private 
nature received by such agency or hospital in the course of discharging 
the duties under such agreement except as is provided therein, or is 
otherwise specifically authorized by the Administrator.
    (c) Nothing in this section shall preclude disclosure, upon proper 
inquiry, of information as to the presence of an eligible person in a 
hospital, or as to his general condition and progress.



Sec.  211.15  Nondiscrimination.

    (a) No eligible person shall, on the ground of race, color, or 
national origin, be excluded from participation, be denied any benefits, 
or otherwise be subjected to discrimination of any nature or form in the 
provision of any benefits, under the Act.

[[Page 47]]

    (b) The prohibition in paragraph (a) of this section precludes 
discrimination either in the selection of individuals to receive the 
benefits, in the scope of benefits, or in the manner of providing them. 
It extends to all facilities and services provided by the Administrator 
or an agency to an individual, and to the arrangements and the 
procedures under this part relating thereto, in connection with 
reception, temporary care, treatment, and assistance, and continuing 
hospitalization under the Act.



PART 212_ASSISTANCE FOR UNITED STATES CITIZENS RETURNED FROM FOREIGN COUNTRIES--Table of Contents




Sec.
212.1 General definitions.
212.2 General.
212.3 Eligible person.
212.4 Reception; initial determination, provisions of temporary 
          assistance.
212.5 Periodic review and redetermination; termination of temporary 
          assistance.
212.6 Duty to report.
212.7 Repayment to the United States.
212.8 Federal payments.
212.9 Disclosure of information.
212.10 Nondiscrimination.

    Authority: Sec. 302, 75 Stat. 142, sec. 1102, 49 Stat. 647; 42 
U.S.C. 1313, 1302.

    Source: 39 FR 26548, July 19, 1974, unless otherwise noted.



Sec.  212.1  General definitions.

    When used in this part:
    (a) Act means section 1113 of the Social Security Act, as amended;
    (b) The term Secretary means the Secretary of Health and Human 
Services;
    (c) The term Department means the Department of Health and Human 
Services;
    (d) The term Administration means the Administration for Children 
and Families, Department of Health and Human Services;
    (e) The term Assistant Secretary means the Assistant Secretary for 
Children and Families;
    (f) The term eligible person means an individual with respect to 
whom the conditions in Sec.  212.3 are met;
    (g) The term State includes the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, and Guam;
    (h) The term United States when used in a geographical sense means 
the States;
    (i) The term agency means State or local public agency or 
organization or national or local private agency or organization with 
which the Assistant Secretary has entered into agreement for the 
provision of temporary assistance pursuant to the Act;
    (j) The term temporary assistance means money payments, medical 
care, temporary billeting, transportation, and other goods and services 
necessary for the health, or welfare of individuals, including guidance, 
counseling, and other welfare services.

[39 FR 26548, July 19, 1974, as amended at 53 FR 36580, Sept. 21, 1988; 
60 FR 19864, Apr. 21, 1995]



Sec.  212.2  General.

    The Assistant Secretary shall develop plans and make arrangements 
for provision of temporary assistance within the United States to any 
eligible person, after consultation with appropriate offices of the 
Department of State, the Department of Justice, and the Department of 
Defense. Temporary assistance shall be provided, to the extent feasible, 
in accordance with such plans, as modified from time to time by the 
Assistant Secretary. The Assistant Secretary shall enter into agreements 
with agencies whose services and facilities are to be utilized for the 
purpose of providing temporary assistance pursuant to the Act, 
specifying the conditions governing the provision of such assistance and 
the manner of payment of the cost of providing therefor.

[39 FR 26548, July 19, 1974, as amended at 60 FR 19864, Apr. 21, 1995]



Sec.  212.3  Eligible person.

    In order to establish that an individual is an eligible person, it 
must be found that:
    (a) He is a citizen of the United States or a dependent of a citizen 
of the United States;
    (b) A written statement has been transmitted to the Administration 
by

[[Page 48]]

an authorized official of the Department of State containing information 
which identifies him as having returned, or been brought, from a foreign 
country to the United States because of the destitution of the citizen 
of the United States, or the illness of such citizen or any of his 
dependents, or because of war, threat of war, invasion, or similar 
crisis. Such statement shall, if possible, incorporate or have attached 
thereto, all available pertinent information concerning the individual. 
In case of war, threat of war, invasion, or similar crisis, a 
determination by the Department of State that such a condition is the 
general cause for the return of citizens of the United States and their 
dependents from a particular foreign country, and evidence that an 
individual has returned, or, been brought, from such country to the 
United States shall be considered sufficient identification of the 
reason for his return to, or entry into the United States; and
    (c) He is without resources immediately accessible to meet his 
needs.

[39 FR 26548, July 19, 1974, as amended at 60 FR 19864, Apr. 21, 1995]



Sec.  212.4  Reception; initial determination, provisions of temporary assistance.

    (a) The Administration, or the agency upon notification by the 
Administration, will meet individuals identified as provided in Sec.  
212.3(b), at the port of entry or debarkation.
    (b) The Administration or agency will make findings, setting forth 
the pertinent facts and conclusions, and an initial determination, 
according to standards established by the Administration, as to whether 
an individual is an eligible person.
    (c) The Administration or agency will provide temporary assistance 
within the United States to an eligible person, according to standards 
of need established by the Administration, upon arrival at the port of 
entry or debarkation, during transportation to his intermediate and 
ultimate destinations, and after arrival at such destinations.
    (d) Temporary assistance may be furnished only for 90 days from the 
day of arrival of the eligible person in the United States unless he is 
handicapped in attaining self-support or self-care for such reasons as 
age, disability, or lack of vocational preparation. In such cases 
temporary assistance may be extended upon prior authorization by the 
Administration for nine additional months.

[39 FR 26548, July 19, 1974, as amended at 40 FR 43218, Sept. 19, 1975; 
53 FR 36580, Sept. 21, 1988]



Sec.  212.5  Periodic review and redetermination; termination of temporary assistance.

    (a) The Administration or agency will review the situation of each 
recipient of temporary assistance at frequent intervals to consider 
whether or not circumstances have changed that would require a different 
plan for him.
    (b) Upon a finding by the Administration or agency that a recipient 
of temporary assistance has sufficient resources available to meet his 
needs, temporary assistance shall be terminated.

[39 FR 26548, July 19, 1974, as amended at 53 FR 36580, Sept. 21, 1988]



Sec.  212.6  Duty to report.

    The eligible person who receives temporary assistance, or the person 
who is caring for or otherwise acting on behalf of such eligible person, 
shall report promptly to the Administration or agency any event or 
circumstance which would cause such assistance to be changed in amount 
or terminated.

[39 FR 26548, July 19, 1974, as amended at 53 FR 36580, Sept. 21, 1988]



Sec.  212.7  Repayment to the United States.

    (a) An individual who has received temporary assistance shall be 
required to repay, in accordance with his ability, any or all of the 
cost of such assistance to the United States, except insofar as it is 
determined that:
    (1) The cost is not readily allocable to such individual;
    (2) The probable recovery would be uneconomical or otherwise 
impractical;
    (3) He does not have, and is not expected within a reasonable time 
to have, income and financial resources

[[Page 49]]

sufficient for more than ordinary needs; or
    (4) Recovery would be against equity and good conscience.
    (b) In determining an individual's resources, any claim which he has 
against any individual, trust or estate, partnership, corporation, or 
government shall be considered, and assignment to the United States of 
such claims shall be taken in appropriate cases.
    (c) A determination that an individual is not required to repay the 
cost of temporary assistance shall be final and binding, unless such 
determination was procured by fraud or misrepresentation of the 
individual or some other person, or the individual voluntarily offers to 
repay.
    (d) A determination that an individual is required to repay any or 
all of the cost of temporary assistance may be reconsidered at any time 
prior to repayment of the required amount. A further determination shall 
be made with respect to his liability to repay the balance of such 
amount on the basis of new evidence as to whether (1) he has, or is 
expected within a reasonable time to have, income and financial 
resources sufficient for more than ordinary needs, or (2) recovery would 
be against equity and good conscience.



Sec.  212.8  Federal payments.

    (a) The agreement made by the Assistant Secretary with an agency for 
carrying out the purposes of the Act shall provide for payment to such 
agency, either in advance or by way of reimbursement, of the cost of 
temporary assistance provided pursuant to the Act, and payment of the 
cost of other expenditures necessarily and reasonably related to 
providing the same. Such agreement shall include the cost of other 
expenditures necessarily and reasonably related to providing the same. 
Such agreement shall include the method for determining such costs, as 
well as the methods and procedures for determining the amounts of 
advances or reimbursement and for remittance and adjustment thereof.
    (b) To receive reimbursements, States, or other agencies, shall 
request and receive prior approval from the Assistant Secretary for 
administrative expenses incurred in developing or preparing to implement 
repatriation plans for groups of eligible persons. Such requests should 
include a description of the activities to be undertaken, an estimate of 
the expenses and a rationale for the expenditures. In reviewing 
requests, the Assistant Secretary will consider the necessity and 
reasonableness of the costs. Prior approval is not required for 
administrative expenditures incurred by a State in implementing approved 
repatriation plans as a result of Federal notification that an 
evacuation may be necessary.

[39 FR 26548, July 19, 1974, as amended at 60 FR 19864, Apr. 21, 1995]



Sec.  212.9  Disclosure of information.

    (a) No disclosures of any information of a personal and private 
nature with respect to an individual obtained at any time by any person, 
organization, or institution in the course of discharging the duties of 
the Secretary under the Act shall be made except insofar:
    (1) As the individual or his legal guardian, if any (or, if he is a 
minor, his parent or legal guardian), shall consent;
    (2) As disclosure may be necessary to carry out any functions of the 
Secretary under the Act;
    (3) As disclosure may be necessary to carry out any functions of any 
agency of the United States which are related to the return of the 
individual from a foreign country, or his entry into the United States; 
or
    (4) As expressly authorized by the Assistant Secretary.
    (b) An agreement made with an agency for the provision of temporary 
assistance pursuant to the Act shall provide that no disclosure will be 
made of any information of a personal and private nature received by 
such agency in the course of discharging the duties under such agreement 
except as is provided therein, or is otherwise specifically authorized 
by the Assistant Secretary.

[39 FR 26548, July 19, 1974, as amended at 60 FR 19864, Apr. 21, 1995]

[[Page 50]]



Sec.  212.10  Nondiscrimination.

    (a) No eligible person shall, on the ground of race, color, or 
national origin be excluded from participation, be denied any benefits, 
or otherwise be subjected to discrimination of any nature or form in the 
provision of any benefits under the Act.
    (b) The prohibition in paragraph (a) of this section precludes 
discrimination either in the selection of individuals to receive the 
benefits, in the scope of benefits, or in the manner of providing them. 
It extends to all facilities and services provided by the Administration 
or an agency to an individual, and to the arrangements and the 
procedures under this part relating thereto, in connection with 
reception and temporary assistance under the Act.

[39 FR 26548, July 19, 1974, as amended at 60 FR 19864, Apr. 21, 1995]



PART 213_PRACTICE AND PROCEDURE FOR HEARINGS TO STATES ON CONFORMITY OF PUBLIC ASSISTANCE PLANS TO FEDERAL REQUIREMENTS--Table of Contents




                            Subpart A_General

Sec.
213.1 Scope of rules.
213.2 Records to be public.
213.3 Use of gender and number.
213.4 Suspension of rules.
213.5 Filing and service of papers.

            Subpart B_Preliminary Matters_Notice and Parties

213.11 Notice of hearing or opportunity for hearing.
213.12 Time of hearing.
213.13 Place.
213.14 Issues at hearing.
213.15 Request to participate in hearing.

                      Subpart C_Hearing Procedures

213.21 Who presides.
213.22 Authority of presiding officer.
213.23 Rights of parties.
213.23a Discovery.
213.24 Evidentiary purpose.
213.25 Evidence.
213.26 Exclusion from hearing for misconduct.
213.27 Unsponsored written material.
213.28 Official transcript.
213.29 Record for decision.

               Subpart D_Posthearing Procedures, Decisions

213.31 Posthearing briefs.
213.32 Decisions following hearing.
213.33 Effective date of Administrator's decision.

    Authority: Sec. 1102, 49 Stat. 647; 42 U.S.C. 1302.

    Source: 36 FR 1454, Jan. 29, 1971, unless otherwise noted.



                            Subpart A_General



Sec.  213.1  Scope of rules.

    (a) The rules of procedure in this part govern the practice for 
hearings afforded by the Department to States pursuant to Sec.  201.4 or 
Sec.  201.6 (a) or (b) of this chapter, and the practice relating to 
decisions upon such hearings. These rules may also be applied to 
hearings afforded by the Department to States in other Federal-State 
programs for which Federal administrative responsibility has been 
delegated to the Service.
    (b) Nothing in this part is intended to preclude or limit 
negotiations between the Department and the State, whether before, 
during, or after the hearing to resolve the issues which are, or 
otherwise would be, considered at the hearing. Such negotiations and 
resolution of issues are not part of the hearing, and are not governed 
by the rules in this part, except as expressly provided herein.



Sec.  213.2  Records to be public.

    All pleadings, correspondence, exhibits, transcripts of testimony, 
exceptions, briefs, decisions, and other documents filed in the docket 
in any proceeding may be inspected and copied in the office of the FSA 
Hearing Clerk. Inquiries may be made at the Central Information Center, 
Department of Health and Human Services, 330 Independence Avenue SW., 
Washington, DC 20201.

[36 FR 1454, Jan. 29, 1971, as amended at 53 FR 36580, Sept. 21, 1988]



Sec.  213.3  Use of gender and number.

    As used in this part, words importing the singular number may extend 
and be applied to several persons or things, and vice versa. Words 
importing the

[[Page 51]]

masculine gender may be applied to females or organizations.



Sec.  213.4  Suspension of rules.

    Upon notice to all parties, the Administrator or the presiding 
officer, with respect to matters pending before him and within his 
jurisdiction, may modify or waive any rule in this part upon 
determination that no party will be unduly prejudiced and the ends of 
justice will thereby be served.



Sec.  213.5  Filing and service of papers.

    (a) All papers in the proceedings shall be filed with the FSA 
Hearing Clerk, in an original and two copies. Originals only of exhibits 
and transcripts of testimony need be filed.
    (b) All papers in the proceedings shall be served on all parties by 
personal delivery or by mail. Service on the party's designated attorney 
will be deemed service upon the party.

[36 FR 1454, Jan. 29, 1971, as amended at 53 FR 36580, Sept. 21, 1988]



            Subpart B_Preliminary Matters_Notice and Parties



Sec.  213.11  Notice of hearing or opportunity for hearing.

    Proceedings are commenced by mailing a notice of hearing or 
opportunity for hearing from the Administrator to the State. The notice 
shall state the time and place for the hearing, and the issues which 
will be considered, and shall be published in the Federal Register.



Sec.  213.12  Time of hearing.

    The hearing shall be scheduled not less than 30 days nor more than 
60 days after the date notice of the hearing is furnished to the State.



Sec.  213.13  Place.

    The hearing shall be held in the city in which the regional office 
of the Department is located or in such other place as is fixed by the 
Administrator in light of the circumstances of the case, with due regard 
for the convenience and necessity of the parties or their 
representatives.



Sec.  213.14  Issues at hearing.

    (a) The Administrator may, prior to a hearing under Sec.  201.6 (a) 
or (b) of this chapter, notify the State in writing of additional issues 
which will be considered at the hearing, and such notice shall be 
published in the Federal Register. If such notice is furnished to the 
State less than 20 days before the date of the hearing, the State or any 
other party, at its request, shall be granted a postponement of the 
hearing to a date 20 days after such notice was furnished, or such later 
date as may be agreed to by the Administrator.
    (b) If, as a result of negotiations between the Department and the 
State, the submittal of a plan amendment, a change in the State program, 
or other actions by the State, any issue is resolved in whole or in 
part, but new or modified issues are presented, as specified by the 
Administrator, the hearing shall proceed on such new or modified issues.
    (c)(1) If at any time, whether prior to, during, or after the 
hearing, the Administrator finds that the State has come into compliance 
with Federal requirements on any issue, in whole or in part, he shall 
remove such issue from the proceedings in whole or in part, as may be 
appropriate. If all issues are removed, he shall terminate the hearing.
    (2) Prior to the removal of any issue from the hearing, in whole or 
in part, the Administrator shall provide all parties other than the 
Department and the State (see Sec.  213.15(b)) with the statement of his 
intention, and the reasons therefor, and a copy of the proposed State 
plan provision on which the State and he have settled, and the parties 
shall have opportunity to submit in writing within 15 days, for the 
Administrator's consideration and for the record, their views as to, or 
any information bearing upon, the merits of the proposed plan provision 
and the merits of the Administrator's reasons for removing the issue 
from the hearing.
    (d) The issues considered at the hearing shall be limited to those 
issues of which the State is notified as provided in Sec.  213.11 and 
paragraph (a) of this section, and new or modified issues described in 
paragraph (b) of this section, and shall not include issues or parts of

[[Page 52]]

issues removed from the proceedings pursuant to paragraph (c) of this 
section.



Sec.  213.15  Request to participate in hearing.

    (a) The Department and the State are parties to the hearing without 
making a specific request to participate.
    (b)(1) Other individuals or groups may be recognized as parties, if 
the issues to be considered at the hearing have caused them injury and 
their interest is within the zone of interests to be protected by the 
governing Federal statute.
    (2) Any individual or group wishing to participate as a party shall 
file a petition with the FSA Hearing Clerk within 15 days after notice 
of the hearing has been published in the Federal Register, and shall 
serve a copy on each party of record at that time, in accordance with 
Sec.  213.5(b). Such petition shall concisely state (i) petitioner's 
interest in the proceeding, (ii) who will appear for petitioner, (iii) 
the issues on which petitioner wishes to participate, and (iv) whether 
petitioner intends to present witnesses.
    (3) Any party may, within 5 days of receipt of such petition, file 
comments thereon.
    (4) The presiding officer shall promptly determine whether each 
petitioner has the requisite interest in the proceedings and shall 
permit or deny participation accordingly. Where petitions to participate 
as parties are made by individuals or groups with common interests, the 
presiding officer may request all such petitioners to designate a single 
representative, or he may recognize one or more of such petitioners to 
represent all such petitioners. The presiding officer shall give each 
petitioner written notice of the decision on his petition, and if the 
petition is denied, he shall briefly state the grounds for denial.
    (c)(1) Any interested person or organization wishing to participate 
as amicus curiae shall file a petition with the FSA Hearing Clerk before 
the commencement of the hearing. Such petition shall concisely state (i) 
the petitioner's interest in the hearing, (ii) who will represent the 
petitioner, and (iii) the issues on which petitioner intends to present 
argument. The presiding officer may grant the petition if he finds that 
the petitioner has a legitimate interest in the proceedings, that such 
participation will not unduly delay the outcome and may contribute 
materially to the proper disposition of the issues. An amicus curiae is 
not a party but may participate as provided in this paragraph.
    (2) An amicus curiae may present a brief oral statement at the 
hearing, at the point in the proceedings specified by the presiding 
officer. He may submit a written statement of position to the presiding 
officer prior to the beginning of a hearing, and shall serve a copy on 
each party. He may also submit a brief or written statement at such time 
as the parties submit briefs, and shall serve a copy on each party.

[36 FR 1454, Jan. 29, 1971, as amended at 53 FR 36580, Sept. 21, 1988]



                      Subpart C_Hearing Procedures



Sec.  213.21  Who presides.

    (a) The presiding officer at a hearing shall be the Administrator or 
his designee.
    (b) The designation of the presiding officer shall be in writing. A 
copy of the designation shall be served on all parties.

[39 FR 40850, Nov. 21, 1974]



Sec.  213.22  Authority of presiding officer.

    (a) The presiding officer shall have the duty to conduct a fair 
hearing, to avoid delay, maintain order, and make a record of the 
proceedings. He shall have all powers necessary to accomplish these 
ends, including, but not limited to, the power to:
    (1) Change the date, time, and place of the hearing, upon due notice 
to the parties. This includes the power to continue the hearing in whole 
or in part. In hearings pursuant to section 1116(a)(2) of the Social 
Security Act (see Sec.  201.4 of this chapter), changes of time are 
subject to the requirements of the statute.
    (2) Hold conferences to settle or simplify the issues in a 
proceeding, or to consider other matters that may aid in the expeditious 
disposition of the proceeding.

[[Page 53]]

    (3) Regulate participation of parties and amici curiae and require 
parties and amici curiae to state their position with respect to the 
various issues in the proceeding.
    (4) Administer oaths and affirmations.
    (5) Rule on motions and other procedural items on matters pending 
before him including issuance of protective orders or other relief to a 
party against whom discovery is sought.
    (6) Regulate the course of the hearing and conduct of counsel 
therein.
    (7) Examine witnesses.
    (8) Receive, rule on, exclude or limit evidence or discovery.
    (9) Fix the time for filing motions, petitions, briefs, or other 
items in matters pending before him.
    (10) If the presiding officer is the Administrator, make a final 
decision.
    (11) If the presiding officer is a hearing examiner, certify the 
entire record including his recommended findings and proposed decision 
to the Administrator.
    (12) Take any action authorized by the rules in this part or in 
conformance with the provisions of 5 U.S.C. 551 through 559.
    (b) The presiding officer does not have authority to compel by 
subpoena the production of witnesses, papers, or other evidence.
    (c) If the presiding officer is a hearing examiner, his authority 
pertains to the issues of compliance by a State with Federal 
requirements which are to be considered at the hearing, and does not 
extend to the question of whether, in case of any noncompliance, Federal 
payments will not be made in respect to the entire State plan or will be 
limited to categories under or parts of the State plan affected by such 
noncompliance.

[40 FR 50272, Oct. 29, 1975]



Sec.  213.23  Rights of parties.

    All parties may:
    (a) Appear by counsel or other authorized representative, in all 
hearing proceedings.
    (b) Participate in any prehearing conference held by the presiding 
officer.
    (c) Agree to stipulations as to facts which will be made a part of 
the record.
    (d) Make opening statements at the hearing.
    (e) Present relevant evidence on the issues at the hearing.
    (f) Present witnesses who then must be available for cross-
examination by all other parties.
    (g) Present oral arguments at the hearing.
    (h) Submit written briefs, proposed findings of fact, and proposed 
conclusions of law, after the hearing.



Sec.  213.23a  Discovery.

    The Department and any party named in the notice issued pursuant to 
Sec.  213.11 shall have the right to conduct discovery (including 
depositions) against opposing parties. Rules 26-37 of the Federal Rules 
of Civil Procedures shall apply to such proceedings; there will be no 
fixed rule on priority of discovery. Upon written motion, the Presiding 
Officer shall promptly rule upon any objection to such discovery action 
initiated pursuant to this section. The Presiding Officer shall also 
have the power to grant a protective order or relief to any party 
against whom discovery is sought and to restrict or control discovery so 
as to prevent undue delay in the conduct of the hearing. Upon the 
failure of any party to make discovery, the Presiding Officer may, in 
his discretion, issue any order and impose any sanction (other than 
contempt orders) authorized by Rule 37 of the Federal Rules of Civil 
Procedure.

[40 FR 50272, Oct. 29, 1975]



Sec.  213.24  Evidentiary purpose.

    The hearing is directed to receiving factual evidence and expert 
opinion testimony related to the issues in the proceeding. Argument will 
not be received in evidence; rather it should be presented in 
statements, memoranda, or briefs, as determined by the presiding 
officer. Brief opening statements, which shall be limited to statement 
of the party's position and what he intends to prove, may be made at 
hearings.

[[Page 54]]



Sec.  213.25  Evidence.

    (a) Testimony. Testimony shall be given orally under oath or 
affirmation by witnesses at the hearing. Witnesses shall be available at 
the hearing for cross-examination by all parties.
    (b) Stipulations and exhibits. Two or more parties may agree to 
stipulations of fact. Such stipulations, or any exhibit proposed by any 
party, shall be exchanged at the prehearing conference or otherwise 
prior to the hearing if the presiding officer so requires.
    (c) Rules of evidence. Technical rules of evidence shall not apply 
to hearings conducted pursuant to this part, but rules or principles 
designed to assure production of the most credible evidence available 
and to subject testimony to test by cross-examination shall be applied 
where reasonably necessary by the presiding officer. A witness may be 
cross-examined on any matter material to the proceeding without regard 
to the scope of his direct examination. The presiding officer may 
exclude irrelevant, immaterial, or unduly repetitious evidence. All 
documents and other evidence offered or taken for the record shall be 
open to examination by the parties and opportunity shall be given to 
refute facts and arguments advanced on either side of the issues.



Sec.  213.26  Exclusion from hearing for misconduct.

    Disrespectful, disorderly, or contumacious language or contemptuous 
conduct, refusal to comply with directions, or continued use of dilatory 
tactics by any person at the hearing before a presiding officer shall 
constitute grounds for immediate exclusion of such person from the 
hearing by the presiding officer.



Sec.  213.27  Unsponsored written material.

    Letters expressing views or urging action and other unsponsored 
written material regarding matters in issue in a hearing will be placed 
in the correspondence section of the docket of the proceeding. These 
data are not deemed part of the evidence or record in the hearing.



Sec.  213.28  Official transcript.

    The Department will designate the official reporter for all 
hearings. The official transcripts of testimony taken, together with any 
stipulations, exhibits, briefs, or memoranda of law filed therewith 
shall be filed with the Department. Transcripts of testimony in hearings 
may be obtained from the official reporter by the parties and the public 
at rates not to exceed the maximum rates fixed by the contract between 
the Department and the reporter. Upon notice to all parties, the 
presiding officer may authorize corrections to the transcript which 
involve matters of substance.



Sec.  213.29  Record for decision.

    The transcript of testimony, exhibits, and all papers and requests 
filed in the proceedings, except the correspondence section of the 
docket, including rulings and any recommended or initial decision shall 
constitute the exclusive record for decision.



               Subpart D_Posthearing Procedures, Decisions



Sec.  213.31  Posthearing briefs.

    The presiding officer shall fix the time for filing posthearings 
briefs, which may contain proposed findings of fact and conclusions of 
law, and, if permitted, reply briefs.



Sec.  213.32  Decisions following hearing.

    (a) If the Administrator is the presiding officer, he shall, when 
the time for submission of posthearing briefs has expired, issue his 
decision within 60 days.
    (b)(1) If a hearing examiner is the presiding officer, he shall, 
when the time for submission of posthearing briefs has expired, certify 
the entire record, including his recommended findings and proposed 
decision, to the Administrator. The Administrator shall serve a copy of 
the recommended findings and proposed decision upon all parties, and 
amici, if any.
    (2) Any party may, within 20 days, file with the Administrator 
exceptions to the recommended findings and proposed decision and a 
supporting brief or statement.

[[Page 55]]

    (3) The Administrator shall thereupon review the recommended 
decision and, within 60 days of its issuance, issue his own decision.
    (c) If the Administrator concludes that a State plan does not comply 
with Federal requirements, he shall also, in the case of a hearing 
pursuant to Sec.  201.6(a) of this chapter, specify whether further 
payments will not be made to the State or whether, in the exercise of 
his discretion, payments will be limited to categories under or parts of 
the State plan not affected by such noncompliance. The Administrator may 
ask the parties for recommendations or briefs or may hold conferences of 
the parties on this question.
    (d) The decision of the Administrator under this section shall be 
the final decision of the Secretary and shall constitute ``final agency 
action'' within the meaning of 5 U.S.C. 704 and a ``final 
determination'' within the meaning of section 1116(a)(3) of the Act and 
Sec.  201.7 of this chapter. The Administrator's decision shall be 
promptly served on all parties, and amici, if any.

[36 FR 1454, Jan. 29, 1971, as amended at 36 FR 21520, Nov. 10, 1971]



Sec.  213.33  Effective date of Administrator's decision.

    If, in the case of a hearing pursuant to Sec.  201.6(a) of this 
chapter, the Administrator concludes that a State plan does not comply 
with Federal requirements, his decision that further payments will not 
be made to the State, or payments will be limited to categories under or 
parts of the State plan not affected, shall specify the effective date 
for the withholding of Federal funds. The effective date shall not be 
earlier than the date of the Administrator's decision and shall not be 
later than the first day of the next calendar quarter. The provisions of 
this section may not be waived pursuant to Sec.  213.4.



PART 225_TRAINING AND USE OF SUBPROFESSIONALS AND VOLUNTEERS--Table of Contents




Sec.
225.1 Definitions.
225.2 State plan requirements.
225.3 Federal financial participation.

    Authority: Sec. 1102, 49 Stat. 647; 42 U.S.C. 1302.



Sec.  225.1  Definitions.

    (a) The classification of subprofessional staff as community service 
aides refers to persons in a variety of positions in the planning, 
administration, and delivery of health, social, and rehabilitation 
services in which the duties of the position are composed of tasks that 
are an integral part of the agency's service responsibilities to people 
and that can be performed by persons with less than a college education, 
by high school graduates, or by persons with little or no formal 
education.
    (b) Full-time or part-time employment means that the person is 
employed by the agency and his position is incorporated into the regular 
staffing pattern of the agency. He is paid a regular wage or salary in 
relation to the value of services rendered and time spent on the job.
    (c) The term Volunteer describes a person who contributes his 
personal service to the community through the agency's human services 
program. He is not a replacement or substitute for paid staff but adds 
new dimensions to agency services, and symbolizes the community's 
concern for the agency's clientele.
    (d) Partially paid volunteers means volunteers who are compensated 
for expenses incurred in the giving of services. Such payment does not 
reflect the value of the services rendered, or the amount of time given 
to the agency.

[34 FR 1319, Jan. 28, 1969]



Sec.  225.2  State plan requirements.

    The State plan for financial assistance programs under titles I, X, 
XIV, or XVI (AABD) of the Social Security Act for Guam, Puerto Rico and 
the Virgin Islands or for child welfare services under title IV-B of the 
Act must:
    (a) Provide for the training and effective use of subprofessional 
staff as community service aides through part-time or full-time 
employment of persons of low income and, where applicable, of recipients 
and for that purpose will provide for:
    (1) Such methods of recruitment and selection as will offer 
opportunity for full-time or part-time employment of

[[Page 56]]

persons of low income and little or no formal education, including 
employment of young and middle aged adults, older persons, and the 
physically and mentally disabled, and in the case of a State plan for 
financial assistance under title I, X, XIV, or XVI (AABD), of 
recipients: And will provide that such subprofessional positions are 
subject to merit system requirements, except where special exemption is 
approved on the basis of a State alternative plan for recruitment and 
selection among the disadvantaged of persons who have the potential 
ability for training and job performance to help assure achievement of 
program objectives;
    (2) An administrative staffing plan to include the range of service 
personnel of which subprofessional staff are an integral part;
    (3) A career service plan permitting persons to enter employment at 
the subprofessional level and, according to their abilities, through 
work experience, pre-service and in-service training and educational 
leave with pay, progress to positions of increasing responsibility and 
reward;
    (4) An organized training program, supervision, and supportive 
services for subprofessional staff; and
    (5) Annual progressive expansion of the plan to assure utilization 
of increasing numbers of subprofessional staff as community service 
aides, until an appropriate number and proportion of subprofessional 
staff to professional staff are achieved to make maximum use of 
subprofessionals in program operation.
    (b) Provide for the use of nonpaid or partially paid volunteers in 
providing services and in assisting any advisory committees established 
by the State agency and for that purpose provide for:
    (1) A position in which rests responsibility for the development, 
organization, and administration of the volunteer program, and for 
coordination of the program with related functions;
    (2) Methods of recruitment and selection which will assure 
participation of volunteers of all income levels in planning capacities 
and service provision;
    (3) A program for organized training and supervision of such 
volunteers;
    (4) Meeting the costs incident to volunteer service and assuring 
that no individual shall be deprived of the opportunity to serve because 
of the expenses involved in such service; and
    (5) Annual progressive expansion of the numbers of volunteers 
utilized, until the volunteer program is adequate for the achievement of 
the agency's service goals.

[34 FR 1320, Jan. 28, 1969, as amended at 41 FR 12015, Mar. 23, 1976; 42 
FR 60566, Nov. 28, 1977; 45 FR 56686, Aug. 25, 1980; 51 FR 9204, Mar. 
18, 1986]



Sec.  225.3  Federal financial participation.

    Under the State plan for financial assistance programs under titles 
I, X, XIV, XVI (AABD) or for child welfare services under title IV-B of 
the Act, Federal financial participation in expenditures for the 
recruitment, selection, training, and employment and other use of 
subprofessional staff and volunteers is available at the rates and under 
related conditions established for training, services, and other 
administrative costs under the respective titles.

[51 FR 9204, Mar. 18, 1986]



PART 233_COVERAGE AND CONDITIONS OF ELIGIBILITY IN FINANCIAL ASSISTANCE PROGRAMS--Table of Contents




Sec.
233.10 General provisions regarding coverage and eligibility.
233.20 Need and amount of assistance.
233.21 Budgeting methods for OAA, AB, APTD, and AABD.
233.22 Determining eligibility under prospective budgeting.
233.23 When assistance shall be paid under retrospective budgeting.
233.24 Retrospective budgeting; determining eligibility and computing 
          the assistance payment in the initial one or two months.
233.25 Retrospective budgeting; computing the assistance payment after 
          the initial one or two months.
233.26 Retrospective budgeting; determining eligibility after the 
          initial one or two months.
233.27 Supplemental payments under retrospective budgeting.
233.28 Monthly reporting.
233.29 How monthly reports are treated and what notices are required.

[[Page 57]]

233.31 Budgeting methods for AFDC.
233.32 Payment and budget months (AFDC).
233.33 Determining eligibility prospectively for all payment months 
          (AFDC).
233.34 Computing the assistance payment in the initial one or two months 
          (AFDC).
233.35 Computing the assistance payment under retrospective budgeting 
          after the initial one or two months (AFDC).
233.36 Monthly reporting (AFDC).
233.37 How monthly reports are treated and what notices are required 
          (AFDC).
233.38 Waiver of monthly reporting and retrospective budgeting 
          requirements; AFDC.
233.39 Age.
233.40 Residence.
233.50 Citizenship and alienage.
233.51 Eligibility of sponsored aliens.
233.52 Overpayment to aliens.
233.53 Support and maintenance assistance (including home energy 
          assistance) in AFDC.
233.60 Institutional status.
233.70 Blindness.
233.80 Disability.
233.90 Factors specific to AFDC.
233.100 Dependent children of unemployed parents.
233.101 Dependent children of unemployed parents.
233.106 Denial of AFDC benefits to strikers.
233.107 Restriction in payment to households headed by a minor parent.
233.110 Foster care maintenance and adoption assistance.
233.145 Expiration of medical assistance programs under titles I, IV-A, 
          X, XIV and XVI of the Social Security Act.

    Authority: 42 U.S.C. 301, 602, 602 (note), 606, 607, 1202, 1302, 
1352, and 1382 (note).



Sec.  233.10  General provisions regarding coverage and eligibility.

    (a) State plan requirements. A State plan under title I, IV--A, X, 
XIV, or XVI, of the Social Security Act must:
    (1) Specify the groups of individuals, based on reasonable 
classifications, that will be included in the program, and all the 
conditions of eligibility that must be met by the individuals in the 
groups. The groups selected for inclusion in the plan and the 
eligibility conditions imposed must not exclude individuals or groups on 
an arbitrary or unreasonable basis, and must not result in inequitable 
treatment of individuals or groups in the light of the provisions and 
purposes of the public assistance titles of the Social Security Act. 
Under this requirement:
    (i) A State shall impose each condition of eligibility required by 
the Social Security Act; and
    (ii) A State may:
    (A) Provide more limited public assistance coverage than that 
provided by the Act only where the Social Security Act or its 
legislative history authorizes more limited coverage;
    (B) Impose conditions upon applicants for and recipients of public 
assistance which, if not satisfied, result in the denial or termination 
of public assistance, if such conditions assist the State in the 
efficient administration of its public assistance programs, or further 
an independent State welfare policy, and are not inconsistent with the 
provisions and purposes of the Social Security Act.
    (iii) There must be clarity as to what groups are included in the 
plan, and which are within, and which are outside, the scope of Federal 
financial participation.
    (iv) Eligibility conditions must be applied on a consistent and 
equitable basis throughout the State.
    (v) A plan under title XVI must have the same eligibility conditions 
and other requirements for the aged, blind, and disabled, except as 
otherwise specifically required or permitted by the Act.
    (vi) Eligibility conditions or agency procedures or methods must not 
preclude the opportunity for an individual to apply and obtain a 
determination of eligibility or ineligibility.
    (vii) Methods of determining eligibility must be consistent with the 
objective of assisting all eligible persons to qualify.
    (2) Provide that the State agency will establish methods for 
identifying the expenditures for assistance for any groups included in 
the plan for whom Federal financial participation in assistance may not 
be claimed.
    (3) In addition, a State plan under title IV-A, X, XIV, or XVI of 
the Act, must: Provided that no aid or assistance will be provided under 
the plan to an individual with respect to a period for which he is 
receiving aid or assistance under a State plan approved under any other 
of such titles or under title I of the Act.

[[Page 58]]

    (b) Federal financial participation. (1) The provisions which govern 
Federal financial participation in assistance payments are set forth in 
the Social Security Act, throughout this chapter, and in other policy 
issuances of the Secretary. Where indicated, State plan provisions are 
prerequisite to Federal financial participation with respect to the 
applicable group and payments. State plan provisions on need, the amount 
of assistance, and eligibility determine the limits of Federal financial 
participation. Federal financial participation is excluded from 
assistance payments in which the State refuses to participate because of 
the failure of a local authority to apply such State plan provisions.
    (2) The following is a summary statement regarding the groups for 
whom Federal financial participation is available. (More detailed 
information is given elsewhere.)
    (i) OAA--for needy individuals under the plan who are 65 years of 
age or older.
    (ii) AFDC--for:
    (a) Needy children under the plan who are:
    (1) Under the age of 18, or age 18 if a full-time student in a 
secondary school, or in the equivalent level of vocational or technical 
training, and reasonably expected to complete the program before 
reaching age 19;
    (2) Deprived of parental support or care by reason of the death, 
continued absence from the home, or physical or mental incapacity of a 
parent, or unemployment of a principal earner, and
    (3) Living in the home of a parent or of certain relatives specified 
in the Act.
    (b) The parent(s) of a dependent child, a caretaker relative (other 
than a parent) of a dependent child, and, in certain situations, a 
parent's spouse.
    (iii) AB--for needy individual's under the plan who are blind.
    (iv) APTD--for needy individuals under the plan who are 18 years of 
age or older and permanently and totally disabled.
    (v) AABD--for needy individuals under the plan who are aged, blind, 
or 18 years of age or older and permanently and totally disabled.
    (3) Federal financial participation is available in assistance 
payments made for the entire month in accordance with the State plan if 
the individual was eligible for a portion of the month, provided that 
the individual was eligible on the date that the payment was made; 
except that where it has been determined that the State agency had 
previously denied assistance to which the individual was entitled, 
Federal financial participation will be provided in any corrective 
payment regardless of whether the individual is eligible on the date 
that the corrective payment is made.
    (4) Federal financial participation is available in assistance 
payments which are continued in accordance with the State plan, for a 
temporary period during which the effects of an eligibility condition 
are being overcome, e.g., blindness in AB, disability in APTD, physical 
or mental incapacity, continued absence of a parent, or unemployment of 
a principal earner in AFDC.
    (5) Where changed circumstances or a hearing decision makes the 
individual ineligible for any assistance, or eligible for a smaller 
amount of assistance than was actually paid, Federal financial 
participation is available in excess payments to such individuals, for 
not more than one month following the month in which the circumstances 
changed or the hearing decision was rendered. Federal financial 
participation is available where assistance is required to be continued 
unadjusted because a hearing has been requested.

[36 FR 3866, Feb. 27, 1971, as amended at 38 FR 8744, Apr. 6, 1973; 39 
FR 26912, July 24, 1974; 40 FR 32958, Aug. 5, 1975; 47 FR 5674, Feb. 5, 
1982; 47 FR 47828, Oct. 28, 1982; 51 FR 9204, Mar. 18, 1986; 57 FR 
30158, July 8, 1992]



Sec.  233.20  Need and amount of assistance.

    (a) Requirements for State Plans. A State Plan for OAA, AFDC, AB, 
APTD or AABD must, as specified below:
    (1) General. (i) Provide that the determination of need and amount 
of assistance for all applicants and recipients will be made on an 
objective and equitable basis and all types of income will be taken into 
consideration in the

[[Page 59]]

same way except where otherwise specifically authorized by Federal 
statute and
    (ii) Provide that the needs, income, and resources of individuals 
receiving SSI benefits under title XVI, individuals with respect to whom 
Federal foster care payments are made, individuals with respect to whom 
State or local foster care payments are made, individuals with respect 
to whom Federal adoption assistance payments are made, or individuals 
with respect to whom State or local adoption assistance payments are 
made, for the period for which such benefits or payments are received, 
shall not be included in determining the need and the amount of the 
assistance payment of an AFDC assistance unit; except that the needs, 
income, and resources of an individual with respect to whom Federal 
adoption assistance payments are made, or individuals with respect to 
whom State or local adoption assistance payments are made are included 
in determining the need and the amount of the assistance payment for an 
AFDC assistance unit of which the individual would otherwise be regarded 
as a member where the amount of the assistance payment that the unit 
would receive would not be reduced by including the needs, income, and 
resources of such individual. Under this requirement, ``individuals 
receiving SSI benefits under title XVI'' include individuals receiving 
mandatory or optional State supplementary payments under section 1616(a) 
of the Social Security Act or under section 212 of Public Law 93-66, and 
``individuals with respect to whom Federal foster care payments are 
made'' means a child with respect to whom Federal foster care 
maintenance payments under section 472(b) and defined in section 
475(4)(A) of title IV-E of the Social Security Act are made, and a child 
whose costs in a foster family home or child care institution are 
covered by the Federal foster care maintenance payments made with 
respect to his or her minor parent under sections 472(h) and 475(4)(B) 
of title IV-E. ``Individuals with respect to whom Federal adoption 
assistance payments are made'' means a child who receives payments made 
under an approved title IV-E plan based on an adoption assistance 
agreement between the State and the adoptive parents of a child with 
special needs, pursuant to sections 473 and 475(3) of the Social 
Security Act.
    (iii) For AFDC, when an individual who is required to be included in 
the assistance unit pursuant to Sec.  206.10(a)(1)(vii) is also required 
to be included in another assistance unit, those assistance units must 
be consolidated, and treated as one assistance unit for purposes of 
determining eligibility and the amount of payment.
    (iv) For AFDC, when a State learns of an individual who is required 
to be included in the assistance unit after the date he or she is 
required to be included in the unit, the State must redetermine the 
assistance unit's eligibility and payment amount, including the need, 
income, and resources of the individual. This redetermination must be 
retroactive to the date that the individual was required to be in the 
assistance unit either through birth/adoption or by becoming a member of 
the household. Any resulting overpayment must be recovered or corrective 
payment made pursuant to Sec.  233.20(a)(13).
    (v) In determining need and the amount of payment for AFDC, all 
income and resources of an individual required to be in the assistance 
unit, but subject to sanction under Sec.  250.34 or because of an 
intentional program violation under the optional fraud control program 
implementing section 416 of the Social Security Act, are considered 
available to the assistance unit to the same extent that they would be 
if the person were not subject to a sanction. However, the needs of the 
sanctioned individual(s) are not considered. In accord with Sec.  
250.34(c), if a parent in an AFDC-UP case is sanctioned pursuant to 
Sec.  233.100(a)(5), the needs of the second parent are not taken into 
account in determining the family's need for assistance and the amount 
of the assistance payment unless the second parent is participating in 
the JOBS program. An individual required to be in an assistance unit 
pursuant to Sec.  206.10(a)(1)(vii) but who fails to cooperate in 
meeting a condition of his or her eligibility for assistance is a 
sanctioned individual whose needs, income,

[[Page 60]]

and resources are treated in the manner described above.
    (2) Standards of assistance. (i) Specify a statewide standard, 
expressed in money amounts, to be used in determining (a) the need of 
applicants and recipients and (b) the amount of the assistance payment.
    (ii) In the AFDC plan, provide that by July 1, 1969, the State's 
standard of assistance for the AFDC program will have been adjusted to 
reflect fully changes in living costs since such standards were 
established, and any maximums that the State imposes on the amount of 
aid paid to families will have been proportionately adjusted. In such 
adjustment a consolidation of the standard (i.e., combining of items) 
may not result in a reduction in the content of the standard. In the 
event the State is not able to meet need in full under the adjusted 
standard, the State may make ratable reductions in accordance with 
paragraph (a)(3)(viii) of this section. Nevertheless, if a State 
maintains a system of dollar maximums these maximums must be 
proportionately adjusted in relation to the updated standards.
    (iii) Provide that the standard will be uniformly applied throughout 
the State except as provided under Sec.  239.54.
    (iv) Include the method used in determining need and the amount of 
the assistance payment. For AFDC, the method must provide for rounding 
down to the next lower whole dollar when the result of determining the 
standard of need or the payment amount is not a whole dollar. Proration 
under Sec.  206.10(a)(6)(i)(D) to determine the amount of payment for 
the month of application must occur before rounding to determine the 
payment amount for that month.
    (v) If the State IV-A agency includes special need items in its 
standard:
    (A) Describe those that will be recognized and the circumstances 
under which they will be included, and
    (B) Provide that they will be considered for all applicants and 
recipients requiring them; except that:
    (1) Under AFDC, work expenses and child care (or care of 
incapacitated adults living in the same home and receiving AFDC) 
resulting from employment or participation in either a CWEP or an 
employment search program cannot be special needs, and
    (2) In a State which has a JOBS program under part 250, child care, 
transportation, work-related expenses, other work-related supportive 
services, and the costs of education (including tuition, books, and 
fees) resulting from participation in JOBS (including participation 
pursuant to Sec. Sec.  250.46, 250.47, and 250.48) or any other 
education or training activity cannot be special needs.
    (vi) If the State chooses to establish the need of the individual on 
a basis that recognizes, as essential to his well-being, the presence in 
the home of other needy individuals, (A) specify the persons whose needs 
will be included in the individual's need, and (B) provide that the 
decision as to whether any individual will be recognized as essential to 
the recipient's well-being shall rest with the recipient.
    (vii) [Reserved]
    (viii) Provide that the money amount of any need item included in 
the standard will not be prorated or otherwise reduced solely because of 
the presence in the household of a non-legally responsible individual; 
and the agency will not assume any contribution from such individual for 
the support of the assistance unit except as provided in paragraphs 
(a)(3)(xiv) and (a)(5) of this section and Sec.  233.51 of this part.
    (ix) For AFDC, provide that a State shall consider utility payments 
made in lieu of any direct rental payment to a landlord or public 
housing agency to be shelter costs for applicants or recipients living 
in housing assisted under the U.S. Housing Act of 1937, as amended, and 
section 236 of the National Housing Act. The amount considered as a 
shelter payment shall not exceed the total amount the applicant or 
recipient is expected to contribute for the cost of housing as 
determined by HUD. Utility payments means only those payments made 
directly to a utility company or supplier which are for gas, 
electricity, water, heating fuel, sewerage systems, and trash and 
garbage collection. Utility payments are made ``in lieu of any direct 
rental payment to a landlord or public housing agency'' when, and only 
when, the AFDC family pays its entire required

[[Page 61]]

contribution at HUD's direction to one or more utility companies and 
does not make any direct payment to the landlord or the public housing 
agency. Housing covered by ``the U.S. Housing Act of 1937, as amended, 
and section 236 of the National Housing Act'' means Department of 
Housing and Urban Development assisted housing which includes Indian and 
public housing, section 8 new and existing rental housing, and section 
236 rental housing.
    (3) Income and resources. (i)(A) OAA, AB, APTD, AABD, Specify the 
amount and types of real and personal property, including liquid assets, 
that may be reserved, i.e., retained to meet the current and future 
needs while assistance is received on a continuing basis. In addition to 
the home, personal effects, automobile and income producing property 
allowed by the agency, the amount of real and personal property, 
including liquid assets, that can be reserved for each individual 
recipient shall not be in excess of two thousand dollars. Policies may 
allow reasonable proportions of income from businesses or farms to be 
used to increase capital assets, so that income may be increased; and 
(B) in AFDC--The amount of real and personal property that can be 
reserved for each assistance unit shall not be in excess of one thousand 
dollars equity value (or such lesser amount as the State specifies in 
its State plan) excluding only:
    (1) The home which is the usual residence of the assistance unit;
    (2) One automobile, up to $1,500 of equity value or such lower limit 
as the State may specify in the State plan; (any excess equity value 
must be applied towards the general resource limit specified in the 
State plan);
    (3) One burial plot (as defined in the State plan) for each member 
of the assistance unit;
    (4) Bona fide funeral agreements (as defined and within limits 
specified in the State plan) up to a total of $1,500 in equity value or 
such lower limit as the State may specify in the State plan for each 
member of the assistance unit (any excess equity value must be applied 
towards the general resource limit specified in the State plan). This 
provision addresses only formal agreements for funeral and burial 
expenses such as burial contracts, burial trusts or other funeral 
arrangements (generally with licensed funeral directors) and does not 
apply to other assets (e.g., passbook bank accounts, simple set-aside of 
savings, and cash surrender value of life insurance policies);
    (5) Real property for a period of six consecutive months (or, at the 
option of the State, nine consecutive months) which the family is making 
a good faith effort (as defined in the State plan) to sell, subject to 
the following provisions. The family must sign an agreement to dispose 
of the property and to repay the amount of aid received during such 
period that would not have been paid had the property been sold at the 
beginning of such period, but not to exceed the amount of the net 
proceeds of the sale. The family has five working days from the date it 
realizes cash from the sale of the excess real property to repay the 
overpayment; failure to make repayment within this period results in the 
cash being considered to be an available resource. If the family becomes 
ineligible for AFDC for any other reason during the conditional payment 
period while making a good faith effort to sell the property, or fails 
to sell the property by the end of the period despite such a good faith 
effort, then the amount of the overpayment attributable to the real 
property will not be determined and recovery will not be begun until the 
property is, in fact, sold. However, if the property was intentionally 
sold at less than fair market value so that a good faith effort to sell 
it was not made, or if it is otherwise determined that a good faith 
effort to sell the property is not being made, the overpayment amount 
shall be computed using the fair market value determined at the 
beginning of the period. For applicants, the conditional payment period 
begins with the first payment month for which all otherwise applicable 
eligibility conditions are met and payment is authorized. For recipients 
who acquire property while receiving assistance, the period begins with 
the payment month in which the recipient receives the property; and
    (6) At State option, basic maintenance items essential to day-to-day 
living such as clothes, furniture and

[[Page 62]]

other similarly essential items of limited value.
    (ii) Provide that in determining need and the amount of the 
assistance payment, after all policies governing the reserves and 
allowances and disregard or setting aside of income and resources 
referred to in this section have been uniformly applied:
    (A) In determining need, all remaining income and resources shall be 
considered in relation to the State's need standard;
    (B) In determining financial eligibility and the amount of the 
assistance payment all remaining income (except unemployment 
compensation received by an unemployed principal earner) and, except for 
AFDC, all resources may be considered in relation to either the State's 
need standard or the State's payment standard. Unemployment compensation 
received by an unemployed principal earner shall be considered only by 
subtracting it from the amount of the assistance payment after the 
payment has been determined under the State's payment method;
    (C) States may have policies which provide for allocating an 
individual's income for his or her own support if the individual is not 
applying for or receiving assistance; for the support of other 
individuals living in the same household but not receiving assistance; 
and for the support of other individuals living in another household. 
Such other individuals are those who are or could be claimed by the 
individual as dependents for determining Federal personal income tax 
liability, or those he or she is legally obligated to support. No income 
may be allocated to meet the needs of an individual who has been 
sanctioned under Sec. Sec.  224.51, 232.11(a)(2), 232.12(d), 238.22 or 
240.22 or who is required to be included in the assistance unit and has 
failed to cooperate. The amount allocated for the individual and the 
other individuals who are living in the home must not exceed the State's 
need standard amount for a family group of the same composition. The 
amount allocated for individuals not living in the home must not exceed 
the amount actually paid.
    (D) Income after application of disregards, except as provided in 
paragraph (a)(3)(xiii) of this section, and resources available for 
current use shall be considered. To the extent not inconsistent with any 
other provision of this chapter, income and resources are considered 
available both when actually available and when the applicant or 
recipient has a legal interest in a liquidated sum and has the legal 
ability to make such sum available for support and maintenance.
    (E) For AFDC, income tax refunds, but such payments shall be 
considered as resources; and
    (F) When the AFDC assistance unit's income, after applying 
applicable disregards, exceeds the State need standard for the family 
because of receipt of nonrecurring earned or unearned lump sum income 
(including for AFDC, title II and other retroactive monthly benefits, 
and payments in the nature of a windfall, e.g., inheritances or lottery 
winnings, personal injury and worker compensation awards, to the extent 
it is not earmarked and used for the purpose for which it is paid, i.e., 
monies for back medical bills resulting from accidents or injury, 
funeral and burial costs, replacement or repair of resources, etc.), the 
family will be ineligible for aid for the full number of months derived 
by dividing the sum of the lump sum income and other income by the 
monthly need standard for a family of that size. Any income remaining 
from this calculation is income in the first month following the period 
of ineligibility. The period of ineligibility shall begin with the month 
of receipt of the nonrecurring income or, at State option, as late as 
the corresponding payment month. For purposes of applying the lump sum 
provision, family includes all persons whose needs are taken into 
account in determining eligibility and the amount of the assistance 
payment, and includes solely for determining the income and resources of 
a family an individual who must be in a family pursuant to Sec.  
206.10(a)(1)(vii) but who does not meet a condition of his or her 
eligibility due to a failure to cooperate or is required by law to have 
his or her needs excluded from an assistance unit's AFDC grant 
calculation due to the failure to perform some action. A State may

[[Page 63]]

shorten the remaining period of ineligibility when: the standard of need 
increases and the amount the family would have received also changes 
(e.g., situations involving additions to the family unit during the 
period of ineligibility of persons who are otherwise eligible for 
assistance); the lump sum income or a portion thereof becomes 
unavailable to the family for a reason beyond the control of the family; 
or the family incurs and pays for medical expenses. If the State chooses 
to shorten the period of ineligibility, the State plan shall:
    (1) Identify which of the above situations are included;
    (2) In the case of situations involving an increase in the need 
standard and changes in the amount that should have been paid to the 
family, specify the types of circumstances which will be included;
    (3) In the case of situations involving the unavailability of the 
lump sum income, include a definition of unavailability, and specify 
what reasons will be considered beyond the control of the family; and
    (4) In the case of situations involving the payment of medical 
expenses, specify the types of medical expenses the State will allow to 
be offset against the lump sum income.


For purposes of this paragraph (a)(3): Automobile means a passenger car 
or other motor vehicle used to provide transportation of persons or 
goods. (In AFDC, in appropriate geographic areas, one alternate primary 
mode of transportation may be substituted for the automobile); Equity 
value means fair market value minus encumbrances (legal debts); Fair 
market value means the price an item of a particular make, model, size, 
material or condition will sell for on the open market in the geographic 
area involved (If a motor vehicle is especially equipped with apparatus 
for the handicapped, the apparatus shall not increase the value of the 
vehicle); Liquid assets are those properties in the form of cash or 
other financial instruments which are convertible to cash and include 
savings accounts, checking accounts, stocks, bonds, mutual fund shares, 
promissory notes, mortgages, cash value of insurance policies, and 
similar properties; Need standard means the money value assigned by the 
State to the basic and special needs it recognizes as essential for 
applicants and recipients; Payment standard means the amount from which 
non-exempt income is subtracted.

    (iii) States may prorate income received by individuals employed on 
a contractual basis over the period of the contract or may prorate 
intermittent income received quarterly, semiannually, or yearly over the 
period covered by the income. In OAA, AB, APTD and AABD, they may use 
the prorated amount to determine need under Sec.  233.23 and the amount 
of the assistance payment under Sec. Sec.  233.24 and 233.25. In AFDC, 
they may use the prorated amount to determine need under Sec.  233.33 
and the amount of the assistance payment under Sec. Sec.  233.34 and 
233.35.
    (iv) Provide that in determining the availability of income and 
resources, the following will not be included as income:
    (A) Except for AFDC, income equal to expenses reasonably 
attributable to the earning of income (including earnings from public 
service employment);
    (B) Grants, such as scholarships, obtained and used under conditions 
that preclude their use for current living costs;
    (C) Home produce of an applicant or recipient, utilized by him and 
his household for their own consumption;
    (D) For AFDC, any amounts paid by a State IV-A agency from State-
only funds to meet needs of children receiving AFDC, if the payments are 
made under a statutorily-established State program which has been 
continuously in effect since before January 1, 1979;
    (E) For AFDC, income tax refunds, but such payments shall be 
considered as resources; and
    (F) At State option, small nonrecurring gifts, such as those for 
Christmas, birthdays and graduations, not to exceed $30 per recipient in 
any quarter; and
    (G) For AFDC, the amount paid to the family by the IV-A agency under 
Sec.  232.20(d) or, in a State that treats direct support payments as 
income under Sec.  233.20(a)(3)(v)(B), the first $50 received by the 
assistance unit which represents a current monthly support obligation

[[Page 64]]

or a voluntary support payment. In no case shall the total amount 
disregarded exceed $50 per month per assistance unit.
    (v) Provide that agency policies will assure that:
    (A) In determining eligibility for an assistance payment, support 
payments assigned under Sec.  232.11 of this chapter will be treated in 
accordance with Sec.  232.20 and Sec.  232.21 of this chapter; and
    (B) In determining the amount of an assistance payment, assigned 
support payments retained in violation of Sec.  232.12(b)(4) of this 
chapter, will be counted as income to meet need unless the approved IV-A 
State plan provides that such support payments are subject to IV-D 
recovery under Sec. Sec.  302.31(a)(3) and 303.80 of this title or 
unless such payments are sufficient to render the family ineligible as 
provided at Sec.  232.20 of this chapter.
    (vi)(A) In family groups living together, income of the spouse is 
considered available for his spouse and income of a parent is considered 
available for children under 21, except as provided in paragraphs 
(a)(3)(xiv) and (a)(3)(xviii) of this section for AFDC. If an individual 
is a spouse or parent who is a recipient of SSI benefits under title 
XVI, an individual with respect to whom Federal foster care payments are 
made, an individual with respect to whom State or local foster care 
payments are made, an individual with respect to whom Federal adoption 
assistance payments are made, or an individual with respect to whom 
State or local adoption assistance payments are made, then, for the 
period for which such benefits or payments are received, his or her 
income and resources shall not be counted as income and resources 
available to the AFDC unit except that a child receiving adoption 
assistance payments will not be excluded if such exclusion would cause 
the AFDC benefits of the assistance unit of which the child would 
otherwise be considered a member to be reduced. For purposes of this 
exception, ``a recipient of SSI benefits under title XVI'' includes a 
spouse or parent receiving mandatory or optional State supplementary 
payments under section 1616(a) of the Social Security Act or under 
section 212 of Public Law 93-66 and an ``individual with respect to whom 
Federal foster care payments are made'' means a child with respect to 
whom Federal foster care maintenance payments are made under section 
472(b) and defined in section 475(4)(A) of the Act, and a child whose 
costs in a foster family home or child-care institution are covered by 
the foster care maintenance payments made with respect to his or her 
minor parent under sections 472(h) and 475(4)(B) of the Act. 
``Individuals with respect to whom Federal adoption assistance payments 
are made'' means a child who receives payments made under an approved 
title IV-E plan based on an adoption assistance agreement between the 
State and the adoptive parents of a child with special needs, pursuant 
to sections 473 and 475(3) of the Social Security Act.
    (B) Income of an alien parent, who is disqualified pursuant to Sec.  
233.50(c) is considered available to the otherwise eligible child by 
applying the stepparent deeming formula at 45 CFR 233.20(a)(3)(xiv).
    (vii) If the State agency establishes policy under which assistance 
from other agencies and organizations will not be deducted in 
determining the amount of assistance to be paid, provide that no 
duplication shall exist between such other assistance and that provided 
by the public assistance agency. In such complementary program 
relationships, nonduplication shall be assured by provision that such 
aid will be considered in relation to: (a) The different purpose for 
which the other agency grants aid such as vocational rehabilitation; (b) 
the provision of goods and services that are not included in the 
statewide standard of the public assistance agency, e.g., a private 
agency might provide money for special training for a child or for 
medical care when the public assistance agency does not carry this 
responsibility; or housing and urban development payments might be 
provided to cover moving expenses that are not included in the 
assistance standard; or (c) the fact that public assistance funds are 
insufficient to meet the total amount of money determined to be needed 
in accordance with the statewide standard. In such instances, grants by 
other agencies in an amount sufficient to

[[Page 65]]

make it possible for the individual to have the amount of money 
determined to be needed, in accordance with the public assistance agency 
standard, will not constitute duplication.
    (viii) Provide that: (A) Payment will be based on the determination 
of the amount of assistance needed; (B) if full individual payments are 
precluded by maximums or insufficient funds, adjustments will be made by 
methods applied uniformly statewide; (C) in the case of AFDC no payment 
of aid shall be made to an assistance unit in any month in which the 
amount of aid prior to any adjustments is determined to be less than 
$10; and (D) an individual who is denied aid because of the limitation 
specified in (C) of this section, or because the payment amount is 
determined to be zero as a result of rounding the payment amount as 
required by Sec.  233.20(a)(2)(iv), shall be deemed a recipient of aid 
for all other purposes except participation in the Community Work 
Experience Program.
    (ix) Provide that the agency will establish and carry out policies 
with reference to applicants' and recipients' potential sources of 
income that can be developed to a state of availability.
    (x) Provide that the income and resources of individuals receiving 
SSI benefits under title XVI, individuals with respect to whom Federal 
foster care payments are made, individuals with respect to whom State or 
local foster care payments are made, individuals with respect to whom 
Federal adoption assistance payments are made, or individuals with 
respect to whom State or local adoption assistance payments are made, 
for the period for which such benefits or payments are received, shall 
not be counted as income and resources of an assistance unit applying 
for or receiving assistance under title IV-A; except that a child 
receiving adoption assistance payments will not be excluded if such 
exclusion would cause the AFDC benefits of the assistance unit of which 
the child would otherwise be considered a member to be reduced. Under 
this requirement, ``individuals receiving SSI benefits under title XVI'' 
include individuals receiving mandatory or optional State supplementary 
payments under section 1616(a) of the Social Security Act or under 
section 212 of Public Law 93-66 and, ``individuals with respect to whom 
Federal foster care payments are made'' means a child with respect to 
whom Federal foster care maintenance payments are made under section 
472(b) and defined in section 475(4)(A) of the Act, and a child whose 
costs in a foster family home or child-care institution are covered by 
foster care maintenance payments made with respect to his or her minor 
parent under sections 472(h) and 475(4)(B) of the Act. ``Individuals 
with respect to whom Federal adoption assistance payments are made'' 
means a child who receives payments made under an approved title IV-E 
plan based on an adoption assistance agreement between the State and the 
adoptive parents of a child with special needs, pursuant to sections 473 
and 475(3) of the Social Security Act.
    (xi) In the case of AFDC if the State chooses to count the value of 
the food stamp coupons as income, provide that the State plan shall:
    (A) Identify the amount for food included in its need and payment 
standards for an assistance unit of the same size and composition. 
(States which have a flat grant system must estimate the amount based on 
historical data or some other justifiable procedure.); and
    (B) Specify the amount of such food stamp coupons that it will count 
as income. Under this requirement, the amount of food stamp coupons 
which a State may count as income may not exceed the amount for food 
established in its payment standard for an assistance unit of the same 
size and composition.
    (xii) In the case of AFDC if the State chooses to count the value of 
the governmental rent or housing subsidies as income, provide that the 
State plan shall:
    (A) Identify the amount for shelter included in its need and payment 
standards for an assistance unit of the same size and composition. 
(States which have a flat grant system must estimate this amount based 
on historical data or some other justifiable procedure.); and
    (B) Specify the amount of such housing assistance that it will count 
as income. Under this requirement, the

[[Page 66]]

amount of such rent or housing subsidies which a State may count as 
income may not exceed the amount for shelter established in its payment 
standard for assistance unit of the same size and composition.
    (xiii) Under the AFDC plan, provide that no assistance unit is 
eligible for aid in any month in which the unit's income (other than the 
assistance payment) exceeds 185 percent of the State's need standard 
(including special needs) for a family of the same composition 
(including special needs), without application of the disregards in 
paragraph (a)(11)(i) (except to the extent provided for under paragraph 
(a)(3)(xix)), paragraph (a)(11)(ii) and paragraph (a)(11)(viii) of this 
section.
    (xiv) For AFDC, in States that do not have laws of general 
applicability holding the stepparent legally responsible to the same 
extent as the natural or adoptive parent, the State agency shall count 
as income to the assistance unit the income of the stepparent (i.e., one 
who is married, under State law, to the child's parent) of an AFDC child 
who is living in the household with the child after applying the 
following disregards (exception: if the stepparent is included in the 
assistance unit, the disregard under paragraph (a)(11) (i) and (ii) of 
this section apply instead:
    (A) The first $90 of the gross earned income of the stepparent;
    (B) An additional amount for the support of the stepparent and any 
other individuals who are living in the home, but whose needs are not 
taken into account in making the AFDC eligibility determinations except 
for sanctioned individuals or individuals who are required to be 
included in the assistance unit but have failed to cooperate and are or 
could be claimed by the stepparent as dependents for purposes of 
determining his or her Federal personal income tax liability. This 
disregarded amount shall equal the State's need standard amount for a 
family group of the same composition as the stepparent and those other 
individuals described in the preceding sentence;
    (C) Amounts actually paid by the stepparent to individuals not 
living in the home but who are or could be claimed by him or her as 
dependents for purposes of determining his or her Federal personal 
income tax liability; and
    (D) Payments by such stepparent of alimony or child support with 
respect to individuals not living in the household.
    (xv) For AFDC, provide for the consideration of the income and 
resources of an alien's sponsor who is an individual as provided in 
Sec.  233.51.
    (xvi) For AFDC, provide that in considering the availability of 
income and resources, support and maintenance assistance (including home 
energy assistance) will be taken into account in accordance with Sec.  
233.53.
    (xvii) In the case of AFDC, if the State chooses to disregard 
monthly income of any dependent child when the income is derived from 
participation in a program under the JTPA, provide that the State plan 
shall:
    (A) Identify from which programs under the JTPA, income will be 
disregarded;
    (B) In the case of earned income, specify what amount will be 
disregarded, and the length of time the disregard will be applicable (up 
to six months per calendar year); and
    (C) In the case of unearned income, specify what amount will be 
disregarded, and the length of time per calendar year the disregard will 
be applicable if any such limit is chosen.
    (xviii) For AFDC, in the case of a dependent child whose parent is a 
minor under the age of 18 (without regard to school attendance), the 
State shall count as income to the assistance unit the income, after 
appropriate disregards, of such minor's own parent(s) living in the same 
household as the minor and dependent child. The disregards to be applied 
are the same as are applied to the income of a stepparent pursuant to 
paragraph (a)(3)(xiv) of this section. However, in applying the 
disregards, each employed parent will receive the benefit of the work 
expense disregard in paragraph (a)(3)(xiv)(A) of this section.
    (xix) In the case of AFDC, if the State chooses to disregard monthly 
earned income of dependent children who are full-time students in the 
determination of whether the family's income exceeds the limit under

[[Page 67]]

Sec.  233.20(a)(3)(xiii) of this section, provide that the State plan 
shall specify what amounts will be disregarded and the length of time 
the disregard will be applicable (up to six months per calendar year) 
except that earned income derived from participation in a program under 
the JTPA may only be disregarded under this paragraph, paragraph 
(a)(3)(xvii) or a combination of both paragraphs for a total of 6 months 
per calendar year.
    (xx) In the case of AFDC, if the State chooses to disregard in the 
determination of eligibility the monthly earned income of dependent 
children applying for AFDC who are full-time students, provide that the 
State plan shall:
    (A) Specify the amount that will be disregarded, and
    (B) Provide that the disregard shall only apply to the extent that 
the earned income is also disregarded pursuant to paragraph (a)(3)(xix) 
of this section.
    (xxi) Provide that the principal of a bona fide loan will not be 
counted as income or resources in the determination of eligibility and 
the amount of assistance. Interest earned on a loan is counted as 
unearned income in the month received and as resources thereafter and 
purchases made with a loan are counted as resources. For purposes of 
this paragraph, a loan is considered bona fide when it meets objective 
and reasonable criteria included in the State plan.
    (4) Disregard of income in OAA, AFDC, AB, APTD, OR AABD. (i) For all 
programs except AFDC. If the State chooses to disregard income from all 
sources before applying other provisions for disregarding or setting 
aside income, specify the amount that is first to be disregarded, but 
not more than $7.50 per month, of any income of an individual, child or 
relative claiming assistance. All income must be included such as social 
security or other benefits, earnings, contributions from relatives, or 
other income the individual may have.
    (ii) Provide that in determining eligibility for public assistance 
and the amount of the assistance payment, the following will be 
disregarded as income and resources:
    (a) In OAA, AB, APTD, and AABD, the value of the coupon allotment 
under the Food Stamp Act of 1964 in excess of the amount paid for the 
coupons;
    (b) The value of the U.S. Department of Agriculture donated foods 
(surplus commodities);
    (c) Any payment received under title II of the Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970;
    (d) Grants or loans to any undergraduate student for educational 
purposes made or insured under any programs administered by the 
Secretary of Education except the programs under the Carl D. Perkins 
Vocational and Applied Technology Education Act (20 U.S.C. 2301 et 
seq.). Student financial assistance provided under the Carl D. Perkins 
Vocational and Applied Technology Education Act will be disregarded in 
accordance with paragraph (a)(4)(ii)(t) of this section.
    (e) Any funds distributed per capita to or held in trust for members 
of any Indian tribe under Public Law 92-254 or Pub. L. 94-540;
    (f) Any benefits received under title VII, Nutrition Program for the 
Elderly, of the Older Americans Act of 1965, as amended;
    (g) Payments for supporting services or reimbursement of out-of-
pocket expenses made to individual volunteers serving as foster 
grandparents, senior health aides, or senior companions, and to persons 
serving in the Service Corps of Retired Executives (SCORE) and Active 
Corps of Executives (ACE) and any other programs under titles II and 
III, pursuant to section 418 of Pub. L. 93-113;
    (h) Payments to applicants or recipients participating in the 
Volunteers in Service to America (VISTA) Program, except that this 
disregard will not be applied when the Director of ACTION determines 
that the value of all such payments, adjusted to reflect the number of 
hours such volunteers are serving, is equivalent to or greater than the 
minimum wage then in effect under the Fair Labor Standards Act of 1938, 
or the minimum wage under the laws of the States where the volunteers 
are serving, whichever is greater. (Section

[[Page 68]]

404(g) of Pub. L. 93-113, as amended by section 9 of Pub. L. 96-143);
    (i) The value of supplemental food assistance received under the 
Child Nutrition Act of 1966 as amended, and the special food service 
program for children under the National School Lunch Act, as amended 
(Pub. L. 92-433 and Pub. L. 93-150);
    (j) [Reserved]
    (k) Pursuant to section 15 of Public Law 100-241, any of the 
following distributions made to a household, an individual Native, or a 
descendant of a Native by a Native Corporation established pursuant to 
the Alaska Native Claims Settlement Act (ANCSA) (Pub. L. 92-203, as 
amended):
    (1) Cash distributions (including cash dividends on stock from a 
Native Corporation) received by an individual are never counted as 
income or resources to the extent that such cash does not, in the 
aggregate, exceed $2,000 in a year. Cash which, in the aggregate, is in 
excess of $2,000 in a year is not subject to the income and resources 
disregards in this paragraph (a)(4)(ii)(k)(1);
    (2) Stock (including stock issued or distributed by a Native 
Corporation as a dividend or distribution on stock);
    (3) A partnership interest;
    (4) Land or an interest in land (including land or an interest in 
land received from a Native Corporation as a dividend or distribution on 
stock); and
    (5) An interest in a settlement trust.
    (l) Benefits paid to eligible households under the Low Income Home 
Energy Assistance Act of 1981 pursuant to section 2605(f) of Pub. L. 97-
35;
    (m) Effective October 17, 1975, pursuant to section 6 of Pub. L. 94-
114 (89 Stat. 577, 25 U.S.C. 459e) receipts distributed to members of 
certain Indian tribes which are referred to in section 5 of Pub. L. 94-
114 (89 Stat. 577, 25 U.S.C. 459d).
    (n) Pursuant to section 7 of Public Law 93-134, as amended by 
section 4 of Public Law 97-458, Indian judgment funds that are held in 
trust by the Secretary of the Interior (including interest and 
investment income accrued while such funds are so held in trust), or 
distributed per capita to a household or member of an Indian tribe 
pursuant to a plan prepared by the Secretary of the Interior and not 
disapproved by a joint resolution of the Congress, and initial purchases 
made with such funds. This disregard does not apply to proceeds from the 
sale of initial purchases, subsequent purchases made with funds derived 
from the sale or conversion of the initial purchases, or to funds or 
initial purchases which are inherited or transferred.
    (o) Pursuant to section 2 of Public Law 98-64, all funds held in 
trust by the Secretary of the Interior for an Indian tribe (including 
interest and investment income accrued while such funds are so held in 
trust) and distributed per capita to a household or member of an Indian 
tribe, and initial purchases made with such funds. This disregard does 
not apply to proceeds from the sale of initial purchases, subsequent 
purchases made with funds derived from the sale or conversion of initial 
purchases, or to funds or initial purchases which are inherited or 
transferred.
    (p) Any student financial assistance provided under programs in 
title IV of the Higher Education Act of 1965, as amended, and under 
Bureau of Indian Affairs education assistance programs.
    (q) For AFDC, any payments made as restitution to an individual 
under title I of Public Law 100-383 (the Civil Liberties Act of 1988) or 
under title II of Public Law 100-383 (the Aleutian and Pribilof Islands 
Restitution Act).
    (r) Any Federal major disaster and emergency assistance provided 
under the Disaster Relief Act of 1974, as amended by Public Law 100-707 
(the Disaster Relief and Emergency Assistance Amendments of 1988) and 
comparable disaster assistance provided by States, local governments and 
disaster assistance organizations.
    (s) Any payments made pursuant to the settlement in the In Re Agent 
Orange Product liability litigation, M.D.L. No. 381 (E.D.N.Y.).
    (t) Student financial assistance made available for the attendance 
costs defined in this paragraph under programs in the Carl D. Perkins 
Vocational and Applied Technology Education Act (20 U.S.C. 2301 et 
seq.). Attendance costs are: tuition and fees normally assessed a 
student carrying the same academic

[[Page 69]]

workload as determined by the institution, and including costs for 
rental or purchase of any equipment, materials, or supplies required of 
all students in the same course of study; and an allowance for books, 
supplies, transportation, dependent care and miscellaneous personal 
expenses for a student attending the institution on at least a half-time 
basis, as determined by the institution.
    (u) For AFDC, any payments made pursuant to section 6(h)(2) of 
Public Law 101-426, the Radiation Exposure Compensation Act.
    (iii) Provide that income and resources which are disregarded or set 
aside under this part will not be taken into consideration in 
determining the need of any other individual for assistance.
    (iv) For AFDC, any amounts determined to have been paid by a State 
from State-only funds to supplement or otherwise increase the amount of 
aid paid to an assistance unit as computed under Sec.  233.35 for a 
month in recognition of current or anticipated needs of the assistance 
unit for that same month shall not be counted as income--to the extent 
that the total of the State supplemental payment, the AFDC payment and 
actual income (i.e., the amount of income received during the payment 
month after subtracting from gross income the $75 work expense disregard 
(to recognize mandatory payroll deductions, transportation costs, and 
other work expenses), child care and other applicable disregards) 
received in that month are not in excess of what the State would have 
paid for that month to an assistance unit of the same size and 
composition with no income--in computing the assistance payment under 
Sec.  233.35 for the corresponding payment month.
    (5) Proration of shelter, utilities, and similar needs in AFDC. (i) 
Provide that the State agency may prorate allowances in the need and 
payment standards for shelter, utilities, and similar needs when the 
AFDC assistance unit lives together with other individuals as a 
household; except that, the State shall not prorate with respect to any 
person receiving SSI to whom the statutory one-third reduction (section 
1612(a)(2)(A)(i) of the Act) is applied, or prorate when a bona fide 
landlord-tenant relationship exists. If the State chooses to prorate 
under this paragraph, it must prorate both the need standard and payment 
standard.
    (ii) If the State agency elects to prorate allowances for shelter, 
utilities, and similar needs the State plan must:
    (A) Indicate which allowances will be prorated, and describe the 
procedure which will be used to prorate the allowances;
    (B) Provide that the allowances will be prorated on a reasonable 
basis; and
    (C) Specify the circumstances under which proration will occur, 
including a description of which individuals are considered to be living 
with an AFDC assistance unit as a household.
    (6) Disregard of earned income; definition. Provide that for 
purposes of disregarding earned income the agency policies will include:
    (i) A definition of earned income in accordance with the provisions 
of paragraphs (a)(6) (iii) through (ix) of this section; and
    (ii) Provision for disregarding earned income for the period during 
which it is earned, rather than when it is paid, in cases of lump-sum 
payment for services rendered over a period of more than 1 month.
    (iii) The term earned income encompasses income in cash or in kind 
earned by an individual through the receipt of wages, salary, 
commissions, or profit from activities in which he is engaged as a self-
employed individual or as an employee. For AFDC, earned income means 
gross earned income prior to any deductions for taxes or for any other 
purposes, except as provided in paragraph (a)(6)(v). Such earned income 
may be derived from his own employment, such as a business enterprise, 
or farming; or derived from wages or salary received as an employee. It 
includes earnings over a period of time for which settlement is made at 
one given time, as in the instance of sale of farm crops, livestock, or 
poultry. For OAA, AB, APTD and AABD only, in considering income from 
farm operation, the option available for reporting under OASDI, namely 
the cash receipts and disbursements method, i.e., a record of actual 
gross, of expenses, and of net, is an individual

[[Page 70]]

determination and is acceptable also for these assistance programs.
    (iv) With reference to commissions, wages, or salary, the term 
earned income means the total amount, irrespective of personal expenses, 
such as income-tax deductions, lunches, and transportation to and from 
work, and irrespective of expenses of employment which are not personal, 
such as the cost of tools, materials, special uniforms, or 
transportation to call on customers.
    (v)(A) For OAA, AB, APTD, and AABD, with respect to self-employment, 
the term earned income means the total profit from business enterprise, 
farming, etc., resulting from a comparison of the gross income received 
with the business expenses, i.e., total cost of the production of the 
income. Personal expenses, such as income-tax payments, lunches, and 
transportation to and from work, are not classified as business 
expenses.
    (B) For AFDC, with respect to self-employment the term earned income 
means the total profit from business enterprise, farming, etc., 
resulting from a comparison of the gross receipts with the business 
expenses, i.e., expenses directly related to producing the goods or 
services and without which the goods or services could not be produced. 
However, items such as depreciation, personal business and entertainment 
expenses, personal transportation, purchase of capital equipment and 
payments on the principal of loans for capital assets or durable goods 
are not business expenses.
    (vi) The definition shall exclude the following from earned income: 
Returns from capital investment with respect to which the individual is 
not himself actively engaged, as in a business (for example, under most 
circumstances, dividends and interest would be excluded from earned 
income); benefits (not in the nature of wages, salary, or profit) 
accruing as compensation, or reward for service, or as compensation for 
lack of employment (for example, pensions and benefits, such as United 
Mine Workers' benefits or veterans' benefits).
    (vii) With regard to the degree of activity, earned income is income 
produced as a result of the performance of services by a recipient; in 
other words, income which the individual earns by his own efforts, 
including managerial responsibilities, would be properly classified as 
earned income, such as management of capital investment in real estate. 
Conversely, for example, in the instance of capital investment wherein 
the individual carries no specific responsibility, such as where rental 
properties are in the hands of rental agencies and the check is 
forwarded to the recipient, the income would not be classified as earned 
income.
    (viii) Reserves accumulated from earnings are given no different 
treatment than reserves accumulated from any other sources.
    (7) Disregard of earned income; method. (i) Provide that for other 
than AFDC, the following method will be used for disregarding earned 
income: The applicable amounts of earned income to be disregarded will 
be deducted from the gross amount of earned income, and all work 
expenses, personal and non-personal, will then be deducted. Only the net 
amount remaining will be applied in determining need and the amount of 
the assistance payment.
    (ii) In applying the $30 and one-third disregard under paragraph 
(a)(11)(i)(D) of this section to an applicant for AFDC, there will be a 
preliminary step to determine whether the assistance unit is eligible 
without applying the disregard to the individual's earned income, by 
comparing the applicant's gross earned income (less the disregards in 
paragraphs (a)(11)(i) (A), (B) and (C)) and all of the assistance unit's 
other income to the State need standard. This preliminary step does not 
apply if the individual has received AFDC in one of the four months 
prior to the month of application.
    (8) Disregard of earned income applicable only to OAA, APTD, or 
AABD. If the State chooses to disregard earned income, specify the 
amount to be disregarded of the first $80 per month of income that is 
earned by an aged or disabled individual claiming OAA, APTD, or AABD, 
who is not blind, but not more than $20 per month plus one-half of the 
next $60 of such earned income.
    (9) Disregard of income and resources applicable only to APTD or 
AABD. If the

[[Page 71]]

State chooses to disregard income (which may be additional to the income 
disregarded under paragraph (a)(8) of this section) or resources for a 
disabled individual to achieve the fulfillment of a plan of self-
support, provide that the amounts of additional income and resources 
will not exceed those found necessary for the period during which the 
individual is actually undergoing vocational rehabilitation, and specify 
the period, not in excess of 36 months, for which such amounts are to be 
disregarded.
    (10) Disregard of income and resources applicable only to AB or 
AABD. Provide that, in determining the need of individuals who are 
blind, (i) the first $85 per month of earned income of the individual 
plus one-half of earned income in excess of $85 per month will be 
disregarded; and (ii) if the individual has a plan for achieving self-
support, such additional income and resources as are necessary to 
fulfill such plan will be disregarded for a period not in excess of 12 
months. Such additional income and resources may be disregarded for an 
additional period not in excess of 24 months (for a total of 36 months), 
as specified in the State plan.
    (11) Disregard of income and resources applicable only to AFDC. (i) 
For purposes of eligibility determination, the State must disregard from 
the monthly earned income, i.e., earned income as defined in Sec.  
233.20(a)(6)(iii), of each individual whose needs are included in the 
eligibility determination:
    (A) Disregard all of the monthly earned income of each child 
receiving AFDC if the child is a full-time student or is a part-time 
student who is not a full-time employee. A student is one who is 
attending a school, college, or university or a course of vocational or 
technical training designed to fit him or her for gainful employment and 
includes a participant in the Job Corps program under the Job Training 
Partnership Act (JTPA).
    (B) The first $90.
    (C) Where appropriate, an amount equal to $30 plus one-third of the 
earned income not already disregarded under paragraphs (a)(11)(i), 
(a)(11)(v) and (a)(11)(vi) of this section of an individual who received 
assistance in one of the four prior months.
    (D) An amount equal to the actual cost for the care of each 
dependent child or incapacitated adult living in the same home and 
receiving AFDC, but not to exceed $175 for each dependent child who is 
at least age two or each incapacitated adult, and not to exceed $200 for 
each dependent child who is under age two. For individuals not engaged 
in full-time employment or not employed throughout the month, the $175 
and $200 disregard limits may be applied, or the State agency may 
establish disregard limits less than $175 and $200.
    (E) Where appropriate, $30 of the earned income not already 
disregarded under paragraphs (a)(11) (i), (v), and (vi) of this section, 
in the case of an individual who reapplies for assistance within the 
eight-month period that he/she is eligible for the $30 disregard.
    (ii) For purposes of benefit calculation for individuals found 
eligible under paragraph (a)(11)(i) of this section, the following 
disregards must be made by the State:
    (A) Disregard all of the monthly earned income of each child 
receiving AFDC if the child is a full-time student or is a part-time 
student who is not a full-time employee. A student is one who is 
attending a school, college, or university or a course of vocational or 
technical training designed to fit him or her for gainful employment and 
includes a participant in the Job Corps program under the Job Training 
Partnership Act (JTPA).
    (B) Disregard from any other individual's earned income the amounts 
specified in paragraphs (a)(11)(i)(B) and (a)(11)(i)(D) of this section, 
and $30 plus one-third of the individual's earned income not already 
disregarded under paragraphs (a)(11)(ii) and (a)(11)(v) of this section. 
However, the State may not provide the one-third portion of the 
disregard to an individual after the fourth consecutive month (any month 
for which the unit loses the $30 plus one-third disregard because of a 
provision in paragraph (a)(11)(iii) of this section, shall be considered 
as one of these months) it has been applied to the individual's earned 
income and may not apply the $30 disregard after the eighth month 
following the fourth consecutive month (regardless of whether the $30

[[Page 72]]

disregard was actually applied in those months) unless twelve 
consecutive months have passed during which the individual is not a 
recipient of AFDC. If income from a recurring source resulted in 
suspension or termination due to an extra paycheck, the month of 
ineligibility does not interrupt the accumulation of consecutive months 
of the $30 plus one-third disregard, nor does it count as one of the 
consecutive months.
    (iii) The applicable earned income disregards in paragraphs (i) (B) 
and (C) and (ii)(B) of this paragraph do not apply to the earned income 
of the individual for the month in which one of the following conditions 
apply to him:
    (A) An individual terminated his employment or reduced his earned 
income without good cause (as specified in the State plan) within the 
period of 30 days preceding such month;
    (B) An individual refused without good cause (as specified in the 
State plan) within the period of 30 days preceding such month to accept 
employment in which he is able to engage which is offered through the 
public employment offices of the State, or is otherwise offered by an 
employer if the offer of such employer is determined by the State or 
local agency administering the State plan, after notification by him, to 
be a bona fide offer of employment;
    (C) An individual failed without good cause (as specified in the 
State plan) to make a timely report (as defined in Sec.  233.37(c)) of 
that income; or
    (D) The individual voluntarily requests assistance to be terminated 
for the primary purpose of avoiding receiving the $30 and one-third 
disregard for four consecutive months.
    (iv) [Reserved]
    (v) The treatment of earned income and expenses under JOBS is as 
follows:
    (A) For earned income from regular employment or on-the-job 
training, as described at Sec.  250.61, the disregards in paragraphs 
(a)(11)(i) and (a)(11)(ii)(B) shall apply.
    (B) For earned income from a job under the work supplementation 
component, as described at Sec.  250.62, the disregards in paragraphs 
(a)(11)(i) and (a)(11)(ii)(B) shall apply unless the State IV-A agency 
in its State JOBS plan, has elected to provide otherwise under Sec.  
250.62(j) and Sec.  250.62(k).
    (C) For all activities under JOBS and self-initiated education and 
training in non-JOBS areas, advance payment or reimbursement to the 
individual for child care, transportation, work-related expenses, or 
work-related supportive services is disregarded.
    (D) Payment or reimbursement of child care pursuant to part 255 for 
employed individuals who are not JOBS participants and one-time work-
related expenses for individuals who are not JOBS participants pursuant 
to part 255 are disregarded.
    (vi) At State option, disregard all or part of the monthly income of 
any dependent child applying for or receiving AFDC when the income is 
derived from a program carried out under the Job Training Partnership 
Act of 1982, except that in respect to earned income such disregard may 
not exceed six months per calendar year.
    (vii) At State option, disregard all or part of the monthly earned 
income of any dependent child applying for AFDC, if the child is a full-
time student, and that income has been disregarded for purposes of 
paragraph (a)(3)(xiii) of this section.
    (viii) Disregard as income the amount of any earned income tax 
credit payments received by an applicant or recipient. Disregard as 
resources, in the month of receipt and the following month, the amount 
of any earned income tax credit payments received by an applicant or 
recipient. ``Earned income tax credit payments'' include: Any advance 
earned income tax credit payment made to a family by an employer and any 
earned income tax credit payment made as a refund of Federal income 
taxes.
    (12) Recoupment of overpayments and correction of underpayments for 
programs other than AFDC. Specify uniform Statewide policies for:
    (i) Recoupment of overpayments of assistance, including certain 
overpayments resulting from assistance paid pending hearing decisions.
    (A) The State may not recoup any overpayment previously made to a 
recipient:

[[Page 73]]

    (1) Unless the recipient has income or resources exclusive of the 
current assistance payment currently available in the amount by which 
the agency proposes to reduce payments: except that,
    (2) Where such overpayments were occassioned or caused by the 
recipient's willful withholding of information concerning his income, 
resources or other circumstances which may affect the amount of payment, 
the State may recoup prior overpayments from current assistance grants 
irrespective of current income or resources.
    (B) Withholding of information which is subject to the provisions of 
paragraph (a)(12)(i)(A)(2) of this section includes the following:
    (1) Willful misstatements (either oral or written) made by a 
recipient in response to oral or written questions from the State agency 
concerning the recipient's income, resources or other circumstances 
which may affect the amount of payment. Such misstatements may include 
understatements of amounts of income or resources and omission of an 
entire category of income or resources;
    (2) A willful failure by the recipient to report changes in income, 
resources or other circumstances which may affect the amount of payment, 
if the State agency has clearly notified the recipient of an obligation 
to report such changes. The recipient shall be given such notification 
periodically at times (not less frequently than semi-annually) and by 
methods which the State agency determines will effectively bring such 
reporting requirements to the recipient's attention:
    (3) A willfull failure by the recipient (i) to report receipt of a 
payment which the recipient knew represented an erroneous overpayment, 
or (ii) to notify the State agency of receipt of a check which exceeded 
the prior check by at least the amount which the State agency had 
previously notified the recipient (pursuant to the provisions of 
paragraph (a)(12)(i)(A)(4) of this section) might represent an 
overpayment and constitute a sum to which the recipient would not be 
entitled. In making a determination pursuant to this paragraph 
(a)(12)(i)(B)(3), all relevant circumstances including the amount by 
which the erroneous payment exceeded the previous payment shall be 
considered.
    (C) Each periodic notification under paragraph (a)(12)(i)(B)(2) of 
this section shall:
    (1) Include a reminder that it is the recipient's continuing 
obligation to furnish to the State agency accurate and timely 
information concerning changes in income, resources, or other 
circumstances which may affect the amount of payment, within a 
reasonable specified period after such change. The recipient may also be 
notified that a failure to so notify the State agency within the 
designated time period may constitute a willful withholding of such 
information and permit the State agency to recover any overpayment 
occasioned or caused by the willful withholding;
    (2) Specifically and comprehensibly in simple phraseology indicate 
the type of information to be disclosed by the recipient. Examples shall 
be furnished of the most frequent types of newly acquired income or 
resources (e.g., inheritance, wages from a part-time job);
    (3) Require that, if there is any doubt whether a particular change 
in circumstances constitutes such reportable information, the recipient 
contact the State agency or a designated representative thereof within a 
reasonable specified period of time after such change in circumstances;
    (4) If the State plan provides for recoupment in the circumstances 
described in paragraph (a)(12)(i)(B)(3)(ii) of this section, notify the 
recipient that if the check received exceeds the prior check by a 
specified amount (which amount may not be less than that which a 
reasonable man should have known was erroneous), this increased check 
may constitute a sum to which the recipient is not entitled. In such 
instances, the notification may require that the recipient notify the 
State agency or a designated representative thereof prior to the 
negotiation of such check, so that corrective action may be taken; the 
State agency shall respond to such notification within 24 hours. The 
recipient may also be notified that a failure to so notify the State 
agency within the designated time period may constitute a willful

[[Page 74]]

withholding of such information and permit the State agency to recover 
such overpayment.
    (D) The State agency shall require periodic formal acknowledgement 
by recipients (on a form utilized for this purpose) that the reporting 
obligations of this paragraph had been brought to the recipient's 
attention and that they were understood.
    (E) Any recoupment of overpayments made under circumstances other 
than those specified in paragraph (a)(12)(i)(B) of this section shall be 
limited to overpayments made during the 12 months preceding the month in 
which the overpayment was discovered.
    (F) Any recoupment of overpayments permitted by paragraph 
(a)(12)(i)(A)(2) of this section may be made from available income and 
resources (including disregarded, set-aside or reserved items) or from 
current assistance payment or from both. If recoupments are made from 
current assistance payments, the State shall, on a case-by-case basis, 
limit the proportion of such payments that may be deducted in each case, 
so as not to cause undue hardship to recipients.
    (G) The plan may provide for recoupment in all situations specified 
herein, or only in certain of the circumstances specified herein, and 
for waiver of the overpayment where the cost of collection would exceed 
the amount of the overpayment.
    (H) Election by the State not to recoup overpayments shall not waive 
the provisions of Sec. Sec.  205.40, and 205.41, or any other quality 
control requirement.
    (ii) Prompt correction of underpayments to current recipients, 
resulting from administrative error where the State plan provides for 
recoupment of overpayments. Under this requirement:
    (a) Retroactive corrective payment shall be made only for the 12 
months preceding the month in which the underpayment is discovered;
    (b) For purposes of determining continued eligibility and amount of 
assistance, such retroactive corrective payments shall not be considered 
as income or as a resource in the month paid nor in the next following 
month; and
    (c) No retroactive payment need be made where the administrative 
cost would exceed the amount of the payment.
    (13) Recovery of overpayments and correction of underpayments for 
AFDC.(i) Specify uniform Statewide policies for recovery of overpayments 
of assistance, including overpayments resulting from assistance paid 
pending hearing decisions. Overpayment means a financial assistance 
payment received by or for an assistance unit for the payment month 
which exceeds the amount for which that unit was eligible. (The agency 
may deny assistance for the corresponding payment month rather than 
recover if the assistance unit was ineligible for the budget month, the 
State becomes aware of the ineligibility when the monthly report is 
submitted, the recipient accurately reported the budget month's income 
and other circumstances, and the assistance unit will be eligible for 
the following payment month.)
    (A) The State must take all reasonable steps necessary to promptly 
correct any overpayment, except that, as set forth in the plan, a State 
may waive any overpayment which occurred because receipt of an earned 
income tax credit payment by a family during the period January 1, 1990, 
to December 31, 1990, caused ineligibility under the 185 percent gross 
income limitation in paragraph (a)(3)(xiii) of this section.
    (1) Any recovery of an overpayment to a current assistance unit, 
including a current assistance unit or recipient whose overpayment 
occurred during a prior period of eligibility, must be recovered through 
repayment (in part or in full) by the individual responsible for the 
overpayment or recovering the overpayment by reducing the amount of any 
aid payable to the assistance unit of which he or she is a member, or 
both.
    (2) If recovery is made from the grant, such recovery shall result 
in the assistance unit retaining, for any payment month, from the 
combined aid, income and liquid resources, (without application of 
section 402(a)(8) of the Act) not less than 90 percent of the amount 
payable under the State plan to a family of the same composition with no 
other income. Where a State chooses to recover at a rate less than

[[Page 75]]

the maximum, it must recover promptly.

    (B) The State shall recover an overpayment from (1) the assistance 
unit which was overpaid, or (2) any assistance unit of which a member of 
the overpaid assistance unit has subsequently become a member, or (3) 
any individual members of the overpaid assistance unit whether or not 
currently a recipient. If the State recovers from individuals who are no 
longer recipients, or from recipients who refuse to repay the 
overpayment from their income and resources, recovery shall be made by 
appropriate action under State law against the income or resources of 
those individuals.
    (C) If through recovery, the amount payable to the assistance unit 
is reduced to zero, members of the assistance unit are still considered 
recipients of AFDC.
    (D) In cases which have both an underpayment and an overpayment, the 
State may offset one against the other in correcting the payment.
    (E) Prompt recovery of an overpayment: A State must take one of the 
following three actions by the end of the quarter following the quarter 
in which the overpayment is first identified:
    (1) Recover the overpayment, (2) initiate action to locate and/or 
recover the overpayment from a former recipient, or (3) execute a 
monthly recovery agreement from a current recipient's grant or income/
resources.
    (ii) Specify uniform Statewide policies for prompt correction of any 
underpayments to current recipients and those who would be a current 
recipient if the error causing the underpayment had not occurred. 
Underpayment means a financial assistance payment received by or for an 
assistance unit for the payment month which is less than the amount for 
which the assistance unit was eligible, or failure by the State to issue 
a financial assistance payment for the payment month to an eligible 
assistance unit if such payment should have been issued. Under this 
requirement, for purposes of determining continued eligibility and 
amount of assistance, such retroactive corrective payments shall not be 
considered as income, or as a resource in the month paid nor in the next 
following month.
    (iii) Paragraph (a)(13) of this section is effective for incorrect 
payments which are identified subsequent to September 30, 1981.
    (iv) In locating former recipients who have outstanding overpayments 
the State should use appropriate data sources such as State unemployment 
insurance files, State Department of Revenue information from tax 
returns, State automobile registration, Bendex, and other files relating 
to current or former recipients.
    (v) The State must maintain information on the individual and total 
number and amount of overpayments identified and their disposition for 
current and former recipients.
    (vi) The State may elect not to attempt recovery of an overpayment 
from an individual no longer receiving aid where the overpayment amount 
is less than $35. Where the overpayment amount owed by an individual no 
longer receiving aid is $35 or more, the State can determine when it is 
no longer cost-effective to continue overpayment recovery efforts, 
provided it has made reasonable efforts to recover the overpayment from 
the individual. Reasonable efforts must include notification of the 
amount of and reason for the overpayment and that repayment is required. 
States must also maintain information regarding uncollected overpayments 
as provided under paragraph (a)(13)(v) of this section, to enable the 
State to recover those overpayments if the individual subsequently 
becomes a recipient. In cases involving fraud, States must make every 
effort to recover the overpayment, regardless of the amount.
    (14) For Medicaid eligibility only, beginning October 1, 1998, 
pursuant to section 402(a)(37) of the Act, an assistance unit will be 
deemed to be receiving AFDC, but only for the purposes of this 
paragraph, for a period of nine months after the last month the family 
actually received aid if the loss of AFDC eligibility was solely because 
a member of the unit was no longer eligible due to the 4 and 12 month 
time limitations to have the $30 and one-third or the $30 disregard in 
paragraph (a)(11)(ii)(B) applied to his or her

[[Page 76]]

earned income. At State option, an additional period of Medicaid 
coverage for up to six months may be provided when the assistance unit 
would be eligible during such additional period to receive AFDC if the 
$30 and one-third or the $30 disregards were applied to the assistance 
unit's earned income.
    (15) For Medicaid eligibility only, pursuant to section 406(h) of 
the Act:
    (i) Each dependent child and each relative with whom such a child is 
living (including the eligible spouse of such relative pursuant to 
section 237.50(b) of this chapter) who becomes ineligible for AFDC 
wholly or partly because of the initiation of or an increase in the 
amount of a child or spousal support collection under title IV-D will be 
deemed to be receiving AFDC, but only for purposes of this paragraph 
(a)(15), for a period of four consecutive calendar months beginning with 
the first month of AFDC ineligibility. To be eligible for extended 
Medicaid coverage pursuant to this paragraph (a)(15), each dependent 
child and relative must meet the following conditions:
    (A) The individual must have become ineligible for AFDC on or after 
August 16, 1984; and
    (B) The individual must have received AFDC in at least three of the 
six months immediately preceding the month in which the individual 
becomes ineligible for AFDC; and
    (C) The individual must have become ineligible for AFDC wholly or 
partly as a result of the initiation of or an increase in the amount of 
a child or spousal support collection under title IV-D.
    (ii)(A) Except as provided in paragraph (a)(15)(ii)(B) of this 
section, individuals who are eligible for extended Medicaid lose this 
coverage if they move to another State during the 4-month period. 
However, if they move back to and reestablish residence in the State in 
which they have extended coverage, they are eligible for any of the 
months remaining in the 4-month period in which they are residents of 
the State.
    (B) If a State has chosen in its State plan to provide Medicaid to 
non-residents, the State may continue to provide the 4-month extended 
benefits to individuals who have moved to another State.
    (iii) For purposes of paragraph (i) of this section:
    (A) The new collection or increased collection of child or spousal 
support results in the termination of AFDC eligibility when it actively 
causes or contributes to the termination. This occurs when:
    (1) The change in support collection in and of itself is sufficient 
to cause ineligibility. This rule applies even if the support collection 
must be added to other, stable income. It also applies even if other 
independent factors, alone or in combination with each other, might 
simultaneously cause ineligibility; or
    (2) The change in support contributes to ineligibility but does not 
by itself cause ineligibility. Ineligibility must result when the change 
in support is combined with other changes in income or changes in other 
circumstances and the other changes in income or circumstances cannot 
alone or in combination result in termination without the change in 
support.
    (B) In cases of increases in the amounts of both the support 
collections and earned income, eligibility under this section does not 
preclude eligibility under paragraph (a)(14) of this section or section 
1925 of the Social Security Act (which was added by section 303(a) of 
the Family Support Act of 1988 (42 U.S.C. 139r-6)). Extended periods 
result from both an increase in the amount of the support collection and 
from an increase in earned income must run concurrently.
    (b) Federal financial participation; General. (1) Federal 
participation will be available in financial assistance payments made on 
the basis that (after application of policies governing the allowable 
reserve, disregard or setting aside of income and resources), all income 
of the needy individual, together with the assistance payment, do not 
exceed the State's defined standard of assistance, and available 
resources of the needy individuals do not exceed the limits under the 
State plan.
    (2) Federal participation is available within the maximums specified 
in the Federal law, when the payments do not exceed the amount 
determined to be

[[Page 77]]

needed under the statewide standard, and are made in accordance with the 
State method for determining the amount of the payments, as specified in 
Sec.  233.31 for AFDC and in Sec. Sec.  233.24 and 233.25 for OAA, AB, 
APTD, and AABD.
    (3) Federal participation is available in financial assistance 
payments made on the basis of the need of the individual. This basis may 
include consideration of needy persons living in the same home with the 
recipient when such other persons are within the State's policy as 
essential to his well-being. Persons living in the home who are 
``essential to the well-being of the recipient,'' as specified in the 
State plan, will govern as the basis for Federal participation (see 
Guides and Recommendations). When the State includes persons living 
outside the home or persons not in need, Federal participation is not 
available for that portion of financial assistance payments attributable 
to such persons, and the State's claims must, therefore, identify the 
amounts of any such nonmatchable payments.
    (4) For all assistance programs except AFDC, Federal participation 
is available for supplemental payments in the retrospective budgeting 
system.
    (c) Federal financial participation in vendor payments for home 
repairs. With respect to expenditures made after December 31, 1967, 
expenditures to a maximum of $500 are subject to Federal financial 
participation at 50 percent for repairing the home owned by an 
individual who is receiving aid or assistance (other than Medical 
Assistance for the Aged) under a State plan for OAA, AFDC, AB, APTD, or 
AABD if:
    (1) Prior to making the expenditures the agency determined that: (i) 
The home is so defective that continued occupancy is unwarranted; (ii) 
unless repairs are made the recipient would need to move to rental 
quarters; and (iii) the rental cost of quarters for the recipient 
(including the spouse living with him in such home and any other 
individual whose needs were considered in determining the recipient's 
need) would exceed (over a period of 2 years) the repair costs needed to 
make such home habitable together with other costs attributable to 
continued occupancy of such home.
    (2) No expenditures for repair of such home were made previously 
pursuant to a determination as described in paragraph (c)(1) of this 
section. This does not preclude more than one payment made at the time 
repairs are made pursuant to the determination, e.g., separate payments 
to the roofer, the electrician, and the plumber.
    (3) Expenditures for home repairs are authorized in writing by a 
responsible agency person, records show the eligible person in whose 
behalf the home repair expenditure was made, and there is sufficient 
evidence that the home repair was performed.

[34 FR 1394, Jan. 29, 1969]

    Editorial Note: For Federal Register citations to Sec.  233.20, see 
the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.

    Effective Date Note: At 47 FR 5678, Feb. 5, 1982, in Sec.  233.20, 
paragraph (a)(13)(v) was added. The amendment contains information 
collection and recordkeeping requirements and will not become effective 
until approval has been given by the Office of Management and Budget.



Sec.  233.21  Budgeting methods for OAA, AB, APTD, and AABD.

    (a) Requirements for State plans. A State plan for OAA, AB, APTD, 
and AABD shall specify if assistance payments shall be computed using a 
prospective budgeting system or a retrospective budgeting system. A 
State electing retrospective budgeting shall specify which options it 
selects and the State plan shall state that it shall meet the 
requirements in Sec. Sec.  233.21 through 233.29. Budgeting methods for 
AFDC are described in Sec. Sec.  233.31 through 233.37.
    (b) Definitions. The following definitions apply to Sec. Sec.  
233.21 through 233.29:
    (1) Prospective budgeting means that the agency shall compute the 
amount of assistance for a payment month based on its best estimate of 
income and circumstances which will exist in that month. This estimate 
shall be based on the agency's reasonable expectation and knowledge of 
current, past or future circumstances.
    (2) Retrospective budgeting means that the agency shall compute the 
amount of assistance for a payment month

[[Page 78]]

based on actual income or circumstances which existed in a previous 
month, the ``budget month''.
    (3) Budget month means the fiscal or calendar month from which the 
agency shall use income or circumstances of the family to compute the 
amount of assistance.
    (4) Payment month means the fiscal or calendar month for which an 
agency shall pay assistance. Payment is based upon income or 
circumstances in the budget month. In prospective budgeting, the budget 
month and the payment month are the same. In retrospective budgeting, 
the payment month follows the budget month and the payment month shall 
begin within 32 days after the end of the budget month.
    (5) Make an assistance payment. In the context of retrospective 
budgeting, to make an assistance payment means that the check shall be 
deposited in the U.S. mail, hand delivered to the recipient, or 
deposited with an intermediary organization, such as a bank.
    (6) Supplemental payment. In the context of retrospective budgeting, 
a supplemental payment is a payment which maintains a family during the 
time it takes for the monthly assistance payment to reflect a change in 
circumstances or income.

[44 FR 26082, May 4, 1979, as amended at 47 FR 5678, Feb. 5, 1982]



Sec.  233.22  Determining eligibility under prospective budgeting.

    In States which compute the amount of the assistance payment 
prospectively, the State plan shall provide that the State shall also 
determine all factors of eligibility prospectively. Thus, the State 
agency shall establish eligibility based on its best estimate of income 
and circumstances which will exist in the month for which the assistance 
payment is made.

[44 FR 26082, May 4, 1979]



Sec.  233.23  When assistance shall be paid under retrospective budgeting.

    (a) A State which uses retrospective budgeting shall specify in its 
plan that it will make assistance payments within the following time 
limits to recipients who file a completed report on time, and to those 
who are not required to file a report. A State shall choose one of two 
time periods for making assistance payments. The State plan shall 
provide that payment must be made:
    (1) Within 25 days from the close of the budget month; or
    (2) Between 25 and 45 days from the close of the budget month.
    (b)(1) Where a State makes payments between 25 and 45 days from the 
close of the budget month, the State plan shall provide that the State 
will make supplemental payments as provided in Sec.  233.27.
    (2) If a State makes payments within 25 days from the close of the 
budget month, and also makes supplemental payments as provided in Sec.  
233.27, the State plan shall so specify.
    (c) In States which issue two checks for each payment month, these 
time periods apply to the first check.

[44 FR 26083, May 4, 1979]



Sec.  233.24  Retrospective budgeting; determining eligibility and computing the assistance payment in the initial one or two months.

    (a) States which make assistance payments within 25 days of the 
close of the budget month shall determine eligibility and compute the 
amount of the payment for all recipients prospectively for the initial 
month of assistance. These States may choose to determine eligibility 
and compute the payment prospectively for the second month, also.
    (b) States which make assistance payments between 25 and 45 days 
from the close of the budget month shall determine eligibility and 
compute the amount of the payment prospectively for the initial two 
months of assistance.
    (c) When a person who previously received assistance reapplies 
during the same month in which a termination became effective, 
eligibility shall be determined according to paragraph (a) or (b) of 
this section. However, the amount of the assistance payment for the 
month of the reapplication shall be computed retrospectively.

[44 FR 26083, May 4, 1979]

[[Page 79]]



Sec.  233.25  Retrospective budgeting; computing the assistance payment after the initial one or two months.

    The State plan shall provide:
    (a) After the initial one or two payment months of assistance under 
Sec.  233.24, the amount of each subsequent month's payment shall be 
computed retrospectively, i.e., shall be based on earned and unearned 
income received in the corresponding budget month.
    (b) In these subsequent months, other factors of need which affect 
the amount of the assistance payment may also be based on circumstances 
in the corresponding budget month, or they may be based on circumstances 
in the payment month.
    (c) For the first month in which retrospective budgeting is used, a 
State shall not consider income received by the recipient before the 
date of application. When a person reapplies during the same month in 
which a termination became effective, the State may consider income 
received before the date of application.

[44 FR 26083, May 4, 1979]



Sec.  233.26  Retrospective budgeting; determining eligibility after the initial one or two months.

    (a) Under retrospective budgeting, there are three options for 
determining eligibility. The State plan shall specify that eligibility, 
following the initial one or two months under Sec.  233.24, shall be 
determined by one of the following methods:
    (1) A State may consider all factors, including income 
retrospectively, i.e., only from the budget month. For example, if a 
change in circumstances occurs which affects eligibility, e.g., 
deprivation ceases, the change may be reported at the end of the budget 
month and assistance shall be terminated for the corresponding payment 
month. Thus, even if the agency could have terminated assistance earlier 
than the corresponding payment month, it shall not do so under 
retrospective determination of eligibility.
    (2) A State may consider all factors, including income, 
prospectively. For example, if deprivation ceases, and the family 
becomes ineligible, the agency shall immediately take steps to terminate 
assistance.
    (3) A State may use a combination of the options in paragraphs (a) 
and (b) of this section by considering factors related to earned and 
unearned income retrospectively and all other factors prospectively. For 
example, if a change in income makes the family ineligible, the agency 
shall wait until the corresponding payment month to terminate 
assistance. On the other hand, if a change of circumstances other than 
income makes the family ineligible, the agency shall immediately take 
steps to terminate assistance.

[44 FR 26083, May 4, 1979; 44 FR 29065, May 18, 1979, as amended at 47 
FR 47828, Oct. 28, 1982]



Sec.  233.27  Supplemental payments under retrospective budgeting.

    (a) General requirements. A State plan which provides for payments 
between 25 and 45 days from the close of a budget month, shall provide 
for supplemental payments to eligible recipients who request them. A 
State plan which provides for payments within 25 days may provide for 
supplemental payments:
    (1) The supplemental payment shall be paid for the month in which it 
was requested.
    (2) The recipient family is eligible for a supplemental payment if 
its income for the month is less than 80 percent of the amount the State 
would pay for a similar family with no income. However, this percentage 
of the amount the State would pay for a similar family with no income 
may be set between 80 and 100 percent, as specified in the State plan. 
The supplemental payment equals the difference between the family's 
income in the payment month and that percentage.
    (3) Supplemental payments shall be issued within 5 working days of 
request.
    (b) How income is treated. For purposes of supplemental payments, 
income includes that month's assistance payment and any income received 
or expected to be received by the recipient, but does not include work-
related expenses.
    (1) The amount used for the assistance payment shall be the monthly 
assistance payment without regard to

[[Page 80]]

any recoupments made for prior overpayments or adjustments for prior 
underpayments.
    (2) The agency may include as income cash in hand or available in 
bank accounts. It may also include as income any cash disregarded in 
determining need or the amount of the assistance payment, but not cash 
payments that are disregarded by Sec.  233.20(a)(4)(ii), paragraphs (c) 
on relocation assistance, (d) on educational grants or loans and (g) on 
payments for certain services.

[44 FR 26083, May 4, 1979, as amended at 51 FR 9205, Mar. 18, 1986]



Sec.  233.28  Monthly reporting.

    (a) State plans specifying retrospective budgeting shall require 
that recipients with earned income, other than income from self-
employment, report that income to the agency monthly. The State may 
require recipients with unearned income, no income, or income from self-
employment to report monthly. The agency shall provide a form for this 
purpose, which:
    (1) Is written in clear simple language;
    (2) Specifies the date by which the agency must receive the form and 
the consequences of a late or incomplete form, including whether the 
agency will delay or withhold payment if the form is not returned by the 
specified date;
    (3) Identifies an individual or agency unit the recipient should 
contact to receive prompt answers to questions about information 
requested on the form, and provides a telephone number for this purpose;
    (4) Includes a statement, to be signed by the recipient, that he or 
she understands that the information he or she provides may result in 
changes in assistance, including reduction or termination;
    (5) Advises the recipient if supplemental payments are available and 
the proper procedures for initiating a request; and
    (6) Advises the recipient of his or her right to a fair hearing on 
any decrease or termination of assistance or denial of a supplemental 
payment.
    (b) The agency shall specify the date by which it must receive the 
monthly report. This date shall be at least 5 days from the end of the 
budget month and shall also allow the recipient at least 5 days to 
complete the report.
    (c) The agency may consider a monthly report incomplete only if it 
is unsigned or omits information necessary to determine eligibility or 
compute the payment amount.
    (d) The agency shall provide a stamped, self-addressed envelope for 
returning the monthly report.
    (e) The agency shall make special provisions for persons who are 
illiterate or have other handicaps so that they cannot complete a 
monthly report form.

[44 FR 26083, May 4, 1979]



Sec.  233.29  How monthly reports are treated and what notices are required.

    (a) What happens if a completed monthly report is received on time. 
When the agency receives a completed monthly report by the date 
specified in Sec.  233.28 it shall process the payment. The agency shall 
notify the recipient of any changes from the prior payment and the basis 
for its determinations. This notice must meet the requirements of Sec.  
205.10(a)(4)(i)(B) of this chapter on adequate notice if the payment is 
being reduced or assistance is being terminated. This notice must be 
received by the recipient no later than his or her resulting payment or 
in lieu of the payment.
    (b) What happens if the completed monthly report is received before 
the extension deadline. (1) If the completed monthly report is not 
received by the date specified in Sec.  233.28, the agency shall send a 
notice to the recipient. This notice shall inform him or her that the 
monthly report is overdue or is not complete and that he or she has at 
least 10 additional days to file. It must inform the recipient that 
termination may result if that is the agency's policy, if the report is 
not filed within the extension period. This notice must reach the 
recipient at least 10 days before the expected payment. However, in 
States in which the date specified in Sec.  233.28 is within 10 days of 
the expected payment date, the notice must reach the recipient on or 
before the expected payment date.

[[Page 81]]

    (2) When the report is received within the extension period, the 
agency may delay payment to the recipient, as follows:
    (i) In a State that pays within 25 days of the budget month the 
payment may be delayed 10 days;
    (ii) In a State that pays within 25 to 45 days of the budget month, 
the payment may not be delayed beyond the 45th day.
    (c) What happens if a monthly report is not received by the end of 
the extension period. An agency may terminate assistance if it has not 
received a report or has received an incomplete report, and the 10 day 
extension period has expired. If the State decides to terminate 
assistance, it must send the recipient a notice which meets the 
requirements of Sec.  205.10(a)(4)(i)(B) on adequate notice.
    (d) How a recipient may delay an adverse action based on a monthly 
report. If a recipient's assistance is reduced or terminated based on 
information in the monthly report, and he or she requests a fair hearing 
within 10 days, the assistance payment shall be reinstated immediately 
at the previous month's level pending the hearing decision. The payment 
shall be made effective from the date assistance was reduced or 
terminated.

[44 FR 26084, May 4, 1979]



Sec.  233.31  Budgeting methods for AFDC.

    (a) Requirements for State plans. A State plan for AFDC shall 
specify that all factors of eligibility shall be determined 
prospectively and the amount of the assistance for any month for all 
assistance units required to file a monthly report for the month 
designated as the budget month under the State's retrospective budgeting 
procedures shall be determined using retrospective budgeting as provided 
in Sec. Sec.  233.31-233.37 except as provided in Sec.  233.34. The 
State plan shall specify whether the State uses prospective or 
retrospective budgeting to determine the amount of the assistance 
payments for recipients not required to report monthly. Budgeting 
methods for OAA, AB, APTD, and AABD are described in Sec. Sec.  233.21-
233.29.
    (b) Definitions. The following definitions apply to Sec. Sec.  
233.31 through 233.37:
    (1) Prospective budgeting means that the agency shall determine 
eligibility (and compute the amount of assistance for the first one or 
two months) based on its best estimate of income and circumstances which 
will exist in that month. This estimate shall be based on the agency's 
reasonable expectation and knowledge of current, past or future 
circumstances.
    (2) Retrospective budgeting means that the agency shall compute the 
amount of assistance for a payment month based on actual income or 
circumstances which existed in a previous month, the ``budget month.''
    (3) Budget month means the fiscal or calendar month from which the 
agency shall use income or circumstances of the family to compute the 
amount of assistance.
    (4) Payment month means the fiscal or calendar month for which an 
agency shall pay assistance. Payment is based upon income or 
circumstances in the budget month. In prospective budgeting, the budget 
month and the payment month are the same. In retrospective budgeting, 
the payment month follows the budget month.
    (5) Recent work history means the individual received earned income 
in any one of the two months prior to the budget month.

[47 FR 5678, Feb. 5, 1982, as amended at 49 FR 35602, Sept. 10, 1984; 57 
FR 30160, July 8, 1992]



Sec.  233.32  Payment and budget months (AFDC).

    A State shall specify in its plan for AFDC the time period covered 
by the payment (payment month) and the time period used to determine 
that payment (budget month) and whether it adopts (a) a one-month or 
two-month retrospective system; and (b) a one-month or two-month 
prospective system for the initial payment months. If a State elects to 
have a two-month retrospective system it must also elect a two-month 
prospective system.

[47 FR 5678, Feb. 5, 1982]



Sec.  233.33  Determining eligibility prospectively for all payment months (AFDC).

    (a) The State plan for AFDC shall provide that the State shall 
determine all factors of eligibility prospectively for all payment 
months. Thus, the State agency shall establish eligibility

[[Page 82]]

based on its best estimate of income and circumstances which will exist 
in the month for which the assistance payment is made.
    (b) When a IV-A agency receives an official report of a child 
support collection it shall consider that information as provided in 
Sec.  232.20(a) of this chapter. (Sec.  232.20(a) explains the treatment 
of child support collections.)

[47 FR 5678, Feb. 5, 1982]



Sec.  233.34  Computing the assistance payment in the initial one or two months (AFDC).

    A State shall compute the amount of the AFDC payment for the initial 
month of eligibility:
    (a) Prospectively (except as in paragraphs (b) and (c) of this 
section); or
    (b) Retrospectively if the applicant received assistance (or would 
have except for the prohibition on payments of less than $10) for the 
immediately preceding payment month (except where the State pays the 
second month after application prospectively); or
    (c) Retrospectively if:
    (1) Assistance had been suspended as defined in paragraph (d) of 
this section; and
    (2) The initial month follows the month of suspension; and
    (3) The family's circumstances for the initial month had not changed 
significantly from those reported in the corresponding budget month, 
e.g., loss of job.
    (d) A State may suspend, rather than terminate, assistance when:
    (1) The agency has knowledge of, or reason to believe that 
ineligibility would be only for one payment month; and
    (2) Ineligibility for that one payment month was caused by income or 
other circumstances in the corresponding budget month.
    (e) If the initial month is computed prospectively as in paragraph 
(a) of this section, the second month shall be prospective if the State 
elects a 2-month retrospective budgeting system.

[47 FR 5679, Feb. 5, 1982]



Sec.  233.35  Computing the assistance payment under retrospective budgeting after the initial one or two months (AFDC).

    The State plan for AFDC shall provide:
    (a) After the initial one or two payment months of assistance under 
Sec.  233.34, the amount of each subsequent month's payment shall be 
computed retrospectively, i.e., shall be based on income and other 
relevant circumstances in the corresponding budget month except as 
provided in Sec.  233.20(a)(3)(iii). In any month for which an 
individual will be determined eligible prospectively and will be added 
to an existing AFDC assistance unit, the State must meet the 
individual's needs to the same extent it would if the individual were an 
applicant for AFDC.
    (b) Except as provided in Sec.  233.34(b), for the first and second 
payment month for which retrospective budgeting is used, the State shall 
not count income from the budget month already considered for any 
payment month determined prospectively which is not of a continuous 
nature.

[47 FR 5679, Feb. 5, 1982]



Sec.  233.36  Monthly reporting (AFDC).

    (a) Except as provided in paragraph (b) of this section, a State 
plan for AFDC shall require the caretaker relative, or another person 
designated by the State, to submit, on behalf of each assistance unit 
whose members have earned income or recent work history, each assistance 
unit which has income deemed to it from individuals living with the unit 
who have earned income or a recent work history and, at State option, 
other assistance units, a completed report form to the agency monthly 
on:
    (1) Budget month income, family composition, and other circumstances 
relevant to the amount of the assistance payment; and
    (2) Any changes in income, resources, or other relevant 
circumstances affecting continued eligibility which the assistance unit 
expects to occur in the current month or in future months.
    (3) The income of a parent or a legal guardian of a minor parent, a 
stepparent, or an alien sponsor, as well as

[[Page 83]]

the resources of an alien sponsor, where appropriate.
    (b) A State may exempt categories of recipients otherwise required 
to report monthly from reporting each month with prior approval by the 
Secretary if the State can demonstrate that not requiring these cases to 
file monthly reports is cost effective. The Secretary will grant waivers 
under this provision for a period up to one year, at the end of which 
time the State may request an extension of the waiver. A decision by the 
Secretary not to approve a request for an exemption is not appealable. 
The plan shall include criteria for assuring (1) that exempted cases are 
unlikely to incur changes in circumstances from month to month which 
would impact their eligibility r amount of assistance and (2) that the 
administrative cost of requiring those categories to report monthly will 
be greater than the program savings which would accrue.
    (c) States shall also direct recipients to report information as 
defined in paragraph (a)(2) of this section to the agency as they become 
aware of expected changes rather than waiting to inform the State on the 
monthly report.

[47 FR 5679, Feb. 5, 1982 as amended at 49 FR 35602, Sept. 10, 1984; 57 
FR 30160, July 8, 1992]



Sec.  233.37  How monthly reports are treated and what notices are required (AFDC).

    (a) What happens if a completed monthly report is received on time. 
When the agency receives a completed monthly report as specified in 
Sec.  233.36, and if all eligibility conditions are met, it shall 
process the payment. The agency shall notify the recipient of any 
changes from the prior payment and the basis for its determinations. 
This notice must meet the requirements of Sec.  205.10(a)(4)(i)(B) of 
this chapter on adequate notice if the payment is being reduced or 
assistance is terminated as a result of information provided in the 
monthly report. The notice must be mailed to arrive no later than the 
resulting payment or in lieu of the payment. A recipient has 10 days 
from the date of the notice to request a hearing in order to receive 
reinstatement.
    (b) What happens if a completed monthly report is not received by 
the agency. An agency may terminate assistance if it has received no 
report or has received only an incomplete report as defined by the 
State. In this case, the agency must send the recipient a notice meeting 
the requirements of Sec.  205.10(a)(4)(i)(B) to arrive not later than 
the date it would have made payment if the agency had received a 
completed monthly report on time. If the recipient notifies the agency 
and files a completed report within 10 days of the date of this notice, 
the agency must accept the replacement form and make a payment based on 
the information on the form if the information indicates that the person 
is still eligible (without the applicable earned income disregards if 
the State agency determines no good cause exists for failing to file a 
timely report of earnings). If the recipient is found ineligible or 
eligible for an amount less than the prior month's payment, the State 
must promptly notify the recipient of his or her right to a fair hearing 
and his or her right to have assistance reinstated. A recipient has 10 
days from the date of the notice to request a hearing in order to 
receive reinstatement.
    (c) What happens if a completed monthly report is received but is 
not timely. States must specify in their plans a definition of 
timeliness related to the filing of a monthly report and the number of 
days an individual has to report changes in earnings which impact 
eligibility. States must inform recipients what constitutes timeliness 
and that no disregard of earnings as described in Sec.  233.20(a)(11) 
(i) and (ii)(B) ($30 and one-third, child care, and work expenses) will 
be applied to any earnings which are not reported in a timely manner 
without good cause. The State must provide recipients an opportunity to 
show good cause for not filing a timely report of earnings. If the State 
finds good cause, then applicable earned income disregards will be 
applied in determining payment. If the State does not find good cause, 
then applicable earned income disregards will not be applied. If the 
recipient is found ineligible or eligible for an amount less than the 
prior month's payment, the

[[Page 84]]

State must promptly notify the recipient of his or her right to a fair 
hearing and his or her right to have assistance reinstated. A recipient 
has 10 days from the date of the notice to request a hearing in order to 
receive reinstatement.

[47 FR 5679, Feb. 5, 1982]



Sec.  233.38  Waiver of monthly reporting and retrospective budgeting requirements; AFDC.

    (a) States may request waivers of the requirements at Sec. Sec.  
233.31-233.37 to promote compatibility with monthly reporting and 
budgeting requirements of the Food Stamp Act of 1977 as amended.
    (b) The Secretary will not approve requests for waivers unless the 
information documenting the need for the waiver shows that the waiver 
would simplify administration of both programs and would not result in a 
net cost to the Federal government. Approvals for waivers will be for 
periods up to one year, after which time the State may request an 
extension of the waiver.
    (c) Any decision by the Secretary not to approve a request for a 
waiver is not appealable.

[49 FR 35602, Sept. 10, 1984]



Sec.  233.39  Age.

    (a) Condition for plan approval. A State plan under title I or XVI 
of the Social Security Act may not impose any age requirement of more 
than 65 years.
    (b) Federal financial participation. (1) Federal financial 
participation is available in financial assistance provided to otherwise 
eligible persons who were, for any portion of the month for which 
assistance is paid:
    (i) In OAA or AABD with respect to the aged, 65 years of age or 
over;
    (ii) In AFDC, under 18 years of age; or age 18 if a full-time 
student in a secondary school, or in the equivalent level of vocational 
or technical training, and reasonably expected to complete the program 
before reaching age 19.
    (iii) In AB or AABD with respect to the blind, any age;
    (iv) In APTD or AABD with respect to the disabled, 18 years of age 
or older.
    (2) Federal determination of whether an individual meets the age 
requirements of the Social Security Act will be made according to the 
common-law method (under which a specific age is attained the day before 
the anniversary of birth), unless the State plan specifies that the 
popular usage method (under which an age is attained on the anniversary 
of birth), is used.
    (3) The State agency may adopt an arbitrary date such as July 1 as 
the point from which age will be computed in all instances where the 
month of an individual's birth is not available, but the year can be 
established.

[36 FR 3866, Feb. 27, 1971. Redesignated and amended at 47 FR 5678, Feb. 
5, 1982]



Sec.  233.40  Residence.

    (a) Condition for plan approval. A State plan under title I, IV-A, 
X, XIV, or XVI of the Social Security Act may not impose any residence 
requirement which excludes any individual who is a resident of the State 
except as provided in paragraph (b) of this section. For purposes of 
this section:
    (1) A resident of a State is one: (i) Who is living in the State 
voluntarily with the intention of making his or her home there and not 
for a temporary purpose. A child is a resident of the State in which he 
or she is living other than on a temporary basis. Residence may not 
depend upon the reason for which the individual entered the State, 
except insofar as it may bear upon whether the individual is there 
voluntarily or for a temporary purpose; or
    (ii) Who, is living in the State, is not receiving assistance from 
another State, and entered the State with a job commitment or seeking 
employment in the State (whether or not currently employed). Under this 
definition, the child is a resident of the State in which the caretaker 
is a resident.
    (2) Residence is retained until abandoned. Temporary absence from 
the State, with subsequent returns to the State, or intent to return 
when the purposes of the absence have been accomplished, does not 
interrupt continuity of residence.
    (b) Exception. A State plan under title I, X, XIV, or XVI need not 
include an

[[Page 85]]

individual who has been absent from the State for a period in excess of 
90 consecutive days (regardless of whether the individual has maintained 
his or her residence in the State during this period) until he or she 
has been present in the State for a period of 30 consecutive days (or a 
shorter period specified by the State) in the case of such individual 
who has maintained residence in the State during such period of absence 
or for a period of 90 consecutive days (or a shorter period as specified 
by the State) in the case of any other such individual. An individual 
thus excluded under any such plan may not, as a consequence of that 
exclusion, be excluded from assistance under the State's title XIX plan 
if otherwise eligible under the title XIX plan (see 42 CFR 436.403).

[45 FR 26962, Apr. 22, 1980]



Sec.  233.50  Citizenship and alienage.

    A State plan under title I (OAA); title IV-A (AFDC); title X (AB); 
title XIV (APTD); and title XVI (AABD-disabled) of the Social Security 
Act shall provide that an otherwise eligible individual, dependent 
child, or a caretaker relative or any other person whose needs are 
considered in determining the need of the child or relative claiming 
aid, must be either:
    (a) A citizen, or
    (b) An alien lawfully admitted for permanent residence or otherwise 
permanently residing in the United States under color of law, including 
certain aliens lawfully present in the United States as a result of the 
application of the following provisions of the Immigration and 
Nationality Act:
    (1) Section 207(c), in effect after March 31, 1980--Aliens Admitted 
as Refugees.
    (2) Section 203(a)(7), in effect prior to April 1, 1980--Individuals 
who were Granted Status as Conditional Entrant Refugees.
    (3) Section 208--Aliens Granted Political Asylum by the Attorney 
General.
    (4) Section 212(d)(5)--Aliens Granted Temporary Parole Status by the 
Attorney General, or
    (c) An alien granted lawful temporary resident status pursuant to 
section 201, 302, or 303 of the Immigration Reform and Control Act of 
1986 (Pub. L. 99-603) who must be either:
    (1) A Cuban and Haitian entrant as defined in paragraph (1) or 
(2)(A) of section 501(e) of Pub. L. 96-422, as in effect on April 1, 
1983, or
    (2) An adult assistance applicant for OAA, AB, APTD, or AABD, or
    (3) An applicant for AFDC who is not a Cuban and Haitian applicant 
under paragraph (c)(1) of this section who was adjusted to lawful 
temporary resident status more than five years prior to application.

All other aliens granted lawful temporary or permanent resident status, 
pursuant to sections 201, 302, or 303 of the Immigration Reform and 
Control Act of 1986, are disqualified for five years from the date 
lawful temporary resident status is granted.

[47 FR 5680, Feb. 5, 1982; 47 FR 43383, Oct. 1, 1982, as amended at 52 
FR 48689, Dec. 24, 1987 (interim); 53 FR 30433, Aug. 12, 1988 (final); 
54 FR 10544, Mar. 14, 1989]



Sec.  233.51  Eligibility of sponsored aliens.

    Definition: Sponsor is any person who, or any public or private 
agency or organization that, executed an affidavit(s) of support or 
similar agreement on behalf of an alien (who is not the child of the 
sponsor or the sponsor's spouse) as a condition of the alien's entry 
into the United States. Paragraphs (a) through (d) of this section apply 
only to aliens who are sponsored by individuals and who filed 
applications for the first time after September 30, 1981. Paragraphs (e) 
and (f) apply only to aliens sponsored by public or private agencies or 
organizations with respect to periods after October 1, 1984. A State 
plan under title IV-A of the Act shall provide that:
    (a) For a period of three years following entry for permanent 
residence into the United States, a sponsored alien who is not exempt 
under paragraph (g) of this section, shall provide the State agency with 
any information and documentation necessary to determine the income and 
resources of the sponsor and the sponsor's spouse (if applicable and if 
living with the sponsor) that can be deemed available to the alien, and 
obtain any cooperation necessary from the sponsor.
    (b) The income and resources of a sponsor and the sponsor's spouse 
shall be deemed to be the unearned income

[[Page 86]]

and resources of an alien for three years following the alien's entry 
into the United States:
    (1) Monthly income deemed available to the alien from the sponsor 
and the sponsor's spouse not receiving AFDC or SSI shall be:
    (i) The total monthly unearned and earned income of the sponsor and 
sponsor's spouse reduced by 20 percent (not to exceed $175) of the total 
of any amounts received by them in the month as wages or salary or as 
net earnings from self-employment.
    (ii) The amount described in paragraph (b)(1)(i) of this section 
reduced by:
    (A) The cash needs standard under the plan in the alien's State of 
residence for a family of the same size and composition as the sponsor 
and those other people living in the same household as the sponsor who 
are or could be claimed by the sponsor as dependents to determine his or 
her Federal personal income tax liability but whose needs are not taken 
into account in making a determination under Sec.  233.20 of this 
chapter;
    (B) Any amounts actually paid by the sponsor or sponsor's spouse to 
people not living in the household who are or could be claimed by them 
as dependents to determine their Federal personal income tax liability; 
and
    (C) Actual payments of alimony or child support, with respect to 
individuals not living in the household.
    (2) Monthly resources deemed available to the alien from the sponsor 
and sponsor's spouse shall be the total amount of their resources 
determined as if they were applying for AFDC in the alien's State of 
residence, less $1500.
    (c) In any case where a person is the sponsor of two or more aliens, 
the income and resources of the sponsor and sponsor's spouse, to the 
extent they would be deemed the income and resources of any one of the 
aliens under the provisions of this section, shall be divided equally 
among the sponsored aliens.
    (d) Income and resources which are deemed to a sponsored alien shall 
not be considered in determining the need of other unsponsored members 
of the alien's family except to the extent the income or resources are 
actually available.
    (e) For a period of three years following entry for permanent 
residence into the United States, any alien who is not exempt under 
paragraph (g) of this section and has been sponsored by a public or 
private agency or organization, shall be ineligible for assistance 
unless the State agency determines (in accordance with paragraph (f)) 
that the sponsor no longer exists or has become unable to meet the 
alien's needs.
    (f) The State plan shall set forth the criteria the State agency 
will use in determining whether an agency or organization no longer 
exists or is unable to meet the alien's needs and the documentation the 
agency will require of the alien in making such determination. The 
sponsored alien shall provide the State agency with any information and 
documentation necessary for such determination and obtain any 
cooperation necessary from the sponsor.
    (g) The provisions of this section shall not apply to any alien who 
is:
    (1) Admitted as a conditional entrant refugee to the United States 
as a result of the application, of the provisions of section 203(a)(7) 
(in effect prior to April 1, 1980) of the Immigration and Nationality 
Act;
    (2) Admitted as a refugee to the United States as a result of the 
application of the provisions of section 207(c) (in effect after March 
31, 1980) of the Immigration and Nationality Act;
    (3) Paroled into the United States as a refugee under section 
212(d)(5) of the Immigration and Nationality Act;
    (4) Granted political asylum by the Attorney General under section 
208 of the Immigration and Nationality Act;
    (5) A Cuban or Haitian entrant, as defined in section 501(e) of the 
Refugee Education Assistance Act of 1980 (Pub. L. 96-422); or
    (6) The dependent child of the sponsor or sponsor's spouse.

[[Page 87]]

    (h) The Secretary shall make information necessary to make a 
determination under this section and supplied under agreement with the 
Secretary of State and the Attorney General, available upon request to a 
concerned State Agency.

[47 FR 5680, Feb. 5, 1982; 47 FR 43383, Oct. 1, 1982; 47 FR 47828, Oct. 
28, 1982; 49 FR 35602, Sept. 10, 1984; 57 FR 30160, July 8, 1992]



Sec.  233.52  Overpayment to aliens.

    A State Plan under title IV-A of the Social Security Act, shall 
provide that:
    (a) Any sponsor of an alien and the alien shall be jointly and 
severally liable for any overpayment of aid under the State plan made to 
the alien during the three years after the alien's entry into the United 
States due to the sponsor's failure to provide correct information under 
the provisions of Sec.  233.51, except as provided in paragraph (b) of 
this section.
    (b) When a sponsor is found to have good cause or to be without 
fault (as defined in the State plan) for not providing information to 
the agency, the sponsor will not be held liable for the overpayment and 
recovery will not be made from this sponsor.
    (c) An overpayment for which the alien or the sponsor and the alien 
are liable (as described in paragraphs (a) and (b) of this section) 
shall be repaid to the State or recovered in accordance with Sec.  
233.20(a)(13). If the agency is unable to recover the overpayment 
through this method, funds to reimburse the agency for the overpayment 
shall be withheld from future payments to which the alien or the alien 
and the individual sponsor are entitled under:
    (1) Any State administered or supervised program established by the 
Social Security Act, or
    (2) Any federally administered cash benefit program established by 
the Social Security Act.

[47 FR 5680, Feb. 5, 1982 as amended at 49 FR 35602, Sept. 10, 1984]



Sec.  233.53  Support and maintenance assistance (including home energy assistance) in AFDC.

    (a) General. At State option, certain support and maintenance 
assistance (including home energy assistance) may be excluded from 
income and resources.
    (b) Definitions. The following definitions are limited to the 
support and maintenance assistance provisions of this section.
    Appropriate State agency means the agency designated by the chief 
executive officer of the State to handle the State's responsibilities 
with respect to support and maintenance assistance under paragraph (c) 
of this section.
    Based on need means that the assistance is given to or on behalf of 
an applicant or recipient for the purpose of support and maintenance 
(including home energy) and meets the criteria established by the State 
for determining the need for such assistance.
    In kind assistance means assistance furnished in any form except 
direct cash payments to an applicant or recipient or direct payments to 
an applicant or recipient through other financial instruments which are 
convertible to cash.
    Private, nonprofit organization means a religious, charitable, 
educational, or other organization such as described in section 501(c) 
of the Internal Revenue Code of 1954. (Actual tax exempt certification 
by IRS is not necessary).
    Rate-of-return entity means an entity whose revenues are primarily 
received from the entity's charges to the public for goods or services, 
and such charges are based on rates regulated by a State or Federal 
governmental body.
    Support and maintenance assistance means any assistance designed to 
meet the expenses of day to day living. Support and maintenance 
assistance includes home energy assistance. Home energy assistance means 
any assistance related to meeting the cost of heating or cooling a home. 
Home energy assistance includes such items as payments for utility 
service or bulk fuels; assistance in kind such as portable heaters, 
fans, blankets, storm doors, or other items which help reduce the costs 
of heating and cooling such as conservation or weatherization materials 
and services; etc.
    (c) Requirements for State Plans. If a State elects to exclude from 
income and resources support and maintenance assistance, the State plan 
for AFDC must as specified below:

[[Page 88]]

    (1) Provide that an appropriate State agency will certify that 
support and maintenance assistance is based on need (as defined in 
paragraph (b) of this section), and that such certification will be 
accepted for purposes of determining eligibility for and the amount of 
payments under the AFDC program.
    (2) Provide that in joint AFDC/SSI households, support and 
maintenance assistance furnished to the household which is not excluded 
under this paragraph will be prorated on a reasonable basis to determine 
the amount provided to the AFDC assistance unit. The State plan must 
describe the method that will be used to prorate the assistance in these 
circumstances.
    (3) Provide that the types and amount of support and maintenance 
assistance that are excluded when received by an AFDC applicant or 
recipient will also be excluded in determining the income and resources 
of a parent, stepparent, spouse or alien sponsor whose income is 
considered available to an AFDC applicant or recipient.
    (4) Provide that the State may exclude, from income and resources, 
support and maintenance assistance (as defined in paragraph (b) of this 
section) which the appropriate State agency certifies is based on need, 
if the assistance is furnished by:
    (i) A supplier of home heating gas or oil, regardless of whether the 
assistance is in cash or in kind; or
    (ii) A municipal utility providing home energy, regardless of 
whether the assistance is in cash or in kind; or
    (iii) A rate-of-return entity which provides home energy, regardless 
of whether the assistance is in cash or in kind; or
    (iv) A private nonprofit organization, but only if such assistance 
is in kind.
    (5) Provide that, if the State elects to exclude from income and 
resources any support and maintenance assistance, the State plan must:
    (i) Describe the criteria that will be used to determine the need 
for the assistance;
    (ii) Identify the types and amounts of assistance which will be 
excluded; and
    (iii) Provide that any limitations will be made on a reasonable 
basis.

[51 FR 39533, Oct. 29, 1986, as amended at 56 FR 64204, Dec. 9, 1991]



Sec.  233.60  Institutional status.

    (a) Federal financial participation. (1) Federal financial 
participation under title I, X, XIV, or XVI of the Social Security Act 
is not available in payments to or in behalf of any individual who is an 
inmate of a public institution except as a patient in a medical 
institution.
    (2)(i) Federal financial participation under title X or XIV of the 
Social Security Act is not available in payments to or in behalf of any 
individual who is a patient in an institution for tuberculosis or mental 
diseases.
    (ii) Federal financial participation under title XVI of the Social 
Security Act is not available in payments to or in behalf of any 
individual who has not attained 65 years of age and who is a patient in 
an institution for tuberculosis or mental diseases.
    (3) For purposes of this paragraph:
    (i) Federal financial participation is available in payments for the 
month in which an individual (if otherwise eligible) became an inmate of 
a public institution, or a patient in an institution for tuberculosis or 
mental diseases;
    (ii) Whether an institution is one for tuberculosis or mental 
diseases will be determined by whether its overall character is that of 
a facility established and maintained primarily for the care and 
treatment of individuals with tuberculosis or mental diseases (whether 
or not it is licensed);
    (iii) An institution for the mentally retarded is not an institution 
for mental diseases;
    (iv) An individual on conditional release or convalescent leave from 
an institution for mental diseases is not considered to be a patient in 
such institution.
    (b) Definitions. For purposes of Federal financial participation 
under paragraph (a) of this section:
    (1) Institution means an establishment which furnishes (in single or 
multiple facilities) food and shelter to four or more persons unrelated 
to the proprietor, and in addition, provides some treatment or services 
which meet some

[[Page 89]]

need beyond the basic provision of food and shelter.
    (2) In an institution refers to an individual who is admitted to 
participate in the living arrangements and to receive treatment or 
services provided there which are appropriate to his requirements.
    (3) Public institution means an institution that is the 
responsibility of a governmental unit or over which a governmental unit 
exercises administrative control.
    (4) Inmate of a public institution means a person who is living in a 
public institution. An individual is not considered an inmate when:
    (i) He is in a public educational or vocational training 
institution, for purposes of securing education or vocational training, 
or
    (ii) He is in a public institution for a temporary emergent period 
pending other arrangements appropriate to his needs.
    (5) Medical institution means an institution which:
    (i) Is organized to provide medical care, including nursing and 
convalescent care;
    (ii) Has the necessary professional personnel, equipment, and 
facilities to manage the medical, nursing, and other health needs of 
patients on a continuing basis in accordance with accepted standards;
    (iii) Is authorized under State law to provide medical care;
    (iv) Is staffed by professional personnel who have clear and 
definite responsibility to the institution in the provision of 
professional medical and nursing services including adequate and 
continual medical care and supervision by a physician; sufficient 
registered nurse or licensed practical nurse supervision and services 
and nurse aid services to meet nursing care needs; and appropriate 
guidance by a physician(s) on the professional aspects of operating the 
facility.
    (6) Institution for tuberculosis means an institution which is 
primarily engaged in providing diagnosis, treatment, or care of persons 
with tuberculosis, including medical attention, nursing care, and 
related services.
    (7) Institution for mental diseases means an institution which is 
primarily engaged in providing diagnosis, treatment or care of persons 
with mental diseases, including medical attention, nursing care, and 
related services.
    (8) Patient means an individual who is in need of and receiving 
professional services directed by a licensed practitioner of the healing 
arts toward maintenance, improvement, or protection of health, or 
alleviation of illness, disability, or pain.

[36 FR 3867, Feb. 27, 1971]



Sec.  233.70  Blindness.

    (a) State plan requirements. A State plan under title X or XVI of 
the Social Security Act must:
    (1) Contain a definition of blindness in terms of ophthalmic 
measurement. The following definition is recommended: An individual is 
considered blind if he has central visual acuity of 20/200 or less in 
the better eye with correcting glasses or a field defect in which the 
peripheral field has contracted to such an extent that the widest 
diameter of visual field subtends an angular distance of no greater than 
20[deg].
    (2) Provide, in any instance in which a determination is to be made 
whether an individual is blind or continues to be blind as defined under 
the State plan, that there will be an initial examination or re-
examination performed by either a physician skilled in the diseases of 
the eye or by an optometrist, whichever the individual so selects.
    (i) No examination is necessary when both eyes are missing.
    (ii) Where an initial eye examination or re-examination is 
necessary, the physician or optometrist conducting such examination will 
submit to the State agency a report thereof, on such forms and in such 
manner, as may be prescribed for such purpose. A determination whether 
the individual meets the State's definition of blindness under the State 
plan will be based upon a review of such eye examination report as 
provided for in paragraph (a)(3) of this section, and other information 
or additional examination reports as the State deems necessary.
    (3) Provide that each initial eye examination report and any 
subsequent re-examination report will be reviewed

[[Page 90]]

by a State reviewing physician skilled in the diseases of the eye (e.g., 
an ophthalmologist or an eye, ear, nose and throat specialist). Such 
physician is responsible for making the agency's decision that the 
applicant or recipient does or does not meet the State's definition of 
blindness, and for determining if and when reexaminations are necessary 
in periodic reviews of eligibility, as required in Sec.  
206.10(a)(9)(iii) of this chapter.
    (b) Federal financial participation--(1) Assistance payments. 
Federal financial participation is available in assistance provided to 
or in behalf of any otherwise eligible person who is blind under the 
State's title X or XVI plan. Blindness may be considered as continuing 
until a determination by the reviewing physician establishes the fact 
that the recipient's vision has improved beyond the State's definition 
of blindness set forth under its State title of X or XVI plan.
    (2) Administrative expenses. Federal financial participation is 
available in any expenditures incident to the eye examination necessary 
to determine whether an individual is blind.

[36 FR 3867, Feb. 27, 1971, as amended at 40 FR 25819, June 19, 1975]



Sec.  233.80  Disability.

    (a) State plan requirements. A State plan under title XIV or XVI of 
the Social Security Act must:
    (1) Contain a definition of permanently and totally disabled, 
showing that:
    (i) ``Permanently'' is related to the duration of the impairment or 
combination of impairments; and
    (ii) ``Totally'' is related to the degree of disability.

The following definition is recommended:
    ``Permanently and totally disabled'' means that the individual has 
some permanent physical or mental impairment, disease, or loss, or 
combination thereof, this substantially precludes him from engaging in 
useful occupations within his competence, such as holding a job.

Under this definition:
    ``Permanently'' refers to a condition which is not likely to improve 
or which will continue throughout the lifetime of the individual; it may 
be a condition which is not likely to respond to any known therapeutic 
procedures, or a condition which is likely to remain static or to become 
worse unless certain therapeutic measures are carried out, where 
treatment is unavailable, inadvisable, or is refused by the individual 
on a reasonable basis; ``permanently'' does not rule out the possibility 
of vocational rehabilitation or even possible recovery in light of 
future medical advances or changed prognosis; in this sense the term 
refers to a condition which continues indefinitely, as distinct from one 
which is temporary or transient;
    ``Totally'' involves considerations in addition to those verified 
through the medical findings, such as age, training, skills, and work 
experience, and the probable functioning of the individual in his 
particular situation in light of his impairment; an individual's 
disability would usually be tested in relation to ability to engage in 
remunerative employment; the ability to keep house or to care for others 
would be the appropriate test for (and only for) individuals, such as 
housewives, who were engaged in this occupation prior to the disability 
and do not have a history of gainful employment; eligibility may 
continue, even after a period of rehabilitation and readjustment, if the 
individual's work capacity is still very considerably limited (in 
comparison with that of a normal person) in terms of such factors as the 
speed with which he can work, the amount he can produce in a given 
period of time, and the number of hours he is able to work.

    (2) Provide for the review of each medical report and social history 
by technically competent persons--not less than a physician and a social 
worker qualified by professional training and pertinent experience--
acting cooperatively, who are responsible for the agency's decision that 
the applicant does or does not meet the State's definition of permanent 
and total disability. Under this requirement:
    (i) The medical report must include a substantiated diagnosis, based 
either on existing medical evidence or upon current medical examination;
    (ii) The social history must contain sufficient information to make 
it possible to relate the medical findings to the activities of the 
``useful occupation'' and to determine whether the individual is totally 
disabled, and
    (iii) The review physician is responsible for setting dates for 
reexamination; the review team is responsible for reviewing 
reexamination reports in conjunction with the social data to determine 
whether disabled recipients whose health condition may improve

[[Page 91]]

continue to meet the State's definition of permanent and total 
disability.
    (3) Provide for cooperative arrangements with related programs, such 
as vocational rehabilitation services.
    (b) Federal financial participation--(1) Assistance payments. 
Federal financial participation is available in payments to or in behalf 
of any otherwise eligible individual who is permanently and totally 
disabled. Permanent and total disability may be considered as continuing 
until the review team establishes the fact that the recipient's 
disability is no longer within the State's definition of permanent and 
total disability.
    (2) Administrative expenses. Federal financial participation is 
available in any expenditures incident to the medical examinations 
necessary to determine whether an individual is permanently and totally 
disabled.

[36 FR 3867, Feb. 27, 1971]



Sec.  233.90  Factors specific to AFDC.

    (a) State plan requirements. A State plan under title IV-A of the 
Social Security Act shall provide that:
    (1) The determination whether a child has been deprived of parental 
support or care by reason of the death, continued absence from the home, 
or physical or mental incapacity of a parent, or (if the State plan 
includes such cases) the unemployment of his or her parent who is the 
principal earner will be made only in relation to the child's natural or 
adoptive parent, or in relation to the child's stepparent who is 
married, under State law, to the child's natural or adoptive parent and 
is legally obligated to support the child under State law of general 
applicability which requires stepparents to support stepchildren to the 
same extent that natural or adoptive parents are required to support 
their children. Under this requirement, the inclusion in the family, or 
the presence in the home, of a ``substitute parent'' or ``man-in-the-
house'' or any individual other than one described in this paragraph is 
not an acceptable basis for a finding of ineligibility or for assuming 
the availability of income by the State; and
    (2) Where it has reason to believe that a child receiving aid is in 
an unsuitable environment because of known or suspected instances of 
physical or mental injury, sexual abuse or exploitation, or negligent 
treatment or maltreatment of such child, under circumstances which 
indicate the child's health or welfare is threatened, the State or local 
agency will:
    (i) Bring such condition to the attention of a court, law-
enforcement agency, or other appropriate agency in the State, providing 
whatever data it has with respect to the situation;
    (ii) In reporting such conditions, use the same criteria as are used 
in the State for all other parents and children; and
    (iii) Cooperate with the court or other agency in planning and 
implementing action in the best interest of the child.
    (b) Conditions for plan approval. (1) A child may not be denied AFDC 
either initially or subsequently ``because of the conditions of the home 
in which the child resides'', or because the home is considered 
``unsuitable'', unless ``provision is otherwise made pursuant to a State 
statute for adequate care and assistance with respect to such child''. 
(Section 404(b) of the Social Security Act.)
    (2) An otherwise eligible child who is under the age of 18 years may 
not be denied AFDC, regardless of whether she attends school (unless she 
is required to participate in the JOBS program pursuant to Sec.  250.30 
and she is assigned to educational activities) or makes satisfactory 
grades.
    (3) A state may elect to include in its AFDC program children age 18 
who are full-time students in a secondary school, or in the equivalent 
level of vocational or technical training, and who may reasonably be 
expected to complete the program before reaching age 19.
    (4)(i) A child may not be denied AFDC either initially or 
subsequently because a parent or other caretaker relative fails to 
cooperate with the child support agency in performing any of the 
activities needed to:
    (A) Establish the paternity of a child born out of wedlock; or
    (B) Obtain support from a person having a legal duty to support the 
child.

[[Page 92]]

    (ii) Any parent or caretaker relative who fails to so cooperate 
shall be treated in accordance with Sec.  232.12 of this chapter.
    (5) [Reserved]
    (6) An otherwise eligible child may not be denied AFDC if a parent 
is mentally or physically incapacitated as defined in paragraph 
(c)(1)(iv) of this section.
    (c) Federal financial participation. (1) Federal financial 
participation under title IV-A of the Social Security Act in payments 
with respect to a ``dependent child,'' as defined in section 406(a) of 
the Act, is available within the following interpretations:
    (i) Needy child deprived by reason of. The phrase ``needy child * * 
* deprived * * * by reason of'' requires that both need and deprivation 
of parental support or care exist in the individual case. The phrase 
encompasses the situation of any child who is in need and otherwise 
eligible, and whose parent--father or mother--either has died, has a 
physical or mental incapacity, or is continually absent from the home. 
This interpretation is equally applicable whether the parent was the 
chief bread winner or devoted himself or herself primarily to the care 
of the child, and whether or not the parents were married to each other. 
The determination whether a child has been deprived of parental support 
or care is made in relation to the child's natural parent or, as 
appropriate, the adoptive parent or stepparent described in paragraph 
(a) of this section.
    (ii) Death of a parent. If either parent of a child is deceased, the 
child is deprived of parental support or care, and may, if he is in need 
and otherwise eligible, be included within the scope of the program.
    (iii) Continued absence of the parent from the home. Continued 
absence of the parent from the home constitutes the reason for 
deprivation of parental support or care when the parent is out of the 
home, the nature of the absence is such as either to interrupt or to 
terminate the parent's functioning as a provider of maintenance, 
physical care, or guidance for the child, and the known or indefinite 
duration of the absence precludes counting on the parent's performance 
of the function of planning for the present support or care of the 
child. If these conditions exist, the parent may be absent for any 
reason, and may have left only recently or some time previously; except 
that a parent whose absence is occasioned solely by reason of the 
performance of active duty in the uniformed services of the United 
States (as defined in section 101(3) of Title 37, United States code) is 
not considered absent from the home. A parent who is a convicted 
offender but is permitted to live at home while serving a court-imposed 
sentence by performing unpaid public work or unpaid community service 
during the workday is considered absent from the home.
    (iv) ``Physical or mental incapacity''. ``Physical or mental 
incapacity'' of a parent shall be deemed to exist when one parent has a 
physical or mental defect, illness, or impairment. The incapacity shall 
be supported by competent medical testimony and must be of such a 
debilitating nature as to reduce substantially or eliminate the parent's 
ability to support or care for the otherwise eligible child and be 
expected to last for a period of at least 30 days. In making the 
determination of ability to support, the agency shall take into account 
the limited employment opportunities of handicapped individuals.

A finding of eligibility for OASDI or SSI benefits, based on disability 
or blindness is acceptable proof of incapacity for AFDC purposes.
    (v) ``Living with [a specified relative] in a place of residence 
maintained * * * as his * * * own home''. (A) A child may be considered 
to meet the requirement of living with one of the relatives specified in 
the Act if his home is with a parent or a person in one of the following 
groups:
    (1) Any blood relative, including those of half-blood, and including 
first cousins, nephews, or nieces, and persons of preceding generations 
as denoted by prefixes of grand, great, or great-great.
    (2) Stepfather, stepmother, stepbrother, and stepsister.
    (3) Person who legally adopt a child or his parent as well as the 
natural and other legally adopted children of such persons, and other 
relatives of the

[[Page 93]]

adoptive parents in accordance with State law.
    (4) Spouses of any persons named in the above groups even after the 
marriage is terminated by death or divorce.
    (B) A home is the family setting maintained or in process of being 
established, as evidenced by assumption and continuation of 
responsibility for day to day care of the child by the relative with 
whom the child is living. A home exists so long as the relative 
exercises responsibility for the care and control of the child, even 
though either the child or the relative is temporarily absent from the 
customary family setting. Within this interpretation, the child is 
considered to be ``living with'' his relative even though:
    (1) He is under the jurisdiction of the court (e.g., receiving 
probation services or protective supervision); or
    (2) Legal custody is held by an agency that does not have physical 
possession of the child.
    (2) Federal financial participation is available in:
    (i) Initial payments made on behalf of a child who goes to live with 
a relative specified in section 406(a)(1) of the Social Security Act 
within 30 days of the receipt of the first payment, provided payments 
are not made for concurrent period for the same child in the home of 
another relative or as foster care under title IV-E;
    (ii) Payments made for the entire month in the course of which a 
child leaves the home of a specified relative, provided payments are not 
made for a concurrent period for the same child in the home of another 
relative or as foster care under title IV-E; and
    (iii) Payments made to persons acting for relatives specified in 
section 406(a)(1) of the Act in emergency situations that deprive the 
child of the care of the relative through whom he has been receiving 
aid, for a temporary period necessary to make and carry out plans for 
the child's continuing care and support.
    (iv) At State option, (A) payments with respect to a pregnant woman 
with no other children receiving assistance, and additionally, at State 
option, (B) payments for the purpose of meeting special needs occasioned 
by or resulting from pregnancy both for the pregnant woman with no other 
children as well as for the pregnant woman receiving AFDC. However, for 
both paragraphs (c)(2)(iv) (A) and (B) of this section it must be 
medically verified that the child is expected to be born in the month 
such payments are made or within the three-month period following such 
month of payment, and who, if such child had been born and was living 
with her in the month of payment, would be eligible for aid to families 
with dependent children. Federal financial participation is not 
available to meet the needs of the unborn child. (Refer to Medicaid 
regulations at 42 CFR 435.115 for Medicaid coverage of pregnant women.)
    (3) Federal financial participation (at the 50 percent rate) is 
available in any expenses incurred in establishing eligibility for AFDC, 
including expenses incident to obtaining necessary information to 
determine the existence of incapacity of a parent or pregnancy of a 
mother.

[36 FR 3868, Feb. 27, 1971 as amended at 39 FR 34038, Sept. 23, 1974; 40 
FR 27156, June 26, 1975; 44 FR 12424, Mar. 7, 1979; 47 FR 5681, Feb. 5, 
1982; 47 FR 41114, Sept. 17, 1982; 48 FR 28409, June 21, 1983; 51 FR 
9206, Mar. 18, 1986; 52 FR 28824, Aug. 4, 1987; 54 FR 42243, Oct. 13, 
1989; 58 FR 49218, Sept. 22, 1993; 59 FR 26142, May 19, 1994]



Sec.  233.100  Dependent children of unemployed parents.

    (a) Requirements for State Plans. If a State wishes to provide AFDC 
for children of unemployed parents, the State plan under title IV-A of 
the Social Security Act must:
    (1) Include a definition of an unemployed parent who is the 
principal earner which shall apply only to families determined to be 
needy in accordance with the provisions in Sec.  233.20. Such definition 
must include any such parent who:
    (i) Is employed less than 100 hours a month; or
    (ii) Exceeds that standard for a particular month, if the work is 
intermittent and the excess is of a temporary nature as evidenced by the 
fact that he or she was under the 100-hour standard for the prior 2 
months and is expected to be under the standard during the next month; 
except that at the option

[[Page 94]]

of the State, such definition need not include a principal earner who is 
unemployed because of participation in a labor dispute (other than a 
strike) or by reason of conduct or circumstances which result or would 
result in disqualification for unemployment compensation under the 
State's unemployment compensation law.
    (2) Include a definition of a dependent child which shall include 
any child of an unemployed parent (as defined by the State pursuant to 
paragraph (a)(1) of this section) who would be, except for the fact that 
his parent is not dead, absent from the home, or incapacitated, a 
dependent child under the State's plan approved under section 402 of the 
Act.
    (3) Provide for payment of aid with respect to any dependent child 
(as defined by the State pursuant to paragraphs (a)(2) of this section) 
when the conditions set forth in paragraphs (a)(3) (i), (ii), (iii), and 
(vii) of this section are met:
    (i) His or her parent who is the principal earner has been 
unemployed for at least 30 days prior to the receipt of such aid.
    (ii) Such parent has not without good cause, within such 30-day 
period prior to the receipt of such aid, refused a bona fide offer of 
employment or training for employment. Before it is determined that such 
parent has refused a bona fide offer of employment or training for 
employment without good cause, the agency must make a determination that 
such an offer was actually made. (In the case of offers of employment 
made through the public employment or manpower agencies, the 
determination as to whether the offer was bona fide, or whether there 
was good cause to refuse it, will be made by that office or agency.) The 
parent must be given an opportunity to explain why such offer was not 
accepted. Questions with respect to the following factors must be 
resolved:
    (a) That there was a definite offer of employment at wages meeting 
any applicable minimum wage requirements and which are customary for 
such work in the community;
    (b) Any questions as to the parent's inability to engage in such 
employment for physical reasons or because he has no way to get to or 
from the particular job; and
    (c) Any questions of working conditions, such as risks to health, 
safety, or lack of worker's compensation protection.
    (iii) Such parent (a) has six or more quarters of work (as defined 
in paragraph (a)(3)(iv) of this section), within any 13-calendar-quarter 
period ending within 1 year prior to the application for such aid, or 
(b) within such 1-year period, received unemployment compensation under 
an unemployment compensation law of a State or of the United States, or 
was qualified under the terms of paragraph (a)(3)(v) of this section) 
for such compensation under the State's unemployment compensation law.
    (iv) A ``quarter of work'' with respect to any individual means a 
period (of 3 consecutive calendar months ending on March 31, June 30, 
September 30, or December 31) in which he or she received earned income 
of not less than $50 (or which is a ``quarter of coverage'' as defined 
in section 213(a)(2) of the Act), or in which he or she participated in 
a community work experience program under section 409 of the Act or the 
work incentive program established under title IV-C of the Act.
    (v) An individual shall be deemed ``qualified'' for unemployment 
compensation under the State's unemployment compensation law if he would 
have been eligible to receive such benefits upon filing application, or 
he performed work not covered by such law which, if it had been covered, 
would (together with any covered work he performed) have made him 
eligible to receive such benefits upon filing application.
    (vi)(A) The ``parent who is the principal earner'' means, in the 
case of any child, whichever parent, in a home in which both parents of 
such child are living, earned the greater amount of income in the 24-
month period the last month of which immediately precedes the month in 
which an application is filed for aid under this part on the basis of 
the unemployment of a parent. If the State cannot secure primary 
evidence of earnings for this period, the State shall designate the 
principal

[[Page 95]]

earner, using the best evidence available. The earnings of each parent 
are considered in determining the principal earner regardless of when 
their relationship began. The principal earner so defined remains the 
principal earner for each consecutive month for which the family 
receives such aid on the basis of such application. This requirement 
applies to both new applicants and current AFDC unemployed parent 
families who were eligible and receiving aid prior to October 1, 1981.
    (B) If both parents earned an identical amount of income (or earned 
no income) in such 24-month period, the State shall designate which 
parent shall be the principal earner.
    (vii) The parent who is the principal earner (unless exempt under 
Sec.  240.14) has met the requirements for participation in an 
employment search program under part 240 of this chapter.
    (4) Provide for entering into cooperative arrangements with the 
State agency responsible for administering or supervising the 
administration of vocational education to assure maximum utilization of 
available public vocational education services and facilities in the 
State to encourage the retraining of individuals capable of being 
retrained.
    (5) Provide for the denial of such aid to any such dependent child 
or the relative specified in section 406(a)(1) of the Act with whom such 
child is living,
    (i) If and for so long as such child's parent, unless exempt under 
Sec.  224.20, is not currently registered for the work incentive program 
or if exempt under Sec.  224.20(b)(6), is not currently registered with 
a public employment office in the State, except that in a State with an 
approved JOBS plan under Sec.  250.20, such child's parent, unless 
exempt under Sec.  250.30(b), must be currently participating (or 
available for participation) in a program under part 250, or, if he is 
exempt under Sec.  250.30(b)(5), must be registered with a public 
employment office in the State, and
    (ii) With respect to any week for which such child's parent 
qualifies for unemployment compensation under an unemployment 
compensation law of the State or of the United States but refuses to 
apply for or accept such unemployment compensation, and
    (iii) If the parent who is the principal earner (unless exempt under 
Sec.  240.14) fails to meet the requirements for participation in a 
program of employment search established under part 240 of this chapter.
    (6) Provide that within 30 days after the receipt of such aid, 
unemployed principal earners will be certified for participation in the 
Work Incentive program under part 224 or, if the State IV-A agency has 
an approved JOBS plan pursuant to Sec.  250.20, will participate or 
apply for participation in a program under part 250 unless the program 
is not available in the area where the parent is living.
    (b) [Reserved]
    (c) Federal financial participation. (1) Federal financial 
participation is available in payments authorized in accordance with the 
State plan approved under section 402 of the Act as aid to families with 
dependent children with respect to a child.
    (i) Who meets the requirements of section 406(a)(2) of the Act;
    (ii) Who is living with any of the relatives specified in section 
406(a)(1) of the Act in a place of residence maintained by one or more 
of such relatives as his (or their) own home;
    (iii) Who has been deprived of parental support or care by reason of 
the fact that his or her parent who is the principal earner is employed 
less than 100 hours a month; or exceeds that standard for a particular 
month if his or her work is intermittent and the excess is of a 
temporary nature as evidenced by the fact that he or she was under the 
100-hour standard for 2 prior months and is expected to be under the 
standard during the next month.
    (iv) Whose parent who is the principal earner (a) has six or more 
quarters of work (as defined in paragraph (a)(3)(iv) of this section) 
within any 13-calendar-quarter period ending within 1 year prior to the 
application for such aid, (b) within such 1-year period, received 
unemployment compensation under an unemployment compensation law of a 
State or of the United States, or was qualified (under the terms of 
paragraph (a)(3)(v) of this section) for such compensation under the 
State's unemployment compensation law; and

[[Page 96]]

    (v) Whose parent who is the principal earner (a) is currently 
registered with the WIN program unless exempt or is registered with the 
public employment office in the State if exempt from WIN registration 
under Sec.  224.20(b)(6) or because there is no WIN program in which he 
can effectively participate; and (b) has not refused to apply for or 
accept unemployment compensation with respect to any week for which such 
child's parent qualifies for unemployment compensation under an 
unemployment compensation law of a State or of the United States.
    (2) The State may not include in its claim for Federal financial 
participation payments made as aid under the plan with respect to a 
child who meets the conditions set forth in paragraph (c)(1) of this 
section, where such payments were made.
    (i) For any part of the 30-day period specified in paragraph 
(a)(3)(i) of this section;
    (ii) For such 30-day period if during that period the parent refused 
without good cause a bona fide offer of employment or training for 
employment;
    (iii) For any period beginning with the 31st day after receipt of 
aid, if and for as long as no action is taken during the period to 
certify the parent for participation in the Work Incentive program under 
part 224, or if the State IV-A agency has an approved JOBS plan pursuant 
to Sec.  250.20, no action is taken during the period to undertake 
appropriate steps directed toward the participation of such parent in a 
program under part 250; and
    (iv) For any part of the sanction period imposed under Sec.  240.22 
(for failure to meet the requirements for participation in the 
employment search program).
    (d) For all States (other than Puerto Rico, American Samoa, Guam, 
and the Virgin Islands) the provisions of this section are suspended 
through September 30, 1998. For Puerto Rico, American Samoa, Guam, and 
the Virgin Islands, the provisions of this section are suspended from 
October 1, 1992, through September 30, 1998.

[34 FR 1146, Jan. 24, 1969, as amended at 36 FR 13604, July 22, 1971; 38 
FR 18549, July 12, 1973; 38 FR 26608, Sept. 24, 1973; 46 FR 46769, Sept. 
21, 1981; 47 FR 5681, Feb. 5, 1982; 47 FR 41114, Sept. 17, 1982; 47 FR 
43383, Oct. 1, 1982; 48 FR 28409, June 21, 1983; 51 FR 9206, Mar. 18, 
1986; 54 FR 42244, Oct. 13, 1989; 57 FR 30426, July 9, 1992]



Sec.  233.101  Dependent children of unemployed parents.

    (a) Requirements for State Plans. Effective October 1, 1990 (for 
Puerto Rico, American Samoa, Guam, and the Virgin Islands, October 1, 
1992), a State plan must provide for payment of AFDC for children of 
unemployed parents. A State plan under title IV-A for payment of such 
aid must:
    (1) Include a definition of an unemployed parent who is the 
principal earner which shall apply only to families determined to be 
needy in accordance with the provisions in Sec.  233.20 of this part. 
Such definition must have a reasonable standard for measuring 
unemployment and, at a minimum, include any such parent who:
    (i) Is employed less than 100 hours a month; or
    (ii) Exceeds that standard for a particular month, if the work is 
intermittent and the excess is of a temporary nature as evidenced by the 
fact that he or she was under the 100-hour standard for the prior 2 
months and is expected to be under the standard during the next month; 
except that at the option of the State, such definition need not include 
a principal earner who is unemployed because of participation in a labor 
dispute (other than a strike) or by reason of conduct or circumstances 
which result or would result in disqualification for unemployment 
compensation under the State's unemployment compensation law.
    (2) Include a definition of a dependent child which shall include 
any child of an unemployed parent (as defined by the State pursuant to 
paragraph (a)(1) of this section) who would be, except for the fact that 
his parent is not dead, absent from the home, or incapacitated, a 
dependent child under the State's plan approved under section 402 of the 
Act.

[[Page 97]]

    (3) Provide for payment of aid with respect to any dependent child 
(as defined by the State pursuant to paragraph (a)(2) of this section) 
when the conditions set forth in paragraphs (a)(3)(i), (a)(3)(ii), and 
(a)(3)(iii) of this section are met.
    (i) His or her parent who is the principal earner has been 
unemployed for at least 30 days prior to the receipt of such aid;
    (ii) Such parent has not without good cause, within such 30-day 
period prior to the receipt of such aid, refused a bona fide offer of 
employment or training for employment. Before it is determined that such 
parent has refused a bona fide offer of employment or training for 
employment without good cause, the agency must make a determination that 
such offer was actually made. (In the case of offers of employment made 
through the public employment or manpower agencies, the determination as 
to whether the offer was bona fide, or whether there was good cause to 
refuse it, shall be made by the title IV-A agency. The IV-A agency may 
accept the recommendations of such agencies.) The parent must be given 
an opportunity to explain why such offer was not accepted. Questions 
with respect to the following factors must be resolved:
    (A) That there was a definite offer of employment at wages meeting 
any applicable minimum wage requirements and which are customary for 
such work in the community;
    (B) Any questions as to the parent's inability to engage in such 
employment for physical reasons or because he has no way to get to or 
from the particular job; and
    (C) Any questions of working conditions, such as risks to health, 
safety, or lack of worker's compensation protection.
    (iii) Such parent:
    (A) Has six or more quarters of work (as defined in paragraph 
(a)(3)(iv) of this section), within any 13-calendar-quarter period 
ending within one year prior to the application for such aid, or
    (B) Within such 1-year period, received unemployment compensation 
under an unemployment compensation law of a State or of the United 
States, or was qualified under the terms of paragraph (a)(3)(v) of this 
section for such compensation under the State's unemployment 
compensation law.
    (iv) A ``quarter of work'' with respect to any individual means a 
period (of 3 consecutive calendar months ending on March 31, June 30, 
September 30, or December 31):
    (A) In which an individual received earned income of not less than 
$50 (or which is a ``quarter of coverage'' as defined in section 
213(a)(2) of the Social Security Act) or participated in a program under 
part 250 of this chapter; or
    (B) At State option (as specified in the plan), in one or more 
subdivisions of the State, in which he or she attended, full-time, an 
elementary school, a secondary school, or a vocational or technical 
training course that is designed to prepare the individual for gainful 
employment, or in which the individual participated in an educational or 
training program established under the Job Training Partnership Act, 
provided that an individual may qualify for no more than four quarters 
of work under this paragraph for purposes of the requirement set forth 
in paragraph (a)(3)(iii)(A) of this section; and
    (C) A calendar quarter ending before October 1990 in which an 
individual participated in CWEP under section 409 of the Social Security 
Act or the WIN program established under title IV-C of the Social 
Security Act (as in effect for a State immediately before the effective 
date of that State's JOBS program).
    (v) An individual shall be deemed ``qualified'' for unemployment 
compensation under the State's unemployment compensation law if he or 
she would have been eligible to receive such benefits upon filing an 
application, or he performed work not covered by such law, which, if it 
had been covered, would (together with any covered work he performed) 
have made him eligible to receive such benefits upon filing an 
application.
    (vi)(A) The ``parent who is the principal earner'' means, in the 
case of any child, whichever parent, in a home in which both parents of 
such child are living, earned the greater amount of income in the 24-
month period the last month of which immediately precedes

[[Page 98]]

the month in which an application is filed for aid under this part on 
the basis of the unemployment of a parent. If the State cannot secure 
primary evidence of earnings for this period, the State shall designate 
the principal earner, using the best evidence available. The earnings of 
each parent are considered in determining the principal earner 
regardless of when their relationship began. The principal earner so 
defined remains the principal earner for each consecutive month for 
which the family receives such aid on the basis of such application. 
This requirement applies to both new applicants and current AFDC 
unemployed parent families who were eligible and receiving aid prior to 
October 1, 1981.
    (B) If both parents earned an identical amount of income (or earned 
no income) in such 24-month period, the State shall designate which 
parent shall be the principal earner.
    (4) Provide for entering into cooperative arrangements with the 
State agency responsible for administering or supervising the 
administration of vocational education to assure maximum utilization of 
available public vocational education services and facilities in the 
State to encourage the retraining of individuals capable of being 
retrained.
    (5) Provide that the needs of the child's parent(s) shall not be 
taken into account in determining the needs and amount of assistance of 
the child's family:
    (i) If and for so long as such child's parent(s), unless exempt 
under Sec.  250.30(b) of this chapter, is not currently participating 
(or available for participation) in a program under part 250 of this 
chapter or, if they are exempt under Sec.  250.30(b)(5) of this chapter 
(or because a JOBS program has not been established in the subdivision 
where they reside or they reside in a JOBS subdivision but there is no 
appropriate JOBS activity in which they can participate), are not 
registered with a public employment office in the State, and
    (ii) With respect to any week for which such child's parent 
qualifies for unemployment compensation under an unemployment 
compensation law of the State or of the United States but refuses to 
apply for or accept such unemployment compensation.
    (6) Provide that medical assistance will be furnished under the 
State's approved plan under title XIX during any month in which an 
otherwise eligible individual is denied assistance solely by reason of 
the time limitation provided under paragraph (b)(3) of this section.
    (b) State Plan Options. A State plan under title IV-A may:
    (1) Require the principal earner or both parents to participate in 
an activity in the JOBS program under part 250 of this chapter, subject 
to the limitations and conditions of part 250 of this chapter, provided 
that the participation of each parent in all required activities under 
the JOBS program does not exceed 40 hours per week, per parent.
    (2) Provide cash assistance after the performance of assigned 
program activities by parents required to participate in an activity in 
the JOBS program under part 250 of this chapter (as provided in 
paragraph (b)(1) of this section) so long as the State:
    (i) Makes assistance payments at regular intervals at least monthly,
    (ii) Prescribes a set of criteria which defines goals or standards 
for each assigned activity in the JOBS program which must be completed 
by the participant prior to payment, and
    (iii) Prior to, or concurrent with, assignment to an activity, 
notifies the participant of the prescribed goals or standards and that 
payment for a period will be withheld unless performance of each 
assigned activity for that period is completed.
    (3) Provide for a State to operate a payment after performance 
system under which a family is issued an assistance payment after the 
applicable family member has successfully completed her obligation to 
participate in JOBS for a specific period. If the applicable family 
member fails without good cause to satisfy the obligation, the State 
may:
    (i) Impose a sanction in accordance with the JOBS program rules at 
Sec. Sec.  250.34, 250.35 and 250.36 of this chapter;
    (ii) Reduce the family's assistance payment to which the specific 
period

[[Page 99]]

applies by the amount of the payment attributable to the family member 
for that period or do not make the payment to the family; or
    (iii) Reduce the family's assistance payment to which the specific 
period applies (or the amount of the payment attributable to the family 
member for that period) in proportion to the number of required hours 
that were not completed.

For States that elect to implement paragraphs (b)(3) (ii) or (iii) of 
this section, the fair hearing requirements set forth at Sec.  
205.10(a)(4)(ii)(K) of this chapter apply.

    (4) Limit the number of months that a family may receive AFDC-UP 
under this section when the following conditions are met:
    (i) The State did not have on September 26, 1988, an approved AFDC-
UP program under section 407 of the Social Security Act.
    (ii) The family received such aid (on the basis of the unemployment 
of the parent who is the principal earner) in at least 6 of the 
preceding 12 months.
    (iii) The State has in effect a program (described in the plan) for 
providing education, training, and employment services to assist parents 
in preparing for and obtaining employment throughout the year. Such a 
program may include education, training and employment activities under 
the JOBS program which are provided in part 250 of this chapter or under 
a State-designed program which provides:
    (A) Education and instruction for individuals who have not graduated 
from a secondary school or obtained an equivalent degree,
    (B) Training whereby an individual acquires market-oriented skills 
necessary for self-support, and
    (C) Employment services which seek to place individuals in jobs.
    (iv) The State must guarantee child care necessary for an individual 
to participate in an approved, State-designed, non-JOBS program. The 
regulations at part 255 of this chapter apply to such care.
    (v) The State has the option of providing necessary supportive 
services associated with an individual's participation in a State-
designed, non-JOBS program. Federal financial participation is available 
under sections 403 (k) and (l) of the Social Security Act. The 
regulations at part 255 of this chapter apply to such supportive 
services.
    (vi) The State must inform an AFDC-UP family at the time of 
application that AFDC-UP cash assistance will terminate due to a time 
limitation, that any family with a child who is (or becomes) deprived 
due to the death, continued absence, or incapacity of a parent may 
receive cash assistance under the AFDC program during the time 
limitation for AFDC-UP, and that a program of training, education, and 
employment services is available to prepare the family to become self-
supporting.
    (vii) Prior to termination due to a time limitation, the State must 
notify an AFDC-UP recipient family of the earliest month that it may 
receive AFDC-UP cash assistance again. This notification may be included 
in the notice of proposed action which is required pursuant to Sec.  
205.10(a)(4) of this chapter. To receive assistance again, the family 
must make a new application.
    (viii) In establishing eligibility upon re-application following 
months of nonpayment due to the time limitation, an otherwise eligible 
family that does not receive aid in a month solely by reason of the 
option to limit assistance under this paragraph shall be deemed, for 
purposes of determining the period under paragraph (a)(3)(iii)(A) of 
this section, to be receiving AFDC-UP cash assistance in that month. 
This provision also applies if, at the time of the family's original 
application for assistance, eligibility was established based on the 
provisions of paragraph (a)(3)(iii)(B) of this section, but eligibility 
could have been established based on the provisions of paragraph 
(a)(3)(iii)(A) of this section.
    (c) Federal Financial Participation. (1) Federal financial 
participation is available for payments authorized in accordance with 
the State plan approved under section 402 of the Act as aid to families 
with dependent children with respect to a child:
    (i) Who meets the requirements of section 406(a)(2) of the Act;
    (ii) Who is living with any of the relatives specified in section 
406(a)(1) of

[[Page 100]]

the Act in a place of residence maintained by one or more of such 
relatives as his (or their) own home;
    (iii) Who has been deprived of parental support or care by reason of 
the fact that his or her parent who is the principal earner is employed 
less than 100 hours a month; or exceeds that standard for a particular 
month if his or her work is intermittent and the excess is of a 
temporary nature as evidenced by the fact that he or she was under the 
100-hour standard for 2 prior months and is expected to be under the 
standard during the next month;
    (iv) Whose parent who is the principal earner:
    (A) Has six or more quarters of work (as defined in paragraph 
(a)(3)(iv) of this section) within any 13-calendar-quarter period ending 
within 1 year prior to the application for such aid,
    (B) Within such 1-year period, received unemployment compensation 
under an unemployment compensation law of a State or of the United 
States, or was qualified (under the terms of paragraph (a)(3)(v) of this 
section) for such compensation under the State's unemployment 
compensation law; and
    (v) Whose parent who is the principal earner:
    (A) Is currently participating in or available to participate in an 
activity in the JOBS program under part 250 of this chapter, unless 
exempt, or is registered with the public employment office in the State 
if exempt from the JOBS program under Sec.  250.30(b)(5) of this 
chapter; and
    (B) Has not refused to apply for or accept unemployment compensation 
with respect to any week for which such child's parent qualifies for 
unemployment compensation under an unemployment compensation law of the 
State or of the United States.
    (2) The State may not include in its claim for Federal financial 
participation payments made as aid under the plan with respect to a 
child who meets the conditions set forth in paragraph (c)(1) of this 
section, where such payments were made:
    (i) For any part of the 30-day period specified in paragraph 
(a)(3)(i) of this section;
    (ii) For such 30-day period if during that period the parent refused 
without good cause a bona fide offer of employment or training for 
employment;
    (iii) For any period beginning with the 31st day after the receipt 
of aid, if and for as long as no action is taken during the period to 
undertake appropriate steps directed toward the participation of the 
parent who is the principal earner in a program under part 250 of this 
chapter;
    (iv) To the extent that such payments are made to meet the need of 
an individual who is subject to a sanction imposed, under part 250 of 
this chapter (for failure to meet the requirements for participation in 
the JOBS program).
    (3) Federal financial participation is available for child care and 
supportive services expenditures associated with participation in an 
approved State-designed program (as provided in paragraph (b)(3)(iii) of 
this section) under titles IV-A and IV-F of the Act respectively. 
However, Federal financial participation is not available for any other 
costs, program or administrative, associated with State-designed 
programs.
    (d) For all States (other than Puerto Rico, American Samoa, Guam, 
and the Virgin Islands) the provisions of this section are in effect 
through September 30, 1998. For Puerto Rico, American Samoa, Guam, and 
the Virgin Islands, the provisions of this section are in effect from 
October 1, 1992, through September 30, 1998.

[57 FR 30426, July 9, 1992, as amended at 63 FR 42274, Aug. 7, 1998]



Sec.  233.106  Denial of AFDC benefits to strikers.

    (a) Condition for plan approval. A State plan under title IV-A of 
the Social Security Act must:
    (1) Provide that participation in a strike shall not constitute good 
cause to leave, or to refuse to seek or accept, employment.
    (2)(i) Provide for the denial of AFDC benefits to any family for any 
month in which any caretaker relative with whom the child is living is, 
on the last day of such month, participating in a strike; and
    (ii) Provide that no individual's needs shall be included in 
determining the amount of aid payable for any month

[[Page 101]]

to a family under the plan if, on the last day of such month, such 
individual is participating in a strike.
    (b) Definitions. (1) The State must define ``strike'' by using the 
National Labor Relations Board definition (29 U.S.C. 142(2)) or another 
definition of the term that is currently in State law.
    (2) The State must define the term ``participating in a strike.''
    (3) For purposes of paragraph (a)(2)(i) of this section, ``caretaker 
relative'' means any natural or adoptive parent.

[47 FR 5682, Feb. 5, 1982]



Sec.  233.107  Restriction in payment to households headed by a minor parent.

    (a) State plan requirements. A State in its title IV-A State plan 
may provide that a minor parent and the dependent child in his or her 
care must reside in the household of a parent, legal guardian, or other 
adult relative, or in an adult-supervised supportive living arrangement 
in order to receive, AFDC unless:
    (1) The minor parent has no living parent or legal guardian whose 
whereabouts is known;
    (2) No living parent or legal guardian of the minor parent allows 
the minor parent to live in his or her home;
    (3) The minor parent lived apart from his or her own parent or legal 
guardian for a period of at least one year before either the birth of 
the dependent child or the parent's having made application for AFDC;
    (4) The physical or emotional health or safety of the minor parent 
or dependent child would be jeopardized if they resided in the same 
residence with the minor parent's parent or legal guardian;
    (5) There is otherwise good cause for the minor parent and dependent 
child to receive assistance while living apart from the minor parent's 
parent, legal guardian, or other adult relative, or an adult-supervised 
supportive living arrangement.
    (b) Allegations. If a minor parent makes allegations supporting the 
conclusion that paragraph (a)(4) of this section applies, the State 
agency shall determine whether it is justified.
    (c) Good Cause. The circumstances justifying a determination of good 
cause must be set forth in the State plan.
    (d) Protective Payments. When a minor parent and his or her 
dependent child are required to live with the minor parent's parent, 
legal guardian, or other adult relative, or in an adult-supervised 
supportive living arrangement, then AFDC is paid (where possible) in the 
form of a protective payment.
    (e) Definitions: For purposes of this section:
    (1) A minor parent is an individual who (i) is under the age of 18, 
(ii) has never been married, and (iii) is either the natural parent of a 
dependent child living in the same household or eligible for assistance 
paid under the State plan to a pregnant woman as provided in Sec.  
233.90(c)(2)(iv) of this part.
    (2) A household of a parent, legal guardian, or other adult 
relatives means the place of residence of (i) a natural or adoptive 
parent or a stepparent, or (ii) a legal guardian as defined by the 
State, or (iii) another individual who is age 18 or over and related to 
the minor parent as specified in Sec.  233.90(c)(1)(v) of this part 
provided that the residence is maintained as a home for the minor parent 
and child as provided in Sec.  233.90(c)(1)(v)(B) of this part.
    (3) An adult-supervised supportive living arrangement means a 
private family setting or other living arrangement (not including a 
public institution), which, as determined by the State, is maintained as 
a family setting, as evidenced by the assumption of responsibility for 
the care and control of the minor parent and dependent child or the 
provision of supportive services, such as counseling, guidance, or 
supervision. For example, foster homes and maternity homes are ``adult-
supervised supportive living arrangements.''
    (f) Notice Requirements. Minor applicants shall be informed about 
the eligibility requirements and their rights and obligations consistent 
with the provisions at Sec.  206.10(a)(2)(i). For example, a State may 
wish to: (1) Advise the minor of the possible exemptions and 
specifically ask whether one or more of these exemptions is applicable; 
and (2) assist the minor in attaining the necessary verifications if one 
or more of these exemptions is alleged.

[57 FR 30428, July 9, 1992]

[[Page 102]]



Sec.  233.110  Foster care maintenance and adoption assistance.

    (a) State plan requirements. A State plan under title IV-A of the 
Social Security Act must provide that the State has in effect a plan 
approved under part E, title IV of the Social Security Act, and operates 
a foster care maintenance and adoption assistance program in conformity 
with such a plan.
    (b) [Reserved]

[51 FR 9206, Mar. 18, 1986]



Sec.  233.145  Expiration of medical assistance programs under titles I, IV-A, X, XIV and XVI of the Social Security Act.

    (a) Under the provisions of section 121(b) of Pub. L. 89-97, enacted 
July 30, 1965, no payment may be made to any State under title I, IV-A, 
X, XIV or XVI of the Social Security Act for aid or assistance in the 
form of medical or any other type of remedial care for any period after 
December 31, 1969. However, these provisions do not affect the 
availability of Federal financial participation in the cost of medical 
or remedial care furnished under title IV-A of the Act (pursuant to 
sections 403(a)(5) and 406(e) ) of the Act, as emergency assistance to 
needy families with children (see Sec.  233.120 of this part), subject 
to the provisions of paragraph (c) \1\ of this section. Federal 
financial participation in vendor payments for medical care and services 
is not otherwise available except under title XIX of the Act.
---------------------------------------------------------------------------

    \1\ See notice published Aug. 29, 1973 (38 FR 23337).
---------------------------------------------------------------------------

    (b) Under the provisions of section 4(c) of Pub. L. 92-223, enacted 
December 28, 1971, and the provisions of section 292 of Pub. L. 92-603, 
enacted October 30, 1972:
    (1) In the case of any State which on January 1, 1972, had in effect 
a State plan approved under title XIX of the Social Security Act, 
section 1121 of the Act authorizing payments under title I, X, XIV, or 
XVI of the Act for assistance in the form of institutional services in 
intermediate care facilities is rescinded; and
    (2) In the case of any State which on January 1, 1972, did not have 
in effect a State plan approved under title XIX of the Act, Federal 
financial participation is available in assistance in the form of 
institutional services in intermediate care facilities pursuant to 
section 1121 of the Act and under the provisions of Sec.  234.130 of 
this chapter until the first day of the first month after January 1, 
1972, that the State has in effect a State plan approved under title 
XIX.
    (c)(1) Under the provisions of section 249D of Pub. L. 92-603, 
enacted October 30, 1972, Federal matching is not available for any 
portion of any payment by any State under titles I, IV-A, X, XIV, or XVI 
of the Social Security Act for or on account of any medical or any other 
type of remedial care provided by an institution to any individual as an 
inpatient thereof, in the case of any State which has a plan approved 
under title XIX of such Act, if such care is (or could be provided, 
under a State plan approved under title XIX of such Act, by an 
institution certified under such title XIX. The effective date of this 
proposed provision will be the date of publication of the final 
regulation in the Federal Register.
    (2) For purposes of this paragraph,
    (i) An institution (see Sec.  233.60(b)(1) of this chapter) is 
considered to provide medical or remedial care if it provides any care 
or service beyond room and board because of the physical or mental 
condition (or both) of its inpatients;
    (ii) An inpatient is an individual who is living in an institution 
which provides medical or remedial care and who is receiving care or 
service beyond room and board because of his physical or mental 
condition (or both).
    (iii) Federal financial participation is not available for any 
portion of the payment for care of an inpatient. It is immaterial 
whether such payment is made as a vendor payment or as a money payment 
or other cash assistance payment. It is also immaterial whether the 
payment is divided into components, such as separate amounts or payments 
for room and board, and for care or services beyond room and board, or 
whether the payment is considered to meet ``basic'' needs or ``special'' 
needs. If, however, a money payment (or protective payment) is made to 
an individual who is living in an institution, and such payment does not

[[Page 103]]

exceed a reasonable rate for room, board and laundry for individuals not 
living in their own homes, and no additional payment is made for such 
individual's care in the institution, Federal financial participation is 
available in the money payment (or protective payment) since the 
individual may spend the funds at his discretion and obtain room and 
board at the place of his choice.
    (iv) Federal financial participation is available in cash assistance 
payments to meet the needs of an inpatient for specific medical 
services, such as dental care or prescription drugs, which generally are 
not delivered in an institutional setting and in fact are not provided 
by the institution to the inpatient, provided that such services are not 
available to the individual under the State's approved title XIX plan.

[38 FR 26379, Sept. 20, 1973, as amended at 38 FR 32912, Nov. 29, 1973]



PART 234_FINANCIAL ASSISTANCE TO INDIVIDUALS--Table of Contents




Sec.
234.11 Assistance in the form of money payments.
234.60 Protective, vendor, and two-party payments for dependent 
          children.
234.70 Protective payments for the aged, blind, or disabled.
234.75 Rent payments to public housing agencies.
234.120 Federal financial participation.
234.130 Assistance in the form of institutional services in intermediate 
          care facilities.

    Authority: 42 U.S.C. 602, 603, 606, and 1302.



Sec.  234.11  Assistance in the form of money payments.

    (a) Federal financial participation is available in money payments 
made under a State plan under title I, IV-A, X, XIV, or XVI of the 
Social Security Act to eligible families and individuals. Money payments 
are payments in cash, checks, or warrants immediately redeemable at par, 
made to the grantee or his legal representative with no restrictions 
imposed by the agency on the use of funds by the individual.
    (b) [Reserved]

[36 FR 22238, Nov. 23, 1971, as amended at 51 FR 9206, Mar. 18, 1986]



Sec.  234.60  Protective, vendor and two-party payments for dependent children.

    (a) State plan requirements. (1) If a State plan for AFDC under 
title IV-A of the Social Security Act provides for protective, vendor 
and two-party payments for cases other than failure to participate in 
the Job Opportunities and Basic Skills Training (JOBS) Program under 
Sec.  250.34(d), or failure by the caretaker relative to meet the 
eligibility requirements of Sec.  232.11, 232.12, or 232.13 of this 
chapter. It must meet the requirements in paragraphs (a) (2) through 
(11) of this section. In addition, the plan may provide for protective, 
vendor, and two-party payments at the request of recipients as provided 
in paragraph (a)(14) of this section.
    (2)(i) Methods will be in effect to identify children whose 
relatives have demonstrated such an inability to manage funds that 
payments to the relative have not been or are not currently used in the 
best interest of the child. This means that the relative has misused 
funds to such an extent that allowing him or her to manage the AFDC 
grant is a threat to the health or safety of the child.
    (ii) States will establish criteria to determine if mismanagement 
exists. Under this provision, States may elect to use as one criterion a 
presumption of mismanagement based on a recipient's nonpayment of rent.
    (iii) Under State agency procedures, the recipient shall be notified 
whenever a creditor requests a protective, vendor, or two-party payment 
for mismangement on the basis of non-payment of bills.
    (iv) The recipient shall be notified by the agency of a decision not 
to use a protective, vendor, or two-party payment if such payment has 
been requested by a creditor.
    (v) A statement of the specific reasons that demonstrate the need 
for making protective, vendor, and two-party payments must be placed in 
the file of the child involved.
    (3) Criteria will be established to identify the circumstances under 
which protective, vendor, or two-party payments will be made in whole or 
in part to:

[[Page 104]]

    (i) Another individual who is interested in or concerned with the 
welfare of the child or relative; or
    (ii) A person or persons furnishing food, living accommodations or 
other goods, services, or items to or for the child, relative, or 
essential person.
    (4) Procedures will be established for making protective, vendor, or 
two-party payments. Under this provision, part of the payment may be 
made to the family and part may be made to a protective payee or to a 
vendor, or part may be made in the form of two-party payments, i.e., 
checks which are drawn jointly to the order of the recipient and the 
person furnishing goods, services, or items and negotiable only upon 
endorsement by both the recipient and the other person.
    (5)-(6) [Reserved]
    (7) Standards will be established for selection:
    (i) Of protective payees, who are interested in or concerned with 
the recepient's welfare, to act for the recipient in receiving and 
managing assistance, with the selection of a protective payee being made 
by the recipient, or with his participation and consent, to the extent 
possible. If it is in the best interest of the recipient for a staff 
member of a private agency, of the public welfare department, or of any 
other appropriate organization to serve as a protective payee, such 
selection will be made preferably from the staff of an agency or that 
part of the agency providing protective services for families; and the 
public welfare department will employ such additional staff as may be 
necessary to provide protective payees. The selection will not include: 
The executive head of the agency administering public assistance; the 
person determining financial eligibility for the family; special 
investigative or resource staff; or staff handling fiscal processes 
related to the recipient; or landlords, grocers, or other vendors of 
goods, services, or items dealing directly with the recipient.
    (ii) Of such persons providing goods, services, or items with the 
selection of such persons being made by the recipient, or with his 
participation and consent, to the extent possible.
    (8) The agency will undertake and continue special efforts to 
develop greater ability on the part of the relative to manage funds in 
such manner as to protect the welfare of the family.
    (9) Review will be made as frequently as indicated by the 
individual's circumstances, and at least once every 12 months, of:
    (i) The need for protective, vendor, and two-party payments; and
    (ii) The way in which a protective payee's responsibilities are 
carried out.
    (10) Provision will be made for termination of protective payments, 
or payments to a person furnishing goods or services, as follows:
    (i) When relatives are considered able to manage funds in the best 
interest of the child, there will be a return to money payment status.
    (ii) When it appears that need for protective, vendor, or two-party 
payments will continue or is likely to continue beyond 2 years because 
all efforts have not resulted in sufficiently improved use of assistance 
in behalf of the child, judicial appointment of a guardian or other 
legal representative will be sought and such payments will terminate 
when the appointment has been made.
    (11)(i) Opportunity for a fair hearing pursuant to Sec.  205.10 will 
be given to any individual claiming assistance in relation to the 
determination:
    (A) That a protective, vendor, and two-party payment should be made 
or continued.
    (B) As to the payee selected.
    (ii) In cases where the agency has elected the option to presume 
mismanagement based on a recipient's nonpayment of rent pursuant to 
paragraph (a)(2)(ii), the agency may also elect the option to provide 
the opportunity for a fair hearing pursuant to Sec.  205.10 either 
before or after the manner or form of payment has been changed for these 
cases.
    (12) In cases where an individual is sanctioned for failure to 
participate in WIN, employment search, CWEP, or JOBS, the State plan 
must provide that when protective or vendor payments are made pursuant 
to Sec.  224.52(a)(1), Sec.  238.22, Sec.  240.22(a)(1), Sec.  
240.22(b)(1) and Sec.  250.34(d) of this chapter, only paragraphs 
(a)(7), (a)(9)(ii), and (a)(11)(i) and (ii) of this section will

[[Page 105]]

be applicable. Under these circumstances, when protective payments are 
made, the entire payment will be made to the protective payee; and when 
vendor payments are made, at least the greater part of the payment will 
be through this method. However, if after making all reasonable efforts, 
the State agency is unable to locate an appropriate individual to whom 
protective payments can be made, the State may continue to make payments 
on behalf of the remaining members of the assistance unit to the 
sanctioned caretaker relative. Provision will be made for termination of 
protective payments, or payments to a person furnishing goods or 
services, with return to money payment status when adults who refused 
training, employment, or participation in employment search without good 
cause either accept training, employment, or employment search or agree 
to do so. In the case of continuing refusal of the relative to 
participate, payments will be continued for the children in the home in 
accordance with this paragraph.
    (13) For cases in which a caretaker relative fails to meet the 
eligibility requirements of Sec. Sec.  232.11, 232.12, or 232.13 of this 
chapter by failing to assign rights to support or cooperate in 
determining paternity, securing support, or identifying and providing 
information to assist the State in pursuing third party liability for 
medical services, the State plan must provide that only the requirements 
of paragraphs (a)(7) and (9)(ii) of this section will be applicable. For 
such cases, the entire amount of the assistance payment will be in the 
form of protective or vendor payments. These protective or vendor 
payments will be terminated, with return to money payment status, only 
upon compliance by the caretaker relative with the eligibility 
requirements of Sec. Sec.  232.11, 232.12, and 232.13 of this chapter. 
However, if after making reasonable efforts, the State agency is unable 
to locate an appropriate individual to whom protective payments can be 
made, the State may continue to make payments to the sanctioned 
caretaker relative on behalf of the remaining members of the assistance 
unit.
    (14) If the plan provides for protective, vendor, or two-party 
payments:
    (i) The State may use any combination of protective, vendor, or two-
party payments (at the request of the recipient),
    (ii) The request must be in writing from the recipient to whom 
payment would otherwise be made in an unrestricted manner and must be 
recorded or retained in the case file, and
    (iii) The restriction will be discontinued promptly upon the written 
request of the recipient who initiated it.
    (b) Federal financial participation. Federal financial participation 
is available in payments which otherwise qualify as money payments with 
respect to an eligible dependent child, but which are made as 
protective, vendor or two-party payments under this section. Payrolls 
must identify protective, vendor, or two-party payments either by use of 
a separate payroll for these cases or by using a special identifying 
code or symbol on the regular payroll. The payment must be supported by 
an authorization of award through amendment of an existing authorization 
document for each case or by preparation of a separate authorization 
document. In either instance, the authorization document must be a 
formal agency record signed by a responsible agency official, showing 
the name of each eligible child and relative, the amount of payment 
authorized and the name of the protective, vendor or two-party payee.

[37 FR 9025, May 4, 1972, as amended at 37 FR 12202, June 20, 1972; 45 
FR 20480, Mar. 28, 1980; 47 FR 5682, Feb. 5, 1982; 49 FR 35603, Sept. 
10, 1984; 51 FR 9206, Mar. 18, 1986; 54 FR 42244, Oct. 13, 1989; 56 FR 
8932, Mar. 4, 1991; 57 FR 30160, July 8, 1992]



Sec.  234.70  Protective payments for the aged, blind, or disabled.

    (a) State plan requirements. If a State plan for OAA, AB, APTD, or 
AABD under the Social Security Act includes provisions for protective 
payments, the State plan must provide that:
    (1) Methods will be in effect to determine that needy individuals 
have, by reason of physical or mental condition, such inability to 
manage funds that making payment to them would be contrary to their 
welfare; such methods to include medical or psychological

[[Page 106]]

evaluations, or other reports of physical or mental conditions including 
observation of gross conditions such as extensive paralysis, serious 
mental retardation, continued disorientation, or severe memory loss.
    (2) There will be responsibility to assure referral to social 
services for appropriate action to protect recipients where problems and 
needs for services and care of the recipients are manifestly beyond the 
ability of the protective payee to handle. (See paragraph (a)(5) of this 
section.)
    (3) Standards will be established for selection of protective payees 
who are interested in or concerned with the individual's welfare, to act 
for the individual in receiving and managing assistance, with the 
selection of a protective payee being made by the individual, or with 
his participation and consent, to the extent possible. If it is in the 
best interest of the individual for a staff member of a private agency, 
of the public welfare department, or of any other appropriate 
organization to serve as a protective payee, such selection will be made 
preferably from the staff of an agency or that part of the agency 
providing protective services for families or for the disabled or aged 
group of which the recipient is a member; and such staff of the public 
welfare department will be utilized only to the extent that the 
department has adequate staff for this purpose. The selection will not 
include: The executive head of the agency administering public 
assistance; the person determining financial eligibility for the 
individual; special investigative or resource staff, or staff handling 
fiscal processes related to the recipient; or landlords, grocers, or 
other vendors of goods or services dealing directly with the recipient--
such as the proprietor, administrator or fiscal agent of a nursing home, 
or social care, medical or nonmedical institution, except for the 
superintendent of a public institution for mental diseases or a public 
institution for the mentally retarded, or the designee of such 
superintendent, when no other suitable protective payee can be found and 
there are appropriate staff available to assist the superintendent in 
carrying out the protective payment function.
    (4) Protective payments will be made only in cases in which the 
assistance payment, with other available income, meets all the needs of 
the individual, using the State's standards for assistance for the 
pertinent program, not standards for protective payment cases only.
    (5) The agency will undertake and continue special efforts to 
protect the welfare of such individuals and to improve, to the extent 
possible, their capacity for self-care and to manage funds.
    (6) Reconsideration of the need for protective payments and the way 
in which a protective payee's responsibilities are carried out will be 
as frequent as indicated by the individual's circumstances and at least 
every 6 months.
    (7) Provision will be made for appropriate termination of protective 
payments as follows:
    (i) When individuals are considered able to manage funds in their 
best interest, there will be a return to money payment status.
    (ii) When a judicial appointment of a guardian or other legal 
representative appears to serve the best interest of the individual, 
such appointment will be sought and the protective payment will 
terminate when the appointment has been made.
    (8) Opportunity for a fair hearing will be given to any individual 
claiming assistance in relation to the determination that a protective 
payment should be made or continued, and in relation to the payee 
selected.
    (b) Federal financial participation. Federal financial participation 
is available for payments, which otherwise qualify as money payments 
with respect to a needy individual, but which are made to a protective 
payee under paragraph (a)(3) of this section. The payment must be 
supported by an authorization of award through amendment of an existing 
authorization document for such case or by preparation of a separate 
authorization document. In either instance, the authorization document 
must be a formal agency record signed by a responsible agency official 
showing the name of each eligible individual, the amount of payment

[[Page 107]]

authorized and the name of the protective payee. Payrolls must identify 
protective payment cases either by use of a separate payroll for these 
cases or by using a special identifying code or symbol on the regular 
payroll.

[34 FR 1323, Jan. 28, 1969]



Sec.  234.75  Rent payments to public housing agencies.

    At the option of a State, if its plan approved under title I, X, 
XIV, or XVI of the Social Security Act so provides, Federal financial 
participation under such title is available in rent payments made 
directly to a public housing agency on behalf of a recipient or a group 
or groups of recipients of OAA, AB, APTD, or AABD. Such Federal 
financial participation is available in rent payments only to the extent 
that they do not exceed the amount included for rent under the State's 
standard of assistance or the amount of rent due under applicable law, 
whichever is less.

[38 FR 26380, Sept. 20, 1973]



Sec.  234.120  Federal financial participation.

    Federal financial participation is available in assistance payments 
made under a State plan under title I, IV-A, X, XIV, or XVI of the 
Social Security Act to any family or individual for periods beginning 
with the month in which they meet all eligibility conditions under the 
plan and in which an application has been received by the agency. Such 
assistance payments include:
    (a) Money payments (titles I, IV-A, X, XIV, and XVI, see Sec.  
234.11 of this chapter);
    (b) Protective and vendor payments for dependent children (title IV-
A, see Sec.  234.60 of this chapter);
    (c) Protective payments for the aged, blind, or disabled (titles I, 
X, XIV, and XVI, see Sec.  234.70 of this chapter);
    (d) AFDC foster care payments (title IV-A, see Sec.  233.110 of this 
chapter);
    (e) Vendor payments for institutional services in intermediate care 
facilities (titles I, X, XIV, and XVI), but only in a State that did 
not, as of January 1, 1972, have an approved plan under title XIX of the 
act, and only until such State has such a plan in effect (see Sec.  
234.130 of this chapter);
    (f) Emergency assistance to needy families with children (title IV-
A, see Sec.  233.120 of this chapter);
    (g) Vendor payments for home repairs (titles I, IV-A, X, XIV, and 
XVI, see Sec.  233.20(c) of this chapter); and
    (h) Rent payments to public housing agencies (titles I, X, XIV, and 
XVI, see Sec.  234.75 of this chapter).

[38 FR 26380, Sept. 20, 1973]



Sec.  234.130  Assistance in the form of institutional services in intermediate care facilities.

    (a) Applicability and State plan requirements. A State which, on 
January 1, 1972, did not have in effect a State plan approved under 
title XIX of the Social Security Act may provide assistance under title 
I, X, XIV, or XVI of the Act in the form of institutional services in 
intermediate care facilities as authorized under title XI of the Act, 
until the first day of the first month (occurring after January 1, 1972) 
that such State does have in effect a State plan approved under title 
XIX of the Act. In any State which may provide such assistance as 
authorized under title XI of the Act, a State plan under title I, X, 
XIV, or XVI of the Act which includes such assistance must:
    (1) Provide that such benefits will be provided only to individuals 
who:
    (i) Are entitled (or would, if not receiving institutional services 
in intermediate care facilities, be entitled) to receive assistance, 
under the State plan, in the form of money payments; and
    (ii) Because of their physical or mental condition (or both) require 
living accommodations and care which, as a practical matter, can be made 
available to them only through institutional facilities; and
    (iii) Do not have such an illness, disease, injury, or other 
condition as to require the degree of care and treatment which a 
hospital or skilled nursing home (as that term is employed in title XIX) 
is designed to provide.
    (2) Provide that, in determining financial eligibility for benefits 
in the form of institutional services in intermediate care facilities, 
available income will be applied, first for personal

[[Page 108]]

and incidental needs including clothing, and that any remaining income 
will be applied to the costs of care in the intermediate care facility.
    (3) Provide methods of administration that include:
    (i) Placing of responsibility, within the State agency, with one or 
more staff members with sufficient staff time exclusive of other duties 
to direct and guide the agency's activities with respect to services in 
intermediate care facilities, including arrangements for consultation 
and working relationships with the State standard-setting authority and 
State agencies responsible for mental health and for mental retardation;
    (ii) In relation to authorization of benefits, provisions for 
evaluation by a physician of the individual's physical and mental 
condition and the kinds and amounts of care he requires; evaluation by 
the agency worker of the resources available in the home, family and 
community; and participation by the recipient in determining where he is 
to receive care, except that in the case of services being provided in a 
Christian Science Sanatorium, certification by a qualified Christian 
Science practitioner that the individual meets the requirements 
specified in paragraphs (a)(1) (ii) and (iii) of this section may be 
substituted for the evaluation by a physician;
    (iii) Provisions for redetermination at least semiannually that the 
individual is properly a recipient of intermediate care.
    (4) Provide for regular, periodic review and reevaluation no less 
often than annually (by or on behalf of the State agency administering 
the plan and in addition to the activities described in paragraph (a)(3) 
of this section) of recipients in intermediate care facilities to 
determine whether their current physical and mental conditions are such 
as to indicate continued placement in the intermediate care facility, 
whether the services actually rendered are adequate and responsive to 
the conditions and needs identified, and whether a change to other 
living arrangements, or other institutional facilities (including 
skilled nursing homes) is indicated. Such reviews must be followed by 
appropriate action on the part of the State agency administering the 
plan. They must be conducted by or under the supervision of a physician 
with participation by a registered professional nurse and other 
appropriate medical and social service personnel not employed by or 
having a financial interest in the facility, except that, in the case of 
recipients who have elected care in a Christian Science sanatorium, 
review by a physician or other medical personnel is not required.
    (5) Provide that all services with respect to social and related 
problems which the agency makes available to applicants and recipients 
of assistance under the plan will be equally available to all applicants 
for and recipients of benefits in the form of institutional services in 
intermediate care facilities.
    (6) Specify the types of facilities, however described, that will 
qualify under the State plan for participation as intermediate care 
facilities, and provide for availability to the Department of Health and 
Human Services, upon request of (i) copies of the State's requirements 
for licensing of such facilities, (ii) any requirements imposed by the 
State in addition to licensing and to definition of intermediate care 
facilities, and (iii) a description of the manner in which such 
requirements are applied and enforced including copies of agreements or 
contracts, if any, with the licensing authority for this purpose.
    (7) Provide for and describe methods of determining amounts of 
vendor payments to intermediate care facilities which systematically 
relate amounts of the payment to the kinds, levels, and quantities of 
services provided to the recipients by the institutions and to the cost 
of providing such services.
    (b) Other requirements. Except when inconsistent with purposes of 
section 1121 of the Act or contrary to any provision therein, any 
modification, pursuant thereto, of an approved State plan shall be 
subject to the same conditions, limitations, rights, and obligations as 
obtained with respect to such approved State plan. Included specifically 
among such conditions and limitations are the provisions of titles I, X, 
XIV, and XVI relating to payments to or care in behalf of any individual 
who

[[Page 109]]

is an inmate of a public institution (except as a patient in a medical 
institution).
    (c) Federal financial participation. (1) Federal financial 
participation is available under section 1121 of the Act in vendor 
payments for institutional services provided to individuals who are 
eligible under the respective State plan and who are residents in 
intermediate care facilities. The rate of participation is the same as 
for money payments under the respective title or, if the State so 
elects, at the rate of the Federal medical assistance percentage as 
defined in section 1905(b) of the Act. Such Federal financial 
participation ends on the date specified in paragraph (c)(2) of this 
section, or 12 months after the date when the State first has in effect 
a State plan approved under title XIX of the Act, whichever is later.
    (2) For the period from January 1, 1972, to the date on which a 
determination is made under the provisions of 42 CFR 449.33 as to a 
facility's eligibility to receive payments for intermediate care 
facility services under the medical assistance program, title XIX of the 
Act, but not later than 12 months following the effective date of these 
regulations, Federal financial participation in payments for such 
services under title XIX is governed by the provisions of this section, 
applied to State plans under title XIX.
    (d) Definition of terms. For purposes of section 1121 of the Social 
Security Act, the following definitions apply:
    (1) Institutional services. The term, institutional services, means 
those items and services provided by or under the auspices of the 
institution which contribute to the health, comfort, and well-being of 
the residents thereof; except that the term, institutional services, 
does not include allowances for clothing and incidental expenses for 
which money payments to recipients are made under the plan, nor does it 
include medical care, in a form identifiable as such and separable from 
the routine services of the facility, for which vendor payments may be 
made under a State plan approved under title XIX.
    (2) Distinct part of an institution. A distinct part of an 
institution is defined as a part which meets the definition of an 
intermediate care facility and the following conditions:
    (i) Identifiable unit. The distinct part of the institution is an 
entire unit such as an entire ward or contiguous wards, wing, floor, or 
building. It consists of all beds and related facilities in the unit and 
houses all residents, except as hereafter provided, for whom payment is 
being made for intermediate care. It is clearly identified and is 
approved, in writing, by the agency applying the definition of 
intermediate care facility herein.
    (ii) Staff. Appropriate personnel are assigned and work regularly in 
the unit. Immediate supervision of staff is provided in the unit at all 
time by qualified personnel.
    (iii) Shared facilities and services. The distinct part may share 
such central services and facilities as management services, building 
maintenance and laundry, with other units.
    (iv) Transfers between distinct parts. In a facility having distinct 
parts devoted to skilled nursing home care and intermediate care, which 
facility has been determined by the appropriate State agency to be 
organized and staffed to provide services according to individual needs 
throughout the institution, nothing herein shall be construed to require 
transfer of an individual within the institution when in the opinion of 
the individual's physician such transfer might be harmful to the 
physical or mental health of the individual.
    (3) Intermediate care facility. An intermediate care facility is an 
institution or a distinct part thereof which:
    (i) Is licensed, under State law to provide the residents thereof, 
on a regular basis, the range or level of care and services as defined 
in paragraph (d)(4) of this section, which is suitable to the needs of 
individuals who:
    (a) Because of their physical or mental limitations or both, require 
living accommodations and care which, as a practical matter, can be made 
available to them only through institutional facilities, and
    (b) Do not have such an illness, disease, injury, or other condition 
as to

[[Page 110]]

require the degree of care and treatment which a hospital or skilled 
nursing home (as that term is employed in title XIX) is designed to 
provide:
    (ii) Does not provide the degree of care required to be provided by 
a skilled nursing home furnishing services under a State plan approved 
under title XIX:
    (iii) Meets such standards of safety and sanitation as are 
applicable to nursing homes under State law; and
    (iv) Regularly provides a level of care and service beyond board and 
room.

The term intermediate care facility also includes a Christian Science 
sanatorium operated, or listed and certified, by the First Church of 
Christ, Scientist, Boston, Mass.
    (4) Range or level of care and services. The range or level of care 
and services suitable to the needs of individuals described in paragraph 
(d)(3)(i) of this section is to be defined by the State agency. The 
following items are recommended as a minimum.
    (i) Admission, transfer, and discharge of residents. The admission, 
transfer, and discharge of residents of the facility are conducted in 
accordance with written policies of the institution that include at 
least the following provisions.
    (a) Only those persons are accepted into the facility whose needs 
can be met within the accommodations and services the facility provides;
    (b) As changes occur in their physical or mental condition, 
necessitating service or care not regularly provided by the facility, 
residents are transferred promptly to hospitals, skilled nursing homes, 
or other appropriate facilities;
    (c) The resident, his next of kin, and the responsible agency if 
any, are consulted in advance of the discharge of any resident, and 
casework services or other means are utilized to assure that adequate 
arrangements exist for meeting his needs through other resources.
    (ii) Personal care and protective services. The types and amounts of 
protection and personal service needed by each resident of the facility 
are a matter of record and are known to all staff members having 
personal contact with the resident. At least the following services are 
provided.
    (a) There is, at all times, a responsible staff member actively on 
duty in the facility, and immediately accessible to all residents, to 
whom residents can report injuries, symptoms of illness, or emergencies, 
and who is immediately responsible for assuring that appropriate action 
is taken promptly.
    (b) Assistance is provided, as needed by individual residents, with 
routine activities of daily living including such services as help in 
bathing, dressing, grooming, and management of personal affairs such as 
shopping.
    (c) Continuous supervision is provided for residents whose mental 
condition is such that their personal safety requires such supervision.
    (iii) Social services. Services to assist residents in dealing with 
social and related problems are available to all residents through one 
or more caseworkers on the staff of the facility; and/or, in the case of 
recipients of assistance, through caseworkers on the staff of the 
assistance agency; or through other arrangements.
    (iv) Activities. Activities are regularly available for all 
residents, including social and recreational activities involving active 
participation by the residents, entertainment of appropriate frequency 
and character, and opportunities for participation in community 
activities as possible and appropriate.
    (v) Food service. At least three meals a day, constituting a 
nutritionally adequate diet, are served in one or more dining areas 
separate from sleeping quarters, and tray service is provided for 
residents temporarily unable to leave their rooms.
    (vi) Special diets. If the facility accepts or retains individuals 
in need of medically prescribed special diets, the menus for such diets 
are planned by a professionally qualified dietitian, or are reviewed and 
approved by the attending physician, and the facility provides 
supervision of the preparation and serving of the meals and their 
acceptance by the resident.
    (vii) Health services. Whether provided by the facility or from 
other sources, at least the following services are available to all 
residents:
    (a) Immediate supervision of the facility's health services by a 
registered

[[Page 111]]

professional nurse or a licensed practical nurse employed full-time in 
the facility and on duty during the day shift except that, where the 
State recognizes and describes two or more distinct levels of 
institutions as intermediate care facilities such personnel are not 
required in any level that serves only individuals who have been 
determined by their physicians not to be in need of such supervision and 
whose need for such supervision is reviewed as indicated, and at least 
quarterly;
    (b) Continuing supervision by a physician who sees the resident as 
needed and in no case, less often than quarterly;
    (c) Under direction by the resident's physician and (where 
applicable in accordance with (d)(4)(vii)(a) of this section), general 
supervision by the nurse in charge of the facility's health services, 
guidance, and assistance for each resident in carrying out his personal 
health program to assure that preventive measures, treatments, and 
medications prescribed by the physician are properly carried out and 
recorded;
    (d) Arrangements for services of a physician in the event of an 
emergency when the resident's own physician cannot be reached;
    (e) In the presence of minor illness and for temporary periods, 
bedside care under direction of the resident's physician including 
nursing service provided by, or supervised by, a registered professional 
nurse or a licensed practical nurse;
    (f) An individual health record for each resident including;
    (1) The name, address, and telephone number of his physician;
    (2) A record of the physician's findings and recommendations in the 
preadmission evaluation of the individual's condition and in subsequent 
reevaluations and all orders and recommendations of the physician for 
care of the resident;
    (3) All symptoms and other indications of illness or injury brought 
to the attention of the staff by the resident, or from other sources, 
including the date, time, and action taken regarding each.
    (viii) Living accommodations. Space and furnishings provide each 
resident clean, comfortable, and reasonably private living 
accommodations with no more than four residents occupying a room, with 
individual storage facilities for clothing and personal articles, and 
with lounge, recreation and dining areas provided apart from sleeping 
quarters.
    (ix) Administration and management. The direction and management of 
the facility are such as to assure that the services required by the 
residents are so organized and administered that they are, in fact, 
available to the residents on a regular basis and that this is 
accomplished efficiently and with consideration for the objective of 
providing necessary care within a homelike atmosphere. Staff are 
employed by the facility sufficient in number and competence, as 
determined by the appropriate State agency, to meet the requirements of 
the residents.

[35 FR 8990, June 10, 1970, as amended at 39 FR 2220, Jan. 17, 1974; 39 
FR 8918, Mar. 7, 1974]



PART 235_ADMINISTRATION OF FINANCIAL ASSISTANCE PROGRAMS--Table of Contents




Sec.
235.40 [Reserved]
235.50 State plan requirements for methods of personnel administration.
235.60 Federal financial participation (FFP) for State and local 
          training.
235.61 Definition of terms.
235.62 State plan requirements for training programs.
235.63 Conditions for FFP.
235.64 FFP rates, and activities and costs matchable as training 
          expenditures.
235.65 Activities and costs not matchable as training expenditures.
235.66 Sources of State funds.
235.70 Prompt notice to child support or Medicaid agency.
235.110 Fraud.

    Authority: 42 U.S.C. 603, 616, and 1302.



Sec.  235.40  [Reserved]



Sec.  235.50  State plan requirements for methods of personnel administration.

    (a) A State plan for financial assistance programs under title I, 
IV-A, X, XIV, or XVI (AABD) of the Social Security Act must provide that 
methods

[[Page 112]]

of personnel administration will be established and maintained in public 
agencies administering or supervising the administration of the program 
in conformity with the Standards for a Merit System of Personnel 
Administration, 5 CFR part 900, subpart F, which incorporates the 
Intergovernmental Personnel Act Merit Principles (Pub. L. 91-648, 
section 2, 84 Stat. 1909), prescribed by the Office of Personnel 
Management pursuant to section 208 of the Intergovernmental Personnel 
Act of 1970 as amended.

[45 FR 25398, Apr. 15, 1980]



Sec.  235.60  Federal financial participation (FFP) for State and local training.

    Sections 235.61 through 235.66 contain (a) State plan requirements 
for training programs and (b) conditions for Federal financial 
participation (FFP) for training costs under the State plans. These 
sections apply to the State plans for the financial assistance programs 
in all jurisdictions under title I, IV-A, X, XIV, or XVI (AABD) of the 
Social Security Act.

[45 FR 29833, May 6, 1980]



Sec.  235.61  Definition of terms.

    For purposes of Sec. Sec.  235.60-235.66:
    Act means the Social Security Act, as amended.
    A grant to an educational institution means payments to an 
educational institution for services rendered under a time limited 
agreement between the State agency and the eligible educational 
institution which provides for the training of State or local agency 
employees or persons preparing for employment with the State or local 
agency.
    A training program is the method through which the State agency 
carries out a plan of educational and training activities to improve the 
operation of its programs.
    (a) Initial in-service training means a period of intensive, task-
oriented training to prepare new employees to assume job 
responsibilities.
    (b) Continuing training means an on-going program of training 
planned to enable employees to: (1) Reinforce their basic knowledge and 
develop the required skills for the performance of specific functions, 
and (2) acquire additional knowledge and skill to meet changes such as 
enactment of new legislation, development of new policies, or shifts in 
program emphasis.
    (c) Full-time training means training that requires employees to be 
relieved of all responsibility for performance of current work to 
participate in a training program.
    (d) Part-time training means training that allows employees to 
continue full time in their jobs or requires only partial reduction of 
work activities to participate in a training program outside of the 
State or local agency.
    (e) Long-term training means training for eight consecutive work 
weeks or longer.
    (f) Short-term training means training for less than eight 
consecutive work weeks.
    FFP or Federal financial participation means the Federal 
government's share of expenditures made by a State or local agency under 
a training program.
    Fringe benefits means the employer's share of premiums for 
industrial compensation, employee's retirement, unemployment 
compensation, health insurance, and similar expenses.
    Persons preparing for employment means individuals who are not yet 
employed by the State or local agency, but who have received financial 
assistance from the State agency for training, and have made a legally 
binding commitment with the State or local agency for future employment 
under the conditions of these regulations.
    Stipend means the basic living allowance paid to a student.

[45 FR 29833, May 6, 1980]



Sec.  235.62  State plan requirements for training programs.

    A State plan under title I, IV-A, X, XIV, or XVI (AABD) of the Act 
must provide for a training program for agency personnel. The training 
program must:
    (a) Include initial in-service training for newly appointed staff, 
and continuing agency training opportunities to improve the operation of 
the program. The training program may also include short-term and long-
term training at educational institutions

[[Page 113]]

through grants to institutions or by direct financial assistance to 
students enrolled in institutions who are agency employees or persons 
preparing for employment with the State or local agency;
    (b) Be related to job duties performed or to be performed by the 
persons trained, and be consistent with the program objectives of the 
agency; and
    (c) Be described in an annual training plan prepared prior to the 
beginning of the fiscal year. Copies of the training plan shall be made 
available upon request to the Regional Office of Family Assistance for 
review by the Federal staff.

[45 FR 29833, May 6, 1980, as amended at 46 FR 29264, June 1, 1981]



Sec.  235.63  Conditions for FFP.

    (a) Who may be trained. FFP is available only for training provided 
personnel employed in all classes of positions, volunteers, and persons 
preparing for employment by the State or local agency administering the 
program.
    (b) When FFP is available. FFP is available for personnel employed 
and persons preparing for employment by the State or local agency 
provided the following conditions are met, and with the following 
limitations:
    (1) Employees in full-time, long-term training make a commitment to 
work in the agency for a period of time equal to the period for which 
financial assistance is granted. A State agency may exempt an employee 
from fulfilling this commitment only if failure to continue in 
employment is due to death, disability, employment in a financial 
assistance program in a public assistance agency in another State, or 
other emergent circumstances determined by the single State agency head 
to be valid for exemption;
    (2) An employee retains his or her rights and benefits in the agency 
while on full-time, long-term training leave;
    (3) Persons preparing for employment are selected by the State 
agency and accepted by the school;
    (4) Persons preparing for employment are pursuing educational 
programs approved by the State agency;
    (5) Persons preparing for employment are committed to work for State 
or local agency for a period of time at least equal to the period for 
which financial assistance is granted if employment is offered within 2 
months after training is completed;
    (6) The State or local agency offers the individual preparing for 
employment a job upon completion of training unless precluded by merit 
system requirements, legislative budget cuts, position freezes, or other 
circumstances beyond the agency's control; and if unable to offer 
employment, releases the individual from his or her commitment;
    (7) The State agency keeps a record of the employment of persons 
trained. If the persons are not employed by the State or local agency, 
the record specifies the reason for non-employment;
    (8) The State agency evaluates the training programs; and
    (9) Any recoupment of funds by the State from trainees failing to 
fulfill their commitment under this section shall be treated as a refund 
and deducted from total training costs for the purpose of determining 
net costs for FFP.
    (c) Grants to educational institutions. FFP is available in payments 
for services rendered under grants to educational institutions provided 
all of the following conditions are met:
    (1) Grants are made for the purpose of developing, expanding, or 
improving training for personnel employed by the State or local agency 
or preparing for employment by the State or local agency administering 
the program. Grants are made for an educational program (curriculum 
development, classroom instruction, field instruction, or any 
combination of these) that is directly related to the agency's program. 
Grants are made for not more than 3 years, but may be renewed, subject 
to the conditions of this section;
    (2) Grants are made to educational institutions and programs that 
are accredited by the appropriate institutional accrediting body 
recognized by the U.S. Commissioner of Education. When a specialized 
program within the institution for which there is a specialized 
accrediting body is used, that program must be accredited by or have 
pre-accreditation status from that body. (Part 149 of this title 
explains the

[[Page 114]]

requirements and procedures for obtaining recognition as an accrediting 
agency or association. Lists of currently recognized accrediting bodies 
are published in the Federal Register periodically. See also Nationally 
Recognized Accrediting Agencies and Associations published by the Office 
of Education);
    (3) The State agency has written policies establishing conditions 
and procedures for such grants;
    (4) Each grant describes objectives in terms of how the educational 
program is related to the financial assistance programs and how it is 
designed to meet the State or local agency's manpower needs; and
    (5) An evaluation of the educational program funded by each grant is 
made no later than the close of the second year of the grant. The 
evaluation shall be conducted by representatives from the educational 
institution and the State agency to determine whether conditions and 
objectives described in the grant are being met. If the educational 
program does not meet these conditions and objectives, payment shall be 
terminated no later than the close of the second year of the grant.

[45 FR 29834, May 6, 1980]



Sec.  235.64  FFP rates, and activities and costs matchable as training expenditures.

    Under title I, IV-A, X, XIV, or XVI(AABD) of the Act, FFP is 
available at the rate of 50 percent for the following costs:
    (a) Salaries, fringe benefits, travel and per diem for:
    (1) Staff development personnel (including support staff) assigned 
full time to training functions and;
    (2) Staff development personnel assigned part time to training 
functions to the extent time is spent performing such functions.
    (b) For agency training sessions, FFP is available for:
    (1) Salaries, fringe benefits, travel and per diem for employees in 
initial in-service training of at least one week;
    (2) Travel and per diem for employees in agency training sessions 
away from the employee's work site, or in institutes, seminars or 
workshops related to the job and sponsored by professional 
organizations;
    (3) Salaries, fringe benefits, travel and per diem for experts 
outside the agency engaged to develop or conduct special programs; and
    (4) Costs of space, postage, teaching supplies, purchase or 
development of teaching material and equipment, and costs of maintaining 
and operating the agency library as an essential resource to the 
agency's training program.
    (c) For training and education outside of the agency, FFP is 
available for:
    (1) Salaries, fringe benefits, dependency allowance, travel, 
tuition, books, and educational supplies for employees in full-time, 
long-term training programs (with no assigned agency duties);
    (2) Salaries, fringe benefits, travel, tuition, books, and 
educational supplies for employees in full-time, short-term training 
programs of four or more consecutive work weeks;
    (3) Travel, per diem, tuition, books and educational supplies for 
employees in short-term training programs of less than four consecutive 
work weeks, or part-time training programs; and
    (4) Stipends, travel, tuition, books and educational supplies for 
persons preparing for employment with the State or local agency.
    (d) FFP is available for payments to educational institutions, as 
described in Sec.  235.63(c) for salaries, fringe benefits, and travel 
of instructors, clerical assistance, teaching materials and equipment.

[45 FR 29834, May 6, 1980, as amended at 47 FR 5683, Feb. 5, 1982; 59 FR 
12861, Mar. 18, 1994]



Sec.  235.65  Activities and costs not matchable as training expenditures.

    FFP is not available for the following expenditures as training 
costs; however, the expenditures described in this section may be 
matched as administrative costs, if conditions for such matching are 
met:
    (a) Salaries of supervisors (day-to-day supervision of staff is not 
a training activity); and

[[Page 115]]

    (b) Employment of students on a temporary basis, such as in the 
summertime.

[45 FR 29835, May 6, 1980]



Sec.  235.66  Sources of State funds.

    (a) Public funds. Public funds may be considered as the State's 
share in claiming Federal reimbursement where the funds:
    (1) Are appropriated directly to the State or local agency, or 
transferred from another public agency (including Indian tribes) to the 
State or local agency and under its administrative control, or certified 
by the contributing public agency as representing expenditures eligible 
for FFP under Sec. Sec.  235.60-235.66;
    (2) Are not used to match other Federal funds; and
    (3) Are not federal funds, or are Federal funds authorized by 
Federal law to be used to match other Federal funds.
    (b) Private funds. Funds donated from private sources may be 
considered as the State's share in claiming Federal reimbursement only 
where the funds are:
    (1) Transferred to the State or local agency and under its 
administrative control;
    (2) Donated without any restriction which would require their use 
for the training of a particular individual or at particular facilities 
or institutions; and
    (3) Do not revert to the donor's facility or use.

[45 FR 29835, May 6, 1980]



Sec.  235.70  Prompt notice to child support or Medicaid agency.

    (a) A State plan under title IV-A of the Social Security Act must 
provide for prompt notice to the State or local child support agency 
designated pursuant to section 454(3) of the Social Security Act and to 
the State title XIX agency, as appropriate, whenever:
    (1) Aid is furnished to a child who has been deserted or abandoned 
by a parent, to the parent(s) with whom the child lives, or to a 
pregnant woman under Sec.  233.90(c)(2)(iv), or
    (2) Any of the persons in paragraph (a)(1) of this section is deemed 
to be a recipient of aid under Sec.  233.20(a)(3)(viii)(D).
    (b) In this section:
    (1) Aid means Aid to Families with Dependent Children, or AFDC 
Foster Care.
    (2) Prompt notice means written notice including a copy of the AFDC 
case record, or all relevant information as prescribed by the child 
support agency. Prompt notice must also include all relevant information 
as prescribed by the State medicaid agency for the pursuit of liable 
third parties. The prompt notice shall be provided within two working 
days of the furnishing of aid or the determination that an individual is 
a recipient under Sec.  233.20(a)(3)(viii)(D). The title IV-A, IV-D and 
XIX agencies may agree to provide notice immediately upon the filing of 
an application for assistance.
    (3) Furnish means the date on which cash is given to the family, a 
check or warrant is mailed to the family, a deposit is made in a bank 
for the family, or other similar circumstances in which an assistance 
payment is made to the family, or the date on which individuals are 
determined to be recipients under Sec.  233.20(a)(3)(viii)(D).
    (4) A child who has been deserted or abandoned by a parent means any 
child whose eligibility for AFDC is based on continued absence of a 
parent from the home, and includes a child born out of wedlock without 
regard to whether the paternity of such child has been established.

[47 FR 5683, Feb. 5, 1982, as amended at 56 FR 8933, Mar. 4, 1991]



Sec.  235.110  Fraud.

    State plan requirements: A State plan under title I, IV-A, X, XIV, 
or XVI of the Social Security Act must provide:
    (a) That the State agency will establish and maintain:
    (1) Methods and criteria for identifying situations in which a 
question of fraud in the program may exist, and
    (2) Procedures developed in cooperation with the State's legal 
authorities for referring to law enforcement officials situations in 
which there is valid reason to suspect that fraud has been practiced.

[[Page 116]]


The definition of fraud for purposes of this section will be determined 
in accordance with State law.
    (b) For methods of investigation of situations which there is a 
question of fraud, that do not infringe on the legal rights of persons 
involved and are consistent with the principles recognized as affording 
due process of law.
    (c) For the designation of official position(s) responsible for 
referral of situations involving suspected fraud to the proper 
authorities.

[36 FR 3869, Feb. 27, 1971]



PART 237_FISCAL ADMINISTRATION OF FINANCIAL ASSISTANCE PROGRAMS--Table of Contents




    Authority: Section 1102 of the Social Security Act (42 U.S.C. 1302); 
49 Stat. 647, as amended.



Sec.  237.50  Recipient count, Federal financial participation.

    Pursuant to the formulas in sections 3, 403, 1003, 1118, 1121, 1403, 
and 1603 of the Social Security Act, it is necessary to identify 
expenditures that may be included in claims for Federal financial 
participation. The quarterly statement of expenditures and recoveries 
which is required for OAA, AFDC, AB, APTD, and AABD must include, as a 
part of the basis for computing the amount of Federal participation in 
such expenditures, the number of eligible recipients each month. 
However, where the State is making claims under section 1118 of the Act 
or under optional provisions for Federal sharing specified in such 
paragraphs no recipient count is involved. Vendor payments for medical 
care may not be considered if the State has a plan approved under title 
XIX of the Act. The procedures for determining recipient count are set 
forth in paragraphs (a), (b) and (c) of this section.
    (a) Adult assistance categories. For each adult assistance category, 
under title I, X, XIV, or XVI, of the Act, the recipient count for any 
month may include:

    (1) Eligible recipients who receive money payments or in whose 
behalf protective payments are made for that month:

Provided, That such payments are not excluded from Federal financial 
participation under the provisions of Sec.  233.145(c) of this chapter; 
plus
    (2) Other eligible recipients in whose behalf payments are made for 
institutional services in intermediate care facilities for that month, 
but only in a State which does not have in effect a plan approved under 
Title XIX of the Act. (See Sec.  233.145(b)(2) of this chapter.)

    (b) AFDC category. For the AFDC category under title IV, part A, of 
the Act:
    (1) The recipient count for any month includes:
    (i) Eligible recipients in families which receive a money payment, 
plus
    (ii) Eligible recipients in families not otherwise counted on whose 
behalf protective or nonmedical vendor assistance payments are made for 
such month in accordance with the vendor payment provisions at Sec.  
234.60, provided that such payments are not excluded from Federal 
financial participation under the provisions of Sec.  233.145(c) of this 
chapter.
    (2) For the purpose of this provision, recipients means, if 
otherwise eligible:
    (i) Children;
    (ii) In a home with no parent who is the caretaker relative, an 
otherwise eligible relative of specified degree;
    (iii) Parent(s);
    (iv) The spouse of such parent, in the case of AFDC eligibility due 
to incapacity or unemployment;
    (3) As used in paragraph (b)(2)(iii) of this section, the term 
parent means the natural or adoptive parent, or the stepparent who is 
married to the child's natural or adoptive parent and is legally 
obligated to support the child under a State law of general 
applicability which requires stepparents to support stepchildren to the 
same extent that natural or adoptive parents are required to support 
their children; and the term ``spouse'' as used in paragraph (b)(2)(iv) 
of this section means an individual who is the husband or wife of the 
child's own parent, as defined above, by reason of a legal marriage as 
defined under State law.
    (4) Where there are two or more dependent children living in a place 
of residence with two other persons and each of such other persons is a 
relative who has responsibility for the care and

[[Page 117]]

control of one or more of the dependent children, there may be two AFDC 
families (assistance units), if neither family includes a parent or 
sibling included in the other family pursuant to Sec.  206.10 
(a)(1)(vii).
    (c) Essential person. An essential person or other ineligible person 
who is living with the eligible person may not be counted as a 
recipient.

[38 FR 32914, Nov. 29, 1973, as amended at 57 FR 30161, July 8, 1992]



PART 260_GENERAL TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) PROVISIONS--Table of Contents




     Subpart A_What Provisions Generally Apply to the TANF Program?

Sec.
260.10 What does this part cover?
260.20 What is the purpose of the TANF program?
260.30 What definitions apply under the TANF regulations?
260.31 What does the term ``assistance'' mean?
260.32 What does the term ``WtW cash assistance'' mean?
260.33 When are expenditures on State or local tax credits allowable 
          expenditures for TANF-related purposes?
260.34 When do the Charitable Choice provisions of TANF apply?
260.35 What other Federal laws apply to TANF?
260.40 When are these provisions in effect?

Subpart B_What Special Provisions Apply to Victims of Domestic Violence?

260.50 What is the purpose of this subpart?
260.51 What definitions apply to this subpart?
260.52 What are the basic provisions of the Family Violence Option 
          (FVO)?
260.54 Do States have flexibility to grant good cause domestic violence 
          waivers?
260.55 What are the additional requirements for Federal recognition of 
          good cause domestic violence waivers?
260.58 What penalty relief is available to a State whose failure to meet 
          the work participation rates is attributable to providing 
          federally recognized good cause domestic violence waivers?
260.59 What penalty relief is available to a State that failed to comply 
          with the five-year limit on Federal assistance because it 
          provided federally recognized good cause domestic violence 
          waivers?

 Subpart C_What Special Provisions Apply to States That Were Operating 
                    Programs Under Approved Waivers?

260.70 What is the purpose of this subpart?
260.71 What definitions apply to this subpart?
260.72 What basic requirements must State demonstration components meet 
          for the purpose of determining if inconsistencies exist with 
          respect to work requirements or time limits?
260.73 How do existing welfare reform waivers affect the participation 
          rates and work rules?
260.74 How do existing welfare reform waivers affect the application of 
          the Federal time-limit provisions?
260.75 If a State is claiming a waiver inconsistency for work 
          requirements or time limits, what must the Governor certify?
260.76 What special rules apply to States that are continuing 
          evaluations of their waiver demonstrations?

    Authority: 42 U.S.C. 601, 601 note, 603, 604, 606, 607, 608, 609, 
610, 611, 619, and 1308.

    Source: 64 FR 17878, Apr. 12, 1999, unless otherwise noted.



        Subpart A_What Rules Generally Apply to the TANF Program?



Sec.  260.10  What does this part cover?

    This part includes regulatory provisions that generally apply to the 
Temporary Assistance for Needy Families (TANF) program.



Sec.  260.20  What is the purpose of the TANF program?

    The TANF program has the following four purposes:
    (a) Provide assistance to needy families so that children may be 
cared for in their own homes or in the homes of relatives;
    (b) End the dependence of needy parents on government benefits by 
promoting job preparation, work, and marriage;
    (c) Prevent and reduce the incidence of out-of-wedlock pregnancies 
and establish annual numerical goals for preventing and reducing the 
incidence of these pregnancies; and
    (d) Encourage the formation and maintenance of two-parent families.

[[Page 118]]



Sec.  260.30  What definitions apply under the TANF regulations?

    The following definitions apply under parts 260 through 265 of this 
chapter:
    ACF means the Administration for Children and Families.
    Act means Social Security Act, unless otherwise specified.
    Adjusted State Family Assistance Grant, or adjusted SFAG, means the 
SFAG amount, minus any reductions for Tribal Family Assistance Grants 
paid to Tribal grantees on behalf of Indian families residing in the 
State and any transfers to the Social Services Block Grant or the Child 
Care and Development Block Grant.
    Administrative costs has the meaning specified at Sec.  263.0(b) of 
this chapter.
    Adult means an individual who is not a ``minor child,'' as defined 
elsewhere in this section.
    AFDC means Aid to Families with Dependent Children.
    Aid to Families with Dependent Children means the welfare program in 
effect under title IV-A of prior law.
    Assistance has the meaning specified at Sec.  260.31.
    Basic MOE means the expenditure of State funds that must be made in 
order to meet the MOE requirement at section 409(a)(7) of the Act.
    Cash assistance, when provided to participants in the Welfare-to-
Work program (WtW), has the meaning specified at Sec.  260.32.
    CCDBG means the Child Care and Development Block Grant Act of 1990, 
as amended, 42 U.S.C. 9858 et seq.
    CCDF means the Child Care and Development Fund, or those child care 
programs and services funded either under section 418(a) of the Act or 
CCDBG.
    Commingled State TANF expenditures means expenditures of State funds 
that are made within the TANF program and commingled with Federal TANF 
funds.
    Contingency fund means Federal TANF funds available under section 
403(b) of the Act, and contingency funds means the Federal monies made 
available to States under that section. Neither term includes any State 
funds expended pursuant to section 403(b).
    Contingency fund MOE means the MOE expenditures that a State must 
make in order to meet the MOE requirements at sections 403(b)(6) and 
409(a)(10) of the Act and subpart B of part 264 of this chapter and 
retain contingency funds made available to the State. The only 
expenditures that qualify for Contingency Fund MOE are State TANF 
expenditures.
    Control group is a term relevant to continuation of a ``waiver'' and 
has the meaning specified at Sec.  260.71.
    Countable State expenditures has the meaning specified at Sec.  
264.0 of this chapter.
    Discretionary fund of the CCDF refers to child care funds 
appropriated under the CCDBG.
    EA means Emergency Assistance.
    Eligible State means a State that, during the 27-month period ending 
with the close of the first quarter of the fiscal year, has submitted a 
TANF plan that we have determined is complete.
    Emergency assistance means the program option available to States 
under sections 403(a)(5) and 406(e) of prior law to provide short-term 
assistance to needy families with children.
    Expenditure means any amount of Federal TANF or State MOE funds that 
a State expends, spends, pays out, or disburses consistent with the 
requirements of parts 260 through 265 of this chapter. It may include 
expenditures on the refundable portions of State or local tax credits, 
if they are consistent with the provisions at Sec.  260.33. It does not 
include any amounts that merely represent avoided costs or foregone 
revenue. Avoided costs include such items as contractor penalty payments 
for poor performance and purchase price discounts, rebates, and credits 
that a State receives. Foregone revenue includes State tax provisions--
such as waivers, deductions, exemptions, or nonrefundable tax credits--
that reduce a State's tax revenue.
    Experimental group is a term relevant to continuation of a 
``waiver'' and has the meaning specified at Sec.  260.71.
    FAG has the meaning specified at Sec.  264.0(b) of this chapter.
    Family Violence Option (or FVO) has the meaning specified at Sec.  
260.51.
    FAMIS means the automated statewide management information system 
under sections 402(a)(30), 402(e), and 403 of prior law.

[[Page 119]]

    Federal expenditures means expenditures by a State of Federal TANF 
funds.
    Federal TANF funds means all funds provided to the State under 
section 403 of the Act except WtW funds awarded under section 403(a)(5), 
including the SFAG, any bonuses, supplemental grants, or contingency 
funds.
    Federally recognized good cause domestic violence waiver has the 
meaning specified at Sec.  260.51.
    Fiscal year means the 12-month period beginning on October 1 of the 
preceding calendar year and ending on September 30.
    FY means fiscal year.
    Good cause domestic violence waiver has the meaning specified at 
Sec.  260.51.
    Governor means the Chief Executive Officer of the State. It thus 
includes the Governor of each of the 50 States and the Territories and 
the Mayor of the District of Columbia.
    IEVS means the Income and Eligibility Verification System operated 
pursuant to the provisions in section 1137 of the Act.
    Inconsistent is a term relevant to continuation of a ``waiver'' and 
has the meaning specified at Sec.  260.71.
    Indian, Indian Tribe and Tribal Organization have the meaning given 
such terms by section 4 of the Indian Self-Determination and Education 
Assistance Act (25 U.S.C. 450b), except that the term ``Indian tribe'' 
means, with respect to the State of Alaska, only the Metlakatla Indian 
Community of the Annette Islands Reserve and the following Alaska Native 
regional nonprofit corporations:
    (1) Arctic Slope Native Association;
    (2) Kawerak, Inc.;
    (3) Maniilaq Association;
    (4) Association of Village Council Presidents;
    (5) Tanana Chiefs Council;
    (6) Cook Inlet Tribal Council;
    (7) Bristol Bay Native Association;
    (8) Aleutian and Pribilof Island Association;
    (9) Chugachmuit;
    (10) Tlingit Haida Central Council;
    (11) Kodiak Area Native Association; and
    (12) Copper River Native Association.
    Individual Development Account, or IDA, has the meaning specified at 
Sec.  263.20 of this chapter.
    Job Opportunities and Basic Skills Training Program means the 
program under title IV-F of prior law to provide education, training and 
employment services to welfare recipients.
    JOBS means the Job Opportunities and Basic Skills Training Program.
    Minor child means an individual who:
    (1) Has not attained 18 years of age; or
    (2) Has not attained 19 years of age and is a full-time student in a 
secondary school (or in the equivalent level of vocational or technical 
training).
    MOE means maintenance-of-effort.
    Needy State is a term that pertains to the provisions on the 
Contingency Fund and the penalty for failure to meet participation 
rates. It means, for a month, a State where:
    (1)(i) The average rate of total unemployment (seasonally adjusted) 
for the most recent 3-month period for which data are published for all 
States equals or exceeds 6.5 percent; and
    (ii) The average rate of total unemployment (seasonally adjusted) 
for such 3-month period equals or exceeds 110 percent of the average 
rate for either (or both) of the corresponding 3-month periods in the 
two preceding calendar years; or
    (2) The Secretary of Agriculture has determined that the average 
number of individuals participating in the Food Stamp program in the 
State has grown at least 10 percent in the most recent 3-month period 
for which data are available.
    Noncustodial parent means a parent of a minor child who:
    (1) Lives in the State; and
    (2) Does not live in the same household as the minor child.
    Prior law means the provisions of title IV-A and IV-F of the Act in 
effect as of August 21, 1996. They include provisions related to Aid to 
Families with Dependent Children (or AFDC), Emergency Assistance (or 
EA), Job Opportunities and Basic Skills Training (or JOBS), and FAMIS.
    PRWORA means the Personal Responsibility and Work Opportunity

[[Page 120]]

Reconciliation Act of 1996, or Pub. L. 104-193, 42 U.S.C. 1305 note.
    Qualified Aliens has the meaning prescribed under section 431 of 
PRWORA, as amended, 8 U.S.C. 1641.
    Qualified State Expenditures means the total amount of State funds 
expended during the fiscal year that count for basic MOE purposes. It 
includes expenditures, under any State program, for any of the following 
with respect to eligible families:
    (1) Cash assistance;
    (2) Child care assistance;
    (3) Educational activities designed to increase self-sufficiency, 
job training, and work, excluding any expenditure for public education 
in the State except expenditures involving the provision of services or 
assistance of an eligible family that is not generally available to 
persons who are not members of an eligible family;
    (4) Any other use of funds allowable under subpart A of part 263 of 
this chapter; and
    (5) Administrative costs in connection with the matters described in 
paragraphs (1), (2), (3) and (4) of this definition, but only to the 
extent that such costs do not exceed 15 percent of the total amount of 
qualified State expenditures for the fiscal year.
    Secretary means Secretary of the Department of Health and Human 
Services or any other Department official duly authorized to act on the 
Secretary's behalf.
    Segregated State TANF expenditures means expenditures of State funds 
within the TANF program that are not commingled with Federal TANF funds.
    Separate State program, or SSP, means a program operated outside of 
TANF in which the expenditures of State funds may count for basic MOE 
purposes.
    SFAG means State family assistance grant, as defined in this 
section.
    SFAG payable means the SFAG amount, reduced, as appropriate, for any 
Tribal Family Assistance Grants made on behalf of Indian families 
residing in the State and any penalties imposed on a State under this 
chapter.
    Single audit means an audit or supplementary review conducted under 
the authority of the Single Audit Act at 31 U.S.C. chapter 75.
    Social Services Block Grant means the social services program 
operated under title XX of the Act, pursuant to 42 U.S.C. 1397.
    SSBG means the Social Services Block Grant.
    State means the 50 States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, and American Samoa, unless otherwise specified.
    State agency means the agency that the Governor certifies as the 
administering and supervising agency for the TANF program, pursuant to 
section 402(a)(4) of the Act.
    State family assistance grant means the amount of the basic block 
grant allocated to each eligible State under the formula at section 
403(a)(1) of the Act.
    State MOE expenditures means the expenditure of State funds that may 
count for purposes of the basic MOE requirements at section 409(a)(7) of 
the Act and the Contingency Fund MOE requirements at sections 403(b)(4) 
and 409(a)(10) of the Act.
    State TANF expenditures means the expenditure of State funds within 
the TANF program.
    TANF means The Temporary Assistance for Needy Families Program.
    TANF program means a State program of family assistance operated by 
an eligible State under its State TANF plan.
    Territories means the Commonwealth of Puerto Rico, the United States 
Virgin Islands, Guam, and American Samoa.
    Title IV-A refers to the title and part of the Act that now includes 
TANF, but previously included AFDC and EA. For the purpose of the TANF 
program regulations, this term does not include child care programs 
authorized and funded under section 418 of the Act, or their 
predecessors, unless we specify otherwise.
    Tribal family assistance grant means a grant paid to a Tribe that 
has an approved Tribal family assistance plan under section 412(a)(1) of 
the Act.
    Tribal grantee means a Tribe that receives Federal TANF funds to 
operate a Tribal TANF program under section 412(a) of the Act.

[[Page 121]]

    Tribal TANF program means a TANF program developed by an eligible 
Tribe, Tribal organization, or consortium and approved by us under 
section 412 of the Act.
    Tribe means Indian Tribe or Tribal organization, as defined 
elsewhere in this section. The definition may include Tribal consortia 
(i.e., groups of federally recognized Tribes or Alaska Native entities 
that have banded together in a formal arrangement to develop and 
administer a Tribal TANF program).
    Victim of domestic violence has the meaning specified at Sec.  
260.51.
    Waiver, when used in subpart C of this part, has the meaning 
specified at Sec.  260.71.
    We (and any other first person plural pronouns) means the Secretary 
of Health and Human Services or any of the following individuals or 
organizations acting in an official capacity on the Secretary's behalf: 
the Assistant Secretary for Children and Families, the Regional 
Administrators for Children and Families, the Department of Health and 
Human Services, and the Administration for Children and Families.
    Welfare-to-Work means the new program for funding work activities at 
section 403(a)(5) of the Act.
    WtW means Welfare-to-Work.
    WtW cash assistance has the meaning specified at Sec.  260.32.

[64 FR 17878, Apr. 12, 1999; 64 FR 40291, July 26, 1999]



Sec.  260.31  What does the term ``assistance'' mean?

    (a)(1) The term ``assistance'' includes cash, payments, vouchers, 
and other forms of benefits designed to meet a family's ongoing basic 
needs (i.e., for food, clothing, shelter, utilities, household goods, 
personal care items, and general incidental expenses).
    (2) It includes such benefits even when they are:
    (i) Provided in the form of payments by a TANF agency, or other 
agency on its behalf, to individual recipients; and
    (ii) Conditioned on participation in work experience or community 
service (or any other work activity under Sec.  261.30 of this chapter).
    (3) Except where excluded under paragraph (b) of this section, it 
also includes supportive services such as transportation and child care 
provided to families who are not employed.
    (b) It excludes:
    (1) Nonrecurrent, short-term benefits that:
    (i) Are designed to deal with a specific crisis situation or episode 
of need;
    (ii) Are not intended to meet recurrent or ongoing needs; and
    (iii) Will not extend beyond four months.
    (2) Work subsidies (i.e., payments to employers or third parties to 
help cover the costs of employee wages, benefits, supervision, and 
training);
    (3) Supportive services such as child care and transportation 
provided to families who are employed;
    (4) Refundable earned income tax credits;
    (5) Contributions to, and distributions from, Individual Development 
Accounts;
    (6) Services such as counseling, case management, peer support, 
child care information and referral, transitional services, job 
retention, job advancement, and other employment-related services that 
do not provide basic income support; and
    (7) Transportation benefits provided under a Job Access or Reverse 
Commute project, pursuant to section 404(k) of the Act, to an individual 
who is not otherwise receiving assistance.
    (c) The definition of the term assistance specified in paragraphs 
(a) and (b) of this section:
    (1) Does not apply to the use of the term assistance at part 263, 
subpart A, or at part 264, subpart B, of this chapter; and
    (2) Does not preclude a State from providing other types of benefits 
and services in support of the TANF goal at Sec.  260.20(a).



Sec.  260.32  What does the term ``WtW cash assistance'' mean?

    (a) For the purpose of Sec.  264.1(b)(1)(iii) of this chapter, WtW 
cash assistance only includes benefits that:
    (1) Meet the definition of assistance at Sec.  260.31; and
    (2) Are directed at basic needs.

[[Page 122]]

    (b) Thus, it includes benefits described in paragraphs (a)(1) and 
(a)(2) of Sec.  260.31, but excludes benefits described in paragraph 
(a)(3) of Sec.  260.31.
    (c) It only includes benefits identified in paragraphs (a) and (b) 
of this section when they are provided in the form of cash payments, 
checks, reimbursements, electronic funds transfers, or any other form 
that can legally be converted to currency.



Sec.  260.33  When are expenditures on State or local tax credits allowable expenditures for TANF-related purposes?

    (a) To be an allowable expenditure for TANF-related purposes, any 
tax credit program must be reasonably calculated to accomplish one of 
the purposes of the TANF program, as specified at Sec.  260.20.
    (b)(1) In addition, pursuant to the definition of expenditure at 
Sec.  260.30, we would only consider the refundable portion of a State 
or local tax credit to be an allowable expenditure.
    (2) Under a State Earned Income Tax Credit (EITC) program, the 
refundable portion that may count as an expenditure is the amount that 
exceeds a family's State income tax liability prior to application of 
the EITC. (The family's tax liability is the amount owed prior to any 
adjustments for credits or payments.) In other words, we would count 
only the portion of a State EITC that the State refunds to a family and 
that is above the amount of EITC used as credit towards the family's 
State income tax liability.
    (3) For other refundable (and allowable) State and local tax 
credits, such as refundable dependent care credits, the refundable 
portion that would count as an expenditure is the amount of the credit 
that exceeds the taxpayer's tax liability prior to the application of 
the credit. (The taxpayer's liability is the amount owed prior to any 
adjustments for credits or payments.) In other words, we would count 
only the portion of the credit that the State refunds to the taxpayer 
and that is above the amount of the credit applied against the 
taxpayer's tax bill.



Sec.  260.34  When do the Charitable Choice provisions of TANF apply?

    (a) These Charitable Choice provisions apply whenever a State or 
local government uses Federal TANF funds or expends State and local 
funds used to meet maintenance-of-effort (MOE) requirements of the TANF 
program to directly procure services and benefits from non-governmental 
organizations, or provides TANF beneficiaries with certificates, 
vouchers, or other forms of indirect disbursement redeemable from such 
organizations. For purposes of this section:
    (1) Direct funding or funds provided directly means that the 
government or an intermediate organization with the same duties as a 
governmental entity under this part selects the provider and purchases 
the needed services straight from the provider (e.g., via a contract or 
cooperative agreement).
    (2) Indirect funding or funds provided indirectly means placing the 
choice of service provider in the hands of the beneficiary, and then 
paying for the cost of that service through a voucher, certificate, or 
other similar means of payment.
    (b)(1) Religious organizations are eligible, on the same basis as 
any other organization, to participate in TANF as long as their Federal 
TANF or State MOE funded services are provided consistent with the 
Establishment Clause and the Free Exercise Clause of the First Amendment 
to the United States Constitution.
    (2) Neither the Federal government nor a State or local government 
in its use of Federal TANF or State MOE funds shall, in the selection of 
service providers, discriminate for or against an organization that 
applies to provide, or provides TANF services or benefits on the basis 
of the organization's religious character or affiliation.
    (c) No Federal TANF or State MOE funds provided directly to 
participating organizations may be expended for inherently religious 
activities, such as worship, religious instruction, or proselytization. 
If an organization conducts such activities, it must offer them 
separately, in time or location, from the programs or services for which 
it receives direct Federal TANF or State MOE funds under this part,

[[Page 123]]

and participation must be voluntary for the beneficiaries of those 
programs or services.
    (d) A religious organization that participates in the TANF program 
will retain its independence from Federal, State, and local governments 
and may continue to carry out its mission, including the definition, 
practice and expression of its religious beliefs, provided that it does 
not expend Federal TANF or State MOE funds that it receives directly to 
support any inherently religious activities, such as worship, religious 
instruction, or proselytization. Among other things, faith-based 
organizations may use space in their facilities to provide TANF-funded 
services without removing religious art, icons, scriptures, or other 
symbols. In addition, a Federal TANF or State MOE funded religious 
organization retains the authority over its internal governance, and it 
may retain religious terms in its organization's name, select its board 
members on a religious basis, and include religious references in its 
organization's mission statements and other governing documents.
    (e) The participation of a religious organization in, or its receipt 
of funds from, a TANF program does not affect that organization's 
exemption provided under 42 U.S.C. 2000e-1 regarding employment 
practices.
    (f) A religious organization that receives Federal TANF or State MOE 
funds shall not, in providing program services or benefits, discriminate 
against a TANF applicant or recipient on the basis of religion, a 
religious belief, a refusal to hold a religious belief, or a refusal to 
actively participate in a religious practice.
    (g)(1) If an otherwise eligible TANF applicant or recipient objects 
to the religious character of a TANF service provider, the recipient is 
entitled to receive services from an alternative provider to which the 
individual has no religious objection. In such cases, the State or local 
agency must refer the individual to an alternative provider of services 
within a reasonable period of time, as defined by the State or local 
agency. That alternative provider must be reasonably accessible and have 
the capacity to provide comparable services to the individual. Such 
services shall have a value that is not less than the value of the 
services that the individual would have received from the program 
participant to which the individual had such objection, as defined by 
the State or local agency.
    (2) The alternative provider need not be a secular organization. It 
must simply be a provider to which the recipient has no religious 
objection. States may adopt reasonable definitions of the terms 
``reasonably accessible,'' ``a reasonable period of time,'' 
``comparable,'' ``capacity,'' and `` value that is not less than.'' We 
expect States to apply these terms in a fair and consistent manner.
    (3) The appropriate State or local governments that administer 
Federal TANF or State MOE funded programs shall ensure that notice of 
their right to alternative services is provided to applicants or 
recipients. The notice must clearly articulate the recipient's right to 
a referral and to services that reasonably meet the timeliness, 
capacity, accessibility, and equivalency requirements discussed above.
    (h) Religious organizations that receive Federal TANF and State MOE 
funds are subject to the same regulations as other non-governmental 
organizations to account, in accordance with generally accepted 
auditing/accounting principles, for the use of such funds. Religious 
organizations may keep Federal TANF and State MOE funds they receive for 
services segregated in a separate account from non-governmental funds. 
If religious organizations choose to segregate their funds in this 
manner, only the Federal TANF and State MOE funds are subject to audit 
by the government under the program.
    (i) This section applies whenever a State or local organization uses 
Federal TANF or State MOE funds to procure services and benefits from 
non-governmental organizations, or redeems certificates, vouchers, or 
other forms of disbursement from them whether with Federal funds, or 
State and local funds claimed to meet the MOE requirements of section 
409(a)(7) of the Social Security Act. Subject to the requirements of 
paragraph (j), when State or local funds are used to meet the TANF MOE 
requirements, the

[[Page 124]]

provisions apply irrespective of whether the State or local funds are 
commingled with Federal funds, segregated, or expended in separate State 
programs.
    (j) Preemption. Nothing in this section shall be construed to 
preempt any provision of a State constitution, or State statute that 
prohibits or restricts the expenditure of segregated or separate State 
funds in or by religious organizations.
    (k) If a non-governmental intermediate organization, acting under a 
contract or other agreement with a State or local government, is given 
the authority under the contract or agreement to select non-governmental 
organizations to provide Federal TANF or MOE funded services, the 
intermediate organization must ensure that there is compliance with the 
Charitable Choice statutory provisions and these regulations. The 
intermediate organization retains all other rights of a non-governmental 
organization under the Charitable Choice statute and regulations.
    (l) Any party which seeks to enforce its right under this section 
may assert a civil action for injunctive relief exclusively in an 
appropriate State court against the entity or agency that allegedly 
commits such violation.

[68 FR 56465, Sept. 30, 2003]



Sec.  260.35  What other Federal laws apply to TANF?

    (a) Under section 408(d) of the Act, the following provisions of law 
apply to any program or activity funded with Federal TANF funds:
    (1) The Age Discrimination Act of 1975;
    (2) Section 504 of the Rehabilitation Act of 1973;
    (3) The Americans with Disabilities Act of 1990; and
    (4) Title VI of the Civil Rights Act of 1964.
    (b) The limitation on Federal regulatory and enforcement authority 
at section 417 of the Act does not limit the effect of other Federal 
laws, including Federal employment laws (such as the Fair Labor 
Standards Act (FLSA), the Occupational Safety and Health Act (OSHA) and 
unemployment insurance (UI)) and nondiscrimination laws. These laws 
apply to TANF beneficiaries in the same manner as they apply to other 
workers.



Sec.  260.40  When are these provisions in effect?

    (a) In determining whether a State is subject to a penalty under 
parts 261 through 265 of this chapter, we will not apply the regulatory 
provisions in parts 260 through 265 of this chapter retroactively. We 
will judge State actions that occurred prior to the effective date of 
these rules and expenditures of funds received prior to the effective 
date only against a reasonable interpretation of the statutory 
provisions in title IV-A of the Act.
    (b) The effective date of these rules is October 1, 1999.



Subpart B_What Special Provisions Apply to Victims of Domestic Violence?



Sec.  260.50  What is the purpose of this subpart?

    Under section 402(a)(7) of the Act, under its TANF plan, a State may 
elect to implement a special program to serve victims of domestic 
violence and to waive program requirements for such individuals. This 
subpart explains how adoption of these provisions affects the penalty 
determinations applicable if a State fails to meet its work 
participation rate or comply with the five-year limit on Federal 
assistance.



Sec.  260.51  What definitions apply to this subpart?

    Family Violence Option (or FVO) means the provision at section 
402(a)(7) of the Act under which a State certifies in its State plan if 
it has elected the option to implement comprehensive strategies for 
identifying and serving victims of domestic violence.
    Federally recognized good cause domestic violence waiver means a 
good cause domestic violence waiver that meets the requirements at 
Sec. Sec.  260.52(c) and 260.55.
    Good cause domestic violence waiver means a waiver of one or more 
program requirements granted by a State to a victim of domestic violence 
under the FVO, as described at Sec.  260.52(c).
    Victim of domestic violence means an individual who is battered or 
subject to

[[Page 125]]

extreme cruelty under the definition at section 408(a)(7)(C)(iii) of the 
Act.



Sec.  260.52  What are the basic provisions of the Family Violence Option (FVO)?

    Section 402(a)(7) of the Act provides that States electing the FVO 
certify that they have established and are enforcing standards and 
procedures to:
    (a) Screen and identify individuals receiving TANF and MOE 
assistance with a history of domestic violence, while maintaining the 
confidentiality of such individuals;
    (b) Refer such individuals to counseling and supportive services; 
and
    (c) Provide waivers, pursuant to a determination of good cause, of 
normal program requirements to such individuals for so long as necessary 
in cases where compliance would make it more difficult for such 
individuals to escape domestic violence or unfairly penalize those who 
are or have been victimized by such violence or who are at risk of 
further domestic violence.



Sec.  260.54  Do States have flexibility to grant good cause domestic violence waivers?

    (a) Yes; States have broad flexibility to grant these waivers to 
victims of domestic violence. For example, they may determine which 
program requirements to waive and decide how long each waiver might be 
necessary.
    (b) However, if a State wants us to take the waivers that it grants 
into account in deciding if it has reasonable cause for failing to meet 
its work participation rates or comply with the five-year limit on 
Federal assistance, has achieved compliance or made significant progress 
towards achieving compliance with such requirements during a corrective 
compliance period, or qualifies for a reduction in its work penalty 
under Sec.  261.51 of this chapter, the waivers must be federally 
recognized good cause domestic violence waivers, within the meaning of 
Sec. Sec.  260.52(c) and 260.55, and the State must submit the 
information specified at Sec.  265.9(b)(5) of this chapter on its 
strategies and procedures for serving victims of domestic violence and 
the number of waivers granted.



Sec.  260.55  What are the additional requirements for Federal recognition of good cause domestic violence waivers?

    To be federally recognized, good cause domestic violence waivers 
must:
    (a) Identify the specific program requirements that are being 
waived;
    (b) Be granted appropriately based on need, as determined by an 
individualized assessment by a person trained in domestic violence and 
redeterminations no less often than every six months;
    (c) Be accompanied by an appropriate services plan that:
    (1) Is developed by a person trained in domestic violence;
    (2) Reflects the individualized assessment and any revisions 
indicated by the redetermination; and
    (3) To the extent consistent with Sec.  260.52(c), is designed to 
lead to work.



Sec.  260.58  What penalty relief is available to a State whose failure to meet the work participation rates is attributable to providing federally recognized 
          good cause domestic violence waivers?

    (a)(1) We will determine that a State has reasonable cause if its 
failure to meet the work participation rates was attributable to 
federally recognized good cause domestic violence waivers granted to 
victims of domestic violence.
    (2) To receive reasonable cause under the provisions of Sec.  
262.5(b) of this chapter, the State must provide evidence that it 
achieved the applicable rates, except with respect to any individuals 
who received a federally recognized good cause domestic violence waiver 
of work participation requirements. In other words, it must demonstrate 
that it met the applicable rates when such waiver cases are removed from 
the calculations at Sec. Sec.  261.22(b) and 261.24(b) of this chapter.
    (b)(1) We will reduce a State's penalty based on the degree of 
noncompliance to the extent that its failure to meet the work 
participation rates was attributable to federally recognized good cause 
domestic violence waivers.
    (2) To receive a reduction based on degree of noncompliance under 
the provisions of Sec.  261.51 of this chapter, a State granting 
federally recognized

[[Page 126]]

good cause domestic violence waivers of work participation requirements 
must demonstrate that it achieved participation rates above the 
threshold at Sec.  261.51(b)(3) of this chapter, when such waiver cases 
are removed from the calculations at Sec. Sec.  261.22(b) and 261.24(b) 
of this chapter.
    (c) We may take federally recognized good cause domestic violence 
waivers of work requirements into consideration in deciding whether a 
State has achieved compliance or made significant progress towards 
achieving compliance in meeting the work participation rates during a 
corrective compliance period.
    (d) To receive the penalty relief specified in paragraphs (a), (b), 
and (c) of this section, the State must submit the information specified 
at Sec.  265.9(b)(5) of this chapter.



Sec.  260.59  What penalty relief is available to a State that failed to comply with the five-year limit on Federal assistance because it provided federally 
          recognized good cause domestic violence waivers?

    (a)(1) We will determine that a State has reasonable cause if it 
failed to comply with the five-year limit on Federal assistance because 
of federally recognized good cause domestic violence waivers granted to 
victims of domestic violence.
    (2) More specifically, to receive reasonable cause under the 
provisions at Sec.  264.3(b) of this chapter, a State must demonstrate 
that:
    (i) It granted federally recognized good cause domestic violence 
waivers to extend time limits based on the need for continued assistance 
due to current or past domestic violence or the risk of further domestic 
violence; and
    (ii) When individuals and their families are excluded from the 
calculation, the percentage of families receiving federally funded 
assistance for more than 60 months did not exceed 20 percent of the 
total.
    (b) We may take federally recognized good cause domestic violence 
waivers to extend time limits into consideration in deciding whether a 
State has achieved compliance or made significant progress towards 
achieving compliance in meeting the five-year limit on Federal 
assistance during a corrective compliance period.
    (c) To receive the penalty relief specified in paragraphs (a) and 
(b) of this section, the State must submit the information specified at 
Sec.  265.9(b)(5) of this chapter.

[64 FR 17878, Apr. 12, 1999]



 Subpart C_What Special Provisions Apply to States that Were Operating 
                    Programs Under Approved Waivers?



Sec.  260.70  What is the purpose of this subpart?

    (a) Under section 415 of the Act, if a State was granted a waiver 
under section 1115 of the Act and that waiver was in effect on August 
22, 1996, the amendments made by PRWORA do not apply for the period of 
the waiver, to the extent that they are inconsistent with the waiver and 
the State elects to continue its waiver.
    (b) Identification of waiver inconsistencies is relevant for the 
determination of penalties in three areas:
    (1) Under Sec.  261.50 of this chapter for failing to meet the work 
participation rates at part 261 of this chapter;
    (2) Under Sec.  264.2 of this chapter for failing to comply with the 
five-year limit on Federal assistance at subpart A of part 264 of this 
chapter; and
    (3) Under Sec.  261.54 of this chapter for failing to impose 
sanctions on individuals who fail to work.
    (c) This subpart explains how we will determine waiver 
inconsistencies and apply them in the penalty determination process for 
these penalties.



Sec.  260.71  What definitions apply to this subpart?

    (a) Inconsistent means that complying with the TANF work 
participation or sanction requirements at section 407 of the Act or the 
time-limit requirement at section 408(a)(7) of the Act would necessitate 
that a State change a policy reflected in an approved waiver.
    (b) Waiver consists of the work participation or time-limit 
component of the State's demonstration project under section 1115 of the 
Act. The component includes the revised AFDC requirements indicated in 
the State's

[[Page 127]]

waiver list, as approved by the Secretary under the authority of section 
1115, and the associated AFDC provisions that did not need to be waived.
    (c) Control group and experimental group have the meanings specified 
in the terms and conditions of the State's demonstration.



Sec.  260.72  What basic requirements must State demonstration components meet for the purpose of determining if inconsistencies exist with respect to work 
          requirements or time limits?

    (a) The policies must be consistent with the requirements of section 
415 of the Act and the requirements of this subpart.
    (b) The policies must be within the scope of the approved waivers 
both in terms of geographical coverage and the coverage of the types of 
cases specified in the waiver approval package.
    (c) The State must have applied its waiver policies on a continuous 
basis from the date that it implemented its TANF program, except that it 
may have adopted modifications that have the effect of making its 
policies more consistent with the provisions of PRWORA.
    (d) An inconsistency may not apply beyond the earlier of the 
following dates:
    (1) The expiration of waiver authority as determined in accordance 
with the demonstration terms and conditions; or
    (2) For any specific inconsistency, the date upon which the State 
discontinued the applicable waiver policy.
    (e) The State must submit the Governor's certification specified in 
Sec.  260.75.
    (f) In general, the policies in this subpart do not have the effect 
of delaying the date when a State might be subject to the work or time-
limit penalties at Sec. Sec.  261.50, 261.54, and 264.1 of this chapter 
or the data collection requirements at part 265 of this chapter.



Sec.  260.73  How do existing welfare reform waivers affect the participation rates and work rules?

    (a) If a State is implementing a work participation component under 
a waiver, in accordance with this subpart, the provisions of section 407 
of the Act will not apply in determining if a penalty should be imposed, 
to the extent that the provision is inconsistent with the waiver.
    (b) For the purpose of determining if the State's demonstration has 
a work participation component, the waiver list for the demonstration 
must include one or more specific provisions that directly correspond to 
the work policies in section 407 of the Act (i.e., change allowable JOBS 
activities, exemptions from JOBS participation, hours of required JOBS 
participation, or sanctions for noncompliance with JOBS participation).
    (c) Corresponding to the inconsistencies certified by the Governor 
under Sec.  260.75:
    (1) We will calculate the State's work participation rates, by:
    (i) Excluding cases exempted from participation under the 
demonstration component and, if applicable, experimental and control 
cases not otherwise exempted, in calculating the rate;
    (ii) Defining work activities as defined in the demonstration 
component in determining the numerator; and
    (iii) Including cases meeting the required number of hours of 
participation in work activities in accordance with demonstration 
component policy, in determining the numerator.
    (2) We will determine whether a State is taking appropriate 
sanctions when an individual refuses to work based on the State's 
certified waiver policies.
    (d) We will use the data submitted by States pursuant to Sec.  265.3 
of this chapter to calculate and make public a State's work 
participation rates under both the TANF requirements and the State's 
alternative waiver requirements.



Sec.  260.74  How do existing welfare reform waivers affect the application of the Federal time-limit provisions?

    (a)(1) If a State is implementing a time-limit component under a 
waiver, in accordance with this subpart, the provisions of section 
408(a)(7) of the Act will not apply in determining if a penalty should 
be imposed, to the extent that they are inconsistent with the waiver.

[[Page 128]]

    (2) For the purpose of determining if the State's demonstration has 
a time-limit component, the waiver list for the demonstration must 
include provisions that directly correspond to the time-limit policies 
enumerated in section 408(a)(7) of the Act (i.e., address which 
individuals or families are subject to, or exempt from, terminations of 
assistance based solely on the passage of time or who qualifies for 
extensions to the time limit).
    (b)(1) Generally, under an approved waiver, except as provided in 
paragraph (b)(3) of this section, a State will count, toward the Federal 
five-year limit, all months for which the head-of-household or spouse of 
the head-of-household subject to the State time limit receives 
assistance with Federal TANF funds, just as it would if it did not have 
an approved waiver.
    (2) The State need not count, toward the Federal five-year limit, 
any months for which a head-of-household or spouse of the head-of-
household receives assistance with Federal TANF funds while that 
individual is exempt from the State's time limit under the State's 
approved waiver.
    (3) Where a State has continued a time limit under waivers that only 
terminates assistance for adults, the State need not count, toward the 
Federal five-year limit, any months for which an adult subject to the 
State time limit receives assistance with Federal TANF funds.
    (4) The State may continue to provide assistance with Federal TANF 
funds for more than 60 months, without a numerical limit, to families 
provided extensions to the State time limit, under the provisions of the 
terms and conditions of the approved waiver.
    (c) Corresponding to the inconsistencies certified by the Governor 
under Sec.  260.75, we will calculate the State's time-limit exceptions 
by:
    (1) Excluding, from the determination of the number of months of 
Federal assistance received by a family:
    (i) Any month in which the adult(s) were exempt from the State's 
time limit under the terms of an approved waiver or any months in which 
the children received assistance under a waiver that only terminated 
assistance to adults; and
    (ii) If applicable, experimental and control group cases not 
otherwise exempted; and
    (2) Applying the State's waiver policies with respect to the 
availability of extensions to the time limit.



Sec.  260.75  If a State is claiming a waiver inconsistency for work requirements or time limits, what must the Governor certify?

    (a) The Governor of the State must certify in writing to the 
Secretary that:
    (1) The applicable policies have been continually applied in 
operating the TANF program, as described in Sec.  260.72(c);
    (2) The inconsistencies claimed by the State are within the scope of 
the approved waivers, as described in Sec.  260.72(b);
    (b) The certification must identify the specific inconsistencies 
that the State chooses to continue with respect to work and time limits.
    (1) If the waiver inconsistency claim includes work provisions, the 
certification must specify the standards that will apply, in lieu of the 
provisions in subparts B and C of part 261 of this chapter, to 
determine:
    (i) The number of two-parent and all-parent cases that are exempt 
from participation, if any, for the purpose of determining the 
denominator of the work participation rate;
    (ii) The number of nonexempt two-parent and all-parent cases that 
are participating in work activities for the purpose of determining the 
numerator of the work participation rate, including standards applicable 
to;
    (A) Countable work activities; and
    (B) Required hours of work for participation for individual 
participants; and
    (iii) The penalty against an individual or family when an individual 
refuses to work.
    (2) If the waiver inconsistency claim includes time-limit 
provisions, the certification must include the standards that will 
apply, in lieu of the provisions in Sec.  264.1 of this chapter, in 
determining:
    (i) Which families are counted toward the Federal time limit; and

[[Page 129]]

    (ii) Whether a family is eligible for an extension of its time limit 
on federally funded assistance.
    (3) If the State is continuing policies for evaluation purposes in 
accordance with Sec.  260.76:
    (i) The certification must specify any special work or time-limit 
standards that apply to the control group and experimental group cases; 
and
    (ii) The State may choose to exclude cases assigned to the 
experimental and control groups, which are not otherwise exempt, for the 
purpose of calculating the work participation rate or determining State 
compliance related to limiting assistance to families including adults 
who have received 60 months of Federal TANF assistance. In doing so, the 
State may effectively exclude all experimental group cases and/or 
control group cases, not otherwise exempt, but may not exclude 
individual cases on a selective basis.
    (c) The certification may include a claim of inconsistency with 
respect to hours of required participation in work activities only if 
the State has written evidence that, when implemented, the waiver 
policies established specific requirements related to hours of work for 
nonexempt individuals.
    (d)(1) The Governor's certification must be provided no later than 
October 1, 1999.
    (2) If a State modifies its waiver policies in a way that has a 
substantive effect on the determination of its work sanctions, or the 
calculation of its work participation rates or its time-limit 
exceptions, it must submit an amended certification no later than the 
end of the fiscal quarter in which the modifications take effect.



Sec.  260.76  What special rules apply to States that are continuing evaluations of their waiver demonstrations?

    If a State is continuing research that employs an experimental 
design in order to complete an impact evaluation of a waiver 
demonstration, the experimental and control groups may continue to be 
subject to prior AFDC law, except as modified by the waiver.



PART 261_ENSURING THAT RECIPIENTS WORK--Table of Contents




Sec.
261.1 What does this part cover?
261.2 What definitions apply to this part?

 Subpart A_What Are the Provisions Addressing Individual Responsibility?

261.10 What work requirements must an individual meet?
261.11 Which recipients must have an assessment under TANF?
261.12 What is an individual responsibility plan?
261.13 May an individual be penalized for not following an individual 
          responsibility plan?
261.14 What is the penalty if an individual refuses to engage in work?
261.15 Can a family be penalized if a parent refuses to work because he 
          or she cannot find child care?
261.16 Does the imposition of a penalty affect an individual's work 
          requirement?

   Subpart B_What Are the Provisions Addressing State Accountability?

261.20 How will we hold a State accountable for achieving the work 
          objectives of TANF?
261.21 What overall work rate must a State meet?
261.22 How will we determine a State's overall work rate?
261.23 What two-parent work rate must a State meet?
261.24 How will we determine a State's two-parent work rate?
261.25 Does a State include Tribal families in calculating the work 
          participation rate?

      Subpart C_What Are the Work Activities and How Do They Count?

261.30 What are the work activities?
261.31 How many hours must a work-eligible individual participate for 
          the family to count in the numerator of the overall rate?
261.32 How many hours must work-eligible individuals participate for the 
          family to count in the numerator of the two-parent rate?
261.33 What are the special requirements concerning educational 
          activities in determining monthly participation rates?
261.34 Are there any limitations in counting job search and job 
          readiness assistance toward the participation rates?
261.35 Are there any special work provisions for single custodial 
          parents?

[[Page 130]]

261.36 Do welfare reform waivers affect the calculation of a State's 
          participation rates?

 Subpart D_How Will We Determine Caseload Reduction Credit for Minimum 
                          Participation Rates?

261.40 Is there a way for a State to reduce the work participation 
          rates?
261.41 How will we determine the caseload reduction credit?
261.42 Which reductions count in determining the caseload reduction 
          credit?
261.43 What is the definition of a ``case receiving assistance'' in 
          calculating the caseload reduction credit?
261.44 When must a State report the required data on the caseload 
          reduction credit?

 Subpart E_What Penalties Apply to States Related to Work Requirements?

261.50 What happens if a State fails to meet the participation rates?
261.51 Under what circumstances will we reduce the amount of the penalty 
          below the maximum?
261.52 Is there a way to waive the State's penalty for failing to 
          achieve either of the participation rates?
261.53 May a State correct the problem before incurring a penalty?
261.54 Is a State subject to any other penalty relating to its work 
          program?
261.55 Under what circumstances will we reduce the amount of the penalty 
          for not properly imposing penalties on individuals?
261.56 What happens if a parent cannot obtain needed child care?
261.57 What happens if a State sanctions a single parent of a child 
          under six who cannot get needed child care?

     Subpart F_How Do We Ensure the Accuracy of Work Participation 
                              Information?

261.60 What hours of participation may a State report for a work-
          eligible individual?
261.61 How must a State document a work-eligible individual's hours of 
          participation?
261.62 What must a State do to verify the accuracy of its work 
          participation information?
261.63 When is the State's Work Verification Plan due?
261.64 How will we determine whether a State's work verification 
          procedures ensure an accurate work participation measurement?
261.65 Under what circumstances will we impose a work verification 
          penalty?

           Subpart G_What Nondisplacement Rules Apply in TANF?

261.70 What safeguards are there to ensure that participants in work 
          activities do not displace other workers?

     Subpart H_How Do Welfare Reform Waivers Affect State Penalties?

261.80 How do existing welfare reform waivers affect a State's penalty 
          liability under this part?

    Authority: 42 U.S.C. 601, 602, 607, and 609; Pub. L. 109-171.

    Source: 64 FR 17884, Apr. 12, 1999, unless otherwise noted.



Sec.  261.1  What does this part cover?

    This part includes the regulatory provisions relating to the 
mandatory work requirements of TANF and State work participation data 
verification requirements.

[71 FR 37475, June 29, 2006]



Sec.  261.2  What definitions apply to this part?

    (a) The general TANF definitions at Sec. Sec.  260.30 through 260.33 
of this chapter apply to this part.
    (b) Unsubsidized employment means full-or part-time employment in 
the public or private sector that is not subsidized by TANF or any other 
public program.
    (c) Subsidized private sector employment means employment in the 
private sector for which the employer receives a subsidy from TANF or 
other public funds to offset some or all of the wages and costs of 
employing an individual.
    (d) Subsidized public sector employment means employment in the 
public sector for which the employer receives a subsidy from TANF or 
other public funds to offset some or all of the wages and costs of 
employing an individual.
    (e) Work experience (including work associated with the refurbishing 
of publicly assisted housing) if sufficient private sector employment is 
not available means a work activity, performed in return for welfare, 
that provides an individual with an opportunity to acquire the general 
skills, knowledge, and work habits necessary to obtain employment. The 
purpose of work experience is to improve the employability of those who 
cannot find unsubsidized

[[Page 131]]

full-time employment. This activity must be supervised by an employer, 
work site sponsor, or other responsible party on an ongoing basis no 
less frequently than once in each day in which the individual is 
scheduled to participate.
    (f) On-the-job training means training in the public or private 
sector that is given to a paid employee while he or she is engaged in 
productive work and that provides knowledge and skills essential to the 
full and adequate performance of the job.
    (g) Job search and job readiness assistance means the act of seeking 
or obtaining employment, preparation to seek or obtain employment, 
including life skills training, and substance abuse treatment, mental 
health treatment, or rehabilitation activities. Such treatment or 
therapy must be determined to be necessary and documented by a qualified 
medical, substance abuse, or mental health professional. Job search and 
job readiness assistance activities must be supervised by the TANF 
agency or other responsible party on an ongoing basis no less frequently 
than once each day in which the individual is scheduled to participate.
    (h) Community service programs mean structured programs and embedded 
activities in which individuals perform work for the direct benefit of 
the community under the auspices of public or nonprofit organizations. 
Community service programs must be limited to projects that serve a 
useful community purpose in fields such as health, social service, 
environmental protection, education, urban and rural redevelopment, 
welfare, recreation, public facilities, public safety, and child care. 
Community service programs are designed to improve the employability of 
individuals not otherwise able to obtain unsubsidized full-time 
employment, and must be supervised on an ongoing basis no less 
frequently than once each day in which the individual is scheduled to 
participate. A State agency shall take into account, to the extent 
possible, the prior training, experience, and skills of a recipient in 
making appropriate community service assignments.
    (i) Vocational educational training (not to exceed 12 months with 
respect to any individual) means organized educational programs that are 
directly related to the preparation of individuals for employment in 
current or emerging occupations. Vocational educational training must be 
supervised on an ongoing basis no less frequently than once each day in 
which the individual is scheduled to participate.
    (j) Job skills training directly related to employment means 
training or education for job skills required by an employer to provide 
an individual with the ability to obtain employment or to advance or 
adapt to the changing demands of the workplace. Job skills training 
directly related to employment must be supervised on an ongoing basis no 
less frequently than once each day in which the individual is scheduled 
to participate.
    (k) Education directly related to employment, in the case of a 
recipient who has not received a high school diploma or a certificate of 
high school equivalency means education related to a specific 
occupation, job, or job offer. Education directly related to employment 
must be supervised on an ongoing basis no less frequently than once each 
day in which the work-eligible individual is scheduled to participate.
    (l) Satisfactory attendance at secondary school or in a course of 
study leading to a certificate of general equivalence, in the case of a 
recipient who has not completed secondary school or received such a 
certificate means regular attendance, in accordance with the 
requirements of the secondary school or course of study, at a secondary 
school or in a course of study leading to a certificate of general 
equivalence, in the case of a work-eligible individual who has not 
completed secondary school or received such a certificate. This activity 
must be supervised on an ongoing basis no less frequently than once each 
day in which the individual is scheduled to participate.
    (m) Providing child care services to an individual who is 
participating in a community service program means providing child care 
to enable another TANF or SSP recipient to participate in a community 
service program. This is an unpaid activity and must be a structured

[[Page 132]]

program designed to improve the employability of individuals who 
participate in this activity. This activity must be supervised on an 
ongoing basis no less frequently than once each day in which the 
individual is scheduled to participate.
    (n)(1) Work-eligible individual means an adult (or minor child head-
of-household) receiving assistance under TANF or a separate State 
program or a non-recipient parent living with a child receiving such 
assistance unless the parent is:
    (i) A minor parent and not the head-of-household;
    (ii) A non-citizen who is ineligible to receive assistance due to 
his or her immigration status; or
    (iii) At State option on a case-by-case basis, a recipient of 
Supplemental Security Income (SSI) benefits or Aid to the Aged, Blind or 
Disabled in the Territories.
    (2) The term also excludes:
    (i) A parent providing care for a disabled family member living in 
the home, provided that there is medical documentation to support the 
need for the parent to remain in the home to care for the disabled 
family member;
    (ii) At State option on a case-by-case basis, a parent who is a 
recipient of Social Security Disability Insurance (SSDI) benefits; and
    (iii) An individual in a family receiving MOE-funded assistance 
under an approved Tribal TANF program, unless the State includes the 
Tribal family in calculating work participation rates, as permitted 
under Sec.  261.25.

[73 FR 6821, Feb. 5, 2008]



 Subpart A_What Are the Provisions Addressing Individual Responsibility?



Sec.  261.10  What work requirements must an individual meet?

    (a)(1) A parent or caretaker receiving assistance must engage in 
work activities when the State has determined that the individual is 
ready to engage in work or when he or she has received assistance for a 
total of 24 months, whichever is earlier, consistent with section 
407(e)(2) of the Act.
    (2) The State must define what it means to engage in work for this 
requirement; its definition may include participation in work activities 
in accordance with section 407 of the Act.
    (b) If a parent or caretaker has received assistance for two months, 
he or she must participate in community service employment, consistent 
with section 407(e)(2) of the Act, unless the State has exempted the 
individual from work requirements or he or she is already engaged in 
work activities as described at Sec.  261.30. The State will determine 
the minimum hours per week and the tasks the individual must perform as 
part of the community service employment.



Sec.  261.11  Which recipients must have an assessment under TANF?

    (a) The State must make an initial assessment of the skills, prior 
work experience, and employability of each recipient who is at least age 
18 or who has not completed high school (or equivalent) and is not 
attending secondary school.
    (b) The State may make any required assessments within 30 days (90 
days, at State option) of the date an individual becomes eligible for 
assistance.



Sec.  261.12  What is an individual responsibility plan?

    An individual responsibility plan is a plan developed at State 
option, in consultation with the individual, on the basis of the 
assessment made under Sec.  261.11. The plan:
    (a) Should set an employment goal and a plan for moving immediately 
into private-sector employment;
    (b) Should describe the obligations of the individual. These could 
include going to school, maintaining certain grades, keeping school-aged 
children in school, immunizing children, going to classes, or doing 
other things that will help the individual become or remain employed in 
the private sector;
    (c) Should be designed to move the individual into whatever private-
sector employment he or she is capable of handling as quickly as 
possible and to increase over time the responsibility and the amount of 
work the individual handles;

[[Page 133]]

    (d) Should describe the services the State will provide the 
individual to enable the individual to obtain and keep private sector 
employment, including job counseling services; and
    (e) May require the individual to undergo appropriate substance 
abuse treatment.



Sec.  261.13  May an individual be penalized for not following an individual responsibility plan?

    Yes. If an individual fails without good cause to comply with an 
individual responsibility plan that he or she has signed, the State may 
reduce the amount of assistance otherwise payable to the family, by 
whatever amount it considers appropriate. This penalty is in addition to 
any other penalties under the State's TANF program.



Sec.  261.14  What is the penalty if an individual refuses to engage in work?

    (a) If an individual refuses to engage in work required under 
section 407 of the Act, the State must reduce or terminate the amount of 
assistance payable to the family, subject to any good cause or other 
exceptions the State may establish. Such a reduction is governed by the 
provisions of Sec.  261.16.
    (b)(1) The State must, at a minimum, reduce the amount of assistance 
otherwise payable to the family pro rata with respect to any period 
during the month in which the individual refuses to work.
    (2) The State may impose a greater reduction, including terminating 
assistance.
    (c) A State that fails to impose penalties on individuals in 
accordance with the provisions of section 407(e) of the Act may be 
subject to the State penalty specified at Sec.  261.54.



Sec.  261.15  Can a family be penalized if a parent refuses to work because he or she cannot find child care?

    (a) No, the State may not reduce or terminate assistance based on an 
individual's refusal to engage in required work if the individual is a 
single custodial parent caring for a child under age six who has a 
demonstrated inability to obtain needed child care, as specified at 
Sec.  261.56.
    (b) A State that fails to comply with the penalty exception at 
section 407(e)(2) of the Act and the requirements at Sec.  261.56 may be 
subject to the State penalty specified at Sec.  261.57.



Sec.  261.16  Does the imposition of a penalty affect an individual's work requirement?

    A penalty imposed by a State against the family of an individual by 
reason of the failure of the individual to comply with a requirement 
under TANF shall not be construed to be a reduction in any wage paid to 
the individual.



   Subpart B_What Are the Provisions Addressing State Accountability?

    Source: 73 FR 6822, Feb. 5, 2008, unless otherwise noted.



Sec.  261.20  How will we hold a State accountable for achieving the work objectives of TANF?

    (a) Each State must meet two separate work participation rates in FY 
2006 and thereafter, one--the two-parent rate based on how well it 
succeeds in helping work-eligible individuals in two-parent families 
find work activities described at Sec.  261.30, the other--the overall 
rate based on how well it succeeds in finding those activities for work-
eligible individuals in all the families that it serves.
    (b) Each State must submit data, as specified at Sec.  265.3 of this 
chapter, that allows us to measure its success in requiring work-
eligible individuals to participate in work activities.
    (c) If the data show that a State met both participation rates in a 
fiscal year, then the percentage of historic State expenditures that it 
must expend under TANF, pursuant to Sec.  263.1 of this chapter, 
decreases from 80 percent to 75 percent for that fiscal year. This is 
also known as the State's TANF ``maintenance-of-effort'' (MOE) 
requirement.
    (d) If the data show that a State did not meet a minimum work 
participation rate for a fiscal year, a State could be subject to a 
financial penalty.
    (e) Before we impose a penalty, a State will have the opportunity to 
claim reasonable cause or enter into a

[[Page 134]]

corrective compliance plan, pursuant to Sec. Sec.  262.5 and 262.6 of 
this chapter.



Sec.  261.21  What overall work rate must a State meet?

    Each State must achieve a 50 percent minimum overall participation 
rate in FY 2006 and thereafter, minus any caseload reduction credit to 
which it is entitled as provided in subpart D of this part.



Sec.  261.22  How will we determine a State's overall work rate?

    (a)(1) The overall participation rate for a fiscal year is the 
average of the State's overall participation rates for each month in the 
fiscal year.
    (2) The rate applies to families with a work-eligible individual.
    (b) We determine a State's overall participation rate for a month as 
follows:
    (1) The number of TANF and SSP-MOE families that include a work-
eligible individual who meets the requirements set forth in Sec.  261.31 
for the month (i.e., the numerator), divided by,
    (2) The number of TANF and SSP-MOE families that include a work-
eligible individual, minus the number of such families that are subject 
to a penalty for refusing to work in that month (i.e., the denominator). 
However, if a family with a work-eligible individual has been penalized 
for refusal to participate in work activities for more than three of the 
last 12 months, we will not exclude it from the participation rate 
calculation.
    (3) At State option, we will include in the participation rate 
calculation families with a work-eligible individual that have been 
penalized for refusing to work no more than three of the last 12 months.
    (c)(1) A State has the option of not requiring a single custodial 
parent caring for a child under age one to engage in work.
    (2) At State option, we will disregard a family with such a parent 
from the participation rate calculation for a maximum of 12 months.
    (d)(1) If a family receives assistance for only part of a month, we 
will count it as a month of participation if a work-eligible individual 
is engaged in work for the minimum average number of hours in each full 
week that the family receives assistance in that month.
    (2) If a State pays benefits retroactively (i.e., for the period 
between application and approval of benefits), it has the option to 
consider the family to be receiving assistance during the period of 
retroactivity.



Sec.  261.23  What two-parent work rate must a State meet?

    Each State must achieve a 90 percent minimum two-parent 
participation rate in FY 2006 and thereafter, minus any caseload 
reduction credit to which it is entitled as provided in subpart D of 
this part.



Sec.  261.24  How will we determine a State's two-parent work rate?

    (a)(1) The two-parent participation rate for a fiscal year is the 
average of the State's two-parent participation rates for each month in 
the fiscal year.
    (2) The rate applies to two-parent families with two work-eligible 
individuals. However, if one of the parents is a work-eligible 
individual with a disability, we will not consider the family to be a 
two-parent family; i.e., we will not include such a family in either the 
numerator or denominator of the two-parent rate.
    (b) We determine a State's two-parent participation rate for the 
month as follows:
    (1) The number of two-parent TANF and SSP-MOE families in which both 
parents are work-eligible individuals and together they meet the 
requirements set forth in Sec.  261.32 for the month (i.e., the 
numerator), divided by,
    (2) The number of two-parent TANF and SSP-MOE families in which both 
parents are work-eligible individuals during the month, minus the number 
of such two-parent families that are subject to a penalty for refusing 
to work in that month (the denominator). However, if a family with a 
work-eligible individual has been penalized for more than three months 
of the last 12 months, we will not exclude it from the participation 
rate calculation.
    (3) At State option, we will include in the participation rate 
calculation families with a work-eligible individual that have been 
penalized for refusing to

[[Page 135]]

work no more than three of the last 12 months.
    (c) For purposes of the calculation in paragraph (b) of this 
section, a two-parent family includes, at a minimum, all families with 
two natural or adoptive parents (of the same minor child) who are work-
eligible individuals and living in the home, unless both are minors and 
neither is a head-of-household.
    (d)(1) If the family receives assistance for only part of a month, 
we will count it as a month of participation if a work-eligible 
individual in the family (or both work-eligible individuals, if they are 
both required to work) is engaged in work for the minimum average number 
of hours in each full week that the family receives assistance in that 
month.
    (2) If a State pays benefits retroactively (i.e., for the period 
between application and approval of benefits), it has the option to 
consider the family to be receiving assistance during the period of 
retroactivity.



Sec.  261.25  Do we count Tribal families in calculating the work participation rate?

    At State option, we will include families with a work-eligible 
individual that are receiving assistance under an approved Tribal family 
assistance plan or under a Tribal work program in calculating the 
State's participation rates under Sec. Sec.  261.22 and 261.24.



      Subpart C_What Are the Work Activities and How Do They Count?



Sec.  261.30  What are the work activities?

    The work activities are:
    (a) Unsubsidized employment;
    (b) Subsidized private-sector employment;
    (c) Subsidized public-sector employment;
    (d) Work experience if sufficient private-sector employment is not 
available;
    (e) On-the-job training (OJT);
    (f) Job search and job readiness assistance;
    (g) Community service programs;
    (h) Vocational educational training;
    (i) Job skills training directly related to employment;
    (j) Education directly related to employment, in the case of a 
recipient who has not received a high school diploma or a certificate of 
high school equivalency;
    (k) Satisfactory attendance at secondary school or in a course of 
study leading to a certificate of general equivalence, if a recipient 
has not completed secondary school or received such a certificate; and
    (l) Providing child care services to an individual who is 
participating in a community service program.



Sec.  261.31  How many hours must a work-eligible individual participate for the family to count in the numerator of the overall rate?

    (a) Subject to paragraph (d) of this section, a family with a work-
eligible individual counts as engaged in work for a month for the 
overall rate if:
    (1) He or she participates in work activities during the month for 
at least a minimum average of 30 hours per week; and
    (2) At least 20 of the above hours per week come from participation 
in the activities listed in paragraph (b) of this section.
    (b) The following nine activities count toward the first 20 hours of 
participation: unsubsidized employment; subsidized private-sector 
employment; subsidized public-sector employment; work experience; on-
the-job training; job search and job readiness assistance; community 
service programs; vocational educational training; and providing child 
care services to an individual who is participating in a community 
service program.
    (c) Above 20 hours per week, the following three activities may also 
count as participation: job skills training directly related to 
employment; education directly related to employment; and satisfactory 
attendance at secondary school or in a course of study leading to a 
certificate of general equivalence.
    (d)(1) We will deem a work-eligible individual who participates in a 
work experience or community service program for the maximum number of

[[Page 136]]

hours per month that a State may require by dividing the combined 
monthly TANF or SSP-MOE grant and food stamp allotment by the higher of 
the Federal or State minimum wage to have participated for an average of 
20 hours per week for the month in that activity.
    (2) This policy is limited to States that have adopted a Simplified 
Food Stamp Program option that permits a State to count the value of 
food stamps in determining the maximum core hours of participation 
permitted by the FLSA.
    (3) In order for Puerto Rico, which does not have a traditional Food 
Stamp Program, to deem core hours, it must include the value of food 
assistance benefits provided through the Nutrition Assistance Program in 
the same manner as a State must include food stamp benefits under 
subsection (d)(1).

[73 FR 6823, Feb. 5, 2008]



Sec.  261.32  How many hours must work-eligible individuals participate for the family to count in the numerator of the two-parent rate?

    (a) Subject to paragraph (d) of this section, a family with two 
work-eligible parents counts as engaged in work for the month for the 
two-parent rate if:
    (1) Work-eligible parents in the family are participating in work 
activities for a combined average of at least 35 hours per week during 
the month, and
    (2) At least 30 of the 35 hours per week come from participation in 
the activities listed in paragraph (b) of this section.
    (b) The following nine activities count for the first 30 hours of 
participation: unsubsidized employment; subsidized private-sector 
employment; subsidized public-sector employment; work experience; on-
the-job training; job search and job readiness assistance; community 
service programs; vocational educational training; and providing child 
care services to an individual who is participating in a community 
service program.
    (c) Above 30 hours per week, the following three activities may also 
count for participation: job skills training directly related to 
employment; education directly related to employment; and satisfactory 
attendance at secondary school or in a course of study leading to a 
certificate of general equivalence.
    (d)(1) We will deem a family with two work-eligible parents in which 
one or both participates in a work experience or community service 
program for the maximum number of hours per month that a State may 
require by dividing the combined monthly TANF or SSP-MOE grant and food 
stamp allotment by the higher of the Federal or State minimum wage to 
have participated for an average of 30 hours per week for the month in 
that activity.
    (2) This policy is limited to States that have adopted a Simplified 
Food Stamp Program option that permits a State to count the value of 
food stamps in determining the maximum core hours of participation 
permitted by the FLSA.
    (3) In order for Puerto Rico, which does not have a traditional Food 
Stamp Program, to deem core hours, it must include the value of food 
assistance benefits provided through the Nutrition Assistance Program in 
the same manner as a State must include food stamp benefits under 
paragraph (d)(1) of this section.
    (e)(1) Subject to paragraph (f) of this section, if the family 
receives federally funded child care assistance and an adult in the 
family does not have a disability or is not caring for a child with a 
disability, then the work-eligible individuals must be participating in 
work activities for an average of at least 55 hours per week to count as 
a two-parent family engaged in work for the month.
    (2) At least 50 of the 55 hours per week must come from 
participation in the activities listed in paragraph (b) of this section.
    (3) Above 50 hours per week, the three activities listed in 
paragraph (c) of this section may also count as participation.
    (f)(1) We will deem a family with two work-eligible parents in which 
one or both participates in a work experience or community service 
program for the maximum number of hours per month that a State may 
require by dividing the combined monthly TANF or SSP-MOE grant and food 
stamp allotment

[[Page 137]]

by the higher of the Federal or State minimum wage to have participated 
for an average of 50 hours per week for the month in that activity.
    (2) This policy is limited to States that have adopted a Simplified 
Food Stamp Program option that permits a State to count the value of 
food stamps in determining the maximum core hours of participation 
permitted by the FLSA.
    (3) In order for Puerto Rico, which does not have a traditional Food 
Stamp Program, to deem core hours, it must include the value of food 
assistance benefits provided through the Nutrition Assistance Program in 
the same manner as a State must include food stamp benefits under 
paragraph (d)(1) of this section.

[73 FR 6823, Feb. 5, 2008]



Sec.  261.33  What are the special requirements concerning educational activities in determining monthly participation rates?

    (a) Vocational educational training may only count for a total of 12 
months for any individual.
    (b)(1) A recipient who is married or a single head-of-household 
under 20 years old counts as engaged in work in a month if he or she:
    (i) Maintains satisfactory attendance at a secondary school or the 
equivalent during the month; or
    (ii) Participates in education directly related to employment for an 
average of at least 20 hours per week during the month.
    (2)(i) For a married recipient, such participation counts as the 
greater of 20 hours or the actual hours of participation.
    (ii) If both parents in the family are under 20 years old, the 
requirements at Sec.  261.32(d) are met if both meet the conditions of 
paragraphs (b)(1)(i) or (b)(1)(ii) of this section.
    (c) In counting individuals for each participation rate, not more 
than 30 percent of individuals engaged in work in a month may be 
included in the numerator because they are:
    (1) Participating in vocational educational training; and
    (2) In fiscal year 2000 or thereafter, individuals deemed to be 
engaged in work by participating in educational activities described in 
paragraph (b) of this section.



Sec.  261.34  Are there any limitations in counting job search and job readiness assistance toward the participation rates?

    Yes. There are four limitations concerning job search and job 
readiness assistance.
    (a) Except as provided in paragraph (b) of this section, an 
individual's participation in job search and job readiness assistance 
counts for a maximum of six weeks in the preceding 12-month period.
    (b) If the State's total unemployment rate is at least 50 percent 
greater than the United States' total unemployment rate or if the State 
meets the definition of a ``needy State'', specified at Sec.  260.30 of 
this chapter, then an individual's participation in job search and job 
readiness assistance counts for a maximum of 12 weeks in that 12-month 
period.
    (c) For purposes of paragraphs (a) and (b) of this section, a week 
equals 20 hours for a work-eligible individual who is a single custodial 
parent with a child under six years of age and equals 30 hours for all 
other work-eligible individuals.
    (d) An individual's participation in job search and job readiness 
assistance does not count for a week that immediately follows four 
consecutive weeks in which the State reports any hours of such 
participation in the preceding 12-month period. For purposes of this 
paragraph a week means seven consecutive days.
    (e) Not more than once for any individual in the preceding 12-month 
period, a State may count three or four days of job search and job 
readiness assistance during a week as a full week of participation. We 
calculate a full week of participation based on the average daily hours 
of participation for three or four days and will prorate participation 
at that level for the remaining one or two days to determine the total 
hours for a five-day week. Any prorated hours of participation must be 
included in the calculation of total hours permitted under the 
limitation in this section.

[73 FR 6824, Feb. 5, 2008]

[[Page 138]]



Sec.  261.35  Are there any special work provisions for single custodial parents?

    Yes. A single custodial parent or caretaker relative with a child 
under age six will count as engaged in work if he or she participates 
for at least an average of 20 hours per week.



Sec.  261.36  Do welfare reform waivers affect the calculation of a State's participation rates?

    A welfare reform waiver could affect the calculation of a State's 
participation rate, pursuant to subpart C of part 260 and section 415 of 
the Act.



 Subpart D_How Will We Determine Caseload Reduction Credit for Minimum 
                          Participation Rates?

    Source: 73 FR 6824, Feb. 5, 2008, unless otherwise noted.



Sec.  261.40  Is there a way for a State to reduce the work participation rates?

    (a)(1) If the average monthly number of cases receiving assistance, 
including assistance under a separate State program (as provided at 
Sec.  261.42(b)), in a State in the preceding fiscal year was lower than 
the average monthly number of cases that received assistance, including 
assistance under a separate State program in that State in FY 2005, the 
minimum overall participation rate the State must meet for the fiscal 
year (as provided at Sec.  261.21) decreases by the number of percentage 
points the prior-year caseload fell in comparison to the FY 2005 
caseload.
    (2) The minimum two-parent participation rate the State must meet 
for the fiscal year (as provided at Sec.  261.23) decreases, at State 
option, by either:
    (i) The number of percentage points the prior-year two-parent 
caseload, including two-parent cases receiving assistance under a 
separate State program (as provided at Sec.  261.42(b)), fell in 
comparison to the FY 2005 two-parent caseload, including two-parent 
cases receiving assistance under a separate State program; or
    (ii) The number of percentage points the prior-year overall 
caseload, including assistance under a separate State program (as 
provided at Sec.  261.42(b)), fell in comparison to the FY 2005 overall 
caseload, including cases receiving assistance under a separate State 
program.
    (3) For the credit calculation, we will refer to the fiscal year 
that precedes the fiscal year to which the credit applies as the 
``comparison year.''
    (b)(1) The calculations in paragraph (a) of this section must 
disregard caseload reductions due to requirements of Federal law and to 
changes that a State has made in its eligibility criteria in comparison 
to its criteria in effect in FY 2005.
    (2) At State option, the calculation may offset the disregard of 
caseload reductions in paragraph (b)(1) of this section by changes in 
eligibility criteria that increase caseloads.
    (c)(1) To establish the caseload base for FY 2005 and to determine 
the comparison-year caseload, we will use the combined TANF and Separate 
State Program caseload figures reported on the Form ACF-199, TANF Data 
Report, and Form ACF-209, SSP-MOE Data Report, respectively.
    (2) To qualify for a caseload reduction, a State must have reported 
monthly caseload information, including cases in separate State 
programs, for FY 2005 and the comparison year for cases receiving 
assistance as defined at Sec.  261.43.
    (d)(1) A State may correct erroneous data or submit accurate data to 
adjust program data or to include unduplicated cases within the fiscal 
year.
    (2) We will adjust both the FY 2005 baseline and the comparison-year 
caseload information, as appropriate, based on these State submissions.
    (e) We refer to the number of percentage points by which a caseload 
falls, disregarding the cases described in paragraph (b) of this 
section, as a caseload reduction credit.



Sec.  261.41  How will we determine the caseload reduction credit?

    (a)(1) We will determine the overall and two-parent caseload 
reduction credits that apply to each State based on the information and 
estimates reported to us by the State on eligibility

[[Page 139]]

policy changes using application denials, case closures, or other 
administrative data sources and analyses.
    (2) We will accept the information and estimates provided by a 
State, unless they are implausible based on the criteria listed in 
paragraph (d) of this section.
    (3) We may conduct on-site reviews and inspect administrative 
records on applications, case closures, or other administrative data 
sources to validate the accuracy of the State estimates.
    (b) In order to receive a caseload reduction credit, a State must 
submit a Caseload Reduction Report to us containing the following 
information:
    (1) A listing of, and implementation dates for, all State and 
Federal eligibility changes, as defined at Sec.  261.42, made by the 
State since the beginning of FY 2006;
    (2) A numerical estimate of the positive or negative average monthly 
impact on the comparison-year caseload of each eligibility change 
(based, as appropriate, on application denials, case closures or other 
analyses);
    (3) An overall estimate of the total net positive or negative impact 
on the applicable caseload as a result of all such eligibility changes;
    (4) An estimate of the State's caseload reduction credit;
    (5) A description of the methodology and the supporting data that a 
State used to calculate its caseload reduction estimates; and
    (6) A certification that it has provided the public an appropriate 
opportunity to comment on the estimates and methodology, considered 
their comments, and incorporated all net reductions resulting from 
Federal and State eligibility changes.
    (c)(1) A State requesting a caseload reduction credit for the 
overall participation rate must base its estimates of the impact of 
eligibility changes on decreases in its comparison-year overall caseload 
compared to the FY 2005 overall caseload baseline established in 
accordance with Sec.  261.40(d).
    (2) A State requesting a caseload reduction credit for its two-
parent rate must base its estimates of the impact of eligibility changes 
on decreases in either:
    (i) Its two-parent caseload compared to the FY 2005 base-year two-
parent caseload baseline established in accordance with Sec.  261.40(d); 
or
    (ii) Its overall caseload compared to the FY 2005 base-year overall 
caseload baseline established in accordance with Sec.  261.40(d).
    (d)(1) For each State, we will assess the adequacy of information 
and estimates using the following criteria: Its methodology; Its 
estimates of impact compared to other States; the quality of its data; 
and the completeness and adequacy of its documentation.
    (2) If we request additional information to develop or validate 
estimates, the State may negotiate an appropriate deadline or provide 
the information within 30 days of the date of our request.
    (3) The State must provide sufficient data to document the 
information submitted under paragraph (b) of this section.
    (e) We will not calculate a caseload reduction credit unless the 
State reports case-record data on individuals and families served by any 
separate State program, as required under Sec.  265.3(d) of this 
chapter.
    (f) A State may only apply to the participation rate a caseload 
reduction credit that we have calculated. If a State disagrees with the 
caseload reduction credit, it may appeal the decision as an adverse 
action in accordance with Sec.  262.7 of this chapter.



Sec.  261.42  Which reductions count in determining the caseload reduction credit?

    (a)(1) A State's caseload reduction credit must not include caseload 
decreases due to Federal requirements or State changes in eligibility 
rules since FY 2005 that directly affect a family's eligibility for 
assistance. These include, but are not limited to, more stringent income 
and resource limitations, time limits, full family sanctions, and other 
new requirements that deny families assistance when an individual does 
not comply with work requirements, cooperate with child support, or 
fulfill other behavioral requirements.

[[Page 140]]

    (2) At State option, a State's caseload reduction credit may include 
caseload increases due to Federal requirements or State changes in 
eligibility rules since FY 2005 if used to offset caseload decreases in 
paragraph (a)(1) of this section.
    (3) A State may not receive a caseload reduction credit that exceeds 
the actual caseload decline between FY 2005 and the comparison year.
    (4) A State may count the reductions attributable to enforcement 
mechanisms or procedural requirements that are used to enforce existing 
eligibility criteria (e.g., fingerprinting or other verification 
techniques) to the extent that such mechanisms or requirements identify 
or deter families otherwise ineligible under existing rules.
    (b) A State must include cases receiving assistance in separate 
State programs as part of its FY 2005 caseload and comparison-year 
caseload. However, if a State provides documentation that separate State 
program cases overlap with or duplicate cases in the TANF caseload, we 
will exclude them from the caseload count.



Sec.  261.43  What is the definition of a ``case receiving assistance'' in calculating the caseload reduction credit?

    (a) The caseload reduction credit is based on decreases in caseloads 
receiving TANF- or SSP-MOE-funded assistance (other than those excluded 
pursuant to Sec.  261.42).
    (b)(1) A State that is investing State MOE funds in excess of the 
required 80 percent or 75 percent basic MOE amount need only include the 
pro rata share of caseloads receiving assistance that is required to 
meet basic MOE requirements.
    (2) For purposes of paragraph (b)(1) of this section, a State may 
exclude from the overall caseload reduction credit calculation the 
number of cases funded with excess MOE. This number is calculated by 
dividing annual excess MOE expenditures on assistance by the average 
monthly expenditures on assistance per case for the fiscal year,
    (i) Where annual excess MOE expenditures on assistance equal total 
annual MOE expenditures minus the percentage of historic State 
expenditures specified in paragraph (v) of this section, multiplied by 
the percentage that annual expenditures on assistance (both Federal and 
State) represent of all annual expenditures, and
    (ii) Where the average monthly assistance expenditures per case for 
the fiscal year equal the sum of annual TANF and SSP-MOE assistance 
expenditures (both Federal and State) divided by the average monthly sum 
of TANF and SSP-MOE caseloads for the fiscal year.
    (iii) If the excess MOE calculation is for a separate two-parent 
caseload reduction credit, we multiply the number of cases funded with 
excess MOE by the average monthly percentage of two-parent cases in the 
State's total (TANF plus SSP-MOE) average monthly caseload.
    (iv) All financial data must agree with data reported on the TANF 
Financial Report (form ACF-196) and all caseload data must agree with 
data reported on the TANF Data and SSP-MOE Data Reports (forms ACF-199 
and ACF-209).
    (v) The State must use 80 percent of historic expenditures when 
calculating excess MOE; however if it has met the work participation 
requirements for the year, it may use 75 percent of historic 
expenditures.



Sec.  261.44  When must a State report the required data on the caseload reduction credit?

    A State must report the necessary documentation on caseload 
reductions for the preceding fiscal year by December 31.



 Subpart E_What Penalties Apply to States Related to Work Requirements?



Sec.  261.50  What happens if a State fails to meet the participation rates?

    (a) If we determine that a State did not achieve one of the required 
minimum work participation rates, we must reduce the SFAG payable to the 
State.
    (b)(1) If there was no penalty for the preceding fiscal year, the 
base penalty for the current fiscal year is five percent of the adjusted 
SFAG.

[[Page 141]]

    (2) For each consecutive year that the State is subject to a penalty 
under this part, we will increase the amount of the base penalty by two 
percentage points over the previous year's penalty. However, the penalty 
can never exceed 21 percent of the State's adjusted SFAG.
    (c) We impose a penalty by reducing the SFAG payable for the fiscal 
year that immediately follows our final determination that a State is 
subject to a penalty and our final determination of the penalty amount.
    (d) In accordance with the procedures specified at Sec.  262.4 of 
this chapter, a State may dispute our determination that it is subject 
to a penalty.



Sec.  261.51  Under what circumstances will we reduce the amount of the penalty below the maximum?

    (a) We will reduce the amount of the penalty based on the degree of 
the State's noncompliance.
    (1) If the State fails only the two-parent participation rate 
specified at Sec.  261.23, reduced by any applicable caseload reduction 
credit, its maximum penalty will be a percentage of the penalty 
specified at Sec.  261.50. This percentage will equal the percentage of 
two-parent cases in the State's total caseload.
    (2) If the State fails the overall participation rate specified at 
Sec.  261.21, reduced by any applicable caseload reduction credit, or 
both rates, its maximum penalty will be the penalty specified at Sec.  
261.50.
    (b)(1) In order to receive a reduction of the penalty amounts 
determined under paragraphs (a)(1) or (a)(2) of this section:
    (i) The State must achieve participation rates equal to a threshold 
level defined as 50 percent of the applicable minimum participation rate 
at Sec.  261.21 or Sec.  261.23, minus any caseload reduction credit 
determined pursuant to subpart D of this part; and
    (ii) The adjustment factor for changes in the number of individuals 
engaged in work, described in paragraph (b)(4) of this section, must be 
greater than zero.
    (2) If the State meets the requirements of paragraph (b)(1) of this 
section, we will base its reduction on the severity of the failure. For 
this purpose, we will calculate the severity of the State's failure 
based on:
    (i) The degree to which it missed the target rate;
    (ii) An adjustment factor that accounts for changes in the number of 
individuals who are engaged in work in the State since the prior year; 
and
    (iii) The number of consecutive years in which the State failed to 
meet the participation rates and the number of rates missed.
    (3) We will determine the degree to which the State missed the 
target rate using the ratio of the following two factors:
    (i) The difference between the participation rate achieved by the 
State and the 50-percent threshold level (adjusted for any caseload 
reduction credit determined pursuant to subpart D of this part); and
    (ii) The difference between the minimum applicable participation 
rate and the threshold level (both adjusted for any caseload reduction 
credit determined pursuant to subpart D of this part).
    (4) We will calculate the adjustment factor for changes in the 
number of individuals engaged in work using the following formula:
    (i) The average monthly number of individuals engaged in work in the 
penalty year minus the average monthly number of individuals engaged in 
work in the prior year, divided by,
    (ii) The product of 0.15 and the average monthly number of 
individuals engaged in work in the prior year.
    (5) Subject to paragraph (c) of this section, if the State fails 
only the two-parent participation rate specified at Sec.  261.23, and 
qualifies for a penalty reduction under paragraph (b)(1) of this 
section, its penalty reduction will be the product of:
    (i) The amount determined in paragraph (a)(1) of this section;
    (ii) The ratio described in paragraph (b)(3) of this section 
computed with respect to two-parent families; and
    (iii) The adjustment factor described in paragraph (b)(4) of this 
section computed with respect to two-parent families.
    (6) Subject to paragraph (c) of this section, if the State fails the 
overall

[[Page 142]]

participation rate specified at Sec.  261.21, or both rates, and 
qualifies for a penalty reduction under paragraph (b)(1) of this 
section, its penalty reduction will be the product of:
    (i) The amount determined in paragraph (a)(2) of this section;
    (ii) The ratio described in paragraph (b)(3) of this section 
computed with respect to all families; and
    (iii) The adjustment factor described in paragraph (b)(4) of this 
section.
    (7) Pursuant to Sec.  260.58 of this chapter, we will adjust the 
calculations in this section to exclude cases for which a State has 
granted federally recognized good cause domestic violence waivers.
    (c)(1) If the State was not subject to a penalty the prior year, the 
State will receive:
    (i) The full applicable penalty reduction described in paragraph 
(b)(5) or (b)(6) of this section if it failed only one participation 
rate; or
    (ii) 50 percent of the penalty reduction described in paragraph 
(b)(6) of this section if it failed both participation rates.
    (2) If the penalty year is the second successive year in which the 
State is subject to a penalty, the State will receive:
    (i) 50 percent of the applicable penalty reduction described in 
paragraph (b)(5) or (b)(6) of this section if it failed only one 
participation rate; or
    (ii) 25 percent of the penalty reduction described in paragraph 
(b)(6) of this section if it failed both participation rates.
    (3) If the penalty year is the third or greater successive year in 
which the State is subject to a penalty, the State will not receive a 
penalty reduction described in paragraph (b)(5) or (b)(6) of this 
section.
    (d)(1) We may reduce the penalty if the State failed to achieve a 
participation rate because:
    (i) It meets the definition of a needy State, specified at Sec.  
260.30 of this chapter; or,
    (ii) Noncompliance is due to extraordinary circumstances such as a 
natural disaster, regional recession, or substantial caseload increase.
    (2) In determining noncompliance under paragraph (d)(1)(ii) of this 
section, we will consider such objective evidence of extraordinary 
circumstances as the State chooses to submit.



Sec.  261.52  Is there a way to waive the State's penalty for failing to achieve either of the participation rates?

    (a) We will not impose a penalty under this part if we determine 
that the State has reasonable cause for its failure.
    (b) In addition to the general reasonable cause criteria specified 
at Sec.  262.5 of this chapter, a State may also submit a request for a 
reasonable cause exemption from the requirement to meet the minimum 
participation rate in two specific case situations.
    (1) We will determine that a State has reasonable cause if it 
demonstrates that failure to meet the work participation rates is 
attributable to its provision of federally recognized good cause 
domestic violence waivers (i.e., it provides evidence that it achieved 
the applicable work rates when individuals receiving federally 
recognized good cause domestic violence waivers of work requirements, in 
accordance with the provisions at Sec. Sec.  260.54(b) and 260.55 of 
this chapter, are removed from the calculations in Sec. Sec.  261.22(b) 
and 261.24(b)).
    (2) We will determine that a State has reasonable cause if it 
demonstrates that its failure to meet the work participation rates is 
attributable to its provision of assistance to refugees in federally 
approved alternative projects under section 412(e)(7) of the Immigration 
and Nationality Act (8 U.S.C. 1522(e)(7)).
    (c) In accordance with the procedures specified at Sec.  262.4 of 
this chapter, a State may dispute our determination that it is subject 
to a penalty.



Sec.  261.53  May a State correct the problem before incurring a penalty?

    (a) Yes. A State may enter into a corrective compliance plan to 
remedy a problem that caused its failure to meet a participation rate, 
as specified at Sec.  262.6 of this chapter.
    (b) To qualify for a penalty reduction under Sec.  262.6(j)(1) of 
this chapter, based

[[Page 143]]

on significant progress towards correcting a violation, a State must 
reduce the difference between the participation rate it achieved in the 
year for which it is subject to a penalty and the rate applicable during 
the penalty year (adjusted for any caseload reduction credit determined 
pursuant to subpart D of this part) by at least 50 percent.



Sec.  261.54  Is a State subject to any other penalty relating to its work program?

    (a) If we determine that, during a fiscal year, a State has violated 
section 407(e) of the Act, relating to imposing penalties against 
individuals, we must reduce the SFAG payable to the State.
    (b) The penalty amount for a fiscal year will equal between one and 
five percent of the adjusted SFAG.
    (c) We impose a penalty by reducing the SFAG payable for the fiscal 
year that immediately follows our final determination that a State is 
subject to a penalty and our final determination of the penalty amount.



Sec.  261.55  Under what circumstances will we reduce the amount of the penalty for not properly imposing penalties on individuals?

    (a) We will reduce the amount of the penalty based on the degree of 
the State's noncompliance.
    (b) In determining the size of any reduction, we will consider 
objective evidence of:
    (1) Whether the State has established a control mechanism to ensure 
that the grants of individuals are appropriately reduced for refusing to 
engage in required work; and
    (2) The percentage of cases for which the grants have not been 
appropriately reduced.



Sec.  261.56  What happens if a parent cannot obtain needed child care?

    (a)(1) If the individual is a single custodial parent caring for a 
child under age six, the State may not reduce or terminate assistance 
based on the parent's refusal to engage in required work if he or she 
demonstrates an inability to obtain needed child care for one or more of 
the following reasons:
    (i) Appropriate child care within a reasonable distance from the 
home or work site is unavailable;
    (ii) Informal child care by a relative or under other arrangements 
is unavailable or unsuitable; or
    (iii) Appropriate and affordable formal child care arrangements are 
unavailable.
    (2) Refusal to work when an acceptable form of child care is 
available is not protected from sanctioning.
    (b)(1) The State will determine when the individual has demonstrated 
that he or she cannot find child care, in accordance with criteria 
established by the State.
    (2) These criteria must:
    (i) Address the procedures that the State uses to determine if the 
parent has a demonstrated inability to obtain needed child care;
    (ii) Include definitions of the terms ``appropriate child care,'' 
``reasonable distance,'' ``unsuitability of informal care,'' and 
``affordable child care arrangements''; and
    (iii) Be submitted to us.
    (c) The TANF agency must inform parents about:
    (1) The penalty exception to the TANF work requirement, including 
the criteria and applicable definitions for determining whether an 
individual has demonstrated an inability to obtain needed child care;
    (2) The State's process or procedures (including definitions) for 
determining a family's inability to obtain needed child care, and any 
other requirements or procedures, such as fair hearings, associated with 
this provision; and
    (3) The fact that the exception does not extend the time limit for 
receiving Federal assistance.

[64 FR 17884, Apr. 12, 1999; 64 FR 40291, July 26, 1999]



Sec.  261.57  What happens if a State sanctions a single parent of a child under six who cannot get needed child care?

    (a) If we determine that a State has not complied with the 
requirements of Sec.  261.56, we will reduce the SFAG payable to the 
State by no more than five percent for the immediately succeeding fiscal 
year unless the State demonstrates to our satisfaction that it

[[Page 144]]

had reasonable cause or it achieves compliance under a corrective 
compliance plan pursuant to Sec. Sec.  262.5 and 262.6 of this chapter.
    (b) We will impose the maximum penalty if:
    (1) The State does not have a statewide process in place to inform 
parents about the exception to the work requirement and enable them to 
demonstrate that they have been unable to obtain child care; or
    (2) There is a pattern of substantiated complaints from parents or 
organizations verifying that a State has reduced or terminated 
assistance in violation of this requirement.
    (c) We may impose a reduced penalty if the State demonstrates that 
the violations were isolated or that they affected a minimal number of 
families.



     Subpart F_How Do We Ensure the Accuracy of Work Participation 
                              Information?

    Source: 73 FR 6826, Feb. 5, 2008, unless otherwise noted.



Sec.  261.60  What hours of participation may a State report for a work-eligible individual?

    (a) A State must report the actual hours that an individual 
participates in an activity, subject to the qualifications in paragraphs 
(b) and (c) of this section and Sec.  261.61(c). It is not sufficient to 
report the hours an individual is scheduled to participate in an 
activity.
    (b) For the purposes of calculating the work participation rates for 
a month, actual hours may include the hours for which an individual was 
paid, including paid holidays and sick leave. For participation in 
unpaid work activities, it may include excused absences for hours missed 
due to a maximum of 10 holidays in the preceding 12-month period and up 
to 80 hours of additional excused absences in the preceding 12-month 
period, no more than 16 of which may occur in a month, for each work-
eligible individual. Each State must designate the days that it wishes 
to count as holidays for those in unpaid activities in its Work 
Verification Plan. It may designate no more than 10 such days. In order 
to count an excused absence as actual hours of participation, the 
individual must have been scheduled to participate in a countable work 
activity for the period of the absence that the State reports as 
participation. A State must describe its excused absence policies and 
definitions as part of its Work Verification Plan, specified at Sec.  
261.62.
    (c) For unsubsidized employment, subsidized employment, and OJT, a 
State may report projected actual hours of employment participation for 
up to six months based on current, documented actual hours of work. Any 
time a State receives information that the client's actual hours of work 
have changed, or no later than the end of any six-month period, the 
State must re-verify the client's current actual average hours of work, 
and may report these projected actual hours of participation for another 
six-month period.
    (d) A State may not count more hours toward the participation rate 
for a self-employed individual than the number derived by dividing the 
individual's self-employment income (gross income less business 
expenses) by the Federal minimum wage. A State may propose an 
alternative method of determining self-employment hours as part of its 
Work Verification Plan.
    (e) A State may count supervised homework time and up to one hour of 
unsupervised homework time for each hour of class time. Total homework 
time counted for participation cannot exceed the hours required or 
advised by a particular educational program.



Sec.  261.61  How must a State document a work-eligible individual's hours of participation?

    (a) A State must support each individual's hours of participation 
through documentation in the case file. In accordance with Sec.  261.62, 
a State must describe in its Work Verification Plan the documentation it 
uses to verify hours of participation in each activity.
    (b) For an employed individual, the documentation may consist of, 
but is not limited to pay stubs, employer reports, or time and 
attendance records substantiating hours of participation. A State may 
presume that an employed individual participated for the

[[Page 145]]

total number of hours for which that individual was paid.
    (c) The State must document all hours of participation in an 
activity; however, if a State is reporting projected hours of actual 
employment in accordance with Sec.  261.60(c), it need only document the 
hours on which it bases the projection.
    (d) For an individual who is self-employed, the documentation must 
comport with standards set forth in the State's approved Work 
Verification Plan. Self-reporting by a participant without additional 
verification is not sufficient documentation.
    (e) For an individual who is not employed, the documentation for 
substantiating hours of participation may consist of, but is not limited 
to, time sheets, service provider attendance records, or school 
attendance records. For homework time, the State must also document the 
homework or study expectations of the educational program.



Sec.  261.62  What must a State do to verify the accuracy of its work participation information?

    (a) To ensure accuracy in the reporting of work activities by work-
eligible individuals on the TANF Data Report and, if applicable, the 
SSP-MOE Data Report, each State must:
    (1) Establish and employ procedures for determining whether its work 
activities may count for participation rate purposes;
    (2) Establish and employ procedures for determining how to count and 
verify reported hours of work;
    (3) Establish and employ procedures for identifying who is a work-
eligible individual;
    (4) Establish and employ internal controls to ensure compliance with 
the procedures; and
    (5) Submit to the Secretary for approval the State's Work 
Verification Plan in accordance with paragraph (b) of this section.
    (b) A State's Work Verification Plan must include the following:
    (1) For each countable work activity:
    (i) A description demonstrating how the activity meets the relevant 
definition at Sec.  261.2;
    (ii) A description of how the State determines the number of 
countable hours of participation; and
    (iii) A description of the documentation it uses to monitor 
participation and ensure that the actual hours of participation are 
reported;
    (2) A description of the State's procedures for identifying all 
work-eligible individuals, as defined at Sec.  261.2;
    (3) A description of how the State ensures that, for each work-
eligible individual, it:
    (i) Accurately inputs data into the State's automated data 
processing system;
    (ii) Properly tracks the hours though the automated data processing 
system; and
    (iii) Accurately reports the hours to the Department;
    (4) A description of the procedures for ensuring it does not 
transmit to the Department a work-eligible individual's hours of 
participation in an activity that does not meet a Federal definition of 
a countable work activity; and
    (5) A description of the internal controls that the State has 
implemented to ensure a consistent measurement of the work participation 
rates, including the quality assurance processes and sampling 
specifications it uses to monitor adherence to the established work 
verification procedures by State staff, local staff, and contractors.
    (c) We will review a State's Work Verification Plan for completeness 
and approve it if we believe that it will result in accurate reporting 
of work participation information.



Sec.  261.63  When is a State's Work Verification Plan due?

    (a) Each State must submit its interim Work Verification Plan for 
validating work activities reported in the TANF Data Report and, if 
applicable, the SSP-MOE Data Report no later than September 30, 2006.
    (b) If HHS requires changes, a State must submit them within 60 days 
of receipt of our notice and include all necessary changes as part of a 
final approved Work Verification Plan no later than September 30, 2007.
    (c) If a State modifies its verification procedures for TANF or SSP-
MOE work activities or its internal controls

[[Page 146]]

for ensuring a consistent measurement of the work participation rate, 
the State must submit for approval an amended Work Verification Plan by 
the end of the quarter in which the State modifies the procedures or 
internal controls.



Sec.  261.64  How will we determine whether a State's work verification procedures ensure an accurate work participation measurement?

    (a) We will determine that a State has met the requirement to 
establish work verification procedures if it submitted an interim Work 
Verification Plan by September 30, 2006 and a complete Work Verification 
Plan that we approved by September 30, 2007.
    (b) A ``complete'' Work Verification Plan means that:
    (1) The plan includes all the information required by Sec.  
261.62(b); and
    (2) The State certifies that the plan includes all the information 
required by Sec.  261.62(b) and that it accurately reflects the 
procedures under which the State is operating.
    (c) For conduct occurring after October 1, 2007, we will use the 
single audit under OMB Circular A-133 in conjunction with other reviews, 
audits, and data sources, as appropriate, to assess the accuracy of the 
data filed by States for use in calculating the work participation 
rates.



Sec.  261.65  Under what circumstances will we impose a work verification penalty?

    (a) We will take action to impose a penalty under Sec.  262.1(a)(15) 
of this chapter if:
    (1) The requirements under Sec. Sec.  261.64(a) and (b) have not 
been met; or
    (2) We determine that the State has not maintained adequate 
documentation, verification, or internal control procedures to ensure 
the accuracy of the data used in calculating the work participation 
rates.
    (b) If a State fails to submit an interim or complete Work 
Verification Plan by the due dates in Sec.  261.64(a), we will reduce 
the SFAG payable for the immediately succeeding fiscal year by five 
percent of the adjusted SFAG.
    (c) If a State fails to maintain adequate internal controls to 
ensure a consistent measurement of work participation, we will reduce 
the adjusted SFAG by the following percentages for a fiscal year:
    (1) One percent for the first year;
    (2) Two percent for second year;
    (3) Three percent for the third year;
    (4) Four percent for the fourth year; and,
    (5) Five percent for the fifth and subsequent years.
    (d) If a State complies with the requirements in this subpart for 
two consecutive years, then any penalty imposed for subsequent failures 
will begin anew, as described in paragraph (c) of this section.
    (e) If we take action to impose a penalty under Sec. Sec.  261.64(b) 
or (c), we will reduce the SFAG payable for the immediately succeeding 
fiscal year.



           Subpart G_What Nondisplacement Rules Apply in TANF?



Sec.  261.70  What safeguards are there to ensure that participants in work activities do not displace other workers?

    (a) An adult taking part in a work activity outlined in Sec.  261.30 
may not fill a vacant employment position if:
    (1) Another individual is on layoff from the same or any 
substantially equivalent job; or
    (2) The employer has terminated the employment of any regular 
employee or caused an involuntary reduction in its work force in order 
to fill the vacancy with an adult taking part in a work activity.
    (b) A State must establish and maintain a grievance procedure to 
resolve complaints of alleged violations of the displacement rule in 
this section.
    (c) This section does not preempt or supersede State or local laws 
providing greater protection for employees from displacement.



     Subpart H_How Do Welfare Reform Waivers Affect State Penalties?



Sec.  261.80  How do existing welfare reform waivers affect a State's penalty liability under this part?

    A welfare reform waiver could affect a State's penalty liability 
under this

[[Page 147]]

part, subject to subpart C of part 260 of this chapter and section 415 
of the Act.

[64 FR 17884, Apr. 12, 1999. Redesignated at 71 FR 37479, June 29, 2006]



PART 262_ACCOUNTABILITY PROVISIONS_GENERAL--Table of Contents




Sec.
262.0 What definitions apply to this part?
262.1 What penalties apply to States?
262.2 When do the TANF penalty provisions apply?
262.3 How will we determine if a State is subject to a penalty?
262.4 What happens if we determine that a State is subject to a penalty?
262.5 Under what general circumstances will we determine that a State 
          has reasonable cause?
262.6 What happens if a State does not demonstrate reasonable cause?
262.7 How can a State appeal our decision to take a penalty?

    Authority: 31 U.S.C. 7501 et seq.; 42 U.S.C. 606, 609, and 610; Pub. 
L. 109-171.

    Source: 64 FR 17890, Apr. 12, 1999, unless otherwise noted.



Sec.  262.0  What definitions apply to this part?

    The general TANF definitions at Sec. Sec.  260.30 through 260.33 of 
this chapter apply to this part.



Sec.  262.1  What penalties apply to States?

    (a) We will assess fiscal penalties against States under 
circumstances defined in parts 261 through 265 of this chapter. The 
penalties are:
    (1) A penalty of the amount by which a State misused its TANF funds;
    (2) An additional penalty of five percent of the adjusted SFAG if 
such misuse was intentional;
    (3) A penalty of four percent of the adjusted SFAG for each quarter 
a State fails to submit an accurate, complete and timely required 
report;
    (4) A penalty of up to 21 percent of the adjusted SFAG for failure 
to satisfy the minimum participation rates;
    (5) A penalty of no more than two percent of the adjusted SFAG for 
failure to participate in IEVS;
    (6) A penalty of no more than five percent of the adjusted SFAG for 
failure to enforce penalties on recipients who are not cooperating with 
the State Child Support Enforcement (IV-D) agency;
    (7) A penalty equal to the outstanding loan amount, plus interest, 
for failure to repay a Federal loan;
    (8) A penalty equal to the amount by which a State fails to meet its 
basic MOE requirement;
    (9) A penalty of five percent of the adjusted SFAG for failure to 
comply with the five-year limit on Federal assistance;
    (10) A penalty equal to the amount of contingency funds that were 
received but were not remitted for a fiscal year, if the State fails to 
maintain 100 percent of historic State expenditures in that fiscal year;
    (11) A penalty of no more than five percent of the adjusted SFAG for 
the failure to maintain assistance to an adult single custodial parent 
who cannot obtain child care for a child under age six;
    (12) A penalty of no more than two percent of the adjusted SFAG plus 
the amount a State has failed to expend of its own funds to replace the 
reduction to its SFAG due to the assessment of penalties in this section 
in the immediately succeeding fiscal year;
    (13) A penalty equal to the amount of the State's Welfare-to-Work 
formula grant for failure to meet its basic MOE requirement during a 
year in which it receives the formula grant;
    (14) A penalty of not less than one percent and not more than five 
percent of the adjusted SFAG for failure to impose penalties properly 
against individuals who refuse to engage in required work in accordance 
with section 407 of the Act; and
    (15) A penalty of not less than one percent and not more than five 
percent of the adjusted SFAG for failure to establish or comply with 
work participation verification procedures.
    (b) In the event of multiple penalties for a fiscal year, we will 
add all applicable penalty percentages together. We will then assess the 
penalty amount against the adjusted SFAG that would have been payable to 
the State if we had assessed no penalties. As a final step, we will 
subtract other (fixed) penalty amounts from the adjusted SFAG.
    (c)(1) We will take the penalties specified in paragraphs (a)(1), 
(a)(2), and

[[Page 148]]

(a)(7) of this section by reducing the SFAG payable for the quarter that 
immediately follows our final decision.
    (2) We will take the penalties specified in paragraphs (a)(3), 
(a)(4), (a)(5), (a)(6), (a)(8), (a)(9), (a)(10), (a)(11), (a)(12), 
(a)(13), (a)(14), and (a)(15) of this section by reducing the SFAG 
payable for the fiscal year that immediately follows our final decision.
    (d) When imposing the penalties in paragraph (a) of this section, 
the total reduction in an affected State's quarterly SFAG amount must 
not exceed 25 percent. If this 25-percent limit prevents the recovery of 
the full penalty amount imposed on a State during a quarter or a fiscal 
year, as appropriate, we will apply the remaining amount of the penalty 
to the SFAG payable for the immediately succeeding quarter until we 
recover the full penalty amount.
    (e)(1) In the immediately succeeding fiscal year, a State must 
expend additional State funds to replace any reduction in the SFAG 
resulting from penalties.
    (2) The State must document compliance with this replacement 
provision on its TANF Financial Report (or Territorial Financial 
Report).

[64 FR 17890, Apr. 12, 1999, as amended at 71 FR 37480, June 29, 2006]



Sec.  262.2  When do the TANF penalty provisions apply?

    (a) A State will be subject to the penalties specified in Sec.  
262.1(a)(1), (2), (7), (8), (9), (10), (11), (12), (13), and (14) for 
conduct occurring on and after the first day the State operates the TANF 
program.
    (b) A State will be subject to the penalties specified in Sec.  
262.1(a)(3), (4), (5), and (6) for conduct occurring on and after July 
1, 1997, or the date that is six months after the first day the State 
operates the TANF program, whichever is later.
    (c) For the time period prior to October 1, 1999, we will assess 
State conduct as specified in Sec.  260.40(b) of this chapter.
    (d) The penalty specified in Sec.  262.1(a)(15) takes effect on 
October 1, 2006, for failure to establish work participation 
verification procedures and on October 1, 2007, for failure to comply 
with those procedures.

[64 FR 17890, Apr. 12, 1999, as amended at 71 FR 37480, June 29, 2006]



Sec.  262.3  How will we determine if a State is subject to a penalty?

    (a)(1) We will use the single audit under OMB Circular A-133, in 
conjunction with other reviews, audits, and data sources, as 
appropriate, to determine if a State is subject to a penalty for 
misusing Federal TANF funds (Sec.  263.10 of this chapter), 
intentionally misusing Federal TANF funds (Sec.  263.12 of this 
chapter), failing to participate in IEVS (Sec.  264.10 of this chapter), 
failing to comply with paternity establishment and child support 
requirements (Sec.  264.31 of this chapter), failing to maintain 
assistance to an adult single custodial parent who cannot obtain child 
care for a child under 6 (Sec.  261.57 of this chapter), failing to 
reduce assistance to a recipient who refuses without good cause to work 
(Sec.  261.54 of this chapter), and after October 1, 2007 failing to 
comply with work participation verification procedures (Sec.  261.64 of 
this chapter).
    (2) We will also use the single audit as a secondary method of 
determining if a State is subject to other penalties if an audit detects 
lack of compliance in other penalty areas.
    (b)(1) We will use the TANF Data Report required under part 265 of 
this chapter to determine if a State failed to meet participation rates 
(Sec. Sec.  261.21 and 261.23 of this chapter) or failed to comply with 
the five-year limit on Federal assistance (Sec.  264.1 of this chapter).
    (2) Data in these reports are subject to our verification in 
accordance with Sec.  265.7 of this chapter.
    (c)(1) We will use the TANF Financial Report (or, as applicable, the 
Territorial Financial Report) as the primary method for determining if a 
State has failed to meet the basic MOE requirement (Sec.  263.8 of this 
chapter), meet the Contingency Fund MOE requirement (Sec.  264.76 of 
this chapter), or replace SFAG reductions with State-only funds (Sec.  
264.50 of this chapter).
    (2) Data in these reports are subject to our verification in 
accordance with Sec.  265.7 of this chapter.

[[Page 149]]

    (d) We will determine that a State is subject to the specific 
penalties for failure to perform if we find information in the reports 
under paragraphs (b) and (c) of this section to be insufficient to show 
compliance or if we determine that the State has not adequately 
documented actions verifying that it has met the participation rates or 
the time limits.
    (e) To determine if a State has met its MOE requirements, we will 
also use the supplemental information in the annual report required in 
accordance with Sec.  265.9(c) of this chapter.
    (f) States must maintain records in accordance with Sec.  92.42 of 
this title.

[64 FR 17890, Apr. 12, 1999, as amended at 71 FR 37481, June 29, 2006]



Sec.  262.4  What happens if we determine that a State is subject to a penalty?

    (a) If we determine that a State is subject to a penalty, we will 
notify the State agency in writing, specifying which penalty we will 
impose and the reasons for the penalty. This notice will:
    (1) Specify the penalty provision at issue, including the penalty 
amount;
    (2) Specify the source of information and the reasons for our 
decision;
    (3) Invite the State to present its arguments if it believes that 
the information or method that we used were in error or were 
insufficient or that its actions, in the absence of Federal regulations, 
were based on a reasonable interpretation of the statute; and
    (4) Explain how and when the State may submit a reasonable cause 
justification under Sec.  262.5 and/or corrective compliance plan under 
Sec.  262.6.
    (b) Within 60 days of when it receives our notification, the State 
may submit a written response that:
    (1) Demonstrates that our determination is incorrect because our 
information or the method that we used in determining the violation or 
the amount of the penalty was in error or was insufficient, or that the 
State acted, in the absence of Federal rules, on a reasonable 
interpretation of the statute;
    (2) Demonstrates that the State had reasonable cause for failing to 
meet the requirement(s); and/or
    (3) Provides a corrective compliance plan, pursuant to Sec.  262.6.
    (c) If we find that we determined the penalty erroneously, or that 
the State has adequately demonstrated that it had reasonable cause for 
failing to meet one or more requirements, we will not impose the 
penalty.
    (d) Reasonable cause and corrective compliance plans are not 
available for failing to repay a Federal loan; meet the basic MOE 
requirement; meet the Contingency Fund MOE requirement; expend 
additional State funds to replace adjusted SFAG reductions due to the 
imposition of one or more penalties listed in Sec.  262.1; or maintain 
80 percent, or 75 percent, as appropriate, basic MOE during a year in 
which the State receives a Welfare-to-Work grant.
    (e)(1) If we request additional information from a State that we 
need to determine reasonable cause, the State must ordinarily provide 
such information within 30 days.
    (2) Under unusual circumstances, we may give the State an extension 
of the time to respond to our request.
    (f)(1)(i) We will notify the State in writing of our findings with 
respect to reasonable cause generally within 60 days of the date when we 
receive its response to our penalty notice (in accordance with paragraph 
(b) of this section).
    (ii) If the finding is negative and the State has not yet submitted 
a corrective compliance plan, it may do so in response to this notice in 
accordance with Sec.  262.6.
    (2) We will notify the State of our decision regarding its 
corrective compliance plan in accordance with the provisions of Sec.  
262.6(g).
    (g) We will impose a penalty in accord with the provisions in Sec.  
262.1(c) after we make our final decision and the appellate process is 
completed, if applicable. If there is an appellate decision upholding 
the penalty, we will take the penalty and charge interest back to the 
date that we formally notified the Governor of the adverse action 
pursuant to Sec.  262.7(a)(1).



Sec.  262.5  Under what general circumstances will we determine that a State has reasonable cause?

    (a) We will not impose a penalty against a State if we determine 
that the State had reasonable cause for its

[[Page 150]]

failure. The general factors a State may use to claim reasonable cause 
include:
    (1) Natural disasters and other calamities (e.g., hurricanes, 
earthquakes, fire) whose disruptive impact was so significant as to 
cause the State's failure;
    (2) Formally issued Federal guidance that provided incorrect 
information resulting in the State's failure; or
    (3) Isolated problems of minimal impact that are not indicative of a 
systemic problem.
    (b)(1) We will grant reasonable cause to a State that:
    (i) Clearly demonstrates that its failure to submit complete, 
accurate, and timely data, as required at Sec.  265.8 of this chapter, 
for one or both of the first two quarters of FY 2000, is attributable, 
in significant part, to its need to divert critical system resources to 
Year 2000 compliance activities; and
    (ii) Submits complete and accurate data for the first two quarters 
of FY 2000 by September 30, 2000.
    (2) A State may also use the additional factors for claiming 
reasonable cause for failure to comply with the five-year limit on 
Federal assistance or the minimum participation rates, as specified at 
Sec. Sec.  261.52 and 264.3 and subpart B of part 260 of this chapter.
    (c) In determining reasonable cause, we will consider the efforts 
the State made to meet the requirement, as well as the duration and 
severity of the circumstances that led to the State's failure to achieve 
the requirement.
    (d)(1) The burden of proof rests with the State to fully explain the 
circumstances and events that constitute reasonable cause for its 
failure to meet a requirement.
    (2) The State must provide us with sufficient relevant information 
and documentation to substantiate its claim of reasonable cause.

[64 FR 17890, Apr. 12, 1999; 64 FR 40291, July 26, 1999]



Sec.  262.6  What happens if a State does not demonstrate reasonable cause?

    (a) A State may accept the penalty or enter into a corrective 
compliance plan that will correct or discontinue the violation in order 
to avoid the penalty if:
    (1) A State does not claim reasonable cause; or
    (2) We find that the State does not have reasonable cause.
    (b) A State that does not claim reasonable cause will have 60 days 
from receipt of our notice described in Sec.  262.4(a) to submit its 
corrective compliance plan.
    (c) A State that unsuccessfully claimed reasonable cause will have 
60 days from the date that it received our second notice, described in 
Sec.  262.4(f), to submit its corrective compliance plan.
    (d) The corrective compliance plan must include:
    (1) A complete analysis of why the State did not meet the 
requirements;
    (2) A detailed description of how the State will correct or 
discontinue, as appropriate, the violation in a timely manner;
    (3) The time period in which the violation will be corrected or 
discontinued;
    (4) The milestones, including interim process and outcome goals, 
that the State will achieve to assure it comes into compliance within 
the specified time period; and
    (5) A certification by the Governor that the State is committed to 
correcting or discontinuing the violation, in accordance with the plan.
    (e) The corrective compliance plan must correct or discontinue the 
violation within the following time frames:
    (1) For a penalty under Sec. Sec.  262.1(a)(4), (a)(9), or (a)(15), 
by the end of the first fiscal year ending at least six months after our 
receipt of the corrective compliance plan; and
    (2) For the remaining penalties, by a date the State proposes that 
reflects the minimum period necessary to achieve compliance.
    (f) During the 60-day period following our receipt of the State's 
corrective compliance plan, we may request additional information and 
consult with the State on modifications to the plan including in the 
case of a penalty under Sec.  262.1(a)(15), modifications to the State's 
work verification procedures and Work Verification Plan.
    (g) We will accept or reject the State's corrective compliance plan, 
in writing, within 60 days of our receipt of

[[Page 151]]

the plan, although a corrective compliance plan is deemed to be accepted 
if we take no action during the 60-day period following our receipt of 
the plan.
    (h) If a State does not submit an acceptable corrective compliance 
plan on time, we will assess the penalty immediately.
    (i) We will not impose a penalty against a State with respect to any 
violation covered by a corrective compliance plan that we accept if the 
State completely corrects or discontinues, as appropriate, the violation 
within the period covered by the plan.
    (j) Under limited circumstances, we may reduce the penalty if the 
State fails to completely correct or discontinue the violation pursuant 
to its corrective compliance plan and in a timely manner. To receive a 
reduced penalty, the State must demonstrate that it met one or both of 
the following conditions:
    (1) Although it did not achieve full compliance, the State made 
significant progress towards correcting or discontinuing the violation; 
or
    (2) The State's failure to comply fully was attributable to either a 
natural disaster or regional recession.

[64 FR 17890, Apr. 12, 1999, as amended at 71 FR 37481, June 29, 2006]



Sec.  262.7  How can a State appeal our decision to take a penalty?

    (a)(1) We will formally notify the Governor and the State agency of 
an adverse action (i.e., the reduction in the SFAG) within five days 
after we determine that a State is subject to a penalty under parts 261 
through 265 of this chapter.
    (2) Such notice will include the factual and legal basis for taking 
the penalty in sufficient detail for the State to be able to respond in 
an appeal.
    (b)(1) The State may file an appeal of the action, in whole or in 
part, with the HHS Departmental Appeals Board (the Board) within 60 days 
after the date it receives notice of the adverse action. The State must 
submit its brief and supporting documents when it files its appeal.
    (2) The State must send a copy of the appeal, and any supplemental 
filings, to the Office of the General Counsel, Children, Families and 
Aging Division, Room 411-D, 200 Independence Avenue, SW., Washington, DC 
20201.
    (c) We will submit our reply brief and supporting documentation 
within 45 days of the receipt of the State's submission under paragraph 
(b) of this section.
    (d) The State may submit a reply and any supporting documentation 
within 21 days of its receipt of our reply under paragraph (c) of this 
section.
    (e) The appeal to the Board must follow the provisions of the rules 
under this section and those at Sec. Sec.  16.2, 16.9, 16.10, and 16.13-
16.22 of this title, to the extent that they are consistent with this 
section.
    (f) The Board will consider an appeal filed by a State on the basis 
of the documentation and briefs submitted, along with any additional 
information the Board may require to support a final decision. Such 
information may include a hearing if the Board determines that it is 
necessary. In deciding whether to uphold an adverse action or any 
portion of such action, the Board will conduct a thorough review of the 
issues.
    (g)(1) A State may obtain judicial review of a final decision by the 
Board by filing an action within 90 days after the date of such 
decision. It should file this action with the district court of the 
United States in the judicial district where the State agency is located 
or in the United States District Court for the District of Columbia.
    (2) The district court will review the final decision of the Board 
on the record established in the administrative proceeding, in 
accordance with the standards of review prescribed by 5 U.S.C. 706(2). 
The court will base its review on the documents and supporting data 
submitted to the Board.



PART 263_EXPENDITURES OF STATE AND FEDERAL TANF FUNDS--Table of Contents




Sec.
263.0 What definitions apply to this part?

     Subpart A_What Rules Apply to a State's Maintenance of Effort?

263.1 How much State money must a State expend annually to meet the 
          basic MOE requirement?

[[Page 152]]

263.2 What kinds of State expenditures count toward meeting a State's 
          basic MOE expenditure requirement?
263.3 When do child care expenditures count?
263.4 When do educational expenditures count?
263.5 When do expenditures in State-funded programs count?
263.6 What kinds of expenditures do not count?
263.8 What happens if a State fails to meet the basic MOE requirement?
263.9 May a State avoid a penalty for failing to meet the basic MOE 
          requirement through reasonable cause or through corrective 
          compliance?

      Subpart B_What Rules Apply to the Use of Federal TANF Funds?

263.10 What actions would we take against a State if it uses Federal 
          TANF funds in violation of the Act?
263.11 What uses of Federal TANF funds are improper?
263.12 How will we determine if a State intentionally misused Federal 
          TANF funds?
263.13 Is there a limit on the amount of Federal TANF funds that a State 
          may spend on administrative costs?
263.14 What methodology shall States use to allocate TANF costs?

     Subpart C_What Rules Apply to Individual Development Accounts?

263.20 What definitions apply to Individual Development Accounts (IDAs)?
263.21 May a State use the TANF grant to fund IDAs?
263.22 Are there any restrictions on IDA funds?
263.23 How does a State prevent a recipient from using the IDA account 
          for unqualified purposes?

    Authority: 42 U.S.C. 604, 607, 609, and 862a; Pub. L. 109-171.

    Source: 64 FR 17893, Apr. 12, 1999, unless otherwise noted.



Sec.  263.0  What definitions apply to this part?

    (a) Except as noted in Sec.  263.2(d), the general TANF definitions 
at Sec.  260.30 through Sec.  260.33 of this chapter apply to this part.
    (b) The term ``administrative costs'' means costs necessary for the 
proper administration of the TANF program or separate State programs.
    (1) It excludes direct costs of providing program services.
    (i) For example, it excludes costs of providing diversion benefits 
and services, providing program information to clients, screening and 
assessments, development of employability plans, work activities, post-
employment services, work supports, and case management. It also 
excludes costs for contracts devoted entirely to such activities.
    (ii) It excludes the salaries and benefits costs for staff providing 
program services and the direct administrative costs associated with 
providing the services, such as the costs for supplies, equipment, 
travel, postage, utilities, rental of office space and maintenance of 
office space.
    (2) It includes costs for general administration and coordination of 
these programs, including contract costs and all indirect (or overhead) 
costs. Examples of administrative costs include:
    (i) Salaries and benefits of staff performing administrative and 
coordination functions;
    (ii) Activities related to eligibility determinations;
    (iii) Preparation of program plans, budgets, and schedules;
    (iv) Monitoring of programs and projects;
    (v) Fraud and abuse units;
    (vi) Procurement activities;
    (vii) Public relations;
    (viii) Services related to accounting, litigation, audits, 
management of property, payroll, and personnel;
    (ix) Costs for the goods and services required for administration of 
the program such as the costs for supplies, equipment, travel, postage, 
utilities, and rental of office space and maintenance of office space, 
provided that such costs are not excluded as a direct administrative 
cost for providing program services under paragraph (b)(1) of this 
section;
    (x) Travel costs incurred for official business and not excluded as 
a direct administrative cost for providing program services under 
paragraph (b)(1) of this section;
    (xi) Management information systems not related to the tracking and 
monitoring of TANF requirements (e.g., for a personnel and payroll 
system for State staff); and

[[Page 153]]

    (xii) Preparing reports and other documents.



     Subpart A_What Rules Apply to a State's Maintenance of Effort?



Sec.  263.1  How much State money must a State expend annually to meet the basic MOE requirement?

    (a)(1) The minimum basic MOE for a fiscal year is 80 percent of a 
State's historic State expenditures.
    (2) However, if a State meets the minimum work participation rate 
requirements in a fiscal year, as required under Sec. Sec.  261.21 and 
261.23 of this chapter, after adjustment for any caseload reduction 
credit under Sec.  261.41 of this chapter, then the minimum basic MOE 
for that fiscal year is 75 percent of the State's historic State 
expenditures.
    (3) A State that does not meet the minimum participation rate 
requirements in a fiscal year, as required under Sec. Sec.  261.21 and 
261.23 of this chapter (after adjustment for any caseload reduction 
credit under Sec.  261.41 of this chapter), but which is granted full or 
partial penalty relief for that fiscal year, must still meet the minimum 
basic MOE specified under paragraph (a)(1) of this section.
    (b) The basic MOE level also depends on whether a Tribe or 
consortium of Tribes residing in a State has received approval to 
operate its own TANF program. The State's basic MOE level for a fiscal 
year will be reduced by the same percentage as we reduced the SFAG as 
the result of any Tribal Family Assistance Grants awarded to Tribal 
grantees in the State for that year.



Sec.  263.2  What kinds of State expenditures count toward meeting a State's basic MOE expenditure requirement?

    (a) Expenditures of State funds in TANF or separate State programs 
may count if they are made for the following types of benefits or 
services:
    (1) Cash assistance, including the State's share of the assigned 
child support collection that is distributed to the family, and 
disregarded in determining eligibility for, and amount of the TANF 
assistance payment;
    (2) Child care assistance (see Sec.  263.3);
    (3) Education activities designed to increase self-sufficiency, job 
training, and work (see Sec.  263.4);
    (4) Any other use of funds allowable under section 404(a)(1) of the 
Act including:
    (i) Nonmedical treatment services for alcohol and drug abuse and 
some medical treatment services (provided that the State has not 
commingled its MOE funds with Federal TANF funds to pay for the 
services), if consistent with the goals at Sec.  260.20 of this chapter; 
and
    (ii) Pro-family healthy marriage and responsible fatherhood 
activities enumerated in part IV-A of the Act, sections 
403(a)(2)(A)(iii) and 403(a)(2)(C)(ii) that are consistent with the 
goals at Sec. Sec.  260.20(c) or (d) of this chapter, but do not 
constitute ``assistance'' as defined in Sec.  260.31(a) of this chapter; 
and
    (5)(i) Administrative costs for activities listed in paragraphs 
(a)(1) through (a)(4) of this section, not to exceed 15 percent of the 
total amount of countable expenditures for the fiscal year.
    (ii) Costs for information technology and computerization needed for 
tracking or monitoring required by or under part IV-A of the Act do not 
count towards the limit in paragraph (5)(i) of this section, even if 
they fall within the definition of ``administrative costs.''
    (A) This exclusion covers the costs for salaries and benefits of 
staff who develop, maintain, support, or operate the portions of 
information technology or computer systems used for tracking and 
monitoring.
    (B) It also covers the costs of contracts for the development, 
maintenance, support, or operation of those portions of information 
technology or computer systems used for tracking or monitoring.
    (b) With the exception of paragraph (a)(4)(ii) of this section, the 
benefits or services listed under paragraph (a) of this section count 
only if they have been provided to or on behalf of eligible families. An 
``eligible family'' as defined by the State, must:
    (1) Be comprised of citizens or non-citizens who:
    (i) Are eligible for TANF assistance;
    (ii) Would be eligible for TANF assistance, but for the time limit 
on the

[[Page 154]]

receipt of federally funded assistance; or
    (iii) Are lawfully present in the United States and would be 
eligible for assistance, but for the application of title IV of PRWORA;
    (2) Include a child living with a custodial parent or other adult 
caretaker relative (or consist of a pregnant individual); and
    (3) Be financially eligible according to the appropriate income and 
resource (when applicable) standards established by the State and 
contained in its TANF plan.
    (c) Benefits or services listed under paragraph (a) of this section 
provided to a family that meets the criteria under paragraphs (b)(1) 
through (b)(3) of this section, but who became ineligible solely due to 
the time limitation given under Sec.  264.1 of this chapter, may also 
count.
    (d) Expenditures for the benefits or services listed under paragraph 
(a) of this section count whether or not the benefit or service meets 
the definition of assistance under Sec.  260.31 of this chapter. 
Further, families that meet the criteria in paragraphs (b)(2) and (b)(3) 
of this section are considered to be eligible for TANF assistance for 
the purposes of paragraph (b)(1)(i) of this section.
    (e) Expenditures for benefits or services listed under paragraph (a) 
of this section may include allowable costs borne by others in the State 
(e.g., local government), including cash donations from non-Federal 
third parties (e.g., a non-profit organization) and the value of third 
party in-kind contributions if:
    (1) The expenditure is verifiable and meets all applicable 
requirements in 45 CFR 92.3 and 92.24;
    (2) There is an agreement between the State and the other party 
allowing the State to count the expenditure toward its MOE requirement; 
and,
    (3) The State counts a cash donation only when it is actually spent.
    (f)(1) The expenditures for benefits or services in State-funded 
programs listed under paragraph (a) of this section count only if they 
also meet the requirements of Sec.  263.5.
    (2) Expenditures that fall within the prohibitions in Sec.  263.6 do 
not count.
    (g) State funds used to meet the Healthy Marriage Promotion and 
Responsible Fatherhood Grant match requirement may count to meet the MOE 
requirement in Sec.  263.1, provided the expenditure also meets all the 
other MOE requirements in this subpart.

[73 FR 6827, Feb. 5, 2008]



Sec.  263.3  When do child care expenditures count?

    (a) State funds expended to meet the requirements of the CCDF 
Matching Fund (i.e., as match or MOE amounts) may also count as basic 
MOE expenditures up to the State's child care MOE amount that must be 
expended to qualify for CCDF matching funds.
    (b) Child care expenditures that have not been used to meet the 
requirements of the CCDF Matching Fund (i.e., as match or MOE amounts), 
or any other Federal child care program, may also count as basic MOE 
expenditures. The limit described in paragraph (a) of this section does 
not apply.
    (c) The child care expenditures described in paragraphs (a) and (b) 
of this section must be made to, or on behalf of, eligible families, as 
defined in Sec.  263.2(b).



Sec.  263.4  When do educational expenditures count?

    (a) Expenditures for educational activities or services count if:
    (1) They are provided to eligible families (as defined in Sec.  
263.2(b)) to increase self-sufficiency, job training, and work; and
    (2) They are not generally available to other residents of the State 
without cost and without regard to their income.
    (b) Expenditures on behalf of eligible families for educational 
services or activities provided through the public education system do 
not count unless they meet the requirements under paragraph (a) of this 
section.



Sec.  263.5  When do expenditures in State-funded programs count?

    (a) If a current State or local program also operated in FY 1995, 
and expenditures in this program would have been previously authorized 
and allowable under the former AFDC, JOBS, Emergency Assistance, Child 
Care for

[[Page 155]]

AFDC recipients, At-Risk Child Care, or Transitional Child Care 
programs, then current fiscal year expenditures in this program count in 
their entirety, provided that the State has met all requirements under 
Sec.  263.2.
    (b) If a current State or local program also operated in FY 1995, 
and expenditures in this program would not have been previously 
authorized and allowable under the former AFDC, JOBS, Emergency 
Assistance, Child Care for AFDC recipients, At-Risk Child Care, or 
Transitional Child care programs, then countable expenditures are 
limited to:
    (1) The amount by which total current fiscal year expenditures for 
or on behalf of eligible families, as defined in Sec.  263.2(b), exceed 
total State expenditures in this program during FY 1995; or, if 
applicable,
    (2) The amount by which total current fiscal year expenditures for 
pro-family activities under Sec.  263.2(a)(4)(ii) exceed total State 
expenditures in this program during FY 1995.

[64 FR 17893, Apr. 12, 1999, as amended at 73 FR 6828, Feb. 5, 2008]



Sec.  263.6  What kinds of expenditures do not count?

    The following kinds of expenditures do not count:
    (a) Expenditures of funds that originated with the Federal 
government;
    (b) State expenditures under the Medicaid program under title XIX of 
the Act;
    (c) Expenditures that a State makes as a condition of receiving 
Federal funds under another program that is not in Part IV-A of the Act, 
except as provided in Sec.  263.3;
    (d) Expenditures that a State made in a prior fiscal year;
    (e) Expenditures that a State uses to match Federal Welfare-to-Work 
funds provided under section 403(a)(5) of the Act; and
    (f) Expenditures that a State makes in the TANF program to replace 
the reductions in the SFAG as a result of penalties, pursuant to Sec.  
264.50 of this chapter.

[71 FR 37481, June 29, 2006]



Sec.  263.8  What happens if a State fails to meet the basic MOE requirement?

    (a) If any State fails to meet its basic MOE requirement for any 
fiscal year, then we will reduce dollar-for-dollar the amount of the 
SFAG payable to the State for the following fiscal year.
    (b) If a State fails to meet its basic MOE requirement for any 
fiscal year, and the State received a WtW formula grant under section 
403(a)(5)(A) of the Act for the same fiscal year, we will also reduce 
the amount of the SFAG payable to the State for the following fiscal 
year by the amount of the WtW formula grant paid to the State.



Sec.  263.9  May a State avoid a penalty for failing to meet the basic MOE requirement through reasonable cause or corrective compliance?

    No. The reasonable cause and corrective compliance provisions at 
Sec. Sec.  262.4, 262.5, and 262.6 of this chapter do not apply to the 
penalties in Sec.  263.8.



      Subpart B_What Rules Apply to the Use of Federal TANF Funds?



Sec.  263.10  What actions would we take against a State if it uses Federal TANF funds in violation of the Act?

    (a) If a State misuses its Federal TANF funds, we will reduce the 
SFAG payable for the immediately succeeding fiscal year quarter by the 
amount misused.
    (b) If the State fails to demonstrate that the misuse was not 
intentional, we will further reduce the SFAG payable for the immediately 
succeeding fiscal year quarter in an amount equal to five percent of the 
adjusted SFAG.
    (c) The reasonable cause and corrective compliance provisions of 
Sec. Sec.  262.4 through 262.6 of this chapter apply to the penalties 
specified in paragraphs (a) and (b) of this section.



Sec.  263.11  What uses of Federal TANF funds are improper?

    (a) States may use Federal TANF funds for expenditures:
    (1) That are reasonably calculated to accomplish the purposes of 
TANF, as specified at Sec.  260.20 of this chapter; or
    (2) For which the State was authorized to use IV-A or IV-F funds 
under prior law, as in effect on September 30,

[[Page 156]]

1995 (or, at the option of the State, August 21, 1996).
    (b) We will consider use of funds in violation of paragraph (a) of 
this section, sections 404 and 408 and other provisions of the Act, 
section 115(a)(1) of PRWORA, the provisions of part 92 of this title, or 
OMB Circular A-87 to be misuse of funds.



Sec.  263.12  How will we determine if a State intentionally misused Federal TANF funds?

    (a) The State must show, to our satisfaction, that it used these 
funds for purposes that a reasonable person would consider to be within 
the purposes of the TANF program (as specified at Sec.  260.20 of this 
chapter) and consistent with the provisions listed in Sec.  263.11.
    (b) We may determine that a State misused funds intentionally if 
there is supporting documentation, such as Federal guidance or policy 
instructions, precluding the use of Federal TANF funds for such purpose.
    (c) We may also determine that a State intentionally misused funds 
if the State continues to use the funds in the same or similarly 
improper manner after receiving notification that we had determined such 
use to be improper.



Sec.  263.13  Is there a limit on the amount of Federal TANF funds that a State may spend on administrative costs?

    (a)(i) Yes, a State may not spend more than 15 percent of the amount 
that it receives as its adjusted SFAG, or under other provisions of 
section 403 of the Act, on ``administrative costs,'' as defined at Sec.  
263.0(b).
    (ii) Any violation of the limitation in paragraph (a)(i) of this 
section will constitute a misuse of funds under Sec.  263.11(b).
    (b) Expenditures on the information technology and computerization 
needed for tracking and monitoring required by or under part IV-A of the 
Act do not count towards the limit specified in paragraph (a) of this 
section.
    (1) This exclusion covers the costs for salaries and benefits of 
staff who develop, maintain, support or operate the portions of 
information technology or computer systems used for tracking and 
monitoring.
    (2) It also covers the costs of contracts for development, 
maintenance. support, or operation of those portions of information 
technology or computer systems used for tracking or monitoring.



Sec.  263.14  What methodology shall States use to allocate TANF costs?

    States shall use a benefiting program cost allocation methodology 
consistent with the general requirements of OMB Circular A-87 (2 CFR 
part 225) to allocate TANF costs.

[73 FR 42721, July 23, 2008]



     Subpart C_What Rules Apply to Individual Development Accounts?



Sec.  263.20  What definitions apply to Individual Development Accounts (IDAs)?

    The following definitions apply with respect to IDAs:
    Date of acquisition means the date on which a binding contract to 
obtain, construct, or reconstruct the new principal residence is entered 
into.
    Eligible educational institution means an institution described in 
section 481(a)(1) or section 1201(a) of the Higher Education Act of 1965 
(20 U.S.C. 1088(a)(1) or 1141(a)), as such sections were in effect on 
August 21, 1996. Also, an area vocational education school (as defined 
in subparagraph (C) or (D) of section 521(4) of the Carl D. Perkins 
Vocational and Applied Technology Education Act (20 U.S.C. 2471(4)) that 
is in any State (as defined in section 521(33) of such Act), as such 
sections were in effect on August 21, 1996.
    Individual Development Account (IDA) means an account established 
by, or for, an individual who is eligible for assistance under the TANF 
program, to allow the individual to accumulate funds for specific 
purposes. Notwithstanding any other provision of law (other than the 
Internal Revenue Code of 1986), the funds in an IDA account must be 
disregarded in determining eligibility for, or the amount of, assistance 
in any Federal means-tested programs.

[[Page 157]]

    Post-secondary educational expenses means a student's tuition and 
fees required for the enrollment or attendance at an eligible 
educational institution, and required course fees, books, supplies, and 
equipment required at an eligible educational institution.
    Qualified acquisition costs means the cost of obtaining, 
constructing, or reconstructing a residence. The term includes any usual 
or reasonable settlement, financing, or other closing costs.
    Qualified business means any business that does not contravene State 
law or public policy.
    Qualified business capitalization expenses means business expenses 
pursuant to a qualified plan.
    Qualified entity means a nonprofit, tax-exempt organization, or a 
State or local government agency that works cooperatively with a 
nonprofit, tax-exempt organization.
    Qualified expenditures means expenses entailed in a qualified plan, 
including capital, plant equipment, working capital, and inventory 
expenses.
    Qualified first-time home buyer means a taxpayer (and, if married, 
the taxpayer's spouse) who has not owned a principal residence during 
the three-year period ending on the date of acquisition of the new 
principal residence.
    Qualified plan means a business plan that is approved by a financial 
institution, or by a nonprofit loan fund having demonstrated fiduciary 
integrity. It includes a description of services or goods to be sold, a 
marketing plan, and projected financial statements, and it may require 
the eligible recipient to obtain the assistance of an experienced 
entrepreneurial advisor.
    Qualified principal residence means the place a qualified first-time 
home buyer will reside in accordance with the meaning of section 1034 of 
the Internal Revenue Code of 1986 (26 U.S.C. 1034). The qualified 
acquisition cost of the residence cannot exceed the average purchase 
price of similar residences in the area.



Sec.  263.21  May a State use the TANF grant to fund IDAs?

    If the State elects to operate an IDA program, then the States may 
use Federal TANF funds or WtW funds to fund IDAs for individuals who are 
eligible for TANF assistance and exercise flexibility within the limits 
of Federal regulations and the statute.



Sec.  263.22  Are there any restrictions on IDA funds?

    The following restrictions apply to IDA funds:
    (a) A recipient may deposit only earned income into an IDA.
    (b) A recipient's contributions to an IDA may be matched by, or 
through, a qualified entity.
    (c) A recipient may withdraw funds only for the following reasons:
    (1) To cover post-secondary education expenses, if the amount is 
paid directly to an eligible educational institution;
    (2) For the recipient to purchase a first home, if the amount is 
paid directly to the person to whom the amounts are due and it is a 
qualified acquisition cost for a qualified principal residence by a 
qualified first-time home buyer; or
    (3) For business capitalization, if the amounts are paid directly to 
a business capitalization account in a federally insured financial 
institution and used for a qualified business capitalization expense.



Sec.  263.23  How does a State prevent a recipient from using the IDA account for unqualified purposes?

    To prevent recipients from using the IDA account improperly, States 
may do the following:
    (a) Count withdrawals as earned income in the month of withdrawal 
(unless already counted as income);
    (b) Count withdrawals as resources in determining eligibility; or
    (c) Take such other steps as the State has established in its State 
plan or written State policies to deter inappropriate use.



PART 264_OTHER ACCOUNTABILITY PROVISIONS--Table of Contents




Sec.
264.0 What definitions apply to this part?

[[Page 158]]

    Subpart A_What Specific Rules Apply for Other Program Penalties?

264.1 What restrictions apply to the length of time Federal TANF 
          assistance may be provided?
264.2 What happens if a State does not comply with the five-year limit?
264.3 How can a State avoid a penalty for failure to comply with the 
          five-year limit?
264.10 Must States do computer matching of data records under IEVS to 
          verify recipient information?
264.11 How much is the penalty for not participating in IEVS?
264.30 What procedures exist to ensure cooperation with the child 
          support enforcement requirements?
264.31 What happens if a State does not comply with the IV-D sanction 
          requirement?
264.40 What happens if a State does not repay a Federal loan?
264.50 What happens if, in a fiscal year, a State does not expend, with 
          its own funds, an amount equal to the reduction to the 
          adjusted SFAG resulting from a penalty?

      Subpart B_What are the Requirements for the Contingency Fund?

264.70 What makes a State eligible to receive a provisional payment of 
          contingency funds?
264.71 What determines the amount of the provisional payment of 
          contingency funds that will be made to a State?
264.72 What requirements are imposed on a State if it receives 
          contingency funds?
264.73 What is an annual reconciliation?
264.74 How will we determine the Contingency Fund MOE level for the 
          annual reconciliation?
264.75 For the annual reconciliation, what are qualifying State 
          expenditures?
264.76 What action will we take if a State fails to remit funds after 
          failing to meet its required Contingency Fund MOE level?
264.77 How will we determine if a State met its Contingency Fund 
          expenditure requirements?

Subpart C_What Rules Pertain Specifically to the Spending Levels of the 
                              Territories?

264.80 If a Territory receives Matching Grant funds, what funds must it 
          expend?
264.81 What expenditures qualify for Territories to meet the Matching 
          Grant MOE requirement?
264.82 What expenditures qualify for meeting the Matching Grant FAG 
          amount requirement?
264.83 How will we know if a Territory failed to meet the Matching Grant 
          funding requirements at Sec.  264.80?
264.84 What will we do if a Territory fails to meet the Matching Grant 
          funding requirements at Sec.  264.80?
264.85 What rights of appeal are available to the Territories?

    Authority: 31 U.S.C. 7501 et seq.; 42 U.S.C. 609, 654, 1302, 1308, 
and 1337.

    Source: 64 FR 17896, Apr. 12, 1999, unless otherwise noted.



Sec.  264.0  What definitions apply to this part?

    (a) The general TANF definitions at Sec. Sec.  260.30 through 260.33 
of this chapter apply to this part.
    (b) The following definitions also apply to this part:
    Countable State Expenditures means the amount of qualifying State 
expenditures, as defined in Sec.  264.75, plus the amount of contingency 
funds expended by the State in the fiscal year.
    FAG means the Family Assistance Grant granted to a Territory 
pursuant to section 403(a)(1) of the Act. It is thus the Territorial 
equivalent of the SFAG, as defined at Sec.  260.30 of this chapter.
    Food Stamp Trigger means a State's monthly average of individuals 
participating in the Food Stamp program (as of the last day of the 
month) for the most recent three-month period that exceeds its monthly 
average of individuals in the corresponding three-month period in the 
Food Stamp caseload for FY 1994 or FY 1995, whichever is less, by at 
least ten percent, assuming that the immigrant provisions of title IV 
and the Food Stamp provisions under title VII of PRWORA had been in 
effect in those years.
    Unemployment Trigger means a State's average unemployment rate for 
the most recent three-month period of at least 6.5 percent and equal to 
at least 110 percent of the State's unemployment rate for the 
corresponding three-month period in either of the two preceding calendar 
years.

[[Page 159]]



    Subpart A_What Specific Rules Apply for Other Program Penalties?



Sec.  264.1  What restrictions apply to the length of time Federal TANF assistance may be provided?

    (a)(1) Subject to the exceptions in this section, no State may use 
any of its Federal TANF funds to provide assistance (as defined in Sec.  
260.31 of this chapter) to a family that includes an adult head-of-
household or a spouse of the head-of-household who has received Federal 
assistance for a total of five years (i.e., 60 cumulative months, 
whether or not consecutive).
    (2) The provision in paragraph (a)(1) of this section also applies 
to a family that includes a pregnant minor head-of-household, minor 
parent head-of-household, or spouse of such a head-of-household who has 
received Federal assistance for a total of five years.
    (3) Notwithstanding the provisions of paragraphs (a)(1) and (a)(2) 
of this section, a State may provide assistance under WtW, pursuant to 
section 403(a)(5) of the Act, to a family that is ineligible for TANF 
solely because it has reached the five-year time limit.
    (b)(1) States must not count toward the five-year limit:
    (i) Any month of receipt of assistance by an individual who is not 
the head-of-household or married to the head-of-household;
    (ii) Any month of receipt of assistance by an adult while living in 
Indian country (as defined in section 1151 of title 18, United States 
Code) or a Native Alaskan Village where at least 50 percent of the 
adults were not employed; and
    (iii) Any month for which an individual receives only noncash 
assistance provided under WtW, pursuant to section 403(a)(5) of the Act.
    (2) Only months of assistance that are paid for with Federal TANF 
funds (in whole or in part) count towards the five-year time limit.
    (c) States have the option to extend assistance paid for by Federal 
TANF funds beyond the five-year limit for up to 20 percent of the 
average monthly number of families receiving assistance during the 
fiscal year or the immediately preceding fiscal year, whichever the 
State elects. States are permitted to extend assistance to families only 
on the basis of:
    (1) Hardship, as defined by the State; or
    (2) The fact that the family includes someone who has been battered, 
or subject to extreme cruelty based on the fact that the individual has 
been subjected to:
    (i) Physical acts that resulted in, or threatened to result in, 
physical injury to the individual;
    (ii) Sexual abuse;
    (iii) Sexual activity involving a dependent child;
    (iv) Being forced as the caretaker relative of a dependent child to 
engage in nonconsensual sexual acts or activities;
    (v) Threats of, or attempts at, physical or sexual abuse;
    (vi) Mental abuse; or
    (vii) Neglect or deprivation of medical care.
    (d) If a State opts to extend assistance to part of its caseload as 
permitted under paragraph (c) of this section, it would grant such an 
extension to a specific family once a head-of-household or spouse of a 
head-of-household in the family has received 60 cumulative months of 
assistance.
    (e) To determine whether a State has failed to comply with the five-
year limit on Federal assistance established in paragraph (c) of this 
section for a fiscal year, we would divide the average monthly number of 
families with a head-of-household or a spouse of a head-of-household who 
has received assistance for more than 60 cumulative months by the 
average monthly number of all families that received assistance during 
that fiscal year or during the immediately preceding fiscal year.
    (f) If the five-year limit is inconsistent with a State's waiver 
granted under section 1115 of the Act, we will determine State 
compliance with the Federal time limit in accordance with the provisions 
of subpart C of part 260.



Sec.  264.2  What happens if a State does not comply with the five-year limit?

    If we determine that a State has not complied with the requirements 
of Sec.  264.1, we will reduce the SFAG payable to the State for the 
immediately

[[Page 160]]

succeeding fiscal year by five percent of the adjusted SFAG unless the 
State demonstrates to our satisfaction that it had reasonable cause, or 
it corrects or discontinues the violation under an approved corrective 
compliance plan.



Sec.  264.3  How can a State avoid a penalty for failure to comply with the five-year limit?

    (a) We will not impose the penalty if the State demonstrates to our 
satisfaction that it had reasonable cause for failing to comply with the 
five-year limit on Federal assistance or it achieves compliance under a 
corrective compliance plan, pursuant to Sec. Sec.  262.5 and 262.6 of 
this chapter.
    (b) In addition, we will determine a State has reasonable cause if 
it demonstrates that it failed to comply with the five-year limit on 
Federal assistance because of federally recognized good cause domestic 
violence waivers provided to victims of domestic violence in accordance 
with provisions of subpart B of part 260.

[64 FR 17896, Apr. 12, 1999; 64 FR 40292, July 26, 1999]



Sec.  264.10  Must States do computer matching of data records under IEVS to verify recipient information?

    (a) Pursuant to section 1137 of the Act and subject to paragraph 
(a)(2) of that section, States must meet the requirements of IEVS and 
request the following information from the Internal Revenue Service 
(IRS), the State Wage Information Collections Agency (SWICA), the Social 
Security Administration (SSA), and the Immigration and Naturalization 
Service (INS):
    (1) IRS unearned income;
    (2) SWICA employer quarterly reports of income and unemployment 
insurance benefit payments;
    (3) IRS earned income maintained by SSA; and
    (4) Immigration status information maintained by the INS.
    (b) The requirements at Sec. Sec.  205.51 through 205.60 of this 
chapter also apply to the TANF IEVS requirement.

[64 FR 17896, Apr. 12, 1999; 64 FR 40292, July 26, 1999]



Sec.  264.11  How much is the penalty for not participating in IEVS?

    If we determine that the State has not complied with the 
requirements of Sec.  264.10, we will reduce the SFAG payable for the 
immediately succeeding fiscal year by two percent of the adjusted SFAG 
unless the State demonstrates to our satisfaction that it had reasonable 
cause or achieved compliance under a corrective compliance plan pursuant 
to Sec. Sec.  262.5 and 262.6 of this chapter.



Sec.  264.30  What procedures exist to ensure cooperation with the child support enforcement requirements?

    (a)(1) The State agency must refer all appropriate individuals in 
the family of a child, for whom paternity has not been established or 
for whom a child support order needs to be established, modified or 
enforced, to the child support enforcement agency (i.e., the IV-D 
agency).
    (2) Referred individuals must cooperate in establishing paternity 
and in establishing, modifying, or enforcing a support order with 
respect to the child.
    (b) If the IV-D agency determines that an individual is not 
cooperating, and the individual does not qualify for a good cause or 
other exception established by the State agency responsible for making 
good cause determinations in accordance with section 454(29) of the Act 
or for a good cause domestic violence waiver granted in accordance with 
Sec.  260.52 of this chapter, then the IV-D agency must notify the IV-A 
agency promptly.
    (c) The IV-A agency must then take appropriate action by:
    (1) Deducting from the assistance that would otherwise be provided 
to the family of the individual an amount equal to not less than 25 
percent of the amount of such assistance; or
    (2) Denying the family any assistance under the program.



Sec.  264.31  What happens if a State does not comply with the IV-D sanction requirement?

    (a)(1) If we find that, for a fiscal year, the State IV-A agency did 
not enforce the penalties against recipients required under Sec.  
264.30(c), we will reduce the SFAG payable for the next fiscal

[[Page 161]]

year by one percent of the adjusted SFAG.
    (2) Upon a finding for a second fiscal year, we will reduce the SFAG 
by two percent of the adjusted SFAG for the following year.
    (3) A third or subsequent finding will result in the maximum penalty 
of five percent.
    (b) We will not impose a penalty if:
    (1) The State demonstrates to our satisfaction that it had 
reasonable cause pursuant to Sec.  262.5 of this chapter; or
    (2) The State achieves compliance under a corrective compliance plan 
pursuant to Sec.  262.6 of this chapter.



Sec.  264.40  What happens if a State does not repay a Federal loan?

    (a) If a State fails to repay the amount of principal and interest 
due at any point under a loan agreement developed pursuant to section 
406 of the Act:
    (1) The entire outstanding loan balance, plus all accumulated 
interest, becomes due and payable immediately; and
    (2) We will reduce the SFAG payable for the immediately succeeding 
fiscal year quarter by the outstanding loan amount plus interest.
    (b) Neither the reasonable cause provisions at Sec.  262.5 of this 
chapter nor the corrective compliance plan provisions at Sec.  262.6 of 
this chapter apply when a State fails to repay a Federal loan.



Sec.  264.50  What happens if, in a fiscal year, a State does not expend, with its own funds, an amount equal to the reduction to the adjusted SFAG resulting 
          from a penalty?

    (a)(1) When we withhold Federal TANF funds from a State during a 
fiscal year because of other penalty actions listed at Sec.  262.1 of 
this chapter, the State must replace these Federal TANF funds with State 
funds during the subsequent fiscal year.
    (2) If the State fails to replace funds during the subsequent year, 
then we will assess an additional penalty of no more than two percent of 
the adjusted SFAG during the year that follows the subsequent year.
    (b) A State must expend such replacement funds under its TANF 
program, not under ``separate State programs.''
    (c) We will assess a penalty of no more than two percent of the 
adjusted SFAG plus the amount equal to the difference between the amount 
the State was required to expend and the amount it actually expended in 
the fiscal year.
    (1) We will assess the maximum penalty amount if the State made no 
additional expenditures to compensate for the reductions to its adjusted 
SFAG resulting from penalties.
    (2) We will reduce the percentage portion of the penalty if the 
State has expended some of the amount required. In such case, we will 
calculate the applicable percentage portion of the penalty by 
multiplying the percentage of the required expenditures that the State 
failed to make in the fiscal year by two percent.
    (d) The reasonable cause and corrective compliance plan provisions 
at Sec. Sec.  262.5 and 262.6 of this chapter do not apply to this 
penalty.



      Subpart B_What Are the Requirements for the Contingency Fund?



Sec.  264.70  What makes a State eligible to receive a provisional payment of contingency funds?

    (a) In order to receive a provisional payment of contingency funds, 
a State must:
    (1) Be a needy State, as defined in Sec.  260.30 of this chapter; 
and
    (2) Submit to ACF a request for contingency funds for an eligible 
month (i.e., a month in which a State is a needy State).
    (b) A determination that a State is a needy State for a month makes 
that State eligible to receive a provisional payment of contingency 
funds for two consecutive months.
    (c) Only the 50 States and the District of Columbia may receive 
contingency funds. Territories and Tribal TANF grantees are not 
eligible.

[[Page 162]]



Sec.  264.71  What determines the amount of the provisional payment of contingency funds that will be made to a State?

    We will make a provisional payment to a State that meets the 
requirements of Sec.  264.70, within the following limits:
    (a) The amount that we will pay to a State in a fiscal year will not 
exceed an amount equal to \1/12\ times 20 percent of that State's SFAG 
for that fiscal year, multiplied by the number of eligible months for 
which the State has requested contingency funds;
    (b) The total amount that we will pay to all States during a fiscal 
year will not exceed the amount appropriated for this purpose; and
    (c) We will pay contingency funds to States in the order in which we 
receive requests for such payments.



Sec.  264.72  What requirements are imposed on a State if it receives contingency funds?

    (a)(1) A State must meet a Contingency Fund MOE level of 100 percent 
of historic State expenditures for FY 1994.
    (2) A State must exceed the Contingency Fund MOE level to keep any 
of the contingency funds that it received. It may be able to retain a 
portion of the amount of contingency funds that match countable State 
expenditures, as defined in Sec.  264.0, that are in excess of the 
State's Contingency Fund MOE level, after the overall adjustment 
required by section 403(b)(6)(C) of the Act.
    (b) A State must complete an annual reconciliation, in accordance 
with Sec.  264.73, in order to determine how much, if any, of the 
contingency funds that it received in a fiscal year it may retain.
    (c) If required to remit funds under the annual reconciliation, a 
State must remit all (or a portion) of the funds paid to it for a fiscal 
year within one year after it has failed to meet either the Food Stamp 
trigger or the Unemployment trigger, as defined in Sec.  264.0, for 
three consecutive months.
    (d) A State must expend contingency funds in the fiscal year in 
which they are awarded.
    (e) A State may not transfer contingency funds to the Discretionary 
Fund of the CCDF or the SSBG.
    (f) A State must follow the restrictions and prohibitions in effect 
for Federal TANF funds, including the provisions of Sec.  263.11 of this 
chapter, in its use of contingency funds.



Sec.  264.73  What is an annual reconciliation?

    (a) The annual reconciliation involves the calculation, for a fiscal 
year, of:
    (1) The amount of a State's qualifying expenditures;
    (2) The amount by which a State's countable State expenditures, as 
defined in Sec.  264.0, exceed the State's required Contingency Fund MOE 
level; and
    (3) The amount of contingency funds that the State may retain or 
must remit.
    (b) If a State exceeded its required Contingency Fund MOE level, it 
may be able to retain some or all of the contingency funds that it 
received.
    (c) A State determines the amount of contingency funds that it may 
retain by performing the following calculations:
    (1) From the lesser of the following two amounts:
    (i) The amount of contingency funds paid to it during the fiscal 
year; or
    (ii) Its countable State expenditures, as defined in Sec.  264.0, 
minus its required Contingency Fund MOE level, multiplied by:
    (A) The State's Federal Medical Assistance Percentage (FMAP) 
applicable for the fiscal year for which funds were awarded; and
    (B) \1/12\ times the number of months during the fiscal year for 
which the State received contingency funds.
    (2) Subtract the State's proportionate remittance (as reported to 
the State by ACF) for the overall adjustment of the Contingency Fund for 
that fiscal year required by section 403(b)(6)(C) of the Act.



Sec.  264.74  How will we determine the Contingency Fund MOE level for the annual reconciliation?

    (a)(1) The Contingency Fund MOE level includes the State's share of 
expenditures for AFDC benefit payments, administration, and FAMIS; EA; 
and the JOBS program for FY 1994.

[[Page 163]]

    (2) We will use the same data sources and date, i.e., April 28, 
1995, that we used to determine the basic MOE levels for FY 1994. We 
will exclude the State's share of expenditures from the former IV-A 
child care programs (AFDC/JOBS, Transitional and At-Risk child care) in 
the calculation.
    (b) We will reduce a State's Contingency Fund MOE level by the same 
percentage that we reduce the basic MOE level for any fiscal year in 
which we reduce the State's annual SFAG allocation to provide funding to 
Tribal grantees operating a Tribal TANF program.



Sec.  264.75  For the annual reconciliation, what are qualifying State expenditures?

    (a) Qualifying State expenditures are expenditures of State funds 
made in the State TANF program, with respect to eligible families, for 
the following:
    (1) Cash assistance, including assigned child support collected by 
the State, distributed to the family, and disregarded in determining 
eligibility for, and amount of the TANF assistance payment;
    (2) Educational activities designed to increase self-sufficiency, 
job training, and work, excluding any expenditure for public education 
in the State except expenditures involving the provision of services or 
assistance to an eligible family that are not generally available to 
persons who are not members of an eligible family;
    (3) Any other services allowable under section 404(a)(1) of the Act 
and consistent with the goals at Sec.  260.20 of this chapter; and
    (4) Administrative costs in connection with the provision of the 
benefits and services listed in paragraphs (a)(1) through (a)(3) of this 
section, but only to the extent that such costs are consistent with the 
15-percent limitation at Sec.  263.2(a)(5) of this chapter.
    (b) Qualifying State expenditures do not include:
    (1) Child care expenditures; and
    (2) Expenditures made under separate State programs.



Sec.  264.76  What action will we take if a State fails to remit funds after failing to meet its required Contingency Fund MOE level?

    (a) If, for a fiscal year in which it receives contingency funds, a 
State fails to meet its required Contingency Fund MOE level, we will 
penalize the State by reducing the SFAG payable for the next fiscal year 
by the amount of contingency funds not remitted.
    (b) A State may appeal this decision, as provided in Sec.  262.7 of 
this chapter.
    (c) The reasonable cause exceptions and corrective compliance 
regulations at Sec. Sec.  262.5 and 262.6 of this chapter do not apply 
to this penalty.



Sec.  264.77  How will we determine if a State met its Contingency Fund expenditure requirements?

    (a) States receiving contingency funds for a fiscal year must 
complete the quarterly TANF Financial Report. As part of the fourth 
quarter's report, a State must complete its annual reconciliation.
    (b) The TANF Financial Report and State reporting on expenditures 
are subject to our review.



Subpart C_What Rules Pertain Specifically to the Spending Levels of the 
                              Territories?



Sec.  264.80  If a Territory receives Matching Grant funds, what funds must it expend?

    (a) If a Territory receives Matching Grant funds under section 
1108(b) of the Act, it must:
    (1) Contribute 25 percent of the expenditures funded under the 
Matching Grant for title IV-A or title IV-E expenditures;
    (2) Expend 100 percent of the amount of historic expenditures for FY 
1995 for the AFDC program (including administrative costs and FAMIS), 
the EA program, and the JOBS program; and
    (3) Expend 100 percent of the amount of the Family Assistance Grant 
annual allocation using Federal TANF, title IV-E funds and/or Territory-
only funds, without regard to any penalties applied in accordance with 
section 409 of the Act.
    (b) Territories may not use the same Territorial expenditures to 
satisfy the

[[Page 164]]

requirements of paragraphs (a)(1), (a)(2) and (a)(3) of this section.



Sec.  264.81  What expenditures qualify for Territories to meet the Matching Grant MOE requirement?

    To meet the Matching Grant MOE requirements, Territories may count:
    (a) Territorial expenditures made in accordance with Sec. Sec.  
263.2, 263.3, 263.4, and 263.6 of this chapter that are commingled with 
Federal TANF funds or made under a segregated TANF program; and
    (b) Territorial expenditures made pursuant to the regulations at 45 
CFR parts 1355 and 1356 for the Foster Care and Adoption Assistance 
programs and section 477 of the Act for the Independent Living program.



Sec.  264.82  What expenditures qualify for meeting the Matching Grant FAG amount requirement?

    To meet the Matching Grant FAG amount requirement, Territories may 
count:
    (a) Expenditures made with Federal TANF funds pursuant to Sec.  
263.11 of this chapter;
    (b) Expenditures made in accordance with Sec. Sec.  263.2, 263.3, 
263.4, and 263.6 of this chapter that are commingled with Federal TANF 
funds or made under a segregated TANF program;
    (c) Amounts transferred from TANF funds pursuant to section 404(d) 
of the Act; and
    (d) The Federal and Territorial shares of expenditures made pursuant 
to the regulations at 45 CFR parts 1355 and 1356 for the Foster Care and 
Adoption Assistance programs and section 477 of the Act for the 
Independent Living program.



Sec.  264.83  How will we know if a Territory failed to meet the Matching Grant funding requirements at Sec.  264.80?

    We will require the Territories to report the expenditures required 
by Sec.  264.80(a)(2) and (a)(3) on the quarterly Territorial Financial 
Report.



Sec.  264.84  What will we do if a Territory fails to meet the Matching Grant funding requirements at Sec.  264.80?

    If a Territory does not meet the requirements at either or both of 
Sec.  264.80(a)(2) and (a)(3), we will disallow all Matching Grant funds 
received for the fiscal year.



Sec.  264.85  What rights of appeal are available to the Territories?

    The Territories may appeal our decisions to the Departmental Appeals 
Board in accordance with our regulations at part 16 of this title if we 
decide to take disallowances under section 1108(b) of the Act.



PART 265_DATA COLLECTION AND REPORTING REQUIREMENTS--Table of Contents




Sec.
265.1 What does this part cover?
265.2 What definitions apply to this part?
265.3 What reports must the State file on a quarterly basis?
265.4 When are quarterly reports due?
265.5 May States use sampling?
265.6 Must States file reports electronically?
265.7 How will we determine if the State is meeting the quarterly 
          reporting requirements?
265.8 Under what circumstances will we take action to impose a reporting 
          penalty for failure to submit quarterly and annual reports?
265.9 What information must the State file annually?
265.10 When is the annual report due?

    Authority: 42 U.S.C. 603, 605, 607, 609, 611, and 613; Pub. L. 109-
171.

    Source: 64 FR 17900, Apr. 12, 1999, unless otherwise noted.



Sec.  265.1  What does this part cover?

    (a) This part explains how we will collect the information required 
by section 411(a) of the Act (data collection and reporting); the 
information required to implement section 407 of the Act (work 
participation requirements), as authorized by section 411(a)(1)(A)(xii); 
the information required to implement section 409 (penalties), section 
403 (grants to States), section 405 (administrative provisions), section 
411(b) (report to Congress), and section 413 (annual rankings of State 
TANF programs); and the data necessary to carry out our financial 
management and oversight responsibilities.

[[Page 165]]

    (b) This part describes the information in the quarterly and annual 
reports that each State must file, as follows: \1\
---------------------------------------------------------------------------

    \1\ The Appendices contain the specific data elements in the 
quarterly Data Report, the quarterly Financial Report, and the Annual 
Report on State MOE Programs, as well as the instructions for filing 
these reports. They also include the form and instructions for the 
Caseload Reduction Report described at Sec.  261.41(b) of this chapter.
---------------------------------------------------------------------------

    (1) The case record information (disaggregated and aggregated) on 
individuals and families in the quarterly TANF Data Report;
    (2) The expenditure data in the quarterly TANF Financial Report (or, 
as applicable, the Territorial Financial Report); and
    (3) The definitions and other information on the State's TANF and 
MOE programs that must be filed annually.
    (c) If a State claims MOE expenditures under a separate State 
program(s), this part describes the case record information 
(disaggregated and aggregated) on individuals and families in the 
quarterly SSP-MOE Data Report that each State must file.
    (d) This part describes when reports are due, how we will determine 
if reporting requirements have been met, and how we will apply the 
statutory penalty for failure to file a timely report. It also specifies 
electronic filing and sampling requirements.

[64 FR 17900, Apr. 12, 1999, as amended at 71 FR 37482, June 29, 2006]



Sec.  265.2  What definitions apply to this part?

    (a) Except as provided in paragraph (b) of this section, the general 
TANF definitions at Sec. Sec.  260.30 through 260.33 and the definitions 
of a work-eligible individual and the work activities in Sec.  261.2 of 
this chapter apply to this part.
    (b) For data collection and reporting purposes only, family means:
    (1) All individuals receiving assistance as part of a family under 
the State's TANF or separate State program (including noncustodial 
parents, where required under Sec.  265.5(g)); and
    (2) The following additional persons living in the household, if not 
included under paragraph (b)(1) of this section:
    (i) Parent(s) or caretaker relative(s) of any minor child receiving 
assistance;
    (ii) Minor siblings of any child receiving assistance; and
    (iii) Any person whose income or resources would be counted in 
determining the family's eligibility for or amount of assistance.

[71 FR 37482, June 29, 2006]



Sec.  265.3  What reports must the State file on a quarterly basis?

    (a) Quarterly reports. (1) Each State must collect on a monthly 
basis, and file on a quarterly basis, the data specified in the TANF 
Data Report and the TANF Financial Report (or, as applicable, the 
Territorial Financial Report).
    (2) Each State that claims MOE expenditures for a separate State 
program(s) must collect on a monthly basis, and file on a quarterly 
basis, the data specified in the SSP-MOE Data Report.
    (b) TANF Data Report. The TANF Data Report consists of four 
sections. Two sections contain disaggregated data elements and two 
sections contain aggregated data elements.
    (1) Disaggregated Data on Families Receiving TANF Assistance--
Section one. Each State must file disaggregated information on families 
receiving TANF assistance. This section specifies identifying and 
demographic data such as the individual's Social Security Number and 
information such as the amount of assistance received, educational 
level, employment status, work participation activities, citizenship 
status, and earned and unearned income. The data must be provided for 
both adults and children.
    (2) Disaggregated Data on Families No Longer Receiving TANF 
Assistance--Section two. Each State must file disaggregated information 
on families no longer receiving TANF assistance. This section specifies 
the reasons for case closure and data similar to the data required in 
section one.
    (3) Aggregated Data--Section three. Each State must file aggregated 
information on families receiving, applying for, and no longer receiving 
TANF assistance. This section of the TANF Data Report requires aggregate 
figures

[[Page 166]]

in such areas as: The number of applications received and their 
disposition; the number of recipient families, adult recipients, and 
child recipients; the number of births and out-of-wedlock births for 
families receiving TANF assistance; the number of noncustodial parents 
participating in work activities; and the number of closed cases.
    (4) Aggregated Caseload Data by Stratum--Section four. Each State 
that opts to use a stratified sample to report the quarterly TANF 
disaggregated data must file the monthly caseload data by stratum for 
each month in the quarter.
    (c) The TANF Financial Report (or Territorial Financial Report). (1) 
Each State must file quarterly expenditure data on the State's use of 
Federal TANF funds, State TANF expenditures, and State expenditures of 
MOE funds in separate State programs.
    (2) If a State is expending Federal TANF funds received in prior 
fiscal years, it must file a separate quarterly TANF Financial Report 
(or, as applicable, Territorial Financial Report) for each fiscal year 
that provides information on the expenditures of that year's TANF funds.
    (3) Territories must report their expenditure and other fiscal data 
on the Territorial Financial Report, as provided at Sec.  264.85 of this 
chapter, in lieu of the TANF Financial Report.
    (d) SSP-MOE Data Report. The SSP-MOE Data Report consists of four 
sections. Two sections contain disaggregated data elements and two 
sections contain aggregated data elements.
    (1) Disaggregated Data on Families Receiving SSP-MOE Assistance--
Section one. Each State that claims MOE expenditures for a separate 
State program(s) must file disaggregated information on families 
receiving SSP-MOE assistance. This section specifies identifying and 
demographic data such as the individual's Social Security Number, the 
amount of assistance received, educational level, employment status, 
work participation activities, citizenship status, and earned and 
unearned income. The data must be provided for both adults and children.
    (2) Disaggregated Data on Families No Longer Receiving SSP-MOE 
Assistance--Section two. Each State that claims MOE expenditures for a 
separate State program(s) must file disaggregated information on 
families no longer receiving SSP-MOE assistance. This section specifies 
the reasons for case closure and data similar to the data required in 
section one.
    (3) Aggregated Data--Section three. Each State that claims MOE 
expenditures for a separate State program(s) must file aggregated 
information on families receiving and no longer receiving SSP-MOE 
assistance. This section of the SSP-MOE Data Report requires aggregate 
figures in such areas as: The number of recipient families, adult 
recipients, and child recipients; the total amount of assistance for 
families receiving SSP-MOE assistance; the number of non-custodial 
parents participating in work activities; and the number of closed 
cases.
    (4) Aggregated Caseload Data by Stratum--Section four. Each State 
that claims MOE expenditures for a separate State program(s) and that 
opts to use a stratified sample to report the SSP-MOE quarterly 
disaggregated data must file the monthly caseload by stratum for each 
month in the quarter.
    (e) Optional data elements. A State has the option not to report on 
some data elements for some individuals in the TANF Data Report and the 
SSP-MOE Data Report, as specified in the instructions to these reports.
    (f) Non-custodial parents. A State must report information on a non-
custodial parent (as defined in Sec.  260.30 of this chapter) if the 
non-custodial parent:
    (1) Is receiving assistance as defined in Sec.  260.31 of this 
chapter;
    (2) Is participating in work activities as defined in section 407(d) 
of the Act; or
    (3) Has been designated by the State as a member of a family 
receiving assistance.

[71 FR 37482, June 29, 2006]



Sec.  265.4  When are quarterly reports due?

    (a) Each State must file the TANF Data Report and the TANF Financial 
Report (or, as applicable, the Territorial Financial Report) within 45 
days following the end of the quarter or be subject to a penalty.

[[Page 167]]

    (b) Each State that claims MOE expenditures for a separate State 
program(s) must file the SSP-MOE Data Report within 45 days following 
the end of the quarter or be subject to a penalty.
    (c) A State that fails to submit the reports within 45 days will be 
subject to a penalty unless the State files complete and accurate 
reports before the end of the fiscal quarter that immediately succeeds 
the quarter for which the reports were required to be submitted.

[71 FR 37483, June 29, 2006]



Sec.  265.5  May States use sampling?

    (a) Each State may report the disaggregated data in the TANF Data 
Report and the SSP-MOE Data Report on all recipient families or on a 
sample of families selected through the use of a scientifically 
acceptable sampling method that we have approved. States may use 
sampling to generate certain aggregated data elements as identified in 
the instructions to the reports. States may not use sampling to report 
expenditure data.
    (b) ``Scientifically acceptable sampling method'' means:
    (1) A probability sampling method in which every sampling unit in 
the population has a known, non-zero chance to be included in the 
sample; and
    (2) Our sample size requirements are met.
    (c) In reporting data based on sampling, the State must follow the 
specifications and procedures in the TANF Sampling Manual.



Sec.  265.6  Must States file reports electronically?

    Each State must file all quarterly reports (i.e., the TANF Data 
Report, the TANF Financial Report (or, as applicable, the Territorial 
Financial Report), and the SSP-MOE Data Report) electronically, based on 
format specifications that we will provide.



Sec.  265.7  How will we determine if the State is meeting the quarterly reporting requirements?

    (a) Each State's quarterly reports (the TANF Data Report, the TANF 
Financial Report (or Territorial Financial Report), and the SSP-MOE Data 
Report) must be complete and accurate and filed by the due date.
    (b) For a disaggregated data report, ``a complete and accurate 
report'' means that:
    (1) The reported data accurately reflect information available to 
the State in case records, financial records, and automated data 
systems, and include correction of the quarterly data by the end of the 
fiscal year reporting period;
    (2) The data are free from computational errors and are internally 
consistent (e.g., items that should add to totals do so);
    (3) The State reports data for all required elements (i.e., no data 
are missing);
    (4)(i) The State provides data on all families; or
    (ii) If the State opts to use sampling, the State reports data on 
all families selected in a sample that meets the specification and 
procedures in the TANF Sampling Manual (except for families listed in 
error); and
    (5) Where estimates are necessary (e.g., some types of assistance 
may require cost estimates), the State uses reasonable methods to 
develop these estimates.
    (c) For an aggregated data report, ``a complete and accurate 
report'' means that:
    (1) The reported data accurately reflect information available to 
the State in case records, financial records, and automated data 
systems;
    (2) The data are free from computational errors and are internally 
consistent (e.g., items that should add to totals do so);
    (3) The State reports data on all applicable elements; and
    (4) Monthly totals are unduplicated counts for all families (e.g., 
the number of families and the number of out-of-wedlock births are 
unduplicated counts).
    (d) For the TANF Financial Report (or, as applicable, the 
Territorial Financial Report), ``a complete and accurate report'' means 
that:
    (1) The reported data accurately reflect information available to 
the State in case records, financial records, and automated data 
systems;

[[Page 168]]

    (2) The data are free from computational errors and are internally 
consistent (e.g., items that should add to totals do so);
    (3) The State reports data on all applicable elements; and
    (4) All expenditures have been made in accordance with Sec.  
92.20(a) of this title.
    (e) We will review the data filed in the quarterly reports to 
determine if they meet these standards. In addition, we will use audits 
and reviews to verify the accuracy of the data filed by the States.
    (f) States must maintain records to adequately support any report, 
in accordance with Sec.  92.42 of this title.

[64 FR 17900, Apr. 12, 1999, as amended at 73 FR 6828, Feb. 5, 2008]



Sec.  265.8  Under what circumstances will we take action to impose a reporting penalty for failure to submit quarterly and annual reports?

    (a) We will take action to impose a reporting penalty under Sec.  
262.1(a)(3) of this chapter if:
    (1) A State fails to file the quarterly TANF Data Report, the 
quarterly TANF Financial Report (or, as applicable, the Territorial 
Financial Report), or the quarterly SSP-MOE Data Report (if applicable) 
within 45 days of the end of the quarter;
    (2) The disaggregated data in the TANF Data Report or the SSP-MOE 
Data Report are not accurate or a report does not include all the data 
required by section 411(a) of the Act (other than section 
411(a)(1)(A)(xii) of the Act) or the nine additional elements necessary 
to carry out the data collection system requirements, including the 
social security number;
    (3) The aggregated data elements in the TANF Data Report or the SSP-
MOE Data Report required by section 411(a) of the Act are not accurate 
and the report does not include the data elements necessary to carry out 
the data collection system requirements and to verify and validate the 
disaggregated data;
    (4) The TANF Financial Report (or, as applicable, the Territorial 
Financial Report) does not contain complete and accurate information on 
total expenditures and expenditures on administrative costs and 
transitional services; or
    (5) The annual report under Sec.  265.9 does not contain the 
description of transitional services provided by a State to families no 
longer receiving assistance due to employment.
    (b) If we determine that a State meets one or more of the conditions 
set forth in paragraph (a) of this section, we will notify the State 
that we intend to reduce the SFAG payable for the immediately succeeding 
fiscal year.
    (c) We will not impose the penalty at Sec.  262.1(a)(3) of this 
chapter if the State files the complete and accurate quarterly report or 
the annual report before the end of the fiscal quarter that immediately 
succeeds the fiscal quarter for which the reports were required.
    (d) If the State does not file all reports as provided under 
paragraph (a) of this section by the end of the immediately succeeding 
fiscal quarter, the penalty provisions of Sec. Sec.  262.4 through 262.6 
of this chapter will apply.
    (e) Subject to paragraphs (a) through (c) of this section and 
Sec. Sec.  262.4 through 262.6 of this chapter, for each quarter for 
which a State fails to meet the reporting requirements, we will reduce 
the SFAG payable by an amount equal to four percent of the adjusted SFAG 
(or a lesser amount if the State achieves substantial compliance under a 
corrective compliance plan).

[71 FR 37483, June 29, 2006]



Sec.  265.9  What information must the State file annually?

    (a) Each State must file an annual report containing information on 
the TANF program and the State's MOE program(s) for that year. The 
report may be filed as:
    (1) An addendum to the fourth quarter TANF Data Report; or
    (2) A separate annual report.
    (b) Each State must provide the following information on the TANF 
program:
    (1) The State's definition of each work activity;
    (2) A description of the transitional services provided to families 
no longer receiving assistance due to employment;

[[Page 169]]

    (3) A description of how a State will reduce the amount of 
assistance payable to a family when an individual refuses to engage in 
work without good cause pursuant to Sec.  261.14 of this chapter;
    (4) The average monthly number of payments for child care services 
made by the State through the use of disregards, by the following types 
of child care providers:
    (i) Licensed/regulated in-home child care;
    (ii) Licensed/regulated family child care;
    (iii) Licensed/regulated group home child care;
    (iv) Licensed/regulated center-based child care;
    (v) Legally operating (i.e., no license category available in State 
or locality) in-home child care provided by a nonrelative;
    (vi) Legally operating (i.e., no license category available in State 
or locality) in-home child care provided by a relative;
    (vii) Legally operating (i.e., no license category available in 
State or locality) family child care provided by a nonrelative;
    (viii) Legally operating (i.e., no license category available in 
State or locality) family child care provided by a relative;
    (ix) Legally operating (i.e., no license category available in State 
or locality) group child care provided by a nonrelative;
    (x) Legally operating (i.e., no license category available in State 
or locality) group child care provided by a relative; and
    (xi) Legally operated (i.e., no license category available in State 
or locality) center-based child care;
    (5) If the State has adopted the Family Violence Option and wants 
Federal recognition of its good cause domestic violence waivers under 
subpart B of part 260 of this chapter, a description of the strategies 
and procedures in place to ensure that victims of domestic violence 
receive appropriate alternative services and an aggregate figure for the 
total number of good cause domestic waivers granted;
    (6) A description of any nonrecurrent, short-term benefits provided, 
including:
    (i) The eligibility criteria associated with such benefits, 
including any restrictions on the amount, duration, or frequency of 
payments;
    (ii) Any policies that limit such payments to families that are 
eligible for TANF assistance or that have the effect of delaying or 
suspending a family's eligibility for assistance; and
    (iii) Any procedures or activities developed under the TANF program 
to ensure that individuals diverted from assistance receive information 
about, referrals to, or access to other program benefits (such as 
Medicaid and food stamps) that might help them make the transition from 
welfare to work;
    (7) A description of the procedures the State has established and is 
maintaining to resolve displacement complaints, pursuant to section 
407(f)(3) of the Act. This description must include the name of the 
State agency with the lead responsibility for administering this 
provision and explanations of how the State has notified the public 
about these procedures and how an individual can register a complaint;
    (8) A summary of State programs and activities directed at the third 
and fourth statutory purposes of TANF (as specified at Sec.  260.20(c) 
and (d) of this chapter); and
    (9) An estimate of the total number of individuals who have 
participated in subsidized employment under Sec.  261.30(b) or (c) of 
this chapter.
    (c) Each State must provide the following information on the State's 
program(s) for which the State claims MOE expenditures:
    (1) The name of each program and a description of the major 
activities provided to eligible families under each such program;
    (2) Each program's statement of purpose;
    (3) If applicable, a description of the work activities in each 
separate State MOE program in which eligible families are participating;
    (4) For each program, both the total annual State expenditures and 
the total annual State expenditures claimed as MOE;

[[Page 170]]

    (5) For each program, the average monthly total number or the total 
number of eligible families served for which the State claims MOE 
expenditures as of the end of the fiscal year;
    (6) The eligibility criteria for the families served under each 
program/activity;
    (7) A statement whether the program/activity had been previously 
authorized and allowable as of August 21, 1996, under section 403 of 
prior law;
    (8) The FY 1995 State expenditures for each program/activity not 
authorized and allowable as of August 21, 1996, under section 403 of 
prior law (see Sec.  263.5(b) of this chapter); and
    (9) A certification that those families for which the State is 
claiming MOE expenditures met the State's criteria for ``eligible 
families.'' \7\
---------------------------------------------------------------------------

    \7\ See Appendix I for the reporting form for the Annual Report on 
State Maintenance-of-Effort Programs.
---------------------------------------------------------------------------

    (d) If the State has submitted the information required in 
paragraphs (b) and (c) of this section in the State Plan, it may meet 
the annual reporting requirements by reference in lieu of re-submission. 
If the information in the annual report has not changed since the 
previous annual report, the State may reference this information in lieu 
of re-submission.
    (e) If a State makes a substantive change in certain data elements 
in paragraphs (b) and (c) of this section, it must file a copy of the 
change with the next quarterly data report or as an amendment to its 
State Plan. The State must also indicate the effective date of the 
change. This requirement is applicable to the following data elements:
    (1) Paragraphs (b)(1), (b)(2), and (b)(3) of this section; and
    (2) Paragraphs (c)(1), (c)(2), (c)(3), (c)(6), (c)(7), and (c)(8) of 
this section.



Sec.  265.10  When is the annual report due?

    The annual report required by Sec.  265.9 is due at the same time as 
the fourth quarter TANF Data Report.



PART 270_HIGH PERFORMANCE BONUS AWARDS--Table of Contents




Sec.
270.1 What does this part cover?
270.2 What definitions apply to this part?
270.3 What is the annual maximum amount we will award and the maximum 
          amount that a State can receive each year?
270.4 On what measures will we base the bonus awards?
270.5 What factors will we use to determine a State's score on the work 
          measures?
270.6 What data and other information must a State report to us?
270.7 What data will we use to measure performance on the work support 
          and other measures?
270.8 How will we allocate the bonus award funds?
270.9 How will we redistribute funds if that becomes necessary?
270.10 How will we annually review the award process?
270.11 When must the States report the data and other information in 
          order to compete for bonus awards?
270.12 Must States file the data electronically?
270.13 What do States need to know about the use of bonus funds?

    Authority: 42 U.S.C. 603(a)(4).

    Source: 65 FR 52851, Aug. 30, 2000, unless otherwise noted.



Sec.  270.1  What does this part cover?

    This part covers the regulatory provisions relating to the bonus to 
reward high performing States in the TANF program, as authorized in 
section 403(a)(4) of the Social Security Act.



Sec.  270.2  What definitions apply to this part?

    The following definitions apply under this part:
    Absolute rate means the actual rate of performance achieved in the 
performance year or the comparison year.
    Act means the Social Security Act, as amended.
    Bonus year means each of the fiscal years 2002 and 2003 in which 
TANF bonus funds are awarded, as well as any subsequent fiscal year for 
which Congress authorizes and appropriates bonus funds.
    CCDF means the Child Care and Development Fund.

[[Page 171]]

    Comparison year means the fiscal or calendar year preceding the 
performance year.
    Fiscal year means the 12-month period beginning on October 1 of the 
preceding calendar year and ending on September 30.
    Food Stamp Program means the program administered by the United 
States Department of Agriculture pursuant to the Food Stamp Act of 1977, 
U.S.C. 2011 et seq.
    CMS is the Centers for Medicare & Medicaid Services.
    Improvement rate means the positive percentage point change between 
the absolute rate of performance in the performance year and the 
comparison year, except for the calculation and ranking of States on the 
increase in success in the work force measure in Sec.  270.5(a)(4).
    Medicaid is a State program of medical assistance operated in 
accordance with a State plan under title XIX of the Act.
    MSIS is the Medicaid Statistical Information System.
    Performance year means the year in which a State's performance is 
measured, i.e., the fiscal year or the calendar year immediately 
preceding the bonus year.
    SCHIP is the State Children's Health Insurance Program as described 
in title XXI of the Act.
    Separate State Program (SSP) means a program operated outside of 
TANF in which the expenditure of State funds may count for TANF 
maintenance-of-effort (MOE) purposes.
    SSP-MOE Data Report is the report containing disaggregated and 
aggregated data required to be filed on SSP-MOE recipients in separate 
State programs as specified in Sec.  265.3(d) of this chapter.
    State means each of the 50 States of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, and American Samoa.
    TANF means The Temporary Assistance for Needy Families Program.
    We (and any other first person plural pronouns) means the Secretary 
of Health and Human Services or any of the following individuals or 
organizations acting in an official capacity on the Secretary's behalf: 
the Assistant Secretary for Children and Families, the Department of 
Health and Human Services, and the Administration for Children and 
Families.



Sec.  270.3  What is the annual maximum amount we will award and the maximum amount that a State can receive each year?

    (a) Except as provided in Sec.  270.9, we will award $200 million in 
bonus funds annually, subject to Congressional authorization and the 
availability of the appropriation.
    (b) The amount payable to a State in a bonus year may not exceed 
five percent of a State's family assistance grant.



Sec.  270.4  On what measures will we base the bonus awards?

    (a) Performance measures: general. In FY 2002 and beyond, we will 
base the high performance bonus awards on: four work measures; five 
measures that support work and self-sufficiency related to participation 
by low-income working families in the Food Stamp Program, participation 
of former TANF recipients in the Medicaid and SCHIP programs, and 
receipt of child care; and one measure on family formation and 
stability.
    (b) Work measures. (1) Beginning in FY 2002, we will measure State 
performance on the following work measures:
    (i) Job entry rate;
    (ii) Success in the work force rate;
    (iii) Increase in the job entry rate; and
    (iv) Increase in success in the work force rate.
    (2) For any given year, we will score and rank competing States and 
award bonuses to the ten States with the highest scores in each work 
measure.
    (c) Measures of participation by low-income working households in 
the Food Stamp Program--(1) Food Stamp absolute measure. (i) Beginning 
in FY 2002, we will measure the number of low-income working households 
with children (i.e., households with children under age 18 which have an 
income less than 130 percent of poverty and earnings equal to at least 
half-time, full-year minimum

[[Page 172]]

wage) receiving Food Stamps as a percentage of the number of low-income 
working households with children (as defined in this paragraph) in the 
State.
    (ii) We will rank all States that choose to compete on this measure 
and will award bonuses to the three States with the highest scores. We 
will calculate the percentage rate for this measure to two decimal 
points. If two or more States have the same percentage rate for the 
measure, we will calculate the rates for these States to as many decimal 
points as necessary to eliminate the tie.
    (2) Food Stamp improvement measure. (i) Beginning in FY 2002, we 
will measure the improvement in the number of low-income working 
households with children (i.e., households with children under age 18 
which have an income less than 130 percent of poverty and earnings equal 
to at least half-time, full-year Federal minimum wage) receiving Food 
Stamps as a percentage of the number of low-income working households 
with children (as defined in this subparagraph) in the State.
    (ii) For any given year, we will compare a State's performance on 
this measure to its performance in the previous year, beginning with a 
comparison of calendar (CY) 2000 to CY 2001, based on Census Bureau 
decennial and annual demographic program data.
    (iii) We will rank all States that choose to compete on this measure 
and will award bonuses to the seven States with the greatest percentage 
point improvement in this measure. We will calculate the percentage rate 
for this measure to two decimal points. If two or more States have the 
same percentage rate for this measure, we will calculate the rates for 
these States to as many decimal points as necessary to eliminate the 
tie.
    (d) Measures of participation by low-income families in the 
Medicaid/SCHIP Programs. (1) Medicaid/SCHIP absolute measure. (i) 
Beginning in FY 2002, we will measure the number of individuals 
receiving TANF benefits who are also enrolled in Medicaid or SCHIP, who 
leave TANF in a fiscal year and are enrolled in Medicaid or SCHIP in the 
fourth month after leaving TANF assistance, and who are not receiving 
TANF assistance in the fourth month as a percentage of individuals who 
left TANF in the fiscal year and are not receiving TANF assistance in 
the fourth month after leaving.
    (ii) We will rank the performance of each State that chooses to 
compete on this absolute measure and award bonuses to the three States 
with the highest scores.
    (iii) We will calculate the percentage rate for this measure to two 
decimal points. If two or more States have the same percentage rate for 
this measure, we will calculate the rates for these States to as many 
decimal points as necessary to eliminate the tie.
    (2) Medicaid/SCHIP improvement measure. (i) Beginning in FY 2002, we 
will measure the improvement in the number of individuals receiving TANF 
benefits who are also enrolled in Medicaid or SCHIP, who leave TANF in a 
fiscal year and are enrolled in Medicaid or SCHIP in the fourth month 
after leaving TANF assistance, and who are not receiving TANF assistance 
in the fourth month as a percentage of individuals who left TANF in the 
fiscal year and are not receiving TANF assistance in the fourth month 
after leaving.
    (ii) For any given year, we will compare a State's performance on 
this improvement measure to its performance in the previous year, 
beginning with a comparison of FY 2000 to FY 2001, based on a quarterly 
submission by the State as determined by matching individuals (adults 
and children) who have left TANF assistance and who are not receiving 
TANF assistance in the fourth month with Medicaid or SCHIP enrollment 
data.
    (iii) We will rank the performance of all States that choose to 
compete on this improvement measure and will award bonuses to the seven 
States with the greatest percentage point improvement in this measure.
    (iv) We will calculate the percentage rate for the measure to two 
decimal points. If two or more States have the same percentage rate for 
this measure, we will calculate the rates for these States to as many 
decimal points as necessary to eliminate the tie.
    (e) Child care subsidy measure. (1) Beginning in FY 2002, we will 
measure

[[Page 173]]

State performance based upon a composite ranking of:
    (i) The accessibility of services based on the percentage of 
children in the State who meet the maximum allowable Federal eligibility 
requirements for the Child Care and Development Fund (CCDF) who are 
served by the State during the performance year, and who are included in 
the data reported on the ACF-800 and ACF-801 for the same fiscal year; 
and
    (ii) The affordability of CCDF services based on a comparison of the 
reported assessed family co-payment to reported family income and a 
comparison of the number of eligible children under the State's defined 
income limits to the number of eligible children under the federal 
eligibility limits.
    (2) Beginning in FY 2003, we will measure State performance based 
upon a composite ranking of:
    (i) The two components described in paragraph (e)(1) of this 
section; and
    (ii) The quality of CCDF services based on a comparison of 
reimbursement rates during the performance year to the market rates, 
determined in accordance with 45 CFR 98.43(b)(2), applicable to that 
year.
    (3) For the affordability component in paragraph (e)(1)(ii) of this 
section, we will compare family income to the assessed State family co-
payment as reported on the ACF-801 across four income ranges. These 
income ranges refer to percentages of the Federal Poverty Guidelines for 
a family of three persons. The income ranges are as follows:
    (i) Income below the poverty level;
    (ii) Income at least 100 percent and below 125 percent of poverty;
    (iii) Income at least 125 percent and below 150 percent of poverty; 
and
    (iv) Income at least 150 percent and below 175 percent of poverty.
    (4)(i) For the affordability component, we will calculate, for each 
income range, the average of the ratios of family co-payment to family 
income for each family served; and
    (ii) We will calculate a ratio of the number of children eligible 
under the State's defined income limits compared to the number of 
children eligible under the Federal eligibility limits in the CCDF, 
i.e., 85 percent of the State's median income.
    (iii) We will rank each State based on each of the four averages 
calculated in paragraph (e)(4)(i) of this section and the ratio 
calculated in paragraph (e)(4)(ii) of this section and combine the ranks 
to obtain the State's score on this component.
    (5) For the quality component specified in paragraph (e)(2)(ii) of 
this section, in FY 2003 and beyond, we will compare the actual rates 
paid by the State as reported on the ACF-801 (not the published maximum 
rates) to the market rates applicable to the performance year, i.e., FY 
2002. Each State competing on this measure must submit the following 
data as a part of its market rate survey:
    (i) Age-specific rates for children 0-13 years of age reported by 
the child care centers and family day care homes responding to the 
State's market rate survey; and
    (ii) The provider's county or, if the State uses multi-county 
regions to measure market rates or set maximum payment rates, the 
administrative region.
    (6) For the quality component, we will compute the percentile of the 
market represented by the amount paid for each child as reported on the 
ACF-801 by comparing the actual payment for each child to the array of 
reported market rates for children of the same age in the relevant 
county or administrative region. (We will compare payments for children 
in center-based care to reported center care provider rates. We will 
compare payments for children in non-center-based care, i.e., family day 
care and unlicensed child care, to reported family child care provider 
rates.)
    (i) We will take the percentile that results from the per-child 
comparison of the actual payment to the reported market rates and 
compute separate State-wide averages for center-based and non-center-
based care; and
    (ii) We will rank the State according to the two State-wide averages 
and combine the ranks to obtain the State's score on this component.
    (7) For any given year, we will rank the States that choose to 
compete on

[[Page 174]]

the child care measure on each component of the overall measure and 
award bonuses to the ten States with the highest composite rankings.
    (8) We will calculate each component score for this measure to two 
decimal points. If two or more States have the same score for a 
component, we will calculate the scores for these States to as many 
decimal points as necessary to eliminate the tie.
    (9)(i) The rank of the measure for the FY 2002 bonus year will be a 
composite weighted score of the two components at paragraph (e)(1) of 
this section, with the component at paragraph (e)(1)(i) of this section 
having a weight of 6 and the component at paragraph (e)(1)(ii) of this 
section having a weight of 4.
    (ii) The rank of the measure for the bonus beginning in FY 2003 will 
be a composite weighted score of the three components at paragraph 
(e)(2) of this section, with the component at paragraph (e)(1)(i) of 
this section having a weight of 5, the component at paragraph (e)(1)(ii) 
of this section having a weight of 3, and the component at paragraph 
(e)(2)(ii) of this section having a weight of 2.
    (10) We will award bonuses only to the top ten qualifying States 
that have fully obligated their CCDF Matching Funds for the fiscal year 
corresponding to the performance year and fully expended their CCDF 
Matching Funds for the fiscal year preceding the performance year.
    (f) Family formation and stability measure. (1) Beginning in FY 2002 
and beyond, we will measure the increase in the percent of children in 
each State who reside in married couple families, beginning with a 
comparison of CY 2000 and CY 2001 data from the Census Bureau. For any 
given subsequent year we will compare a State's performance on this 
measure to its performance in the previous year.
    (2) We will rank the performance of those States that choose to 
compete on this measure and will award bonuses to the ten States with 
the greatest percentage point improvement in this measure.
    (3) We will calculate the percentage rate for the measure to two 
decimal points. If two or more States have the same percentage rate for 
this measure, we will calculate the rates for these States to as many 
decimal points as necessary to eliminate the tie.
    (g) Option to compete. Each State has the option to compete on one, 
any number of, or none of the measures specified in this section.

[65 FR 52851, Aug. 30, 2000, as amended at 65 FR 75634, Dec. 4, 2000; 66 
FR 23859, May 10, 2001]

    Effective Date Note: At 66 FR 23859, May 10, 2001, in Sec.  270.4, 
paragraph (e)(2)(ii) was revised. The amendment contains information 
collection and recordkeeping requirements and will not become effective 
until approval has been given by the Office of Management and Budget.



Sec.  270.5  What factors will we use to determine a State's score on the work measures?

    (a) Definitions. The work measures are defined as follows:
    (1) The Job Entry Rate means the unduplicated number of adult 
recipients who entered employment for the first time in the performance 
year (job entries) as a percentage of the total unduplicated number of 
adult recipients unemployed at some point in the performance year.
    (2) The Success in the Work Force Rate is composed of two equally 
weighted sub-measures defined as follows:
    (i) The Job Retention Rate means the performance year sum of the 
unduplicated number of employed adult recipients in each quarter one 
through four who were also employed in the first and second subsequent 
quarters, as a percentage of the sum of the unduplicated number of 
employed adult recipients in each quarter. (At some point, the adult 
might become a former recipient.); and
    (ii) The Earnings Gain Rate means the performance year sum of the 
gain in earnings between the initial and second subsequent quarter in 
each of quarters one through four for adult recipients employed in both 
these quarters as a percentage of the sum of their initial earnings in 
each of quarters one through four. (At some point, the adult might 
become a former recipient.)
    (3) The Increase in the Job Entry Rate means the positive percentage 
point difference between the job entry rate

[[Page 175]]

for the performance year and the job entry rate for the comparison year; 
and
    (4) The Increase in Success in the Work Force Rate means the 
positive percentage point difference on at least one sub-measure between 
the success in the work force rate for the performance year and the 
success in the work force rate for the comparison year. It is composed 
of two equally weighted sub-measures defined as follows:
    (i) The Increase in the Job Retention Rate means the percentage 
point difference between the job retention rate for the performance year 
and the job retention rate for the comparison year; and
    (ii) The Increase in the Earning Gain Rate means the percentage 
point difference between the earnings gain rate for the performance year 
and the earnings gain rate for the comparison year.
    (b) Ranking of States. (1) We will measure State performance in the 
work measures over the course of an entire fiscal year both for the 
performance year and the comparison year, if applicable.
    (2) We will rank the competing States on the work measures for which 
they:
    (i) Indicate they wish to compete; and
    (ii) Submit the data specified in Sec.  270.6 within the time frames 
specified in Sec.  270.11.
    (3) We will rank the States on absolute performance in each of the 
work measures in paragraphs (a)(1) and (a)(2) of this section. For each 
of the work measures in paragraphs (a)(3) and (a)(4) of this section, we 
will rank States based on the percentage point change in their 
improvement rate in the performance year compared to the comparison 
year. The rank of the performance in paragraphs (a)(2) and (a)(4) of 
this section will be a composite score of the rank of the job retention 
and the earnings gain measures.
    (4) We will calculate the percentage rate for each work measure to 
two decimal points. If two or more States have the same absolute or 
improvement rate for a specific work measure, we will calculate the 
rates for these States to as many decimal points as necessary to 
eliminate the tie.



Sec.  270.6  What data and other information must a State report to us?

    (a) Data for work measures. (1) If a State wishes to compete on any 
of the work measures specified in Sec.  270.5(a), it must collect 
quarterly and report semi-annually for the performance year and, if the 
State chooses to compete on an improvement measure, the comparison year, 
the identifying information on all adult TANF recipients as specified in 
program guidance.
    (2) Each State must submit the information in this paragraph for 
both adult TANF recipients and adult SSP-MOE recipients for whom the 
State would report the data described in paragraph (b) of this section.
    (b) Data on SSP-MOE programs. In order to compete on any high 
performance bonus measure, each State must submit the information in 
Sections One and Three of the SSP-MOE Data Report as specified in Sec.  
265.3(d) of this chapter.
    (c) Data for the Medicaid/SCHIP measures. If a State wishes to 
compete on the Medicaid/SCHIP measures in Sec.  270.4(d), it must submit 
the information that we and CMS will specify.
    (d) Data for the child care measure. If a State wishes to compete on 
the child care measure in Sec.  270.4(e), it must report the data as 
required by the CCDF program and additional data on child care market 
rates that we will specify.
    (e) Intent to compete. Each State must notify us on which of the 
measures it will compete in each bonus year.



Sec.  270.7  What data will we use to measure performance on the work support and other measures?

    (a) We will use Census Bureau data to rank States on their 
performance on the Food Stamp measures in Sec.  270.4(c) and on the 
measure of family formation and stability in Sec.  270.4(f). We will 
also use Census Bureau data, along with other information, to rank 
States on the child care measure in Sec.  270.4(e). We will rank only 
those States that choose to compete on these measures.
    (b) We will rank State performance on the Medicaid/SCHIP measures in 
Sec.  270.4(d) based on data submitted by those States that choose to 
compete on these measures, as determined by matching TANF individuals 
who were

[[Page 176]]

enrolled in Medicaid/SCHIP and are no longer receiving TANF assistance 
with Medicaid/SCHIP enrollment data.
    (c) We will rank State performance on the child care measure based 
on data submitted by those States that choose to compete on this 
measure. We will use data reported on Forms ACF 800, ACF 801, ACF 696 
and other necessary data we will specify.



Sec.  270.8  How will we allocate the bonus award funds?

    (a) In FY 2002 and beyond, we will allocate and award $140 million 
to the ten States with the highest scores for each work measure as 
follows, subject to reallocation as specified in Sec.  270.9:

    (1) Job Entry Rate--$56 million
    (2) Success in the Work Force--$35 million
    (3) Increase in Job Entry Rate--$28 million
    (4) Increase in Success in the Work Force--$21 million;

    (b) In FY 2002 and beyond, we will allocate and award $20 million to 
the ten States with the highest scores on the Food Stamp measures and 
$20 million to the ten States with the highest scores on the Medicaid/
SCHIP measures, subject to reallocation as specified in Sec.  270.9. For 
these measures, we will:
    (1) Award $6 million to the three States with the highest scores on 
the Food Stamp absolute measure;
    (2) Award $6 million to the three States with the highest scores on 
the Medicaid/SCHIP absolute measure;
    (3) Award $14 million to the seven States with the highest scores on 
the Food Stamp improvement measure; and
    (4) Award $14 million to the seven States with the highest scores on 
the Medicaid/SCHIP improvement measure.
    (c) In FY 2002 and beyond, we will allocate and award $10 million to 
the ten States with the highest scores on the child care subsidy measure 
and $10 million to the ten States with the highest scores on the family 
formation and stability improvement measure.
    (d) We will distribute the bonus dollars for each measure based on 
each State's percentage of the total amount of the State family 
assistance grants of the States that will receive a bonus.



Sec.  270.9  How will we redistribute funds if that becomes necessary?

    (a) If we cannot distribute the funds as specified in Sec.  270.8, 
we will reallocate any undistributed funds among the measures listed in 
Sec.  270.4.
    (b) If we still cannot distribute funds within the bonus year, they 
will remain available for distribution in the next bonus year, to the 
extent authorized by law.



Sec.  270.10  How will we annually review the award process?

    (a) Annual determination. Annually, as needed, we will review the 
measures, data sources, and funding allocations specified in this part 
to determine if modifications, adjustments, or technical changes are 
necessary. We will add new measures or make changes in the funding 
allocations for the various measures only through regulations.
    (b) Criteria. We will determine if any modifications, adjustments, 
or technical changes need to be made based on:
    (1) Our experience in awarding high performance bonuses in previous 
years; and
    (2) The availability of national, State-reliable, and objective 
data.
    (c) Consultation. We will consult with the National Governors' 
Association, the American Public Human Services Association, and other 
interested parties before we make our final decisions on any 
modification, adjustment, or technical changes for the bonus awards. We 
will notify States and other interested parties of our decisions through 
annual program guidance. We will also post this information on the 
Internet.



Sec.  270.11  When must the States report the data and other information in order to compete for bonus awards?

    (a) All measures. Each State must submit a list of the measures on 
which it is competing by February 28 of each bonus year.
    (b) Work measures. Each State must collect quarterly and submit 
semi-annually during the bonus year the data specified in Sec.  270.6(a) 
as follows:

[[Page 177]]

    (1) The data for the first and second quarters of the performance 
year and, if a State chooses to compete on an improvement measure, the 
first and second quarters of the comparison year, must be submitted by 
the dates we will specify in program guidance.
    (2) The data for the third and fourth quarters of the performance 
year and, if a State chooses to compete on an improvement measure, the 
third and fourth quarters of the comparison year, must be submitted by 
the dates we will specify in program guidance.
    (c) SSP-MOE reporting. Each State must collect quarterly its SSP-MOE 
Data Report as specified in Sec.  270.6(b) and submit it:
    (1) At the same time as it submits its quarterly TANF Data Report; 
or
    (2) At the time it seeks to be considered for a high performance 
bonus as long as it submits the required data for the full period for 
which this determination will be made.
    (d) Medicaid/SCHIP measures. Each State must submit the data 
required to compete on the Medicaid/SCHIP measures by the dates and in a 
manner that we and CMS will specify.
    (e) Child care subsidy measure. Each State must submit the data 
required to compete on the child care measure by the date(s) we will 
specify.



Sec.  270.12  Must States file the data electronically?

    Each State must submit the data required to compete for the high 
performance bonus work measures and the Medicaid/SCHIP measures 
electronically in a manner that we and CMS will specify.



Sec.  270.13  What do States need to know about the use of bonus funds?

    (a) A State must use bonus award funds to carry out the purposes of 
the TANF block grant as specified in section 401 (Purpose) and section 
404 (Use of Grants) of the Act.
    (b) As applicable, these funds are subject to the requirements in 
and limitations of sections 404 and 408 of the Act and Sec.  263.11 of 
this chapter.
    (c) For Puerto Rico, Guam, the Virgin Islands, and American Samoa, 
the bonus award funds are not subject to the mandatory ceilings on 
funding established in section 1108(c)(4) of the Act.
    (d) States must report quarterly on the use of the bonus funds.

                           PART 282 [RESERVED]



PART 283_IMPLEMENTATION OF SECTION 403(A)(2) OF THE SOCIAL SECURITY ACT BONUS TO REWARD DECREASE IN ILLEGITIMACY RATIO--Table of Contents




Sec.
283.1 What does this part cover?
283.2 What definitions apply to this part?
283.3 What steps will we follow to award the bonus?
283.4 If a State wants to be considered for bonus eligibility, what 
          birth data must it submit?
283.5 How will we use these birth data to determine bonus eligibility?
283.6 If a State wants to be considered for bonus eligibility, what data 
          on abortions must it submit?
283.7 How will we use these data on abortions to determine bonus 
          eligibility?
283.8 What will be the amount of the bonus?
283.9 What do eligible States need to know to access and use the bonus 
          funds?

    Authority: 42 U.S.C. 603.

    Source: 64 FR 18493, Apr. 14, 1999, unless otherwise noted.



Sec.  283.1  What does this part cover?

    This part explains how States may be considered for the ``Bonus to 
Reward Decrease in Illegitimacy Ratio,'' as authorized by section 
403(a)(2) of the Social Security Act. It describes the data on which we 
will base the bonus, how we will make the award, and how we will 
determine the amount of the award.



Sec.  283.2  What definitions apply to this part?

    The following definitions apply to this part:
    Abortions means induced pregnancy terminations, including both 
medically and surgically induced pregnancy terminations. This term does 
not include spontaneous abortions, i.e., miscarriages.
    Act means the Social Security Act.
    Bonus refers to the Bonus to Reward Decrease in Illegitimacy Ratio, 
as set forth in section 403(a)(2) of the Act.

[[Page 178]]

    Calculation period refers to the four calendar years used for 
determining the decrease in the out-of-wedlock birth ratios for a bonus 
year. (The years included in the calculation period change from year to 
year.)
    Most recent two-year period for which birth data are available means 
the most recent two calendar years for which the National Center for 
Health Statistics has released final birth data by State.
    Most recent year for which abortion data are available means the 
year that is two calendar years prior to the current calendar year. (For 
example, for eligibility determinations made during calendar year 1999, 
the most recent year for which abortion data are available would be 
calendar year 1997.)
    NCHS means the National Center for Health Statistics, of the Centers 
for Disease Control and Prevention, U.S. Department of Health and Human 
Services.
    Number of out-of-wedlock births for the State means the final number 
of births occurring outside of marriage to residents of the State, as 
reported in NCHS vital statistics data.
    Number of total births for the State means the final total number of 
live births to residents of the State, as reported in NCHS vital 
statistics data.
    Rate of abortions means the number of abortions reported by the 
State in the most recent year for which abortion data are available 
divided by the State's total number of resident live births reported in 
vital statistics for that same year. (This measure is also more 
traditionally known as the ``abortion to live birth ratio.'')
    Ratio refers to the ratio of live out-of-wedlock births to total 
live births, as defined in Sec.  283.5(b).
    State means the 50 States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, and American Samoa, as provided in section 419(a)(5) of 
the Act.
    Vital statistics data means the data reported by State health 
departments to NCHS, through the Vital Statistics Cooperative Program 
(VSCP).
    We (and any other first person plural pronouns) means the Secretary 
of Health and Human Services or any of the following individuals or 
organizations acting in an official capacity on the Secretary's behalf: 
the Assistant Secretary for Children and Families, the Regional 
Administrators for Children and Families, the Department of Health and 
Human Services, and the Administration for Children and Families.



Sec.  283.3  What steps will we follow to award the bonus?

    (a) For each of the fiscal years 1999 through 2002, we will:
    (1) Based on the vital statistics data provided by NCHS as described 
in Sec.  283.4, calculate the ratios for the most recent two years for 
which final birth data are available, and for the prior two years, as 
described in Sec.  283.5;
    (2) Calculate the proportionate change between these two ratios, as 
described in Sec.  283.5.
    (3) Identify as potentially eligible a maximum of eight States, 
i.e., Guam, the Virgin Islands, and American Samoa, and five other 
States, that have qualifying decreases in their ratios, using the 
methodology described in Sec.  283.5;
    (4) Notify these potentially eligible States that we will consider 
them for the bonus if they submit data on abortions as stated in Sec.  
283.6; and
    (5) Identify which of the potentially eligible States that submitted 
the required data on abortions have experienced decreases in their rates 
of abortion relative to 1995, as described in Sec.  283.7. These States 
will receive the bonus.
    (b) We will determine the amount of the grant for each eligible 
State, based on the number of eligible States, and whether Guam, 
American Samoa, or the Virgin Islands are eligible. No State will 
receive a bonus award greater than $25 million in any year.



Sec.  283.4  If a State wants to be considered for bonus eligibility, what birth data must it submit?

    (a) To be considered for a bonus, the State must have submitted data 
on out-of-wedlock births as follows:
    (1) The State must have submitted to NCHS the final vital statistics 
data files for all births occurring in the State. These files must show, 
among

[[Page 179]]

other elements, the total number of live births and the total number of 
out-of-wedlock live births occurring in the State. These data must 
conform to the Vital Statistics Cooperative Program contract for all 
years in the calculation period. This contract specifies, among other 
things, the guidelines and time-lines for submitting vital statistics 
data files; and
    (2) The State must have submitted these data for the most recent two 
years for which NCHS reports final data, as well as for the previous two 
years.
    (b) If a State has changed its method of determining marital status 
for the purposes of these data, the State also must have met the 
following requirements:
    (1) The State has identified all years for which the method of 
determining marital status is different from that used for the previous 
year;
    (2) For those years identified under paragraph (b)(1) of this 
section, the State has either:
    (i) Replicated as closely as possible a consistent method for 
determining marital status at the time of birth, and the State has 
reported to NCHS the resulting alternative number of out-of-wedlock 
births; or
    (ii) If NCHS agrees that such replication is not methodologically 
feasible, the State may chose to accept an NCHS estimate of what the 
alternative number would be;
    (3) The State has submitted documentation to NCHS on what changes 
occurred in the determination of marital status for those years and, if 
appropriate, how it determined the alternative number of out-of-wedlock 
births for the State; and
    (4) For methodological changes that were implemented prior to 1998 
and applicable to data collected for the bonus period, the State has 
submitted the information described in paragraphs (b)(1), (2) and (3) of 
this section within two months after April 14, 1999. For such changes 
implemented during or after 1998, the State must submit such information 
either by the end of calendar year 1999 or according to the same 
deadline that applies to its vital statistics data for that year, 
whichever is later.



Sec.  283.5  How will we use these birth data to determine bonus eligibility?

    (a) We will base eligibility determinations on final vital 
statistics data provided by NCHS showing the number of out-of-wedlock 
live births and the number of total live births among women living in 
each State and a factor provided by NCHS to adjust for changes in data 
reporting for those States that have changed their methodology for 
collecting data on out-of-wedlock births during the bonus period.
    (b) We will use the number of total live births and the number of 
out-of-wedlock births, adjusted for any changes in data collection or 
reporting, to calculate the decrease in the ratio of out-of-wedlock to 
total births for each State as follows:
    (1) We will calculate the ratio as the number of out-of-wedlock 
births for the State during the most recent two-year period for which 
NCHS has final birth data divided by the number of total births for the 
State during the same period. We will calculate, to three decimal 
places, the ratio for each State that submits the necessary data on 
total and out-of-wedlock births described in Sec.  283.4.
    (2) We will calculate the ratio for the previous two-year period 
using the same methodology.
    (3) We will calculate the proportionate change in the ratio as the 
ratio of out-of-wedlock births to total births for the most recent two-
year period minus the ratio of out-of-wedlock births to total births 
from the prior two-year period, all divided by the ratio of out-of-
wedlock births to total births for the prior two-year period. A negative 
number will indicate a decrease in the ratio and a positive number will 
indicate an increase in the ratio.
    (c) We will identify which States have a decrease in their ratios 
large enough to make them potentially eligible for the bonus, as 
follows:
    (1) For States other than Guam, American Samoa and the Virgin 
Islands, we will use this calculated change to rank the States and 
identify which five States have the largest decrease in their ratios. 
Only States among the top five will be potentially

[[Page 180]]

eligible for the bonus. We will identify fewer than five such States as 
potentially eligible if fewer than five experience decreases in their 
ratios. We will not include Guam, American Samoa and the Virgin Islands 
in this ranking.
    (2) If we identify more than five States due to a tie in the 
decrease, we will recalculate the ratio and the decrease in the ratio to 
as many decimal places as necessary to eliminate the tie. We will 
identify no more than five States.
    (3) For Guam, American Samoa and the Virgin Islands, we will use the 
calculated change in the ratio to identify which of these States 
experienced a decrease that is either at least as large as the smallest 
qualifying decrease identified in paragraph (c)(1) of this section, or a 
decrease that ranks within the top five decreases when all States and 
Territories are ranked together. These identified States will be 
potentially eligible for the bonus also.
    (4) We will notify the potentially eligible States, as identified 
under paragraphs (a) through (c) of this section that they must submit 
the information on abortions specified under Sec.  283.6 if they want to 
be considered for the bonus.



Sec.  283.6  If a State wants to be considered for bonus eligibility, what data on abortions must it submit?

    (a) To be considered further for bonus eligibility, each potentially 
eligible State, as identified under Sec.  283.5, must submit to ACF data 
and information on the number of abortions for calendar year 1995 within 
two months of this notification. This number must measure either of the 
following:
    (1) For calendar year 1995, the total number of abortions performed 
by all providers within the State; or
    (2) For calendar year 1995, the total number of abortions performed 
by all providers within the State on the total population of State 
residents only. This is the preferred measure.
    (b) States must have obtained these data on abortions for calendar 
year 1995 within 60 days of publication of the final rule and must 
include with their submission of 1995 data an official record 
documenting when they obtained the abortion data.
    (c) Within two months of notification by ACF of potential 
eligibility, the State must submit:
    (1) The number of abortions performed for the most recent year for 
which abortion data are available (as defined in Sec.  283.2 to mean the 
year that is two calendar years prior to the current calendar year). In 
measuring the number of abortions, the State must use the same 
definition, either under paragraph (a)(1) or paragraph (a)(2) of this 
section, for both 1995 and the most recent year; or
    (2) If applicable, the adjusted number and information specified in 
paragraph (d) of this section.
    (d) If the State's data collection or reporting methodology changed 
between 1995 and the bonus year in such a way as to reflect an increase 
or decrease in the number of abortions that is different than what 
actually occurred during the period, the State must:
    (1) When submitting the number of abortions for the most recent year 
under paragraph (c)(2), adjust the number to exclude increases or 
decreases in the number due to changes in methodology for collecting or 
reporting the data. For example, this calculation should include 
adjustments for increases or decreases in response rates for providers 
in reporting abortion data;
    (2) Provide a rationale for the adjustment, i.e., a description of 
how the data collection or reporting methodology was changed. This could 
include a description of how legislative, policy or procedural changes 
affected the collection or reporting of abortion data, or an indication 
of changes in the response rate of providers in reporting abortion data; 
and
    (3) Provide a certification by the Governor, or his or her designee, 
that the number of abortions reported to ACF accurately reflects these 
adjustments for changes in data collection or reporting methodology.



Sec.  283.7  How will we use these data on abortions to determine bonus eligibility?

    (a) For those States that have met all the requirements under 
Sec. Sec.  283.1 through 283.6, we will calculate the

[[Page 181]]

rate of abortions for calendar year 1995 and for the most recent year 
for which abortion data are available as defined in Sec.  283.2. These 
rates will equal the number of abortions reported by the State to ACF 
for the applicable year, divided by total live births among women living 
in the State reported by NCHS for the same year. We will calculate the 
rates to three decimal places.
    (b) If ACF determines that the State's rate of abortions for the 
most recent year for which abortion data are available is less than the 
rate for 1995, and, if the State has met all the requirements listed 
elsewhere under this part, the State will receive the bonus.



Sec.  283.8  What will be the amount of the bonus?

    (a) If, for a bonus year, none of the eligible States is Guam, 
American Samoa or the Virgin Islands, then the amount of the grant shall 
be:
    (1) $20 million per State if there are five eligible States; or
    (2) $25 million per State if there are fewer than five eligible 
States.
    (b) If for a bonus year, Guam, the Virgin Islands, or American Samoa 
is an eligible State, then the amount of the grant shall be:
    (1) In the case of such a State, 25 percent of the mandatory ceiling 
amount as defined in section 1108 of the Act; and
    (2) In the case of any other State, $100 million, minus the total 
amount of any bonuses paid to Guam, the Virgin Islands, and American 
Samoa, and divided by the number of eligible States other than Guam, 
American Samoa and the Virgin Islands, not to exceed $25 million per 
State.



Sec.  283.9  What do eligible States need to know to access and use the bonus funds?

    (a) States must use the bonus funds to carry out the purposes of the 
Temporary Assistance for Needy Families Block Grant in section 401 and 
404 of the Act. This may include statewide programs to prevent and 
reduce the incidence of out-of-wedlock pregnancies.
    (b) As applicable, these funds are subject to the requirements in, 
and the limitations of, sections 404 and 408 of the Act.
    (c) For Puerto Rico, Guam, the Virgin Islands, and American Samoa, 
the bonus award funds are not subject to the mandatory ceilings on 
funding established in section 1108(c)(4) of the Act.



PART 284_METHODOLOGY FOR DETERMINING WHETHER AN INCREASE IN A STATE OR TERRITORY'S CHILD POVERTY RATE IS THE RESULT OF THE TANF PROGRAM--Table of Contents




Sec.
284.10 What does this part cover?
284.11 What definitions apply to this part?
284.15 Who must submit information to ACF to carry out the requirements 
          of this part?
284.20 What information will we use to determine the child poverty rate 
          in each State?
284.21 What will we do if the State's child poverty rate increased five 
          percent or more over the two-year period?
284.30 What information must the State include in its assessment of the 
          impact of the TANF program(s) in the State on the increase in 
          child poverty?
284.35 What action will we take in response to the State's assessment 
          and other information?
284.40 When is a corrective action plan due?
284.45 What are the contents and duration of a corrective action plan?
284.50 What information will we use to determine the child poverty rate 
          in each Territory?

    Authority: 42 U.S.C. 613(i)

    Source: 65 FR 39248, June 23, 2000, unless otherwise noted.



Sec.  284.10  What does this part cover?

    (a) This part describes the methodology for determining the child 
poverty rates in the States and the Territories, as required by section 
413(i) of the Social Security Act, including determining whether the 
child poverty rate increased by five percent or more as a result of the 
TANF program(s) in the State or Territory. It also describes the content 
and duration of the corrective action plan.
    (b) The requirements of this part do not apply to any Territory that 
has never operated a TANF program.

[[Page 182]]



Sec.  284.11  What definitions apply to this part?

    The following definitions apply to this part:
    ACF means the Administration for Children and Families.
    Act means the Social Security Act, unless otherwise specified.
    Census Bureau methodology means the various methods developed by the 
Census Bureau for estimating the number and percentage of children in 
poverty in each State. These methods may include national estimates 
based on the Current Population Survey; the Small Area Income and 
Poverty Estimates; the annual demographic programs, including the 
American Community Survey; or any other programs or methods used by the 
Census Bureau to estimate poverty. ``Children in poverty'' means 
children that live in families with incomes below 100 percent of the 
Census Bureau's poverty threshold.
    Child poverty rate means the percentage of all children in a State 
or Territory which live in families with incomes below 100 percent of 
the Census Bureau's poverty threshold.
    Date of enactment means calendar year 1996.
    MOE means maintenance-of-effort. This is a provision in section 
409(a)(7) of the Social Security Act that requires States to maintain a 
certain level of spending based on historical (i.e., FY 1994) 
expenditure levels.
    SAIPE means the Small Area Income and Poverty Estimates, a 
methodology developed by the Census Bureau to obtain more accurate 
estimates of poverty and income (including the number and percentage of 
children in poverty) at the State and county level between decennial 
censuses.
    SSP-MOE means a separate State program operated outside of the TANF 
program for which the expenditure of State funds may count for MOE 
purposes.
    State means each of the 50 States of the United States and the 
District of Columbia.
    TANF means the Temporary Assistance for Needy Families program under 
sections 401 through 419 of the Social Security Act, as enacted by the 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996, 
sections 101-116 of Pub. L. 104-193 (42 U.S.C. 601-619).
    Territories means American Samoa, the Commonwealth of Puerto Rico, 
Guam, and the United States Virgin Islands.
    Tribal TANF program means a TANF program developed by an eligible 
Tribe, Tribal organization, or consortium of Tribes, and approved by us 
under section 412 of the Act.
    We (and any other first person plural pronouns) means the Secretary 
of Health and Human Services or any of the following individuals and 
organizations acting in an official capacity on the Secretary's behalf: 
The Assistant Secretary for Children and Families, the Regional 
Administrators for Children and Families, the Department of Health and 
Human Services, and the Administration for Children and Families.



Sec.  284.15  Who must submit information to ACF to carry out the requirements of this part?

    (a) The Chief Executive Officer of the State, or his or her 
designee, is responsible for submitting to ACF the information required 
by this part.
    (b) The State should obtain information from and work with the 
Indian tribe(s) (and Tribal consortia) operating a Tribal TANF program 
in the State in preparing and submitting the assessment, as specified in 
Sec.  284.30, and the corrective action plan, as specified in Sec.  
284.45.



Sec.  284.20  What information will we use to determine the child poverty rate in each State?

    (a) General. We will determine the child poverty rate in each State 
based on estimates from either the Census Bureau or the State, as 
described in this section. Each year we will use these data to determine 
the change in the State's child poverty rate over a two-year period, 
beginning with calendar years 1996 and 1997.
    (b) Estimates from the Census Bureau. (1) Annually, we will obtain 
from the Census Bureau and provide to each State the estimate of the 
number and percentage of children in poverty in each State. The estimate 
will be based on the Census Bureau methodology.

[[Page 183]]

    (2) In 2000, and annually thereafter, we will determine for each 
State, at the 90-percent confidence level, the percentage change in the 
child poverty rate and provide this information to the State. The 
determination of percentage change in 2000 will cover the change between 
calendar years 1996 and 1997.
    (c) Estimates from the State. (1) As an alternative to the Census 
Bureau estimates provided to the State under paragraph (b) of this 
section, the State may provide to us data on child poverty in the State 
derived from an independent source.
    (2) If the State provides data on child poverty as described in 
paragraph (c)(1) of this section, it must:
    (i) Provide an estimate of the child poverty rate for the same two 
calendar years as the Census Bureau estimates provided to the State 
under paragraph (b)(2) of this section;
    (ii) Provide the change in the child poverty rate for the applicable 
two-calendar-year period at the 90-percent confidence level;
    (iii) Use the official definition of poverty as used by the Census 
Bureau; and
    (iv) Describe the methodology used to develop its independent 
estimates, the sources of data and methodology for collecting the data, 
any known problems associated with making estimates of this type, the 
estimate of the standard error, and the power of the sample to detect a 
five percent change in the child poverty rate.
    (3) The State must submit its independent estimates and supporting 
information within 45 days of the date the State receives the Census 
Bureau estimates as described in paragraph (b) of this section.
    (d) Determination of the State's child poverty rate. (1) If we 
determine that the State's independent estimates of the child poverty 
rate are more reliable than the Census Bureau estimates, we will accept 
these estimates.
    (2) For all other States, we will determine the State's child 
poverty rate based on the Census Bureau's estimates.



Sec.  284.21  What will we do if the State's child poverty rate increased five percent or more over the two-year period?

    (a) If we determine, based on Sec.  284.20, that the State's child 
poverty rate did not increase by five percent or more over the 
applicable two-year period at the 90-percent confidence interval, we 
will:
    (1) Conclude that the State has satisfied the statutory requirements 
of section 413(i) of the Act; and
    (2) Notify the State that no further information from or action by 
the State is required for the applicable two-calendar-year period.
    (b) If we determine, based on Sec.  284.20, that the State's child 
poverty rate increased by five percent or more over the applicable two-
year period at the 90-percent confidence level, we will notify the State 
that it has 90 days from the date of its receipt of our notification to 
submit an assessment of the impact of the TANF program(s) in the State, 
as specified in Sec.  284.30.



Sec.  284.30  What information must the State include in its assessment of the impact of the TANF program(s) in the State on the increase in child poverty?

    (a) The State's assessment must:
    (1) Cover the same two-calendar-year period as the Census Bureau 
estimates provided to the State in Sec.  284.20(b)(2);
    (2) Directly address the issue of whether the State's child poverty 
rate increased as a result of the TANF program(s) in the State and 
include the State's analysis, explanation, and conclusions in relation 
to this issue; and (3) Include the information on which the assessment 
was based.
    (b) The State's assessment may be supported by any materials the 
State believes to be pertinent to its analysis, explanation, and 
conclusions. The following are examples of such materials:
    (1) The number of families receiving TANF cash assistance payments 
under the State TANF program and, if applicable, the Tribal TANF 
program(s);
    (2) The total amount of State and Tribal spending on TANF cash 
assistance payments;
    (3) The number and/or percentage of eligible families with children 
in the State who are participating in the

[[Page 184]]

Food Stamp Program or other State supportive and assistance programs;
    (4) The proportion of students certified for free or reduced-price 
school lunches;
    (5) TANF income eligibility rules that show that client 
participation was not limited or cash benefits did not decrease;
    (6) Examples of efforts that the State and the Indian tribe(s), as 
appropriate, have taken using TANF and other funds to support families 
entering the work force;
    (7) The percentage of eligible individuals in the State receiving 
TANF assistance;
    (8) Information on TANF program participation such as the number of 
applications disapproved or denied, or cases sanctioned;
    (9) The number of TANF cases closed as a result of time-limit 
restrictions or non-compliance with work requirements;
    (10) The amount of total cash assistance expenditures that can be 
claimed for SSP-MOE purposes;
    (11) Information based on Unemployment Insurance wage record data 
showing, for example, increases in the number of TANF participants 
entering jobs, retaining jobs, and increasing their earnings;
    (12) The number of families receiving work subsidies, i.e., payments 
to employers or third parties to help cover the costs of employee wages, 
benefits, supervision, and training;
    (13) Information that a State met the definition of ``needy State'' 
under section 403(b)(6) of the Act for an extended period of time within 
the applicable two-calendar-year period;
    (14) Examples of past efforts that the State and the Indian 
tribe(s), as appropriate, have taken to mitigate or address child 
poverty;
    (15) Any other data on the TANF program(s) in the State that would 
support the State's conclusions; and
    (16) Information on other circumstances in the State that may have 
contributed to the increase in child poverty such as changes in economic 
or social conditions, e.g., an increase in the State's unemployment 
rate.



Sec.  284.35  What action will we take in response to the State's assessment and other information?

    (a) We will review the State's assessment along with other available 
information. If we determine that the increase in the child poverty rate 
of five percent or more is not the result of the TANF program(s) in the 
State, we will notify the State that no further information from, or 
action by, the State is required for the applicable two-calendar-year 
period.
    (b) Based on our review of the State's assessment and other 
information, if we determine that the increase in the State's child 
poverty rate of five percent or more is the result of the TANF 
program(s) in the State, we will notify the State that it must submit a 
corrective action plan as specified in Sec. Sec.  284.40 and 284.45.



Sec.  284.40  When is a corrective action plan due?

    Each State must submit a corrective action plan to ACF within 90 
days of the date the State receives notice of our determination that, as 
a result of the TANF program(s) in the State, its child poverty rate 
increased by five percent or more for the applicable two-calendar-year 
period.



Sec.  284.45  What are the contents and duration of the corrective action plan?

    (a) The State must include in the corrective action plan:
    (1) An outline of the manner in which the State or Territory will 
reduce its child poverty rate;
    (2) A description of the actions it will take under the plan; and
    (3) Any actions to be taken under the plan by the Indian tribe(s) 
(or Tribal consortia) operating a TANF program in the State.
    (b) The State must implement the corrective action plan until it 
determines and notifies us that its child poverty rate, as determined in 
Sec.  284.20, is less than the lowest child poverty rate on the basis of 
which the State was required to submit the corrective action plan. The 
``lowest child poverty rate'' means the five percent threshold above the 
first year in the two-year comparison period.

[[Page 185]]



Sec.  284.50  What information will we use to determine the child poverty rate in each Territory?

    (a) Our intent is that, to the extent that reliable data are 
available and the procedures are appropriate, the Territories must meet 
the requirements in Sec. Sec.  284.11 through 284.45 as specified for 
the 50 States and the District of Columbia.
    (b) When reliable Census Bureau data are available for the 
Territories, we will:
    (1) Notify the Territories through guidance of our intent to use 
these data in the implementation of this part; and
    (2) Begin the process by providing to each Territory the number and 
percent of children in poverty in each jurisdiction, as specified in 
Sec.  284.20(b).

                           PART 285 [RESERVED]



PART 286_TRIBAL TANF PROVISIONS--Table of Contents




                Subpart A_General Tribal TANF Provisions

Sec.
286.1 What does this part cover?
286.5 What definitions apply to this part?
286.10 What does the term ``assistance'' mean?
286.15 Who is eligible to operate a Tribal TANF program?

                      Subpart B_Tribal TANF Funding

286.20 How is the amount of a Tribal Family Assistance Grant (TFAG) 
          determined?
286.25 How will we resolve disagreements over the State-submitted data 
          used to determine the amount of a Tribal Family Assistance 
          Grant?
286.30 What is the process for retrocession of a Tribal Family 
          Assistance Grant?
286.35 What are proper uses of Tribal Family Assistance Grant funds?
286.40 May a Tribe use the Tribal Family Assistance Grant to fund IDAs?
286.45 What uses of Tribal Family Assistance Grant funds are improper?
286.50 Is there a limit on the percentage of a Tribal Family Assistance 
          Grant that can be used for administrative costs?
286.55 What types of costs are subject to the administrative cost limit 
          on Tribal Family Assistance Grants?
286.60 Must Tribes obligate all Tribal Family Assistance Grant funds by 
          the end of the fiscal year in which they are awarded?

            Subpart C_Tribal TANF Plan Content and Processing

286.65 How can a Tribe apply to administer a Tribal Temporary Assistance 
          for Needy Families (TANF) program?
286.70 Who submits a Tribal Family Assistance Plan?
286.75 What must be included in the Tribal Family Assistance Plan?
286.80 What information on minimum work participation requirements must 
          a Tribe include in its Tribal Family Assistance Plan?
286.85 How will we calculate the work participation rates?
286.90 How many hours per week must an adult or minor head-of-household 
          participate in work-related activities to count in the 
          numerator of the work participation rate?
286.95 What, if any, are the special rules concerning counting work for 
          two-parent families?
286.100 What activities count towards the work participation rate?
286.105 What limitations concerning vocational education, job search and 
          job readiness assistance exist with respect to the work 
          participation rate?
286.110 What safeguards are there to ensure that participants in Tribal 
          TANF work activities do not displace other workers?
286.115 What information on time limits for the receipt of assistance 
          must a Tribe include in its Tribal Family Assistance Plan?
286.120 Can Tribes makes exceptions to the established time limit for 
          families?
286.125 Does the receipt of TANF benefits under a State or other Tribal 
          TANF program count towards a Tribe's TANF time limit?
286.130 Does the receipt of Welfare-to-Work (WtW) cash assistance count 
          towards a Tribe's TANF time limit?
286.135 What information on penalties against individuals must be 
          included in a Tribal Family Assistance Plan?
286.140 What special provisions apply to victims of domestic violence?
286.145 What is the penalty if an individual refuses to engage in work 
          activities?
286.150 Can a family, with a child under age 6, be penalized because a 
          parent refuses to work because (s)he cannot find child care?
286.155 May a Tribe condition eligibility for Tribal TANF assistance on 
          assignment of child support to the Tribe?
286.160 What are the applicable time frames and procedures for 
          submitting a Tribal Family Assistance Plan?
286.165 How is a Tribal Family Assistance Plan amended?

[[Page 186]]

286.170 How may a Tribe petition for administrative review of 
          disapproval of a TFAP or amendment?
286.175 What special provisions apply to Alaska?
286.180 What is the process for developing the comparability criteria 
          that are required in Alaska?
286.185 What happens when a dispute arises between the State of Alaska 
          and the Tribal TANF eligible entities in the State related to 
          the comparability criteria?
286.190 If the Secretary, the State of Alaska, or any of the Tribal TANF 
          eligible entities in the State of Alaska want to amend the 
          comparability criteria, what is the process for doing so?

                 Subpart D_Accountability and Penalties

286.195 What penalties will apply to Tribes?
286.200 How will we determine if Tribal Family Assistance Grant funds 
          were misused or intentionally misused?
286.205 How will we determine if a Tribe fails to meet the minimum work 
          participation rate(s)?
286.210 What is the penalty for a Tribe's failure to repay a Federal 
          loan?
286.215 When are the TANF penalty provisions applicable?
286.220 What happens if a Tribe fails to meet TANF requirements?
286.225 How may a Tribe establish reasonable cause for failing to meet a 
          requirement that is subject to application of a penalty?
286.230 What if a Tribe does not have reasonable cause for failing to 
          meet a requirement?
286.235 What penalties cannot be excused?
286.240 How can a Tribe appeal our decision to take a penalty?

          Subpart E_Data Collection and Reporting Requirements

286.245 What data collection and reporting requirements apply to Tribal 
          TANF programs?
286.250 What definitions apply to this subpart?
286.255 What quarterly reports must the Tribe submit to us?
286.260 May Tribes use sampling and electronic filing?
286.265 When are quarterly reports due?
286.270 What happens if the Tribe does not satisfy the quarterly 
          reporting requirements?
286.275 What information must Tribes file annually?
286.280 When are annual reports due?
286.285 How do the data collection and reporting requirements affect 
          Public Law 102-477 Tribes?

    Authority: 42 U.S.C. 612.

    Source: 65 FR 8530, Feb. 18, 2000, unless otherwise noted.



                Subpart A_General Tribal TANF Provisions



Sec.  286.1  What does this part cover?

    Section 412 of the Social Security Act allows Indian tribes to apply 
to operate a Tribal Family Assistance program. This part implements 
section 412. It specifies:
    (a) who can apply to operate a Tribal Family Assistance program;
    (b) the requirements for the submission and contents of a Tribal 
Family Assistance Plan;
    (c) the determination of the amount of a Tribal Family Assistance 
Grant; and
    (d) other program requirements and procedures.



Sec.  286.5  What definitions apply to this part?

    The following definitions apply under this part:
    ACF means the Administration for Children and Families.
    Act means the Social Security Act, unless otherwise specified.
    Administrative cost means costs necessary for the proper 
administration of the TANF program.
    (1) It excludes the direct costs of providing program services.
    (i) For example, it excludes costs of providing diversion benefits 
and services, providing program information to clients, screening and 
assessments, development of employability plans, work activities, post-
employment services, work supports, information on and referral to 
Medicaid, Child Health Insurance Program (CHIP), Food Stamp and Native 
Employment Works (NEW) programs and case management.
    (ii) It excludes the salaries and benefit costs for staff providing 
program services and the direct administrative costs associated with 
providing the services, such as the costs for supplies, equipment, 
travel, postage, utilities, rental of office space and maintenance of 
office space, and
    (iii) It excludes information technology and computerization needed 
for tracking and monitoring.

[[Page 187]]

    (2) It includes the costs for general administration and 
coordination of this program, including contract costs for these 
functions and indirect (or overhead) costs. Some examples of 
administrative costs include, but are not limited to:
    (i) Salaries and benefits and all other direct costs not associated 
with providing program services to individuals, including staff 
performing administrative and coordination functions;
    (ii) Preparation of program plans, budgets, and schedules;
    (iii) Monitoring of programs and projects;
    (iv) Fraud and abuse units;
    (v) Procurement activities;
    (vi) Public relations;
    (vii) Services related to accounting, litigation, audits, management 
of property, payroll, and personnel;
    (viii) Costs for the goods and services required for administration 
of the program such as the costs for supplies, equipment, travel, 
postage, utilities, and rental of office space and maintenance of office 
space, provided that such costs are not excluded as a direct 
administrative cost for providing program services under paragraph (1) 
of this definition;
    (ix) Travel costs incurred for official business and not excluded as 
a direct administrative cost for providing program services under 
paragraph (1) of this definition;
    (x) Management information systems not related to the tracking and 
monitoring of TANF requirements (e.g., for a personnel and payroll 
system for Tribal staff); and
    (xi) Preparing reports and other documents related to program 
requirements.
    Adult means an individual who is not a ``minor child,'' as defined 
below.
    Alaska Tribal TANF entity means the twelve Alaska Native regional 
nonprofit corporations in the State of Alaska and the Metlakatla Indian 
Community of the Annette Islands Reserve.
    Assistant Secretary means the Assistant Secretary for Children and 
Families, Department of Health and Human Services.
    Cash assistance, when provided to participants in the Welfare-to-
Work program, has the meaning specified at Sec.  286.130.
    Comparability means similarity between State and Tribal TANF 
programs in the State of Alaska. Comparability, when defined related to 
services provided, does not necessarily mean identical or equal 
services.
    Consortium means a group of Tribes working together for the same 
identified purpose and receiving combined TANF funding for that purpose.
    The Department means the Department of Health and Human Services.
    Duplicative Assistance means the receipt of services/ assistance 
from two or more TANF programs for the same purpose.
    Eligible families means all families eligible for TANF funded 
assistance under the Tribal TANF program funded under section 412(a), 
including:
    (1) All U.S. citizens who meet the Tribe's criteria for Tribal TANF 
assistance;
    (2) All qualified aliens, who meet the Tribe's criteria for Tribal 
TANF assistance, who entered the U.S. before August 22, 1996;
    (3) All qualified aliens, who meet the Tribe's criteria for Tribal 
TANF assistance, who entered the U.S. on or after August 22, 1996, who 
have been in the U.S. for at least 5 years beginning on the date of 
entry into the U.S. with a qualified alien status, are eligible 
beginning 5 years after the date of entry into the U.S. There are 
exceptions to this 5-year bar for qualified aliens who enter on or after 
August 22, 1996, and the Tribal TANF program must cover these excepted 
individuals:
    (a) An alien who is admitted to the U.S. as a refugee under section 
207 of the Immigration and Nationality Act;
    (b) An alien who is granted asylum under section 208 of such Act;
    (c) An alien whose deportation is being withheld under section 
243(h) of such Act; and
    (d) An alien who is lawfully residing in any State and is a veteran 
with an honorable discharge, is on active duty in the Armed Forces of 
the U.S., or is the spouse or unmarried dependent child of such an 
individual;
    (4) All permanent resident aliens who are members of an Indian 
tribe, as defined in section 4(e) of the Indian Self-

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Determination and Education Assistance Act;
    (5) All permanent resident aliens who have 40 qualifying quarters of 
coverage as defined by Title II of the Act.
    Eligible Indian tribe means any Tribe or intertribal consortium that 
meets the definition of Indian tribe in this section and is eligible to 
submit a Tribal TANF plan to ACF.
    Family Violence Option (or FVO) means the provision at section 
402(a)(7) of the Act made available to Tribes under which a Tribe may 
certify in its Tribal TANF plan that it has elected the option to 
implement comprehensive strategies for identifying and serving victims 
of domestic violence.
    Fiscal year means the 12-month period beginning on October 1 of the 
preceding calendar year and ending on September 30.
    FY means fiscal year.
    Good cause domestic violence waiver means a waiver of one or more 
program requirements granted by a Tribe to a victim of domestic violence 
under the FVO, as described in Sec.  286.140(a)(3).
    Grant period means the period of time that is specified in the 
Tribal TANF grant award document.
    Indian, Indian tribe and Tribal Organization have the same meaning 
given such terms by section 4 of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450b), except that the term ``Indian 
tribe'' means, with respect to the State of Alaska, only the Metlakatla 
Indian Community of the Annette Islands Reserve and the following Alaska 
Native regional nonprofit corporations:
    (1) Arctic Slope Native Association;
    (2) Kawerak, Inc.;
    (3) Maniilaq Association;
    (4) Association of Village Council Presidents;
    (5) Tanana Chiefs Council;
    (6) Cook Inlet Tribal Council;
    (7) Bristol Bay Native Association;
    (8) Aleutian and Pribilof Island Association;
    (9) Chugachmuit;
    (10) Tlingit Haida Central Council;
    (11) Kodiak Area Native Association; and
    (12) Copper River Native Association.
    Indian country has the meaning given the term in 18 U.S.C. 1151.
    Minor child means an individual who:
    (1) Has not attained 18 years of age; or
    (2) Has not attained 19 years of age and is a full-time student in a 
secondary school (or in the equivalent level of vocational or technical 
training).
    Minor Head-of-Household means an individual under age 18, or 19 and 
a full-time student in a secondary school, who is the custodial parent 
of a minor child.
    PRWORA means the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996.
    Qualified Aliens has the same meaning given the term in 8 U.S.C. 
1641 except that it also includes members of an Indian tribe, as defined 
in section 4(e) of the Indian Self-Determination and Education 
Assistance Act, who are lawfully admitted under 8 U.S.C. 1359.
    Retrocession means the process by which a Tribe voluntarily 
terminates and cedes back (or returns) a Tribal TANF program to the 
State which previously served the population covered by the Tribal TANF 
plan. Retrocession includes the voluntary relinquishment of the 
authority to obligate previously awarded grant funds before that 
authority would otherwise expire.
    Secretary means the Secretary of the Department of Health and Human 
Services.
    Scientifically acceptable sampling method means a probability 
sampling method in which every sampling unit has a known, non-zero 
chance to be included in the sample and the sample size requirements are 
met.
    SFAG or State Family Assistance Grant means the amount of the block 
grant funded under section 403(a) of the Act for each eligible State.
    SFAP or State Family Assistance Plan is the plan for implementation 
of a State TANF program under PRWORA.
    State means, except as otherwise specifically provided, the 50 
States of the United States, the District of Columbia, the Commonwealth 
of Puerto Rico, the United States Virgin Islands, Guam, and American 
Samoa.
    TANF means the Temporary Assistance for Needy Families Program, 
which is authorized under title IV-A of the Social Security Act.

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    TANF funds mean funds authorized under section 412(a) of the Act.
    TFAG or Tribal Family Assistance Grant means the amount of the block 
grant funded under section 412(a) of the Act for each eligible Tribe.
    TFAP or Tribal Family Assistance Plan means the plan for 
implementation of the Tribal TANF program under section 412(b) of the 
Act.
    Title IV-A refers to the title of the Social Security Act that now 
includes TANF, but previously included AFDC and EA. For the purpose of 
the TANF program regulations, this term does not include child care 
programs authorized and funded under section 418 of the Act, or their 
predecessors, unless we specify otherwise.
    Title IV-F refers to the title of the Social Security Act that was 
eliminated with the creation of TANF and previously included the Job 
Opportunities and Basic Skills Training Program (JOBS).
    Tribal TANF expenditures means expenditures of TANF funds, within 
the Tribal TANF program.
    Tribal TANF program means a Tribal program subject to the 
requirements of section 412 of the Act that is funded by TANF funds on 
behalf of eligible families.
    Victim of domestic violence means an individual who is battered or 
subject to extreme cruelty under the definition at section 
408(a)(7)(C)(iii) of the Act.
    We (and any other first person plural pronouns) refers to The 
Secretary of Health and Human Services, or any of the following 
individuals or organizations acting in an official capacity on the 
Secretary's behalf: the Assistant Secretary for Children and Families, 
the Regional Administrators for Children and Families, the Department of 
Health and Human Services, and the Administration for Children and 
Families.
    Welfare-related services means all activities, assistance, and 
services funded under Tribal TANF provided to an eligible family. See 
definition of ``Assistance'' in Sec.  286.10.
    Welfare-to-Work means the program for funding work activities at 
section 412(a)(2)(C) of the Act.
    WtW means Welfare-to-Work.
    WtW cash assistance, when provided to participants in the Welfare-
to-Work program, has the meaning specified at Sec.  286.130.



Sec.  286.10  What does the term ``assistance'' mean?

    (a) The term ``assistance'' includes cash, payments, vouchers, and 
other forms of benefits designed to meet a family's ongoing basic needs 
(i.e., for food, clothing, shelter, utilities, household goods, personal 
care items, and general incidental expenses).
    (1) It includes such benefits even when they are:
    (i) Provided in the form of payments by a TANF agency, or other 
agency on its behalf, to individual recipients; and
    (ii) Conditioned on participation in work experience or community 
service or any other work activity.
    (2) Except where excluded under paragraph (b) of this section, it 
also includes supportive services such as transportation and child care 
provided to families who are not employed.
    (b) It excludes:
    (1) Nonrecurring, short-term benefits that:
    (i) Are designed to deal with a specific crisis situation or episode 
of need;
    (ii) Are not intended to meet recurrent or ongoing needs; and
    (iii) Will not extend beyond four months.
    (2) Work subsidies (i.e., payments to employers or third parties to 
help cover the costs of employee wages, benefits, supervision, and 
training);
    (3) Supportive services such as child care and transportation 
provided to families who are employed;
    (4) Refundable earned income tax credits;
    (5) Contributions to, and distributions from, Individual Development 
Accounts;
    (6) Services such as counseling, case management, peer support, 
child care information and referral, information on and referral to 
Medicaid, Child Health Insurance Program (CHIP), Food Stamp and Native 
Employment Works (NEW) programs, transitional services, job retention, 
job advancement, and other employment-related services that do not 
provide basic income support; and

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    (7) Transportation benefits provided under a Job Access or Reverse 
Commute project, pursuant to section 404(k) of the Act, to an individual 
who is not otherwise receiving assistance.
    (c) The definition of the term assistance specified in paragraphs 
(a) and (b) of this section does not preclude a Tribe from providing 
other types of benefits and services consistent with the purposes of the 
TANF program.



Sec.  286.15  Who is eligible to operate a Tribal TANF program?

    (a) An Indian tribe that meets the definition of Indian tribe given 
in Sec.  286.5 is eligible to apply to operate a Tribal Family 
Assistance Program.
    (b) In addition, an intertribal consortium of eligible Indian tribes 
may develop and submit a single TFAP.



                      Subpart B_Tribal TANF Funding



Sec.  286.20  How is the amount of a Tribal Family Assistance Grant (TFAG) determined?

    (a) We will request and use data submitted by a State to determine 
the amount of a TFAG. The State data that we will request and use are 
the total Federal payments attributable to State expenditures, including 
administrative costs (which includes systems costs) for fiscal year 1994 
under the former Aid to Families With Dependent Children, Emergency 
Assistance and Job Opportunities and Basic Skills Training programs, for 
all Indian families residing in the geographic service area or areas 
identified in the Tribe's letter of intent or Tribal Family Assistance 
Plan.
    (1) A Tribe must indicate its definition of ``Indian family'' in its 
Tribal Family Assistance Plan. Each Tribe may define ``Indian family'' 
according to its own criteria.
    (2) When we request the necessary data from the State, the State 
will have 30 days from the date of the request to submit the data.
    (i) If we do not receive the data requested from the State at the 
end of the 30-day period, we will so notify the Tribe.
    (ii) In cases where data is not received from the State, the Tribe 
will have 45 days from the date of the notification in which to submit 
relevant information. Relevant information may include, but is not 
limited to, Census Bureau data, data from the Bureau of Indian Affairs, 
data from other Federal programs, and Tribal records. In such a case, we 
will use the data submitted by the Tribe to assist us in determining the 
amount of the TFAG. Where there are inconsistencies in the data, follow-
up discussions with the Tribe and the State will ensue.
    (b) We will share the data submitted by the State under paragraph 
(a)(2)(i) of this section with the Tribe. The Tribe must submit to the 
Secretary a notice as to the Tribe's agreement or disagreement with such 
data no later than 45 days after the date of our notice transmitting the 
data from the State. During this 45-day period we will help resolve any 
questions the Tribe may have about the State-submitted data.
    (c) We will notify each Tribe that has submitted a TFAP of the 
amount of the TFAG. At this time, we will also notify the State of the 
amount of the reduction in its SFAG.
    (d) We will prorate TFAGs that are initially effective on a date 
other than October 1 of any given Federal fiscal year, based on the 
number of days remaining in the Federal fiscal year.



Sec.  286.25  How will we resolve disagreements over the State-submitted data used to determine the amount of a Tribal Family Assistance Grant?

    (a) If a Tribe disagrees with the data submitted by a State, the 
Tribe may submit additional relevant information to the Secretary. 
Relevant information may include, but is not limited to, Census Bureau 
data, data from the Bureau of Indian Affairs, data from other Federal 
programs, and Tribal records.
    (1) The Tribe must submit any relevant information within 45 days 
from the date it notifies the Secretary of its disagreement with State 
submitted data under Sec.  286.20(b).
    (2) We will review the additional relevant information submitted by 
the Tribe, together with the State-submitted data, in order to make a 
determination as to the amount of the TFAG. We will determine the amount 
of the TFAG at the earliest possible

[[Page 191]]

date after consideration of all relevant data.



Sec.  286.30  What is the process for retrocession of a Tribal Family Assistance Grant?

    (a) A Tribe that wishes to terminate its TFAG prior to the end of 
its three-year plan must--
    (1) Notify the Secretary and the State in writing of the reason(s) 
for termination no later than 120 days prior to the effective date of 
the termination, or
    (2) Notify the Secretary in writing of the reason(s) for termination 
no later than 30 days prior to the effective date of the termination, 
where such effective data is mutually agreed upon by the Tribe and the 
affected State(s).
    (b) The effective date of the termination must coincide with the 
last day of a calendar month.
    (c) For a Tribe that retrocedes, the provisions of 45 CFR part 92 
will apply with regard to closeout of the grant. All unobligated funds 
will be returned by the Tribe to the Federal government.
    (d) The SFAG will be increased by the amount of the TFAG available 
for the subsequent quarterly installment.
    (e) A Tribe's application to implement a TANF program subsequent to 
its retrocession will be treated as any other application to operate a 
TANF program, except that we may take into account when considering 
approval--
    (1) Whether the circumstances that the Tribe identified for 
termination of its TANF program remain applicable and the extent to 
which--
    (i) The Tribe has control over such circumstances, and
    (ii) Such circumstances are reasonably related to program funding 
accountability, and
    (2) Whether any outstanding funds and penalty amounts are repaid.
    (f) A Tribe which retrocedes a Tribal TANF program is responsible 
for:
    (1) Complying with the data collection and reporting requirements 
and all other program requirements for the period before the 
retrocession is effective;
    (2) Any applicable penalties (see subpart D) for actions occurring 
prior to retrocession; the provisions of 45 CFR Part 92 and OMB 
Circulars A-87 and A-133;
    (3) compliance with other Federal statutes and regulations 
applicable to the TANF program; and
    (4) any penalties resulting from audits covering the period before 
the effective date of retrocession.



Sec.  286.35  What are proper uses of Tribal Family Assistance Grant funds?

    (a) Tribes may use TFAGs for expenditures that:
    (1) Are reasonably calculated to accomplish the purposes of TANF, 
including, but not limited to, the provision to low income households 
with assistance in meeting home heating and cooling costs; assistance in 
economic development and job creation activities, the provision of 
supportive services to assist needy families to prepare for, obtain, and 
retain employment; the provision of supportive services to prevent of 
out-of-wedlock pregnancies, and assistance in keeping families together, 
or
    (2) Were an authorized use of funds under the State plans for Parts 
A or F of title IV of the Social Security Act, as such parts were in 
effect on September 30, 1995.



Sec.  286.40  May a Tribe use the Tribal Family Assistance Grant to fund IDAs ?

    (a) If the Tribe elects to operate an IDA program, it may use 
Federal TANF funds or WtW funds to fund IDAs for individuals who are 
eligible for TANF assistance and may exercise flexibility within the 
limits of Federal regulations and the statute.
    (b) The following restrictions apply to IDA funds:
    (1) A recipient may deposit only earned income into an IDA.
    (2) A recipient's contributions to an IDA may be matched by, or 
through, a qualified entity.
    (3) A recipient may withdraw funds only for the following reasons:
    (i) To cover post-secondary education expenses, if the amount is 
paid directly to an eligible educational institution;
    (ii) For the recipient to purchase a first home, if the amount is 
paid directly to the person to whom the amounts are due and it is a 
qualified

[[Page 192]]

acquisition cost for a qualified principal residence by a qualified 
first-time buyer; or
    (iii) For business capitalization, if the amounts are paid directly 
to a business capitalization account in a federally insured financial 
institution and used for a qualified business capitalization expense.
    (c) To prevent recipients from withdrawing funds held in an IDA 
improperly, Tribes may do the following:
    (1) Count withdrawals as earned income in the month of withdrawal, 
unless already counted as income,
    (2) Count withdrawals as resources in determining eligibility, or
    (3) Take such other steps as the Tribe has established in its Tribal 
plan or written Tribal policies to deter inappropriate use.



Sec.  286.45  What uses of Tribal Family Assistance Grant funds are improper?

    (a) A Tribe may not use Tribal Family Assistance Grant funds to 
provide assistance to:
    (1) Families or individuals that do not otherwise meet the 
eligibility criteria contained in the Tribal Family Assistance Plan 
(TFAP); or
    (2) For more than the number of months as specified in a Tribe's 
TFAP (unless covered by a hardship exemption); or
    (3) Individuals who are not citizens of the United States or 
qualified aliens or who do not otherwise meet the definition of 
``eligible families'' at Sec.  286.5.
    (b) Tribal Family Assistance Grant funds may not be used to 
contribute to or to subsidize non-TANF programs.
    (c) A Tribe may not use Tribal Family Assistance Grant funds for 
services or activities prohibited by OMB Circular A-87.
    (d) All provisions in OMB Circular A-133 and in 45 CFR part 92 are 
applicable to the Tribal TANF program.
    (e) Tribal TANF funds may not be used for the construction or 
purchase of facilities or buildings.
    (f) Tribes must use program income generated by the Tribal Family 
Assistance grant for the purposes of the TANF program and for allowable 
TANF services, activities and assistance.



Sec.  286.50  Is there a limit on the percentage of a Tribal Family Assistance Grant that can be used for administrative costs?

    (a) ACF will negotiate a limitation on administrative costs with 
each Tribal TANF applicant individually for the first year of a 
program's operation based on the applicant's proposed administrative 
cost allocation. No Tribal TANF grantee may expend more than 35 percent 
of its Tribal Family Assistance Grant for administrative costs during 
the first year.
    (b) ACF will negotiate a limitation on administrative costs with 
each Tribal TANF applicant individually for the second year of a 
program's operation based on the applicant's proposed administrative 
cost allocation. No Tribal TANF grantee may expend more than 30 percent 
of its TFAG for administrative costs during the second year.
    (c) ACF will negotiate a limitation on administrative costs with 
each Tribal TANF applicant individually for the third and all subsequent 
years of a program's operation based on the applicant's proposed 
administrative cost allocation. As negotiated, a Tribal TANF grantee may 
not expend more than 25 percent of its TFAG for administrative costs 
during any subsequent grant period.
    (1) For the purposes of determining administrative costs, Tribes 
with approved plans who have been operating Tribal TANF programs prior 
to the effective date of this regulation will be able to negotiate a 
reasonable adjustment in their approved administrative cost rate, not to 
exceed the limitations in the Final Rule delineated above.
    (2) [Reserved]
    (d) ACF will negotiate limitations on administrative costs based on, 
but not limited to, a Tribe's TANF funding level, economic conditions, 
and the resources available to the Tribe, the relationship of the 
Tribe's administrative cost allocation proposal to the overall purposes 
of TANF, and a demonstration of the Tribe's administrative capability.

[[Page 193]]



Sec.  286.55  What types of costs are subject to the administrative cost limit on Tribal Family Assistance Grant funds?

    (a) Activities that fall within the definition of ``administrative 
costs'' at Sec.  286.5 are subject to the limit determined under Sec.  
286.50.
    (b) Information technology and computerization for tracking, data 
entry and monitoring, including personnel and other costs associated 
with the automation activities needed for Tribal TANF monitoring, data 
entry and tracking purposes, are excluded from the administrative cost 
cap, even if they fall within the definition of ``administrative 
costs.''
    (c) Designing, administering, monitoring, and controlling a sample 
are not inherent parts of information technology and computerization 
and, thus, costs associated with these tasks must be considered 
administrative costs.
    (d) Indirect Costs negotiated by BIA, the Department's Division of 
Cost Allocation, or another federal agency must be considered to be part 
of the total administrative costs.



Sec.  286.60  Must Tribes obligate all Tribal Family Assistance Grant funds by the end of the fiscal year in which they are awarded?

    (a) No. A Tribe may reserve amounts awarded to it, without fiscal 
year limitation, to provide assistance under the Tribal TANF program.
    (b) A Tribe may expend funds beyond the fiscal year in which awarded 
only on benefits that meet the definition of assistance at Sec.  286.10 
or on the administrative costs directly associated with providing that 
assistance.



            Subpart C_Tribal TANF Plan Content and Processing



Sec.  286.65  How can a Tribe apply to administer a Tribal Temporary Assistance For Needy Families (TANF) Program?

    (a) Any eligible Indian tribe, Alaska Native organization, or 
intertribal consortium that wishes to administer a Tribal TANF program 
must submit a three-year TFAP to the Secretary of the Department of 
Health and Human Services. The original must be submitted to the 
appropriate ACF Regional Office with a copy to the ACF Central Office.
    (b) A Tribe currently operating a Tribal TANF program must submit to 
the appropriate ACF Regional Office, with a copy to the ACF Central 
Office, no later than 120 days prior to the end of the three-year grant 
period, either--
    (1) A letter of intent, with a copy to the affected State or States, 
which specifies they do not intend to continue operating the program 
beyond the end of the three-year grant period; or
    (2) A letter of intent, with a copy to the affected State or States, 
which specifies they intend to continue program operations with no 
changes to the geographic service area or service population; or
    (3) A new three-year plan which indicates a change in either the 
geographic service area or service population.
    (c) For Tribes choosing option (b)(2) above, a new three-year plan 
must be submitted to the appropriate ACF Regional Office, with a copy to 
the ACF Central Office, no later than 60 days before the end of the 
current three-year grant period.



Sec.  286.70  Who submits a Tribal Family Assistance Plan?

    (a) A TFAP must be submitted by the chief executive officer of the 
Indian tribe and be accompanied by a Tribal resolution supporting the 
TFAP.
    (b) A TFAP from a consortium must be forwarded under the signature 
of the chief executive officer of the consortium and be accompanied by 
Tribal resolutions from all participating Tribes that demonstrate each 
individual Tribe's support of the consortium, the delegation of 
decision-making authority to the consortium's governing board, and the 
Tribe's recognition that matters involving operation of the Tribal TANF 
consortium are the express responsibility of the consortium's governing 
board.
    (c) When one of the participating Tribes in a consortium wishes to 
withdraw from the consortium, the Tribe needs to both notify the 
consortium and the Secretary of this fact.

[[Page 194]]

    (1) This notification must be made at least 120 days prior to the 
effective date of the withdrawal.
    (2) The time frame in paragraph (c)(i) of this section is applicable 
only if the Tribe's withdrawal will cause a change to the service area 
or population of the consortium.
    (d) When one of the participating Tribes in a consortium wishes to 
withdraw from the consortium in order to operate its own Tribal TANF 
program, the Tribe needs to submit a Tribal TANF plan that follows the 
requirements at Sec.  286.75 and Sec.  286.165.



Sec.  286.75  What must be included in the Tribal Family Assistance Plan?

    (a) The TFAP must outline the Tribe's approach to providing welfare-
related services for the three-year period covered by the plan, 
including:
    (1) Information on the general eligibility criteria the Tribe has 
established, which includes a definition of ``needy family,'' including 
income and resource limits and the Tribe's definition of ``Tribal member 
family'' or ``Indian family.''
    (2) A description of the assistance, services, and activities to be 
offered, and the means by which they will be offered. The description of 
the services, assistance, and activities to be provided includes whether 
the Tribe will provide cash assistance, and what other assistance, 
services, and activities will be provided.
    (3) If the Tribe will not provide the same services, assistance, and 
activities in all parts of the service area, the TFAP must indicate any 
variations.
    (4) If the Tribe opts to provide different services to specific 
populations, including teen parents and individuals who are 
transitioning off TANF assistance, the TFAP must indicate whether any of 
these services will be provided and, if so, what services will be 
provided.
    (5) The Tribe's goals for its TANF program and the means of 
measuring progress towards those goals;
    (6) Assurance that a 45-day public comment period on the Tribal TANF 
plan concluded prior to the submission of the TFAP.
    (7) Assurance that the Tribe has developed a dispute resolution 
process to be used when individuals or families want to challenge the 
Tribe's decision to deny, reduce, suspend, sanction or terminate 
assistance.
    (8) Tribes may require cooperation with child support enforcement 
agencies as a condition of eligibility for TANF assistance. Good cause 
and other exceptions to cooperation shall be defined by the Tribal TANF 
program.
    (b) The TFAP must identify which Tribal agency is designated by the 
Tribe as the lead agency for the overall administration of the Tribal 
TANF program along with a description of the administrative structure 
for supervision of the TANF program.
    (c) The TFAP must indicate whether the services, assistance and 
activities will be provided by the Tribe itself or through grants, 
contracts or compacts with inter-Tribal consortia, States, or other 
entities.
    (d) The TFAP must identify the population to be served by the Tribal 
TANF program.
    (1) The TFAP must identify whether it will serve Tribal member 
families only, or whether it will serve all Indian families residing in 
the Tribal TANF service area.
    (2) If the Tribe wishes to serve any non-Indian families (and thus 
include non-Indians in its service population), an agreement with the 
State TANF agency must be included in the TFAP. This agreement must 
provide that, where non-Indians are to be served by Tribal TANF, these 
families are subject to Tribal TANF program rules.
    (e) The TFAP must include a description of the geographic area to be 
served by the Tribal TANF program, including a specific description of 
any ``near reservation'' areas, as defined at 45 CFR 20.1(r), or any 
areas beyond ``near reservation'' to be included in the Tribal TANF 
service area.
    (1) In areas beyond those defined as ``near reservation'', the TFAP 
must demonstrate the Tribe's administrative capacity to serve such areas 
and the State(s)', and if applicable, other Tribe(s)' concurrence with 
the proposed defined boundaries.
    (2) A Tribe cannot extend its service area boundaries beyond the 
boundaries of the State(s) in which the reservation

[[Page 195]]

and BIA near-reservation designations are located.
    (3) For Tribes in Oklahoma, if the Tribe defines its service area as 
other than its ``tribal jurisdiction statistical area'' (TJSA), the 
Tribe must include an agreement with the other Tribe(s) reflecting 
agreement to the service area. TJSAs are areas delineated by the Census 
Bureau for each federally-recognized Tribe in Oklahoma without a 
reservation.
    (f) The TFAP must provide that a family receiving assistance under 
the plan may not receive duplicative assistance from other State or 
Tribal TANF programs and must include a description of the means by 
which the Tribe will ensure duplication does not occur.
    (g) The TFAP must identify the employment opportunities in and near 
the service area and the manner in which the Tribe will cooperate and 
participate in enhancing such opportunities for recipients of assistance 
under the plan, consistent with any applicable State standards. This 
should include:
    (1) A description of the employment opportunities available, in both 
the public and private sector, within and near the Tribal service area; 
and
    (2) A description of how the Tribe will work with public and private 
sector employers to enhance the opportunities available for Tribal TANF 
recipients.
    (h) The TFAP must provide an assurance that the Tribe applies the 
fiscal accountability provisions of section 5(f)(1) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450c(f)(1)), 
relating to the submission of a single-agency audit report required by 
chapter 75 of title 31, United States Code.



Sec.  286.80  What information on minimum work participation requirements must a Tribe include in its Tribal Family Assistance Plan?

    (a) To assess a Tribe's level of success in meeting its TANF work 
objectives, a Tribe that submits a TFAP must negotiate with the 
Secretary minimum work participation requirements that will apply to 
families that receive Tribal TANF assistance that includes an adult or 
minor head of household receiving such assistance.
    (b) A Tribe that submits a TFAP must include in the plan the Tribe's 
proposal for minimum work participation requirements, which includes the 
following:
    (1) For each fiscal year covered by the plan, the Tribe's proposed 
participation rate(s) for all families, for all families and two-parent 
families, or for one-parent families and two-parent families;
    (2) For each fiscal year covered by the plan, the Tribe's proposed 
minimum number of hours per week that adults and minor heads of 
household will be required to participate in work activities;
    (i) If the Tribe elects to include reasonable transportation time to 
and from the site of work activities in determining the hours of work 
participation, it must so indicate in its TFAP along with a definition 
of ``reasonable'' for purposes of this subsection, along with:
    (A) An explanation of how the economic conditions and/or resources 
available to the Tribe justify inclusion of transportation time in 
determining work participation hours; and
    (B) An explanation of how counting reasonable transportation time is 
consistent with the purposes of TANF;
    (3) The work activities that count towards these work requirements;
    (4) Any exemptions, limitations and special rules being established 
in relation to work requirements; and
    (5) The Tribe must provide rationale for the above, explaining how 
the proposed work requirements relate to and are justified based on the 
Tribe's needs and conditions.
    (i) The rationale must address how the proposed work requirements 
are consistent with the purposes of TANF and with the economic 
conditions and resources of the Tribe.
    (ii) Examples of the information that could be included to 
illustrate the Tribe's proposal include, but are not limited to: 
poverty, unemployment, jobless and job surplus rates; education levels 
of adults in the service area; availability of and/or accessibility to

[[Page 196]]

resources (educational facilities, transportation) to help families 
become employable and find employment; and employment opportunities on 
and near the service area.



Sec.  286.85  How will we calculate the work participation rates?

    (a) Work participation rate(s) will be the percentage of families 
with an adult or minor head-of-household receiving TANF assistance from 
the Tribe who are participating in a work activity approved in the TFAP 
for at least the minimum number of hours approved in the TFAP.
    (b) The participation rate for a fiscal year is the average of the 
Tribe's participation rate for each month in the fiscal year.
    (c) A Tribe's participation rate for a month is expressed as the 
following ratio:
    (1) The number of families receiving TANF assistance that include an 
adult or a minor head-of-household who is participating in activities 
for the month (numerator), divided by
    (2) The number of families that include an adult or a minor head-of-
household receiving TANF assistance during the month excluding:
    (i) Families that were penalized for non-compliance with the work 
requirements in that month as long as they have not been sanctioned for 
more than three months (whether or not consecutively) out of the last 12 
months; and
    (ii) Families with children under age one, if the Tribe chooses to 
exempt these families from participation requirements.
    (d) If a family receives assistance for only part of a month or 
begins participating in activities during the month, the Tribe may count 
it as a month of participation if an adult or minor head-of-household in 
the family is participating for the minimum average number of hours in 
each full week that the family receives assistance or participates in 
that month.
    (e) Two-parent families in which one of the parents is disabled are 
considered one-parent families for the purpose of calculating a Tribe's 
participation rate.



Sec.  286.90  How many hours per week must an adult or minor head-of-household participate in work-related activities to count in the numerator of the work 
          participation rate?

    During the month, an adult or minor head-of-household must 
participate in work activities for at least the minimum average number 
of hours per week specified in the Tribe's approved Tribal Family 
Assistance Plan.



Sec.  286.95  What, if any, are the special rules concerning counting work for two-parent families?

    Parents in a two-parent family may share the number of hours 
required to be considered as engaged in work.



Sec.  286.100  What activities count towards the work participation rate?

    (a) Activities that count toward a Tribe's participation rate may 
include, but are not limited to, the following:
    (1) Unsubsidized employment;
    (2) Subsidized private sector employment;
    (3) Subsidized public sector employment;
    (4) Work experience;
    (5) On-the-job training (OJT);
    (6) Job search and job readiness assistance; (see Sec.  286.105)
    (7) Community service programs;
    (8) Vocational educational training; (see Sec.  286.105)
    (9) Job skills training directly related to employment;
    (10) Education directly related to employment, in the case of a 
recipient who has not received a high school diploma or a certificate of 
high school equivalency;
    (11) Satisfactory attendance at secondary school or in a course of 
study leading to a certificate of general equivalence, if a recipient 
has not completed secondary school or received such a certificate;
    (12) Providing child care services to an individual who is 
participating in a community service program; and
    (13) Other activities that will help families achieve self-
sufficiency.
    (b) [Reserved]

[[Page 197]]



Sec.  286.105  What limitations concerning vocational education, job search and job readiness assistance exist with respect to the work participation rate?

    (a) Tribes are not required to limit vocational education for any 
one individual to a period of 12 months.
    (b) There are two limitations concerning job search and job 
readiness:
    (1) Job search and job readiness assistance only count for 6 weeks 
in any fiscal year.
    (2) If the Tribe's unemployment rate in the Tribal TANF service area 
is at least 50 percent greater than the United States' total 
unemployment rate for that fiscal year, then an individual's 
participation in job search or job readiness assistance counts for up to 
12 weeks in that fiscal year.
    (c) If job search or job readiness is an ancillary part of another 
activity, then there is no limitation on counting the time spent in job 
search/job readiness.



Sec.  286.110  What safeguards are there to ensure that participants in Tribal TANF work activities do not displace other workers?

    (a) An adult or minor head-of-household taking part in a work 
activity outlined in Sec.  286.100 cannot fill a vacant employment 
position if:
    (1) Any other individual is on layoff from the same or any 
substantially equivalent job; or
    (2) The employer has terminated the employment of any regular 
employee or otherwise caused an involuntary reduction in its work force 
in order to fill the vacancy with the TANF participant.
    (b) A Tribe must establish and maintain a grievance procedure to 
resolve complaints of alleged violations of this displacement rule.
    (c) This regulation does not preempt or supersede Tribal laws 
providing greater protection for employees from displacement.



Sec.  286.115  What information on time limits for the receipt of assistance must a Tribe include in its Tribal Family Assistance Plan?

    (a) The TFAP must include the Tribe's proposal for:
    (1) Time limits for the receipt of Tribal TANF assistance;
    (2) Any exceptions to these time limits; and
    (3) The percentage of the caseload to be exempted from the time 
limit due to hardship or if the family includes an individual who has 
been battered or subjected to extreme cruelty.
    (b) The Tribe must also include the rationale for its proposal in 
the plan. The rationale must address how the proposed time limits are 
consistent with the purposes of TANF and with the economic conditions 
and resources of the Tribe.
    (1) Examples of the information that could be included to illustrate 
the Tribe's proposal include, but are not limited to: Poverty, 
unemployment, jobless and job surplus rates; education levels of adults 
in the service area; availability of and/or accessibility to resources 
(educational facilities, transportation) to help families become 
employable and find employment; and employment opportunities on and near 
the service area.
    (c) We may require that the Tribe submit additional information 
about the rationale before we approve the proposed time limits.
    (d) Tribes must not count towards the time limit:
    (1) Any month of receipt of assistance to a family that does not 
include an adult head-of-household;
    (2) A family that does not include a pregnant minor head-of-
household, minor parent head-of-household, or spouse of such a head-of-
household; and
    (3) Any month of receipt of assistance by an adult during which the 
adult lived in Indian country or in an Alaskan Native Village in which 
at least 50 percent of the adults were not employed.
    (e) A Tribe must not use any of its TFAG to provide assistance (as 
defined in Sec.  286.10) to a family that includes an adult or minor 
head-of-household who has received assistance beyond the number of 
months (whether or not consecutive) that is negotiated with the Tribe.

[[Page 198]]



Sec.  286.120  Can Tribes make exceptions to the established time limit for families?

    (a) Tribes have the option to exempt families from the established 
time limits for:
    (1) Hardship, as defined by the Tribe, or
    (2) The family includes someone who has been battered or has been 
subject to extreme cruelty.
    (b) If a Tribe elects the hardship option, the Tribe must specify in 
its TFAP the maximum percent of its average monthly caseload of families 
on assistance that will be exempt from the established time limit under 
paragraph (a) of this section.
    (c) If the Tribe proposes to exempt more than 20 percent of the 
caseload under paragraph (a) of this section, the Tribe must include a 
rationale in the plan.



Sec.  286.125  Does the receipt of TANF benefits under a State or other Tribal TANF program count towards a Tribe's TANF time limit?

    Yes, the Tribe must count prior months of TANF assistance funded 
with TANF block grant funds, except for any month that was exempt or 
disregarded by statute, regulation, or under any experimental, pilot, or 
demonstration project approved under section 1115 of the Act.



Sec.  286.130  Does the receipt of Welfare-to-Work (WtW) cash assistance count towards a Tribe's TANF time limit?

    (a) For purposes of an individual's time limit for receipt of TANF 
assistance as well as the penalty provision at Sec.  286.195(a)(1), WtW 
cash assistance counts towards a Tribe's TANF time limit only if:
    (1) Such assistance satisfies the definition at Sec.  286.10; and
    (2) Is directed at ongoing basic needs.
    (b) Only cash assistance provided in the form of cash payments, 
checks, reimbursements, electronic funds transfers, or any other form 
that can legally be converted to currency is subject to paragraph (a) of 
this section.



Sec.  286.135  What information on penalties against individuals must be included in a Tribal Family Assistance Plan?

    (a) The TFAP must include the Tribe's proposal for penalties against 
individuals who refuse to engage in work activities. The Tribe's 
proposal must address the following:
    (1) Will the Tribe impose a pro rata reduction, or more at Tribal 
option, or will it terminate assistance to a family?
    (2) After consideration of the provision specified at Sec.  286.150, 
what will be the proposed Tribal policies related to a single custodial 
parent, with a child under the age of 6, who refuses to engage in work 
activities because of a demonstrated inability to obtain needed child 
care?
    (3) What good cause exceptions, if any, does the Tribe propose that 
will allow individuals to avoid penalties for failure to engage in work?
    (4) What other rules governing penalties does the Tribe propose?
    (5) What, if any, will be the Tribe's policies related to victims of 
domestic violence consistent with Sec.  286.140?
    (b) The Tribe's rationale for its proposal must also be included in 
the TFAP.
    (1) The rationale must address how the proposed penalties against 
individuals are consistent with the purposes of TANF, consistent with 
the economic conditions and resources of the Tribe, and how they relate 
to the requirements of section 407(e) of the Act.
    (2) Examples of the information that could be included to illustrate 
the Tribe's proposal include, but are not limited to; poverty, 
unemployment, jobless and job surplus rates; education levels of adults 
in the service area; availability of and/or accessibility to resources 
(educational facilities, transportation) to help families become 
employable and find employment; and employment opportunities on and near 
the service area.
    (c) We may require a Tribe to submit additional information about 
the rationale before we approve the proposed penalties against 
individuals.

[[Page 199]]



Sec.  286.140  What special provisions apply to victims of domestic violence?

    (a) Tribes electing the Family Violence Option (FVO) must certify 
that they have established and are enforcing standards and procedures 
to:
    (1) Screen and identify individuals receiving TANF assistance with a 
history of domestic violence, while maintaining the confidentiality of 
such individuals;
    (2) Refer such individuals to counseling and supportive services; 
and
    (3) Provide waivers, pursuant to a determination of good cause, of 
TANF program requirements to such individuals for so long as necessary 
in cases where compliance would make it more difficult for such 
individuals to escape domestic violence or unfairly penalize those who 
are or have been victimized by such violence or who are at risk of 
further domestic violence.
    (b) Tribes have broad flexibility to grant waivers of TANF program 
requirements, but such waivers must:
    (1) Identify the specific program requirement being waived;
    (2) Be granted based on need as determined by an individualized 
assessment by a person trained in domestic violence and redeterminations 
no less than every six months;
    (3) Be accompanied by an appropriate services plan that:
    (i) Is developed in coordination with a person trained in domestic 
violence;
    (ii) Reflects the individualized assessment and any revisions 
indicated by any redetermination; and
    (iii) To the extent consistent with paragraph (a)(3) of this 
section, is designed to lead to work.
    (c) If a Tribe wants us to take waivers that it grants under this 
section into account in deciding if it has reasonable cause for failing 
to meet its work participation rates or comply with the established time 
limit on TANF assistance, has achieved compliance or made significant 
progress towards achieving compliance with such requirements during a 
corrective compliance period, the waivers must comply with paragraph (b) 
of this section.
    (d) We will determine that a Tribe has reasonable cause for failing 
to meet its work participation rates or to comply with established time 
limits on assistance if--
    (1) Such failures were attributable to good cause domestic violence 
waivers granted to victims of domestic violence;
    (2) In the case of work participation rates, the Tribe provides 
evidence that it achieved the applicable rates except with respect to 
any individuals who received a domestic violence waiver of work 
participation requirements. In other words, the Tribe must demonstrate 
that it met the applicable rates when such waiver cases are removed from 
the calculation of work participation rate;
    (3) In the case of established time limits on assistance, the Tribe 
provides evidence that it granted good cause domestic violence waivers 
to extend time limits based on the need for continued assistance due to 
current or past domestic violence or the risk of further domestic 
violence, and individuals and their families receiving assistance beyond 
the established time limit under such waivers do not exceed 20 percent 
of the total number of families receiving assistance.
    (e) We may take good cause domestic violence waivers of work 
participation or waivers which extend the established time limits for 
assistance into consideration in deciding whether a Tribe has achieved 
compliance or made significant progress toward achieving compliance 
during a corrective compliance period.
    (f) Tribes electing the FVO must submit the information specified at 
Sec.  286.275(b)(7).



Sec.  286.145  What is the penalty if an individual refuses to engage in work activities?

    If an individual refuses to engage in work activities in accordance 
with the minimum work participation requirements specified in the 
approved TFAP, the Tribe must apply to the individual the penalties 
against individuals that were established in the approved TFAP.

[[Page 200]]



Sec.  286.150  Can a family, with a child under age 6, be penalized because a parent refuses to work because (s)he cannot find child care?

    (a) If the individual is a single custodial parent caring for a 
child under age six, the Tribe may not reduce or terminate assistance 
based on the parent's refusal to engage in required work if he or she 
demonstrates an inability to obtain needed child care for one or more of 
the following reasons:
    (1) Appropriate child care within a reasonable distance from the 
home or work site is unavailable;
    (2) Informal child care by a relative or under other arrangements is 
unavailable or unsuitable; or
    (3) Appropriate and affordable formal child care arrangements are 
unavailable.
    (b) Refusal to work when an acceptable form of child care is 
available is not protected from sanctioning.
    (c) The Tribe will determine when the individual has demonstrated 
that he or she cannot find child care, in accordance with criteria 
established by the Tribe. These criteria must:
    (1) Address the procedures that the Tribe uses to determine if the 
parent has a demonstrated inability to obtain needed child care;
    (2) Include definitions of the terms ``appropriate child care,'' 
``reasonable distance,'' ``unsuitability of informal care,'' and 
``affordable child care arrangements''; and
    (3) Be submitted to us.
    (d) The Tribal TANF agency must inform parents about:
    (1) The penalty exception to the Tribal TANF work requirement, 
including the criteria and applicable definitions for determining 
whether an individual has demonstrated an inability to obtain needed 
child care;
    (2) The Tribe's procedures (including definitions) for determining a 
family's inability to obtain needed child care, and any other 
requirements or procedures, such as fair hearings, associated with this 
provision; and
    (3) The fact that the exception does not extend the time limit for 
receiving Federal assistance.



Sec.  286.155  May a Tribe condition eligibility for Tribal TANF assistance on assignment of child support to the Tribe?

    (a) Tribes have the option to condition eligibility for Tribal TANF 
assistance on assignment of child support to the Tribe consistent with 
paragraph (b) of this section.
    (b) For Tribes choosing to condition eligibility for Tribal TANF 
assistance on assignment of child support to the Tribe, the TFAP must 
address the following--
    (1) Procedures for ensuring that assigned child support collections 
in excess of the amount of Tribal TANF assistance received by the family 
will not be retained by the Tribe; and
    (2) How any amounts generated under an assignment and retained by 
the Tribe will be used to further the Tribe's TANF program, consistent 
with Sec.  286.45(f).

[65 FR 8530, Feb. 18, 2000, as amended at 69 FR 16672, Mar. 30, 2004]



Sec.  286.160  What are the applicable time frames and procedures for submitting a Tribal Family Assistance Plan?

    (a) A Tribe must submit a Tribal TANF letter of intent and/or a TFAP 
to the Secretary according to the following time frames:

----------------------------------------------------------------------------------------------------------------
                                       Letter of intent due to                           ACF notification to the
         Implementation date:             ACF and the State:    Formal plan due to ACF:         State due:
----------------------------------------------------------------------------------------------------------------
January 1, February 1 or March 1.....  July 1 of previous year  September 1 of previous  October 1 of previous
                                                                 year.                    year.
April 1, May 1 or June 1.............  October 1 of previous    December 1 of previous   January 1 of same year.
                                        year.                    year.
July 1, August 1 or September 1......  January 1 of same year.  March 1 of same year...  April 1 of same year.
October 1, November 1 or December 1..  April 1 of same year...  June 1 of same year....  July 1 of same year.
----------------------------------------------------------------------------------------------------------------


[[Page 201]]

    (b) A Tribe that has requested and received data from the State and 
has resolved any issues concerning the data more than six months before 
its proposed implementation date is not required to submit a letter of 
intent.
    (c) The effective date of the TFAP must be the first day of any 
month.
    (d) The original TFAP must be sent to the appropriate ACF Regional 
Administrator, with a copy sent to the Division of Tribal Services, 
Office of Community Services, Administration for Children and Families.
    (e) A Tribe that submits a TFAP or an amendment to an existing plan 
that cannot be approved by the Secretary will be given the opportunity 
to make revisions in order to make the TFAP, or an amendment, 
approvable.
    (f) Tribes operating a consolidated Public Law 102-477 program must 
submit a TFAP plan to the Secretary for review and approval prior to the 
consolidation of the TANF program into the Public Law 102-477 plan.



Sec.  286.165  How is a Tribal Family Assistance Plan amended?

    (a) An amendment to a TFAP is necessary if the Tribe makes any 
substantial changes to the plan, including those which impact an 
individual's eligibility for Tribal TANF services or participation 
requirements, or any other program design changes which alter the nature 
of the program.
    (b) A Tribe must submit a plan amendment(s) to the Secretary no 
later than 30 days prior to the proposed implementation date. Proposed 
implementation dates shall be the first day of any month.
    (c) We will promptly review and either approve or disapprove the 
plan amendment(s).
    (d) Approved plan amendments are effective no sooner than 30 days 
after date of submission.
    (e) A Tribe whose plan amendment is disapproved may petition for an 
administrative review of such disapproval under Sec.  286.170 and may 
appeal our final written decision to the Departmental Appeals Board no 
later than 30 days from the date of the disapproval. This appeal to the 
Board should follow the provisions of the rules under this subpart and 
those at 45 CFR part 16, where applicable.



Sec.  286.170  How may a Tribe petition for administrative review of disapproval of a TFAP or amendment?

    (a) If, after a Tribe has been provided the opportunity to make 
revisions to its TFAP or amendment, the Secretary determines that the 
TFAP or amendment cannot be approved, a written Notice of Disapproval 
will be sent to the Tribe. The Notice of Disapproval will indicate the 
specific grounds for disapproval.
    (b) A Tribe may request reconsideration of a disapproval 
determination by filing a written Request for Reconsideration to the 
Secretary within 60 days of receipt of the Notice of Disapproval. If 
reconsideration is not requested, the disapproval is final and the 
procedures under paragraph (f) of this section must be followed.
    (1) The Request for Reconsideration must include--
    (i) All documentation that the Tribe believes is relevant and 
supportive of its TFAP or amendment; and
    (ii) A written response to each ground for disapproval identified in 
the Notice of Disapproval indicating why the Tribe believes that its 
TFAP or amendment conforms to the statutory and regulatory requirements 
for approval.
    (c) Within 30 days after receipt of a Request for Reconsideration, 
the Secretary or designee will notify the Tribe of the date and time a 
hearing for the purpose of reconsideration of the Notice of Disapproval 
will be held. Such a hearing may be conducted by telephone conference 
call.
    (d) A hearing conducted under Sec.  286.170(c) must be held not less 
than 30 days nor more than 60 days after the date of the notice of such 
hearing is furnished to the Tribe, unless the Tribe agrees in writing to 
an extension.
    (e) The Secretary or designee will make a written determination 
affirming, modifying, or reversing disapproval of the TFAP or amendment 
within 60 days after the conclusion of the hearing.
    (f) If a TFAP or amendment is disapproved, the Tribe may appeal this

[[Page 202]]

final written decision to the Departmental Appeals Board (the Board) 
within 30 days after such party receives notice of determination. The 
party's appeal to the Board should follow the provisions of the rules 
under this section and those at 45 CFR part 16, where applicable.



Sec.  286.175  What special provisions apply in Alaska?

    A Tribe in the State of Alaska that receives a TFAG must use the 
grant to operate a program in accordance with program requirements 
comparable to the requirements applicable to the State of Alaska's 
Temporary Assistance for Needy Families program. Comparability of 
programs must be established on the basis of program criteria developed 
by the Secretary in consultation with the State of Alaska and the Tribes 
in Alaska. The State of Alaska has authority to waive the program 
comparability requirement based on a request by an Indian tribe in the 
State.



Sec.  286.180  What is the process for developing the comparability criteria that are required in Alaska?

    We will work with the Tribes in Alaska and the State of Alaska to 
develop an appropriate process for the development and amendment of the 
comparability criteria.



Sec.  286.185  What happens when a dispute arises between the State of Alaska and the Tribal TANF eligible entities in the State related to the comparability 
          criteria?

    (a) If a dispute arises between the State of Alaska and the Tribes 
in the State on any part of the comparability criteria, we will be 
responsible for making a final determination and notifying the State of 
Alaska and the Tribes in the State of the decision.
    (b) Any of the parties involved may appeal our decision, in whole or 
in part, to the HHS Departmental Appeals Board (the Board) within 60 
days after such party receives notice of determination. The party's 
appeal to the Board should follow the provisions of the rules under this 
section and those at 45 CFR part 16, where applicable.



Sec.  286.190  If the Secretary, the State of Alaska, or any of the Tribal TANF eligible entities in the State of Alaska want to amend the comparability 
          criteria, what is the process for doing so?

    (a) At such time that any of the above parties wish to amend the 
comparability document, the requesting party should submit a request to 
us, with a copy to the other parties, explaining the requested change(s) 
and supplying background information in support of the change(s).
    (b) After review of the request, we will make a determination on 
whether or not to accept the proposed change(s).
    (c) If any party wishes to appeal the decision regarding the 
adoption of the proposed amendment, they may appeal using the appeals 
process pursuant to Sec.  286.165.



                 Subpart D_Accountability and Penalties



Sec.  286.195  What penalties will apply to Tribes?

    (a) Tribes will be subject to fiscal penalties and requirements as 
follows:
    (1) If we determine that a Tribe misused its Tribal Family 
Assistance Grant funds, including providing assistance beyond the 
Tribe's negotiated time limit under Sec.  286.115, we will reduce the 
TFAG for the following fiscal year by the amount so used;
    (2) If we determine that a Tribe intentionally misused its TFAG for 
an unallowable purpose, the TFAG for the following fiscal year will be 
reduced by an additional five percent;
    (3) If we determine that a Tribe failed to meet the minimum work 
participation rate(s) established for the Tribe, the TFAG for the 
following fiscal year will be reduced. The amount of the reduction will 
depend on whether the Tribe was under a penalty for this reason in the 
preceding year. If not, the penalty reduction will be a maximum of five 
percent. If a penalty was imposed on the Tribe in the preceding year, 
the penalty reduction will be increased by an additional 2 percent, up 
to a maximum of 21 percent. In determining the penalty amount, we will 
take into consideration the severity of

[[Page 203]]

the failure and whether the reasons for the failure were increases in 
the unemployment rate in the TFAG service area and changes in TFAG 
caseload size during the fiscal year in question; and
    (4) If a Tribe fails to repay a Federal loan provided under section 
406 of the Act, we will reduce the TFAG for the following fiscal year by 
an amount equal to the outstanding loan amount plus interest.
    (b) In calculating the amount of the penalty, we will add together 
all applicable penalty percentages, and the total is applied to the 
amount of the TFAG that would have been payable if no penalties were 
assessed against the Tribe. As a final step, we will subtract other 
(non-percentage) penalty amounts.
    (c) When imposing the penalties in paragraph (a) of this section, we 
will not reduce an affected Tribe's grant by more than 25 percent. If 
the 25 percent limit prevents the recovery of the full penalty imposed 
on a Tribe during a fiscal year, we will apply the remaining amount of 
the penalty to the TFAG payable for the immediately succeeding fiscal 
year.
    (1) If we reduce the TFAG payable to a Tribe for a fiscal year 
because of penalties that have been imposed, the Tribe must expend 
additional Tribal funds to replace any such reduction. The Tribe must 
document compliance with this provision on its TANF expenditure report.
    (2) We will impose a penalty of not more than 2 percent of the 
amount of the TFAG on a Tribe that fails to expend additional Tribal 
funds to replace amounts deducted from the TFAG due to penalties. We 
will apply this penalty to the TFAG payable for the next succeeding 
fiscal year, and this penalty cannot be excused (see Sec.  286.235).
    (d) If a Tribe retrocedes the program, the Tribe will be liable for 
any penalties incurred for the period the program was in operation.



Sec.  286.200  How will we determine if Tribal Family Assistance Grant funds were misused or intentionally misused?

    (a) We will use the single audit or Federal review or audit to 
determine if a Tribe should be penalized for misusing Tribal Family 
Assistance Grant funds under Sec.  286.195(a)(1) or intentionally 
misusing Tribal Family Assistance Grant funds under Sec.  286.195(a)(2).
    (b) If a Tribe uses the TFAG in violation of the provisions of the 
Act, the provisions of 45 CFR part 92, OMB Circulars A-87 and A-133, or 
any Federal statutes and regulations applicable to the TANF program, we 
will consider the funds to have been misused.
    (c) The Tribe must show, to our satisfaction, that it used the funds 
for purposes that a reasonable person would consider to be within the 
purposes of the TANF program (as specified at Sec.  286.35) and the 
provisions listed in Sec.  286.45.
    (d) We will consider the TFAG to have been intentionally misused 
under the following conditions:
    (1) There is supporting documentation, such as Federal guidance or 
policy instructions, indicating that TANF funds could not be used for 
that purpose; or
    (2) After notification that we have determined such use to be 
improper, the Tribe continues to use the funds in the same or similarly 
improper manner.
    (e) If the single audit determines that a Tribe misused Federal 
funds in applying the negotiated time limit provisions under Sec.  
286.115, the amount of the penalty for misuse will be limited to five 
percent of the TFAG amount.
    (1) This penalty shall be in addition to the reduction specified 
under Sec.  286.195(a)(1).
    (2) [Reserved]



Sec.  286.205  How will we determine if a Tribe fails to meet the minimum work participation rate(s)?

    (a) We will use the Tribal TANF Data Reports required under Sec.  
286.255 to determine if we will assess the penalty under Sec.  
286.195(a)(3) for failure to meet the minimum participation rate(s) 
established for the Tribe.
    (b) Each Tribal TANF Grantee's quarterly reports (the TANF Data 
Report and the Tribal TANF Financial Report) must be complete and 
accurate and filed by the due date. The accuracy

[[Page 204]]

of the reports are subject to validation by us.
    (1) For a disaggregated data report, ``a complete and accurate 
report'' means that:
    (i) The reported data accurately reflect information available to 
the Tribal TANF grantee in case records, financial records, and 
automated data systems;
    (ii) The data are free from computational errors and are internally 
consistent (e.g., items that should add to totals do so);
    (iii) The Tribal TANF grantee reports data for all required elements 
(i.e., no data are missing);
    (iv) The Tribal TANF grantee provides data on all families; or
    (v) If the Tribal TANF grantee opts to use sampling, the Tribal TANF 
grantee reports data on all families selected in a sample that meets the 
specification and procedures in the TANF Sampling Manual (except for 
families listed in error); and
    (vi) Where estimates are necessary (e.g., some types of assistance 
may require cost estimates), the Tribal TANF grantee uses reasonable 
methods to develop these estimates.
    (2) For an aggregated data report, ``a complete and accurate 
report'' means that:
    (i) The reported data accurately reflect information available to 
the Tribal TANF grantee in case records, financial records, and 
automated data systems;
    (ii) The data are free from computational errors and are internally 
consistent (e.g., items that should add to totals do so);
    (iii) The Tribal TANF grantee reports data on all applicable 
elements; and
    (iv) Monthly totals are unduplicated counts for all families (e.g., 
the number of families and the number of out-of-wedlock births are 
unduplicated counts).
    (3) For the Tribal TANF Financial Report, a ``complete and accurate 
report'' means that:
    (i) The reported data accurately reflect information available to 
the Tribal TANF grantee in case records, financial records, and 
automated data systems;
    (ii) The data are free from computational errors and are internally 
consistent (e.g., items that should add to totals do so);
    (iii) The Tribal TANF grantee reports data on all applicable 
elements; and
    (iv) All expenditures have been made in accordance with 45 CFR part 
92 and all relevant OMB circulars.
    (4) We will review the data filed in the quarterly reports to 
determine if they meet these standards. In addition, we will use audits 
and reviews to verify the accuracy of the data filed by the Tribal TANF 
grantee.
    (c) Tribal TANF grantees must maintain records to adequately support 
any report, in accordance with 45 CFR part 92 and all relevant OMB 
circulars.
    (d) If we find reports so significantly incomplete or inaccurate 
that we seriously question whether the Tribe has met its participation 
rate, we may apply the penalty under Sec.  286.195(a)(3).



Sec.  286.210  What is the penalty for a Tribe's failure to repay a Federal loan?

    (a) If a Tribe fails to repay the amount of principal and interest 
due at any point under a loan agreement:
    (1) The entire outstanding loan balance, plus all accumulated 
interest, becomes due and payable immediately; and
    (2) We will reduce the TFAG payable for the immediately succeeding 
fiscal year quarter by the outstanding loan amount plus interest.
    (b) Neither the reasonable cause provisions at Sec.  286.225 nor the 
corrective compliance plan provisions at Sec.  286.230 apply when a 
Tribe fails to repay a Federal loan.



Sec.  286.215  When are the TANF penalty provisions applicable?

    (a) A Tribe may be subject to penalties, as described in Sec.  
286.195(a)(1), Sec.  286.195(a)(2) and Sec.  286.195(a)(4), for conduct 
occurring on and after the first day of implementation of the Tribe's 
TANF program.
    (b) A Tribe may be subject to penalties, as described in Sec.  
286.195(a)(3), for conduct occurring on and after the date that is six 
months after the Tribe begins operating the TANF program.

[[Page 205]]

    (c) We will not apply the regulations retroactively. We will judge 
Tribal actions that occurred prior to the effective date of these rules 
and expenditures of funds received prior to the effective date only 
against a reasonable interpretation of the statutory provisions in title 
IV-A of the Act.
    (1) To the extent that a Tribe's failure to meet the requirements of 
the penalty provisions is attributable to the absence of Federal rules 
or guidance, Tribes may qualify for reasonable cause, as discussed in 
Sec.  286.225.
    (2) [Reserved]



Sec.  286.220  What happens if a Tribe fails to meet TANF requirements?

    (a) If we determine that a Tribe is subject to a penalty, we will 
notify the Tribe in writing. This notice will:
    (1) Specify what penalty provision(s) are in issue;
    (2) Specify the amount of the penalty;
    (3) Specify the reason for our determination;
    (4) Explain how and when the Tribe may submit a reasonable cause 
justification under Sec.  286.225 and/or a corrective compliance plan 
under Sec.  286.230(d) for those penalties for which reasonable cause 
and/or corrective compliance plan apply; and
    (5) Invite the Tribe to present its arguments if it believes that 
the data or method we used were in error or were insufficient, or that 
the Tribe's actions, in the absence of Federal regulations, were based 
on a reasonable interpretation of the statute.
    (b) Within 60 days of receipt of our written notification, the Tribe 
may submit a written response to us that:
    (1) Demonstrates that our determination is incorrect because our 
data or the method we used in determining the penalty was in error or 
was insufficient, or that the Tribe acted prior to June 19, 2000, on a 
reasonable interpretation of the statute;
    (2) Demonstrates that the Tribe had reasonable cause for failing to 
meet the requirement(s); and/or
    (3) Provides a corrective compliance plan as discussed in Sec.  
286.230.
    (c) If we find that the Tribe was correct and that a penalty was 
improperly determined, or find that a Tribe had reasonable cause for 
failing to meet a requirement, we will not impose the related penalty 
and so notify the Tribe in writing within two weeks of such a 
determination.
    (d) If we determine that the Tribe has not demonstrated that our 
original determination was incorrect or that it had reasonable cause, we 
will notify the Tribe of our decision in writing.
    (e) If we request additional information from a Tribe, it must 
provide the information within thirty days of the date of our request.



Sec.  286.225  How may a Tribe establish reasonable cause for failing to meet a requirement that is subject to application of a penalty?

    (a) We will not impose a penalty against a Tribe if it is determined 
that the Tribe had reasonable cause for failure to meet the requirements 
listed at Sec.  286.195(a)(1), Sec.  286.195(a)(2), or Sec.  
286.195(a)(3). The general factors a Tribe may use to claim reasonable 
cause include, but are not limited to, the following:
    (1) Natural disasters, extreme weather conditions, and other 
calamities (e.g., hurricanes, earthquakes, fire, and economic disasters) 
whose disruptive impact was so significant that the Tribe failed to meet 
a requirement.
    (2) Formally issued Federal guidance which provided incorrect 
information resulting in the Tribe's failure or prior to the effective 
date of these regulations, guidance that was issued after a Tribe 
implemented the requirements of the Act based on a different, but 
reasonable, interpretation of the Act.
    (3) Isolated, non-recurring problems of minimal impact that are not 
indicative of a systemic problem.
    (4) Significant increases in the unemployment rate in the TFAG 
service area and changes in the TFAG caseload size during the fiscal 
year being reported.
    (b) We will grant reasonable cause to a Tribe that:
    (1) Clearly demonstrates that its failure to submit complete, 
accurate, and timely data, as required at Sec.  286.245, for one or both 
of the first two quarters of FY 2000, is attributable, in significant

[[Page 206]]

part, to its need to divert critical system resources to Year 2000 
compliance activities; and
    (2) Submits complete and accurate data for the first two quarters of 
FY 2000 by November 15, 2000.
    (c) In addition to the reasonable cause criteria specified above, a 
Tribe may also submit a request for a reasonable cause exemption from 
the requirement to meet its work participation requirements in the 
following situation:
    (1) We will consider that a Tribe has reasonable cause if it 
demonstrates that its failure to meet its work participation rate(s) is 
attributable to its provisions with regard to domestic violence as 
follows:
    (i) To demonstrate reasonable cause, a Tribe must provide evidence 
that it achieved the applicable work rates, except with respect to any 
individuals receiving good cause waivers of work requirements (i.e., 
when cases with good cause waivers are removed from the calculation in 
Sec.  286.85); and
    (ii) A Tribe must grant good cause waivers in domestic violence 
cases appropriately, in accordance with the policies in the Tribe's 
approved Tribal Family Assistance Plan.
    (2) [Reserved]
    (d) In determining reasonable cause, we will consider the efforts 
the Tribe made to meet the requirements, as well as the duration and 
severity of the circumstances that led to the Tribe's failure to achieve 
the requirement.
    (e) The burden of proof rests with the Tribe to fully explain the 
circumstances and events that constitute reasonable cause for its 
failure to meet a requirement.
    (1) The Tribe must provide us with sufficient relevant information 
and documentation to substantiate its claim of reasonable cause.
    (2) [Reserved]



Sec.  286.230  What if a Tribe does not have reasonable cause for failing to meet a requirement?

    (a) To avoid the imposition of a penalty under Sec.  286.195(a)(1), 
Sec.  286.195(a)(2), or Sec.  286.195(a)(3), under the following 
circumstances a Tribe must enter into a corrective compliance plan to 
correct the violation:
    (1) If a Tribe does not claim reasonable cause for failing to meet a 
requirement; or
    (2) If we found that a Tribe did not have reasonable cause.
    (b) A Tribe that does not claim reasonable cause will have 60 days 
from receipt of the notice described in Sec.  286.220(a) to submit its 
corrective compliance plan to us.
    (c) A Tribe that does not demonstrate reasonable cause will have 60 
days from receipt of the second notice described in Sec.  286.220(d) to 
submit its corrective compliance plan to us.
    (d) In its corrective compliance plan the Tribe must outline:
    (1) Why it failed to meet the requirements;
    (2) How it will correct the violation in a timely manner; and
    (3) What actions, outcomes and time line it will use to ensure 
future compliance.
    (e) During the 60-day period beginning with the date we receive the 
corrective compliance plan, we may, if necessary, consult with the Tribe 
on modifications to the plan.
    (f) A corrective compliance plan is deemed to be accepted if we take 
no action to accept or reject the plan during the 60-day period that 
begins when the plan is received.
    (g) Once a corrective compliance plan is accepted or deemed 
accepted, we may request reports from the Tribe or take other actions to 
confirm that the Tribe is carrying out the corrective actions specified 
in the plan.
    (1) We will not impose a penalty against a Tribe with respect to any 
violation covered by that plan if the Tribe corrects the violation 
within the time frame agreed to in the plan.
    (2) We must assess some or all of the penalty if the Tribe fails to 
correct the violation pursuant to its corrective compliance plan.



Sec.  286.235  What penalties cannot be excused?

    (a) The penalties that cannot be excused are:
    (1) The penalty for failure to repay a Federal loan issued under 
section 406.
    (2) The penalty for failure to replace any reduction in the TFAG 
resulting

[[Page 207]]

from other penalties that have been imposed.
    (b) [Reserved]



Sec.  286.240  How can a Tribe appeal our decision to take a penalty?

    (a) We will formally notify the Tribe of a potential reduction to 
the Tribe's TFAG within five days after we determine that a Tribe is 
subject to a penalty and inform the Tribe of its right to appeal to the 
Departmental Appeals Board (the Board) established in the Department of 
Health and Human Services. Such notification will include the factual 
and legal basis for taking the penalty in sufficient detail for the 
Tribe to be able to respond in an appeal.
    (b) Within 60 days of the date it receives notice of the penalty, 
the Tribe may file an appeal of the action, in whole or in part, to the 
Board.
    (c) The Tribe must include all briefs and supporting documentation 
when it files its appeal. A copy of the appeal and any supplemental 
filings must be sent to the Office of General Counsel, Children, 
Families and Aging Division, Room 411-D, 200 Independence Avenue, SW, 
Washington, DC 20201.
    (d) ACF must file its reply brief and supporting documentation 
within 45 days after receipt of the Tribe's submission under paragraph 
(c) of this section.
    (e) The Tribe's appeal to the Board must follow the provisions of 
this section and those at Sec. Sec.  16.2, 16.9, 16.10, and 16.13 
through 16.22 of this title to the extent they are consistent with this 
section.
    (f) The Board will consider an appeal filed by a Tribe on the basis 
of the documentation and briefs submitted, along with any additional 
information the Board may require to support a final decision. Such 
information may include a hearing if the Board determines that it is 
necessary. In deciding whether to uphold an adverse action or any 
portion of such action, the Board will conduct a thorough review of the 
issues.
    (g) The filing date shall be the date materials are received by the 
Board in a form acceptable to it.
    (h) A Tribe may obtain judicial review of a final decision by the 
Board by filing an action within 90 days after the date of such decision 
with the district court of the United States in the judicial district 
where the Tribe or TFAG service area is located.
    (1) The district court will review the final decision of the Board 
on the record established in the administrative proceeding, in 
accordance with the standards of review prescribed by 5 U.S.C. 706(2). 
The court's review will be based on the documents and supporting data 
submitted to the Board.
    (2) [Reserved]
    (i) No reduction to the Tribe's TFAG will occur until a final 
disposition of the matter has been made.



          Subpart E_Data Collection and Reporting Requirements



Sec.  286.245  What data collection and reporting requirements apply to Tribal TANF programs?

    (a) Section 412(h) of the Act makes section 411 regarding data 
collection and reporting applicable to Tribal TANF programs. This 
section of the regulations explains how we will collect the information 
required by section 411 of the Act and information to implement section 
412(c) (work participation requirements).
    (b) Each Tribe must collect monthly and file quarterly data on 
individuals and families as follows:
    (1) Disaggregated data collection and reporting requirements in this 
part apply to families receiving assistance and families no longer 
receiving assistance under the Tribal TANF program; and
    (2) Aggregated data collection and reporting requirements in this 
part apply to families receiving, families applying for, and families no 
longer receiving assistance under the Tribal TANF program.
    (c) Each Tribe must file in its quarterly TANF Data Report and in 
the quarterly TANF Financial Report the specified data elements.
    (d) Each Tribe must also submit an annual report that contains 
specified information.
    (e) Each Tribe must submit the necessary reports by the specified 
due dates.

[[Page 208]]



Sec.  286.250  What definitions apply to this subpart?

    (a) Except as provided in paragraph (b) of this section, the general 
TANF definitions at Sec. Sec.  286.5 and 286.10 apply to this subpart.
    (b) For data collection and reporting purposes only, ``TANF family'' 
means:
    (1) All individuals receiving assistance as part of a family under 
the Tribe's TANF program; and
    (2) The following additional persons living in the household, if not 
included under paragraph (b)(1) of this section:
    (i) Parent(s) or caretaker relative(s) of any minor child receiving 
assistance;
    (ii) Minor siblings of any child receiving assistance; and
    (iii) Any person whose income or resources would be counted in 
determining the family's eligibility for or amount of assistance.



Sec.  286.255  What quarterly reports must the Tribe submit to us?

    (a) Quarterly reports. Each Tribe must collect on a monthly basis, 
and file on a quarterly basis, the data specified in the Tribal TANF 
Data Report and the Tribal TANF Financial Report.
    (b) Tribal TANF Data Report. The Tribal TANF Data Report consists of 
three sections. Two sections contain disaggregated data elements and one 
section contains aggregated data elements.
    (1) TANF Data Report: Disaggregated Data--Sections one and two. Each 
Tribe must file disaggregated information on families receiving TANF 
assistance (section one) and families no longer receiving TANF 
assistance (section two). These two sections specify identifying and 
demographic data such as the individual's Social Security Number; and 
information such as the type and amount of assistance received, 
educational level, employment status, work participation activities, 
citizenship status, and earned and unearned income. These reports also 
specify items pertaining to child care and child support. The data 
requested cover adults (including non-custodial parents who are 
participating in work activities) and children.
    (2) TANF Data Report: Aggregated Data--Section three. Each Tribe 
must file aggregated information on families receiving, applying for, 
and no longer receiving TANF assistance. This section of the Report asks 
for aggregate figures in the following areas: the total number of 
applications and their disposition; the total number of recipient 
families, adult recipients, and child recipients; the total number of 
births, out-of-wedlock births, and minor child heads-of-households; the 
total number of non-custodial parents participating in work activities; 
and the total amount of TANF assistance provided.
    (c) The Tribal TANF Financial Report. Each Tribe must file quarterly 
expenditure data on the Tribe's use of Tribal Family Assistance Grant 
funds, any Tribal fund expenditures which are being substituted for TFAG 
funds withheld due to a penalty, and any State contributions. The report 
must be submitted on a form prescribed by ACF.



Sec.  286.260  May Tribes use sampling and electronic filing?

    (a) Each Tribe may report disaggregated data on all recipient 
families (universal reporting) or on a sample of families selected 
through the use of a scientifically acceptable sampling method. The 
sampling method must be approved by ACF in advance of submitting 
reports.
    (1) Tribes may not use a sample to generate the aggregated data.
    (2) [Reserved]
    (b) ``Scientifically acceptable sampling method'' means a 
probability sampling method in which every sampling unit has a known, 
non-zero chance to be included in the sample, and the sample size 
requirements are met.
    (c) Each Tribe may file quarterly reports electronically, based on 
format specifications that we will provide. Tribes who do not have the 
capacity to submit reports electronically may submit quarterly reports 
on a disk or in hard copy.



Sec.  286.265  When are quarterly reports due?

    (a) Upon a Tribe's initial implementation of TANF, the Tribe shall 
begin collecting data for the TANF Data Report as of the date that is 
six months after the initial effective date of its

[[Page 209]]

TANF program. The Tribe shall begin collecting financial data for the 
TANF Financial Report as of the initial effective date of its TANF 
program.
    (b) Each Tribe must submit its TANF Data Report and TANF Financial 
Report within 45 days following the end of each quarter. If the 45th day 
falls on a weekend or on a national, State or Tribal holiday, the 
reports are due no later than the next business day.



Sec.  286.270  What happens if the Tribe does not satisfy the quarterly reporting requirements?

    (a) If we determine that a Tribe has not submitted to us a complete 
and accurate Tribal TANF Data Report within the time limit, the Tribe 
risks the imposition of a penalty at Sec.  286.205 related to the work 
participation rate targets since the data from the Tribal TANF Data 
Report is required to calculate participation rates.
    (b) Non-reporting of the Tribal TANF Financial Report may give rise 
to a penalty under Sec.  286.200 since this Report is used to 
demonstrate compliance with provisions of the Act, the provisions of 45 
CFR part 92, OMB Circulars A-87 and A-133, or any Federal statutes and 
regulations applicable to the TANF program.



Sec.  286.275  What information must Tribes file annually?

    (a) Each Tribal TANF grantee must file an annual report containing 
information on its TANF program for that year. The report may be filed 
as:
    (1) An addendum to the fourth quarter TANF Data Report; or
    (2) A separate annual report.
    (b) Each Tribal TANF grantee must provide the following information 
on its TANF program:
    (1) The Tribal TANF grantee's definition of each work activity;
    (2) A description of the transitional services provided to families 
no longer receiving assistance due to employment; and
    (3) A description of how a Tribe will reduce the amount of 
assistance payable to a family when an individual refuses to engage in 
work without good cause pursuant to Sec.  286.145.
    (4) The average monthly number of payments for child care services 
made by the Tribal TANF grantee through the use of disregards, by the 
following types of child care providers:
    (i) Licensed/regulated in-home child care;
    (ii) Licensed/regulated family child care;
    (iii) Licensed/regulated group home child care;
    (iv) Licensed/regulated center-based child care;
    (v) Legally operating (i.e., no license category available in Tribal 
TANF grantee's locality) in-home child care provided by a nonrelative;
    (vi) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) in-home child care provided by a 
relative;
    (vii) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) family child care provided by a 
nonrelative;
    (viii) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) family child care provided by a 
relative;
    (ix) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) group child care provided by a 
nonrelative;
    (x) Legally operating (i.e., no license category available in Tribal 
TANF grantee's locality) group child care provided by a relative; and
    (xi) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) center-based child care.
    (5) A description of any nonrecurring, short-term benefits provided, 
including:
    (i) The eligibility criteria associated with such benefits, 
including any restrictions on the amount, duration, or frequency of 
payments;
    (ii) Any policies that limit such payments to families that are 
eligible for TANF assistance or that have the effect of delaying or 
suspending a family's eligibility for assistance; and
    (iii) Any procedures or activities developed under the TANF program 
to ensure that individuals diverted from assistance receive information 
about, referrals to, or access to other program benefits (such as 
Medicaid and food stamps) that might help them make

[[Page 210]]

the transition from Welfare-to-Work; and
    (6) A description of the procedures the Tribal TANF grantee has 
established and is maintaining to resolve displacement complaints, 
pursuant to Sec.  286.110. This description must include the name of the 
Tribal TANF grantee agency with the lead responsibility for 
administering this provision and explanations of how the Tribal TANF 
grantee has notified the public about these procedures and how an 
individual can register a complaint.
    (7) Tribes electing the FVO must submit a description of the 
strategies and procedures in place to ensure that victims of domestic 
violence receive appropriate alternative services, as well as an 
aggregate figure for the total number of good cause domestic waivers 
granted.
    (c) If the Tribal TANF grantee has submitted the information 
required in paragraph (b) of this section in the TFAP, it may meet the 
annual reporting requirements by reference in lieu of re-submission. 
Also, if the information in the annual report has not changed since the 
previous annual report, the Tribal TANF grantee may reference this 
information in lieu of re-submission.
    (d) If a Tribal TANF grantee makes a substantive change in certain 
data elements in paragraph (b) of this section, it must file a copy of 
the change either with the next quarterly data report or as an amendment 
to its TFAP. The Tribal TANF grantee must also indicate the effective 
date of the change. This requirement is applicable to paragraphs (b)(1), 
(b)(2), and (b)(3) of this section.



Sec.  286.280  When are annual reports due?

    (a) The annual report required by Sec.  286.275 is due 90 days after 
the end of the Fiscal Year which it covers.
    (b) The first annual report for a Tribe must include all months of 
operation since the plan was approved.



Sec.  286.285  How do the data collection and reporting requirements affect Public Law 102-477 Tribes?

    (a) A Tribe that consolidates its Tribal TANF program into a Public-
Law 102-477 plan is required to comply with the TANF data collection and 
reporting requirements of this section.
    (b) A Tribe that consolidates its Tribal TANF program into a Public-
Law 102-477 plan may submit the Tribal TANF Data Reports and the Tribal 
TANF Financial Report to the BIA, with a copy to us.



PART 287_THE NATIVE EMPLOYMENT WORKS (NEW) PROGRAM--Table of Contents




                    Subpart A_General NEW Provisions

Sec.
287.1 What does this part cover?
287.5 What is the purpose and scope of the NEW Program?
287.10 What definitions apply to this part?

                        Subpart B_Eligible Tribes

287.15 Which Tribes are eligible to apply for NEW Program grants?
287.20 May a Public Law 102-477 Tribe operate a NEW Program?
287.25 May Tribes form a consortium to operate a NEW Program?
287.30 If an eligible consortium breaks up, what happens to the NEW 
          Program grant?

                      Subpart C_NEW Program Funding

287.35 What grant amounts are available under the Personal 
          Responsibility and Work Opportunity Reconciliation Act of 1996 
          (PRWORA) for the NEW Program?
287.40 Are there any matching funds requirements with the NEW Program?
287.45 How can NEW Program funds be used?
287.50 What are the funding periods for NEW Program grants?
287.55 What time frames and guidelines apply regarding the obligation 
          and liquidation periods for NEW Program funds?
287.60 Are there additional financial reporting and auditing 
          requirements?
287.65 What OMB circulars apply to the NEW Program?

                       Subpart D_Plan Requirements

287.70 What are the plan requirements for the NEW Program?
287.75 When does the plan become effective?
287.80 What is the process for plan review and approval?
287.85 How is a NEW plan amended?
287.90 Are Tribes required to complete any certifications?
287.95 May a Tribe operate both a NEW Program and a Tribal TANF program?

[[Page 211]]

287.100 Must a Tribe that operates both NEW and Tribal TANF programs 
          submit two separate plans?

                 Subpart E_Program Design and Operations

287.105 What provisions of the Social Security Act govern the NEW 
          Program?
287.110 Who is eligible to receive assistance or services under a 
          Tribe's NEW Program?
287.115 When a NEW grantee serves TANF recipients, what coordination 
          should take place with the Tribal or State TANF agency?
287.120 What work activities may be provided under the NEW Program?
287.125 What supportive and job retention services may be provided under 
          the NEW Program?
287.130 Can NEW Program activities include job market assessments, job 
          creation and economic development activities?
287.135 Are bonuses, rewards and stipends allowed for participants in 
          the NEW Program?
287.140 With whom should the Tribe coordinate in the operation of its 
          work activities and services?
287.145 What measures will be used to determine NEW Program outcomes?

          Subpart F_Data Collection and Reporting Requirements

287.150 Are there data collection requirements for Tribes who operate a 
          NEW Program?
287.155 What reports must a grantee file with the Department about its 
          program operations?
287.160 What reports must a grantee file regarding financial operations?
287.165 What are the data collection and reporting requirements for 
          Public Law 102-477 Tribes that consolidate a NEW Program with 
          other programs?
287.170 What are the data collection and reporting requirements for a 
          Tribe that operates both the NEW Program and a Tribal TANF 
          program?

    Authority: 42 U.S.C. 612.

    Source: 65 FR 8554, Feb. 18, 2000, unless otherwise noted.



                    Subpart A_General NEW Provisions



Sec.  287.1  What does this part cover?

    (a) The regulations in this part prescribe the rules for 
implementing section 412(a)(2) of the Social Security Act (the Act), as 
amended by the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (PRWORA) (Pub. L. 104-193) and the Balanced 
Budget Act of 1997 (Pub. L. 105-33).
    (b) Section 412(a)(2) of the Act, as amended, authorizes the 
Secretary to issue grants to eligible Indian tribes to operate a program 
that makes work activities available to ``such population and such 
service area or areas as the tribe specifies.''
    (c) We call this Tribal work activities program the Native 
Employment Works (NEW) program.
    (d) These regulations specify the Tribes who are eligible to receive 
NEW Program funding. They also prescribe requirements for: funding; 
program plan development and approval; program design and operation; and 
data collection and reporting.



Sec.  287.5  What is the purpose and scope of the NEW Program?

    The purpose of the NEW Program is to provide eligible Indian tribes, 
including Alaska Native organizations, the opportunity to provide work 
activities and services to their needy clients.



Sec.  287.10  What definitions apply to this part?

    The following definitions apply to this part:
    ACF means the Administration for Children and Families;
    Act means the Social Security Act, unless we specify otherwise;
    Alaska Native organization means an Alaska Native village, or 
regional or village corporation, as defined in or established pursuant 
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), 
that is eligible to operate a Federal program under the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450);
    Consortium means a group of Tribes working together for the same 
identified purpose and receiving combined NEW funding for that purpose.
    Department means the Department of Health and Human Services;
    Division of Tribal Services (DTS) means the unit in the Office of 
Community Services within the Department's Administration for Children 
and Families that has as its primary responsibility the administration 
of the Tribal family

[[Page 212]]

assistance program, called the Tribal Temporary Assistance for Needy 
Families (TANF) program, and the Tribal work program, called the Native 
Employment Works (NEW) program, as authorized by section 412(a);
    Eligible Indian tribe means an Indian tribe, a consortium of Indian 
tribes, or an Alaska Native organization that operated a Tribal Job 
Opportunities and Basic Skills Training (JOBS) program in fiscal year 
1995 under section 482(i) of the Act, as in effect during that fiscal 
year;
    Fiscal year means the 12-month period beginning on October 1 of the 
preceding calendar year and ending on September 30;
    FY means fiscal year;
    Indian, Indian tribe, and Tribal organization--The terms Indian, 
Indian tribe, and Tribal organization have the meaning given such terms 
by section 4 of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450b);
    Native Employment Works Program means the Tribal work program under 
section 412(a)(2) of the Act;
    NEW means the Native Employment Works Program;
    Program Year means, for the NEW Program, the 12-month period 
beginning on July 1 of the calendar year and ending on June 30;
    PRWORA means the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996, Public Law 104-193;
    Public Law 102-477 refers to the Indian Employment, Training and 
Related Services Demonstration Act of 1992, whose purpose is to provide 
for the integration of employment, training and related services to 
improve the effectiveness of those services;
    Secretary means the Secretary of the Department of Health and Human 
Services;
    State means, except as otherwise specifically provided, the 50 
States of the United States, the District of Columbia, the Commonwealth 
of Puerto Rico, the United States Virgin Islands, Guam, and American 
Samoa;
    TANF means the Temporary Assistance for Needy Families Program;
    Temporary Assistance for Needy Families Program means a family 
assistance grant program operated either by a Tribe under section 
412(a)(1) of the Act or by a State under section 403 of the Act;
    Tribal TANF program means a Tribal program subject to the 
requirements of section 412 of the Act which is funded by TANF funds on 
behalf of eligible families;
    We (and any other first person plural pronouns) refers to The 
Secretary of Health and Human Services, or any of the following 
individuals or organizations acting in an official capacity on the 
Secretary's behalf: The Assistant Secretary for Children and Families, 
the Regional Administrators for Children and Families, the Department of 
Health and Human Services, and the Administration for Children and 
Families.



                        Subpart B_Eligible Tribes



Sec.  287.15  Which Tribes are eligible to apply for NEW Program grants?

    To be considered for a NEW Program grant, a Tribe must be an 
``eligible Indian tribe.'' An eligible Indian tribe is an Indian tribe 
or Alaska Native organization that operated a Job Opportunities and 
Basic Skills Training (JOBS) program in FY 1995.



Sec.  287.20  May a Public Law 102-477 Tribe operate a NEW Program?

    Yes, if the Tribe is an ``eligible Indian tribe.''



Sec.  287.25  May Tribes form a consortium to operate a NEW Program?

    (a) Yes, as long as each Tribe forming the consortium is an 
``eligible Indian tribe.''
    (b) To apply for and conduct a NEW Program, the consortium must 
submit a plan to ACF.
    (c) The plan must include a copy of a resolution from each Tribe 
indicating its membership in the consortium and authorizing the 
consortium to act on its behalf in regard to administering a NEW 
Program. If an Alaska Native organization forms a consortium, submission 
of the required resolution from the governing board of the organization 
is sufficient to satisfy this requirement.

[[Page 213]]



Sec.  287.30  If an eligible consortium breaks up, what happens to the NEW Program grant?

    (a) If a consortium should break up or any Tribe withdraws from a 
consortium, it will be necessary to allocate unobligated funds and 
future grants among the Tribes that were members of the consortium, if 
each individual Tribe obtains ACF approval to continue to operate a NEW 
Program.
    (b) Each withdrawing Tribe must submit to ACF a copy of the Tribal 
resolution that confirms the Tribe's decision to withdraw from the 
consortium and indicates whether the Tribe elects to continue its 
participation in the program.
    (c) The allocation can be accomplished by any method that is 
recommended and agreed to by the leaders of those Tribes.
    (d) If no recommendation is made by the Tribal leaders or no 
agreement is reached, the Secretary will determine the allocation of 
funds based on the best available data.



                      Subpart C_NEW Program Funding



Sec.  287.35  What grant amounts are available under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) for the NEW Program?

    Each Tribe shall receive a grant in an amount equal to the amount 
received by the Tribe in FY 1994 under section 482(i) of the Act (as in 
effect during FY 1994).



Sec.  287.40  Are there any matching funds requirements with the NEW Program?

    No, Tribal grantees are not required to match NEW Federal funds.



Sec.  287.45  How can NEW Program funds be used?

    (a) NEW grants are for making work activities available to such 
population as the Tribe specifies.
    (b) NEW funds may be used for work activities as defined by the 
Tribal grantee.
    (c) Work activities may include supportive services necessary for 
assisting NEW Program participants in preparing for, obtaining, and/or 
retaining employment.



Sec.  287.50  What are the funding periods for NEW Program grants?

    NEW Program funds are for operation of the NEW Program for a 12-
month period from July 1 through June 30.



Sec.  287.55  What time frames and guidelines apply regarding the obligation and liquidation periods for NEW Program funds?

    (a) NEW Program funds provided for a FY are for use during the 
period July 1 through June 30 and must be obligated no later than June 
30. Carry forward of an unobligated balance of NEW funds is not 
permitted. A NEW fund balance that is unobligated as of June 30 will be 
returned to the Federal government through the issuance of a negative 
grant award. Unobligated funds are to be reported on the SF-269A that 
Tribes must submit within 30 days after the funding period, i.e., no 
later than July 30. This report is called the interim financial report.
    (b) A Tribe must liquidate all obligations incurred under the NEW 
Program grant awards not later than one year after the end of the 
obligation period, i.e., no later than June 30 of the following FY. An 
unliquidated balance at the close of the liquidation period will be 
returned to the Federal government through the issuance of a negative 
grant award. Unliquidated obligations are to be reported on the SF-269A 
that Tribes must submit within 90 days after the liquidation period, 
i.e., by September 28. This report is called the final financial report.



Sec.  287.60  Are there additional financial reporting and auditing requirements?

    (a) The reporting of expenditures are generally subject to the 
requirements of 45 CFR 92.41.
    (b) NEW Program funds and activities are subject to the audit 
requirement of the Single Audit Act of 1984 (45 CFR 92.26).
    (c) A NEW Program grantee must comply with all laws, regulations, 
and Departmental policies that govern submission of financial reports by 
recipients of Federal grants.

[[Page 214]]

    (d) Improper expenditure claims under this program are subject to 
disallowance.
    (e) If a grantee disagrees with the Agency's decision to disallow 
funds, the grantee may follow the appeal procedures at 45 CFR Part 16.



Sec.  287.65  What OMB circulars apply to the NEW Program?

    NEW Programs are subject to the following OMB circulars where 
applicable: A-87 ``Cost Principles for State, Local, and Indian Tribal 
Governments,'' A-122 ``Cost Principles for Non-Profit Organizations,'' 
and A-133 ``Audits of States and Local Governments.''



                       Subpart D_Plan Requirements



Sec.  287.70  What are the plan requirements for the NEW Program?

    (a) To apply for and conduct a NEW Program, a Tribe must submit a 
plan to ACF.
    (b) The plan must identify the agency responsible for administering 
the NEW Program and include a description of the following:
    (1) Population to be served;
    (2) Service area;
    (3) Client services;
    (4) Work activities to be provided;
    (5) Supportive and job retention services to be provided;
    (6) Anticipated program outcomes, and the measures the Tribe will 
use to determine them; and
    (7) Coordination activities conducted and expected to be conducted 
with other programs and agencies.
    (c) The plan must also describe how the Tribe will deliver work 
activities and services.
    (d) The format is left to the discretion of each NEW grantee.



Sec.  287.75  When does the plan become effective?

    NEW plans, which are three-year plans, become effective when 
approved by the Secretary. The plans are usually operative the beginning 
of a NEW Program year, July 1.



Sec.  287.80  What is the process for plan review and approval?

    (a) A Tribe must submit its plan to the ACF Regional Office, with a 
copy sent to the Division of Tribal Services, Office of Community 
Services, Administration for Children and Families, Attention: Native 
Employment Works Team.
    (b) To receive funding by the beginning of the NEW Program year 
(July 1), a Tribe must submit its plan by the established due date.
    (c) ACF will complete its review of the plan within 45 days of 
receipt.
    (d) After the plan review has occurred, if the plan is approvable, 
ACF will approve the plan, certifying that the plan meets all necessary 
requirements. If the plan is not approvable, the Regional Office will 
notify the Tribe regarding additional action needed for plan approval.



Sec.  287.85  How is a NEW plan amended?

    (a) If a Tribe makes substantial changes in its NEW Program plan or 
operations, it must submit an amendment for the changed section(s) of 
the plan to the appropriate ACF Regional Office for review and approval, 
with a copy sent to the Division of Tribal Services, Office of Community 
Services, Administration of Children and Families, Attention: Native 
Employment Works Team. The review will verify consistency with section 
412(a)(2) of the Act.
    (b) A substantial change is a change in the agency administering the 
NEW Program, a change in the designated service area and/or population, 
a change in work activities provided or a change in performance 
standards.
    (c) A substantial change in plan content or operations must be 
submitted to us no later than 45 days prior to the proposed 
implementation date.
    (d) ACF will complete the review of the amended plan within 45 days 
of receipt.
    (e) An amended plan becomes effective when it is approved by the 
Secretary.



Sec.  287.90  Are Tribes required to complete any certifications?

    Yes. A Tribe must include in its NEW Program plan the following four 
certifications and any additional certifications that the Secretary 
prescribes in the planning guidance: Certification Regarding Debarment, 
Suspension, and

[[Page 215]]

Other Responsibility Matters--Primary Covered Transactions; 
Certification Regarding Drug Free Workplace Requirements for Grantees 
Other Than Individuals; Certification Regarding Tobacco Smoke, and 
Assurances--Non-Construction Programs.



Sec.  287.95  May a Tribe operate both a NEW Program and a Tribal TANF program?

    Yes. However, the Tribe must adhere to statutory and regulatory 
requirements of the individual programs.



Sec.  287.100  Must a Tribe that operates both NEW and Tribal TANF programs submit two separate plans?

    Yes. Separate plans are needed to reflect different program and plan 
requirements as specified in the statute and in plan guidance documents 
issued by the Secretary for each program.



                 Subpart E_Program Design and Operations



Sec.  287.105  What provisions of the Social Security Act govern the NEW Program?

    NEW Programs are subject only to those requirements at section 
412(a)(2) of the Act, as amended by PRWORA, titled ``Grants for Indian 
Tribes that Received JOBS Funds.''



Sec.  287.110  Who is eligible to receive assistance or services under a Tribe's NEW Program?

    (a) A Tribe must specify in its NEW Program plan the population and 
service area to be served. In cases where a Tribe designates a service 
area for its NEW Program that is different from its Bureau of Indian 
Affairs (BIA) service area, an explanation must be provided.
    (b) A Tribe must include eligibility criteria in its plan and 
establish internal operating procedures that clearly specify the 
criteria to be used to establish an individual's eligibility for NEW 
services. The eligibility criteria must be equitable.



Sec.  287.115  When a NEW grantee serves TANF recipients, what coordination should take place with the Tribal or State TANF agency?

    The Tribe should coordinate with the Tribal or State TANF agency on:
    (a) Eligibility criteria for TANF recipients to receive NEW Program 
services;
    (b) Exchange of case file information;
    (c) Changes in client status that result in a loss of cash 
assistance, food stamps, Medicaid or other medical coverage;
    (d) Identification of work activities that may meet Tribal or State 
work participation requirements;
    (e) Resources available from the Tribal or State TANF agency to 
ensure efficient delivery of benefits to the designated service 
population;
    (f) Policy for exclusions from the TANF program (e.g., criteria for 
exemptions and sanctions);
    (g) Termination of TANF assistance when time limits become 
effective;
    (h) Use of contracts in delivery of TANF services;
    (i) Prevention of duplication of services to assure the maximum 
level of services is available to participants;
    (j) Procedures to ensure that costs of other program services for 
which welfare recipients are eligible are not shifted to the NEW 
Program; and
    (k) Reporting data for TANF quarterly and annual reports.



Sec.  287.120  What work activities may be provided under the NEW Program?

    (a) The Tribe will determine what work activities are to be 
provided.
    (b) Examples of allowable activities include, but are not limited 
to: Educational activities, alternative education, post secondary 
education, job readiness activity, job search, job skills training, 
training and employment activities, job development and placement, on-
the-job training (OJT), employer work incentives related to OJT, 
community work experience, innovative approaches with the private 
sector, pre/post employment services, job retention services, 
unsubsidized employment, subsidized public or private sector employment, 
community service programs, entrepreneurial training, management 
training, job creation activities, economic development leading to job 
creation, and traditional subsistence activities.

[[Page 216]]



Sec.  287.125  What supportive and job retention services may be provided under the NEW Program?

    The NEW Program grantee may provide, pay for or reimburse expenses 
for supportive services, including but not limited to transportation, 
child care, traditional or cultural work related services, and other 
work or family sufficiency related expenses that the Tribe determines 
are necessary to enable a client to participate in the program.



Sec.  287.130  Can NEW Program activities include job market assessments, job creation and economic development activities?

    (a) A Tribe may conduct job market assessments within its NEW 
Program. These might include the following:
    (1) Consultation with the Tribe's economic development staff or 
leadership that oversees the economic and employment planning for the 
Tribe;
    (2) Consultation with any local employment and training program, 
Workforce Development Boards, One-Stop Centers, or planning agencies 
that have undertaken economic and employment studies for the area in 
which the Tribe resides;
    (3) Communication with any training, research, or educational 
agencies that have produced economic development plans for the area that 
may or may not include the Tribe; and
    (4) Coordination with any State or local governmental agency 
pursuing economic development options for the area.
    (b) The Tribe's NEW Program may engage in activities and provide 
services to create jobs and economic opportunities for its participants. 
These services should be congruous with any available local job market 
assessments and may include the following:
    (1) Tribal Employment Rights Office (TERO) services;
    (2) Job creation projects and services;
    (3) Self-employment;
    (4) Self-initiated training that leads a client to improved job 
opportunities and employment;
    (5) Economic development projects that lead to jobs, improved 
employment opportunities, or self-sufficiency of program participants;
    (6) Surveys to collect information regarding client characteristics; 
and
    (7) Any other development and job creation activities that enable 
Tribal members to increase their economic independence and reduce their 
need for benefit assistance and supportive services.



Sec.  287.135  Are bonuses, rewards and stipends allowed for participants in the NEW Program?

    Bonuses, stipends, and performance awards are allowed. However, such 
allowances may be counted as income in determining eligibility for some 
TANF or other need-based programs.



Sec.  287.140  With whom should the Tribe coordinate in the operation of its work activities and services?

    The administration of work activities and services provided under 
the NEW Program must ensure that appropriate coordination and 
cooperation is maintained with the following entities operating in the 
same service areas as the Tribe's NEW Program:
    (a) State, local and Tribal TANF agencies, and agencies operating 
employment and training programs;
    (b) Any other agency whose programs impact the service population of 
the NEW Program, including employment, training, placement, education, 
child care, and social programs.



Sec.  287.145  What measures will be used to determine NEW Program outcomes?

    Each grantee must develop its own performance standards and measures 
to ensure accountability for its program results. A Tribe's program plan 
must identify planned program outcomes and the measures the Tribe will 
use to determine them. ACF will compare planned outcomes against 
outcomes reported in the Tribe's annual reports.



          Subpart F_Data Collection and Reporting Requirements



Sec.  287.150  Are there data collection requirements for Tribes that operate a NEW Program?

    (a) Yes, the Tribal agency or organization responsible for operation 
of a NEW Program must collect data and

[[Page 217]]

submit reports as specified by the Secretary.
    (b) A NEW Program grantee must establish and maintain efficient and 
effective record-keeping systems to provide accurate and timely 
information regarding its service population.
    (c) Required reports will provide Tribes, the Secretary, Congress, 
and other interested parties with information to assess the success of 
the NEW Program in meeting its goals. Also, the reports will provide the 
Secretary with information for monitoring program and financial 
operations.



Sec.  287.155  What reports must a grantee file with the Department about its NEW Program operations?

    (a) Each eligible Tribe must submit an annual report that provides a 
summary of program operations.
    (b) The Secretary has developed an annual operations report (OMB 
clearance number 0970-0174). The report specifies the data elements on 
which grantees must report, including elements that provide information 
regarding the number and characteristics of those served by the NEW 
Program. This report is in addition to any financial reports required by 
law, regulations, or Departmental policies.
    (c) The report form and instructions are distributed through ACF's 
program instruction system.
    (d) The program operations report will be due September 28th, 90 
days after the close of the NEW Program year.



Sec.  287.160  What reports must a grantee file regarding financial operations?

    (a) Grantees will use SF-269A to make an annual financial report of 
expenditures for program activities and services.
    (b) Two annual financial reports will be due to the appropriate 
Regional Office. The interim SF-269A is due no later than July 30, i.e., 
30 days after the end of the obligation period. The final SF-269A is due 
90 days after the end of the liquidation period.



Sec.  287.165  What are the data collection and reporting requirements for Public Law 102-477 Tribes that consolidate a NEW Program with other programs?

    (a) Currently, there is a single reporting system for all programs 
operated by a Tribe under Public Law 102-477. This system includes a 
program report, consisting of a narrative report, a statistical form, 
and a financial report.
    (1) The program report is required annually and submitted to BIA, as 
the lead Federal agency and shared with DHHS and DOL.
    (2) The financial report is submitted on a SF-269A to BIA.
    (b) Information regarding program and financial operations of a NEW 
Program administered by a Public Law 102-477 Tribe will be captured 
through the existing Public Law 102-477 reporting system.



Sec.  287.170  What are the data collection and reporting requirements for a Tribe that operates both the NEW Program and a Tribal TANF program?

    Tribes operating both NEW and Tribal TANF programs must adhere to 
the separate reporting requirements for each program. NEW Program 
reporting requirements are specified in Sec. Sec.  287.150-287.170.

                        PARTS 288	299 [RESERVED]

[[Page 219]]



    CHAPTER III--OFFICE OF CHILD SUPPORT ENFORCEMENT (CHILD SUPPORT 
    ENFORCEMENT PROGRAM), ADMINISTRATION FOR CHILDREN AND FAMILIES, 
                 DEPARTMENT OF HEALTH AND HUMAN SERVICES




  --------------------------------------------------------------------


  Editorial Note: Nomenclature changes to chapter III appear at 66 FR 
39452, July 31, 2001.
Part                                                                Page
300

[Reserved]

301             State plan approval and grant procedures....         221
302             State plan requirements.....................         226
303             Standards for program operations............         243
304             Federal financial participation.............         274
305             Program performance measures, standards, 
                    financial incentives, and penalties.....         282
306

[Reserved]

307             Computerized support enforcement systems....         294
308             Annual State self-assessment review and 
                    report..................................         306
309             Tribal child support enforcement (IV-D) 
                    program.................................         311
310             Comprehensive tribal child support 
                    enforcement (CSE) programs..............         329
311-399

[Reserved]

[[Page 221]]

                           PART 300 [RESERVED]



PART 301_STATE PLAN APPROVAL AND GRANT PROCEDURES--Table of Contents




Sec.
301.0 Scope and applicability of this part.
301.1 General definitions.
301.10 State plan.
301.11 State plan; format.
301.12 Submittal of State plan for Governor's review.
301.13 Approval of State plans and amendments.
301.14 Administrative review of certain administrative decisions.
301.15 Grants.
301.16 Withholding of advance funds for not reporting.

    Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1301, and 
1302.

    Source: 40 FR 27157, June 26, 1975, unless otherwise noted.



Sec.  301.0  Scope and applicability of this part.

    This part deals with the administration of title IV-D of the Social 
Security Act by the Federal Government including actions on the State 
plan and amendments thereto and review of such actions; grants under the 
approved plan; review and audit of State and local expenditures; and 
reconsideration of disallowances of expenditures for Federal financial 
participation.



Sec.  301.1  General definitions.

    When used in this chapter, unless the context otherwise indicates:
    Act means the Social Security Act, and the title referred to is 
title IV-D of that Act.
    Applicable matching rate means the rate of Federal funding of State 
IV-D programs' administrative costs for the appropriate fiscal year. The 
applicable matching rate for FY 1990 and thereafter is 66 percent.
    Assigned support obligation means, unless otherwise specified, any 
support obligation which has been assigned to the State under section 
408(a)(3) of the Act or section 471(a)(17) of the Act, or any medical 
support obligation or payment for medical care from any third party 
which has been assigned to the State under 42 CFR 433.146.
    Assignment means, unless otherwise specified, any assignment of 
rights to support under section 408(a)(3) of the Act or section 
471(a)(17) of the Act, or any assignment of rights to medical support 
and to payment for medical care from any third party under 42 CFR 
433.146.
    Birthing hospital means a hospital that has an obstetric care unit 
or provides obstetric services, or a birthing center associated with a 
hospital. A birthing center is a facility outside a hospital that 
provides maternity services.
    Central registry means a single unit or office within the State IV-D 
agency which receives, disseminates and has oversight responsibility for 
processing incoming interstate IV-D cases, including UIFSA petitions and 
requests for wage withholding in IV-D cases and, at the option of the 
State, intrastate IV-D cases.
    Department means the Department of Health and Human Services.
    Director means the Director, Office of Child Support Enforcement, 
who is the Secretary's designee to administer the Child Support 
Enforcement program under title IV-D.
    Federal PLS means the Parent Locator Service operated by the Office 
of Child Support Enforcement pursuant to section 452(a)(9) of the Act.
    IV-D Agency means the single and separate organizational unit in the 
State that has the responsibility for administering or supervising the 
administration of the State plan under title IV-D of the Act.
    Medicaid means medical assistance provided under a State plan 
approved under title XIX of the Act.
    Medicaid agency means the single State agency that has the 
responsibility for the administration of, or supervising the 
administration of, the State plan under title XIX of the Act.
    Non-IV-A Medicaid recipient means any individual who has been 
determined eligible for or is receiving Medicaid under title XIX of the 
Act but is not receiving, nor deemed to be receiving, title IV-A under 
title IV-A of the Act.
    Office means the Office of Child Support Enforcement which is the 
separate organizational unit within the Department with the 
responsibility for the

[[Page 222]]

administration of the program under this title.
    Overdue support means a delinquency pursuant to an obligation 
determined under a court order, or an order of an administrative process 
established under State law, for support and maintenance of a minor 
child, which is owed to or on behalf of the child, or for the 
noncustodial parent's spouse (or former spouse) with whom the child is 
living, but only if a support obligation has been established with 
respect to the spouse and the support obligation established with 
respect to the child is being enforced under State's IV-D plan. At the 
option of the State, overdue support may include amounts which otherwise 
meet the definition in the previous sentence but which are owed to or on 
behalf of a child who is not a minor child. The option to include 
support owed to children who are not minors applies independently to the 
procedures required under Sec.  302.70 of this chapter.
    Past-due support means the amount of support determined under a 
court order or an order of an administrative process established under 
State law for support and maintenance of a child or of a child and the 
parent with whom the child is living, which has not been paid. For 
purposes of referral for Federal income tax refund offset of support due 
an individual who is receiving services under Sec.  302.33 of this 
chapter, past-due support means support owed to or on behalf of a 
qualified child, or a qualified child and the parent with whom the child 
is living if the same support order includes support for the child and 
the parent.
    Political subdivision means a legal entity of the State as defined 
by the State, including a legal entity of the political subdivision so 
defined, such as a Prosecuting or District Attorney or a Friend of the 
Court.
    Procedures means a written set of instructions which describe in 
detail the step by step actions to be taken by child support enforcement 
personnel in the performance of a specific function under the State's 
IV-D plan. The IV-D agency may issue general instructions on one or more 
functions, and delegate responsibility for the detailed procedures to 
the office, agency, or political subdivision actually performing the 
function.
    Qualified child means a child who is a minor or who, while a minor, 
was determined to be disabled under title II or XVI of the Act, and for 
whom a support order is in effect.
    Regional Office and Central Office refer to the Regional Offices and 
the Central Office of the Office of Child Support Enforcement, 
respectively.
    Secretary means the Secretary of Health and Human Services.
    Spousal support means a legally enforceable obligation assessed 
against an individual for the support of a spouse or former spouse who 
is living with a child or children for whom the individual also owes 
support.
    State means the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam and American 
Samoa.
    The State plan means the State plan for child and spousal support 
under section 454 of the Act.
    State PLS means the service established by the IV-D agency pursuant 
to section 454(8) of the Act to locate parents.

[47 FR 57280, Dec. 23, 1982, as amended at 50 FR 19647, May 9, 1985; 50 
FR 23958, June 7, 1985; 50 FR 31719, Aug. 6, 1985; 53 FR 5256, Feb. 22, 
1988; 54 FR 32308, Aug. 4, 1989; 56 FR 8002, Feb. 26, 1991; 57 FR 30429, 
July 9, 1992; 58 FR 41437, Aug. 4, 1993; 59 FR 66249, Dec. 23, 1994; 61 
FR 67240, Dec. 20, 1996; 64 FR 6247, Feb. 9, 1999; 68 FR 25303, May 12, 
2003]



Sec.  301.10  State plan.

    The State plan is a comprehensive statement submitted by the IV-D 
agency describing the nature and scope of its program and giving 
assurance that it will be administered in conformity with the specific 
requirements stipulated in title IV-D, the regulations in Subtitle A and 
this chapter of this title, and other applicable official issuances of 
the Department. The State plan contains all information necessary for 
the Office to determine whether the plan can be approved, as a basis for 
Federal financial participation in the State program.



Sec.  301.11  State plan; format.

    The State plan must be submitted to the Office in the format and 
containing

[[Page 223]]

the information prescribed by the Office, and within time limits set in 
implementing instructions issued by the Office. Such time limits will be 
adequate for proper preparation of plans and submittal in accordance 
with the requirements for State Governors' review (see Sec.  301.12 of 
this chapter).

(Approved by the Office of Management and Budget under control number 
0960-0253)

[40 FR 27147, June 26, 1975, as amended at 51 FR 37730, Oct. 24, 1986]



Sec.  301.12  Submittal of State plan for Governor's review.

    The State plan must be submitted to the State Governor for his 
review and comments, and the State plan must provide that the Governor 
will be given opportunity to review State plan amendments and long-range 
program planning projections or other periodic reports thereon. This 
requirement does not apply to periodic statistical or budget and other 
fiscal reports. Under this requirement, the Office of the Governor will 
be afforded a specified period in which to review the material. Any 
comments made will be transmitted to the Office with the documents.

(Approved by the Office of Management and Budget under control number 
0960-0253)

[40 FR 27147, June 26, 1975, as amended at 51 FR 37730, Oct. 24, 1986]



Sec.  301.13  Approval of State plans and amendments.

    The State plan consists of written documents furnished by the State 
to cover its Child Support Enforcement program under title IV-D of the 
Act. After approval of the original plan by the Office, all relevant 
changes, required by new statutes, rules, regulations, interpretations, 
and court decisions, are required to be submitted currently so that the 
Office may determine whether the plan continues to meet Federal 
requirements and policies.
    (a) Submittal. State plans and revisions of the plans are submitted 
first to the State governor or his designee for review in accordance 
with Sec.  301.12, and then to the regional office. The States are 
encouraged to obtain consultation of the regional staff when a plan is 
in process of preparation or revision.
    (b) Review. The Office of Child Support Enforcement in the regional 
offices is responsible for review of State plans and amendments. It also 
initiates discussion with the IV-D agency on clarification of 
significant aspects of the plan which come to its attention in the 
course of this review. State plan material on which the regional staff 
has questions concerning the application of Federal policy is referred 
with recommendations as required to the Office of Child Support 
Enforcement in the central office for technical assistance. Comments and 
suggestions, including those of consultants in specified areas, may be 
prepared by the central office for use by the regional staff in 
negotiations with the IV-D agency.
    (c) Action. The Regional Office exercises delegated authority to 
take affirmative action on the State plan and amendments thereto on the 
basis of policy statements or precedents previously approved by the 
Director. The Director retains authority for determining that proposed 
plan material is not approvable, or that a previously approved plan no 
longer meets the requirements for approval, except that a final 
determination of disapproval may not be made without prior consultation 
and discussion by the Director with the Secretary. The Regional Office 
or the Director formally notifies the IV-D agency of the actions taken 
on the State plan or revisions thereto.
    (d) Basis for approval. Determinations as to whether the State plan 
(including plan amendments and administrative practice under the plan) 
originally meets or continues to meet the requirements for approval are 
based on relevant Federal statutes and regulations. Guidelines are 
furnished to assist in the interpretation of the regulations.
    (e) Prompt approval of the State plan. The determination as to 
whether the State plan submitted for approval conforms to the 
requirements for approval under the Act and regulations issued pursuant 
thereto shall be made promptly and not later than the 90th day following 
the date on which the plan submittal is received in the regional office, 
unless the Regional Office has secured from the IV-D agency

[[Page 224]]

a written agreement to extend that period.
    (f) Prompt approval of plan amendments. Any amendment of an approved 
State plan may, at the option of the State, be considered as a 
submission of a new State plan. If the State requests that such 
amendments be so considered, the determination as to its conformity with 
the requirements for approval shall be made promptly and not later than 
the 90th day following the date on which such a request is received in 
the Regional Office with respect to an amendment that has been received 
in such office, unless the Regional Commissioner has secured from the 
State agency a written agreement to extend that period.
    (g) Effective date. The effective date of a new plan may not be 
earlier than the first day of the calendar quarter in which an 
approvable plan is submitted.

(Approved by the Office of Management and Budget under control number 
0960-0253)

[40 FR 27147, June 26, 1975, as amended at 51 FR 37730, Oct. 24, 1986]



Sec.  301.14  Administrative review of certain administrative decisions.

    Any State dissatisfied with a determination of the Director pursuant 
to Sec.  301.13 (e) or (f) with respect to any plan or amendment may, 
within 60 days after the date of receipt of notification of such 
determination, file a petition with the Regional Office asking the 
Director for reconsideration of the issue of whether such plan or 
amendment conforms to the requirements for approval under the Act and 
pertinent Federal requirements. Within 30 days after receipt of such a 
petition, the Director shall notify the State of the time and place at 
which the hearing for the purpose of reconsidering such issue will be 
held. Such hearing shall be held not less than 30 days nor more than 60 
days after the date notice of such hearing is furnished to the State, 
unless the Director and the State agree in writing on another time. The 
hearing procedures contained in 45 CFR part 213 applicable to Sec.  
201.4 of this title shall apply to reconsiderations brought under this 
section. A determination affirming, modifying, or reversing the 
Director's original decision will be made within 60 days of the 
conclusion of the hearing. Action pursuant to an initial determination 
by the Director described in such Sec.  301.1 (e) or (f) that a plan or 
amendment is not approvable shall not be stayed pending the 
reconsideration, but in the event that the Director subsequently 
determines that his original decision was incorrect he shall certify 
restitution forthwith in a lump sum of any funds incorrectly withheld or 
otherwise denied.



Sec.  301.15  Grants.

    To States with approved plans, a grant is made each quarter for 
expenditures under the plan for the administration of the Child Support 
Enforcement program. The determination as to the amount of a grant to be 
made to a State is based upon documents submitted by the IV-D agency 
containing information required under the Act and such other pertinent 
facts as may be found necessary.
    (a) Form and manner of submittal--
    (1) Time and place. An estimate for a grant for each quarterly 
period must be forwarded to the Regional Office 45 days prior to the 
period of the estimate. It includes a certification of State funds and a 
justification statement in support of the estimate. A statement of 
quarterly expenditures and any necessary supporting schedules must be 
forwarded to the Department of Health and Human Services, Administration 
for Children and Families, Office of Program Support, Division of 
Formula, Entitlement and Block Grants, 370 L'Enfant Promenade, S.W., 
Washington, DC 20447, not later than 30 days after the end of the 
quarter.
    (2) Description of forms. ``State Agency Expenditure Projection--
Quarterly Projection by Program'' represents the IV-D agency's estimate 
of the total amount and the Federal share of expenditures for the 
administration of the title IV-D program for the quarter. From this 
estimate the State and Federal shares of the total expenditures are 
computed. The State's computed share of total estimated expenditures is 
the amount of State and local funds necessary for the quarter. The 
Federal share is the basis for the funds to be advanced for the quarter. 
The agency

[[Page 225]]

must also certify, on this form or otherwise, the amount of State funds 
(exclusive of any balance of advances received from the Federal 
Government) actually on hand and available for expenditure; this 
certification must be signed by the executive officer of the IV-D agency 
submitting the estimate or a person officially designated by him, or by 
a fiscal officer of the State if required by State law or regulation. (A 
form ``Certificate of Availability of State Funds for Assistance and 
Administration during Quarter'' is available for submitting this 
information, but its use is optional.) If the amount of State funds (or 
State and local funds if localities participate in the program), shown 
as available for expenditures is not sufficient to cover the State's 
proportionate share of the amount estimated to be expended, the 
certification must contain a statement showing the source from which the 
amount of the deficiency is expected to be derived and the time when 
this amount is expected to be made available.
    (3) The IV-D agency must also submit a quarterly statement of 
expenditures for the title IV-D program. This is an accounting statement 
of the disposition of the Federal funds granted for past periods and 
provides the basis for making the adjustments necessary when the State's 
estimate for any prior quarter was greater or less than the amount the 
State actually expended in that quarter. The statement of expenditures 
also shows the share of the Federal Government in any recoupment, from 
whatever source, of expenditures claimed in any prior period, and also 
in expenditures not properly subject to Federal financial participation 
which are acknowledged by the IV-D agency or have been revealed in the 
course of an audit.
    (b) Review. The State's estimate is analyzed by the regional office 
and is forwarded with recommendations as required to the central office. 
The central office reviews the State's estimate, other relevant 
information, and any adjustments to be made for prior periods, and 
computes the grant.
    (c) Grant award. The grant award computation form shows the amount 
of the estimate for the ensuing quarter, and the amounts by which the 
estimate is reduced or increased because of over- or under-estimate for 
the prior quarter and for other adjustments. This form is transmitted to 
the IV-D agency to draw the amount of the grant award as needed, to meet 
the Federal share of disbursements. The draw is through a commercial 
bank and the Federal Reserve system against a continuing letter of 
credit certified to the Secretary of the Treasury in favor of the State 
payee. A notice of the amount of the grant award is sent to the State 
Central Information Reception Agency in accord with section 201 of the 
Intergovernmental Cooperation Act of 1968.
    (d) Letter of credit payment system. The letter of credit system for 
payment of advances of Federal funds was established pursuant to 
Treasury Department regulations. (Circular No. 1075), published in the 
Federal Register on July 11, 1967 (32 FR 10201). The HHS ``Instructions 
to Recipient Organizations for Use of Letter of Credit'' was transmitted 
to all grantees by memorandum from the Assistant Secretary-Comptroller 
on January 15, 1968.
    (e) General administrative requirements. With the following 
exceptions, the provisions of part 74 of this title, establishing 
uniform administrative requirements and cost principles, shall apply to 
all grants made to States under this part:

                             45 CFR Part 74

45 CFR 74.23 Cost Sharing or Matching.
45 CFR 74.52 Financial Reporting.

(Approved by the Office of Management and Budget under control numbers 
0960-0239 and 0960-0235)

[40 FR 27147, June 26, 1975, as amended at 51 FR 37731, Oct. 24, 1986; 
61 FR 67240, Dec. 20, 1996]



Sec.  301.16  Withholding of advance funds for not reporting.

    (a) No advance for any quarter will be made unless full and complete 
reports on expenditures and collections, as required by Sec. Sec.  
301.15 and 302.15 of this chapter, respectively, have been submitted to 
the Office by the IV-D agency for all quarters with the exception of the 
two quarters immediately preceding the quarter for which the advance is 
to be made.

[[Page 226]]

    (b) For purposes of this section, a report is full and complete if:
    (1) All line items of information are reported in accordance with 
OCSE instructions; and
    (2) The report contains all applicable information available to the 
State and appropriate for inclusion in the report for the quarter being 
reported and prior quarters.

(Collection reporting form approved by the Office of Management and 
Budget under control number 0960-0238 and expenditure reporting form 
approved under control number 0960-0235)

[47 FR 8570, Mar. 1, 1982]



PART 302_STATE PLAN REQUIREMENTS--Table of Contents




Sec.
302.0 Scope of this part.
302.1 Definitions.
302.10 Statewide operations.
302.11 State financial participation.
302.12 Single and separate organizational unit.
302.13 Plan amendments.
302.14 Fiscal policies and accountability.
302.15 Reports and maintenance of records.
302.17 Inclusion of State statutes.
302.19 Bonding of employees.
302.20 Separation of cash handling and accounting functions.
302.30 Publicizing the availability of support enforcement services.
302.31 Establishing paternity and securing support.
302.32 Collection and disbursement of support payments by the IV-D 
          Agency.
302.33 Service to individuals not receiving title IV-A or title IV-E 
          foster care assistance.
302.34 Cooperative arrangements.
302.35 State parent locator service.
302.36 Provisions of services in interstate and intergovernmental IV-D 
          cases.
302.37 [Reserved]
302.38 Payments to the family.
302.39 Standards for program operation.
302.40 [Reserved]
302.50 Assignment of rights to support.
302.51 Distribution of support collections.
302.52 Distribution of support collected in Title IV-E foster care 
          maintenance cases.
302.54 Notice of collection of assigned support.
302.55 Incentive payments to States and political subdivisions.
302.56 Guidelines for setting child support awards.
302.60 Collection of past-due support from Federal tax refunds.
302.65 Withholding of unemployment compensation.
302.70 Required State laws.
302.75 Procedures for the imposition of late payment fees on 
          noncustodial parents who owe overdue support.
302.80 Medical support enforcement.
302.85 Mandatory computerized support enforcement system.

    Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1302, 
1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), 1396(k).

    Effective Date Note: At 73 FR 56443, Sept. 26, 2008, the authority 
citation for part 302 was revised, effective Mar. 23, 2009. For the 
convenience of the user, the revised text is set forth as follows:
    Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667, 1302, 
1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), 1396(k).

    Source: 40 FR 27159, June 26, 1975, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 302 appear at 64 FR 
6247, Feb. 9, 1999.



Sec.  302.0  Scope of this part.

    This part defines the State plan provisions required for an approved 
plan under title IV-D of the Act.



Sec.  302.1  Definitions.

    The definitions found in Sec.  301.1 of this chapter also are 
applicable to this part.



Sec.  302.10  Statewide operations.

    The State plan shall provide that:
    (a) It will be in operation on a statewide basis in accordance with 
equitable standards for administration that are mandatory throughout the 
State;
    (b) If administered by a political subdivision of the State, the 
plan will be mandatory on such political subdivision;
    (c) The IV-D agency will assure that the plan is continuously in 
operation in all appropriate offices or agencies through:
    (1) Methods for informing staff of State policies, standards, 
procedures and instructions; and
    (2) Regular planned examination and evaluation of operations in 
local offices by regularly assigned State staff, including regular 
visits by such staff; and through reports, controls, or other necessary 
methods.

[[Page 227]]



Sec.  302.11  State financial participation.

    The State plan shall provide that the State will participate 
financially in the program.



Sec.  302.12  Single and separate organizational unit.

    (a) The State plan shall provide for the establishment or 
designation of a single and separate organizational unit to administer 
the IV-D plan. Such unit is referred to as the IV-D agency. Under this 
requirement:
    (1) The IV-D agency may be:
    (i) Located in any other agency of the State; or,
    (ii) Established as a new agency of the State.
    (2) The IV-D agency shall be responsible and accountable for the 
operation of the IV-D program. Except as provided in Sec.  303.20 of 
this part, the agency need not perform all the functions of the IV-D 
program so long as it insures that all these functions are being carried 
out properly, efficiently, and effectively;
    (3) If the IV-D agency delegates any of the functions of the IV-D 
program to any other State or local agency or official, or any official 
with whom a cooperative agreement as described in Sec.  302.34 has been 
entered into or purchases services from any person or private agency 
pursuant to Sec.  304.22 of this part, the IV-D agency shall have 
responsibility for securing compliance with the requirements of the 
State plan by such agency or officials.
    (b) The State plan shall describe the structure of the IV-D agency 
and the distribution of responsibilities among the major divisions 
within the unit, and if it is located within another agency, show its 
place in such agency. If any of the IV-D program functions are to be 
performed outside of the IV-D agency then these functions shall be 
listed with the name of the organization responsible for performing 
them.

(Approved by the Office of Management and Budget under control number 
0960-0253)

[40 FR 27159, June 26, 1975, as amended at 51 FR 37731, Oct. 24, 1986; 
64 FR 6247, Feb. 9, 1999]



Sec.  302.13  Plan amendments.

    (a) The State plan shall provide that the plan will be amended 
whenever necessary to reflect new or revised Federal statutes or 
regulations, or material change in any phase of State law, organization, 
policy of IV-D agency operation.
    (b) Federal financial participation. Except where otherwise 
provided, Federal financial participation is available in the additional 
expenditures resulting from an amended provision of the State plan as of 
the first day of the calendar quarter in which an approvable amendment 
is submitted or the date on which the amended provision becomes 
effective in the State, whichever is later.

(Approved by the Office of Management and Budget under control number 
0960-0253)

[40 FR 27159, June 26, 1975, as amended at 51 FR 37731, Oct. 24, 1986]



Sec.  302.14  Fiscal policies and accountability.

    The State plan shall provide that the IV-D agency, in discharging 
its fiscal accountability, will maintain an accounting system and 
supporting fiscal records adequate to assure that claims for Federal 
funds are in accord with applicable Federal requirements. The retention 
and custodial requirements for these records are prescribed in 45 CFR 
part 74.



Sec.  302.15  Reports and maintenance of records.

    The State plan shall provide that:
    (a) The IV-D agency will maintain records necessary for the proper 
and efficient operation of the plan, including records regarding:
    (1) Applications pursuant to Sec.  302.33 for support services 
available under the State plan;
    (2) Location of noncustodial parents, actions to establish paternity 
and obtain and enforce support, and the costs incurred in such actions;
    (3) Amount and sources of support collections and the distribution 
of these collections;
    (4) Any fees charged or paid for support enforcement services;
    (5) Any other administrative costs;
    (6) Any other information required by the Office; and

[[Page 228]]

    (7) Statistical, fiscal, and other records necessary for reporting 
and accountability required by the Secretary.

The retention and custodial requirements for these records are 
prescribed in 45 CFR part 74.
    (b) The IV-D agency will make such reports in such form and 
containing such information, as the Secretary may from time to time 
require, and comply with such provisions as he may from time to time 
find necessary to assure the correctness and verification of such 
reports.

(Approved by the Office of Management and Budget under control numbers 
0960-0154, 0960-0226 and 0960-0238)

[40 FR 27159, June 26, 1975, as amended at 47 FR 57281, Dec. 23, 1982; 
48 FR 51917, Nov. 15, 1983; 51 FR 37731, Oct. 24, 1986; 61 FR 67240, 
Dec. 20, 1996]



Sec.  302.17  Inclusion of State statutes.

    The State plan shall provide a copy of State statutes, or 
regulations promulgated pursuant to such statutes and having the force 
of law (including citations of such statutes and regulations), that 
provide procedures to determine the paternity of a child born out of 
wedlock, to establish the child support obligation of a responsible 
parent, and to enforce a support obligation, including spousal support 
if appropriate.

(Approved by the Office of Management and Budget under control numbers 
0960-0253 and 0960-0385)

[50 FR 19647, May 9, 1985, as amended at 51 FR 37731, Oct. 24, 1986]



Sec.  302.19  Bonding of employees.

    The State plan shall provide that the following requirements and 
criteria to bond employees are in effect:
    (a) IV-D responsibility. The IV-D agency will insure that every 
person, who has access to or control over funds collected under the 
child support enforcement program, is covered by a bond against loss 
resulting from employee dishonesty.
    (b) Scope. The requirement in paragraph (a) of this section applies 
to every person who, as a regular part of his or her employment, 
receives, disburses, handles or has access to support collections, which 
includes:
    (1) IV-D agency employees and employees of any other State or local 
agency to which IV-D functions have been delegated.
    (2) Employees of a court or law enforcement official performing 
under a cooperative agreement with the IV-D agency.
    (3) Employees of any private or governmental entity from which the 
IV-D agency purchases services.
    (c) Bond. The bond will be for an amount which the State IV-D agency 
deems adequate to indemnify the State IV-D program for loss resulting 
from employee dishonesty.
    (d) Self-bonding System. A State or political subdivision may comply 
with the requirement in paragraph (a) of this section:
    (1) By means of a self-bonding system established under State law 
or,
    (2) In the case of a political subdivision, by means of a self-
bonding system approved by the State IV-D agency.
    (e) IV-D liability. The requirements of this section do not reduce 
or limit the ultimate liability of the IV-D agency for losses of support 
collections from the State's IV-D program.

[44 FR 28803, May 17, 1979; 44 FR 45137, Aug. 1, 1979, as amended at 47 
FR 57281, Dec. 23, 1982]



Sec.  302.20  Separation of cash handling and accounting functions.

    The State plan shall provide that the following requirements and 
criteria to separate the cash handling and accounting functions are in 
effect.
    (a) IV-D responsibility. The IV-D agency will maintain methods of 
administration designed to assure that persons responsible for handling 
cash receipts of support do not participate in accounting or operating 
functions which would permit them to conceal in the accounting records 
the misuse of support receipts. Such methods of administration shall 
follow generally recognized accounting standards.
    (b) Scope. The requirement in paragraph (a) of this section applies 
to persons who participate in the collection, accounting or operating 
functions which include:
    (1) IV-D agency employees and employees of any other State or local

[[Page 229]]

agency to which IV-D functions have been delegated.
    (2) Employees of a court or law enforcement official performing 
under a cooperative agreement with the IV-D agency.
    (3) Employees of any private or governmental entity from which the 
IV-D agency purchases services.
    (c) Exception. The Regional Office may grant a waiver to sparsely 
populated geographical areas, where the requirements in paragraph (a) of 
this section would necessitate the hiring of unreasonable numbers of 
additional staff. The IV-D agency must document such administrative 
infeasibility and provide an alternative system of controls that 
reasonably insures that support collections will not be misused.

[44 FR 28803, May 17, 1979, as amended at 47 FR 57281, Dec. 23, 1982]



Sec.  302.30  Publicizing the availability of support enforcement services.

    Effective October 1, 1985, the State plan shall provide that the 
State will publicize regularly and frequently the availability of 
support enforcement services under the plan through public service 
announcements. Publicity must include information on any application 
fees which may be imposed for such services and a telephone number or 
postal address where further information may be obtained.

(Approved by the Office of Management and Budget under control number 
0960-0385)

[50 FR 19647, May 9, 1985, as amended at 51 FR 37731, Oct. 24, 1986]



Sec.  302.31  Establishing paternity and securing support.

    The State plan shall provide that:
    (a) The IV-D agency will undertake:
    (1) In the case of a child born out of wedlock with respect to whom 
an assignment as defined in Sec.  301.1 of this chapter is effective, to 
establish the paternity of such child; and
    (2) In the case of any individual with respect to whom an assignment 
as defined in Sec.  301.1 of this chapter is effective, to secure 
support for a child or children from any person who is legally liable 
for such support, using State laws regarding intrastate and interstate 
establishment and enforcement of support obligations. Effective October 
1, 1985, this includes securing support for a spouse or former spouse 
who is living with the child or children, but only if a support 
obligation has been established for that spouse and the child support 
obligation is being enforced under the title IV-D State plan.
    (3) When assigned medical support payments are received and retained 
by a non-IV-A Medicaid recipient, the IV-D agency shall notify the 
Medicaid agency whenever it discovers that directly received medical 
support payments are being, or have been, retained.
    (b) Upon receiving notice of a claim of good cause for failure to 
cooperate, the IV-D agency will suspend all activities to establish 
paternity or secure support until notified of a final determination by 
the appropriate agency.
    (c) The IV-D agency will not undertake to establish paternity or 
secure support in any case for which it has received notice that there 
has been a finding of good cause unless there has been a determination 
that support enforcement may proceed without the participation of the 
caretaker or other relative. If there has been such a determination, the 
IV-D agency will undertake to establish paternity or secure support but 
may not involve the caretaker or other relative in such undertaking.

(Approved by the Office of Management and Budget under control numbers 
0960-0385 and 0970-0107)

[50 FR 19647, May 9, 1985, as amended at 51 FR 25526, July 15, 1986; 51 
FR 37731, Oct. 24, 1986; 56 FR 8003, Feb. 26, 1991; 64 FR 6247, Feb. 9, 
1999; 68 FR 25303, May 12, 2003]



Sec.  302.32  Collection and disbursement of support payments by the IV-D Agency.

    The State plan shall provide that effective October 1, 1998 (or 
October 1, 1999, for States which paid support through courts on August 
22, 1996,):
    (a) In any case in which support payments are collected for a 
recipient of aid under the State's title IV-A plan with respect to whom 
an assignment under section 408(a)(3) of the Act is effective, such 
payments shall be made to the State disbursement unit and shall not be 
paid directly to the family.

[[Page 230]]

    (b) Timeframes for disbursement of support payments by State 
disbursement unit (SDU) under section 454B of the Act.
    (1) In interstate IV-D cases, amounts collected by the responding 
State on behalf of the initiating State must be forwarded to the 
initiating State within 2 business days of the date of receipt by the 
SDU in the responding State, in accordance with Sec.  303.7(c)(7)(iv).
    (2) Amounts collected by the IV-D agency on behalf of recipients of 
aid under the State's title IV-A or IV-E plan for whom an assignment 
under sections 408(a)(3) or 471(a)(17) of the Act is effective shall be 
disbursed by the SDU within the following timeframes:
    (i) Except as specified under paragraph (b)(2)(iv) of this section, 
if the SDU sends payment to the family (other than payments sent to the 
family from the State share of assigned support collections), the SDU 
must send these payments within 2 business days of the end of the month 
in which the payment was received by the SDU. Any payment passed through 
to the family from the State share of assigned support collections must 
be sent to the family within 2 business days of the date of receipt by 
the SDU.
    (ii) Except as specified under paragraph (b)(2)(iv) of this section, 
when the SDU sends collections to the family for the month after the 
month the family becomes ineligible for title IV-A, the SDU must send 
collections to the family within 2 business days of the date of receipt 
by the SDU.
    (iii) Except as specified under paragraph (b)(2)(iv) of this 
section, when the SDU sends collections to the IV-E foster care agency 
under Sec.  302.52(b)(2) and (4) of this part, the SDU must send 
collections to the IV-E agency within 15 business days of the end of the 
month in which the support was received by the SUD.
    (iv) Collections as a result of Federal income tax refund offset 
paid to the family under section 457(a)(2)(iv) of the Act or distributed 
in title IV-E foster care cases under Sec.  302.52(b)(4) of this part, 
must be sent to the IV-A family or IV-E agency, as appropriate, within 
30 calendar days of the date of initial receipt by the IV-D agency, 
unless State law requires a post-offset appeal process and an appeal is 
filed timely, in which case the SDU must send any payment to the IV-A 
family or IV-E agency within 15 calendar days of the date the appeal is 
resolved.
    (3)(i) Except as provided under paragraph (b)(3)(ii) of this 
section, amounts collected on behalf of individuals receiving services 
under Sec.  302.33 of this part shall be disbursed by the SDU pursuant 
to section 457 of the Act, within 2 business days of receipt by the SDU.
    (ii) Collections due the family under section 457(a)(2)(iv) of the 
Act as a result of Federal income tax refund offset must be sent to the 
family within 30 calendar days of the date of initial receipt in the IV-
D agency, except:
    (A) If State law requires a post-offset appeal process and an appeal 
is timely filed, in which case the SDU must send any payment to the 
family within 15 calendar days of the date the appeal is resolved; or
    (B) As provided in Sec.  303.72(h)(5) of this chapter.

[64 FR 6247, Feb. 9, 1999, as amended at 68 FR 25303, May 12, 2003]



Sec.  302.33  Services to individuals not receiving title IV-A or title IV-E foster care assistance.

    (a) Availability of Services. (1) The State plan must provide that 
the services established under the plan shall be made available to any 
individual who:
    (i) Files an application for the services with the IV-D agency. In 
an interstate case, only the initiating State may require an application 
under this section; or
    (ii) Is a non-IV-A Medicaid recipient; or
    (iii) Has been receiving IV-D services and is no longer eligible for 
assistance under the title IV-A, IV-E foster care, and Medicaid program.
    (2) The State may not require an application, other request for 
services or an application fee from any individual who is eligible to 
receive services under paragraphs (a)(1) (ii) and (iii) of this section. 
If an individual receiving services under paragraph (a)(1)(iii) of this 
section refuses services in response to a notice under paragraph (a)(4) 
of this section, and subsequently requests services, that individual 
must file an application and pay an application fee.

[[Page 231]]

    (3) The State may not charge fees or recover costs from any 
individual who is eligible to receive services under paragraph 
(a)(1)(ii) of this section.
    (4) Whenever a family is no longer eligible for assistance under the 
State's title IV-A, IV-E foster care, and Medicaid programs, the IV-D 
agency must notify the family, within five working days of the 
notification of ineligibility, that IV-D services will be continued 
unless the IV-D agency is notified to the contrary by the family. The 
notice must inform the family of the consequences of continuing to 
receive IV-D services, including the available services and the State's 
fees, cost recovery and distribution policies.
    (5) The State must provide all appropriate IV-D services, in 
addition to IV-D services related to securing medical support, to all 
individuals who are eligible to receive services under paragraph 
(a)(1)(ii) of this section unless the individual notifies the State that 
only IV-D services related to securing medical support are wanted.
    (b) Definitions. For purposes of this section:
    Applicant's income means the disposable income available for the 
applicant's use under State law.
    (c) Application fee. (1) Beginning October 1, 1985, the State plan 
must provide that an application fee will be charged for each individual 
who applies for services under this section. Under this paragraph:
    (i) The State shall collect the application fee from the individual 
applying for IV-D services or pay the application fee out of State 
funds.
    (ii) The State may recover the application fee from the noncustodial 
parent who owes a support obligation to a non-IV-A family on whose 
behalf the IV-D agency is providing services and repay it to the 
applicant or itself.
    (iii) State funds used to pay an application fee are not program 
expenditures under the State plan but are program income under Sec.  
304.50 of this chapter.
    (iv) Any application fee charged must be uniformly applied on a 
statewide basis and must be:
    (A) A flat dollar amount not to exceed $25 (or such higher or lower 
amount as the Secretary may determine to be appropriate for any fiscal 
year to reflect increases or decreases in administrative costs); or
    (B) An amount based on a fee schedule not to exceed the flat dollar 
amount specified in paragraph (c)(2)(iv)(A) of this section. The fee 
schedule must be based on the applicant's income.
    (v) The State may allow the jurisdiction that collects support for 
the State under this part to retain any application fee collected under 
this section.
    (2) In an interstate case, the application fee is charged by the 
State where the individual applies for services under this section.
    (d) Recovery of costs. (1) The State may elect in its State plan to 
recover any costs incurred in excess of any fees collected to cover 
administrative costs under the IV-D State plan. A State which elects to 
recover costs shall collect on a case by case basis either excess actual 
or standardized costs:
    (i) From the individual who owes a support obligation to a non-IV-A 
family on whose behalf the IV-D agency is providing services under this 
section; or
    (ii) From the individual who is receiving IV-D services under 
paragraph (a)(1) (i) or (iii) of this section, either directly or from 
the support collected on behalf of the individual, but only if the State 
has in effect a procedure for informing all individuals authorized 
within the State to establish an obligation for support that the State 
will recover costs from the individual receiving IV-D services under 
paragraphs (a)(1) (i) and (iii) of this section.
    (2) A State that recovers standardized costs under paragraph (d)(1) 
of this section shall develop a written methodology to determine 
standardized costs which are as close to actual costs as is possible. 
This methodology must be made available to any individual upon request.
    (3) The IV-D agency shall not treat any amount collected from the 
individual as a recovery of costs under paragraph (d)(1)(i) of this 
section except amounts which exceed the current support owed by the 
individual under the obligation.

[[Page 232]]

    (4) If a State elects to recover costs under paragraph (d)(1)(ii) of 
this section, the IV-D agency may attempt to seek reimbursement from the 
individual who owes a support obligation for any costs paid by the 
individual who is receiving IV-D services and pay all amounts reimbursed 
to the individual who is receiving IV-D services.
    (5) If a State elects to recover costs under this section, the IV-D 
agency must notify, consistent with the option selected, either the 
individual who is receiving IV-D services under paragraphs (a)(1) (i) or 
(iii) of this section, or the individual who owes a support obligation 
that such recovery will be made. In an interstate case, the IV-D agency 
where the case originated must notify the individual receiving IV-D 
services of the States that recover costs.
    (6) The IV-D agency must notify the IV-D agencies in all other 
States if it recovers costs from the individual receiving IV-D services.


(Approved by the Office of Management and Budget under control numbers 
0960-0253, 0960-0385, 0960-0402, and 0970-0107)

[49 FR 36772, Sept. 19, 1984, as amended at 50 FR 19648, May 9, 1985; 51 
FR 37731, Oct. 24, 1986; 56 FR 8003, Feb. 26, 1991; 61 FR 67240, Dec. 
20, 1996]



Sec.  302.34  Cooperative arrangements.

    The State plan shall provide that the State will enter into written 
agreements for cooperative arrangements under Sec.  303.107 with 
appropriate courts, law enforcement officials, Indian tribes or tribal 
organizations. Such arrangements may be entered into with a single 
official covering more than one court, official, or agency, if the 
single official has the legal authority to enter into arrangements on 
behalf of the courts, officials, or agencies. Such arrangements shall 
contain provisions for providing courts and law enforcement officials 
with pertinent information needed in locating noncustodial parents, 
establishing paternity and securing support, to the extent that such 
information is relevant to the duties to be performed pursuant to the 
arrangement. They shall also provide for assistance to the IV-D agency 
in carrying out the program, and may relate to any other matters of 
common concern. Under matters of common concern, such arrangements may 
include provisions for the investigation and prosecution of fraud 
directly related to paternity and child and spousal support, and 
provisions to reimburse courts and law enforcement officials for their 
assistance.

[54 FR 30222, July 19, 1989, as amended at 61 FR 67240, Dec. 20, 1996; 
64 FR 6248, Feb. 9, 1999]



Sec.  302.35  State parent locator service.

    The State plan shall provide as follows:
    (a) The IV-D agency shall establish a State PLS using:
    (1) All relevant sources of information and records available in the 
State, and in other States as appropriate; and
    (2) The Federal PLS of the Department of Health and Human Services.
    (b)(1) The IV-D agency shall establish a central State PLS office 
and may also designate additional IV-D offices within the State to 
submit requests to the Federal PLS.
    (2) To designate more than two additional IV-D offices within the 
State, the IV-D agency must obtain written approval from the Office.
    (c) The State PLS shall only accept requests to use the Federal PLS 
from:
    (1) Any State or local agency or official seeking to collect child 
and spousal support obligations under the State plan;
    (2) A court that has authority to issue an order or to serve as the 
initiating court in an action to seek an order against a noncustodial 
parent for the support and maintenance of a child, or any agent of such 
court;
    (3) The resident parent, legal guardian, attorney, or agent of a 
child who is not receiving aid under title IV-A of the Act; and
    (4) Authorized persons as defined in Sec.  303.15 of this chapter if 
an agreement is in effect under Sec.  303.15 to use the Federal PLS in 
connection with parental kidnapping or child custody or visitation 
cases.
    (5) A State agency that is administering a program operated under a 
State plan under subpart 1 of part B, or a State plan approved under 
subpart 2 of part B or under part E.

[[Page 233]]

    (d) The State PLS shall, subject to the privacy safeguards required 
under section 454(26) of the Act, disclose only the information 
described in sections 453 and 463 of the Act to the authorized persons 
specified in such sections for the purposes specified in such sections.

[46 FR 54556, Nov. 3, 1981, as amended at 47 FR 57281, Dec. 23, 1982; 50 
FR 19648, May 9, 1985; 64 FR 6248, Feb. 9, 1999; 68 FR 25303, May 12, 
2003]

    Effective Date Note: At 73 FR 56443, Sept. 26, 2008, Sec.  302.35 
was revised, effective Mar. 23, 2009. For the convenience of the user, 
the revised text is set forth as follows:



Sec.  302.35  State parent locator service.

    The State plan shall provide as follows:
    (a) State PLS. The IV-D agency shall maintain a State PLS to provide 
locate information to authorized persons for authorized purposes.
    (1) For IV-D cases and IV-D purposes by the IV-D agency. The State 
PLS shall access the Federal PLS and all relevant sources of information 
and records available in the State, and in other States as appropriate, 
for locating custodial parents, noncustodial parents, and children for 
IV-D purposes.
    (2) For authorized non-IV-D individuals and purposes--
    (i) The State PLS shall access and release information authorized to 
be disclosed under Section 453(a)(2) of the Act from the Federal PLS 
and, in accordance with State law, information from relevant in-state 
sources of information and records, as appropriate, for locating 
custodial parents, noncustodial parents, and children upon request of 
authorized individuals specified in paragraph (c) of this section, for 
authorized purposes specified in paragraph (d) of this section.
    (ii) The State PLS shall not release information from the 
computerized support enforcement system required under part 307 of this 
chapter, IRS information, or financial institution data match 
information, nor shall the State PLS forward a non-IV-D request to 
another State IV-D agency.
    (iii) The State PLS need not make subsequent location attempts if 
locate efforts fail to find the individual sought unless a new request 
is submitted.
    (b) Central State PLS requirement. The IV-D program shall maintain a 
central State PLS to submit requests to the Federal PLS.
    (c) Authorized persons. The State PLS shall accept requests for 
locate information only from the following authorized persons:
    (1) Any State or local agency or official providing child and 
spousal support services under the State plan;
    (2) A court that has authority to issue an order or to serve as the 
initiating court in an action to seek an order against a noncustodial 
parent for the support and maintenance of a child, or any agent of such 
court;
    (3) The resident parent, legal guardian, attorney, or agent of a 
child who is not receiving assistance under title IV-A of the Act only 
if the individual:
    (i) Attests that the request is being made to obtain information on, 
or to facilitate the discovery of, any individual in accordance with 
section 453(a)(2) of the Act for the purpose of establishing parentage, 
establishing, setting the amount of, modifying, or enforcing child 
support obligations;
    (ii) Attests that any information obtained through the Federal or 
State PLS shall be used solely for these purposes and shall be otherwise 
treated as confidential;
    (iii) Provides evidence that the requestor is the parent, legal 
guardian, attorney, or agent of a child not receiving assistance under 
title IV-A, and if an agent of such a child, evidence of a valid 
contract that meets any requirements in State law or written policy for 
acting as an agent and, if a parent, attestation that he or she is the 
resident parent.
    (iv) Pays the fee required for Federal PLS services under section 
453(e)(2) of the Act and Sec.  303.70(f)(2)(i) of this chapter, if the 
State does not pay the fee itself. The State may also charge a fee to 
cover its costs of processing the request, which must be as close to 
actual costs as possible, so as not to discourage requests to use the 
Federal PLS. If the State itself pays the fee for use of the Federal PLS 
or the State PLS in a non-IV-D case, Federal financial participation is 
not available in those expenditures.
    (4) Authorized persons as defined in Sec.  303.15 of this chapter in 
connection with parental kidnapping, child custody or visitation cases; 
or
    (5) A State agency that is administering a program operated under a 
State plan under titles IV-B or IV-E of the Act.
    (d) Authorized purposes for requests and scope of information 
provided. The State PLS shall obtain location information under this 
section only for the purposes specified in paragraphs (d)(1) and (d)(2) 
of this section.
    (1) To locate an individual with respect to a child in a IV-D, non-
IV-D, IV-B, or IV-E case. The State PLS shall locate individuals for the 
purpose of establishing parentage, or establishing, setting the amount 
of, modifying, or enforcing child support obligations or for determining 
who has or may have parental rights with respect to a child. For these 
purposes, only information available through the Federal PLS or the 
State PLS may be provided. This information is limited to Social 
Security Number(s), most recent address, employer name and address, 
employer identification number, wages or other income from, and benefits 
of, employment, including rights to, or enrollment in, health care 
coverage, and asset or debt information.

[[Page 234]]

    (2) To locate an individual sought for the unlawful taking or 
restraint of a child or for child custody or visitation purposes. The 
State PLS shall locate individuals for the purpose of enforcing a State 
law with respect to the unlawful taking or restraint of a child or for 
making or enforcing a child custody or visitation determination as 
defined in section 463(d)(1) of the Act. For this purpose, only the 
information available through the Federal PLS or the State PLS may be 
provided. This information is limited to most recent address and place 
of employment of a parent or child.
    (e) Locate information subject to disclosure. Subject to the 
requirements of this section and the privacy safeguards required under 
section 454(26) of the Act and the family violence indicators under 
section 307.11(f)(1)(x) of this part, the State PLS shall disclose the 
following information to authorized persons for authorized purposes,
    (1) Federal PLS information described in sections 453 and 463 of the 
Act; and
    (2) Information from in-state locate sources.



Sec.  302.36  Provision of services in interstate and intergovernmental IV-D cases.

    (a) The State plan shall provide that:
    (1) The State will extend the full range of services available under 
its IV-D plan to any other State in accordance with the requirements set 
forth in Sec.  303.7 of this chapter; and
    (2) The State will extend the full range of services available under 
its IV-D plan to all Tribal IV-D programs, including promptly opening a 
case where appropriate.
    (b) The State plan shall provide that the State will establish a 
central registry for interstate IV-D cases in accordance with the 
requirements set forth in Sec.  303.7(a) of this chapter.

[53 FR 5256, Feb. 22, 1988, as amended at 61 FR 67240, Dec. 20, 1996; 69 
FR 16672, Mar. 30, 2004]



Sec.  302.37  [Reserved]



Sec.  302.38  Payments to the family.

    The State plan shall provide that any payment required to be made 
under Sec. Sec.  302.32 and 302.51 of this part to a family will be made 
to the resident parent, legal guardian, or caretaker relative having 
custody of or responsibility for the child or children.



Sec.  302.39  Standards for program operation.

    The State plan shall provide that the IV-D agency will comply with 
the standards for program operation and the organizational and staffing 
requirements prescribed by part 303 of this chapter.

[41 FR 55348, Dec. 20, 1976]



Sec.  302.40  [Reserved]



Sec.  302.50  Assignment of rights to support.

    The State plan shall provide as follows:
    (a) An assignment of support rights, as defined in Sec.  301.1 of 
this chapter, constitutes an obligation owed to the State by the 
individual responsible for providing such support. Such obligation shall 
be established by:
    (1) Order of a court of competent jurisdiction or of an 
administrative process; or
    (2) Except for obligations assigned under 42 CFR 433.146, other 
legal process as established by State laws, such as a legally 
enforceable and binding agreement.
    (b) The amount of the obligation described in paragraph (a) of this 
section shall be:
    (1) The amount specified in the order of a court of competent 
jurisdiction or administrative process which covers the assigned support 
rights.
    (2) If there is no court or administrative order, an amount 
determined in writing by the IV-D agency as part of the legal process 
referred to in paragraph (a)(2) of this section in accordance with the 
requirements of Sec.  302.56.
    (c) The obligation described in paragraph (a) of this section shall 
be deemed for collection purposes to be collectible under all applicable 
State and local processes.
    (d) Any amounts which represent support payments collected from an 
individual responsible for providing support under the State plan shall 
reduce, dollar for dollar, the amount of his obligation under this 
section.
    (e) No portion of any amounts collected which represent an assigned 
support obligation defined under Sec.  301.1 of this chapter may be used 
to satisfy a medical support obligation unless the

[[Page 235]]

court or administrative order designates a specific dollar amount for 
medical purposes.

[64 FR 6248, Feb. 9, 1999, as amended at 68 FR 25303, May 12, 2003]



Sec.  302.51  Distribution of support collections.

    The State plan shall provide as follows:
    (a)(1) For purposes of distribution in a IV-D case, amounts 
collected, except as provided under paragraph (a)(3) of this section, 
shall be treated first as payment on the required support obligation for 
the month in which the support was collected and if any amounts are 
collected which are in excess of such amount, these excess amounts shall 
be treated as amounts which represent payment on the required support 
obligation for previous months.
    (2) In title IV-A and title IV-E foster care cases in which 
conversion to a monthly amount is necessary because support is ordered 
to be paid other than monthly, the IV-D agency may round off the 
converted amount to whole dollar amount for the purpose of distribution 
under this section and Sec.  302.52 of this part.
    (3) Amounts collected through Federal income tax refund offset must 
be distributed as arrearages in accordance with Sec.  303.72(h) of this 
chapter, and section 457(a)(2)(B)(iv) of the Act.
    (4)(i) Effective October 1, 1998 (or October 1, 1999 if applicable) 
except with respect to those collections addressed under paragraph 
(a)(3) of this section and except as specified under paragraph 
(a)(4)(ii) of this section, with respect to amounts collected and 
distributed under title IV-D of the Act, the date of collection for 
distribution purposes in all IV-D cases is the date of receipt in the 
State disbursement unit established under section 454B of the Act.
    (ii) If current support is withheld by an employer in the month when 
due, and received by the State in a month other than the month when due, 
the date of withholding may be deemed to be the date of collection.
    (iii) When the date of collection pursuant to this subparagraph is 
deemed to be the date the wage or other income was withheld, and the 
employer fails to report the date of withholding, the IV-D agency must 
reconstruct that date by contacting the employer or comparing actual 
amounts collected with the pay schedule specified in the court or 
administrative order.
    (b) If an amount collected as support represents payment on the 
required support obligation for future months, the amount shall be 
applied to such future months. However, no such amounts shall be applied 
to future months unless amounts have been collected which fully satisfy 
the support obligation assigned under section 403(a)(8) of the Act for 
the current month and all past months.
    (c)(1) The amounts collected by the IV-D agency which represent 
specific dollar amounts designated in the support order for medical 
purposes that have been assigned to the State under 42 CFR 433.146 shall 
be forwarded to the Medicaid agency for distribution under 42 CFR 
433.154.
    (2) When a family ceases receiving assistance under the State's 
title XIX plan, the assignment of medical support rights under section 
1912 of the Act terminates, except for the amount of any unpaid medical 
support obligation that has accrued under such assignment. The IV-D 
agency shall attempt to collect any unpaid specific dollar amounts 
designated in the support order for medical purposes. Under this 
requirement, any medical support collection made by the IV-D agency 
under this paragraph shall be forwarded to the Medicaid agency for 
distribution under 42 CFR 433.154.

[64 FR 6248, Feb. 9, 1999, as amended at 68 FR 25303, May 12, 2003]



Sec.  302.52  Distribution of support collected in Title IV-E foster care maintenance cases.

    Effective October 1, 1984, the State plan shall provide as follows:
    (a) For purposes of distribution under this section, amounts 
collected in foster care maintenance cases shall be treated in 
accordance with the provisions of Sec.  302.51(a) of this part.
    (b) The amounts collected as support by the IV-D agency under the 
State plan on behalf of children for whom the State is making foster 
care maintenance payments under the title IV-E

[[Page 236]]

State plan and for whom an assignment under section 471(a)(17) of the 
Act is effective shall be distributed as follows:
    (1) Any amount that is collected in a month which represents payment 
on the required support obligation for that month shall be retained by 
the State to reimburse itself for foster care maintenance payments. Of 
that amount retained by the State as reimbursement for that month's 
foster care maintenance payment, the State IV-D agency shall determine 
the Federal government's share so that the State may reimburse the 
Federal government to the extent of its participation in financing of 
the foster care maintenance payment.
    (2) If the amount collected is in excess of the monthly amount of 
the foster care maintenance payment but not more than the monthly 
support obligation, the State must pay the excess to the State agency 
responsible for supervising the child's placement and care under section 
472(a)(2) of the Act. The State agency must use the money in the manner 
it determines will serve the best interests of the child including:
    (i) Setting aside amounts for the child's future needs; or
    (ii) Making all or part of the amount available to the person 
responsible for meeting the child's daily needs to be used for the 
child's benefit.
    (3) If the amount collected exceeds the amount required to be 
distributed under paragraphs (b) (1) and (2) of this section, but not 
the total unreimbursed foster care maintenance payments provided under 
title IV-E or unreimbursed assistance payments provided under title IV-
A, the State shall retain the excess to reimburse itself for these 
payments. If past assistance or foster care maintenance payments are 
greater than the total support obligation owed, the maximum amount the 
State may retain as reimbursement for such payments is the amount of 
such obligation. If amounts are collected which represent the required 
support obligation for periods prior to the first month in which the 
family received assistance under the State's title IV-A plan or foster 
care maintenance payments under the State's title IV-E plan, such 
amounts may be retained by the State to reimburse the difference between 
such support obligation and such payments. Of the amounts retained by 
the State, the State IV-D agency shall determine the Federal 
government's share of the amount so that the State may reimburse the 
Federal government to the extent of its participation in financing the 
assistance payments and foster care maintenance payments.
    (4) Any balance shall be paid to the State agency responsible for 
supervising the child's placement and care and shall be used to serve 
the best interests of the child as specified in paragraph (b)(2) of this 
section.
    (5) If an amount collected as support represents payment on the 
required support obligation for future months, the amount shall be 
applied to those future months. However, no amounts shall be applied to 
future months unless amounts have been collected which fully satisfy the 
support obligation assigned under sections 408(a)(3) and 471 (a)(17) of 
the Act for the current month and all past months.
    (c) When a State ceases making foster care maintenance payments 
under the State's title IV-E State plan, the assignment of support 
rights under section 471(a)(17) of the Act terminates except for the 
amount of any unpaid support that has accrued under the assignment. The 
IV-D agency shall attempt to collect such unpaid support. Under this 
requirement, any collection made by the State under this paragraph must 
be distributed in accordance with paragraph (b)(3) of this section.

(Approved by the Office of Management and Budget under control number 
0960-0385)

[50 FR 19648, May 9, 1985, as amended at 50 FR 31719, Aug. 6, 1985; 51 
FR 37731, Oct. 24, 1986; 64 FR 6249, Feb. 9, 1999]



Sec.  302.54  Notice of collection of assigned support.

    (a) Effective January 1, 1993, the State plan shall provide that the 
State has in effect procedures for issuing notices of collections as 
follows:
    (1) The IV-D agency must provide a monthly notice of the amount of 
support payments collected for each month to individuals who have 
assigned rights to support under section 408(a)(3) of the Act, unless no 
collection

[[Page 237]]

is made in the month, the assignment is no longer in effect and there 
are no longer any assigned arrearages, or the conditions in paragraph 
(b) of this section are met.
    (2) The monthly notice must list separately payments collected from 
each noncustodial parent when more than one noncustodial parent owes 
support to the family and must indicate the amount of current support 
collected, the amount of arrearages collected and the amount of support 
collected which was paid to the family.
    (b)(1) The Office may grant a waiver to permit a State to provide 
quarterly, rather than monthly, notices, if the State:
    (i) Until September 30, 1997, does not have an automated system that 
performs child support enforcement activities consistent with Sec.  
302.85 or has an automated system that is unable to generate monthly 
notices; or
    (ii) Uses a toll-free automated voice response system which provides 
the information required under paragraph (a) of this section.
    (2) A quarterly notice must be provided in accordance with 
conditions set forth in paragraph (a)(1) of this section and such notice 
must contain the information set forth in paragraph (a)(2) of this 
section.

[57 FR 30681, July 10, 1992, as amended at 61 FR 67241, Dec. 20, 1996; 
64 FR 6249, Feb. 9, 1999; 68 FR 25303, May 12, 2003]



Sec.  302.55  Incentive payments to States and political subdivisions.

    Effective October 1, 1985, in order for the State to be eligible to 
receive any incentive payments under Sec.  304.12 and part 305 of this 
chapter, the State plan shall provide that, if one or more political 
subdivisions of the State participate in the costs of carrying out the 
activities under the State plan during any period, each such subdivision 
shall be entitled to receive an appropriate share of any incentive 
payments made to the State for such period, as determined by the State 
in accordance with Sec.  303.52 of this chapter, taking into account the 
efficiency and effectiveness of the political subdivision in carrying 
out the activities under the State plan.

(Approved by the Office of Management and Budget under control number 
0960-0385)

[50 FR 19649, May 9, 1985; 50 FR 23958, June 7, 1985, as amended at 51 
FR 37731, Oct. 24, 1986; 54 FR 32309, Aug. 4, 1989; 65 FR 82208, Dec. 
27, 2000]



Sec.  302.56  Guidelines for setting child support awards.

    (a) Effective October 13, 1989, as a condition of approval of its 
State plan, the State shall establish one set of guidelines by law or by 
judicial or administrative action for setting and modifying child 
support award amounts within the State.
    (b) The State shall have procedures for making the guidelines 
available to all persons in the State whose duty it is to set child 
support award amounts.
    (c) The guidelines established under paragraph (a) of this section 
must at a minimum:
    (1) Take into consideration all earnings and income of the 
noncustodial parent;
    (2) Be based on specific descriptive and numeric criteria and result 
in a computation of the support obligation; and
    (3) Address how the parents will provide for the child(ren)'s health 
care needs through health insurance coverage and/or through cash medical 
support in accordance with Sec.  303.31 of this chapter.
    (d) The State must include a copy of the guidelines in its State 
plan.
    (e) The State must review, and revise, if appropriate, the 
guidelines established under paragraph (a) of this section at least once 
every four years to ensure that their application results in the 
determination of appropriate child support award amounts.
    (f) Effective October 13, 1989, the State must provide that there 
shall be a rebuttable presumption, in any judicial or administrative 
proceeding for the award of child support, that the amount of the award 
which would result from the application of the guidelines established 
under paragraph (a) of this section is the correct amount of child 
support to be awarded.

[[Page 238]]

    (g) A written finding or specific finding on the record of a 
judicial or administrative proceeding for the award of child support 
that the application of the guidelines established under paragraph (a) 
of this section would be unjust or inappropriate in a particular case 
shall be sufficient to rebut the presumption in that case, as determined 
under criteria established by the State. Such criteria must take into 
consideration the best interests of the child. Findings that rebut the 
guidelines shall state the amount of support that would have been 
required under the guidelines and include a justification of why the 
order varies from the guidelines.
    (h) As part of the review of a State's guidelines required under 
paragraph (e) of this section, a State must consider economic data on 
the cost of raising children and analyze case data, gathered through 
sampling or other methods, on the application of, and deviations from, 
the guidelines. The analysis of the data must be used in the State's 
review of the guidelines to ensure that deviations from the guidelines 
are limited.

(Approved by the Office of Management and Budget under control number 
0960-0385)

[50 FR 19649, May 9, 1985; 50 FR 23958, June 7, 1985, as amended at 51 
FR 37731, Oct. 24, 1986; 56 FR 22354, May 15, 1991; 73 FR 42441, July 
21, 2008]



Sec.  302.60  Collection of past-due support from Federal tax refunds.

    The State plan shall provide that:
    (a) The IV-D agency has in effect procedures necessary to obtain 
payment of past-due support from Federal tax refunds as set forth in 
section 464 of the Act, Sec.  303.72 of this chapter, and regulations of 
the Internal Revenue Service at 26 CFR 304.6402-1; and
    (b) The IV-D agency shall take the steps necessary to implement and 
use these procedures.

(Approved by the Office of Management and Budget under control number 
0960-0253)

[47 FR 7428, Feb. 19, 1982]



Sec.  302.65  Withholding of unemployment compensation.

    The State plan shall provide that the requirements of this section 
are met.
    (a) Definitions. When used in this section:
    Legal process means a writ, order, summons or other similar process 
in the nature of a garnishment, which is issued by a court of competent 
jurisdiction or by an authorized official pursuant to an order of such 
court or pursuant to State or local law.
    State employment security agency or SESA means the State agency 
charged with the administration of the State unemployment compensation 
laws in accordance with title III of the Act.
    Unemployment compensation means any compensation payable under State 
unemployment compensation law (including amounts payable in accordance 
with agreements under any Federal unemployment compensation law). It 
includes extended benefits, unemployment compensation for Federal 
employees, unemployment compensation for ex-servicemen, trade 
readjustment allowances, disaster unemployment assistance, and payments 
under the Redwood National Park Expansion Act.
    (b) Agreement. The State IV-D agency shall enter into a written 
agreement with the SESA in its State for the purpose of withholding 
unemployment compensation from individuals with unmet support 
obligations being enforced by the IV-D agency. The IV-D agency shall 
agree only to a withholding program that it expects to be cost-effective 
and to reimbursement for the SESA's actual, incremental costs of 
providing services to the IV-D agency.
    (c) Functions to be performed by the IV-D agency. The IV-D agency 
shall:
    (1) Determine periodically from information provided by the SESA 
under section 508 of the Unemployment Compensation Amendments of 1976 
whether individuals applying for or receiving unemployment compensation 
owe support obligations that are being enforced by the IV-D agency.
    (2) Enforce unmet support obligations by arranging for the 
withholding of unemployment compensation based on a voluntary agreement 
with the individual who owes the support, or in appropriate cases which 
meet the case selection criteria established under paragraph (c)(3), 
through legal process

[[Page 239]]

pursuant to State or local law. If a voluntary agreement is obtained, 
the IV-D agency must give the SESA a copy of the voluntary agreement.
    (3) Establish and use written criteria for selecting cases to pursue 
via the withholding of unemployment compensation for support purposes. 
These criteria must be designed to insure maximum case selection and 
minimal discretion in the selection process.
    (4) Provide a receipt at least annually to an individual who 
requests a receipt for the support paid via the withholding of 
unemployment compensation, if receipts are not provided through other 
means.
    (5) Maintain direct contact with the SESA in its State:
    (i) By processing cases through the SESA in its own State or through 
IV-D agencies in other States; and
    (ii) By receiving all amounts withheld by the SESA in its own State 
and forwarding any amounts withheld on behalf of IV-D agencies in other 
States to those agencies.
    (6) Reimburse the administrative costs incurred by the SESA that are 
actual, incremental costs attributable to the process of withholding 
unemployment compensation for support purposes insofar as these costs 
have been agreed upon by the SESA and the IV-D agency.
    (7) Review and document, at least annually, program operations, 
including case selection criteria established under paragraph (c)(3), 
and costs of the withholding process versus the amounts collected and, 
as necessary, modify procedures and renegotiate the services provided by 
the SESA to improve program and cost effectiveness.

[49 FR 8927, Mar. 9, 1984, as amended at 68 FR 25303, May 12, 2003]



Sec.  302.70  Required State laws.

    (a) Required Laws. The State plan shall provide that, in accordance 
with sections 454(20) and 466 of the Act and part 303 of this chapter, 
the State has in effect laws providing for, and has implemented 
procedures to improve, program effectiveness:
    (1) Procedures for carrying out a program of withholding under which 
new or existing support orders are subject to the State law governing 
withholding so that a portion of the noncustodial parent's wages may be 
withheld, in accordance with the requirements set forth in Sec.  303.100 
of this chapter;
    (2) Expedited processes to establish paternity and to establish and 
enforce child support orders having the same force and effect as those 
established through full judicial process, in accordance with the 
requirements set forth in Sec.  303.101 of this chapter;
    (3) Procedures for obtaining overdue support from State income tax 
refunds on behalf of individuals receiving IV-D services, in accordance 
with the requirements set forth in Sec.  303.102 of this chapter;
    (4) Procedures for the imposition of liens against the real and 
personal property of noncustodial parents who owe overdue support;
    (5)(i) Procedures for the establishment of paternity for any child 
at least to the child's 18th birthday, including any child for whom 
paternity has not yet been established and any child for whom a 
paternity action was previously dismissed under a statute of limitations 
of less than 18 years; and
    (ii) Effective November 1, 1989, procedures under which the State is 
required (except in cases where the individual involved has been found 
under section 454(29) of the Act to have good cause for refusing to 
cooperate or if, in accordance with Sec.  303.5(b) of this chapter the 
IV-D agency has determined that it would not be in the best interest of 
the child to establish paternity in a case involving incest or forcible 
rape, or in any case in which legal proceedings for adoption are 
pending) to require the child and all other parties in a contested 
paternity case to submit to genetic tests upon the request of any such 
party, in accordance with Sec.  303.5 (d) and (e) of this chapter.
    (iii) Procedures for a simple civil process for voluntarily 
acknowledging paternity under which the State must provide that, before 
a mother and putative father can sign a voluntary acknowledgment of 
paternity, the mother and the putative father must be given notice, 
orally or through video or audio equipment, and in writing, of the 
alternatives to, the legal consequences of, and the rights (including 
any rights, if a parent is a minor, due to minority

[[Page 240]]

status) and responsibilities of acknowledging paternity, and ensure that 
due process safeguards are afforded. Such procedures must include:
    (A) A hospital-based program in accordance with Sec.  303.5(g) for 
the voluntary acknowledgment of paternity during the period immediately 
before or after the birth of a child to an unmarried mother, and a 
requirement that all public and private birthing hospitals participate 
in the hospital-based program defined in Sec.  303.5(g)(2); and
    (B) A process for voluntary acknowledgment of paternity in 
hospitals, State birth record agencies, and in other entities designated 
by the State and participating in the State's voluntary paternity 
establishment program; and
    (C) A requirement that the procedures governing hospital-based 
programs and State birth record agencies must also apply to other 
entities designated by the State and participating in the State's 
voluntary paternity establishment program, including the use of the same 
notice provisions, the same materials, the same evaluation methods, and 
the same training for the personnel of these other entities providing 
voluntary paternity establishment services.
    (iv) Procedures under which the voluntary acknowledgment of 
paternity creates a rebuttable or, at the option of the State, 
conclusive presumption of paternity, and under which such voluntary 
acknowledgment is admissible as evidence of paternity;
    (v) Procedures which provide that any objection to genetic testing 
results must be made in writing within a specified number of days before 
any hearing at which such results may be introduced into evidence; and 
if no objection is made, a written report of the test results is 
admissible as evidence of paternity without the need for foundation 
testimony or other proof of authenticity or accuracy;
    (vi) Procedures which create a rebuttable or, at the option of the 
State, conclusive presumption of paternity upon genetic testing results 
indicating a threshold probability of the alleged father being the 
father of the child;
    (vii) Procedures under which a voluntary acknowledgment must be 
recognized as a basis for seeking a support order without requiring any 
further proceedings to establish paternity; and
    (viii) Procedures requiring a default order to be entered in a 
paternity case upon a showing that process was served on the defendant 
in accordance with State law, that the defendant failed to respond to 
service in accordance with State procedures, and any additional showing 
required by State law.
    (6) Procedures which require that a noncustodial parent give 
security, post a bond, or give some other guarantee to secure payment of 
support, in accordance with the procedures set forth in Sec.  303.104 of 
this chapter;
    (7) Procedures for making information regarding the amount of 
overdue support owed by a noncustodial parent available to consumer 
reporting agencies;
    (8) Procedures under which all child support orders which are issued 
or modified in the State will include provision for withholding from 
income, in order to assure that withholding as a means of collecting 
child support is available if arrearages occur without the necessity of 
filing an application for services under Sec.  302.33 of this part, in 
accordance with Sec.  303.100(i) of this chapter;
    (9) Procedures which require that any payment or installment of 
support under any child support order, whether ordered through the State 
judicial system or through the expedited processes required by paragraph 
(a)(2) of this section, is (on and after the date it is due):
    (i) A judgment by operation of law, with the full force, effect, and 
attributes of a judgment of the State, including the ability to be 
enforced;
    (ii) Entitled as a judgment to full faith and credit in such State 
and in any other State; and
    (iii) Not subject to retroactive modification by such State or by 
any other State, except as provided in Sec.  303.106(b).
    (10) Procedures for the review and adjustment of child support 
orders:
    (i) Effective on October 13, 1990 until October 12, 1993, in 
accordance with the requirements of Sec.  303.8 (a) and (b) of this 
chapter; and

[[Page 241]]

    (ii) Effective October 13, 1993, or an earlier date the State may 
select, in accordance with the requirements of Sec.  303.8 (a) and (c) 
through (f) of this chapter.
    (11) Procedures under which the State must give full faith and 
credit to a determination of paternity made by any other State, whether 
established through voluntary acknowledgment or through administrative 
or judicial processes.
    (b) A State need not apply a procedure required under paragraphs (a) 
(3), (4), (6) and (7) of this section in an individual case if the State 
determines that it is not appropriate using guidelines generally 
available to the public which take into account the payment record of 
the noncustodial parent, the availability of other remedies, and other 
relevant considerations. The guidelines may not determine a majority of 
cases in which no other remedy is being used to be inappropriate.
    (c) State laws enacted under this section must give States 
sufficient authority to comply with the requirements of Sec. Sec.  
303.100 through 303.102 and Sec.  303.104 of this chapter.
    (d)(1) Exemption. A State may apply for an exemption from any of the 
requirements of section 466 of the Act by the submittal of a request for 
exemption to the appropriate Regional Office.
    (2) Basis for granting exemption. The Secretary will grant a State, 
or political subdivision in the case of section 466(a)(2) of the Act, an 
exemption from any of the requirements of paragraph (a) of this section 
for a period not to exceed three years if the State demonstrates that 
compliance would not increase the effectiveness and efficiency of its 
Child Support Enforcement program. Demonstration of the program's 
efficiency and effectiveness must be shown by actual, or, if actual is 
not available, estimated data pertaining to caseloads, processing times, 
administrative costs, and average support collections or such other 
actual or estimated data as the Office may request. The State must 
demonstrate to the satisfaction of the Secretary that the program's 
effectiveness would not improve by using these procedures. Disapproval 
of a request for exemption is not subject to appeal.
    (3) Review of exemption. The exemption is subject to continuing 
review by the Secretary and may be terminated upon a change in 
circumstances or reduced effectiveness in the State or political 
subdivision, if the State cannot demonstrate that the changed 
circumstances continue to warrant an exemption in accordance with this 
section.
    (4) Request for extension. The State must request an extension of 
the exemption by submitting current data in accordance with paragraph 
(d)(2) of this section 90 days prior to the end of the exemption period 
granted under paragraph (d)(2) of this section.
    (5) When an exemption is revoked or an extension is denied. If the 
Secretary revokes an exemption or does not grant an extension of an 
exemption, the State must enact the appropriate laws and procedures to 
implement the mandatory practice by the beginning of the fourth month 
after the end of the first regular, special, budget or other session of 
the State's legislature which ends after the date the exemption is 
revoked or the extension is denied. If no State law is necessary, the 
State must establish and be using the procedure by the beginning of the 
fourth month after the date the exemption is revoked.

(Approved by the Office of Management and Budget under control number 
0960-0385)

[50 FR 19649, May 9, 1985, as amended at 51 FR 37731, Oct. 24, 1986; 54 
FR 15764, Apr. 19, 1989; 56 FR 8004, Feb. 26, 1991; 56 FR 22354, May 15, 
1991; 57 FR 30681, July 10, 1992; 57 FR 61581, Dec. 28, 1992; 59 FR 
66249, Dec. 23, 1994; 64 FR 6249, Feb. 9, 1999; 64 FR 11809, Mar. 10, 
1999; 68 FR 25303, May 12, 2003; 68 FR 53052, Sept. 9, 2003]



Sec.  302.75  Procedures for the imposition of late payment fees on noncustodial parents who owe overdue support.

    (a) Effective September 1, 1984, the State plan may provide for 
imposition of late payment fees on noncustodial parents who owe overdue 
support.
    (b) If a State opts to impose late payment fees--
    (1) The late payment fee must be uniformly applied in an amount not 
less than 3 percent nor more than 6 percent of overdue support.

[[Page 242]]

    (2) The fee shall accrue as arrearages accumulate and shall not be 
reduced upon partial payment of arrears. The fee may be collected only 
after the full amount of overdue support is paid and any requirements 
under State law for notice to the noncustodial parent have been met.
    (3) The collection of the fee must not directly or indirectly reduce 
the amount of current or overdue support paid to the individual to whom 
it is owed.
    (4) The late payment fee must be imposed in cases where there has 
been an assignment under section 408(a)(3) of the Act or section 
471(a)(17) of the Act or the IV-D agency is providing services under 
Sec.  302.33 of this chapter.
    (5) The State may allow fees collected to be retained by the 
jurisdiction making the collection.
    (6) The State must reduce its expenditures claimed under the Child 
Support Enforcement program by any fees collected under this section in 
accordance with Sec.  304.50 of this chapter.

(Approved by the Office of Management and Budget under control number 
0960-0385)

[50 FR 19650, May 9, 1985, as amended at 51 FR 37731, Oct. 24, 1986; 56 
FR 8004, Feb. 26, 1991; 64 FR 6249, Feb. 9, 1999; 68 FR 25303, May 12, 
2003]



Sec.  302.80  Medical support enforcement.

    (a) The State plan may provide that the IV-D agency will secure and 
enforce medical support obligations under a cooperative agreement 
between the IV-D agency and the State Medicaid agency.
    (b) The State plan must provide that the IV-D agency shall secure 
medical support information and establish and enforce medical support 
obligations in accordance with the requirements contained in Sec. Sec.  
303.30 and 303.31 of this chapter.

(Approved by the Office of Management and Budget under control number 
0960-0420)

[50 FR 41894, Oct. 16, 1985, as amended at 51 FR 37731, Oct. 24, 1986; 
54 FR 32309, Aug. 4, 1989; 61 FR 67241, Dec. 20, 1996; 64 FR 6249, Feb. 
9, 1999]



Sec.  302.85  Mandatory computerized support enforcement system.

    (a) General. The State plan shall provide that the State will have 
in effect a computerized support enforcement system:
    (1) By October 1, 1997, which meets all the requirements of Title 
IV-D of the Act which were enacted on or before the date of enactment of 
the Family Support Act of 1988, Pub. L. 100-485, in accordance with 
Sec. Sec.  307.5 and 307.10 of this chapter and the OCSE guideline 
entitled ``Automated Systems for Child Support Enforcement: A Guide for 
States.'' This guide is available from the Child Support Information 
Systems Division, Office of State Systems, ACF, 370 L'Enfant Promenade, 
SW., Washington, DC 20447; and
    (2) By October 1, 2000, which meets all the requirements of title 
IV-D of the Act enacted on or before the date of enactment of the 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996, 
Pub. L. 104-193, in accordance with Sec. Sec.  307.5 and 307.11 of this 
chapter and the OCSE guideline referenced in paragraph (a)(1) of this 
section.
    (b) Waiver--(1) Request for waiver. The State may apply for a waiver 
of any condition for initial approval of an APD in Sec.  307.15(b) of 
this chapter, or any system functional requirement in Sec.  307.10 of 
this chapter, by the submission of a request for waiver under Sec.  
307.5 of this chapter.
    (2) Basis for granting waiver. The Secretary will grant a State a 
waiver if a State demonstrates that it has an alternative approach to 
APD requirements or an alternative system configuration, as defined in 
Sec.  307.1 of this chapter, that enables the State, in accordance with 
part 305 of this chapter, to be in substantial compliance with all other 
requirements of this chapter; and either:
    (i) The waiver request meets the criteria set forth in section 
1115(c)(1), (2) and (3) of the Act; or
    (ii) The State provides written assurances that steps will be taken 
to otherwise improve the State's Child Support Enforcement program.

[57 FR 47002, Oct. 14, 1992, as amended at 61 FR 67241, Dec. 20, 1996; 
63 FR 44814, Aug. 21, 1998]

[[Page 243]]



PART 303_STANDARDS FOR PROGRAM OPERATIONS--Table of Contents




Sec.
303.0 Scope and applicability of this part.
303.1 Definitions.
303.2 Establishment of cases and maintenance of case records.
303.3 Location of noncustodial parents.
303.4 Establishment of support obligation.
303.5 Establishment of paternity.
303.6 Enforcement of support obligations.
303.7 Provision of services in interstate IV-D cases.
303.8 Review and adjustment of child support orders.
303.10 [Reserved]
303.11 Case closure criteria.
303.15 Agreements to use the Federal Parent Locator Service (PLS) in 
          parental kidnapping and child custody or visitation cases.
303.20 Minimum organizational and staffing requirements.
303.21 Safeguarding and disclosure of confidential information.
303.30 Securing medical support information.
303.31 Securing and enforcing medical support obligations.
303.32 National Medical Support Notice.
303.35 Administrative complaint procedure.
303.52 Pass-through of incentives to political subdivisions.
303.69 Requests by agents or attorneys of the United States for 
          information from the Federal Parent Locator Service (FPLS).
303.70 Requests by the State Parent Locator Service (SPLS) for 
          information from the Federal Parent Locator Service (FPLS).
303.71 Requests for full collection services by the Secretary of the 
          Treasury.
303.72 Requests for collection of past-due support by Federal tax refund 
          offset.
303.73 Applications to use the courts of the United States to enforce 
          court orders.
303.100 Procedures for income withholding.
303.101 Expedited processes.
303.102 Collection of overdue support by State income tax refund offset.
303.104 Procedures for posting security, bond or guarantee to secure 
          payment of overdue support.
303.106 Procedures to prohibit retroactive modification of child support 
          arrearages.
303.107 Requirements for cooperative arrangements.
303.108 Quarterly wage and unemployment compensation claims reporting to 
          the National Directory of New Hires.
303.109 Procedures for State monitoring, evaluation and reporting on 
          programs funded by Grants to States for Access and Visitation 
          Programs.

    Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667, 1302, 
1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).

    Effective Date Note: At 73 FR 56443, Sept. 26, 2008, the authority 
citation for part 303 was revised, effective Mar. 23, 2009. For the 
convenience of the user, the revised text is set forth as follows:
    Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667, 1302, 
1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).

    Editorial Note: Nomenclature changes to part 303 appear at 64 FR 
6249, Feb. 9, 1999.

    Source: 40 FR 27164, June 26, 1975, unless otherwise noted.



Sec.  303.0  Scope and applicability of this part.

    This part prescribes:
    (a) The minimum organizational and staffing requirements the State 
IV-D agency must meet in carrying out the IV-D program, and
    (b) The standards for program operation which the IV-D agency must 
meet.

[41 FR 55348, Dec. 20, 1976, as amended at 54 FR 32309, Aug 4, 1989]



Sec.  303.1  Definitions.

    The definitions found in Sec.  301.1 of this chapter also are 
applicable to this part.



Sec.  303.2  Establishment of cases and maintenance of case records.

    (a) The IV-D agency must:
    (1) Make applications for child support services readily accessible 
to the public;
    (2) When an individual requests an application or IV-D services, 
provide an application to the individual on the day the individual makes 
a request in person or send an application to the individual within no 
more than 5 working days of a written or telephone request. Information 
describing available services, the individual's rights and 
responsibilities, and the State's fees, cost recovery and distribution 
policies must accompany all applications for services and must be 
provided to title IV-A, Medicaid and title IV-E foster care applicants 
or recipients within no more than 5 working days of referral to the IV-D 
agency; and
    (3) Accept an application as filed on the day it and the application 
fee are received. An application is a written

[[Page 244]]

document provided by the State which indicates that the individual is 
applying for child support enforcement services under the State's title 
IV-D program and is signed by the individual applying for IV-D services.
    (b) For all cases referred to the IV-D agency or applying for 
services under Sec.  302.33 of this chapter, the IV-D agency must, 
within no more than 20 calendar days of receipt of referral of a case or 
filing of an application for services under Sec.  302.33, open a case by 
establishing a case record and, based on an assessment of the case to 
determine necessary action:
    (1) Solicit necessary and relevant information from the custodial 
parent and other relevant sources and initiate verification of 
information, if appropriate; and
    (2) If there is inadequate location information to proceed with the 
case, request additional information or refer the case for further 
location attempts, as specified in Sec.  303.3.
    (c) The case record must be supplemented with all information and 
documents pertaining to the case, as well as all relevant facts, dates, 
actions taken, contacts made and results in a case.

[54 FR 32309, Aug. 4, 1989]



Sec.  303.3  Location of noncustodial parents.

    (a) Definition. Location means information concerning the physical 
whereabouts of the noncustodial parent, or the noncustodial parent's 
employer(s), other sources of income or assets, as appropriate, which is 
sufficient and necessary to take the next appropriate action in a case.
    (b) For all cases referred to the IV-D agency or applying for 
services under Sec.  302.33 of this chapter, the IV-D agency must 
attempt to locate all noncustodial parents or sources of income and/or 
assets when location is necessary to take necessary action. Under this 
standard, the IV-D agency must:
    (1) Use appropriate location sources such as the Federal PLS; 
interstate location networks; local officials and employees 
administering public assistance, general assistance, medical assistance, 
food stamps and social services (whether such individuals are employed 
by the State or a political subdivision); relatives and friends of the 
noncustodial parent; current or past employers; the local telephone 
company; the U.S. Postal Service; financial references; unions; 
fraternal organizations; and police, parole, and probation records if 
appropriate; and State agencies and departments, as authorized by State 
law, including those departments which maintain records of public 
assistance, wages and employment, unemployment insurance, income 
taxation, driver's licenses, vehicle registration, and criminal records 
and other sources;
    (2) Establish working relationships with all appropriate agencies in 
order to utilize locate resources effectively;
    (3) Within no more than 75 calendar days of determining that 
location is necessary, access all appropriate location sources, 
including transmitting appropriate cases to the Federal PLS, and ensure 
that location information is sufficient to take the next appropriate 
action in a case;
    (4) Refer appropriate cases to the IV-D agency of any other State, 
in accordance with the requirements of Sec.  303.7 of this part. The IV-
D agency of such other State shall follow the procedures in paragraphs 
(b)(1) through (b)(3) of this section for such cases, as necessary, 
except that the responding State is not required to access the Federal 
PLS under paragraph (b)(3) of this section;
    (5) Repeat location attempts in cases in which previous attempts to 
locate noncustodial parents or sources of income and/or assets have 
failed, but adequate identifying and other information exists to meet 
requirements for submittal for location, either quarterly or immediately 
upon receipt of new information which may aid in location, whichever 
occurs sooner. Quarterly attempts may be limited to automated sources 
but must include accessing State employment security files. Repeated 
attempts because of new information which may aid in location must meet 
the requirements of paragraph (b)(3) of this section; and
    (c) The State must establish guidelines defining diligent efforts to 
serve process. These guidelines must include periodically repeating 
service of process attempts in cases in which previous

[[Page 245]]

attempts to serve process have failed, but adequate identifying and 
other information exists to attempt service of process.

[54 FR 32310, Aug. 4, 1989, as amended at 55 FR 25840, June 25, 1990; 57 
FR 28110, June 24, 1992; 57 FR 31235, July 14, 1992; 64 FR 6249, Feb. 9, 
1999]

    Effective Date Note: At 73 FR 56443, Sept. 26, 2008, Sec.  303.3 was 
revised, effective Mar. 23, 2009. For the convenience of the user, the 
revised text is set forth as follows:



Sec.  303.3  Location of noncustodial parents in IV-D cases.

    (a) Definition. For purposes of this section, location means 
obtaining information concerning the physical whereabouts of the 
noncustodial parent, or the noncustodial parent's employer(s), other 
sources of income or assets, as appropriate, which is sufficient and 
necessary to take the next appropriate action in a IV-D case.
    (b) For all cases referred to the IV-D program for IV-D services 
because of an assignment of support rights or cases opened upon 
application for IV-D services under Sec.  302.33 of this chapter, the 
IV-D program must attempt to locate all noncustodial parents or their 
sources of income and/or assets when location is needed to take a 
necessary action. Under this standard, the IV-D program must:
    (1) Use appropriate location sources such as the Federal PLS; 
interstate location networks; local officials and employees 
administering public assistance, general assistance, medical assistance, 
food stamps, and social services (whether such individuals are employed 
by the State or a political subdivision); relatives and friends of the 
noncustodial parent, current or past employers; the local telephone 
company; the U.S. Postal Service; financial references; unions; 
fraternal organizations; and police, parole, and probation records, if 
appropriate; and State agencies and departments, as authorized by State 
law, including those departments which maintain records of public 
assistance, wages and employment, unemployment insurance, income 
taxation, driver's licenses, vehicle registration, and criminal records 
and other sources;
    (2) Establish working relationships with all appropriate agencies in 
order to use locate resources effectively;
    (3) Within no more than 75 calendar days of determining that 
location is necessary, access all appropriate location sources and 
ensure that location information is sufficient to take the next 
appropriate action in a case;
    (4) Refer appropriate IV-D cases to the IV-D program of any other 
State, in accordance with the requirements of Sec.  303.7 of this part. 
The IV-D program of such other State shall follow the procedures in 
paragraphs (b)(1) through (b)(3) of this section for such cases, as 
necessary, except that the responding State is not required to access 
the Federal PLS;
    (5) Repeat location attempts in cases in which previous attempts to 
locate noncustodial parents or sources of income and/or assets have 
failed, but adequate identifying and other information exists to meet 
requirements for submittal for location, either quarterly or immediately 
upon receipt of new information which may aid in location, whichever 
occurs sooner. Quarterly attempts may be limited to automated sources, 
but must include accessing State employment security files. Repeated 
attempts because of new information which may aid in location must meet 
the requirements of paragraph (b)(3) of this section; and
    (6) Have in effect safeguards, applicable to all confidential 
information handled by the IV-D program, that are designed to protect 
the privacy rights of the parties and that comply with the requirements 
of sections 454(26) and 454A(d) and (f) of the Act and Sec. Sec.  303.21 
and 307.13.
    (c) The State must establish guidelines defining diligent efforts to 
serve process. These guidelines must include periodically repeating 
service of process attempts in cases in which previous attempts to serve 
process have failed, but adequate identifying and other information 
exists to attempt service of process.



Sec.  303.4  Establishment of support obligations.

    For all cases referred to the IV-D agency or applying under Sec.  
302.33 of this chapter, the IV-D Agency must:
    (a) When necessary, establish paternity pursuant to the standards of 
Sec.  303.5;
    (b) Utilize appropriate State statutes and legal processes in 
establishing the support obligation pursuant to Sec.  302.50 of this 
chapter.
    (c) Periodically review and adjust child support orders, as 
appropriate, in accordance with Sec.  303.8.
    (d) Within 90 calendar days of locating the alleged father or 
noncustodial parent, regardless of whether paternity has been 
established, establish an order for support or complete service of 
process necessary to commence proceedings to establish a support order 
and, if necessary, paternity (or document unsuccessful attempts to serve 
process, in accordance with the State's guidelines defining diligent 
efforts under Sec.  303.3(c)).

[[Page 246]]

    (e) If the court or administrative authority dismisses a petition 
for a support order without prejudice, the IV-D agency must, at the time 
of dismissal, examine the reasons for dismissal and determine when it 
would be appropriate to seek an order in the future, and seek a support 
order at that time.
    (f) Seek a support order based on a voluntary acknowledgment in 
accordance with Sec.  302.70(a)(5)(vii).

[40 FR 27164, June 26, 1975, as amended at 50 FR 19650, May 9, 1985; 54 
FR 32310, Aug. 4, 1989; 57 FR 30681, July 10, 1992; 59 FR 66250, Dec. 
23, 1994]



Sec.  303.5  Establishment of paternity.

    (a) For all cases referred to the IV-D agency or applying for 
services under Sec.  302.33 of this chapter in which paternity has not 
been established, the IV-D agency must, as appropriate:
    (1) Provide an alleged father the opportunity to voluntarily 
acknowledge paternity in accordance with Sec.  302.70(a)(5)(iii); and
    (2) Attempt to establish paternity by legal process established 
under State law.
    (b) The IV-D agency need not attempt to establish paternity in any 
case involving incest or forcible rape, or in any case in which legal 
proceedings for adoption are pending, if, in the opinion of the IV-D 
agency, it would not be in the best interests of the child to establish 
paternity.
    (c) The IV-D agency must identify and use through competitive 
procurement laboratories which perform, at reasonable cost, legally and 
medically acceptable genetic tests which tend to identify the father or 
exclude the alleged father. The IV-D agency must make available a list 
of such laboratories to appropriate courts and law enforcement 
officials, and to the public upon request.
    (d)(1) Upon request of any party in a contested paternity case in 
accordance with section 466(a)(5)(B) of the Act, and subject to the 
provisions of paragraph (b) of this section, the IV-D agency shall 
require all parties to submit to genetic tests unless, in the case of an 
individual receiving aid under the State's title IV-A, IV-E or XIX plan, 
or those recipients of the food stamp program, as defined under section 
3(h) of the Food Stamp Act of 1977 who are required to cooperate with 
the child support program, there has been a determination of good cause 
for refusal to cooperate under section 454(29) of the Act.
    (2) A contested paternity case is any action in which the issue of 
paternity may be raised under State law and one party denies paternity.
    (e)(1) Except as provided in paragraph (e)(3) of this section, the 
IV-D agency may charge any individual who is not a recipient of aid 
under the State's title IV-A or XIX plan a reasonable fee for performing 
genetic tests.
    (2) Any fee charged must be reasonable so as not to discourage those 
in need of paternity establishment services from seeking them and may 
not exceed the actual costs of the genetic tests.
    (3) If paternity is established and genetic tests were ordered by 
the IV-D agency, the IV-D agency must pay the costs of such tests, 
subject to recoupment (if the agency elects) from the alleged father who 
denied paternity. If a party contests the results of an original test, 
the IV-D agency shall obtain additional tests but shall require the 
contestant to pay for the costs of any such additional testing in 
advance.
    (4) The IV-D agency must use any amount collected under paragraphs 
(e) (1) and (3) of this section that exceeds the costs of performing 
genetic tests to reimburse any fee paid under paragraph (e)(1) of this 
chapter.
    (f) The IV-D agency must seek entry of a default order by the court 
or administrative authority in a paternity case by showing that process 
has been served on the defendant in accordance with State law, that the 
defendant has failed to respond to service in accordance with State 
procedures, and any additional showing required by State law, in 
accordance with Sec.  302.70(a)(5)(viii).
    (g) Voluntary paternity establishment programs. (1) The State must 
establish, in cooperation with hospitals, State

[[Page 247]]

birth record agencies, and other entities designated by the State and 
participating in the State's voluntary paternity establishment program, 
a program for voluntary paternity establishment services.
    (i) The hospital-based portion of the voluntary paternity 
establishment services program must be operational in all private and 
public birthing hospitals statewide and must provide voluntary paternity 
establishment services focusing on the period immediately before and 
after the birth of a child born out-of-wedlock.
    (ii) The voluntary paternity establishment services program must 
also be available at the State birth record agencies, and at other 
entities designated by the State and participating in the State's 
voluntary paternity establishment program. These entities may include 
the following types of entities:
    (A) Public health clinics (including Supplementary Feeding Program 
for Women, Infants, and Children (WIC) and Maternal and Child Health 
(MCH) clinics), and private health care providers (including 
obstetricians, gynecologists, pediatricians, and midwives);
    (B) Agencies providing assistance or services under Title IV-A of 
the Act, agencies providing food stamp eligibility service, and agencies 
providing child support enforcement (IV-D) services;
    (C) Head Start and child care agencies (including child care 
information and referral providers), and individual child care 
providers;
    (D) Community Action Agencies and Community Action Programs;
    (E) Secondary education schools (particularly those that have 
parenthood education curricula);
    (F) Legal Aid agencies, and private attorneys; and
    (G) Any similar public or private health, welfare or social services 
organization.
    (2) The hospitals, State birth record agencies, and other entities 
designated by the State and participating in the State's voluntary 
paternity establishment program must, at a minimum:
    (i) Provide to both the mother and alleged father:
    (A) Written materials about paternity establishment,
    (B) The forms necessary to voluntarily acknowledge paternity,
    (C) Notice, orally or through video or audio equipment, and in 
writing, of the alternatives to, the legal consequences of, and the 
rights (including any rights, if a parent is a minor, due to minority 
status) and responsibilities or acknowledging paternity, and
    (D) The opportunity to speak with staff, either by telephone or in 
person, who are trained to clarify information and answer questions 
about paternity establishment;
    (ii) Provide the mother and alleged father the opportunity to 
voluntarily acknowledge paternity;
    (iii) Afford due process safeguards; and
    (iv) File signed original of voluntary acknowledgments or 
adjudications of paternity with the State registry of birth records (or 
a copy if the signed original is filed with another designated entity) 
for comparison with information in the State case registry.
    (3) The hospitals, State birth record agencies, and other entities 
designated by the State and participating in the State's voluntary 
paternity establishment program need not provide services specified in 
paragraph (g)(2) of this section in cases where the mother or alleged 
father is a minor or a legal action is already pending, if the provision 
of such services is precluded by State law.
    (4) The State must require that a voluntary acknowledgment be signed 
by both parents, and that the parents' signatures be authenticated by a 
notary or witness(es).
    (5) The State must provide to all hospitals, State birth record 
agencies, and other entities designated by the State and participating 
in the State's voluntary paternity establishment program:
    (i) Written materials about paternity establishment,
    (ii) Form necessary to voluntarily acknowledge paternity, and
    (iii) Copies of a written description of the alternatives to, the 
legal consequences of, and the rights (including any rights, if a parent 
is a minor, due

[[Page 248]]

to minority status) and responsibilities of acknowledging paternity.
    (6) The State must provide training, guidance, and written 
instructions regarding voluntary acknowledgment of paternity, as 
necessary to operate the voluntary paternity establishment services in 
the hospitals, State birth record agencies, and other entities 
designated by the State and participating in the State's voluntary 
paternity establishment program.
    (7) The State must assess each hospital, State birth record agency, 
local birth record agency designated by the State, and other entity 
participating in the State's voluntary paternity establishment program 
that are providing voluntary paternity establishment services on at 
least an annual basis.
    (8) Hospitals, State birth record agencies, and other entities 
designated by the State and participating in the State's voluntary 
paternity establishment program must forward completed voluntary 
acknowledgments or copies to the entity designated by the State. If any 
entity other than the State registry of birth records is designated by 
the State, a copy must be filed with the State registry of birth 
records, in accordance with Sec.  303.5(g)(2)(iv). Under State 
procedures, the designated entity must be responsible for promptly 
recording identifying information about the acknowledgments with a 
statewide database, and the IV-D agency must have timely access to 
whatever identifying information and documentation it needs to determine 
in accordance with Sec.  303.5(h) if an acknowledgment has been recorded 
and to seek a support order on the basis of a recorded acknowledgment in 
accordance with Sec.  303.4(f).
    (h) In IV-D cases needing paternity establishment, the IV-D agency 
must determine if identifying information about a voluntary 
acknowledgment has been recorded in the statewide database in accordance 
with Sec.  303.5(g)(8).

[40 FR 27164, June 26, 1975, as amended at 50 FR 19650, May 9, 1985; 54 
FR 32310, Aug. 4, 1989; 56 FR 22354, May 15, 1991; 59 FR 66250, Dec. 23, 
1994; 64 FR 6249, Feb. 9, 1999; 64 FR 11809, Mar. 10, 1999]



Sec.  303.6  Enforcement of support obligations.

    For all cases referred to the IV-D agency or applying for services 
under Sec.  302.33 in which the obligation to support and the amount of 
the obligation have been established, the IV-D agency must maintain and 
use an effective system for:
    (a) Monitoring compliance with the support obligation;
    (b) Identifying on the date the parent fails to make payments in an 
amount equal to the support payable for one month, or on an earlier date 
in accordance with State law, those cases in which there is a failure to 
comply with the support obligation; and
    (c) Enforcing the obligation by:
    (1) Initiating income withholding, in accordance with Sec.  303.100;
    (2) Taking any appropriate enforcement action (except income 
withholding and Federal and State income tax refund offset) unless 
service of process is necessary, within no more than 30 calendar days of 
identifying a delinquency or other support-related non-compliance with 
the order or the location of the noncustodial parent, whichever occurs 
later. If service of process is necessary prior to taking an enforcement 
action, service must be completed (or unsuccessful attempts to serve 
process must be documented in accordance with the State's guidelines 
defining diligent efforts under Sec.  303.3(c)), and enforcement action 
taken if process is served, within no later than 60 calendar days of 
identifying a delinquency or other support-related non-compliance with 
the order, or the location of the noncustodial parent, whichever occurs 
later;
    (3) Submitting once a year all cases which meet the certification 
requirements under Sec.  303.102 of this part and State guidelines 
developed under Sec.  302.70(b) of this title for State income tax 
refund offset, and which meet the certification requirements under Sec.  
303.72 of this part for Federal income tax refund offset; and
    (4) In cases in which enforcement attempts have been unsuccessful, 
at the time an attempt to enforce fails, examining the reason the 
enforcement attempt failed and determining when it

[[Page 249]]

would be appropriate to take an enforcement action in the future, and 
taking an enforcement action in accordance with the requirements of this 
section at that time.

[54 FR 32310, Aug. 4, 1989, as amended at 55 FR 25840, June 25, 1990]



Sec.  303.7  Provision of services in interstate IV-D cases.

    (a) Interstate central registry. (1) The State IV-D agency must 
establish an interstate central registry responsible for receiving, 
distributing and responding to inquiries on all incoming interstate IV-D 
cases.
    (2) Within 10 working days of receipt of an interstate IV-D case 
from an initiating State, the central registry must:
    (i) Ensure that the documentation submitted with the case has been 
reviewed to determine completeness;
    (ii) Forward the case for necessary action either to the State PLS 
for location services or to the appropriate agency for processing;
    (iii) Acknowledge receipt of the case and ensure that any missing 
documentation has been requested from the initiating State; and
    (iv) Inform the IV-D agency in the initiating State where the case 
was sent for action.
    (3) If the documentation received with a case is inadequate and 
cannot be remedied by the central registry without the assistance of the 
initiating State, the central registry must forward the case for any 
action which can be taken pending necessary action by the initiating 
State.
    (4) The central registry must respond to inquiries from other States 
within 5 working days of receipt of the request for a case status 
review.
    (b) Initiating State IV-D agency responsibilities. The IV-D agency 
must:
    (1) Use its long arm statute to establish paternity, when 
appropriate.
    (2) Except as provided in paragraph (b)(1) of this section, within 
20 calendar days of determining that the noncustodial parent is in 
another State, and, if appropriate, receipt of any necessary information 
needed to process the case, refer any interstate IV-D case to the 
responding State's interstate central registry for action, including 
requests for location, document verification, administrative reviews in 
Federal income tax refund offset cases, income withholding, and State 
income tax refund offset in IV-D cases.
    (3) Provide the IV-D agency in the responding State sufficient, 
accurate information to act on the case by submitting with each case any 
necessary documentation and Federally-approved interstate forms. The 
State may use computer-generated replicas in the same format and 
containing the same information in place of the Federal forms.
    (4) Provide the IV-D agency or central registry in the responding 
State with any requested additional information or notify the responding 
State when the information will be provided within 30 calendar days of 
receipt of the request for information by submitting an updated form, or 
a computer-generated replica in the same format and containing the same 
information, and any necessary additional documentation.
    (5) Notify the IV-D agency in the responding State within 10 working 
days of receipt of new information on a case by submitting an updated 
form and any necessary additional documentation.
    (6) Send a request for review of a child support order to another 
State within 20 calendar days of determining that a request for review 
of the order should be sent to the other State and of receipt of 
information from the requestor necessary to conduct the review in 
accordance with Sec.  303.8 of this part.
    (c) Responding State IV-D agency responsibilities. (1) The IV-D 
agency must establish and use procedures for managing its interstate IV-
D caseload which ensure provision of necessary services and include 
maintenance of case records in accordance with Sec.  303.2 of this part.
    (2) The IV-D agency must periodically review program performance on 
interstate IV-D cases to evaluate the effectiveness of the procedures 
established under this section.
    (3) The State must ensure that the organizational structure and 
staff of

[[Page 250]]

the IV-D agency are adequate to provide for the administration or 
supervision of the following support enforcement functions specified in 
Sec.  303.20(c) of this part for its interstate IV-D caseload: Intake; 
establishment of paternity and the legal obligation to support; 
location; financial assessment; establishment of the amount of child 
support; collection; monitoring; enforcement and investigation.
    (4) Within 75 calendar days of receipt of an Interstate Child 
Support Enforcement Transmittal Form, and documentation from its 
interstate central registry, the IV-D agency must:
    (i) Provide location services in accordance with Sec.  303.3 of this 
part if the request is for location services or the form or 
documentation does not include adequate location information on the 
noncustodial parent;
    (ii) If unable to proceed with the case because of inadequate 
documentation, notify the IV-D agency in the initiating State of the 
necessary additions or corrections to the form or documentation.
    (iii) If the documentation received with a case is inadequate and 
cannot be remedied by the responding IV-D agency without the assistance 
of the initiating State, the IV-D agency must process the interstate IV-
D case to the extent possible pending necessary action by the initiating 
State.
    (5) Within 10 working days of locating the noncustodial parent in a 
different jurisdiction within the State, the IV-D agency must forward 
the form and documentation to the appropriate jurisdiction and notify 
the initiating State and central registry of its action.
    (6) Within 10 working days of locating the noncustodial parent in a 
different State, the IV-D agency must--
    (i) Return the form and documentation, including the new location, 
to the initiating State, or, if directed by the initiating State, 
forward the form and documentation to the central registry in the State 
where the noncustodial parent has been located; and
    (ii) Notify the central registry where the case has been sent.
    (7) The IV-D agency must provide any necessary services as it would 
in intrastate IV-D cases by:
    (i) Establishing paternity in accordance with Sec.  303.5 of this 
part and attempting to obtain a judgment for costs should paternity be 
established;
    (ii) Establishing a child support obligation in accordance with 
Sec. Sec.  303.4, 303.31 and 303.101 of this part;
    (iii) Processing and enforcing orders referred by another State, 
whether pursuant to the Uniform Interstate Family Support Act or other 
legal processes, using appropriate remedies applied in its own cases in 
accordance with Sec. Sec.  303.6, 303.31, 303.32, 303.100 through 
303.102, and 303.104 of this part; and
    (iv) Collecting and monitoring any support payments from the 
noncustodial parent and forwarding payments to the location specified by 
the IV-D agency in the initiating State. The IV-D agency must include 
sufficient information to identify the case, indicate the date of 
collection as defined under Sec.  302.51(a) of this chapter, and include 
the responding State's identifying code as defined in the Federal 
Information Processing Standards Publication (FIPS) issued by the 
National Bureau of Standards or the Worldwide Geographic Location Codes 
issued by the General Services Administration.
    (v) Reviewing and adjusting child support orders upon request in 
accordance with Sec.  303.8 of this part.
    (8) The IV-D agency must provide timely notice to the IV-D agency in 
the initiating State in advance of any formal hearings which may result 
in establishment or adjustment of an order.
    (9) The IV-D agency must notify the IV-D agency in the initiating 
State within 10 working days of receipt of new information on a case by 
submitting an updated form or a computer-generated replica in the same 
format and containing the same information.
    (10) The IV-D agency must notify the interstate central registry in 
the responding State when a case is closed.
    (d) Payment and recovery of costs in interstate IV-D cases. (1) 
Except as provided in paragraphs (2) and (4), the IV-D agency in the 
responding State must pay the costs it incurs in processing interstate 
IV-D cases.
    (2) The IV-D agency in the initiating State must pay for the costs 
of genetic

[[Page 251]]

testing in actions to establish paternity.
    (3) If paternity is established in the responding State, the IV-D 
agency must attempt to obtain a judgment for the costs of genetic 
testing ordered by the IV-D agency from the alleged father who denied 
paternity. If the costs of initial or additional genetic testing are 
recovered, the responding State must reimburse the initiating State.
    (4) Each IV-D agency may recover its costs of providing services in 
interstate non-IV-A cases in accordance with Sec.  302.33(d) of this 
chapter.
    (5) The IV-D agency in the responding State must identify any fees 
or costs deducted from support payments when forwarding payments to the 
IV-D agency in the initiating State in accordance with Sec.  
303.7(c)(7)(iv) of this section.

(Approved by the Office of Management and Budget under control number 
0970-0085)

[53 FR 5257, Feb. 22, 1988, as amended at 53 FR 18987, May 26, 1988; 53 
FR 21645, June 9, 1988; 53 FR 27518, July 21, 1988; 54 FR 32311, Aug. 4, 
1989; 55 FR 25840, June 25, 1990; 56 FR 22355, May 15, 1991; 57 FR 
30681, July 10, 1992; 57 FR 61581, Dec. 28, 1992; 64 FR 6250, Feb. 9, 
1999; 68 FR 25303, May 12, 2003; 73 FR 42441, July 21, 2008]



Sec.  303.8  Review and adjustment of child support orders.

    (a) Definition. For purposes of this section, Parent includes any 
custodial parent or noncustodial parent (or for purposes of requesting a 
review, any other person or entity who may have standing to request an 
adjustment to the child support order).
    (b) Required procedures. Pursuant to section 466(a)(10) of the Act, 
when providing services under this chapter:
    (1) The State must have procedures under which, every 3 years (or 
such shorter cycle as the State may determine), upon the request of 
either parent, or, if there is an assignment under part A, upon the 
request of the State agency under the State plan or of either parent, 
the State shall with respect to a support order being enforced under 
this part, taking into account the best interests of the child involved:
    (i) Review and, if appropriate, adjust the order in accordance with 
the guidelines established pursuant to section 467(a) of the Act if the 
amount of the child support award under the order differs from the 
amount that would be awarded in accordance with the guidelines;
    (ii) Apply a cost-of-living adjustment to the order in accordance 
with a formula developed by the State; or
    (iii) Use automated methods (including automated comparisons with 
wage or State income tax data) to identify orders eligible for review, 
conduct the review, identify orders eligible for adjustment, and apply 
the appropriate adjustment to the orders eligible for adjustment under 
any threshold that may be established by the State.
    (2) If the State elects to conduct the review under paragraph 
(b)(1)(ii) or (iii) of this section, the State must have procedures 
which permit either party to contest the adjustment, within 30 days 
after the date of the notice of the adjustment, by making a request for 
review and, if appropriate, adjustment of the order in accordance with 
the child support guidelines established pursuant to section 467(a) of 
the Act.
    (3) If the State conducts a guideline review under paragraph 
(b)(1)(i) of this section:
    (i) Review means an objective evaluation, conducted through a 
proceeding before a court, quasi-judicial process, or administrative 
body or agency, of information necessary for application of the State's 
guidelines for support to determine:
    (A) The appropriate support award amount; and
    (B) The need to provide for the child's health care needs in the 
order through health insurance coverage or other means.
    (ii) Adjustment applies only to the child support provisions of the 
order, and means:
    (A) An upward or downward change in the amount of child support 
based upon an application of State guidelines for setting and adjusting 
child support awards; and/or
    (B) Provision for the child's health care needs, through health 
insurance coverage or other means.
    (4) The State must have procedures which provide that any adjustment 
under paragraph (b)(1)(i) of this section shall be made without a 
requirement

[[Page 252]]

for proof or showing of a change in circumstances.
    (5) The State must have procedures under which, in the case of a 
request for a review, and if appropriate, an adjustment outside the 3-
year cycle (or such shorter cycle as the State may determine) under 
paragraph (b)(1) of this section, the State shall review and, if the 
requesting party demonstrates a substantial change in circumstances, 
adjust the order in accordance with the guidelines established pursuant 
to section 467(a) of the Act.
    (6) The State must provide notice not less than once every 3 years 
to the parents subject to the order informing the parents of their right 
to request the State to review and, if appropriate, adjust the order 
consistent with this section. The notice must specify the place and 
manner in which the request should be made. The initial notice may be 
included in the order.
    (c) Standard for adequate grounds. The State may establish a 
reasonable quantitative standard based upon either a fixed dollar amount 
or percentage, or both, as a basis for determining whether an 
inconsistency between the existent child support award amount and the 
amount of support determined as a result of a review is adequate grounds 
for petitioning for adjustment of the order.
    (d) Health care needs must be adequate basis. The need to provide 
for the child's health care needs in the order, through health insurance 
or other means, must be an adequate basis under State law to initiate an 
adjustment of an order, regardless of whether an adjustment in the 
amount of child support is necessary. In no event shall the eligibility 
for or receipt of Medicaid be considered to meet the need to provide for 
the child's health care needs in the order.
    (e) Timeframes for review and adjustment. Within 180 calendar days 
of receiving a request for a review or locating the non-requesting 
parent, whichever occurs later, a State must: Conduct a review of the 
order and adjust the order or determine that the order should not be 
adjusted, in accordance with this section.
    (f) Interstate review and adjustment. (1) In interstate cases, the 
State with legal authority to adjust the order must conduct the review 
and adjust the order pursuant to this section.
    (2) The applicable laws and procedures for review and adjustment of 
child support orders, including the State guidelines for setting child 
support awards, established in accordance with Sec.  302.56 of this 
chapter, are those of the State in which the review and adjustment, or 
determination that there be no adjustment, takes place.

[68 FR 25303, May 12, 2003, as amended at 69 FR 77661, Dec. 28, 2004]



Sec.  303.10  [Reserved]



Sec.  303.11  Case closure criteria.

    (a) The IV-D agency shall establish a system for case closure.
    (b) In order to be eligible for closure, the case must meet at least 
one of the following criteria:
    (1) There is no longer a current support order and arrearages are 
under $500 or unenforceable under State law;
    (2) The noncustodial parent or putative father is deceased and no 
further action, including a levy against the estate, can be taken;
    (3) Paternity cannot be established because:
    (i) The child is at least 18 years old and action to establish 
paternity is barred by a statute of limitations which meets the 
requirements of Sec.  302.70(a)(5) of this chapter;
    (ii) A genetic test or a court or administrative process has 
excluded the putative father and no other putative father can be 
identified; or
    (iii) In accordance with Sec.  303.5(b) of this part, the IV-D 
agency has determined that it would not be in the best interests of the 
child to establish paternity in a case involving incest or forcible 
rape, or in any case where legal proceedings for adoption are pending;
    (iv) The identity of the biological father is unknown and cannot be 
identified after diligent efforts, including at least one interview by 
the IV-D agency with the recipient of services;
    (4) The noncustodial parent's location is unknown, and the State has 
made diligent efforts using multiple sources, in accordance with Sec.  
303.3, all

[[Page 253]]

of which have been unsuccessful, to locate the noncustodial parent:
    (i) Over a three-year period when there is sufficient information to 
initiate an automated locate effort, or
    (ii) Over a one-year period when there is not sufficient information 
to initiate an automated locate effort;
    (5) The noncustodial parent cannot pay support for the duration of 
the child's minority because the parent has been institutionalized in a 
psychiatric facility, is incarcerated with no chance for parole, or has 
a medically-verified total and permanent disability with no evidence of 
support potential. The State must also determine that no income or 
assets are available to the noncustodial parent which could be levied or 
attached for support;
    (6) The noncustodial parent is a citizen of, and lives in, a foreign 
country, does not work for the Federal government or a company with 
headquarters or offices in the United States, and has no reachable 
domestic income or assets; and the State has been unable to establish 
reciprocity with the country;
    (7) The IV-D agency has provided location-only services as requested 
under Sec.  302.35(c)(3) of this chapter;
    (8) The non-IV-A recipient of services requests closure of a case 
and there is no assignment to the State of medical support under 42 CFR 
433.146 or of arrearages which accrued under a support order;
    (9) There has been a finding by the responsible State agency of good 
cause or other exceptions to cooperation with the IV-D agency and the 
State or local IV-A, IV-D, IV-E, Medicaid or food stamp agency has 
determined that support enforcement may not proceed without risk of harm 
to the child or caretaker relative;
    (10) In a non-IV-A case receiving services under Sec.  302.33(a)(1) 
(i) or (iii), or under Sec.  302.33(a)(1)(ii) when cooperation with the 
IV-D agency is not required of the recipient of services, the IV-D 
agency is unable to contact the recipient of services within a 60 
calendar day period despite an attempt of at least one letter sent by 
first class mail to the last known address;
    (11) In a non-IV-A case receiving services under Sec.  302.33(a)(1) 
(i) or (iii), or under Sec.  302.33(a)(1)(ii) when cooperation with the 
IV-D agency is not required of the recipient of services, the IV-D 
agency documents the circumstances of the recipient of services's 
noncooperation and an action by the recipient of services is essential 
for the next step in providing IV-D services.
    (12) The IV-D agency documents failure by the initiating State to 
take an action which is essential for the next step in providing 
services.
    (c) In cases meeting the criteria in paragraphs (b) (1) through (6) 
and (10) through (12) of this section, the State must notify the 
recipient of services, or in an interstate case meeting the criteria for 
closure under (b)(12), the initiating State, in writing 60 calendar days 
prior to closure of the case of the State's intent to close the case. 
The case must be kept open if the recipient of services or the 
initiating State supplies information in response to the notice which 
could lead to the establishment of paternity or a support order or 
enforcement of an order, or, in the instance of paragraph (b)(10) of 
this section, if contact is reestablished with the recipient of 
services. If the case is closed, the former recipient of services may 
request at a later date that the case be reopened if there is a change 
in circumstances which could lead to the establishment of paternity or a 
support order or enforcement of an order by completing a new application 
for IV-D services and paying any applicable application fee.
    (d) The IV-D agency must retain all records for cases closed 
pursuant to this section for a minimum of three years, in accordance 
with 45 CFR part 74.

[54 FR 32311, Aug. 4, 1989, as amended at 56 FR 8004, Feb. 26, 1991; 64 
FR 11817, 11818, Mar. 10, 1999; 73 FR 42441, July 21, 2008]



Sec.  303.15  Agreements to use the Federal Parent Locator Service (PLS) in parental kidnapping and child custody or visitation cases.

    (a) Definitions. The following definitions apply to this section:
    (1) Authorized person means the following:
    (i) Any agent or attorney of any State having an agreement under 
this section, who has the duty or authority

[[Page 254]]

under the laws of the State to enforce a child custody or visitation 
determination;
    (ii) Any court having jurisdiction to make or enforce a child 
custody or visitation determination, or any agent of the court; or
    (iii) Any agent or attorney of the United States, or of a State 
having an agreement under this section, who has the duty or authority to 
investigate, enforce, or bring a prosecution with respect to the 
unlawful taking or restraint of a child.
    (2) Custody or visitation determination means a judgment, decree, or 
other order of a court providing for custody or visitation of a child, 
and includes permanent and temporary orders, and initial orders and 
modifications.
    (b) A State shall enter into an agreement with the Office that meets 
the requirements of section 463 of the Act and this section of the 
regulations so that the State IV-D agency may request information from 
the Federal PLS for the purpose of:
    (1) Enforcing any State or Federal law with respect to the unlawful 
taking or restraint of a child; or
    (2) Making or enforcing a child custody or visitation determination.
    (c) An agreement under section 463 of the Act must contain the 
following provisions:
    (1) The Director will provide the State IV-D agency with the most 
recent home address and place of employment of a parent or child if the 
information is requested for the purposes specified in paragraph (b) of 
this section.
    (2) The State shall make requests for information under the 
agreement only for the purposes specified in paragraph (b) of this 
section.
    (3) The State shall make requests to the Federal PLS through the 
State PLS established under Sec.  302.35 of this chapter.
    (4) The State shall submit requests in the standard format and 
exchange media normally available to or used by the State PLS.
    (5) The State shall identify requests in a manner prescribed by the 
Office in instructions so that requests can be distinguished from other 
types of requests submitted to the Federal PLS.
    (6) The State shall impose, collect and account for fees to offset 
the costs to the State and the Office incurred in processing requests.
    (7) The State shall periodically transmit the fees collected to 
cover the costs to the Federal PLS of processing requests. Fees shall be 
transmitted in the amount and in the manner prescribed by the Office in 
instructions.
    (8) The State shall adopt policies and procedures to ensure that 
information shall be used and disclosed solely for the purposes 
specified in paragraph (b) of this section. Under this requirement, the 
State shall:
    (i) Restrict access to the information to authorized persons whose 
duties or responsibilities require access in connection with child 
custody and parental kidnapping cases;
    (ii) Store the information during nonduty hours, or when not in use, 
in a locked container within a secure area that is safe from access by 
unauthorized persons;
    (iii) Process the information under the immediate supervision and 
control of authorized personnel, in a manner which will protect the 
confidentiality of the information, and in such a way that unauthorized 
persons cannot retrieve the information by computer, remote terminal, or 
other means;
    (iv) Brief all employees who will have access to the data on 
security procedures and instructions;
    (v) Send the information directly to the requestor and make no other 
use of the information;
    (vi) After the information is sent to the requestor, destroy any 
confidential records and information related to the request.
    (d)(1) An agreement under section 463 of the Act must be signed by 
the Governor of the State or the Governor's designee.
    (2) The agreement must also be signed by the Attorney General of the 
State who must certify that the signing State official has the authority 
under State law to commit the State to the agreement.

[46 FR 54557, Nov. 3, 1981, as amended at 64 FR 6250, Feb. 9, 1999; 68 
FR 25304, May 12, 2003]

[[Page 255]]



Sec.  303.20  Minimum organizational and staffing requirements.

    (a) The organizational structure of the IV-D agency (see Sec.  
302.12) provides for administration or supervision of all the functions 
for which it is responsible under the State plan, is appropriate to the 
size and scope of the program in the State, and contains clearly 
established lines for administrative and supervisory authority.
    (b) There is an organizational structure and sufficient staff to 
fulfill the following required State level functions:
    (1) The establishment and administration of the State plan.
    (2) Formal evaluation of the quality, efficiency, effectiveness, and 
scope of services provided under the plan.
    (3) Coordination of activities pursuant to, and assurance of 
compliance with, the requirements of the State's Uniform Interstate 
Family Support Act for cases pursuant to a State plan.
    (4) Requests to the DHHS Office of Child Support Enforcement for use 
of the Federal Parent Locator Service, the U.S. District Courts, and 
Secretary of the U.S. Treasury collection procedures.
    (5) Preparation and submission of reports required by the Office.
    (6) Financial control of the operation of the plan.
    (7) Operation of the State Parent Locator Service as required under 
Sec.  302.35 of this chapter.
    (c) There is an organizational structure and sufficient resources at 
the State and local level to meet the performance and time standards 
contained in this part and to provide for the administration or 
supervision of the following support enforcement functions:
    (1) Intake. Activities associated with initial support case opening.
    (2) Establishing the legal obligation to support. Activities related 
to determining the noncustodial parent's legal obligation to support his 
or her dependent children, including paternity determination when 
necessary.
    (3) Locate. Activities associated with locating a noncustodial 
parent.
    (4) Financial assessment. Activities related to determining a 
noncustodial parent's ability to provide support.
    (5) Establishment of the amount of support. Activities related to 
determining a noncustodial parent's child support obligation, including 
methods and terms of payment.
    (6) Collection. Activities related to monitoring payment activities 
and processing cash flow.
    (7) Enforcement. Activities to enforce collection of support, 
including income withholding and other available enforcement techniques.
    (8) Investigation. Activities related to investigation necessary to 
accomplish the functions of this paragraph.
    (d) The functions referred to in paragraphs (b) (1), (2) and (6) of 
this section may not be delegated by the IV-D agency. The functions 
referred to in paragraph (b)(5) of this section may be delegated to the 
extent necessary to report on activities delegated by the IV-D agency.
    (e) No functions under the State plan may be delegated by the IV-D 
agency if such functions are to be performed by caseworkers who are also 
performing the assistance payments or social services functions under 
title IV-A or XX of the Act.

In the case of a sparsely populated geographic area, upon justification 
by the IV-D agency documenting a lack of administrative feasibility in 
not utilizing staff of the IV-A agency, the Office may approve alternate 
arrangements that include sufficient reporting and cost allocation 
methods that will assure compliance with Federal requirements and proper 
claims for Federal financial participation. Under this provision:
    (1) Caseworker means any person who has decision-making authority 
over individual cases on a day-to-day basis and includes, but is not 
limited to such designations as intake worker, eligibility technician, 
caseworker, and social worker.
    (2) The assistance payments function means activities related to 
determination of eligibility for, and amount of financial assistance 
under the approved State plan under title I, IV-A, X, XIV, or XVI, State 
Supplemental income payments under title XVI of the Act, and State or 
local General Assistance programs. It includes the complete

[[Page 256]]

process of determining initial and continuing eligibility for financial 
and medical assistance and commodities distribution or food stamps.
    (3) The social services function means those activities included in 
the approved State plan and carried out pursuant to title XX of the Act. 
It includes determination of eligibility for, and delivery of services 
to, families and individuals under the approved State plan or under 
title XX of the Act.
    (f) There are the following types of staff in sufficient numbers to 
achieve the standards for an effective program prescribed in this part:
    (1) Attorneys or prosecutors to represent the agency in court or 
administrative proceedings with respect to the establishment and 
enforcement of orders of paternity and support, and
    (2) Other personnel such as legal, interviewer, investigative, 
accounting, clerical, and other supportive staff.
    (g) If it is determined as a result of an audit conducted under part 
305 of this chapter that a State is not in substantial compliance with 
the requirements of title IV-D of the Act, the Secretary will evaluate 
whether inadequate resources was a major contributing factor and, if 
necessary, may set resource standards for the State.

[40 FR 27164, June 26, 1975, as amended at 47 FR 57282, Dec. 23, 1982; 
54 FR 32312, Aug. 4, 1989; 64 FR 6250, Feb. 9, 1999; 68 FR 25304, May 
12, 2003]

    Effective Date Note: At 73 FR 56444, Sept. 26, 2008, Sec.  303.20 
was amended by revising paragraph (b)(7), effective Mar. 23, 2009. For 
the convenience of the user, the revised text is set forth as follows:



Sec.  303.20  Minimum organizational and staffing requirements.

    (b) * * *
    (7) Operation of the State PLS as required under Sec. Sec.  302.35, 
303.3, and 303.70 of this chapter.



Sec.  303.21  Safeguarding and disclosure of confidential information.

    (a) Definitions--(1) Confidential information means any information 
relating to a specified individual or an individual who can be 
identified by reference to one or more factors specific to him or her, 
including but not limited to the individual's Social Security number, 
residential and mailing addresses, employment information, and financial 
information.
    (2) Independent verification is the process of acquiring and 
confirming confidential information through the use of a second source. 
The information from the second source, which verifies the information 
about NDNH or FCR data, may be released to those authorized to inspect 
and use the information as authorized under the regulations or the Act.
    (b) Scope. The requirements of this section apply to the IV-D 
agency, any other State or local agency or official to whom the IV-D 
agency delegates any of the functions of the IV-D program, any official 
with whom a cooperative agreement as described in Sec.  302.34 of this 
part has been entered into, and any person or private agency from whom 
the IV-D agency has purchased services pursuant to Sec.  304.22 of this 
chapter.
    (c) General rule. Except as authorized by the Act and implementing 
regulations, an entity described in paragraph (b) of this section may 
not disclose any confidential information, obtained in connection with 
the performance of IV-D functions, outside the administration of the IV-
D program.
    (d) Authorized disclosures. (1) Upon request, the IV-D agency may, 
to the extent that it does not interfere with the IV-D agency meeting 
its own obligations and subject to such requirements as the Office may 
prescribe, disclose confidential information to State agencies as 
necessary to carry out State agency functions under plans or programs 
under title IV (including tribal programs under title IV) and titles 
XIX, or XXI of the Act, including:
    (i) Any investigation, prosecution or criminal or civil proceeding 
conducted in connection with the administration of any such plan or 
program; and
    (ii) Information on known or suspected instances of physical or 
mental injury, sexual abuse or exploitation, or negligent treatment or 
maltreatment of a child under circumstances which indicate that the 
child's health or welfare is threatened.
    (2) Upon request, the IV-D agency may disclose information in the 
SDNH, pursuant to