[Federal Register Volume 89, Number 125 (Friday, June 28, 2024)]
[Rules and Regulations]
[Pages 53870-53877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13865]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 265

RIN 0970-AD04


Temporary Assistance for Needy Families Work Outcomes Measures

AGENCY: Office of Family Assistance (OFA), Administration for Children 
and Families (ACF), Department of Health and Human Services (HHS).

ACTION: Interim final rule.

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SUMMARY: This interim final rule modifies ACF regulations in order to 
implement the statutory changes enacted by section 304 of the Fiscal 
Responsibility Act of 2023 (FRA) related to the reporting of work 
outcomes under the Temporary Assistance for Needy Families (TANF) 
program. ACF is promulgating this rule as an interim final rule to 
ensure states and territories have sufficient time to comply with data 
collection for fiscal year 2025.

DATES: This interim final rule (IFR) is effective on October 1, 2024. 
Comments on this IFR must be received on or before December 26, 2024.

ADDRESSES: ACF encourages the public to submit comments electronically 
to ensure they are received in a timely manner. You may submit 
comments, identified by Regulatory Information Number (RIN) 0970-AD04, 
by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
    Instructions: All submissions received must include the agency name 
and RIN (0970-AD04) for this rulemaking. All comments received will be 
posted without change to https://www.regulations.gov,including any 
personal information provided.
    We will not consider comments received beyond the 180-day comment 
period in modifying the interim final rule. You may find the following 
suggestions helpful for preparing your comments:
     Be specific;
     Address only issues raised by the rulemaking in the 
interim final rule and the information collections, not the changes to 
the statute itself;
     Explain reasons for any objections or recommended changes;
     Propose appropriate alternatives; and
     Reference the specific section of the interim final rule 
being addressed.
    You can obtain copies of the proposed collection of information and 
submit comments by emailing [email protected]. Identify all 
requests by the title of the information collection.

FOR FURTHER INFORMATION CONTACT: Lauren Frohlich, TANF Data Division, 
Office of Family Assistance, ACF, at [email protected] or 202-401-
9275. Deaf and hard of hearing individuals may call 202-401-9275 
through their chosen relay service or 711 between 8 a.m. and 7 p.m. 
Eastern Time.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background
II. Themes From Consultation and Research
    A. Workforce System Alignment
    B. Equity
III. Regulations
    A. Definition of Exit
    B. Work Outcomes Data Sources
    C. Federal Matching for Calculating Work Outcomes of TANF 
Exiters
    D. State-Level Matching for the Supplemental Work Outcomes 
Report
    E. Secondary School Diploma or its Recognized Equivalent 
Attainment Rate
IV. Justification for Interim Final Rule
V. Collection of Information Requirements
    A. Reports
    B. Request for Feedback
    C. Review and Approval of the Information Collection
VI. Regulatory Review and Analysis

I. Background

    The Fiscal Responsibility Act (FRA) of 2023, Public Law 118-5, 
requires each state, in consultation with the Secretary of the 
Department of Health and Human Services (HHS), to collect and report 
information relating to work outcomes measures for work-eligible 
individuals in the Temporary Assistance for Needy Families (TANF) 
Program. Section 304 of the legislation requires HHS to issue 
regulations implementing these new requirements. It states, ``in order 
to ensure nationwide comparability of data, the Secretary, after 
consultation with the Secretary of Labor and with States, shall issue 
regulations governing the reporting of performance indicators under 
this subsection.''
    We are updating the existing TANF data regulations (45 CFR part 
265, Data Collection and Reporting Requirements) to reflect the new 
reporting requirements. ``Each state . . . shall collect and submit to 
the Secretary the information necessary for each indicator. . . .'' 
Section 304. ``State'' is defined to mean ``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.'' 42 U.S.C. 619 
(5). States and territories must begin reporting on those requirements 
in fiscal year (FY) 2025. For the remainder of the preamble, we will 
use the term ``states'' to refer to states and territories. These 
provisions do not apply to Tribal TANF programs.
    Section 304 of the FRA specifies that to ensure nationwide 
comparability of data, all states must collect and submit ``the 
information necessary'' to determine four indicators of performance. 
These are:
     Employment Rate--2nd Quarter After Exit: The percentage of 
individuals who were work-eligible individuals as of the time of exit 
from the program, who are in unsubsidized employment during the second 
quarter after the exit;
     Employment Retention Rate--4th Quarter After Exit: The 
percentage of individuals who were work-eligible individuals as of the 
time of exit from the program who were in unsubsidized employment in 
the second quarter after the exit, who are also in unsubsidized

[[Page 53871]]

employment during the fourth quarter after the exit;
     Median Earnings--2nd Quarter After Exit: The median 
earnings of individuals who were work-eligible individuals as of the 
time of exit from the program, who are in unsubsidized employment 
during the second quarter after the exit; and
     Secondary School Diploma or its Recognized Equivalent 
Attainment Rate: The percentage of individuals who have not attained 24 
years of age, are attending high school or enrolled in an equivalency 
program, and are work-eligible individuals or were work-eligible 
individuals as of the time of exit from the program, who obtain a high 
school degree or its recognized equivalent while receiving assistance 
under the state program funded under this part or within one year after 
the exit.
    Further, the statute required HHS to consult with states and the 
Department of Labor (DOL) before issuing regulations. In response, HHS 
engaged in consultation including issuing a Request for Information 
(RFI) (88 FR 82902, November 27, 2023) providing states and the general 
public with an opportunity to provide input, hosted listening sessions 
with state TANF leadership and data leads, held meetings with the DOL 
and the Department of Education (ED), and had discussions with 
practitioners and researchers as part of the Workforce IT Support 
Center Steering Committee and the National Association of Welfare 
Research Statistics annual conference. Through these discussions, we 
identified promising practices and recommendations for policy options.

II. Themes From Consultation and Research

    Written responses to ACF's RFI included responses from state TANF 
agencies and social services departments, national associations that 
represent state and county human services agencies, and a small number 
of advocacy groups. The use of ``state'' in the summary of comments 
below refers to both states who responded directly and associations who 
collected comments and responded on behalf of member states.

A. Workforce System Alignment

    TANF's new statutory work outcomes measures are similar to the 
performance measures established by the Workforce Innovation and 
Opportunity Act of 2014 (WIOA). DOL and ED shared lessons learned from 
implementing WIOA that inform our implementation of TANF's work 
outcomes measures, such as factors impacting the implementation 
timeline and data quality across sources. States also shared their 
experiences with WIOA and several respondents encouraged ACF--in 
partnership with DOL--to support opportunities for state workforce and 
human services agencies to engage in peer learning and information 
sharing around the new measures. They requested ACF, where possible, 
foster the alignment through shared definitions, data sources, and 
report timeframes. They noted that supporting alignment with WIOA 
outcome reporting strengthens collaboration between TANF and the 
broader workforce system, which will yield operational efficiencies 
across programs, identification of promising practices, a more client-
centered culture, and improved service delivery.
    We appreciate the time and attention that respondents gave to 
reviewing the RFI and preparing their comments. This IFR seeks to make 
the new reporting requirements as useful as possible for program 
improvement, considers the challenges of implementation, and provides 
flexibility for states when possible.

B. Equity

    The Office of Family Assistance (OFA) is committed to improving the 
equitable administration of all OFA programs for the children and 
families we serve. In the RFI, we asked in what ways equity should be 
considered when implementing work outcome measures.
    Respondents expressed gratitude for our consideration of equity in 
the implementation of the work outcomes measures. All noted the 
advantages of collecting and reporting data disaggregated by race, 
ethnicity, age, disability, and other demographic characteristics or 
geography.
    We appreciate the importance of understanding outcome disparities 
in the TANF program, and we are committed to providing increased 
technical assistance to states on how to use their own data to 
understand outcomes disparities in the TANF program so that they can 
better ensure equity throughout the system.
    Respondents also made suggestions for practices in the context of 
work outcomes that could support equity. We remain committed to 
supporting states as they identify and explore meaningful ways of 
addressing disparities and ensuring equity.

III. Regulations

    The following discussion provides information on the changes we are 
making in 45 CFR part 265. We discuss how we will operationalize the 
statutory changes enacted in the FRA related to the reporting of work 
outcomes under the TANF program.
    In Sec.  265.2, ``What definitions apply to this part?'', we added 
definitions of ``exit'' and ``unsubsidized employment'' for the purpose 
of calculating the Work Outcomes of TANF Exiters Report and the 
Secondary School Diploma or its Recognized Equivalent Attainment Rate. 
We also defined ``secondary school diploma'' and its ``recognized 
equivalent.''
    We added two new reporting requirements. States are required to 
submit the data required for the Work Outcomes of TANF Exiters Report 
quarterly and the Secondary School Diploma or its Recognized Equivalent 
Attainment Rate annually. The regulation also includes the option for 
states to voluntarily submit their own calculated work outcomes 
measures. The regulation details what to include in the supplemental 
report for states who choose to submit one. In addition to submitting 
the Work Outcomes of TANF Exiters Report, any state that does not have 
an Unemployment Insurance program and thus is currently unable to 
submit quarterly wage data to the ACF-designated wage match source will 
be required to submit the Supplemental Work Outcomes Report.
    Other revisions:
     Section 265.1 What does this part cover?--replaced 
outdated reference to section 413 (rankings of State TANF programs) 
with section 411(f).
     Section 265.3 What reports must the State file on a 
quarterly basis?-- added quarterly report Work Outcomes of TANF Exiters 
Report and details of (1) Employment Rate--2nd Quarter After Exit; (2) 
Employment Retention Rate--4th Quarter After Exit; and (3) Median 
Earnings--2nd Quarter After Exit.
     Section 265.4 When are quarterly reports due?--added Work 
Outcomes of TANF Exiters Report.
     Section 265.5 May States use sampling?--clarified that 
sampling is not allowed for either Work Outcomes of TANF Exiters Report 
or Secondary School Diploma or its Recognized Equivalent Attainment 
Rate and moves that clause to paragraph (d).
     Section 265.6 Must States file reports electronically?--
added Work Outcomes of TANF Exiters Report, Secondary School Diploma or 
its Recognized Equivalent Attainment Rate, and Supplemental Work 
Outcomes Report.
     Section 265.7 How will we determine if the State is 
meeting the quarterly reporting requirements?--

[[Page 53872]]

added requirements for Work Outcomes of TANF Exiters Report.
     Section 265.9 What information must the State file 
annually?--added paragraphs (f), the Secondary School Diploma or its 
Recognized Equivalent Attainment Rate, and (g), Supplemental Work 
Outcomes Report.
     Section 265.10 When are annual reports due?--clarified due 
dates of all annual reports in Sec.  265.9.

A. Definition of Exit

    The work outcomes measures depend on a definition of what it means 
to ``exit'' the TANF program. The legislation defines ``exit'' as, 
``with respect to a State program funded under this part, ceases to 
receive assistance under the program funded by this part.''
    We believe, and states concurred during consultation, that further 
clarification of what it means to ``exit'' the TANF program is 
necessary to ensure consistency across states' interpretations of the 
exiting population. Research studies and state respondents warned about 
the issue of ``churn,'' in which individuals and families cycle on and 
off the TANF caseload due to temporary jobs, shifting life 
circumstances, sanctions, or terminations of assistance for not meeting 
program administrative requirements. We note that TANF ``leavers'' 
studies from the early 2000s often defined a ``leaver'' as someone who 
has left cash assistance for at least two months, while WIOA defines a 
``common exit'' as a participant not receiving DOL-administered 
services for at least 90 days.\1\ DOL, states, researchers, and 
advocacy organizations all recommended that the TANF work outcomes 
measures align with WIOA's performance measures as much as possible, in 
order to support coordination between TANF and WIOA programs and their 
shared participants. That approach is supported by the statutory 
language requiring the Department to consult with DOL. For these 
reasons, and to account for the impact of churn, we are defining 
``exit'' as a family having not received TANF assistance for at least 
90 days. We are using ``family'' in the definition to account for the 
cases where, for example, due to sanction, the state removes the needs 
of the work-eligible individual from the assistance payment while 
continuing to provide assistance to the family. In other words, a work-
eligible individual will be included as an exiter in these measures 
only when their family ceases to receive assistance, and will not meet 
the definition of an exiter when the needs of the work-eligible 
individual are removed from the assistance payment but the family 
continues to receive assistance. An individual in the family must have 
been ``a work-eligible individual,'' as defined in 45 CFR 261.2(n)(1), 
in their last month of assistance.
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    \1\ See https://aspe.hhs.gov/tanf-leavers-applicants-caseload-studies and https://www.dol.gov/agencies/eta/performance/definitions.
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    Multiple respondents to the RFI stressed the importance of taking 
into account the reasons someone would exit TANF. Some individuals may 
have been taken off TANF because of a sanction for noncompliance with 
work activities, while others obtained jobs or moved out of state. 
States are currently required to report to ACF on the reasons for case 
closure in section two (2) of the TANF Data Report (ACF-199). However, 
states interpret and use the reporting categories of reasons for case 
closure inconsistently. For instance, on average, states reported that 
34 percent of closed cases were closed due to ``other/unknown'' 
reasons, but across states that percentage ranged from 5 to 98 percent 
in FY 2022.\2\ While OFA has decided not to use this IFR to modify the 
data reporting elements for case closure, we encourage states to 
improve the quality of their reporting for the existing data element in 
the TANF Data Report (ACF-199). OFA will include recommendations in 
guidance to states on how to improve the quality of this data element.
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    \2\ Characteristics and Financial Circumstances of TANF 
Recipients, Fiscal Year 2022, Office of Family Assistance, 
Administration for Children and Families (https://www.acf.hhs.gov/ofa/data/characteristics-and-financial-circumstances-tanf-recipients-fiscal-year-2022).
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    We note that some states may move individuals out of the TANF 
program and into separate state programs (funded by maintenance-of-
effort funds) or solely state-funded programs (not reported as 
maintenance-of-effort). For some states, these may be distinctly 
different programs, while for other states the difference may just be 
the funding source. The statute clearly states ``with respect to State 
program funded under this part'' which refers only to the TANF program, 
and not separate state programs or solely state-funded programs. 
Therefore, when considering who exited TANF for this data collection, 
states should include those work-eligible individuals who were moved to 
separate state programs or solely-state funded programs and have not 
received TANF-funded assistance in at least 90 days.

B. Work Outcomes Data Sources

    States are proud of the work they are doing to improve TANF 
outcomes. Some states are already collecting and studying data for 
employment, retention, and income and are eager to share the results 
and best practices. These states explained both the benefits and 
drawbacks of the systems they use. Many included specific timelines, 
charts, and other visuals to depict the level of complexity involved. 
Others offered their templates and experience to ACF as we develop 
guidance and technical assistance products.
    States that have already implemented similar measures rely on wage 
data for administration of state programs, using a combination of 
sources including state departments of labor, state unemployment 
insurance wage records, the State Wage Interchange System (SWIS), and 
the National Directory of New Hires (NDNH).\3\
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    \3\ State Welfare (``TANF'' or ``IV-A'') Agencies are authorized 
to request NDNH information to carry out state responsibilities 
under programs funded under part A of title IV of the Social 
Security Act, specifically 42 U.S.C. 653(j)(3). Section 304 of the 
FRA amended section 411 of the Social Security Act (42 U.S.C. 611) 
to specify that each state, in consultation with the Secretary of 
HHS, shall collect and submit the information necessary for the 
reporting of work outcomes for fiscal year 2025 and each fiscal year 
thereafter.
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    Others expressed trepidation around the new measures. Most notably, 
they expressed concern around the resources and time required to 
implement data sharing agreements, system changes, and new processes. 
These commenters welcome a national approach that allows them to 
maintain their focus on program improvement.
    Nearly all respondents noted the value in standard measures and the 
utility of having a centralized data match at the Federal level to meet 
the requirement of ``nationwide comparability of data'' in section 304 
of the FRA. They also noted that the employment landscape can vary from 
region to region and state to state. They requested that ACF provide 
appropriate context when measures are published. Respondents noted 
macroeconomics (cost of living, unemployment rates, geography, state 
minimum wage, impacts of natural disasters etc.), program design and 
policy (county-administered versus state, benefit caps, political 
climate), and participant demographics (sex, gender, race, income, 
family status, disability, formerly incarcerated) as some of the 
factors that inform the outcome measures.
    Taking into consideration the comments we received, ACF is

[[Page 53873]]

instituting a two-pronged approach: Federal matching for calculating 
Work Outcomes of TANF Exiters and a Supplemental Work Outcomes Report. 
Consultations with states and DOL, ED, and others informed our two-
pronged approach and raised several important considerations. States 
expressed concerns about the implementation timeline if state-level 
data sharing agreements were needed, but other states were concerned 
about the lag in results with a Federal match that would make the 
outcomes less useful. ACF heard from various stakeholders that, while a 
Federal-level match with the NDNH has the benefit of reporting wages 
earned across state lines and from Federal employment, state-level 
matches could include other sources of wage data such as self-
employment or gig work. Each data source and methodology has its own 
strengths and shortcomings, and these new measures provide an 
opportunity for learning about the best tools for assessing and 
improving outcomes for TANF exiters. More information about Federal 
matching for calculating Work Outcomes of TANF Exiters and the 
Supplemental Work Outcomes Report is below.

C. Federal Matching for Calculating Work Outcomes of TANF Exiters

    For the first three statutory measures (i.e., work outcomes of TANF 
exiters), states will report information to ACF that is necessary to 
calculate the measures of work outcomes of TANF exiters at the Federal 
level. Specifically, states will be required to submit Social Security 
Numbers (SSNs) of all work-eligible individuals who exit TANF in a 
given quarter on a quarterly basis. ACF will then match those SSNs with 
quarterly wage records in the NDNH, which is a national database of 
wage and employment information on most American workers administered 
by ACF's Office of Child Support Services.\4\ In FY 2022, over 752 
million quarterly wage records were submitted to the NDNH.\5\ ACF will 
use these matched results to compute the first three work outcomes 
measures on behalf of states. This approach will allow for standardized 
measures and will not require states to initiate new data-sharing 
agreements at the state level. We understand that Guam does not 
currently have an Unemployment Insurance program and therefore does not 
submit quarterly wage data to the NDNH. Guam will still need to submit 
the Work Outcomes of TANF Exiters report so that ACF is able to capture 
outcomes of individuals who find work outside of Guam after exiting the 
Guam TANF Program. In addition, any state, like Guam, that does not 
have an Unemployment Insurance program and thus is currently unable to 
submit quarterly wage records to the ACF-designated wage match source 
will be required to submit the Supplemental Work Outcomes Report. That 
report will be used to calculate the same performance measures as those 
in the Work Outcomes of TANF Exiters Report. We will work closely with 
Guam to assess the data and provide technical assistance to support 
calculating the performance measures.
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    \4\ For more detail on the NDNH: https://www.acf.hhs.gov/sites/default/files/documents/ocse/a_guide_to_the_national_directory_of_new_hires.pdf.
    \5\ FY 2022 Preliminary Data Report and Tables from Table P-97 
(https://www.acf.hhs.gov/css/policy-guidance/fy-2022-preliminary-data-report-and-tables).
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    The Work Outcomes of TANF Exiters measures have various operational 
timelines. The measures themselves specify employment and earnings at 
different intervals following exit. Further, as noted above, the 
definition of ``exit'' includes a 90 day wait period. ACF will provide 
subsequent guidance on and technical support regarding which 
``exiters'' to include in each quarterly data submission. ACF will run 
matches each quarter so that states will not need to track or re-
identify work-eligible individuals the second and fourth quarters after 
they exited TANF.
    ACF will continue to explore how to share information gained from 
the Federal-level match to make the data available to and useful for 
state TANF programs, in addition to satisfying the reporting 
requirements of the FRA. This may involve providing preliminary match 
results to states on a quarterly basis before the data have settled and 
been finalized.

D. State-Level Matching for the Supplemental Work Outcomes Report

    Several states requested the option to provide additional data that 
would enrich the outcomes generated from a centralized data match. The 
states that have systems and data-sharing agreements in place believe 
those systems to be timelier and more comprehensive. Notably, some 
states reported that they will continue to produce their own 
performance measure reports due not only to local statutory 
requirements but also to support program partnership and continuous 
improvement. ACF wants to empower states to analyze their own data for 
program improvement and policy decision-making. To support this effort, 
these regulations establish an additional Supplemental Work Outcomes 
Report to be submitted annually by interested states. This will allow 
states that already have performance reporting infrastructure in place 
to provide calculated outcomes measures results with alternative data 
sources. The report will include documentation of data sources and 
methodology to assess validity and support ongoing learning and 
identification of best practices. ACF will encourage this voluntary 
submission as a way for states and the Federal government to promote 
and learn more about alternative data sources as compared to matching 
to wage data at the Federal level. ACF will report on findings from the 
Supplemental Work Outcomes Report as part of ongoing learning and 
context for state performance measures. This report will be mandatory 
for any state, like Guam, that does not have an Unemployment Insurance 
program and is thus unable to submit quarterly wage data to the ACF-
designated wage match source. The Supplemental Work Outcomes Report 
also provides an avenue for continued alignment with WIOA performance 
measures; states that have highly coordinated TANF and workforce 
agencies could demonstrate the benefits of state-level data matching 
(potentially through SWIS) and the addition of supplemental wage 
information, such as for those who are self-employed or participate in 
gig work and are not systematically captured in quarterly wage records. 
ACF is committed to providing technical assistance and support to 
states interested in developing their own infrastructure to calculate 
work outcomes, including helping develop relationships across state 
agencies, data system modifications, data sharing agreements, and data 
analysis capacity. ACF began this work with the TANF Data Collaborative 
\6\ and plans to continue to find innovative ways to support states as 
they focus on better outcomes for TANF recipients and exiters.
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    \6\ The TANF Data Collaborative was a 30-month pilot program 
that offered technical assistance and training to support cross-
disciplinary teams of staff at eight state and county TANF programs 
in the routine use of TANF and other administrative data to inform 
policy and practice. Learn more about the program and participants 
here: https://www.acf.hhs.gov/opre/report/tanf-data-collaborative-pilot-profiles-collection-data-analytics-projects-state-county.
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E. Secondary School Diploma or Its Recognized Equivalent Attainment 
Rate

    ACF has experience with TANF outcomes measures similar to the ones 
that the Work Outcomes for TANF Exiters Report will capture, through 
the

[[Page 53874]]

former High Performance Bonus measures, 42 U.S.C. 603(a)(4), and more 
recently for performance measures that are reported as part of the 
Congressional Budget Justification. However, ACF has little experience 
collecting information related to the Secondary School Diploma or its 
Recognized Equivalent Attainment Rate (hereafter Secondary School 
Diploma Attainment Rate) for TANF participants and exiters. States 
reported to us that they also have little experience with this type of 
measure and anticipated that it would be more difficult to implement.
    The Secondary School Diploma Attainment Rate measure presents its 
own unique challenges, and states have requested support for 
implementing this measure. Participant surveys may be the most direct 
way to obtain the data; however, states requested technical assistance 
to increase survey response rates. In addition, states want guidance 
for navigating the complex network of educational systems and setting 
up data-sharing agreements with the various entities involved.
    We learned from our research, consultations, and the RFI that some 
states have existing longitudinal databases and cross-department 
agreements that would be well-suited for calculating these measures. 
Other states did not have this type of existing access and 
infrastructure. The ED, DOL, and respondents to the RFI emphasized that 
there are multiple ways a person may earn a secondary school diploma or 
recognized equivalent, including but not limited to adult school/
education, community college, or public or private high school within 
K-12 systems. Local education agencies often have different 
geographical maps from TANF offices or workforce investment boards. For 
some states, secondary school equivalency testing may be independent of 
state government, while for others, such testing may be managed by 
state education agencies.
    The wide range of structures and readiness for collecting 
information for this measure across states led us to the decision to 
leave the data source selection up to the states, following sub-
regulatory guidance from ACF. ACF will provide thorough guidance and 
technical support for the calculation of the rate, including who 
belongs in the numerator and denominator. States must use universe-
level data in their calculations, meaning that the rate should be based 
on the entire population that meets the criteria and not a sample of 
that population.
    ACF recognizes that the typical secondary academic calendar is at 
odds with the Federal fiscal year and annual submission of the data for 
the Secondary School Diploma Attainment Rate. This is further 
complicated by the range of timelines of the various data sources and 
tracking individuals after exit. We note that the Secondary School 
Diploma Attainment Rate submission is on a longer lag because of the 
nature and complexity of the data and the 1-year post-exit wait period. 
ACF will provide guidance on and technical support regarding the 
reporting periods that should be covered in a given annual report. We 
acknowledge states are only able to submit information known to them at 
the time of reporting and commit to providing additional guidance to 
manage the level of effort associated with tracking this small subset 
of TANF participants.
    ACF intends to support states in finding innovative ways to collect 
this information. ACF will ask for sources and methodology as part of 
the reporting to assess validity of the measure and to support ongoing 
learning and identification of best practices. Our Federal partners 
have learned a lot already from states' implementation of WIOA's 
credential attainment measure, which has some helpful parallels.

IV. Justification for Interim Final Rule

    The Administrative Procedure Act (APA) generally requires agencies 
to follow certain procedures when promulgating rules. 5 U.S.C. 551 et 
seq. Under section 553(b)(B)) of the APA, however, a notice of proposed 
rulemaking is not required when an agency, for good cause, finds (and 
incorporates the finding and a brief statement of reasons in the rule 
issued) that notice and public comment is impracticable, unnecessary, 
or contrary to the public interest. We find that good cause exists 
because, under the specific circumstances here, it is impracticable to 
provide an opportunity for notice and comment prior to issuing this 
rule.
    Providing notice and comment before issuing this rule was 
impracticable because of the limited time period following the 
statute's enactment in June 2023 for ACF to consult with states and DOL 
and then promulgate regulations with sufficient lead-time for states to 
make necessary system changes to comply with the statutory reporting 
obligations beginning on October 1, 2024. States will need to plan for, 
budget, and implement systems changes to comply with data collection 
and reporting requirements for fiscal year 2025. This may require 
states to reallocate their budgets, modify existing contracts, and/or 
enter into new ones, modify and/or enter into new data sharing 
agreements, and create and/or modify systems for data collection. We 
are issuing an IFR so that states have time to complete each of these 
necessary steps before the October 1, 2024, compliance date.
    It also was not practicable to provide notice and comment because 
we needed time to consult with the DOL and with states, as required by 
section 304 of the FRA, prior to issuing regulations. In addition to 
being statutorily mandated, the consultation period was necessary to 
allow ACF to obtain state input on a number of technical questions 
before moving forward with the rule making process. This technical 
information from states was key to the agency's thinking and approach 
around this rulemaking. Consultations with DOL and ED began in July 
2023, just one month after the statute was enacted, and have continued 
throughout the development of this regulation.
    The consultation period, described in greater detail in section II 
above, included a RFI which was published on November 27, 2023. ACF had 
received 24 comments on the RFI by January 11, 2024. The RFI outlined 
several possible approaches and factors that needed to be considered 
and sought public comment. Those comments informed the approach set 
forth in this IFR.
    In addition to issuing the RFI, ACF met with states and conducted 
listening sessions between September 2023 and January 2024. Almost all 
states, whether during listening sessions or in response to the RFI, 
requested that ACF expedite the issuance of regulations and develop 
guidance as soon as possible. Many respondents wrote that it will take 
several months or more to set up the necessary infrastructure required 
to respond to the requirements of the FRA. States specifically 
requested that the Department convey as soon as possible how it is 
interpreting Congress' definition of the statutory term ``exit'' so 
that states could provide the specifications necessary to their 
contractors or in-house developers so that they could begin the task of 
system changes. In anticipation of the implementation, some states have 
initiated system changes without the definition of ``exit,'' whereas 
others are waiting on guidance so that they do not risk costly updates 
that need to be modified. Further delay of the regulation could lead to 
states applying the statute ineffectively or inconsistently, which 
could ultimately reduce the data quality and comparability of the 
measures. Our goal has been to issue regulations as soon as possible so 
that states can make sound decisions on the allocation of resources

[[Page 53875]]

and operationalize plans in time for the fiscal year 2025 reporting 
deadlines.
    We believe that issuing an IFR is in the interest of the entities 
that must meet the reporting requirements, and the effective date for 
this IFR is justified and reasonable. Although this IFR is being 
published with an effective date of October 1, 2024, we encourage 
interested parties to provide comments through December 26, 2024, so 
that we may have the benefit of public participation in advance of 
issuing a final rule. ACF will modify the IFR's provisions if warranted 
by public comments. As we implement the IFR, we welcome public comments 
on any relevant implementation issues, and we will take those comments 
into consideration in developing the final rule.

V. Collection of Information Requirements

    The Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq., provides 
that a Federal agency generally cannot conduct or sponsor a collection 
of information, and the public is generally not required to respond to 
an information collection, unless it is approved by the Office of 
Management and Budget (OMB) under the PRA and displays a currently 
valid OMB Control Number. In addition, notwithstanding any other 
provisions of law, no person shall generally be subject to penalty for 
failing to comply with a collection of information that does not 
display a valid Control Number. See 5 CFR 1320.5(a) and 1320.6.
    This interim final rule includes the following new information 
collections.
 Work Outcomes of TANF Exiters Report
 Secondary School Diploma or its Recognized Equivalent Rate
 Supplemental Work Outcomes Report
    As required by PRA, we will submit the proposed information 
collection(s) to OMB for review and approval.

A. Reports

    Work Outcomes of TANF Exiters Report: Quarterly, states will be 
required to submit Social Security numbers (SSNs) of all work-eligible 
individuals who exit TANF in a given quarter. Each state must file the 
report within 45 days following the end of the quarter (QE). The report 
must contain the SSNs of all individuals who are confirmed to have 
exited during the reporting period. An individual's exit date is 
confirmed when 90 days have elapsed since the participant last received 
assistance. States submit SSNs 45 days after the QE in which their exit 
date was confirmed. For example:

    An individual exits on November 23, 2024 (FY 2025, Quarter 
[Q]1). For the state to confirm the exit date, 90-days must elapse 
since the participant last received assistance. The exit date is 
confirmed on February 21, 2025 (FY 2025, Q2). The individual's SSN 
is included as an exiter in the quarter ending (QE) March 31, 2025 
report (FY 2025, Q2), covering reporting period October 1, 2024-
December 31, 2024 (FY 2025, Q1).
    ACF will then match the SSN with quarterly wage records in the 
NDNH to obtain records from two quarters after the individual's exit 
(FY 2025, Q3) through four quarters after the individual's exit (FY 
2026, Q1). ACF will use the matched results to compute the measures 
on behalf of states: Employment Rate--2nd Quarter After Exit; 
Employment Retention Rate--4th Quarter After Exit; and Median 
Earnings--2nd Quarter After Exit.

    Secondary School Diploma Attainment Rate: Annually, states will be 
asked to submit their calculated rate following the definitions and 
formula set by ACF. The report must include documentation of 
methodology and data sources.
    Supplemental Work Outcomes Report: Annually, states have the option 
to submit the state's calculation of the first three work outcomes, 
following the definitions and formulas set by ACF. The report must 
include documentation of methodology and data sources. Any state like 
Guam that does not have an Unemployment Insurance program and thus is 
currently unable to submit quarterly wage records to the ACF-designated 
wage match source will be required to submit the Supplemental Work 
Outcomes Report.

B. Request for Feedback

    In compliance with the requirements of Section 3506(c)(2)(A) of the 
PRA, the ACF is soliciting public comment on the specific aspects of 
the information collection described above. You can request copies of 
the proposed collections by emailing [email protected]. ACF 
requests comments on these new collections, including but not limited 
to the quality, utility, and clarity of the information to be collected 
and the estimated time to complete.
    ACF is particularly interested in feedback on the estimated time to 
complete each of the new information collections. Currently, ACF is 
estimating the time to complete as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                     Secondary
                                                                   Work outcomes  school diploma   Supplemental
                                                                      of TANF        attainment    work outcomes
                                                                  exiters report       rate           report
----------------------------------------------------------------------------------------------------------------
Annual Estimated Number of Respondents..........................              54              54              54
Total Number of Responses per Respondent Each Year..............               4               1               1
Average Burden Hours per Response...............................              16             100              30
Total Annual Burden Hours.......................................            3456            5400            1620
----------------------------------------------------------------------------------------------------------------

    In estimating time to complete, you should include the time 
associated with activities necessary to complete the requests. This 
should include the time associated with the following example 
activities (as applicable):
 Reviewing instructions
 Compiling information or materials to respond
 Acquiring, installing, and utilizing technology and systems
 Updating current technology and systems
 Completing and reviewing collected information
 Finalizing and sending information
    Submit comments to [email protected] by August 27, 2024. 
Consideration will be given to comments and suggestions submitted 
within the timeframe specified.

C. Review and Approval of the Information Collection

    The comments received in response to this notification will fulfill 
the requirement for a 60-day comment period in compliance with the 
requirements of section 3506(c)(2)(A) of the PRA. We will submit an 
information collection request for these new proposed collections to 
OMB for review and approval following consideration of public comment. 
These requirements will not become effective until approved by OMB.

VI. Regulatory Review and Analysis

    We have examined the impacts of the final rule under Executive 
Order 12866,

[[Page 53876]]

Executive Order 13563, Executive Order 14094, the Regulatory 
Flexibility Act (5 U.S.C. 601-612), the Congressional Review Act/Small 
Business Regulatory Enforcement Fairness Act (5 U.S.C. 801, Pub. L. 
104-121), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).
    Executive Orders 12866, 13563, and 14094 direct us to assess all 
benefits, costs, and transfers of available regulatory alternatives 
and, when regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety, and other advantages; distributive impacts; 
and equity). Rules are ``significant'' under Executive Order 12866, 
section 3(f)(1) (as amended by Executive Order 14094), if they ``have 
an annual effect on the economy of $200 million or more (adjusted every 
3 years by the Administrator of [the Office of Information and 
Regulatory Affairs (OIRA)] for changes in gross domestic product); or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, territorial, or tribal governments 
or communities.'' This interim final rule implements the data 
collection and reporting requirements of section 304 of the Fiscal 
Responsibility Act of 2023, which could entail a small incremental 
increase in time spent by state governments for these activities. Thus, 
this interim final rule is not a significant regulatory action under 
Executive Order 12866, section 3(f)(1).
    Because this rule is not likely to result in an annual effect on 
the economy of $100 million or more or meet other criteria specified in 
the Congressional Review Act/Small Business Regulatory Enforcement 
Fairness Act, this interim final rule does not fall within the scope of 
5 U.S.C. 804(2).
    The Regulatory Flexibility Act requires us to analyze regulatory 
options that would minimize any significant impact of a rule on small 
entities. The Secretary certifies that this interim final rule will not 
result in a significant impact on a substantial number of small 
entities. The primary impact is on state governments, which are not 
considered small entities under the RFA.
    The Unfunded Mandates Reform Act of 1995 (UMRA) generally requires 
that each agency conduct a cost-benefit analysis, identify and consider 
a reasonable number of regulatory alternatives, and select the least 
costly, most cost-effective, or least burdensome alternative that 
achieves the objectives of the rule before promulgating any proposed or 
final rule that includes a Federal mandate that may result in 
expenditures of more than $100 million (adjusted for inflation) in at 
least one year by state, local, and tribal governments, or by the 
private sector. The current threshold after adjustment for inflation 
using the Implicit Price Deflator for the Gross Domestic Product is 
$183 million, reported in 2023 dollars. This interim final rule will 
not result in an unfunded mandate in any year that meets or exceeds 
this amount.

List of Subjects in 45 CFR Part 265

    Employment, Grant programs--social programs, Public assistance 
programs, Reporting and recordkeeping requirements.

    For the reasons discussed in the preamble, the OFA amends 45 CFR 
part 265 as follows:

PART 265--DATA COLLECTION AND REPORTING REQUIREMENTS

0
1. The authority citation for part 265 is revised to read as follows:

    Authority:  42 U.S.C. 603, 605, 607, 609, 611, and 613.

0
2. Amend Sec.  265.1 by:
0
a. Revising paragraph (a);
0
b. Removing footnote 1 from paragraph (b) introductory text;
0
c. Revising paragraphs (b)(2) and (3); and
0
d. Adding paragraphs (b)(4) and (5).
    The revisions and additions read as follows:


Sec.  265.1  What does this part cover?

    (a) This part explains how we will collect the information required 
by section 411(a) of the Act (data collection and reporting); the 
information required to implement section 407 of the Act (work 
participation requirements), as authorized by section 
411(a)(1)(A)(xii); the information required to implement section 409 
(penalties), section 403 (grants to States), section 405 
(administrative provisions), section 411(b) (report to Congress), and 
section 411(f) (reporting performance indicators); and the data 
necessary to carry out our financial management and oversight 
responsibilities.
    (b) * * *
    (2) The expenditure data in the quarterly TANF Financial Report 
(or, as applicable, the Territorial Financial Report);
    (3) The definitions and other information on the State's TANF and 
MOE programs that must be filed annually;
    (4) The definitions and other information necessary for the Work 
Outcomes of TANF Exiters Report; and
    (5) The definitions and other information necessary for the 
Secondary School Diploma or its Recognized Equivalent Attainment Rate.
* * * * *

0
3. Amend Sec.  265.2 by:
0
a. Revising paragraph (a); and
0
b. Adding paragraphs (c) through (e).
    The revision and additions read as follows:


Sec.  265.2  What definitions apply to this part?

    (a) Except as provided in paragraphs (b) through (e) of this 
section, the general TANF definitions at Sec. Sec.  260.30 through 
260.33 and the definitions of a work-eligible individual and the work 
activities in Sec.  261.2 of this chapter apply to this part.
* * * * *
    (c) For purposes of the Work Outcomes of TANF Exiters Report and 
the Secondary School Diploma or its Recognized Equivalent Attainment 
Rate, exit is the date that a family with a work-eligible individual 
ceases to receive assistance (as defined in Sec.  260.31) from the TANF 
program. The last day of assistance cannot be determined until 90 days 
have elapsed since the participant last received assistance.
    (d) For purposes of the Work Outcomes of TANF Exiters Report, 
unsubsidized employment means full- or part-time employment in the 
private or public sector after exiting the TANF program.
    (e) For purposes of the Secondary School Diploma or its Recognized 
Equivalent Attainment Rate:
    (1) A secondary school diploma is a ``regular high school diploma'' 
as that term is defined in 21 U.S.C. 7801(43), the Elementary and 
Secondary Education Act of 1965 (ESEA), as amended by the Every Student 
Succeeds Act (ESSA).
    (2) A recognized equivalent to a secondary school diploma is a 
certification recognized by a State that signifies that a student has 
completed the State's requirements for a high school education.

0
4. Amend Sec.  265.3 by:
0
a. Revising paragraph (a)(1); and
0
b. Adding paragraph (g).
    The revision and addition read as follows:


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

    (a) * * *
    (1) Each State must collect on a monthly basis, and file on a 
quarterly basis, the data specified in the TANF Data Report, the TANF 
Financial Report (or, as applicable, the Territorial Financial Report), 
and the Work Outcomes of TANF Exiters Report.
* * * * *

[[Page 53877]]

    (g) Work Outcomes of TANF Exiters Report. Each State must file the 
Social Security numbers of all work-eligible individuals, as defined in 
Sec.  261.2(n), who have exited the program, as defined in Sec.  
265.2(b). This information will be used for calculating the following 
Work Outcomes performance indicators:
    (1) Employment Rate--2nd Quarter After Exit: the percentage of 
individuals who were work-eligible individuals as of the time of exit 
from the program, who are employed during the second quarter after the 
exit;
    (2) Employment Retention Rate--4th Quarter After Exit: the 
percentage of individuals who were work-eligible individuals as of the 
time of exit from the program who were employed in the second quarter 
after the exit, who are also employed during the fourth quarter after 
the exit; and
    (3) Median Earnings--2nd Quarter After Exit: the median earnings of 
individuals who were work-eligible individuals as of the time of exit 
from the program, who are employed during the second quarter after the 
exit.

0
5. Amend Sec.  265.4 by adding paragraph (d) to read as follows:


Sec.  265.4  When are quarterly reports due?

* * * * *
    (d) Each State must file the Work Outcomes of TANF Exiters Report 
within 45 days following the end of the quarter.

0
6. Amend Sec.  265.5 by:
0
a. Removing the last sentence of paragraph (a); and
0
b. Adding paragraph (d).
    The addition reads as follows:


Sec.  265.5  May States use sampling?

* * * * *
    (d) States may not use sampling to report expenditure data, data 
included in the Work Outcomes of TANF Exiters Report, or data included 
in the Secondary School Diploma or its Recognized Equivalent Attainment 
Rate.

0
7. Revise Sec.  265.6 to read as follows:


Sec.  265.6  Must States file reports electronically?

    Each State must file all reports (i.e., the TANF Data Report, the 
TANF Financial Report (or, as applicable, the Territorial Financial 
Report), the SSP-MOE Data Report, the Work Outcomes of TANF Exiters 
Report, and the Secondary School Diploma or its Recognized Equivalent 
Attainment Rate) electronically, based on format specifications that we 
will provide.

0
8. Amend Sec.  265.7 by:
0
a. Revising paragraph (a);
0
b. Redesignating paragraphs (e) and (f) as paragraphs (f) and (g); and
0
c. Adding new paragraph (e).
    The revision and addition read as follows:


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

    (a) Each State's quarterly reports (the TANF Data Report, the TANF 
Financial Report (or Territorial Financial Report), the SSP-MOE Data 
Report, and the Work Outcomes of TANF Exiters Report) must be complete 
and accurate and filed by the due date.
* * * * *
    (e) For the Work Outcomes of TANF Exiters Report, ``complete and 
accurate report'' means that:
    (1) The reported data accurately reflect information available to 
the State in case records, and automated data systems;
    (2) The State reports data on all applicable elements (i.e., no 
data are missing); and
    (3) The State reports universe data on all work eligible 
individuals who exited TANF in a particular quarter.
* * * * *

0
9. Amend Sec.  265.9 by:
0
a. Removing footnote 7 from paragraph (c)(9); and
0
b. Adding paragraphs (f) and (g).
    The additions read as follows:


Sec.  265.9  What information must the State file annually?

* * * * *
    (f) Each State must submit the percentage of individuals who have 
not attained 24 years of age, are attending high school or enrolled in 
an equivalency program, and are work-eligible individuals or were work-
eligible individuals as of the time of exit from the program, who 
obtain a high school degree or its recognized equivalent while 
receiving assistance under the State program funded under this part or 
within one year after the individuals exit from the program. The 
Secondary School Diploma or its Recognized Equivalent Attainment Rate 
report must include methodology and documentation of data sources.
    (g) On a voluntary basis, a State may also submit calculated work 
outcomes measures that follow the definitions of the Work Outcomes of 
TANF Exiters (as defined in Sec.  265.3(g)) based on alternative data 
sources. The report must include documentation of data sources. In 
addition to the Work Outcomes of TANF Exiters Report, this Supplemental 
Work Outcomes Report is mandatory for any State that is unable to 
submit quarterly wage data to the ACF-designated wage match source.

0
10. Revise Sec.  265.10 to read as follows:


Sec.  265.10  When are the annual reports due?

    The annual reports required by Sec.  265.9 are due 45 days after 
the end of the fiscal year.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-13865 Filed 6-27-24; 8:45 am]
BILLING CODE 4184-36-P