[Federal Register Volume 65, Number 34 (Friday, February 18, 2000)]
[Rules and Regulations]
[Pages 8478-8558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3342]



[[Page 8477]]

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

Part II





Department of Health and Human Services





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



Administration for Children and Families



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



45 CFR Parts 286 and 287



Tribal Temporary Assistance for Needy Families Program (Tribal TANF) 
and Native Employment Works (NEW) Program; Final Rule

  Federal Register / Vol. 65, No. 34 / Friday, February 18, 2000 / 
Rules and Regulations  

[[Page 8478]]


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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Parts 286 and 287

RIN 0970-AB78


Tribal Temporary Assistance for Needy Families Program (Tribal 
TANF) and Native Employment Works (NEW) Program

AGENCY: Administration for Children and Families, HHS.

ACTION: Final rule.

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

SUMMARY: The Administration for Children and Families is issuing final 
regulations to implement key tribal provisions of the new welfare block 
grant program enacted in 1996--the Temporary Assistance for Needy 
Families, or TANF program and the new tribal work activities program--
the Native Employment Works, or NEW Program. The Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA), Public Law 104-193, established the Tribal TANF and NEW 
Programs. Subsequent technical changes were enacted by the Balanced 
Budget Act of 1997, Public Law 105-33. The TANF block grant program 
replaces the national welfare program known as Aid to Families with 
Dependent Children (AFDC) and the related programs known as the Job 
Opportunities and Basic Skills Training Program (JOBS) and the 
Emergency Assistance (EA) program.
    These Final Rules reflect new Federal, Tribal, and State 
relationships in the administration of welfare programs; a new focus on 
moving TANF recipients into work; and a new emphasis on program 
information, measurement, and performance. They also reflect the 
Administration's commitment to regulatory reform.

EFFECTIVE DATE: These Final Rules are effective June 19, 2000.

FOR FURTHER INFORMATION CONTACT: John Bushman, Director, Division of 
Tribal Services, Office of Community Services, Administration for 
Children and Families (ACF), at 202-401-2418, Raymond Apodaca, Tribal 
TANF Team Leader, at 202-401-5020, or Ja-Na Oliver-Bordes, NEW Team 
Leader, at 202-401-5713.
    Deaf and hearing impaired individuals may call the Federal Dual 
Party Relay Service at 1-800-877-8339 between 8 a.m. and 7 p.m. eastern 
time.

SUPPLEMENTARY INFORMATION: On July 22, 1998, ACF published in the 
Federal Register (63 FR 39365-39429) a Notice of Proposed Rulemaking 
(NPRM) that covered key Tribal TANF provisions of the new welfare block 
grant program, known as Temporary Assistance for Needy Families, or 
TANF. In addition, the NPRM covered key provisions of the Native 
Employment Works (NEW) program. We provided an extended 120-day comment 
period which ended on November 20, 1998. We offered commenters the 
opportunity to submit comments by mail or electronically via our web 
site. A number of commenters took advantage of this electronic access, 
but the majority of the comments we received were through the mail.

Comment Overview

    We received an estimated 400 comments on the NPRM from 46 separate 
commenters. The largest number of comments came from tribal 
governments, followed by state agencies, and tribal organizations. For 
several reasons, we decided not to attempt precise numerical counts of 
the comments received. First, several comments had multiple signatories 
and others provided general endorsements of the comments of other 
parties. Also, commenters presented their views of overlapping and 
cross-cutting issues in many different ways; for example, some 
commented generically about major provisions of the proposed rule, 
while others provided specific suggestions about alternative 
approaches, words, and phrases. The diversity in the approach of 
commenters made precision in tallying comments impossible. 
Nevertheless, we are confident that this preamble accurately conveys 
the scope and nature of the comments received.
    In the preamble to the proposed rule we discussed our general 
approach to some of the major cross-cutting issues up front, prior to 
the section-by-section analysis. Many of the commenters organized their 
comments in the same way, addressing the issues thematically instead of 
following the specific structure of the rule. This preamble follows 
that same basic format, presenting a separate discussion of cross-
cutting issues apart from the separate section-by-section analysis 
(e.g., consultation, child support, plan format).
    The discussion of data collection and reporting issues is presented 
in several places--the preambles for part 286 (Tribal TANF) and part 
287 (NEW), and the preamble discussion entitled the ``Paperwork 
Reduction Act'' in the ``Regulatory Impact Analyses'' section of the 
preamble.
    We believe that structuring the preamble this way enables us to 
provide a clearer framework for the specific regulatory provisions and 
to represent the commenters' concerns most accurately.
    We appreciate the time and attention that commenters gave to 
reviewing the NPRM and preparing their comments, and we have reviewed 
and considered each. As a result of their efforts, we have been able to 
resolve certain technical and administrative issues, incorporate 
numerous substantive revisions to the proposed rule, make key 
clarifications of policy goals, and consider alternative regulatory 
approaches.

Table of Contents

I. Overview: The Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996
    II. Regulatory Framework
    A. Pre-NPRM Consultation Process
    B. Related Regulations
    C. Statutory Context
    D. Regulatory Reform
    E. Scope of This Rulemaking
    F. Federal Programs to Assist Families to Achieve Self 
Sufficiency
    G. Applicability of the Rules
III. Principles Governing Regulatory Development
    A. Tribal Flexibility
    B. Regulatory Authority
    C. Accountability for Meeting Program Requirements and Goals
IV. Discussion of Cross-Cutting Issues
    A. Child Support
    B. Plan Format
    C. Approved Plans Which Do Not Meet the Terms of the Final Rule
    D. Other General Issues
V. Part 286 Tribal TANF Program Provisions
    A. General Tribal TANF Provisions
    B. Tribal TANF Funding
    C. Tribal TANF Plan Content and Processing
    D. Accountability and Penalties
    E. Data Collection and Reporting Requirements
VI. Part 287--Native Employment Works (NEW) Program Provisions
    A. General NEW Provisions
    B. Eligible Tribes
    C. NEW Program Funding
    D. Plan Requirements
    E. Program Design and Operations
    F. Data Collection and Reporting Requirements
VII. Regulatory Impact Analyses
    A. Executive Order 12866
    B. Regulatory Flexibility Analysis
    C. Family Impact Assessment
    D. Paperwork Reduction Act
    E. Unfunded Mandates Reform Act of 1995
    F. Congressional Review of Regulations
    G. Executive Order 13132

I. Overview: The Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996

    On August 22, 1996, President Clinton signed ``The Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996'' 
(PRWORA)

[[Page 8479]]

into law. The first title of this new law (Pub. L. 104-193) establishes 
a comprehensive welfare reform program that is designed to change the 
nation's welfare system. The new program is called Temporary Assistance 
for Needy Families, or TANF, in recognition of its focus on moving 
recipients into work and time-limiting assistance.
    PRWORA repeals the existing welfare program known as Aid to 
Families with Dependent Children (AFDC), which provided cash assistance 
to needy families on an entitlement basis. It also repeals the related 
programs known as the Job Opportunities and Basic Skills Training 
program (JOBS) and Emergency Assistance (EA).
    The new law reflects widespread, bipartisan agreement on a number 
of key principles:
     Welfare programs should be designed to help move people 
from Welfare-to-Work.
     Welfare should be a short-term, transitional experience, 
not a way of life.
     Parents should receive the child care and the health care 
they need to protect their children as they move from Welfare-to-Work.
     Child support programs should become tougher and more 
effective in securing support from absent parents.
     Because many factors contribute to poverty and dependency, 
solutions to these problems should not be ``one size fits all.'' The 
system should allow States, Indian tribes, and localities to develop 
diverse and creative responses to their own problems.
     The Federal government should focus less attention on 
eligibility determinations and place more emphasis on program results.
    After more than two years of discussion and negotiation, PRWORA 
emerged as a bipartisan vehicle for comprehensive welfare reform. As 
President Clinton stated in his remarks as he signed the bill, ``* * * 
legislation provides an historic opportunity to end welfare as we know 
it and transform our broken welfare system by promoting the fundamental 
values of work, responsibility, and family.'' Under the new statute, 
TANF funding and assistance for families comes with new expectations 
and responsibilities. Adults receiving assistance are expected to 
engage in work activities and develop the capability to support 
themselves and their families before their time-limited assistance runs 
out.
    The new law provides federally-recognized Indian tribes, or 
consortia of such Tribes, the opportunity to apply for funding under 
section 412 of the Social Security Act (or the Act), as amended by 
PRWORA, to operate their own TANF programs beginning July 1, 1997.
    The law gives States and federally recognized Indian tribes the 
authority to use Federal welfare funds ``in any manner that is 
reasonably calculated to accomplish the purposes'' of the new program. 
Those purposes are: (1) To provide assistance to needy families so that 
children may be cared for in their own homes or in the homes of 
relatives; (2) to end the dependence of needy parents on government 
benefits by promoting job preparation, work, and marriage; (3) to 
prevent and reduce the incidence of out-of-wedlock pregnancies and 
establish annual numerical goals for preventing and reducing the 
incidence of these pregnancies; and (4) to encourage the formation and 
maintenance of two-parent families.
    Indian tribes that choose to administer a Tribal TANF program have 
been given broad flexibility to set TANF eligibility rules and to 
decide what benefits are most appropriate for their service areas and 
populations. Tribes who take on the responsibility for administering a 
TANF program will be expected to assist recipients making the 
transition to employment. Tribal TANF grantees also will be expected to 
meet work participation rates and other critical program requirements 
in order to avoid penalties and maintain their Federal funding. In 
meeting these expectations, Tribes need to examine the needs of their 
service areas and service populations, identify the causes of long-term 
underemployment and dependency, and work with families, communities, 
businesses, and other social service agencies in resolving employment 
barriers. TANF gives Tribes the flexibility they need to respond to 
such individual family needs. However, in return, it expects Tribes to 
move towards a strategy that provides appropriate services for needy 
families. PRWORA offers States and Tribes an opportunity to try new, 
far-reaching changes that can respond more effectively to the needs of 
families within their own unique environments. PRWORA also redefines 
the Federal role in administration of the nation's welfare system. It 
limits Federal regulatory and enforcement authority, but gives the 
Federal government new responsibilities for tracking the performance of 
States and Tribes.
    In addition to establishing the Tribal TANF program, PRWORA 
authorizes funding, to the former Tribal JOBS grantees, for a tribal 
program ``to make work activities available.'' Based upon tribal 
recommendations, we have designated this tribal work activities program 
as the Native Employment Works (NEW) program. Tribes are encouraged to 
focus the NEW Program on work activities and on services which support 
participation in work activities. In addition, Tribes are encouraged to 
create and expand employment opportunities when possible.
    This new welfare reform legislation not only gives Tribes new 
opportunities, as in the case of the TANF program, and continued 
responsibilities, as in the case of the NEW Program, but it also 
dramatically affects intergovernmental relationships. It challenges 
Federal, Tribal, State and local governments to foster positive changes 
in the culture of the welfare system. It transforms the way agencies do 
business, requiring that they engage in genuine partnerships with each 
other, community organizations, businesses, and needy families.

II. Regulatory Framework

A. Pre-NPRM Consultation Process

    In the spirit of both regulatory reform and the government-to-
government relationship between Tribes and the federal government, we 
implemented a broad consultation strategy prior to the drafting of the 
Notice of Proposed Rulemaking (NPRM). In the preamble to the NPRM we 
briefly discussed this consultation strategy. However, we received many 
comments from Tribes questioning whether we had engaged in effective or 
meaningful Tribal consultation in the drafting of the proposed 
regulations. We are therefore taking this opportunity to further 
explain our consultation strategy.
    In May 1998 President Clinton signed Executive Order 13084, which 
provides for ``an effective process to permit elected officials and 
other representatives of Indian Tribal governments to provide 
meaningful and timely input in the development of regulatory policies 
on matters that significantly or uniquely affect their communities.'' 
In recognizing the unique relationship which the federal government and 
Tribal governments share, this consultation process allows agencies to 
develop meaningful consultation opportunities with the Tribes in the 
development of regulatory policies which directly affect them.
    Accordingly, when PRWORA was signed on August 22, 1996 we began 
internal discussions on how best to obtain input from Tribes on the 
content of the regulations. We decided to take a multi-pronged 
approach, which was designed to ensure that Tribes would be provided 
opportunities at various times

[[Page 8480]]

throughout the regulation-drafting process to comment and provide input 
into the proposed regulations.
    In early 1997, ACF Regional Offices sent letters out to all 
eligible tribal governments seeking comments and input on the TANF and 
NEW regulations. These offices then began to conduct regional Pre-NPRM 
Tribal TANF/NEW consultation meetings. These Regional meetings were 
held to discuss the PRWORA law and its potential impact on the Tribes, 
and to obtain specific information on what should be in the proposed 
regulations. Representatives from many Tribes attended these on-site 
consultations, providing us with much useful information. Concurrent 
with those meetings, we mailed a questionnaire to all federally 
recognized Tribes in the lower forty-eight states, as well as all 
Alaska Native entities eligible to operate a TANF and/or NEW Program, 
asking them to respond to specific questions in the areas of TANF and/
or NEW implementation, plan content, penalties, work participation 
requirements, time limits, data reporting, and special provisions. We 
received many letters back from Tribes that provided valuable 
information and insights to us as we began to draft the regulations.
    As we drafted the regulations we continued to seek tribal input 
about potential tribal TANF operations. Several meetings were held in 
Washington, D.C. with advocates, tribal representatives, national 
tribal organizations, and other stakeholders. Although these meetings 
included agenda items in addition to TANF, we took every available 
opportunity to include separate sessions where individuals were 
specifically invited to discuss what should be in the proposed rule. 
Similarly, Regional Offices included TANF discussions in meetings and 
discussions which they held throughout their regions. Finally, Tribes, 
tribal organizations, and other stakeholders had the opportunity to 
provide specific written comments in response to the published NPRM. 
The comments received were both valuable and appreciated.
    Although we were unable to meet individually with every Tribe and 
tribal organization, we believe that we made our best and concerted 
effort of consulting with and involving the Tribes in the development 
of these regulations. We provided an effective process for the 
provision of meaningful and timely input into both the development and 
revision of the regulations. As you review the final Tribal TANF 
regulation, you will see the fruits of that consultation--many of these 
comments have brought about substantive changes to the Final Rule, 
changes which we believe will have a positive effect on the provision 
of Tribal TANF services in Indian country.

B. Related Regulations

    There is an important relationship between this rulemaking and the 
Final TANF Rule (64 FR 17720, April 12, 1999) generally applicable to 
State TANF programs. Tribal decisions on whether to elect to administer 
a Tribal TANF program will depend on a number of factors, including the 
nature of services and benefits that will be available to tribal 
members under the State TANF program. Thus, Tribes have a direct 
interest in the regulations governing State TANF programs.
    Tribes also have an interest in these regulations because, while 
the statute allows Tribes to negotiate certain program requirements, 
such as work participation rates and time limits, it subjects tribal 
programs to the same data collection and reporting requirements as 
States. These requirements are found at part 265 of the Final TANF Rule 
(64 FR 17900) and appendices.
    A number of States and Tribes have inquired whether a State can 
count contributions made to an Indian tribe with an approved Tribal 
Family Assistance Plan toward the State's MOE requirement. On June 2, 
1997, the Office of Community Services and the Office of Family 
Assistance jointly issued a Policy Announcement, TANF-ACF-PA-2 in this 
regard. This policy announcement provides that State funds paid to an 
Indian tribe with an approved Tribal Family Assistance Plan may meet 
the definition of a qualified State expenditure for the purpose of a 
State's required MOE, if the funds are expended for: (1) ``Eligible 
families,'' families who meet the income and resource standards 
established by the State; and (2) cash assistance, child care 
assistance, certain educational activities, or any other use of funds 
allowable under section 404(a)(1) of the Act, i.e., any use that is 
reasonably calculated to accomplish the purpose of the TANF program. 
The requirements contained in TANF-ACF-PA-2 remain in effect and fit 
within the provisions of 45 CFR 263.2 relating to the kind of 
expenditures that count toward meeting a State's basic MOE requirement, 
and funds spent accordingly would be allowable to satisfy the MOE 
requirements. In addition, the definition of ``eligible families'' 
limits MOE expenditures to families that include a child living with a 
parent or other adult care relative or to pregnant women.
    In order for welfare reform to succeed in Indian country, it is 
important for State and Tribal governments to work together on a number 
of key issues, including data exchange and coordination of services. We 
remind States that Tribes have a right under law to operate their own 
programs. States should cooperate in providing the information 
necessary for Tribes to do so. Likewise, Tribes should cooperate with 
States in identifying tribal members and tracking receipt of 
assistance.
    PRWORA also changed other major programs administered by ACF, the 
Department, and other Federal agencies that may significantly affect a 
State or Tribe's success in implementing welfare reform. For example, 
title VI of PRWORA repealed the child care programs that were 
previously authorized under title IV-A of the Social Security Act. In 
their place, it provided two new sources of child care funding (which 
we refer to collectively as the Child Care and Development Fund). These 
funds go to the Lead Agency that administers the Child Care and 
Development Block Grant program. A major purpose of the increases in 
child care funding provided under PRWORA is to assist low-income 
families in their efforts toward self-sufficiency. We issued Final 
Rules covering the Child Care and Development Fund on July 24, 1998 
(see 63 FR 39935).
    In 1998, the Office of Child Support Enforcement (OCSE), Native 
American Program, conducted a series of six Nation-to-Nation 
consultations with Indian tribes, tribal organizations and other 
interested parties to obtain tribal input prior to drafting the 
regulations for direct funding to Tribes and tribal organizations as 
authorized by section 455(f) of the Social Security Act. OCSE is 
drafting those regulations and expects that the NPRM will be published 
in the Federal Register by late summer.
    The Secretary of Labor issued interim Final Rules on section 
5001(c) of Public Law 105-33, regarding Welfare-to-Work (WtW) grants 
for Tribes, on November 18, 1997. A copy of these rules is available on 
the Internet at http://www.wdsc.org/dinap/dinapw2w/ta.html. General 
information on the Department of Labor's Indian and Native American WtW 
program is available at http://www.wdsc.org/dinap/dinapw2w/index.html.
    We encourage you to look in the Federal Register for actions on 
these related rules in order to understand the important relationships 
among these programs in developing a comprehensive strategy that can 
provide

[[Page 8481]]

support to all families that are working to maintain their family 
structure and become self-sufficient.

C. Statutory Context

    These Final Rules reflect PRWORA, as enacted, and amended by Pub. 
L. 105-33 and Pub. L. 105-200. Pub. L. 105-33 created the new Welfare-
to-Work (WtW) program, made a few substantive changes to the TANF 
program, and made numerous technical corrections to the TANF statute. 
Under section 403 of The Child Support Performance and Incentives Act 
of 1998, Pub. L. 105-200, Congress added a ``rule of interpretation'' 
to section 404(k)(3) of the Social Security Act, which indicates that 
the provision of transportation benefits under section 3037 of the 
Transportation Equity Act to an individual who is not otherwise 
receiving TANF assistance would not be considered assistance. We have 
made a conforming change to our definition of assistance at Sec. 286.10 
to reflect this policy.

D. Regulatory Reform

    In its latest Document Drafting Handbook, the Office of the Federal 
Register supports the efforts of the National Partnership for 
Reinventing Government and encourages Federal agencies to produce more 
reader-friendly regulations. In drafting the proposed and Final Rules, 
we paid close attention to this guidance and worked to produce a more 
readable rule. Individuals who are familiar with our previous welfare 
regulations should notice that this package incorporates a distinctly 
different, more readable style. We also provided electronic access to 
the document and gave readers the option to submit their comments 
electronically. We received a number of positive comments about how the 
NPRM was written and the electronic access.
    Based in part on the positive reaction to the proposed rule, and in 
the spirit of facilitating understanding, we decided to retain much of 
the NPRM preamble discussion. We believe it will be useful for some 
readers in providing the overall context for the final regulations. 
However, where we are changing our policy in the Final Rule, or the 
context has changed since we issued the NPRM, we have made appropriate 
changes to the preamble. We also exercised some editorial discretion to 
make the discussion more succinct or clearer in places. Wherever we 
made significant changes in policy, the preamble notes and explains 
those changes.
    In the spirit of providing access to information, we included draft 
data collection and reporting forms as appendices to the proposed rules 
even though we did not intend to publish the forms as part of the Final 
Rule. We thought that the inclusion of the draft forms would expand 
public access to this information and make it easier to comment on our 
data collection and reporting plans.

E. Scope of This Rulemaking

    Because there are no existing Tribal TANF or NEW regulations, this 
package is intended to cover the Final Rules as they relate to the 
provisions of the Tribal TANF and NEW Programs (including definitions 
of common and frequently used terms). While this decision has resulted 
in a large rule, we think it has enabled us to develop a more coherent 
regulatory framework and provide readers an opportunity to look at the 
many interconnected pieces at one time.

F. Federal Programs To Assist Families To Achieve Self-Sufficiency

Child Care
    Federal Child Care and Development Fund (CCDF) grants enable Tribes 
to provide child care subsidies to low-income Indian families so they 
can work, attend training or return to school. The importance of 
providing Federal support for child care stems from increased emphasis 
on transitioning welfare recipients to work and enabling low-income 
working families to remain in the workforce. Obtaining affordable and 
safe child care is widely recognized as a major barrier that keeps 
families on welfare and out of the workforce. Parents are more likely 
to obtain work and remain in the workforce if child care is affordable, 
stable, conveniently located and of good quality. Child care helps 
parents reach and maintain economic self-sufficiency. Quality child 
care also plays an important role in children's healthy development and 
preparation for school.
    The Child Care and Development Fund (CCDF), as authorized by the 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA), assists low-income families and those transitioning off 
welfare to obtain child care so they can work or attend training/
education.
    The CCDF brings together four Federal child care subsidy programs 
and allows States and Tribes to design a comprehensive, integrated 
service delivery system to meet the needs of low-income working 
families. The Child Care and Development Block Grant Act (CCDBG), as 
amended by PRWORA, now permits tribal grantees to directly administer 
child care funds related to the now repealed Title IV-A programs (At-
Risk, Transitional and AFDC child care), in addition to operating CCDBG 
programs. The amended CCDBG Act also permits tribal grantees to use 
funds for construction and renovation purposes.
    The Administration for Children and Families (ACF) Child Care 
Bureau is responsible for oversight of the CCDF. Two percent of CCDF 
funding is earmarked for tribal child care programs. In fiscal year 
(FY) 1999, Tribes received over $62 million from the CCDF, more than 
doubling previous Federal grant amounts made directly to Tribes for 
child care prior to PRWORA. (See http://www.acf.dhhs.gov/programs/ccb 
for more information.)
Programs Promoting Work
    This Administration has repeatedly shown its commitment to 
promoting the work objectives of this new law. Before and since the 
legislation was passed, the President and the Administration have 
worked very hard to ensure that Congress passed strong work provisions 
and provided adequate child care funding and other program supports to 
help families making the transition from Welfare-to-Work. These 
include, the Welfare-to-Work program (WtW), administered by the 
Department of Labor, the Welfare-to-Work Tax Credit enacted in the 
Balanced Budget Act, Welfare-to-Work housing vouchers included in the 
Fiscal Year 1999 budget for the Department of Housing and Urban 
Development, and Job Access transportation grants.
    WtW provides grants to Indian tribes, States, localities, and other 
grantees to help them move long-term welfare recipients and certain 
noncustodial parents into lasting, unsubsidized jobs. The Welfare-to-
Work Tax Credit provides a credit equal to 35 percent of the first 
$10,000 in wages in the first year of employment, and 50 percent of the 
first $10,000 in wages in the second year, to encourage the hiring and 
retention of long-term recipients. (It complements the Work Opportunity 
Tax Credit, which provides a credit of up to $2,400 for the first year 
of wages to employers who hire long-term welfare recipients.)
    The Welfare-to-Work Housing Voucher Program provides tenant-based 
Section 8 housing assistance to help eligible families make the 
transition from welfare to work. In FY 1999, HUD awarded 50,280 
vouchers to communities, including two Tribes, that

[[Page 8482]]

created cooperative efforts among their housing, welfare and employment 
agencies. (Only Tribes with Section 8 housing programs were eligible to 
apply. You can find additional information on this initiative at http://www.hud.gov/native.)
    The Transportation Equity Act for the 21st Century (TEA-21) 
authorizes $750 million over five years for competitive grants to 
communities to develop innovative transportation activities to help 
welfare recipients and other low-income workers (i.e., those with 
income up to 150 percent of poverty) get to work. For FY 1999, the 
Department of Transportation awarded 171 grants totaling $71 million, 
including grants to several Tribes. You can find additional information 
at http://www.fta.dot.gov/. You can find more information about the 
Administration's initiatives at http://www. whitehouse.gov/WH/Welfare.
    The President has also challenged America's businesses, its large 
nonprofit sector, and the executive branch of the Federal government to 
help welfare recipients go to work and succeed in the workplace.
    In May 1997, the President helped to launch a new private-sector 
initiative to promote the hiring of welfare recipients by private-
sector employers. The Welfare-to-Work Partnership, which started with 
105 participating businesses, now includes over 12,000 businesses that 
have hired over 410,000 welfare recipients. This partnership has 
produced a variety of materials to support businesses in these efforts, 
including the ``Blueprint for Business'' hiring manual and ``The Road 
to Retention,'' a report of companies that have achieved higher 
retention rates for former welfare recipients. You can find information 
about the Welfare-to-Work Partnership at http://www.welfaretowork.org.
    The Small Business Administration (SBA) is addressing the unique 
and vital role of small businesses, which account for over one-half of 
all private-sector employment. It is helping small businesses make 
connections to job training organizations and job-ready welfare 
recipients. SBA is also providing training and assistance to Tribal 
welfare recipients who wish to start their own businesses through its 
Tribal Business Information Centers. Businesses can receive assistance 
through SBA's 1-800-U-ASK-SBA and through its network of one-stop 
centers, one-stop capital shops, and district offices. Information on 
SBA's Welfare-to-Work initiative (WtW) and other activities are 
available through the SBA home page at http://www.sba.gov.
    In addition, the Vice President has developed a coalition of 
national civic, service, and faith-based groups committed to helping 
former welfare recipients succeed in the workforce--by providing 
mentoring, job training, child care, and other supports. On March 8, 
1997, the President directed all Federal agencies to submit plans 
describing the efforts they would make to respond to this challenge. 
Under the Vice President's leadership, Federal agencies committed to 
hiring at least 10,000 welfare recipients over the next four years. 
Agencies have already fulfilled this commitment--nearly two years ahead 
of schedule. (You can find additional information on this effort at 
http://www.welfaretowork.fed.gov.)

G. Applicability of the Rules

    As we indicated in the NPRM, a Tribe may operate its TANF and/or 
NEW Program under a reasonable interpretation of the statute prior to 
publication of the Final Rules. Thus, in determining whether a Tribe is 
subject to a penalty under TANF or a disallowance under the NEW 
Program, we would not apply regulatory interpretations retroactively. 
We have retained this basic policy, but modify it to clarify that the 
``reasonable interpretation'' standard applies until the effective date 
of these Final Rules. Tribes remain bound by any Policy Announcements 
issued by ACF, including those issued in advance of the final 
regulations, both prior to and after the effective date of these 
regulations. You can find additional discussion of this policy at Part 
IV.C below, as well as in Sec. 286.215 of the preamble.

III. Principles Governing Regulatory Development

A. Tribal Flexibility

    In the conference report to PRWORA, Congress stated that the best 
welfare solutions come from those closest to the problems, not from the 
Federal government. Thus, the legislation provides Tribes with the 
opportunity to reform welfare in ways that work best to serve the needs 
of their service areas and service populations. It gives Tribes the 
flexibility to design their own programs, define who will be eligible, 
establish what benefits and services will be available, and develop 
their own strategies for achieving program goals, including how to help 
recipients move into the work force.
    To ensure that our rules support the legislative goals of PRWORA, 
we are also committed to gathering information on how Tribes are 
responding to the new opportunities available to them. We reserve the 
right to revisit some issues, either through proposed legislation or 
regulation, if we identify situations where these rules are not 
furthering the objectives of the Act.

B. Regulatory Authority

    Early input from the consultations with Indian tribes suggested 
that, consistent with the intent of Congress to provide for program 
flexibility, we should limit the extent to which we regulate Tribal 
TANF and NEW Programs. However, Congress gave us more authority to 
regulate the Tribal TANF and NEW Programs than State TANF programs. 
Unlike the process for reviewing and accepting plans for State TANF, 
the statute requires us to approve Tribal TANF plans. While we propose 
maximum flexibility in program design and procedure, we believe it is 
important for us to set forth, in regulations, the process for the 
submission and approval of plans and other program requirements.
    Tribal TANF programs must meet minimum work participation rates, 
and Tribal TANF recipients are subject to maximum time limits for the 
receipt of assistance as well as penalties for failure to meet program 
requirements. While these requirements are specified in PRWORA for 
State TANF programs, they are not specified for Tribal TANF programs, 
and we will negotiate these with each tribal program. Although the 
proposed rules suggested flexibility in how these requirements could be 
established, we believe that it is important for us to lay out, in 
regulations, the criteria that we will use.
    Although Tribes that operate TANF programs are subject to some of 
the same statutory requirements as are States, there are some 
requirements that do not apply to Tribes, such as the prohibitions in 
section 408. Since the statute does not always treat Tribes and States 
in the same way, we believe the Tribal TANF regulations should reflect 
the distinctions where appropriate.

C. Accountability for Meeting Program Requirements and Goals

    The new law gives Tribes flexibility to design their TANF programs 
in ways that strengthen families and promote work, responsibility, and 
self-sufficiency. At the same time, however, TANF reflects a bipartisan 
commitment to ensuring that State and Tribal programs support the goals 
of welfare reform. To this end, the statutory provisions on data 
collection and penalties are crucial because they give us the authority 
we need to track what is happening to needy families and children under 
the new law, measure

[[Page 8483]]

program outcomes, and promote key objectives.

IV. Discussion of Cross-Cutting Issues

A. Child Support

    One of TANF's purposes is to provide assistance to needy families 
so that children may be cared for in their own homes or the homes of 
relatives. Another is to end the dependence of needy parents on 
government benefits by promoting job preparation, work, marriage, and 
parental responsibility. A third is to prevent and reduce the incidence 
of out-of-wedlock pregnancies and to encourage the formation and 
maintenance of two-parent families. Child support enforcement provides 
an important means of achieving all of these goals for Indian families 
and children. In the NPRM, we solicited comments on the subject of 
conditioning eligibility for receipt of Tribal TANF assistance on 
cooperation with child support enforcement efforts. We received very 
few comments on this issue. The comments we received indicated that the 
decision on conditioning eligibility for Tribal TANF assistance on 
either cooperation or assignment of child support to the Tribe should 
be left to the individual Tribes or to tribal-state negotiations.
    We have considered all comments received on the issue and believe 
that conditioning Tribal TANF eligibility on cooperation with child 
support enforcement agencies is consistent with assisting needy 
families achieve self-sufficiency. Section 286.75(a)(8) provides that, 
at their option, Tribal TANF programs may require cooperation with IV-D 
agencies as a prerequisite to receipt of TANF assistance. Good cause 
and other exceptions to cooperation shall be defined by the Tribal TANF 
program.
    In addition, at Sec. 286.155 we establish the rule that Tribal TANF 
programs may, at their option, condition eligibility for TANF 
assistance on assignment of child support to the Tribe. The statute 
does not address conditioning eligibility for Tribal TANF on the 
assignment of child support and we have determined that Tribes may 
require assignment as a condition of eligibility for Tribal TANF. If a 
Tribe elects this option, it may be approved only if the TFAP addresses 
the following to the satisfaction of the Secretary: (1) how the Tribe 
will use assigned support to further their TANF programs and, (2) 
procedures by which the Tribe will pay to the family any amount of 
child support collected and assigned to the Tribe that is in excess of 
the amount of TANF assistance provided to that family.
    Section 286.155(b)(1) means that a Tribe may not retain assigned 
support in excess of TANF assistance. Any such excess must be passed on 
to the family. Section 286.155(b)(2) requires that assigned child 
support retained by the Tribe be used for TANF purposes under the TFAP. 
The TFAP should specify how assigned support will be used.
    Until ACF issues regulations regarding the direct funding of Tribal 
child support enforcement programs, most child support will continue to 
be collected by States. States will continue to distribute amounts 
collected in accordance with Federal requirements and may, consistent 
with those requirements, retain amounts assigned to the State as a 
condition of receipt of AFDC and/or State TANF assistance. Amounts in 
excess of the amount that may be retained by the State would normally 
be passed through to the family. However, States may remit such 
amounts, if assigned to a Tribe with respect to Tribal TANF, to the 
Tribe within the required disbursement time frames.
    As we stated above, to ensure that our rules support the 
legislative goals of PRWORA, we are committed to gathering information 
on how Tribes are responding to the new opportunities available to them 
to promote self-sufficiency. We intend to revisit the issue of child 
support enforcement as it relates to Tribal TANF programs, either 
through proposed legislation or regulation, if we identify situations 
where the Final Tribal TANF rules are not furthering the objectives of 
the Act.
    Implementation of child support enforcement in Indian country is 
key to achieving self-sufficiency. The Federal government has a major 
role in child support enforcement (particularly with regard to the 
operation of the Federal Case Registry, National New Hire Directory and 
the expanded Federal Parent Locator Service), the continuing Federal 
interest in the effectiveness of child support collections, and the 
continued Federal financial commitment, under TANF, for needy families 
whose children do not have access to parental support.

B. Plan Format

    In the NPRM, we solicited comments on the subject of whether ACF 
should develop a format or preprint for TANF. We received few comments 
on this issue. We have decided that, although all plans have common 
required elements, there is no need to prescribe the format which a 
Tribe should use to develop its plan. A Tribe may therefore use a 
format of its choosing, as long as all required statutory and 
regulatory elements are addressed.

C. Approved Plans Which Do Not Meet the Terms of the Final Rule

    The Supreme Court has held that the Administrative Procedures Act 
(5 U.S.C. 551 et seq.) prohibits regulations from having retroactive 
effect because section 551 defines a rule as agency action having 
``future effect.'' We acknowledge that there will inevitably be Tribal 
TANF programs that are currently operating in a manner that is 
inconsistent with the Final Rule and that will need time to amend their 
plans and their operations to bring programs in line with the final 
regulations. Between publication of the final Tribal TANF and NEW 
regulations and the effective date of the regulations, we will permit 
Tribal TANF and NEW Programs to continue to operate under a 
``reasonable interpretation'' of the statute and applicable Policy 
Announcements, with the understanding that as of the effective date ALL 
Tribal TANF and New programs must comply with the final regulations or 
face penalties for non-compliance. The time frames for submitting 
amendments at Sec. 286.165 applies; any amendments must be submitted at 
least 30 days prior to the effective date of the final regulations 
(i.e., 90 days from the date of publication of the Final Rule).

D. Other General Issues

    The following is a discussion of all the comments we received 
regarding the proposed rule, as well as a discussion of all the 
regulatory provisions which we have changed. In most cases the 
discussion follows the order of the regulatory text, addressing each 
part and section in turn. However, we incorporated the discussion 
regarding any changes to the ``definitions'' section in the appropriate 
topic area discussion section. For areas where we received no comments, 
and where no changes have been made to the draft language, we have 
included the preamble discussion from the NPRM. The entire regulatory 
text is included in the Final Rule.

V. Part 286--Tribal TANF Program Provisions

Subpart A--General Tribal TANF Provisions (Secs. 286.1-286.15)

Section 286.1  What Does This Part Cover?

    This part contains our Final Rule for the implementation of section 
412 of the Social Security Act, except for section 412(a)(2) which is 
covered in part 287.

[[Page 8484]]

Section 412 allows federally-recognized Indian tribes, certain 
specified Alaska Native organizations and Tribal consortia to submit 
plans for the administration of a Temporary Assistance for Needy 
Families (TANF) program.
    In this Final Rule, we have tried to retain the flexibility 
provided by the statute to the Tribal Family Assistance program. At the 
same time, we recognize the need to set forth the general rules that 
will govern the program.
    In addition, in recognition of the unique legal relationship the 
United States has with Tribal governments, these regulations will be 
applied in a manner that respects and promotes a government-to-
government relationship between Tribal governments and the United 
States government, Tribal sovereignty, and the realization of Indian 
self-governance.
    In this Final Rule the terms ``Tribal Family Assistance program'' 
or ``TFAP'' and ``Tribal TANF program'' are used interchangeably.

Section 286.5  What Definitions Apply to This Part?

    This section of the Final Rule includes definitions of the terms 
used in Part 286. Where appropriate, it also includes cross-references 
which direct the reader to other sections or subparts of the Final Rule 
for additional information.
    In drafting this section of the Final Rule, we chose not to define 
every term used in the statute and in these final regulations. We 
understand that excessive definitions may unduly and unintentionally 
limit Tribal flexibility in designing programs that best serve their 
needs.
    For example, we have not defined ``Indian family'' or ``service 
population.'' Each Tribe administering its own Tribal TANF program is 
permitted by the statute to define its service population. Because 
funding for the Tribal TANF program is based on State expenditures of 
Federal funds on Indian families during fiscal year 1994, we believe 
the Tribal TANF program was intended to serve primarily Indian 
families. However, in order to provide flexibility to Tribes and 
States, Tribes may define service population and have the option of 
including only a portion of the Tribal enrollment, only Tribal members, 
all Indians, or even non-Indians residing in the service area. It will 
be up to each Tribe submitting a TANF plan to define the service 
population that the plan covers. The service population definition 
provided by a Tribe in turn determines what data the State would be 
asked to provide to calculate the amount of the Tribal TANF grant. Note 
that at Sec. 286.75(d)(2) if a Tribe chooses to include non-Indian 
families in its service population definition, the Tribe is required to 
demonstrate State agreement with the inclusion of that portion of the 
Tribe's service population.
    We also have not defined the individual work activities that count 
for the purpose of calculating a Tribe's work participation rate. These 
are terms the Tribe should define in designing its Tribal TANF program. 
We believe Tribes should have maximum flexibility to define these terms 
as appropriate for their program design.
    Readers will note that we use the term ``we'' throughout the 
regulation and preamble. The term ``we'' means the Secretary of the 
Department of Health and Human Services or any of the following 
individuals or agencies acting on the Secretary's behalf: the Assistant 
Secretary for Children and Families, the Regional Administrators for 
Children and Families, the Department of Health and Human Services, and 
the Administration for Children and Families.
    Readers should also note that we use the term ``Tribe'' throughout 
the regulation and preamble. The term ``Tribe'' means federally-
recognized Indian tribes, consortia of such Indian tribes, and the 13 
entities in the State of Alaska that are eligible to administer a 
Tribal Family Assistance program, under an approved plan. It also 
refers to the Indian tribes and the Alaska Native organizations that 
are eligible to administer a NEW Program because they operated a Tribal 
JOBS Program in fiscal year 1995.
    We have provided necessary definitions from PRWORA for the readers' 
convenience. However, we have chosen not to augment these statutory 
definitions.
    We also have provided clarifying, operational and administrative 
definitions in the interest of developing clearer, more coherent and 
succinct regulations. These include common acronyms and definitions we 
believe are needed in order to understand the nature and scope of the 
provisions in this Final Rule. Some of these terms have commonly 
understood meanings; others are consistent with definitions included in 
the State TANF Final Rule. We advise readers to review all the terms in 
this section carefully because many of them determine the application 
of substantive requirements.
    Federal requirements related to the expenditures of Federal grant 
funds necessitate the use of precise definitions. An example of such a 
definition is that used for the term ``administrative costs,'' which 
triggers particular Federal grant requirements (see Sec. 286.50). This 
definition is important because we have established, at Sec. 286.50, a 
graduated cap over the first three years of operation which will 
ultimately limit to 25 percent the amount of Tribal TANF funds that a 
Tribe may use for administrative costs.
    The terms ``assistance'' and ``families receiving assistance'' are 
used in the PRWORA in many critical places that affect the Tribal TANF 
program. For the purposes of the Tribal TANF program, we are adopting 
the same definition of assistance as developed and included in the 
Final Rule for the State TANF program. Please refer to Sec. 286.10 for 
a detailed discussion of this definition.

Section 286.10  What Does the Term ``Assistance'' Mean? (New Section)

    This is a new section in the Final Rule. In the NPRM we noted that 
the term ``assistance'' was a key term that affected Tribal TANF 
programs in the areas of calculating work participation rates and time 
limits, data collection and reporting, and consistency with legislative 
mandates for TANF program operations. The proposed rule included the 
definition of assistance in Sec. 286.5, with the other Tribal TANF 
definitions. However, because of the length and significance of this 
term, we decided to give it its own section in the Final Rule.

Background

    The legislative history for title IV-A of the Act makes clear that 
Congress did not intend ``assistance'' to mean something different in 
the Tribal TANF context than it does in the general TANF context. In 
addition, while the legislative history indicates that Congress 
intended ``assistance'' to encompass more than cash payments, it does 
not provide specific guidance (see H.R. Rep. No. 725, 104th Cong., 2d 
Session). Insofar as the legislative history circumscribes the 
development of a Final Rule on the definition of ``assistance,'' we 
determined that the statute requires a single definition of the term 
regardless of whether a State or a Tribe is administering the TANF 
program. Both the NPRM applicable to State TANF programs and the NPRM 
applicable to Tribal TANF programs proposed the same definition of 
assistance. For reference, please refer to 64 FR 17755 for an overview 
of comments received on the definition of assistance proposed in the 
NPRM applicable to State TANF programs published by ACF on November 20, 
1997.

[[Page 8485]]

Overview of Comments

    We received multiple comments in response to the Tribal TANF NPRM 
on this definition. Several commenters indicated that individual Tribes 
should determine what they consider short term/emergency assistance. 
Others wanted to narrow the possible benefits that could be considered 
within the definition of assistance. Commenters also requested that we 
expand the definition of one-time short-term assistance.
    As a result of consideration of all comments received on this key 
concept, we have made substantial modifications to the definition of 
assistance as in the proposed Tribal TANF rule. The modifications 
address concerns with the scope of benefits treated as assistance, the 
treatment of work supports and the exclusion from the definition of 
``one-time, short-term'' assistance.

Appropriateness of a Single Federal Definition of Assistance

    Comment: Several commenters argued that Tribes should be able to 
determine for themselves how assistance would be defined in the TANF 
program rather than having a single Federal definition of TANF 
assistance.
    Response: There are several reasons why we do not believe that this 
a feasible option. The definition of assistance is central to the 
accountability provisions in the statute. There must be a single 
definition of this term in order to insure that key TANF provisions are 
implemented as intended. Having various definitions of assistance 
rather than a single, uniform definition would raise questions about 
the consistency and comparability of TANF data reports, program 
information, work participation rates, time limits, and application of 
penalties. It would also make it very difficult to understand whether 
or how the TANF program is contributing to the movement of needy 
families to self-sufficiency.
    We have established one uniform definition of assistance at 
Sec. 286.10. We emphasize that this definition does not substantially 
impede the flexibility of States and Tribes to set eligibility rules or 
to expend funds on a broad range of benefits and services for needy 
families. The definition of assistance does not limit the types of 
allowable benefits or services which State and Tribal TANF programs may 
provide. Rather, the major effect of the definition is to determine the 
applicability of key TANF requirements to the benefits that a State or 
Tribe elects to provide.

Scope of Benefits Treated as Assistance

    Comments: Several comments were received to the effect that the 
scope of what is considered assistance should be narrow and should 
exclude a variety of supports for working families such as child care, 
transportation and work-based assistance such as wage subsidies.
    Response: We have made significant modifications to the definition 
of assistance with the effect that the scope of benefits deemed 
assistance is narrower than proposed in the published NPRMs. We agree 
that there are sound reasons for narrowing the definition of assistance 
to exclude some work supports. While neither the statute nor the 
legislative history specifically indicate that a particular subset of 
benefits under a TANF program should be excluded from the definition of 
assistance, there is also little direct evidence that Congress intended 
for time limits and data collection to apply to every conceivable array 
of new benefits or to working families that have not traditionally been 
part of the welfare system.
    Clearly, in reforming the welfare program, Congress was trying to 
facilitate the ability of families to work and become self-sufficient. 
Two of the main effects of defining a TANF benefit as ``assistance'' 
are to require that a family work so that it can become self-sufficient 
and to time limit that benefit. However, the need to time limit work 
supports is mitigated where the family is already moving toward self-
sufficiency.
    At Sec. 286.10(b) the definition of ``assistance'' provides that 
supports for working families (such as child care and transportation) 
are excluded. This exclusion covers supportive services needed to 
address employment-related needs and time spent by an employed 
individual in education and training needed for job retention and 
career advancement.
    Except as provided in Sec. 286.10(b), the exclusion does not cover 
supportive services related to participation in education, training, 
job search and related employment activities for nonworking families. 
Supportive services provided in this situation (to nonworking families) 
look more like traditional welfare rather than work supports. In 
addition, the same rationale for excluding nonworking families from the 
TANF work requirements, including work participation and time limits, 
does not exist for these families as exists for families that are 
already working. Educational and training activities are generally 
excluded under Sec. 286.10(b)(6). The one exception is if education or 
training benefits include allowances or stipends designed to provide 
income support. These particular types of education and training 
benefits are considered assistance.
    While our definition excludes some forms of support as 
``assistance,'' the exclusions do not apply to the eligible Alaska 
Tribal entities and the State of Alaska in determining whether the 
Alaska Tribal entities' Tribal TANF programs are comparable to Alaska's 
State TANF program. For example, an Alaska Tribal entity that 
implements a Tribal TANF program may choose to include ``direct 
services'' as part of their benefit level definition, and these 
``direct services'' would trigger the TANF requirements, i.e., work 
requirements, time limits, and data collection and reporting. Please 
refer to Sec. 286.175 for more information on the Alaska comparability 
requirement.

Exclusion of Contribution To and Distributions From Individual 
Development Accounts

    The definition at Sec. 286.10(b)(5) excludes contributions to, and 
distributions from Individual Development Accounts (IDAs). While 
commenters did not raise concerns with the treatment of IDA benefits 
under the definition of assistance, enactment of the Assets for 
Independence Act (AFIA) (under title IV of Pub. L. 105-285) subsequent 
to publication of the Tribal TANF NPRM justify a specific discussion 
here of the impact of IDAs on Tribal TANF programs. Please note that we 
have added a new section, Sec. 286.40 and ask that you refer to the 
discussion of Sec. 286.40 in the Preamble for additional information 
about Tribal contributions to IDAs and the extent to which such 
contributions are allowable TANF expenditures.
    Contributions to and distributions from IDAs are excluded from the 
definition of assistance for several reasons. First, many of the assets 
in IDA accounts represent deposits from the earnings of low-income 
families and the interest on those deposits. These sorts of assets do 
not represent assistance from TANF or any other governmental source. 
Second, when contributions are made into IDA accounts from the Tribal 
TANF agency or other third parties, they only represent potential 
assistance at that point. The individuals whose funds are in the 
account are potential beneficiaries, but have very limited access to 
the funds in the account. These funds are unavailable to meet their 
basic needs. Furthermore, the distributions from IDA accounts would 
normally be excluded under other provisions of our definition (e.g. as

[[Page 8486]]

emergency benefits, for education, and as nonrecurring, short-term 
benefits). Because the residual cases are likely insignificant in terms 
of the amount of assistance involved and the tracking of such amounts 
might create significant administrative burdens, we believe it is 
appropriate to provide an umbrella exclusion for IDA benefits.

Employment-related Services

    The ``employment-related services'' exclusion at Sec. 286.10(b)(6) 
generally covers on-the-job training, subsidized employment, and most 
education and training activities since most do not represent income 
support. This exclusion also covers payments to employers and third 
parties for supervision and training and payments under performance-
based contracts for success in achieving job placements and job 
retention. As discussed above, there may be types of education and 
training benefits (e.g. stipends or allowances) that fall within the 
definition of assistance. The definition of assistance includes 
payments to individuals participating in work experience or community 
service. It also includes need-based payments to individuals in any 
work activity whose purpose is to supplement the money they receive for 
participating in the activity.
    The distinction we make between work subsidies paid to employers 
and payments to participants in work experience and community service 
is similar to distinctions made under tax law. For example, we refer 
you to Notice 93-3, issued by the Internal Revenue Service on December 
17, 1998. This Notice explains that TANF payments that meet certain 
conditions would not be considered income, earned income, or wages for 
Federal income tax purposes. The Notice provides that: ``Payments by a 
governmental unit to an individual under a legislatively provided 
social benefit for the promotion of the general welfare that are not 
basically for services rendered are not includable in the individual's 
gross income and are not wages for employment tax purposes, even if the 
individual is required to perform certain activities to remain eligible 
for the payments. * * * Similarly, these payments are not earned income 
for Earned Income Credit (EIC) purposes.'' Our definition of assistance 
distinguishes between work subsidies paid to employers and community 
service and work experience on a similar basis. We believe that 
payments to participants in work experience and community service are 
closely associated with traditional welfare benefits and are designed 
primarily to meet basic needs rather than as compensation for services 
performed. This view is also reflected in the Conference Report, H. 
Rep. 105-34, which added the Welfare-to-Work (WtW) program. In 
discussing the treatment of WtW cash assistance for time-limit 
purposes, it indicates that wage subsidies are indirect cash 
assistance. (See discussion in the preamble for Sec. 286.130).

Nonrecurring, Short-Term Benefits

    Comment: We received comments asking that short-term, episodic 
assistance for families in discrete circumstances and encompassing 
nonrecurring, short-term payments that could occur more than once in a 
12 month period be excluded from the definition of assistance. Concerns 
were raised about the negative impact on innovation by TANF agencies 
unless the exclusion were expanded.
    Response: In part, the narrower language in the proposed rule 
reflected our determination that it would not be appropriate to exempt 
families that received a substantial amount of assistance, assistance 
over a significant amount of time, or assistance provided on a 
recurring basis from work requirements and time limits. At the same 
time, we did not intend our definition to undermine State and Tribal 
efforts to divert families from the welfare rolls by providing short-
term relief that could resolve discrete family problems. Based on 
comments received on the proposed rule as well as other sources of 
information, we realize that diversion activities are an important part 
of State and Tribal strategies to reduce dependency and encourage self-
sufficiency. Restrictive Federal rules in this area could inadvertently 
stifle the ability of States and Tribes to respond effectively to 
discrete family problems. We also understand that subjecting families 
in diversion programs to all the TANF administrative and programmatic 
requirements would not represent an effective use of limited TANF 
resources.
    Thus, the Final Rules include a revised definition that excludes 
more than one payment a year, so long as such payments provide only 
short-term relief to families, are meant to address a discrete crisis 
situation rather than to meet ongoing or recurrent needs, and will not 
provide for needs extending beyond four months. The revised definition 
uses the term ``nonrecurring'' rather than ``one-time'' because the 
former term is more consistent with the intended policy. A family may 
receive such benefits more than once. However, the expectation at the 
time such benefits are granted is that the situation will not occur 
again, and such benefits are not to be provided on a regular basis. We 
believe the revised exclusion is limited enough in nature and scope not 
to undermine the statutory provisions of the TANF program, while giving 
Tribes the flexibility to design effective diversion strategies.
    The definition also excludes supports provided to individuals 
participating in applicant job search. Applicant job search is a common 
form of diversion that clearly fits within the goals of TANF and within 
this exclusion's view of a ``short-term'' benefit.
    Similarly, the definition excludes supports for families that were 
recently employed, during periods of temporary unemployment, in order 
to enable them to maintain continuity in their service arrangements. 
Unnecessary disruptions in these arrangements could negatively affect 
the family's ability to re-enter the labor force quickly and, in the 
case of child care, could negatively affect the children in the family.
    The four-month limitation reflects our belief that we could not 
maintain the integrity of the short-term exclusion without providing 
some regulatory framework. As written, the four-month limitation does 
not restrict the amount of accrued debts or liabilities (such as 
overdue rent) that a Tribe may cover or impose a specific monetary 
limit on the amount of benefits that the Tribe may provide. The 
exclusion at Sec. 286.10(b)(1) is more flexible with respect to past 
debts or liabilities; it merely limits the extent to which payments for 
future needs can be excluded from the definition of assistance. The 
limitation reflects the period of time for which future needs can be 
addressed by a single ``nonrecurrent, short-term'' benefit. It is not 
appropriate for Tribes merely to condense the time period over which 
they pay assistance to needy families so they can categorize the 
benefits as ``nonassistance'' and avoid TANF requirements. Also, if a 
family's emergency is not resolvable within a reasonably short period 
of time, the Tribe should not keep the case in emergency status, but 
should convert it to a TANF assistance case.
    At the same time, if a family receives aid in one month that falls 
under the nonrecurring, short-term exclusion, but suffers a major 
setback later in the year and develops a need for ongoing assistance, 
we do not want to require the Tribe to redefine the month of initial 
aid as assistance and retroactively subject the family to TANF 
requirements.
    We note that diverting individuals from programs where they have an 
entitlement to benefits or to prompt

[[Page 8487]]

action on a request for assistance could represent a violation of rules 
in the other programs. Because of the tremendous importance of food 
stamps and Medicaid as supports for working families, we strongly 
encourage Tribes to maintain critical linkages with States with regard 
to these programs because accessing these other program benefits could 
further the goals of TANF. Please refer to 64 FR 17760 for a full 
discussion of State responsibilities under the Food Stamp and Medicaid 
programs.

Transitional services

    To the extent that Tribes provide supports for working families, 
such as child care and transportation or work subsidies, or work-
related services such as counseling, coaching, referrals, and job 
retention and advancement services under their transitional services 
programs, we exclude those services from the definition of assistance. 
In addition, short-term benefits such as cash assistance to stabilize a 
housing situation are excluded as ``nonrecurring, short-term'' 
assistance.
    Tribes wanting to provide ongoing transitional payments that meet 
the definition of assistance to former recipients have two options. 
They may fund those programs under TANF as assistance, but use 
different need standards than they do for other forms of TANF 
assistance, or Tribes may fund ongoing transitional benefits with non-
Federal Tribal funds.

Section 286.15 (Sec. 286.10 in the NPRM) Who Is Eligible To Operate a 
Tribal TANF Program?

    This section of the Final Rule specifies which Indian tribes are 
eligible to submit Tribal Family Assistance Plans (TFAPs).
    In general, any federally-recognized Indian tribe is eligible to 
submit a Tribal Family Assistance Plan. However, with respect to the 
State of Alaska, only the 12 Alaska Native regional nonprofit 
corporations specified at section 419 of the Act, plus the Metlakatla 
Indian Community of the Annette Islands Reserve may submit a TFAP.
    In addition, a consortium of eligible Indian tribes may develop and 
submit a single TFAP.

Subpart B--Tribal TANF Funding (Secs. 286.20-286.60)

Section 286.20 (Sec. 286.15 in the NPRM)  How Is the Amount of a Tribal 
Family Assistance Grant (TFAG) Determined?, and

Section 286.25 (Sec. 286.20 in the NPRM)  How Will We Resolve 
Disagreements Over the State-submitted Data Used to Determine the 
Amount of a Tribal Family Assistance Grant?

    We have combined the discussions for these two sections of the 
Final Rule because they are interrelated. These sections of the Final 
Rule discuss how the amount of a Tribal Family Assistance Grant (TFAG) 
will be determined and the actions we believe will be necessary to 
resolve disagreements over the data received from a State.
    PRWORA requires the Secretary to pay TFAGs to federally-recognized 
Indian tribes with approved 3-year Tribal Family Assistance Plans. To 
determine the amount of a TFAG, we must use data submitted by the State 
or States in which the Indian tribe is located. Section 412(a)(1)(B) 
specifies the data that we will use. The statute provides that, for 
each fiscal year 1997-2002, an Indian tribe that has an approved Tribal 
Family Assistance Plan will receive an amount equal to the Federal 
share (including administrative expenditures, which would include 
systems costs) of all expenditures (other than child care expenditures) 
by the State or States under the AFDC and Emergency Assistance (title 
IV-A) programs, and the JOBS (title IV-F) program for fiscal year (FY) 
1994 for Indian families residing in the service area(s) identified in 
the Tribal Family Assistance Plan. For Tribes that operated a Tribal 
JOBS Program in FY 1994, the State title IV-F expenditures (including 
administrative costs) used in the calculation of the TFAG would be for 
expenditures made by the State on behalf of non-member Indians and non-
Indians, if either or both are included in the Tribal TANF population 
and are living in the designated Tribal TANF service area(s). Any 
expenditures by the State for Tribal members who were served by the 
State JOBS program will also be included in the determination.
    Section 412(a)(1)(B)(ii)(II) of the statute allows Tribes the 
opportunity to disagree with State-submitted data and to submit 
additional information relevant to our determination of the TFAG 
amount. We believe Tribes should have an opportunity to submit relevant 
information in instances in which the State has failed to submit 
requested data on a timely basis. However, we believe the lack of 
State-submitted data will be a very rare occurrence.
    We will request State data based on the Tribe's identified service 
area and population, which may include areas outside the reservation 
and non-Indian families. We will allow States 30 days from the date of 
our request to submit the requested data before notifying the affected 
Tribe of its option under section 412(a)(1)(B)(ii)(II) of PRWORA to 
submit its own data. This time frame should allow States adequate time 
to gather and submit the data. However, in order for us to notify the 
State of any reduction in its grant not later than three months before 
payment of any quarterly installment, as specified by section 405(b), 
we will use the best available data to determine the amount of the 
TFAG, if the State has not submitted the specified data at the end of 
the 30-day period. Our experience to date has shown that we need time 
to resolve any issues related to determining the amount of a TFAG in 
order to meet the statutory requirement for notification to the State 
of the reduction in the amount of their State TANF grant.
    We also believe a Tribe should have a reasonable period of time in 
which to review the State-submitted data and make a determination as to 
whether or not it concurs with the data. We have determined that a 
forty-five (45) day period should be sufficient for this activity. 
Therefore, we will allow a Tribe 45 days from when it receives the 
State-submitted data from us to notify us of its concurrence or non-
concurrence with the data.
    Once we receive State data, we will share it with the Tribe. We 
will also facilitate any meeting or discussions between the Tribe and 
the State to answer any questions the Tribe has about the submitted 
data. Any meetings or discussions to answer the Tribe's questions about 
the data need to be held within the 45-day period for Tribal 
concurrence. We believe it is in the best interests of both the Tribe 
and the State to reach a consensus on the State data. However, if the 
Tribe finds it cannot concur with the State data and has notified us to 
this effect, we will provide the Tribe an additional 45 days to submit 
additional relevant information. It will then be our responsibility 
under section 412(a)(1)(B)(ii)(II) to make the final determination as 
to the amount of the TFAG after review of the information submitted by 
the Tribe.
    In instances in which the State has not submitted the requested 
data within

[[Page 8488]]

the time period given, we will notify the Tribe. We will give the Tribe 
45 days from the date of our notification to submit relevant data. This 
45-day time frame is the same time frame we have established for Tribes 
to submit information if they disagree with State-submitted data. In 
the absence of State-submitted data, we propose to use relevant Tribe-
submitted data to determine the amount of the TFAG.
    If a Tribe disagrees with the data submitted by the State, we will 
use the State-submitted data and any additional relevant information 
submitted by the Tribe to determine the amount of the TFAG. Relevant 
Tribal data may include, but are not limited to, Census Bureau data, 
data from the Bureau of Indian Affairs, data from other Federal 
programs, and tribal records.
    Once the amount of the TFAG is officially determined, we will 
notify both the Tribe and the State of the Secretary's decision. Our 
goal will be to resolve any data issues at least two weeks prior to 
when we are required to notify the State. We will make official 
notification of the amount of the State Family Assistance Grant 
reduction to the appropriate State(s) no later than 90 days before the 
payment of the State's next quarterly SFAG installment.
    Comments: Tribal commenters raised the issue of the sufficiency of 
fiscal year 1994 figures to determine the amount of the TFAG.
    Response: ACF recognizes that the statutory TFAG funding formula 
fails to account for the State portion of funds expended for Indian 
families in fiscal year 1994. Without agreements with States to provide 
State matching funds, Tribes must absorb this funding gap. While ACF is 
committed to facilitating Tribes and States agreements on the provision 
of State matching funds, under the current statute, the amount of the 
TFAG is limited by the statutory formula specified at section 
412(a)(1)(B) of the Act, and this formula does not allow for any 
adjustment to make up for the missing State portion of funds expended 
for Indian families in fiscal year 1994.
    Comments: Commenters suggested that we clarify that the TFAG amount 
determined under section 412(a)(1)(B) is an amount equal to the total 
amount of Federal payments to the State for fiscal year 1994 
attributable to expenditures under the former AFDC, JOBS and Emergency 
Assistance programs for Indian families, and that this amount includes 
not only expenditures attributable to direct family assistance, but 
also expenditures for administrative costs.
    Response: The statute is clear that the TFAG amount is determined 
based on total Federal expenditures, and all expenditures for 
administrative costs must be included in the data that States submit 
under section 412(a)(1)(B)(ii)(I).
    Comments: We received several comments calling for us to clarify 
that determination of the TFAG is not based upon the Tribe's definition 
of service population.
    Response: We agree that, under the law, there is no nexus between a 
Tribe's definition of its service population and the formula under 
which the TFAG is determined. The TFAG funding formula must take into 
account ALL Indian families residing in the geographic service area or 
areas defined by the Tribe, but there is no requirement that the Indian 
families residing in a Tribe's geographic service area coincide with 
the Tribe's service population. Section 412(b)(1)(C) of the Act makes a 
clear distinction between a Tribe's service population and its service 
area or areas. The statute bases TFAG funding levels on ALL Indian 
families residing in the geographic service area determined by the 
Tribe. The statute leaves it to the Tribe to determine its service 
population and this service population may, but does not have to, 
include all Indian families residing in the Tribe's service area.
    Comments: Several commenters suggested that we define the term 
``Indian Family'' for the limited purpose of determining the amount of 
the TFAG. One commenter argued that a definition of Indian Family was 
critical in determining the amount of the TFAG. This commenter 
suggested that when we request the necessary data from the state to 
determine the TFAG, we should include in our letter to the state the 
definition of the Indian Family being proposed by the Tribe.
    Response: In drafting the proposed rule, we chose not to define 
``Indian family'' or ``service population.'' ACF will not define the 
term ``Indian family'' in recognition of the fact that like any 
sovereign government, Tribes determine their own membership criteria. 
Each Tribe administering its own Tribal TANF program is permitted by 
the statute to define its service population. As we noted in the 
preamble, in order to provide maximum flexibility to the Tribe, each 
Tribe may define its service population and it has the option of 
including only a portion of the tribal enrollment, only tribal members, 
all Indians, or even non-Indians residing in the service area. It will 
be up to each Tribe submitting a TANF plan to define the population 
that the plan will serve.
    We continue to believe that excessive definitions may in fact 
unduly and unintentionally limit tribal flexibility in designing 
programs that best meet their service population needs. We are not 
persuaded that defining the term Indian family is critical to 
determination of the TFAG.
    However, because States need to know what data to submit under 
section 412(a)(1)(B)(ii)(I), we will require a Tribe to declare its 
definition of ``Indian family'' in its Tribal Family Assistance Plan. 
We therefore adopt the suggestion that, when we request the necessary 
data from the state to determine the TFAG, we include in our letter the 
definition of Indian family and a description of the proposed service 
area proposed by the Tribe (Sec. 286.20). We believe this information 
will aid the State in determining the amount equal to the Federal 
expenditures (other than child care expenditures) spent by the State or 
States under the AFDC and Emergency Assistance Programs (including 
administrative costs), and the JOBS programs for fiscal year 1994 for 
Indian families residing in the service area(s) identified in the TFAP.
    Comments: A significant number of commenters requested that we 
extend the time frames for State submission of expenditure data used to 
determine the TFAG amount, and the time frame for the Tribe to notify 
us of either their concurrence or non-concurrence with the State 
expenditure data. All commenters were unanimous in their view that the 
proposed time frames of 21 days for the state to respond to our data 
request and the amount of time provided to the Tribe to determine 
whether or not it concurs with the state data were insufficient. All 
commenters recommended the proposed time frames of 21 days be extended. 
Some commenters recommended the time frames be extended to 30 days, 
while others recommended the time frames be extended to anywhere from 
45 days to 90 days.
    Response: We have determined that it would be helpful to allow the 
State to take up to 30 days from the date of our letter to submit its 
data, 45 days for the Tribe to concur or nonconcur, and 45 days for the 
Tribe to submit alternative data, prior to our making a determination 
of the TFAG amount. Our experience to date has shown that this will 
allow sufficient time for the State to gather the expenditure data, and 
sufficient time for the Tribe to either concur or not concur with the 
State expenditure data.
    Comment: One commenter suggested that States be given the 
opportunity to review and rebut data submitted by

[[Page 8489]]

Tribes under section 412(a)(1)(B)(ii)(II) of the Act. Section 
412(a)(1)(B)(ii)(II) specifies that if Tribes disagree with data States 
are required to submit under section 412(a)(1)(B)(ii)(I) in order to 
determine the TFAG, Tribes may submit to the Secretary such additional 
information as may be relevant to making the determination and the 
Secretary may consider such information before making such 
determination.
    Response: We agree with tribal commenters that the statute 
contemplates only that States submit the data described in section 
412(a)(1)(B)(i) of the Act. The law requires States to submit data 
indicating the total amount of the Federal payments to a State or 
States * * * attributable to expenditures by the State or States under 
parts A and F (as so in effect) for fiscal year 1994 for Indian 
families residing in the service area or areas identified by the Indian 
tribe. The statute clearly indicates the parameters for State-submitted 
data. Once States submit the data described in section 412(a)(1)(B)(i) 
of the Act, only Tribes are afforded the opportunity to rebut or 
supplement such data by submitting additional information as may be 
relevant to the Secretary. Where there are inconsistencies in the data, 
follow-up discussions with the Tribe and the State will ensue.
    Comments: Regarding the final regulation at Sec. 286.25(a)(2), 
several comments were received proposing that we require a Tribe's 
agreement before the TFAG amount is determined.
    Response: We have considered this and decided not to adopt this 
proposal. We have determined that the law does not envision 
conditioning determination of the TFAG amount on a Tribe's agreement. 
The statute specifies the data upon which the Secretary must determine 
the TFAG amount and provides for Tribes to submit additional relevant 
data in the event of disagreement with such data. The proposed scheme 
would frustrate clear Congressional intent as to how the TFAG is to be 
determined.

Section 286.30 (286.25 in the NPRM)  What Is the Process for 
Retrocession of a Tribal Family Assistance Grant?

    As defined at Sec. 286.5, retrocession is a voluntary termination 
of a Tribal TANF program. Section 412 of the Act does not include a 
provision for retrocession. However, we recognize that Tribes 
voluntarily implement a TANF program for their needy families and 
should, therefore, be afforded the opportunity to withdraw their 
agreement to operate the program. For example, a Tribe may lose a 
State's commitment to provide State funds for Tribal TANF, which could 
significantly impact the Tribe's financial ability to operate the 
program. Based on overwhelming support and comments by both Tribes and 
States, we determined the necessity of a retrocession provision in 
these regulations.
    In providing a retrocession provision in the regulations, we 
developed a time frame which we believed ensured that: (1) There would 
be minimal disruption of services to families in need of assistance; 
(2) a Tribe made an informed decision in determining whether or not to 
cease operating the Tribal TANF program; and (3) a State was provided 
adequate notice to ensure continuity of program services.
    A Tribe that retrocedes a Tribal TANF program is responsible for 
complying with the data collection and reporting requirements and all 
other program requirements for the period before the retrocession is 
effective. In addition, the Tribe is liable for any applicable 
penalties (see subpart D); and it is subject to the provisions of 45 
CFR part 92 and OMB Circulars A-87 and A-133, and other Federal 
statutes and regulations applicable to the TANF program. The Tribe also 
will be responsible for any penalties resulting from audits covering 
the period up to the effective date of retrocession. Please refer to 
Sec. 286.195 for the discussion on penalties.

Overview of Comments

    We received substantial comments regarding the proposed 
retrocession process. Most of these comments came from Tribes, but we 
also received a number of comments from States, advocacy groups, and 
other community organizations. All commenters agreed that a Tribe 
should be allowed to relinquish the program, but most questioned both 
the time frame for notification as well as the time frame for 
retrocession itself.
    To deal with the large number of comments on this issue, we decided 
to cluster the comments into the following general categories: (1) When 
a Tribe should be allowed to relinquish the program; (2) how much 
advance notice is adequate; (3) conditions for return of a program to a 
Tribe who has retroceded its grant; and (4) other concerns.

Timing for Relinquishment

    Comment: The draft regulation required that the effective date of a 
retrocession coincide with the end of the grant period. Virtually all 
commenters took exception to this limitation, noting that a Tribe 
should be allowed to relinquish the program (upon adequate notice) at 
any point in the year. These commenters argued that Tribes unable to 
adequately administer a program should be permitted to retrocede as 
soon as the state is able to begin providing services to the Tribal 
TANF service population. To require a Tribe to keep operating a program 
after the proposed effective date of the retrocession could result in a 
program diminished by a lack of resources or staff, an increased chance 
of tribal penalties, and the possibility of negative fiscal impacts 
occurring to other programs operated by the Tribe as the results of the 
Tribe's effort to meet the programmatic responsibilities under its 
tribal TANF plan.
    Response: Regarding retrocession, we acknowledge that our proposal 
may not have been adequately responsive to the needs of Tribes 
operating a Tribal TANF program or to the families receiving services 
under the TANF program. However, that language was proposed because we 
believe that with approval of a plan to operate a Tribal TANF program 
comes both the Tribe's commitment and its responsibility to utilize 
funds specifically awarded under the TFAG to provide the approved 
services to its identified service population throughout the duration 
of the plan.
    We agree with the commenters that Tribal TANF grantees should be 
given the opportunity to retrocede more than one day per year. It was 
never our intent to place tribal programs in the position of continuing 
operations beyond a reasonable time frame from when they sought to 
terminate Tribal TANF operations. Therefore, we have included specific 
language in the regulatory text which permits a Tribe to retrocede at 
any time, with the effective date of the retrocession the last day of 
any month, as mutually agreed upon by ACF, the Tribe, and the affected 
State.

Adequate Advance Notice

    Comments: There were no consistent comments in this area. Although 
most Tribes and States agreed with the proposed 120-day time frame for 
notification, several Tribes commented that a time frame of 60 or 90 
days was more than adequate for a state, in order to assure that a 
program failing to provide services would not be forced into a 
situation it could not handle. On the other hand, one state voiced 
concern that it would need a minimum of 180 days advance notice in 
order to develop the necessary infrastructure for service delivery and 
to minimize disruption of services.

[[Page 8490]]

    Response: Since States are currently operating TANF programs, and 
since many States are already coordinating with Tribes, we believe that 
120 days formal advance notice will give the State ample time to begin 
to implement services to those individuals previously served by the 
Tribal TANF program. However, in order to be responsive to unforeseen 
emergency circumstances which may require a more expeditious 
retrocession of a Tribal TANF program back to the state, the revised 
regulation will provide for an emergency waiver from the 120-day 
notice, upon mutual agreement by the Tribe and the affected State.
    Comments: In many cases commenters recommended that the Tribe 
provide simultaneous notice to ACF and the state of its intent to 
terminate operation of the TANF program, thereby enabling the Tribe and 
state to begin discussions early, rather than waiting for ACF to 
formally notify the state of the Tribe's intent.
    Response: In the writing of this section of the regulation we never 
intended to function as the intermediary between the Tribe and the 
State. Rather, our expectation has always been that the Tribe and State 
will work together to ensure that the families served under the Tribal 
TANF plan receive the necessary services. We believe it may be 
reasonably implied from section 405(b) of the Act that it is our 
responsibility to notify a State at least 90 days prior to the 
effective date of a Tribe's retrocession of the TANF program. However, 
we see no reason why the state, which will be responsible for taking 
over provision of TANF services to persons formerly served by the 
tribal program, should have less notice than ACF. We have revised the 
language in the final regulation to indicate that the Tribe should 
simultaneously notify ACF and the state of its intent to retrocede the 
TANF program.

Conditions for Return of a Program to a Tribe Who Had Retroceded 
its Grant

    Comments: The draft regulations delineated two conditions for 
return of a TANF program to a Tribe that had previously retroceded. 
These conditions are that ``the reasons for the retrocession are no 
longer applicable, and all outstanding funds and penalty amounts [are] 
repaid.'' Several commenters expressed their views that these 
conditions were unfair and exceeded the Secretary's authority under the 
statute.
    Response: Section 412(e) of the Act grants the Secretary broad 
authority to ``maintain program funding accountability.'' It is a 
reasonable exercise of that authority to take into account the 
circumstances of a Tribe's previous retrocession when considering the 
approval of a subsequent Tribal TANF plan. We have rewritten the 
regulation to emphasize that Sec. 286.30(e) (previously Sec. 286.25(d)) 
is intended to implement the Secretary's fiscal oversight authority.
    Comment: Several commenters referred to a retroceded Tribe's 
motivation for deciding to ``renew'' its TANF program operation, as 
distinguished from a ``continuing program context.'' They pointed out 
that an unauthorized penalty would be imposed on a Tribe in this 
``renewal context,'' and that there is no regulatory authority to deny 
a Tribe the right to operate a program.
    Response: If a Tribe submits a TFAP subsequent to its retrocession 
of its TANF program back to the State, it is inaccurate to characterize 
this as a ``renewal.'' Rather, it is an application to operate a TANF 
program by an entity that was not able to complete its approved three-
year TANF program. If a Tribe retrocedes its TANF program to the State, 
there are significant administrative, financial, and technical issues 
that must be addressed in transferring the Tribal TANF caseload to the 
State TANF program. It is an appropriate exercise of the Secretary's 
authority to ``maintain program funding accountability'' to require 
that a Tribe demonstrate that the circumstances that led to 
retrocession are no longer present. However, the Secretary may consider 
the extent to which the Tribe has control over such circumstances and 
those circumstances are related to fiscal accountability.
    It is inaccurate to characterize Sec. 286.25(d) as presented in the 
proposed rule as a ``penalty.'' It is not. Rather, it is a reasonable 
inquiry that only arises when triggered by a particular objective fact: 
Namely, tribal retrocession. Tribes that retrocede are not 
``penalized''; they are merely required to rebut the presumption that 
they cannot complete a three-year TANF plan which is based on the fact 
that the Tribe retroceded a previously approved three-year TANF plan. 
If the ``reason'' for retrocession is beyond the control of the Tribe, 
or is not reasonably related to fiscal accountability, then the fact 
that a Tribe retroceded is irrelevant to its subsequent application to 
operate a TANF program.

Other Concerns

    Comments: One Tribe commented that rather than return all 
unobligated funds to the Federal government, Tribes who retrocede a 
program should be allowed to retain a pro-rated amount of funds based 
on the amount of time they operated the TANF program. These funds could 
be used in a variety of other welfare-related programs that the Tribe 
is involved with.
    Response: Tribal TANF funds are awarded to provide specific 
welfare-related services and assistance under the Tribal TANF program, 
as specified in Secs. 286.35-286.45. Tribes who are no longer operating 
a TANF program have no authority to expend Tribal TANF funds beyond 
those that were obligated for the purposes of the TANF program prior to 
the effective date of the retrocession. Upon retrocession, they are 
therefore unable to retain any funds other than those which were 
previously obligated.
    Comments: Several states requested that the regulations devote more 
attention to the potential problems that a state may encounter after a 
retrocession. One state indicated that if a Tribe runs out of funds 
before it retrocedes the program, the state may not have sufficient 
funds to absorb the returning caseload. They requested that adequate 
federal funds be made available until state appropriations could be 
provided by the state legislature. Similarly, one state organization 
requested guidance on how states and Tribes should proceed if the 
tribal grant is exhausted before the end of the fiscal year.
    Response: If a Tribe is making expenditures for purposes which are 
reasonably calculated to accomplish the purpose of the statute, such 
expenditures are within the authority of the Tribe to determine. If a 
Tribe expends all of its TANF grant before it retrocedes the program 
and such expenditures are not otherwise improper, there is no general 
authority under which the federal government may augment State TANF 
funds to absorb any returning caseload subsequent to retrocession.
    We take seriously the concerns raised about potential problems that 
a State may encounter subsequent to retrocession. In fact, this is a 
major reason why we would permit retrocession during a grant period 
only upon agreement of the state. In the current environment we should 
not presume that this situation would create a financial hardship for 
the State. Some states have surplus funds because of caseload 
reductions. In addition, states have access to some supplemental 
funding sources that are not accessible to the Tribes--including the 
Bonus to Reward Decrease in Illegitimacy Ratio (section 403(a)(2)), 
Supplemental Grant for Population Increases (section 403(a)(3)), the 
High Performance Bonus

[[Page 8491]]

(section 403(a)(4)), and the Contingency Fund (section 403(b)).
    In order for welfare reform to work in Indian country, it is 
important for State and Tribal governments to work together. To avoid 
some of the potential problems that may arise subsequent to 
retrocession, we encourage States to plan for such contingencies as 
well as to work with tribal partners to minimize its occurrence.
    It is the responsibility of the Tribe to carefully manage funds in 
order to minimize potential problems in this area. The federal 
government has the authority to monitor TANF expenditures on the 
mandated quarterly reports to ensure the Tribe is maintaining a viable 
TANF program and we will provide technical assistance to the extent 
necessary to prevent retrocession where that is possible.
    Comment: One state objected that unobligated funds would be 
returned by the Tribe to the federal government rather than the State, 
indicating that the regulation was unclear as to whether these funds 
would be returned to the States' SFAG account for drawdown 
availability. The return of funds would promote service continuity and 
ease financial constraints that may be brought about as a result of the 
retrocession.
    Response: We have clarified the regulation to specify that the SFAG 
will be increased by the amount of the TFAG available for the 
subsequent quarterly installment.
    Comments: Several states indicated that the regulations should 
incorporate ongoing budgetary oversight of the tribal programs and 
provide HHS with the ability to intervene if a tribal program is losing 
financial viability. They requested that the regulations be amended to 
include criteria and a process for a federal decision to terminate a 
tribal program if tribal members are not able to gain access to the 
services specified in the TFAP as well as provisions for early 
notification to the state of possible financial problems with a Tribal 
TANF program, and for early notification to clients and other involved 
parties prior to retrocession.
    Response: The United States has a unique legal relationship with 
Indian tribal governments. The federal government has guaranteed the 
right of Indian tribes to self-government, and the Tribes exercise 
sovereign powers over their members and territory. Just as states, 
Tribes must be provided the opportunity to develop and administer their 
own TANF programs within the confines of the statue and regulations. 
Adequate budgetary oversight is provided through the mandated 
submission of the quarterly reports.
    Comments: Several states appealed for a ``grace period'' in meeting 
work participation requirements when there is a retrocession, and that 
they should be able to increase the percentage that can be exempted 
from time limits if adversely affected by a retrocession.
    Response: The statute does not provide for a grace period, nor can 
we revise state TANF requirements in the Tribal TANF regulation. 
However, Regional Offices are available to provide technical assistance 
if a State is having difficulty incorporating former Tribal TANF 
recipients into the State program.
    Comment: One state requested that the draft regulations be amended 
to include provisions allowing for ``partial retrocession,'' such as 
when a consortium member drops out, or a Tribe changes its service area 
or service population in a way which changes the amount of the 
allocation.
    Response: We have considered the suggestion and determined that 
Sec. 286.30 of these rules adequately accommodate these situations.

Section 286.35 (Section 286.30 in the NPRM)   What are Proper Uses of 
Tribal Family Assistance Grant Funds?

    Section 412 of the Act does not specify the particular purposes for 
which a TFAG may be used. However, under these Final Rules any such use 
must be consistent with section 401(a) of the Act. We believe the 
Tribes should have the same flexibility as the States in their use of 
TANF funds. Therefore, we indicate at Sec. 286.35 that the Tribal TANF 
grantees will be able to use their TFAGs for the same purposes as 
States may use their TANF funds as specified in section 404(a) of the 
Act.
    Thus, a Tribe may use its TFAG in any reasonable manner to 
accomplish the purposes of part A of title IV of the Act. This may 
include the provision of low-income households with assistance in 
meeting home heating and cooling costs. In addition, we believe that 
Tribes should be able to use their TFAGs in any manner that was an 
authorized use of funds under the AFDC and JOBS programs, as those 
programs were in effect on September 30, 1995.
    In determining whether a welfare-related service or activity may be 
funded with its TFAG, a Tribe should refer to the purposes of TANF, as 
described in section 401 of the Act, as well as to section 404(a). 
Tribes should be aware that TANF funds may be used for activities 
reasonably calculated to accomplish the purposes of part IV-A of the 
Act. As specified in section 401(a), those purposes are: (1) To provide 
assistance to needy families so that children may be cared for in their 
own homes or in the homes of relatives; (2) to end the dependence of 
needy parents on government benefits by promoting job preparation, 
work, and marriage; (3) to prevent and reduce the incidence of out-of-
wedlock pregnancies; and (4) to encourage the formation and maintenance 
of two-parent families. TANF funds are not authorized to be used to 
contribute to or otherwise support non-TANF programs. Use of TANF funds 
to support non-TANF programs or other unauthorized purpose shall give 
rise to penalties under section 409(a)(1) of the Act (made applicable 
to Tribes by section 412(g).
    Comments: Several commenters raised concerns with perceived 
restrictions on the use of TFAG funds for economic development and job 
creation activities.
    Response: We will consider expenditures for economic development 
and job creation activities, and for supportive services to assist 
needy families to prepare for, obtain and retain employment to be 
permissible uses of TANF grant funds and will revise the regulatory 
language accordingly.
    Comment: One commenter suggested that the language of 
Sec. 286.30(a)(1) in the proposed rule be amended with the insertion of 
the words ``but not limited to'' after the word ``including'' on line 2 
to clarify the fact that ``reasonably related purposes'' is not limited 
to home heating and cooling.
    Response: The suggestion is appropriate, and we amended the 
language of Sec. 286.35(a)(1) to insure clarity.
    Comment: Regarding the proposed regulation at Sec. 286.30(b), one 
commenter observed that in the proposed rule we had reserved this 
subsection, and presumed that we had intended to use it to define an 
appeals process when there was disagreement with the Secretary's 
determination of the TFAG amount. The commenter further suggested that 
Sec. 286.30(b) specify that the appeals procedures found in 25 CFR part 
900, subpart L, apply where the Tribe disagrees with the Secretary's 
determination of the TFAG amount.
    Response: The commenter's presumption was incorrect on two counts. 
First, it is standard regulatory practice in order to preserve the 
future structural integrity of the provision to reserve a subsequent 
subsection when only one element in a sequence is used. Secondly, the 
appeals procedures found in 25 CFR part 900, subpart L, do not apply to 
the TANF program. The appeals procedures found in 25 CFR

[[Page 8492]]

part 900, subpart L, apply only to contracts by the Department of 
Health and Human Services (DHHS) and the Department of the Interior 
(DOI) in implementing title I of the Indian Self-Determination and 
Education Assistance Act or to programs administered by the DHHS or DOI 
for the benefit of Indians. The Department has determined that the TANF 
program is not contractible under the Indian Self-Determination and 
Education Assistance Act, nor is it a program administered by DHHS for 
the benefit of Indians. The TANF program is not one under which the 
federal government provides benefits or services directly to Indian 
tribes nor is TANF a program designed to benefit Indians based on their 
status as Indians, but rather it is a program designed to provide time 
limited assistance to needy families.

Section 286.40   May a Tribe Use the Tribal Family Assistance Grant To 
Fund IDAs ? (New Section)

    Comment: Comments were raised about the extent to which the 
Individual Development Account (IDA) provision at section 404(h) of the 
Act was an optional program that Tribes could choose to implement.
    Response: We addressed in the Preamble discussion at Sec. 286.10 
the question of the extent to which contributions to or distributions 
from IDAs were excluded from the definition of assistance. Here, we 
discuss the extent to which such contributions are allowable Tribal 
TANF expenditures. Section 404(h) of the Act expressly gives States the 
option to fund IDAs with TANF funds for individuals who are eligible 
for TANF assistance. The statute is silent with regard to whether 
Tribes have the same option to fund IDAs with TANF funds for 
individuals who are eligible for Tribal TANF assistance. However, in 
the subsequently enacted Assets for Independence Act (Pub. L. 105-285, 
or AFIA), there is strong evidence that Congress intended Tribes to 
have the same option to fund IDAs with TANF funds as is expressly 
provided to States. For example, section 412 of AFIA requires each 
qualified entity (including tribal governments) to prepare an annual 
report on the progress of the demonstration project including 
information on ``the number and characteristics of individuals making a 
deposit into an individual development account, the amounts withdrawn 
from the individual development accounts and the purposes for which 
such amounts were withdrawn, and the balances remaining in the 
individual development accounts.'' This legislative requirement would 
not make sense unless Congress intended to authorize Tribes as well as 
States to fund IDAs with TANF funds. It is not necessary for a Tribal 
government to have applied for AFIA funding in order for a Tribal TANF 
program to fund IDAs with TANF funds. Rather, it is the authorization 
at section 404(7) of AFIA which indicates that Congress intended to 
permit Tribal TANF programs to fund IDAs on the same basis as State 
TANF programs may fund IDAs.
    The IDA provision in the Act creates an optional program which is 
subject to specific statutory requirements. IDAs are similar to savings 
accounts and enable recipients to save earned income for certain 
specified, significant items. IDAs are subject to special statutory 
restrictions on TANF recipient deposits, who can match recipient 
contributions, and how recipients may spend IDA funds.
    Funds in an IDA account do not affect a recipient's eligibility for 
TANF assistance. Withdrawals from the IDA must be paid directly to a 
college or university, a bank, savings and loan institution, an 
individual selling a home, or a special account (if the recipient is 
starting a business). Section 404(h)(2)(D) authorizes the Secretary to 
establish regulations to ensure that individuals do not withdraw funds 
held in an IDA except for one or more of the qualified purposes. Post 
secondary education expenses, first home purchase, and business 
capitalization specifically are allowed qualified withdrawals. With 
this in mind, we did not feel it was necessary to be overly 
prescriptive in mandating how Tribes would ensure that individuals do 
not make unauthorized withdrawals from IDA accounts. We have given 
States and Tribes broad flexibility to establish procedures that ensure 
that only qualified withdrawals are made.

Section 286.45 (Section 286.35 in the NPRM)   What Uses of Tribal 
Family Assistance Grant Funds Are Improper?

    Just as section 412 of the Act does not specify the particular 
purposes for which Tribal Family Assistance Grant funds may be used, it 
does not specify any prohibitions or restrictions on the use of TFAG 
funds in a Tribal TANF program. However, we believe it is important to 
indicate in this Final Rule what would not be a proper use of a TFAG. 
TFAG funds must be used for the operation and administration of the 
TANF program. Tribal TFAG funds may not be used to contribute to or to 
subsidize non-TANF programs. Any use of TFAG funds to contribute to or 
otherwise support non-TANF programs will be considered an improper use 
of TANF funds and subject to penalties under Sec. 286.195.
    TFAG funds must be used to provide assistance to families and 
individuals that meet the eligibility criteria contained in the TFAP. 
We have revised the language in the final rule to clarify that funds 
must be used only for families or individuals meeting the Tribe's 
eligibility criteria. In addition, we propose that a TFAG may be used 
to provide assistance for no more than the number of months specified 
in a Tribe's approved TFAP.
    OMB Circular A-87 includes restrictions and prohibitions that limit 
the use of a TFAG. In addition, all provisions in 45 CFR part 92 and 
OMB Circular A-133 apply to the Tribal TANF program. TANF is not one of 
the Block Grant programs exempt from the requirement of part 92 because 
OMB has determined that TANF should be subject to part 92.

Non-Citizens

    Title IV of PRWORA establishes restrictions on the use of TANF 
funds to provide assistance to certain individuals who are not citizens 
of the United States. These restrictions are part of the definition of 
eligible family at Sec. 286.5. Individuals who do not meet the criteria 
at Sec. 286.5 may not receive TANF assistance paid with Tribal Family 
Assistance Grant funds.

Construction and Purchase of Facilities

    The Comptroller General of the United States has prohibited the use 
of Federal funds for the construction or purchase of facilities or 
buildings unless there is explicit statutory authority permitting such 
use. Since the statute is silent on this, a Tribe may not use its TFAG 
for construction or for the purchase of facilities or buildings.

Program Income

    We have received inquiries as to whether TANF funds may be used to 
generate program income. An example of program income is the income a 
Tribe earns if it sells a product (e.g., a software program) developed, 
in whole or mostly with TANF funds.
    Tribes may generate program income to defray costs of the program. 
Under 45 CFR 92.25, there are several options for how this program 
income may be treated. To give Tribes flexibility in the use of TFAGs, 
we are proposing to permit Tribes to add to their Tribal Family 
Assistance Grant program income that has been earned by the Tribe. 
Tribes must use such program income for the purposes of the TANF 
program and for allowable TANF services, activities and assistance. We

[[Page 8493]]

will not require Tribes to report on the amount of program income 
earned, but they must keep on file financial records on program income 
earned and the purposes for which it is used in the event of an audit 
or review.
    Comment: One comment relating to Sec. 286.35(f) as proposed in the 
NPRM suggests that the proposed rule requiring that, ``Tribes must use 
program income generated by the Tribal Family Assistance Grant for 
administrative costs during the grant period'' needs to be clarified or 
deleted.
    Response: There is no language or proposed rule in this section 
that requires that a Tribe use program income for administrative costs.
    Comment: One comment relating to Sec. 286.35(f) as proposed in the 
NPRM questions the statutory authority for this subsection, which 
requires that, ``Tribes must use program income generated by the Tribal 
Family Assistance Grant for the purposes of the TANF program and for 
allowable TANF services, activities, and assistance,'' and suggests 
that this provision be clarified or deleted.
    Response: The authority for this requirement is found in 45 CFR 
Part 92.25(g)(2), which governs the use of program income for Federal 
grants and cooperative agreements and subawards to State, local and 
Indian tribal governments.

Use of Funds

    Comment: A commenter suggests that Sec. 286.35(a)(3) as proposed in 
the NPRM should be amended by including qualified aliens in the 
language, to clarify that TFAG fund cannot be used to provide services 
to individuals who are not qualified aliens and who do not meet the 
definition of eligible families.
    Response: The suggested amendment is in order, and we have 
incorporated it in the regulatory text at Sec. 286.45(a)(3). However, 
for Tribes that receive State funds (which the State can count for MOE 
purposes) and those funds are not commingled with Federal TANF funds, a 
Tribe may use these funds to provide a State or local public benefit as 
defined in PRWORA title IV, section 411(c) to members of eligible 
families as defined in Sec. 263.2(b) of the TANF Final Rule applicable 
to State TANF programs. (64 FR 17894, April 12, 1999) A State or local 
public benefit may be provided to qualified aliens and some non-
qualified aliens (non-immigrants under the Immigration and Nationality 
Act or aliens paroled into this country under section 212(d)(5) of such 
Act for less than one year). State or local public benefits may also be 
provided to illegal aliens if the State enacts a law after August 22, 
1996 that affirmatively provides that illegal aliens are eligible to 
receive all or particular State or local public benefits (per 411(d) of 
PRWORA).
    If the benefit is not a State or local public benefit or if the 
Federal or State or local public benefit is a non-cash benefit that is 
included on the Attorney General's Notice dated August 23, 1996 as 
necessary for the protection of life or safety, then the Tribe may help 
the alien family members--qualified and non-qualified. (See discussion 
in the preamble to the State TANF Final Rule (64 FR 17817-819, April 
12, 1999).
    Comment: With reference to Sec. 286.35(b) as proposed, a commenter 
suggests that the * * * (p)rohibition on using TANF funds to contribute 
to or subsidize non-TANF programs is overly restrictive.''
    Response: We disagree with the suggestion that the prohibition is 
overly restrictive. TANF funds may only be expended to further the 
purposes and goals for which the TANF program was created. The 
authority for this prohibition is clearly established in 45 CFR 
92.25(g)(2).

Section 286.50 (Section 286.40 in the NPRM)  Is There a Limit on the 
Percentage of a Tribal Family Assistance Grant That Can Be Used for 
Administrative Costs?

    Under section 404(b) of the Act no more than 15 percent of a 
State's SFAG may be spent on administrative expenditures. Expenditures 
by a State for information technology and computerization needed for 
tracking or monitoring cases covered by the TANF program are excluded 
from the 15 percent limit. Because section 404(b) is not applicable to 
Tribal TANF programs, we asked in our discussions with Tribes and 
States, what limit, if any, should be placed on administrative 
expenditures under the Tribal TANF program. Many respondents indicated 
that a limit on administrative expenditures should not be applied to 
Tribal TANF programs. Other respondents indicated that Tribes do not 
have the same level of experience in operating this kind of welfare 
program as do States, and, that if a limit had to be set, any limit 
should be higher than the State TANF limit. Respondents also cited both 
the additional start-up expenses that Tribes will experience and the 
new requirements of the TANF program as a reason to set a higher limit 
for Tribal TANF programs.
    In our deliberations on whether to propose a limit on 
administrative expenditures, we considered various options. One was to 
follow the statute and be silent on the issue. The second option was to 
apply the same limit placed on States. The third option was to set a 
limit that recognizes the special needs of Tribes mentioned above. In 
whatever option we chose, we felt it necessary to ensure that most of a 
Tribal TANF grant would be available to carry out the primary objective 
of the TANF statute.
    We understand the reason why many of the respondents said that an 
administrative expenditure limit should not be placed on Tribal TANF 
programs. However, not placing a limit could result in depriving needy 
families of the program benefits Congress intended families to receive. 
We believe setting a limit on administrative expenditures is more 
consistent with the purposes of the Act. Placing a limit on 
administrative expenditures guarantees that the major portion of a 
Tribal TANF grant goes to assisting needy families.
    We have responded to the fact that Tribes do not have the same 
level of experience operating welfare programs as do the States. In 
addition, we recognize that Tribes will need to expend a larger portion 
of their grant funds on administration than States because they cannot 
take advantage of economies of scale. Therefore, as the discussion 
below details, we revised this section to provide for a graduated cap 
over the first three years of operation which will ultimately limit to 
25 percent the amount of Tribal TANF funds that a Tribe may use for 
administrative expenditures during any grant period. Thus, after the 
first two years of operation each Tribal TANF grantee will be required 
to expend at least 75 percent of its grant on direct program services 
(and technology) during the grant period.
    Because expenditures for information technology and computerization 
needed for tracking and monitoring of cases under the TANF program by 
the States will be excluded from the administrative expenditure limit, 
these same expenditures by Tribes will also be excluded from the Tribal 
limit.
    Tribes must allocate costs to proper programs. Under the Federal 
Appropriations Law, grantees must use funds in accordance with the 
purpose for which they were appropriated. In addition, as stated 
previously, the grants administration regulations at part 92, and OMB 
Circular A-87, ``Cost Principles for State, Local, and Indian Tribal 
Governments'', apply to the TANF program. OMB Circular A-87, in 
particular, establishes the procedures and rules applicable to the 
allocation of costs among programs and the allowability of costs under 
Federal grant programs such as TANF.

[[Page 8494]]

Overview of Comments

    We received numerous comments regarding the proposed administrative 
cost provisions. A substantial majority of these comments came from 
Tribes and tribal organizations, but we also received comments from 
States, advocacy groups, and other community organizations.
    To deal with the number of responses on this issue, we decided to 
cluster the comments into the following general categories: (1) The 
imposition of an administrative cost cap, including whether or not 
there is authority to impose such a cap; (2) the proposed 20 percent 
administrative cost limitation; (3) the treatment of eligibility 
determination and verification costs, as well as data entry costs, in 
the definition; (4) the relationship of indirect costs to 
administrative costs; and (5) identifying the base to be used to 
determine the cap (that is, whether the appropriate base for computing 
the Federal cap includes State matching funds). The first two 
categories will be dealt with in this section; the remaining three will 
be addressed in Sec. 286.55.

Imposition of an Administrative Cost Cap

    Comments: We received multiple comments questioning whether ACF had 
statutory authority to impose a cap. Comments from a number of Tribes 
indicated their belief that the cap goes beyond the authority of Public 
Law 93-638, the Indian Self-Determination Act. These respondents asked 
that the entire section be deleted.
    Response: There is legal support for imposition of an 
administrative cap. Although the statute only requires an 
administrative cost cap for States, Federal law does not preclude the 
Secretary from establishing a cap for the Tribal TANF program. Both the 
statute and legislative history make it clear that Congress intended 
that a substantial majority of TFAG funds be available to provide time-
limited program assistance and/or services to needy Indian families. 
Section 412(b), which specifies Tribal Family Assistance plan 
requirements, clearly contemplates that the TFAG be used to support the 
provision of ``assistance'' and ``welfare-related services.''
    While we believe in granting Tribes broad flexibility to design 
their programs and have left key definitions up to the discretion of 
the Tribes, we believe there is a need for Federal guidance on the 
definition of ``administrative costs.'' The approach in this rule is a 
compromise between a Federal and tribal definition. It sets a Federal 
framework that specifies some items that must be considered 
``administrative costs,'' but does not attempt to fully define the 
term.
    We believe this framework is important. First, as the comments we 
received demonstrate, there is no common view of the meaning of this 
term. If we left this matter entirely to tribal discretion, we could 
expect a diversity of approaches, and Tribes might be subject to widely 
different penalty standards. Also, some Tribes might define the term so 
narrowly as to substantially undermine the intent of the administrative 
cost cap provisions. The philosophy underlying the administrative cost 
cap is clear: in order to protect needy families and children, it is 
critical that the substantial majority of TANF funds go towards helping 
needy families.

The Amount of the Administrative Cost Cap

    Comments: Almost all respondents requested the flexibility to 
negotiate a higher administrative cap either over the course of the 
entire three-year grant or for the initial start-up year(s). There were 
widespread comments attesting to the fact that although states have 
operated similar programs in the past and have invested heavily in an 
infrastructure to support the program, no such opportunity has existed 
for Tribes. Tribes will initially have extensive administrative costs 
while they develop the required infrastructure and data systems to 
manage the program, and some small Tribes may also experience economy 
of scale problems. Tribes believe that the 20 percent limitation 
provided for in the NPRM is overly restrictive and unrealistic, and 
they furthermore maintain that any cap should not have as its basis the 
state cap.
    Response: Although we do not believe that the administrative cap 
proposed in the draft regulations was either arbitrary or 
paternalistic, we believe that a negotiated and graduated 
administrative cost cap would recognize that Indian tribes do not have 
the same sorts of resources as are available to States and therefore 
should be allowed to claim more administrative costs, especially in the 
initial operation and administration of a TANF program. There is no 
provision for start-up funds in the legislation, which compels Tribes 
to use funds from their Tribal Family Assistance Grant for that 
purpose.
    It is critical to the establishment and effective and efficient 
operation of any viable social service program that a solid 
infrastructure be developed from the beginning. TANF is the first 
comprehensive social services program that Tribes will operate. 
Therefore, Tribes with little or no infrastructure will need to create 
or strengthen their infrastructure in order to ensure a viable 
operating base for the program. Due to the uniqueness of TANF, even 
those Tribes with more sophisticated infrastructures will need to 
enhance and/or make substantial changes in their infrastructures to 
allow for the changes necessary to operate the TANF program 
effectively.
    In most grant and contract programs Tribes are provided funds for 
planning, setup costs, contract support funds, and indirect costs to 
offset the lack of a tax base and other sources of funding to support 
Tribal programs. PRWORA provides no funding for Tribes to develop the 
necessary infrastructure to operate a TANF program.
    Furthermore, program development and administrative activities 
(e.g., conference travel, home visits, procurement of goods and 
services, meetings with state and local TANF staff, etc.) are generally 
more expensive for Tribes than for state or local governments because 
of the distance from urban centers for most tribes, as well as the lack 
of transportation and public services.
    Recognizing the unique administrative burdens on Tribes who have 
never been in the position of operating these programs, and who need to 
build an infrastructure capable of operating the Tribal TANF program, 
we have revised this section to allow ACF to negotiate with each Tribal 
TANF applicant individually for each year of a program's operation, a 
negotiated administrative cap for the first year not to exceed 35 
percent, a negotiated administrative cap for the second year not to 
exceed 30 percent, and a negotiated administrative cap for all 
subsequent years of operation (that is, any and all years of program 
operation after the first two years) not to exceed 25 percent. Our 
negotiations will be based on, but not limited to, a Tribe's TANF 
funding level, the economic conditions and resources available to the 
Tribe, the relationship of the Tribe's administrative cost allocation 
proposal to the overall purposes of TANF, and a demonstration of the 
Tribe's administrative capability.
    We believe that this graduated cap meets the intent of the law, yet 
provides Tribal TANF programs with additional funds to develop the 
necessary infrastructure to be successful in operating the Tribal TANF 
program. After the first two years of funding, each Tribal TANF grantee 
will be required to

[[Page 8495]]

expend at least 75 percent of its grant on direct service and benefits.
    If a Tribe's administrative costs exceed the 25 percent limit (or 
35 percent in the first year or 30 percent in the second year of 
operations), the penalty for misuse of funds (refer to Sec. 286.195) 
will apply. The penalty will be in the amount spent on administrative 
costs in excess of the administrative cap for that particular year of 
operation. We will take an additional penalty in the amount of five 
percent of the TFAG if we find that a Tribe has intentionally exceeded 
the administrative cap limit. See discussion of Sec. 286.200.

Section 286.55 (Section 286.45 in the NPRM)  What Types of Costs Are 
Subject to the Administrative Cost Limit on Tribal Family Assistance 
Grants?

    Just as with the State TANF program, we considered not proposing a 
Federal definition of ``administrative costs.'' That option had appeal 
because: (1) It is consistent with the philosophy of a block grant; (2) 
we took a similar approach in some other policy areas (i.e., in not 
defining individual work activities); (3) we support the idea that we 
should focus on outcomes, rather than process; and (4) the same 
definition might not work for each Tribe. Also, we were concerned we 
could exacerbate consistency problems if we created a Federal 
definition. Because of the wide variety of definitions in other related 
Federal programs, adoption of a single national definition could create 
variances in operational procedures within Tribal agencies and add to 
the complexities administrators would face in operating these programs.
    At the same time, we were hesitant to defer totally to Tribal 
definitions. The philosophy underlying this provision is very 
important; in the interest of protecting needy families and children, 
it is critical that the substantial majority of Federal TANF funds go 
towards helping needy families. If we did not provide some definition, 
it would be impossible to ensure that the limit had meaning. Also, we 
felt that it would be better to give general guidance to Tribes than to 
get into disputes with individual Tribes about whether their 
definitions represented a ``reasonable interpretation of the statute.''
    We thought that it was very important that any definition be 
flexible enough not to unnecessarily constrain Tribal choices on how 
they deliver services. We believe a traditional definition of 
administrative costs would be inappropriate because the TANF program is 
unique, and we expect TANF to evolve into something significantly 
different from its predecessors and from other welfare-related 
programs. Specifically, we expect TANF to be a more service-oriented 
program, with substantially more resources devoted to case management 
and fewer distinctions between administrative activities and services 
provided to recipients.
    The definition we have established does not directly address case 
management or eligibility determination. We understand that, especially 
for Tribal programs, the same individuals may be performing both 
activities. In such cases, to the extent that a worker's activities are 
essentially administrative in nature (e.g., traditional eligibility 
determinations or verifications), the portion of the worker's time 
spent on such activities must be treated as administrative costs. 
However, to the extent that a worker's time is spent on case-management 
functions or delivering services to clients, that portion of the 
worker's time can be charged as program costs.
    We believe that the definition in the Final Rule will not create a 
significant new administrative burden on Tribes. We believe that it is 
flexible enough to facilitate effective case management, accommodate 
evolving TANF program designs, and support innovation and diversity 
among Tribal TANF programs. It also has the significant advantage of 
being closely related to the definition in effect under the Job 
Training Partnership Act (JTPA). Thus, it should facilitate the 
coordination of Welfare-to-Work and TANF activities and support the 
transition of hard-to-employ TANF recipients into the work force.
    Under Secs. 286.40-45 of the Tribal TANF proposed regulations, 
Tribes could not spend more than 20 percent of their Federal TANF funds 
on administrative costs. The proposed regulation excluded expenditures 
for ``information technology and computerization needed for tracking or 
monitoring'' from the administrative cost cap, and the definition of 
administrative cost in Sec. 286.5 provided additional information on 
what costs are both included and excluded from the definition of 
administrative costs and the cap.
    The proposed definition at Sec. 286.5 stated: ``Administrative 
costs means costs necessary for the proper administration of the TANF 
program. It includes the costs for general administration and 
coordination of this program, including overhead costs.'' It also 
provided examples of eleven types of activities that would be 
classified as ``administrative costs,'' such as salaries and benefits 
not associated with providing program services, plan and budget 
preparation, procurement, accounting, and payroll. In developing this 
definition, our intention was that it would be flexible enough to 
facilitate effective case management, accommodate evolving Tribal TANF 
program designs, and support innovation and diversity among the Tribal 
TANF programs. We expected that our final definition would support the 
evolution of Tribal TANF into a more service-oriented program, with 
substantially more resources devoted to case management and fewer 
distinctions between administrative activities and services provided to 
recipients.
    We have not included specific language in the Final Rule about 
treatment of costs incurred by subgrantees, contractors, community 
service providers, and other third parties, and we received no comments 
in this area. Neither the statute nor the final regulation make any 
provision for special treatment of such costs. Thus, the expectation is 
that administrative costs incurred by these entities would be part of 
the total administrative cost cap. In other words, it is immaterial 
whether costs are incurred by the Tribal TANF agency directly or by 
other parties.
    We realize this policy may create additional administrative burdens 
for the Tribe and do not want to unnecessarily divert resources to 
administrative activities. At the same time, we do not want to distort 
agency incentives to contract for administrative or program services. 
In seeking possible solutions for this problem, we looked at the JTPA 
approach (which allows expenditures on services that are available 
``off-the-shelf'' to be treated entirely as program costs), but did not 
think that it provided an adequate solution. We thought that too few of 
the service contracts under TANF would qualify for simplified treatment 
on that basis.

The Treatment of Certain Costs

    Comments: We received a number of comments requesting that we 
specify that the list of examples delineated in Sec. 286.5 is for 
guidance only. There is a great deal of concern that this list will be 
seen as all-inclusive, rather than as a list of examples of activities 
which are considered as administrative costs.
    Response: Although we believe our language is clear in this regard, 
we will clarify in the regulation that this list provides examples of 
costs that are considered administrative in nature, but is not all-
inclusive.
    Comments: Many of those commenting on this issue (and on the

[[Page 8496]]

definition of administrative costs found in Sec. 286.5) wanted us to 
clarify that eligibility determinations and verifications are more 
closely aligned to program costs than to administrative costs. Some 
argued that eligibility determination was not an administrative 
activity and was not easily or logically separable from case 
management. Still others commented on the burden associated with our 
proposal and the general need for tribal flexibility in this area. They 
argued that because eligibility determination and verification is part 
of the overall case management function, it would more appropriately be 
categorized as a program or service function than administration. They 
further argued that the differentiation between eligibility and service 
delivery would be virtually impossible, because a case manager may 
collect information for the purpose of providing or arranging 
supportive services, but use that same information to determine the 
family's eligibility.
    Response: While we understand that Tribes with limited resources do 
not want to direct those limited resources to prorating the expenses of 
front-line workers who are simultaneously engaged in eligibility 
determination, case management, and service provision to Tribal TANF 
beneficiaries, we do not believe it would be consistent with the intent 
of the administrative cost cap provisions for Tribes to be spending 
large amounts of money on eligibility determinations rather than 
program services. We have a statutory responsibility for protecting 
against misuse of funds, and we know that money diverted to 
administrative activities could decrease the availability of benefits 
and services for needy families. We also believe that a clear policy on 
eligibility determinations might produce more consistent penalty 
determinations and reduce audit disputes, appeals, and litigation 
regarding application of the misuse of funds penalty.
    We do not agree that Tribes must incur a significant administrative 
burden in order to identify the costs associated with eligibility 
determination activities. We recognize that the nature of staff 
responsibilities is changing and the line between case management and 
eligibility determination is blurring. Thus, it may be more difficult 
to develop rules for allocating the time of workers between 
administrative and program activities. However, once a Tribe develops 
its allocation rules, the process of allocating staff time is 
straightforward and no more difficult than the current cost allocation 
process.
    We also recognize that the Tribal TANF program offers the 
possibility for Tribes to administer programs in new ways. We 
understand that Tribes are developing program structures with blended 
functions, and we support such efforts. These Final Rules do not in any 
sense require Tribes to have separate administrative and program staff. 
They merely require that Tribes provide a reasonable method for 
determining and allocating administrative and program costs.
    Based on these considerations, we have decided to add eligibility 
determinations to the list of administrative activities at Sec. 286.5. 
More specifically, this rule reflects the basic definition that was in 
the proposed regulation (with the same basic examples of administrative 
cost activities), but adds the NPRM preamble policy that required 
eligibility determination to be treated as an administrative cost. We 
recognize that this is a significant policy decision that merits 
inclusion directly in the regulatory text.
    Under the Final Rule, Tribes may develop their own definitions of 
administrative costs, consistent with this regulatory framework. 
Nevertheless, we want to remind them that they must properly allocate 
costs; that is, they must attribute administrative, program, and 
systems costs to benefitting programs and appropriate cost categories, 
in accordance with an approved cost allocation plan and the cost 
principles in part 92 and OMB Circular A-87, ``Cost Principles for 
State, Local, and Indian Tribal Governments.''
    Comments: A number of comments suggested that the proposed language 
in Sec. 286.5, the definition of administrative costs, was not 
sufficiently clear.
    Response: We never intended to develop a regulation that fully 
defined the term administrative costs. For example, we believed that, 
by inference, readers would understand the language proposed at 
Sec. 286.5 to mean that costs related to delivery of program services 
were not administrative costs. However, comments received suggest that 
the proposed rule was not sufficiently clear, and we have revised 
Sec. 286.5 to make this point more clearly. More specifically, we have 
added a new paragraph, to exclude costs of providing services from the 
definition of administrative costs. The definition more directly states 
that costs of providing services are outside the definition of 
administrative costs, and it explicitly provides that case management, 
diversion and assessment activities are both program service costs and 
not considered administrative costs. (Note: Here, we would make a 
distinction between assessment activities designed to identify needs 
and develop appropriate service strategies versus assessing income, 
resources, and documentation for eligibility determination purposes; 
the latter are administrative costs). Further, it explains that items 
that would normally be administrative costs, but are systems-related 
and needed for monitoring or tracking purposes under Tribal TANF, fall 
under a systems exclusion. In other words, we will not consider those 
costs in determining whether a Tribe has exceeded its cap.

The Relationship of Indirect Costs to Administrative Costs

    Indirect Costs negotiated by BIA, the Department's Division of Cost 
Allocation, or another federal agency are considered to be part of the 
total administrative costs. This is because such indirect costs are 
generally administrative, reflecting the proration of common 
administrative costs and overhead charges which are not readily 
identifiable as program costs. They must therefore be calculated as 
part of the administrative cost cap.
    Comments: A number of respondents were adamant that we should use 
indirect cost rates that have already been negotiated with HHS or BIA, 
stating that negotiated indirect cost rate agreements with Federal 
agencies must be honored.
    Response: In response to the comments that previously negotiated 
indirect cost rate caps be used, we emphasize that although most 
indirect costs are administrative in nature, there is no immediate 
relationship between administrative and indirect costs. Administrative 
costs might be classified as either direct or indirect costs, depending 
on how they are identified in the program. Indirect costs are costs 
(both administrative and programmatic) incurred for common or joint 
objectives across all programs, which cannot be identified readily or 
specifically but which are nevertheless necessary to the operations of 
the organization. A negotiated indirect cost rate is based on a 
specific direct cost base which is much smaller than the entire TFAG 
base. Tribal TANF programs whose actual administrative costs do not 
reach the imposed cap may be able to recover additional indirect costs 
in accordance with their agreements, as long as the total amount 
recovered does not exceed the approved indirect cost rate.

[[Page 8497]]

Base for Computing the Cap

    Comments: Several commenters argued that we should allow for the 
combining of program funding sources under a single cost pool for the 
purposes of determining administrative costs associated with program 
operations. The inclusion of any state ``match'' funds in the base 
would streamline accounting functions by allowing a Tribe to negotiate 
one administrative cost rate for multiple funding sources. They asked 
that TFAG funding and state funding be considered as one program for 
purposes of determining administrative costs.
    Response: In most cases state ``match'' is comprised of additional 
state funds that a state pays to tribal grantees on behalf of Indian 
families residing in the State. There is no requirement that a state 
provide such funds to Tribes. Since these are state, and not federal 
funds, we are not regulating the use of the funds in this rule. 
Notwithstanding the fact that we know states use these funds toward 
their required MOE amount, and would rather have all funds used toward 
service provision, states should understand that some administrative 
activities are a necessary part of service provision. It is therefore 
in the interest of the Tribe, when negotiating with a state over the 
receipt and use of any additional state funds, to ensure that a portion 
of those funds be allowable for administrative activities. However, we 
decline to make the requested change in the final regulation.
    Comments: Several respondents, including one Federal agency, noted 
that Tribes have insufficient funds to develop the necessary 
infrastructure, and will be unable to purchase the hardware and 
software required to support an automated system whether they are 
charged as administrative or program costs. They recommended that 
federal start-up costs be provided outside of the cap for this purpose.
    Response: We acknowledge the fact that states have been operating 
assistance programs for many years, and have had many opportunities to 
develop the essential infrastructures. However, additional funds were 
not appropriated by Congress to provide funds to Tribes separate from 
their TFAG in order to develop such systems. No additional sources of 
funding are available for this purpose.

Section 286.60 (Section 286.50 in the NPRM)  Must Tribes Obligate All 
Tribal Family Assistance Grant Funds by the End of the Fiscal Year in 
Which They Are Awarded?

Background

    Section 404(e) of the Act, entitled ``Authority to Reserve Certain 
Amounts for Assistance,'' allows States to reserve Federal TANF funds 
that they receive ``for any fiscal year for the purpose of providing, 
without fiscal year limitation, assistance under the State program 
funded under this part.''
    This section initially did not apply to Tribal TANF or NEW 
Programs. Our original interpretation of the statute was that it 
precluded us granting to Tribes the authority to reserve TFAGs grants 
paid to them without fiscal year limitation. Therefore, the NPRM 
indicated that Tribes must obligate their TFAGs by the end of the 
fiscal year in which they are awarded.
    Comments: Every Tribe commenting on this provision of the proposed 
rule voiced opposition, indicating that the proposed rule would 
frustrate contingency budgeting, prevent Tribes from coping with 
volatile and increasing caseloads, and generally hamper Tribes' efforts 
to achieve the objectives of the TANF program.
    Response: The proposed rule was based on fact that States are 
permitted to reserve TANF funds with no fiscal year limitation under 
section 404(e) of the Act which, at that time, did not apply to Tribal 
TANF programs. Since 404(e) did not apply to Tribal TANF programs, our 
proposed rule required Tribal TANF programs to obligate their TANF 
funds no later than the end of the fiscal year in which the TANF grant 
funds were awarded.
    In response to comments raised to this proposed rule, we 
reconsidered and determined that there was statutory authority for 
limited carry forward of Tribal TANF funds beyond what we had initially 
proposed in the NPRM. However, the Foster Care Independence Act of 1999 
(Pub. L. 106-169), signed by the President on December 14, 1999, 
included a number of technical corrections to PRWORA which made our 
reconsideration of this rule moot. Included in those amendments is a 
provision which makes section 404(e) of PRWORA applicable to Tribes. 
Pursuant to amended section 404(e), a Tribe may reserve amounts awarded 
to the Tribe under section 412, without fiscal year limitation, to 
provide assistance under the Tribal TANF program. Federal unobligated 
balances carried forward from previous fiscal years may only be 
expended on assistance and related administrative costs associated with 
providing such assistance. The related administrative costs to provide 
that assistance will be reported against the negotiated administrative 
cost cap for the fiscal year in which the Federal funds were originally 
awarded.
    The statute limits a Tribe's ability to spend reserved money in one 
very important way. A Tribe may expend funds only on benefits that meet 
the definition of assistance at Sec. 286.10 or on the administrative 
costs directly associated with providing such assistance. It may not 
expend reserved funds on benefits specifically excluded from the 
definition of assistance or on activities generally directed at serving 
the goals of the program, but outside the scope of the definition of 
assistance.
    The Tribe must obligate by September 30 of the current fiscal year 
any funds for expenditures on non-assistance. The Tribe must liquidate 
these obligations by September 30 of the immediate succeeding Federal 
fiscal year for which the funds were awarded. If the final liquidation 
amounts are lower than the original amount obligated, these funds must 
be reported as an unobligated balance for the year in which they were 
awarded. As mentioned in the previous paragraph, unobligated balances 
from previous fiscal years may only be expended on assistance and the 
administrative costs related to providing that assistance.

Subpart C--Tribal TANF Plan Content and Processing (Secs. 286.65-
286.190)

Section 286.65 (Section 286.55 in the NPRM)  How Can a Tribe Apply To 
Administer a Tribal Temporary Assistance for Needy Families (TANF) 
Program?

    Any eligible Indian tribe or Alaska Native regional non-profit 
corporation or intertribal consortium that wishes to administer a 
Tribal TANF program must submit a three-year Tribal Family Assistance 
Plan to the Secretary of the Department of Health and Human Services. 
This requirement extends to those Tribes that are operating a Pub. L. 
102-477 employment and training program (please refer to Sec. 286.160 
for information on this).
    Comment: One State commented that the regulation should address 
what happens at the end of the three-year grant cycle, including a 
notification deadline for a Tribe to declare to ACF and the state an 
intent to continue or discontinue Tribal TANF operations.
    Response: The statute requires that an eligible Tribe, Alaska 
Native organization or intertribal consortium wishing to administer a 
Tribal TANF

[[Page 8498]]

program submit a three-year TFAP. Although section 412(a)(1)(A) 
authorizes Tribal TANF funding for more than three years, the statute 
is silent as to the required procedures for Tribes which intend to 
continue operating a Tribal TANF program beyond the initial three-year 
period.
    We have added regulatory language to Sec. 286.65 to indicate that, 
120 days prior to the end of the three-year grant period, current 
Tribal TANF grantees must notify the appropriate Regional Office, the 
Central Office, and the affected State or States of their intentions 
for the following grant cycle. They must do one of the following:
    (1) If they do not intend to continue operating the Tribal TANF 
program beyond the three years, they should submit a letter of intent 
that so specifies;
    (2) If they intend to continue program operations with no changes 
to the geographic service area or service population, they should 
submit a letter of intent that so specifies. A current Tribal TANF 
grantee that intends to continue TANF program operations with no 
changes in service area or service population must submit a three-year 
TANF plan for approval no later than 60 days before the end of the 
current grant cycle;
    (3) If they intend to continue program operations, but are 
proposing a change in the geographic service area and/or service 
population that will require new data from the state or a renegotiation 
of the grant amount, then they must submit a new three-year plan for 
approval at that time.
    We believe that this process will provide all parties with 
sufficient time to ensure that there is no disruption in service to the 
Tribal TANF families.

Section 286.70 (Section 286.60 in the NPRM)  Who Submits a Tribal 
Family Assistance Plan?

    The chief executive officer of the Tribe, eligible Alaska Tribal 
entity, or Tribal consortium must sign and submit the TFAP. This is 
generally the Tribal Chairperson. The TFAP must also be accompanied by 
a Tribal resolution indicating Tribal Council support for the proposed 
Tribal TANF program. In the case of a Tribal consortium, the TFAP must 
be accompanied by Tribal resolutions from all members of the 
consortium. These Tribal Council resolutions must demonstrate each 
individual Tribe's support of the consortium, the delegation of 
decision-making authority to the consortium's governing board, and the 
Tribe's recognition that matters involving relationships between the 
Tribal TANF consortia and the State and/or Federal government on TANF 
matters are the express responsibility of the consortium's governing 
board.
    We recognize that changes in the leadership of a Tribe or some 
other event may cause a participating Tribe to rethink its 
participation in the consortium and/or in Tribal TANF. If, for example, 
a subsequently elected Council decided to terminate participation in 
the consortium and in TANF, that decision might create a need for time 
to reintegrate a Tribal program or a part of the Tribal program into 
the State program. Thus, we specify at Sec. 286.70(c) that, when one of 
the participating Tribes in a consortium wishes to withdraw from the 
consortium for purposes of either withdrawing from Tribal TANF 
altogether or to operate its own Tribal TANF program, that the Tribe 
needs to notify both the consortium and us of this fact at least 120 
days prior to the planned effective date. This notification time frame 
is especially applicable if the Tribe is withdrawing from Tribal TANF 
altogether and the Tribe's withdrawal will cause a change to the 
service area or population of the consortium.
    A Tribe withdrawing from a consortium for purposes of operating its 
own program must, in addition to the notification specified in the 
previous paragraph, submit its own Tribal TANF plan that meets the plan 
requirements at Sec. 286.75 and the time frames specified at 
Sec. 286.160.

Section 286.75 (Section 286.65 in the NPRM)  What Must Be Included in 
the Tribal Family Assistance Plan?

Background

    The TANF program concerns work, responsibility, and self-
sufficiency for families. To that end, section 412(b) of the Act lists 
six features of a Tribal Family Assistance Plan.

Approach to Providing Welfare-Related Services

    The TFAP must outline the Tribe's strategy for providing welfare-
related services. The Act does not specify what this outline must 
entail; however, we believe it is important that it includes 
information necessary for anyone to understand what services will be 
provided and to whom the services will be provided.
    To that end, the Tribal Family Assistance Plan must include, but is 
not limited to, information such as general eligibility criteria and 
special populations to be served, a description of the assistance and 
services to be offered, and the means by which they will be offered 
using TANF funds.
    The description of general eligibility requirements consists of the 
Tribe's definition of ``eligible family,'' including income and 
resource limits that make a family ``needy,'' and the Tribe's 
definition of ``Tribal member family'' or ``Indian family.'' The 
description of the services and assistance to be provided includes 
whether the Tribe will provide cash assistance, and what other 
assistance and services will be provided.
    The PRWORA discusses a variety of special populations who can 
benefit from a TANF program. While the statute does not require a 
Tribal TANF program to provide specific or targeted services to these 
populations, if the Tribe opts to do so, it must include a discussion 
of those services in the TFAP. For example, teen parents without a 
secondary degree are a special target population for State TANF-related 
services. If a Tribe wants to provide specific services to teen 
parents, it needs to describe the specific services in the plan.
    We are also requiring information in the Tribal TANF plan regarding 
whether services will be provided to families who are transitioning off 
TANF assistance due to employment. Section 411(a)(5) of the Act 
requires Tribes to report, on a quarterly basis, the total amount of 
TANF funds expended to provide transitional services to families that 
have ceased to receive assistance because of employment, along with a 
description of such services. Therefore, we believe it prudent for ACF 
and the public to know whether the Tribe's TANF program provides 
transitional services and, if so, what types of services will be 
offered.
    Questions have been raised about the potential dual eligibility of 
Indians for State and Tribal TANF programs. It is the position of the 
Department that section 417 of the Act precludes our regulating the 
conduct of States in this area. Nonetheless, we note that the issue of 
the dual eligibility of Indians raises constitutional concerns about 
the denial of state citizenship rights under the fourteenth amendment. 
We also note that, under section 408(c) of the Act, State TANF programs 
are subject to title VI of the Civil Rights Act of 1964 and certain 
other Federal non-discrimination provisions.
    As TANF focuses on outcomes, we believe a TFAP needs to identify 
the Tribe's goals for its TANF program and indicate how it will measure 
progress towards those goals. We believe this will help focus efforts 
on achieving positive outcomes for families. Progress can be measured 
longitudinally over time or over the short term, but should

[[Page 8499]]

be clearly targeted on those being served by the Tribal TANF program. 
For example: the incidence of teen pregnancy will be reduced by 
approximately X % over the three-year period of the TFAP, or 
educational achievement by teen parents receiving TANF assistance will 
experience an overall gain of at least one grade level over the three-
year-period of the TFAP.
    Sections 402(a)(4)(A) and (B) of the Act require States to certify 
that local governments and private sector organizations have been 
consulted regarding the State TANF plan and design of welfare services 
and have had at least 45 days to submit comments on the plan. We have 
included similar requirements as part of the Tribal TANF plan process. 
We have incorporated a public comment period as a means of soliciting 
input into the design of the Tribal TANF program and providing a means 
through which Tribes may design a program which truly meets the 
community's needs. This public comment period should afford affected 
parties the opportunity to review and comment on a Tribe's TFAP. While 
the Act does not specifically require Tribes to conduct a public 
comment period prior to submission of the TFAP, previous experience 
demonstrates the value of such a comment period towards tailoring the 
program to meet the individual circumstances of those who will be 
affected by the program and its far-reaching impact on Tribal children 
and families. Furthermore, we discern Congressional recognition in the 
Act of the value of public comment on the content of TANF plans and the 
design of welfare services. We believe that this is equally applicable 
to Tribal TANF plans.
    Finally, it is important that individuals who apply for and/or 
receive TANF are afforded due process should the Tribe take an adverse 
action against them. Therefore, the TFAP must include an assurance that 
the Tribe has developed a specific TANF dispute resolution process. 
This process must be used when individuals or families dispute the 
Tribe's decision to deny, reduce, suspend, sanction or terminate 
assistance.

Child Support Enforcement

    Just as the enactment of PRWORA created opportunities for Tribes to 
operate their own TANF programs, it provided new opportunities to 
ensure that Tribal families receive child support from responsible 
parents. The relationship between TANF and child support enforcement 
programs is important, regardless of whether the State or Tribe 
operates one or both of these programs. In addition, the relationship 
between self-sufficiency and child support becomes extremely important 
for TANF families because of the time-limited nature of TANF 
assistance.
    Under PRWORA, in order to receive a TANF block grant, a State must 
certify that it operates a child support enforcement program meeting 
requirements under title IV-D of the Act. A State child support 
enforcement program must provide the following services to TANF and 
former TANF recipients and to others who apply for services: location 
of parents, establishment of paternity and support orders and 
enforcement of orders. In order to receive TANF assistance from a 
State, a TANF applicant or recipient must assign any rights to support 
to the State and cooperate with the child support enforcement program 
in establishing paternity and securing support. Collections of assigned 
support are used to reduce State and Federal costs of the TANF program.
    PRWORA does not place similar requirements on Tribes or families 
receiving Tribal TANF assistance. Tribes are not required to certify 
that they are operating a child support enforcement program as a 
condition of receiving a Tribal TANF grant. Nor is there any 
requirement that Tribal TANF applicants and recipients assign all 
rights to support as a condition of receipt of Tribal TANF. There are, 
therefore, no penalties to the Tribe for failing to operate a child 
support enforcement program nor to a Tribal TANF recipient for failing 
to cooperate with child support efforts. However, several Tribes with 
approved Tribal TANF plans are requiring Tribal TANF recipients to 
cooperate with child support efforts.
    Prior to enactment of PRWORA, title IV-D of the Act placed 
responsibility for the delivery of child support enforcement services 
with the States. Consequently, States have attempted to provide child 
support services on Tribal lands but have generally been constrained in 
their abilities to establish paternity, or establish or enforce child 
support orders with respect to noncustodial parents who reside within 
the jurisdiction of a Tribe because of sovereignty and jurisdictional 
issues. Therefore, arrangements for child support services on Tribal 
lands may involve a specific agreement to recognize State or county 
jurisdiction on Tribal lands for the narrow purpose of child support 
enforcement. In such agreements, Tribes agree to allow the child 
support agency to extend State program procedures to the reservation. 
Alternatively, some States and Tribes have entered into cooperative 
agreements under which a Tribal entity provides child support services 
on Tribal lands and receives funding from the State.
    Under PRWORA, requirements for State/Tribal cooperative agreements, 
as well as direct Federal funding of Tribes for operating child support 
enforcement programs, were addressed for the first time in title IV-D 
of the Act. Section 5546 of the Balanced Budget Act of 1997 made 
technical amendments to the cooperative agreements language in section 
454(33) of the Act and to direct funding of Tribal child support 
enforcement programs under section 455(f) of the Act.
    Issues relating to responsibilities for providing child support 
enforcement services for Tribal TANF assistance cases and distribution 
of support collections in such cases have already been raised in 
several States. States and Tribes must work together to determine how 
Tribal TANF and State child support programs will work best for Tribal 
families. More than ever before, this collaboration is critical.
    Since child support is a critical component of self-sufficiency for 
many single parent families, Tribes need to determine whether they want 
to condition a family's eligibility for Tribal TANF assistance on 
cooperation with the State child support enforcement program. If the 
Tribe will so condition eligibility, the TFAP should so specify.
    Tribes that have entered into, or will enter into, cooperative 
agreements with their States on child support matters have decided that 
child support is a critical issue for families. Likewise, Tribes that 
will decide, after regulations have been issued, to operate their own 
child support enforcement programs know the importance of child 
support.

Provision of Services

    As required by section 412(b)(1)(B), the TFAP must indicate whether 
the welfare-related services provided under this plan will be provided 
by the Indian tribe or through agreements, contracts or compacts with 
inter-Tribal consortia, States, or other entities. The Tribe determines 
which Tribal agency will have the lead responsibility for the overall 
administration of the Tribal TANF program. The designated lead agency 
plans, directs and operates the Tribal TANF Program on behalf of the 
Tribe. While it has the flexibility to contract many portions of the 
Tribal TANF program with public and/or private entities, the lead 
agency must maintain overall administrative control of the program. The 
lead agency is

[[Page 8500]]

required to submit and administer the Tribal TANF plans, coordinate 
Tribal TANF services with other Tribal and State programs, and collect 
and submit required data. Although not required by statute, we are 
requiring at Sec. 286.75(b) that Tribes identify the lead agency in the 
TFAP because of its importance in the overall administration of and 
responsibility for the Tribal TANF program. The plan must also include 
a description of the administrative structure for supervision of the 
Tribal TANF program, including the designated unit responsible for the 
program and its location within the Tribal government.
    For lead agencies that wish to enter into agreements or contracts 
with other entities, the TFAP needs to specify how the welfare-related 
services will be provided, e.g., through sub-contracts. In the instance 
of Tribal consortia, the lead agency fulfills the same responsibility 
as the designated unit discussed above.

Population/Service Area

    Section 412(b)(1)(C) of the Act requires that a TFAP identify the 
population and service area or areas to be served by the plan. Yet the 
statute defines neither of these terms.
    In our consultation with Tribes on how service area and population 
should be defined, we heard from Tribes that they should be given 
flexibility to define their own Tribal TANF service area and 
population. We have also heard that, at least in the case of Oklahoma, 
we might expect disagreements between Tribes to arise if service area 
parameters were not established for Tribes in that State. This concern 
was due to the fact that none of the Tribes in Oklahoma, except for 
one, have reservations. Our intent in this Final Rule is to balance 
Tribal flexibility with the need to afford consideration to Tribes who 
disagree with another Tribe's proposed service area or population.
    Therefore, with regards to service population, Tribes have the 
flexibility to decide whether their TFAP will serve all Indian families 
within the service area or solely the enrolled members of the Tribe. A 
Tribe would convey its decision in the TFAP. If the TFAP provides for 
services to all Indian families within the service area, then the Tribe 
agrees to provide such services. If the TFAP provides for services 
solely to families of enrolled members of the Tribe, then the Tribe 
does not agree to provide services to the families of non-enrolled 
Indians residing in the service area of the Tribe.
    Regardless of the decision reached by the Tribe in this matter, the 
responsibility for TANF services to non-Indian families in the Tribal 
service area resides with the State TANF program, unless the Tribe has 
negotiated an agreement with the State to allow the Tribe to serve non-
Indian families within the Tribal service area. If such an agreement 
has been reached, the Tribe must include a copy of the agreement or 
other such documentation of State concurrence, such as a letter from 
the State, with the TFAP.
    There may be various reasons why both a Tribe and the State would 
want the Tribe to provide TANF assistance to all needy families in its 
service area (for example, there are very few non-Indian families in 
the service area). We believe this flexibility to allow a Tribe to 
include non-Indians in its service population, with State agreement, 
benefits both Tribes and States.
    In those instances where non-enrolled Indians or non-Indians are 
served by the Tribal TANF Program, the Tribal TANF program is the final 
authority on the services to be provided. The non-enrolled member's 
Tribe or the State(s) cannot decide on the nature of the services to be 
provided by the Tribal TANF program.
    With regards to service area, a Tribal TANF service area could 
include the Tribe's reservation or just portions of the reservation. It 
could also include ``near reservation areas'' meeting BIA requirements 
as outlined at 25 CFR 20.1(r). For Tribes without land bases, the 
service area could include all or part of the Tribe's service area as 
defined by BIA.
    In the case of claimed service areas extending beyond the Tribe's 
``near reservation area'' or BIA-defined service area, we are concerned 
about possible complications resulting from misunderstandings on the 
scope of the service area. Therefore, if a Tribe claims an alternative 
service area, the TFAP should clearly define the demographic extent of 
such areas and include a memorandum of understanding with the 
appropriate State(s) agency or Tribal government reflecting State(s) or 
Tribal agreement to the servicing of the Tribal TANF service population 
by the Tribal TANF Program in the extended area.
    Likewise, for Tribes in Oklahoma, if the Tribe defines its service 
area as other than just its ``tribal jurisdiction statistical area'' 
(TJSA), the Tribe must include an agreement with the appropriate Tribal 
government reflecting that Tribe's agreement to the service area. TJSAs 
are areas delineated for each federally-recognized Tribe in Oklahoma 
without a reservation by the Census Bureau.

Duplicative Assistance

    Section 412(b)(1)(D) indicates that an individual receiving 
assistance from a Tribal TANF program may not receive assistance from 
another State or Tribal TANF program for the same purpose. The TFAP 
must contain an assurance that families receiving assistance under the 
Tribal TANF plan will not receive duplicative services under any other 
State or Tribal TANF plan. The Tribe must develop a process to ensure 
that duplication does not occur and must include a description of that 
process in the TFAP. We believe any process the Tribe develops should 
include a mutual information exchange between the Tribe and State(s) 
and other nearby Tribal TANF grantees.

Employment Opportunities

    Section 412(b)(1)(E) requires that Tribes identify in their TFAPs 
the employment opportunities in and near the service area or areas of 
the Indian tribe. Section 286.75(g) of the Final Rule reiterates this 
requirement. The employment opportunities within and near the Tribal 
TANF service area will greatly impact the service population's ability 
to obtain and maintain employment. In designing the Tribal TANF 
program, Tribes should consider current unemployment rates, public and 
private sector employment opportunities, and education and training 
resources. These factors should provide a basis for the Tribe's 
proposed work activities, work participation requirements, penalties 
against individuals, and time limits.
    Section 412(b)(1)(D) of the Act also requires that TFAPs identify 
the manner in which the Indian tribe will cooperate and participate in 
enhancing employment opportunities for TANF recipients consistent with 
any applicable State standards. At Sec. 286.75(g)(2) we reiterate the 
statutory requirement that the TFAPs describe how the Tribe will 
enhance employment opportunities for their TANF recipients. Tribes 
should consider the best means by which they can work with other Tribal 
or State agencies, and other private and public sector entities on or 
near the reservation, to enhance employment opportunities. These 
efforts may be through memoranda of understanding or other public-
private partnerships. These activities should also be consistent with 
any State employment standards (for example, a State minimum wage 
requirement).

[[Page 8501]]

Fiscal Accountability

    As required by section 412(b)(1)(F) of the Act, the TFAP must 
provide an assurance that the Tribe applies the fiscal accountability 
provisions of section 5(f)(1) of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450c(f)(1)), relating to the 
submission of a single-agency audit report required by chapter 75 of 
title 31, United States Code.

Establishing Minimum Work Participation Requirements, Time Limits 
for the Receipt of Assistance and Penalties Against Individuals

    PRWORA promotes self-sufficiency and independence while holding 
individuals to a higher standard of personal responsibility for the 
support of their children than prior law. The legislation expands the 
concept of mutual responsibility, introduced under the Family Support 
Act of 1988, that income assistance to families with able-bodied adults 
should be transitional and conditioned upon their efforts to become 
self-sufficient. These goals are reflected in the State TANF provisions 
requiring individuals to participate in work activities, limiting the 
number of months that assistance will be provided, and penalizing 
individuals for failure to participate in work activities as required.
    Minimum work participation requirements, time limits for the 
receipt of assistance and penalties against individuals who refuse to 
participate in work activities as required are explicitly stated for 
the State TANF programs in the statute. For the Tribal TANF programs, 
these three components are not specified. Instead, section 412(c) of 
the Act provides that for each Tribal TANF grantee Tribal TANF minimum 
work participation requirements, time limits for the receipt of 
assistance, and penalties against individuals are to be established by 
the Secretary with the participation of the Tribes.
    The statute further specifies that Tribal TANF work participation 
requirements and time limits are to be consistent with the purposes of 
TANF and consistent with the economic conditions and resources 
available to each Tribe. In addition, penalties against individuals are 
to be similar to those found in section 407(e) of the statute. However, 
the statute does not specify a process or procedure to be used to 
establish minimum work participation requirements, appropriate time 
limits for the receipt of assistance, and penalties against individuals 
for each Tribal TANF grantee.
    During discussions with Tribes and States as to what process should 
be used to establish these requirements for each Tribal TANF grantee, 
many suggested that we use the proposal a Tribe includes in its Tribal 
TANF plan as the basis for negotiating and establishing these 
requirements. We agree that it would be prudent to establish these 
requirements as part of the TANF plan process so that Tribes will know 
in advance of accepting the TANF program grant the requirements to 
which they are committing and for which they will be held accountable.
    Thus, we are requiring that each Tribe specify its proposal for 
minimum work participation requirements, time limits for the receipt of 
assistance, penalties against individuals who refuse to participate in 
work activities as required, and related policies in its Tribal TANF 
plan. In addition, the Tribe must include a rationale for its proposals 
and related policies in the plan. The rationale should address how the 
Tribe's proposal is consistent with the purposes of TANF and is 
consistent with the economic conditions and resources available to the 
Tribe.
    Examples of the information that we would expect to be included to 
illustrate the Tribe's proposal include, but are not limited to: 
Poverty, unemployment, jobless and job surplus rates; education levels 
of adults in the service area; availability of and/or accessibility to 
resources (educational facilities, transportation) to help families 
become employable and find employment; and employment opportunities on 
and near the service area.
    We will review and evaluate a Tribe's proposal for these components 
as part of the review and approval process for the entire plan. 
Additional information or discussion about a Tribe's proposal may be 
necessary before we approve the plan.
    Minimum work participation requirements are further detailed at 
Secs. 286.80-110 of the Final Rule. The Final Rule at Secs. 286.115-130 
contains additional information on time limits. Information on 
penalties against individuals is outlined at Secs. 286.135-150.
    Comments: We received a number of comments regarding the definition 
of ``service population.'' One commenter concurred that a Tribe should 
define its own service area and service population. Another commenter 
asked that the TFAP include information on how other entities would 
serve groups excluded from the definition of ``service population.'' 
Yet another commenter indicated that a Tribe should be mandated to 
provide services to all individuals living within its boundaries and 
precluded from considering enrolled members who are located near-
reservation.
    Response: Section 412(b)(1)(C) of the Act requires a Tribe to 
identify the service area or areas to be served by the TFAP, yet does 
not define the term. The preamble of the proposed rule included a 
lengthy discussion on our intent and expectations in this area, and we 
have restated that discussion above. We believe that all comments have 
already been answered.
    Comment: One commenter asked that the final regulations encourage a 
mutual effort between the state and the Tribe as the Tribe defines its 
service area.
    Response: For welfare reform to succeed in Indian country, Tribes 
and States need to work together in addressing various issues. 
Throughout this rule we encourage coordination and cooperation between 
Tribes and States, as well as between Tribes.

Section 286.80 (Section 286.70 in the NPRM)  What Information on 
Minimum Work Participation Requirements Must a Tribe Include in Its 
Tribal Family Assistance Plan?

Background

    As Tribes focus on assisting adults in obtaining work and earning 
paychecks quickly, parents receiving assistance from a Tribal TANF 
program are also expected to meet new and more stringent work 
requirements.
    Section 401(a)(2) of the Act states that one of the purposes of 
TANF is to promote job preparation and work to help needy families 
become self-sufficient. The statute, at section 407, provides specific 
individual work participation requirements and participation rate goals 
to ensure this purpose is carried out under State TANF programs. For 
State TANF programs, work participation requirements encompass (1) the 
proportion of TANF families participating in the activities 
(participation rate targets); (2) the activity level to be required of 
families, e.g., average number of hours of work per week; (3) the 
activities that families must be engaged in, e.g., subsidized 
employment, vocational training, etc.; and (4) exemptions, limitations 
and special rules related to work requirements.
    In providing flexibility in establishing work participation 
requirements, Congress recognized that Tribal economies and resources 
will vary and affect a Tribal TANF family's and program's ability to 
meet the work requirements imposed upon State TANF

[[Page 8502]]

recipients and State TANF programs. Since the statutory language 
requires that the work requirements take into consideration the 
economic conditions and resources available to each Tribe, we cannot 
establish across-the-board minimum work requirements that would be 
applied to all Tribes. Additionally, written and verbal feedback from 
Tribes indicated overwhelming support for negotiating on a case-by-case 
basis with each individual Tribe (as opposed to applying an across-the-
board minimum) that will reflect the differences among Tribal economies 
and resources.
    In order to have the information needed to establish minimum work 
participation requirements for each Tribal grantee, we specify at 
Sec. 286.80 that each Tribe specify in its TFAP: (1) The targeted 
participation rates for each of the fiscal years covered by the plan; 
(2) the minimum number of hours families will be required to 
participate in work activities for each of the fiscal years covered by 
the plan; (3) the work activities that count towards the work 
requirement; (4) any limitations and special rules related to work 
requirements; and (5) the rationale for the Tribe's proposed work 
requirements, including how they are consistent with the purposes of 
TANF and with the economic conditions and resources available to the 
Tribe.
    Considering that many Tribal families reside in remote areas and 
lack of adequate transportation is a major concern, the final 
regulation at Sec. 286.80(b)(2)(i) allows a Tribe to include reasonable 
transportation time to and from the activity site in determining the 
number of hours of participation. Counting transportation time may be 
indicative of the economic conditions and resources available to a 
Tribe, and transportation is an economic resource.
    Therefore, if a Tribe proposes to count reasonable transportation 
time towards the minimum number of hours individuals participate, the 
Tribe's TFAP will need to so specify. The Tribe's definition of 
``reasonable'' would also have to be included in the plan. However, we 
would also expect Tribes proposing to include reasonable transportation 
time in determining the number of hours of work participation, to 
demonstrate that their overall proposal for number of hours is 
consistent with the purposes of TANF.
    As discussed above, the Tribe's rationale for its proposed work 
participation requirements could include, but is not limited to: 
Poverty, unemployment, jobless and job surplus rates; education levels 
of adults in the service area; availability and/or accessibility to 
resources (educational facilities, transportation) to help families 
become employable and find employment; and employment opportunities on 
and near the service area.
    As noted above, any Tribe proposing to include reasonable 
transportation time as part of its proposal on minimum hours of 
participation will also have to include a rationale for this decision.
    Comments: Several commenters support the overall flexibility 
afforded Tribes in defining work and negotiating participation rates 
proposed in Sec. 286.70 of the NPRM. They indicate that the provisions 
of the section appear reasonable. They also support providing the 
Tribes the opportunity to revise rates in subsequent years.
    However, one commenter, in addressing this section, suggested that 
the work participation rates should be capped at 15 percent.
    Response: The statute at Section 412(c) provides that work 
participation rates shall be established consistent with the purposes 
of the Act, consistent with the economic conditions and resources 
available to each Tribe, and in a manner similar to comparable 
provisions in Section 407(e). This clearly provides for a negotiated 
rate and not for any type of general cap.
    Comment: One commenter suggests that in Sec. 286.70(a) of the NPRM 
the words ``negotiate with us'' be removed and replaced with ``provide 
ACF''.
    Response: The statute at section 412 provides that ``The Secretary, 
with the participation of the Indian tribes, shall establish for each 
Indian tribe * * * minimum work requirements. * * * This clearly 
provides for a negotiation process.
    Comments: Several commenters strongly endorsed the provisions of 
Sec. 286.70(b)(1) as proposed in the NPRM, which allows the Tribes the 
option to establish different participation rates, i.e. one for all 
families, a rate for all families and two-parent families, or two 
separate rates for one-parent and two-parent families.
    Several commenters agreed with Sec. 286.70(b)(2)(i) as proposed, 
which allows ``reasonable'' transportation time to be counted toward 
determining the hours of work participation and encourage its 
retention. However, one commenter objected to the Tribes having to 
explain how counting this time is consistent with the purposes of TANF.
    Response: We agree with the desirability of retaining this 
provision. However, just as a basic rationale is required to explain or 
``justify'' work requirements and participation rates on a plan by plan 
basis, so too should a basic rationale be provided to establish the 
``reasonableness'' of the allowance, and to explain how it contributes 
to the needs of the Tribe and is therefore consistent with the purposes 
of TANF.
    Comments: Several commenters pointed out that there is no reason or 
justification for the requirement found in Sec. 286.70(b)(5) of the 
proposed rule, that if a Tribe's TFAP differs from that required of the 
State for participation rates and work activities, it must be justified 
in comparison to the State requirements. Commenters point out that 
while justification for participation rates and work activities is 
necessary and proper, it should be based on tribal criteria and 
established needs, and not be measured against or compared with the 
State's.
    Response: We agree. We have revised the first paragraph of 
Sec. 286.80(b)(5) accordingly.

(Section 286.75 in the NPRM)  What Additional Information on Minimum 
Work Participation Rates Must Be Included in a Tribal Family Assistance 
Plan? (Deleted)

    Upon review of the proposed rule, we determined that this section 
was unnecessary, as it repeated information found in other sections as 
well. We therefore removed it from the Final Rule, and renumbered the 
rule accordingly.

Section 286.85 (Section 286.80 in the NPRM)  How Will We Calculate the 
Work Participation Rates?

    Commenters addressing this section agreed with its provisions as 
written and endorsed their retention.
    Similar to the calculations for State participation rates, the 
final regulations at Sec. 286.85 indicate that the yearly participation 
rate will be the average of the monthly participation rates. Monthly 
rates, for each rate approved in the Tribe's TANF plan, will be 
determined by a ratio with the numerator and denominator defined as 
follows:
    Numerator: The number of families with an adult or minor head-of-
household receiving TANF assistance from the Tribe engaged in work 
activities as defined in the Tribe's approved TANF plan for the 
required number of hours.
    Denominator: The number of families with an adult or minor head-of-
household receiving TANF assistance from the Tribe.
    This calculation will be appropriately modified depending upon 
whether the Tribe chooses to target (1) an all-family

[[Page 8503]]

rate, (2) an all-family rate and a two-parent rate, or (3) a one-parent 
rate and a two-parent rate.
    We have also made it clear in this Final Rule that a Tribe may 
count as a month of participation any partial months of assistance, if 
an adult in the family is engaged in work activities for the minimum 
average number of hours in each full week that the family receives 
assistance in that month. These families are already included in the 
denominator since they are recipients of assistance in that month.

Exclusions From Work Participation Rate Calculations

    The PRWORA does not specify exclusions from the participation rate 
calculations for Tribal TANF programs. However, consistent with the 
flexibility provided State TANF programs, in Sec. 286.85(c)(2) we allow 
Tribes to exclude from the total number of TANF families (the 
denominator): (1) Those families who have a child under the age of one 
if the Tribe opts to exempt these families from participating in 
activities (and so specified in the Tribe's TANF plan); and (2) on a 
limited basis, those families who are sanctioned for non-compliance.
    The statute at section 407(b)(1)(B)(i)(II) precludes States from 
excluding families sanctioned for non-compliance with the work 
participation requirements from the denominator if the families have 
been sanctioned for more than three months out of a twelve-month 
period. We considered whether to apply the same restriction to Tribal 
TANF work participation rate calculations. We were concerned that if we 
did not apply the same restriction and allowed Tribes to exclude 
sanctioned families indefinitely, then we would be inadvertently 
encouraging Tribes to discontinue their efforts in bringing those 
families into compliance and working towards self-sufficiency. 
Therefore, we decided at Sec. 286.85(c)(2)(i) that families sanctioned 
for non-compliance with the work participation requirements are to be 
excluded from the denominator only if they have not been sanctioned for 
more than three months (whether or not consecutively) out of the last 
twelve months.
    The final regulations do not provide for any other exclusions in 
calculating the Tribal TANF participation rate.
    We considered whether we should negotiate exclusions from the work 
participation rate calculations on a case-by-case basis with each 
individual Tribe. We rejected this approach because we believe a 
uniform method for calculating Tribal TANF work participation rates 
will help ensure that penalties are applied equitably across Tribes 
administering a TANF program. Additionally, since the rates themselves 
will be negotiated with each individual Tribe, such negotiations will 
already take into account unique circumstances which may make it 
difficult for certain families to participate in work activities.

Two-Parent Families

    Section 407(b)(2) of the Act, as amended by the Balanced Budget Act 
of 1997, requires a State to not consider as a two-parent family a 
family in which one of the parents is disabled for purposes of the work 
participation rate. Thus, a two-parent family in which one of the 
parents is disabled will be treated as a single-parent family for 
purposes of calculating the work participation rate. In Sec. 286.85(e) 
this provision is made applicable to Tribal TANF programs as well.

Section 286.90 (Section 286.85 in the NPRM)  How Many Hours Per Week 
Must an Adult or Minor Head-of-Household Participate in Work-Related 
Activities To Count in the Numerator of the Work Participation Rate?, 
and

Section 286.95 (Section 286.90 in the NPRM)  What, if Any, Are the 
Special Rules Concerning Counting Work for Two-Parent Families?

    For Tribal TANF programs the statute does not specify the minimum 
number of hours individuals must participate in order to be counted for 
participation rate calculations. The Act gives us the authority to 
negotiate these requirements with Tribes. The final regulation at 
Sec. 286.95 indicates that the minimum average number of hours per week 
for State TANF families presumptuously applies to Tribal TANF families 
as well. However, unlike the State requirements, we have provided 
Tribes the opportunity to rebut this presumption. Tribes will be 
permitted to establish fewer minimally required hours for families if a 
Tribe provides appropriate justification in its TANF plan. For example, 
the availability and accessibility of resources may not enable Tribal 
individuals to participate at the minimum number of hours per week 
required of State TANF recipients.
    Section 407(c)(2)(B) of the Act enables States to consider as 
engaged in work a custodial parent or caretaker relative with a child 
under age 6, who is the only parent or caretaker relative in the 
family, if s(he) participates for an average of 20 hours per week. We 
have extended this provision to Tribal TANF programs.
    The Balanced Budget Act of 1997 amended section 407(c)(1)(B)(i) of 
the Act to allow both parents in a two-parent family to share the 
number of hours required to be considered as engaged in work for 
purposes of meeting State TANF work requirements. The final regulation 
at Sec. 286.95 indicates that Tribal TANF programs will also be able to 
apply this policy.
    Comments: Several commenters pointed out that (as indicated in the 
proposed rule) Sec. 286.85, or at least Sec. 286.85(a), appeared to be 
in conflict with proposed Sec. 286.80 and Sec. 286.90. They pointed out 
that Sec. 286.80 allowed for a Tribe to establish minimum work 
participation rates for all cases, while Sec. 286.90 provided only that 
an adult or minor caretaker must participate in work activities for at 
least the minimum average number of hours per week specified in the 
Tribe's approved TFAG. On the other hand, Sec. 286.90(a) established a 
mandatory 20 hours per week minimum for a single custodial parent or 
caretaker relative with a child under six years of age. Additionally, 
Sec. 286.90(b) provided that in a two-parent family the number of work 
hours required could be shared. Commenters suggested that Sec. 286.90 
should be deleted in its entirety.
    Response: We agree there was a conflict between what is now 
Sec. 286.95(a) and Secs. 286.70 and 286.80, and that Sec. 286.95(a) 
should be deleted. The Tribe should be allowed to set minimum work 
requirements for parents or caretakers of children under six as part of 
their general establishment of work requirements in its TFAG. However, 
we have determined that permitting two-parent families to share hours 
encourages and supports the maintenance of such families. Therefore, 
Sec. 286.95 is justified under section 401 of the Act.

Section 286.100 (Section 286.95 in the NPRM)  What Activities Count 
Towards the Work Participation Rates?

    Comments: Commenters supported the flexibility this section allowed 
the Tribes in identifying work activities.
    PRWORA does not specify the work activities required of Tribal TANF 
recipients but instead authorizes the establishment of minimum work 
participation requirements, which include work activities, for each 
Tribal grantee. The overwhelming feedback we received in discussions 
with Tribes suggested that the work activities identified for States in 
the statute be considered activities that count toward a Tribal TANF 
participation rate with two caveats: (1) That they not be limited to 
those activities; and (2) that they not

[[Page 8504]]

be further defined in the regulations. Therefore, at Sec. 286.100 we 
listed the same activities found at section 407(b) of the Act. In 
addition, we are providing Tribes further flexibility to identify 
additional activities that they would consider acceptable and necessary 
in helping families work towards self-sufficiency. For example, a Tribe 
may identify subsistence activities or substance abuse treatment as 
activities the Tribe believes necessary to help families achieve self-
sufficiency.
    Furthermore, since we are not defining the work activities in the 
final regulations for States, but are instead asking States to define 
them, we feel it is appropriate to afford Tribes the same definition 
flexibility.

Section 286.105 (Section 286.100 in the NPRM)  What Limitations 
Concerning Vocational Education, Job Search and Job Readiness 
Assistance Exist with Respect to the Work Participation Rate?

    Tribal TANF work activities should not be subject to the same 
restrictions on vocational training as are placed on State TANF 
programs by statute (i.e., not be limited to 12 months). Because Tribal 
families may have minimal work skills and experience, and Tribal work 
opportunities may be much more limited, Tribes should have the 
flexibility to engage Tribal families in more extensive training. 
Therefore, the final regulation at Sec. 286.105(a) does not impose the 
same limitation that is imposed upon States.
    However, with respect to the job search/job readiness limitation 
required of State TANF programs, we believe that Tribal TANF families 
should also not simply be asked to job search or participate in job 
readiness activities as their sole activity for lengthy periods of 
time. Therefore, the Final Rule at Sec. 286.105(b) is similar to the 
provision found at section 407(c)(2)(A)(i) of the Act that limits to 
six weeks in a fiscal year the length of time that a State can consider 
participation in job search/job readiness in a fiscal year by any 
individual to be considered engaged in work.
    We are also affording Tribes the option afforded to States that if 
the unemployment rate in a Tribal TANF service area is at least 50 
percent greater than the United States' total unemployment rate for the 
fiscal year, then job search and job readiness assistance can be 
counted for up to twelve weeks during that fiscal year.
    However, unlike for State TANF programs, we indicate at 
Sec. 286.105(c) that if job search is conducted on an ancillary basis 
as part of another activity, then time spent in job search activities 
can count without limitation. We believe that as long as a family is 
engaging in activities in addition to job searching, then including 
hours spent in job search as part of their other activities is 
consistent with the intent of the law, to help families reach their 
goal of achieving self-sufficiency as soon as possible.
    Comments: Several commenters strongly supported the provisions of 
this section. Three commenters objected to the limitation in proposed 
Sec. 286.100(b)(1) on job search and job readiness activities, arguing 
that this section was not supported by section 412 of the Act. They 
suggested that the six week limitation on job search and job readiness 
activities should be deleted and that any limitations should be 
negotiated by the Tribes.
    Response: Given that all TANF assistance is time-limited and the 
fact that the statute specifically limits the amount of time that job 
search and job readiness may be counted as work activities under State 
programs, we determined that permitting Tribes to negotiate limitations 
on job search and job readiness on a case-by-case basis could not be 
justified under the statute. Therefore, we have not changed the 
language in this section.

Section 286.110 (Section 286.105 in the NPRM)  What Safeguards Are 
There To Ensure That Participants in Tribal TANF Work Activities Do Not 
Displace Other Workers?

    Section 407(f)(2) of the Act contains two safeguards to ensure that 
in helping welfare recipients become self-sufficient, we do not 
jeopardize the economic well-being of non-TANF families through 
displacement. First, a recipient may not be assigned to a vacant 
position if the employer has placed other individuals on layoff from 
the same or equivalent job. Second, an employer may not terminate the 
employment of any regular employee in order to create a vacancy for the 
employment of a TANF recipient. We believe these safeguards provide 
important protection for all workers and need to be in place under both 
Tribal and State TANF programs. Furthermore, we do not intend for these 
provisions to preempt or supersede any Tribal laws providing greater 
protection for employees.

Time Limits

    In addition to promoting self-sufficiency and independence through 
employment, PRWORA stresses the temporary nature of welfare and limits 
the number of months that assistance can be provided with TANF funds. 
PRWORA provides a 60-month (or less, at State option) time limit for 
the receipt of TANF assistance under State TANF programs. The time 
limit provisions include not only the length of time that assistance 
can be provided, but also what months of assistance will count toward 
the time limit and whether any categories of recipients are exempt from 
the time limit rules. We have the authority, under section 412(c) of 
the Act, to establish for each Tribe, with the participation of the 
Tribe, appropriate time limits for receipt of assistance. Once 
established for each Tribe, the Tribe may not use its TFAG to provide 
assistance to a family that includes an adult beyond the established 
time limit.
    Section 412(c)(2) of the statute further provides that the time 
limits established for Tribal TANF programs must be consistent with the 
purposes of TANF and consistent with the economic conditions and 
resources available to each Tribe. This principle has been echoed in 
our on-going consultation with Tribes and Tribal organizations. The 
comments we have received strongly suggest that the Tribal TANF time 
limits should reflect the unique circumstances of each service area and 
service population.
    Comments: Several commenters objected to proposed Sec. 286.105, 
which requires safeguards to ensure that participants in tribal TANF 
work activities do not displace other workers. Their objections were 
based on the premise that these provisions sought to impose a rule on 
Tribes that the Act, at section 407(f)(2), applies only to the states. 
They further argued that, as proposed in Sec. 286.105(2)(b), it would 
impose on the Tribes requirements for internal grievance procedures, in 
direct violation of their sovereignty. They argue that while the Tribes 
should have the option to adopt such rules on a voluntary basis and 
that while they probably would do so, they should not be imposed on 
them as mandatory requirements. On this basis, they recommended that 
this section be deleted entirely.
    Response: The requirement that each Tribal TANF program create 
nondisplacement procedures reflects our concern about the possibility 
that placement of Tribal TANF recipients at work sites could displace 
other workers from their jobs. When workers are displaced by Tribal 
TANF recipients, there is the danger that the displaced workers may be 
forced to become the next generation of TANF recipients, which would be 
contrary to the purposes of the TANF program. In addition, this 
requirement is consistent with section 412 (a)(3)(B) of the Act that

[[Page 8505]]

applies to Tribal Welfare-to-Work programs and that incorporate a 
nondisplacement requirement. Through Sec. 286.110, we want to encourage 
Tribes to exercise due care as they promote work and implement new job 
development, placement, and referral activities in a manner that is 
consistent with the proper use of TANF funds and that does not 
unintentionally frustrate the goals of the TANF program. Section 
286.110(2)(b) merely requires that Tribes establish and maintain 
internal grievance procedures to resolve complaints that workers have 
been displaced. We agree that it is an essential exercise of tribal 
sovereignty for Tribes to determine for themselves the substance of 
these grievance procedures and to take whatever action the Tribe deems 
appropriate to resolve complaints concerning displacement under those 
procedures.

Section 286.115 (Section 286.110 in the NPRM)  What Information on Time 
Limits for the Receipt of Assistance Must a Tribe Include in Its Tribal 
Family Assistance Plan?

    As part of its plan, a Tribe will propose a time limit for receipt 
of Tribal TANF assistance that will apply to its service population and 
provide a rationale for its proposal. By ``time limit,'' we mean the 
maximum number of months (whether or not consecutive) that federally 
funded assistance will be provided to a Tribal TANF family that 
includes an adult. The proposed time limit should reflect the intent of 
Congress that welfare should be temporary and not a way of life. The 
proposal should also take into consideration those factors that may 
impact on the length of time that a TANF family might be expected to 
need in order to find employment and become self-sufficient.
    To allow for maximum flexibility, we are not requiring that the 
same time limit apply throughout the Tribal TANF service area. A Tribe 
should have the option to decide that because economic conditions and 
the availability and accessibility of services vary, it is appropriate 
to establish different time limits by geographic area. For example, a 
Tribe could choose to establish a shorter time limit for a part of the 
service area that has many employment opportunities than for another 
part of the service area with high unemployment.
    If the Tribe proposes to provide assistance for longer than 60 
months, it should explain how that time limit was determined and 
provide a rationale for its determination. As mentioned earlier, 
examples of the information that we would expect to be included to 
illustrate the Tribe's proposal include, but are not limited to: 
Poverty, unemployment, jobless and job surplus rates; education levels 
of adults in the service area; availability of and/or accessibility to 
resources (educational facilities, transportation) to help families 
become employable and find employment; and employment opportunities on 
and near the service area.
    As part of the negotiation process, we may ask for additional 
information and/or further discussion before the proposed time limits 
are approved. This would ensure that all factors are considered in 
establishing appropriate time limits for a Tribal TANF program.

Determining if the Time Limit Has Been Exceeded

    Section 408(a)(7) of the Act provides that States may not use 
Federal funds to provide assistance to a family that includes an adult 
who has received assistance for more than five years. In other words, 
if a family does not include any adults who are receiving assistance 
(i.e., only the children receive assistance), then the time limit does 
not apply. We have made the Tribal TANF requirements consistent with 
the State requirements in this area. The intent of Congress is that 
families should achieve self-sufficiency through employment. It does 
not seem reasonable to apply the time limit requirement to cases where 
only children are receiving assistance, and employment is not an 
option.
    Section 408(a)(7)(B) of the Act requires States to disregard 
certain months of assistance in determining if the 60-month time limit 
has been exceeded. Specifically, State TANF programs do not count any 
month during which a minor who was not head of the household or married 
to the head of the household received assistance. For the reasons 
explained below, we propose to apply this disregard provision to 
Tribes.
    The decision as to whether a family has met the time limit is based 
on how long the adults have received assistance. Therefore, it does not 
seem reasonable to include months when an individual received 
assistance as a minor. However, Tribes, like States, would count months 
when a minor received assistance as the head of a household or as the 
spouse of the head of the household. The reason is that minor heads of 
households and minors who are married to heads of household are 
generally treated as adults in terms of other program requirements 
under the Act.
    Section 407(a)(7)(D) of the Act, as amended by the Balanced Budget 
Act of 1997, requires that Tribes and States disregard as a month of 
assistance any month during which an adult lived in Indian country or 
an Alaskan Native village in which at least 50 percent of the adults 
were not employed. To determine whether 50 percent of the adults were 
not employed, the statute allows the use of any reliable data with 
respect to the month. This would allow the use of the Labor Force 
Report, which is issued every two years by the Bureau of Indian 
Affairs, Department of Labor Unemployment Data, or any other reliable 
data source or combination of data sources.
    Comments: Several comments were received supporting maximum 
flexibility for Tribes in accommodating the unique characteristics of 
their service populations.
    Comments were also received noting that, while the regulations 
provide for time limits to be negotiated by Tribes beyond the 60-month 
limit imposed on states by statute, ``* * * no clear guidance has been 
provided on the type of information that will be considered in 
approving extended time limits,'' and suggesting that factors that 
would be considered be enumerated in the Final Rule.
    Response: Section 286.115(b)(1) does provide examples of the types 
of information that will be considered. However, this list is not 
intended to be exhaustive. In acknowledgment of the differences of 
geographical, social, and economical conditions affecting each Tribe, 
each Tribe must have the opportunity to justify its proposed time limit 
based on its unique needs, and where appropriate, even to justify 
different time limits for different geographic areas based on special 
conditions.
    Comment: Comments were received supporting the flexibility provided 
in proposed Sec. 286.110(d)(2) which allowed Tribes a very wide range 
in the data that could be used to establish and support the invocation 
of the ``50 percent not employed exception.'' However, these commenters 
also suggested that, ``(i)f Tribes are expected and required to collect 
and collate this data, adequate resources for comprehensive data 
collection should be made available.''
    Response: While we do not disagree on the need for adequate 
resources, the statute makes no provision for funding to Tribes for 
data collection.
    Comment: With regard to proposed Sec. 286.110(e), one commenter 
suggested that additional language should be inserted at the beginning 
of this section making more specific reference to proposed 
Secs. 286.110(a)(2) and (3); Sec. 286.110(d); and Sec. 286.115 as

[[Page 8506]]

exceptions to the requirement to count previous assistance received 
toward the total lifetime restriction.
    Response: We believe the language in Secs. 286.115(a) and 286.120 
is sufficient and that additional language would be redundant and 
unnecessary.
    Comment: One commenter recommended including the definition of 
``adult'' for the purposes of the 50 percent unemployment disregard.
    Response: There is no qualifier in the statute, so we have chosen 
not to further define this term in the regulation.

Section 286.120 (Section 286.115 in the NPRM)  Can Tribes Make 
Exceptions to the Established Time Limit for Families?

    For State TANF programs, section 408(a)(7)(C) of the Act allows for 
two hardship exceptions from the 60-month time limit: (1) Families that 
meet the State's definition of ``hardship''; and (2) families that 
include an individual who has been battered or subjected to extreme 
cruelty. A State may exempt no more than 20 percent of its average 
monthly caseload under these exceptions.
    Section 412(c) of the Act does not mention a similar exception for 
Tribal TANF programs. However, because the time limit provisions 
include not only how long a family may receive Tribal TANF benefits, 
but also who is subject to the time limits, it is reasonable that 
Tribes should have the option to provide for similar exceptions from 
their established time limits. The final regulations provide that we 
will negotiate the maximum percentage of cases in the Tribe's caseload 
which may be exempted from the established time limits.
    Comment: One commenter recommended the addition of language in 
proposed Sec. 286.115 for exemption from the time limit to be made for 
``(f)amilies who are determined by the Tribe to be directly impacted by 
a declared economic disaster in their area * * *.''
    Response: Section 286.120(a)(1) provides that exemptions may be 
provided for ``hardship, as defined by the Tribe * * *.'' This allows 
for the Tribe to make provision for such an exemption in their plan if 
it chooses to do so.
    Comment: One commenter suggested that due to the nature of domestic 
violence and the resulting length of time often needed to assist a 
victim in becoming job ready, Tribes should define exceptions on an 
individual basis.
    Response: This section provides no standard for the length of 
exemptions. Each Tribe may define these based on its client and program 
needs if it chooses to do so.

Section 286.125 (Section 286.120 in the NPRM)  Does the Receipt of TANF 
Benefits Under a State or Other Tribal TANF Program Count Towards a 
Tribe's TANF Time Limit?

    Under section 408(a)(7) of the Act, a State must consider receipt 
of TANF benefits under other State programs in determining if the 60-
month time limit has been exceeded. Although section 412 of the Act 
does not include a similar requirement for Tribal TANF programs, we 
believe that prior receipt of TANF must also be counted by Tribes when 
determining if the time limit has been exceeded. We do not believe the 
intent of Congress was otherwise. Thus, a Tribe must count towards an 
adult's time limit all prior months of TANF assistance funded with TANF 
block grant funds, except for any month that was exempt or disregarded 
by statute or regulation.
    As stated earlier, the PRWORA promotes self-sufficiency and 
independence by providing people with more work opportunities while 
holding individuals to a higher standard of personal responsibility for 
the support of their children. The legislation expands the concept of 
mutual responsibility, introduced under the Family Support Act of 1988, 
that income assistance to families with able-bodied adults should be 
transitional and conditioned upon their efforts to become self-
sufficient. As Tribes focus on helping adults get work and earn 
paychecks quickly, parents are also expected to meet new, tougher work 
requirements. We will expect Tribes to ensure that parents understand 
what is required of them, and to develop proposals for penalties 
against individuals that reflect the importance of those requirements.
    Comments: Commenters pointed to the difficulty in complying with 
the requirements of proposed Sec. 286.120 that a participant's prior 
months of TANF assistance received outside of their own program must be 
counted toward the individual's total eligibility determination. The 
difficulty is based on the lack of reliable information exchange 
systems between Tribes and between Tribes and states or other local 
governments administering TANF. It was suggested that language be added 
relieving the Tribe of this need to comply if information is not 
available or ``* * * where compliance is not required under an approved 
tribal TANF plan.''
    Response: While we recognize the difficulty for Tribes in 
determining prior receipt of TANF assistance, we believe that Congress 
was clear that TANF assistance must be time-limited. Therefore, it is 
necessary to document all assistance provided to an individual 
regardless of source.
    We also recognize that if the information necessary to determine 
length of assistance from other sources, i.e. a state or another Tribe, 
cannot be accessed or if an individual commits fraud at the time of 
enrollment in identifying prior assistance, the Tribe cannot be held 
responsible. However, TFAPs do include provisions for recourse against 
individuals in instances of misrepresentation and fraud.

Section 286.130  Does the Receipt of Welfare-to-Work (WtW) Cash 
Assistance Count Towards a Tribe's Time Limit? (New Section)

    Comment: A couple of commenters suggested that we address the 
impact of WtW cash assistance on the time limit for receipt of Tribal 
TANF assistance. We believe that discussion of this issue is especially 
important in light of amendments to the Act dealing with WtW assistance 
which were enacted subsequent to publication of the Tribal TANF NPRM.
    Response: This is a new section in the Final Rule. Here we have 
clarified the circumstances under which benefits received by a family 
under WtW count against the time limit for receipt of TANF assistance. 
We do not believe that the statute permits a broad exclusion of WtW 
cash assistance from the definition of assistance applicable to Tribal 
TANF operations. Section 408(a)(7)(G) of the Act provides that 
``noncash [WtW] assistance'' shall not be considered assistance for 
purposes of the TANF program time limit. This specific and limited 
exclusion strongly suggests that cash WtW assistance should generally 
be considered assistance. If a WtW benefit falls within the definition 
of assistance at Sec. 286.130, it must count toward the TANF time 
limit.
    In defining ``WtW cash assistance,'' (i.e., what counts towards the 
time limit for receipt of TANF assistance), we started with the 
presumption that to be considered ``WtW cash assistance'' a benefit 
must fall within the general definition of assistance at Sec. 286.10. 
Therefore, services, work supports, and nonrecurring, short-term 
benefits that are excluded from the definition of assistance at 
Sec. 286.10(b) may not be ``WtW cash assistance.'' Also excluded are 
supportive services for nonworking families. Although these may be 
thought of as assistance, these benefits are services designed to meet 
specific

[[Page 8507]]

nonbasic needs and should not be characterized like cash.
    ``WtW cash assistance'' includes assistance designed to meet a 
family's ongoing, basic needs. It also includes such benefits as cash 
assistance to the family, even when provided to participants in 
community service or work experience (or other work activities) and 
conditioned on work. Conference Report (H.Rpt. 105-217) specifically 
mentions ``wage subsidies'' as an example of ``WtW cash assistance.''
    We want to make it clear that the definition of ``WtW cash 
assistance'' in no way limits the types of WtW benefits for which 
families that have exhausted receipt of TANF assistance are eligible or 
may receive. States, Tribes, and local agencies may provide cash and 
noncash WtW assistance and other benefits to such families beyond the 
TANF-related time limit on assistance.

Section 286.135 (Section 286.125 in the NPRM)  What Information on 
Penalties Against Individuals Must Be Included in a Tribal Family 
Assistance Plan?;

Section 286.140  What Special Provisions Apply to Victims of Domestic 
Violence? (New Section);

Section 286.145 (Section 286.130 in the NPRM)  What Is the Penalty if 
an Individual Refuses to Engage in Work Activities?; and

Section 286.150 (Section 286.135 in the NPRM)  Can a Family, With a 
Child Under Age 6, Be Penalized Because a Parent Refuses To Work 
Because (S)He Cannot Find Child Care?

    Similar to our handling of these three sections in the NPRM, this 
Final Rule combines the discussions of these because of the inter-
relationship among them.
    As mentioned above, section 412(c) of the Act gives flexibility to 
establish penalties against individuals, and related policies, for each 
Tribal TANF grantee. Section 412(c)(3) specifies that penalties against 
individuals established for each Tribal TANF grantee must be similar to 
comparable provisions in section 407(e). However, the statute does not 
specify a process or procedure to accomplish this.
    As discussed earlier, we will use the Tribal TANF plan process to 
establish the requirements related to penalties against individuals and 
related policies that will become a part of the Tribal TANF program. In 
addition, the Tribe must include a rationale for its proposal and 
related policies in the plan. The rationale needs to address how the 
Tribe's proposal is: consistent with the purposes of section 412 of the 
Act; consistent with the economic conditions and resources available to 
the Tribe; and similar to the requirements applicable to States as 
specified at section 407(e) of the Act.
    States are required to reduce the amount of assistance otherwise 
payable to the family pro rata (or more at State option) for the period 
during the month in which the individual refused to engage in work as 
required, subject to good cause and other exceptions determined by the 
State. The States also are given, by the statute at section 
407(e)(1)(B), the option to terminate the case.
    In addition, a State may establish, pursuant to section 407(e)(1) 
of the Act, good cause exceptions to penalties for failure to engage in 
work as required. We believe that Tribes must also be able to establish 
reasonable good cause exceptions because penalties against individuals 
established for each Tribal TANF grantee must be comparable to those 
specified at section 407(e). A Tribe must include a rationale for its 
good cause exceptions. The rationale should address how the good cause 
exceptions are reasonable and how they relate to the goals of the 
Tribe's TANF program.
    As specified in the statute at section 407(e)(2), a State may not 
reduce or terminate assistance to a single custodial parent caring for 
a child under age six for refusing to engage in work as required, if 
the parent demonstrates an inability (as determined by the State) to 
obtain needed child care. The parent's demonstrated inability must be 
for one of the following reasons:
     Appropriate child care within a reasonable distance from 
the individual's home or work site is unavailable;
     Informal child care by a relative or under other 
arrangements is unavailable or unsuitable; or
     Appropriate and affordable formal child care arrangements 
are unavailable.
    We believe a comparable provision should apply to Tribal TANF 
programs as the lack of child care may be even more acute on remote 
Indian reservations.
    Refusal to work when the Tribe determines an acceptable form of 
child care is available is not protected from sanctioning.
    Because each Tribe has the authority to determine whether the 
individual has adequately demonstrated an inability to obtain needed 
child care, we expect the Tribe to define the terms ``appropriate child 
care,'' ``reasonable distance,'' ``unsuitability of informal care,'' 
and ``affordable child care arrangements.'' The Tribe must also provide 
families with the criteria (including the definitions) that it applies 
in implementing the exception and the means by which a parent can 
demonstrate an inability to obtain needed child care.
    To keep families moving toward self-sufficiency and to promote 
Tribal compliance with this penalty exception, our rules provide that 
Tribes must have procedures in place that: (1) Enable a family to 
demonstrate its inability to obtain needed child care; (2) inform 
parents that the family's benefits cannot be reduced or terminated when 
they demonstrate that they are unable to work due to the lack of needed 
child care for a child under the age of six; and (3) advise parents 
that the time during which they are excepted from the penalty will 
still count toward the time limit on Federal benefits at section 
408(a)(7) of the Act, if applicable.
    The regulations for the Child Care and Development Fund (CCDF) 
reinforce the importance of providing this vital information to parents 
by also requiring the child care lead agency, as part of its consumer 
education efforts, to inform TANF parents seeking child care in the 
CCDF system of the existence of the child care exception and how to 
demonstrate an inability to obtain needed child care. Further, the CCDF 
rule requires the lead agency for child care to coordinate with the 
TANF agency in order to understand how the TANF agency defines and 
applies the terms of the statute regarding the penalty exception and to 
include the definitions of any appropriate terms or criteria in the 
CCDF plan.
    Under section 402(a)(7) of the Act States may opt to establish and 
enforce standards and procedures for identifying and helping victims of 
domestic violence. If the State has chosen to establish these 
standards, it may waive certain program requirements, including work 
requirements, in cases where compliance would make it more difficult 
for an individual receiving assistance to escape domestic violence or 
would unfairly penalize victims or individuals who are at risk of 
further violence. The State must determine that the individual 
receiving the program waiver has good cause for failing to comply with 
the requirements. Tribes may also wish to consider whether to establish 
their own standards and procedures related to victims of domestic 
violence.
    There may be other reasons a Tribe may want to impose a penalty on 
an individual who refuses to cooperate with program requirements other 
than work activity requirements. For

[[Page 8508]]

example, a Tribe may want to impose a penalty on a custodial parent who 
refuses to cooperate with a child support enforcement program.
    Based on the above information, we believe the Tribe's TANF plan 
must address the following questions:
    (1) Will the Tribe impose a pro rata reduction, or more at Tribal 
option, or will it terminate assistance to a family which includes an 
adult or minor head-of-household that refuses to engage in work as 
required?
    (2) What will be the proposed Tribal policies with respect to a 
single custodial parent, with a child under the age of 6, who refuses 
to engage in work activities because of a demonstrated inability to 
obtain child care?
    (3) What good cause exceptions, if any, does the Tribe propose 
which will allow individuals to avoid penalties for failure to engage 
in work activities? What is the rationale for these exceptions?
    (4) What other rules governing penalties does the Tribe propose?
    (5) What, if any, will be the Tribe's policies in relation to 
victims of domestic violence?
    With respect to the prohibition on penalizing single custodial 
parents with a child under age 6, we want to underscore the pivotal 
role of child care in supporting work and that the lack of appropriate, 
affordable child care can create unacceptable hardships on children and 
families. To keep families moving toward self-sufficiency, Tribes may 
want to consider adopting a process or procedure that enables a family 
to demonstrate its inability to obtain needed child care. Just as 
States must have policies for continuing benefits to a single-parent 
family when it demonstrates that it is unable to work due to the lack 
of child care for a child under the age of six, it is important for 
Tribes to have policies too. Like States, Tribes should inform eligible 
parents that the time during which they are excepted from the penalty 
will count towards the time limit on benefits, unless the Tribe's 
approved time limit proposal provides for an exception.
    The regulations for the Child Care and Development Fund (CCDF) 
reinforce the importance of providing this vital information to parents 
by requiring the child care Lead Agency, as part of its consumer 
education efforts, to inform parents about the penalty exception to the 
TANF work requirement. It must also provide parents with the 
information outlined above concerning the process or procedures for 
demonstrating an inability to obtain needed child care.
    As the role of child care is pivotal in supporting work activities, 
it is important for the Tribal and State CCDF programs to coordinate 
fully with the Tribal TANF program. Coordination between CCDF and TANF 
is critical to the success of both programs.
    In addressing the economic conditions and available resources in 
support of its proposal for penalties against individuals, the Tribe 
may refer back to the information already provided in the plan in 
relation to the Tribe's proposal for minimum work participation 
requirements and time limits. It may also offer additional information 
in support of its proposal.
    Comment: One commenter objected toSec. 286.125 as proposed on the 
basis that it ``* * * proposes to establish criteria which must be 
included in a Tribal TANF plan for penalizing individuals who refuse to 
engage in work activities.''
    Response: We believe that the commenter has misread this section. 
The specific subsection to which we believe reference is made, 
Sec. 286.125(a)(1) as proposed, does not propose to establish any 
criteria. It requires that the Tribe respond to the question of whether 
it plans to impose a pro rata reduction or some other alternative, 
without imposing either.
    When coupled with Sec. 286.145, this section clearly provides that 
penalties, and the methodology for imposing them, can be established in 
their TFAP by each Tribe.
    Comment: One commenter objected to the entire Sec. 286.135 as 
proposed, arguing that it ``describes special rules to be imposed by 
ACF on Tribes,'' and that ``(t)he law does not require special 
consideration in these areas.''
    Response: We believe the rule recognizes that child care helps 
parents reach and maintain economic self-sufficiency and is consistent 
with the law. Obtaining appropriate, affordable and safe child care is 
widely recognized as a major barrier that keeps families on welfare and 
out of the workforce. This section recognizes that parents are more 
likely to obtain work and remain in the workforce if appropriate child 
care is available while also recognizing that Tribes must define for 
themselves the criteria which families must satisfy in order to avoid 
work participation penalties due to unavailability of child care.
    Comment: Commenters suggested that while child care may be 
available, it may not always be appropriate, and therefore recommends 
that the work ``appropriate'' be inserted before the words ``child 
care.''
    Response: We have revised the regulatory language accordingly.

Section 286.155  May a Tribe Condition Eligibility for Tribal TANF 
Assistance on Assignment of Child Support to the Tribe? (New Section)

    A thorough discussion of this section can be found earlier in the 
preamble, under IV.A Discussion of Cross-Cutting Issues--Child Support.

Tribal TANF Plan Processing

Section 286.160 (Section 286.140 in the NPRM)  What Are the Applicable 
Time Frames and Procedures for Submitting a Tribal Family Assistance 
Plan?

    The PRWORA does not give a date by which a Tribe must submit a 
Tribal Family Assistance Plan. In establishing the time frame within 
which a Tribe must submit the TFAP, we considered two factors. The 
first was the requirement found at section 405(b) of the Act that we 
provide to a State timely notice of the amount of the reduction to its 
State Family Assistance Grant (SFAG) that results from the operation of 
a Tribal TANF program. The statute requires this notice to be made 
three (3) months before we take the reduction in the State's SFAG 
quarterly installment. The second consideration is the authority at 
section 412 (b)(2) of the Act which provides for Secretarial approval 
of each Tribal Family Assistance Plan.
    As mentioned in the discussion on determining the amount of a 
Tribal Family Assistance Grant, our experience to date has indicated 
that we need sufficient time to request data from the State, receive 
and process it, and resolve any issues, prior to making official notice 
to the State. We have outlined time frames at Sec. 286.20 for 
requesting State data and resolving any issues concerning the data. In 
order to meet these time frames and meet the requirement for a three-
month notice to the State, the Final Rule at Sec. 286.160 requires a 
Tribe to submit to us a letter of intent, unless the Tribe has already 
requested, received and resolved any issues regarding the State-
supplied data. We will use the letter of intent to request the data 
from the State and thus will need to specify the Tribe's proposed 
implementation date and proposed service area and population. We have 
specified time frames for the submission of the letter of intent at 
Sec. 286.160(a).
    In order to meet the approval requirement, including review, 
discussion, and where appropriate, modification of the TFAP in 
consultation with the Tribe, we have determined that we will need a

[[Page 8509]]

minimum of 120 days to accomplish these actions for Tribes who propose 
to implement a program on the first day of a calendar quarter. 
Therefore, the final regulation at Sec. 286.160(a) requires the formal 
submission of a Tribal TANF plan to us based on the dates specified in 
the table below.
    A Tribe will be able to implement a Tribal TANF program on the 
first day of any month. However, due to the requirement for a three-
month notification to the State of its adjusted quarterly SFAG amount, 
a Tribe who wishes to implement a TANF program on other than the first 
day of a calendar quarter, i.e., January 1, April 1, July 1 or October 
1, will need to submit both its letter of intent and its formal plan as 
if the proposed implementation date was the first day of a calendar 
quarter. The following table illustrates, based on implementation 
dates, when a Tribe needs to submit its letter of intent and formal 
plan in order for us to meet the statutory requirement for notification 
to the State.

----------------------------------------------------------------------------------------------------------------
                                       The letter of intent is                            And we must notify the
 If proposed implementation date is:             due:           The formal plan is due:         State by:
----------------------------------------------------------------------------------------------------------------
January 1, February 1 or March 1.....  July 1 of previous year  September 1 of previous  October 1 of previous
                                                                 year.                    year.
April 1, May 1 or June 1.............  October 1 of previous    December 1 of previous   January 1 of same year.
                                        year.                    year.
July 1, August 1 or September 1......  January 1 of same year.  March 1 of same year...  April 1 of same year.
October 1, November 1 or December 1..  April 1 of same year...  June 1 of same year....  July 1 of same year.
----------------------------------------------------------------------------------------------------------------

    As noted above, the Secretary has explicit authority to approve 
Tribal TANF plans. In exercising this authority, we plan to work with 
each Tribe that submits a TFAP to ensure that plans contain the 
information required by statute and regulation. A Tribe may make 
revisions to its plan during the review process. In instances where we 
disapprove a plan, the final regulation at Sec. 286.165(e) provides an 
appeal process.

Public Law 102-477

    Public Law 102-477, the Indian Employment, Training and Related 
Services Demonstration Act of 1992, allows Tribes to integrate certain 
federally funded employment, training and related services programs 
into a single plan. The purpose of this public law is to improve the 
effectiveness of these programs and services.
    The PRWORA requires the Secretary to review and approve all TFAPs 
for Tribes seeking to operate a Tribal TANF Program. Those requirements 
are found at section 412(a). Section 5 of Public Law 102-477 states 
``the programs that may be integrated in a demonstration project * * * 
shall include any program under which an Indian tribe is eligible for 
receipt of funds.'' In order to receive a Tribal Family Assistance 
Grant, Tribes must first have approved Tribal TANF plans. Therefore, 
the final regulation at Sec. 286.160(f) indicates that a Tribe must 
have separate approval of its TFAP from the Secretary before it can 
integrate the Tribal TANF program into a Public Law 102-477 plan.

Overview of Comments

    Comments were received from several Tribes, consortia, inter-tribal 
organizations, and states regarding this requirement. All the 
commenters questioned the need for a separate stand-alone plan and 
recommended that this requirement be dropped. The commenters supported 
this position by noting that the intent of Pub.L. 102-477 is to 
facilitate integration of labor-related social service programs. They 
also noted that such integration would ``* * * provide a more 
comprehensive view'' and ``give * * * ACF staff greater understanding 
of how the Tribe(s) will provide services to meet TANF work 
requirements.'' Finally, the commenters argued that, ``there is no 
reason why an annual integrated plan cannot * * * include the required 
items (elements)'' of a TANF plan.
    Response: The rationale cited in the proposed rule and related 
discussions for requiring approval of a stand-alone TANF plan prior to 
integration into a Pub.L. 102-477 plan is that the statute specifically 
requires the Secretary to approve a tribal TANF plan as opposed to just 
acknowledging the plan as complete, as is done with state plans. Just 
as the review, negotiation, and approval process(es) that must take 
place between the Tribe and HHS to arrive at an approved plan cannot be 
delegated to any other agency or department, neither can it be subject 
to any conditions that might be imposed by the Department of Interior 
relating to approval of a Pub.L. 102-477 program.
    Furthermore, in addition to the requirement for approval of the 
plan and the process that it necessitates, there are important 
programmatic considerations that must be taken into consideration:
    First, the development of the tribal TANF plans, at least 
initially, can and does often entail developmental activities and 
negotiation processes involving the Tribe, State, and HHS, that are 
unique to the TANF program and clearly beyond the scope of what is 
allowed or required of other programs that could be included in a 
Pub.L. 477 plan. These include such things as: Establishing service 
area and population; determining level of funding entitlement; 
establishing eligibility criteria, tenure of service and program 
duration; negotiating the nature and scope of state support; and 
development of state and tribal collaboration.
    Second, at the time of renewal or in the case of an amendment to a 
TANF plan, there is a requirement for renegotiation with, and 
subsequent review and approval by the Secretary that requires the plan 
to be considered on its own merit.
    Finally, Pub. L. 102-477 gives the Department of Interior complete 
authority to approve or disapprove Pub.L. 102-477 plans, while PRWORA 
gives the Secretary sole authority to approve or disapprove TANF plans. 
These two functions and the processes which they entail are unique, 
distinct processes and of necessity must remain so between the two 
Departments.

Section 286.165 (Section 286.145 in the NPRM)  How Is a Tribal Family 
Assistance Plan Amended?

    Section 412 of the statute does not address amendments to Tribal 
TANF plans. We believe that Tribes need to have an opportunity, during 
the period covered by a plan, to amend the plan. Thus, the final 
regulation at Sec. 286.165 allows Tribes to amend TFAPs.
    In addition, the final regulation establishes the procedure for the 
submission, review and implementation of a Tribal TANF plan amendment. 
We require the submission to the Secretary of a plan amendment no later 
than thirty (30) days prior to the implementation of the amendment. The 
implementation date for an approved amendment will be the first day of 
any month. We will take prompt action to approve or disapprove the 
proposed amendment. If we disapprove a plan amendment, the Tribe will 
be given an opportunity to appeal

[[Page 8510]]

the decision. Use of TANF funds for services or activities under an 
amendment cannot be made until the implementation date of the approved 
amendment.

Section 286.170  How May a Tribe Petition for Administrative Review of 
Disapproval of a TFAP or Amendment? (New Section)

    We received a comment that the Final Rule should outline an appeals 
process to be used by Tribes when a TFAP or plan amendment is not 
approved. We concur and, accordingly, have included this new section in 
the Final Rule.

Specials Provisions for Alaska

Section 286.175 (Section 286.150 in the NPRM)  What Special Provisions 
Apply to Alaska?;

Section 286.180 (Section 286.155 in the NPRM)  What is the Process for 
Developing the Comparability Criteria That Are Required in Alaska?;

Section 286.185 (Section 286.160 in the NPRM)  What Happens When a 
Dispute Arises Between the State of Alaska and the Tribal TANF Eligible 
Entities in the State Related to the Comparability Criteria?; and

Section 286.190 (Section 286.165 in the NPRM)  If the Secretary, the 
State of Alaska, or Any of the Tribal TANF Eligible Entities in the 
State of Alaska Want to Amend the Comparability Criteria, What is the 
Process for Doing So?

    Comment: One commenter expressed concern that the comparability 
requirement places an unfair burden to Tribes in Alaska and has been a 
major deterrent toTribes wishing to operate a Tribal TANF program in 
Alaska.
    Response: Section 412(i) of the statute requires the Tribal TANF 
eligible entities in the State of Alaska to operate a program in 
accordance with requirements comparable to the State of Alaska's TANF 
program. Given the requirements of the statute, we provided a framework 
for Tribes to work together with the state toward developing 
comparability criteria. As we indicated in the Preamble to the proposed 
rule, in November 1996 we sponsored a meeting during which a ``Single 
Points of Contact (SPOC)'' group was formed to develop an initial 
comparability criteria document. These representatives of the 13 
eligible Tribal TANF eligible entities, the State, and ACF continued to 
meet and further refine the document until such time as the first 
eligible entity submitted a Tribal TANF plan. Because of the ongoing 
collaboration and coordination among all affected parties, this process 
allowed the greatest level of flexibility possible given the mandatory 
requirements of the statute. All eligible entities have agreed to the 
comparability criteria document which was developed as a result of this 
process.

Subpart D--Accountability and Penalties (Sections 286.195-286.240)

    It is clear that, in enacting the applicable penalties at section 
409(a) of the Act, Congress intended for Tribal flexibility to be 
balanced with Tribal accountability. To assure that Tribes fulfil their 
new responsibilities under the TANF program, Congress established a 
number of penalties and requirements under section 409. The penalty 
areas indicate the areas of performance that Congress found most 
significant and appropriate for Tribal programs. Through specific 
sanctions, Congress provided the Secretary authority to enforce 
particular provisions in the law.
    As referenced in section 412 of the Act, section 409(a) includes 
four penalties that can be imposed on Tribes. This subpart of the Final 
Rule covers these penalties.
    Comment: One commenter points out the inequity found in the fact 
that while Tribes can be penalized for not meeting the participation 
rates, they are excluded from the bonus rewards for achieving certain 
levels of performance.
    Response: These provisions are set by the statute and cannot be 
affected by regulation.

Section 286.195 (Section 286.170 in the NPRM)  What Penalties Will 
Apply to Tribes?

    The four penalties that apply to Tribes are as follows:
    (1) A penalty of the amount by which a Tribe's grant was used in 
violation of part IV-A of the Act;
    (2) A penalty of five percent of the TFAG as a result of findings 
which show that the Tribe intended to violate a provision of the Act;
    (3) A penalty in the amount of the outstanding loan plus the 
interest owed on the outstanding amount for failure to repay a Federal 
loan; and
    (4) A penalty for failure to satisfy the minimum work participation 
rates.
    As specified in section 409(a)(3) of the Act, the participation 
rate penalty amount will depend on whether the Tribe was under a 
penalty for this reason in the preceding fiscal year. If a penalty was 
not imposed on the Tribe in the preceding year, the penalty reduction 
will be a maximum of five percent of the TFAG in the following year. If 
a penalty was imposed in the preceding year, the penalty reduction will 
be increased by 2 percent per year, up to a maximum of 21 percent. We 
will take into consideration the severity of the failure in determining 
the amount of the penalty. In our consultation with Tribes, we have 
been advised that it will be difficult to satisfy the participation 
rates because of economic conditions (e.g., high unemployment rates) in 
Tribal service areas. Although these conditions will be considered in 
establishing the minimum participation rates for each TFAG program, we 
recognize that it may still be difficult for Tribes to meet this 
requirement. For this reason, we will take into consideration the 
following two factors in determining the amount of the penalty: (1) 
Increases in the unemployment rate in the Tribe's service area, and (2) 
changes in TFAG caseload (e.g., increases in the number of families 
receiving services).
    If we impose a penalty on a Tribe, the following fiscal year's TFAG 
will be reduced. In calculating the amount of the penalty, all 
applicable penalty percentages will be added together and the total 
will be applied to the amount of the TFAG that would have been payable 
if no penalties were assessed against the Tribe. As a final step, other 
(non-percentage) penalty amounts will be subtracted. If this 
calculation would result in the TFAG being reduced by more than 25 
percent, we will apply the State TANF limitation in section 409(d) of 
the Act. In applying the penalties against a State TANF program, we 
cannot reduce the State's block grant by more than 25 percent in any 
quarter. If we are unable to collect the entire penalty in a fiscal 
year, any excess penalty amounts will be applied against the grants for 
succeeding years. We intend to treat Tribes like States in this area, 
and limit the amount of TFAG reduction due to penalties to 25 percent 
in any given fiscal year.

Failure To Repay a Federal Loan

    Section 406 of the Act permits Tribes to borrow funds to operate 
their TANF programs. Tribes must use these loan funds for the same 
purposes as apply to other Federal TANF funds. In addition, the statute 
also specifically provides that Tribes may use such loans for welfare 
anti-fraud activities and for the provision of assistance to Indian 
families that have moved from the service area of a State or other 
Tribe operating a Tribal TANF program. Tribes have three years to repay 
loans and must pay interest on any loans received. We will be issuing a 
program instruction notifying Tribes and States of the application 
process and the information needed for the application.

[[Page 8511]]

    Section 409(a)(6) of the Act establishes a penalty for Tribes that 
do not repay loans provided under section 406. We will penalize Tribes 
for failing to repay a loan provided under section 406 (see 
Sec. 286.195(a)(4) and Sec. 286.210). A specific vehicle for 
determining a Tribe's compliance with this requirement is unnecessary. 
In our loan agreements with Tribes, we will specify due dates for the 
repayment of the loans and will know if payments are not made.

Outstanding Penalties and Retrocession

    In developing the proposed rules, a question arose concerning how 
we will treat situations where a Tribe decides to retrocede the TANF 
program. Since the Tribe will no longer receive a TFAG, we would be 
unable to collect any penalty by withholding or offsetting in the 
succeeding fiscal year. However, we stipulate in the final regulation 
that a Tribe that retrocedes a Tribal TANF program is responsible for 
the payment of any penalty that may be assessed for the period the 
program was in effect.

Replacement of Penalty Amounts

    Section 409(a)(12) of the Act requires a State to expend its own 
funds to replace any reduction in its SFAG due to the imposition of a 
penalty. This is to prevent recipients from also being penalized for 
the State's failure to administer its program in accordance with the 
requirements of the Act. We believe that a similar failure by a Tribe 
should not cause Tribal TANF recipients to be penalized. For this 
reason, in the same fiscal year as a penalty is imposed, at 
Sec. 286.195(c)(1) we require a Tribe to expend Tribal funds to replace 
any reduction in the TFAG resulting from penalties that have been 
imposed. The Tribe must document compliance with this provision on its 
TANF Financial Report.
    As amended by the Balanced Budget Act of 1997, section 409(a)(12) 
states that failure of a State to replace any reduction in its SFAG 
amount due to penalties may result in a penalty of not more than 2 
percent of the SFAG, plus the amount that was required to be replaced. 
However, we do not want to subject Tribes to a penalty that is so 
severe that services to recipients are jeopardized. Therefore, at 
Sec. 286.195(c)(2) we impose a similar, but not the same, penalty on 
Tribes. We stipulate in the Final Rule that we may impose a penalty of 
not more than 2 percent of the TFAG if a Tribe fails to expend its own 
funds to replace any reduction in the TFAG due to penalties.
    Comments: Two commenters suggested that there is no statutory basis 
for this section and that it should be deleted.
    Response: The statutory basis for this section is found at sections 
412(g)(1) and (a)(2) which clearly make the provisions of subsections 
(a)(1), (a)(3), (a)(6), (b), and (c) of section 409 applicable to 
tribal grants.
    Comment: One commenter suggested that ``(t)he Tribes need to have 
meaningful involvement * * *'' in the process of determining whether 
violations have occurred and whether penalties should be assessed.''
    Response: We believe that this is provided by the very nature of 
the process as set forth in Sec. 286.220, which provides opportunity 
for the Tribe to respond to and dispute any findings.
    Comment: One commenter objected specifically to proposed 
Sec. 286.170(a)(3), which imposes penalties for failure to meet minimum 
work requirements.
    Response: As noted in the previous response to the general 
objections to this section, these penalties are specified by the 
statute.
    Comment: Several commenters objected to the provisions of 
subsections (c)(1) and (c)(2), which provide that the Tribe must expend 
additional tribal funds to replace any reduction due to penalties and 
provide for additional penalties for failure to do so.
    Response: Although section 409(a)(12) of the statute only requires 
states to provide ``replacement funds'' for funds lost due to 
penalties, and additional penalties for failure to provide them, 
Federal law does not preclude the Secretary from establishing this 
requirement for Tribes. A Tribe's failure to administer its program in 
accordance with the requirements of the Act should not cause Tribal 
TANF recipients to be penalized. Thus we have made no changes to this 
section.

Section 286.200 (Section 286.175 in the NPRM)   How Will We Determine 
if Tribal Family Assistance Grant Funds Were Misused or Intentionally 
Misused?

    It is clear that in establishing the many penalties at section 
409(a) of the Act, Congress expressed its intent that both States and 
Tribes balance flexibility with accountability. Because of the 
differences in the requirements for State and Tribal programs, as 
mentioned above, section 412 specifies that only four of the 
requirements and penalties under section 409 apply to Tribes. The 
penalty areas, or rather, the areas of Tribal performance that Congress 
found significant and attached fiscal sanctions to, vary considerably. 
Thus, in considering what method to employ in monitoring Tribal 
performance, we concluded that no one method could be employed. The 
following explains the different methods we will use to determine if a 
Tribe used TFAG funds in violation of the Act.

Misuse of Funds

    The penalty at Sec. 286.195(a)(1) and Sec. 286.200(a) provides that 
if a Tribe has been found to have used funds in violation of title IV-A 
through an audit conducted under the Single Audit Act (31 U.S.C. 
Chapter 75), as referenced in section 102(f) of the Indian Self-
Determination Act Amendments of 1994 (Pub. L. 103-413), the Tribe is 
subject to a penalty in the amount misused. This is the only penalty 
for which Congress identified a method for determining a penalty.
    Under the requirements of the Single Audit Act, Tribes operating 
Federal grant programs meeting a monetary threshold (currently $300,000 
for all Federal grants) must conduct an annual audit. Those Tribes 
which meet the threshold must comply with this annual audit 
requirement.
    The single audit is an organization-wide audit that reviews Tribal 
performance in many program areas. We implemented the Single Audit Act 
through use of Office of Management and Budget (OMB) Circular A-128, 
``Audits of State and Local Governments.'' Because of amendments made 
to the Single Audit Act in 1996, OMB recently revised this circular and 
a similar circular for non-profit organizations, A-133. Effective June 
30, 1997, A-128 has been rescinded, with the result that the revised A-
133 now includes the single audit requirements for States, local 
governments, Indian tribes and non-profit organizations.
    In conducting their audits, among the tools auditors use are the 
statute and regulations for each program and a compliance supplement 
issued by OMB that focuses on certain areas of primary concern. Upon 
issuance of final regulations, we will prepare a TANF program 
compliance supplement.
    The Single Audit Act does not preclude us or other Federal offices 
or agencies, such as the Office of the Inspector General (OIG), from 
conducting audits or reviews. In fact, we conclude that we have 
specific authority to conduct additional audits or reviews. Under 31 
U.S.C. 7503(b),

``* * * a Federal agency may conduct, or arrange for additional 
audits which are necessary to carry out its responsibilities under 
Federal law or regulation. The provisions of this chapter do not 
authorize any non-Federal entity (or subrecipient thereof) to 
constrain, in any manner, such agency from carrying out or arranging 
for

[[Page 8512]]

such additional audits, except that the Federal agency shall plan 
such audits to not be duplicative of audits of Federal awards.''

Thus, although the single audit will be our primary means for 
determining if a Tribe has misused funds, we may, through our own 
audits and reviews, or through OIG and its contractors, conduct audits 
or reviews of the Tribal TANF program which will not be duplicative of 
single organization-wide audit activities. Our need to conduct such 
audits may arise from complaints from individuals and organizations, 
requests by the Congress to review particular areas of interest, or 
other indications which signal problems in Tribal compliance with TANF 
program requirements. These additional reviews and audits may be the 
basis for assessing a penalty under this section.

Intentional Misuse of Funds

    Where a penalty is determined for the misuse of funds, we may apply 
a second penalty if we determine that the Tribe has intentionally 
misused its TFAG. The criteria for determining ``intentional misuse'' 
are found at Sec. 286.200(d). The single audit will be the primary 
means for determining this penalty as it is linked to the penalty for 
misuse of funds. However, as with the use of the single audit for 
misuse of funds, we may also conduct other reviews and audits in 
response to complaints from individuals and organizations or other 
indications which signal problems with compliance with TANF program 
requirements. These additional reviews and audits may be the basis for 
assessing a penalty under this section.

Additional Single Audit Discussion

    Although we specify that the single audit will be the primary means 
to determine the specific penalties for misuse and intentional misuse 
of TFAG funds, we will not ignore other single audit findings such as 
Tribal non-compliance with the minimum participation rate requirement. 
Where the single audit is used to determine a penalty for failure to 
satisfy the minimum participation rate, the penalty that will apply is 
the percentage reduction described at Sec. 286.195(a)(3), not the 
dollar-for-dollar penalty at Sec. 286.195(a)(1) for misuse of funds.
    The single audit may also reveal Tribal non-compliance with the 
negotiated time limit requirements (see Sec. 286.120). Since Tribes are 
not subject to the State penalty at section 409(a)(9) for failure to 
comply with the time limit provisions, the question arose as to whether 
the Tribe's failure should be treated as a misuse of funds. Because the 
penalty for misuse of funds is equal to the amount that was spent 
incorrectly, the Tribal penalty could potentially be higher than the 
five percent penalty for States. As a result, a Tribe could be subject 
to a higher penalty by comparison. To avoid disparate treatment of 
States and Tribes in this area, we will limit any potential penalty for 
failure to comply with the Tribal time limits to a maximum of five 
percent.
    Similarly, where we, or OIG, conduct an audit or review and have 
findings that could result in a penalty, the penalty amount that will 
apply is the penalty amount associated with the specific penalty under 
section 409(a) of the Act.
    Comments: Several Tribes questioned whether ACF has the authority 
to conduct additional audits and reviews that may result in penalties 
on Tribes. They assert that the only penalties that may be applied 
regarding misuse of funds are determined by the Single Audit Act.
    Response: The single audit will be the primary means for 
determining the penalty for misuse of funds, whether misused 
intentionally or not. The single audit may also be used to determine 
tribal non-compliance with other Tribal TANF requirements, such as 
minimum participation rate or negotiated time limit requirements. 
However, the Single Audit Act does not preclude Federal agencies from 
conducting additional audits or reviews. As we indicated above, we have 
specific authority under 31 U.S.C. 7503(b) to conduct or arrange for 
such additional audits or reviews. Such an audit or review will not be 
duplicative of the single organization-wide audit activities. The need 
to conduct such an audit or review will be based on indications that 
may signal problems in tribal compliance with TANF program 
requirements, such as complaints from individuals or organizations, or 
may arise from a request by Congress to review a particular area of 
interest.

Section 286.205 (Section 286.180 in the NPRM)  How Will We Determine if 
a Tribe Fails To Meet the Minimum Work Participation Rate(s)?

    Tribal compliance with the minimum work participation rates under 
Sec. 286.205 will be primarily monitored through the information 
required by section 411(a) of the Act. The Final Rule at Sec. 286.80 
provides additional information on minimum work participation 
requirements.
    Some of the data required to be reported by section 411(a) of the 
Act were included to gather information in this area. Thus, we 
concluded that the section 411(a) data collection tools would be our 
primary means for determining this penalty. Our ability to meet our 
program management responsibilities may also mean that we will conduct 
reviews in the future to verify the data submitted by Tribes, 
particularly in this area where a fiscal penalty is applicable.
    Timely and accurate data is essential if we are to determine Tribal 
compliance in this area. Thus, if a Tribe fails to submit a timely 
report, we will consider this as a failure by the Tribe to meet its 
work participation rate requirements and will enforce the penalty for 
failure to meet the work participation requirements. Likewise, if the 
data indicating that the Tribe has met its participation rate is found 
to be so inaccurate as to seriously raise a doubt that the Tribe has 
met these requirements, we may enforce the participation rate penalty.
    Although the single audit will be the primary means for determining 
certain specific penalties for misuse or intentional misuse of TFAG 
funds, if a single audit detects Tribal non-compliance in the minimum 
participation rate area, we cannot ignore that finding. Therefore, we 
will consider imposing a penalty based on the single audit in this 
area. The penalty amount that will apply is the penalty under section 
409(a)(3) for failure to meet the participation rates and not the 
penalty under section 409(a)(1) for misuse of funds.
    Comment: A commenter suggested that an exception should be made to 
the requirement for meeting work participation requirements for 
``regions struggling because of declared economic disasters.''
    Response: Tribes already have the ability in Sec. 286.80 to 
establish exemptions, limitations, and special rules in relation to 
work requirements as part of their basic plan.
    Comment: One commenter questions the language of proposed 
Sec. 286.185(b), which provides that ``* * * (t)he accuracy of the 
reports are subject to validation by (ACF) * * *'' and asks how that 
will occur. Suggestion was made that either the information identifying 
the means of validation be included or that this language be removed 
altogether.
    Response: Section 286.205(a) clearly provides that the Tribal TANF 
Data Report submitted by the Tribe will be the major source for 
determining compliance. Also, Sec. 286.220 provides opportunity for the 
Tribe to explain and/or justify the data.

[[Page 8513]]

Section 286.210 (Section 286.185 of the NPRM)   What is the Penalty For 
a Tribe's Failure To Repay a Federal Loan?

    If the Tribe fails to repay its loan, plus any accumulated 
interest, in accordance with its agreement with ACF, we will reduce the 
Tribe's TFAG for the immediately succeeding fiscal year by the 
outstanding loan amount, plus any interest owed. Neither the reasonable 
cause provisions at Sec. 286.225 of this chapter nor the corrective 
compliance plan provisions at Sec. 286.230 of this chapter apply when a 
Tribe fails to repay a Federal loan. Please refer to Sec. 286.235 for 
more information on this penalty.

Section 286.215 (Section 286.190 in the NPRM)  When Are the TANF 
Penalty Provisions Applicable?

    This section of the Final Rules provides the general time frames 
for the effective dates of the Tribal TANF provisions. As we noted in 
the NPRM, many of the penalty and funding provisions had statutorily 
delayed effective dates. For example, while Tribes will be held 
accountable for the penalties of misuse of funds from the date of 
implementation of TANF, the penalty to satisfy minimum participation 
rates will not apply until six months after the date of implementation 
of the Tribal TANF program.
    We also made the important point that we did not intend to apply 
the TANF rules retroactively against Tribes. We indicated that, with 
respect to any actions or behavior that occurred before the Final Rule, 
we would judge Tribal actions and behavior only against a reasonable 
interpretation of the statute.
    In the period prior to the effective date of the Final Rules, 
Tribes must implement the TANF provisions in accordance with a 
reasonable interpretation of the statute. If a Tribe's actions are 
found to be inconsistent with the final regulations, but it has acted 
in accordance with a reasonable interpretation of the statute and its 
approved TFAP, no penalty will be taken against the Tribe. However, if 
a Tribe is found to be liable for a penalty prior to the effective date 
of the Final Rules, the Tribe may present its arguments for 
``reasonable cause,'' which, if granted, will result in no penalty 
being taken.
    Comments: Several commenters suggested that the provisions of 
proposed Sec. 286.190(b), which provides that a Tribe may be subject to 
the penalties for failure to meet the minimum work requirements 
beginning after the first 6 months of operation of a program, are too 
stringent. Suggestions were made that the ``grace period'' on 
compliance should be extended from 12 to 24 months.
    Response: Minimum work requirements are determined via the 
negotiation process. If a Tribe determines during this process that it 
may have difficulty meeting the negotiated rate, it should not agree to 
that rate. Thus, we are retaining the proposed language.

Section 286.220 (Section 286.195 in the NPRM)  What Happens if a Tribe 
Fails To Meet TANF Requirements?

    If we determine that a Tribe has failed to meet any of the 
requirements included in the penalty provisions, we will notify the 
Tribe in writing. Our notification to the Tribe will include: (1) The 
penalty, including the specific penalty amount; (2) the basis for our 
decision; (3) an explanation of the Tribe's opportunity to submit a 
reasonable cause justification and/or corrective compliance plan where 
appropriate; and, (4) an invitation to the Tribe to present its 
arguments if it believes that the data or method for making the 
decision was in error, or that the Tribe's actions, in the absence of 
Federal regulations, were based on a reasonable interpretation of the 
statute.

Reasonable Cause and Corrective Compliance Plan

    Provisions at sections 409(b) of the Act state that we can excuse 
or reduce certain penalties if we determine that the Tribe has 
reasonable cause for failing to comply with certain requirements that 
are subject to a penalty. At Sec. 286.225 Tribes will have the 
opportunity to demonstrate reasonable cause upon receipt of a written 
notification of a proposed penalty.
    Section 409(c) of the Act, as amended by the Balanced Budget Act of 
1997, provides that prior to imposing certain penalties against a 
Tribe, we will notify the Tribe of the violation and allow the Tribe 
the opportunity to enter into a corrective compliance plan which 
outlines how the Tribe will correct the violation and ensure continuing 
compliance with TANF requirements.
    Comments: Several comments were received relating to the fact that, 
while setting time frames for the Tribe to respond to findings that 
would result in penalties, Sec. 286.195 as proposed sets no time frame 
for the agency to respond, and that the two-week time frame in 
subsection (e) for the Tribe to submit additional information is too 
short.
    Response: We have clarified subsection (c) to specify that we will 
notify the Tribe of our decision with respect to their submissions 
within two weeks from when the determination is made. We have amended 
subsection (e) to allow the Tribe thirty (30) days for submission of 
additional information. We have also amended Sec. 286.205 to clarify 
what we mean by ``complete and accurate.''

Section 286.225 (Section 286.200 in the NPRM)  How May a Tribe 
Establish Reasonable Cause For Failing To Meet a Requirement That Is 
Subject to Application of a Penalty?

    This section describes the factors that we will consider in 
deciding whether or not to excuse a penalty based on a Tribe's claim of 
reasonable cause, describes the contents of an acceptable corrective 
compliance plan that will correct the problems that resulted in a 
penalty, and discusses the process for applying these provisions.
    PRWORA did not specify any definition of reasonable cause or 
indicate what factors we should use in determining a reasonable cause 
exceptions for a penalty. We will consider only certain, limited 
factors when we decide whether or not to excuse a penalty for 
reasonable cause. In keeping with the need to support the commitment of 
Congress, the Administration, States, and Tribes to the objectives of 
the TANF program, including program accountability, we have identified 
a limited number of reasonable cause factors with an emphasis on 
corrective solutions. These are the same reasonable cause factors that 
are applicable for State programs. These factors are applicable to all 
penalties for which the reasonable cause provision applies. In the case 
of the penalty for failure to satisfy the minimum participation rates, 
one additional factor is applicable only to that specific penalty.
    General reasonable cause may include the following: (1) Natural 
disasters and other calamities (e.g., hurricanes, tornadoes, 
earthquakes, fires, floods, etc.) whose disruptive impact was so 
significant that the Tribe failed to meet a requirement; (2) formally 
issued Federal guidance which provided incorrect information resulting 
in the Tribe's failure, or guidance that was issued after a Tribe 
implemented the requirements of the Act based on a different but 
reasonable interpretation of the Act; (3) isolated, non-recurring 
problems of minimum impact that are not indicative of a systemic 
problem; (4) significant increases in the unemployment rate in the 
service area and changes in the TFAG caseload size; and (5) the clearly 
demonstrated need to

[[Page 8514]]

divert critical system resources to Y2K compliance activities.
    We have included one additional specific reasonable cause factor 
for a Tribe's failure to satisfy minimum work participation rates. 
Under the Final Rule at Sec. 286.225(c), a Tribe may demonstrate that 
its failure is due to its granting of good cause to victims of domestic 
violence. In this case, the Tribe must show that it would have achieved 
the work participation rate(s) if cases with good cause were removed 
from both parts of the calculation (i.e., from the denominator and the 
numerator described in Sec. 286.85). In addition, a Tribe must show 
that it granted good cause in accordance with policies approved in the 
Tribe's Family Assistance Plan (refer to Sec. 286.135).
    We understand that limited employment opportunities in many Tribal 
service areas may affect a Tribe's ability to satisfy the participation 
rates. However, as explained in Sec. 286.100, the work participation 
requirements established for each Tribe will take into consideration 
the Tribe's economic conditions and resources.
    The burden of proof rests with the Tribe to adequately and fully 
explain what circumstances, events, or other occurrences constitute 
reasonable cause with reference to failure to meet a particular 
requirement. The Tribe must provide us with all relevant information 
and documentation to substantiate its claim of reasonable cause for 
failure to meet one or more of these requirements.
    Comments: Several commenters suggested that the language of 
Sec. 286.170(a)(3) as proposed, which provides for consideration to be 
given for unemployment increases and changes in the caseload size in 
determining whether a Tribe has failed to meet the minimum work 
participation rates, should be incorporated into this section.
    Response: We agree. We have amended Sec. 286.225(a) with the 
addition of these additional factors that can be used to claim 
reasonable cause.
    Comment: A commenter suggested an exception be made for ``* * * 
regions struggling because of declared economic disasters.''
    Response: We believe that the revision mentioned above addresses 
this concern.
    Comment: One commenter suggested that an exception should be made 
for ``* * * extreme weather conditions * * *.''
    Response: We believe that it is not unreasonable to include extreme 
weather conditions, which seriously disrupt transportation or prevent 
access to services, work sites, or related activities in this section. 
We have amended section 286.225(a)(1) accordingly.
    Comment: One commenter suggests that ``* * * this section should 
include acknowledgment of the lack of employment, poor economic 
development, and lack of transportation and childcare on 
reservations.''
    Response: We believe these factors are acknowledged in the general 
plan content area. They are also taken into account when negotiating 
work participation rates in the individual plans.

Section 286.230 (Section 286.205 in the NPRM)  What If a Tribe Does Not 
Have Reasonable Cause for Failing To Meet a Requirement?

    As mentioned above, section 409(c) of the Act, as amended by the 
Balanced Budget Act of 1997, provides that prior to imposing certain 
penalties against a Tribe, the Tribe will be given the opportunity to 
enter into a corrective compliance plan.
    The corrective compliance plan must identify the action steps, 
outcomes, and time frames for completion that the Tribe believes will 
fully and adequately correct the violation. We recognize that each plan 
will be specific to the violation (or penalty) and that each Tribe 
operates its TANF program in a unique manner. Thus, we will review each 
plan on a case-by-case basis. Our determination to accept a plan will 
be guided by the extent to which the Tribe's plan indicates that it 
will correct the situation leading to the penalty.
    In instances where a Tribe used its TFAG in a manner that is 
prohibited (see Sec. 286.200 on misuse of funds), we will expect that 
it will remove this expenditure from its TANF accounting records and 
provide steps to assure that such a problem does not recur.
    Section 409(c)(3) of the Act appropriately requires that a 
violation be corrected ``in a timely manner.'' A Tribe's timely 
correction of problems resulting in a penalty is critical if for no 
other reason than to assure that the Tribe is not subject to subsequent 
penalties. While we recognize that the types of problems Tribes 
encounter may vary, some concern exists that, if we do not restrict the 
length of a corrective compliance plan, there is the possibility a 
Tribe could indefinitely prolong the corrective compliance process, 
leaving problems unresolved into another fiscal year. As a result, the 
Tribe's ability to operate an effective program to serve the needs of 
its service population would be severely limited.
    Therefore, we are limiting the period covered by a corrective 
compliance plan to six months, i.e., the plan period ends six months 
from the date we accept a Tribe's compliance plan. We believe that, for 
most violations, Tribes will have some indication prior to our notice 
that a problem exists and will be able to begin addressing the problem 
prior to submitting the corrective compliance plan. Therefore, we think 
it fair and reasonable that the corrective compliance plan period begin 
with our acceptance of the plan, giving the Tribe sufficient time to 
correct or terminate the violation(s).
    Our review of a Tribe's efforts to complete its action steps and 
achieve the outcomes within the time frames established in the plan 
will determine if the penalty will be fully excused, reduced, or 
applied in full.

Corrective Compliance Plan Review

    During the 60-day period defined below, we will consult with the 
Tribe on any modifications to the corrective compliance plan and seek 
mutual agreement on a final plan. Any modifications to the Tribe's 
corrective compliance plan resulting from such consultation will 
constitute the Tribe's final corrective compliance plan and will 
obligate the Tribe to initiate the corrective actions specified in that 
plan.
    We may either accept the Tribe's corrective compliance plan within 
the 60-day period that begins on the date the plan is received by us, 
or reject the plan during this same period. If a Tribe does not agree 
to modify its plan as we recommend, we may reject the plan. If we 
reject the plan, we will immediately notify the Tribe that the penalty 
is imposed. The Tribe may appeal this decision in accordance with the 
provisions of section 410 of the Act and the final regulations at 
Sec. 286.240. If we have not taken an action to reject a plan by the 
end of the 60-day period, the plan is accepted, as required by section 
409(c)(1)(D) of the Act.
    If a Tribe corrects or discontinues, as appropriate, the problems 
in accordance with its corrective compliance plan, we will not impose 
the penalty. If we find that the Tribe has acted in substantial 
compliance with its plan but the violation has not been fully 
corrected, we may decide to reduce the amount of the penalty or, if the 
situation is compelling, excuse the penalty in its entirety. We will 
make a determination of substantial compliance based upon information 
and documentation furnished by the Tribe. In determining substantial 
compliance, we will consider the willingness of the Tribe to correct 
the violation and the adequacy of the corrective actions undertaken by 
the Tribe pursuant to its plan.

[[Page 8515]]

Process

    Because both the reasonable cause and the corrective compliance 
plan provisions apply, we will establish the determination of 
reasonable cause in conjunction with the determination of acceptability 
of a Tribe's corrective compliance plan, if any is submitted. Thus, a 
Tribe may submit to us its justification for reasonable cause and 
corrective compliance plan within 60 days of the receipt of our notice 
of failure to comply with a requirement.
    A Tribe may choose to submit reasonable cause justification without 
a corrective compliance plan. If we do not accept the Tribe's 
justification, the Tribe will be notified in writing. This notification 
will also inform the Tribe of its opportunity to submit a corrective 
compliance plan. The Tribe will have a 60-day period that begins with 
the date of the notice of the violation to submit to us a corrective 
compliance plan to correct the violation. A Tribe may also choose to 
submit only a corrective compliance plan if it believes that the 
reasonable cause factors do not apply to the particular penalty.
    Although a corrective compliance plan is not required when a Tribe 
has reasonable cause for failing to meet a requirement which is subject 
to a penalty, we stress the importance of corrective action to prevent 
similar problems from recurring. While a Tribe may have a very good 
explanation why it failed to satisfy a requirement under the Act, we 
will work with the Tribe to identify solutions to eliminate these 
problems or prevent them from recurring. Otherwise, they may well 
continue and detract from the Tribe's ability to operate an effective 
program to serve the needs of its families. Our goal is to focus on 
positive steps to improve the program.

Due Dates

    The Tribe's response to our notification that it has failed to meet 
a requirement under section 409(a) of the Act, either including its 
reasonable cause justification and/or its corrective compliance plan, 
must be postmarked within sixty days of the receipt of our notification 
letter to the Tribe. Also, if a Tribe believes that our determination 
is incorrect, any documentation supporting its position should be 
submitted within sixty days of the date of the receipt of our notice.
    If, upon review of the Tribe's submittal, we find that we need 
additional information, the Tribe must provide the information within 
two weeks of the date of our request. This is to make sure we are able 
to respond timely.

Imposing the Penalty

    Once a final decision is made to impose a full or partial penalty, 
we will notify the Tribe that its TFAG will be reduced and inform the 
Tribe of its right to appeal our decision to the Departmental Appeals 
Board (the Board).
    In imposing a penalty, we will not reduce any TFAG to a Tribe by 
more than 25 percent. If this limitation of 25 percent prevents us from 
recovering the full amount of penalties during a fiscal year, we will 
carry the penalty forward and reduce the TFAG for the immediately 
succeeding fiscal year by the remaining amount.
    Comment: A comment was received indicating that the time frames 
proposed in Sec. 286.205(b) and (c) appear to be adequate.
    Response: No response is needed.
    Comment: A comment regarding proposed Sec. 286.205(f) suggests that 
there needs to be documentation accepting or rejecting a compliance 
plan, and that the time frame for response should be accelerated and 
begin with the postmark date of the plan rather than the receipt date 
at ACF.
    Response: We believe the process, which provides for notification 
to the Tribe of our determination that a penalty is applicable, and the 
Tribe's response in the form of either a submission of a compliance 
plan or challenge to the finding(s), as well as other corresponding 
actions throughout the appeal process adequately provides for 
sufficient documentation. The time frame in Sec. 286.230(f), like the 
time frames set forth throughout this entire section, is determined by 
the Departmental Appeals Board procedures.

Section 286.235 (Section 286.210 in the NPRM)  What Penalties Cannot Be 
Excused?

    Sections 409(b)(2) and 409(c)(3), as amended by the Balanced Budget 
Act of 1997, provide that reasonable cause and corrective compliance 
plan are not available for certain penalties. One of these penalties is 
the penalty for failure to repay a Federal loan issued under section 
406. Thus we cannot forgive any outstanding loan amount or the interest 
owed on the outstanding amount.
    The other penalty that cannot be excused is the penalty for failure 
to replace any grant reduction resulting from other penalties that have 
been imposed.

Section 286.240 (Section 286.215 in the NPRM)  How Can a Tribe Appeal 
Our Decision To Take a Penalty?

    Section 410 of the Act provides that within five days after the 
date the Secretary takes any adverse action under this part with 
respect to a State, the Secretary shall notify the chief executive 
officer of the State of the adverse action. We believe that it is 
reasonable to make these same appeal provisions, including the time 
frames in section 410, available for Tribes. Thus, within sixty days 
after the date a Tribe receives notice of such adverse action, the 
Tribe may appeal the action, in whole or in part, to the Board by 
filing an appeal with the Board. Where not inconsistent with section 
410(b)(2), a Tribes's appeal to the Board will be subject to our 
regulations at 45 CFR part 16.
    By inclusion in this rule, section 410(b)(2) provides that the 
Board shall consider an appeal filed by the Tribe on the basis of 
documentation the Tribe may submit, along with any additional 
information required by the Board to support a final decision. In 
deciding whether to uphold an adverse action or any portion of such 
action, the Board shall conduct a thorough review of the issues and 
make a final determination within sixty days after the appeal is filed.
    Finally, a Tribe may obtain judicial review of a final decision by 
the Board by filing an action within ninety days after the date of the 
final decision with the district court of the United States in the 
judicial district where the Tribe or TFAG service area is located. The 
district court shall review the final decision of the Board on the 
record established in the administrative proceeding, in accordance with 
the standards of review prescribed by subparagraphs (A) and (E) of 
section 706(2) of title 5, U.S.C. The review will be on the basis of 
the documents and supporting data submitted to the Board.
    Comments: Several commenters commented on the fact that 
Sec. 286.215 as proposed does not specify whether ACF will cease or 
reduce funding during an appeal.
    Response: We do not intend to cease or withdraw funding during the 
appeals process. We have amended Sec. 286.240 accordingly.

Subpart E--Data Collection and Reporting Requirements (Sections 
286.245--286.285, Appendices A-H)

General Approach

    Section 412(h) of the Act makes section 411 data collection and 
reporting requirements applicable to

[[Page 8516]]

Tribes. The requirements for States are addressed separately under the 
final State TANF regulations (64 FR 17857) which were published April 
12, 1999. Although the reporting requirements stipulated under the 
final State TANF regulations are also required of Tribes under the 
statute, some of the particular data elements are not applicable. In 
order to minimize misunderstandings about what data elements are 
applicable to Tribes, we separately address the Tribal data collection 
and reporting requirements in this Final Rule. Additional background 
and summary information on these requirements, including a complete 
discussion of modifications which have been made to the proposed 
requirements, can be found at part 265 of the State TANF Final Rule.
    Based on comments we received both prior to and after the 
development of the proposed regulations, Tribes generally view the 
section 411 requirements as very difficult to meet. Automated systems 
capabilities necessary for collecting and reporting the data required 
of the Act are sorely lacking on most reservations. Tribes also cited 
difficulties in obtaining current and accurate data from other program 
sources that are not administered by Tribes, and that may not be 
readily available to Tribal TANF program operators. For example, Tribes 
do not generally administer programs such as Food Stamps, Medicaid, 
subsidized housing, Child Support Enforcement, and State-administered 
child care programs, yet the specified data elements require such 
information. Tribes expressed concern that obtaining these data would 
entail developing costly mechanisms to gather accurate information on a 
monthly basis from States.
    We are sensitive to these issues and are committed to helping 
Tribes, to the extent possible, in meeting the reporting requirements.
    Before we discuss the comments associated with specific sections of 
the regulatory text or the Appendices, we want to respond to two cross-
cutting issues:

Publishing the Appendices as a Part of the Rule

    Comment: A few commenters urged us to publish the specific data 
elements as a part of the Final Rule and to codify them as a part of 
the Code of Federal Regulations (CFR). This approach, they believed, 
would help ensure that Tribes would not only have early access to the 
requirements but, once they were codified, the requirements would be 
less subject to change, given the time it takes to revise Federal 
rules.
    Other commenters urged us to publish the data elements in the 
Federal Register at the same time we published the Final Rule for the 
purpose of advance notice to the Tribes of the specific data 
requirements, but they did not recommend that they be a part of the 
Final Rule in the CFR.
    Response: We agree with the importance of giving Tribes early 
access to the specific data elements and have published the appendices, 
including all data elements and instructions, in today's Federal 
Register along with the Final Rule.
    It was never our intention, however, that these data collection 
requirements become a part of the rule itself or be codified in the 
CFR. We believe data collection needs may change over time, in part 
because the program is a dynamic one and because Congress may modify 
the reporting requirements. Therefore, we would want to be able to 
respond to those changes as quickly as possible. Since changes in 
reporting requirements require Paperwork Reduction Act (PRA) approvals, 
the public is guaranteed an opportunity to comment on any future 
changes to the TANF Data and Financial Reports as a part of the PRA 
review process.

Y2K Compliance

    We have taken a number of actions to raise awareness of the problem 
and respond to questions from human service providers. For example, we 
have established an Internet e-mail address and phone line and a Y2K 
web page (http://www.y2k.acf.dhhs.gov). We have also distributed 
information packages to more than 7,000 human service providers and 
representative organizations, and we have added a reasonable cause 
criterion related to Y2K compliance. This new criterion provides 
penalty relief to a Tribe if it can clearly demonstrate that addressing 
Y2K issues prevented it from meeting the reporting requirements for the 
first two quarters and it reports the first two quarters of data by 
November 15, 2000.

Section 286.245 (Section 286.220 in the NPRM)  What Data Collection and 
Reporting Requirements Apply to Tribal TANF Programs?

    This section describes the general scope and purpose of this 
subpart as it applies to Tribal TANF data collection and reporting. 
Paragraph (a) also makes clear that section 412(h) of the Act requires 
that the same reporting requirements of section 411 of the Act be 
applied to Tribal TANF Programs. We have modified the proposed State 
regulatory requirements in order to collect from Tribal TANF programs 
only the data required based on section 411(a) of the Act--quarterly 
reporting requirements; section 411(b)--report to Congress, and section 
412(c)--work participation requirements. One reason for the 
modification is that Tribes do not have a maintenance-of-effort (MOE) 
requirement; thus there is no need for data related to MOE. (Section 
411(a)(1)(A)(xii) authorizes the collection of information that is 
necessary for calculating participation rates).
    The final regulation at Sec. 286.255(b) also makes clear that 
Tribes will be required to submit: (1) Disaggregated data for two types 
of families: those receiving assistance and those no longer receiving 
assistance; and (2) aggregated data for three categories of families: 
Those receiving assistance, those applying for assistance, and those no 
longer receiving assistance.
    This subpart also explains the proposed content of the quarterly 
TANF Data Report, TANF Financial Report, and the annual report, as well 
as reporting due dates.

Section 286.250 (Section 286.225 in the NPRM) What Definitions Apply to 
This Subpart?

    The data collection and reporting regulations rely on the general 
Tribal TANF definitions at Sec. 286.5.
    In this subpart, we are proposing one additional definition--for 
data collection and reporting purposes only--a definition of ``TANF 
family.'' This definition will apply to data collection for the Tribal 
TANF program as it will to State TANF programs.
    The law uses various terms to describe persons being served under 
the TANF program, e.g., eligible families, families receiving 
assistance, and recipients. Unlike the AFDC program, there are no 
persons who must be served under the TANF program. Therefore, each 
Tribe and State will develop its own definition of ``eligible family,'' 
to meet its unique program design and circumstances.
    We do not expect coverage and family eligibility definitions to be 
comparable across Tribes and States. Therefore, we have established a 
definition that will enable us to better understand the different 
Tribal and State programs and their effects. The definition of ``TANF 
family'' starts with the persons in the family who are actually 
receiving assistance under the Tribal TANF program. (Any non-custodial 
parents participating in work activities will be included as a person 
receiving assistance in an ``eligible family'' since

[[Page 8517]]

Tribes may only serve non-custodial parents on that basis.) We, then, 
would include three additional categories of persons living in the 
household, if they are not already receiving assistance. These three 
additional categories are:
    (1) Parent(s) or caretaker relative(s) of any minor child receiving 
assistance;
    (2) Minor siblings of any child receiving assistance; and
    (3) Any person whose income and resources would be counted in 
determining the family's eligibility for or amount of assistance.
    We believe information on these additional individuals is critical 
to understanding the effects of TANF on families and the variability 
among Tribal and State caseloads, e.g., to what extent are differences 
due to, or artifacts of, Tribal or State eligibility rules.
     We need information on the parent(s) or caretaker 
relative(s) (i.e., an adult relative, living in the household but not 
receiving assistance, and caring for a minor child) to understand the 
circumstances that exist in no-parent (e.g., child-only) cases not 
covered by key program requirements, such as time limits and work 
requirements.
     We need information on minor siblings in order to 
understand the impact of ``family cap'' provisions.
     We also need information on other persons whose income or 
resources are considered in order to understand the paths by which 
families avoid dependence.
    For research and other purposes, there was interest in collecting 
data on a broader range of persons in the household, e.g., any other 
person living in the household such as a grandmother or a non-marital 
partner of the mother. We determined that we should limit reporting to 
those categories of persons on whom the Tribes and States will gather 
data for their own purposes and for which information will be directly 
relevant to administration of the TANF program.
    In the interest of greater comparability of data, we also 
considered defining terms such as ``parent,'' ``caretaker relative,'' 
and ``sibling.'' We chose not to define these terms because we were 
concerned that our data collection policies could inadvertently 
constrain Tribal and State flexibility in designing their programs. We 
believe that variation among Tribal and State definitions in these 
areas will not be significant and will not decrease the usefulness of 
the data.
    We believe this definition of family will not create an undue 
burden on Tribes since all these additional persons either are part of 
an aided child's immediate family or have their income or resources 
considered in determining eligibility.
    Finally, we want to emphasize that we have established this 
definition of ``TANF family'' for reporting purposes only. Our aim is 
to obtain data that will be as comparable as possible under the 
statute, and, to the extent possible, over time. Some comparability in 
data collection is necessary for assessing program performance; 
understanding the impact of program changes on families and children; 
and informing the States, the Tribes, the Congress, and the public of 
the progress of welfare reform.

Section 286.255 (Section 286.230 in the NPRM) What Quarterly Reports 
Must the Tribe Submit to Us?

    Each Tribe must file two reports on a quarterly basis--the TANF 
Data Report and the Tribal TANF Financial Report. You will find the 
Data Report in its entirety in the Appendices to this Part.

TANF Data Report

    The TANF Data Report consists of three sections (Appendices A, B, 
and C), two of which provide disaggregated case information. The third 
section provides aggregated data. The contents of each section were 
thoroughly discussed in the NPRM.

Section 286.260 (Section 286.235 of the NPRM) May Tribes Use Sampling 
and Electronic Filing?

    We will implement section 411(a) of the Act by permitting Tribes to 
meet the data collection and reporting requirements by submitting the 
disaggregated case file data based on the use of a scientifically 
acceptable sampling method approved by the Secretary. Tribes may also 
submit all data on all cases monthly rather than on a sample of cases. 
However, Tribes, like States, are not authorized to submit aggregated 
data based on a sample.
    We provide a definition of ``scientifically acceptable sampling 
method'' in paragraph (b) of this section. This definition reflects 
generally acceptable statistical standards for selecting samples and is 
consistent with existing AFDC/JOBS statistical policy.
    At a later date, we will issue the TANF Sampling and Statistical 
Manual which will contain instructions on the approved procedures and 
more detailed specifications for sampling methods applicable to both 
Tribal and State TANF programs.
    We also offer Tribes the opportunity to file quarterly reports 
electronically. We plan to develop a PC-based software package that 
will facilitate data entry and create transmission files for each 
report. The transmission files created by the system will be the 
standard file format for electronic submission to us. We also plan to 
provide some edits in the system to ensure data consistency.
    Because the data collection and reporting requirements are 
applicable in advance of our developing the software package, Tribes 
will have the option to submit a disk with the required data or submit 
hard copy reports. Additionally, Tribes that do not have the necessary 
equipment for electronic submission would continue to submit data on 
disk or submit hard copy reports.

Section 286.265 (Section 286.240 in the NPRM) When Are Quarterly 
Reports Due?

    Unlike for States, there are no report submission time frames 
specified by the Act for Tribes. In our December 1997 policy 
announcement (TANF-ACF-PA-97-4), we stated that Tribes are required to 
submit the TANF data reports within 45 days following the end of each 
report quarter (consistent with that given to States). This Final Rule 
contains the same time frame; Tribes must submit the TANF Data Report 
and the Tribal TANF Financial Report no later than 45 days following 
the close of each report quarter. If the 45th day falls on a weekend or 
on a national, State or Tribal holiday, the reports will be due no 
later than the next business day.
    Section 116(a) of PRWORA indicates that the effective date for 
title IV-A of the Social Security Act as amended by PRWORA is July 1, 
1997. This would seem to indicate that Tribal TANF grantees would need 
to begin collecting the required TANF data as of the implementation 
date of their Tribal TANF program. However, section 116(a)(2) states 
that the provisions of section 411(a) are delayed for States to the 
later of July 1, 1997, or the date that is six months after the date 
that the Secretary of Health and Human Services receives a complete 
State plan.
    Although section 116(a) on its face seems to apply only to the 
States, we are interpreting this section to be applicable to Tribal 
grantees as well with regards to section 411(a). We base our 
interpretation on section 412(h) which states that section 411 applies 
to Tribes and the fact that section 116(a)(2) is titled ``Delayed 
Effective Date For Certain Provisions''. We interpret the language of 
section 116(a)(2) to mean that section 411(a) of the Act could be 
delayed by all entities subject to it. As the effective date of section 
411(a) is delayed for States, we believe the effective date is also 
delayed for Tribes.
    We will also apply section 116(a)(2) of the Act to Tribes. Section 
116(a)(2) gives States a six-month reprieve from data reporting 
requirements upon initial

[[Page 8518]]

implementation of their TANF programs. We recognize that, unlike 
States, most Tribes have never operated an AFDC-type program, and 
considerable time and effort will be needed to start up the Tribal TANF 
program. We believe that providing Tribes with a six-month time period 
before data needs to begin to be collected and submitted will aid 
Tribes in the initial program implementation stage.
    Therefore, the effective date of a Tribe's first TANF Data Report 
and Tribal TANF Financial Report will be for the period beginning six 
months after the implementation date of its TANF program.
    For example --

----------------------------------------------------------------------------------------------------------------
                                           Data collection                                 First data report is
        Tribe implements TANF          reporting period starts    Covering the period              due
----------------------------------------------------------------------------------------------------------------
July 1, 1997.........................  January 1, 1998........  Jan.-Mar. 1998.........  May 15, 1998.
October 1, 1997......................  April 1, 1998..........  Apr.-June1998..........  Aug. 14, 1998.
November 1, 1997.....................  May 1, 1998............  May-June 1998..........  Aug. 14, 1998.
January 1, 1998......................  July 1, 1998...........  July-Sept. 1998........  Nov. 16, 1998.
February 1, 1998.....................  August 1, 1998.........  Aug.-Sept. 1998........  Nov. 16, 1998.
March 1, 1998........................  September 1, 1998......  Sept. 1998.............  Nov. 16, 1998.
April 1, 1998........................  October 1, 1998........  Oct.-Dec.1998..........  Feb. 15, 1999.
----------------------------------------------------------------------------------------------------------------

    For Tribes currently operating a TANF program, the Tribe shall 
begin collecting data for the TANF Data Report as of the effective date 
of this regulation.
    Comment: It was pointed out that proposed Sec. 286.240(a) failed to 
recognize State and Tribal holidays as legitimate ``one business day'' 
waivers for the submission of required quarterly reports..
    Response: We have revised the regulations at Sec. 286.265(b) to 
include such holidays as legitimate waivers.
    Comment: Several comments were made that the data collection and 
reporting requirements proposed in Sec. 286.240(b) should be 
implemented after 12 months rather than six months.
    Response: Section 116 of PRWORA permits only a six-month delay. 
Furthermore, the wording of Sec. 286.240(b) as proposed implied that 
financial data did not have to be gathered and reported for six months. 
This is an obvious oversight, and we have corrected that language.

Section 286.270 (Section 286.245 in the NPRM) What Happens if the Tribe 
Does Not Satisfy the Quarterly Reporting Requirements?

    As previously discussed, section 412(h) of the Act requires Tribes 
to report on certain data in accordance with section 411. Unlike for 
States, the Act does not impose fiscal penalties on Tribes that do not 
submit the reports. However, in Sec. 286.270(a), we caution Tribes that 
by not submitting complete and accurate reports, which include the data 
necessary for calculating participation rates, they are liable for 
penalties associated with failure to meet the established participation 
targets.
    In addition, failure to submit the required Tribal TANF Financial 
Report could raise an issue of proper use of funds.

Section 286.275 (Section 286.250 in the NPRM) What Information Must 
Tribes File Annually?

    Section 411(b) of the Act requires the Secretary to prepare an 
annual report to Congress addressing the States' implementation and 
operation of the TANF program. Since section 412(h) makes all of 
section 411 applicable to Tribal TANF programs, we interpret this to 
mean that Congress intended that Tribes as well as States collect the 
data necessary for the section 411(b) annual report. Therefore, we will 
need data on Tribal TANF programs for inclusion in the section 411(b) 
Report to Congress. We will collect some of the information required in 
section 411(b) for this Report to Congress as an addendum to the fourth 
quarter Tribal TANF Financial Report.
    At a later date, we will work with Tribes and others to identify 
the specific information that should be included in this report.
    In order to minimize the reporting burden on Tribes, we will 
collect some information for our report to Congress from the quarterly 
Data and Financial Reports, Tribal plans, annual reviews, and/or 
special studies. We also want to take advantage of the research efforts 
on the TANF program currently being conducted by several research 
organizations. To the extent that we may be able to build on existing 
endeavors, we will avoid duplication of effort, reduce reporting 
burden, and produce a better, more complete picture of Tribal TANF 
programs nationally.
    Comment: Some commenters said that the data required was repetitive 
of information collected for use in other program functions.
    Response: We have changed the regulations to indicate that the 
Tribal TANF grantee's annual report may include by reference all 
information previously supplied either in its TFAP or a previous annual 
report, and we will no longer require performance and program reports. 
Further, the annual report is no longer associated with the Tribal TANF 
grantee's fourth quarter financial report. The annual report may now be 
submitted either as an addendum to the fourth quarter TANF data report 
or as a separate annual report.

Section 286.280 (Section 286.255 in the NPRM)  When Are Annual Reports 
Due?

    As indicated at Sec. 286.280(a), the annual reports must be filed 
ninety (90) days after the close of the Federal fiscal year. This 
deadline is consistent with the deadline for most annual reports under 
DHHS grant programs.
    Comment: Some commenters expressed concern about the timing of the 
first annual report, as some Tribes may have only a month or two of 
Tribal TANF operations before the first such report is due.
    Response: We revised Sec. 286.280(b) to indicate that a Tribe does 
not have to submit an annual report until the end of the first full 
fiscal year during which it has operated the plan, but the report must 
include all relevant data since the plan was approved. For example, if 
a plan is approved September 1999, the first annual report is due 90 
days after the end of Fiscal Year 2000, and is to cover the period 
September 1999 through September 2000.
    In addition, the wording of Sec. 286.255(b) as proposed implied 
that the first annual report for all Tribes is for FY 1998. This was an 
obvious oversight, and we corrected that language.
    Comment: It was suggested that we use State-submitted data where 
there is a duplication of TANF data.
    Response: The Statue specifically requires that Tribes gather and 
report data on their service population. To the

[[Page 8519]]

extent that data required are available only from a State or another 
Tribe (e.g., months receiving TANF), the Tribe must make a good faith 
effort to obtain the data.

Section 286.285 (Section 286.260 in the NPRM)  How Do the Data 
Collection and Reporting Requirements Affect Public Law 102-477 Tribes?

    Pub. L. 102-477, the Indian Employment and Training and Related 
Services Demonstration Act of 1992, affords Tribes an opportunity to 
consolidate certain programs into one grant. In paragraph (a) of this 
section we require Tribes desiring to include TANF in their Pub. L. 
102-477 plan to obtain approval to operate a Tribal TANF program first 
through the Tribal TANF plan submission process outlined in these 
regulations. (See Sec. 286.160 regarding the Tribal TANF plan approval 
process).
    While Pub. L. 102-477 enables Tribes to prepare one consolidated 
report regarding the programs included in the plan, it does not provide 
for waivers of statutory requirements. Because the Tribal TANF data 
collection and reporting requirements are statutory, Sec. 286.285(a) 
clarifies that Pub. L. 102-477 Tribes must continue to submit the 
specified data of the Act.
    However, in Sec. 286.285(b) we propose that the statutory data 
(both disaggregated and aggregated) can be submitted in a Pub. L. 102-
477 consolidated report to the U.S. Department of the Interior, Bureau 
of Indian Affairs (BIA), in a format negotiated with BIA. We considered 
whether we should require Pub. L. 102-477 Tribes to submit TANF reports 
directly to us, but rejected this idea on the basis that Pub. L. 102-
477 specifically authorizes Tribes to consolidate data and make one 
report for all integrated programs in the plan. However, we are 
providing Pub. L. 102-477 Tribes with the option to report the required 
TANF data directly to us. We will work jointly with BIA in collecting 
the statutory data required.

Appendices A-H

Background

    In Subpart E--Data Collection and Reporting Requirements--of the 
Proposed Rule we published the following eight Appendices: Appendix A--
Proposed TANF Disaggregated Data Collection for Families Receiving 
Assistance Under the TANF Program; Appendix B--Proposed TANF 
Disaggregated Data Collection for Families no Longer Receiving 
Assistance under the TANF Program; Appendix C--Proposed TANF Aggregated 
Data Collection for Families Applying for, Receiving, and no Longer 
Receiving Assistance under the TANF Program; Appendix D--Proposed TANF 
Financial Report; Appendix E--Proposed Summary of Sampling 
Specifications; Appendix F--Statutory Reference Table for Appendix A; 
Appendix G--Statutory Reference Table for Appendix B; and Appendix H--
Statutory Reference Table for Appendix C.
    In the NPRM we indicated that these appendices to part 286 would 
not be included in the final regulations. However, we are addressing 
the comments we received about these appendices.
    Comments: We received several comments about not including 
Appendices A, B, C, and D in the final regulations.
    Response: Our rationale for not including them is threefold. First, 
if they were included, then anytime it was necessary to make any type 
of change to the data to be reported (including reducing the data 
required, sample sizes, and changes in definitions), it would be 
necessary to republish the revised requirements as regulations. Second, 
it is necessary to design a data collection system that accurately 
reflects statutory intent. And third, pursuant to section 412(g) of 
PRWORA, the data collection and reporting requirements of section 411 
apply to Tribal TANF programs, subject to certain clarifications. We 
will make such clarifications as are necessary through the issuance of 
a Program Instruction.
    In the interim, for purposes of implementing statutory provisions 
relating to data and measurement of work participation rates, it is 
necessary to obtain some data about Tribal TANF programs. Instructions 
as to what data must be supplied by the Tribes are contained in the 
data system program instructions issued by ACF on May 5, 1998-- ``TANF-
ACF-PI-98-2 Interim Tribal TANF Data Report, Form ACF-343, Approved by 
the Office of Management and Budget (OMB) Through 12/31/1998 (Control 
No. 0970-0176)''. Note: an extension through April 30, 2000 has been 
granted.
    Comments: In the preamble, we requested comments as to whether we 
should include a tribal enrollment identifier. The comments we received 
indicate general opposition to this provision.
    Response: A tribal enrollment identifier is not included.

Appendix A, TANF Disaggregated Data Collection for Families 
Receiving Assistance Under the TANF Program; and:

Appendix B, TANF Disaggregated Data Collection for Families no 
Longer Receiving Assistance Under the TANF Program

    Comments: Commenters requested assurance that specific individuals 
and families not be identified.
    Response: All data gathered under this Statute is covered by the 
Privacy Act of 1974, 5 U.S.C. section 552a, as amended in 1997 (5 
U.S.C.A. section 552a), which restricts the use and release of data on 
individuals.
    Comment: It was stated that the data requested in Appendix B would 
be available only for the last month the case was active and thus would 
place a tremendous burden on Tribes to collect. The only time such data 
would be available would be for the last month the case was active.
    Response: The data being requested is to be supplied only once--in 
the month in which the case was closed, which would be the month after 
the last month it was active.

Appendix C, TANF Aggregated Data Collection for Families Applying 
for, Receiving, and no Longer Receiving Assistance Under the TANF 
Program

    Comment: A comment was received that the term ``out-of-wedlock'' 
should be replaced with ``marital status of household adults'' because 
the term is culturally insensitive to Tribes who consider no birth of a 
child within a tribal community illegitimate.
    Response: The statute requires data on ``out-of-wedlock'' births. 
Marital status of adults during the month of the report is already 
included as an item to be reported.

Appendix D, TANF Financial Report

    Instructions for completing and submitting a Tribal TANF financial 
report will be issued in a subsequent program instruction.
    Comment: A comment was received that we should not require 
reporting of tribal expenditures for TANF.
    Response: This data is to be reported only when TFAG funds are 
withheld for a penalty and the Tribe must substitute its own funds in 
an amount that is no less than the amount withheld. Fiduciary 
responsibilities require us to obtain this particular data.

Appendix E, Summary of Sampling Specifications

    Comment: Several commenters expressed concern that the sample sizes

[[Page 8520]]

proposed were too large to permit all but the largest Tribes to utilize 
that method of collecting and reporting data.
    Response: The proposed sample sizes specified were based on the 
necessity for making confidence level statements about the observed 
work participation rates being within a given range. The sample size 
could be reduced based on the proportion of the caseload it represented 
through a statistical formula called the ``finite population factor'' 
(or population correction factor). Use of this factor is already 
permitted in the interim data system program instructions issued by ACF 
on May 5, 1998 (TANF-ACF-PI-98-2) and may be used for the final system.
    All samples involve extra administrative costs for design, control, 
and monitoring. While the use of the ``finite population factor'' will 
somewhat reduce the sample size, the reduction may not be significant 
enough to offset the extra administrative costs involved. If the 
caseload is small and there is relatively low turnover in the cases, 
the extra administrative costs of design, control, and monitoring may 
far outweigh any benefits to be derived from sampling.
    ACF has made available to Tribes, at no cost, an automated data 
entry and reporting system for the interim reporting that is now in 
effect. As data collection requirements are finalized for Tribes, a new 
system will be made available to the Tribes, again at no cost. The 
essential value to this system (or any other similar automated system) 
is that once the data is entered into the system, only changes have to 
be entered. This reduces the reporting burden substantially. Costs 
associated with designing, administering, monitoring, and controlling a 
sample will be considered administrative costs.
    Comment: A comment was received that the sample size should be for 
the TANF program as a whole rather than for each individual Tribe.
    Response: The Statue requires that we determine if each Tribe is 
meeting its negotiated work participation rates. We can do this only if 
we obtain scientifically acceptable samples from each Tribe.
    Comment: It was suggested that ``scientifically acceptable sampling 
method'' be replaced with ``or any other scientifically supportable 
sampling method proposed by the Tribe and approved for use which has 
been included in the Tribal TANF plan.''
    Response: There is no practical difference between ``scientifically 
supportable'' and ``scientifically acceptable.'' ``Scientifically 
acceptable sampling method'' has the advantage of being the more 
commonly used and understood phrase. Inclusion of a statistical sample 
plan development process within the framework of the Tribal TANF plan 
development process would unnecessarily complicate this process.

VI. Part 287--Native Employment Works (NEW) Program Provisions

Discussion of Selected Regulatory Provisions

    The following is a discussion of selected NEW regulatory 
provisions. It is divided into two sections. In the first section, we 
summarize each subpart of Part 287 and provide background or additional 
explanatory information if it is helpful for clarification of the Final 
Rules. In the second section, we address the following program areas in 
detail: client eligibility, work activities and coordination.

Overview of Comments

    Seventeen entities commented on the NEW provisions, including 
twelve Tribes. Of those twelve, nine were NEW grantees and two of the 
grantees have incorporated NEW under a Pub.L. 102-477 demonstration 
project. Several Tribal and State coalition organizations also provided 
comments, as well as three states. No federal agencies submitted 
comments.
    In general, the NEW proposed rule received strong support for 
providing broad flexibility in: conducting NEW Programs, determining 
service populations and areas, formatting plans, designing programs, 
defining work activities, providing services and allowing job creation 
activities. There was also praise for supporting incorporation of the 
NEW Program into Pub.L. 102-477 demonstration projects and preserving 
the concept of a single plan and report.
    Several comments addressed issues beyond the department's control, 
such as providing additional program funding, amending the program to 
include other Tribes, and changing the basis of NEW funding from the FY 
94 funding level.
    Comment: One state commented that states should not have to count 
tribal members that receive TANF benefits in the state's participation 
rate.
    Response: According to Sec. 261.25 of the State TANF regulations, 
states have the option to include tribal families receiving assistance 
under a tribal TANF or work program in calculating the State's 
participation rates under Sec. 261.22 and 261.24. Issues related to 
providing services to tribal families by State TANF programs fall under 
the purview of State TANF regulations.
    Comment: Some commenters assumed that the purpose of the NEW 
Program was identical to that of the Tribal Job Opportunities and Basic 
Skills (JOBS) Training Program.
    Response: Although NEW replaced the Tribal JOBS Program, its 
purpose and scope are different, with the NEW legislation authorizing a 
program to provide work activities. The statute allows Tribes the 
autonomy to determine service population, service area and work 
activities.
    Comments: Comments from several states indicated a concern that the 
NEW regulations are not overly supportive of TANF requirements, and do 
not specifically target TANF recipients.
    Response: The regulations do not target TANF recipients because the 
statute does not require them to do so.
    We believe the law provides the opportunity for eligible Tribes to 
design programs to create work activities for their participants. The 
tribal work program is a new program with a different purpose than the 
old Tribal JOBS Program. The funding is a separate appropriation and 
not from the state TANF allocation. Even though NEW Programs are not 
mandated to serve TANF recipients, an overwhelming majority of NEW 
grantees do.
    Comment: Several commenters asked that we permit a grantee 
operating both NEW and Tribal TANF programs to submit a single, 
comprehensive program plan. They suggested the statute does not 
prohibit this action, that it would eliminate unnecessary 
administrative paperwork, emphasize that the NEW Program is a natural 
complement to Tribal TANF, and encourage the coordination of NEW and 
Tribal TANF programs.
    Response: Regardless of whether a grantee operates the NEW Program 
or both the NEW and Tribal TANF programs, the grantee must meet the 
separate statutory requirements of each program. There is no provision 
in the statute that permits a Tribe to meet a different set of 
provisions if it operates both programs.
    Because the statutory requirements of the NEW and Tribal TANF 
programs are significantly different, we believe it would be 
inefficient to develop and maintain procedures for submission of joint 
plans. Through the plan, the grantee provides information to establish 
that the Tribe is committed to meeting the statutory requirements of 
the program. It establishes that the grantee intends to fulfill the 
requirements of the law and has implemented operational procedures by 
which the Tribe will operate a program in compliance with the statute. 
Because

[[Page 8521]]

of the significant difference in the statutory requirements for NEW and 
Tribal TANF, the requirements related to plan content must of necessity 
reflect these different requirements. For example, the statute requires 
numerous data reporting requirements that are applicable to Tribal TANF 
grantees and not to NEW Program grantees. These varying requirements 
are reflected in different plan structures and outlines for the two 
programs.
    In addition, NEW and Tribal TANF programs have different funding 
sources. These sources do not merge when a Tribe receives funding for 
operation of the programs, unless a Tribe is operating under the 102-
477 Demonstration Project. The programs remain distinct when they enter 
into a Tribe's funding stream. With programs having separate funding 
sources, the grantee must report program operations and financial 
activities that are unique to each program. The Tribe must keep 
separate and distinct information about each of the programs in terms 
of activities and services and provide an accounting of funds in 
accordance with regulatory requirements and Departmental policies.
    Because a grantee must meet the statutory requirements of each 
program, we do not believe a significant reduction in paperwork would 
result by having a single plan. As noted above, even if a single plan 
were used, it would still be necessary to include documentation about 
each program's purpose, structure, objectives, operational procedures, 
services and benefits and reporting requirements.
    Development and maintenance of separate plans when a Tribe operates 
both NEW and Tribal TANF programs does not necessarily result in a loss 
of a Tribe's ability to coordinate activities of the two programs. It 
could also serve to emphasize the flexibility a grantee has to design 
and integrate programs that will complement each other in providing 
effective services to its service population.
    We made a technical correction to Sec. 287.160(b) to clarify 
language regarding the deadline for submission of the financial report 
(SF-269A).
    Other commenters addressed coordination factors, language, and 
report due dates. Responses are provided for those specific comments 
organized by subparts and sections, following the order of the 
regulatory text.

Subpart A--General NEW Provisions (Sections 287.1-287.10)

    Part 287 contains our Final Rule for implementation of section 
412(a)(2) of the Act, as enacted by PRWORA. The statute provides 
flexibility to the Tribes in the implementation and operation of the 
NEW Program, which is to provide work activities. Not only do we 
highlight this factor as an intent of the statute, we express that 
Tribes have the opportunity to create a program that will serve a 
Tribe's most vulnerable and needy population.
    This is also the portion of the Final Rule where we indicate the 
start date and define terms in part 287 that have special meanings or 
need clarification to ensure a common understanding. Although a term 
may be defined in this subpart, that definition may be repeated in a 
section if the term is uncommon or used in a special way. We chose not 
to define every term used in the statute and in these Final Rules. We 
believe that excessive definitions may unduly and unintentionally limit 
Tribal flexibility in designing programs.

Section 287.5  What is the Purpose and Scope of the NEW Program?

    Comments: Several commenters suggested clarification of the purpose 
and scope of the tribal work program that ACF has designated as the NEW 
Program. Since the NEW Program replaced the Tribal JOBS Program, the 
commenters' expectations were that the two programs would have similar 
purposes.
    Response: Unlike the Tribal JOBS Program, which served only AFDC 
clients, the purpose for the tribal work program is to make work 
activities available to the populations and areas the Tribe specifies.
    Comment: One commenter indicated the scope of the program, as 
stated in the proposed regulations at Sec. 287.5, extended beyond the 
statutory language.
    Response: In order to conform the scope of the program with the 
statute, we have deleted Sec. 287.5(b).
    Comment: One State suggested designing a program more supportive of 
TANF requirements.
    Response: The statute does not require the tribal work program to 
supplement the TANF program. Requiring grantees to design their 
programs to support TANF requirements would impinge upon the Tribe's 
sovereignty and program flexibility. Section 287.115 of the regulations 
does, however, require coordination between NEW Programs and TANF 
agencies in cases where the NEW Program has decided to serve TANF 
recipients.

Subpart B--Eligible Tribes (Sections 287.15-287.30)

    Funding to operate a NEW Program is only available to those 
grantees who are defined as ``eligible Indian tribes'' in the statute. 
An eligible Indian tribe is an Indian tribe or Alaska Native 
organization that operated a Job Opportunities and Basic Skills 
Training (JOBS) program in fiscal year (FY) 1995. When PRWORA was 
enacted, seventy-six Indian tribes and Alaska Native organizations 
comprised the universe of eligible Indian tribes.
    A consortium of eligible Indian tribes may receive NEW Program 
funding. Where the consortium operated a JOBS program in FY 1995, the 
Tribes may apply again as a consortium for NEW Program funds, or a 
Tribe that is a member of the consortium may apply for individual 
funding.
    If a consortium should break up or any Tribe withdraws from a 
consortium, remaining funds and future grants must be divided among the 
Tribes that were members of the consortium, if each individual Tribe 
obtains ACF approval to continue to operate a NEW Program.
    Public Law 102-477 allows Tribal governments to coordinate 
federally funded programs that provide employment, training and related 
services into a single, comprehensive program. The 102-477 grantees may 
include the NEW Program in their plan.

Section 287.15  Which Tribes are Eligible to Apply for NEW Program 
Grants?

    Comment: One commenter on this section suggested that NEW needs to 
be amended to include Tribes who have not previously operated the JOBS 
program.
    Response: ACF recognizes the potential benefits of having NEW 
Programs operate in additional tribal areas. However, section 412(a)(2) 
of the Act explicitly specifies those Tribes and Alaska Native 
Organizations who are eligible for NEW Program funding. Only ``eligible 
Tribes'' qualify to receive funding. The law clearly indicates that it 
was Congressional intent to establish a limited work activities 
program, one that would allow only those Tribes who had previously and 
most recently operated a JOBS program to continue operation of the 
replacement work activities program.

Section 287.25  May Tribes Form a Consortium to Operate a NEW Program?

    Comment: In the proposed rule, ACF proposed at Sec. 287.25(c) to 
require that the program plan submitted by a newly formed consortium 
include a copy of a

[[Page 8522]]

resolution from each Tribe indicating its membership in the consortium 
and authorizing the consortium to act on its behalf in regard to 
administering a NEW Program. One commenter suggested that we add that 
for Alaska Native Organizations grantees that form a consortium, a 
supporting resolution from their executive board is sufficient to 
satisfy this requirement.
    Response: We incorporated the suggestion.

Section 287.30  If an Eligible Consortium Breaks up, What Happens to 
the NEW Program Grant?

    Comments: Two commenters suggested that only those grantees who 
operated a JOBS Program in FY 1995 should continue to receive NEW 
funding at the FY 1994 funding level, regardless of a change in service 
area.
    Response: Statutory provisions governing the NEW Program provide 
that funding for an eligible Tribe shall not be affected by a change in 
its service area. PRWORA authorizes funds for operation of the NEW 
Program for six fiscal years (FY 1997-FY 2002). The amount of each 
eligible Tribe's grant is fixed for each of those six years and is 
equal to the amount of the JOBS grant the eligible Tribe received in FY 
1994.

Subpart C--NEW Program Funding (Sections 287.35-287.65)

    With the creation of the TANF block grant, the JOBS programs, 
including Tribal JOBS, were terminated. However, funding was continued 
to those Tribes who operated a Tribal JOBS Program in fiscal year 1995 
for the purpose of providing work activities. The NEW Program provides 
funding for Tribes and inter-tribal consortia to administer NEW 
Programs in FYs 1997 through 2002. The funding level is set by the 
statute to remain at $7,638,474 for each FY, the FY 1994 Tribal JOBS 
funding level. This is the sole basis for the funding amounts. The FY 
1994 JOBS grant amounts were originally based on agreements between 
Tribal JOBS grantees and their respective States regarding the ratio of 
Tribe to State adult AFDC recipients. Recipient counts and agreements 
are not now required, since the NEW Program grants are fixed amounts. 
There are no matching fund requirements for NEW. To apply for funding, 
an eligible grantee must submit a plan that establishes it will operate 
a program in accordance with the statute. Funds must be used to operate 
programs that make work activities available to such population and 
service area as the grantees specify. Work activities may include 
supportive and job retention services necessary for assisting NEW 
Program participants in preparing for, obtaining and/or retaining 
employment. Grantees are required to adhere to applicable financial 
reporting and auditing requirements.
    Some Tribes expressed an interest in being able to carry forward 
any unexpended NEW funds to the next year. Section 404(e) of the Act 
allows States to reserve amounts paid to the State for any FY for the 
purpose of providing TANF assistance without FY limitation. This 
section 404(e) of the statute is not applicable to Tribal TANF or NEW 
Programs. Section 412(a)(2) is silent on an obligation period for NEW 
Program funds. The absence in the statute of a specific provision 
authorizing carryover of NEW Program funds means that such carryover is 
not permissible. Carryover authority may not be implied, but must be 
specifically granted by Congress. Unauthorized carryover of 
appropriated funds violates 31 U.S.C. 1301(c)(2), which states that an 
appropriation may be construed to be permanent or available 
continuously only if the appropriation expressly provides that it is 
available after the fiscal year covered by the law in which it appears.

Section 287.35  What Grant Amounts are Available Under the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) 
for the NEW Program?

    Comment: One commenter observed that to base NEW Program funding on 
the FY 1994 funding level is inaccurate due to population increases, 
economic inflation, and similar factors.
    Response: ACF is unable to change the manner in which the NEW 
Program is funded. The statute specifies that each eligible Tribe shall 
receive a grant each fiscal year in the amount of its fiscal year 1994 
tribal JOBS grant. The grants are fixed amounts. Congress chose not to 
link the funding to additional factors.

Section 287.55  What Time Frames and Guidelines Apply Regarding the 
Obligation and Liquidation Periods for NEW Program Funds?

    Comment: One Tribe requested that we clarify the terms ``fiscal 
year'' and ``program year.'' It was stated that the terms are confusing 
and misleading. The commenter also noted that because of the financial 
procedures related to obligating and liquidating funds, it is important 
that the terms are clearly defined in the regulations.
    Response: In accordance with provisions of section 116(a)(1) of 
Title I of PRWORA, funding for the NEW Program became available on July 
1, 1997. NEW Program funds are issued for each fiscal year thereafter. 
The grants are annual grants. The definition of fiscal year found at 
section 419 of the Act is applicable to the NEW Program. A fiscal year 
is the twelve-month period that begins October 1 and ends September 30. 
The definitions of fiscal year and program year are contained in 
Sec. 287.10.
    Because of the provisions of PRWORA and fiscal policies governing 
the use of annual grants, we determined that funds provided for a 
fiscal year are for use during the twelve-month period July 1 through 
June 30. We call this twelve-month period for use of program funds the 
program year. The program year, therefore, represents the annual 
program operations year.
    Possible confusion between the two terms is minimized by recalling 
that funds for a fiscal year for operation of a NEW Program are not 
available at the beginning of a FY, October 1, but are first available 
on July 1. For example, NEW funds appropriated for FY 1998 (October 1, 
1997-September 1998) were first available on July 1, 1998, for 
operation of the 1998 NEW Program year. The 1998 NEW Program year began 
July 1, 1998, and ended June 30, 1999.
    Comment: ACF was asked to explain the time frames and guidelines 
that apply regarding obligation and liquidation periods for NEW Program 
funds.
    Response: Funds allocated for a FY are for use during the 
corresponding program year, the period that begins July 1 of the FY and 
ends June 30 of the following FY. Since the funds are annual grant 
awards, they must be obligated by June 30, the end of the funding 
period or program year. Unobligated funds will be returned to the 
Federal government through the issuance of negative grant awards. 
Eligible Tribes are required to report any unobligated funds on the SF-
269A within 30 days after the funding period, i.e. by July 30.
    The liquidation period is the one-year period after the end of the 
obligation period. This means a Tribe must liquidate all obligations 
incurred under the NEW Program grant award not later than June 30 of 
the following FY. For example, funds provided for FY 1998 must be 
obligated no later than June 30, 1999. All obligations for operation of 
the program must then be liquidated no later than June 30, 2000, one 
year after the end of the obligation period. Eligible Tribes are 
required to report any unliquidated funds on the SF-269A within 90 days 
after the conclusion of

[[Page 8523]]

the program year or of the liquidation period.
    Comment: Numerous comments were received regarding the proposed 
prohibition on carry over of unobligated NEW grant funds into future 
program years.
    Response: While ACF is sensitive to the fact that carry-over of 
funds is permitted in other Federal Indian work programs, we have 
nonetheless determined that specific legislative authorization is 
needed to allow NEW grantees to reserve grant funds for future program 
years. Tribal NEW grants are fixed for each fiscal year at the amount 
received by the Indian tribe in fiscal year 1994 under section 482(i) 
(as in effect during fiscal year 1994). Thus, the statute determines 
that NEW grant funds are ``one-year'' monies. This means that NEW grant 
funds must be obligated for the needs of the current program year. ACF 
has determined that specific statutory authorization would be needed to 
permit NEW grantees to reserve or carry over NEW grant funds without 
fiscal year limitation.

Section 287.65  What OMB Circulars Apply to the NEW Program?

    Comment: ACF received one comment to this section. The commenter 
noted that if a program is implemented by a nonprofit organization 
rather than a Tribe, OMB circular A-122, ``Cost Principles for Non-
Profit Organizations'' would apply. Therefore, the list of circulars 
applicable to the NEW Program should include OMB Circular A-122.
    Response: We concur with the commenter's suggestion. In a limited 
number of instances, the administrative unit qualifying to receive NEW 
Program funds on behalf of an eligible Tribe or a consortium of 
eligible Tribes is a non-profit agency or organization. We have revised 
the final regulations to indicate OMB Circular A-122 may apply to the 
NEW Program.

Subpart D--Plan Requirements (Sections 287.70-287.100)

    The submission of a NEW plan is to document the establishment and 
operation of a Tribe's NEW Program. Through this document the Tribe 
requests funding for its program, as outlined. The requirement for 
submission of a NEW Program plan also applies to a Tribe if it operates 
a Tribal TANF program.
    For operation of a NEW Program for the first year in which funds 
were available, FY 1997, we required a one year interim preprint. This 
allowed Tribes the opportunity to structure their initial NEW Program 
around a shorter planning cycle. Guidance for preprint submittal to 
operate a FY 1997 NEW Program was issued in the document entitled, 
``Native Employment Works Program: Abbreviated Preprint.'' Issued 
through a program instruction (NEW-ACF-PI-97-1, dated July 17, 1997), 
it also included instructions for Tribes operating Pub. L. 102-477 
programs.
    After the first year of operation, a Tribe will be able to develop 
a long range planning document that takes into consideration the 
positive and negative aspects of the interim preprint. We will require 
the ongoing plan, including certifications, to cover a three-year 
period. The requirement that a NEW Program plan cover a three-year 
period is consistent with the Tribal TANF plan requirement. We will 
issue program instructions to provide guidance for submission and 
approval of future NEW plans and any subsequent modifications.
    In general, Tribes who had previously consolidated their JOBS 
program into a Pub. L. 102-477 plan submitted a letter indicating that 
the NEW Program was incorporated into their 102-477 plan where there 
were no substantive changes between the Tribal JOBS Program and the NEW 
Program. However, a 102-477 plan modification will be required if 
substantive changes are made in the future.
    We considered a number of factors in deciding on the funding period 
for the NEW Program. We noted that PRWORA first made funds available on 
July 1, 1997, for the operation of the NEW Program. Yet, the law refers 
to funding the program for FYs and defines FY in the usual manner. We 
believe a correct interpretation of the statute is to have the NEW 
Program begin on July 1 of each year and run through June 30 of the 
following year.

Section 287.70  What Are the Plan Requirements for the NEW Program?

    Comments: Several commenters suggested that the description of the 
NEW Program plan exclude the description of client services because it 
was duplicative of the description of work activities to be provided.
    Response: The elements grantees are required to describe in the 
plan were taken directly from the NEW planning guidance. Upon further 
review, we determined that the applicable section of the guide was 
requesting information to determine client eligibility and a process 
for prioritizing clients to receive services. Thus, the information 
requested is different and not duplicative. As a result, we did not 
change that section.
    Comment: One state commented that the Tribes should be required to 
describe the NEW Program as states are required to.
    Response: We believe the commenter was confused because states 
don't have work programs per se, and Sec. 287.70 does list plan 
requirements for Tribes.

Section 287.75  When Does the Plan Become Effective?

    The Secretary required Tribes to submit an interim Tribal preprint, 
the ``Native Employment Works Program Abbreviated Preprint,'' if they 
were offering NEW Program services effective July 1, 1997. The preprint 
became operative July 1, 1997, and remained in effect until the end of 
the program year, June 30, 1998. Subsequent three-year plans must be 
submitted to the Secretary by a deadline to be established. The 1998 
plan covered program years 1998, 1999, and 2000.

Section 287.85  How Is a NEW Plan Amended?

    Comments: Comments were received suggesting a word change in 
proposed Sec. 287.85(c) that any substantial change in plan content or 
operations be ``submitted'' rather than ``reported'' to ACF.
    Response: We have made that change to the regulatory language.
    Comment: A commenter suggested that an amendment to a NEW plan 
become effective the first day of the quarter in which the amendment is 
submitted.
    Response: Such an action would make the amendment retroactive. If 
for some reason the amendment was disapproved, there may be a negative 
consequence if the grantee had already implemented the change. A 
quarterly time frame is essentially meaningless for NEW operations and 
reports.

Subpart E--Program Design and Operations (Sections 287.105-287.145)

    In this subpart, we require Tribes to indicate who the program will 
serve, what activities and services will be provided, the coordination 
required to promote program effectiveness and program outcomes. Each 
Tribe will have to give careful consideration to the populations most 
in need of services to help them avoid long-term dependency and chronic 
unemployment. Opportunities for work may not be readily available on 
reservations and the surrounding economic conditions vary greatly. 
Consequently, we are allowing grantees the option of using program 
funds to encourage economic development initiatives leading to job 
creation. Additionally, we support the

[[Page 8524]]

alternative of encouraging traditional subsistence and other culturally 
relevant activities.
    Generally, the need for services exceeds the demand. Consequently, 
an intake prioritization procedure may need to be instituted to 
determine the order of serving clients. NEW Programs should be tailored 
to fit the needs of its designated population and can be designed to 
serve a variety of clients, including General Assistance, TANF clients, 
other target groups, such as, teen parents, non-custodial parents, 
seasonal workers, unemployed parents and veterans, ex-offenders, etc.
    It is not only important to coordinate with other tribal programs 
to develop a comprehensive service delivery system, but State programs, 
social service agencies, non-profit organizations, private industry and 
any other entity which can provide resources or opportunities for the 
benefit of NEW clients and their families. It is common practice to 
combine activities and services from different programs to provide 
seamless services to individual clients and their families. This may be 
very appropriate in the delivery of services to TANF clients who are 
obligated to participate in prescribed work activities. NEW Program 
activities may supplement TANF work activities in order to meet TANF 
work requirements. In some cases States are counting NEW Program 
participation in fulfillment of participation rate requirements, where 
possible.
    By allowing Tribes flexibility in determining measures of program 
outcome, we do not intend to imply that this is not an important area. 
Because each NEW Program grantees' goals, objectives, population and 
economic conditions will be different, we anticipate that Tribes will 
develop different program standards and measures to realistically 
reflect achievable outcomes and evaluate program performance.
    It is crucial for NEW Program grantees to establish at the outset 
of program operations their goals, expected outcomes, and outcome 
measures. Only with such information will program administrators be 
able to reasonably evaluate to what extent a NEW Program is successful.
    There was one technical change. The word ``tribal'' was added to 
the regulatory text, at Sec. 287.115(d), regarding TANF participation 
rates because this section pertains to Tribal and State TANF programs.

Section 287.110  Who is Eligible to Receive Assistance or Services 
Under a Tribe's NEW Program?

    Comment: One comment suggested that all welfare recipients on the 
reservation be eligible for the NEW Program.
    Response: The statute as amended stipulates each grantee ``shall 
use the grant for the purpose of operating a program to make work 
activities available to such population and such service area or areas 
as the Tribe specifies.'' Each grantee has the autonomy to determine 
client eligibility. Whether or not to serve TANF recipients is a 
decision to be made by each tribal grantee.

Section 287.115  When a NEW Grantee Serves TANF Recipients, What 
Coordination Should Take Place With the Tribal or State TANF Agency?

    Comments: Conflicting comments were received on this section. Some 
commenters wanted the factors upon which coordination should occur to 
be reduced to only the essential ones. Other commenters wanted more 
guidance on coordination when a NEW Program serves TANF recipients.
    Response: The Final Rule stipulates coordination should occur, not 
must occur. While some areas of coordination are more important than 
others, each factor listed represents a sound management practice. The 
language presented in no way discourages tribal-state negotiations and 
presents more options for tribal-state collaboration. It is ACF's 
intent to insure that each grantee evaluate the need for various 
coordination activities based on its program structure and operations.
    Comment: It was recommended that ACF mandate Tribe/State agreements 
to delineate roles, responsibilities, and services.
    Response: While ACF would advocate such a practice, this is an area 
left to tribal/state discretion. Consequently, the suggestion was not 
incorporated.

Section 287.120  What Work Activities May be Provided Under the NEW 
Program?

    Comment: There was a comment that Tribes be able to include work 
activities for their TANF recipients.
    Response: Section 287.120 allows Tribes to define their own work 
activities to best address their clients' needs. The Tribes may include 
whatever work activities they deem appropriate to their service 
populations. Those listed in the rules are merely examples and not all-
inclusive. The rule was not changed to include more examples.
    Comment: One commenter expressed the importance of including 
traditional and tribal relevant activities as allowable work 
activities. The commenter further suggested that NEW participants be 
allowed to comply with work participation requirements.
    Response: Since ``traditional subsistence activities'' is listed in 
Sec. 287.120, that activity is already identified as an allowable 
activity. However, the listed activities are examples and grantees are 
not limited to the list. Regarding the second comment, it should be 
noted that there are no work activity requirements under the NEW 
Program. The commenter may be referring to TANF work participation 
requirements. It is left to the discretion of the NEW grantee what work 
activities are to be provided. Negotiations and agreement with the TANF 
agency (and applicable TANF rules) will determine whether NEW work 
activities can be counted toward a TANF agency's participation rate.

Section 287.130  Can NEW Program Activities Include Job Market 
Assessments, Job Creation and Economic Development Activities?

    Comments: Some commenters suggested that the term ``job market 
assessments'' be eliminated from the list of activities allowable under 
the NEW Program. Another commenter categorized this section as good for 
offering guidance on maximizing their program services.
    Response: This proposed activity was recommended by one of the of 
NEW Program directors and has validity for the grantees that choose to 
conduct such activity. ACF would rather be inclusive and provide a 
greater range rather than be exclusive for those grantees interested in 
conducting such activity. This is an allowable, not mandatory activity. 
The suggested change was not made.

Section 287.140  With Whom Should the Tribe Coordinate in the Operation 
of its Work Activities and Services?

    Comment: It was suggested that the Indian and Native American 
Welfare-to-Work (INAWTW) program be specifically mentioned as a program 
to coordinate NEW with in Sec. 287.140.
    Response: Often Federal programs are not reauthorized, or are 
authorized with different names and/or revised scopes. For that reason, 
in the proposed rules we opted not to name specific programs. 
Consequently the suggestion was not incorporated.

[[Page 8525]]

Section 287.145  What Measures Will be Used to Determine NEW Program 
Outcomes?

    Comments: Several comments were received urging ACF to allow 
grantees the ability to define their own standards and measures.
    Response: That was the intent of the proposed rules and remains so 
in the Final Rule. According to the NEW Program Planning Guidance, each 
NEW grantee is to develop at least two program standards. The guidance 
states ``the Tribe is encouraged to develop its own standards.'' The 
Final Rule supports and encourages each grantee to develop its own 
standards. Several examples are provided in the regulations due to the 
many inquiries that were received for guidance in this area. If more 
standards are developed and achieved by the NEW grantee, the successful 
program elements will provide further evidence of positive program 
performance.

Subpart F--Data Collection and Reporting Requirements Sections 
287.150--287.170)

    Although not specified in PRWORA for the NEW Program, it is 
necessary to outline the minimum data gathering and reporting 
obligations for any grantee receiving Federal funding. The particular 
nature of the program services offered within the NEW Program require 
the granting authority to set forth some uniform standards for 
appropriate accountability and service definitions and to insure the 
availability of information necessary for public oversight and 
evaluation.
    Through considerable consultation and discussion with advocacy 
groups and many eligible Tribes, the Secretary has elected to develop 
minimum reporting and data collection requirements. This minimum 
reporting requirement will be evident in the shift from quarterly 
reporting, which was required under the Tribal JOBS Program, to annual 
program and fiscal reporting. We expect NEW grantees to simply maintain 
certain case information on file rather than regularly submitting 
formal reports of these records to the Federal government.
    We will require NEW Program grantees to submit a report covering 
program operations and a report covering financial expenditures. These 
reports must also be submitted by NEW Program grantees who operate a 
TANF program.
    The program operations report will provide information essential 
for monitoring and measuring program performance. It also includes data 
elements to assist management in evaluating program objectives, 
performance measures and allocation of resources.
    The NEW Program operations report is an annual report. The report 
will be due September 28, which is 90 days after the close of the NEW 
Program year. The report is based on data collected from the current 
program year. The report must be submitted to the appropriate ACF 
Regional Administrator and a copy forwarded to the ACF, Office of 
Community Services, Division of Tribal Services, Attention: Data 
Reporting Team.
    Under the Public Law 102-477 initiative, all services are 
integrated under a single 102-477 program plan; funds from the programs 
are commingled under a single budget; and activities are reported under 
a single reporting system. In general, the 102-477 Tribes deal only 
with the lead Federal agency, the Bureau of Indian Affairs (BIA). The 
report is submitted annually to BIA and shared with the Departments of 
Health and Human Services and Labor.
    The program operations report was developed by the Secretary in 
consultation with NEW Program grantees and other interested parties. 
For simplicity and consistency the NEW report was formatted very 
similar to the 102-477 report.
    For Tribes that operate both the NEW and TANF programs, we 
considered developing a single reporting instrument. However, we 
believe that a single report is not feasible nor would it reduce the 
amount of reporting. There are TANF reporting requirements in the law 
which are not required for NEW Program grantees. Also, the reporting 
cycles could be different for a Tribe operating TANF and NEW Programs 
and to report program operations with different reporting periods on a 
single form could be more complicated and confusing than if separate 
reports were used. In addition, we may obtain data which is not 
comparable if we require Tribes who operate only a NEW Program to 
report one set of data while requiring Tribes that operate TANF and NEW 
Programs to report on different or fewer data elements.
    Grantees must report NEW financial activities annually on a 
Standard Form SF-269A. This form is required for reporting NEW Program 
expenditures if a Tribe operates both NEW and TANF programs. 102-477 
grantees also report financial data on the SF-269A.
    Comment: It was suggested that we give grantees at least a 12-month 
grace period before data section reporting requirements are 
implemented.
    Response: We believe a delay in submitting financial and operations 
reports is unwarranted for several reasons. First, submission of the 
required reports in accordance with the time frames set forth in the 
regulations provide both the agency and the grantees with essential 
management information required to access how the newly instituted work 
activities programs are meeting their goals and objectives. Second, 
grantees must meet time frames for submission of forms regarding 
financial activities in accordance with applicable regulations and 
Departmental policies. Finally, reporting requirements for the NEW 
Program are minimal. Only an annual financial activities report and an 
annual program operations report are required.

Section 287.160  What Reports Must a Grantee File Regarding Financial 
Operations?

    Comment: Several commenters objected to requiring submission of the 
annual fiscal report on September 28 rather than September 30. The 
commenters note that while September 28 may be literally 90 days from 
the end of the NEW Program year, an end-of-the-quarter date of 
September 30 would be much easier for tribal staff to remember and be 
consistent with other deadlines that commonly fall either at the 
beginning or the end of a calendar month.
    Response: Regulations at 45 CFR 92.41(4) require that grantees 
submit annual reports 90 days after the end of the reporting quarter. 
For the NEW Program, the end of the reporting quarter is June 30. The 
90 days after June 30 is September 28. Consequently, ACF is unable to 
change the due date of the fiscal reports to September 30.

Section 287.165  What are the Data Collection and Reporting 
Requirements for Public Law 102-477 Tribes That Consolidate a NEW 
Program With Other Programs?

    Comment: It was suggested that ACF needs to begin identifying a 
process with Pub.L. 102-477 Tribes to reduce reporting requirements 
while maintaining the efficiencies and opportunities offered under Pub. 
L. 102-477.
    Response: The operation of work programs under a Pub.L. 102-477 
plan affords Tribes the opportunity to consolidate the administrative, 
operational and reporting activities of these programs into a single 
system. The NEW Program is eligible for inclusion under a Pub.L. 102-
477 plan. We encourage eligible Tribes to consider the benefits of 
operating under this

[[Page 8526]]

demonstration program. Minimal reporting requirements are already in 
place for 102-477 Tribes. If a Tribe incorporates NEW under a Pub.L. 
102-477 demonstration program, only the Pub.L. 102-477 annual report is 
due to BIA. There are no separate or additional NEW reporting 
requirements.
    Comment: One commenter stated it was unclear what reports are due 
when Tribes operate under Pub.L. 102-477 and suggested that flexibility 
should be maximized to the greatest extent possible by carrying the 
objectives of Pub.L. 102-477 into data reporting.
    Response: The BIA administers the Pub.L. 102-477 demonstration 
programs and establishes guidelines regarding data collection and 
reporting requirements. Currently, only an annual operations report and 
an annual fiscal report are required for Tribes that operate under 
Pub.L. 102-477. For Tribes operating Pub.L. 102-477 programs, we will 
obtain information on NEW Program operations and fiscal activities 
through the Pub.L. 102-477 reporting system.

Section 287.170  What are the Data Collection and Reporting 
Requirements for a Tribe That Operates Both the NEW Program and a 
Tribal TANF Program?

    Comment: Several commenters stated that separate data collection 
and reporting requirements for Tribes that operate both TANF and NEW 
Programs are burdensome and unnecessary. One commenter noted that 
requiring reports for both programs exacerbates the already cumbersome 
proposed reporting requirements for TANF.
    Response: ACF believes that a single report for Tribes operating 
both Tribal TANF and NEW Programs would not reduce the amount of 
reporting but would more likely make the reporting requirements more 
burdensome and complex. There are TANF reporting requirements in the 
law which are not required for NEW Program grantees. Also, the 
reporting cycles could be different for a Tribe operating TANF and NEW 
Programs, and to report program operations with different reporting 
periods on a single form could be more confusing and complicated than 
if separate reports were used. In addition, we may obtain data which is 
not comparable if we require Tribes who operate only a NEW Program to 
report one set of data while requiring Tribes that operate TANF and NEW 
Programs to report on different data elements.

Discussion of Program Areas

Client Eligibility

    Section 412(a)(2)(C) of the Act, as amended, allows for NEW 
grantees to define their population and service area(s) for the NEW 
Program. This eligibility requirement is different and much broader 
than the Tribal JOBS Program, where the purpose was to provide Tribal 
members receiving AFDC with education, training and employment 
services.
    There has been some discussion between ACF and the Tribes on how 
and who the NEW Program should supplement or support. Should NEW be an 
adaptable, independent program addressing client needs; should it 
support the Tribal TANF program if a Tribe were to choose to operate 
its own TANF program; should it be a supplement to State TANF programs, 
acting as a safety net for those that don't qualify for TANF or who 
have met the TANF time limits; or should the program be a combination 
of these options? We believe each NEW grantee should make these 
determinations, for they are in the best position to respond to the 
needs of their reservation and to allocate Tribal program resources to 
meet those needs.
    In light of scarce Tribal resources, unnecessary restrictions and 
rules may prevent Tribes from using their NEW Programs as safety nets 
for families ineligible for other programs or who have met the time 
limits under TANF. Some Tribes are beginning to struggle with the issue 
of Tribal families having met the time limits in States where shorter 
time limits were established under waivers.
    Moreover, the Indian and Native American Welfare-to-Work program, 
which all NEW grantees are eligible to apply for, makes available 
funding to serve categories of hard-to-employ TANF recipients. 
Duplication of services should be avoided. NEW grantees have the option 
of supplementing work activities and services provided by TANF and 
Welfare-to-Work programs to TANF clients or providing work activities 
and services to other needy clients. A grantee may also choose to serve 
both TANF and non-TANF clients. The decisions are left to Tribal 
discretion and not dictated by these rules.
    When an eligible Tribe elects to receive NEW Program funds, but not 
to operate the Tribal TANF program, individuals receiving State TANF 
assistance must participate in State TANF work activities. If a NEW 
Program elects to serve individuals who are State TANF recipients, then 
it should do so as an addition to or extension of the State TANF work 
activities to avoid duplication of services and provide maximum 
benefits to the families served. There will need to be close 
coordination between the TANF agency and the NEW Program to provide 
comprehensive services to the families jointly served.
    During our consultation phase, our Tribal partners overwhelmingly 
recommended that they be allowed maximum flexibility as reflected in 
PRWORA, including defining their service population and area(s) and 
designing and operating effective programs. Restrictive program rules 
on client eligibility and program expenditures would create barriers to 
providing comprehensive, seamless service delivery to needy Tribal 
families. Consequently, in keeping with the intent of the law and 
Tribal sovereignty, we have chosen to allow maximum flexibility in NEW 
client eligibility requirements, program design and operations.

Work Activities

    Section 412(a)(2)(C) of the Act, as amended, describes the use of 
the NEW grant. Each Indian tribe to which a grant is made under this 
paragraph must use the grant for the purpose of operating a program to 
make work activities available to such population and service area(s) 
as the Tribe specifies.
    ACF supports Tribal autonomy in defining what constitutes work 
activities. The statutory language for NEW contrasts notably with the 
statute for the now repealed Tribal JOBS Program. JOBS required that 
Tribes have the following mandatory work components: Educational 
activity; job skills training; job readiness; and job development and 
job placement activity. In addition, a Tribe was required to have at 
least one of the following components: group and individual job search; 
on-the-job training; community work experience; work supplementation; 
or alternative education, training and employment activities.
    Section 407(d) defines work activities for the TANF program as: 
Unsubsidized employment; subsidized private or public sector 
employment; work experience; on-the-job training; job search and job 
readiness; community service programs; vocational educational training; 
job skills training; education; satisfactory attendance; and provision 
of child care.
    In order to determine how work activities should be defined under 
NEW, we reviewed allowable activities under JOBS, TANF and Welfare-to-
Work. Again we consulted our Tribal partners and other interested 
parties regarding both the Tribal TANF and the NEW Programs.

[[Page 8527]]

    The first question posed was: ``What relationship should there be 
between work activities as defined in section 407 of the Act and the 
work activity that is required to be made available by section 
412(a)(2)?'' The consensus was that NEW Program grantees should define 
``work activities'' and that section 407 should serve as a guideline 
for them. Tribes stated that they should be allowed to use culturally 
relevant activities to solve unique problems. In order to give Tribes 
as much flexibility as possible we have included the activities listed 
in section 407 as examples of NEW work activities. In addition, we have 
added job creation, economic development, and traditional subsistence 
activities, such as hunting and fishing.
    The second question posed was: ``What is the interconnection 
between NEW work activities and work activity participation to the 
State or Tribal TANF program?'' Some felt that requiring NEW Programs 
to ``mirror'' TANF work activities would facilitate Tribe/State 
coordination and simplify program administration. However, certain 
educational and training assistance which may accrue to the clients 
would be lost in the process, possibly eliminating client options which 
are more practical, available or needed. NEW Programs can provide work 
activities above and beyond what can be provided under TANF or WtW 
programs, thus broadening the clients' opportunities and options.
    States and Tribes should coordinate closely to ensure that NEW and 
TANF work activities are best arranged in a complimentary fashion to 
advance the TANF client's employability goals.

Coordination

    The Family Support Act of 1988 created the opportunity for Indian 
tribes and Alaska Native organizations to conduct JOBS programs. 
Operating a Tribal JOBS Program required coordination with State 
programs to ensure that the necessary interfaces between the Tribal 
JOBS Programs and State title IV-A programs were in place. It also 
required that a Tribe and a State be able to exchange information 
regarding such things as eligibility status, child care services, 
changes in employment status, and participation status.
    Under the JOBS program, coordination was necessary in order to 
prevent duplication of services, assure the maximum level of services 
was available to participants and ensure that costs of other program 
services for which welfare recipients were eligible were not shifted to 
the JOBS program. Coordination between TANF and NEW is still needed for 
some of these same reasons.
    All work activities required as a condition of eligibility to 
receive temporary public assistance are now prescribed by the TANF 
program administered by the States and, at their option, Tribes. There 
is some misunderstanding that NEW Programs should serve all State 
tribal TANF recipients. With 74 percent of all NEW grants being below 
$100,000, it is unrealistic to expect NEW Programs to be able to meet 
such demands. The Tribe and State should negotiate an agreement if the 
Tribe plans to serve all Tribal TANF clients, which may necessitate the 
need for supplementary funding from the State. Additional State funds 
would allow Tribes to: increase the availability of activities and 
services; provide additional activities and services so that clients 
could meet the State's participation rate; or serve more clients.
    Congress did not replace the Tribal JOBS Program with another 
tribal work program of identical focus. Individuals who receive TANF 
assistance, regardless of Native American or Alaska Native heritage, 
have to participate in work activities as prescribed by the State TANF 
program (unless the Tribe elects to operate its own TANF program) in 
order to continue to be eligible to receive TANF assistance. Under 
these circumstances then, what are the requirements for coordination 
between a NEW Program and a State TANF program?
    For participants in the NEW Program, coordination efforts should be 
designed to best fulfill the participants' self-sufficiency goals. It 
is critical that any TANF client referred to NEW be placed in 
activities leading to fulfillment of their employment goal or a job as 
soon as possible. Otherwise the client may consume valuable time. Since 
TANF is time limited any TANF client not able to receive immediate 
services should be sent back to the referring agency. Clients in work 
activities under a State TANF program may be required to participate 
for a minimum number of hours per week to remain eligible for TANF 
assistance, and the State maintains responsibility for the costs of 
that participation. If a NEW Program elects to serve individuals who 
are participating in State TANF work activities, it should do so as an 
addition or extension to the State TANF work activities. This will 
avoid duplication of services, extend the range of work activities and 
services provided, and assure that costs of State TANF work activities 
are not shifted inappropriately to the NEW Program. In order to provide 
these assurances, initial and ongoing coordination between the NEW 
Program and the State TANF agency will be necessary. Also, the 
responsibility of meeting the TANF reporting requirements must be 
coordinated when serving TANF clients.
    Moreover, local NEW and TANF case workers need to be aware of each 
program's requirements and procedures to offer the best mix of services 
to joint clients. For example, bonuses, stipends, and performance 
awards are allowed under NEW. However, depending on the rules of a 
Tribal or State TANF program, such payments made from NEW Program funds 
may be counted as income in determining and maintaining TANF 
eligibility. Rules of other need-based programs may also require that 
such payments be counted as income in the eligibility and payment 
determinations. NEW Program operators would want to take such 
information into consideration when determining what services to 
provide and the affect on their clients' situations.
    For a Tribe that previously operated a JOBS program and elects to 
also conduct a TANF program, many of the coordination and collaboration 
relationships will be internal within the Tribe. This would also be 
true if a grantee had responsibility for the DOL or BIA employment 
programs. The importance of developing and maintaining those 
relationships is amplified by the additional responsibilities that come 
with operating a public assistance program. Many contracted work sites, 
for example, used by a State may also be available to Tribal TANF 
programs.
    Section 407(b)(4) of the Act, as amended by the Balanced Budget Act 
of 1997, expands the State option to include individuals receiving 
assistance from a Tribal TANF program in the State's work participation 
rate calculation to also include individuals receiving assistance from 
a Tribal NEW Program. Unlike the Tribal JOBS Program, this is a State 
option, and as such Tribes do not have authority to exempt NEW/TANF 
program participants from State TANF program work requirements. The 
statute is silent (exception at section 412(h) noted) regarding 
comparability of programs. However, the statute prescribes minimum work 
participation rates for State TANF programs and the minimum number of 
hours necessary to qualify as engaged in work, and we would expect that 
agreements on respective roles and responsibilities will be established 
between States and Tribes operating NEW Programs.

[[Page 8528]]

VII. Regulatory Impact Analyses

A. Executive Order 12866

    Executive Order 12866 requires that regulations be drafted to 
ensure that they are consistent with the priorities and principles set 
forth in the Executive Order. The Department has determined that this 
rule is consistent with these priorities and principles. This 
rulemaking implements statutory authority based on broad consultation 
and coordination. It reflects our response to comments received on the 
NPRM that we issued on July 22, 1998.
    The Executive Order encourages agencies, as appropriate, to provide 
the public with meaningful participation in the regulatory process. As 
described elsewhere in the preamble, ACF consulted with Tribal, State 
and local officials and their representative organizations, as well as 
a broad range of advocacy groups, researchers and others to obtain 
their views prior to the publication of the NPRM. We also considered 
comments received in response to the NPRM.
    We respond to the comments that we received in the discussions of 
individual regulatory provisions within the preamble. These rules 
reflect the comments that we received in response to the NPRM. They 
also reflect the intent of PRWORA to achieve a balance between granting 
Indian tribes the flexibility they need to develop and operate 
effective and responsive programs and ensuring that the objectives of 
the statute are met. In addition, these rules recognize the differences 
that must and will exist between Tribal and State TANF programs.
    Under the new law, tribal flexibility is achieved by giving Tribes 
the opportunity to develop, design and administer their own TANF block 
grants; and for the NEW grantees, they have great flexibility in the 
design of their NEW Programs. Ensuring that program goals are 
accomplished is achieved through the provisions on plan content, 
penalty provisions, and data collection.
    We support tribal flexibility in various ways--such as giving 
Tribes the ability to define key program terms; and supporting the 
negotiation of minimum work participation requirements and time limits 
for each Tribal TANF program. We support the achievement of program 
goals by ensuring that we capture key information on what is happening 
under both the Tribal TANF and NEW Programs and maintaining the 
integrity of the work and other penalty provisions of the TANF program.
    We take care to protect against negative impacts on needy families 
receiving assistance from Tribal TANF grantees by including three 
provisions not required by the statute, using the regulatory authority 
given to us by the statute. One of these provisions is the provision 
for retrocession; the second provision is the limit on administrative 
expenditures. Retrocession can be found at Sec. 286.30, and the 
limitation on administrative expenditures can be found at Sec. 286.50.
    The third provision we included to protect against negative impacts 
on needy families is the provision for the replacement of amounts 
withheld from a tribal Family Assistance Grant due to the imposition of 
a penalty. We considered not including this provision; however, we 
believe that the benefits and protections this policy brings to the 
needy families being served by a Tribal TANF program outweigh the 
potential cost to the Tribe.
    One of our key goals in developing the Tribal TANF penalty rules 
was to ensure tribal performance in the key areas provided under 
statute--including work participation, the proper use of Federal TANF 
funds, and data reporting. The law specified that we should enforce 
tribal actions in these areas and also specified the penalty for each 
failure. Through the ``reasonable cause'' and ``corrective compliance'' 
provisions in the rules we give some consideration to special 
circumstances within a Tribe to help ensure that neither the Tribe nor 
needy families served by the Tribe will be unfairly penalized for 
circumstances beyond their control.
    In the work and penalty areas, this rulemaking provides information 
to the Tribes that will help them understand our specific expectations 
and take the steps necessary to avoid penalties. These rules may 
ultimately affect the number and size of penalties that are imposed on 
Tribes, but the basic expectations on Tribes are statutory.
    The financial impacts to the Federal government of these rules are 
minimal for three reasons. First, the level of funding provided for 
both the block grant and the NEW Program is fixed. Second, the amount 
of a Tribe's TANF block grant is deducted from the State TANF block 
grant of the State in which the Tribe is located; thus, no additional 
Federal outlays are necessary beyond the amount needed for State Family 
Assistance Grants. And third, Tribal TANF grantees are not eligible for 
either the contingency fund or performance bonuses; thus, there are no 
additional outlays required for these two items.
    A Tribe's TANF grant could be affected by the penalty decisions 
made under the law and these rules. Otherwise, we do not believe that 
the rulemaking will affect the overall level of funding or 
expenditures. However, it could have minor impacts on the nature and 
distribution of such expenditures.
    These rules could have a minimal financial impact on State 
governments. This is due to the statutory requirement that State data 
be used to determine the amount of a Tribal Family Assistance Grant. 
The actual impact to any one State is difficult to determine as it is 
not known how many Tribes will apply to administer a TANF program. 
There are some States that have federally-recognized Tribes within 
their borders; yet there are many that do not have any federally-
recognized Tribes within their borders.
    In the area of TANF data collection, the statutory requirements are 
specific and extensive--especially with respect to case-record or 
disaggregated data. These rules also include data reporting with 
respect to program expenditures. They expand upon the expenditure data 
explicitly mentioned by the statute in order to ensure that: needy 
families continue to receive assistance and services; monies go for the 
intended purposes; and the financial integrity of the program is 
maintained.
    The NEW Program grantees must report participant characteristics 
and program outcome date that the Secretary and others will use to 
determine the impact of the program. Only an annual operations report 
and an annual financial activities report are required.
    The impacts of these rules on needy individuals and families will 
depend on the choices that a Tribe makes in implementing the new law. 
Our data collection should enable tracking of these effects over time 
and across Tribes. Overall, our assessment of these rules indicates 
that they represent the least burdensome approach consistent with the 
regulatory objectives.
    The Department has determined that this rule is significant under 
the Executive Order. The Office of Management and Budget has reviewed 
the rule.

B. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (5 U.S.C. Ch. 6) requires the 
Federal government to anticipate and reduce the impact of rules and 
paperwork requirements on small businesses and other small entities. 
Small entities are defined in the Act to include small businesses, 
small non-profit organizations, and small governmental entities. This 
rule will affect only

[[Page 8529]]

federally-recognized Indian tribes and Alaska Native organizations. 
Therefore, the Secretary certifies that this rule will not have a 
significant impact on small entities.

C. Family Impact Assessment

    We certify that we have made an assessment of this rule's impact on 
the well-being of families, as required under section 654 of The 
Treasury and General Government Appropriations Act of 1999. The purpose 
of the TANF program is to strengthen the economic and social stability 
of families, in part by supporting the formation and maintenance of 
two-parent families and reducing out-of-wedlock child-bearing. As 
required by statute, this rule gives flexibility to Tribes to design 
programs that can best serve this purpose.

D. Paperwork Reduction Act

    This rule contains information collection activities that have been 
reviewed and approved by the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act of 1995 (PRA). (OMB has already 
approved an Interim Tribal TANF Data Report, Form ACF-343, Control No. 
0970-0176. OMB has also approved a NEW Program data reporting form, 
``The Native Employment Works (NEW) Program Plan Guidance and Report 
Requirements,'' Control No. 0970-0174). Under this Act, no persons are 
required to respond to a collection of information unless it displays a 
valid OMB control number. If you have any comments on these information 
collection requirements, please submit them to OMB within thirty days. 
The address is: Office of Management and Budget, Paperwork Reduction 
Project, 725 17th Street NW, Washington, DC 20503, Attn: ACF/DHHS Desk 
Officer. The public will have an opportunity to provide comments before 
OMB makes a final decision.
    The following discussion incorporates our response to comments 
regarding information collection that we received on the NPRM and the 
Paperwork Notice published on July 22, 1998. This rule contains 
provisions covering two quarterly reports (one program data, the other 
financial) and one annual report for the Tribal TANF program. The 
proposed reports were attached to the proposed rule as an Appendix. We 
will revise these instruments based on the comments we have received, 
and will issue them to Tribes through the ACF policy issuance system 
after they have been cleared through OMB. We have, however, responded 
to the comments received elsewhere in the preamble of this Final Rule.

Quarterly Data and Financial Reports

    The two quarterly reports are the Tribal TANF Data Report 
(Appendices A through C) and the Tribal TANF Financial Report (Appendix 
D). The Tribal TANF Data Report consists of three sections. Two of 
these three sections consist of disaggregated case-record data 
elements, and one consists of aggregated data elements.
    We need this information collection to meet the requirements of 
section 411(a) and to implement other sections of the Act, including 
sections 407 (work participation requirements), 409 (penalties), and 
411(b) (Annual Report to Congress).
    The Tribal TANF Financial Report consists of one form. (See 
Appendix D.) We need this report to meet the requirements of sections 
411(a)(2), 411(a)(3), and 411(a)(5), and to carry out our other 
financial management and oversight responsibilities. These include 
providing information that could be used in determining whether Tribes 
are subject to penalties under section 409(a)(1), tracking the 
reasonableness of our definition of ``assistance'; learning the extent 
to which recipients of benefits and services are covered by program 
requirements, and helping to validate the disaggregated data we receive 
on TANF cases.

Annual Reports

    We are also requiring an annual report in order to collect the data 
required by section 411(b). This report requires the submission of 
information about the characteristics of each tribal program; the 
design and operation of the program; the services, benefits, and 
assistance provided; the Tribe's eligibility criteria; and the Tribe's 
definition of work activities. At its option, each Tribe may also 
include a description of any unique features, accomplishments, 
innovations, or additional information appropriate for inclusion in the 
Department's annual report to the Congress.
    Instructions pertaining to submission of the annual NEW Program 
operations report are contained in the NEW Program guidance document, 
``The Native Employment Works (NEW) Program Plan Guidance and Report 
Requirements.'' This document will be distributed through ACF's program 
instruction system.

Changes in the Estimate of Burden

    In the NPRM we estimated that only 18 Tribes would have approved 
Tribal TANF plans and would therefore be respondents. Based both on the 
number of Tribes currently operating TANF and those who are actively 
preparing Tribal TANF plans, we have increased those estimates.
Burden Estimates
    The respondents for the Tribal TANF Data Reports and the Reasonable 
Cause/Corrective Action documentation process are the Tribes that have 
approved Tribal TANF plans.
    In estimating the reporting burden in the NPRM, we pointed out that 
this reporting burden will be new to the Tribes. Unlike States, many 
Tribes do not have the electronic capacity for meeting the reporting 
requirements. However, Tribal TANF programs will not be required to 
submit all of the data required for State TANF programs because some 
provisions for which data are being collected apply only to States. In 
addition, the number of families on which the Tribal TANF grantees will 
have to report will be substantially lower than the number of families 
on which States will be reporting.
    In calculating the estimates of the reporting burden, we assumed 
that not all Tribal TANF grantees would collect the data by means of a 
review sample because their caseloads will not support a valid sample. 
However, we believe that a number of Tribal TANF grantees will 
eventually choose to undertake the one-time burden and cost of 
developing or modifying their systems to provide the required data 
directly from their automated systems, thus substantially reducing or 
eliminating the ongoing annual burden and cost reflected in these 
estimates.
    The annual burden estimates include any time involved pulling 
records from files, abstracting information, returning records to 
files, assembling any other material necessary to provide the requested 
information, and transmitting the information.
    The annual burden estimates for the Tribal TANF data collections 
are:

----------------------------------------------------------------------------------------------------------------
                                                                            Number of     Average
                                                               Number of    responses      burden       Total
                 Instrument or  requirement                   respondents      per       hours per      burden
                                                                            respondent    response      hours
----------------------------------------------------------------------------------------------------------------
Tribal TANF Data Report--Sec.  286.255(b)...................       \1\ 36            4          451       64,944

[[Page 8530]]

 
Tribal TANF Annual Report--Sec.  286.275....................       \2\ 36            1           40        1,440
Reasonable Cause/ Corrective Action Documentation Process--        \3\ 36            1           60        2,160
 Sec.  286.225..............................................
----------------------------------------------------------------------------------------------------------------

    Estimated Total Annual Burden Hours: 68,544
    The annual burden estimates for the NEW data collections are:

----------------------------------------------------------------------------------------------------------------
                                                                            Number of     Average
                                                               Number of    responses      burden       Total
                 Instrument or  requirement                   respondents      per       hours per      burden
                                                                            respondent    response      hours
----------------------------------------------------------------------------------------------------------------
NEW Program Operations Report...............................       \4\ 78            1           16        1,248
----------------------------------------------------------------------------------------------------------------

    As indicated above, we have made a substantial upward adjustment in 
the number of respondents and total burden hours.
    We considered comments by the public on these collections of 
information in:
     Evaluating whether the collections are necessary for the 
proper performance of our functions, including whether the information 
will have practical utility;
     Evaluating the accuracy of our estimate of the burden of 
the collections of information, including the validity of the 
methodology and assumptions used, and the frequency of collection;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technology, e.g., the 
electronic submission of responses.

E. Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded 
Mandates Act) requires that a covered agency prepare a budgetary impact 
statement before promulgating a rule that includes any Federal mandate 
that may result in the expenditure by State, local, and Tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year.
    If a covered agency must prepare a budgetary impact statement, 
section 205 further requires that it select the most cost-effective and 
least burdensome alternative that achieves the objectives of the rule 
and is consistent with the statutory requirements. In addition, section 
203 requires a plan for informing and advising any small government 
that may be significantly or uniquely impacted by the rule.
    We have determined that the rules will not result in the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector, of more than $100 million in any one year. 
Accordingly, we have not prepared a budgetary impact statement, 
specifically addressed the regulatory alternatives considered, or 
prepared a plan for informing and advising any significantly or 
uniquely impacted small government.

F. Congressional Review of Regulations

    This Final Rule is not a ``major'' rule as defined in Chapter 8 of 
5 U.S.C.

G. Executive Order 13132

    Executive Order 13132 on Federalism applies to policies that have 
federalism implications, defined as ``regulations, legislative comments 
or proposed legislation, and other policy statements or actions that 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government.'' 
This rule does not have federalism implications for State or local 
governments as defined in the Executive Order.

List of Subjects in 45 CFR Parts 286 and 287

    Administrative practice and procedure, Day Care, Employment, Grant 
programs-- social programs, Indian tribes, Loan programs--social 
programs, Manpower training programs, Penalties, Public Assistance 
programs, Reporting and record keeping requirements, Vocational 
education.

(Catalogue of Federal Domestic Assistance Programs: 93.558 TANF 
programs--Tribal Family Assistance Grants; 93.559--Loan Fund; 
93.594--Native Employment Works Program; 93.595--Welfare Reform 
Research, Evaluations and National Studies)

    Dated: January 28, 2000.
Olivia A. Golden,
Assistant Secretary for Children and Families.

    Approved: February 7, 2000.
Donna E. Shalala,
Secretary, Department of Health and Human Services.

    For the reasons set forth in the preamble, we are amending 45 CFR 
chapter II by adding parts 286 and 287 to read as follows:

PART 286--TRIBAL TANF PROVISIONS

Sec.
Subpart A--General Tribal TANF Provisions
286.1   What does this part cover?
286.5   What definitions apply to this part?
286.10   What does the term ``assistance'' mean?
286.15   Who is eligible to operate a Tribal TANF program?
Subpart B--Tribal TANF Funding
286.20   How is the amount of a Tribal Family Assistance Grant 
(TFAG) determined?
286.25   How will we resolve disagreements over the State-submitted 
data used to determine the amount of a Tribal Family Assistance 
Grant?
286.30   What is the process for retrocession of a Tribal Family 
Assistance Grant?
286.35   What are proper uses of Tribal Family Assistance Grant 
funds?
286.40   May a Tribe use the Tribal Family Assistance Grant to fund 
IDAs?
286.45   What uses of Tribal Family Assistance Grant funds are 
improper?
286.50   Is there a limit on the percentage of a Tribal Family 
Assistance Grant that can be used for administrative costs?
286.55   What types of costs are subject to the administrative cost 
limit on Tribal Family Assistance Grants?
286.60   Must Tribes obligate all Tribal Family Assistance Grant 
funds by the end of the fiscal year in which they are awarded?

[[Page 8531]]

Subpart C--Tribal TANF Plan Content and Processing
286.65   How can a Tribe apply to administer a Tribal Temporary 
Assistance for Needy Families (TANF) program?
286.70   Who submits a Tribal Family Assistance Plan?
286.75   What must be included in the Tribal Family Assistance Plan?
286.80   What information on minimum work participation requirements 
must a Tribe include in its Tribal Family Assistance Plan?
286.85   How will we calculate the work participation rates?
286.90   How many hours per week must an adult or minor head-of-
household participate in work-related activities to count in the 
numerator of the work participation rate?
286.95   What, if any, are the special rules concerning counting 
work for two-parent families?
286.100   What activities count towards the work participation rate?
286.105   What limitations concerning vocational education, job 
search and job readiness assistance exist with respect to the work 
participation rate?
286.110   What safeguards are there to ensure that participants in 
Tribal TANF work activities do not displace other workers?
286.115   What information on time limits for the receipt of 
assistance must a Tribe include in its Tribal Family Assistance 
Plan?
286.120   Can Tribes makes exceptions to the established time limit 
for families?
286.125   Does the receipt of TANF benefits under a State or other 
Tribal TANF program count towards a Tribe's TANF time limit?
286.130   Does the receipt of Welfare-to-Work (WtW) cash assistance 
count towards a Tribe's TANF time limit?
286.135   What information on penalties against individuals must be 
included in a Tribal Family Assistance Plan?
286.140   What special provisions apply to victims of domestic 
violence?
286.145   What is the penalty if an individual refuses to engage in 
work activities?
286.150   Can a family, with a child under age 6, be penalized 
because a parent refuses to work because (s)he cannot find child 
care?
286.155   May a Tribe condition eligibility for Tribal TANF 
assistance on assignment of child support to the Tribe?
286.160   What are the applicable time frames and procedures for 
submitting a Tribal Family Assistance Plan?
286.165   How is a Tribal Family Assistance Plan amended?
286.170   How may a Tribe petition for administrative review of 
disapproval of a TFAP or amendment?
286.175   What special provisions apply to Alaska?
286.180   What is the process for developing the comparability 
criteria that are required in Alaska?
286.185   What happens when a dispute arises between the State of 
Alaska and the Tribal TANF eligible entities in the State related to 
the comparability criteria?
286.190   If the Secretary, the State of Alaska, or any of the 
Tribal TANF eligible entities in the State of Alaska want to amend 
the comparability criteria, what is the process for doing so?
Subpart D--Accountability and Penalties
286.195   What penalties will apply to Tribes?
286.200   How will we determine if Tribal Family Assistance Grant 
funds were misused or intentionally misused?
286.205   How will we determine if a Tribe fails to meet the minimum 
work participation rate(s)?
286.210   What is the penalty for a Tribe's failure to repay a 
Federal loan?
286.215   When are the TANF penalty provisions applicable?
286.220   What happens if a Tribe fails to meet TANF requirements?
286.225   How may a Tribe establish reasonable cause for failing to 
meet a requirement that is subject to application of a penalty?
286.230   What if a Tribe does not have reasonable cause for failing 
to meet a requirement?
286.235   What penalties cannot be excused?
286.240   How can a Tribe appeal our decision to take a penalty?
Subpart E--Data Collection and Reporting Requirements
286.245   What data collection and reporting requirements apply to 
Tribal TANF programs?
286.250   What definitions apply to this subpart?
286.255   What quarterly reports must the Tribe submit to us?
286.260   May Tribes use sampling and electronic filing?
286.265   When are quarterly reports due?
286.270   What happens if the Tribe does not satisfy the quarterly 
reporting requirements?
286.275   What information must Tribes file annually?
286.280   When are annual reports due?
286.285   How do the data collection and reporting requirements 
affect Public Law 102-477 Tribes?

    Authority: 42 U.S.C. 612

Subpart A--General Tribal TANF Provisions


Sec. 286.1  What does this part cover?

    Section 412 of the Social Security Act allows Indian tribes to 
apply to operate a Tribal Family Assistance program. This part 
implements section 412. It specifies:
    (a) who can apply to operate a Tribal Family Assistance program;
    (b) the requirements for the submission and contents of a Tribal 
Family Assistance Plan;
    (c) the determination of the amount of a Tribal Family Assistance 
Grant; and
    (d) other program requirements and procedures.


Sec. 286.5  What definitions apply to this part?

    The following definitions apply under this part:
    ACF means the Administration for Children and Families.
    Act means the Social Security Act, unless otherwise specified.
    Administrative cost means costs necessary for the proper 
administration of the TANF program.
    (1) It excludes the direct costs of providing program services.
    (i) For example, it excludes costs of providing diversion benefits 
and services, providing program information to clients, screening and 
assessments, development of employability plans, work activities, post-
employment services, work supports, information on and referral to 
Medicaid, Child Health Insurance Program (CHIP), Food Stamp and Native 
Employment Works (NEW) programs and case management.
    (ii) It excludes the salaries and benefit costs for staff providing 
program services and the direct administrative costs associated with 
providing the services, such as the costs for supplies, equipment, 
travel, postage, utilities, rental of office space and maintenance of 
office space, and
    (iii) It excludes information technology and computerization needed 
for tracking and monitoring.
    (2) It includes the costs for general administration and 
coordination of this program, including contract costs for these 
functions and indirect (or overhead) costs. Some examples of 
administrative costs include, but are not limited to:
    (i) Salaries and benefits and all other direct costs not associated 
with providing program services to individuals, including staff 
performing administrative and coordination functions;
    (ii) Preparation of program plans, budgets, and schedules;
    (iii) Monitoring of programs and projects;
    (iv) Fraud and abuse units;
    (v) Procurement activities;
    (vi) Public relations;
    (vii) Services related to accounting, litigation, audits, 
management of property, payroll, and personnel;
    (viii) Costs for the goods and services required for administration 
of the program such as the costs for supplies, equipment, travel, 
postage, utilities, and rental of office space and maintenance of 
office space, provided that such costs are not excluded as a direct 
administrative cost for providing program services under paragraph (1) 
of this definition;
    (ix) Travel costs incurred for official business and not excluded 
as a direct

[[Page 8532]]

administrative cost for providing program services under paragraph (1) 
of this definition;
    (x) Management information systems not related to the tracking and 
monitoring of TANF requirements (e.g., for a personnel and payroll 
system for Tribal staff); and
    (xi) Preparing reports and other documents related to program 
requirements.
    Adult means an individual who is not a ``minor child,'' as defined 
below.
    Alaska Tribal TANF entity means the twelve Alaska Native regional 
nonprofit corporations in the State of Alaska and the Metlakatla Indian 
Community of the Annette Islands Reserve.
    Assistant Secretary means the Assistant Secretary for Children and 
Families, Department of Health and Human Services.
    Cash assistance, when provided to participants in the Welfare-to-
Work program, has the meaning specified at Sec. 286.130.
    Comparability means similarity between State and Tribal TANF 
programs in the State of Alaska. Comparability, when defined related to 
services provided, does not necessarily mean identical or equal 
services.
    Consortium means a group of Tribes working together for the same 
identified purpose and receiving combined TANF funding for that 
purpose.
    The Department means the Department of Health and Human Services.
    Duplicative Assistance means the receipt of services/ assistance 
from two or more TANF programs for the same purpose.
    Eligible families means all families eligible for TANF funded 
assistance under the Tribal TANF program funded under section 412(a), 
including:
    (1) All U.S. citizens who meet the Tribe's criteria for Tribal TANF 
assistance;
    (2) All qualified aliens, who meet the Tribe's criteria for Tribal 
TANF assistance, who entered the U.S. before August 22, 1996;
    (3) All qualified aliens, who meet the Tribe's criteria for Tribal 
TANF assistance, who entered the U.S. on or after August 22, 1996, who 
have been in the U.S. for at least 5 years beginning on the date of 
entry into the U.S. with a qualified alien status, are eligible 
beginning 5 years after the date of entry into the U.S. There are 
exceptions to this 5-year bar for qualified aliens who enter on or 
after August 22, 1996, and the Tribal TANF program must cover these 
excepted individuals:
    (a) An alien who is admitted to the U.S. as a refugee under section 
207 of the Immigration and Nationality Act;
    (b) An alien who is granted asylum under section 208 of such Act;
    (c) An alien whose deportation is being withheld under section 
243(h) of such Act; and
    (d) An alien who is lawfully residing in any State and is a veteran 
with an honorable discharge, is on active duty in the Armed Forces of 
the U.S., or is the spouse or unmarried dependent child of such an 
individual;
    (4) All permanent resident aliens who are members of an Indian 
tribe, as defined in section 4(e) of the Indian Self-Determination and 
Education Assistance Act;
    (5) All permanent resident aliens who have 40 qualifying quarters 
of coverage as defined by Title II of the Act.
    Eligible Indian tribe means any Tribe or intertribal consortium 
that meets the definition of Indian tribe in this section and is 
eligible to submit a Tribal TANF plan to ACF.
    Family Violence Option (or FVO) means the provision at section 
402(a)(7) of the Act made available to Tribes under which a Tribe may 
certify in its Tribal TANF plan that it has elected the option to 
implement comprehensive strategies for identifying and serving victims 
of domestic violence.
    Fiscal year means the 12-month period beginning on October 1 of the 
preceding calendar year and ending on September 30.
    FY means fiscal year.
    Good cause domestic violence waiver means a waiver of one or more 
program requirements granted by a Tribe to a victim of domestic 
violence under the FVO, as described in Sec. 286.140(a)(3).
    Grant period means the period of time that is specified in the 
Tribal TANF grant award document.
    Indian, Indian tribe and Tribal Organization have the same meaning 
given such terms by section 4 of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450b), except that the term 
``Indian tribe'' means, with respect to the State of Alaska, only the 
Metlakatla Indian Community of the Annette Islands Reserve and the 
following Alaska Native regional nonprofit corporations:
    (1) Arctic Slope Native Association;
    (2) Kawerak, Inc.;
    (3) Maniilaq Association;
    (4) Association of Village Council Presidents;
    (5) Tanana Chiefs Council;
    (6) Cook Inlet Tribal Council;
    (7) Bristol Bay Native Association;
    (8) Aleutian and Pribilof Island Association;
    (9) Chugachmuit;
    (10) Tlingit Haida Central Council;
    (11) Kodiak Area Native Association; and
    (12) Copper River Native Association.
    Indian country has the meaning given the term in 18 U.S.C. 1151.
    Minor child means an individual who:
    (1) Has not attained 18 years of age; or
    (2) Has not attained 19 years of age and is a full-time student in 
a secondary school (or in the equivalent level of vocational or 
technical training).
    Minor Head-of-Household means an individual under age 18, or 19 and 
a full-time student in a secondary school, who is the custodial parent 
of a minor child.
    PRWORA means the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996.
    Qualified Aliens has the same meaning given the term in 8 U.S.C. 
1641 except that it also includes members of an Indian tribe, as 
defined in section 4(e) of the Indian Self-Determination and Education 
Assistance Act, who are lawfully admitted under 8 U.S.C. 1359.
    Retrocession means the process by which a Tribe voluntarily 
terminates and cedes back (or returns) a Tribal TANF program to the 
State which previously served the population covered by the Tribal TANF 
plan. Retrocession includes the voluntary relinquishment of the 
authority to obligate previously awarded grant funds before that 
authority would otherwise expire.
    Secretary means the Secretary of the Department of Health and Human 
Services.
    Scientifically acceptable sampling method means a probability 
sampling method in which every sampling unit has a known, non-zero 
chance to be included in the sample and the sample size requirements 
are met.
    SFAG or State Family Assistance Grant means the amount of the block 
grant funded under section 403(a) of the Act for each eligible State.
    SFAP or State Family Assistance Plan is the plan for implementation 
of a State TANF program under PRWORA.
    State means, except as otherwise specifically provided, the 50 
States of the United States, the District of Columbia, the Commonwealth 
of Puerto Rico, the United States Virgin Islands, Guam, and American 
Samoa.
    TANF means the Temporary Assistance for Needy Families Program, 
which is authorized under title IV-A of the Social Security Act.
    TANF funds mean funds authorized under section 412(a) of the Act.
    TFAG or Tribal Family Assistance Grant means the amount of the 
block

[[Page 8533]]

grant funded under section 412(a) of the Act for each eligible Tribe.
    TFAP or Tribal Family Assistance Plan means the plan for 
implementation of the Tribal TANF program under section 412(b) of the 
Act.
    Title IV-A refers to the title of the Social Security Act that now 
includes TANF, but previously included AFDC and EA. For the purpose of 
the TANF program regulations, this term does not include child care 
programs authorized and funded under section 418 of the Act, or their 
predecessors, unless we specify otherwise.
    Title IV-F refers to the title of the Social Security Act that was 
eliminated with the creation of TANF and previously included the Job 
Opportunities and Basic Skills Training Program (JOBS).
    Tribal TANF expenditures means expenditures of TANF funds, within 
the Tribal TANF program.
    Tribal TANF program means a Tribal program subject to the 
requirements of section 412 of the Act that is funded by TANF funds on 
behalf of eligible families.
    Victim of domestic violence means an individual who is battered or 
subject to extreme cruelty under the definition at section 
408(a)(7)(C)(iii) of the Act.
    We (and any other first person plural pronouns) refers to The 
Secretary of Health and Human Services, or any of the following 
individuals or organizations acting in an official capacity on the 
Secretary's behalf: the Assistant Secretary for Children and Families, 
the Regional Administrators for Children and Families, the Department 
of Health and Human Services, and the Administration for Children and 
Families.
    Welfare-related services means all activities, assistance, and 
services funded under Tribal TANF provided to an eligible family. See 
definition of ``Assistance'' in Sec. 286.10.
    Welfare-to-Work means the program for funding work activities at 
section 412(a)(2)(C) of the Act.
    WtW means Welfare-to-Work.
    WtW cash assistance, when provided to participants in the Welfare-
to-Work program, has the meaning specified at Sec. 286.130.


Sec. 286.10  What does the term ``assistance'' mean?

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


Sec. 286.15  Who is eligible to operate a Tribal TANF program?

    (a) An Indian tribe that meets the definition of Indian tribe given 
in Sec. 286.5 is eligible to apply to operate a Tribal Family 
Assistance Program.
    (b) In addition, an intertribal consortium of eligible Indian 
tribes may develop and submit a single TFAP.

Subpart B--Tribal TANF Funding


Sec. 286.20  How is the amount of a Tribal Family Assistance Grant 
(TFAG) determined?

    (a) We will request and use data submitted by a State to determine 
the amount of a TFAG. The State data that we will request and use are 
the total Federal payments attributable to State expenditures, 
including administrative costs (which includes systems costs) for 
fiscal year 1994 under the former Aid to Families With Dependent 
Children, Emergency Assistance and Job Opportunities and Basic Skills 
Training programs, for all Indian families residing in the geographic 
service area or areas identified in the Tribe's letter of intent or 
Tribal Family Assistance Plan.
    (1) A Tribe must indicate its definition of ``Indian family'' in 
its Tribal Family Assistance Plan. Each Tribe may define ``Indian 
family'' according to its own criteria.
    (2) When we request the necessary data from the State, the State 
will have 30 days from the date of the request to submit the data.
    (i) If we do not receive the data requested from the State at the 
end of the 30-day period, we will so notify the Tribe.
    (ii) In cases where data is not received from the State, the Tribe 
will have 45 days from the date of the notification in which to submit 
relevant information. Relevant information may include, but is not 
limited to, Census Bureau data, data from the Bureau of Indian Affairs, 
data from other Federal programs, and Tribal records. In such a case, 
we will use the data submitted by the Tribe to assist us in determining 
the amount of the TFAG. Where there are inconsistencies in the data, 
follow-up discussions with the Tribe and the State will ensue.
    (b) We will share the data submitted by the State under paragraph 
(a)(2)(i) of this section with the Tribe. The Tribe must submit to the 
Secretary a notice as to the Tribe's agreement or disagreement with 
such data no later than 45 days after the date of our notice 
transmitting the data from the State. During this 45-day period we will 
help resolve any questions the Tribe may have about the State-submitted 
data.
    (c) We will notify each Tribe that has submitted a TFAP of the 
amount of the TFAG. At this time, we will also notify the State of the 
amount of the reduction in its SFAG.
    (d) We will prorate TFAGs that are initially effective on a date 
other than October 1 of any given Federal fiscal

[[Page 8534]]

year, based on the number of days remaining in the Federal fiscal year.


Sec. 286.25  How will we resolve disagreements over the State-submitted 
data used to determine the amount of a Tribal Family Assistance Grant?

    (a) If a Tribe disagrees with the data submitted by a State, the 
Tribe may submit additional relevant information to the Secretary. 
Relevant information may include, but is not limited to, Census Bureau 
data, data from the Bureau of Indian Affairs, data from other Federal 
programs, and Tribal records.
    (1) The Tribe must submit any relevant information within 45 days 
from the date it notifies the Secretary of its disagreement with State 
submitted data under Sec. 286.20(b).
    (2) We will review the additional relevant information submitted by 
the Tribe, together with the State-submitted data, in order to make a 
determination as to the amount of the TFAG. We will determine the 
amount of the TFAG at the earliest possible date after consideration of 
all relevant data.


Sec. 286.30  What is the process for retrocession of a Tribal Family 
Assistance Grant?

    (a) A Tribe that wishes to terminate its TFAG prior to the end of 
its three-year plan must--
    (1) Notify the Secretary and the State in writing of the reason(s) 
for termination no later than 120 days prior to the effective date of 
the termination, or
    (2) Notify the Secretary in writing of the reason(s) for 
termination no later than 30 days prior to the effective date of the 
termination, where such effective data is mutually agreed upon by the 
Tribe and the affected State(s).
    (b) The effective date of the termination must coincide with the 
last day of a calendar month.
    (c) For a Tribe that retrocedes, the provisions of 45 CFR part 92 
will apply with regard to closeout of the grant. All unobligated funds 
will be returned by the Tribe to the Federal government.
    (d) The SFAG will be increased by the amount of the TFAG available 
for the subsequent quarterly installment.
    (e) A Tribe's application to implement a TANF program subsequent to 
its retrocession will be treated as any other application to operate a 
TANF program, except that we may take into account when considering 
approval--
    (1) Whether the circumstances that the Tribe identified for 
termination of its TANF program remain applicable and the extent to 
which--
    (i) The Tribe has control over such circumstances, and
    (ii) Such circumstances are reasonably related to program funding 
accountability, and
    (2) Whether any outstanding funds and penalty amounts are repaid.
    (f) A Tribe which retrocedes a Tribal TANF program is responsible 
for:
    (1) Complying with the data collection and reporting requirements 
and all other program requirements for the period before the 
retrocession is effective;
    (2) Any applicable penalties (see subpart D) for actions occurring 
prior to retrocession; the provisions of 45 CFR Part 92 and OMB 
Circulars A-87 and A-133;
    (3) compliance with other Federal statutes and regulations 
applicable to the TANF program; and
    (4) any penalties resulting from audits covering the period before 
the effective date of retrocession.


Sec. 286.35  What are proper uses of Tribal Family Assistance Grant 
funds?

    (a) Tribes may use TFAGs for expenditures that:
    (1) Are reasonably calculated to accomplish the purposes of TANF, 
including, but not limited to, the provision to low income households 
with assistance in meeting home heating and cooling costs; assistance 
in economic development and job creation activities, the provision of 
supportive services to assist needy families to prepare for, obtain, 
and retain employment; the provision of supportive services to prevent 
of out-of-wedlock pregnancies, and assistance in keeping families 
together, or
    (2) Were an authorized use of funds under the State plans for Parts 
A or F of title IV of the Social Security Act, as such parts were in 
effect on September 30, 1995.


Sec. 286.40  May a Tribe use the Tribal Family Assistance Grant to fund 
IDAs ?

    (a) If the Tribe elects to operate an IDA program, it may use 
Federal TANF funds or WtW funds to fund IDAs for individuals who are 
eligible for TANF assistance and may exercise flexibility within the 
limits of Federal regulations and the statute.
    (b) The following restrictions apply to IDA funds:
    (1) A recipient may deposit only earned income into an IDA.
    (2) A recipient's contributions to an IDA may be matched by, or 
through, a qualified entity.
    (3) A recipient may withdraw funds only for the following reasons:
    (i) To cover post-secondary education expenses, if the amount is 
paid directly to an eligible educational institution;
    (ii) For the recipient to purchase a first home, if the amount is 
paid directly to the person to whom the amounts are due and it is a 
qualified acquisition cost for a qualified principal residence by a 
qualified first-time buyer; or
    (iii) For business capitalization, if the amounts are paid directly 
to a business capitalization account in a federally insured financial 
institution and used for a qualified business capitalization expense.
    (c) To prevent recipients from withdrawing funds held in an IDA 
improperly, Tribes may do the following:
    (1) Count withdrawals as earned income in the month of withdrawal, 
unless already counted as income,
    (2) Count withdrawals as resources in determining eligibility, or
    (3) Take such other steps as the Tribe has established in its 
Tribal plan or written Tribal policies to deter inappropriate use.


Sec. 286.45  What uses of Tribal Family Assistance Grant funds are 
improper?

    (a) A Tribe may not use Tribal Family Assistance Grant funds to 
provide assistance to:
    (1) Families or individuals that do not otherwise meet the 
eligibility criteria contained in the Tribal Family Assistance Plan 
(TFAP); or
    (2) For more than the number of months as specified in a Tribe's 
TFAP (unless covered by a hardship exemption); or
    (3) Individuals who are not citizens of the United States or 
qualified aliens or who do not otherwise meet the definition of 
``eligible families'' at Sec. 286.5.
    (b) Tribal Family Assistance Grant funds may not be used to 
contribute to or to subsidize non-TANF programs.
    (c) A Tribe may not use Tribal Family Assistance Grant funds for 
services or activities prohibited by OMB Circular A-87.
    (d) All provisions in OMB Circular A-133 and in 45 CFR part 92 are 
applicable to the Tribal TANF program.
    (e) Tribal TANF funds may not be used for the construction or 
purchase of facilities or buildings.
    (f) Tribes must use program income generated by the Tribal Family 
Assistance grant for the purposes of the TANF program and for allowable 
TANF services, activities and assistance.


Sec. 286.50  Is there a limit on the percentage of a Tribal Family 
Assistance Grant that can be used for administrative costs?

    (a) ACF will negotiate a limitation on administrative costs with 
each Tribal TANF applicant individually for the

[[Page 8535]]

first year of a program's operation based on the applicant's proposed 
administrative cost allocation. No Tribal TANF grantee may expend more 
than 35 percent of its Tribal Family Assistance Grant for 
administrative costs during the first year.
    (b) ACF will negotiate a limitation on administrative costs with 
each Tribal TANF applicant individually for the second year of a 
program's operation based on the applicant's proposed administrative 
cost allocation. No Tribal TANF grantee may expend more than 30 percent 
of its TFAG for administrative costs during the second year.
    (c) ACF will negotiate a limitation on administrative costs with 
each Tribal TANF applicant individually for the third and all 
subsequent years of a program's operation based on the applicant's 
proposed administrative cost allocation. As negotiated, a Tribal TANF 
grantee may not expend more than 25 percent of its TFAG for 
administrative costs during any subsequent grant period.
    (1) For the purposes of determining administrative costs, Tribes 
with approved plans who have been operating Tribal TANF programs prior 
to the effective date of this regulation will be able to negotiate a 
reasonable adjustment in their approved administrative cost rate, not 
to exceed the limitations in the Final Rule delineated above.
    (2) [Reserved]
    (d) ACF will negotiate limitations on administrative costs based 
on, but not limited to, a Tribe's TANF funding level, economic 
conditions, and the resources available to the Tribe, the relationship 
of the Tribe's administrative cost allocation proposal to the overall 
purposes of TANF, and a demonstration of the Tribe's administrative 
capability.


Sec. 286.55  What types of costs are subject to the administrative cost 
limit on Tribal Family Assistance Grant funds?

    (a) Activities that fall within the definition of ``administrative 
costs'' at Sec. 286.5 are subject to the limit determined under 
Sec. 286.50.
    (b) Information technology and computerization for tracking, data 
entry and monitoring, including personnel and other costs associated 
with the automation activities needed for Tribal TANF monitoring, data 
entry and tracking purposes, are excluded from the administrative cost 
cap, even if they fall within the definition of ``administrative 
costs.''
    (c) Designing, administering, monitoring, and controlling a sample 
are not inherent parts of information technology and computerization 
and, thus, costs associated with these tasks must be considered 
administrative costs.
    (d) Indirect Costs negotiated by BIA, the Department's Division of 
Cost Allocation, or another federal agency must be considered to be 
part of the total administrative costs.


Sec. 286.60  Must Tribes obligate all Tribal Family Assistance Grant 
funds by the end of the fiscal year in which they are awarded?

    (a) No. A Tribe may reserve amounts awarded to it, without fiscal 
year limitation, to provide assistance under the Tribal TANF program.
    (b) A Tribe may expend funds beyond the fiscal year in which 
awarded only on benefits that meet the definition of assistance at 
Sec. 286.10 or on the administrative costs directly associated with 
providing that assistance.

Subpart C--Tribal TANF Plan Content and Processing


Sec. 286.65  How can a Tribe apply to administer a Tribal Temporary 
Assistance For Needy Families (TANF) Program?

    (a) Any eligible Indian tribe, Alaska Native organization, or 
intertribal consortium that wishes to administer a Tribal TANF program 
must submit a three-year TFAP to the Secretary of the Department of 
Health and Human Services. The original must be submitted to the 
appropriate ACF Regional Office with a copy to the ACF Central Office.
    (b) A Tribe currently operating a Tribal TANF program must submit 
to the appropriate ACF Regional Office, with a copy to the ACF Central 
Office, no later than 120 days prior to the end of the three-year grant 
period, either--
    (1) A letter of intent, with a copy to the affected State or 
States, which specifies they do not intend to continue operating the 
program beyond the end of the three-year grant period; or
    (2) A letter of intent, with a copy to the affected State or 
States, which specifies they intend to continue program operations with 
no changes to the geographic service area or service population; or
    (3) A new three-year plan which indicates a change in either the 
geographic service area or service population.
    (c) For Tribes choosing option (b)(2) above, a new three-year plan 
must be submitted to the appropriate ACF Regional Office, with a copy 
to the ACF Central Office, no later than 60 days before the end of the 
current three-year grant period.


Sec. 286.70  Who submits a Tribal Family Assistance Plan?

    (a) A TFAP must be submitted by the chief executive officer of the 
Indian tribe and be accompanied by a Tribal resolution supporting the 
TFAP.
    (b) A TFAP from a consortium must be forwarded under the signature 
of the chief executive officer of the consortium and be accompanied by 
Tribal resolutions from all participating Tribes that demonstrate each 
individual Tribe's support of the consortium, the delegation of 
decision-making authority to the consortium's governing board, and the 
Tribe's recognition that matters involving operation of the Tribal TANF 
consortium are the express responsibility of the consortium's governing 
board.
    (c) When one of the participating Tribes in a consortium wishes to 
withdraw from the consortium, the Tribe needs to both notify the 
consortium and the Secretary of this fact.
    (1) This notification must be made at least 120 days prior to the 
effective date of the withdrawal.
    (2) The time frame in paragraph (c)(i) of this section is 
applicable only if the Tribe's withdrawal will cause a change to the 
service area or population of the consortium.
    (d) When one of the participating Tribes in a consortium wishes to 
withdraw from the consortium in order to operate its own Tribal TANF 
program, the Tribe needs to submit a Tribal TANF plan that follows the 
requirements at Sec. 286.75 and Sec. 286.165.


Sec. 286.75  What must be included in the Tribal Family Assistance 
Plan?

    (a) The TFAP must outline the Tribe's approach to providing 
welfare-related services for the three-year period covered by the plan, 
including:
    (1) Information on the general eligibility criteria the Tribe has 
established, which includes a definition of ``needy family,'' including 
income and resource limits and the Tribe's definition of ``Tribal 
member family'' or ``Indian family.''
    (2) A description of the assistance, services, and activities to be 
offered, and the means by which they will be offered. The description 
of the services, assistance, and activities to be provided includes 
whether the Tribe will provide cash assistance, and what other 
assistance, services, and activities will be provided.
    (3) If the Tribe will not provide the same services, assistance, 
and activities in all parts of the service area, the TFAP must indicate 
any variations.

[[Page 8536]]

    (4) If the Tribe opts to provide different services to specific 
populations, including teen parents and individuals who are 
transitioning off TANF assistance, the TFAP must indicate whether any 
of these services will be provided and, if so, what services will be 
provided.
    (5) The Tribe's goals for its TANF program and the means of 
measuring progress towards those goals;
    (6) Assurance that a 45-day public comment period on the Tribal 
TANF plan concluded prior to the submission of the TFAP.
    (7) Assurance that the Tribe has developed a dispute resolution 
process to be used when individuals or families want to challenge the 
Tribe's decision to deny, reduce, suspend, sanction or terminate 
assistance.
    (8) Tribes may require cooperation with child support enforcement 
agencies as a condition of eligibility for TANF assistance. Good cause 
and other exceptions to cooperation shall be defined by the Tribal TANF 
program.
    (b) The TFAP must identify which Tribal agency is designated by the 
Tribe as the lead agency for the overall administration of the Tribal 
TANF program along with a description of the administrative structure 
for supervision of the TANF program.
    (c) The TFAP must indicate whether the services, assistance and 
activities will be provided by the Tribe itself or through grants, 
contracts or compacts with inter-Tribal consortia, States, or other 
entities.
    (d) The TFAP must identify the population to be served by the 
Tribal TANF program.
    (1) The TFAP must identify whether it will serve Tribal member 
families only, or whether it will serve all Indian families residing in 
the Tribal TANF service area.
    (2) If the Tribe wishes to serve any non-Indian families (and thus 
include non-Indians in its service population), an agreement with the 
State TANF agency must be included in the TFAP. This agreement must 
provide that, where non-Indians are to be served by Tribal TANF, these 
families are subject to Tribal TANF program rules.
    (e) The TFAP must include a description of the geographic area to 
be served by the Tribal TANF program, including a specific description 
of any ``near reservation'' areas, as defined at 45 CFR 20.1(r), or any 
areas beyond ``near reservation'' to be included in the Tribal TANF 
service area.
    (1) In areas beyond those defined as ``near reservation'', the TFAP 
must demonstrate the Tribe's administrative capacity to serve such 
areas and the State(s)', and if applicable, other Tribe(s)' concurrence 
with the proposed defined boundaries.
    (2) A Tribe cannot extend its service area boundaries beyond the 
boundaries of the State(s) in which the reservation and BIA near-
reservation designations are located.
    (3) For Tribes in Oklahoma, if the Tribe defines its service area 
as other than its ``tribal jurisdiction statistical area'' (TJSA), the 
Tribe must include an agreement with the other Tribe(s) reflecting 
agreement to the service area. TJSAs are areas delineated by the Census 
Bureau for each federally-recognized Tribe in Oklahoma without a 
reservation.
    (f) The TFAP must provide that a family receiving assistance under 
the plan may not receive duplicative assistance from other State or 
Tribal TANF programs and must include a description of the means by 
which the Tribe will ensure duplication does not occur.
    (g) The TFAP must identify the employment opportunities in and near 
the service area and the manner in which the Tribe will cooperate and 
participate in enhancing such opportunities for recipients of 
assistance under the plan, consistent with any applicable State 
standards. This should include:
    (1) A description of the employment opportunities available, in 
both the public and private sector, within and near the Tribal service 
area; and
    (2) A description of how the Tribe will work with public and 
private sector employers to enhance the opportunities available for 
Tribal TANF recipients.
    (h) The TFAP must provide an assurance that the Tribe applies the 
fiscal accountability provisions of section 5(f)(1) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450c(f)(1)), 
relating to the submission of a single-agency audit report required by 
chapter 75 of title 31, United States Code.


Sec. 286.80  What information on minimum work participation 
requirements must a Tribe include in its Tribal Family Assistance Plan?

    (a) To assess a Tribe's level of success in meeting its TANF work 
objectives, a Tribe that submits a TFAP must negotiate with the 
Secretary minimum work participation requirements that will apply to 
families that receive Tribal TANF assistance that includes an adult or 
minor head of household receiving such assistance.
    (b) A Tribe that submits a TFAP must include in the plan the 
Tribe's proposal for minimum work participation requirements, which 
includes the following:
    (1) For each fiscal year covered by the plan, the Tribe's proposed 
participation rate(s) for all families, for all families and two-parent 
families, or for one-parent families and two-parent families;
    (2) For each fiscal year covered by the plan, the Tribe's proposed 
minimum number of hours per week that adults and minor heads of 
household will be required to participate in work activities;
    (i) If the Tribe elects to include reasonable transportation time 
to and from the site of work activities in determining the hours of 
work participation, it must so indicate in its TFAP along with a 
definition of ``reasonable'' for purposes of this subsection, along 
with:
    (A) An explanation of how the economic conditions and/or resources 
available to the Tribe justify inclusion of transportation time in 
determining work participation hours; and
    (B) An explanation of how counting reasonable transportation time 
is consistent with the purposes of TANF;
    (3) The work activities that count towards these work requirements;
    (4) Any exemptions, limitations and special rules being established 
in relation to work requirements; and
    (5) The Tribe must provide rationale for the above, explaining how 
the proposed work requirements relate to and are justified based on the 
Tribe's needs and conditions.
    (i) The rationale must address how the proposed work requirements 
are consistent with the purposes of TANF and with the economic 
conditions and resources of the Tribe.
    (ii) Examples of the information that could be included to 
illustrate the Tribe's proposal include, but are not limited to: 
poverty, unemployment, jobless and job surplus rates; education levels 
of adults in the service area; availability of and/or accessibility to 
resources (educational facilities, transportation) to help families 
become employable and find employment; and employment opportunities on 
and near the service area.


Sec. 286.85  How will we calculate the work participation rates?

    (a) Work participation rate(s) will be the percentage of families 
with an adult or minor head-of-household receiving TANF assistance from 
the Tribe who are participating in a work activity approved in the TFAP 
for at least the minimum number of hours approved in the TFAP.
    (b) The participation rate for a fiscal year is the average of the 
Tribe's

[[Page 8537]]

participation rate for each month in the fiscal year.
    (c) A Tribe's participation rate for a month is expressed as the 
following ratio:
    (1) The number of families receiving TANF assistance that include 
an adult or a minor head-of-household who is participating in 
activities for the month (numerator), divided by
    (2) The number of families that include an adult or a minor head-
of-household receiving TANF assistance during the month excluding:
    (i) Families that were penalized for non-compliance with the work 
requirements in that month as long as they have not been sanctioned for 
more than three months (whether or not consecutively) out of the last 
12 months; and
    (ii) Families with children under age one, if the Tribe chooses to 
exempt these families from participation requirements.
    (d) If a family receives assistance for only part of a month or 
begins participating in activities during the month, the Tribe may 
count it as a month of participation if an adult or minor head-of-
household in the family is participating for the minimum average number 
of hours in each full week that the family receives assistance or 
participates in that month.
    (e) Two-parent families in which one of the parents is disabled are 
considered one-parent families for the purpose of calculating a Tribe's 
participation rate.


Sec. 286.90  How many hours per week must an adult or minor head-of-
household participate in work-related activities to count in the 
numerator of the work participation rate?

    During the month, an adult or minor head-of-household must 
participate in work activities for at least the minimum average number 
of hours per week specified in the Tribe's approved Tribal Family 
Assistance Plan.


Sec. 286.95  What, if any, are the special rules concerning counting 
work for two-parent families?

    Parents in a two-parent family may share the number of hours 
required to be considered as engaged in work.


Sec. 286.100  What activities count towards the work participation 
rate?

    (a) Activities that count toward a Tribe's participation rate may 
include, but are not limited to, the following:
    (1) Unsubsidized employment;
    (2) Subsidized private sector employment;
    (3) Subsidized public sector employment;
    (4) Work experience;
    (5) On-the-job training (OJT);
    (6) Job search and job readiness assistance; (see Sec. 286.105)
    (7) Community service programs;
    (8) Vocational educational training; (see Sec. 286.105)
    (9) Job skills training directly related to employment;
    (10) Education directly related to employment, in the case of a 
recipient who has not received a high school diploma or a certificate 
of high school equivalency;
    (11) Satisfactory attendance at secondary school or in a course of 
study leading to a certificate of general equivalence, if a recipient 
has not completed secondary school or received such a certificate;
    (12) Providing child care services to an individual who is 
participating in a community service program; and
    (13) Other activities that will help families achieve self-
sufficiency.
    (b) [Reserved]


Sec. 286.105  What limitations concerning vocational education, job 
search and job readiness assistance exist with respect to the work 
participation rate?

    (a) Tribes are not required to limit vocational education for any 
one individual to a period of 12 months.
    (b) There are two limitations concerning job search and job 
readiness:
    (1) Job search and job readiness assistance only count for 6 weeks 
in any fiscal year.
    (2) If the Tribe's unemployment rate in the Tribal TANF service 
area is at least 50 percent greater than the United States' total 
unemployment rate for that fiscal year, then an individual's 
participation in job search or job readiness assistance counts for up 
to 12 weeks in that fiscal year.
    (c) If job search or job readiness is an ancillary part of another 
activity, then there is no limitation on counting the time spent in job 
search/job readiness.


Sec. 286.110  What safeguards are there to ensure that participants in 
Tribal TANF work activities do not displace other workers?

    (a) An adult or minor head-of-household taking part in a work 
activity outlined in Sec. 286.100 cannot fill a vacant employment 
position if:
    (1) Any other individual is on layoff from the same or any 
substantially equivalent job; or
    (2) The employer has terminated the employment of any regular 
employee or otherwise caused an involuntary reduction in its work force 
in order to fill the vacancy with the TANF participant.
    (b) A Tribe must establish and maintain a grievance procedure to 
resolve complaints of alleged violations of this displacement rule.
    (c) This regulation does not preempt or supersede Tribal laws 
providing greater protection for employees from displacement.


Sec. 286.115  What information on time limits for the receipt of 
assistance must a Tribe include in its Tribal Family Assistance Plan?

    (a) The TFAP must include the Tribe's proposal for:
    (1) Time limits for the receipt of Tribal TANF assistance;
    (2) Any exceptions to these time limits; and
    (3) The percentage of the caseload to be exempted from the time 
limit due to hardship or if the family includes an individual who has 
been battered or subjected to extreme cruelty.
    (b) The Tribe must also include the rationale for its proposal in 
the plan. The rationale must address how the proposed time limits are 
consistent with the purposes of TANF and with the economic conditions 
and resources of the Tribe.
    (1) Examples of the information that could be included to 
illustrate the Tribe's proposal include, but are not limited to: 
Poverty, unemployment, jobless and job surplus rates; education levels 
of adults in the service area; availability of and/or accessibility to 
resources (educational facilities, transportation) to help families 
become employable and find employment; and employment opportunities on 
and near the service area.
    (c) We may require that the Tribe submit additional information 
about the rationale before we approve the proposed time limits.
    (d) Tribes must not count towards the time limit:
    (1) Any month of receipt of assistance to a family that does not 
include an adult head-of-household;
    (2) A family that does not include a pregnant minor head-of-
household, minor parent head-of-household, or spouse of such a head-of-
household; and
    (3) Any month of receipt of assistance by an adult during which the 
adult lived in Indian country or in an Alaskan Native Village in which 
at least 50 percent of the adults were not employed.
    (e) A Tribe must not use any of its TFAG to provide assistance (as 
defined in Sec. 286.10) to a family that includes an adult or minor 
head-of-household who has received assistance beyond the number of 
months (whether or not consecutive) that is negotiated with the Tribe.

[[Page 8538]]

Sec. 286.120  Can Tribes make exceptions to the established time limit 
for families?

    (a) Tribes have the option to exempt families from the established 
time limits for:
    (1) Hardship, as defined by the Tribe, or
    (2) The family includes someone who has been battered or has been 
subject to extreme cruelty.
    (b) If a Tribe elects the hardship option, the Tribe must specify 
in its TFAP the maximum percent of its average monthly caseload of 
families on assistance that will be exempt from the established time 
limit under paragraph (a) of this section.
    (c) If the Tribe proposes to exempt more than 20 percent of the 
caseload under paragraph (a) of this section, the Tribe must include a 
rationale in the plan.


Sec. 286.125  Does the receipt of TANF benefits under a State or other 
Tribal TANF program count towards a Tribe's TANF time limit?

    Yes, the Tribe must count prior months of TANF assistance funded 
with TANF block grant funds, except for any month that was exempt or 
disregarded by statute, regulation, or under any experimental, pilot, 
or demonstration project approved under section 1115 of the Act.


Sec. 286.130  Does the receipt of Welfare-to-Work (WtW) cash assistance 
count towards a Tribe's TANF time limit?

    (a) For purposes of an individual's time limit for receipt of TANF 
assistance as well as the penalty provision at Sec. 286.195(a)(1), WtW 
cash assistance counts towards a Tribe's TANF time limit only if:
    (1) Such assistance satisfies the definition at Sec. 286.10; and
    (2) Is directed at ongoing basic needs.
    (b) Only cash assistance provided in the form of cash payments, 
checks, reimbursements, electronic funds transfers, or any other form 
that can legally be converted to currency is subject to paragraph (a) 
of this section.


Sec. 286.135  What information on penalties against individuals must be 
included in a Tribal Family Assistance Plan?

    (a) The TFAP must include the Tribe's proposal for penalties 
against individuals who refuse to engage in work activities. The 
Tribe's proposal must address the following:
    (1) Will the Tribe impose a pro rata reduction, or more at Tribal 
option, or will it terminate assistance to a family?
    (2) After consideration of the provision specified at Sec. 286.150, 
what will be the proposed Tribal policies related to a single custodial 
parent, with a child under the age of 6, who refuses to engage in work 
activities because of a demonstrated inability to obtain needed child 
care?
    (3) What good cause exceptions, if any, does the Tribe propose that 
will allow individuals to avoid penalties for failure to engage in 
work?
    (4) What other rules governing penalties does the Tribe propose?
    (5) What, if any, will be the Tribe's policies related to victims 
of domestic violence consistent with Sec. 286.140?
    (b) The Tribe's rationale for its proposal must also be included in 
the TFAP.
    (1) The rationale must address how the proposed penalties against 
individuals are consistent with the purposes of TANF, consistent with 
the economic conditions and resources of the Tribe, and how they relate 
to the requirements of section 407(e) of the Act.
    (2) Examples of the information that could be included to 
illustrate the Tribe's proposal include, but are not limited to; 
poverty, unemployment, jobless and job surplus rates; education levels 
of adults in the service area; availability of and/or accessibility to 
resources (educational facilities, transportation) to help families 
become employable and find employment; and employment opportunities on 
and near the service area.
    (c) We may require a Tribe to submit additional information about 
the rationale before we approve the proposed penalties against 
individuals.


Sec. 286.140  What special provisions apply to victims of domestic 
violence?

    (a) Tribes electing the Family Violence Option (FVO) must certify 
that they have established and are enforcing standards and procedures 
to:
    (1) Screen and identify individuals receiving TANF assistance with 
a history of domestic violence, while maintaining the confidentiality 
of such individuals;
    (2) Refer such individuals to counseling and supportive services; 
and
    (3) Provide waivers, pursuant to a determination of good cause, of 
TANF program requirements to such individuals for so long as necessary 
in cases where compliance would make it more difficult for such 
individuals to escape domestic violence or unfairly penalize those who 
are or have been victimized by such violence or who are at risk of 
further domestic violence.
    (b) Tribes have broad flexibility to grant waivers of TANF program 
requirements, but such waivers must:
    (1) Identify the specific program requirement being waived;
    (2) Be granted based on need as determined by an individualized 
assessment by a person trained in domestic violence and 
redeterminations no less than every six months;
    (3) Be accompanied by an appropriate services plan that:
    (i) Is developed in coordination with a person trained in domestic 
violence;
    (ii) Reflects the individualized assessment and any revisions 
indicated by any redetermination; and
    (iii) To the extent consistent with paragraph (a)(3) of this 
section, is designed to lead to work.
    (c) If a Tribe wants us to take waivers that it grants under this 
section into account in deciding if it has reasonable cause for failing 
to meet its work participation rates or comply with the established 
time limit on TANF assistance, has achieved compliance or made 
significant progress towards achieving compliance with such 
requirements during a corrective compliance period, the waivers must 
comply with paragraph (b) of this section.
    (d) We will determine that a Tribe has reasonable cause for failing 
to meet its work participation rates or to comply with established time 
limits on assistance if--
    (1) Such failures were attributable to good cause domestic violence 
waivers granted to victims of domestic violence;
    (2) In the case of work participation rates, the Tribe provides 
evidence that it achieved the applicable rates except with respect to 
any individuals who received a domestic violence waiver of work 
participation requirements. In other words, the Tribe must demonstrate 
that it met the applicable rates when such waiver cases are removed 
from the calculation of work participation rate;
    (3) In the case of established time limits on assistance, the Tribe 
provides evidence that it granted good cause domestic violence waivers 
to extend time limits based on the need for continued assistance due to 
current or past domestic violence or the risk of further domestic 
violence, and individuals and their families receiving assistance 
beyond the established time limit under such waivers do not exceed 20 
percent of the total number of families receiving assistance.
    (e) We may take good cause domestic violence waivers of work 
participation or waivers which extend the established time limits for 
assistance into consideration in deciding whether a Tribe has achieved 
compliance or made significant progress toward achieving compliance 
during a corrective compliance period.

[[Page 8539]]

    (f) Tribes electing the FVO must submit the information specified 
at Sec. 286.275(b)(7).


Sec. 286.145  What is the penalty if an individual refuses to engage in 
work activities?

    If an individual refuses to engage in work activities in accordance 
with the minimum work participation requirements specified in the 
approved TFAP, the Tribe must apply to the individual the penalties 
against individuals that were established in the approved TFAP.


Sec. 286.150  Can a family, with a child under age 6, be penalized 
because a parent refuses to work because (s)he cannot find child care?

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


Sec. 286.155  May a Tribe condition eligibility for Tribal TANF 
assistance on assignment of child support to the Tribe?

    (a) Tribes have the option to condition eligibility for Tribal TANF 
assistance on assignment of child support to the Tribe consistent with 
paragraph (b) of this section.
    (b) For Tribes choosing to condition eligibility for Tribal TANF 
assistance on assignment of child support to the Tribe, the TFAP must 
address the following--
    (1) Procedures for ensuring that child support collections, if any, 
in excess of the amount of Tribal TANF assistance received by the 
family must be paid to the family; and,
    (2) How any amounts generated under an assignment and retained by 
the Tribe will be used to further the Tribe's TANF program, consistent 
with Sec. 286.45(f).


Sec. 286.160  What are the applicable time frames and procedures for 
submitting a Tribal Family Assistance Plan?

    (a) A Tribe must submit a Tribal TANF letter of intent and/or a 
TFAP to the Secretary according to the following time frames:

----------------------------------------------------------------------------------------------------------------
                                       Letter of intent due to                           ACF notification to the
         Implementation date:             ACF and the State:    Formal plan due to ACF:         State due:
----------------------------------------------------------------------------------------------------------------
January 1, February 1 or March 1.....  July 1 of previous year  September 1 of previous  October 1 of previous
                                                                 year.                    year.
April 1, May 1 or June 1.............  October 1 of previous    December 1 of previous   January 1 of same year.
                                        year.                    year.
July 1, August 1 or September 1......  January 1 of same year.  March 1 of same year...  April 1 of same year.
October 1, November 1 or December 1..  April 1 of same year...  June 1 of same year....  July 1 of same year.
----------------------------------------------------------------------------------------------------------------

    (b) A Tribe that has requested and received data from the State and 
has resolved any issues concerning the data more than six months before 
its proposed implementation date is not required to submit a letter of 
intent.
    (c) The effective date of the TFAP must be the first day of any 
month.
    (d) The original TFAP must be sent to the appropriate ACF Regional 
Administrator, with a copy sent to the Division of Tribal Services, 
Office of Community Services, Administration for Children and Families.
    (e) A Tribe that submits a TFAP or an amendment to an existing plan 
that cannot be approved by the Secretary will be given the opportunity 
to make revisions in order to make the TFAP, or an amendment, 
approvable.
    (f) Tribes operating a consolidated Public Law 102-477 program must 
submit a TFAP plan to the Secretary for review and approval prior to 
the consolidation of the TANF program into the Public Law 102-477 plan.


Sec. 286.165  How is a Tribal Family Assistance Plan amended?

    (a) An amendment to a TFAP is necessary if the Tribe makes any 
substantial changes to the plan, including those which impact an 
individual's eligibility for Tribal TANF services or participation 
requirements, or any other program design changes which alter the 
nature of the program.
    (b) A Tribe must submit a plan amendment(s) to the Secretary no 
later than 30 days prior to the proposed implementation date. Proposed 
implementation dates shall be the first day of any month.
    (c) We will promptly review and either approve or disapprove the 
plan amendment(s).
    (d) Approved plan amendments are effective no sooner than 30 days 
after date of submission.
    (e) A Tribe whose plan amendment is disapproved may petition for an 
administrative review of such disapproval under Sec. 286.170 and may 
appeal our final written decision to the Departmental Appeals Board no 
later than 30 days from the date of the disapproval. This appeal to the 
Board should follow the provisions of the rules under this subpart and 
those at 45 CFR part 16, where applicable.


Sec. 286.170  How may a Tribe petition for administrative review of 
disapproval of a TFAP or amendment?

    (a) If, after a Tribe has been provided the opportunity to make 
revisions to its TFAP or amendment, the Secretary determines that the 
TFAP or amendment cannot be approved, a written Notice of Disapproval 
will be

[[Page 8540]]

sent to the Tribe. The Notice of Disapproval will indicate the specific 
grounds for disapproval.
    (b) A Tribe may request reconsideration of a disapproval 
determination by filing a written Request for Reconsideration to the 
Secretary within 60 days of receipt of the Notice of Disapproval. If 
reconsideration is not requested, the disapproval is final and the 
procedures under paragraph (f) of this section must be followed.
    (1) The Request for Reconsideration must include--
    (i) All documentation that the Tribe believes is relevant and 
supportive of its TFAP or amendment; and
    (ii) A written response to each ground for disapproval identified 
in the Notice of Disapproval indicating why the Tribe believes that its 
TFAP or amendment conforms to the statutory and regulatory requirements 
for approval.
    (c) Within 30 days after receipt of a Request for Reconsideration, 
the Secretary or designee will notify the Tribe of the date and time a 
hearing for the purpose of reconsideration of the Notice of Disapproval 
will be held. Such a hearing may be conducted by telephone conference 
call.
    (d) A hearing conducted under Sec. 286.170(c) must be held not less 
than 30 days nor more than 60 days after the date of the notice of such 
hearing is furnished to the Tribe, unless the Tribe agrees in writing 
to an extension.
    (e) The Secretary or designee will make a written determination 
affirming, modifying, or reversing disapproval of the TFAP or amendment 
within 60 days after the conclusion of the hearing.
    (f) If a TFAP or amendment is disapproved, the Tribe may appeal 
this final written decision to the Departmental Appeals Board (the 
Board) within 30 days after such party receives notice of 
determination. The party's appeal to the Board should follow the 
provisions of the rules under this section and those at 45 CFR part 16, 
where applicable.


Sec. 286.175  What special provisions apply in Alaska?

    A Tribe in the State of Alaska that receives a TFAG must use the 
grant to operate a program in accordance with program requirements 
comparable to the requirements applicable to the State of Alaska's 
Temporary Assistance for Needy Families program. Comparability of 
programs must be established on the basis of program criteria developed 
by the Secretary in consultation with the State of Alaska and the 
Tribes in Alaska. The State of Alaska has authority to waive the 
program comparability requirement based on a request by an Indian tribe 
in the State.


Sec. 286.180  What is the process for developing the comparability 
criteria that are required in Alaska?

    We will work with the Tribes in Alaska and the State of Alaska to 
develop an appropriate process for the development and amendment of the 
comparability criteria.


Sec. 286.185  What happens when a dispute arises between the State of 
Alaska and the Tribal TANF eligible entities in the State related to 
the comparability criteria?

    (a) If a dispute arises between the State of Alaska and the Tribes 
in the State on any part of the comparability criteria, we will be 
responsible for making a final determination and notifying the State of 
Alaska and the Tribes in the State of the decision.
    (b) Any of the parties involved may appeal our decision, in whole 
or in part, to the HHS Departmental Appeals Board (the Board) within 60 
days after such party receives notice of determination. The party's 
appeal to the Board should follow the provisions of the rules under 
this section and those at 45 CFR part 16, where applicable.


Sec. 286.190  If the Secretary, the State of Alaska, or any of the 
Tribal TANF eligible entities in the State of Alaska want to amend the 
comparability criteria, what is the process for doing so?

    (a) At such time that any of the above parties wish to amend the 
comparability document, the requesting party should submit a request to 
us, with a copy to the other parties, explaining the requested 
change(s) and supplying background information in support of the 
change(s).
    (b) After review of the request, we will make a determination on 
whether or not to accept the proposed change(s).
    (c) If any party wishes to appeal the decision regarding the 
adoption of the proposed amendment, they may appeal using the appeals 
process pursuant to Sec. 286.165.

Subpart D--Accountability and Penalties


Sec. 286.195  What penalties will apply to Tribes?

    (a) Tribes will be subject to fiscal penalties and requirements as 
follows:
    (1) If we determine that a Tribe misused its Tribal Family 
Assistance Grant funds, including providing assistance beyond the 
Tribe's negotiated time limit under Sec. 286.115, we will reduce the 
TFAG for the following fiscal year by the amount so used;
    (2) If we determine that a Tribe intentionally misused its TFAG for 
an unallowable purpose, the TFAG for the following fiscal year will be 
reduced by an additional five percent;
    (3) If we determine that a Tribe failed to meet the minimum work 
participation rate(s) established for the Tribe, the TFAG for the 
following fiscal year will be reduced. The amount of the reduction will 
depend on whether the Tribe was under a penalty for this reason in the 
preceding year. If not, the penalty reduction will be a maximum of five 
percent. If a penalty was imposed on the Tribe in the preceding year, 
the penalty reduction will be increased by an additional 2 percent, up 
to a maximum of 21 percent. In determining the penalty amount, we will 
take into consideration the severity of the failure and whether the 
reasons for the failure were increases in the unemployment rate in the 
TFAG service area and changes in TFAG caseload size during the fiscal 
year in question; and
    (4) If a Tribe fails to repay a Federal loan provided under section 
406 of the Act, we will reduce the TFAG for the following fiscal year 
by an amount equal to the outstanding loan amount plus interest.
    (b) In calculating the amount of the penalty, we will add together 
all applicable penalty percentages, and the total is applied to the 
amount of the TFAG that would have been payable if no penalties were 
assessed against the Tribe. As a final step, we will subtract other 
(non-percentage) penalty amounts.
    (c) When imposing the penalties in paragraph (a) of this section, 
we will not reduce an affected Tribe's grant by more than 25 percent. 
If the 25 percent limit prevents the recovery of the full penalty 
imposed on a Tribe during a fiscal year, we will apply the remaining 
amount of the penalty to the TFAG payable for the immediately 
succeeding fiscal year.
    (1) If we reduce the TFAG payable to a Tribe for a fiscal year 
because of penalties that have been imposed, the Tribe must expend 
additional Tribal funds to replace any such reduction. The Tribe must 
document compliance with this provision on its TANF expenditure report.
    (2) We will impose a penalty of not more than 2 percent of the 
amount of the TFAG on a Tribe that fails to expend additional Tribal 
funds to replace amounts deducted from the TFAG due to penalties. We 
will apply this penalty to the TFAG payable for the next succeeding 
fiscal year, and this penalty cannot be excused (see Sec. 286.235).
    (d) If a Tribe retrocedes the program, the Tribe will be liable for 
any penalties incurred for the period the program was in operation.

[[Page 8541]]

Sec. 286.200  How will we determine if Tribal Family Assistance Grant 
funds were misused or intentionally misused?

    (a) We will use the single audit or Federal review or audit to 
determine if a Tribe should be penalized for misusing Tribal Family 
Assistance Grant funds under Sec. 286.195(a)(1) or intentionally 
misusing Tribal Family Assistance Grant funds under Sec. 286.195(a)(2).
    (b) If a Tribe uses the TFAG in violation of the provisions of the 
Act, the provisions of 45 CFR part 92, OMB Circulars A-87 and A-133, or 
any Federal statutes and regulations applicable to the TANF program, we 
will consider the funds to have been misused.
    (c) The Tribe must show, to our satisfaction, that it used the 
funds for purposes that a reasonable person would consider to be within 
the purposes of the TANF program (as specified at Sec. 286.35) and the 
provisions listed in Sec. 286.45.
    (d) We will consider the TFAG to have been intentionally misused 
under the following conditions:
    (1) There is supporting documentation, such as Federal guidance or 
policy instructions, indicating that TANF funds could not be used for 
that purpose; or
    (2) After notification that we have determined such use to be 
improper, the Tribe continues to use the funds in the same or similarly 
improper manner.
    (e) If the single audit determines that a Tribe misused Federal 
funds in applying the negotiated time limit provisions under 
Sec. 286.115, the amount of the penalty for misuse will be limited to 
five percent of the TFAG amount.
    (1) This penalty shall be in addition to the reduction specified 
under Sec. 286.195(a)(1).
    (2) [Reserved]


Sec. 286.205  How will we determine if a Tribe fails to meet the 
minimum work participation rate(s)?

    (a) We will use the Tribal TANF Data Reports required under 
Sec. 286.255 to determine if we will assess the penalty under 
Sec. 286.195(a)(3) for failure to meet the minimum participation 
rate(s) established for the Tribe.
    (b) Each Tribal TANF Grantee's quarterly reports (the TANF Data 
Report and the Tribal TANF Financial Report) must be complete and 
accurate and filed by the due date. The accuracy of the reports are 
subject to validation by us.
    (1) For a disaggregated data report, ``a complete and accurate 
report'' means that:
    (i) The reported data accurately reflect information available to 
the Tribal TANF grantee in case records, financial records, and 
automated data systems;
    (ii) The data are free from computational errors and are internally 
consistent (e.g., items that should add to totals do so);
    (iii) The Tribal TANF grantee reports data for all required 
elements (i.e., no data are missing);
    (iv) The Tribal TANF grantee provides data on all families; or
    (v) If the Tribal TANF grantee opts to use sampling, the Tribal 
TANF grantee reports data on all families selected in a sample that 
meets the specification and procedures in the TANF Sampling Manual 
(except for families listed in error); and
    (vi) Where estimates are necessary (e.g., some types of assistance 
may require cost estimates), the Tribal TANF grantee uses reasonable 
methods to develop these estimates.
    (2) For an aggregated data report, ``a complete and accurate 
report'' means that:
    (i) The reported data accurately reflect information available to 
the Tribal TANF grantee in case records, financial records, and 
automated data systems;
    (ii) The data are free from computational errors and are internally 
consistent (e.g., items that should add to totals do so);
    (iii) The Tribal TANF grantee reports data on all applicable 
elements; and
    (iv) Monthly totals are unduplicated counts for all families (e.g., 
the number of families and the number of out-of-wedlock births are 
unduplicated counts).
    (3) For the Tribal TANF Financial Report, a ``complete and accurate 
report'' means that:
    (i) The reported data accurately reflect information available to 
the Tribal TANF grantee in case records, financial records, and 
automated data systems;
    (ii) The data are free from computational errors and are internally 
consistent (e.g., items that should add to totals do so);
    (iii) The Tribal TANF grantee reports data on all applicable 
elements; and
    (iv) All expenditures have been made in accordance with 45 CFR part 
92 and all relevant OMB circulars.
    (4) We will review the data filed in the quarterly reports to 
determine if they meet these standards. In addition, we will use audits 
and reviews to verify the accuracy of the data filed by the Tribal TANF 
grantee.
    (c) Tribal TANF grantees must maintain records to adequately 
support any report, in accordance with 45 CFR part 92 and all relevant 
OMB circulars.
    (d) If we find reports so significantly incomplete or inaccurate 
that we seriously question whether the Tribe has met its participation 
rate, we may apply the penalty under Sec. 286.195(a)(3).


Sec. 286.210  What is the penalty for a Tribe's failure to repay a 
Federal loan?

    (a) If a Tribe fails to repay the amount of principal and interest 
due at any point under a loan agreement:
    (1) The entire outstanding loan balance, plus all accumulated 
interest, becomes due and payable immediately; and
    (2) We will reduce the TFAG payable for the immediately succeeding 
fiscal year quarter by the outstanding loan amount plus interest.
    (b) Neither the reasonable cause provisions at Sec. 286.225 nor the 
corrective compliance plan provisions at Sec. 286.230 apply when a 
Tribe fails to repay a Federal loan.


Sec. 286.215  When are the TANF penalty provisions applicable?

    (a) A Tribe may be subject to penalties, as described in 
Sec. 286.195(a)(1), Sec. 286.195(a)(2) and Sec. 286.195(a)(4), for 
conduct occurring on and after the first day of implementation of the 
Tribe's TANF program.
    (b) A Tribe may be subject to penalties, as described in 
Sec. 286.195(a)(3), for conduct occurring on and after the date that is 
six months after the Tribe begins operating the TANF program.
    (c) We will not apply the regulations retroactively. We will judge 
Tribal actions that occurred prior to the effective date of these rules 
and expenditures of funds received prior to the effective date only 
against a reasonable interpretation of the statutory provisions in 
title IV-A of the Act.
    (1) To the extent that a Tribe's failure to meet the requirements 
of the penalty provisions is attributable to the absence of Federal 
rules or guidance, Tribes may qualify for reasonable cause, as 
discussed in Sec. 286.225.
    (2) [Reserved]


Sec. 286.220  What happens if a Tribe fails to meet TANF requirements?

    (a) If we determine that a Tribe is subject to a penalty, we will 
notify the Tribe in writing. This notice will:
    (1) Specify what penalty provision(s) are in issue;
    (2) Specify the amount of the penalty;
    (3) Specify the reason for our determination;
    (4) Explain how and when the Tribe may submit a reasonable cause 
justification under Sec. 286.225 and/or a corrective compliance plan 
under Sec. 286.230(d) for those penalties for

[[Page 8542]]

which reasonable cause and/or corrective compliance plan apply; and
    (5) Invite the Tribe to present its arguments if it believes that 
the data or method we used were in error or were insufficient, or that 
the Tribe's actions, in the absence of Federal regulations, were based 
on a reasonable interpretation of the statute.
    (b) Within 60 days of receipt of our written notification, the 
Tribe may submit a written response to us that:
    (1) Demonstrates that our determination is incorrect because our 
data or the method we used in determining the penalty was in error or 
was insufficient, or that the Tribe acted prior to June 19, 2000, on a 
reasonable interpretation of the statute;
    (2) Demonstrates that the Tribe had reasonable cause for failing to 
meet the requirement(s); and/or
    (3) Provides a corrective compliance plan as discussed in 
Sec. 286.230.
    (c) If we find that the Tribe was correct and that a penalty was 
improperly determined, or find that a Tribe had reasonable cause for 
failing to meet a requirement, we will not impose the related penalty 
and so notify the Tribe in writing within two weeks of such a 
determination.
    (d) If we determine that the Tribe has not demonstrated that our 
original determination was incorrect or that it had reasonable cause, 
we will notify the Tribe of our decision in writing.
    (e) If we request additional information from a Tribe, it must 
provide the information within thirty days of the date of our request.


Sec. 286.225  How may a Tribe establish reasonable cause for failing to 
meet a requirement that is subject to application of a penalty?

    (a) We will not impose a penalty against a Tribe if it is 
determined that the Tribe had reasonable cause for failure to meet the 
requirements listed at Sec. 286.195(a)(1), Sec. 286.195(a)(2), or 
Sec. 286.195(a)(3). The general factors a Tribe may use to claim 
reasonable cause include, but are not limited to, the following:
    (1) Natural disasters, extreme weather conditions, and other 
calamities (e.g., hurricanes, earthquakes, fire, and economic 
disasters) whose disruptive impact was so significant that the Tribe 
failed to meet a requirement.
    (2) Formally issued Federal guidance which provided incorrect 
information resulting in the Tribe's failure or prior to the effective 
date of these regulations, guidance that was issued after a Tribe 
implemented the requirements of the Act based on a different, but 
reasonable, interpretation of the Act.
    (3) Isolated, non-recurring problems of minimal impact that are not 
indicative of a systemic problem.
    (4) Significant increases in the unemployment rate in the TFAG 
service area and changes in the TFAG caseload size during the fiscal 
year being reported.
    (b) We will grant reasonable cause to a Tribe that:
    (1) Clearly demonstrates that its failure to submit complete, 
accurate, and timely data, as required at Sec. 286.245, for one or both 
of the first two quarters of FY 2000, is attributable, in significant 
part, to its need to divert critical system resources to Year 2000 
compliance activities; and
    (2) Submits complete and accurate data for the first two quarters 
of FY 2000 by November 15, 2000.
    (c) In addition to the reasonable cause criteria specified above, a 
Tribe may also submit a request for a reasonable cause exemption from 
the requirement to meet its work participation requirements in the 
following situation:
    (1) We will consider that a Tribe has reasonable cause if it 
demonstrates that its failure to meet its work participation rate(s) is 
attributable to its provisions with regard to domestic violence as 
follows:
    (i) To demonstrate reasonable cause, a Tribe must provide evidence 
that it achieved the applicable work rates, except with respect to any 
individuals receiving good cause waivers of work requirements (i.e., 
when cases with good cause waivers are removed from the calculation in 
Sec. 286.85); and
    (ii) A Tribe must grant good cause waivers in domestic violence 
cases appropriately, in accordance with the policies in the Tribe's 
approved Tribal Family Assistance Plan.
    (2) [Reserved]
    (d) In determining reasonable cause, we will consider the efforts 
the Tribe made to meet the requirements, as well as the duration and 
severity of the circumstances that led to the Tribe's failure to 
achieve the requirement.
    (e) The burden of proof rests with the Tribe to fully explain the 
circumstances and events that constitute reasonable cause for its 
failure to meet a requirement.
    (1) The Tribe must provide us with sufficient relevant information 
and documentation to substantiate its claim of reasonable cause.
    (2) [Reserved]


Sec. 286.230  What if a Tribe does not have reasonable cause for 
failing to meet a requirement?

    (a) To avoid the imposition of a penalty under Sec. 286.195(a)(1), 
Sec. 286.195(a)(2), or Sec. 286.195(a)(3), under the following 
circumstances a Tribe must enter into a corrective compliance plan to 
correct the violation:
    (1) If a Tribe does not claim reasonable cause for failing to meet 
a requirement; or
    (2) If we found that a Tribe did not have reasonable cause.
    (b) A Tribe that does not claim reasonable cause will have 60 days 
from receipt of the notice described in Sec. 286.220(a) to submit its 
corrective compliance plan to us.
    (c) A Tribe that does not demonstrate reasonable cause will have 60 
days from receipt of the second notice described in Sec. 286.220(d) to 
submit its corrective compliance plan to us.
    (d) In its corrective compliance plan the Tribe must outline:
    (1) Why it failed to meet the requirements;
    (2) How it will correct the violation in a timely manner; and
    (3) What actions, outcomes and time line it will use to ensure 
future compliance.
    (e) During the 60-day period beginning with the date we receive the 
corrective compliance plan, we may, if necessary, consult with the 
Tribe on modifications to the plan.
    (f) A corrective compliance plan is deemed to be accepted if we 
take no action to accept or reject the plan during the 60-day period 
that begins when the plan is received.
    (g) Once a corrective compliance plan is accepted or deemed 
accepted, we may request reports from the Tribe or take other actions 
to confirm that the Tribe is carrying out the corrective actions 
specified in the plan.
    (1) We will not impose a penalty against a Tribe with respect to 
any violation covered by that plan if the Tribe corrects the violation 
within the time frame agreed to in the plan.
    (2) We must assess some or all of the penalty if the Tribe fails to 
correct the violation pursuant to its corrective compliance plan.


Sec. 286.235  What penalties cannot be excused?

    (a) The penalties that cannot be excused are:
    (1) The penalty for failure to repay a Federal loan issued under 
section 406.
    (2) The penalty for failure to replace any reduction in the TFAG 
resulting from other penalties that have been imposed.
    (b) [Reserved]


Sec. 286.240  How can a Tribe appeal our decision to take a penalty?

    (a) We will formally notify the Tribe of a potential reduction to 
the Tribe's

[[Page 8543]]

TFAG within five days after we determine that a Tribe is subject to a 
penalty and inform the Tribe of its right to appeal to the Departmental 
Appeals Board (the Board) established in the Department of Health and 
Human Services. Such notification will include the factual and legal 
basis for taking the penalty in sufficient detail for the Tribe to be 
able to respond in an appeal.
    (b) Within 60 days of the date it receives notice of the penalty, 
the Tribe may file an appeal of the action, in whole or in part, to the 
Board.
    (c) The Tribe must include all briefs and supporting documentation 
when it files its appeal. A copy of the appeal and any supplemental 
filings must be sent to the Office of General Counsel, Children, 
Families and Aging Division, Room 411-D, 200 Independence Avenue, SW, 
Washington, DC 20201.
    (d) ACF must file its reply brief and supporting documentation 
within 45 days after receipt of the Tribe's submission under paragraph 
(c) of this section.
    (e) The Tribe's appeal to the Board must follow the provisions of 
this section and those at Secs. 16.2, 16.9, 16.10, and 16.13 through 
16.22 of this title to the extent they are consistent with this 
section.
    (f) The Board will consider an appeal filed by a Tribe on the basis 
of the documentation and briefs submitted, along with any additional 
information the Board may require to support a final decision. Such 
information may include a hearing if the Board determines that it is 
necessary. In deciding whether to uphold an adverse action or any 
portion of such action, the Board will conduct a thorough review of the 
issues.
    (g) The filing date shall be the date materials are received by the 
Board in a form acceptable to it.
    (h) A Tribe may obtain judicial review of a final decision by the 
Board by filing an action within 90 days after the date of such 
decision with the district court of the United States in the judicial 
district where the Tribe or TFAG service area is located.
    (1) The district court will review the final decision of the Board 
on the record established in the administrative proceeding, in 
accordance with the standards of review prescribed by 5 U.S.C. 706(2). 
The court's review will be based on the documents and supporting data 
submitted to the Board.
    (2) [Reserved]
    (i) No reduction to the Tribe's TFAG will occur until a final 
disposition of the matter has been made.

Subpart E--Data Collection and Reporting Requirements


Sec. 286.245  What data collection and reporting requirements apply to 
Tribal TANF programs?

    (a) Section 412(h) of the Act makes section 411 regarding data 
collection and reporting applicable to Tribal TANF programs. This 
section of the regulations explains how we will collect the information 
required by section 411 of the Act and information to implement section 
412(c) (work participation requirements).
    (b) Each Tribe must collect monthly and file quarterly data on 
individuals and families as follows:
    (1) Disaggregated data collection and reporting requirements in 
this part apply to families receiving assistance and families no longer 
receiving assistance under the Tribal TANF program; and
    (2) Aggregated data collection and reporting requirements in this 
part apply to families receiving, families applying for, and families 
no longer receiving assistance under the Tribal TANF program.
    (c) Each Tribe must file in its quarterly TANF Data Report and in 
the quarterly TANF Financial Report the specified data elements.
    (d) Each Tribe must also submit an annual report that contains 
specified information.
    (e) Each Tribe must submit the necessary reports by the specified 
due dates.


Sec. 286.250  What definitions apply to this subpart?

    (a) Except as provided in paragraph (b) of this section, the 
general TANF definitions at Secs. 286.5 and 286.10 apply to this 
subpart.
    (b) For data collection and reporting purposes only, ``TANF 
family'' means:
    (1) All individuals receiving assistance as part of a family under 
the Tribe's TANF program; and
    (2) The following additional persons living in the household, if 
not included under paragraph (b)(1) of this section:
    (i) Parent(s) or caretaker relative(s) of any minor child receiving 
assistance;
    (ii) Minor siblings of any child receiving assistance; and
    (iii) Any person whose income or resources would be counted in 
determining the family's eligibility for or amount of assistance.


Sec. 286.255  What quarterly reports must the Tribe submit to us?

    (a) Quarterly reports. Each Tribe must collect on a monthly basis, 
and file on a quarterly basis, the data specified in the Tribal TANF 
Data Report and the Tribal TANF Financial Report.
    (b) Tribal TANF Data Report. The Tribal TANF Data Report consists 
of three sections. Two sections contain disaggregated data elements and 
one section contains aggregated data elements.
    (1) TANF Data Report: Disaggregated Data--Sections one and two. 
Each Tribe must file disaggregated information on families receiving 
TANF assistance (section one) and families no longer receiving TANF 
assistance (section two). These two sections specify identifying and 
demographic data such as the individual's Social Security Number; and 
information such as the type and amount of assistance received, 
educational level, employment status, work participation activities, 
citizenship status, and earned and unearned income. These reports also 
specify items pertaining to child care and child support. The data 
requested cover adults (including non-custodial parents who are 
participating in work activities) and children.
    (2) TANF Data Report: Aggregated Data--Section three. Each Tribe 
must file aggregated information on families receiving, applying for, 
and no longer receiving TANF assistance. This section of the Report 
asks for aggregate figures in the following areas: the total number of 
applications and their disposition; the total number of recipient 
families, adult recipients, and child recipients; the total number of 
births, out-of-wedlock births, and minor child heads-of-households; the 
total number of non-custodial parents participating in work activities; 
and the total amount of TANF assistance provided.
    (c) The Tribal TANF Financial Report. Each Tribe must file 
quarterly expenditure data on the Tribe's use of Tribal Family 
Assistance Grant funds, any Tribal fund expenditures which are being 
substituted for TFAG funds withheld due to a penalty, and any State 
contributions. The report must be submitted on a form prescribed by 
ACF.


Sec. 286.260  May Tribes use sampling and electronic filing?

    (a) Each Tribe may report disaggregated data on all recipient 
families (universal reporting) or on a sample of families selected 
through the use of a scientifically acceptable sampling method. The 
sampling method must be approved by ACF in advance of submitting 
reports.
    (1) Tribes may not use a sample to generate the aggregated data.
    (2) [Reserved]
    (b) ``Scientifically acceptable sampling method'' means a 
probability

[[Page 8544]]

sampling method in which every sampling unit has a known, non-zero 
chance to be included in the sample, and the sample size requirements 
are met.
    (c) Each Tribe may file quarterly reports electronically, based on 
format specifications that we will provide. Tribes who do not have the 
capacity to submit reports electronically may submit quarterly reports 
on a disk or in hard copy.


Sec. 286.265  When are quarterly reports due?

    (a) Upon a Tribe's initial implementation of TANF, the Tribe shall 
begin collecting data for the TANF Data Report as of the date that is 
six months after the initial effective date of its TANF program. The 
Tribe shall begin collecting financial data for the TANF Financial 
Report as of the initial effective date of its TANF program.
    (b) Each Tribe must submit its TANF Data Report and TANF Financial 
Report within 45 days following the end of each quarter. If the 45th 
day falls on a weekend or on a national, State or Tribal holiday, the 
reports are due no later than the next business day.


Sec. 286.270  What happens if the Tribe does not satisfy the quarterly 
reporting requirements?

    (a) If we determine that a Tribe has not submitted to us a complete 
and accurate Tribal TANF Data Report within the time limit, the Tribe 
risks the imposition of a penalty at Sec. 286.205 related to the work 
participation rate targets since the data from the Tribal TANF Data 
Report is required to calculate participation rates.
    (b) Non-reporting of the Tribal TANF Financial Report may give rise 
to a penalty under Sec. 286.200 since this Report is used to 
demonstrate compliance with provisions of the Act, the provisions of 45 
CFR part 92, OMB Circulars A-87 and A-133, or any Federal statutes and 
regulations applicable to the TANF program.


Sec. 286.275  What information must Tribes file annually?

    (a) Each Tribal TANF grantee must file an annual report containing 
information on its TANF program for that year. The report may be filed 
as:
    (1) An addendum to the fourth quarter TANF Data Report; or
    (2) A separate annual report.
    (b) Each Tribal TANF grantee must provide the following information 
on its TANF program:
    (1) The Tribal TANF grantee's definition of each work activity;
    (2) A description of the transitional services provided to families 
no longer receiving assistance due to employment; and
    (3) A description of how a Tribe will reduce the amount of 
assistance payable to a family when an individual refuses to engage in 
work without good cause pursuant to Sec. 286.145.
    (4) The average monthly number of payments for child care services 
made by the Tribal TANF grantee through the use of disregards, by the 
following types of child care providers:
    (i) Licensed/regulated in-home child care;
    (ii) Licensed/regulated family child care;
    (iii) Licensed/regulated group home child care;
    (iv) Licensed/regulated center-based child care;
    (v) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) in-home child care provided by a 
nonrelative;
    (vi) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) in-home child care provided by a 
relative;
    (vii) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) family child care provided by a 
nonrelative;
    (viii) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) family child care provided by a 
relative;
    (ix) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) group child care provided by a 
nonrelative;
    (x) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) group child care provided by a 
relative; and
    (xi) Legally operating (i.e., no license category available in 
Tribal TANF grantee's locality) center-based child care.
    (5) A description of any nonrecurring, short-term benefits 
provided, including:
    (i) The eligibility criteria associated with such benefits, 
including any restrictions on the amount, duration, or frequency of 
payments;
    (ii) Any policies that limit such payments to families that are 
eligible for TANF assistance or that have the effect of delaying or 
suspending a family's eligibility for assistance; and
    (iii) Any procedures or activities developed under the TANF program 
to ensure that individuals diverted from assistance receive information 
about, referrals to, or access to other program benefits (such as 
Medicaid and food stamps) that might help them make the transition from 
Welfare-to-Work; and
    (6) A description of the procedures the Tribal TANF grantee has 
established and is maintaining to resolve displacement complaints, 
pursuant to Sec. 286.110. This description must include the name of the 
Tribal TANF grantee agency with the lead responsibility for 
administering this provision and explanations of how the Tribal TANF 
grantee has notified the public about these procedures and how an 
individual can register a complaint.
    (7) Tribes electing the FVO must submit a description of the 
strategies and procedures in place to ensure that victims of domestic 
violence receive appropriate alternative services, as well as an 
aggregate figure for the total number of good cause domestic waivers 
granted.
    (c) If the Tribal TANF grantee has submitted the information 
required in paragraph (b) of this section in the TFAP, it may meet the 
annual reporting requirements by reference in lieu of re-submission. 
Also, if the information in the annual report has not changed since the 
previous annual report, the Tribal TANF grantee may reference this 
information in lieu of re-submission.
    (d) If a Tribal TANF grantee makes a substantive change in certain 
data elements in paragraph (b) of this section, it must file a copy of 
the change either with the next quarterly data report or as an 
amendment to its TFAP. The Tribal TANF grantee must also indicate the 
effective date of the change. This requirement is applicable to 
paragraphs (b)(1), (b)(2), and (b)(3) of this section.


Sec. 286.280  When are annual reports due?

    (a) The annual report required by Sec. 286.275 is due 90 days after 
the end of the Fiscal Year which it covers.
    (b) The first annual report for a Tribe must include all months of 
operation since the plan was approved.


Sec. 286.285  How do the data collection and reporting requirements 
affect Public Law 102-477 Tribes?

    (a) A Tribe that consolidates its Tribal TANF program into a 
Public-Law 102-477 plan is required to comply with the TANF data 
collection and reporting requirements of this section.
    (b) A Tribe that consolidates its Tribal TANF program into a 
Public-Law 102-477 plan may submit the Tribal TANF Data Reports and the 
Tribal TANF Financial Report to the BIA, with a copy to us.

    Note: The following appendices will not appear in the Code of 
Federal Regulations.


[[Page 8545]]



Appendix A.--TANF Disaggregated Data Collection for Families Receiving 
Assistance Under the TANF Program--ACTIVES

Instructions and Definitions

    General:
     The Tribal grantee should collect and report data for 
each data element. The data must be complete (unless explicitly 
instructed to leave the field blank) and accurate (i.e., correct).
     An ``Unknown'' code may appear only on four sets of 
data elements ([#32 and #67] Date of Birth, [#33 and #68] Social 
Security Number, [#41 and #74] Educational Level, and [#42 and #75] 
Citizenship/Alienage). For these data elements, unknown is not an 
acceptable code for individuals who are members of the eligible 
family (i.e., family affiliation code ``1'').
     There are five data elements for which Tribes have the 
option to report based on either the budget month or the reporting 
month. These are: #16 Amount of Food Stamps Assistance; #19 Amount 
of Child Support; #20 Amount of Families Cash Resources; #64 Amount 
of Earned Income; and [#35 and #76] Amount of Unearned Income. 
Whichever choice the Tribe selects must be used for all families 
reported each month and must be used for all months in the fiscal 
year.
    1. State FIPS Code: Tribal grantees should enter ``00'' or leave 
blank.
    2. County FIPS Code: Tribal grantees should leave this field 
blank.
    3. Tribal Code: For Tribal grantees, enter the three-digit 
Tribal code that represents your Tribe. See Appendix E of the TANF 
Sampling and Statistical Methods Manual for a complete listing of 
Tribal Codes. If there appears to be no code for your Tribe, 
immediately contact the Director, Division of Tribal Services, 
Office of Community Services. Newly formed consortiums must contact 
the Division to obtain a code. State agencies should leave this 
field blank.
    4. Reporting Month: Enter the four-digit year and two-digit 
month codes that identify the year and month for which the data are 
being reported.
    5. Stratum:
    Guidance: If a Tribe opts to provide data for its entire 
caseload, it may use this for its own coding purposes as long as a 
two-digit numerical code is specified.
    Instruction: Enter any two-digit numerical code.

Family-Level Data

    Definition: For reporting purposes, the TANF family means:
    (a) All individuals receiving assistance as part of a family 
under the Tribe's TANF Program; and
    (b) The following additional persons living in the household, if 
not included under (a) above:
    (1) Parent(s) or caretaker relative(s) of any minor child 
receiving assistance;
    (2) Minor siblings of any child receiving assistance; and
    (3) Any person whose income or resources would be counted in 
determining the family's eligibility for or amount of assistance.
    6. Case Number--TANF:
    Guidance: If the case number is less than the allowable eleven 
characters, Tribes may use lead zeros to fill in the number. This 
number will be used to refer back to the Tribal records concerning 
the case if a question about the data arises.
    Instruction: Enter the number assigned by the Tribal grantee to 
uniquely identify the case.
    7. ZIP Code: Enter the five-digit ZIP code for the TANF family's 
place of residence for the reporting month.
    8. Funding Stream:
    Guidance: Tribal grantees are not to report data on families 
which do not receive any assistance, in at least part, from Federal 
TANF funds. The only applicable code for Tribes is ``1''.
    Instructions: Enter code ``1''.
    9. Disposition:
    Guidance: If a Tribe opts to report on its entire caseload, the 
only applicable code for the Tribe is ``1''.
    Instructions: Enter code ``1''.
    10. New Applicant:
    Guidance: A newly-approved applicant means the current reporting 
month is the first month in which the TANF family receives TANF 
assistance (and thus has had a chance to be reported on). This may 
be either the first month that the TANF family has ever received 
assistance or the first month of a new spell on assistance. A TANF 
family that is reinstated from a suspension is not a newly, approved 
applicant.
    Instruction: Enter the one-digit code that indicates whether or 
not the TANF family is a newly-approved applicant.
    1=Yes, a newly-approved application.
    2=No.
    11. Number of Family Members:
    Instruction: Enter two digits that represent the number of 
members in the family receiving assistance under the Tribe's TANF 
Program during the reporting month. Include in the number of family 
members, the noncustodial parent who the Tribe has opted to include 
as part of the eligible family, who is receiving assistance as 
defined in Sec. 260.31, or who is participating in work activities 
as defined for Tribes in their approved plan.
    12. Type of Family for Work Participation:
    Guidance: This data element will be used in conjunction with 
other data elements (dependent on the approved Tribal plan) to 
determine work participation rates.
    A family with a minor child head-of-household should be coded as 
either a single-parent family or two-parent family, whichever is 
appropriate.
    If the family receiving assistance includes a custodial and 
noncustodial parent, then, if neither parent is disabled, the family 
should be coded as a two-parent family. A noncustodial parent is 
defined in section 260.30 as a parent who lives in the State or 
States (in which the Tribal Service area is located) and does not 
live with his/her child(ren). The Tribe must report information on 
the noncustodial parent if the noncustodial parent: (1) Is receiving 
assistance as defined in Sec. 260.31; (2) is participating in work 
activities as defined in the Tribal plan; or (3) has been designated 
by the Tribe as a member of a family receiving assistance.
    Instruction: Enter the one-digit code that represents the type 
of family
    1=One parent family.
    2=Two-Parent Family.
    3=Family excluded from both the overall and two-parent work 
participation rates (no adult receiving assistance).
    13. Receives Subsidized Housing:
    Guidance: Subsidized housing refers to housing for which money 
was paid by the Federal, State, or local government or through a 
private social service agency to the family or to the owner of the 
housing to assist the family in paying rent. Two families sharing 
living expenses does not constitute subsidized housing.
    Instruction: Enter the one-digit code that indicates whether or 
not the TANF family received subsidized housing for the reporting 
month.
    1=Public housing.
    2=Rent subsidy.
    3=No housing subsidy.
    14. Receives Medical Assistance:
    Instruction: Enter ``1'' if, for the reporting month, any TANF 
family member is enrolled in Medicaid and thus eligible to receive 
medical assistance under the State plan approved under Title XIX or 
``2'' if no TANF family member is enrolled in Medicaid.
    1=Yes, enrolled in Medicaid.
    2=No.
    15. Receives Food Stamps:
    Instruction: Enter the one-digit code that indicates whether or 
not the TANF family is receiving food stamp assistance.
    1=Yes, receives food stamp assistance.
    2=No.
    16. Amount of Food Stamp Assistance:
    Guidance: For situations in which the food stamp household 
differs from the TANF family, code this element in a manner that 
most accurately reflects the resources available to the TANF family. 
One acceptable method for calculating the amount of food stamp 
assistance available to the TANF family is to prorate the amount of 
food stamps equally among each food stamp recipient then add 
together the amounts belonging to the TANF recipients to get the 
total amount for the TANF family.
    Instruction: Enter the TANF family's authorized dollar amount of 
food stamp assistance for the reporting month or for the month used 
to budget for the reporting month.
    17. Receives Subsidized Child Care:
    Instruction: If the TANF family receives subsidized child care 
for the reporting month, enter code ``1'' or ``2'', whichever is 
appropriate. Otherwise, enter code ``3''.
    1=Yes, receives child care funded entirely or in part with 
Federal funds (e.g., receives TANF, CCDF, SSBG, or other federally 
funded child care).
    2=Yes, receives child care funded entirely under a State, 
Tribal, and/or local program (i.e., no Federal funds used).
    3=No subsidized child care received.
    18. Amount of Subsidized Child Care:
    Guidance: Subsidized child care means a grant by the Federal, 
State, Tribal, or local government to or on behalf of a parent (or 
caretaker relative) to support, in part or

[[Page 8546]]

whole, the cost of child care services provided by an eligible 
provider to an eligible child. The grant may be paid directly to the 
parent (or caretaker relative) or to a child care provider on behalf 
of the parent (or caretaker relative).
    Instruction: Enter the total dollar amount of subsidized child 
care from all sources (e.g., CCDF, TANF, SSBG, State, Tribal, local, 
etc.) that the TANF family has received for services in the 
reporting month. If the TANF family did not receive any subsidized 
child care for services in the reporting month, enter ``0''.
    19. Amount of Child Support:
    Instruction: Enter the total dollar value of child support 
received on behalf of the TANF family in the reporting month or for 
the month used to budget for the reporting month. This includes 
current payments, arrearages, recoupment, and pass-through amounts 
whether paid to the State or the family.
    20. Amount of the Family's Cash Resources:
    Instruction: Enter the total dollar amount of the TANF family's 
cash resources as the State defines them for determining eligibility 
and/or computing benefits for the reporting month or for the month 
used to budget for the reporting month.
    Amount of Assistance Received and the Number of Months That the 
Family Has Received Each Type of Assistance under the Tribal TANF 
Program.
    Guidance: The term ``assistance'' includes cash, payments, 
vouchers, and other forms of benefits designed to meet a family's 
ongoing basic needs (i.e., for food, clothing, shelter, utilities, 
household goods, personal care items, and general incidental 
expenses). It includes such benefits even when they are provided in 
the form of payments by a TANF agency, or other agency on its 
behalf, to individual recipients and conditioned on their 
participation in work experience, community service, or other work 
activities.
    Except where excluded as indicated in the following paragraph, 
it also includes supportive services such as transportation and 
child care provided to families who are not employed.
    The term ``assistance'' excludes:
    (1) Nonrecurrent, short-term benefits (such as payments for rent 
deposits or appliance repairs) that:
    (i) Are designed to deal with a specific crisis situation or 
episode of need;
    (ii) Are not intended to meet recurrent or ongoing needs; and
    (iii) Will not extend beyond four months.
    (2) Work subsidies (i.e., payments to employers or third parties 
to help cover the costs of employee wages, benefits, supervision, 
and training);
    (3) Supportive services such as child care and transportation 
provided to families who are employed;
    (4) Refundable earned income tax credits;
    (5) Contributions to, and distributions from, Individual 
Development Accounts;
    (6) Services such as counseling, case management, peer support, 
child care information and referral, transitional services, job 
retention, job advancement, and other employment-related services 
that do not provide basic income support; and
    (7) Transportation benefits provided under an Access to Jobs or 
Reverse Commute project, pursuant to section 404(k) of the Act, to 
an individual who is not otherwise receiving assistance.
    The exclusion of nonrecurrent, short-term benefits under (1) of 
this paragraph also covers supportive services for recently employed 
families, for temporary periods of unemployment, in order to enable 
continuity in their service arrangements.
    Instruction: For each type of assistance provided under the 
Tribal TANF Program, enter the dollar amount of assistance that the 
TANF family received or that was paid on behalf of the TANF family 
for the reporting month and the number of months that the TANF 
family has received assistance under the Tribe's TANF program. For 
TANF Child Care also enter the number of children covered by the 
dollar amount of child care. If, for a ``type of assistance'', no 
dollar amount of assistance was provided during the reporting month, 
enter ``0'' as the amount. If, for a ``type of assistance'', no 
assistance has been received (since the Tribe began its TANF Program 
or since the effective date of the final regulations) by the TANF 
eligible family, enter ``0'' as the number of months of assistance.
    21. Cash and Cash Equivalents:
    A. Amount.
    B. Number of Months.
    22. TANF Child Care:
    Guidance: For TANF Child Care, enter the dollar amount, the 
number of children covered by the dollar amount of child care, and 
the total number of months that the family has received TANF child 
care assistance for families not employed. For example, a TANF 
family may receive a total of $500.00 in TANF child care assistance 
for two children for the reporting month. Furthermore, the family 
may have received TANF child care for one or more child(ren) for a 
total of six months under the State (Tribal) TANF Program. In this 
example, the State (Tribe) would code 500, 2, and 6 for the amount, 
number of children and number of months respectively. Include only 
the child care funded directly by the Tribal TANF Program. Do not 
include child care funded under the Child Care and Development Fund, 
even though some of the funds were transferred to the CCDF from the 
TANF program.
    A. Amount.
    B. Number of Children Covered.
    C. Number of Months.
    23. Transportation:
    A. Amount.
    B. Number of Months.
    24. Transitional Services:
    A. Amount.
    B. Number of Months.
    25. Other:
    A. Amount.
    B. Number of Months.
    26. Reason for and Amount of Reductions in Assistance:
    Instruction: The amount of assistance received by a TANF family 
may have been reduced for one or more of the following reasons. For 
each reason listed below, indicate whether the TANF family received 
a reduction in assistance. Enter the total dollar value of the 
reduction(s) for each group of reasons for the reporting month. If 
for any reason there was no reduction in assistance, enter ``0''.
    a. Sanctions:
    i. Total Dollar Amount of Reductions due to Sanctions:
    Enter the total dollar value of reduction in assistance due to 
sanctions.
    ii. Work Requirements Sanction:
    1=Yes.
    2=No.
    iii. Family Sanction for an Adult with No High School Diploma or 
Equivalent:
    1=Yes.
    2=No.
    iv. Sanction for Teen Parent not Attending School:
    1=Yes.
    2=No.
    v. Non-Cooperation with Child Support:
    1=Yes.
    2=No.
    vi. Failure to Comply with an Individual Responsibility Plan:
    1=Yes.
    2=No.
    vii. Other Sanction:
    1=Yes.
    2=No.
    b. Recoupment of Prior Overpayment:
    Enter the total dollar value of reduction in assistance due to 
recoupment of a prior overpayment.
    c. Other:
    i. Total Dollar Amount of Reductions due to Other Reasons 
(exclude amounts for sanctions and recoupment): Enter the total 
dollar value of reduction in assistance due to reasons other than 
sanctions and recoupment.
    ii. Family Cap:
    1=Yes.
    2=No.
    iii. Reduction Based on Family Moving into the Tribal service 
area from a State or another Tribal area:
    1=Yes.
    2=No.
    iv. Reduction Based on Length of Receipt of Assistance:
    1=Yes.
    2=No.
    v. Other, Non-sanction:
    1=Yes.
    2=No.
    27. Waiver Evaluation Experimental and Control Groups:
    Guidance: This data element is not applicable to Tribes. Tribes 
should leave it blank.
    28. Is the TANF Family Exempt during the reporting month from 
the Tribal Time-Limit Provisions:
    Guidance: Under TANF rules, an eligible family that does not 
include a recipient who is an adult head-of-household, a spouse of 
the head-of-household, or a minor child head-of-household who has 
received federally-funded assistance for countable months up to the 
Tribal Time limit may continue to receive assistance. A countable 
month is a month of assistance for which the adult head-of-
household, the spouse of the head-of-household, or the minor child 
head-of-household is not exempt from the Tribal

[[Page 8547]]

time-limit provisions. Families with an adult head-of-household, a 
spouse of a head-of-house, or minor child head-of-household who have 
received countable months of assistance up to the Tribal time limit, 
may be exempt from termination of assistance. Exemptions from 
termination of assistance include a hardship exemption (as defined 
by the Tribal plan). Also, if, in the reporting month, the Family 
lives in Indian country or in an Alaskan native village where the 
percent of adults not employed is 50 percent or more, the month of 
assistance is exempt from being counted (is disregarded).
    Instruction: If the TANF family has no exemption from the Tribal 
time limit, enter code ``01''. If the TANF family does not include 
an adult head-of-household, a spouse of the head-of-household, or a 
minor child head-of-household who has received federally-funded 
assistance for the maximum number of countable months or is 
otherwise exempt from accrual of months of assistance or termination 
of assistance under the Tribal time limit for the reporting month, 
enter ``02''. If the TANF family includes an adult head-of-
household, a spouse of the head-of-household, or minor child head-
of-household who has not received federally-funded assistance for 
the maximum number of countable months or is otherwise exempt from 
accrual of months of assistance or termination of assistance under 
the Tribal time limit for the reporting month, enter ``03'', ``04'', 
or ``05'', whichever is appropriate. If the TANF family includes an 
adult head-of-household, a spouse of the head-of-household, or minor 
child head-of-household who has received assistance for the maximum 
countable months and the family is exempt from termination of 
assistance, enter code ``06'', ``07'', ``08'', ``09'', ``10'', or 
``11'', whichever is appropriate.
    01=Family is not exempt from Federal time limit.
    Family does not include an adult head-of-household, a spouse of 
the head-of-household, or minor child head-of-household who has 
received federally-funded assistance for the maximum number of 
countable months:
    02=Family is exempt from accrual of months and termination of 
assistance under the Federal five-year time limit for the reporting 
month because no adult head-of-household, a spouse of the head-of-
household, or minor child head-of-household in the eligible family 
is receiving assistance.
    Family includes an adult head-of-household, a spouse of the 
head-of-household, or minor child head-of-household, but has accrued 
less than the maximum number of months of assistance:
    03=Not to be used by Tribes.
    04=Family is exempt from accrual of months under the Tribal time 
limit for the reporting month because the family is living in Indian 
country or an Alaskan native village, where at least 50 percent of 
the adults living in the Indian country or Alaskan native village 
are not employed.
    05=Not to be used by Tribes.
    Family includes an adult head-of-household, a spouse of the 
head-of-household, or minor child head-of-household who has received 
federally-funded assistance for the maximum number of countable 
months:
    06=Not to be used by Tribes.
    07=Family is exempt from termination of assistance under the 
Tribal time limit for the reporting month due to a hardship 
exemption, battery, or extreme cruelty.
    08=Family is exempt from termination of assistance under Tribal 
policy for the reporting month based on a federally recognized good 
cause domestic violence waiver of time limits.
    09=Family is exempt from termination of assistance under the 
Federal five-year time limit for the reporting month because the 
adult head-of-household, the spouse of the head-of-household, or 
minor child head-of-household is living in Indian country or an 
Alaskan native village, where at least 50 percent of whose adults 
are not employed.
    10=Not to be used by Tribes.
    11=Not to be used by Tribes.
    29. Is the TANF Family A New Child-Only Family?
    Guidance: A child-only family is a TANF family that does not 
include an adult or a minor child head-of-household who is receiving 
TANF assistance. For purposes of this data element, a new child-only 
family is a TANF family that: (a) has received TANF assistance for 
at least two months (i.e., the reporting month and the month prior 
to the reporting month); (b) received benefits in the prior month, 
but not as a child-only case; and (c) is a child-only family for the 
reporting month. All other families--including those that are not a 
child-only case during the reporting month--are coded as ``not a 
new-child-only family'', i.e., as code ``2''.
    Instructions: If the TANF family is a new child-only family, 
enter code ``1''. Otherwise, enter code ``2''.
    1=Yes, a new child-only family.
    2=No, not a new child-only family.

Person-Level Data

    Person-level data has two sections: (1) The adult and minor 
child head-of-household characteristic section and (2) the child 
characteristics section. Section 419 of the Act defines adult and 
minor child. An adult is an individual that is not a minor child. A 
minor child is an individual who (a) has not attained 18 years of 
age or (b) has not attained 19 years of age and is a full-time 
student in a secondary school (or in the equivalent level of 
vocational or technical training).
    Detailed data elements must be reported on all individuals 
unless, for a specific data element, the instructions explicitly 
give Tribes an option to not report for a specific group of 
individuals.

Adult and Minor Child Head-of-Household Characteristics

    This section allows for coding up to six adults (or a minor 
child who is either a head-of-household or married to the head-of-
household and up to five adults) in the TANF family. A minor child 
who is either a head-of-household or married to the head-of-
household should be coded as an adult and will hereafter be referred 
to as a ``minor child head-of-household''. For each adult (or minor 
child head-of-household) in the TANF family, complete the adult 
characteristics section. A noncustodial parent is defined in section 
260.30 as a parent who lives in the State or States (in which the 
Tribal Service area is located) and does not live with his/her 
child(ren). The Tribe must report information on the noncustodial 
parent if the noncustodial parent: (1) Is receiving assistance as 
defined in Sec. 260.31; (2) is participating in work activities as 
defined in the Tribal Plan; or (3) has been designated by the Tribe 
as a member of a family receiving assistance.
    The Tribe has the option to count a family with a noncustodial 
parent receiving assistance as a two-parent family for work 
participation rate purposes. As indicated below, reporting for 
certain specified data elements in this section is optional for 
certain individuals (whose family affiliation code is a 2, 3, or 5).
    If there are more than six adults (or a minor child head-of-
household and five adults) in the TANF family, use the following 
order to identify the persons to be coded: (1) The head-of-
household; (2) parents in the eligible family receiving assistance; 
(3) other adults in the eligible family receiving assistance; (4) 
parents not in the eligible family receiving assistance; (5) 
caretaker relatives not in the eligible family receiving assistance; 
and (6) other persons whose income or resources count in determining 
eligibility for or amount of assistance of the eligible family 
receiving assistance, in descending order from the person with the 
most income to the person with least income (or resources if no 
income).
    30. Family Affiliation:
    Guidance: This data element is used both for (1) The adult and 
minor child head-of-household section and (2) the minor child 
section. The same coding schemes are used in both sections. Some of 
these codes may not be applicable for adults.
    Instruction: Enter the one-digit code that shows the adult's (or 
minor child head-of-household's) relation to the eligible family 
receiving assistance.
    1=Member of the eligible family receiving assistance.
    Not in eligible family receiving assistance, but in the 
household:
    2=Parent of minor child in the eligible family receiving 
assistance.
    3=Caretaker relative of minor child in the eligible family 
receiving assistance.
    4=Minor sibling of child in the eligible family receiving 
assistance.
    5=Person whose income or resources are considered in determining 
eligibility for or amount of assistance for the eligible family 
receiving assistance.
    31. Noncustodial Parent Indicator:
    Guidance: A noncustodial parent is defined in section 260.30 as 
a parent who lives in the State or States (in which the Tribal 
Service area is located) and does not live with his/her child(ren). 
The Tribe must report information on the noncustodial parent if the 
noncustodial parent: (1) Is receiving assistance as defined in Sec. 
260.31; (2) is participating in work activities as defined in the 
Tribal plan; or (3) has been designated by the Tribe as a member of 
a family receiving assistance.

[[Page 8548]]

    Instruction: Enter the one-digit code that indicates the adult's 
(or minor child head-of-household's) noncustodial parent status.
    1=Yes, a noncustodial parent.
    2=No.
    32. Date of Birth: Enter the eight-digit code for date of birth 
for the adult (or minor child head-of-household) under the Tribal 
TANF Program in the format YYYYMMDD. If the adult's (or minor child 
head-of-household's) date of birth is unknown and the family 
affiliation code is not ``1'', enter the code ``99999999''.
    33. Social Security Number: Enter the nine-digit Social Security 
Number for the adult (or minor child head-of-household) in the 
format nnnnnnnnn. If the social security number is unknown and the 
family affiliation code is not ``1'', enter ``999999999''.
    34. Ethnicity:
    Instruction: To allow for the multiplicity of race/ethnicity, 
please enter the one-digit code for each category of race and 
ethnicity of the TANF adult (or minor child head-of-household). 
Reporting of this data element is optional for individuals whose 
family affiliation code is 5.
    Ethnicity:
    a. Hispanic or Latino:
    1=Yes, Hispanic or Latino.
    2=No.
    Race:
    b. American Indian or Alaska Native:
    1=Yes, American Indian or Alaska Native.
    2=No.
    c. Asian:
    1=Yes, Asian.
    2=No.
    d. Black or African American:
    1=Yes, Black or African American.
    2=No.
    e. Native Hawaiian or Other Pacific Islander:
    1=Yes, Native Hawaiian or Pacific Islander.
    2=No.
    f. White:
    1=Yes, White.
    2=No.
    35. Gender: Enter the one-digit code that indicates the adult's 
(or minor child head-of-household's) gender:
    1=Male.
    2=Female.
    36. Receives Disability Benefits: The Act specifies five types 
of disability benefits. For each type of disability benefits, enter 
the one-digit code that indicates whether or not the adult (or minor 
child head-of-household) received the benefit.
    a. Receives Federal Disability Insurance Benefits Under the 
Social Security OASDI Program (Title II of the Social Security Act):
    1=Yes, received Federal disability insurance.
    2=No.
    b. Receives Benefits Based on Federal Disability Status under 
Non-Social Security Act Programs: These programs include Veteran's 
disability benefits, Worker's disability compensation, and Black 
Lung Disease disability benefits.
    1=Yes, received benefits based on Federal disability status.
    2=No.
    c. Receives Aid to the Permanently and Totally Disabled Under 
Title XIV-APDT of the Social Security Act:
    1=Yes, received aid under Title XIV-APDT.
    2=No.
    d. Receives Aid to the Aged, Blind, and Disabled Under Title 
XVI-AABD of the Social Security Act:
    1=Yes, received aid under Title XVI-AABD.
    2=No.
    e. Receives Supplemental Security Income under Title XVI-SSI of 
the Social Security Act:
    1=Yes, received aid under Title XVI-SSI.
    2=No.
    37. Marital Status: Enter the one-digit code for the adult's (or 
minor child head-of-household's) marital status for the reporting 
month. Reporting of this data element is optional for individuals 
whose family affiliation code is 5.
    1=Single, never married.
    2=Married, living together.
    3=Married, but separated.
    4=Widowed.
    5=Divorced.
    38. Relationship to Head-of-Household:
    Guidance: This data element is used both for (1) the adult or 
minor child head-of-household section and (2) the minor child 
section. The same coding schemes are used in both sections. Some of 
these codes may not be applicable for adults.
    Instruction: Enter the two-digit code that shows the adult's 
relationship (including by marriage) to the head of the household, 
as defined by the Food Stamp Program or as determined by the State 
(Tribe) (i.e., the relationship to the principal person of each 
person living in the household). If minor child head-of-household, 
enter code ``01''.
    01=Head-of-household.
    02=Spouse.
    03=Parent.
    04=Daughter or son.
    05=Stepdaughter or stepson.
    06=Grandchild or great grandchild.
    07=Other related person (brother, niece, cousin).
    08=Foster child.
    09=Unrelated child.
    10=Unrelated adult.
    39. Parent With Minor Child in the Family:
    Guidance: A parent with a minor child in the family may be a 
natural parent, adoptive parent, or step-parent of a minor child in 
the family. Reporting of this data element is optional for 
individuals whose family affiliation code is 3 or 5.
    Instruction: Enter the one-digit code that indicates the adult's 
(or minor child head-of-household's) parental status.
    1=Yes, a parent with a minor child in the family and used in 
two-parent participation rate.
    2=Yes, a parent with a minor child in the family, but not used 
in two-parent participation rate.
    3=No.
    40. Needs of a Pregnant Woman: Some States (Tribes) consider the 
needs of a pregnant woman in determining the amount of assistance 
that the TANF family receives. If the adult (or minor child head-of-
household) is pregnant and the needs associated with this pregnancy 
are considered in determining the amount of assistance for the 
reporting month, enter a ``1'' for this data element. Otherwise 
enter a ``2'' for this data element. This data element is applicable 
only for individuals whose family affiliation code is 1.
    1=Yes, additional needs associated with pregnancy are considered 
in determining the amount of assistance.
    2=No.
    41. Educational Level: Enter the two-digit code to indicate the 
highest level of education attained by the adult (or minor child 
head-of-household). Unknown is not an acceptable code for 
individuals whose family affiliation code is ``1''. Reporting of 
this data element is optional for individuals whose family 
affiliation code is 5.
    01-11=Grade level completed in primary/secondary school 
including secondary level vocational school or adult high school.
    12=High school diploma, GED, or National External Diploma 
Program.
    13=Awarded Associate's Degree.
    14=Awarded Bachelor's Degree.
    15=Awarded graduate degree (Master's or higher).
    16=Other credentials (degree, certificate, diploma, etc.).
    98=No formal education.
    99=Unknown.
    42. Citizenship/Alienage:
    Instruction: Enter the one-digit code that indicates the adult's 
(or minor child head-of-household's) citizenship/alienage. Unknown 
is not an acceptable code for individuals whose family affiliation 
code is ``1''. Reporting of this data element is optional for 
individuals whose family affiliation code is 5.
    1=U. S. citizen, including naturalized citizens.
    2=Qualified alien.
    9=Unknown.
    43. Cooperation with Child Support: Enter the one-digit code 
that indicates if the adult (or minor child head-of-household) has 
cooperated with child support. Reporting of this data element is 
optional for individuals whose family affiliation code is 5.
    1=Yes, adult (or minor child head-of-household) has cooperated 
with child support.
    2=No.
    9=Not applicable.
    44. Number of Months Countable toward Federal Time Limit: Enter 
the number of months countable toward the adult's (or minor child 
head-of-household's) Tribal time limit based on the cumulative 
amount of time the individual has received TANF from both the State 
(Tribe) and other States or Tribes. Reporting of this data element 
is optional for individuals whose family affiliation code is 2, 3, 
or 5.
    45. Number of Countable Months Remaining Under the Tribe's Time 
Limit: Enter the number of months that remain countable toward the 
adult's (or minor child head-of-household's) Tribal time limit. 
Reporting of this data element is optional for individuals whose 
family affiliation code is 2, 3, or 5.
    46. Is Current Month Exempt from the State's (Tribe's) Time 
Limit: Enter the one-digit code that indicates the adult's (or minor 
child head-of-household's) current exempt

[[Page 8549]]

status from Tribe's time limit. Reporting of this data element is 
optional for individuals whose family affiliation code is 2, 3, or 
5.
    1=Yes, adult (or minor child head-of-household) is exempt from 
the Tribe's time limit for the reporting month.
    2=No.
    47. Employment Status: Enter the one-digit code that indicates 
the adult's (or minor child head-of-household's) employment status. 
Reporting of this data element is optional for individuals whose 
family affiliation code is 5.
    1=Employed.
    2=Unemployed, looking for work.
    3=Not in labor force (i.e., unemployed, not looking for work, 
includes discouraged workers).
    48. Work Participation Status:
    Guidance: This item is used in calculating the work 
participation rates. The following two definitions are used in 
reporting this item and in determining which families are included 
in and excluded from the calculations.
    ``Disregarded'' from the participation rate means the TANF 
family is not included in the calculation of the work participation 
rate.
    ``Exempt'' means that the individual will not be penalized for 
failure to engage in work (i.e., good cause exception); however, the 
TANF family is included in the calculation of the work participation 
rate.
    A Tribe is not required to disregard all families that could be 
disregarded. For example, a family with a single custodial parent 
with a child under 12 months (and the parent has not been 
disregarded for 12 months) may be disregarded. However, if the 
single custodial parent is meeting the work requirements, the Tribe 
may want to include the family in its work participation rate. In 
this situation, the Tribe should use work participation status code 
``19'' rather than code ``01''.
    Instruction: Enter the two-digit code that indicates the adult's 
(or minor child head-of-household's) work participation status. If 
the State chooses to include the noncustodial parent in the two-
parent work participation rate, the State must code the data element 
``Type of Family for Work Participation Rate'' with a ``2'' and 
enter the applicable code for this data element. If a State chooses 
to exclude the noncustodial parent from the two-parent work 
participation rate, the State must code the data element ``Type of 
Family for Work Participation'' with a ``1'' and code the data 
element ``Work Participation Status'' for the noncustodial parent 
with a ``99''. This data element is not applicable for individuals 
whose family affiliation code is 2, 3, 4, or 5 (i.e., use code 
``99'' or leave blank).
    01=Disregarded from participation rate, single custodial parent 
with child under 12 months.
    02=Disregarded from participation rate because all of the 
following apply: required to participate, but not participating; and 
sanctioned for the reporting month, but not sanctioned for more than 
3 months within the preceding 12-month period (Note, this code 
should be used only in a month for which the family is disregarded 
from the participation rate. While one or more adults may be 
sanctioned in more than 3 months within the preceding 12-month 
period, the family may not be disregarded from the participation 
rate for more than 3 months within the preceding 12-month period).
    03=Disregarded, family is part of an ongoing research evaluation 
(as a member of a control group or experimental group) approved 
under Section 1115 of the Social Security Act.
    04=Not applicable to Tribes.
    05=Not applicable to Tribes.
    06=Exempt, single custodial parent with child under age 6 and 
child care unavailable.
    07=Exempt, disabled.
    08=Exempt, caring for a severely disabled child.
    09=Exempt, under a federally recognized good cause domestic 
violence waiver.
    10=Not applicable to Tribes.
    11=Exempt, other.
    12=Required to participate, but not participating; sanctioned 
for the reporting month; and sanctioned for more than 3 months 
within the preceding 12-month period.
    13=Required to participate, but not participating; and 
sanctioned for the reporting month, but not sanctioned for more than 
3 months within the preceding 12-month period.
    14=Required to participate, but not participating; and not 
sanctioned for the reporting month.
    15=Deemed engaged in work--single teen head-of-household or 
married teen who maintains satisfactory school attendance.
    16=Deemed engaged in work--single teen head-of-household or 
married teen who participates in education directly related to 
employment for an average of at least 20 hours per week during the 
reporting month.
    17=Deemed engaged in work--parent or relative (who is the only 
parent or caretaker relative in the family) with child under age 6 
and parent engaged in work activities for at least 20 hours per 
week.
    18=Required to participate and participating, but not meeting 
minimum participation requirements.
    19=Required to participate and meeting minimum participation 
requirements.
    99=Not applicable (e.g., person living in household and whose 
income or resources are counted in determining eligibility for or 
amount of assistance of the family receiving assistance, but not in 
eligible family receiving assistance or noncustodial parent that the 
Tribe opted to exclude in determining participation rate).

Adult Work Participation Activities

    Guidance: To calculate the average number of hours per week of 
participation in a work activity, add the number of hours of 
participation across all weeks in the month and divide by the number 
of weeks in the month. Round to the nearest whole number.
    Some weeks have days in more than one month. Include such a week 
in the calculation for the month that contains the most days of the 
week (e.g., the week of July 27-August 2, 1997 would be included in 
the July calculation). Acceptable alternatives to this approach must 
account for all weeks in the fiscal year. One acceptable alternative 
is to include the week in the calculation for whichever month the 
Friday falls (i.e., the JOBS approach). A second acceptable 
alternative is to count each month as having 4. 33 weeks.
    During the first or last month of any spell of assistance, a 
family may happen to receive assistance for only part of the month. 
If a family receives assistance for only part of a month, the State 
(Tribe) may count it as a month of participation if an adult (or 
minor child head-of-household) in the family (both adults, if they 
are both required to work) is engaged in work for the minimum 
average number of hours for any full week(s) that the family 
receives assistance in that month.
    Special Rules: Each adult (or minor child head-of-household) has 
a life-time limit for vocational educational training. Vocational 
educational training may only count as a work activity for a total 
of 12 months. For any adult (or minor child head-of-household) that 
has exceeded this limit, enter ``0'' as the average number of hours 
per week of participation in vocational education training, even if 
(s)he is engaged in vocational education training. The additional 
participation in vocational education training may be coded under 
``Other''.
    Limitations: The four limitations \1\ concerning job search and 
job readiness are:
---------------------------------------------------------------------------

    \1\ A Tribe, which has negotiated different limitations, should 
use their best judgment to determine which code to use.
---------------------------------------------------------------------------

    (1) Job search and job readiness assistance only count for 6 
weeks in any fiscal year;
    (2) An individual's participation in job search and job 
readiness assistance counts for no more than 4 consecutive weeks;
    (3) If the Tribe's total unemployment rate for a fiscal year is 
at least 50 percent greater than the United States' total 
unemployment rate for that fiscal year, then an individual's 
participation in job search or job readiness assistance counts for 
up to 12 weeks in that fiscal year; and
    (4) A State may count 3 or 4 days of job search and job 
readiness assistance during a week as a full week of participation, 
but only once for any individual. For each week in which an adult 
(or minor child head-of-household) exceeds any of these limitations, 
use ``0'' as the number of hours in calculating the average number 
of hours per week of job search and job readiness, even if (s)he may 
be engaged in job search or job readiness activities.
    Instruction: For each work activity in which the adult (or minor 
child head-of-household) participated during the reporting month, 
enter the average number of hours per week of participation, except 
as noted above. For each work activity in which the adult (or minor 
child head-of-household) did not participate, enter zero as the 
average number of hours per week of participation. These work 
activity data elements are applicable only for individuals whose 
family affiliation code is 1.
    49. Unsubsidized Employment.
    50. Subsidized Private-Sector Employment.
    51. Subsidized Public-Sector Employment.
    52. Work Experience.
    53. On-the-job Training.
    54. Job Search and Job Readiness Assistance.
    Instruction: As noted above, the statute limits participation in 
job search and job

[[Page 8550]]

readiness training in four ways. Enter, in this data element, the 
average number of hours per week of participation in job search and 
job readiness training that are within the statutory limitations.
    Otherwise, count the additional hours of work participation 
under the work activity ``Other Work Activities''.
    55. Community Service Programs.
    56. Vocational Educational Training:
    Instruction: As noted above, the statute contains special rules 
limiting an adult's (or minor child head-of-household's) 
participation in vocational educational training to twelve months. 
Enter, in this data element, the average number of hours per week of 
participation in vocational educational training that are within the 
statutory limits.
    57. Job Skills Training Directly Related to Employment.
    58. Education Directly Related to Employment for Individuals 
with no High School Diploma or Certificate of High School 
Equivalency.
    59. Satisfactory School Attendance for Individuals with No High 
School Diploma or Certificate of High School Equivalency.
    60. Providing Child Care Services to an Individual Who Is 
Participating in a Community Service Program.
    61. This data element is not applicable for Tribes. If the 
Tribe's approved plan contains work activities not listed above, the 
total average hours for those activities should be reported in data 
element 62 ``Other Work Activities''.
    62. Other Work Activities: Tribes should report total average 
hours for activities not elsewhere reported.
    63. Required Hours of Work under Waiver Demonstration: Not 
applicable to Tribes. Leave blank.
    64. Amount of Earned Income: Enter the dollar amount of the 
adult's (or minor child head-of-household's) earned income for the 
reporting month or for the month used to budget for the reporting 
month. Include wages, salaries, and other earned income in this 
item.
    65. Amount of Unearned Income: Unearned income has five 
categories. For each category of unearned income, enter the dollar 
amount of the adult's (or minor child head-of-household's) unearned 
income for the reporting month or for the month used to budget for 
the reporting month.
    a. Earned Income Tax Credit (EITC):
    Guidance: Earned Income Tax Credit is a refundable Federal, 
State, or local tax credit for families and dependent children. EITC 
payments are received monthly (as advance payment through the 
employer), annually (as a refund from IRS), or both.
    Instruction: Enter the total dollar amount of the Earned Income 
Tax Credit actually received, whether received as an advance payment 
or a single payment (e.g., tax refund), by the adult (or minor child 
head-of-household) during the reporting month or the month used to 
budget for the reporting month. If the State counts the EITC as a 
resource, report it here as unearned income in the month received 
(i.e., reporting month or budget month, whichever the State is 
using). If the State assumes an advance payment is applied for and 
obtained, only report what is actually received for this item.
    b. Social Security: Enter the dollar amount of Social Security 
benefits that the adult in the State (Tribal) TANF family has 
received for the reporting month or for the month used to budget for 
the reporting month.
    c. SSI: Enter the dollar amount of SSI that the adult in the 
State (Tribal) TANF family has received for the reporting month or 
for the month used to budget for the reporting month.
    d. Worker's Compensation: Enter the dollar amount of Worker's 
Compensation that the adult in the State (Tribal) TANF family has 
received for the reporting month or for the month used to budget for 
the reporting month.
    e. Other Unearned Income:
    Guidance: Other unearned income includes (but is not limited to) 
RSDI benefits, Veterans benefits, Unemployment Compensation, other 
government benefits, a housing subsidy, a contribution or income-in-
kind, deemed income, Public Assistance or General Assistance, 
educational grants/scholarships/loans, and other. Do not include 
EITC, Social Security, SSI, Worker's Compensation, value of food 
stamp assistance, the amount of a Child Care subsidy, or the amount 
of Child Support.
    Instruction: Enter the dollar amount of other unearned income 
that the adult in the State TANF family has received for the 
reporting month or for the month used to budget for the reporting 
month.

Child Characteristics

    This section allows for coding the child characteristics for up 
to ten children in the TANF family. A minor child head-of-household 
should be coded as an adult, not as a child. The youngest child 
should be coded as the first child in the family, the second 
youngest child as the second child, and so on. If there are more 
than ten children in the TANF family, use the following order to 
identify the persons to be coded: (1) Children in the eligible 
family receiving assistance in order from youngest to oldest; (2) 
minor siblings of child in the eligible family receiving assistance 
from youngest to oldest; and (3) any other children.
    66. Family Affiliation:
    Guidance: This data element is used both for (1) the adult or 
minor child head-of-household section and (2) the minor child 
section. The same coding schemes are used in both sections. Some of 
these codes may not be applicable for children.
    Instruction: Enter the one-digit code that shows the child's 
relation to the eligible family receiving assistance.
    1=Member of the eligible family receiving assistance.
    Not in eligible family receiving assistance, but in the 
household
    2=Parent of minor child in the eligible family receiving 
assistance.
    3=Caretaker relative of minor child in the eligible family 
receiving assistance.
    4=Minor sibling of child in the eligible family receiving 
assistance.
    5=Person whose income or resources are considered in determining 
eligibility for or amount of assistance for the eligible family 
receiving assistance.
    67. Date of Birth: Enter the eight-digit code for date of birth 
for this child under the State (Tribal) TANF Program in the format 
YYYYMMDD. If the child's date of birth is unknown and the family 
affiliation code is not ``1'', enter the code ``99999999''.
    68. Social Security Number: Enter the nine-digit Social Security 
Number for the child in the format nnnnnnnnn. Reporting of this data 
element is optional for individuals whose family affiliation code is 
4. If the Social Security number is unknown and the family 
affiliation code is not ``1'', enter ``999999999''.
    69. Race/Ethnicity:
    Instruction: To allow for the multiplicity of race/ethnicity, 
please enter the one-digit code for each category of race and 
ethnicity of the TANF adult (or minor child head-of-household). 
Reporting of this data element is optional for individuals whose 
family affiliation code is 5.
    Ethnicity:
    a. Hispanic or Latino:
    1=Yes, Hispanic or Latino.
    2=No.
    Race:
    b. American Indian or Alaska Native:
    1=Yes, American Indian or Alaska Native.
    2=No.
    c. Asian:
    1=Yes, Asian.
    2=No.
    d. Black or African American:
    1=Yes, Black or African American.
    2=No.
    e. Native Hawaiian or Other Pacific Islander:
    1=Yes, Native Hawaiian or Pacific Islander.
    2=No.
    f. White:
    1=Yes, White.
    2=No.
    70. Gender: Enter the one-digit code that indicates the adult's 
(or minor child head-of-household's) gender:
    1=Male.
    2=Female.
    71. Receives Disability Benefits: The Act specifies five types 
of disability benefits. Two of these types of disability benefits 
are applicable to children. For each type of disability benefits, 
enter the one-digit code that indicates whether or not the child 
received the benefit.
    a. Receives Benefits Based on Federal Disability Status under 
Non-Social Security Act Programs: These programs include Veteran's 
disability benefits, Worker's disability compensation, and Black 
Lung Disease disability benefits.
    1=Yes, received benefits based on Federal disability status.
    2=No.
    b. Receives Supplemental Security Income under Title XVI-SSI of 
the Social Security Act:
    1=Yes, received aid under Title XVI-SSI.
    2=No.
    72. Relationship to Head-of-Household:
    Guidance: This data element is used both for (1) the adult or 
minor child head-of-household section and (2) the minor child 
section. The same coding schemes are used in both sections. Some of 
these codes may not be applicable for children.

[[Page 8551]]

    Instruction: Enter the two-digit code that shows the child's 
relationship (including by marriage) to the head of the household, 
as defined by the Food Stamp Program or as determined by the Tribe, 
(i.e., the relationship to the principal person of each person 
living in the household. )
    01=Head-of-household.
    02=Spouse.
    03=Parent.
    04=Daughter or son.
    05=Stepdaughter or stepson.
    06=Grandchild or great grandchild.
    07=Other related person (brother, niece, cousin).
    08=Foster child.
    09=Unrelated child.
    10=Unrelated adult.
    73. Parent With Minor Child in the Family:
    Guidance: This data element is used both for (1) the adult or 
minor child head-of-household section and (2) the minor child 
section. The same coding schemes are used in both sections. Code 
``1'' is not applicable for children. A parent with a minor child in 
the family may be a natural parent, adoptive parent, or step-parent 
of a minor child in the family. Reporting of this data element is 
optional for individuals whose family affiliation code is 4 or 5.
    Instruction: Enter the one-digit code that indicates the child's 
parental status.
    1=Yes, a parent with a minor child in the family and used in 
two-parent participation rate.
    2=Yes, a parent with a minor child in the family, but not used 
in two-parent participation rate.
    3=No.
    74. Educational Level: Enter the two-digit code to indicate the 
highest level of education attained by the child. Unknown is not an 
acceptable code for individuals whose family affiliation code is 
``1''. Reporting of this data element is optional for individuals 
whose family affiliation code is 4.
    01-11=Grade level completed in primary/secondary school 
including secondary level vocational school or adult high school.
    12=High school diploma, GED, or National External Diploma 
Program.
    13=Awarded Associate's Degree.
    14=Awarded Bachelor's Degree.
    15=Awarded graduate degree (Master's or higher).
    16=Other credentials (degree, certificate, diploma, etc. ).
    98=No formal education.
    99=Unknown.
    75. Citizenship/Alienage:
    Instruction: Enter the one-digit code that indicates the child's 
citizenship/alienage. Unknown is not an acceptable code for an 
individual whose family affiliation code is ``1''. Reporting of this 
data element is optional for individuals whose family affiliation 
code is ``4''.
    1=U. S. citizen, including naturalized citizens.
    2=Qualified alien.
    9=Unknown.
    76. Amount of Unearned Income: Unearned income has two 
categories. For each category of unearned income, enter the dollar 
amount of the child's unearned income.
    a. SSI: Enter the dollar amount of SSI that the child in the 
State (Tribal) TANF family has received for the reporting month or 
for the month used to budget for the reporting month.
    b. Other Unearned Income: Enter the dollar amount of other 
unearned income that the child in the State (Tribal) TANF family has 
received for the reporting month or for the month used to budget for 
the reporting month.

APPENDIX B.--TANF Disaggregated Data Collection for Families No Longer 
Receiving Assistance Under the TANF Program--Closed Cases

Instructions and Definitions

    General Instruction: The Tribal grantee should collect and 
report data for each data element. The data must be complete (unless 
explicitly instructed to leave the field blank) and accurate (i.e., 
correct).
    An ``Unknown'' code may appear only on four data elements (#15 
Date of Birth, #16 Social Security Number, #24 Educational Level, 
and #25 Citizenship/Alienage). For these data elements, unknown is 
not an acceptable code for individuals who are members of the 
eligible family (i.e., family affiliation code ``1''). States are 
not expected to track closed cases in order to collect information 
on families for months after the family has left the rolls. Rather, 
States are to report based on the last month of assistance.
    1. State FIPS Code: Tribal grantees should enter ``00'' or leave 
blank.
    2. County FIPS Code: Tribal grantees should leave this field 
blank.
    3. Tribal Code: For Tribal grantees, enter the three-digit 
Tribal code that represents your Tribe. See Appendix E of the TANF 
Sampling and Statistical Methods Manual for a complete listing of 
Tribal Codes. If there appears to be no code for your Tribe, 
immediately contact the Director, Division of Tribal Services, 
Office of Community Services. Newly formed consortiums must contact 
the Division to obtain a code. State agencies should leave this 
field blank.
    4. Reporting Month: Enter the four-digit year and two-digit 
month code that identifies the year and month for which the data are 
being reported.
    5. Stratum:
    Guidance: If a Tribe opts to provide data for its entire 
caseload (i.e., does not select a sample of cases to report on), the 
Tribe may use this data element for its own coding purposes as long 
as a two digit numerical code is specified.
    Instruction: Enter any two-digit numerical code.

Family-Level Data

    Definition: For reporting purposes, the TANF family means:
    (a) All individuals receiving assistance as part of a family 
under the State's (Tribe's) TANF Program; and
    (b) The following additional persons living in the household, if 
not included under (a) above:
    (1) Parent(s) or caretaker relative(s) of any minor child 
receiving assistance;
    (2) Minor siblings (including unborn children) of any child 
receiving assistance; and
    (3) Any person whose income or resources would be counted in 
determining the family's eligibility for or amount of assistance.
    6. Case Number--TANF:
    Guidance: If the case number is less than the allowable eleven 
characters, a State may use lead zeros to fill in the number.
    Instruction: Enter the number that was assigned by the State 
agency or Tribal grantee to uniquely identify the TANF family.
    7. ZIP Code: Enter the five-digit ZIP code for the family's 
place of residence for the reporting month.
    8. Disposition:
    Guidance: If a Tribe opts to report on its entire caseload, the 
only applicable code for the Tribe is ``1''.
    Instructions: Enter code ``1''.
    9. Reason for Closure:
    Guidance: A closed case is a family whose assistance was 
terminated for the reporting month, but received assistance under 
the State's TANF Program in the prior month. A temporarily suspended 
case is not a closed case. If there is more than one applicable 
reason for closure, determine the principal (i.e., most relevant) 
reason. If two or more reasons are equally relevant, use the reason 
with the lowest numeric code. For example, when an adult marries, 
the income and resources of the new spouse are considered in 
determining eligibility. If, at the time of the marriage, the family 
becomes ineligible because of the addition of the spouse's income 
and/or resources, the case closure should be coded using code ``2''.
    If the family did not become ineligible based on the income and 
resources at the time of the marriage, but rather due to an increase 
in earnings subsequent to the marriage, then the case closure should 
be coded using code ``1''.
    Instruction: Enter the two-digit code that indicates the reason 
for the TANF family no longer receiving assistance.
    01=Employment and/or excess earnings.
    02=Marriage.
    03=Not applicable to Tribes.
    Sanctions:
    04=Work-related sanction.
    05=Child support sanction.
    06=Teen parent failing to meet school attendance requirement.
    07=Teen parent failing to live in an adult setting.
    08=Failure to finalize an individual responsibility plan (e.g., 
did not sign plan).
    09=Failure to meet individual responsibility plan provision or 
other behavioral requirements (e.g., immunize a minor child, attend 
parenting classes).
    State (Tribal) Policies:
    10=Tribal time limit reached.
    11=Child support collected.
    12=Excess unearned income (exclusive of child support 
collected).
    13=Excess resources.
    14=Youngest child too old to qualify for assistance.
    15=Minor child absent from the home for a significant time 
period.
    16=Failure to appear at eligibility/redetermination appointment, 
submit

[[Page 8552]]

required verification materials, and/or cooperate with eligibility 
requirements.
    17=For Tribes, transfer to a State program, another program of 
the reporting Tribe or another Tribe's TANF program.
    Other.
    18=Family voluntarily closes the case.
    99=Other.
    10. Received Subsidized Housing:
    Guidance: Subsidized housing refers to housing for which money 
was paid by the Federal, State, Tribal, or local government or 
through a private social service agency to the family or to the 
owner of the housing to assist the family in paying rent. Two 
families sharing living expenses does not constitute subsidized 
housing.
    Instruction: Enter the one-digit code that indicates whether or 
not the TANF family received subsidized housing for the reporting 
month (or for the last month of TANF assistance).
    1=Public housing.
    2=Rent subsidy.
    3=No housing subsidy.
    11. Received Medical Assistance: Enter ``1'' if, for the 
reporting month (or for the last month of TANF assistance), any TANF 
family member was enrolled in Medicaid and, thus eligible to receive 
medical assistance under the State plan approved under Title XIX or 
``2''' if no TANF family member was enrolled in Medicaid.
    1=Yes, enrolled in Medicaid.
    2=No.
    12. Received Food Stamps: Enter the one-digit code that 
indicates whether or not the TANF family received food stamp 
assistance for the reporting month (or for the last month of TANF 
assistance).
    1=Yes, received food stamp assistance.
    2=No.
    13. Received Subsidized Child Care:
    Instruction: If the TANF family received subsidized child care 
for services in the reporting month (or for the last month of TANF 
assistance), enter code ``1'' or ``2'', whichever is appropriate. 
Otherwise, enter code ``3''.
    1=Yes, received federally funded (entirely or in part) child 
care (e.g., receives either TANF, CCDF, SSBG, or other federally 
funded child care).
    2=Yes, received child care funded entirely under a State, 
Tribal, and/or local program (i.e., no Federal funds used).
    3=No.

Person-Level Data

    This section allows for coding up to sixteen persons in the TANF 
family. If there are more than sixteen persons in the TANF family, 
use the following order to identify the persons to be coded:
    (1) the head-of-household;
    (2) parents in the eligible family receiving assistance;
    (3) children in the eligible family receiving assistance;
    (4) other adults in the eligible family receiving assistance;
    (5) parents not in the eligible family receiving assistance;
    (6) caretaker relatives not in the eligible family receiving 
assistance;
    (7) minor siblings of a child in the eligible family; and
    (8) other persons, whose income or resources count in 
determining eligibility for or amount of assistance of the eligible 
family receiving assistance, in descending order from the person 
with the most income to the person with the least income (resources 
if no income).
    As indicated below, reporting for certain specified data 
elements in this section is optional for certain individuals (whose 
family affiliation code is a 2, 3, 4, or 5).
    14. Family Affiliation:
    Instruction: Enter the one-digit code that shows the 
individual's relation to the eligible family receiving assistance.
    1=Member of the eligible family receiving assistance. Not in 
eligible family receiving assistance, but in the household:
    2=Parent of minor child in the eligible family receiving 
assistance.
    3=Caretaker relative of minor child in the eligible family 
receiving assistance.
    4=Minor sibling of child in the eligible family receiving 
assistance.
    5=Person whose income or resources are considered in determining 
eligibility for or amount of assistance for the eligible family 
receiving assistance.
    15. Date of Birth: Enter the eight-digit code for date of birth 
for this individual under TANF in the format YYYYMMDD. If the 
individual's date of birth is unknown and the individual's family 
affiliation code is not ``1,'' enter the code ``99999999''.
    16. Social Security Number: Enter the nine-digit Social Security 
Number for the individual in the format nnnnnnnnn. If the social 
security number is unknown and the individual's family affiliation 
code is not ``1,'' enter ``999999999''.
    17. Race/Ethnicity: Instructions: To allow for the multiplicity 
of race/ethnicity, please enter the one-digit code for each category 
of race and ethnicity of the TANF individual. Reporting of this data 
element is optional for individuals whose family affiliation code is 
4 or 5.
    Ethnicity:
    a. Hispanic or Latino:
    1=Yes, Hispanic or Latino.
    2=No.
    Race:
    b. American Indian or Alaska Native:
    1=Yes, American Indian or Alaska Native.
    2=No.
    c. Asian:
    1=Yes, Asian.
    2=No.
    d. Black or African American:
    1=Yes, Black or African American.
    2=No.
    f. Native Hawaiian or Other Pacific Islander:
    1=Yes, Native Hawaiian or Pacific Islander.
    2=No.
    g. White:
    1=Yes, White.
    2=No.
    18. Gender: Enter the one-digit code that indicates the 
individual's gender.
    1=Male.
    2=Female.
    19. Received Disability Benefits:
    Instructions: The Act specifies five types of disability 
benefits. For each type of disability benefits, enter the one-digit 
code that indicates whether or not the individual received the 
benefit.
    a. Received Federal Disability Insurance Benefits Under the 
Social Security OASDI Program (Title II of the Social Security Act):
    Enter the one-digit code that indicates the adult received 
Federal disability insurance benefits for the reporting month (or 
the last month of TANF assistance). This item is not required to be 
coded for a child.
    1=Yes, received Federal disability insurance.
    2=No.
    b. Receives Benefits Based on Federal Disability Status under 
Non-Social Security Act Programs: These programs include Veteran's 
disability benefits, Worker's disability compensation, and Black 
Lung Disease disability benefits. Enter the one-digit code that 
indicates the individual received benefits based on Federal 
disability status for the reporting month (or the last month of TANF 
assistance). This data element should be coded for each adult and 
child with family affiliation code ``1''.
    1=Yes, received benefits based on Federal disability status.
    2=No.
    c. Received Aid to the Permanently and Totally Disabled Under 
Title XIV-APDT of the Social Security Act: Enter the one-digit code 
that indicates the adult received aid under a State plan approved 
under Title XIV for the reporting month (or the last month of TANF 
assistance). This item is not required to be coded for a child.
    1=Yes, received aid under Title XIV-APDT.
    2=No.
    d. Received Aid to the Aged, Blind, and Disabled Under Title 
XVI-AABD of the Social Security Act: Enter the one-digit code that 
indicates the adult received aid under a State plan approved under 
Title XVI-AABD for the reporting month (or the last month of TANF 
assistance). This item is not required to be coded for a child.
    1=Yes, received aid under Title XVI-AABD.
    2=No.
    e. Received Supplemental Security Income Under Title XVI-SSI of 
the Social Security Act: Enter the one-digit code that indicates the 
individual received aid under a State plan approved under Title XVI-
SSI for the reporting month (or the last month of TANF assistance). 
This data element should be coded for each adult and child with 
family affiliation code ``1''.
    1=Yes, received aid under Title XVI-SSI.
    2=No.
    20. Marital Status: Enter the one-digit code for the marital 
status of the adult recipient. Reporting of this data element is 
optional for individuals whose family affiliation code is 4 or 5.
    1=Single, never married.
    2=Married, living together.
    3=Married, but separated.
    4=Widowed.
    5=Divorced.
    21. Relationship to Head-of-Household:
    Instruction: Enter the two-digit code that shows the 
individual's relationship (including by marriage) to the head of the 
household, as defined by the Food Stamp

[[Page 8553]]

Program or as determined by the State (Tribe), (i.e., the 
relationship to the principal person of each person living in the 
household.) If a minor child head-of-household, enter code ``01''.
    01=Head-of-household.
    02=Spouse.
    03=Parent.
    04=Daughter or son.
    05=Stepdaughter or stepson.
    06=Grandchild or great grandchild.
    07=Other related person (brother, niece, cousin).
    08=Foster child.
    09=Unrelated child.
    10=Unrelated adult.
    22. Parent With Minor Child in the Family:
    Guidance: A parent with a minor child in the family may be a 
natural parent, adoptive parent, or step-parent of a minor child in 
the family. Reporting of this data element is optional for 
individuals whose family affiliation code is 3, 4, or 5.
    Instruction: Enter the one-digit code that indicates the 
individual's parental status.
    1=Yes, a parent with a minor child in the family.
    2=No.
    23. Needs of a Pregnant Woman: Some States (Tribes) consider the 
needs of a pregnant woman in determining the amount of assistance 
that the TANF family receives. If the individual was pregnant and 
the needs associated with this pregnancy were considered in 
determining the amount of assistance for the last month of TANF 
assistance, enter a ``1'' for this data element. Otherwise enter a 
``2'' for this data element. This data element is applicable only 
for individuals whose family affiliation code is 1.
    1=Yes, additional needs associated with pregnancy were 
considered in determining the amount of assistance.
    2=No.
    24. Educational Level: Enter the two-digit code to indicate the 
highest level of education attained by the individual. Unknown is 
not an acceptable code for individuals whose family affiliation code 
is ``1''. Reporting of this data element is optional for individuals 
whose family affiliation code is 4 or 5.
    01--11=Grade level completed in primary/secondary school 
including secondary level vocational school or adult high school.
    12=High school diploma, GED, or National External Diploma 
Program.
    13=Awarded Associate's Degree.
    14=Awarded Bachelor's Degree.
    15=Awarded graduate degree (Master's or higher).
    16=Other credentials (degree, certificate, diploma, etc. ).
    98=No formal education.
    99=Unknown.
    25. Citizenship/Alienage:
    Instruction: Enter the one-digit code that indicates the adult's 
(or minor child head-of-household's) citizenship/alienage. Unknown 
is not an acceptable code for an individual whose family affiliation 
code is ``1''. Reporting of this data element is optional for 
individuals whose family affiliation code is 4 or 5.
    1=U. S. citizen, including naturalized citizens.
    2=Qualified alien.
    9=Unknown.
    26. Number of Months Countable toward Tribal Time Limit: Enter 
the number of months countable toward the adult's (or minor child 
head-of-household's) Tribal time limit based on assistance received 
from (1) the Tribe and (2) from other Tribes or from States. 
Reporting of this data element is optional for individuals whose 
family affiliation code is 2, 3, 4, or 5.
    27. Number of Countable Months Remaining Under Tribe's Time 
Limit: Enter the number of months that remain countable toward the 
adult's (or minor child head-of-household's) Tribal time limit. 
Reporting of this data element is optional for individuals whose 
family affiliation code is 2, 3, 4, or 5.
    28. Employment Status: Enter the one-digit code that indicates 
the adult's (or minor child head-of-household's) employment status. 
Leave this field blank for other minor children. Reporting of this 
data element is optional for individuals whose family affiliation 
code is 4 or 5.
    1=Employed.
    2=Unemployed, looking for work.
    3=Not in labor force (i.e., unemployed and not looking for work, 
includes discouraged workers).
    29. Amount of Earned Income: Enter the amount of the adult's (or 
minor child head-of-household's) earned income for the last month on 
assistance or for the month used to budget for the last month on 
assistance.
    30. Amount of Unearned Income: Enter the dollar amount of the 
individual's unearned income for the last month on assistance or for 
the month used to budget for the last month on assistance.

Appendix C--TANF Aggregated Data Collection for Families Applying for, 
Receiving, and No Longer Receiving Assistance Under the TANF Program

Instructions and Definitions

    General Instruction: The State agency or Tribal grantee is to 
collect and report data for each data element, unless explicitly 
instructed to leave the field blank. Monthly caseload counts (e.g., 
number of families, number of two-parent families, and number of 
closed cases) and number of recipients must be unduplicated monthly 
totals. States and Tribal grantees may use samples to estimate the 
monthly totals only for data elements #4, #5, #6, #15, #16, and #17.
    1. State FIPS Code: Tribal grantees should enter ``00'' or leave 
blank.
    2. Tribal Code: For Tribal grantees only, enter the three-digit 
Tribal code that represents your Tribe. See Appendix E of the TANF 
Sampling and Statistical Methods Manual for a complete listing of 
Tribal Codes. If there appears to be no code for your Tribe, 
immediately contact the Director, Division of Tribal Services, 
Office of Community Services. Newly formed consortiums must contact 
the Division to obtain a code. State agencies should leave this 
field blank.
    3. Calendar Quarter: The four calendar quarters are as follows:
    1=First quarter--January-March.
    2=Second quarter--April-June.
    3=Third quarter--July-September.
    4=Fourth quarter--October-December.
    Enter the four-digit year and one-digit quarter code (in the 
format YYYYQ) that identifies the calendar year and quarter for 
which the data are being reported (e.g., first quarter of 1997 is 
entered as ``19971'').

Applications

    Guidance: The term ``application'' means the action by which an 
individual indicates in writing to the agency administering the 
State (or Tribal) TANF Program his/her desire to receive assistance.
    Instruction: All counts of applications should be unduplicated 
monthly totals.
    4. Total Number of Applications: Enter the total number of 
approved and denied applications received for each month of the 
quarter. For each month in the quarter, the total in this item 
should equal the sum of the number of approved applications (in item 
#5) and the number of denied applications (in item #6). The monthly 
totals for this element may be estimated from samples.
    A. First Month:
    B. Second Month:
    C. Third Month:
    5. Total Number of Approved Applications: Enter the number of 
applications approved during each month of the quarter. The monthly 
totals for this element may be estimated from samples.
    A. First Month:
    B. Second Month:
    C. Third Month:
    6. Total Number of Denied Applications: Enter the number of 
applications denied (or otherwise disposed of) during each month of 
the quarter. The monthly totals for this element may be estimated 
from samples.
    A. First Month:
    B. Second Month:
    C. Third Month:

Active Cases

    For purposes of completing this report, include all TANF 
eligible cases receiving assistance (i.e., cases funded under the 
TANF block grant) as cases receiving assistance under the Tribal 
TANF Program. All counts of families and recipients should be 
unduplicated monthly totals.
    7. Total Amount of Assistance: Enter the dollar value of all 
assistance (cash and non-cash) provided to TANF families under the 
State (Tribal) TANF Program for each month of the quarter. Round the 
amount of assistance to the nearest dollar.
    A. First Month:
    B. Second Month:
    C. Third Month:
    8. Total Number of Families: Enter the number of families 
receiving assistance under the State (Tribal) TANF Program for each 
month of the quarter. The total in this item should equal the sum of 
the number of two-parent families (in item #9), the number of one-
parent families (in item #10) and the number of no-parent families 
(in item #11).
    A. First Month:
    B. Second Month:
    C. Third Month:
    9. Total Number of Two-parent Families: Enter the total number 
of 2-parent families receiving assistance under the State (Tribal) 
TANF Program for each month of the quarter.

[[Page 8554]]

    A. First Month:
    B. Second Month:
    C. Third Month:
    10. Total Number of One-Parent Families: Enter the total number 
of one-parent families receiving assistance under the State (Tribal) 
TANF Program for each month of the quarter.
    A. First Month:
    B. Second Month:
    C. Third Month:
    11. Total Number of No-Parent Families: Enter the total number 
of no-parent families receiving assistance under the State (Tribal) 
TANF Program for each month of the quarter.
    A. First Month:
    B. Second Month:
    C. Third Month:
    12. Total Number of Recipients: Enter the total number of 
recipients receiving assistance under the State (Tribal) TANF 
Program for each month of the quarter. The total in this item should 
equal the sum of the number of adult recipients (in item #13) and 
the number of child recipients (in item #14).
    A. First Month:
    B. Second Month:
    C. Third Month:
    13. Total Number of Adult Recipients: Enter the total number of 
adult recipients receiving assistance under the State (Tribal) TANF 
Program for each month of the quarter.
    A. First Month:
    B. Second Month:
    C. Third Month:
    14. Total Number of Child Recipients: Enter the total number of 
child recipients receiving assistance under the State (Tribal) TANF 
Program for each month of the quarter.
    A. First Month:
    B. Second Month:
    C. Third Month:
    15. Total Number of Noncustodial Parents Participating in Work 
Activities: Enter the total number of noncustodial parents 
participating in work activities (even if not receiving assistance) 
under the State (Tribal) TANF Program for each month of the quarter. 
The monthly totals for this element may be estimated from samples.
    A. First Month:
    B. Second Month:
    C. Third Month:
    16. Total Number of Births: Enter the total number of births in 
families receiving assistance under the State (Tribal) TANF Program 
for each month of the quarter. The monthly totals for this element 
may be estimated from samples.
    A. First Month:
    B. Second Month:
    C. Third Month:
    17. Total Number of Out-of-Wedlock Births: Enter the total 
number of out-of-wedlock births in families receiving assistance 
under the State (Tribal) TANF Program for each month of the quarter. 
The monthly totals for this element may be estimated from samples. 
Tribes should report this data based on their historical cultural 
interpretation of out-of-wedlock.
    A. First Month:
    B. Second Month:
    C. Third Month:

Closed Cases

    18. Total Number of Closed Cases: Enter the total number of 
closed cases for each month of the quarter.
    A. First Month:
    B. Second Month:
    C. Third Month:

PART 287--THE NATIVE EMPLOYMENT WORKS (NEW) PROGRAM

Subpart A--General NEW Provisions
Sec.
287.1  What does this part cover?
287.5  What is the purpose and scope of the NEW Program?
287.10  What definitions apply to this part?
Subpart B--Eligible Tribes
287.15  Which Tribes are eligible to apply for NEW Program grants?
287.20  May a Public Law 102-477 Tribe operate a NEW Program?
287.25  May Tribes form a consortium to operate a NEW Program?
287.30  If an eligible consortium breaks up, what happens to the NEW 
Program grant?
Subpart C--NEW Program Funding
287.35  What grant amounts are available under the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA) for the NEW Program?
287.40  Are there any matching funds requirements with the NEW 
Program?
287.45  How can NEW Program funds be used?
287.50  What are the funding periods for NEW Program grants?
287.55  What time frames and guidelines apply regarding the 
obligation and liquidation periods for NEW Program funds?
287.60  Are there additional financial reporting and auditing 
requirements?
287.65  What OMB circulars apply to the NEW Program?
Subpart D--Plan Requirements
287.70  What are the plan requirements for the NEW Program?
287.75  When does the plan become effective?
287.80  What is the process for plan review and approval?
287.85  How is a NEW plan amended?
287.90  Are Tribes required to complete any certifications?
287.95  May a Tribe operate both a NEW Program and a Tribal TANF 
program?
287.100  Must a Tribe that operates both NEW and Tribal TANF 
programs submit two separate plans?
Subpart E--Program Design and Operations
287.105  What provisions of the Social Security Act govern the NEW 
Program?
287.110  Who is eligible to receive assistance or services under a 
Tribe's NEW Program?
287.115  When a NEW grantee serves TANF recipients, what 
coordination should take place with the Tribal or State TANF agency?
287.120  What work activities may be provided under the NEW Program?
287.125  What supportive and job retention services may be provided 
under the NEW Program?
287.130  Can NEW Program activities include job market assessments, 
job creation and economic development activities?
287.135  Are bonuses, rewards and stipends allowed for participants 
in the NEW Program?
287.140  With whom should the Tribe coordinate in the operation of 
its work activities and services?
287.145  What measures will be used to determine NEW Program 
outcomes?
Subpart F--Data Collection and Reporting Requirements
287.150  Are there data collection requirements for Tribes who 
operate a NEW Program?
287.155  What reports must a grantee file with the Department about 
its program operations?
287.160  What reports must a grantee file regarding financial 
operations?
287.165  What are the data collection and reporting requirements for 
Public Law 102-477 Tribes that consolidate a NEW Program with other 
programs?
287.170  What are the data collection and reporting requirements for 
a Tribe that operates both the NEW Program and a Tribal TANF 
program?

    Authority:  42 U.S.C. 612.

Subpart A--General NEW Provisions


Sec. 287.1  What does this part cover?

    (a) The regulations in this part prescribe the rules for 
implementing section 412(a)(2) of the Social Security Act (the Act), as 
amended by the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (PRWORA) (Pub. L. 104-193) and the Balanced 
Budget Act of 1997 (Pub. L. 105-33).
    (b) Section 412(a)(2) of the Act, as amended, authorizes the 
Secretary to issue grants to eligible Indian tribes to operate a 
program that makes work activities available to ``such population and 
such service area or areas as the tribe specifies.''
    (c) We call this Tribal work activities program the Native 
Employment Works (NEW) program.
    (d) These regulations specify the Tribes who are eligible to 
receive NEW Program funding. They also prescribe requirements for: 
funding; program plan development and approval; program design and 
operation; and data collection and reporting.


Sec. 287.5  What is the purpose and scope of the NEW Program?

    The purpose of the NEW Program is to provide eligible Indian 
tribes, including Alaska Native organizations,

[[Page 8555]]

the opportunity to provide work activities and services to their needy 
clients.


Sec. 287.10  What definitions apply to this part?

    The following definitions apply to this part:
    ACF means the Administration for Children and Families;
    Act means the Social Security Act, unless we specify otherwise;
    Alaska Native organization means an Alaska Native village, or 
regional or village corporation, as defined in or established pursuant 
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), 
that is eligible to operate a Federal program under the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450);
    Consortium means a group of Tribes working together for the same 
identified purpose and receiving combined NEW funding for that purpose.
    Department means the Department of Health and Human Services;
    Division of Tribal Services (DTS) means the unit in the Office of 
Community Services within the Department's Administration for Children 
and Families that has as its primary responsibility the administration 
of the Tribal family assistance program, called the Tribal Temporary 
Assistance for Needy Families (TANF) program, and the Tribal work 
program, called the Native Employment Works (NEW) program, as 
authorized by section 412(a);
    Eligible Indian tribe means an Indian tribe, a consortium of Indian 
tribes, or an Alaska Native organization that operated a Tribal Job 
Opportunities and Basic Skills Training (JOBS) program in fiscal year 
1995 under section 482(i) of the Act, as in effect during that fiscal 
year;
    Fiscal year means the 12-month period beginning on October 1 of the 
preceding calendar year and ending on September 30;
    FY means fiscal year;
    Indian, Indian tribe, and Tribal organization--The terms Indian, 
Indian tribe, and Tribal organization have the meaning given such terms 
by section 4 of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450b);
    Native Employment Works Program means the Tribal work program under 
section 412(a)(2) of the Act;
    NEW means the Native Employment Works Program;
    Program Year means, for the NEW Program, the 12-month period 
beginning on July 1 of the calendar year and ending on June 30;
    PRWORA means the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996, Public Law 104-193;
    Public Law 102-477 refers to the Indian Employment, Training and 
Related Services Demonstration Act of 1992, whose purpose is to provide 
for the integration of employment, training and related services to 
improve the effectiveness of those services;
    Secretary means the Secretary of the Department of Health and Human 
Services;
    State means, except as otherwise specifically provided, the 50 
States of the United States, the District of Columbia, the Commonwealth 
of Puerto Rico, the United States Virgin Islands, Guam, and American 
Samoa;
    TANF means the Temporary Assistance for Needy Families Program;
    Temporary Assistance for Needy Families Program means a family 
assistance grant program operated either by a Tribe under section 
412(a)(1) of the Act or by a State under section 403 of the Act;
    Tribal TANF program means a Tribal program subject to the 
requirements of section 412 of the Act which is funded by TANF funds on 
behalf of eligible families;
    We (and any other first person plural pronouns) refers to The 
Secretary of Health and Human Services, or any of the following 
individuals or organizations acting in an official capacity on the 
Secretary's behalf: The Assistant Secretary for Children and Families, 
the Regional Administrators for Children and Families, the Department 
of Health and Human Services, and the Administration for Children and 
Families.

Subpart B--Eligible Tribes


Sec. 287.15  Which Tribes are eligible to apply for NEW Program grants?

    To be considered for a NEW Program grant, a Tribe must be an 
``eligible Indian tribe.'' An eligible Indian tribe is an Indian tribe 
or Alaska Native organization that operated a Job Opportunities and 
Basic Skills Training (JOBS) program in FY 1995.


Sec. 287.20  May a Public Law 102-477 Tribe operate a NEW Program?

    Yes, if the Tribe is an ``eligible Indian tribe.''


Sec. 287.25  May Tribes form a consortium to operate a NEW Program?

    (a) Yes, as long as each Tribe forming the consortium is an 
``eligible Indian tribe.''
    (b) To apply for and conduct a NEW Program, the consortium must 
submit a plan to ACF.
    (c) The plan must include a copy of a resolution from each Tribe 
indicating its membership in the consortium and authorizing the 
consortium to act on its behalf in regard to administering a NEW 
Program. If an Alaska Native organization forms a consortium, 
submission of the required resolution from the governing board of the 
organization is sufficient to satisfy this requirement.


Sec. 287.30  If an eligible consortium breaks up, what happens to the 
NEW Program grant?

    (a) If a consortium should break up or any Tribe withdraws from a 
consortium, it will be necessary to allocate unobligated funds and 
future grants among the Tribes that were members of the consortium, if 
each individual Tribe obtains ACF approval to continue to operate a NEW 
Program.
    (b) Each withdrawing Tribe must submit to ACF a copy of the Tribal 
resolution that confirms the Tribe's decision to withdraw from the 
consortium and indicates whether the Tribe elects to continue its 
participation in the program.
    (c) The allocation can be accomplished by any method that is 
recommended and agreed to by the leaders of those Tribes.
    (d) If no recommendation is made by the Tribal leaders or no 
agreement is reached, the Secretary will determine the allocation of 
funds based on the best available data.

Subpart C--NEW Program Funding


Sec. 287.35  What grant amounts are available under the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) 
for the NEW Program?

    Each Tribe shall receive a grant in an amount equal to the amount 
received by the Tribe in FY 1994 under section 482(i) of the Act (as in 
effect during FY 1994).


Sec. 287.40  Are there any matching funds requirements with the NEW 
Program?

    No, Tribal grantees are not required to match NEW Federal funds.


Sec. 287.45  How can NEW Program funds be used?

    (a) NEW grants are for making work activities available to such 
population as the Tribe specifies.
    (b) NEW funds may be used for work activities as defined by the 
Tribal grantee.
    (c) Work activities may include supportive services necessary for 
assisting NEW Program participants in preparing for, obtaining, and/or 
retaining employment.

[[Page 8556]]

Sec. 287.50  What are the funding periods for NEW Program grants?

    NEW Program funds are for operation of the NEW Program for a 12-
month period from July 1 through June 30.


Sec. 287.55  What time frames and guidelines apply regarding the 
obligation and liquidation periods for NEW Program funds?

    (a) NEW Program funds provided for a FY are for use during the 
period July 1 through June 30 and must be obligated no later than June 
30. Carry forward of an unobligated balance of NEW funds is not 
permitted. A NEW fund balance that is unobligated as of June 30 will be 
returned to the Federal government through the issuance of a negative 
grant award. Unobligated funds are to be reported on the SF-269A that 
Tribes must submit within 30 days after the funding period, i.e., no 
later than July 30. This report is called the interim financial report.
    (b) A Tribe must liquidate all obligations incurred under the NEW 
Program grant awards not later than one year after the end of the 
obligation period, i.e., no later than June 30 of the following FY. An 
unliquidated balance at the close of the liquidation period will be 
returned to the Federal government through the issuance of a negative 
grant award. Unliquidated obligations are to be reported on the SF-269A 
that Tribes must submit within 90 days after the liquidation period, 
i.e., by September 28. This report is called the final financial 
report.


Sec. 287.60  Are there additional financial reporting and auditing 
requirements?

    (a) The reporting of expenditures are generally subject to the 
requirements of 45 CFR 92.41.
    (b) NEW Program funds and activities are subject to the audit 
requirement of the Single Audit Act of 1984 (45 CFR 92.26).
    (c) A NEW Program grantee must comply with all laws, regulations, 
and Departmental policies that govern submission of financial reports 
by recipients of Federal grants.
    (d) Improper expenditure claims under this program are subject to 
disallowance.
    (e) If a grantee disagrees with the Agency's decision to disallow 
funds, the grantee may follow the appeal procedures at 45 CFR Part 16.


Sec. 287.65  What OMB circulars apply to the NEW Program?

    NEW Programs are subject to the following OMB circulars where 
applicable: A-87 ``Cost Principles for State, Local, and Indian Tribal 
Governments,'' A-122 ``Cost Principles for Non-Profit Organizations,'' 
and A-133 ``Audits of States and Local Governments.''

Subpart D--Plan Requirements


Sec. 287.70  What are the plan requirements for the NEW Program?

    (a) To apply for and conduct a NEW Program, a Tribe must submit a 
plan to ACF.
    (b) The plan must identify the agency responsible for administering 
the NEW Program and include a description of the following:
    (1) Population to be served;
    (2) Service area;
    (3) Client services;
    (4) Work activities to be provided;
    (5) Supportive and job retention services to be provided;
    (6) Anticipated program outcomes, and the measures the Tribe will 
use to determine them; and
    (7) Coordination activities conducted and expected to be conducted 
with other programs and agencies.
    (c) The plan must also describe how the Tribe will deliver work 
activities and services.
    (d) The format is left to the discretion of each NEW grantee.


Sec. 287.75  When does the plan become effective?

    NEW plans, which are three-year plans, become effective when 
approved by the Secretary. The plans are usually operative the 
beginning of a NEW Program year, July 1.


Sec. 287.80  What is the process for plan review and approval?

    (a) A Tribe must submit its plan to the ACF Regional Office, with a 
copy sent to the Division of Tribal Services, Office of Community 
Services, Administration for Children and Families, Attention: Native 
Employment Works Team.
    (b) To receive funding by the beginning of the NEW Program year 
(July 1), a Tribe must submit its plan by the established due date.
    (c) ACF will complete its review of the plan within 45 days of 
receipt.
    (d) After the plan review has occurred, if the plan is approvable, 
ACF will approve the plan, certifying that the plan meets all necessary 
requirements. If the plan is not approvable, the Regional Office will 
notify the Tribe regarding additional action needed for plan approval.


Sec. 287.85  How is a NEW plan amended?

    (a) If a Tribe makes substantial changes in its NEW Program plan or 
operations, it must submit an amendment for the changed section(s) of 
the plan to the appropriate ACF Regional Office for review and 
approval, with a copy sent to the Division of Tribal Services, Office 
of Community Services, Administration of Children and Families, 
Attention: Native Employment Works Team. The review will verify 
consistency with section 412(a)(2) of the Act.
    (b) A substantial change is a change in the agency administering 
the NEW Program, a change in the designated service area and/or 
population, a change in work activities provided or a change in 
performance standards.
    (c) A substantial change in plan content or operations must be 
submitted to us no later than 45 days prior to the proposed 
implementation date.
    (d) ACF will complete the review of the amended plan within 45 days 
of receipt.
    (e) An amended plan becomes effective when it is approved by the 
Secretary.


Sec. 287.90  Are Tribes required to complete any certifications?

    Yes. A Tribe must include in its NEW Program plan the following 
four certifications and any additional certifications that the 
Secretary prescribes in the planning guidance: Certification Regarding 
Debarment, Suspension, and Other Responsibility Matters--Primary 
Covered Transactions; Certification Regarding Drug Free Workplace 
Requirements for Grantees Other Than Individuals; Certification 
Regarding Tobacco Smoke, and Assurances--Non-Construction Programs.


Sec. 287.95  May a Tribe operate both a NEW Program and a Tribal TANF 
program?

    Yes. However, the Tribe must adhere to statutory and regulatory 
requirements of the individual programs.


Sec. 287.100  Must a Tribe that operates both NEW and Tribal TANF 
programs submit two separate plans?

    Yes. Separate plans are needed to reflect different program and 
plan requirements as specified in the statute and in plan guidance 
documents issued by the Secretary for each program.

Subpart E--Program Design and Operations


Sec. 287.105  What provisions of the Social Security Act govern the NEW 
Program?

    NEW Programs are subject only to those requirements at section 
412(a)(2) of the Act, as amended by PRWORA, titled ``Grants for Indian 
Tribes that Received JOBS Funds.''

[[Page 8557]]

Sec. 287.110  Who is eligible to receive assistance or services under a 
Tribe's NEW Program?

    (a) A Tribe must specify in its NEW Program plan the population and 
service area to be served. In cases where a Tribe designates a service 
area for its NEW Program that is different from its Bureau of Indian 
Affairs (BIA) service area, an explanation must be provided.
    (b) A Tribe must include eligibility criteria in its plan and 
establish internal operating procedures that clearly specify the 
criteria to be used to establish an individual's eligibility for NEW 
services. The eligibility criteria must be equitable.


Sec. 287.115  When a NEW grantee serves TANF recipients, what 
coordination should take place with the Tribal or State TANF agency?

    The Tribe should coordinate with the Tribal or State TANF agency 
on:
    (a) Eligibility criteria for TANF recipients to receive NEW Program 
services;
    (b) Exchange of case file information;
    (c) Changes in client status that result in a loss of cash 
assistance, food stamps, Medicaid or other medical coverage;
    (d) Identification of work activities that may meet Tribal or State 
work participation requirements;
    (e) Resources available from the Tribal or State TANF agency to 
ensure efficient delivery of benefits to the designated service 
population;
    (f) Policy for exclusions from the TANF program (e.g., criteria for 
exemptions and sanctions);
    (g) Termination of TANF assistance when time limits become 
effective;
    (h) Use of contracts in delivery of TANF services;
    (i) Prevention of duplication of services to assure the maximum 
level of services is available to participants;
    (j) Procedures to ensure that costs of other program services for 
which welfare recipients are eligible are not shifted to the NEW 
Program; and
    (k) Reporting data for TANF quarterly and annual reports.


Sec. 287.120  What work activities may be provided under the NEW 
Program?

    (a) The Tribe will determine what work activities are to be 
provided.
    (b) Examples of allowable activities include, but are not limited 
to: Educational activities, alternative education, post secondary 
education, job readiness activity, job search, job skills training, 
training and employment activities, job development and placement, on-
the-job training (OJT), employer work incentives related to OJT, 
community work experience, innovative approaches with the private 
sector, pre/post employment services, job retention services, 
unsubsidized employment, subsidized public or private sector 
employment, community service programs, entrepreneurial training, 
management training, job creation activities, economic development 
leading to job creation, and traditional subsistence activities.


Sec. 287.125  What supportive and job retention services may be 
provided under the NEW Program?

    The NEW Program grantee may provide, pay for or reimburse expenses 
for supportive services, including but not limited to transportation, 
child care, traditional or cultural work related services, and other 
work or family sufficiency related expenses that the Tribe determines 
are necessary to enable a client to participate in the program.


Sec. 287.130  Can NEW Program activities include job market 
assessments, job creation and economic development activities?

    (a) A Tribe may conduct job market assessments within its NEW 
Program. These might include the following:
    (1) Consultation with the Tribe's economic development staff or 
leadership that oversees the economic and employment planning for the 
Tribe;
    (2) Consultation with any local employment and training program, 
Workforce Development Boards, One-Stop Centers, or planning agencies 
that have undertaken economic and employment studies for the area in 
which the Tribe resides;
    (3) Communication with any training, research, or educational 
agencies that have produced economic development plans for the area 
that may or may not include the Tribe; and
    (4) Coordination with any State or local governmental agency 
pursuing economic development options for the area.
    (b) The Tribe's NEW Program may engage in activities and provide 
services to create jobs and economic opportunities for its 
participants. These services should be congruous with any available 
local job market assessments and may include the following:
    (1) Tribal Employment Rights Office (TERO) services;
    (2) Job creation projects and services;
    (3) Self-employment;
    (4) Self-initiated training that leads a client to improved job 
opportunities and employment;
    (5) Economic development projects that lead to jobs, improved 
employment opportunities, or self-sufficiency of program participants;
    (6) Surveys to collect information regarding client 
characteristics; and
    (7) Any other development and job creation activities that enable 
Tribal members to increase their economic independence and reduce their 
need for benefit assistance and supportive services.


Sec. 287.135  Are bonuses, rewards and stipends allowed for 
participants in the NEW Program?

    Bonuses, stipends, and performance awards are allowed. However, 
such allowances may be counted as income in determining eligibility for 
some TANF or other need-based programs.


Sec. 287.140  With whom should the Tribe coordinate in the operation of 
its work activities and services?

    The administration of work activities and services provided under 
the NEW Program must ensure that appropriate coordination and 
cooperation is maintained with the following entities operating in the 
same service areas as the Tribe's NEW Program:
    (a) State, local and Tribal TANF agencies, and agencies operating 
employment and training programs;
    (b) Any other agency whose programs impact the service population 
of the NEW Program, including employment, training, placement, 
education, child care, and social programs.


Sec. 287.145  What measures will be used to determine NEW Program 
outcomes?

    Each grantee must develop its own performance standards and 
measures to ensure accountability for its program results. A Tribe's 
program plan must identify planned program outcomes and the measures 
the Tribe will use to determine them. ACF will compare planned outcomes 
against outcomes reported in the Tribe's annual reports.

Subpart F--Data Collection and Reporting Requirements


Sec. 287.150  Are there data collection requirements for Tribes that 
operate a NEW Program?

    (a) Yes, the Tribal agency or organization responsible for 
operation of a NEW Program must collect data and submit reports as 
specified by the Secretary.
    (b) A NEW Program grantee must establish and maintain efficient and 
effective record-keeping systems to provide accurate and timely 
information regarding its service population.
    (c) Required reports will provide Tribes, the Secretary, Congress, 
and other interested parties with information to assess the success of 
the NEW Program in meeting its goals. Also, the reports will provide 
the Secretary with information for monitoring program and financial 
operations.

[[Page 8558]]

Sec. 287.155  What reports must a grantee file with the Department 
about its NEW Program operations?

    (a) Each eligible Tribe must submit an annual report that provides 
a summary of program operations.
    (b) The Secretary has developed an annual operations report (OMB 
clearance number 0970-0174). The report specifies the data elements on 
which grantees must report, including elements that provide information 
regarding the number and characteristics of those served by the NEW 
Program. This report is in addition to any financial reports required 
by law, regulations, or Departmental policies.
    (c) The report form and instructions are distributed through ACF's 
program instruction system.
    (d) The program operations report will be due September 28th, 90 
days after the close of the NEW Program year.


Sec. 287.160  What reports must a grantee file regarding financial 
operations?

    (a) Grantees will use SF-269A to make an annual financial report of 
expenditures for program activities and services.
    (b) Two annual financial reports will be due to the appropriate 
Regional Office. The interim SF-269A is due no later than July 30, 
i.e., 30 days after the end of the obligation period. The final SF-269A 
is due 90 days after the end of the liquidation period.


Sec. 287.165  What are the data collection and reporting requirements 
for Public Law 102-477 Tribes that consolidate a NEW Program with other 
programs?

    (a) Currently, there is a single reporting system for all programs 
operated by a Tribe under Public Law 102-477. This system includes a 
program report, consisting of a narrative report, a statistical form, 
and a financial report.
    (1) The program report is required annually and submitted to BIA, 
as the lead Federal agency and shared with DHHS and DOL.
    (2) The financial report is submitted on a SF-269A to BIA.
    (b) Information regarding program and financial operations of a NEW 
Program administered by a Public Law 102-477 Tribe will be captured 
through the existing Public Law 102-477 reporting system.


Sec. 287.170  What are the data collection and reporting requirements 
for a Tribe that operates both the NEW Program and a Tribal TANF 
program?

    Tribes operating both NEW and Tribal TANF programs must adhere to 
the separate reporting requirements for each program. NEW Program 
reporting requirements are specified in Secs. 287.150-287.170.

[FR Doc. 00-3342 Filed 2-17-00; 8:45 am]
BILLING CODE 4184-01-P