[Federal Register Volume 64, Number 171 (Friday, September 3, 1999)]
[Rules and Regulations]
[Pages 48246-48258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23017]
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DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Parts 272 and 273
[Amt. No. 379]
RIN Number: 0584-AC63
Food Stamp Program: Food Stamp Provisions of the Balanced Budget
Act of 1997
AGENCY: Food and Nutrition Service, USDA.
ACTION: Interim rule.
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SUMMARY: This rule will implement two food stamp provisions of the
Balanced Budget Act of 1997. The first provision provides State
agencies the authority to exempt from the food stamp time-limit at
section 6(o)(2) of the Food Stamp Act of 1977 up to 15 percent of the
State's caseload that is subject to the requirement. The second
provision provides additional funding for administration of Food Stamp
Employment and Training programs. These two provisions enhance State
flexibility in exempting portions of a State agency's caseload from the
food stamp time limit and increase significantly the funding available
to create work opportunities for recipients that are subject to the
time limit.
DATES: This rule is effective November 2, 1999. Comments must be
received by November 2, 1999, in order to be assured of consideration.
ADDRESSES: Comments concerning this interim rule should be submitted to
John Knaus, Branch Chief, Program Development Division, Food Stamp
Program, Food and Nutrition Service, USDA, 3101 Park Center Drive,
Alexandria, Virginia 22302; telephone: (703) 305-2519. Comments may
also be datafaxed to the attention of Mr. Knaus at (703) 305-2486 or
sent electronically through the internet to: [email protected].
All written comments will be open for public inspection at the office
of the Food and Nutrition Service during regular business hours (8:30
a.m. to 5 p.m., Monday through Friday) at 3101 Park Center Drive,
Alexandria, Virginia, 22302, Room 720.
[[Page 48247]]
FOR FURTHER INFORMATION CONTACT: Questions regarding this interim
rulemaking should be addressed to John Knaus, Branch Chief, at the
above address or by telephone at (703) 305-2519.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This interim rule has been determined to be economically
significant under Executive Order 12866 and Major under Public Law 104-
121, and was reviewed by the Office of Management and Budget.
Executive Order 12372
The Food Stamp Program is listed in the Catalog of Federal Domestic
Assistance under No. 10.551. For the reasons set forth in the final
rule in 7 CFR part 3015, subpart V and related Notice (48 FR 29115,
June 24, 1983), this Program is excluded from the scope of Executive
Order 12372 which requires intergovernmental consultation with State
and local officials.
Regulatory Flexibility Act
This action has been reviewed with regard to the requirements of
the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Shirley
Watkins, Under Secretary for Food, Nutrition and Consumer Services has
certified that this action will not have a significant economic impact
on a substantial number of small entities. State welfare agencies and
political subdivisions will be affected to the extent they must
implement the provisions described in this action.
Executive Order 12988
This interim rulemaking has been reviewed under Executive Order
12988, Civil Justice Reform. This rule is intended to have preemptive
effect with respect to any State or local laws, regulations or policies
which conflict with its provisions or which would otherwise impede its
full implementation. This rule is not intended to have retroactive
effect unless so specified in the ``Effective Date'' paragraph of this
preamble. Prior to any judicial challenge to the provisions of this
rule or the application of its provisions all applicable administrative
procedures must be exhausted.
Unfunded Mandate Analysis
Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Pub. L.
104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of UMRA, the
Department generally must prepare a written statement, including a cost
benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures to State, local, or tribal
governments, in the aggregate, or to the private sector, of $100
million or more in any one year. When such a statement is needed for a
rule, section 205 of the UMRA generally requires the Department to
identify and consider a reasonable number of regulatory alternatives
and adopt the least costly, more cost-effective or least burdensome
alternative that achieves the objectives of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) which impose costs on State, local,
or tribal governments or to the private sector of $100 million or more
in any one year. Thus this rule is not subject to the requirements of
section 202 and 205 of the UMRA.
Paperwork Reduction Act
This interim rule contains information collections which are
subject to review by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1995 (Pub. L. 104-13) (44 U.S.C. 3507).
The reporting and recordkeeping burdens associated with the 15
percent exemption and the increased funding for State food stamp
employment and training programs authorized by the Balanced Budget Act
of 1997 (Balanced Budget Act) and addressed in this rule necessitated a
revision to a previously approved information collection activity, the
Employment and Training Program Report (FNS-583), approved under OMB
No. 0584-0339. Because the Balanced Budget Act mandated implementation
of the food stamp provisions addressed in this rule effective October
1, 1997, without regard as to whether regulations were promulgated to
implement them, FNS submitted an emergency request to OMB on February
17, 1998, to revise the information collection for the FNS-583 form to
reflect the requirements of the statute. FNS estimated the total annual
burden hours associated with the revised FNS-583 to be 195,363 hours--
182,643 hours for the work registration process, 2,762 hours for the 15
percent ABAWD exemption, and 9,958 hours for the E&T funding
requirements. OMB approved the burden estimate for the revised form for
six months, with an expiration date of August 31, 1998.
On April 27, 1998, FNS issued a notice in the Federal Register (63
FR 20567) describing in detail the revised collection of information
and requesting comments. FNS received no comments from the general
public or other public agencies about the information collection.
On September 23, 1998, FNS received an extension of OMB's approval
of the revised burden estimate for the FNS-583 through September 30,
2001.
Public Participation and Effective Date
The amendments to sections 6(o) and 16(h) of the Food Stamp Act of
1977 (Food Stamp Act) which are reflected in this rule were enacted on
August 5, 1997, as sections 1001 and 1002, respectively, of the
Balanced Budget Act, Title I, Pub. L. 105-33. The amendments were
effective October 1, 1997. Section 1005 of the Balanced Budget Act
required that regulations implementing sections 1001 and 1002 of the
Act be promulgated no later than one year after the date of enactment
of the amendments to the Food Stamp Act. In order to meet the
requirement of section 1005 of the Balanced Budget Act, Shirley
Watkins, Under Secretary for Food, Nutrition and Consumer Services, has
determined, pursuant to 5 U.S.C. 533(b)(3)(B), that public comment on
this rule prior to implementation is impracticable and that good cause
exists for making this rule effective less than 30 days after its
publication. However, because we believe that administration of the
rule may be improved by public comment, comments are solicited on this
rule for 60 days after publication. All comments received within the
comment period will be analyzed, and any appropriate changes will be
incorporated in the subsequent publication of a final rule.
Regulatory Impact Analysis
Need for Action
This action is needed to implement section 1005 of the Balanced
Budget Act. That section requires the Secretary of Agriculture to
promulgate regulations implementing the amendments made to the Act by
Title I of the Balanced Budget Act.
Benefits
The provisions of this rule will provide State agencies the ability
to exempt from the time limits at section 6(o)(2) of the Food Stamp Act
(7 U.S.C. 2015(o)(2)) an additional 15 percent of the State's caseload
subject to the requirement. It will also increase significantly the
funding available to State agencies to create work opportunities for
recipients subject to the time limit. Together the provisions, to the
extent that they are fully
[[Page 48248]]
implemented by the States, will permit an estimated 84,000 recipients a
month who are subject to the time limit at section 6(o)(2) of the Food
Stamp Act to continue to receive Food Stamp Program benefits. Of these
recipients, 64,000 will be exempted under the 15 percent waiver
authority, with an additional 20,000 able to meet the work requirement
and thus retain eligibility due to the expanded E&T funding.
Costs
The amendments made by this rule will increase Food Stamp Program
expenditures by $1.4 billion over the next five years.
Background
On August 5, 1997, the President signed Public Law 105-33, the
Balanced Budget Act of 1997. The Balanced Budget Act includes several
provisions that affect the Food Stamp Program. This rule implements two
provisions of the Balanced Budget Act. The first provision provides
State agencies the authority to exempt from the time limit at section
6(o)(2) of the Food Stamp Act up to 15 percent of the State's caseload
subject to the requirement. The second provision provides additional
funding for administration of Food Stamp Program Employment and
Training (E&T) programs.
15 Percent Exemption
Background
On August 22, 1996 the President signed the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 (PRWORA) (Pub. L. 104-
193). Section 824 of the PRWORA amended section 6(o) of the Food Stamp
Act to provide that able-bodied adults without dependents (ABAWDs) can
only receive food stamps for 3 months in 3 years unless they are
working, participating in a work program 20 hours per week, or
participating in a workfare program. It exempts individuals from the
time limit if they are under 18 or over 50, medically certified as
physically or mentally unfit for employment, a parent or other
household member with responsibility for a dependent child, exempt from
work registration under 6(d)(2) of the Act, or pregnant. It provides
that individuals can regain eligibility if they work 80 hours in a 30
day period. Individuals maintain eligibility as long as they are
satisfying the work requirement. If the individual later loses the job,
he/she can receive an additional 3 months of food stamps while not
working. The additional 3 months must be consecutive and begins on the
date the individual notifies the State that he/she is no longer
working. It should be emphasized that PRWORA provides an individual the
opportunity to receive a maximum of 6 months of food stamps in a 3-year
period without meeting the work requirement, if the two 3-month periods
are interrupted by a period of work.
The Food Stamp Act, as amended by PRWORA, allows waivers of the
time limit for groups of individuals living in areas with an
unemployment rate of more than 10 percent or where there are not a
``sufficient number of jobs to provide employment for the
individuals.'' 7 U.S.C. 2015(o)(4)(A)(ii). Subsequent to the enactment
of PRWORA, the President signed the Balanced Budget Act. Section 1001
of the Balanced Budget Act amended section 6(o) of the Food Stamp Act
to allow State agencies to provide an exemption from the PRWORA-imposed
time limits of section 6(o) of the Food Stamp Act for up to 15 percent
of covered individuals. ``Covered individuals,'' as defined in section
6(o)(6)(ii), are those ABAWDs who are not: excepted under paragraph
6(o)(3) of the Food Stamp Act, covered by a waiver, complying with the
work requirement, or in their first or second three months of
eligibility. Section 1001 of the Balanced Budget Act gives the
Secretary the authority to estimate for Fiscal Year (FY) 1998 the
number of covered individuals in the State based on FY 1996 Quality
Control data and other factors the Secretary considers appropriate due
to the timing and the limitations of the data. It provides that
beginning in FY 1999, the number of exemptions will be adjusted to
reflect changes in (1) the State's entire caseload and (2) changes in
the proportion of the State's food stamp caseload covered by the ABAWD-
related waivers. Section 1001 of the Balanced Budget Act also amended
the Food Stamp Act to require that the Food and Nutrition Service (FNS)
adjust the number of exemptions assigned for a current fiscal year
based on the actual number of exemptions granted by the State agency in
the preceding year. Finally, it gives FNS the authority to require
whatever State reports it deems necessary to ensure compliance with the
15 percent exemption provisions. FNS has no discretion in implementing
this provision.
Because there are many requirements of the PRWORA and the Balanced
Budget Act which apply only to ABAWDs and the time limit, FNS is
creating a new regulatory section, Sec. 273.24 in this interim rule.
This interim rule will incorporate the Balanced Budget Act provisions
regarding the 15 percent exemptions into Sec. 273.24. All the PRWORA
provisions regarding ABAWDs and the time limit will be incorporated
into Sec. 273.24 once the proposed rule implementing those provisions
is finalized.
Determining How To Use the Exemptions
The Balanced Budget Act provides that State agencies may allow an
exemption from the time limits of section 6(o) of the Food Stamp Act of
up to 15 percent of covered individuals. The law does not prescribe how
the State agencies shall use the exemption authority. FNS recognizes
that there are many ways a State agency may want to use the exemption
authority. A State agency can, for example, exempt individuals pursuing
their General Equivalency Diploma (GED), individuals residing in the
balance of a county when only a partial county received a waiver under
section 6(o)(4) of the Food Stamp Act, or individuals in an area that
is geographically remote from the State's workfare sites. States could
also use the exemptions to extend for a certain time the eligibility of
individuals who have exhausted the time limit. Therefore, FNS will not
be prescribing categories or geographic areas for which these
exemptions must be used. Instead FNS will allow State agencies maximum
flexibility regarding the 15 percent exemption authority. State
agencies may apply the exemptions as they deem appropriate. At the same
time FNS would like to remind State agencies that along with the
flexibility they are afforded in terms of determining the exemption
criteria comes the responsibility for developing exemption policies
that comport with their number of exemptions. A State agency should
maximize the number of exemptions without exceeding the number of
exemptions allocated for the year.
Covered Individuals
Section 1001 of the Balanced Budget Act amended section 6(o)(6)(ii)
of the Food Stamp Act to provide that a State agency may provide an
exemption from the time limits of section 6(o) for covered individuals.
The Balanced Budget Act defined ``covered individuals'' as those ABAWDs
who are not: excepted under paragraph 6(o)(3) of the Food Stamp Act,
covered by a waiver under 6(o)(4) of the Food Stamp Act, complying with
the work requirement of 6(o)(2) of the Food Stamp Act, or in their
first or second three months of eligibility. FNS would like to clarify
that it is up to the State
[[Page 48249]]
agency to decide whether or not an individual has to exhaust his/her
first and second three months in order to qualify for an exemption
under this provision. For example, a State agency may exempt every
ABAWD who resides in the part of a county that was not already waived
under 6(o)(4) regardless of whether or not they have exhausted their
first and second three months. However, a State agency may determine
that the best way to manage their finite number of 15 percent
exemptions is to require individuals to exhaust their first and second
three months before receiving an exemption under this provision.
Arriving at the By-State Numbers of Exemptions for FY 1998
The Balanced Budget Act also amended section 6(o) of the Food Stamp
Act to provide in paragraph (6)(C) that for FY 1998, a State agency may
provide a number of exemptions such that the average monthly number of
exemptions in effect during the fiscal year does not exceed 15 percent
of the number of covered individuals in the State in FY 1998, as
estimated by the Secretary, based on the FY 1996 Quality Control (QC)
data and other factors the Secretary considers appropriate due to the
timing and limitations of the survey.
In a memorandum dated September 4, 1997, FNS advised the State
agencies what their average number of monthly exemptions were for FY
1998. To arrive at the number of covered individuals for each State,
FNS began with the entire FY 96 QC data file, and then made adjustments
by:
Excluding recipients exempted from the ABAWD provisions
Excluding to the extent possible those non-citizens made
ineligible for food stamps after August 22, 1997
Excluding the number of recipients who were complying with
the work requirements
Excluding to the extent possible those people who were at
the time in their initial first three months of eligibility
Adjusting this data to reflect the actual change in each
State's caseload between FY 96 and FY 97 and the expected national
caseload change between FY 97 and FY 98, and
Excluding those individuals living in waived areas.
To arrive at 15 percent of the covered individuals, FNS multiplied
the number of covered individuals for each State by 15 percent.
Based on this methodology, FNS authorized for FY 1998 approximately
64,000 average monthly exemptions for ABAWDs nationwide and made
allocations from this total to the States. It is important to note that
the average number of exemptions allocated to each State for FY 1998
was based on the number of covered individuals in FY 1996 (before the
ABAWD time limits took effect) and, therefore, was likely greater than
15 percent of the number of covered individuals in areas that have
implemented the time limits.
Subsequent Fiscal Years
Determining the Number of Exemptions
The Balanced Budget Act amended section 6(o) of the Food Stamp Act
by adding paragraph (6)(D) (7 U.S.C. 2015(o)(6)(D)) to provide that for
FY 1999 and subsequent fiscal years, a State agency may exempt up to 15
percent of their unwaived, unemployed, childless able-bodied population
from the three-month time limit. The number of exemptions allotted each
State will reflect changes in the State's caseload and the proportion
of food stamp recipients covered by waivers granted under paragraph
6(o)(4) of the Food Stamp Act. FNS would like to clarify that the
amendment to section 6(o) of the Food Stamp Act made by section 1001 of
the Balanced Budget Act requires that the adjustments be based on
changes in States' entire caseloads and not just ABAWD caseloads as
stipulated in the Balanced Budget Act definition of caseload.
Adjusting the Exemptions Based on the Previous Year's Use
The Balanced Budget Act also amended section 6(o) of the Food Stamp
Act, again in paragraph (6)(D), to provide that for FY 1999 and each
subsequent fiscal year, the Secretary shall increase or decrease the
number of individuals who may be granted an exemption by a State agency
to the extent that the average monthly number of exemptions in effect
in the State for the preceding fiscal year is different than the
average monthly number of exemptions estimated for the State agency for
the preceding fiscal year. Therefore, if this level of exemptions is
not used by the end of the fiscal year, the State may carry over the
balance. If more exemptions are used than authorized in a fiscal year,
the State's allocation for the next year will be reduced. Final
information to make these adjustments will not be available until after
the start of each fiscal year. Therefore, based on preliminary
information, FNS will provide the State agencies with their average
monthly number of exemptions prior to the start of each fiscal year,
and will make adjustments based on final information if necessary.
Caseload Adjustments
Section 1001 of the Balanced Budget Act also amended section 6(o)
of the Food Stamp Act to provide that the Secretary shall adjust the
estimated number of covered individuals allocated for a State during a
fiscal year if the number of actual food stamp recipients in the State
varies by more than 10 percent, as determined by the Secretary, from
the State's average caseload for the 12-month period preceding June 30
(7 U.S.C. 2015(o)(6)(E)). FNS would like to clarify that the adjustment
will be based on the entire caseload and not just the ABAWD caseload.
FNS will make only one adjustment a year. If an adjustment is
necessary, FNS shall advise the State agencies during the third quarter
of each fiscal year.
Reporting
Finally, the Balanced Budget Act amended section 6(o) of the Food
Stamp Act by adding paragraph (6)(G) to provide that the State agency
shall submit such reports to the Secretary as the Secretary determines
are necessary to ensure compliance with this provision. In order to
monitor State's use of the exemptions and to provide assistance if
necessary, FNS has determined that the State agency shall track and
report the number of cases exempt under the 15 percent criteria. State
agencies shall track the exemptions any way they deem appropriate.
State agencies shall report the numbers to the FNS regional offices on
a quarterly basis on the employment and training report (Form FNS-583),
as provided for in Sec. 273.7(c)(6).
Quality Control Issues
Since State agencies have complete discretion in determining which
recipients will receive exemptions, FNS will not be proscribing
categories or geographic areas. Therefore, QC will not evaluate States'
actual exemption decisions against the exemption criteria they have
adopted under the 15 percent criteria. However, in order to distinguish
cases that are exempt under the 15 percent criteria from cases that are
exempt under section 6(o) of the Food Stamp Act, covered by a waiver,
or fulfilling the work requirement (which will be evaluated by QC),
State agencies need to clearly identify those cases that are exempt
under the 15 percent criteria. For example, a State agency decides to
exempt everyone over the age of 45. QC pulls a case where the State
agency exempted someone who is 43. Even though the State agency
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exempted someone under 45, the case would not be in error because the
State agency can use the 15 percent exemption anyway it chooses. To
avoid an error, however, the State agency must have documented in the
casefile that the person was exempted under the 15 percent criteria.
Additional Funding for Food Stamp Employment and Training Programs
Background
Current Food Stamp Program regulations at section 273.7(d) contain
rules governing State agency use of Federal E&T grants. Current
regulations require FNS to allocate an annual Federal E&T grant to
State agencies based on the number of work registrants in each State
compared to the number of work registrants nationwide. The grant is 100
percent Federally funded and requires no State match. Under current
regulations, each State agency must receive at least $50,000 in 100
percent Federal funds. State agencies are required to use their E&T
grants to fund the administrative costs of planning, implementing and
operating E&T programs. FNS pays 50 percent of all other administrative
costs above those covered by the 100 percent Federal grant that State
agencies incur in operating their E&T programs.
Section 1002 of the Balanced Budget Act provided an additional $599
million over five years in 100 percent Federal funding for the
operation of the E&T programs. It also amended section 16(h)(1) of the
Food Stamp Act (7 U.S.C. 2025(h)(1)), to require that all 100 percent
Federal E&T funding remain available to FNS to allocate to States until
expended.
The apparent intent behind the additional E&T funding provided by
the Balanced Budget Act is to enable State agencies to provide
additional work opportunities for individuals subject to the 3-month
Food Stamp Program time limit discussed in the first section of this
preamble. By providing State agencies with the resources to create more
work opportunities, the supplemental funding will help insure that it
is only those individuals who deliberately choose not to satisfy the
program's work requirements who lose their eligibility and not those
who are willing to work but cannot find opportunities to do so.
Increased Funding Levels
Section 1002 of the Balanced Budget Act significantly increased the
amount of 100 percent Federal funding available to State agencies for
the operation of Food Stamp E&T programs. Section 817 of PRWORA amended
section 16(h)(1) of the Food Stamp Act to provide $405 million in 100
percent Federal E&T funding for FYs 1998 through 2002. The Balanced
Budget Act further amended section 16(h)(1) of the Food Stamp Act to
increase that amount by $599 million. It also amended section 16(h)(1)
of the Food Stamp Act to require that all 100 percent Federal E&T
funding remain available to FNS to allocate to States until expended.
Whereas all State agencies are eligible to receive some percentage
of the 100 percent Federal E&T funding provided under PRWORA, section
1002 of the Balanced Budget Act further amended section 16(h)(1) to
require that for a State agency to receive an allocation of the
additional or ``supplemental'' funding provided under that Act, the
State agency must maintain its level of expenditure of State funds on
E&T and optional workfare programs at a level that is not less than the
level of State agency expenditures on such programs in FY 1996.
Therefore, only State agencies that choose to meet this maintenance of
effort requirement are eligible to receive a portion of the
supplemental Federal E&T funding provided by the Balanced Budget Act.
The Balanced Budget Act's maintenance of effort requirement is
discussed in greater detail below.
Allocation of E&T Grants
Current regulations at Sec. 273.7(d)(1)(i)(A) require that
nonperformanced-based, 100 percent Federal E&T funding be allocated
among States based on the number of work registrants in each State
relative to the total number of work registrants nationwide. In order
to target Federal E&T funding toward serving recipients subject to the
time limit at section 6(o)(2) of the Food Stamp Act, the Balanced
Budget Act amended section 16(h)(1) of the Food Stamp Act to require
that in FY 1998 E&T grants be allocated among States based on (1)
changes in each State's caseload (defined as the average monthly number
of individuals receiving food stamps during the 12-month period ending
the preceding June 30); and (2) each State's portion of food stamp
recipients who are not eligible for an exception under section 6(o)(3)
of the Food Stamp Act to the work requirement at section 6(o)(2). The
Balanced Budget Act further amended section 16(h) to require that in
FYs 1999 through 2002, E&T grants be allocated to States based on (1)
changes in each State's caseload; and (2) each State's portion of food
stamp recipients who are not eligible for an exception under section
6(o)(3) of the Food Stamp Act who (A) do not reside in an area of the
State granted a waiver to the work requirement under section 6(o)(4) of
the Food Stamp Act, or (B) do reside in an area of the State granted a
waiver to the work requirement under section 6(o)(4) of the Food Stamp
Act if the State agency provides E&T services in the area to food stamp
recipients who are subject to the work requirement. This rulemaking
amends food stamp regulations at Sec. 273.2(d)(1)(i)(C) to describe the
new procedures for allocating Federal E&T grants.
Section 1002 of the Balanced Budget Act further amended section
16(h) of the Food Stamp Act to require that, for purposes of
determining each State's allocation of the Federal E&T grant in a
fiscal year, FNS estimate the portion of food stamp recipients residing
in each State who are not eligible for an exception under section
6(o)(3) of the Food Stamp Act using the 1996 QC survey data. This
rulemaking amends food stamp regulations at Sec. 273.2(d)(1)(i)(D) to
incorporate this requirement.
In accordance with the requirements of the Balanced Budget Act, FNS
used the following three-step process to determine each State's
allocation of Federal E&T funds in FY 1998:
1. Determine Population Not Excepted from Work Requirement. FNS
estimated the portion of food stamp recipients residing in each State
who are not eligible for an exception under section 6(o)(3) of the Food
Stamp Act to the work requirement at section 6(o)(2) of that Act using
the 1996 QC survey data.
2. Adjust for Expected Caseload Changes. FNS determined the actual
changes in each State's caseload between FY 96 and FY 97 and the
expected change in national caseload between FY 97 and FY 98. These
adjustments provided a caseload adjustment percentage for each State
that FNS used to modify the FY 96 QC data to represent, as closely as
possible, the population in each State in FY 98 that is not eligible
for an exception under section 6(o)(3) of the Food Stamp Act.
3. Determine the State-By-State Allocation of the 100 percent
Federal E&T Grant. FNS established the percentage basis for the E&T
allocation by dividing each State's estimated FY 98 population of
recipients not eligible for an exception under section 6(o)(3) of the
Food Stamp Act by the national estimate of that population in FY 98.
FNS then multiplied the resulting percentage by both the base Federal
E&T appropriation of $81 million provided under PRWORA and the
supplemental appropriation of $131 million provided
[[Page 48251]]
under the Balanced Budget Act to determine each State's share of base
and supplemental E&T funds. All State agencies were eligible for the
base allocation. To receive a supplemental allocation, a State agency
must meet its maintenance of effort requirement as described below.
To determine each State agency's allocation of 100 percent Federal
E&T funds in FYs 1999 through 2002, FNS will follow the same three-step
procedure as described above, except that in estimating the number of
recipients in each State not eligible for an exception under section
6(o)(3) of the Food Stamp Act, FNS will adjust FY 96 QC data by
eliminating recipients eligible for an exception under section 6(o)(3)
who reside in an area of the State granted a waiver to the work
requirement under section 6(o)(4) of the Food Stamp Act except if the
State agency provides E&T services in the area to food stamp recipients
who are subject to the work requirement. (FNS estimates that 30 out of
the 39 State agencies which had waivers under section 6(o)(4) in April
1998 provided E&T services in at least some of the waived areas). FNS
will also adjust QC data to reflect caseload changes for the
appropriate fiscal years.
Current regulations at Sec. 273.7(d)(1)(i)(B) require that each
State agency receive at a minimum $50,000 in 100 percent Federal E&T
funding a year. The Balanced Budget Act left this requirement
unchanged. In order to ensure that each State agency receives a minimum
allocation of $50,000, FNS shall reduce the grant of each State agency
that is allocated to receive more than $50,000, if necessary,
proportionate to the number of food stamp recipients not eligible for
an exception under section 6(o)(3) of the Food Stamp Act that reside in
the State as compared to the total number of such recipients in all the
State agencies receiving more than $50,000. The funds from the
reduction shall be distributed to State agencies initially allocated to
receive less than $50,000 so that they receive the $50,000 minimum.
This rulemaking amends Food Stamp Program regulations at
Sec. 273.2(d)(1)(i)(E) to incorporate this requirement.
Current regulations at Sec. 273.7(d)(1)(i)(D) provide that FNS may
reallocate unexpended 100 percent Federal E&T grants during a fiscal
year if a State agency will not expend all of its E&T grant. The
Balanced Budget Act contains the same requirement except it provides
FNS the authority to reallocate unexpended funds in the fiscal year
that those funds are allocated or the next fiscal year. This rulemaking
amends Food Stamp Program regulations at Sec. 273.2(d)(1)(i)(F) to
incorporate this requirement.
Use of Funds
The Balanced Budget Act amended section 16(h)(1)(E) of the Food
Stamp Act to require that at least 80 percent of the 100 percent
Federal E&T grant a State agency receives in a fiscal year, including
both the base allocation for which each State agency is eligible and
the supplemental allocation available only to State agencies that
choose to meet their maintenance of effort requirement, be earmarked to
serve food stamp recipients who are not eligible for an exception under
section 6(o)(3) of the Food Stamp Act and who are placed in and comply
with either a workfare program that meets the requirements of section
20 of the Food Stamp Act, 7 U.S.C. 2029, or a comparable program
established by a State or political subdivision of a State, or a work
program for 20 hours or more per week. The 80 percent use of funds
requirement applies to any grant of 100 percent Federal E&T funds a
State receives in a fiscal year, including both the initial grant
received by a State at the beginning of a fiscal year and any grant
composed of reallocated funding which a State receives during a fiscal
year. State funds, including State monies expended to satisfy a State
agency's maintenance of effort requirement as described in the next
section, are not subject to the requirement.
The remaining 20 percent of a State's 100 percent Federal E&T grant
may be used to provide work activities for food stamp recipients who
are eligible for an exception under section 6(o)(3) of the Food Stamp
Act, or on work activities that do not qualify either as work or
workfare programs under sections 6(o)(2)(B) and (C) of the Food Stamp
Act, such as job search or job search training programs for any food
stamp recipient.
Although the language of section 1002 of the Balanced Budget Act
which amends section 16(h)(1)(E) of the Food Stamp Act might be
interpreted as requiring that a specified dollar amount (not less than
80 percent of the funds actually received by a given State agency) must
be expended by the State agency to serve ABAWDs in qualifying
activities, such an interpretation would necessitate an accounting of
each dollar expended by a State so that no less than 80 cents could be
used to serve ABAWDs in qualifying activities and, conversely, not more
than 20 cents could be expended for other allowable E&T costs. In
addition, if a State agency wished to expend the full 20 percent of its
allocation permitted to be used for unrestricted E&T activities, it
would be required to expend all of the amount allocated to it in order
to meet the 80 percent requirement. However, because nothing in the
Balanced Budget Act specifies that 80 percent of the funds which are
restricted to serving ABAWDs in qualifying activities must be expended
before a State agency may expend any of the 20 percent which may be
used for other E&T purposes, the Department is permitting State
agencies to spend the 20 percent of their E&T allocations that are
available for non-ABAWD activities independent of whether they spend
any of the 80 percent of their E&T grants that are earmarked for
ABAWDs. This interpretation of Section 1002 of the Balanced Budget Act
will significantly increase State flexibility in operating their E&T
programs.
State agencies, therefore, are not required to utilize all or any
of the 80 percent of their 100 percent E&T grant earmarked to serve
participants subject to the work requirement but may operate their E&T
programs utilizing only the 20 percent of their grant available to
serve non-ABAWDs and to be spent on non-qualifying activities. If a
State agency chooses not to spend some or any of the 80 percent of its
E&T grant earmarked for ABAWDs and ABAWD qualifying activities,
however, FNS may reallocate the unexpended funds to other State
agencies as it considers appropriate and equitable in accordance with
regulations at Sec. 273.2(d)(1)(i)(F).
If a State agency spends more than 20 percent of the 100 percent
E&T grant it receives for a fiscal year to provide work activities for
food stamp recipients eligible for an exception under section 6(o)(3)
of the Act, or on activities that do not qualify either as work or
workfare programs under sections 6(o)(2)(B) and (C) of the Food Stamp
Act, the allowable costs incurred that are in excess of the 20 percent
threshold will be reimbursed at the normal administrative 50-50 match
rate.
One hundred percent E&T funds that a State expends on ABAWDs who
reside in an area of a State granted a waiver under section 6(o)(4) of
the Food Stamp Act or on ABAWDs who have been granted an exemption
under section 6(o)(6) of the Act will count toward the 80 percent
expenditure requirement so long as the funds are spent creating
activities that meet the requirements of sections 6(o)(2)(B) and (C).
This rulemaking amends food stamp regulations to add a new section
that contains the requirements for State agency use of Federal 100
percent E&T
[[Page 48252]]
funding established by the Balanced Budget Act. The new section will be
designated Sec. 273.7(d)(1)(ii) and titled ``Use of funds.'' Former
Sec. 273.7(d)(1)(ii), which contained requirements for reimbursements
for E&T program participants, will be redesignated Sec. 273.7(d)(1)(v)
and remain unchanged except for changes to several cite references.
Regulations currently contained at Sec. 273.7(d)(1)(i)(E), (F), and
(G), list additional requirements for use of Federal 100 percent E&T
funds. Current regulations at Sec. 273.7(d)(1)(i)(E) require that
Federal 100 percent E&T grants be used only for the purposes of funding
the administrative costs of planning, implementing, and operating E&T
programs and not for funding other activities, such as work
registration or sanctioning activities. Current regulations at
Sec. 273.7(d)(1)(i)(F) require that State agencies have an E&T plan
approved by FNS prior to receiving any Federal 100 percent E&T funding.
Current regulations at Sec. 273.7(d)(1)(i)(G) prohibit State agencies
from using Federal 100 percent E&T funding to supplant nonfederal funds
for existing educational services and activities that are part of
allowable E&T components. This rulemaking makes no changes to the
content of any of the three provisions but moves them all to revised
Sec. 273.7(d)(1)(ii) in order that all requirements concerning use of
Federal 100 percent E&T funds may be in the same location. Current
regulations at Sec. 273.7(d)(1)(i)(E), (F), and (G) will be
redesignated as Sec. 273.7(d)(1)(ii)(E), (F), and (G), respectively.
As noted above, section 824 of the PRWORA amended section 6(o) of
the Food Stamp Act to provide that ABAWDs can only receive food stamps
for 3 months in 3 years unless they are working, participating in a
workfare program, or participating in a work program for 20 hours or
more per week. Section 824 defined a work program as a program operated
under the Job Training Partnership Act (JTPA), a program under section
236 of the Trade Act of 1974, or an E&T program operated or supervised
by the State or a political subdivision that meets standards approved
by the Governor of the State, other than a job search or job search
training program. On August 7, 1998, President Clinton signed the
Workforce Investment Act of 1998 (WIA) (Pub. L. 105-220). Section 199
of the WIA repeals the JTPA effective July 1, 2000. Section 199(A) of
that Act requires that all references in any other law to the JTPA be
deemed to refer to the corresponding provision in the WIA. To address
this change, the new regulations at Sec. 273.7(d)(1)(ii)(A) define a
qualifying work program as one operated under the JTPA or, after July
1, 2000, one that was previously operated under the JTPA that is now
operated under the WIA, a program under section 236 of the Trade Act of
1974, or an E&T program operated or supervised by the State or a
political subdivision that meets standards approved by the Governor of
the State, other than a job search or job search training program.
Maintenance of Effort
Section 1002 of the Balanced Budget Act also amended section
16(h)(1)(F) of the Food Stamp Act to require that, in order for a State
agency to receive its portion of the supplemental E&T funds allocated
under the Balanced Budget Act in any fiscal year, that State agency
must spend in that fiscal year at least the same amount of State funds
it spent in FY 96 to administer E&T and the optional workfare program
(if one was available).
State agencies are required to meet the maintenance of effort
requirement only if they wish to spend some or all of the supplemental
E&T allocation provided under the Balanced Budget Act. State agencies
that chose not to utilize any of the supplemental allocation for which
they are eligible are not required to satisfy the maintenance of effort
requirement. If a State agency chooses not to meet its maintenance of
effort requirement, the supplemental allocation for which it was
eligible will be reallocated to other States in accordance with
regulations at Sec. 273.7(d)(1)(i)(F).
In order to increase State flexibility in operating E&T programs,
FNS is not requiring State agencies to expend all of their required
maintenance of effort funds before they begin spending their
supplemental E&T grants. Instead, FNS is requiring those State agencies
which plan to spend the supplemental allocation for which they are
eligible in a fiscal year to provide in their annual State E&T plans
good faith assurance that they will meet their maintenance of effort
requirement. This rulemaking amends E&T State plan requirements at
Sec. 273.7(c)(4)(ii) to add this requirement. At the end of each fiscal
year, FNS will review State expenditures for operating food stamp E&T
programs to ensure that State agencies which noted in their E&T plans
that they intended to meet their maintenance of effort (MOE)
requirements did in fact do so.
In accordance with the requirements of section 1002 of the Balanced
Budget Act, State funds that are expended to meet a State's MOE
requirement are not subject to the use of funds requirement that at
least 80 percent of a State agency's E&T grant be earmarked to serve
individuals subject to the work requirement at section 6(o)(2) of the
Food Stamp Act and to operate activities that meet the requirements of
sections (6)(o)(2)(B) and (C).
State agencies may not count participant reimbursements as part of
their maintenance of effort expenditure, as this is prohibited under
section 16(h)(3) of the Food Stamp Act. The only exception is in the
case of optional workfare programs in which reimbursements to
participants for work-related expenses are counted as part of the State
agency's administrative expenses. The only State agencies that operated
optional workfare programs in FY 96 were Florida, North Carolina,
Wisconsin, Arkansas, and Colorado. They are the only State agencies
that may apply this exception.
This rulemaking amends food stamp regulations to add a new section
that contains the maintenance of effort requirements established by the
Balanced Budget Act. The new section will be designated
Sec. 273.7(d)(1)(iii) and titled ``Maintenance of Effort.'' Former
Sec. 273.7(d)(1)(iii), which provided for a 50 percent Federal match
for administrative costs incurred by State agencies in operating E&T
programs, will be redesignated Sec. 273.7(d)(1)(vi).
Component Costs
Section 1002 of the Balanced Budget Act amended section 16(h)(1) of
the Food Stamp Act to require FNS to monitor State expenditures of 100
percent Federal E&T funding, including the costs of individual
components of State E&T programs. The Balanced Budget Act also provided
FNS the discretion to set reimbursable costs for individual components
of State E&T programs, making sure that the amount spent or planned to
be spent on the components reflect the reasonable cost of efficiently
and economically providing components appropriate to recipients'
employment and training needs.
FNS has determined that setting reimbursement rates for E&T
activities is necessary to promote the intent of the increased E&T
funding, which was to create a sufficient number of work opportunities
so that as many food stamp recipients as possible who are subject to
the work requirement that wish to work can be given the opportunity to
do so before losing eligibility for the program. Use of the
reimbursement rates will help to ensure that the maximum number of work
opportunities can be created with the available funds, thus potentially
[[Page 48253]]
keeping as many ABAWDs as possible eligible for the program.
FNS recognizes, however, that use of the reimbursement rates will
significantly increase State administrative burdens. Therefore, FNS is
operating a one-year demonstration to test an alternative to the
reimbursement rates. Under the alternative, a State agency may spend
its Federal 100 percent E&T allocation without consideration of per
slot costs if the State agency commits to offering a work opportunity
to every ABAWD applicant or recipient who has exhausted the food stamp
time limit. The alternative to the reimbursement rates is discussed in
more detail below.
The reimbursement rates represent FNS' estimate of the reasonable
cost of efficiently and economically providing the work opportunities.
The rates apply to all 100 percent Federal E&T funds which a State
expends to provide work activities that meet the requirements of
section 6(o)(2)(B) and (C) of the Food Stamp Act for food stamp
recipients who are (1) subject to the work requirement at section
6(o)(2), exempt from the requirement because they reside in an area of
a State granted a waiver under section 6(o)(4), or (3) granted an
exemption from the requirement under section 6(o)(6) of the Act. The
rates do not apply to expenditures of the 20 percent of a State's 100
percent E&T grant that is not earmarked for ABAWDs, unless those funds
are used to create qualifying workfare and education and training slots
for ABAWDs.
The reimbursement rates went into effect on October 1, 1998. For FY
1998, the reimbursement rates did not apply and State agencies were
reimbursed for their actual costs in creating work slots. States were
notified of the reimbursement rates by memorandum from FNS regional
offices in February 1998. The amount of the reimbursement rates, which
is discussed below, may be revised based on cost data submitted by
State agencies. If the rates are revised, FNS will inform States of the
new rates through a policy memorandum.
In determining the reimbursement rates, FNS utilized available
information on the costs of providing E&T components that meet the
requirements of section 6(o)(2)(B) and (C). Because State agencies have
generally emphasized in their E&T programs activities such as job
search and job club that are expressly prohibited as qualifying work
programs under sections 6(o)(2)(B) and (C), FNS had little information
that is directly applicable in establishing reimbursement rates for
qualifying work activities. However, information from job search
activities was used as a basis for extrapolating certain costs, such as
for intake and monitoring, that are common to workfare and education
and training programs. FNS, therefore, has been able to use the
information it has available, in combination with information from
other sources, including a study of workfare programs conducted by the
Manpower Demonstration Research Corporation,\1\ to establish what it
believes to be a reasonable estimate of the maximum costs State
agencies will need to spend to provide workfare and education and
training slots for recipients not eligible for an exception under
section 6(o)(3).
---------------------------------------------------------------------------
\1\ Unpaid Work Experience for Welfare Recipients: Findings and
Lessons from MDRC Research, 1993. Thomas Brock, David Butler, David
Long.
---------------------------------------------------------------------------
FNS has established one reimbursement rate for both workfare and
20-hour a week work program components. However, because FNS recognizes
the uncertain level of compliance with various work requirements among
the childless, able-bodied adult population subject to the work
requirement at section 6(o)(2), it has set two levels for the
reimbursement rate--one level for filled work slots and the other for
unfilled or ``offered'' work slots. A slot is ``filled'' when a
participant reports to a work or training site to begin his or her work
activities. A slot is ``offered'' when a bona fide workfare or training
opportunity is made available to a participant (i.e., the participant
is told to report to a work site at a given date and time) but the
participant either refuses the assignment or does not report. This two-
tiered rate structure insures that a State agency is not denied
reimbursement for costs it incurred in creating work opportunities when
program participants choose not to comply with program work
requirements.
It should be noted that under the reimbursement rate structure
State agencies are reimbursed not for simply creating qualifying
workfare or 20-hour-a week education/training slots but for placing, or
offering to place, participants who are subject to the food stamp work
requirement in those slots. A State agency that assigns two ABAWDs to
the same work slot (one to work four hours in the morning, the other
four hours in the afternoon), would claim reimbursement for two filled
slots since two ABAWDs are retaining eligibility for the program. A
State agency that assigns one ABAWD to two slots in one month, a
workfare slot and a 20-hour-a-week education and training slot, may
only claim reimbursement for one filled slot for that month because
only one ABAWD is retaining eligibility for the program.
The reimbursement rates currently are as follows:
Offered Work Slot: $30
Filled Work Slot: $175
These rates represent the maximum amount of 100 percent Federal
funds that FNS will reimburse State agencies for their expenditures in
providing workfare and work program slots that meet the requirements of
section 6(o)(2)(B) and (C). The rates represent a monthly average per
slot cost, although reconciliation will be conducted on a yearly, not
monthly, basis.
To apply the rates, FNS will sum the number of filled and unfilled
slots a State agency reports at the end of a fiscal year and multiply
each by the appropriate rate. FNS will add the two resulting sums and
compare that against the State's actual expenditure of Federal E&T
money for that year. If the amount spent is less than the amount
allowed under the rates, the actual amount would be paid out of the E&T
grant. If the amount spent by the State agency exceeds the amounts
allowed under the rates, the State agency will be required to pay that
excess amount out of their own funds (which would be eligible for the
standard 50 percent administrative cost Federal match). This procedure
allows State agencies to average the cost of creating slots--i.e.,
balance the cost of higher priced slots with lower costing slots--and
still fall within the rate structure.
FNS is confident that State agencies will be able to create work
opportunities within the fiscal constraints set by the rates. Not only
will State agencies be able to average the costs of more expensive and
less expensive work slots over a fiscal year, but the two-tiered rate
structure enables State agencies to effectively claim reimbursement for
more than the fixed rate for a filled slot. Although the reimbursement
rate for a filled slot is $175, State agencies can claim an additional
$30 reimbursement if the slot is turned down by one participant before
being accepted by another. For example, if a work slot is refused by
four participants before being accepted by a fifth, the State agency
may claim reimbursement for offering the slot four times, or $120, in
addition to claiming a $175 reimbursement for filling the slot. In
other words, the State agency could claim $295 under this example for
the cost of creating one work slot.
A State agency may not claim reimbursement for a filled slot for a
participant who is satisfying the work
[[Page 48254]]
requirement by working 20 hours or more a week. In this case, the State
agency is incurring no reimbursable E&T cost (costs associated with
monitoring the participant's employment would be included as
certification costs).
As noted above, FNS may revise the amount of the reimbursement
rates based on actual data on the cost of creating work slots compiled
by State agencies. This information may be forwarded to FNS at the
address noted earlier in this document. FNS would also be interested in
obtaining from States examples of the types of E&T components that
States would like to operate for ABAWDs which they are not currently
operating, either because the components cannot be supported under the
existing reimbursement rate structure or for some other reason. States
should provide estimates of the costs of these components.
This rulemaking amends food stamp regulations to add a new section
that contains requirements regarding E&T components costs. The new
section will be designated Sec. 273.7(d)(1)(iv) and titled ``Component
Costs.'' Former Sec. 273.7(d)(1)(iii), which provides that enhanced
cost-sharing for placement of workfare participants in paid employment
be available only for placements that occur through optional workfare
programs funded under Sec. 273.22(g), will be redesignated
Sec. 273.7(d)(1)(vii).
Reporting Requirements
Current regulations at Sec. 273.7(c)(6) contain requirements for
State agency reporting of monthly figures for E&T program participants.
Current regulations at Sec. 273.7(d)(3) contain the requirements for
State agency reporting of expenditures on food stamp E&T programs.
Because of the new restrictions on the use of Federal 100 percent
E&T funding imposed by the Balanced Budget Act and described in this
rulemaking, FNS is increasing the reporting burden on State agencies
with regard to E&T programs. Although increased reporting requirements
impose increased administrative burdens on States, FNS concluded that
increasing State reporting requirements for E&T activities was the
simplest and most efficient means for monitoring State compliance with
the 80-20 use of funds requirement and the component cost reimbursement
rates, both described earlier in this memorandum.
In addition to submitting all the information previously required
under Sec. 273.7(c)(6) and Sec. 273(d)(3), State agencies must report
the number of workfare and 20-hour-a-week education and training slots
they created to serve recipients subject to the work requirement at
section 6(o) of the Food Stamp Act. This information must be broken out
to show the number of slots that were filled and the number that were
offered. State agencies must further break out the information to show
the number of slots that were created in areas of a State that have
received a waiver in accordance with section 6(o)(4) and in non-waived
areas (this information will be used by FNS to evaluate the impact on
participants subject to the work requirement of allowing State agencies
to spend the 80 percent of their 100 percent Federal E&T grant on
ABAWDs not in danger of losing eligibility). State agencies must also
report the amount of Federal 100 percent E&T funding spent on workfare
slots and on qualifying 20-hour-a-week work program slots that were
created to serve recipients subject to the work requirement at section
6(o). This information must be included on the Employment and Training
Program Report (FNS-583).
In this rulemaking we are amending food stamp regulations at
Sec. 273.7(c)(6) and Sec. 273(d)(3) to incorporate the new reporting
requirements.
Alternative to the Reimbursement Rates
Although FNS believes that the reimbursement rate structure will be
effective in creating a sufficient number of work opportunities to
insure that most ABAWDs who want to work will be provided the
opportunity to do so before losing eligibility for the Food Stamp
Program, we are also interested in exploring alternatives to the rate
structure which will provide State agencies greater flexibility while
at the same time satisfying the intent behind the increased funding
provided under the Balanced Budget Act. To this end, FNS will operate
in FY 1999 a one-year demonstration under which a State agency may
spend its Federal 100 percent E&T allocation without consideration of
per slot costs if the State agency commits to offering a work
opportunity to every ABAWD applicant or recipient who has exhausted the
time limit and does not reside in an area of a State that has a
received a waiver in accordance with section 6(o)(4) or has not already
received an exemption from the work requirement in accordance with
section 6(o)(6).
FNS will monitor whether State agencies approved for this
alternative are meeting their commitment to offer work opportunities to
all ABAWDs that have exhausted the time limit. In addition, QC errors
will be cited against a State agency operating under this alternative
if it terminated an ABAWD from the program, denied his or her
application because of the time limit without offering the ABAWD a work
slot, or issued benefits to an individual that had exhausted his or her
three months of eligibility but was not offered a slot. A State agency
that does not appear to be meeting its commitment, or that has a
significant number of such QC errors will be required to correct its
operation or be denied this alternative if FNS allows it in future
years.
The State agencies that operate under this alternative must still
meet the requirement that not less than 80 percent of the 100 percent
Federal funds the State agency expends in a fiscal year be spent on
activities that meet the requirements of sections 6(o)(2)(B) and (C) of
the Food Stamp Act.
The criteria FNS shall use to select the State agencies that may
participate in the alternative shall include the following factors:
The size of a State agency's ABAWD caseload;
The State agency's ability to offer a work opportunity to every
ABAWD applicant and participant that has exhausted the time limit;
The State agency's procedures for monitoring its compliance with
the requirements of the demonstration; and
The State agency's plans for taking corrective action if compliance
is not being met.
FNS welcomes comments from States on the alternative program. FNS
would also be interested in obtaining from States other proposals for
alternatives or modifications to the rate structure, such as providing
States a temporary exemption from the rates to start new food stamp E&T
programs in areas not previously served or to expand the capacity of
existing programs so that all ABAWDs reaching the time limit can be
provided with qualifying work opportunities.
Because FNS is operating the reimbursement rate alternative as a
one year demonstration that began on October 1, 1998, we are not
including in this interim rule regulations on the alternative program.
However, depending on the comments received on this program and FNS'
evaluation of the demonstration, FNS may elect to implement the
reimbursement rate alternative as a permanent program available to all
States. If a permanent program is implemented, regulations will be
issued, possibly in the final version of this interim rule.
[[Page 48255]]
Report to Congress
Section 1002(b) of the Balanced Budget Act requires that not later
than 30 months after the date of enactment of the Act, The Secretary of
Agriculture must submit to the Committee on Agriculture of the House of
Representatives and the Committee on Agriculture, Nutrition, and
Forestry of the Senate a report regarding whether the increased E&T
funds provided under section 1002 of the Balanced Budget Act have been
used by State agencies to increase the number of work slots for
recipients subject to the food stamp time limit at section 6(o) of the
Food Stamp Act (7 U.S.C. 2015(o)) in employment and training programs
and workfare in the most efficient and effective manner practicable.
In order to complete the required report, the Department of
Agriculture released a Request for Proposals in April 1998 in which it
solicited bids from parties interested in conducting the study. In
September 1998, the contract to complete the E&T study was awarded to
Health Systems Research, an independent research group.
Implementation
State welfare agencies have been instructed through agency
directive to implement the provisions of the BBA without waiting for
formal regulations. Sections 1001 (15 percent exemption) and 1002
(increased E&T funding) were required to be implemented as of October
1, 1997. The changes in this rule are effective and must be implemented
November 2, 1999. Any variances resulting from implementation of the
provisions of this amendment shall be excluded from error analysis for
120 days from this required implementation date in accordance with
Sec. 275.12(d)(2)(vii).
List of Subjects
7 CFR Part 272
Alaska, Civil rights, food stamps, Grant programs--social programs,
Reporting and recordkeeping requirements.
7 CFR Part 273
Administrative practice and procedures, Aliens, Claims, Food
Stamps, Fraud, Grant Programs--social programs, Penalties, Reporting
and recordkeeping requirements, Social Security, Students.
Accordingly, 7 CFR parts 272 and 273 are amended as follows:
1. The authority citation for 7 CFR parts 272 and 273 continues to
read as follows:
Authority: 7 U.S.C. 2011-2036.
PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES
2. In Sec. 272.1, paragraph (g)(156) is added to read as follows:
Sec. 272.1 General terms and conditions.
* * * * *
(g) Implementation. * * *
(156) Amendment No. 379. The provision of Amendment No. 379
regarding the 15-percent exemption and additional funding for E&T is
effective and must be implemented no later than November 2, 1999. Any
variances resulting from implementation of the provisions of this
amendment shall be excluded from error analysis for 120 days from this
required implementation date in accordance with Sec. 275.12(d)(2)(vii)
of this chapter.
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS
3. In Sec. 273.7:
a. A fourth sentence is added to the end of paragraph (c)(4)(ii).
b. New paragraphs (c)(6)(vi) and (c)(6)(vii) are added;
c. Paragraph (d)(1)(i) is revised.
d. Paragraphs (d)(1)(ii), (d)(1)(iii), and (d)(1)(iv) are
redesignated as (d)(1)(v), (d)(1)(vi) and (d)(1)(vii), respectively;
e. Newly redesignated paragraph (d)(1)(v) is amended by removing
references to ``(d)(1)(ii)(A)'' and ``(d)(1)(ii)(B)'' wherever they
appear, and by adding in their place references to ``(d)(1)(v)(A)'' and
``(d)(1)(v)(B)''.
f. New paragraphs (d)(1)(ii), (d)(1)(iii), and (d)(1)(iv) are
added;
g. A fourth sentence is added to paragraph (d)(3).
The revisions and additions read as follows:
Sec. 273.7 Work requirements.
* * * * *
(c) State agency responsibilities. * * *
(4) * * *
(ii) * * * A State agency which intends to spend the supplemental
E&T grant allocation for which it is eligible in a fiscal year in
accordance with paragraph (d)(1)(i)(B) of this section must declare its
intention to maintain its level of expenditures for E&T and workfare at
a level not less than the level of such expenditures in FY 1996.
* * * * *
(6) * * *
(vi) The number of filled and offered slots created under a
workfare program as described in Sec. 273.22 or a comparable program
that are intended to serve recipients subject to the work requirement
at section 6(o) of the Food Stamp Act. This information must be broken
out to show the number of slots that were created in areas of the State
that have received a waiver in accordance with section 6(o)(4) of the
Food Stamp Act and in non-waived areas;
(vii) The number of filled and offered slots created under a 20-
hour-a-week work program as described in paragraph (d)(1)(ii)(A) of
this section that are intended to serve recipients subject to the work
requirement at section 6(o) of the Food Stamp Act. This information
must be broken out to show the number of slots that were created in
areas of the State that have received a waiver in accordance with
section 6(o)(4) of the Food Stamp Act and in non-waived areas;
* * * * *
(d) Federal financial participation. (1) Employment and training
grants.--(i) Allocation of grants. Each State agency will receive an
E&T program grant for each fiscal year to operate an E&T program. The
grant will consist of a base amount that requires no State matching and
a supplemental amount which will be available only to those State
agencies that elect to meet their maintenance of effort requirements as
described in paragraph (d)(1)(iii) of this section.
(A) In determining each State agency's base 100 percent Federal E&T
grant amount for FYs 1998 through 2002, FNS will apply the percentage
determined in accordance with paragraph (d)(1)(i)(C) of this section to
the total amount of 100 percent Federal E&T grant provided under the
Personal Responsibility and Work Opportunity Reconciliation Act of 1996
for each fiscal year.
(B) In determining each State agency's supplemental 100 percent
Federal E&T grant amount for FYs 1998 through 2002, FNS will apply the
percentage determined in accordance with paragraph (d)(1)(i)(C) of this
section to the total amount of 100 percent Federal E&T grant provided
under the Balanced Budget Act of 1997 for each fiscal year.
(C) Except as otherwise provided in paragraph (d)(1)(i)(F) of this
section, effective in FY 1998, Federal funding for E&T grants,
including both the base and supplemental amounts, shall be allocated on
the basis of food stamp recipients in each State who are not eligible
for an exception under section 6(o)(3) of the Food Stamp Act as a
percentage of such recipients nationwide. Effective in FY 1999, Federal
funding for E&T grants shall be allocated on the basis of food stamp
recipients in each State who are not eligible for an exception under
section 6(o)(3) of the Food Stamp Act and who either do not reside in
an area subject
[[Page 48256]]
to a waiver granted in accordance with section 6(o)(4) of the Food
Stamp Act or do reside in an area subject to a waiver in which the
State agency provides employment and training services to food stamp
recipients who are not eligible for an exception under section 6(o)(3)
of the Food Stamp Act as a percentage of such recipients nationwide.
(D) FNS shall determine each State's percentage of food stamp
recipients not eligible for an exception under section 6(o)(3) of the
Food Stamp Act using FY 1996 Quality Control survey data adjusted for
changes in each State's caseload.
(E) Effective in FY 1998, no State agency shall receive less than
$50,000 in Federal E&T funds. To insure that no State agency receives
less than $50,000 in FY 1998, each State agency that is allocated to
receive more than $50,000 shall have its grant reduced, if necessary,
proportionate to the number of food stamp recipients in the State who
are not eligible for an exception under section 6(o)(3) of the Food
Stamp Act as compared to the total number of such recipients in all the
State agencies receiving more than $50,000. The funds from the
reduction shall be distributed to State agencies initially allocated to
receive less than $50,000. To insure that no State agency receives less
than $50,000 in FY 1999 and subsequent years, each State agency that is
allocated to receive more than $50,000 shall have its grant reduced, if
necessary, proportionate to the number of food stamp recipients in the
State who are not eligible for an exception under section 6(o)(3) of
the Food Stamp Act, and who do not reside in an area subject to a
waiver granted in accordance with section 6(o)(4) of the Food Stamp Act
or who do reside in an area subject to a waiver in which the State
agency provides employment and training services to food stamp
recipients who are not eligible for an exception under section 6(o)(3)
of the Food Stamp Act as compared to the total number of such
recipients in all the State agencies receiving more than $50,000. The
funds from the reduction shall be distributed to State agencies
initially allocated to receive less than $50,000 so that they receive
the $50,000 minimum.
(F) If a State agency will not expend all of the funds allocated to
it for a fiscal year under paragraph (d)(1)(i)(C) of this section, FNS
shall reallocate the unexpended funds to other States during the fiscal
year or the subsequent fiscal year as it considers appropriate and
equitable.
(ii) Use of funds. (A) Not less than 80 percent of the funds a
State agency receives in a fiscal year under paragraph (d)(1)(i) of
this section shall be used to serve food stamp recipients who are not
eligible for an exception under section 6(o)(3) of the Food Stamp Act
and who are placed in and comply with either a workfare program as
described in Sec. 273.22 or a comparable program, or a work program for
20 hours or more per week. A qualifying work program is a program
operated under the JTPA or, after July 1, 2000, a program that was
previously operated under the JTPA that is now operated under the
Workforce Investment Act, a program under section 236 of the Trade Act
of 1974, or an E&T program operated or supervised by the State or a
political subdivision that meets standards approved by the Governor of
the State, including programs described in paragraphs (f)(1)(iv),
(f)(1)(v), (f)(1)(vi) and (f)(1)(vii) of this section. Job search and
job search training programs as described in paragraphs (f)(1)(i) and
(f)(1)(ii) of this section do not meet the definition of qualifying
work program.
(B) Funds which a State agency receives in a fiscal year under
paragraph (d)(1)(i) of this section which are used to serve food stamp
recipients who are not eligible for an exception under section 6(o)(3)
of the Food Stamp Act but who either reside in an area of a State
granted a waiver under section 6(o)(4) of the Food Stamp Act or have
been granted an exemption under section 6(o)(6) of that Act and which
are expended on qualifying work activities as described in paragraph
(d)(1)(ii)(A) of this section shall count toward a State's 80 percent
expenditure.
(C) Not more than 20 percent of the funds a State agency receives
in a fiscal year under paragraph (d)(1)(i) of this section may be used
to serve households eligible for an exception under section 6(o)(3) of
the Food Stamp Act or on work activities that do not meet the
definition of qualifying work activities as described in paragraph
(d)(1)(ii)(A) of this section. E&T funds expended in accordance with
this paragraph (d)(1)(ii)(C) may be spent independent of whether or not
the State agency expends any Federal funds that meet the requirements
of paragraph (d)(1)(ii)(A) of this section. E&T funds expended in
accordance with this paragraph (d)(1)(ii)(C) are not subject to the
component cost reimbursement rates described in paragraph (d)(1)(iv) of
this section.
(D) If at the end of a fiscal year, FNS determines that a State
agency has spent more than 20 percent of the Federal E&T funds it
receives for that fiscal year under paragraph (d)(1)(i) of this section
to serve food stamp recipients who are eligible for an exception under
section 6(o)(3) of the Food Stamp Act or on work activities that do not
meet the definition of qualifying work activities as described in
paragraph (d)(1)(ii)(A) of this section, it shall reimburse States for
allowable costs incurred in excess of the 20 percent threshold at the
normal administrative 50-50 match rate.
(E) State agencies must use E&T program grants to fund the
administrative costs of planning, implementing and operating food stamp
E&T programs in accordance with approved State agency E&T plans. E&T
grants must not be used for the process of determining whether an
individual must be work registered, the work registration process, or
any further screening performed during the certification process, nor
for sanction activity that takes place after the operator of an E&T
component reports noncompliance without good cause. For purposes of
this paragraph (d)(1)(ii)(E), the certification process is considered
ended when an individual is referred to an E&T component for assessment
or participation. E&T grants must also not be used to reimburse
participants under paragraph (d)(1)(ii) of this section, since these
reimbursements which include dependent care and job-related
transportation costs are provided for in a separate 50:50 Federal/State
matching grant. Lastly, E&T grants must not be used to subsidize the
wages of participants, as reflected in current regulations, and in view
of section 16(b) of the Food Stamp Act, added by the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996, which
provides authority for food stamp recipients who also participate in
TANF and other public assistance programs to have their food stamp
benefits paid directly to employers.
(F) A State agency's receipt of the E&T program grant as allocated
under paragraph (d)(1)(i) of this section is contingent on FNS'
approval of the State agency's E&T plan. If an adequate plan is not
submitted, FNS may reallocate a State agency's grant among other State
agencies with approved plans. Non-receipt of an E&T program grant does
not release a State agency from its responsibility under paragraph
(c)(3) of this section to operate an E&T program or from sanctions for
insufficient performance.
(G) Federal funds made available to a State agency to operate a
component under paragraph (f)(1)(vi) of this section must not be used
to supplant nonfederal funds for existing educational services and
activities that promote the purposes of this component. Education
expenses are approvable to the extent that E&T
[[Page 48257]]
component costs exceed the normal cost of services provided to persons
not participating in an E&T program.
(iii) Maintenance of Effort. (A) To be eligible for a grant derived
from the supplemental level of E&T funding described in paragraph
(d)(1)(i)(B) of this section, a State agency must maintain State
expenditures on E&T programs and workfare at a level not less than the
level of such expenditures in FY 1996. A State agency need not expend
all of its required maintenance of effort funds before it begins
spending its supplemental E&T grant. A State agency which intends to
spend the supplemental allocation for which it is eligible in a fiscal
year must, in accordance with paragraph (c)(4)(ii) of this section,
declare in its State E&T plan for that fiscal year its intention to
maintain its level of expenditures for E&T and workfare at a level not
less than the level of such expenditures in FY 1996.
(B) State funds which a State agency expends in order to meet its
maintenance of effort requirement are not subject to the requirements
of paragraph (d)(1)(ii) of this section.
(C) Participant reimbursements paid through State funds shall not
count toward a State agency's maintenance of effort requirement, except
in the case of optional workfare programs in which reimbursements to
participants for work-related expenses are counted as part of the State
agency's administrative expenses in accordance with section 20(g)(1) of
the Food Stamp Act.
(iv) Component costs. FNS shall monitor State agencies'
expenditures of 100 percent Federal E&T funds, including the costs of
individual components of State agencies' programs.
(A) Federal 100 percent E&T funds that State agencies expend in
accordance with paragraph (d)(1)(ii)(A) of this section are subject to
component cost reimbursement rates. The rates represent the maximum
amount of 100 percent Federal funds that FNS will reimburse States on
average each month for their expenditures in providing work
opportunities or ``slots'' that meet the requirements of section
(6)(o)(2)(B) and (C) of the Food Stamp Act.
(B) Separate reimbursement rates will apply for filled slots and
for offered slots. A slot is ``filled'' when a participant reports to a
work or training site to begin his or her work activities. A slot is
``offered'' when a bona fide workfare or training opportunity is made
available to a participant (i.e., the participant is told to report to
a work site at a given date and time) but the participant either
refuses the assignment or does not report.
(C) A State agency may claim reimbursement for only one filled slot
per participant per month. A State agency that assigns one participant
to two slots in the same month, for example a workfare slot and a 20-
hour-a-week training slot, may only claim reimbursement for one filled
slot in that month.
(D) Reconciliation will be conducted on a yearly basis. When
applying the rate, FNS will sum the number of filled and offered slots
a State agency reports for a fiscal year and multiply each by the
appropriate rate. FNS will add the two resulting sums and compare that
against the State agency's actual expenditure of Federal 100 percent
E&T money for that fiscal year. If the amount spent is less than the
amount allowed under the rates, the actual amount would be paid out of
the State agency's 100 percent Federal E&T grant for that fiscal year.
If the amount spent by the State agency exceeds the amounts allowed
under the rates, the State agency will be required to pay that excess
amount. State funds used to cover any shortfalls will be eligible for
the standard 50 percent Federal match in accordance with paragraph
(d)(1)(vi) of this section and Sec. 273.22(g).
* * * * *
(3) Fiscal recordkeeping and reporting requirements. * * * States
shall include as footnotes to the FNS-269 the amount of Federal 100
percent E&T funding spent on slots created under a workfare program as
described in Sec. 273.22 or a comparable program, and the amount of
Federal 100 percent E&T funding spent on slots created under a 20-hour-
a-week work program as described in paragraph (d)(1)(ii)(A) of this
section.
* * * * *
4. A new Sec. 273.24 is added to read as follows:
Sec. 273.24 15 Percent exemption authority for able-bodied adults.
(a) Definitions. For purposes of the food stamp time limit, the
terms below have the following meanings:
(1) Caseload means the average monthly number of individuals
receiving food stamps during the 12-month period ending the preceding
June 30.
(2) Covered individual means a food stamp recipient, or an
individual denied eligibility for food stamp benefits solely due to
paragraph 6(o)(2) of the Food Stamp Act who:
(i) Is not exempt from the work requirements under paragraph
6(o)(3) of the Food Stamp Act,
(ii) Does not reside in an area covered by a waiver granted under
paragraph 6(o)(4) of the Food Stamp Act,
(iii) Is not fulfilling the work requirements of 6(o)(2) of the
Food Stamp Act by working 20 hours a week averaged monthly,
participating and complying with the requirements of a work program for
20 hours or more per week, participating in and complying with the
requirements of a program under section 20 or a comparative program
established by a State or political subdivision of a State,
(iv) Is not receiving food stamp benefits during the 3 months of
eligibility provided under paragraph 6(o)(2) of the Food Stamp Act, and
(v) Is not receiving food stamp benefits under paragraph 6(o)(5) of
the Food Stamp Act.
(b) General rule. Subject to paragraphs (c) through (e) of this
section, a State agency may provide an exemption from the time limits
of paragraph 6(o)(2) of the Food Stamp Act for covered individuals.
Exemptions do not count towards a State's allocation if they are
provided to an individual who is otherwise exempt from the time limit
during that month.
(1) Fiscal year 1998. A State agency may provide a number of
exemptions such that the average monthly number of exemptions in effect
during FY 1998 does not exceed 15 percent of the number of covered
individuals in the State in FY 1998, as estimated by FNS, based on FY
1996 quality control data, and other factors FNS deems appropriate.
(2) Subsequent fiscal years. For FY 1999 and each subsequent fiscal
year, a State agency may provide a number of exemptions such that the
average monthly number of exemptions in effect during the fiscal year
does not exceed 15 percent of the number of covered individuals in the
State, as estimated by FNS, and adjusted by FNS to reflect changes in:
(i) The State's caseload, and
(ii) FNS' estimate of changes in the proportion of food stamp
recipients covered by waivers granted under paragraph 6(o)(4) of the
Food Stamp Act.
(c) Adjustments will be made as follows:
(1) Caseload adjustments. FNS shall adjust the number of covered
individuals estimated for a State under paragraphs (c) and (d) of this
section during a fiscal year if the number of food stamp recipients in
the State varies from the State's caseload by more than 10 percent, as
estimated by FNS.
(2) Exemption adjustments. During FY 1999 and each subsequent
fiscal year, FNS shall adjust the number of exemptions allocated to a
State agency based on the number of exemptions in
[[Page 48258]]
effect in the State for the preceding fiscal year.
(i) If the State agency does not use all of its exemptions by the
end of the fiscal year, FNS shall increase the estimated number of
exemptions allocated to the State agency for the subsequent fiscal year
by the remaining balance.
(ii) If the State agency exceeds its exemptions by the end of the
fiscal year, FNS shall reduce the estimated number of exemptions
allocated to the State agency for the subsequent fiscal year by the
corresponding number.
(d) Reporting requirement. The State agency shall track the number
of exemptions used each month and report this number to the regional
office on a quarterly basis as an addendum to the quarterly employment
and training report (Form FNS-583) required by Sec. 273.7(c)(6).
(e) Other Program rules. Nothing in this section shall make an
individual eligible for benefits under the Food Stamp Act if the
individual is not otherwise eligible for benefits under the other
provisions of the Food Stamp Act.
Dated: August 23, 1999.
Julie Paradis,
Acting Under Secretary, Food, Nutrition and Consumer Services.
[FR Doc. 99-23017 Filed 9-2-99; 8:45 am]
BILLING CODE 3410-30-P