Welfare Reform: HHS Should Exercise Oversight to Help Ensure TANF
Work Participation Is Measured Consistently across States
(19-AUG-05, GAO-05-821).
The debate over reauthorization of the Temporary Assistance for
Needy Families (TANF) block grant has focused on work
requirements and brought attention to the measure of TANF work
participation. The measure is used to assess states' performance
and determine whether a state is subject to penalty for not
meeting TANF work requirements. The 2003 work participation rates
ranged from 9 to 88 percent for the 50 states based on data they
submit to the U.S. Department of Health and Human Services (HHS).
To help Congress understand these rates, GAO looked at (1) how
selected states are defining the categories of work activities,
(2) whether selected states have implemented internal controls
over the work participation data, and (3) what guidance and
oversight HHS has provided states.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-821
ACCNO: A33697
TITLE: Welfare Reform: HHS Should Exercise Oversight to Help
Ensure TANF Work Participation Is Measured Consistently across
States
DATE: 08/19/2005
SUBJECT: Block grants
Data collection
Data integrity
Federal/state relations
Internal controls
Performance measures
Public assistance programs
Reporting requirements
State-administered programs
Statistical data
Welfare recipients
Program evaluation
HHS Temporary Assistance for Needy
Families Block Grant
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GAO-05-821
United States Government Accountability Office
GAO Report to the Chairman, Subcommittee on Human Resources, Committee on Ways
and Means, House of Representatives
August 2005
WELFARE REFORM
HHS Should Exercise Oversight to Help Ensure TANF Work Participation Is Measured
Consistently across States
GAO-05-821
[IMG]
August 2005
WELFARE REFORM
HHS Should Exercise Oversight to Help Ensure TANF Work Participation Is Measured
Consistently across States
What GAO Found
Differences in how states define the 12 categories of work that count
toward meeting TANF work participation requirements have resulted in some
states counting activities that other states do not count and, therefore,
in an inconsistent measurement of work participation across states. For
example, 5 of the 10 states we reviewed considered caring for a disabled
household or family member to count toward the federal work participation
requirement, while 5 did not consider hours spent in this activity to be
countable (see table below). We also found that some states made
significant changes in their definitions of the categories of work. As a
result, the work participation rates for these states cannot be compared
from year to year.
Some of the states in our review have implemented internal controls to
help report work participation hours in accordance with HHS guidance,
while other states lack such internal controls. Some states have not
issued guidance on how to verify that reported hours were actually worked,
nor do they monitor data reported by their staff to help ensure that hours
are reported correctly. In contrast, a few states have systematic
approaches for verifying that hours reported were worked.
HHS has provided limited oversight and guidance to states on appropriately
defining work activities and reporting hours of work participation.
According to HHS officials, HHS has the authority to regulate states'
definitions of work activities. However, to promote state flexibility, HHS
chose not to issue regulations for this purpose. Further, HHS's guidance
lacks specific criteria for determining the appropriate hours to report.
Given that HHS has not exercised oversight of states' definitions and
internal controls, states are making different decisions about what to
measure. Therefore, there is no standard basis for interpreting states'
rates, and the rates cannot effectively be used to assess and compare
states' performance.
Number of Reviewed States that Count Certain Activities toward Meeting the
Federal Work Participation Rate and the Categories of Work in Which the
States Counted the Activities
Number of 10 reviewed states that count the activity as federal work
participation
Federal categories of work in which the reviewed states counted the
activity
Activity
Caring for a disabled household or family member
5 Community Service
Substance abuse 6 Job Search/Readiness, Work Experience,
treatment Community Service
Domestic violence 3 Job Search/Readiness, Work Experience,
counseling Community Service
Other mental 5 Job Search/Readiness, Work Experience,
health counseling Community Service
English as a 7 Job Skills Training, Secondary School or
second language Education Directly Related to Employment,
Community Service, Vocational Education
Source: GAO review of 10 states' TANF documents and interviews with the
states' TANF officials.
Note: An additional state counts substance abuse treatment, domestic
violence counseling, and other mental health counseling
toward meeting the federal work participation rate in limited
circumstances.
United States Government Accountability Office
Contents
Letter 1
Results in Brief 3
Background 6
Differences in How States Define Work Activities Result in
Inconsistent Measurement of Work Participation across States
and over Time 10
Some States Do Not Have Internal Controls Needed for Reporting
Data in Accordance with HHS Guidance, while Other States Do 15
HHS's Oversight and Guidance on Appropriately Defining Work
Activities and Reporting Hours of Work Participation Have Been
Limited 18
Conclusions 22
Recommendations for Executive Action 23
Agency Comments and Our Evaluation 24
Appendix I Elements of the Work Participation Requirement and How the Work
Participation Rate Is Calculated
Appendix II States That Count Certain Activities toward Meeting the
Federal Work Participation Rate
Appendix III States Identified as Lacking Certain Internal Controls
Appendix IV Fiscal Year 2003 Work Participation Rates
Calculated by HHS Based on Data Provided by States 32
Appendix V Comments from the Department of Health and
Human Services 34
Appendix VI GAO Contact and Staff Acknowledgments 39
Related GAO Products 40
Tables
Table 1: 12 Categories of Federal Work Activities and Limitations
on Counting Time in Those Activities 8 Table 2: The Number of 10 Reviewed
States That Count Certain Activities toward Meeting the Federal Work
Participation Rate and the Categories of Work in Which the States Counted
the Activities 11 Table 3: Number of Reviewed States Lacking Internal
Controls to
Help Ensure Hours of Participation Are Reported in
Accordance with HHS Guidance 16 Table 4: Number of Hours Different Types
of Recipients Must Participate in Allowed Work Activities to Count as
Working in the TANF All-Family Work Participation Rate 27 Table 5: Base
Percentage of TANF Families That Must Be Engaged
in Work for the All-Family and the Two-Parent Family
Rates 27 Table 6: States Covered by the Review That Count Certain
Activities toward Meeting the Federal Work Participation Rate 30 Table 7:
States Covered by the Review That Lacked Internal
Controls to Help Ensure Hours of Participation Are
Reported in Accordance with HHS Guidance 31 Table 8: Fiscal Year 2003 Work
Participation Rates Calculated by HHS Based on Data Provided by States 32
Figure
Figure 1: Formula for Calculating the All-Family Work Participation Rate
28
Abbreviations
ACF Administration for Children and Families
HHS U.S. Department of Health and Human Services
MOE maintenance-of-effort
NDNH National Directory of New Hires
OMB Office of Management and Budget
PRWORA Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 SSP separate state program TANF Temporary
Assistance for Needy Families
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United States Government Accountability Office Washington, DC 20548
August 19, 2005
The Honorable Wally Herger
Chairman
Subcommittee on Human Resources
Committee on Ways and Means
House of Representatives
Dear Mr. Chairman:
In fiscal year 2004, states spent $26 billion from the federal Temporary
Assistance for Needy Families (TANF) block grant and related state funds
to assist low-income parents and their children. The federal welfare
reform law-the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (PRWORA)-that created the TANF block grant
included the expectation that welfare recipients would participate in work
activities. The law outlined 12 categories of work activities, such as
"unsubsidized employment" and "community service programs," in which
recipients could participate to meet federal TANF requirements. Under the
law, states have significant flexibility in designing their TANF programs,
such as flexibility in defining specific activities to fall under the 12
categories of work activities outlined in the law. Along with providing
this
flexibility, PRWORA required states to collect and report a specified set
of
data to the Department of Health and Human Services (HHS), including
data on hours recipients spent in work activities. PRWORA also created a
performance measure called the TANF work participation rate for
determining the extent to which a state's TANF families were engaged in
work activities during the year. The 2003 work participation rates
calculated for the 50 states based on the data they submitted to HHS
ranged from 9 to 88 percent. HHS is responsible for reporting these rates
to Congress and for using them to identify states that are not meeting the
required level of work participation for their TANF recipients and, thus,
may be subject to penalties. Given the importance of the work
participation rates, they need to provide a consistent measure of work
participation across states. Without a consistent measure, there will be
no
standard basis for interpreting each state's rate or for comparing the
performance of states.
A key issue in the debate over TANF reauthorization has been whether to
change work requirements, such as by requiring additional hours of work
and allowing more types of work activities to be counted. For example, a
Senate bill proposed adding substance abuse treatment and caring for a
disabled family member to the list of activities that can be counted as
work participation. Another issue in reauthorization has been how to
revise the caseload reduction credit, which uses levels of TANF caseload
declines to reduce the work participation rates states must have in order
to avoid penalty. Because of significant declines in TANF caseloads
following TANF implementation, the caseload reduction credit enabled many
states to have very low work participation rates and still meet their
required levels of work participation. Revisions in the caseload reduction
credit could raise the required level of work participation for many
states and may result in more states being penalized for not having high
enough work participation rates. In considering welfare reauthorization,
Congress has focused much attention on states' current work participation
rates. To help you understand these rates, we looked at (1) how selected
states are defining the work activities that count toward meeting federal
work participation requirements, (2) whether selected states have
implemented internal controls to help ensure that the work participation
data they report are in accordance with HHS guidance, and (3) what
guidance and oversight HHS has provided states regarding appropriately
defining work activities and reporting hours of work participation.
Our review focused on HHS's Administration for Children and Families
(ACF), which administers the TANF block grant, and 10 selected states--
California, Georgia, Kansas, Maryland, Nevada, New York, Ohio,
Pennsylvania, Washington, and Wisconsin. In 2003, the 10 states made up 46
percent of the national TANF caseload. We selected these states to
represent a mix of TANF 2003 work participation rates, according to data
reported by states to ACF.1 (These rates are shown in app. IV.)
Specifically, we selected the 3 states with the lowest rates (9 percent to
11 percent), 3 states with some of the highest rates (62 percent to 88
percent), and 4 states with rates in the middle range (22 percent to 46
percent). We also selected states to represent a variety of other
characteristics, such as geographic location, benefit policies, and use of
waivers that exempt the state from certain TANF requirements. We used a
semistructured interview protocol in conducting telephone interviews with
the 10 selected states' TANF officials.
1The fiscal year 2003 work participation rates were the most recent
available rates at the time of our review.
To learn how selected states are defining the work activities that count
toward meeting federal work participation requirements, we interviewed the
10 selected states' TANF officials about activities they count in work
participation data. We also reviewed state documents, such as annual TANF
reports and TANF manuals that show how states define the 12 federal
categories of work activities and how they classify recipients. Although
our work allowed us to identify inconsistencies in definitions and
classifications across states, we did not have data to evaluate the impact
of different definitions and classifications on the rates.
To learn whether selected states have implemented internal controls to
help ensure the work participation data they report are in accordance with
HHS guidance, we interviewed the 10 selected states' TANF officials about
their internal controls over collection and reporting of the data. We also
reviewed the states' guidance on collection and reporting of the data.2
Through these telephone interviews and document reviews, we learned about
policies and processes established by the states to help ensure data
reported are in accordance with HHS guidance, but we could not learn
whether these policies and processes are effectively carried out by staff
at the local level. Also for the 10 states, we interviewed state auditors
and reviewed single audit reports for fiscal years 2000-2003 and any other
state audit reports that addressed work participation data.
To learn what guidance and oversight HHS has provided states regarding
appropriately defining work activities and reporting hours of work
participation, we interviewed ACF officials about their oversight of
states' definitions of work activities that count toward the work
participation rates and states' data on hours of work participation. We
also interviewed officials from the HHS Office of Inspector General. In
addition, we reviewed ACF's regulations and other guidance for reporting
work participation data. We conducted our work from November 2004 to June
2005 in accordance with generally accepted government auditing standards.
Differences in how states define the 12 categories of work that count
toward meeting federal work participation requirements have resulted in
some states counting activities that other states do not count and,
2To help determine the elements of internal control to address in our
review, we used GAO, Standards for Internal Control in the Federal
Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
Results in Brief
therefore, in an inconsistent measurement of work participation across
states. For example, out of the 10 states we reviewed, 5 considered caring
for a disabled family or household member to be part of the Community
Service category of work activities, but 5 other states considered this
activity as not countable. Also, 6 of the 10 selected states considered
substance abuse treatment to be part of countable categories such as Job
Search/Job Readiness, Work Experience, and Community Service, but 4 states
did not consider it a countable activity. We also found that some states
made significant changes year to year in which activities they count in
the work participation rate. As a result, the rates for these states
cannot be compared from year to year to assess how the states' performance
changed. For example, after expiration of a waiver that had exempted it
from restrictions on time spent in Job Search/Job Readiness, one state
redefined many activities from Job Search/Job Readiness to other
categories without time restrictions. After this change, the state's work
participation rate calculated based on nonwaiver requirements increased
more than 50 percentage points. Another inconsistency among states- which
adult recipients are counted in work rates-occurs because states have
flexibility in how they classify recipients. Four of the 10 states have
used their funding flexibility to serve two-parent families through
separate state-funded programs not covered by TANF work requirements, and
1 state also served adults with significant barriers, such as medical
problems, through a separate state program. Thus, in these states, all of
these cases were removed from the work participation rate calculation,
while these types of cases are included in other states' rate
calculations.
In reviewing the 10 states' internal controls for collecting and reporting
hours TANF recipients spent in work activities (regardless of how the
states defined the activities), we found that some states have implemented
internal controls to help report work hours in accordance with HHS
guidance, while other states are lacking such internal controls. For
example, some states have not issued guidance for their staff on the
support needed to verify that reported hours were worked. As a
consequence, some states report hours that recipients are scheduled to
work instead of hours actually worked, especially in the case of
unsubsidized employment, for which, according to state officials, it is
difficult to get documentation from employers and recipients to verify
hours worked. Two states have guidance allowing hours that were missed to
be reported as worked when case workers determine that the recipient had
good cause for the absence. One state's guidance instructs that 30 hours
of participation per week be reported for certain activities such as a
parent's involvement in her child's Head Start program but does not
require evidence that the parent was actually involved in 30 hours of the
activity. In contrast, a few of the 10 states had systematic approaches
for verifying that hours reported were worked. For example, according to
officials in some states, their states review the documentation in each
sampled file to ensure that hours reported are supported before submitting
their data to HHS.
HHS has provided limited oversight and guidance to states on appropriately
defining work activities and reporting hours of work participation.
According to HHS officials, HHS has authority under PRWORA to regulate
states' definitions of work activities. However, HHS has chosen not to
issue regulations for this purpose in order to promote the flexibility
PRWORA provided states and in response to calls from states for as much
flexibility as possible in designing their TANF programs, according to HHS
officials. The current TANF regulations repeat the 12 categories of work
activities that are included in PRWORA and do not further specify
activities that can and cannot be included under the 12 categories. Given
the current regulatory structure, HHS officials said they cannot direct
states to change their definitions if HHS believes the definitions are
inappropriate. HHS's guidance on the appropriate hours to report is also
limited. HHS has specified in TANF regulations that the quarterly reports
that contain work participation data be "complete and accurate." In other
guidance, HHS has further specified that states must report "actual" hours
that recipients engage in work activities rather than hours for which the
recipient is scheduled or expected to work. However, the guidance does not
specify what support is needed to verify actual hours of work
participation. HHS performs checks on the data that can identify
inconsistencies but cannot determine whether hours reported were actually
worked. According to HHS officials, HHS's primary mechanism for
identifying states that are not reporting data in accordance with HHS
guidance is the state single audits that review internal controls and
compliance with laws and regulations governing federal awards. Although
HHS has identified data problems using state single audit reports, some of
the internal control problems we identified in this review had not been
found by single audits. To emphasize the importance of work participation
data, HHS is adding to the single audit guidance for fiscal year 2005 more
instructions on reviewing work participation data.
To help improve the quality and comparability of the work participation
data, we are recommending that HHS issue regulations to provide oversight
of states' definitions and more guidance on counting hours of work
activities and that HHS work with states to identify cost-effective
internal control practices and disseminate information on these practices
to states.
Background
In commenting on our draft report, HHS said it would consider making the
recommended revisions in its regulations after TANF reauthorization and is
exploring options for implementing the recommendation on internal
controls.
Enactment of the TANF block grant significantly changed federal welfare
policy and gave states more flexibility in designing their welfare
programs. For example, states have flexibility in setting benefit levels,
eligibility requirements,3 work requirements, and policies for sanctioning
noncompliant recipients (that is, reducing or discontinuing their
benefits). Due to this flexibility, TANF programs differ substantially
from state to state. These different state policies can affect the extent
to which a state's TANF recipients participate in work activities and the
type of work activities they engage in. States also have flexibility in
using TANF block grant funds and in using state funds-referred to as
maintenance-of-effort (MOE) funds-that states were required to use toward
TANF purposes in order to qualify for the block grant. For example, if
states want to exclusively use MOE funds for a particular group of welfare
recipients, such as those in two-parent families, they can use these funds
through separate state programs (SSPs) for those recipients and remove
them from the TANF requirements.
Due to the importance of state flexibility under TANF, PRWORA limited
HHS's authority to regulate state TANF programs. PRWORA also substantially
reduced HHS staff available to implement TANF. However, PRWORA established
penalties for states, such as for not meeting required levels of work
participation, and HHS has authority to regulate in situations where
penalties are involved. TANF has two work participation rates-one that
applies to all adult-headed families and another that applies to
two-parent families.4 A certain percentage of each state's adultheaded
TANF cases receiving cash assistance must participate in workrelated
activities for a minimum number of hours each week or the state may face
financial penalty.5 The categories of work activities that can be
3Eligibility requirements can include an amount of income that recipients
can earn and still remain eligible for TANF benefits. Referred to as
earned income disregards, these provisions affect whether recipients who
get a paying job can remain eligible for TANF while they are working.
4The current House and Senate TANF reauthorization bills propose to
eliminate the twoparent rate.
5For the purposes of this report, the term "adult" refers to TANF
recipients age 20 or over or TANF recipients under age 20 who are head of
a household receiving TANF.
counted for the purpose of the performance measure are outlined in TANF
law and regulations. If TANF recipients engage in other activities
provided or permitted under the state's TANF program, then those
activities do not count toward meeting the federal work participation
requirements. Further, if TANF recipients engage in work activities for
less than the minimum required number of hours, then those recipients do
not count as being engaged in work for purposes of the performance
measure.
When a state does not meet its required level of work participation, HHS
will send the state a penalty notice. The state then has the opportunity
to avoid a penalty by providing reasonable cause why it did not meet the
work participation rate or by submitting a corrective compliance plan that
will correct the violation and ensure continued compliance with work
participation requirements. Since implementation of TANF, numerous states
have received penalty notices from HHS for not meeting the required level
of work participation. However, most of these states have avoided
penalties by submitting corrective compliance plans. As of February 2005,
11 states6 and the District of Columbia had paid penalties for not meeting
the two-parent work participation rate.7 Most of these penalties were for
the first 4 years (fiscal years 1997-2000) of TANF implementation, and 5
states and the District of Columbia have paid penalties for more than 1
year.
Each quarter, states are required to report to ACF monthly data on their
TANF cases, including the number of hours each adult recipient spent in
activities that count toward meeting federal work requirements. States
have the option of reporting to ACF on all their TANF cases (the universe)
or on a scientifically drawn sample of TANF cases. Using the data reported
by states, ACF calculates an annual work participation rate for each
state. A state's annual work participation rate is based on the state's
average monthly rate for the year. See appendix I for information on
elements of the work participation requirement and how the work
participation rate is calculated by ACF.
6The states that have paid a penalty for not meeting the two-parent work
participation rate are Arkansas, Delaware, Iowa, Mississippi, Nebraska,
New Jersey, New Mexico, North Carolina, Oklahoma, Virginia, and West
Virginia.
7As of February 2005, Guam and the Virgin Islands, but no states, had paid
penalties for not meeting the all-family work participation rate.
12 Categories of Countable Work Activities
The TANF legislation and regulations outline 12 categories of work
activities that can count toward the federal work requirement. The TANF
regulations name the categories and require each state to include its
definition of each work activity in the annual report it must file each
year with HHS. Hours spent in some activities (referred to as supplemental
activities) generally cannot count toward the federal work requirement
unless hours are also spent in other countable activities (referred to as
core activities). Some activities have restrictions on the amount of time
that can be spent in them. The 12 categories and their time restrictions
are shown in table 1.
Table 1: 12 Categories of Federal Work Activities and Limitations on Counting
Time in Those Activities
Activity Limitations on counting time (for all families) Core activities
1. Unsubsidized employment None
2. Subsidized private sector employment None
3. Subsidized public sector employment None
4. Work experience None
5. On-the-job training None
6. Job search and job readiness assistance 6-week time limit per client
per year, no more than 4 weeks consecutively
7. Community service programs None
8. Caring for child of community service participant None
9. Vocational education training 12-month total time limit per client
Supplemental activities
10. Job skills training directly related to employment Counts only after
accumulating 20 hours in a core activity
11. Education directly related to work Counts only after accumulating 20
hours in a core activity (except if under 20 years old)
12. Satisfactory attendance at high school or equivalent Counts only after
accumulating 20 hours in a core activity (except if under 20 years old)
Source: GAO analysis of section 407 of PRWORA and HHS regulations.
Note: This table does not show all the provisions that apply to the 12
categories.
Single Audits The Single Audit Act, as amended,8 established the concept
of having one audit of an entity as a whole instead of multiple audits of
individual grants
8Chapter 75 of Title 31, United States Code.
received by the entity.9 The act requires state and local governments and
nonprofit organizations that expend $500,000 or more in federal funds
during the year to undergo an organizationwide audit.10 These audits focus
on the entity's internal controls and compliance with laws and regulations
governing federal awards and should be viewed as a tool that raises
relevant or pertinent questions rather than a document that answers all
questions.
Office of Management and Budget (OMB) Circular A-133, Audits of States,
Local Governments, and Non-Profit Organizations, provides the federal
guidance for single audits. It contains a Compliance Supplement that
summarizes key information about federal programs and identifies audit
objectives and suggested procedures for auditors' use in determining
compliance with the requirements. The Compliance Supplement contains
information on TANF, along with over a hundred other federal programs. The
information on TANF includes some key line items, including those for
reporting hours of work activity, from the TANF data report that states
must submit to ACF.
Internal Controls
Internal controls comprise the plans, methods, and procedures an
organization uses to meet its missions, goals, and objectives. Internal
controls are a series of actions and activities that occur throughout an
organization's operations and on an ongoing basis. They provide reasonable
assurance that an organization achieves its objectives of (1) effective
and efficient operations, (2) reliable financial reporting, and (3)
compliance with laws and regulations. An organization's internal controls
over collecting and reporting data could include numerous processes and
procedures, such as guidance that defines the specific data to be
collected and any documentation needed to support that data and monitoring
to ensure that the reported data are complete and accurate.
9For more information on the Single Audit Act, see GAO, Single Audit:
Update on the Implementation of the Single Audit Act Amendments of 1996,
GAO/AIMD-00-293 (Washington, D.C.: Sept. 29, 2000).
10The dollar threshold, currently set at $500,000, for determining which
entities are subject to a single audit is adjusted periodically by the
Director of the Office of Management and Budget.
Differences in How States Define Work Activities Result in Inconsistent
Measurement of Work Participation across States and over Time
We found that differences in how states define the 12 categories of
federal work activities result in some states counting hours recipients
spend in activities that other states do not consider allowable activities
for meeting federal work participation requirements. Also, some states
have made changes in their definitions of some categories of federal work
activities, making what is measured by those states' work participation
rates inconsistent from year to year. Further, some differences across
states in their classification of adult recipients can result in certain
types of recipients being excluded from some states' work participation
rates but included in other states' rates.
Activities Are Defined Inconsistently across States
Although PRWORA outlines 12 categories of work activities that can count
toward meeting federal work participation requirements, states are able to
define the specific activities that fall under each of the categories. We
found that differences in how states define the 12 categories of work
result in some states counting hours spent in certain activities toward
meeting the work participation rate, while other states do not count hours
spent in those activities.
Although PRWORA outlined 12 categories of work activities that count
toward meeting work participation rates, PRWORA does not prevent states
from allowing their recipients to participate in other noncountable
activities, such as activities that help the recipients overcome problems
that prevent them from working. In our review of state TANF documents, we
identified several activities that were commonly mentioned but that were
treated differently by different states, such as substance abuse
treatment. One state may include the activity under 1 of the 12 categories
of work, while other states may consider that activity a state activity
that does not count toward meeting the federal work requirement.
Table 2 shows how many of the 10 reviewed states counted certain
activities that were commonly mentioned in state TANF documents toward
meeting federal work participation requirements. (See app. II for states
included in the table). States were counting these activities toward
meeting the work participation rate by defining one of the 12 categories
of work as including the activities.
Table 2: The Number of 10 Reviewed States That Count Certain Activities
toward Meeting the Federal Work Participation Rate and the Categories of
Work in Which the States Counted the Activities
Number of 10 reviewed
states
that count the Federal categories of work in
activity as which the
Activity federal work reviewed states counted the
participation activity
Caring for a
disabled household 5
or Community Service
family member
Substance abuse 6 Job Search/Readiness, Work
treatment Experience,
Community Service
Domestic violence 3 Job Search/Readiness, Work
counseling Experience,
Community Service
Other mental health 5 Job Search/Readiness, Work
counseling Experience,
Community Service
English as a second 7 Job Skills Training, Secondary
language School or Education
Directly Related to Employment,
Community
Service, Vocational Education
Source: GAO review of 10 states' TANF documents and interviews with the
states' TANF officials.
Note: An additional state counts substance abuse treatment, domestic
violence counseling, and other mental health counseling toward meeting the
federal work participation rate in limited circumstances.
Some states have a very broad definition for at least one federal category
of work that allows the states to include many diverse activities under
the category. For example, one state that defines Community Service as "an
activity approved by your case manager which benefits you, your family,
your community or your tribe" considered all five of the activities shown
in table 2 to fall under the Community Service category.
A few states had activities listed in the definition of a federal work
activity that we did not see in other states' definitions, such as
o bed rest, short-term hospitalizations, and personal care activities a
participant is engaged in as part of recovery from a medical problem (Job
Search/Job Readiness);
o physical rehabilitation, which could include massage, regulated
exercise, or supervised activity with the intent of promoting recovery or
rehabilitation (Job Search/Job Readiness);
o activities to promote a healthier life style that will eventually
assist the recipient in obtaining employment, such as personal journaling,
motivational reading, exercise at home, smoking cessation, and weight loss
promotion (Job Search/Job Readiness);
o participating in your child's Head Start or Early Head Start programs
by participating in home visits, parent meeting presentations, and
classroom volunteering (Community Service); and
o helping a friend or relative with household tasks and errands
(Community Service).
Increasing the number of activities that it counts toward the federal work
participation rate should help a state increase its work participation
rate and avoid incurring penalties. Out of our 10 reviewed states, 2
states counted all five of the activities shown in table 2 above, while 1
state did not count any. Such variation in the number of activities that
states count toward the federal work participation rate suggests that the
states are subject to different standards for work participation. Because
of the differences in states' internal controls over their work
participation data (discussed in the next section of this report), the
data cannot be relied upon for making comparisons across states.
Therefore, we did not analyze states' work participation rates in relation
to the number of activities they counted toward work participation.
Changes in State Definitions Result in Inconsistent Measurement from Year to
Year
Three of the 10 states we reviewed had made changes in their definitions
of work activities within the past 2 years that may have affected their
work participation rates and that could result in work participation rates
that are not comparable over time. Kansas had a dramatic change in its
work participation rate after changing some of its definitions. This state
had a waiver exempting it from the 6-week limit for counting hours
recipients spent in Job Search/Job Readiness activities. For states with
waivers, the effective work participation rate is calculated based on the
conditions of the waiver. However, ACF also calculates a without-waiver
rate for states with waivers. After the state lost its waiver, it
redefined some of its categories of work by placing activities previously
in the Job Search/Job Readiness category (the category that had been
covered by the waiver) into other categories that do not have time
restrictions, such as Community Service. For this state, the 2003
with-waiver rate was significantly higher than the without-waiver rate. If
the without-waiver rate had been the effective rate, the state would have
been subject to penalty for not meeting the required work participation
rate. One month after the waiver expired and the definitions were changed,
the state's rate without the waiver rose over 50 percentage points to
reach the level of the 2003 with-waiver rate.
Another state, Nevada, also moved some activities from Job Search/Job
Readiness to Work Experience to avoid the 6-week time limit on counting
hours spent in Job Search/Job Readiness. According to a state official,
the change was made because, as a result of the 6-week time limit, field
workers would sometimes make decisions that were not in the best interest
of the recipients and move recipients out of activities too quickly. The
state official believes that the change is likely to help raise the
state's work participation rate.
Georgia added an additional activity (caring for a disabled relative who
does not live with the recipient) to its Community Service category and
broadened the definition of job skills training to allow for general
training for a job, rather than just training for a specific job.
According to a state official, these changes have helped the state
increase its work participation rate.
Other Differences in Classifications of Adult Recipients Result in
Inconsistencies across States
Some differences among states in their classification of recipients affect
whether or not recipients are included in the work participation rate
calculation. We found the following different approaches that remove
recipients from the work participation rate calculation.
o Creating separate state programs for two-parent families.11 By
serving two-parent families through separate state programs, states remove
those families from the calculation of work participation rates.12 Four of
the 10 states in our review (California, Georgia, Maryland, and Nevada)
had created separate state programs for two
parent families. Officials from Georgia, Maryland, and Nevada said that
they created the programs because they wanted to avoid having to meet the
higher two-parent family work requirement.13 Officials from
the states we reviewed with separate state programs for two-parent
11For more information on separate state programs for two-parent families,
see GAO, Welfare Reform: With TANF Flexibility, States Vary in How They
Implement Work Requirements and Time Limits, GAO-02-770 (Washington, D.C.:
July 5, 2002).
12States with separate state programs for two-parent families do not have
two-parent families in their TANF program and, therefore, do not have a
two-parent family work participation rate. Also, two-parent families in a
separate state program are not included in the state's all-family work
participation rate.
13Officials from California said that they created a separate state
program for two-parent families in order "to study the unique
characteristics and needs of this large and diverse population."
families said that although the states do not have to meet a federal work
participation requirement for their two-parent families, they still
require the adult recipients in the two-parent families to comply with the
states' work requirements.
o Moving recipients with significant barriers into a separate state
program. Nevada placed recipients who are less likely to meet the federal
work participation requirements in a separate state program, thus removing
them from the work participation rate calculation. These include
recipients (1) with pending applications for Supplemental Security Income,
(2) with medical difficulties confirmed by a physician, (3) in the third
trimester of pregnancy, and (4) caring for a disabled family member.
According to a state official, these recipients are still required to
participate in work activities to the extent that they are able.
o Reclassifying cases as child-only. California removes adults from TANF
cases when they are sanctioned, thus changing the cases from adult-headed
cases to child-only cases.14 Because child-only cases are not included in
state work participation calculations, the reclassification allows the
state to avoid counting noncomplying adults in the calculation, which in
turn is likely to result in a higher work participation rate. According to
a state official, the state's practice of reclassifying cases this way
preceded the implementation of TANF and therefore was not intended to
influence the state's TANF work participation rate.
14In California, when the adult is sanctioned, the family's monthly
benefit is reduced by the amount of the adult's share. In other states,
the case would be classified as partially sanctioned and would be removed
from the work participation rate calculation for 3 months. However, after
those 3 months, the case would again be counted in the work participation
rate calculation.
Some States Do Not Have Internal Controls Needed for Reporting Data in
Accordance with HHS Guidance, while Other States Do
Some of the states we reviewed did not have internal controls to help
ensure that reported hours of participation in work activities are in
accordance with HHS guidance. Other states have implemented systematic
practices to help ensure that reported hours are in accordance with HHS
guidance. Officials in some states cited challenges to obtaining support
for hours of participation in unsubsidized employment.
Some States Lack Internal Controls to Help Ensure Actual Hours of
Participation Are Reported
Some of the states we reviewed did not have internal controls to help
ensure that reported hours of participation in work activities are in
accordance with HHS guidance. The HHS guidance (as discussed more fully
later in this report) requires that states report hours recipients
actually participated in work activities rather than hours that the
recipients were scheduled to participate. Internal control weaknesses
among the states we reviewed include the following:
o Guidance and/or standard processes allow reporting of scheduled hours.
In some states, we found that the hours recorded to show how recipients
plan to comply with state work requirements (scheduled hours) were
reported to ACF as hours actually worked. Reporting hours scheduled
instead of hours worked does not take into account unexpected events or
noncompliance on the part of the recipient that would result in scheduled
hours being different than the hours actually worked. Allowing scheduled
hours to be reported was most common for unsubsidized employment, but in a
few states, we found guidance allowing scheduled hours for other work
activities, such as vocational education. In one state, guidance instructs
that a set number of hours be recorded for certain activities, such as 30
hours per week for parents involved in their children's Head Start
program. However, the guidance does not indicate that the number of hours
recorded should be verified to ensure that they were actual hours of
participation.
o Lack of guidance on the type of documentation needed to support
reported hours of work activities. Without guidance, there is no assurance
that the local staff collecting the data know what type of documentation
is adequate to support hours reported or whether any documentation is
required. The type of support needed would depend on the activity but
could include pay stubs and time and
attendance reports. Without guidance, staff at different locations are
more likely to use different standards for what support is needed.
o Guidance allows for reporting hours missed for good cause. Some states
have guidance specifying that when recipients are absent from a scheduled
activity and the case worker determines that there is a good cause for the
absence, the missed hours can be reported as worked. This results in hours
that were not worked being reported to ACF as worked.
o Insufficient monitoring to verify that hours were reported correctly.
Some states do not have a monitoring process in place to perform timely
reviews to verify that hours were reported correctly.15 Without sufficient
monitoring, states cannot be assured that local staff are reporting hours
that are supportable and complete.
Table 3 shows the number of states with the internal control weaknesses
described above for the states in our review. (See app. III for states
included in the table).
Table 3: Number of Reviewed States Lacking Internal Controls to Help
Ensure Hours of Participation Are Reported in Accordance with HHS Guidance
Number of states (out
of 9 reviewed) with the
internal control
Internal control weakness weakness
Guidance and/or standard processes allow reporting of scheduled hours
Lack of guidance on the type of documentation needed to support reported
hours of work activities
Guidance allows for reporting hours missed for good cause
Insufficient monitoring to verify that hours were reported correctly
Source: GAO review of 9 states' TANF documents and interviews with their
TANF officials.
Notes: (1) The table only covers 9 states because we were unable to assess
the internal controls of one of the 10 states we reviewed. (2) For states
where the internal control activities were determined at the local level,
we identified the state as having an internal control weakness if the
state did not ensure that the local areas were implementing such internal
controls.
15We considered the reviews to be timely if they were conducted at least
once a year.
Six of the states in our review have at least one of the internal control
weaknesses shown in table 3, and 3 of these states have at least two
internal control weaknesses. Two states that did not have any of the
internal control weaknesses have issued appropriate guidance and begun
monitoring as part of corrective action plans developed in response to
state audit findings on data problems. The states we reviewed may have
internal control weaknesses over the collection and reporting of work
participation data that our review was not designed to assess. For
example, a state may have issued appropriate guidance and established a
monitoring process; however, the state's staff may not follow the guidance
or conduct monitoring according to the required process.
Some States Have Systematic Approaches for Verifying Reported Data
While some of the states we reviewed lacked internal controls, other
states have implemented systematic practices to help ensure that reported
data are in accordance with HHS guidance.
o Documentation requirements. Some states we reviewed had guidance
outlining the specific documentation needed to verify actual hours for
each work activity and specified when the documentation must be obtained
and the hours recorded in the state's database.
o Monthly audits. Officials in some states we reviewed told us they
conduct monthly audits of all cases sampled for reporting to ACF to verify
that hours reported were actually worked. If there is not adequate support
showing that hours reported were actually worked, the data are not
reported to ACF, according to state officials.
Unsubsidized Employment Has Been Especially Difficult to Track
State officials cited challenges to obtaining support for hours of
participation in unsubsidized employment. For some states, the standard
process for obtaining hours of unsubsidized employment occurs every 6
months when local staff reverify a recipient's income and benefit
eligibility. Income is typically verified with a recent pay stub, which is
then used to project the hours the recipient will be working for the next
6 months. Some officials told us that trying to obtain documentation for
actual hours of unsubsidized employment from recipients or employers
monthly would be onerous for case workers and recipients. Officials said
they feared that contacting employers frequently to verify a recipient's
employment could jeopardize the recipient's job. In states requiring
monthly documentation, such as pay stubs, for hours of work reported to
HHS, state officials told us they were likely underreporting hours because
of the difficulty local staff face in obtaining the required
documentation.
A new effort on the part of ACF may provide states with additional options
for obtaining information on hours recipients spend in unsubsidized
employment. ACF recently began an initiative using the National Directory
of New Hires (NDNH)16 to help states identify whether or not recipients
are eligible for TANF benefits. If a state chooses to participate, HHS
will conduct data matches comparing NDNH employee data against the state's
list of TANF recipients. If the data matches identify recipients who are
working and are still eligible for TANF, the data may provide states with
a starting point for obtaining more complete work participation data,
according to an ACF official. Because the NDNH does not contain hours
worked, states would need to contact employers or recipients to obtain
information on the actual hours the recipient worked, according to an ACF
official.
HHS has provided minimal oversight of how states define work activities.
Further, HHS has limited guidance for states on reporting the appropriate
hours of work activities. HHS does not have a sufficient mechanism to
identify data not in accordance with ACF guidance.
HHS's Oversight and Guidance on Appropriately Defining Work Activities and
Reporting Hours of Work Participation Have Been Limited
HHS Has Provided Minimal Oversight of States' Definitions of Work Activities
Under PRWORA, HHS has authority to regulate states' definitions of work
activities. However, HHS has chosen not to issue regulations for this
purpose in order to promote the flexibility PRWORA provided states and in
response to calls from states for as much flexibility as possible in
designing their TANF programs, according to HHS officials. The current
TANF regulations only repeat the 12 categories of work activities that are
16The purpose of the NDNH, maintained by HHS's Office of Child Support
Enforcement, is to provide a national directory of employment and
unemployment insurance information to enable state child support
enforcement agencies to be more effective in locating noncustodial parents
who are responsible for paying child support. State directories of new
hires, state employment security agencies, and federal agencies provide
information to the NDNH.
included in PRWORA and do not further specify activities that can and
cannot be included under the 12 categories. Further, the current TANF
regulations do not state that HHS will review states' definitions of work
activities to determine if the definitions are appropriate. Accordingly,
HHS officials said they are unable to direct states to change their
definitions of work activities when they believe the states' definitions
are inappropriate, as has occurred in the past.
HHS Has Provided Limited Guidance to States on the Appropriate Hours to
Report
Although HHS has provided states with general guidance on reporting actual
hours of work participation, the guidance lacks specific criteria for
determining the appropriate hours to report. The requirement for reporting
actual hours of work participation is not specified in federal regulations
but is instead described in other documents. The guidance on the type of
hours are the following:
HHS regulations17
o Quarterly reports containing work participation data must be "complete
and accurate."
HHS responses to comments to proposed regulations18
o Hours for which the recipient was paid may be reported as hours
worked, such as paid holidays.
HHS Web site19
o States must report actual hours of participation for each work
activity.
o Reporting required (or scheduled) hours of participation is
inconsistent with the "complete and accurate" standard and is not
acceptable.
1745 C.F.R. 265.7(a).
1864 Fed. Reg. 17779 (April 12, 1999).
19U.S. Department of Health and Human Services, TANF Program Policy
Questions and Answers, HHS Web site:
http://www.acf.hhs.gov/programs/ofa/polquest/index.htm.
Detailed reporting instructions for TANF data report (reporting
instructions)20
o States are to report actual hours of participation.
o It is not acceptable to report scheduled hours of participation.
o States should validate actual participation in each work activity.
While HHS guidance calls for states to report actual hours, ACF officials
acknowledged it may be difficult or impossible to obtain information on
actual hours for some activities. For example, the ACF officials cited
problems states have in obtaining hours of actual participation for
recipients enrolled in vocational education courses, community colleges,
and universities for which attendance is not taken.
HHS Does Not Have a Sufficient Mechanism to Identify Data Not in Accordance
with ACF Guidance
ACF uses two mechanisms to identify problems with work participation data
submitted by states--computer edit checks and reviews of single audit
findings. However, neither mechanism provides ACF with reasonable
assurance that data reported are in accordance with ACF guidance.
Computer edit checks. ACF performs edit checks of the data submitted
quarterly by states. The edit checks identify outliers, such as if a
recipient is reported to have participated in 80 hours of work activities
for 1 week. The edit checks also identify inconsistencies between data
elements, such as if a recipient is reported as having earnings but is
also reported as having zero hours of work. ACF notifies states of any
problems identified by the edit checks so that states can correct and
resubmit the data. The edit checks can help improve the data; however,
they do not address the issue of verifying whether hours reported are
actual hours of participation.
State single audits. According to ACF officials, HHS's primary vehicle for
identifying problems with the states' data is states' single audit
reports. Findings from the state single audits go through a review process
at HHS to determine whether penalties are warranted. HHS has used findings
from the single audit to take action against a state for reporting poor
quality
20U.S. Department of Health and Human Services, TANF Data Report-Section
One, Disaggregated Data Collection for Families Receiving Assistance under
the TANF Program.
work participation data.21 However, ACF officials acknowledged that the
work participation data reported by states may have problems that the
single audits may not reveal. Our interviews with auditors in the 10
states we reviewed indicate that the level of attention given to work
participation data varies greatly among the states.
o State auditors from 5 states (California, Georgia, Maryland, Nevada,
and Ohio) told us that their most recent single audits covering the TANF
program22 did not review the data states report to HHS on hours of
participation in work activities.23
o Out of the 5 states in which state auditors reported that the most
recent single audits did test hours of work participation:
o Three states (Kansas, Washington, and Wisconsin) reported that the
audits did not look for support of actual hours but instead compared hours
shown in the state's welfare database with the hours reported to HHS for a
sample of cases. State auditors for the 3 states did not report any
findings on work participation data from these reviews.
o Two states (New York and Pennsylvania) looked for supporting
documentation to verify that hours reported to ACF were hours of actual
participation for a sample of cases. In New York, the audit had no finding
regarding work participation hours.24 The audit for
Pennsylvania found that some reported hours had no supporting
documentation to verify that they were actually worked. According to state
officials, Pennsylvania has implemented corrective actions in response to
the single audit findings.
21HHS threatened to penalize Pennsylvania for reporting poor quality work
participation data, and in response, Pennsylvania developed a corrective
compliance plan to address its data problems.
22Because all states' single audits do not review TANF annually, we asked
state auditors about the most recent single audit that did cover the TANF
program. In some states, this audit was not the most recent single audit.
23In Maryland, the single audit did not test the work participation data,
but other audits did. The auditors identified internal control weaknesses
over the work participation data that, according to state officials, have
since been corrected.
24While the most recent single audit for New York did not have findings
related to work participation data, past single audits found that reported
hours lacked documentation to verify that hours reported were actually
worked. The state took corrective action as a result of these findings.
Our review of the 10 states' internal controls identified weaknesses both
in states where state auditors told us that the most recent single audit
did not test the data reported to HHS on hours of participation in work
activities and in states that did. ACF officials acknowledged that because
of the broad nature of the single audits, the quality and focus of the
audits vary from state to state. The single audit, covering hundreds of
federal programs, is designed as a tool that raises relevant questions
about states' internal controls and compliance with laws and regulations
governing federal awards but is not intended to answer all questions.
State auditors responsible for conducting the single audits are provided
with federal guidance issued by OMB-known as the Compliance Supplement.
Currently the Compliance Supplement contains reference to work
participation data only as a key line item for auditors to look at in the
TANF data report. According to ACF officials, the fiscal year 2005
Compliance Supplement for the single audit will contain more guidance to
help auditors identify whether work participation data are reported in
accordance with HHS guidance. The addition to the Compliance Supplement
will suggest that state auditors test a sample of cases to determine the
completeness and accuracy of the data, including the proper documentation,
used in calculating the work participation rate.
By listing 12 categories of permissible work activities, Congress placed
limits on the type of activities that states could count toward meeting
federal work participation requirements. HHS regulations only restate the
12 categories of work activities and do not further specify the types of
activities that can and cannot count toward meeting the federal work
requirements, nor do they provide for HHS's oversight of states'
definitions of the 12 categories. HHS has taken the position that with the
current limited regulations, it will not place restrictions on the
activities states can count toward meeting TANF work requirements. As a
result, states have been able to include any activity in their definitions
of the 12 categories of work. Several states have broadly defined 1 or
more of the categories to include activities, such as substance abuse
treatment, that other states provide but do not consider countable toward
meeting the federal work participation requirement. Another discrepancy
among states occurs with the internal controls over the data they report
to HHS. For example, some states only report hours that have been verified
as having been actually worked, while others report hours without
verification. Because of the differences among states in the activities
that they count in calculating the work participation rate and in the
internal controls over the data used in the calculation, states are being
measured by different standards, and the work participation rates cannot
be used to compare the performance of
Conclusions
states. Further, a high work participation rate does not necessarily
indicate more engagement of TANF recipients in work activities than a
lower rate.
The current caseload reduction credit has greatly reduced the required
level of work participation for most states. However, if TANF
reauthorization results in lowering the caseload reduction credit and
raising the work participation requirements, more states could be
penalized, and states with strict definitions and effective internal
controls may be the most susceptible to penalties. If the TANF work
participation rate is to be an effective and equitable measure for
assessing states' performance and penalizing states, HHS needs to give
more oversight to states' definitions of federal work activities and
internal controls over the data to help make the measure more consistent
across states. We acknowledge that efforts to obtain more valid, accurate,
and consistent information for this performance measure may have
unintended consequences. For example, it may motivate states to use
separate state programs or make other choices about the design of their
TANF programs. However, a measure that is used to assess penalties needs
to be clear and consistent for all those potentially subject to penalty;
otherwise, the measure can result in misleading information and
inequitable penalty assessments.
Recommendations for Executive Action
HHS should issue regulations to
o specify the types of activities that can and cannot be included under
the 12 categories of work activities,
o have HHS oversee states' definitions of activities under the 12
categories, and
o set forth criteria for counting actual hours of activity and whether
there are circumstances under which scheduled hours may be counted.
We also recommend that HHS develop and implement a plan for working with
states to improve internal controls over work participation data. This
plan could make use of existing resources and include steps such as
o working through its regional offices to identify cost-effective
internal controls being used by states,
Agency Comments
and Our Evaluation
o using regional offices and existing sponsored conferences to share
information with states on these internal controls and to emphasize the
importance of internal controls, and
o obtaining information from states about their experiences using the
National Directory of New Hires to determine if it has potential for
helping states collect more complete work participation data and if there
are any useful practices to be shared with other states.
HHS provided written comments on a draft of this report; these comments
appear in appendix V. HHS said that the report provides it with new and
useful information. HHS said it would consider making the recommended
revisions in its regulations after TANF reauthorization and is exploring
options for implementing the recommendation on internal controls. HHS also
provided technical comments that we incorporated as appropriate.
Concerning our recommendation that HHS issue regulations to provide
oversight of states' definition and more guidance on counting hours of
work activities, HHS said that it will consider this recommendation when
it develops the proposed rule after Congress enacts legislation to
reauthorize the TANF program. We agree that addressing this recommendation
during rule making after TANF reauthorization is appropriate, if TANF is
reauthorized in the near future. However, TANF reauthorization has been
delayed for 3 years and if it is delayed for much longer, HHS should take
action to revise TANF regulations without waiting for reauthorization.
Concerning our recommendation that HHS develop and implement a plan for
working with states to improve internal controls over the work
participation data, HHS said it recognized that more can be done to ensure
increased consistency in the accuracy of the work participation data. HHS
also stated that ACF is exploring options to increase oversight and
provide technical assistance to states using its currently limited
resources. Further, HHS noted that federal staff for TANF had been reduced
by 75 percent several years ago. We added a statement about this staff
reduction to the background section of the report.
HHS expressed concern that the draft report did not sufficiently recognize
the flexibility that Congress intended for the TANF program, and it stated
that Congress did not intend that there be a consistent measure of work
participation across states or that HHS make state-by-state comparisons
for penalty purposes. We believe that the report does recognize the
flexibility Congress provided to states. Also, we believe that the fact
that Congress gave states the flexibility to design their TANF programs
does
not indicate that Congress did not want a meaningful measure to determine
if states are meeting TANF requirements. While states have flexibility in
determining what policies they will use to achieve TANF goals and
requirements, the measure used to assess their performance should be
defined the same way from state to state; otherwise, the rates produced by
the measure cannot provide meaningful and understandable information for
national policy makers and for assessing financial penalties. Further,
although the use of waivers and separate state programs contributes to
differences in which families are included in the work participation rate,
HHS has made efforts, through its annual reporting, to ensure transparency
about the rules governing these mechanisms and which states are using
them. The lack of oversight of states' definitions of categories of work
activities results in inconsistencies in performance measurement, as
discussed in this report, that are not transparent.
HHS noted some imprecision in the draft report's description of the work
participation rate calculation. In response, we made revisions to the
report. HHS also took issue with our discussion of how a state's work
participation rate changed after its waiver expired. We continue to
believe that this example of how a state's rate changed over 50 percentage
points 1 month after the waiver expired is a useful illustration of how
changes in definitions can affect work participation rates.
As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after its issue date. At that time, we will send copies of this report to
the Secretary of the Department of Health and Human Services, relevant
congressional committees, and others who are interested. Copies will be
made available to others upon request, and this report will also be
available on GAO's Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact
me on (415) 904-2272. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this report.
Additional GAO contacts and acknowledgments are listed in appendix VI.
Sincerely,
David Bellis, Director
Education, Workforce, and Income Security
Appendix I: Elements of the Work Participation Requirement and How the Work
Participation Rate Is Calculated
The Temporary Assistance for Needy Families (TANF) work participation
requirement is composed of (1) a requirement for a minimum number of hours
recipients must participate in order to be counted as engaged in work
activities and (2) a requirement for the percentage of TANF families with
an adult (or minor head of household) a state must have engaged in work
activities. The Department of Health and Human Services' Administration
for Children and Families (ACF) uses a formula specified in the Personal
Responsibility and Work Opportunity Reconciliation Act for calculating
whether states are meeting the work participation requirement.
The Minimum Number of The minimum number of hours TANF recipients must
participate, on Hours TANF Recipients average, per week to be counted as
engaged in work is shown in table 4.
Must Participate
Table 4: Number of Hours Different Types of Recipients Must Participate in
Allowed Work Activities to Count as Working in the TANF All-Family Work
Participation Rate
Required number of hours on average Type of recipient per week (or
activity)
Single parent with a child under 6 years old
Other adult recipients
Single parent under 20 years old Satisfactory school attendance or
equivalent
Source: GAO analysis of TANF regulations.
Note: Adults in two-parent families have different requirements for the
number of hours of activity.
Base Percentage of a Different base percentages were established for all
families and for two-State's TANF Families Who parent families. The
required percentages rose over time until they Must Be Engaged in Work
reached their current levels shown in table 5.
Activities
Table 5: Base Percentage of TANF Families That Must Be Engaged in Work for
the
All-Family and the Two-Parent Family Rates
Type of participation rate Current required rate
All-family (single and two-parent combined) 50%
Two-parent families 90%
Source: GAO analysis of TANF regulations.
Note: This base percentage is adjusted for each state using the caseload
reduction credit.
Appendix I: Elements of the Work Participation Requirement and How the
Work Participation Rate Is Calculated
Caseload Reduction Credit That Reduces the Base Percentage
For each percentage point that a state's welfare caseload declined from
its 1995 level, the caseload reduction credit reduces the base percentage
of TANF families who must be engaged in work in the state. For example, if
a state's welfare caseload declined 40 percent since 1995, then the
all-family work participation rate that it must meet is 10 percent and the
two-parent family work participation rate that it must meet is 50 percent.
Because of significant declines in welfare caseloads that have occurred in
most states since 1995, 33 of the 50 states were required to meet an
all-family rate of 10 percent or less in fiscal year 2003.
Calculation of Each State's Each quarter, states are required to report to
ACF monthly data on their
Work Participation Rate TANF cases, including the number of hours each
adult recipient spent in countable work activities. States have the option
of reporting to ACF on all their TANF cases (the universe) or on a
scientifically drawn sample of TANF cases.1 Using the data reported by
states, ACF calculates an annual work participation rate for each state. A
state's annual work participation rate is based on the state's average
monthly rate for the year. The formula for the all-family rate is shown in
figure 1.
Figure 1: Formula for Calculating the All-Family Work Participation Rate
A B - C
X 100
A = Adult-headed cases who worked the required minimum number of hours in
countable work activities
B = All adult-headed cases
C = Cases sanctioned for 3 months or less during the year
(
Source: GAO analysis of TANF legislation and regulations.
Note: For the purposes of this formula, the term "adult" refers to TANF
recipients age 20 or over or recipients under age 20 who are head of a
household receiving TANF.
Child-only TANF cases are not included in the calculation. States have the
option of disregarding from the calculation of the all-family work
participation rate families with a single custodial parent and a child
under
1About one-half the states report using the universe, and about one-half
report using a sample.
Appendix I: Elements of the Work Participation Requirement and How the
Work Participation Rate Is Calculated
age one. Other families disregarded in the calculation of the all family
rate include
o families that are part of an ongoing research evaluation approved
under Section 1115 of the Social Security Act;
o families that are disregarded based on an inconsistency under an
approved welfare reform waiver that exempts the family; and
o families participating in a tribal family assistance plan or a Tribal
work program (unless the state chooses to include the families in the
calculation).
The two-parent family rate is calculated the same way as the all-family
rate, except that the calculation only includes two-parent families.
Twoparent families with a disabled parent are not used in calculating the
twoparent rate.
Appendix II: States That Count Certain Activities toward Meeting the Federal
Work Participation Rate
Table 6: States Covered by the Review That Count Certain Activities toward
Meeting the Federal Work Participation Rate
Reviewed states that count the activity as federal work participation
Activity
Caring for a disabled household or family member
Georgia, Maryland, New York, Washington, Wisconsin
Substance abuse treatment Kansas, Maryland, Nevada, New York, Washington,
Wisconsin
Domestic violence counseling Nevada, Washington, Wisconsin
Other mental health counseling Kansas, Nevada, New York, Washington,
Wisconsin
English as a second language Kansas, Nevada, New York, Ohio, Pennsylvania,
Washington, Wisconsin
Source: GAO review of 10 states' TANF documents and interviews with the
states' TANF officials.
Note: In the limited circumstance that counseling is related to employment
and is given to a recipient along with employment services by the same
service provider, Ohio counts hours spent in substance abuse treatment,
domestic violence counseling, and other mental health counseling toward
meeting the federal work participation rate, according to an Ohio
official.
Appendix III: States Identified as Lacking Certain Internal Controls
Table 7: States Covered by the Review That Lacked Internal Controls to
Help Ensure Hours of Participation Are Reported in Accordance with HHS
Guidance
States (out of 9 reviewed) with the internal control weakness
Internal control weakness
Guidance and/or standard processes allow reporting of Georgia, Kansas, Ohio
scheduled hours Lack of guidance on the type of documentation needed to
California, Kansas, New support reported hours of work activities York,
Wisconsin Guidance allows for reporting hours missed for good cause Wisconsin,
New York
Insufficient monitoring to verify that hours were reported Kansas, New
York, correctly Wisconsin
Source: GAO review of 9 states' TANF documents and interviews with their
TANF officials.
Notes: (1) Washington is not included in this table because we were unable
to assess its internal controls. (2) For states where the internal control
activities were determined at the local level, we identified the state as
having an internal control weakness if the state did not ensure that the
local areas were implementing such internal controls. (3) We considered
state monitoring of local offices to be insufficient if it occurred less
than yearly and did not verify that hours in work activities were reported
correctly.
Appendix IV: Fiscal Year 2003 Work Participation Rates Calculated by HHS Based
on Data Provided by States
As discussed in this report, our review covering 10 states found that
there were differences among states in the activities counted in the rates
and, in some cases, weaknesses in internal controls over the data used to
calculate the rates. Therefore, these rates may not reliably reflect work
participation rates and should not be used to make comparisons between
states.
Table 8: Fiscal Year 2003 Work Participation Rates Calculated by HHS Based
on Data Provided by States
Page 32 GAO-05-821 Welfare Reform
All-families Two-parent
State rate families Alabama 37 N/A Alaska 41 Arizona 13 Arkansas 22 California 24 N/A Colorado 33 Connecticut 31 N/A Delaware 18 N/A Florida 33 N/A Georgia 11 N/A Hawaii 66 N/A Idaho 44 Illinois 58 N/A Indiana 40 N/A Iowa 45 Kansas 88 87 Kentucky 33 46 Louisiana 35 39 Maine 28 29 Maryland 9 N/A Massachusetts 61 74 Michigan 25 36 Minnesota 25 N/A Mississippi 17 N/A Missouri 28 N/A Montana 86 96 Nebraska 33 N/A Nevada 22
ratea N/A
Appendix IV: Fiscal Year 2003 Work Participation Rates Calculated by HHS
Based on Data Provided by States
State All-families rate Two-parent families ratea
New Hampshire 28 N/A
New Jersey 35 N/A
New Mexico 42
New York 37
North Carolina 25
North Dakota 27 N/A
Ohio 62
Oklahoma 29
Oregon 60
Pennsylvania 10
Rhode Island 24
South Carolina 54
South Dakota 46 N/A
Tennessee 43 N/A
Texas 28 N/A
Utah 28 N/A
Vermont 24
Wyoming 83 92 Source: Rates calculated by HHS based on data provided by
states.
Virginia 45 N/A Washington 46 44 West Virginia 14 25 Wisconsin 67 40
aSome states do not have two-parent families in their TANF programs. Thus,
the two-parent families rate is not applicable for some states, as
indicated by N/A.
Page 34 GAO-05-821 Welfare Reform
Page 35 GAO-05-821 Welfare Reform
Page 36 GAO-05-821 Welfare Reform
Page 37 GAO-05-821 Welfare Reform
Page 38 GAO-05-821 Welfare Reform
Appendix VI: GAO Contact and Staff Acknowledgments
GAO Contact David Bellis (415) 904-2272
Staff The following staff members made major contributions to the report:
Gale Harris (Assistant Director), Kathy Peyman
(Analyst-in-Charge),Acknowledgments Carolyn Blocker, Amanda Miller, Cady
S. Panetta, Tovah Rom, Dan Schwimer, and Shana Wallace.
Related GAO Products
Welfare Reform: Rural TANF Programs Have Developed Many Strategies to
Address Rural Challenges. GAO-04-921. Washington, D.C.: Sept. 10, 2004.
Supports For Low-Income Families: States Serve a Broad Range of Families
through a Complex and Changing System. GAO-04-256. Washington, D.C.: Jan.
26, 2004.
Welfare Reform: With TANF Flexibility, States Vary in How They Implement
Work Requirements and Time Limits. GAO-02-770. Washington, D.C.: July 5,
2002.
Welfare Reform: Federal Oversight of State and Local Contracting Can Be
Strengthened. GAO-02-661. Washington, D.C.: June 11, 2002.
Welfare Reform: States Are Using TANF Flexibility to Adapt Work
Requirements and Time Limits to Meet State and Local Needs. GAO-02-501T.
Washington, D.C.: Mar. 7, 2002.
Welfare Reform: More Coordinated Federal Effort Could Help States and
Localities Move TANF Recipients with Impairments toward Employment.
GAO-02-37. Washington, D.C.: Oct. 31, 2001.
Welfare Reform: Progress in Meeting Work-Focused TANF Goals. GAO-01-522T.
Washington, D.C.: Mar. 15, 2001.
Welfare Reform: Moving Hard-to-Employ Recipients Into the Workforce.
GAO-01-368. Washington, D.C.: Mar. 15, 2001.
Welfare Reform: Data Available to Assess TANF's Progress. GAO-01-298.
Washington, D.C.: Feb. 28, 2001.
Single Audit: Update of the Implementation of the Single Audit Act
Amendments of 1996. GAO/AIMD-00-293. Washington, D.C.: Sept. 29, 2000.
Welfare Reform: Work-Site-Based Activities Can Play an Important Role in
TANF Programs. GAO/HEHS-00-122. Washington, D.C.: July 28, 2000.
Standards for Internal Control in the Federal Government.
GAO/AIMD-00-21.3.1. Washington, D.C.: Nov. 1999.
Related GAO Products
Performance Plans: Selected Approaches for Verification and Validation of
Agency Performance Information. GAO/GGD-99-139. Washington, D.C.: July 30,
1999.
Block Grants: Issues in Designing Accountability Provisions.
GAO/AIMD-95-226. Washington, D.C.: Sept. 1, 1995.
Welfare to Work: JOBS Participation Rate Data Unreliable for Assessing
States' Performance. GAO/HRD-93-73. Washington, D.C.: May 5, 1993.
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