[Federal Register Volume 64, Number 246 (Thursday, December 23, 1999)]
[Proposed Rules]
[Pages 72196-72223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33131]



[[Page 72195]]

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Part IV





Department of Agriculture





_______________________________________________________________________



Food and Nutrition Service



_______________________________________________________________________



7 CFR Parts 271, 272, and 273



Food Stamp Program: Work Provisions of the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996; Proposed Rule

  Federal Register / Vol. 64, No. 246 / Thursday, December 23, 1999 / 
Proposed Rules  

[[Page 72196]]



DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 271, 272, and 273

RIN 0584-AC45


Food Stamp Program: Work Provisions of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996

AGENCY: Food and Nutrition Service, USDA.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The Food and Nutrition Service (FNS) proposes to amend its 
regulations to implement several work-related provisions of the 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA). This proposed rule makes significant changes to current work 
rules, including requirements for the Food Stamp Employment and 
Training Program and the optional workfare program. These changes 
streamline Food Stamp Program work requirements, simplify the 
disqualification requirements for failure to comply with work rules, 
and provide greater flexibility for States to operate their employment 
and training programs.

DATES: Send your comments to reach us by February 22, 2000.

ADDRESSES: You may mail comments to Food Stamp Program, Food and 
Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, Virginia 
22302, attention Program Design Branch. You may FAX comments to us at 
(703) 305-2486, attention Program Design Branch. You may also hand-
deliver comments to us on the 7th floor at the above address. For 
information about filing comments electronically, see the SUPPLEMENTARY 
INFORMATION section under Electronic access and filing address.

FOR FURTHER INFORMATION CONTACT: John Knaus, Chief, Program Design 
Branch, Program Development Division, Food Stamp Program, FNS, at (703) 
305-2519. Individuals who use a telecommunications device for the deaf 
(TDD) may call the Federal Information Relay Service at 1-800-877-8339 
between 8:00 a.m. and 4:00 p.m. Eastern time, Monday through Friday, 
excluding Federal holidays.

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures

Electronic Access and Filing Address

    You may view and download an electronic version of this proposed 
rule at http://www.fns.usda.gov/fsp/. You may also comment via the 
Internet at the same address. Please include ``Attention: RIN 0584-
AC45'' and your name and return address in your Internet message. If 
you do not receive a confirmation from the system that we have received 
your message, contact us directly at (703) 305-2519.

Written Comments

    Written comments on the proposed rule should be specific, should be 
confined to issues pertinent to the proposed rule, and should explain 
the reason for any change you recommend. Where possible, you should 
reference the specific section of paragraph of the proposed rule you 
are addressing. We may not consider or include in the Administrative 
Record for the final rule comments that we receive after the close of 
the comment period or comments delivered to an address other than those 
listed above. We will make all comments, including names, street 
addresses, and other contact information of respondents, available for 
public inspection on the 7th floor, 3101 Park Center Drive, Alexandria, 
Virginia 22302 between 8:30 a.m. and 5:00 p.m. Eastern time, Monday 
through Friday, excluding Federal holidays. We will also post all 
comments on the Internet at http://www.usda.gov/fsp at the end of the 
comment period. Individual respondents may request confidentiality. If 
you wish to request that we consider withholding your name, street 
address, or other contact information from public review or from 
disclosure under the Freedom of Information Act, you must state this 
prominently at the beginning of your comment. We will honor requests 
for confidentiality on a case-by-case basis to the extent allowed by 
law. We will make available for public inspection in their entirety all 
submissions from organizations or businesses, and from individuals 
identifying themselves as representatives or officials of organizations 
or businesses.

II. Background

    Since 1971, able-bodied food stamp recipients have been required to 
register for work and accept suitable jobs as a condition for receiving 
benefits. In 1982 Congress passed legislation creating workfare, a food 
stamp work-for-benefits program. States and local jurisdictions were 
afforded the option of requiring most able-bodied recipients to work in 
public service jobs in exchange for their food stamps. In 1987 States 
implemented the Food Stamp Employment and Training (E&T) Program, 
designed to improve food stamp recipients' ability to gain employment, 
increase earnings, and reduce their dependency on public assistance.
    In August 1996, President Clinton signed into law ``The Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996,'' or 
PRWORA (Pub. L. 104-193). PRWORA--popularly known as ``welfare 
reform''--contained several Food Stamp Program (FSP) work-related 
provisions that strengthen work requirements, promote personal 
responsibility, streamline E&T requirements, and greatly increase State 
flexibility.
    Section 815 of PRWORA revised FSP work requirements by amending 
section 6(d)(1) of the Food Stamp Act of 1977 (the Act) (7 U.S.C. 
2015(d)(1)). It dealt with disqualification for noncompliance with FSP 
work requirements. It added to the list of ineligible individuals at 
section 6(d)(1)(A) those who: (1) refuse without good cause to provide 
sufficient information to allow a determination of their employment 
status or job availability; (2) voluntarily and without good cause quit 
their job (previously limited to heads of households); (3) voluntarily 
and without good cause reduce their work effort and, after the 
reduction, work less than 30 hours a week; and (4) fail to comply with 
the workfare rules in section 20 of the Act (7 U.S.C. 2029). Section 
815 deleted, as an explicit good cause for refusal to accept an offer 
of employment, the lack of adequate child care for children above age 
five and under age 12. The provision removed the requirement that the 
entire food stamp household be disqualified if the head of the 
household is disqualified. Instead, it provided States the option to 
disqualify the entire household if the head of the household is 
disqualified. Section 815 established new mandatory minimum 
disqualification periods for individuals who fail to comply with work 
requirements. It required the Secretary of Agriculture (the Secretary) 
to determine the meanings of good cause, voluntary quit, and reduction 
of work effort. It required States to determine: (1) the meaning of 
other terms related to FSP work requirements; (2) the procedures for 
determining compliance with work requirements; and (3) whether an 
individual is actually complying with work requirements. Lastly, 
Section 815 specified that States may not use meanings, procedures, or 
determinations that are less restrictive on food stamp recipients than 
comparable meanings, procedures, or determinations are on recipients of 
assistance under State programs funded

[[Page 72197]]

under part A of title IV of the Social Security Act (title IV-A), 42 
U.S.C. 601 et seq.
    Section 817 of PRWORA amended Act language at section 6(d)(4) 
relating to the E&T Program. It streamlined administrative requirements 
for States by: (1) requiring E&T components to be delivered through a 
statewide workforce development system, if available; (2) expanding the 
existing State option to apply E&T requirements to applicants 
(previously limited to job search); (3) eliminating the requirement 
that job search components be comparable with those operated under 
title IV-A; (4) removing requirements for work experience components 
that mandated they serve a useful public service and that they use a 
participant's prior training, experience, and skills; (5) removing 
specific Federal rules as to States' authority to exempt categories of 
individuals and individuals from E&T requirements, as well as removing 
the requirement that such exemptions be evaluated no less often than at 
each certification or recertification of the affected food stamp case; 
(6) deleting outdated language concerning applications by States to 
provide priority service to volunteer E&T participants; (7) removing 
the requirement that States permit, to the greatest practicable extent, 
work registrants exempted from E&T, as well as E&T participants who 
comply with or are in the process of complying with program 
requirements, to participate in E&T, while maintaining the States' 
option to permit voluntary participation; (8) removing the requirement 
for conciliation procedures to resolve disputes involving participation 
in E&T (9) removing the requirement that States' limits for payments 
or reimbursements of dependent care expenses to E&T participants must 
be at least as high as the FSP dependent care deduction cap; (10) 
removing the requirements for E&T performance standards; (11) adding 
the provision that the amount of funds States use to provide E&T 
services to participants receiving benefits under a State program 
funded under title IV-A cannot exceed the amount of funds, if any, 
States used in fiscal year 1995 to provide E&T services to participants 
who were receiving benefits under title IV-A; and (12) removing the 
Secretary's authority to withhold funds from States for failure to 
comply without good cause with E&T requirements.
    PRWORA also contained major changes in the requirements for Federal 
financial participation in the E&T program. Subsequently, the Balanced 
Budget Act of 1997 (Pub. L. 105-33) further amended those requirements. 
Federal financial participation is addressed in a separate rulemaking.
    Three other PRWORA provisions added new language to the Act. 
Section 816 permitted certain States to lower the age at which a child 
exempts a parent/caretaker from food stamp work rules. Section 849 
provided States the option of using a household's food stamp benefits 
to subsidize a job for a household member participating in a work 
supplementation program. Section 852 permitted qualifying States to 
provide certain households with cash in lieu of food stamps.
    Additionally, PRWORA made significant changes to the workfare 
provisions at section 20 of the Act. It removed the States' ability to 
comply with section 20 by operating a workfare program under title IV-
A. It removed the provision that permitted States to combine the value 
of a household's food stamp allotment with the value of assistance 
received by the household from a program under title IV-A in order to 
determine the number of monthly hours of participation required of 
those households in a title IV-A community work experience program. 
Lastly, it eliminated disqualification provisions specific to the 
optional workfare program and incorporated noncompliance with workfare 
into the disqualification provisions governing noncompliance with FSP 
work requirements.
    Lastly, as part of the Department's ongoing regulation streamlining 
and reform initiative, this rule proposes to consolidate the workfare 
regulations at 7 CFR 273.22 with FSP work requirements contained in 7 
CFR 273.7.

III. Discussion of Proposed Rule

Program Work Requirements

    Current regulations at 7 CFR 273.7 require that all physically and 
mentally fit food stamp recipients over the age of 15 and under the age 
of 60 who are not otherwise exempted be registered for work by the 
State agency at the time of application and once every 12 months 
thereafter. Work registrants are required to participate in an E&T 
program if assigned by the State agency, provide information regarding 
employment status and availability for work, report to an employer if 
referred, and accept a bona fide offer of suitable employment at a wage 
no less than the applicable State or Federal minimum wage, whichever is 
highest.
    Failure to meet these requirements without good cause results in a 
two-month disqualification. If the noncompliant individual is the head 
of the household, the entire household is disqualified for two months. 
Otherwise, only the individual is disqualified.
    Additionally, if the head of the household voluntarily quits a job 
of 20 or more hours a week without good cause 60 days or less prior to 
applying for food stamps, or at any time thereafter, the entire 
household is disqualified for 90 days.
    Eligibility may be reestablished by the household during a 
disqualification period if the head of the household becomes exempt 
from the work registration requirement, is no longer a member of the 
household, or complies with the requirement in question. Disqualified 
individuals may reestablish eligibility by becoming exempt from the 
work registration requirement or by complying with the requirement in 
question.
    Certain food stamp recipients are exempt from work registration 
requirements. Among these exempt individuals are those currently 
subject to and complying with a work registration requirement under 
title IV-A or the Federal-State unemployment compensation system. If 
these individuals fail to comply with any work requirement to which 
they are subject that is comparable to a FSP work requirement, they are 
subject to disqualification.
    In accordance with section 815 of PRWORA, which contains amendments 
to section 6(d)(1) of the Act, this rulemaking proposes the following 
changes to current regulations.
Work Registrant Requirements
    The current regulation at 7 CFR 273.7(a) contains the work 
registration requirement for nonexempt food stamp household members.
    Current regulations at 7 CFR 273.7(e) list the responsibilities and 
requirements for work registrants.
    Section 815 of PRWORA amended section 6(d)(1) of the Act by adding 
to the list of reasons for disqualification the refusal without good 
cause by an individual to provide a State agency with sufficient 
information to determine his or her employment status or job 
availability. Note, however, that 7 CFR 273.7(e) already contains the 
requirement that a work registrant respond to a request from the State 
agency or its designee for supplemental information regarding 
employment status or availability for work. Therefore, no action is 
required to amend current regulations in this regard.
    Current regulations at 7 CFR 273.22 contain FSP workfare 
participation requirements for households. 7 CFR

[[Page 72198]]

273.22(f)(6) provides for penalties for failure to comply with workfare 
requirements.
    Section 815 aligned workfare penalties with other work penalties. 
It amended section 20 of the Act by removing workfare disqualification 
provisions, and further amended section 6(d)(1) by including refusal 
without good cause to comply with section 20 of the Act as a reason for 
disqualification.
    Therefore, this rule proposes to amend 7 CFR 273.22(f) by removing 
paragraph (6), Failure to Comply, and to amend 7 CFR 273.7(e) by adding 
as a work registrant requirement participation in a workfare program if 
assigned.
    This rule further proposes to incorporate the work registrant 
requirements listed in 7 CFR 273.7(e) into 7 CFR 273.7(a), which will 
be redesignated 7 CFR 273.7(a)(1) and renamed work requirements.
    This rule also proposes to incorporate the participation 
requirements for strikers listed in 7 CFR 273.7(j); the requirements 
for registration of certain PA, GA, and refugee households listed in 7 
CFR 273.7(k); and the provisions for applicants applying for SSI and 
food stamps under Sec. 273.2(k)(1)(i), listed in 7 CFR 273.7(l), into 7 
CFR 273.7(a). They will be redesignated 7 CFR 273.7(a)(4), (a)(5), and 
(a)(6) respectively.
    Lastly, this rule proposes to make the following changes to 7 CFR 
273.7: (1) the current provisions at 7 CFR 273.7(f), (g), (h), (i), 
(m), and (n) will be redesignated 7 CFR 273.7(e), (f), (g), (h), (i), 
and (j) respectively; (2) the current provisions at 7 CFR 273.7(o) and 
(p) will be deleted and new provisions, designated 7 CFR 273.7(k) and 
(l) will be added; (3) the provisions for the optional workfare program 
at 273.22 will be redesignated 7 CFR 273.7(m); and (4) 7 CFR 273.22 
will be removed.
Administrative Responsibilities
    Current regulations at 7 CFR 273.7(m) assign to State agencies the 
responsibility for determining the existence of good cause in instances 
when an individual fails or refuses to comply with FSP work 
requirements. 7 CFR 273.7(n) assigns to State agencies the 
responsibility for determining whether or not a voluntary quit 
occurred.
    Section 815 of PRWORA amended the Act by adding a new provision, 
section 6(d)(1)(D), Administration. While assigning to the Secretary 
responsibility for determining the meanings of good cause, voluntary 
quit, and reduction of work effort, section 6(d)(1)(D) assigns to State 
agencies the responsibility for determining: (1) the meaning of all 
other terms relating to work requirements; (2) the procedures for 
determining whether an individual is in compliance with work 
requirements; and (3) whether an individual is actually in compliance 
with work requirements.
    However, section 6(d)(1)(D) prohibits State agencies from assigning 
a meaning, procedure, or determination that is less restrictive on food 
stamp recipients than a comparable meaning, procedure, or determination 
under a State program funded under title IV-A.
    This rule proposes to amend 7 CFR 273.7(a) by assigning to the 
State agency responsibility for determining the meaning of all terms 
related to FSP work requirements (other than good cause, voluntary 
quitting, and reducing work effort); for establishing the procedures 
for determining whether an individual is in compliance with FSP work 
requirements; and for determining whether an individual is in actual 
compliance with FSP work requirements. The State agency may not use a 
meaning, procedure, or determination that is less restrictive on food 
stamp recipients than a comparable meaning, procedure, or determination 
is on recipients of a State program funded under title IV-A. These 
provisions will be incorporated in a new paragraph, 7 CFR 273.7(a)(2).
Household Ineligibility
    Current regulations at 7 CFR 273.7(g)(1) require that an 
individual, other than the head of household, who fails or refuses 
without good cause to comply with FSP work requirements be disqualified 
from FSP participation. However, if the head of household fails or 
refuses without good cause to comply, the entire household must be 
disqualified.
    Section 815 of PRWORA amended section 6(d)(1)(B) of the Act by 
removing the requirement that the entire household be disqualified if 
the head of the household fails or refuses without good cause to 
comply. Instead, section 815 provided State agencies the option to 
disqualify the entire household if the head of household fails or 
refuses without good cause to comply with FSP work requirements. It 
limited the length of such an optional household disqualification to 
the duration of the disqualification period applied to the individual 
or 180 days, whichever is shorter.
    This rule proposes to amend redesignated 7 CFR 273.7(f) by 
eliminating the requirement in paragraph (1) that the entire household 
be disqualified if the head of the household fails to comply, and by 
adding a new paragraph (4), Household Ineligibility. 7 CFR 273.7(f)(4) 
will provide that a State agency has the option to disqualify the 
entire household if the head of the household becomes ineligible to 
participate in the FSP for failure to comply with work requirements. If 
the State agency chooses this option, it may disqualify the household 
for the duration of ineligibility of the head of the household, or for 
180 days, whichever is less.
Disqualification Periods
    Current regulations at 7 CFR 273.7(g)(1) establish a two-month 
disqualification period to be imposed for failure or refusal without 
good cause to comply with FSP work requirements.
    Section 815 of PRWORA amended sections 6(d)(1) (a) and (b) of the 
Act to establish mandatory disqualification periods--based on the 
frequency of the violation--for individuals who fail to comply with FSP 
work requirements. For the first violation, the individual is 
disqualified until he or she complies with the requirement, one month, 
or, at State agency option, up to three months, whichever is later. For 
the second violation, until the later of the date the individual 
complies, two months, or a period--determined by the State agency--not 
to exceed six months. For the third or subsequent violation, until the 
later of the date the individual complies with the requirement; six 
months; a date determined by the State agency; or, at the option of the 
State agency, permanently.
    This rule proposes to amend redesignated 7 CFR 273.7(f) by deleting 
reference to a 2-month disqualification period and by inserting a new 
paragraph, 7 CFR 273.7(f)(2), Disqualification Periods. The new 
paragraph (2) will provide for minimum mandatory disqualification 
periods for individuals who fail or refuse without good cause to comply 
with FSP work requirements. State agencies are free to elect which 
disqualification period they institute for each level of noncompliance. 
However, each State agency must apply its disqualification policy 
uniformly, statewide.
    We further propose to add a new paragraph (d)(xiii) under 7 CFR 
272.2, Plan of operation. Paragraph (d)(xiii) will contain the 
requirement for each State agency's disqualification policies.
Ending Disqualification
    Current regulations at 7 CFR 273.7(h) provide that, at the end of 
the 2-month disqualification period, participation may resume if the 
disqualified individual or household reapplies for benefits and is 
determined eligible.

[[Page 72199]]

Eligibility may be reestablished by a household during the 
disqualification period if the head of household becomes exempt from 
the work registration requirement, is no longer a member of the 
household, or complies with the appropriate work requirement. A 
disqualified individual may resume participation during the 
disqualification period by becoming exempt from work registration or by 
complying with the appropriate requirement.
    As discussed previously, section 815 of PRWORA assigned to State 
agencies responsibility for establishing the procedures for determining 
whether an individual is in compliance with work requirements, as well 
as the actual determination of compliance.
    The Department believes that Congress intended for State agencies 
to have maximum flexibility in implementing and administering their 
disqualification policies. Thus, when determining whether a 
disqualified individual or household has complied with the FSP work 
requirement in question, a State agency may use its established 
procedures, as long as these procedures are no less restrictive than 
the State agency's title IV-A process.
    Since section 815 of PRWORA called for mandatory disqualification 
periods (the later of the date of compliance or end of 
disqualification), a disqualified individual will no longer be able to 
comply with the requirement during the disqualification period and end 
or ``cure'' the disqualification early.
    Congress clearly intended to end this practice of curing of a 
disqualification. Section 815 amended section 6(d)(1)(B)(ii) of the Act 
by deleting the following provision: ``Any period of ineligibility for 
violations under this paragraph shall end when the household member who 
committed the violation complies with the requirement that has been 
violated.''
    Thus, PRWORA removed a policy that provoked criticism in the past: 
the possibility of reestablishing eligibility during a disqualification 
by complying with a work requirement. This ability to cure a 
disqualification was viewed as providing a ``revolving door'' through 
which noncompliant participants could continuously reenter the FSP to 
avoid serious penalty.
    In light of this prohibition against curing a disqualification, 
several State agencies have asked whether PRWORA also changed the 
previous policy of ending a disqualification when, during the 
disqualification period, a disqualified individual became exempt from 
FSP work requirements. This policy is unchanged.
    Section 6(d)(2) of the Act provides that a person who must 
otherwise comply with the FSP work requirements in section 6(d)(1), and 
who is subject to the penalties for noncompliance, is exempt from those 
requirements if he or she is: (1) subject to and complying with a title 
IV-A or Federal-State unemployment compensation work requirement; (2) a 
parent or other household member caring for a dependent child under age 
six or an incapacitated person; (3) a student; (4) a regular 
participant in a drug addiction or alcoholic treatment and 
rehabilitation program; (5) working 30 hours a week or earning the 
minimum wage equivalent; or (6) between the age of 16 and 18 and not 
head of a household, or between 16 and 18 and attending school or 
training on a half-time basis. Also exempt are those under 16 or 60 and 
over and those who are physically or mentally unfit.
    In the Department's view, the language of section 6(d)(2) must be 
interpreted to include disqualified individuals who meet one of the 
exemption criteria. In such cases, that individual is no longer subject 
to the work requirements or to the attendant penalties for 
noncompliance. For instance, if a disqualified individual gains 
responsibility for the care of a dependent child under six during his 
or her disqualification period, that individual is no longer subject to 
FSP work requirements. The disqualification must terminate and the 
individual, if otherwise eligible, must be allowed to resume 
participation.
    Therefore, this rule proposes to amend redesignated 7 CFR 273.7(g) 
by deleting reference to a 2-month disqualification period and by 
providing that, at the end of the applicable minimum mandatory 
disqualification period (except in cases of permanent 
disqualification), participation may resume if the disqualified 
individual reapplies for food stamps and is determined by the State 
agency to be in compliance with work requirements. This rule proposes 
to further amend redesignated 7 CFR 273.7(g) by removing the provision 
for curing a disqualification.
Good Cause
    The current regulations at 7 CFR 273.7(m) assign to State agencies 
responsibility for determining good cause when an individual fails to 
comply with FSP work registration, E&T, and voluntary quit 
requirements. The regulations include as good cause circumstances 
beyond the individual's control. One example cited is the lack of 
adequate child care for children ages 6 to 12.
    The current regulations at 7 CFR 273.7(n)(3) contain the good cause 
requirements specifically concerning voluntary quit, as well as the 
procedures for verifying questionable information concerning voluntary 
quit.
    Section 815 of PRWORA amended section 6(d)(1) of the Act by 
deleting language that included the lack of adequate child care for 
children between 6 and 12 as good cause for refusing to accept an offer 
of employment, and by assigning to the Secretary specific authority to 
define the meaning of good cause. We believe that Congress did not 
intend to eliminate lack of adequate child care as a valid good cause 
reason, thereby forcing parents to choose between the well-being of 
their children and the demands of FSP work requirements. Instead, by 
deleting this reference to a very specific, single instance of 
noncompliance, we believe Congress intended to eliminate any confusion 
about applying good cause criteria equitably across-the-board to all 
FSP work requirements. Therefore, lack of adequate child care remains 
as a good cause reason for noncompliance.
    Although current good cause regulations remain basically unchanged, 
we propose to take this opportunity to amend redesignated 7 CFR 
273.7(i) and redesignated 7 CFR 273.7(j) by combining the provisions 
under the specific heading ``Good Cause'' at redesignated 7 CFR 
273.7(i). We also propose to add language to redesignated 7 CFR 
273.7(i) reminding State agencies that it is not possible for the 
Department to enumerate each individual circumstance that should or 
should not be considered good cause. State agencies must consider all 
facts and circumstances in each individual case concerning the 
determination of good cause.
Voluntary Quit
    Current regulations at 7 CFR 273.7(n) contain the procedures for 
disqualifying a household whose head voluntarily quits a job without 
good cause 60 days or less before applying for food stamps, or at any 
time thereafter. For purposes of establishing voluntary quit, a ``job'' 
is considered employment of 20 or more hours per week, or employment 
that provides weekly earnings at least equivalent to the Federal 
minimum wage multiplied by 20 hours. A Federal, State or local 
government employee dismissed from employment because of participation 
in a strike is considered to have voluntarily quit without good cause.

[[Page 72200]]

    In the case of applicant households, if the State agency determines 
that a voluntary quit by the head of household was without good cause, 
the household's application for benefits will be denied and it will not 
be eligible for benefits for 90 days, starting with the date of the 
quit.
    In the case of participating households, if the State agency 
determines that a head of household voluntarily quit a job while 
participating in the FSP, or discovers that a quit occurred within 60 
days prior to application or between application and certification, the 
household will be disqualified from participation for 90 days, 
beginning with the first of the month after all normal adverse action 
procedures are completed.
    Following the end of a voluntary quit disqualification, a household 
may reapply and, if otherwise eligible, begin participation in the FSP. 
Eligibility may be reestablished during a disqualification period and 
the household may, if otherwise eligible, resume participation if the 
head of household secures new employment comparable to the job that was 
quit, or leaves the household. Eligibility may also be reestablished if 
the head of household becomes exempt from work registration. If the 
disqualified household splits, the disqualification follows the head of 
household. If that individual becomes head of a new household, that 
household must serve out the balance of the disqualification period.
    If a disqualified household applies for participation in the third 
month of its disqualification, it does not have to reapply in the next 
month. The State agency must use the same application to deny benefits 
in the remaining month of disqualification and to certify the household 
for any subsequent month(s) if it is otherwise eligible.
    Section 815 of PRWORA amended section 6(d)(1) of the Act by 
removing the requirement that only the head of household is subject to 
voluntary quit. As with all the other sanctionable actions listed in 
section 6(d)(1)(A), each individual household member was made subject 
to disqualification for a voluntary quit. The State agency was afforded 
the option of disqualifying the entire household if the quitter is the 
head of household.
    Section 6(d)(1) was further amended by eliminating the 90-day 
disqualification period for voluntary quit. Penalties for voluntary 
quit are based on the minimum mandatory disqualification provisions 
contained in PRWORA.
    Lastly, section 815 of PRWORA amended section 6(d)(1) by adding the 
provision that an individual who voluntarily and without good cause 
reduces work effort and, after the reduction, works less than 30 hours 
per week, must be disqualified.
    We propose to retain the 60-day pre-application period for 
establishing voluntary quit and to apply the same standard when 
determining reduction of work effort for applicants. The voluntary quit 
and reduction in work effort provisions aim to deter individuals with 
reasonable income from intentionally ending or reducing that income to 
qualify for food stamps or to increase coupon allotments. We believe 
that 60 days is a reasonable time span to use to gauge intent.
    We also propose to increase the 20 hour/equivalent Federal minimum 
wage figure used in defining voluntary quit to 30 hours. Increasing the 
number of hours to 30 provides a logical connection between voluntary 
quit and the reduction of work effort threshold mandated by Congress. 
The 30 hour figure also conforms to the number of hours of work 
required to exempt an employed recipient from Program work 
requirements. The Department welcomes comments on this issue.
    Lastly, Congress clearly stated that any reduction in hours of 
employment to less than 30 hours a week without good cause must be 
penalized. We do not believe Congress intended that a minimum wage 
equivalent of 30 hours be considered when establishing voluntary 
reduction in work hours. The Department proposes to make this clear in 
the rule. We also propose to incorporate good cause for reduction of 
work effort into the good cause provision at redesignated 7 CFR 
273.7(i).
    Accordingly, the following amendments to redesignated 7 CFR 
273.7(j) are proposed. Any individual who, 60 days or less before 
applying for food stamps, or at any time after application, without 
good cause quits a job of 30 hours or more a week or a job that 
provides weekly earnings at least equivalent to the Federal minimum 
wage multiplied by 30 hours, or who is employed 30 or more hours per 
week but without good cause reduces his or her work effort to less than 
30 hours, must be disqualified for a period specified by the State 
agency's minimum mandatory disqualification provisions. The 
disqualified individual must be considered an ineligible household 
member. The individual's income and resources must continue to be 
counted to determine eligibility and level of benefits for the 
remaining household members. If the individual who voluntarily quit his 
or her job, or who reduced his or her work effort without good cause, 
is the head of household the State agency may, at its option, 
disqualify the entire household. Because the ability to cure a 
disqualification was eliminated, the provision for reestablishing 
eligibility during a disqualification if the individual secures new, 
comparable employment is removed.
Failure To Comply With a Title IV-A or Unemployment Compensation Work 
Requirement
    Current regulations at 7 CFR 273.7(g)(2) provide that an individual 
who is exempt from FSP work requirements because he or she is 
registered for work under title IV-A or unemployment compensation but 
fails to comply with a title IV-A or unemployment compensation 
requirement comparable to a food stamp work requirement must be treated 
as though the individual failed to comply with the corresponding food 
stamp requirement. Comparability exists if the title IV-A or 
unemployment compensation requirement places responsibilities on the 
individual similar to food stamp work requirements.
    In the past, this comparability issue created controversy and 
confusion among State agencies. How can a requirement in one program be 
``comparable'' to one in another program with different rules, 
different caseloads, and different operating procedures? The ``similar 
responsibilities'' explanation only added to the confusion. If a title 
IV-A work program contained a training component not available to food 
stamp work registrants, did this mean that participation in that 
component placed a greater responsibility on the title IV-A household 
than on the food stamp household, even if the food stamp household had 
another component available; one that, while not the same, provided 
opportunities for training?
    A conforming amendment to section 819 of PRWORA deleted the 
comparability language in section 6(d)(2)(A) of the Act relating to 
failure to comply with a title IV-A or unemployment compensation work 
requirement.
    With the striking of the comparability requirement, State agencies 
are now able to impose FSP disqualifications on individuals (and-
optionally-households) who fail to comply with title IV-A or 
unemployment compensation work requirements, without regard to the 
existence of ``similar responsibilities'' among programs.

[[Page 72201]]

    The regulation continues to make it clear that the noncomplying 
individual will not be subject to FSP disqualification if he or she 
meets one of the other exemption criteria listed at 7 CFR 273.7(b) 
(excluding participation in title IV-A work activities or receipt of 
unemployment compensation). For example, an individual responsible for 
the care of a child under six who is disqualified under a title IV-A 
program for failure to comply with its work requirements would not be 
subject to a FSP disqualification because that individual remains 
exempt under another FSP criteria.

    Note: Section 819 of PRWORA, titled ``Comparable Treatment for 
Disqualification,'' added a new paragraph (i) to section 6 of the 
Act. Section 6(i) provided that, if a food stamp recipient is 
disqualified for failure to comply with a requirement of a Federal, 
State, or local means-tested public assistance program, the State 
agency may opt to impose the same disqualification on the recipient 
under the FSP. Thus, in the example above, the State agency could, 
under the comparable disqualification provision of section 6(i), 
disqualify the individual who is responsible for the care of a child 
under six, using title IV-A rules and procedures. It is important to 
note that the language of section 6(i) specifically limits this 
option to individuals. Therefore, State agencies may not impose 
comparable treatment for disqualification on the entire household.

    The Department is proposing to amend redesignated 7 CFR 273.7(f)(6) 
accordingly by deleting the comparability requirement for imposing FSP 
disqualifications on individuals who are not otherwise exempt FSP work 
requirements and who fail to comply with the work registration 
requirements of title IV-A or of the Federal-State unemployment 
compensation system. The Department further proposes to add the option 
of allowing State agencies to disqualify individuals who meet other FSP 
exemption criteria by using the same rules and procedures that apply 
under title IV-A for failure to comply with a title IV-A work 
requirement. Such a disqualification must be in accordance with the 
comparable disqualification provisions at 7 CFR 273.11(l).

Caretaker Exemption

    Current regulations at 7 CFR 273.7(b)(iv), pursuant to section 
6(d)(2)(B) of the Act, exempt from FSP work requirements a parent or 
other household member who is responsible for the care of a dependent 
child under six. Prior to the enactment of PRWORA, Eight State agencies 
had submitted requests to waive this regulation to require caretakers 
of children less than six years old to participate in their proposed 
welfare reform demonstration projects. The purpose of these waivers was 
to conform FSP and title IV-A work requirements in order to provide the 
State agencies maximum flexibility in the operation of their 
demonstrations. The Department believed that the States' requests 
violated section 17(b) of the Act, which prohibited the approval of a 
waiver that would lower or further restrict the benefit levels of food 
stamp recipients. The Department concluded that the approval of these 
waivers would subject food stamp recipients to work requirements and 
possible sanctions that they would not be subject to under regular 
program rules. Therefore, the waivers were denied.
    Section 816 of PRWORA amended section 6(d)(2) of the Act by adding 
an option to allow State agencies that previously requested a waiver to 
lower the age of the qualifying dependent child to less than six. Under 
this option, State agencies that had requested such a waiver, but were 
denied before August 1, 1996, may lower the age of a qualifying 
dependent child to between one and six years. This option may be 
exercised for a period of not more than three years.
    This rule proposes to amend 7 CFR 273.7(b)(iv) to include a 
provision offering this option to the State agencies of Alabama, 
Kansas, Maryland, Michigan, North Dakota, Virginia, Wisconsin, and 
Wyoming. According to FNS records, these were the State agencies that 
were denied the exemption waivers before August 1, 1996. These State 
agencies, upon submission of written notification to the Department, 
may, for a maximum of three years, lower the age of a dependent child 
that qualifies a parent or other household member for an exemption to 
between one and six.

Employment and Training Program

    Since April 1987 State agencies have been required to operate a 
Food Stamp Employment and Training Program. The E&T program seeks to 
improve food stamp recipients' ability to obtain regular employment, 
increase earnings, and reduce their dependency on public assistance.
    State agencies may choose to operate one or more of a variety of 
E&T components. The components may vary from State to State, and may 
include job search, job search training, workfare, work experience, 
self-employment activities, and vocational and basic education 
components. Job search has by far been the most prevalent activity, 
because of its relatively low cost.
    The Department funds the E&T Program in three categories. An annual 
100% Federal grant is allocated to State agencies to operate their 
programs. The Department matches allowable operational E&T costs that 
exceed the 100% Federal grant. USDA also matches 50% of the costs 
incurred by participants in fulfilling their E&T obligations by 
contributing half of the costs for dependent care (within certain 
limits), and half of up to $25 per month for transportation and other 
costs. All funding passes from USDA directly to State agencies.
    Prior to the enactment of PRWORA, the Department allocated an 
annual 100% Federal grant of $75 million to State agencies. In 
accordance with section 16(h) of the Act, $60 million was distributed 
according to each State's proportion of work registrants nationwide, 
and the remaining $15 million was distributed based on State agency 
performance in placing people into E&T activities.
    The Food Security Act of 1985 (Pub. L. 99-198), which created the 
E&T Program, mandated that the Department establish performance 
standards requiring State agencies to place at least 50 percent of 
their mandatory participants into E&T programs. Mandatory participants 
are work registrants not exempted from E&T by a State agency. Congress 
lowered the 50 percent performance requirement to 10 percent, effective 
FY 1992, to encourage State agencies to begin utilizing more 
substantive interventions or to target service to certain groups.
    Each State agency must have in place conciliation procedures for 
the resolution of disputes involving the participation of individuals 
in the E&T Program.
    In accordance with section 817 of PRWORA, which contains amendments 
to section 6(d)(4) of the Act, this rulemaking proposes the following 
changes to current regulations.
Statewide Workforce Development System
    Section 817 of PRWORA amended section 6(d)(4) of the Act to require 
that each component of a State agency's E&T program be delivered 
through a statewide workforce development system, unless the component 
is not available locally through such a system.
    A statewide workforce development system is an interconnected 
strategy for providing comprehensive labor market and occupational 
information to jobseekers, employers, providers of one-stop delivery of 
core services, providers of other workforce employment activities, and 
providers of workforce education activities.

[[Page 72202]]

    This rule proposes to add, at 7 CFR 273.7(c), a new paragraph (5), 
which will contain the requirement that each component of a State 
agency's E&T program be delivered through its statewide workforce 
development system. If the component is not available locally through 
such a system, the State agency may use another source.
Acceptable Level of Effort of E&T Components
    Current regulations at 7 CFR 273.7(f)(1) require that any E&T 
component offered by a State agency entail a certain level of effort on 
the part of participants. The Department established a minimum level of 
effort that is comparable to spending 12 hours a month for two months 
(or less in workfare or work experience components) making job 
contacts. The Department based this level on the pre-E&T food stamp job 
search requirement that a participant contact 24 employers in an eight-
week period in an effort to locate suitable employment. The Department 
intends to maintain this level as the acceptable level of component 
effort.
    Section 824 of PRWORA established a new work requirement under 
which nonexempt ABAWDs become ineligible if, during a 36-month period, 
they receive benefits for three months in which they do not meet 
specific conditions. One such condition is participation for 20 or more 
hours a week in a work program, such as E&T--excluding job search or 
job search training activities. The 20-hour requirement does not apply 
to workfare or work experience components of E&T programs. 
Participation in those components is limited to the number of monthly 
hours equal to the result obtained by dividing a household's food stamp 
allotment by the higher of the applicable Federal or State minimum 
wage.
    The Department urges State agencies to plan their E&T component 
participation requirements with the ABAWD provisions in mind. By 
establishing sufficient levels of effort for their non-work, non-job 
search/job search training E&T program components, or by judicious 
scheduling of simultaneous participation in a combination of components 
to meet the ABAWD provisions, State agencies can contribute 
significant--and valuable--resources to permit ABAWDs to maintain their 
food stamp eligibility. State agencies must keep in mind, however, the 
maximum individual or household participation requirements specified in 
section 6(d)(4)(F) of the Act. The total monthly work hours in an E&T 
program required of a household, together with the hours of work in a 
optional workfare program, may not exceed the number of hours equal to 
the household's food stamp allotment divided by the higher of the 
applicable Federal or State minimum wage. The total hours of individual 
participation in E&T, together with any hours worked for compensation 
in cash or in kind (including workfare), cannot exceed 120 hours per 
month.
Applicant Work Requirements
    Current regulations at 7 CFR 273.7(f)(1) allow a State agency to 
require an individual to conduct a job search from the time an 
application is filed for an initial period of up to eight consecutive 
weeks. This State agency option was provided to conform FSP policy with 
title IV-A applicant job search requirements.
    Section 817 of PRWORA amended section 6(d)(4) of the Act by 
expanding this existing State agency option. In addition to job search, 
a State agency may require non-exempt food stamp applicants to 
participate in any of its E&T program components as a condition of 
eligibility.
    This rulemaking proposes to amend redesignated 7 CFR 273.7(e)(1) to 
authorize a State agency to require FSP applicants, at its option, to 
participate in and comply with any component it offers in its E&T 
program for an initial period beginning at the time of application. In 
order to assure the maximum success of applicant participation, the 
Department further proposes to remove the eight-week time limit for 
this initial period of applicant participation. Thus, a State agency 
may require applicant participation for any initial period it 
determines to be adequate to meet program goals. However it was not the 
intent of Congress to permit State agencies to delay the determination 
of an individual's eligibility for benefits or the issuing of benefits 
to an otherwise eligible household until initial participation is 
completed. Therefore, the Department proposes to maintain the 
requirement at redesignated 7 CFR 273.7(e)(1)(i) that, as long as the 
applicant is complying with the E&T requirement, the State agency not 
delay the determination of the individual's eligibility for benefits or 
the issuance of benefits to an otherwise eligible household pending 
completion of an applicant E&T requirement.
Job Search
    Current regulations at 7 CFR 273.7(f)(1)(i) authorize a State 
agency to offer a job search component comparable to that required of a 
program under title IV-A. Aside from the initial applicant job search 
period, discussed above, the work registrant can be required to conduct 
a job search of up to eight weeks (or an equivalent period) in any 
consecutive 12-month period. The first such 12-month period begins at 
any time following the close of the initial period.
    Section 817 of PRWORA amended section 6(d)(4)(B) of the Act by 
deleting the title IV-A comparability requirement for job search.
    Therefore, we propose to amend redesignated 7 CFR 273.7(e)(1)(i) by 
deleting the requirement that a State agency's E&T job search component 
must be comparable to its title IV-A job search component.
    The legislative history of the Act indicates that, while Congress 
did not place a minimum or maximum limit on job search, it did expect 
the Department to develop and implement reasonable requirements. The 
only limitation Congress placed on the Department was that it not 
initiate a mandatory continual job search. Congress did not intend that 
work registrants actively engage in a systematic and sustained effort 
to obtain work every month and provide tangible evidence to the State 
agency of such effort. It feared that such a system would create 
administratively complex and cumbersome reporting systems that would 
flood State agency offices with paperwork, but would not produce jobs. 
At the time of the publication of the original job search rule in 
January 1981, the Department chose the eight-week job search period to 
conform with the requirements of the Aid to Families with Dependent 
Children (AFDC) Program. Job search under AFDC's Work Incentive Program 
(WIN) was mandated to be no more than eight weeks a year.
    In keeping with the State agency flexibility offered under PRWORA, 
the Department further proposes to amend redesignated 7 CFR 
273.7(e)(1)(i) by removing the annual eight week job search limitation. 
Each State agency will be free to conform its E&T job search to that of 
its title IV-A work program, or to establish job search requirements 
that, in the State agency's estimation, will provide participants a 
reasonable opportunity to find suitable employment. However, the 
Department believes that Congress' initial concern about the length of 
job search still applies. If a reasonable period of job search does not 
result in employment, placing the individual in a training or education 
component to improve job skills will likely be more productive.

[[Page 72203]]

The Department welcomes comments on this issue.
    Lastly, the Department proposes to amend redesignated 7 CFR 
273.7(e)(1)(i) by adding that, in accordance with section 6(o)(1)(A) of 
the Act and 7 CFR 273.24 of the regulations, a job search program 
operated as a component of a State's E&T program does not meet the 
definition of work program relating to the participation requirements 
necessary to maintain food stamp eligibility for able-bodied adults. 
This same notice will be added at redesignated 7 CFR 273.7(e)(1)(ii), 
which describes job search training programs. These additions will also 
specify that the prohibitions against E&T job search and job search 
training do not apply to such programs operated under title I of the 
Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq.) (the WIA), or 
under section 236 of the Trade Act of 1974 (19 U.S.C. 2296) (the Trade 
Act). Further, we propose to amend redesignated 7 CFR 273.7(e)(1) to 
add that job search or job search training activities, when offered as 
part of other E&T program components, are acceptable as long as those 
activities comprise less than half the required time spent in the other 
components.
Workfare
    Current regulations at 7 CFR 273.7(f)(1)(iii) authorize assignment 
to workfare components operated in accordance with section 20 of the 
Act and 7 CFR 273.22. As part of a workfare program, the Act permits 
operating agencies to establish a job search period of up to 30 days 
following certification prior to making a workfare assignment. During 
this period, the participant is expected to look for a job. The job 
search period may only be conducted at certification, not at 
recertification. This job search activity is part of the workfare 
assignment and not a job search ``program.'' Therefore, participants 
are to be considered as participating in and complying with the 
requirements of workfare, thereby satisfying the ABAWD work 
requirement.
    We propose to amend redesignated 7 CFR 273.7(e)(1)(iii) to include 
a statement that makes clear that the job search period authorized by 
State agencies for workfare components does meet the work requirement 
for able-bodied adults.
Work Experience Programs
    Current regulations at 7 CFR 273.7(f)(1)(iv) authorize assignment 
to a work experience component to improve the employability of 
participants through training and/or actual work experience. In 
accordance with sections 6(d)(4)(B)(i)(I) and (II) of the Act, 
assignments are limited to ones that serve a useful public purpose in 
fields such as health, social service, environmental protection, urban 
and rural development and redevelopment, welfare, recreation, public 
facilities, public safety, and day care. Additionally, assignments are 
to use, to the greatest extent possible, a participant's prior 
training, experience, and skills.
    Section 817 of PRWORA amended section 6(d)(4) by deleting the above 
limitations imposed on work experience assignments. In taking this 
action, the Department believes that Congress meant to expand State 
agency flexibility to place individuals not only in public or private 
non-profit assignments, but also in work experience positions with 
private sector, for-profit employers. However, the Act and other 
Federal laws--including the Fair Labor Standards Act of 1938, as 
amended (29 U.S.C. 201, et seq.)--govern the rights of participants 
assigned to positions with for-profit employers as well as those in 
non-profit positions. State agencies must exercise great caution to 
comply with those laws and to ensure those rights when establishing and 
operating private sector work experience components.
    This flexibility does not extend to workfare assignments, in which 
participants are required to work off the value of their household's 
monthly food stamp allotment. Workfare assignments may only be in 
public or private non-profit agencies.
    We propose to amend redesignated 7 CFR 273.7(e)(1)(iv) by deleting 
the requirements that work experience assignments serve a useful public 
purpose, and that they use, to the greatest extent possible, a 
participant's prior training, experience, and skills. Thus, assignments 
can be made to any available public or private non-profit project, as 
well as with any private, for-profit employer, regardless of prior 
training, experience, or skills, as long as such assignments, pursuant 
to section 6(d)(4)(B)(iv), do not serve to replace a worker not 
participating in the program; and as long as they provide the same 
benefits and working conditions to E&T participants as those provided 
to regular employees performing comparable work for comparable hours.
``Other Programs, Projects, and Experiments''
    In accordance with section 16(h)(4) of the Act, the Federal 100 
percent E&T grant may only be used by State agencies to operate an E&T 
program under section 6(d)(4). Section 6(d)(4)(B)(vii) of the Act 
includes as an allowable component of an E&T program other employment, 
educational and training programs, projects, and experiments aimed at 
accomplishing the purpose of the E&T program. Such components must be 
approved by the Secretary, or by the State under regulations issued by 
the Secretary. These components include work programs under section 824 
of PRWORA that allow ABAWDs to maintain eligibility for food stamps. 
These work programs are defined as (1) a program under the WIA; (2) a 
program under section 236 of the Trade Act; and (3) a program of 
employment and training operated or supervised by a State or political 
subdivision of a State that meets standards approved by the Governor of 
the State, including a program under subsection (d)(4), other than a 
job search program or a job search training program. Therefore, in 
order to qualify for Federal financial participation, all WIA, Trade 
Act and State/local employment and training programs must be fully 
described in the State E&T plan; must guarantee all the rights and meet 
all the requirements of regular E&T program components; and must be 
approved by the Secretary.
Exemptions
    Current regulations at 7 CFR 273.7(f)(2) permit State agencies, 
subject to approval by the Department, to exempt from E&T certain 
individual work registrants or categories of work registrants for which 
participation is impracticable. Factors listed which may lead to the 
impracticability of participation in some geographic areas, for some 
groups of work registrants, include availability of job opportunities 
and the cost-effectiveness of participation. For individuals, personal 
circumstance such as lack of job readiness, the remote location of work 
opportunities, physical condition, and the unavailability of dependent 
care are listed. Additionally, with approval from the Secretary, 
persons who have participated in the FSP for 30 days or less may be 
exempted from participation.
    Although State agencies are afforded a certain amount of 
flexibility in determining who will or will not participate in E&T, 
they are required to justify proposed exemptions in their E&T State 
plans. The Department can accept or reject the proposed exemptions, 
based on the validity of the State agency's claim.
    Individual exemptions must be reevaluated at each recertification.

[[Page 72204]]

Categorical exemptions should be reviewed no less frequently than 
annually to determine whether they remain valid.
    Current regulations at 7 CFR 273.7(c)(4) detail the State agency's 
responsibilities for preparing and submitting an E&T plan. Paragraph 
(c)(4)(iii) requires the State agency to list the categories and types 
of individuals it seeks to exempt from E&T participation, the basis 
used to determine these exemptions, including any cost information, and 
the estimated percentages of work registrants the State plans to 
exempt.
    Section 817 of PRWORA amended section 6(d)(4)(D) of the Act to 
remove the requirements that: (1) individual and categorical exemptions 
from E&T be based on impracticability; (2) State agencies require the 
approval of the Secretary to exempt household members that have 
participated in the FSP for 30 days or less; and (3) individual 
exemptions be reevaluated no less often than at each certification or 
recertification.
    Accordingly, the Department proposes to amend redesignated 7 CFR 
273.7(e)(2) by removing restrictions on State agency flexibility in 
determining E&T exemptions. The State agency may, at its discretion, 
exempt individual work registrants and categories of work registrants. 
Although the validity of exemptions must be periodically reevaluated, 
each State agency may establish the frequency of its evaluation.
    The Department also proposes to amend 7 CFR 273.7(c)(6)(iii) by 
removing the requirement that the State agency list the basis, 
including cost information, it uses to determine its exemptions; and by 
adding the requirement that it include the frequency with which it 
plans to reevaluate the validity of its exemptions.
Voluntary Participation
    Current regulations at 7 CFR 273.7(f)(4) contain two provisions for 
volunteers. First, that a State agency ``may operate program components 
in which individuals elect to participate.'' Second, a State agency 
``shall permit, to the extent it deems practicable, persons exempt from 
the work registration or employment and training requirements,'' as 
well as those who have complied or are in the process of complying with 
E&T requirements, to participate in any E&T component it offers.
    While the purpose of the two provisions appears to be similar but 
contradictory--one is an option, the other a mandate--they were based 
on Congressional intent to provide for two different circumstances.
    The term volunteer must first be defined. A volunteer is an 
individual who is exempt from FSP work requirements or who is a work 
registrant exempted by the State agency from participation who elects 
to participate in E&T. A mandatory participant who elects to 
participate in an E&T component while or after completing a required 
component is considered a volunteer in the subsequent component.
    In the first instance, Congress, recognizing its potential 
effectiveness, permitted State agencies to allow any individual food 
stamp recipient who elected to participate to volunteer. For example, 
persons with a child under 6--and therefore exempt from work 
registration--who wished to receive training and assistance in finding 
a full-time job would benefit, and long term Federal costs might be 
lowered.
    In the second instance, Congress required State agencies to allow, 
to the greatest practicable extent, work registrants exempted from E&T, 
as well as E&T participants who had complied with or were in the 
process of complying with program requirements, access to any E&T 
program component available.
    Section 817 of PRWORA amended section 6(d)(4)(G) by removing the 
requirement that State agencies shall--to the extent deemed 
practicable--permit both exempt and nonexempt work registrants to 
participate in any E&T component offered. State agencies retain, 
however, the option to operate E&T components in which individuals 
volunteer to participate.
    This rule proposes to amend redesignated 7 CFR 273.7(e)(4) by 
removing the requirement placed on State agencies to permit exempt work 
registrants and participants to take part in any component offered. 
While the Department encourages and supports such participation in E&T 
activities, it believes State agencies should be afforded maximum 
flexibility in determining who may participate in their programs and to 
what degree. State agencies continue to have the option to offer E&T 
components in which volunteers may participate. We do not believe, 
however, that volunteers should be subjected to the same penalties for 
noncompliance as mandatory participants. We also do not believe that a 
distinction should be drawn between volunteer and regular E&T 
participants concerning maximum hour restrictions on participation. 
Accordingly, the Department proposes that the current regulatory 
requirements concerning disqualification and hours of work or 
participation for volunteers continue to apply.
Conciliation
    Current regulations at 7 CFR 273.7(g)(ii) contain requirements for 
a State agency to establish conciliation procedures to be used when an 
individual fails to comply with an E&T Program requirement. The purpose 
of the conciliation effort is to determine the reason(s) the work 
registrant did not comply with the E&T requirement and provide him or 
her with an opportunity to comply prior to issuing a notice of adverse 
action. The conciliation period begins the day after the State agency 
learns of the noncompliance and continues for at least 30 days. In this 
time the State agency is expected to contact the noncompliant 
individual to determine the reason for the noncompliance, establish 
whether good cause exists, and advise the individual on what actions 
need to be taken to avoid disqualification. The noncompliant individual 
must perform a verifiable act of compliance within the 30-day period to 
avoid receiving a notice of adverse action.
    Current regulations at 7 CFR 273.7(g)(iv) and (v) detail the 
adverse action procedures that a State agency must follow as soon as it 
learns about an act of noncompliance with a FSP work requirement other 
than an E&T Program requirement. First, the State agency must establish 
if good cause for the noncompliance exists. Then, within 10 days of 
establishing that good cause does not exist, the State agency must 
issue the noncompliant individual a notice of adverse action.
    The notice of adverse action details the particular act of 
noncompliance committed and the proposed period of disqualification. 
The notice must also specify that the individual may reapply at the end 
of the disqualification period. Information must be included on or with 
the notice describing the action that can be taken to avoid the 
sanction. The disqualification period begins the first month following 
the expiration of the 10-day adverse notice period, unless a fair 
hearing is requested.
    Section 817 of PRWORA amended section 6(d)(4)(H) of the Act by 
deleting the conciliation requirement.
    Accordingly, we propose to amend redesignated 7 CFR 273.7(f) by 
removing the requirements imposed on State agencies to establish and 
operate a conciliation procedure for the resolution of disputes 
involving the participation of an individual in E&T. However, a State 
agency may opt to incorporate an informal conciliation process into its 
E&T program. In such cases the State

[[Page 72205]]

agency must comply with the adverse action procedures at the end of the 
conciliation period.
Performance Standards and State Compliance With Employment and Training 
Requirements
    Current regulations at 7 CFR 273.7(o) set forth the requirements 
for State agencies to meet an annual performance standard for the 
minimum number of participants that a State agency must place in its 
E&T program. Since FY 1992 the performance standard has been set at 10 
percent of a State agency's mandatory E&T participants plus volunteers.
    In order to calculate its performance standard at the end of the 
fiscal year, a State agency is required to collect information on its 
total work registrants, the number of work registrants it exempts from 
E&T, and the number of non-exempt work registrants (mandatory 
participants) and volunteers it places in E&T components during the 
fiscal year.
    The current regulation at 7 CFR 273.7(p)(2) provides that if a 
State agency fails to meet the required performance standard without 
good cause, the Department may disallow administrative funding for the 
State agency's E&T program, as well as withholding the State agency's 
performance-based allocation. Further, the current regulation at 7 CFR 
273.7(p)(1) applies the provisions of Sec. 276.1(a)(4) to State 
agencies that fail to efficiently and effectively administer their E&T 
programs. That regulation authorizes FNS to seek injunctive relief and/
or suspension or disallowance of the Federal share of a State agency's 
administrative funds if the State agency fails to efficiently and 
effectively administer any part of the Food Stamp Program, including 
E&T.
    Section 817 of PRWORA amended section 6(d) of the Act by removing 
paragraph (K), which directed the Secretary to establish performance 
standards to measure the extent of State implementation of E&T. Section 
817 further amended section 6(d) by removing paragraph (L)(ii), which 
authorized the Secretary--in cases where a State agency fails, without 
good cause, to comply with E&T requirements, including failing to meet 
performance standards--to withhold administrative funding, including 
the 100 percent Federal E&T grant.
    Accordingly, we propose to amend 7 CFR 273.7 by removing paragraph 
(o), Performance Standards. It is possible that Congress will, in the 
future, mandate some type of performance measurement system--either 
process or outcome based--for the E&T Program. In the interim, State 
agencies are free to use the resources of their E&T programs to serve 
their at-risk populations in the most effective manner possible.
    We also propose to amend 7 CFR 273.7 by deleting paragraph (p), 
State noncompliance with Employment and Training requirements. The 
former paragraph (p)(1), which, as explained above, details the 
consequences of States not complying with E&T requirements, will be 
redesignated as paragraph (c)(14).
Federal Financial Participation
    Current regulations at 7 CFR 273.7(d) require the Department to 
allocate an annual 100 percent Federal E&T grant to States, based in 
part on the number of work registrants in each State compared to the 
number of work registrants nationwide; and in part on each State 
agency's program performance. Each State agency must receive at least 
$50,000 in unmatched Federal funds. The State agency is required to use 
the E&T grant to fund the administrative costs of planning, 
implementing and operating its E&T program. The Department will pay 50 
percent of all other administrative costs above those covered by the 
100 percent Federal grant that the State agency incurs in operating its 
E&T program.
    The Department matches half the amount State agencies spend to 
reimburse E&T participants for the actual costs of transportation and 
other costs (excluding dependent care) that are determined by the State 
agency to be necessary and directly related to E&T participation, up to 
$25 per month. Thus, the Department will pay up to $12.50 a month of 
each participant's costs. The State agency may supplement this amount, 
but without Federal matching funds.
    State agencies must also provide payments or reimbursements to E&T 
participants for dependent care expenditures, up to a statewide limit 
set by the State agency. This statewide limit may not be less than the 
limit set for the dependent care deduction at 7 CFR 273.9(d)(4), that 
is, $200 per month for each dependent under age 2 and $175 per month 
for each other dependent. However, the reimbursement may not exceed the 
applicable local market rate as determined by procedures consistent 
with the JOBS Program. Thus, the State agency must reimburse actual 
costs of dependent care up to either the local market rate or the 
statewide limit set by the State agency, whichever is lower. The 
Department matches State agency expenditures for reimbursements at the 
50 percent level.
    Section 817 of PRWORA amended sections 6(d)(4) and 16(h) of the Act 
concerning the funding of, and Federal financial participation in, the 
E&T Program. Subsequently, the Balanced Budget Act of 1997 (Pub. L. 
105-33) substantially amended those requirements. Therefore, the 
majority of amendments dealing with funding are addressed in a separate 
rule. However, section 817 amended section 6(d)(4) of the Act in two 
significant areas that will be addressed in this proposed rule.
    Section 817 of PRWORA amended section 6(d)(4) of the Act by 
removing the requirement that reimbursements for dependent care 
expenses incurred due to participation in E&T must equal at least the 
amount of the dependent care deduction established for determining 
household eligibility and benefit amounts. We propose to amend 7 CFR 
273.7(c), State agency responsibilities, by removing the provision that 
requires State agencies, in their State plans, to include a statewide 
limit for dependent care reimbursements established by the State agency 
that must not be less than the dependent care deduction amounts 
specified under Sec. 273.9(d)(4).
    Section 817 of PRWORA further amended section 6(d) of the Act by 
adding the provision that limits the amount of money State agencies may 
spend to provide E&T program services to food stamp recipients who also 
receive benefits under a State program funded under title IV-A. The 
limit is the amount of Federal E&T funds the State agency spent on E&T 
services for the same category of recipients in fiscal year 1995. This 
rule proposes, therefore, to add, at 7 CFR 273.7(d)(1)(i)(F), the 
provision that, notwithstanding any other provision of the paragraph, 
the amount of E&T funds, including participant and dependent care 
reimbursements, a State agency uses to serve participants who are 
receiving benefits under a State program funded under title IV-A may 
not exceed the amount of funds the State agency used in FY 1995 to 
serve participants who were receiving benefits under a State program 
funded under title IV-A.
    Based on information provided by each State agency, the Department 
established claimed Federal E&T expenditures on this category of 
recipients in fiscal year 1995 for the State agencies of Colorado 
($318,613), Utah ($10,200), Vermont ($1,484,913), and Wisconsin 
($10,999,773). These State agencies may spend a like amount each fiscal 
year to serve food stamp recipients who also receive title IV-A 
assistance, if they choose. Other State agencies are prohibited from 
expending

[[Page 72206]]

any Federal E&T funds on title IV-A recipients.

Employment Initiatives Program

    Section 852 of PRWORA amended section 17 of the Act (7 U.S.C. 2026) 
to add provisions for an employment initiatives program under which an 
eligible household in a qualifying State may elect to receive the cash 
equivalent of its food stamp coupon allotment.
    This rule proposes to add, at 7 CFR 273.7, a new paragraph (k), 
containing the following requirements for the employment initiatives 
program.
    A State agency qualifies to operate an employment initiatives 
program if, during the summer of 1993, at least half of its food stamp 
households also received benefits from a State program funded under 
title IV-A. Qualified State agencies are Alaska, California, 
Connecticut, the District of Columbia, Massachusetts, Michigan, 
Minnesota, New Jersey, West Virginia, and Wisconsin.
    A food stamp household in one of the 10 qualified State agencies 
may receive cash benefits if it elects to participate and an adult 
member of the household (1) has worked in regular (i.e., unsubsidized) 
employment for the last 90 days, earning a minimum of $350 per month; 
(2) is receiving cash benefits under a State program funded under title 
IV-A; or (3) was receiving cash benefits from the State program but, 
while participating in the employment initiatives program, became 
ineligible because of earnings and continues to earn at least $350 a 
month from unsubsidized employment.
    As required by section 852, A qualifying State agency operating an 
employment initiatives program must agree to pay for an increase in 
cash benefits to compensate participating households for any State or 
local sales taxes on food purchases.
    Also as required by section 852, a State agency that operates an 
employment initiatives program for two years must evaluate the impact 
of providing cash assistance in lieu of a food stamp coupon allotment 
to participating households. The State agency must provide the 
Department with a written report of its evaluation findings. The State 
agency, with the concurrence of the Department, will determine the 
content of the evaluation. The Department expects the evaluation to 
address, at a minimum, questions concerning the effects of providing 
cash assistance on household food expenditures, food use, and nutrient 
availability. Additionally, related issues such as households' 
experiences in running out of food and expenditure shifts from food to 
other goods and services should be addressed.

Work Supplementation Program

    Section 849 of PRWORA amended section 16(b) of the Act (7 U.S.C. 
2025(b)) to give State agencies the option to implement work 
supplementation (or support) programs. In these programs the cash value 
of public assistance benefits, plus FSP benefits, is provided to an 
employer as a wage subsidy to be used for hiring and employing public 
assistance recipients. The goal of work supplementation is to promote 
self-sufficiency by providing public assistance recipients with work 
experience to help them move into non-subsidized jobs.
    Prior to the enactment of PRWORA, about a dozen States were 
approved to operate demonstration projects in local jurisdictions that 
included a work supplementation component. In July 1997, FNS sent a 
letter to all States about the work supplementation program including a 
set of questions and answers. These guidelines were provided to 
facilitate the implementation of these programs under PRWORA. These 
guidelines placed no requirements on States beyond those of federal law 
and other federal regulations governing reporting on and accounting for 
financial and participation data. Because of the limited experience 
with the work supplementation programs, the Department does not intend 
to propose additional requirements or restrictions. The Department 
hopes that this flexibility encourages more States to develop 
partnerships with private employers in an environment that supports 
innovation and experimentation within the limits of the law.
    This rule proposes to add, at 7 CFR 273.7, a new paragraph (l), 
containing the following requirements for the work supplementation or 
support program.
    We further propose to add a new paragraph (d)(1)(xiv) under 7 CFR 
272.2, Plan of operation. Paragraph (d)(1)(xiv) will contain the 
requirement for a planning document from each State agency that 
operates a work supplementation program.
    A State agency that proposes to implement a work supplementation 
program must submit its plan for FNS approval. This plan must address 
the requirements for a work supplementation or support program listed 
this proposed rule. Once its plan is approved, FNS will provide the 
State agency with the cash value of recipients' food stamp benefits to 
be used as wage subsidies for work supplementation programs and to 
reimburse the State for related administrative costs.
    PRWORA established the following parameters for work 
supplementation programs:
     The individual must be receiving public assistance, but 
must not be employed by the employer at the time the individual enters 
the work supplementation program.
     The wage subsidy received under the work supplementation 
program must be excluded from household income and resources during the 
time the individual is participating in work supplementation.
     The household must not receive a separate food stamp 
allotment while participating in the work supplementation program.
     An individual participating in a work supplementation 
program must be excused from meeting any other work requirements.
     The work supplementation program must not displace any 
persons currently employed who are not supplemented or supported.
     The wage subsidy must not be considered income or 
resources under any Federal, State, or local laws, including, but not 
limited to, laws relating to taxation, welfare, or public assistance 
programs, and the household's food stamp allotment must not be 
effectively decreased due to taxation or any other reason because of 
its use as a wage subsidy.
     The earned income deduction must not be applied to the 
subsidized portion of wages earned in a work supplementation program.
     State agencies must specify how public assistance 
recipients in the proposed work supplementation and support program 
will, within a specified period of time, be moved from supplemented or 
supported employment to employment that is not supplemented or 
supported.
    The Department solicits comments in the following areas that are 
not mandated by PRWORA but are necessary to comply with other laws or 
for accounting and reporting purposes.
     States must ensure that work supplemented or supported 
employees are treated the same as other non-subsidized employees and 
that all subsidized positions comply with the Fair Labor Standards Act.
     States must outline State agency, employer and recipient 
obligations and responsibilities in the proposed work supplementation 
program. They must also describe procedures for providing wage 
subsidies to participating employers and for monitoring the use of the 
funds.

[[Page 72207]]

     At the same time the plan is submitted for approval, the 
State must also submit an operating budget for the proposed program. 
Additionally, before the plan is approved, the State must agree to 
comply with certain reporting and monitoring requirements. State 
agencies operating work supplementation and support programs are 
required to comply with all FNS reporting requirements, including 
reporting the amount of benefits contributed to all employers as a wage 
subsidy on the FNS 388. State Issuance and Participation Estimates; 
FNS-388A, Participation and Issuance Project Area; FNS-46. Issuance 
Reconciliation Report; and SF-269, Addendum Financial Status Report. 
State agencies are also required to report administrative costs 
associated with work supplementation programs on the FNS-366A, Budget 
Projection and SF-269, Financial Status Report. Special codes for work 
supplementation programs will be assigned for reporting purposes.
     The proposed rule asks States to include in their plan 
amendments whether food stamp allotments and public assistance grants 
will be frozen at the time a recipient begins a subsidized job. The 
Department is particularly interested in public comments on the 
desirability of a Federal standard for issuing supplemental allotments 
when earnings unexpectedly fall and, secondly, whether there should be 
a time limit on freezing benefit levels (i.e., not counting any 
unsubsidized wages from the employer).
     Once the work supplementation program plan is approved, 
the State agency must incorporate it into the State Plan of Operation 
and include its operating budget in the State agency budget. After 
approval, the Department will pay the cash value of a recipient's food 
stamp benefits to the State agency so they may be paid directly to an 
employer as a wage subsidy. The State agency will also be reimbursed 
for administrative costs related to the operation of the work 
supplementation program as provided by Section 16 of the Food Stamp 
Act.
     For Quality Control purposes, cases in which a household 
member is participating in a work supplementation program will be coded 
as not subject to review.

Workfare

    Since 1982 the Department has afforded State agencies and political 
subdivisions the option to establish a workfare program. In Workfare, 
nonexempt food stamp household members are required to accept public 
service job offers and work in return for the household's food stamp 
allotment. The number of hours of work required of household member is 
calculated by dividing the household's monthly benefit by the higher of 
the applicable Federal or State minimum wage. Workfare helps ensure 
that only those who are willing to work receive benefits; it provides 
useful public services; and it provides valuable work experience.
    Under current rules, household members subject to the work 
registration requirements of 7 CFR 273.7(a) are also subject to 
workfare. Additionally, recipients of benefits under title IV-A are 
subject to workfare if they are currently involved less than 20 hours a 
week in title IV-A work activities and are not otherwise exempt. 
Applicants for, or recipients of, unemployment compensation are also 
subject to workfare.
    Workfare is a household responsibility. Legislative history 
(Conference Report No. 97-290 on the Agriculture & Food Act of 1981, 
December 10, 1981, page 226) established Congressional intent that the 
household's workfare responsibility be shared by all nonexempt members: 
``Upon a household member's failure to comply with workfare 
requirements, the household would be ineligible for food stamps * * *, 
unless someone in the household satisfies all outstanding workfare 
obligations. * * *'' Failure of a household to comply with workfare 
requirements without good cause results in the disqualification of the 
entire household until the workfare obligation is met, or for two 
months, whichever is less.
    The workfare provisions of section 20 (7 U.S.C. 2029) of the Act 
entitle a political subdivision operating a workfare program to share 
in the benefit reductions that occur when a workfare participant begins 
employment while engaged in workfare for the first time, or within 30 
days of ending the first participation in workfare. This provision is 
available only for workfare programs operated under section 20.
    Workfare may also be offered as a component of a State agency's E&T 
program. However, workfare savings are not available for E&T workfare 
components.
    State agencies and political subdivisions may also operate workfare 
programs in which participation by food stamp recipients is voluntary. 
In a voluntary program, disqualification for failure to comply does not 
apply. The number of hours of work will be negotiated between the 
volunteer household and the agency operating the workfare program.
    Section 815 of PRWORA amended section 20 of the Act to: (1) 
eliminate the requirement for conformance with workfare programs under 
title IV-A ; (2) eliminate the provision for combining the food stamp 
and title IV-A assistance grants to determine the number of hours a 
title IV-A food stamp household can be required to participate in a 
community work experience program established under section 409 of the 
Social Security Act (42 U.S.C. 609); and (3) conform disqualification 
penalties for failure to comply with workfare requirements with those 
under section 6(d)(1) of the Act. Thus, while still a household 
responsibility, State agencies have the option of disqualifying the 
individual or, if the individual is a head of household, the entire 
household.
    This rulemaking proposes to amend 7 CFR 273.22 to incorporate 
PRWORA changes as well as making other technical corrections. Lastly, 
in keeping with the Department's ongoing regulation streamlining and 
reform initiative, and to create a more logical union of food stamp 
work requirements and the optional workfare program, we propose to move 
the amended 7 CFR 273.22 to 7 CFR 273.7, Work provisions, and to 
designate it paragraph (m), Optional workfare program.

Comparable Workfare

    Section 824 of PRWORA established the provision that non-exempt 
individuals will become ineligible if, in the preceding 36-month 
period, they receive food stamps for three months during which they do 
not meet a required work or training obligation. One of the qualifying 
activities is to ``participate in and comply with the requirements of a 
[workfare] program under section 20 or a comparable program established 
by a State or political subdivision of a State * * *''
    Several State agencies are operating--or have expressed an interest 
in operating--programs that, while comparable to workfare in that they 
require the participant to work for his or her household's food stamp 
allotment, vary greatly from the requirements of workfare under section 
20 of the Act. The purpose of these comparable programs is to assist 
ABAWDs in fulfilling their work requirement and maintaining eligibility 
for benefits. Although there are variations, these comparable programs, 
for the most part, provide that the ABAWDs voluntarily participate and 
find their own public service placements. They are also responsible for 
arranging to have their participation reported to their

[[Page 72208]]

caseworkers and for verifying their workfare hours. Participation 
requirements range from three hours a week to 25 hours per month. 
Additionally, these ``self-inititated'' programs may or may not offer 
reimbursement for transportation or other costs of participation. The 
work site is responsible for providing work benefits and/or 
protections.
    The Department initially determined that, since self-initiated 
programs do not meet the requirements of section 20 of the Act, they 
are not eligible for Federal financial participation. However, the 
Balanced Budget Act of 1997 contained a ``use of funds'' requirement 
for 100 percent Federal E&T grant allocations. State agencies must use 
at least 80 percent of their E&T grants to serve nonexempt ABAWDs who 
are placed in and comply with the requirements of an approved work 
program, a workfare program under section 20 or a comparable workfare 
program established by a State or political subdivision. Thus 
comparable self-initiated workfare programs are now eligible for 
Federal financial participation.
    This rule proposes to add a new paragraph (10) to the newly 
designated paragraph 273.7(m). The new paragraph, (m)(10), will contain 
the provisions relating to comparable workfare programs.

IV. Procedural Matters

Executive Order 12866

    This proposed rule has been determined to be economically 
significant and was reviewed by the Office of Management and Budget in 
conformance with Executive Order 12866.

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 3105, subpart V and related Notice to (48 FR 29115), 
this Program is excluded from the scope of Executive Order 12372 which 
requires intergovernmental consultation with State and local officials.

Executive Order 12988

    This rule 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 that 
conflict with its provisions or that would otherwise impede its full 
implementation. This rule is not intended to have retroactive effect 
unless so specified in the ``Effective Date'' paragraph of the final 
rule. Prior to any judicial challenge to the provisions of this rule or 
the application of its provisions, all applicable administrative 
procedures must be exhausted.

Regulatory Flexibility Act

    This rule 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 rule will not have a significant economic impact on 
a substantial number of small entities. The changes will affect food 
stamp applicants and recipients who are subject to FSP work 
requirements. The rulemaking also affects State and local welfare 
agencies that administer the Food Stamp Program.

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.

Regulatory Impact Analysis

Need for Action
    This action is needed to implement the work provisions of Pub. L. 
104-193, the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (PRWORA). These provisions would: (1) 
establish new disqualification penalties for noncompliance with Food 
Stamp Program work requirements; (2) permit certain States to lower the 
age at which a child exempts a parent or caretaker from food stamp work 
rules; (3) revise and streamline the Food Stamp Employment and Training 
(E&T) Program; (4) provide States the option of using a household's 
food stamp benefits to subsidize a job for a household member 
participating in a work supplementation or support program; and (5) 
permit qualifying States to provide certain households with cash in 
lieu of food stamps.
Benefits
    State agencies will benefit from the provisions of this rule 
because they streamline Food Stamp Program work requirements, simplify 
the disqualification requirements for failure to comply with work 
rules, and provide greater flexibility for State agencies to operate 
their employment and training programs.
Costs
    Changes brought about by this rule will reduce Program costs for 
the five-year period FY 99 through FY 03 by approximately $101.7 
million. The savings are realized from section 815, disqualification. 
They are the result of new disqualification penalties for noncompliance 
with Food Stamp Program work requirements. For FY 1999-2003, the 
estimated yearly dollar savings (in millions) are $30.9, $25.9, $19.5, 
$13.3, and $12.1 respectively. The costs/savings of the other four 
provisions cannot be determined because they either do not affect 
eligibility for food stamps or their effect on eligibility cannot be 
determined. They will not be discussed in this analysis.
    Section 815--Disqualification. This provision deals with 
disqualification for noncompliance with Food Stamp Program work 
requirements. It adds to the list of ineligible individuals those who 
refuse without good cause to provide sufficient information to allow a 
determination of their employment status or job availability; 
voluntarily and without good cause quit their job (previously limited 
to heads of households); voluntarily and without good cause reduce 
their work effort to less than 30 hours a week; and fail to comply with 
the workfare rules in section 20 of the Food Stamp Act.
    The disqualification provision deletes the lack of adequate child 
care for children above age five and under age 12 as an explicit good 
cause for refusal to accept a job offer and removes the requirement 
that the entire food stamp household be disqualified if the head of

[[Page 72209]]

the household is disqualified. Instead, if the head of the household is 
disqualified, States have the option of disqualifying the entire 
household for the duration of the head of the household's 
disqualification, or for 180 days, whichever is less.
    The provision establishes new mandatory minimum disqualification 
periods for individuals who fail to comply with work requirements. The 
length of the disqualification is based on the frequency of the 
occurrence. The State agency has the option to choose the length for 
each occurrence: (1) for the first violation, one to three months; (2) 
for the second violation, two to six months; and (3) for the third or 
subsequent violation, six months, a date determined by the State 
agency, or--at State agency option--permanently. In each instance, the 
individual must complete the disqualification period before he or she 
is allowed to comply with the work requirement and establish 
eligibility.
    The disqualification provision requires the Secretary to determine 
the meaning of: (1) good cause; (2) voluntarily quitting; and (3) 
reducing work effort; requires States to determine: (1) The meaning of 
other terms; (2) the procedures for establishing compliance; and (3) 
whether individuals are complying; and requires that none of such 
determinations be less restrictive than comparable determinations under 
title IV-A of the Social Security Act.
    This provision affects participants who fail to comply with Program 
work requirements by requiring minimum disqualification periods, with 
no provision to ``cure'' or end the disqualification by complying. It 
affects households whose heads fail to comply, if the State agency opts 
to disqualify the entire household. It also affects households in which 
a member is disqualified because the disqualified individual's income 
is considered available to the household in calculating household 
benefits.
    We estimate FY 99 savings to be $30.9 million and the five-year 
savings for FY 99 through FY 03 to be $101.7 million. The provisions in 
this section vary only slightly from the work requirements that PRWORA 
imposed on ABAWDs (for example, age ranges varied only slightly--from 
16-60 as opposed to the 18-50 year old range specified for ABAWDs). We 
derived our estimates using a percentage of FSP participants (mostly 
ABAWDs) who may be required to meet PRWORA work requirements but who 
would turn down qualifying work or training opportunities and be 
sanctioned. We estimate that 22,000 persons will be sanctioned in FY 99 
for refusing a work opportunity of some sort. We multiplied this number 
by the average monthly food stamp benefit level for this group 
(estimated to be $118.68 in 1999) times 12.

Paperwork Reduction Act

    Sections 272.2 and 273.7 contain information collection 
requirements. As required by the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), the Food and Nutrition Service is submitting a copy of 
this section to the Office of Management and Budget (OMB) for its 
review.
    Collection of Information: Operating Guidelines, Forms, and 
Waivers.
    The regulations at 7 CFR 272.2 require that State agencies plan and 
budget program operations and establish objectives for each year. 
Section 273.7 contains requirements for the State Employment and 
Training (E&T) Plan, one of the required planning documents. In the 
interest of State flexibility, the PRWORA provisions addressed in this 
rule deleted State E&T planning requirements for describing the 
intensity of E&T services, conciliation procedures, and Statewide 
limits for dependent care reimbursements, while adding the requirement 
that State agencies provide a description of their mandatory 
disqualification procedures and periods for noncompliance with Food 
Stamp Program work requirements.
    The respondents are 53 State agencies and they are required to 
respond once a year. It is estimated that the total annual reporting 
burden is 3,768 hours.
    The PRWORA provisions addressed in this rule deleted reporting 
burdens in the interest of State flexibility, while adding a new burden 
associated with each State agency's mandatory disqualification 
procedures. Thus, the overall reporting and recordkeeping burden for 
this proposed information collection is unchanged.
    PRWORA provided State agencies the option of implementing work 
supplementation or support programs. In these programs the cash value 
of public assistance benefits, plus food stamps, is provided to an 
employer as a wage subsidy to be used for hiring and employing public 
assistance recipients. This rule proposes to add the work 
supplementation or support plan, as required at Sec. 273.7(l)(1), to 
the planning requirements at 7 CFR 272.2.
    The potential respondents are any of the 53 State agencies that may 
opt to initiate a work supplementation or support program. The one-time 
burden associated with a State agency creating a plan for a work 
supplementation or support program is estimated to be 100 hours. 
However, since no State agency has opted to initiate a work 
supplementation or support program since the enactment of PRWORA, it is 
anticipated that this provision will not change the burden associated 
with this information collection.
    Organizations and individuals desiring to submit comments on the 
information collection requirements should direct them to the Office of 
Information and Regulatory Affairs, OMB, Room 10235, New Executive 
Office Building, Washington, D.C. 20503; Attention Desk Officer for the 
Food and Nutrition Service.
    Comments are invited on (a) whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (b) the accuracy of the agency's estimate of the burden of the 
proposed collection of information including the validity of the 
methodology and the information to be collected; (c) ways to enhance 
the quality, usefulness, and clarity of the information to be 
collected; and (d) ways to minimize the burden of the collection of 
information on those who are to respond, including through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology.
    OMB is required to make a decision concerning the collection of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, a comment to OMB is best assured of having its full effect 
if OMB receives it within 30 days of publication. This does not affect 
the deadline for the public to comment to the Department on the 
proposed regulations.

List of Subjects

7 CFR Part 271

    Administrative practice and procedures, Food stamps, Grant 
programs-social programs.

7 CFR Part 272

    Administrative practice and procedures, Food stamps, Grant 
programs-social programs.

7 CFR Part 273

    Administrative practice and procedures, Food stamps, Grant 
programs-social programs, Penalties, Reporting and recordkeeping.
    Accordingly, 7 CFR Parts 271, 272, and 273 are proposed to be 
amended as follows:

[[Page 72210]]

    1. The authority citation for parts 271, 272, and 273 continues to 
read as follows:

    Authority: 7 U.S.C. 2011-2036.

PART 271--GENERAL INFORMATION AND DEFINITIONS

    2. In Sec. 271.2:
    a. Remove the definition of ``Base of eligibles''.
    b. Amend the definition of ``Exempted'' by removing the reference 
to ``Sec. 273.7(f)'' and adding in its place a reference to 
``Sec. 273.7(e)''.
    c. Revise the definition of ``Placed in an employment and training 
(E&T) program'' to read as follows:


Sec. 271.2  Definitions.

* * * * *
    Placed in an employment and training (E&T) program means a State 
agency may count a person as ``placed'' in an E&T program when the 
individual commences a component.
* * * * *

PART 272-REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

    3. In Sec. 272.2, new paragraphs (d)(1)(xiii) and (d)(1)(xiv) are 
added to read as follows:


Sec. 272.2  Plan of operation.

* * * * *
    (d) Planning documents. * * *
    (1) * * *
    (xiii) The State agency's disqualification plan, in accordance with 
Sec. 273.7(f)(3) of this chapter.
    (xiv) If the State agency chooses to implement the provisions for a 
work supplementation or support program, the work supplementation or 
support program plan, in accordance with Sec. 273.7(l)(1) of this 
chapter.
* * * * *

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

    4. Revise Sec. 273.7 to read as follows:


Sec. 273.7  Work Provisions.

    (a) Work requirements. (1) As a condition of eligibility for food 
stamps, each household member not exempt under paragraph (b)(1) of this 
section must comply with the following Food Stamp Program work 
requirements:
    (i) Register for work or be registered by the State agency at the 
time of application and every 12 months after initial registration. The 
registration form need not be completed by the member required to 
register.
    (ii) Participate in an employment and training (E&T) program if 
assigned by the State agency, to the extent required by the State 
agency;
    (iii) Participate in a workfare program if assigned by the State 
agency, to the extent required by the State agency;
    (iv) Provide the State agency or its designee with sufficient 
information regarding employment status or availability for work;
    (v) Report to an employer to whom referred by the State agency or 
its designee if the potential employment meets the suitability 
requirements described in paragraph (h) of this section;
    (vi) Accept a bona fide offer of suitable employment, as defined in 
paragraph (h) of this section, at a site or plant not subject to a 
strike or lockout, at a wage equal to the higher of the Federal or 
State minimum wage or 80 percent of the wage that would have governed 
had the minimum hourly rate under section 6(a)(1) of the Fair Labor 
Standards Act of 1938 (U.S.C. 206(a)(1)) been applicable to the offer 
of employment.
    (vii) Do not voluntarily and without good cause quit a job of 30 or 
more hours a week or reduce work effort to less than 30 hours a week.
    (2) The Food and Nutrition Service (FNS) will determine the meaning 
of ``good cause,'' ``voluntary quit,'' and ``reduction of work effort'' 
as used in paragraph (a)(1) of this section.
    (3) Each State agency will determine the meaning of any other terms 
used in paragraph (a)(1) of this section; the procedures for 
establishing compliance with Food Stamp Program work requirements; and 
whether an individual is complying with Food Stamp Program work 
requirements. A State agency must not use a meaning, procedure, or 
determination that is less restrictive on food stamp recipients than is 
a comparable meaning, procedure required to comply with, or 
determination under the State agency's program funded under title IV-A 
of the Social Security Act.
    (4) Strikers whose households are eligible under the criteria in 
Sec. 273.1(g) are subject to Food Stamp Program work requirements 
unless they are exempt under paragraph (b)(1) of this section at the 
time of application.
    (5) State agencies may request approval from FNS to substitute 
State or local procedures for work registration for PA households not 
subject to the work requirements under title IV of the Social Security 
Act or for GA households. However, the failure of a household member to 
comply with State or local work requirements that exceed the 
requirements listed in this section must not be considered grounds for 
disqualification. Work requirements imposed on refugees participating 
in refugee resettlement programs may also be substituted, with FNS 
approval.
    (6) Household members who are applying for SSI and for food stamps 
under Sec. 273.2(k)(1)(i) will have Food Stamp Program work 
requirements waived until they are determined eligible for SSI and 
become exempt from Food Stamp Program work requirements, or until they 
are determined ineligible for SSI, at which time their exemptions from 
Food Stamp Program work requirements will be reevaluated.
    (b) Exemptions from work requirements. (1) The following persons 
are exempt from Food Stamp Program work requirements:
    (i) A person younger than 16 years of age or a person 60 years of 
age or older. A person age 16 or 17 who is not the head of a household 
or who is attending school, or is enrolled in an employment training 
program, on at least a half-time-basis, is exempt. If the person turns 
16 (or 18 under the preceding sentence) during a certification period, 
the State agency must register the person as part of the next scheduled 
recertification process, unless the person qualifies for another 
exemption.
    (ii) A person physically or mentally unfit for employment. For the 
purposes of this paragraph (b), a State agency will define physical and 
mental fitness; establish procedures for verifying; and will verify 
claimed physical or mental unfitness when necessary. However, the State 
agency must not use a definition, procedure for verification, or 
verification that is less restrictive on food stamp recipients than a 
comparable meaning, procedure, or determination under the State 
agency's program funded under title IV-A of the Social Security Act.
    (iii) A person subject to and complying with any work requirement 
under title IV of the Social Security Act. If the exemption claimed is 
questionable, the State agency is responsible for verifying the 
exemption.
    (iv) (A) A parent or other household member responsible for the 
care of a dependent child under 6 or an incapacitated person. If the 
child has its 6th birthday during a certification period, the State 
agency must work register the individual responsible for the care of 
the child as part of the next scheduled recertification process, unless 
the individual qualifies for another exemption.
    (B) The State agencies of Alabama, Kansas, Maryland, Michigan, 
North Dakota, Virginia, Wisconsin, and Wyoming may opt to lower the age 
of

[[Page 72211]]

a dependent child that qualifies a parent or other household member for 
an exemption to between 1 and 6. The age may be lowered for a maximum 
three-year period. The eligible State agencies must notify FNS, in 
writing, when they decide to initiate their option. Only the State 
agencies listed are authorized this option.
    (v) A person receiving unemployment compensation. A person who has 
applied for, but is not yet receiving, unemployment compensation is 
also exempt if that person is complying with work requirements that are 
part of the Federal-State unemployment compensation application 
process. If the exemption claimed is questionable, the State agency is 
be responsible for verifying the exemption with the appropriate office 
of the State employment services agency.
    (vi) A regular participant in a drug addiction or alcoholic 
treatment and rehabilitation program.
    (vii) An employed or self-employed person working a minimum of 30 
hours weekly or earning weekly wages at least equal to the Federal 
minimum wage multiplied by 30 hours. This includes migrant and seasonal 
farmworkers under contract or similar agreement with an employer or 
crew chief to begin employment within 30 days (although this will not 
prevent individuals from seeking additional services from the State 
employment services agency). For work registration purposes, a person 
residing in areas of Alaska designated in Sec. 274.10(a)(4)(iii) of 
this chapter, who subsistence hunts and/or fishes a minimum of 30 hours 
weekly (averaged over the certification period) is considered exempt as 
self-employed. An employed or self-employed person who voluntarily and 
without good cause reduces his or her work effort and, after the 
reduction, is working less than 30 hours per week, is ineligible to 
participate in the Food Stamp Program under paragraph (j) of this 
section.
    (viii) A student enrolled at least half time in any recognized 
school, training program, or institution of higher education. Students 
enrolled at least half time in an institution of higher education must 
meet the student eligibility requirements listed in Sec. 273.5. A 
student will remain exempt during normal periods of class attendance, 
vacation, and recess. If the student graduates, enrolls less than half 
time, is suspended or expelled, drops out, or does not intend to 
register for the next normal school term (excluding summer), the State 
agency must work register the individual, unless the individual 
qualifies for another exemption.
    (2)(i) Persons losing exemption status due to any changes in 
circumstances that are subject to the reporting requirements of 
Sec. 273.12 (such as loss of employment that also results in a loss of 
income of more than $25 a month, or departure from the household of the 
sole dependent child for whom an otherwise nonexempt household member 
was caring) must register for employment when the change is reported. 
If the State agency does not use a work registration form, it must 
annotate the change to the member's exemption status. If a work 
registration form is used, the State agency is responsible for 
providing the participant with a work registration form when the change 
is reported. Participants are responsible for returning the form to the 
State agency within 10 calendar days from the date the form was handed 
to the household member reporting the change in person, or the date the 
State agency mailed the form. If the participant fails to return the 
form, the State agency must issue a notice of adverse action stating 
that the participant is being terminated and why, but that the 
termination can be avoided by returning the form.
    (ii) Those persons who lose their exemption due to a change in 
circumstances that is not subject to the reporting requirements of 
Sec. 273.12 must register for employment at their household's next 
recertification.
    (c) State agency responsibilities. (1) The State agency must 
register for work each household member not exempted by the provisions 
of paragraph (b)(1) of this section. As part of the work registration 
process, the State agency must explain to the individual the pertinent 
work requirements, the rights and responsibilities of work registered 
household members, and the consequences of failure to comply. The State 
agency must provide a written statement of the above to each individual 
in the household who is registered for work. A notice must also be 
provided when a previously exempt individual or new household member 
becomes subject to a work requirement, and at recertification. The 
State agency must permit the applicant to complete a record or form for 
each household member required to register for employment in accordance 
with paragraph (a)(1)(i) of this section. Household members are 
considered to have registered when an identifiable work registration 
form is submitted to the State agency or when the registration is 
otherwise annotated or recorded by the State agency.
    (2) The State agency is responsible for screening each work 
registrant to determine whether or not it is appropriate, based on the 
State agency's criteria, to refer the individual to an E&T program, and 
if appropriate, referring the individual to an E&T program component. 
Upon entry into each component, the State agency must inform the 
participant, either orally or in writing, of the requirements of the 
component, what will constitute noncompliance and the sanctions for 
noncompliance. A State agency may, with FNS approval, use intake and 
sanction systems that are compatible with its title IV-A work program. 
Such systems must be proposed and explained in the State agency's E&T 
State Plan.
    (3) The State agency must issue a notice of adverse action to an 
individual, or to a household if appropriate, within 10 days after 
learning of the individual's noncompliance with Food Stamp Program work 
requirements. The notice of adverse action must meet the timeliness and 
adequacy requirements of Sec. 273.13. If the individual complies before 
the end of the advance notice period, the State agency will cancel the 
adverse action. If the State agency offers a conciliation process as 
part of its E&T program, it must issue the notice of adverse action no 
later than the end of the conciliation period.
    (4) The State agency must design and operate an E&T program that 
may consist of one or more or a combination of employment and/or 
training components as described in paragraph (e)(1) of this section. 
The State agency must ensure that it is notified by the agency or 
agencies operating its E&T components within 10 days if an E&T 
mandatory participant fails to comply with E&T requirements.
    (5) Each component of a State agency's E&T program must be 
delivered through a statewide workforce development system, unless the 
component is not available locally through such a system.
    (6) In accordance with Sec. 272.2(e)(9) of this chapter, each State 
agency must prepare and submit an Employment and Training Plan to its 
appropriate FNS Regional Office and to the FNS National Office. The E&T 
Plan must be available for public inspection at the State agency 
headquarters. In its E&T Plan, the State agency will detail the 
following:
    (i) The nature of the E&T components the State agency plans to 
offer and the reasons for such components, including cost information. 
The methodology for State agency reimbursement for education components 
must be specifically addressed;

[[Page 72212]]

    (ii) An operating budget for the Federal fiscal year with an 
estimate of the cost of operation for one full year. Any State agency 
that requests 50 percent Federal reimbursement for State agency E&T 
administrative costs, other than for participant reimbursements, must 
include in its plan, or amendments to its plan, an itemized list of all 
activities and costs for which those Federal funds will be claimed, 
including the costs for case management and casework to facilitate the 
transition from economic dependency to self-sufficiency through work. 
Costs in excess of the Federal grant will be allowed only with the 
prior approval of FNS and must be adequately documented to assure that 
they are necessary, reasonable and properly allocated;
    (iii) The categories and types of individuals the State agency 
intends to exempt from E&T participation, the estimated percentage of 
work registrants the State plans to exempt, and the frequency with 
which the State agency plans to reevaluate the validity of its 
exemptions;
    (iv) The characteristics of the population the State agency intends 
to place in E&T
    (v) The estimated number of volunteers the State agency expects to 
place in E&T
    (vi) The geographic areas covered and not covered by the E&T Plan 
and why, and the type and location of services to be offered;
    (vii) The method the State agency uses to count all work 
registrants the first month of each fiscal year;
    (viii) The method the State agency uses to report work registrant 
information on the quarterly Form FNS-583.
    (ix) The method the State agency uses to prevent work registrants 
from being counted twice within a Federal fiscal year. If the State 
agency universally work registers all food stamp applicants, this 
method must specify how the State agency excludes those exempt from 
work registration under paragraph (b)(1) of this section. If the State 
agency work registers nonexempt participants whenever a new application 
is submitted, this method must also specify how the State agency 
excludes those participants who may have already been registered within 
the past 12 months as specified under paragraph (a)(1)(i) of this 
section.
    (x) The organizational relationship between the units responsible 
for certification and the units operating the E&T components, including 
units of the Statewide workforce development system, if available. FNS 
is specifically concerned that the lines of communication be efficient 
and that noncompliance be reported to the certification unit within 10 
working days after the noncompliance occurs;
    (xi) The relationship between the State agency and other 
organizations it plans to coordinate with for the provision of 
services, including organizations in the Statewide workforce 
development system, if available. Copies of contracts must be available 
for inspection;
    (xii) The availability, if appropriate, of E&T programs for Indians 
living on reservations.
    (xiii) If an informal conciliation process is planned, the 
procedures that will be used when an individual fails to comply with an 
E&T program requirement. Include the length of the conciliation period.
    (xiv) The payment rates for child care established in accordance 
with the Child Care and Development Block Grant provisions of 45 CFR 
98.43, which require the State agency to ensure that eligible children 
receive child care services equal to the services provided to children 
not funded through Block Grant assistance or through child care 
assistance under any other Federal, State, or Tribal programs.
    (7) State agencies will submit E&T Plans biennially, at least 45 
days before the start of the Federal fiscal year. State agencies must 
submit plan revisions to the appropriate FNS regional office for 
approval if they plan to alter the nature or location of their 
components or the number or characteristics of persons served. The 
proposed changes must be submitted for approval at least 30 days prior 
to planned implementation.
    (8) The State agency will submit quarterly reports to FNS no later 
than 45 days after the end of each Federal fiscal quarter containing 
monthly figures for the number of:
    (i) Participants newly work registered;
    (ii) Work registrants exempted by the State agency from 
participation in E&T
    (iii) Participants who volunteer for and commence participation in 
an approved E&T component;
    (iv) E&T mandatory participants who commence an approved E&T 
component, including Food Stamp Program applicants if the State agency 
chooses to operate a component for applicants.
    (9) State agencies will submit annually, on their first quarterly 
report, the number of work registered persons in that State in October 
of the new fiscal year.
    (10) State agencies will submit annually, on their final quarterly 
report, the following information:
    (i) The number of work registrants exempted from E&T participation 
as part of a category of persons during the course of the year 
separated by the specific reasons for the exemptions.
    (ii) The number of mandatory and volunteer participants placed in 
each E&T component offered by the State agency.
    (11) Additional information may be required of individual State 
agencies on an as needed basis depending on the contents of the State 
agency's E&T Plan regarding the type of components offered and the 
characteristics of persons served.
    (12) State agencies must ensure, to the maximum extent practicable, 
that E&T programs are provided for Indians living on reservations.
    (13) If a benefit overissuance is discovered for a month or months 
in which a mandatory E & T participant has already fulfilled a work 
component requirement, the State agency must follow the procedure 
specified in paragraph (m)(6)(v) of this section for a workfare 
overissuance.
    (14) If a State agency fails to efficiently and effectively 
administer its E&T program, the provisions of Sec. 276.1(a)(4) of this 
chapter will apply.
    (d) Federal financial participation. (1) Employment and training 
grants. (i) Each State agency will receive an E&T program grant for 
each fiscal year to operate an E&T program. The grant requires no State 
matching. The grant will remain available until expended.
    (A) No State agency will receive less than $50,000 in Federal 100 
percent funds in a fiscal year.
    (B) If a State agency will not expend all of the funds allocated to 
it for a fiscal year, FNS will reallocate the unexpended funds to other 
State agencies during the fiscal year or the subsequent fiscal year.
    (C) 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 may 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), the certification process is considered ended when 
an individual is referred to an E&T component for assessment or 
participation. E&T grants may also not be used to subsidize the wages 
of

[[Page 72213]]

participants, or to reimburse participants under paragraph (d)(1)(ii) 
of this section.
    (D) A State agency's receipt of the E&T program grant as allocated 
under paragraph (d)(1)(i)(A) or (d)(1)(i)(B) of this section is 
contingent on FNS's 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)(4) of this section to operate an E&T 
program.
    (E) Federal funds made available to a State agency to operate a 
component under paragraph (e)(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 component costs exceed 
the normal cost of services provided to persons not participating in an 
E&T program.
    (F) In accordance with section 6(d)(4)(K) of the Food Stamp Act, 
and notwithstanding any other provision of this paragraph (d), the 
amount of Federal E&T funds, including participant and dependent care 
reimbursements, a State agency uses to serve participants who are 
receiving benefits under a State program funded under part A of title 
IV of the Social Security Act must not exceed the amount of Federal E&T 
funds the State agency used in FY 1995 to serve participants who were 
receiving benefits under a State program funded under part A of title 
IV of the Social Security Act.
    (1) Based on information provided by each State agency, FNS 
established claimed Federal E&T expenditures on this category of 
recipients in fiscal year 1995 for the State agencies of Colorado 
($318,613), Utah ($10,200), Vermont ($1,484,913), and Wisconsin 
($10,999,773). These State agencies may spend up to a like amount each 
fiscal year to serve food stamp recipients who also receive title IV 
assistance.
    (2) All other State agencies are prohibited from expending any 
Federal E&T funds on title IV recipients.
    (ii) Participant reimbursements. The State agency must provide 
payments to participants in its E&T program, including applicants and 
volunteers, for expenses that are reasonably necessary and directly 
related to participation in the E&T program. These payments may be 
provided as a reimbursement for expenses incurred or in advance as 
payment for anticipated expenses in the coming month. The State agency 
must inform each E&T participant that allowable expenses up to the 
amounts specified in paragraphs (d)(1)(ii)(A) and (d)(1)(ii)(B) of this 
section will be reimbursed by the State agency upon presentation of 
appropriate documentation. Reimbursable costs may include, but are not 
limited to, dependent care costs, transportation, and other work, 
training or education related expenses such as uniforms, personal 
safety items or other necessary equipment, and books or training 
manuals. These costs must not include the cost of meals away from home. 
If applicable, any allowable costs incurred by a noncompliant E&T 
participant after the expiration of the noncompliant participant's 
minimum mandatory disqualification period, as established by the State 
agency, that are reasonably necessary and directly related to 
reestablishing eligibility, as defined by the State agency, are 
reimbursable under paragraphs (d)(1)(ii)(A) and (d)(1)(ii)(B) of this 
section. The State agency may reimburse participants for expenses 
beyond the amounts specified in paragraphs (d)(1)(ii)(A) and 
(d)(1)(ii)(B) of this section, however, only costs that are up to but 
not in excess of those amounts are subject to Federal cost sharing. 
Reimbursement must not be provided from E&T grants allocated under 
paragraph (d)(1)(i) of this section. Any expense covered by a 
reimbursement under this section is not deductible under 
Sec. 273.10(d)(1)(i). Reimbursements will be provided as follows:
    (A) The costs of dependent care determined by the State agency to 
be necessary for the participation of a household member in the E&T 
program up to the actual cost of dependent care, or the applicable 
payment rate for child care, whichever is lowest. The payment rate for 
child care is determined in accordance with the Child Care and 
Development Block Grant provisions of 45 CFR 98.43, which require the 
State agency to ensure that eligible children receive child care 
services equal to the services provided to children not funded through 
Block Grant assistance or through child care assistance under any other 
Federal, State, or Tribal programs. The State agency will provide a 
dependent care reimbursement to an E&T participant for all dependents 
requiring care unless otherwise prohibited by this section. The State 
agency will not provide a reimbursement for a dependent age 13 or older 
unless the dependent is physically and/or mentally incapable of caring 
for himself or herself or under court supervision. The State agency 
must provide a reimbursement for all dependents who are physically and/
or mentally incapable of caring for themselves or who are under court 
supervision, regardless of age, if dependent care is necessary for the 
participation of a household member in the E&T program. The State 
agency will obtain verification of the physical and/or mental 
incapacity for dependents age 13 or older if the physical and/or mental 
incapacity is questionable. Also, the State agency will verify a court 
imposed requirement for the supervision of a dependent age 13 or older 
if the need for dependent care is questionable. If more than one 
household member is required to participate in an E&T program, the 
State agency will reimburse the actual cost of dependent care, the 
applicable payment rate for child care, or the Statewide limit, 
whichever is lowest, for each dependent in the household, regardless of 
the number of household members participating in the E&T program. An 
individual who is the caretaker relative of a dependent in a family 
receiving benefits under title IV-A of the Social Security Act in a 
local area where an employment, training, or education program under 
title IV-A is in operation is not eligible for such reimbursement. An 
E&T participant is not entitled to the dependent care reimbursement if 
a member of the E&T participant's food stamp household provides the 
dependent care services. The State agency must verify the participant's 
need for dependent care and the cost of the dependent care prior to the 
issuance of the reimbursement. The verification must include the name 
and address of the dependent care provider, the cost and the hours of 
service, e.g., five hours per day, five days per week for two weeks. A 
participant may not be reimbursed for dependent care services beyond 
that which is required for participation in the E&T program. In lieu of 
providing reimbursements for dependent care expenses, a State agency 
may arrange for dependent care through providers by the use of purchase 
of service contracts, by providing vouchers to the household or by 
other means. A State agency may require that dependent care provided or 
arranged by the State agency meet all applicable standards of State and 
local law, including requirements designed to ensure basic health and 
safety protections, e.g., fire safety. An E&T participant may refuse 
available appropriate dependent care as provided or arranged by the 
State agency, if the participant can arrange other dependent care or 
can show that such refusal will not prevent or interfere with

[[Page 72214]]

participation in the E&T program as required by the State agency. A 
State agency may claim 50 percent of actual costs for dependent care 
services provided or arranged for by the State agency up to the actual 
cost of dependent care, the applicable payment rate for child care, or 
the Statewide limit, whichever is lowest.
    (B) The actual costs of transportation and other costs (excluding 
dependent care costs) that are determined by the State agency to be 
necessary and directly related to participation in the E&T program up 
to $25 per participant per month. Such costs are the actual costs of 
participation unless the State agency has a method approved in its E&T 
Plan for providing allowances to participants to reflect approximate 
costs of participation. If a State agency has an approved method to 
provide allowances rather than reimbursements, it must provide 
participants an opportunity to claim actual expenses that exceed the 
standard, up to $25 or such other maximum level of reimbursements 
established by the State agency.
    (C) No participant cost that has been reimbursed under a workfare 
program under paragraph (m)(7)(i) of this section, title IV of the 
Social Security Act or other work program will be reimbursed under this 
section.
    (D) Any portion of dependent care costs that are reimbursed under 
this section may not be claimed as an expense and used in calculating 
the dependent care deduction under Sec. 273.9(d)(4) for determining 
benefits.
    (E) The State agency must inform all mandatory E&T participants 
that they may be exempted from E&T participation if their monthly 
expenses that are reasonably necessary and directly related to 
participation in the E&T program exceed the allowable reimbursement 
amount. Persons for whom allowable monthly expenses in an E&T component 
exceed the amounts specified under paragraphs (d)(1)(ii)(A) and 
(d)(1)(ii)(B) of this section are not required to participate in that 
component. These individuals will be placed, if possible, in another 
suitable component in which the individual's monthly E&T expenses would 
not exceed the allowable reimbursable amount paid by the State agency. 
If a suitable component is not available, these individuals will be 
exempt from E&T participation until a suitable component is available 
or the individual's circumstances change and his/her monthly expenses 
do not exceed the allowable reimbursable amount paid by the State 
agency. Dependent care expenses incurred that are otherwise allowable 
but not reimbursed because they exceed the reimbursable amount 
specified under paragraph (d)(1)(ii)(B) of this section will be 
considered in determining a dependent care deduction under 
Sec. 273.9(d)(4).
    (iii) Fifty percent of all other administrative costs incurred by 
State agencies in operating E&T programs, above the costs referenced in 
paragraph (d)(1)(i) of this section, will be funded by the Federal 
government.
    (iv) Enhanced cost-sharing due to placement of workfare 
participants in paid employment is available only for workfare programs 
funded under paragraph (m)(7)(iv) of this section at the 50 percent 
reimbursement level and reported as such.
    (2) Funding mechanism. E&T program funding will be disbursed 
through States' Letters of Credit in accordance with Sec. 277.5 of this 
chapter. The State agency must ensure that records are maintained that 
support the financial claims being made to FNS.
    (3) Fiscal recordkeeping and reporting requirements. Total E&T 
expenditures are reported on the Financial Status Report (SF-269) in 
the column containing ``other'' expenses. E&T expenditures are also 
separately identified in an attachment to the SF-269 to show, as 
provided in instructions, total State and Federal E&T expenditures; 
expenditures funded with the unmatched Federal grants; State and 
Federal expenditures for participant reimbursements; State and Federal 
expenditures for E&T costs at the 50 percent reimbursement level; and 
State and Federal expenditures for optional workfare program costs, 
operated under section 20 of the Food Stamp Act and paragraph (m)(7) of 
this section. Claims for enhanced funding for placements of 
participants in employment after their initial participation in the 
optional workfare program will be submitted in accordance with 
paragraph (m)(7)(iv) of this section.
    (e) Employment and training programs. Work registrants not 
otherwise exempted by the State agency are subject to the E&T program 
participation requirements imposed by the State agency. Such 
individuals are referred to in this section as E&T mandatory 
participants. Requirements may vary among participants. Failure to 
comply without good cause with the requirements imposed by the State 
agency will result in disqualification as specified in paragraph (f)(2) 
of this section.
    (1) Components. To be considered acceptable by FNS, any component 
offered by a State agency must entail a certain level of effort by the 
participants. The level of effort should be comparable to spending 
approximately 12 hours a month for two months (or less in workfare or 
work experience components if the household's benefit divided by the 
minimum wage is less than this amount) making job contacts; however, 
FNS may approve components which do not meet this guideline which it 
determines will advance program goals. An initial screening by an 
eligibility worker to determine whom to place in an E&T program does 
not constitute a component. The State agency may require Food Stamp 
Program applicants to participate in any component it offers in its E&T 
program at the time of application. The State agency must not impose 
requirements that would delay the determination of an individual's 
eligibility for benefits or in issuing benefits to any household that 
is otherwise eligible. In accordance with section 6(o)(1)(A) of the 
Food Stamp Act and Sec. 273.24 of these regulations, job search and job 
search training, when offered as components of an E&T program do not 
meet the definition of work program relating to the participation 
requirements necessary to maintain food stamp eligibility for able-
bodied adults. However, job search or job search training activities, 
when offered as part of other E&T program components, are acceptable as 
long as those activities comprise less than half the required time 
spent in the other components. An E&T program offered by a State agency 
must include one or more of the following components:
    (i) A job search program. The State agency may require an 
individual to participate in job search from the time an application is 
filed for an initial period established by the State agency. Following 
this initial period (which may extend beyond the date when eligibility 
is determined) the State agency may require an additional job search 
period in any period of 12 consecutive months. The first such period of 
12 consecutive months will begin at any time following the close of the 
initial period. The State agency may establish a job search period, 
that in its estimation, will provide participants a reasonable 
opportunity to find suitable employment. The State agency should not, 
however, establish a continuous, year-round job search requirement. In 
accordance with section 6(o)(1)(A) of the Food Stamp Act and 
Sec. 273.24 of these regulations, a job search program does not meet 
the definition of work program relating to the participation 
requirements necessary to maintain food stamp eligibility for able-
bodied adults. However, such a program, when

[[Page 72215]]

operated under title I of the Workforce Investment Act of 1998 (29 
U.S.C. 2801 et seq.), or under section 236 of the Trade Act of 1974 (19 
U.S.C. 2296) does meet the definition of work program.
    (ii) A job search training program that includes reasonable job 
search training and support activities. Such a program may consist of 
job skills assessments, job finding clubs, training in techniques for 
employability, job placement services, or other direct training or 
support activities, including educational programs determined by the 
State agency to expand the job search abilities or employability of 
those subject to the program. Job search training activities are 
approvable if they directly enhance the employability of the 
participants. A direct link between the job search training activities 
and job-readiness must be established for a component to be approved. 
In accordance with section 6(o)(1) and (2) of the Food Stamp Act and 
Sec. 273.24 of these regulations, a job search program does not meet 
the definition of work program relating to the participation 
requirements necessary to maintain food stamp eligibility for able-
bodied adults. However, such a program, when operated under title I of 
the Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq.), or under 
section 236 of the Trade Act of 1974 (19 U.S.C. 2296) does meet the 
definition of work program.
    (iii) A workfare program as described in paragraph (m) of this 
section. In accordance with section 20(e) of the Food Stamp Act and 
paragraph (m)(6)(ii) of this section, the State agency may establish a 
job search period of up to 30 days following certification prior to 
making a workfare assignment. This job search activity is part of the 
workfare assignment, and not a job search ``program.'' Participants are 
considered to be participating in and complying with the requirements 
of workfare, thereby meeting the work requirement for able-bodied 
adults.
    (iv) A program designed to improve the employability of household 
members through actual work experience or training, or both, and to 
enable individuals employed or trained under such programs to move 
promptly into regular public or private employment. Such an employment 
or training experience must:
    (A) Not provide any work that has the effect of replacing the 
employment of an individual not participating in the employment or 
training experience program; and
    (B) Provide the same benefits and working conditions that are 
provided at the job site to employees performing comparable work for 
comparable hours.
    (v) A project, program or experiment such as a supported work 
program, or a WIA or State or local program aimed at accomplishing the 
purpose of the E&T program.
    (vi) Educational programs or activities to improve basic skills or 
otherwise improve employability including educational programs 
determined by the State agency to expand the job search abilities or 
employability of those subject to the program. Allowable educational 
activities may include, but are not limited to, high school or 
equivalent educational programs, remedial education programs to achieve 
a basic literacy level, and instructional programs in English as a 
second language. Only educational components that directly enhance the 
employability of the participants are allowable. A direct link between 
the education and job-readiness must be established for a component to 
be approved.
    (vii) A program designed to improve the self-sufficiency of 
recipients through self-employment. Included are programs that provide 
instruction for self-employment ventures.
    (2) Exemptions. Each State agency may, at its discretion, exempt 
individual work registrants and categories of work registrants from E&T 
participation. Each State agency must periodically reevaluate its 
individual and categorical exemptions to determine whether they remain 
valid. Each State agency will establish the frequency of its periodic 
evaluation.
    (3) Time spent in an employment and training program. (i) Each 
State agency will determine the length of time a participant spends in 
any E&T component it offers. The State agency may also determine the 
number of successive components in which a participant may be placed.
    (ii) The time spent by the members of a household collectively each 
month in an E&T work program including, but not limited to those 
carried out under paragraphs (e)(1)(iii) and (e)(1)(iv) of this 
section, combined with any hours worked that month in a workfare 
program under paragraph (m) of this section must not exceed the number 
of hours equal to the household's allotment for that month divided by 
the higher of the applicable State or Federal minimum wage. The total 
hours of participation in an E&T component for any household member 
individually in any month, together with any hours worked in a workfare 
program under paragraph (m) of this section and any hours worked for 
compensation (in cash or in kind), must not exceed 120.
    (4) Voluntary participation. (i) A State agency may operate program 
components in which individuals elect to participate.
    (ii) A State agency must not disqualify voluntary participants in 
an E&T component for failure to comply with E&T requirements.
    (iii) The hours of participation or work of a volunteer may not 
exceed the hours required of E&T mandatory participants, as specified 
in paragraph (e)(3) of this section.
    (f) Failure to comply. (1) Ineligibility for failure to comply. A 
nonexempt individual who refuses or fails without good cause, as 
defined in paragraphs (i)(2) and (i)(3) of this section, to comply with 
the Food Stamp Program work requirements listed under paragraph (a)(1) 
of this section; or who, in accordance with paragraph (j) of this 
section, voluntarily and without good cause quits a job or reduces work 
effort and, after the reduction, is working less than 30 hours per 
week, is ineligible to participate in the Food Stamp Program, and will 
be considered an ineligible household member, pursuant to 
Sec. 273.1(b)(2).
    (i) As soon as the State agency learns of the individual's 
noncompliance it must determine whether good cause for the 
noncompliance exists, as discussed in paragraph (i) of this section. 
Within 10 days of establishing that the noncompliance was without good 
cause, the State agency must provide the individual with a notice of 
adverse action, as specified in Sec. 273.13. If the State agency offers 
a conciliation process as part of its E&T program, it must issue the 
notice of adverse action no later than the end of the conciliation 
period.
    (ii) The notice of adverse action must contain the particular act 
of noncompliance committed and the proposed period of disqualification. 
The notice must also specify that the individual may, if appropriate, 
reapply at the end of the disqualification period. Information must be 
included on or with the notice describing the action that can be taken 
to avoid the sanction. The disqualification period must begin with the 
first month following the expiration of the 10-day adverse notice 
period, unless a fair hearing is requested.
    (2) Disqualification periods. The following disqualification 
periods will be imposed:
    (i) For the first occurrence of noncompliance, the individual will 
be disqualified until the later of:
    (A) The date the individual complies, as determined by the State 
agency;
    (B) One month; or
    (C) Up to three months, at State agency option.

[[Page 72216]]

    (ii) For the second occurrence, until the later of:
    (A) The date the individual complies, as determined by the State 
agency;
    (B) Three months; or
    (C) Up to six months, at State agency option.
    (iii) For the third or subsequent occurrence, until the later of:
    (A) The date the individual complies, as determined by the State 
agency;
    (B) Six months;
    (C) A date determined by the State agency; or
    (D) At the option of the State agency, permanently.
    (3) Disqualification plan. In accordance with 
Sec. 272.2(d)(1)(xiii) of this chapter, each State agency must prepare 
and submit a plan detailing its disqualification policies. The plan 
must include the length of disqualification to be enforced for each 
occurrence of noncompliance, how compliance is determined by the State 
agency, and the State agency's household disqualification policy.
    (4) Household ineligibility. (i) If the individual who becomes 
ineligible to participate under paragraph (f)(1) of this section is the 
head of a household, the State agency, at its option, may disqualify 
the entire household from Food Stamp Program participation.
    (ii) The State agency may disqualify the household for a period 
that does not exceed the lesser of:
    (A) The duration of the ineligibility of the noncompliant 
individual under paragraph (f)(2) of this section; or
    (B) 180 days.
    (iii) A household disqualified under this provision may reestablish 
eligibility if:
    (A) The head of the household leaves the household; or
    (B) A new and eligible person joins the household as the head of 
the household, as defined in Sec. 273.1(d)(2).
    (iv) If the head of the household joins another household as its 
head, that household will be disqualified from participating in the 
Food Stamp Program for the remaining period of ineligibility.
    (5) Fair hearings. Each individual or household has the right to 
request a fair hearing, in accordance with Sec. 273.15, to appeal a 
denial, reduction, or termination of benefits due to a determination of 
nonexempt status, or a State agency determination of failure to comply 
with Food Stamp Program work requirements. Individuals or households 
may appeal State agency actions such as exemption status, the type of 
requirement imposed, or State agency refusal to make a finding of good 
cause if the individual or household believes that a finding of failure 
to comply has resulted from improper decisions on these matters. The 
State agency or its designee operating the relevant component must 
receive sufficient advance notice to either permit the attendance of a 
representative or ensure that a representative will be available for 
questioning over the phone during the hearing. A representative of the 
appropriate agency must be available through one of these means. A 
household must be allowed to examine its E&T component casefile at a 
reasonable time before the date of the fair hearing, except for 
confidential information (that may include test results) that the 
agency determines should be protected from release. Confidential 
information not released to a household may not be used by either party 
at the hearing. The results of the fair hearing are binding on the 
State agency.
    (6) Failure to comply with a work requirement under title IV of the 
Social Security Act, or an unemployment compensation work requirement. 
An individual exempt from Food Stamp Program work requirements by 
paragraphs (b)(1)(iii) or (b)(1)(v) of this section because he or she 
is subject to work requirements under title IV-A or unemployment 
compensation who fails to comply with a title IV-A or unemployment 
compensation work requirement will be treated as though he or she 
failed to comply with the Food Stamp Program work requirement.
    (i) When a food stamp household reports the loss or denial of title 
IV-A or unemployment compensation benefits, or if the State agency 
otherwise learns of a loss or denial, the State agency must determine 
whether the loss or denial resulted when a household member refused or 
failed without good cause to comply with a title IV-A or unemployment 
compensation work requirement.
    (ii) If the State agency determines that the loss or denial of 
benefits resulted from an individual's refusal or failure without good 
cause to comply with a title IV or unemployment compensation 
requirement, the individual (or household if applicable under paragraph 
(f)(4) of this section) must be disqualified in accordance with the 
applicable provisions of this paragraph (f). However, if the 
noncomplying individual meets one of the work registration exemptions 
provided in paragraph (b)(1) of this section (other than the exemptions 
provided in paragraphs (b)(1)(iii) and (b)(1)(v) of this section) the 
individual (or household if applicable under paragraph (f)(4) of this 
section) will not be disqualified.
    (iii) If the State agency determination of noncompliance with a 
title IV-A or unemployment compensation work requirement leads to a 
denial or termination of the individuals or household's food stamp 
benefits, the individual or household has a right to appeal the 
decision in accordance with the provisions of paragraph (f)(1) of this 
section.
    (iv) In cases where the individual is disqualified from the title 
IV-A program for refusal or failure to comply with a title IV-A work 
requirement, but the individual meets one of the work registration 
exemptions provided in paragraph (b)(1) of this section other than the 
exemptions provided in paragraphs (b)(1)(iii) and (b)(1)(v) of this 
section, the State agency may, at its option, apply the identical title 
IV-A disqualification on the individual under the Food Stamp Program. 
The State agency must impose such optional disqualifications in 
accordance with section 6(i) of the Food Stamp Act and with the 
provisions of Sec. 273.11(l) of these regulations.
    (g) Ending disqualification. Except in cases of permanent 
disqualification, at the end of the applicable mandatory 
disqualification period for noncompliance with Food Stamp Program work 
requirements, participation may resume if the disqualified individual 
applies again and is determined by the State agency to be in compliance 
with work requirements. A disqualified individual may be permitted to 
resume participation during the disqualification period (if otherwise 
eligible) by becoming exempt from work requirements.
    (h) Suitable employment. (1) In addition to any criteria 
established by State agencies, employment will be considered unsuitable 
if:
    (i) The wage offered is less than the highest of the applicable 
Federal minimum wage, the applicable State minimum wage, or eighty 
percent (80%) of the Federal minimum wage if neither the Federal nor 
State minimum wage is applicable.
    (ii) The employment offered is on a piece-rate basis and the 
average hourly yield the employee can reasonably be expected to earn is 
less than the applicable hourly wages specified under paragraph 
(h)(1)(i) of this section.
    (iii) The household member, as a condition of employment or 
continuing employment, is required to join, resign from, or refrain 
from joining any legitimate labor organization.
    (iv) The work offered is at a site subject to a strike or lockout 
at the time of the offer unless the strike has been

[[Page 72217]]

enjoined under section 208 of the Labor-Management Relations Act (29 
U.S.C. 78) (commonly known as the Taft-Hartley Act), or unless an 
injunction has been issued under section 10 of the Railway Labor Act 
(45 U.S.C. 160).
    (2) In addition, employment will be considered suitable unless the 
household member involved can demonstrate or the State agency otherwise 
becomes aware that:
    (i) The degree of risk to health and safety is unreasonable.
    (ii) The member is physically or mentally unfit to perform the 
employment, as documented by medical evidence or by reliable 
information from other sources.
    (iii) The employment offered within the first 30 days of 
registration is not in the member's major field of experience.
    (iv) The distance from the member's home to the place of employment 
is unreasonable considering the expected wage and the time and cost of 
commuting. Employment will not be considered suitable if daily 
commuting time exceeds 2 hours per day, not including the transporting 
of a child to and from a child care facility. Nor will employment be 
considered suitable if the distance to the place of employment 
prohibits walking and neither public nor private transportation is 
available to transport the member to the jobsite.
    (v) The working hours or nature of the employment interferes with 
the member's religious observances, convictions, or beliefs. For 
example, a Sabbatarian could refuse to work on the Sabbath.
    (i) Good cause. (1) The State agency is responsible for determining 
good cause when a food stamp recipient fails or refuses to comply with 
FSP work requirements. Since it is not possible for the Department to 
enumerate each individual situation that should or should not be 
considered good cause, the State agency must take into account the 
facts and circumstances, including information submitted by the 
household member involved and the employer, in determining whether or 
not good cause exists.
    (2) Good cause includes circumstances beyond the member's control, 
such as, but not limited to, illness, illness of another household 
member requiring the presence of the member, a household emergency, the 
unavailability of transportation, or the lack of adequate child care 
for children who have reached age six but are under age 12.
    (3) Good cause for leaving employment includes the good cause 
provisions found in paragraph (i)(2) of this section, and resigning 
from a job that does not meet the suitability criteria specified in 
paragraphs (h)(1) and (h)(2) of this section. Good cause for leaving 
employment also includes:
    (i) Discrimination by an employer based on age, race, sex, color, 
handicap, religious beliefs, national origin or political beliefs;
    (ii) Work demands or conditions that render continued employment 
unreasonable, such as working without being paid on schedule;
    (iii) Acceptance of employment by the individual, or enrollment by 
the individual in any recognized school, training program or 
institution of higher education on at least a half time basis, that 
requires the individual to leave employment;
    (iv) Acceptance by any other household member of employment or 
enrollment at least half-time in any recognized school, training 
program or institution of higher education in another county or similar 
political subdivision that requires the household to move and thereby 
requires the individual to leave employment;
    (v) Resignations by persons under the age of 60 which are 
recognized by the employer as retirement;
    (vi) Employment that becomes unsuitable by not meeting the criteria 
specified in paragraphs (h)(1) and (h)(2) of this section after the 
acceptance of such employment;
    (vii) Acceptance of a bona fide offer of employment of more than 20 
hours a week or in which the weekly earnings are equivalent to the 
Federal minimum wage multiplied by 20 hours that, because of 
circumstances beyond the individual's control, subsequently either does 
not materialize or results in employment of less than 20 hours a week 
or weekly earnings of less than the Federal minimum wage multiplied by 
20 hours; and
    (viii) Leaving a job in connection with patterns of employment in 
which workers frequently move from one employer to another such as 
migrant farm labor or construction work. There may be some 
circumstances where households will apply for food stamp benefits 
between jobs particularly in cases where work may not yet be available 
at the new job site. Even though employment at the new site has not 
actually begun, the quitting of the previous employment must be 
considered as with good cause if it is part of the pattern of that type 
of employment.
    (4) Verification. To the extent that the information given by the 
household is questionable, as defined in Sec. 273.2(f)(2), State 
agencies must request verification of the household's statements. The 
primary responsibility for providing verification, as provided in 
Sec. 273.2(f)(5), rests with the household.
    (j) Voluntary quit and reduction of work effort. (1) Individual 
ineligibility. An individual is ineligible to participate in the Food 
Stamp Program if, in the 60 days before applying for food stamp 
benefits or at any time thereafter, the individual:
    (i) Voluntarily and without good cause quits a job of 30 hours a 
week or more; or
    (ii) Reduces his or her work effort voluntarily and without good 
cause and, after the reduction, is working less than 30 hours per week.
    (2) Determining whether a voluntary quit or reduction of work 
effort occurred and application processing. (i) When a household files 
an application for participation, or when a participating household 
reports the loss of a source of income or a reduction in household 
earnings, the State agency must determine whether any household member 
voluntarily quit his or her job or reduced his or her work effort. 
Benefits must not be delayed beyond the normal processing times 
specified in Sec. 273.2 pending the outcome of this determination.
    (ii) The voluntary quit provision applies if the employment 
involved 30 hours or more per week or provided weekly earnings at least 
equivalent to the Federal minimum wage multiplied by 30 hours; the quit 
occurred within 60 days prior to the date of application or anytime 
thereafter; and the quit was without good cause. Changes in employment 
status that result from terminating a self-employment enterprise or 
resigning from a job at the demand of the employer will not be 
considered a voluntary quit for purposes of this paragraph (j). An 
employee of the Federal Government, or of a State or local government 
who participates in a strike against such government, and is dismissed 
from his or her job because of participation in the strike, will be 
considered to have voluntarily quit his or her job without good cause. 
If an individual quits a job, secures new employment at comparable 
wages or hours and is then laid off or, through no fault of his own, 
loses the new job, the individual must not be disqualified for the 
earlier quit.
    (iii) The reduction of work effort provision applies if, before the 
reduction, the individual was employed 30 hours or more per week; the 
reduction occurred within 60 days prior to the date of application or 
anytime thereafter; and the reduction was voluntary and without good 
cause. The minimum wage equivalency does not

[[Page 72218]]

apply when determining a reduction in work effort.
    (iv) In the case of an applicant household, the State agency must 
determine if any household member subject to Food Stamp Program work 
requirements voluntarily quit his or her job or reduced his or her work 
effort within the last 60 days. If the State agency learns that a 
household has lost a source of income or experienced a reduction in 
income after the date of application but before the household is 
certified, the State agency must determine whether a voluntarily quit 
or reduction in work effort occurred.
    (v) Upon determining that an individual voluntarily quit employment 
or reduced work effort, the State agency must determine if the 
voluntary quit or reduction of work effort was with good cause as 
defined in paragraph (i)(3) of this section.
    (vi) In the case of an individual who is a member of an applicant 
household, if the voluntary quit or reduction in work effort was 
without good cause, the individual will be determined ineligible to 
participate and will be disqualified according to the State agency's 
established minimum mandatory sanction schedule. The ineligible 
individual must be considered an ineligible household member, pursuant 
to Sec. 273.1(b)(2). The disqualification is effective upon the 
determination of eligibility for the remaining household members. If 
the individual who becomes ineligible is the head of the household, as 
defined in Sec. 273.1(d)(2), the State agency may choose to disqualify 
the entire household, in accordance with paragraph (f)(3) of this 
section. If the State agency chooses to disqualify the household, the 
State agency must provide the applicant household with a notice of 
denial in accordance with Sec. 273.2(g)(3). The notice must inform the 
household of the proposed period of disqualification; its right to 
reapply at the end of the disqualification period; and of its right to 
a fair hearing. The household's disqualification is effective upon the 
issuance of the notice of denial.
    (vii) In the case of an individual who is a member of a 
participating household, if the State agency determines that the 
individual voluntarily quit his or her job or reduced his or her work 
effort without good cause while participating in the program or 
discovers that the individual voluntarily quit his or her job or 
reduced his or her work effort without good cause within 60 days prior 
to application for benefits or between application and certification, 
the State agency must provide the individual with a notice of adverse 
action as specified in Sec. 273.13 within 10 days after the 
determination of a quit or reduction in work effort. The notification 
must contain the particular act of noncompliance committed, the 
proposed period of ineligibility, the actions that may be taken to 
avoid the disqualification, and it must specify that the individual may 
resume participation at the end of the disqualification period, if 
applicable. The individual will be disqualified according to the State 
agency's established minimum mandatory sanction schedule. The 
ineligible individual must be considered an ineligible household 
member, pursuant to Sec. 273.1(b)(2). The disqualification period will 
begin the first month following the expiration of the 10 day adverse 
notice period, unless the individual requests a fair hearing. If a 
voluntary quit or reduction in work effort occurs in the last month of 
a certification period, or is determined in the last 30 days of the 
certification period, the individual must be denied recertification for 
a period equal to the appropriate mandatory disqualification period, 
beginning with the day after the last certification period ends. If the 
individual does not apply for food stamp benefits by the end of the 
certification period, the State agency must establish a claim for the 
benefits received by the individual, for up to the entire appropriate 
mandatory disqualification period, beginning the first of the month 
after the month in which the voluntary quit or reduction in work effort 
occurred. If there are fewer days than the appropriate mandatory 
disqualification period from the first of the month after the month in 
which the voluntary quit or reduction in work effort occurred to the 
end of the certification period, a claim must be imposed, and the 
individual must remain ineligible for benefits for a prorated number of 
days, with the end result that a claim is established or the individual 
is ineligible for the full mandatory disqualification period. Each 
individual has a right to a fair hearing to appeal a denial or 
termination of benefits due to a determination that the individual 
voluntarily quit his or her job or reduced his or her work effort 
without good cause. If the participating individual's benefits are 
continued pending a fair hearing and the State agency determination is 
upheld, the disqualification period must begin the first of the month 
after the hearing decision is rendered.
    (viii) If the individual who voluntarily quit his or her job, or 
who reduced his or her work effort without good cause is the head of a 
household, as defined in Sec. 273.1(d), the State agency, at its 
option, may disqualify the entire household from Food Stamp Program 
participation in accordance with paragraph (f)(3) of this section.
    (3) Ending a voluntary quit or a reduction in work 
disqualification. Except in cases of permanent disqualification, 
following the end of the mandatory disqualification period for 
voluntarily quitting a job or reducing work effort without good cause, 
an individual may begin participation in the program if he or she 
reapplies and is determined eligible by the State agency. Eligibility 
may be reestablished during a disqualification and the individual, if 
otherwise eligible, may be permitted to resume participation if the 
individual becomes exempt from Program work requirements under 
paragraph (b)(1) of this section.
    (4) Application in the final month of disqualification. Except in 
cases of permanent disqualification, if an application for 
participation in the Program is filed in the final month of the 
mandatory disqualification period, the State agency must, in accordance 
with Sec. 273.10(a)(3), use the same application for the denial of 
benefits in the remaining month of disqualification and certification 
for any subsequent month(s) if all other eligibility criteria are met.
    (k) Employment initiatives program. (1) General. In accordance with 
section 17(d)(1)(B) of the Food Stamp Act, qualified State agencies may 
elect to operate an employment initiatives program, in which an 
eligible household can receive the cash equivalent of its food stamp 
coupon allotment.
    (2) State agency qualification. A State agency qualifies to operate 
an employment initiatives program if, during the summer of 1993, at 
least half of its food stamp households also received cash benefits 
from a State program funded under part A of title IV of the Social 
Security Act.
    (3) Qualified State agencies. Alaska, California, Connecticut, DC, 
Massachusetts, Michigan, Minnesota, New Jersey, West Virginia, and 
Wisconsin meet the qualification. These 10 State agencies may operate 
an employment initiatives program.
    (4) Eligible households. A food stamp household in one of the 10 
qualified State agencies may receive cash benefits in lieu of a food 
stamp coupon allotment if it meets the following requirements:
    (i) The food stamp household elects to participate in an employment 
initiatives program;

[[Page 72219]]

    (ii) An adult member of the household:
    (A) Has worked in unsubsidized employment for the last 90 days, 
earning a minimum of $350 per month;
    (B) Is receiving cash benefits under a State program funded under 
part A of title IV of the Social Security Act; or
    (C) Was receiving cash benefits under the State program but, while 
participating in the employment initiatives program, became ineligible 
because of earnings and continues to earn at least $350 a month from 
unsubsidized employment.
    (5) Program provisions. (i) Cash benefits provided in an employment 
initiatives program will be considered an allotment, as defined at 
Sec. 271.2 of this chapter.
    (ii) An eligible household receiving cash benefits in an employment 
initiatives program will not receive any other food stamp benefit 
during the period for which cash assistance is provided.
    (iii) A qualified State agency operating an employment initiatives 
program must increase the cash benefit to participating households to 
compensate for any State or local sales tax on food purchases, unless 
FNS determines that an increase is unnecessary because of the limited 
nature of items subject to the State or local sales tax.
    (iv) Any increase in cash assistance to account for a State or 
local sales tax on food purchases must be paid by the State agency.
    (6) Evaluation. After two years of operating an employment 
initiatives program, a State agency must evaluate the impact of 
providing cash assistance in lieu of a food stamp coupon allotment to 
participating households. The State agency must provide FNS with a 
written report of its evaluation findings. The State agency, with the 
concurrence of FNS, will determine the content of the evaluation.
    (l) Work supplementation program. In accordance with section 16(b) 
of the Food Stamp Act, States may operate work supplementation (or 
support) programs that allow the cash value of food stamp benefits and 
public assistance, such as cash assistance authorized under title IV-A 
of the Social Security or cash assistance under a program established 
by a State, to be provided to employers as a wage subsidy to be used 
for hiring and employing public assistance recipients. The goal of 
these programs is to promote self-sufficiency by providing public 
assistance recipients with work experience to help them move into 
unsubsidized jobs. In accordance with Sec. 272.2(d)(1)(xiv) of this 
chapter, State agencies that wish to exercise their option to implement 
work supplementation programs must submit to FNS for approval a plan 
that complies with the provisions of this paragraph (l). Work 
supplementation programs may not be implemented without prior approval 
from FNS.
    (1) Plan. (i) Assurances. The plan must contain the following 
assurances:
    (A) The individual participating in a work supplementation program 
must not be employed by the employer at the time the individual enters 
the program.
    (B) The wage subsidy received under the work supplementation 
program must be excluded from household income and resources during the 
term the individual is participating in work supplementation.
    (C) The household must not receive a separate food stamp allotment 
while participating in the work supplementation program.
    (D) An individual participating in a work supplementation program 
is excused from meeting any other work requirements.
    (E) The work supplementation program must not displace any persons 
currently employed who are not supplemented or supported.
    (F) The wage subsidy must not be considered income or resources 
under any Federal, State or local laws, including but not limited to, 
laws relating to taxation, welfare, or public assistance programs, and 
the household's food stamp allotment must not be decreased due to 
taxation or any other reason because of its use as a wage subsidy.
    (G) The earned income deduction does not apply to the subsidized 
portion of wages received in a work supplementation program.
    (H) All work supplemented or supported employees must receive the 
same benefits (sick and personal leave, health coverage, workmen's 
compensation, etc.) as similarly situated coworkers who are not 
participating in work supplementation and wages paid under a wage 
supplementation or support program must meet the requirements of the 
Fair Labor Standards Act.
    (ii) Description. The plan must also describe:
    (A) The procedures the State agency will use to ensure that the 
cash value of food stamp benefits for participating households are not 
subject to State or local sales taxes on food purchases. The costs of 
increasing household food stamp allotments to compensate for such sales 
taxes must be paid from State funds.
    (B) State agency, employer and recipient obligations and 
responsibilities.
    (C) The procedures the State agency will use to provide wage 
subsidies to employers and to ensure accountability.
    (D) How public assistance recipients in the proposed work 
supplementation program will, within a specified period of time, be 
moved from supplemented or supported employment to employment that is 
not supplemented or supported.
    (E) Whether the food stamp allotment and public assistance grant 
will be frozen at the time a recipient begins a subsidized job.
    (F) The procedures the State agency will use to ensure that work 
supplementation program participants do not incur any Federal, State, 
or local tax liabilities on the cash value of their food stamp 
benefits.
    (2) Budget. In addition to the plan described in paragraph (l)(1) 
of this section, an operating budget for the proposed work 
supplementation program must be submitted to FNS.
    (3) Approval. FNS will review the initial plan and any subsequent 
amendments. Upon approval by FNS, the State agency must incorporate the 
approved work supplementation program plan or subsequent amendment into 
its State Plan of Operation and its operating budget must be included 
in the State agency budget. No plan or amendment may be implemented 
without approval from FNS.
    (4) Reporting. State agencies operating work supplementation and 
support programs are required to comply with all FNS reporting 
requirements, including reporting the amount of benefits contributed to 
employers as a wage subsidy on the FNS-388, State Issuance and 
Participation Estimates; FNS-388A, Participation and Issuance by 
Project Area; FNS-46, Issuance Reconciliation Report; and SF-269, 
Addendum Financial Status Report. State agencies are also required to 
report administrative costs associated with work supplementation 
programs on the FNS-366A, Budget Projection and SF-269, Financial 
Status Report. Special codes for work supplementation programs will be 
assigned for reporting purposes.
    (5) Funding. FNS will pay the cash value of a participating 
household's food stamp benefits to a State agency with an approved work 
supplementation program to pay to an employer as a wage subsidy, and 
will also reimburse the State agency for related administrative costs, 
in accordance with Section 16 of the Food Stamp Act.

[[Page 72220]]

    (6) Quality control. Cases in which a household member is 
participating in a work supplementation program will be coded as not 
subject to review.
    (m) Optional workfare program. (1) General. This paragraph (m) 
contains the rules to be followed in operating a food stamp workfare 
program. In workfare, nonexempt food stamp recipients may be required 
to perform work in a public service capacity as a condition of 
eligibility to receive the coupon allotment to which their household is 
normally entitled. The primary goal of workfare is to improve 
employability and enable individuals to move into regular employment.
    (2) Program administration. (i) A food stamp workfare program may 
be operated as a component of a State agency's E&T program, or it may 
be operated independently. If the workfare program is part of an E&T 
program it must be included as a component in the State agency's E&T 
plan in accordance with the requirements of paragraph (c)(4) of this 
section. If it is operated independent of the E&T program, the State 
agency must submit a workfare plan to FNS for its approval. For the 
purpose of this paragraph (m) a political subdivision is any local 
government, including, but not limited to, any county, city, town or 
parish. A State agency may implement a workfare program statewide or in 
only some areas of the State. The areas of operation must be identified 
in the State agency's workfare or E&T plan.
    (ii) Political subdivisions are encouraged, but not required, to 
submit their plans to FNS through their respective State agencies. At a 
minimum, however, plans must be submitted to the State agencies 
concurrent with their submission to FNS. Workfare plans and subsequent 
amendments must not be implemented prior to their approval by FNS.
    (iii) When a State agency chooses to sponsor a workfare program by 
submitting a plan to FNS, it must incorporate the approved plan into 
its State Plan of Operations. When a political subdivision chooses to 
sponsor a workfare program by submitting a plan to FNS, the State 
agency is responsible as a facilitator in the administration of the 
program by disbursing Federal funding and meeting the requirements 
identified in paragraph (m)(4) of this section. When it is notified 
that FNS has approved a workfare plan submitted by a political 
subdivision in its State, the State agency must append that political 
subdivision's workfare plan to its own State Plan of Operations.
    (iv) The operating agency is the administrative organization 
identified in the workfare plan as being responsible for establishing 
job sites, assigning eligible recipients to the job sites, and meeting 
the requirements of this paragraph (m). The operating agency may be any 
public or private, nonprofit organization. The State agency or 
political subdivision that submitted the workfare plan is responsible 
for monitoring the operating agency's compliance with the requirements 
of this paragraph (m) or of the workfare plan. The Department may 
suspend or terminate some or all workfare program funding, or withdraw 
approval of the workfare program from the State agency or political 
subdivision that submitted the workfare plan upon finding that that 
State agency or political subdivision, or their respective operating 
agencies, have failed to comply with the requirements of this paragraph 
(m) or of the workfare plan.
    (v) State agencies or other political subdivisions must describe in 
detail in the plan how the political subdivision, working with the 
State agency and any other cooperating agencies that may be involved in 
the program, will fulfill the provisions of this paragraph (m). The 
plan will be a one-time submittal, with amendments submitted as needed 
to cover any changes in the workfare program as they occur.
    (vi) State agencies or political subdivisions submitting a workfare 
plan must submit with the plan an operating budget covering the period 
from the initiation of the workfare program's implementation schedule 
to the close of the Federal fiscal year. In addition, an estimate of 
the cost for one full year of operation must be submitted together with 
the workfare plan. For subsequent fiscal years, the workfare program 
budget must be included in the State agency's budget.
    (vii) If workfare plans are submitted by more than one political 
subdivision, each representing the same population (such as a city 
within a county), the Department will determine which political 
subdivision will have its plan approved. Under no circumstances will a 
food stamp recipient be subject to more than one food stamp workfare 
program. If a political subdivision chooses to operate a workfare 
program and represents a population which is already, at least in part, 
subject to a food stamp workfare program administered by another 
political subdivision, it must establish in its workfare plan how food 
stamp recipients will not be subject to more than one food stamp 
workfare program.
    (3) Operating agency responsibilities. (i) General. The operating 
agency, as designated by the State agency or other political 
subdivision that submits a plan, is responsible for establishing and 
monitoring job sites, interviewing and assessing eligible recipients, 
assigning eligible recipients to appropriate job sites, monitoring 
participant compliance, making initial determinations of good cause for 
household noncompliance, and otherwise meeting the requirements of this 
paragraph (m).
    (ii) Establishment of job sites. Workfare job slots may only be 
located in public or private nonprofit agencies. Contractual agreements 
must be established between the operating agency and organizations 
providing jobs that include, but are not limited to, designation of the 
slots available and designation of responsibility for provision of 
benefits, if any are required, to the workfare participant.
    (iii) Notifying State agency of noncompliance. The operating agency 
must notify the State agency of noncompliance by an individual with a 
workfare obligation when it determines that the individual did not have 
good cause for the noncompliance. This notification must occur within 
five days of such a determination so that the State agency can make a 
final determination as provided in paragraph (m)(4)(iv) of this 
section.
    (iv) Notifications. (A) State agencies must establish and use 
notices to notify the operating agency of workfare-eligible households. 
The notice must include the case name, case number, names of workfare-
eligible household members, address of the household, certification 
period, and indication of any part-time work. If the State agency is 
calculating the hours of obligation, it must also include this in the 
notice. If the operating agency is computing the hours to be worked, 
include the monthly allotment amount.
    (B) Operating agencies must establish and use notices to notify the 
workfare participant of where and when the participant is to report, to 
whom the participant is to report, a brief description of duties for 
the particular placement, and the number of hours to be worked.
    (C) Operating agencies must establish and use notices to notify the 
State agency of failure by a household to meet its workfare obligation.
    (v) Recordkeeping requirements. (A) Files that record activity by 
workfare participants must be maintained. At a minimum, these records 
must contain job sites, hours assigned, and hours completed.
    (B) Program records must be maintained, for audit and review 
purposes, for a period of 3 years from

[[Page 72221]]

the month of origin of each record. Fiscal records and accountable 
documents must be retained for 3 years from the date of fiscal or 
administrative closure of the workfare program. Fiscal closure, as used 
in this paragraph (m), means that workfare program obligations for or 
against the Federal government have been liquidated. Administrative 
closure, as used in this paragraph (m), means that the operating agency 
or Federal government has determined and documented that no further 
action to liquidate the workfare program obligation is appropriate. 
Fiscal records and accountable records must be kept in a manner that 
will permit verification of direct monthly reimbursements to 
recipients, in accordance with paragraph (m)(6)(ii) of this section.
    (vi) Reporting requirements. The operating agency is responsible 
for providing information needed by the State agency to fulfill the 
reporting requirements contained in paragraph (m)(4)(v) of this 
section.
    (vii) Disclosure. The provisions of Sec. 272.1(c) of this chapter 
restricting the use and disclosure of information obtained from food 
stamp households is applicable to the administration of the workfare 
program.
    (4) State agency responsibilities. (i) If a political subdivision 
chooses to operate a workfare program, the State agency must cooperate 
with the political subdivision in developing a plan.
    (ii) The State agency must determine at certification or 
recertification which household members are eligible for the workfare 
program and inform the household representative of the nature of the 
program and of the penalties for noncompliance. If the State agency is 
not the operating agency, each member of a household who is subject to 
workfare under paragraph (m)(5)(i) of this section must be referred to 
the organization which is the operating agency. The information 
identified in paragraph (m)(3)(iv)(A) of this section must be forwarded 
to the operating agency within 5 days after the date of household 
certification. Computation of hours to be worked may be delegated to 
the operating agency.
    (iii) The State agency must inform the household and the operating 
agency of the effect of any changes in a household's circumstances on 
the household's workfare obligation. This includes changes in benefit 
levels or workfare eligibility.
    (iv) Upon notification by the operating agency that a participant 
has failed to comply with the workfare requirement without good cause, 
the State agency must make a final determination as to whether or not 
the failure occurred and whether there was good cause for the failure. 
If the State agency determines that the participant did not have good 
cause for noncompliance, a sanction must be processed as provided in 
paragraph (f)(1)(i) and (f)(1)(ii) of this section. The State agency 
must immediately inform the operating agency of the months during which 
the sanction will apply.
    (v) The State agency must submit quarterly reports to FNS within 45 
days of the end of each quarter identifying for that quarter for that 
State:
    (A) The number of households with workfare-eligible recipients 
referred to the operating agency. A household will be counted each time 
it is referred to the operating agency.
    (B) The number of households assigned to jobs each month by the 
operating agency.
    (C) The number of individuals assigned to jobs each month by the 
operating agency.
    (D) The total number of hours worked by participants.
    (E) The number of individuals against which sanctions were applied. 
An individual being sanctioned over two quarters should only be 
reported as sanctioned for the earlier quarter.
    (vi) The State agency may, at its option, assume responsibility for 
monitoring all workfare programs in its State to assure that there is 
compliance with this section and with the plan submitted and approved 
by FNS. Should the State agency assume this responsibility, it would 
act as agent for FNS, which is ultimately responsible for ensuring such 
compliance. Should the State agency determine that noncompliance 
exists, it may withhold funding until compliance is achieved or FNS 
directs otherwise.
    (5) Household responsibilities. (i) Participation requirement. 
Participation in workfare, if assigned by the State agency, is a Food 
Stamp Program work requirement for all nonexempt household members, as 
provided in paragraph (a) of this section. In addition:
    (A) Those recipients exempt from Food Stamp Program work 
requirements because they are subject to and complying with any work 
requirement under title IV of the Social Security Act are subject to 
workfare if they are currently involved less than 20 hours a week in 
title IV work activities. Those recipients involved 20 hours a week or 
more may be subject to workfare at the option of the political 
subdivision.
    (B) Those recipients exempt from Food Stamp Program work 
requirements because they have applied for or are receiving 
unemployment compensation are subject to workfare.
    (ii) Household obligation. The maximum total number of hours of 
work required of a household each month is determined by dividing the 
household's coupon allotment by the Federal or State minimum wage, 
whichever is higher. Fractions of hours of obligation may be rounded 
down. The household's hours of obligation for any given month may not 
be carried over into another month.
    (6) Other program requirements. (i) Conditions of employment. (A) 
Participants may be required to work up to, but not to exceed, 30 hours 
per week. In addition, the total number of hours worked by a workfare 
participant, together with any other hours worked in any other 
compensated capacity, including hours of participation in a title IV 
work program, by that participant on a regular or predictable part-time 
basis, must not exceed 30 hours a week. With the participant's consent, 
the hours to be worked may be scheduled in such a manner that more than 
30 hours are worked in one week, as long as the total for that month 
does not exceed the weekly average of 30 hours.
    (B) No participant will be required to work more than eight hours 
on any given day without his or her consent.
    (C) No participant will be required to accept an offer of workfare 
employment if it fails to meet the criteria established in paragraphs 
(h)(1)(iii), (h)(1)(iv), (h)(2)(i), (h)(2)(ii), (h)(2)(iv), and 
(h)(2)(v) of this section.
    (D) If the workfare participant is unable to report for job 
scheduling, to appear for scheduled workfare employment, or to complete 
the entire workfare obligation due to compliance with Unemployment 
Insurance requirements; other Food Stamp Program work requirements 
established in paragraph (a)(1) of this section; or the job search 
requirements established in paragraph (e)(1)(i) of this section, that 
inability must not be considered a refusal to accept workfare 
employment. If the workfare participant informs the operating agency of 
the time conflict, the operating agency must, if possible, reschedule 
the missed activity. If the rescheduling cannot be completed before the 
end of the month, that must not be considered as cause for 
disqualification.
    (E) The operating agency must assure that all persons employed in 
workfare jobs receive job-related benefits at the same levels and to 
the same extent as similar non-workfare employees. These are benefits 
related to the actual work being performed, such as workers'

[[Page 72222]]

compensation, and not to the employment by a particular agency, such as 
health benefits. Of those benefits required to be offered, any elective 
benefit that requires a cash contribution by the participant will be 
optional at the discretion of the participant.
    (F) The operating agency must assure that all workfare participants 
experience the same working conditions that are provided to non-
workfare employees similarly employed.
    (G) The provisions of section 2(a)(3) of the Service Contract Act 
of 1965 (Pub. L. 89-286), relating to health and safety conditions, 
apply to the workfare program.
    (H) Operating agencies must not place a workfare participant in a 
work position that has the effect of replacing or preventing the 
employment of an individual not participating in the workfare program. 
Vacancies due to hiring freezes, terminations, or lay-offs must not be 
filled by workfare participants unless it can be demonstrated that the 
vacancies are a result of insufficient funds to sustain former staff 
levels.
    (I) Workfare jobs must not, in any way, infringe upon the 
promotional opportunities that would otherwise be available to regular 
employees.
    (J) Workfare jobs must not be related in any way to political or 
partisan activities.
    (K) The cost of workers' compensation or comparable protection 
provided to workfare participants by the State agency, political 
subdivision, or operating agency is a matchable cost under paragraph 
(m)(7) of this section. However, whether or not this coverage is 
provided, in no case is the Federal government the employer in these 
workfare programs (unless a Federal agency is the job site).The 
Department does not assume liability for any injury to or death of a 
workfare participant while on the job.
    (L) The nondiscrimination requirement provided in Sec. 272.6(a) of 
this chapter applies to all agencies involved in the workfare program.
    (ii) Job search period. The operating agency may establish a job 
search period of up to 30 days following certification prior to making 
a workfare assignment during which the potential participant is 
expected to look for a job. This period may only be established at 
household certification, not at recertification. The potential 
participant would not be subject to any job search requirements beyond 
those required under this section during this time.
    (iii) Participant reimbursement. The operating agency must 
reimburse participants for transportation and other costs that are 
reasonably necessary and directly related to participation in the 
program. These other costs may include the cost of child care, or the 
cost of personal safety items or equipment required for performance of 
work if these items are also purchased by regular employees. These 
other costs may not include the cost of meals away from home. No 
participant cost reimbursed under a workfare program operated under 
Title IV of the Social Security Act or any other workfare program may 
be reimbursed under the food stamp workfare program. Only reimbursement 
of participant costs up to but not in excess of $25 per month for any 
participant will be subject to Federal cost sharing as provided in 
paragraph (m)(7) of this section. Reimbursed child care costs may not 
be claimed as expenses and used in calculating the child care deduction 
for determining household benefits. In accordance with paragraph 
(m)(4)(i) of this section, a State agency may decide what its 
reimbursement policy shall be.
    (iv) Failure to comply. When a workfare participant is determined 
by the State agency to have failed or refused without good cause to 
comply with the requirements of this paragraph, (m), the provisions of 
paragraph (f) of this section will apply.
    (v) Benefit overissuances. If a benefit overissuance is discovered 
for a month or months in which a participant has already performed a 
workfare or work component requirement, the State agency must apply the 
claim recovery procedures contained in paragraphs (m)(6)(v)(A) and 
(m)(6)(v)(B) of this section.
    (A) If the person who performed the work is still subject to a work 
obligation, the State must determine how many extra hours were worked 
because of the improper benefit. The participant should be credited 
that number of hours toward future work obligations.
    (B) If a workfare or work component requirement does not continue, 
the State agency must determine whether the overissuance was the result 
of an intentional program violation, an inadvertent household error, or 
a State agency error. For an intentional program violation a claim 
should be established for the entire amount of the overissuance. If the 
overissuance was caused by an inadvertent household error or State 
agency error, the State agency must determine whether the number of 
hours worked in workfare are more than the number which could have been 
assigned had the proper benefit level been used in calculating the 
number of hours to work. A claim must be established for the amount of 
the overissuance not ``worked off,''' if any. If the hours worked equal 
the amount of hours calculated by dividing the overissuance by the 
minimum wage, no claim will be established. No credit for future work 
requirements will be given.
    (7) Federal financial participation--(i) Administrative costs. 
Fifty percent of all administrative costs incurred by State agencies or 
political subdivisions in operating a workfare program will be funded 
by the Federal government. Such costs include those related to 
recipient participation in workfare, up to $25 per month for any 
participant, as indicated in paragraph (m)(6)(iii) of this section. 
Such costs do not include the costs of equipment, capital expenditures, 
tools or materials used in connection with the work performed by 
workfare participants, the costs of supervising workfare participants, 
the costs of reimbursing participants for meals away from home, or 
reimbursed expenses in excess of $25 per month for any participant.
    (ii) Funding mechanism. The State agencies have responsibility for 
disbursing Federal funds used for the workfare program through the 
State agencies' Letters of Credit. The State agency must also assure 
that records are being maintained which support the financial claims 
being made to FNS. This will be for all programs, regardless of who 
submits the plan. Mechanisms for funding local political subdivisions 
which have submitted plans must be established by the State agencies.
    (iii) Fiscal recordkeeping and reporting requirements. Workfare-
related costs must be identified by the State agency on the Financial 
Status Report (Form SF-269) as a separate column. All financial 
records, supporting documents, statistical records, negotiated 
contracts, and all other records pertinent to workfare program funds 
must be maintained in accordance with Sec. 277.12 of this chapter.
    (iv) Sharing workfare savings--(A) Entitlement. A political 
subdivision is entitled to share in the benefit reductions that occur 
when a workfare participant begins employment while participating in 
workfare for the first time, or within thirty days of ending the first 
participation in workfare.
    (1) To begin employment means to appear at the place of employment 
and to begin working.
    (2) First participation in workfare means performing work for the 
first time in a particular workfare program. The only break in 
participation that does not end the first participation will be due to

[[Page 72223]]

the participant's taking a job which does not affect the household's 
allotment by an entire month's wages and which is followed by a return 
to workfare.
    (B) Calculating the benefit reductions. The political subdivision 
will calculate benefit reductions from each workfare participant's 
employment as follows.
    (1) Unless the political subdivision knows otherwise, it will 
presume that the benefit reduction equals the difference between the 
last allotment issued before the participant began the new employment 
and the first allotment that reflects a full month's wages, earned 
income deduction, and dependent care deduction attributable to the new 
job.
    (2) If the political subdivision knows of other changes besides the 
new job that affect the household's allotment after the new job began, 
the political subdivision will obtain the first allotment affected by 
an entire month's wages from the new job. The political subdivision 
will then recalculate the allotment to account for the wages, earned 
income deduction, and dependent care deduction attributable to the new 
job. In recalculating the allotment the political subdivision will also 
replace any benefits from a State program funded under part A of title 
IV of the Social Security Act received after the new job with benefits 
received in the last month before the new job began. The difference 
between the first allotment that accounts for the new job and the 
recalculated allotment will be the benefit reduction.
    (3) The political subdivision's share of the benefit reduction is 
three times this difference, divided by two.
    (4) If, during these procedures, an error is discovered in the last 
allotment issued before the new employment began, that allotment must 
be corrected before the savings are calculated.
    (C) Accounting. The reimbursement from workfare will be reported 
and paid as follows:
    (1) The political subdivision will report its enhanced 
reimbursement to the State agency in accordance with paragraph 
(m)(7)(iii) of this section.
    (2) The Food and Nutrition Service will reimburse the political 
subdivision in accordance with paragraph (m)(7)(ii) of this section.
    (3) The political subdivision will, upon request, make available 
for review sufficient documentation to justify the amount of the 
enhanced reimbursement.
    (4) The Food and Nutrition Service will reimburse only the 
political subdivision's reimbursed administrative costs in the fiscal 
year in which the workfare participant began new employment and which 
are acceptable according to paragraph (m)(7)(i) of this section.
    (8) Coordination with other workfare-type programs. State agencies 
and political subdivisions may operate workfare programs as provided in 
this section jointly with a workfare program operated under Title IV of 
the Social Security Act to the extent that provisions and protections 
of the statute are maintained or with other workfare programs operated 
by the subdivision to the extent that the provisions and protections of 
this paragraph (m) are maintained. Statutory provisions include, but 
are not limited to, eligible recipients as provided in paragraph 
(m)(5)(i) of this section, maximum hours of work per week as provided 
in paragraph (m)(6)(i)(A) of this section and the penalties for 
noncompliance as provided in paragraph (f) of this section. When a 
household receives benefits from more than one program with a workfare 
requirement and the household is determined to have a food stamp 
workfare obligation, the food stamp obligation may be combined with the 
obligation from the other program. However, this may be done only to 
the extent that eligible food stamp workfare participants are not 
required to work more than 30 hours a week in accordance with paragraph 
(m)(6)(i)(A) of this section. Any intent to coordinate programs should 
be described in the plan. Waivers of provisions in this section, for 
the purpose of operating workfare jointly with local general assistance 
workfare-type programs, may be requested and provided in accordance 
with Sec. 272.3(c) of this chapter. Statutory provisions shall not be 
waived.
    (9) Voluntary workfare program. State agencies and political 
subdivisions may operate workfare programs whereby participation by 
food stamp recipients is voluntary. In such a program, the penalties 
for failure to comply, as provided in paragraph (f) of this section, 
will not apply for noncompliance. The amount of hours to be worked will 
be negotiated between the household and the operating agency, though 
not to exceed the limits provided under paragraph (m)(5)(ii) of this 
section. In addition, all protections provided under paragraph 
(m)(6)(i) of this section shall continue to apply. Those State agencies 
and political subdivisions choosing to operate such a program shall 
indicate in their workfare plan how their staffing will adapt to 
anticipated and unanticipated levels of participation. The Department 
will not approve plans which do not show that the benefits of the 
workfare program, in terms of hours worked by participants and reduced 
food stamp allotments due to successful job attainment, are expected to 
exceed the costs of such a program. In addition, if the Department 
finds that an approved voluntary program does not meet this criteria, 
the Department reserves the right to withdraw approval.
    (10) Comparable workfare programs. In accordance with section 
6(o)(2)(C) of the Food Stamp Act, State agencies and political 
subdivisions may establish programs comparable to workfare under this 
paragraph (m) for the purpose of providing able-bodied adults without 
dependents affected by the participation time limits specified at 
Sec. 273.24 a means of fulfilling the work requirements in order to 
remain eligible for food stamps. While comparable to workfare in that 
they require the participant to work for his or her household's food 
stamp allotment, these programs may or may not conform to other 
workfare requirements. State agencies or political subdivisions 
desiring to operate a comparable workfare program must meet the 
following conditions:
    (i) The maximum number of hours worked weekly in a comparable 
workfare activity, combined with any other hours worked during the week 
by a participant for compensation (in cash or in kind) in any other 
capacity, must not exceed 30.
    (ii) Participants must not receive a fourth month of food stamp 
benefits (the first month for which they would not be eligible under 
the time limit) without having secured a workfare position or without 
having met their workfare obligation. Participation must be verified 
timely to prevent issuance of a month's benefits for which the required 
work obligation is not met.
    (iii) The State agency or political subdivision must maintain 
records to support the issuance of benefits to comparable workfare 
participants beyond the third month of eligibility.
    (iv) The State agency or political subdivision must provide a 
description of its program, including a methodology for ensuring 
compliance with (m)(10)(ii) of this section. The description should be 
submitted to the appropriate Regional office, with copies forwarded to 
the Food Stamp Program National office.


Sec. 273.22  [Removed]

    5. Remove Sec. 273.22.

    Dated: December 16, 1999.
Shirley R. Watkins,
Under Secretary, Food, Nutrition and Consumer Services.
[FR Doc. 99-33131 Filed 12-22-99; 8:45 am]
BILLING CODE 3410-30-U