[Congressional Record (Bound Edition), Volume 158 (2012), Part 10]
[Senate]
[Pages 13529-13532]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                  TANF

  Mr. HATCH. Mr. President, I ask unanimous consent to have printed in 
the Record the GAO opinion letter dated September 4, 2012, and the TANF 
Information Memorandum dated July 12, 2012.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                   U.S. Government


                                        Accountability Office,

                                Washington, DC, September 4, 2012.
     Hon. Orrin Hatch,
     Ranking Member, Committee on Finance, U.S. Senate.
     Hon. Dave Camp,
     Chairman, Committee on Ways and Means, House of 
         Representatives.
       By letter of July 31, 2012, you asked whether an 
     Information Memorandum issued by the Department of Health and 
     Human Services (HHS) on July 12, 2012 concerning the 
     Temporary Assistance for Needy Families (TANF) program 
     constitutes a rule for the purposes of the Congressional 
     Review Act (CRA). The CRA is intended to keep Congress 
     informed of the rulemaking activities of federal agencies and 
     provides that before a rule can take effect, the agency must 
     submit the rule to each House of Congress and the Comptroller 
     General. For the reasons discussed below, we conclude that 
     the July 12, 2012 Information Memorandum is a rule under the 
     CRA. Therefore, it must be submitted to Congress and the 
     Comptroller General before taking effect.


                               BACKGROUND

       The Temporary Assistance for Needy Families block grant, 
     administered by the U.S. Department of Health and Human 
     Services, provides federal funding to states for both 
     traditional welfare cash assistance as well as a variety of 
     other benefits and services to meet the needs of low-income 
     families and children. While states have some flexibility in 
     implementing and administering their state TANF programs, 
     there are numerous federal requirements and guidelines that 
     states must meet. For example, under section 402 of the 
     Social Security Act, in order to be eligible to receive TANF 
     funds, a state must submit to HHS a written plan outlining, 
     among other things, how it will implement various aspects of 
     its TANF program. More specifically, under section 
     402(a)(1)(A)(iii) of the Social Security Act, the written 
     plan must outline how the state will ensure that TANF 
     recipients engage in work activities. Under section 407 of 
     the Social Security Act, states must also ensure that a 
     specified percentage of their TANF recipients engage in work 
     activities as defined by federal law.
       In its July 12 Information Memorandum, HHS notified states 
     of HHS' willingness to exercise its waiver authority under 
     section 1115 of the Social Security Act. Under section 1115, 
     HHS has the authority to waive compliance with the 
     requirements of section 402 in the case of experimental, 
     pilot, or demonstration projects which the Secretary 
     determines are likely to assist in promoting the objectives 
     of TANF. In its Information Memorandum, HHS asserted that it 
     has the authority to waive the requirement in section 
     402(a)(1)(A)(iii) and authorize states to ``test approaches 
     and methods other than those set forth in section 407,'' 
     including definitions of work activities and the calculation 
     of participation rates. HHS informed states that it would use 
     this waiver authority to allow states to test various 
     strategies, policies, and procedures designed to improve 
     employment outcomes for needy families. The Information 
     Memorandum sets forth requirements that must be met for a 
     waiver request to be considered by HHS, including an 
     evaluation plan, a set of performance measures that states 
     will track to monitor ongoing performance and outcomes, and a 
     budget including the costs of program evaluation. In 
     addition, the Information Memorandum provides that states 
     must seek public input on the proposal prior to approval by 
     HHS.


                                ANALYSIS

       The definition of ``rule'' in the CRA incorporates by 
     reference the definition of ``rule'' in the Administrative 
     Procedure Act (APA), with some exceptions. Therefore, our 
     analysis of whether the July 12 Information Memorandum is a 
     rule under the CRA involves determining whether it is rule 
     under the APA and whether it falls within any of the 
     exceptions contained in the CRA. The APA defines a rule as 
     follows:
       ``[T]he whole or a part of an agency statement of general 
     or particular applicability and future effect designed to 
     implement, interpret, or prescribe law or policy or 
     describing the organization, procedure, or practice 
     requirements of an agency and includes the approval or 
     prescription for the future of rates, wages, corporate or 
     financial structures or reorganizations thereof, prices, 
     facilities, appliances, services or allowances therefor or of 
     valuations, costs, or accounting, or practices bearing on any 
     of the foregoing[.]''
       This definition of a rule has been said to include ``nearly 
     every statement an agency may make.''
       The CRA identifies 3 exceptions from its definition of a 
     rule: (1) any rule of particular applicability; (2) any rule 
     relating to agency management or personnel; or (3) any rule 
     of agency organization, procedure, or practice that does not 
     substantially affect the rights or obligations of non-agency 
     parties. 5 U.S.C. 804(3).
       The definition of a rule under the CRA is very broad. See 
     B-287557, May 14, 2001 (Congress intended that the CRA should 
     be broadly interpreted both as to type and scope of rules 
     covered). The CRA borrows the definition of a rule from 5 
     U.S.C. Sec. 551, as opposed to the more narrow definition of 
     legislative rules requiring notice and comment contained in 5 
     U.S.C. Sec. 553. As a result, agency pronouncements may be 
     rules within the definition of 5 U.S.C. Sec. 551, and the 
     CRA, even if they are not subject to notice and comment 
     rulemaking requirements under section 553. See B-316048, 
     April 17, 2008 (the breadth of the term ``rule'' reaches 
     agency pronouncements beyond those that require notice and 
     comment rulemaking) and B-287557, cited above. In addition to 
     the plain language of the CRA, the legislative history 
     confirms that it is intended to include within its purview 
     almost all rules that an agency issues and not only those 
     rules that must be promulgated according to the notice and 
     comment requirements in section 553 of the APA. In his floor 
     statement during final consideration of the bill, 
     Representative McIntosh, a principal sponsor of the 
     legislation, emphasized this point:
       ``Although agency interpretive rules, general statements of 
     policy, guideline documents, and agency policy and procedure 
     manuals may not be subject to the notice and comment 
     provisions of section 553(c) of title 5, United States Code, 
     these types of documents are covered under the congressional 
     review provisions of the new chapter 8 of title 5.
       Under section 801(a), covered rules, with very few 
     exceptions, may not go into effect until the relevant agency 
     submits a copy of the rule and an accompanying report to both 
     Houses of Congress. Interpretive rules, general statements of 
     policy, and analogous agency policy guidelines are covered 
     without qualification because they meet the definition of a 
     `rule' borrowed from section 551 of title 5, and are not 
     excluded from the definition of a rule.''

[[Page 13530]]

       On its face, the July 12 Information Memorandum falls 
     within the definition of a rule under the APA definition 
     incorporated into the CRA. First, consistent with our prior 
     decisions, we look to the scope of the agency's action to 
     determine whether it is a general statement of policy or an 
     interpretation of law of general applicability. That 
     determination does not require a finding that it has general 
     applicability to the population as a whole; instead, all that 
     is required is that it has general applicability within its 
     intended range. See B-287557, cited above (a record of 
     decision affecting the issues of water flow in two rivers was 
     a general statement of policy with general applicability 
     within its intended range). Applying these principles, we 
     have held that a letter released by the Centers for Medicare 
     and Medicaid Services to state health officials concerning 
     the State Children's Health Insurance Program (SCHIP) was of 
     general applicability because it extended to all states that 
     sought to enroll children with family incomes exceeding 250 
     percent of the federal poverty level in their SCHIP programs, 
     as well as all states that had already enrolled such 
     children. Similarly, the July 12 Information Memorandum is of 
     general, rather than particular, applicability because it 
     extends to all states administering Temporary Assistance for 
     Needy Families (TANF) programs that seek a waiver for a 
     demonstration project.
       Next we must determine whether the action is prospective in 
     nature, that is, whether it is concerned with policy 
     considerations for the future and not with the evaluation of 
     past conduct. In B-316048, we held that the SCHIP letter was 
     intended to clarify and explain the manner in which CMS 
     applies statutory and regulatory requirements to states that 
     wanted to extend coverage under the SCHIP programs. 
     Similarly, the July 12 Information Memorandum is concerned 
     with authorizing demonstration projects in the future, rather 
     than the evaluation of past or present demonstration 
     projects. Specifically, the Information Memorandum informs 
     states that HHS will use its statutory authority to consider 
     waiver requests, and sets out requirements that waiver 
     requests must meet. Accordingly, it is designed to implement, 
     interpret, or prescribe law or policy.
       In addition, the Information Memorandum does not fall 
     within any of the three exclusions for a rule under the CRA. 
     As discussed above, the Information Memorandum applies to all 
     states that administer TANF programs, and therefore is of 
     general applicability, rather than particular applicability. 
     The Information Memorandum applies to the states, and does 
     not relate to agency management or personnel. Finally, the 
     Information Memorandum sets out the criteria by which states 
     may apply for waivers from certain requirements of the TANF 
     program. These criteria affect the obligations of the states, 
     which are non-agency parties.
       GAO has consistently emphasized the broad scope of the 
     definition of ``rule'' in the CRA in determining the 
     applicability of the CRA to an agency document. Other 
     documents deemed to be rules include letters, records of 
     decision, booklets, interim guidance, and memoranda. See, for 
     example, B-316048, April 17, 2008 (a letter released by the 
     Centers for Medicare & Medicaid Services of HHS concerning a 
     State Children's Health Insurance Program measure, to ensure 
     that coverage under a state plan does not substitute for 
     coverage under group health plans, described by the agency as 
     a general statement of policy, was a rule) and B-287557, May 
     14, 2001 (a ``record of decision'' issued by the Fish and 
     Wildlife Service of the Department of Interior in connection 
     with a federal irrigation project was a rule).
       Finally, the cases where we have found that an agency 
     pronouncement was not a rule involved facts that are clearly 
     distinguishable from the July 12 Information Memorandum.
       We requested the views of the General Counsel of HHS on 
     whether the July 12 Information Memorandum is a rule for 
     purposes of the CRA by letter dated August 3, 2012. HHS 
     responded on August 31, 2012, stating that the Information 
     Memorandum was issued as a non-binding guidance document, and 
     that HHS contends that guidance documents do not need to be 
     submitted pursuant to the CRA. Furthermore, HHS notes that it 
     informally notified Congress by providing notice to the 
     Majority and Minority staff members of the House Ways and 
     Means Committee and Senate Finance Committee on the day the 
     Information Memorandum was issued.
       We cannot agree with HHS's conclusion that guidance 
     documents are not rules for the purposes of the CRA and HHS 
     cites no support for this position. The definition of 
     ``rule'' is expansive and specifically includes documents 
     that implement or interpret law or policy. This is exactly 
     what the HHS Information Memorandum does. It interprets 
     section 402(a) and section 1115 to permit waivers for a 
     demonstration program HHS is initiating. We have held that 
     agency guidance, including guidance characterized as non-
     binding, constitutes a rule under the CRA. See B-281575, 
     cited above. In addition, the legislative history of the CRA 
     specifically includes guidance documents as an example of an 
     agency pronouncement subject to the CRA. A joint statement 
     for the record by Senators Nickles, Reid, and Stevens, 
     submitted to the Congressional Record upon enactment of the 
     CRA, details four categories of rules covered by the 
     definition in section 551. These categories include formal 
     rulemaking under sections 556 and 557, notice-and-comment 
     rulemaking under section 553, statements of general policy 
     and interpretations of general applicability under section 
     552, and ``a body of materials that fall within the APA 
     definition of a `rule' . . . but that meet none of procedural 
     specifications of the first three classes. These include 
     guidance documents and the like.'' Finally, while HHS may 
     have informally notified the cited Congressional committees 
     of the issuance of the Information Memorandum, informal 
     notification does not meet the reporting requirements of the 
     CRA.


                               CONCLUSION

       We find that the July 12 Information Memorandum issued by 
     HHS is a statement of general applicability and future 
     effect, designed to implement, interpret, or prescribe law or 
     policy with regard to TANF. Furthermore, it does not come 
     within any of the exceptions to the definition of rule 
     contained in the CRA. Accordingly, the Information Memorandum 
     is a rule under the Congressional Review Act.
       We note that this opinion is limited to the issue of 
     whether the Information Memorandum is a rule under the CRA. 
     We are not expressing an opinion on the applicability of any 
     other legal requirements, including, but not limited to, 
     notice and comment rulemaking requirements under the APA, or 
     whether the Information Memorandum would be a valid exercise 
     or interpretation of statutes or regulations.
       Accordingly, given our conclusions above, and in accordance 
     with the provisions of 5 U.S.C. 801(a)(1), the Information 
     Memorandum is subject to the requirement that it be submitted 
     to both Houses of Congress and the Comptroller General before 
     it can take effect.
       If you have any questions concerning this opinion, please 
     contact Edda Emmanuelli Perez, Managing Associate General 
     Counsel.
                                                   Lynn H. Gibson,
     General Counsel.
                                  ____


     Temporary Assistance for Needy Families Information Memorandum

   U.S. Department of Health and Human Services, Administration for 
  Children and Families, Office of Family Assistance, Washington, DC.

           Transmittal No. TANF-ACF-IM-2012-03, July 12, 2012

       To: States administering the Temporary Assistance for Needy 
     Families (TANF) Program and other interested parties
       Subject: Guidance concerning waiver and expenditure 
     authority under Section 1115
       Reference: Section 1115 of the Social Security Act. [42 
     U.S.C. 1315]; Section 402 of the Social Security Act. [42 
     U.S.C. 602]
       Background: Section 1115 of the Social Security Act 
     provides authority for the Secretary of the Department of 
     Health and Human Services (HHS) to consider and approve 
     experimental, pilot, or demonstration projects which, in the 
     Secretary's judgment, are likely to assist in promoting the 
     objectives of Title IV-A. Section 1115 allows for waiver of 
     compliance with section 402 of the Social Security Act to the 
     extent and for the period necessary to enable a state to 
     carry out an approved project. The statute also provides 
     authority for costs of such projects which would not 
     otherwise be an allowable use of funds under Part A of Title 
     IV to be regarded as an allowable use of funds, to the extent 
     and for the period approved.
       As specified in statute, the purpose of Part A is to 
     increase the flexibility of states in operating a program 
     designed to: (1) provide assistance to needy families so that 
     children may be cared for in their own homes or in the homes 
     of relatives; (2) end the dependence of needy parents on 
     government benefits by promoting job preparation, work, and 
     marriage; (3) 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 (4) encourage the formation and maintenance of two-parent 
     families.
       Purpose: HHS is encouraging states to consider new, more 
     effective ways to meet the goals of TANF, particularly 
     helping parents successfully prepare for, find, and retain 
     employment. Therefore, HHS is issuing this information 
     memorandum to notify states of the Secretary's willingness to 
     exercise her waiver authority under section 1115 of the 
     Social Security Act to allow states to test alternative and 
     innovative strategies, policies, and procedures that are 
     designed to improve employment outcomes for needy families.
       States led the way on welfare reform in the 1990s--testing 
     new approaches and learning what worked and what did not. The 
     Secretary is interested in using her authority to approve 
     waiver demonstrations to challenge states to engage in a new 
     round of innovation that seeks to find more effective 
     mechanisms for helping families succeed in employment. In 
     providing for these demonstrations, HHS will hold states 
     accountable by requiring both a federally-approved evaluation 
     and interim performance targets that ensure an immediate 
     focus on measurable

[[Page 13531]]

     outcomes. States must develop evaluation plans that are 
     sufficient to evaluate the effect of the proposed approach in 
     furthering a TANF purpose as well as interim targets the 
     state commits to achieve. States that fail to meet interim 
     outcome targets will be required to develop an improvement 
     plan and can face termination of the waiver project.
       The demonstration authority provided by section 1115 and 
     sound evaluation of approved projects will provide valuable 
     knowledge that will help lead to improvements in achieving 
     the purposes of the TANF program.
       Information: Scope of Authority. Section 1115 authorizes 
     waivers concerning section 402. Accordingly, other provisions 
     of the TANF statute are not waivable. For example, the 
     purposes of TANF are not waivable, because they are contained 
     in section 401. The prohibitions on assistance are not 
     waivable, because they are contained in section 408.
       While the TANF work participation requirements are 
     contained in section 407, section 402(a)(1)(A)(iii) requires 
     that the state plan ``[e]nsure that parents and caretakers 
     receiving assistance under the program engage in work 
     activities in accordance with section 407.'' Thus, HHS has 
     authority to waive compliance with this 402 requirement and 
     authorize a state to test approaches and methods other than 
     those set forth in section 407, including definitions of work 
     activities and engagement, specified limitations, 
     verification procedures, and the calculation of participation 
     rates. As described below, however, HHS will only consider 
     approving waivers relating to the work participation 
     requirements that make changes intended to lead to more 
     effective means of meeting the work goals of TANF.
       Moreover, HHS is committed to ensuring that any 
     demonstration projects approved under this authority will be 
     focused on improving employment outcomes and contributing to 
     the evidence base for effective programs; therefore, terms 
     and conditions will require a federally-approved evaluation 
     plan designed to build our knowledge base. TANF funds may be 
     used to fund an approved evaluation and state funds spent on 
     an approved evaluation may be considered state maintenance-
     of-effort (MOE) expenditures. In addition, terms and 
     conditions will require either interim targets for each 
     performance measure or a strategy for establishing baseline 
     performance on a set of performance measures and a framework 
     for how interim goals will be set after the baseline measures 
     are established. The terms and conditions will establish 
     consequences for failing to meet interim performance targets 
     including, but not limited to, the implementation of an 
     improvement plan and, if the failure to meet performance 
     targets continues, termination of the waivers and 
     demonstration project.
       HHS Priorities. In exercising her broad discretion for 
     waivers, the Secretary is interested in approaches that seek 
     to improve employment outcomes. Accordingly:
       Waivers will be granted only for provisions related to 
     section 402.
       The purposes of TANF, the prohibitions contained in section 
     408 (including the time limits on assistance contained in 
     that section), or any other provision of TANF other than 
     those specified in section 402 will not be waived.
       The Secretary will not approve a waiver for an initiative 
     that appears substantially likely to reduce access to 
     assistance or employment for needy families.
       The Secretary will not use her authority to allow use of 
     TANF funds to provide assistance to individuals or families 
     subject to the TANF prohibitions on assistance.
       The Secretary will not waive section 402(a)(5) relating to 
     requirements to provide equitable access to Indians.
       Waiver demonstration projects may be conducted in limited 
     geographic areas or statewide. The Administration for 
     Children and Families (ACF) is interested in more efficient 
     or effective means to promote employment entry, retention, 
     advancement, or access to jobs that offer opportunities for 
     earnings and advancement that will allow participants to 
     avoid dependence on government benefits. The following are 
     examples of projects that states may want to consider--these 
     are illustrative only:
       Projects that improve coordination with other components of 
     the workforce investment system, including programs operated 
     under the Workforce Investment Act, or to test an innovative 
     approach to use performance-based contracts and management in 
     order to improve employment outcomes.
       Projects that demonstrate attainment of superior employment 
     outcomes if a state is held accountable for negotiated 
     employment outcomes in lieu of participation rate 
     requirements.
       Projects under which a state would count individuals in 
     TANF-subsidized jobs but no longer receiving TANF assistance 
     toward participation rates for a specified period of time in 
     conjunction with an evaluation of the effectiveness of a 
     subsidized jobs strategy.
       Projects that improve collaboration with the workforce and/
     or post-secondary education systems to test multi-year career 
     pathways models for TANF recipients that combine learning and 
     work.
       Projects that demonstrate strategies for more effectively 
     serving individuals with disabilities, along with an 
     alternative approach to measuring participation and outcomes 
     for individuals with disabilities.
       Projects that test the impact of a comprehensive universal 
     engagement system in lieu of certain participation rate 
     requirements.
       Projects that test systematically extending the period in 
     which vocational educational training or job search/readiness 
     programs count toward participation rates, either generally 
     or for particular subgroups, such as an extended training 
     period for those pursuing a credential. The purpose of such a 
     waiver would be to determine through evaluation whether a 
     program that allows for longer periods in certain activities 
     improves employment outcomes.
       Note that this is not a comprehensive list, and HHS will 
     consider other projects consistent with the statute and the 
     guidance provided in this IM. HHS is especially interested in 
     testing approaches that build on existing evidence on 
     successful strategies for improving employment outcomes.
       Waiver requests must include an evaluation plan. In order 
     to provide the strongest evidence about the effectiveness of 
     the demonstration, the preferred evaluation approach is a 
     random assignment methodology, unless the Secretary 
     determines that an alternative approach is more appropriate 
     in light of the demonstration proposed. All evaluation plans 
     and funds to support them must reflect an adequate level of 
     effort and sound methods to produce credible findings. ACF 
     anticipates actively engaging with states to ensure that 
     evaluation plans are appropriate in light of the nature of 
     the demonstration and that the evaluation findings can 
     reasonably be expected to provide information that will 
     enhance understanding of whether the initiative was 
     successful in furthering HHS priorities. ACF staff members 
     are available to work collaboratively with states to develop 
     further or refine the evaluation plan.
       Waiver requests must include a set of performance measures 
     that states will track to monitor ongoing performance and 
     outcomes throughout the length of the demonstration project, 
     along with the evaluation. Waiver applications must specify 
     interim targets for each performance measure, including a 
     framework for how often the measures will be reported, or a 
     strategy for establishing baseline performance on a set of 
     performance measures and a framework for how interim goals 
     will be set after the baseline measures are established. 
     Performance measures must be designed to track improvement 
     across the entire set of families targeted as well as 
     appropriate subgroups. In developing the final terms and 
     conditions for an approved waiver, ACF will work with the 
     state to further refine the appropriate performance measures 
     and interim targets as needed. All approved waivers will 
     include a provision that requires timely reporting to HHS on 
     the agreed upon performance measures and progress toward 
     meeting established interim targets. States that fail to meet 
     interim targets will be required to develop improvement 
     plans. Repeated failure to meet performance benchmarks may 
     lead to the termination of the waiver demonstration pilot.
       The request must specify the proposed length of time for 
     the demonstration project. The final terms and conditions 
     will specify the approved length of the project. Absent 
     special circumstances, the length of an approved project will 
     not exceed five years.
       A state will need to develop and submit a budget that 
     includes the costs of program evaluation. TANF and state MOE 
     funds can be used for the costs of evaluation, including 
     third party contributions counting toward meeting a state's 
     MOE requirement.
       HHS recognizes the importance of public input into the 
     process of developing and implementing a waiver demonstration 
     project. Therefore, the state must provide the public with a 
     meaningful opportunity to provide input into the decision-
     making process prior to the time a proposal is approved by 
     HHS. Further guidance concerning this requirement will be 
     forthcoming.
       Waivers are subject to HHS and Office of Management and 
     Budget (OMB) approval and terms and conditions may include 
     additional requirements, such as site visits, before 
     implementation.
       Terms and conditions will require periodic reporting on how 
     the implementation and operation of the demonstration is 
     progressing, including reporting on the performance measures, 
     in addition to evaluation reports. To support learning and 
     knowledge development, ACF staff may conduct on-site visits 
     to observe demonstration operations and meet with relevant 
     managers and staff.
       Inquiries: Inquiries and applications for projects 
     involving waiver requests should be directed to the 
     appropriate Regional TANF Program Manager.
                                                  Earl S. Johnson,
     Director, Office of Family Assistance.
                                  ____

                                                    July 12, 2012.
       Dear State Human Service Official: Today, the 
     Administration for Children and Families' Office of Family 
     Assistance issued an Information Memorandum that informs 
     states that the Department of Health and Human Services will 
     use its statutory authority to consider waiver requests that

[[Page 13532]]

     strengthen the Temporary Assistance for Needy Families (TANF) 
     program. This Information Memorandum reflects the 
     Department's commitment to provide states, tribes, and 
     territories with more flexibility to innovate in the TANF 
     program with the goal of helping more families find jobs and 
     move toward self-sufficiency.
       On February 28, 2011, President Obama issued a Presidential 
     Memorandum that directed federal agencies ``to work closely 
     with state, local, and tribal governments to identify 
     administrative, regulatory, and legislative barriers in 
     Federally funded programs that currently prevent states, 
     localities, and tribes, from efficiently using tax dollars to 
     achieve the best results for their constituents.''
       The Administration for Children and Families took this 
     charge seriously and held a series of consultation meetings 
     with states, tribes, and territories on a variety of topics 
     including TANF. During those consultations, many 
     jurisdictions expressed a strong interest in greater 
     flexibility in TANF and indicated that greater flexibility 
     could be used by states to improve program effectiveness. We 
     also heard concerns that some TANF rules stifle innovation 
     and focus attention on paperwork rather than helping parents 
     find jobs. States offered a range of suggestions for ways in 
     which expanded flexibility could lead to more effective 
     employment outcomes for families. Two states--Utah and 
     Nevada--submitted written comments that specifically 
     identified waivers as one mechanism for testing new 
     approaches to promoting employment and self-sufficiency, and 
     a number of others states--including California, Connecticut, 
     and Minnesota--have asked about the potential for waivers.
       As described in more detail in the Information Memorandum, 
     the Social Security Act provides the Secretary of the 
     Department of Health and Human Services with the authority to 
     grant states waivers of certain TANF provisions for the 
     purpose of testing new approaches to meeting the goals of the 
     TANF statute. The Secretary is interested in using her 
     authority to allow states to test alternative and innovative 
     strategies, policies, and procedures that are designed to 
     improve employment outcomes for needy families. The statute 
     does not permit tribes to receive waivers under Section 1115, 
     however we are committed to using the underlying flexibility 
     in federal law to help tribes innovate in their programs.
       TANF Waiver demonstration projects under Section 1115 must 
     be accompanied by a high quality evaluation plan, which is 
     critical to ensuring that the pilots result in rigorous 
     evidence about what works and what doesn't in order to inform 
     future decisions made by policymakers at the federal, state, 
     tribal, territorial, and local levels. In addition, states 
     that apply for a waiver must identify interim performance 
     targets that will be used to hold states accountable for 
     improving outcomes for families. We will work with states 
     interested in developing waiver demonstration projects to 
     design these performance measures and targets.
       The Information Memorandum outlines the types of waivers 
     that will and will not be considered. The Secretary is only 
     interested in approving waivers if the state can explain in a 
     compelling fashion why the proposed approach may be a more 
     efficient or effective means to promote employment entry, 
     retention, advancement, or access to jobs that offer 
     opportunities for earnings and advancement that will allow 
     participants to avoid dependence on government benefits.
       States have shown their ability to innovate in ways that 
     help parents find jobs. In 2009 and 2010, 42 states used the 
     TANF Emergency Fund authorized under the American Recovery 
     and Reinvestment Act to create 260,000 subsidized jobs for 
     jobless parents and disadvantaged youth. Over a short period 
     of time, states exhibited enormous creativity as they 
     developed new subsidized employment initiatives that 
     responded to an urgent need for jobs in communities across 
     the country.
       It is critical that we work together to develop effective 
     employment strategies that prepare workers for the jobs of 
     the 21st century. We stand ready to work with states 
     interested in developing innovative demonstration projects 
     that test new approaches to helping parents succeed in the 
     labor market.
           Sincerely,
                                                   George Sheldon,
     Acting Assistant Secretary.

                          ____________________