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Welfare - Regulations - TANF-Final-Issues - Administrative Costs

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Direct Direct Admin Indirect Admin Sub- Recipient Costs Program Costs Costs Services Costs (incurred by (incurred by (incurred by For Total costs for Cost Categories State Agency(s) State Agency(s) State Agencies performing performing administering administering providing admin direct program TANF grant) TANF grant) support to TANF services for services Agency(s)) State including the Agency sub-recipient's own admin costs Costs for General Notapplicable Included in 15% Included in 15% Included in Sub-recipient's Program cap cap 15% cost associated admin Administration cap costs not and Coordination included in 15% (see examples (I)- cap (xii) Salaries and Are program Not included in Notapplicable Not Not included in Benefits of Staff services costs 15% cap Applicable 15% cap Providing Services and Other Costs Directly Associated with Providing Program Services to Individuals [sec. 263.0 (b)(1)] Management Are not Based on Not included in Not Not applicable Information program statutory 15% admin costs included In Systems Costs for services costs, exception, are cap 15% admin Tracking and but are not included in cost cap Monitoring statutorily 15% cap TANF removed from Requirements 15% cap Some comments Sub- corr plant that recipient case management means functions thatwere sub- contracted out were trextal differently them thes Ion kind of any in house. & Batthe? was it true in NPR M but (publec, nonproft)? private fixed here INCLUSIONS BASED ON DEFINITION EXCLUSIONS BASED ON DEFINITION OF ADMINISTRATIVE COSTS: OF ADMINISTRATIVE COSTS: Costs of general administration and Costs directly associated with providing coordination of programs program services (such as diversion assistance, screening and assessments, All indirect (or overhead) costs employability plans, work activities, post-employment services, supports, Salaries and benefits not directly and case management), including: associated with providing program services Salaries and benefits of staff directly providing services Activities related to eligibility determination Administrative costs directly associated with providing program Preparation of program plans, budgets, services, such as supplies, and schedules equipment, and travel Monitoring of programs and projects Costs of fraud and abuse units Procurement activities Public relations Services related to accounting, litigation, audits, management of property, payroll and personnel Preparing reports and other documents Conference travel Training NOTE: We believe changes are required to the regulation and preamble to make these policies clear. INCLUSIONS BASED ON SYSTEMS EXCLUSIONS BASED ON SYSTEMS EXCLUSION PROVISION EXCLUSION PROVISION Systems costs not related to required Direct expenditures on information monitoring or tracking activities (e.g., technology and computerization needed related to general State program for tracking and monitoring required by management and reporting TANF, such as: responsibilities, payroll and budget functions) Purchase or lease of hardware or software dedicated to required All indirect (or overhead) costs monitoring or tracking activities Costs of developing software for Costs related to required monitoring and required monitoring or tracking, tracking, but not directly related to including IEVS matching and information technology or transmission of required TANF computerization (e.g., costs associated reports with follow-up on data match findings) Salaries and benefits of staff performing automated monitoring or tracking functions, including data input and generation of computerized tracking reports Salaries and benefits of staff responsible for maintaining the hardware or software needed for monitoring and tracking Charges for computer time related to monitoring and tracking activities Administrative costs (such as equipment purchase or rental, supplies, and training) directly associated with performing this function Issue 7: Fiscal Issues General: Discuss why there is a different standard for assessing whether expenditure can count towards MOE (outside the TANF program) versus whether expenditures count as "assistance" (within the TANF program.) For example, the MOE standard is tied to furthering the purposes of the TANF program, however, this standard is not used in assessing whether a state expenditure on a specific service falls within the definition of assistance. How much of this difference in the two standards is generated by specific differences in the statutory language, and how much is generated by HHS regulatory interpretation? What is the policy rationale for having difffering standards? P. 472, 2nd full para: please clarify whether the "compromise" approach is new --does reference to "this rule" include the NPRM, or just the final rule? P. 479, 2nd full para: Should you acknowledge in your response the many comments about the no changing nature, and increasingly blended function, of eligibility/case management/service (concerred wes provision? Similarly, in last para, the response that welfare agencies have a long history of undern identifying eligibility costs seems to ignore the changing nature of the work. It's much easier to onpt identify and allocate costs when there are separate staff doing the work. What do we know about no how many states have integrated eligibility and case management/employment functions? data On this issue: roughly what percent of a case manager's time would be spent on eligibility determination? Roughly what kind of burden would a State be incur to allocate these costs? What would be the proportion of costs devoted to eligibility determination (in other words, would a large burden be incurred to track a small proportion of costs? Len than before P. 480, last para and 481, 1st para: how do you envision this working i.e., states developing own definition. Are you asking them to describe the definition and submit it to you? How will this be enforced/audited? stat will have defendion, Fave at normable for andators P. 482, 2nd full para: How do States sort out diversion and assessment activities from eligibility determination? (mage at A of am cort) will do chart policy:- P. 485, 1st para: Please explain how this distinction between not excluding systems costs from admin definition of admin costs, but excluding them from determining whether state has exceeded cap, coats will play out for reporting purposes is the State supposed to track and report systems costs as under admin costs until they hit 15% cap? p-490- performance contracts PP. 491-493: Please clarify the policy on contract costs is an (ys entire contract to be classified as either admin or program in function and reported accordingly, or is there an expectation that contracts which cover a variety of services are to be broken out accordingly? If the latter (as dontacts implied on p. 493, 2nd full para), then the response on p. 491 may need to be clarified. M purpox purpos is Total Admin wits and Systems admin) is program, both admint programm,then Total TANF - transfers Tienal No program must devide (everal 80me adm parancents Concerns ') how toestimate foregor sevemen 2) could provide the herefits to 3) MOE'S middle 11-2000 the pays P. 494, 1st full para: What is the specific reference to part 92 of the regulations? P. 498, 1st full para: Just to clarify, did you use the revised definition of adjusted SFAG, excluding transfers to SSBG and CCDF, to compute participation rate penalties for 97? P. 499, 1st para: What is the admin cap in SSBG and CCDBG? P. 499, 2nd para: On average, how much of a transfer would create a problem in using the post- transfer amount? What do the data show about how much is being transferred, relative to the pre- and post-transfer amount and the admin percentages under each? upto10'h-11% new about 8% P. 506, 1st full para: Were there any Hill comments on this issue? No NPRM? P. 510, 1st full para: Please after walk through example of how this works. Is this a change from yes Premime 8090 stilrcom Submi part into to shaw They have meet 75% (even states not 1-g to report P. 525, 2nd para and 569, 1st para: Please discuss the rationale here and in the NPRM for pmt only counting refundable state EITCs. Why should Federal rules provide a disincentive to States rate) from choosing a credit, which does not require sending money out to the recipient and has the same net effect as a cash expenditure on both the State Treasury and the taxpayer? This is especially true in light of the allowance for public transit reimbursement (p. 576, 1st para), since these lead to lower "revenues" as well. $175 the liability $20,000,1+ The $25 avail MOE foregore revenue" not experition the credit higherthan liability P. 527, last para: What evidence does HHS have to show that Congress intended spending on moral juvenile justice to be allowable with Federal funds but not with State MOE funds? Two related questions: on pp. 540-41, HHS notes that juvenile justice services "do not meet any of the purposes of the TANF program". How is this consistent with the allowable spending discussed on p. 527? In contrast, there are likely to be many families where a troubled child is the reason a needy parent needs government assistance and cannot spend time on job preparation or work. Juvenile justice services may be precisely what is needed to fulfill "purpose 2" and thus make this an allowable MOE expenditure, although HHS concludes differently in the first paragraph of p. 541. Why? P. 531, 3rd para, Response: What is the status of CMIA guidance being developed by ACF and Treasury? P. 538, 1st full para: Has this discussion that certain IV-A services, e.g. EA/ juvenile justice, may your not qualify as MOE changed from the NPRM? Are there certain expenditures that also are not allowable uses of federal TANF funds? If so, what are implications for states how are they now paying for such services? 408 of 115 statute PROWERA has prohibition P. 538, 2nd para: What happens if a child lives with a non-relative legal guardian and that family 569- all state adopt Parent swer yes meets income and resource (if applicable) standards -- is that an eligible family? If yes, please clarify. If no, why not? NCPcan seceive P. 549, last para: Should HHS clarify that months in which an NCP receives TANF assistance Shones would count toward the NCP's time limit, if applicable? the limitallous not not worstinu cuother assistance PP. 551, 555: What are the implications for time limits, work requirements, and reporting regarding spending on "non-assistance" activities in 401? States Will get financell report by caty no reporting /Card record P. 563, last para: What is the purpose of stating what HHS would "prefer" in a State plan? Since this information will come in the annual report, at which time more will be known about what is actually in the programs, why make this nonbinding request? Don't have auth to require 581- do IDA contributions count as "Noodonce" P. 605, 2nd para: Should HHS's sound explanation of "generally available" educational services as those "without cost and without regard to their income" be included in the reg text? P. 639, 1st para: Do the OMB Circulars not require reporting of program income? not refund reprting keepy P. 645, last para: Did OMB make an active, on-the-record determination that the circulars apply? m NPR/ I land In JMB t An program gift before Pat P. 660, 2nd full para: What is the statutory basis for only allowing earned income into an IDA? Sa 404(h)12)(c) P. 928, (x): Are all travel costs considered admin costs, or only those related to administrative functions (for example, are a job developer's travel costs administrative or program expenses)? yeo Jen than 1/10 of19. P. 928/Section 263.0 generally: While classification of contract costs are discussed quite a bit in the preamble, should they also be mentioned in the regulatory language? No Why start the section with ".0" as opposed to the usual ".1"? 584= 1st full pan: is this enployment welen MMg itself (No) 602-605 : what educational etpt litures count? wellook why use spenal class AKto dage Administrative Costs Background Under the TANF statute, states may not spend more than 15 percent of either their Federal TANF funds or their State MOE dollars on administrative costs. The statute excludes from this 15 percent expenditures for "information technology and computerization needed for tracking or monitoring." NPRM Under the proposed rule administrative costs means costs for general administration and coordination of the TANF and separate state programs, including indirect (or overhead) costs. It provided examples of eleven types of activities that would be classified as "administrative costs," such as salaries and benefits not associated with providing program services, plan and budget preparation, procurement, accounting, and payroll. The preamble provided further clarification that eligibility determination would be considered administrative costs, but that case management could be treated as program cost. The NPRM required further that portions of a worker's time be allocated based on this distinction. Finally, the preamble indicated that administrative costs incurred by subgrantees, contractors, community service providers, and third parties would be considered part of the total administrative cost cap. Final Rule The final rule makes one basic change to the regulatory framework with additional detail added in the preamble -- it explicitly includes eligibility determination within the definition of administrative costs in the regulatory text. The preamble provides the following additional changes/clarifications: allows states to determine an entire contract to be for administrative or programmatic service, depending on the initial determination, without need to further itemize or consider individual cost components; includes in the systems exclusion items that would normally be administrative costs, but are needed for monitoring or tracking purposes under TANF (such as data collection input activities, and preparation of reports required under the Act). 1/26/99 COUNTY Rec 2/9/98 #23 COUNTY OF ONONDAGA AN 15 PM 2: 14 OFFICE OF THE COUNTY EXECUTIVE JAMES A. ALBANESE NICHOLAS J. PIRRO ADMINISTRATOR - PHYSICAL SERVICES COUNTY EXECUTIVE JOHN H. MULROY CIVIC CENTER 421 MONTGOMERY STREET - 14TH FLOOR LYNN A. SHEPARD EDWARD KOCHIAN ADMINISTRATOR - HUMAN SERVICES DEPUTY COUNTY EXECUTIVE SYRACUSE, NEW YORK 13202-2995 SUSAN J. TORMEY MARTIN A. FARRELL 315 . 435-3516 RESEARCH & COMMUNICATIONS OFFICER EXECUTIVE COMMUNICATIONS DIRECTOR TELECOPIER: 315 . 435-8582 January 15, 1998 Senator Alfonse D'Amato Hart Senate Office Building Room 520 Washington, D.C. 20510 RE: FEDERAL DEFINITION OF TANF EXPENDITURES Dear Senator D'Am The purpose of this letter is to request your intervention to the preliminary definition of TANF expenditures that has been promulgated by the federal government in 45 CFR part 270. At the local level we understand that case management functions that are purchased fall within an administrative category while those same functions, if performed by government employees, would be classified as programmatic. We strongly believe that this interpretation would put Onondaga County and other county governments over the 15% administrative cap level and thereby jeopardize our local welfare reform efforts. Contracting with the private sector has become an accepted tool for local governments as they reengineer programs to control local costs. To include contracting costs as an administrative cost unfairly penalizes local governments who have been proactive in reducing mandated program costs which benefit federal, state, and local taxpayers To reverse this course of action would only mean higher costs for all taxpayers. As you know, the Onondaga County Department of Social Services has delegated responsibility for JOBS activities to the local community college When we designed this program wc believed, and still believe today, that associating with the community college has given us the flexibility to operate successfully. 100% RECYCLED PAPER Defining this program and those case management activities as administrative expenses as proposed, would cause undue financial hardship and jeopardize our continued success in reforming the welfare system. We wanted to alert you to this federal proposal and ask for your help in developing a federal position that is consistent with the spirit of welfare reform. Very truly yours, Nicholas Nickdes Jhins County Executive Assisting Those In Need - Independence With Disnity AFSCME 2/98 penalty reduction for not meeting the work requirements only if states prove they have not diverted cases to a separate state program to avoid the work participation rates. The regulations emphasize the potential improper motives to the exclusion of other goals state might have to operate state-funded programs. Under § 271.51, HHS can waive the penalty if HHS determines that a state had reasonable cause for failure to comply with the work requirements. A pre-requisite for this wavier is a demonstration that a state has not diverted cases to a separate state program to avoid work participation rates. Again, states will be deterred from setting up separate state-funded programs if they have to prove their intent to HHS. Thus, innovative state-funded programs become suspect. Under § 272.5, HHS would not forgive a state penalty, even based on reasonable cause, if they "detect a significant pattern of diversion of families to a separate State program that achieves the effect of avoiding the work participation rates..." This is a far reaching rule. HHS would be viewing virtually all state funded programs with suspicion. The tone of the regulations might have a chilling effect on states experimenting with innovative programs requiring work activities distinct from those required by the federal mandatory participation rates. AFSCME Recommendations: HHS should base its calculation of meeting work participation requirements on a state's TANF program only and eliminate the effects test from the regulations on reasonable cause exceptions to the penalties. Administrative Costs § 273.0 (b) Administrative Costs The Preamble states that the 15% cap on administrative costs would apply to subgrantees, contractors, community service providers and other third parties. However, there is no reference to this in the proposed regulations. The final regulations should make clear the 15% cap applies to all costs and it is irrelevant whether costs are incurred by the TANF agency directly or by other parties. The Preamble also recognizes there may be instances where individuals are performing work that is administrative (i.e. eligibility determination) and also work that should be viewed as a program cost (Le. case-management functions or delivering services to clients). The Preamble indicates that costs could be allocated to respective categories. This guidance should be in the final regulations. Family Violence Option (FVO) Э 271.52(b)(1) AFSCME applauds HHS for clearly outlining the problem of domestic violence and encouraging states to adopt the family violence option The proposed regulations help states with this mission by ensuring that they will not face penalties for using this option. However, there are several areas in the proposed regulations which need to be modified in 6 FEB-18-1998 17:06 202 429 1284 If the first assumption is not true, I would expect the market clearing price for regulation to rise and if the second assumption is not true, I would expect adjustments between the energy and regulation markets that could tend to depress energy prices and raise regulation prices. Exhibit JSH_4 indicates that the marginal unit could expect to earn about $40,000 to $50,000 per year on an AGC investment of $100,000 if regulation prices were sustained at a level of 5 percent higher than the competitive market. Such an investment has a short 2 to 2.5 year payback period and clearly could be undertaken by a competitor in response to an exercise of market power. Furthermore, I understand that AGC equipment could be installed on an existing unit in significantly less time than the DOJ two-year benchmark. This calculation is indicative and an actual investment analysis would be more detailed, of course. Nonetheless, it suggests that AGC investment is likely to respond quickly to any profit potential, including that created through any attempted exercise of market power. Because of the ease with which entry can occur, I conclude that the existing AES units would be unable to sustain a significant increase in the price of Regulation services. Excess Capacity Another way of assessing market power is to examine AES's Regulation capacity in relation to the amount of Regulation needed by the ISO and the Regulation capacity of other suppliers in the market. I have modeled the electricity market in California to mimic conditions during the peak hour. I have calculated the requirements for Regulation service based upon the standards in the ISO Tariff, using the sum of the peak demands Page 14 compatibility with child care providers may be more important. In the NPRM, we noted that our proposed definition was closely related to the JTPA definition and thus should facilitate the coordination of WTW and TANF activities and support the transition of hard-to-employ TANF recipients into the workforce. As caseloads decline and the proportion of hard-to-serve clients rises, coordination between these two programs may become even more critical. While adopting the CCDF definition might facilitate TANF and CCDF coordination, we do not believe that this coordination depends upon a uniform definition. Also, given the differences in the caps of the two programs (15 percent versus 5 percent) and the different legislative histories, there is little reason to believe that Congress intended a uniform definition. def ww? (e) Treatment of Eligibility Determinations Comment: Many of those commenting on this issue objected to our proposed inclusion of eligibility determination within the administrative costs definition. Some argued that eligibility determination was not an administrative activity and was not easily or logically separable from case Q: what do 4m Q 98 spending reports indicate Need to about admin 475 spending levels ? This as part of justification of not, to ohill well below 15%, weshald we - shd menhan take That into condideration. y management. Still others commented on the burden associated with our proposal, the general need for State flexibility in this area, and the potential negative effects on a State's ability to fund critical staff who work directly with clients. One State agency indicated that the distinction in our proposal was not burdensome, and would require only a slight change in its Random Moment Study. Many commenters took strong exception to our characterization of any portion of the eligibility determination process as administrative. They argued that (1) the classification of eligibility determination as an administrative activity contravened existing State practice; we should honor the State's division of staff in the agency into administration and service categories and not force States that implemented their TANF programs in good faith to re-examine this relationship; (2) the nature of work with families is undergoing significant change (a change recently noted in a study by the Manpower Demonstration Research Corporation entitled "View from the Field") ; traditional approaches under the old AFDC program are entirely inappropriate to the new program; the dichotomy between eligibility determinations and case management is an outdated one; (3) because eligibility determination is part 476 of the case management function, it would more appropriately be categorized as a program or service function than administration; (4) staff performing functions such as substance abuse screening and assessment for domestic violence services may have some administrative duties, but these duties are integral to providing services; and (5) front-line eligibility determinations is arguably a direct service, under the first statutory goal of the TANF program. Commenters further argued that: (1) the differentiation between eligibility and service delivery would be virtually impossible for States; (2) because the same employee has integrated the determination of eligibility, screening and approving applicants for diversion, assessing and developing employability plans and work activities, counseling and providing pre-employment and post-employment supports, it would be impractical and unnecessary to separate these latter duties from eligibility functions; (3) determining eligibility and providing employment and other needed services are not two distinct processes; a case manager may collect information for the purpose of providing or arranging supportive services, but use that same information to determine the family's eligibility; (4) in States that have merged the eligibility determination and case management functions, it would be costly and cumbersome to isolate these costs; and (5) States have computerized much 477 of the eligibility determination process. A couple of commenters indicated that our regulations needed to draw a clearer line between administrative and program costs. One commenter provided several specific examples of situations where the line between administrative and program costs that we drew in the proposed rule was unclear. For example: (1) determining whether a family qualifies for diversion or supportive services may also involve determining if the family qualifies for assistance; and (2) deciding whether to impose a sanction, grant a hardship exception to the time limit, and determine compliance with a school attendance requirement all may have both programmatic and eligibility implications. A significant number of commenters spoke to the burden of the proposed requirement on TANF agencies. They argued that State and local systems are geared towards allocating expenses among a wide variety of Federal and State programs or trying to focus on innovation and results. They do not want to direct resources to prorating the expenses of front- line workers who are simultaneously engaged in eligibility determination, case management, and service provision to TANF beneficiaries. Commenters also made a general plea for flexibility, saying 478 that States need flexibility in order "for the role of front line staff to continue to evolve to best meet the goals of welfare reform" and to enable States to build partnerships with local service providers. Finally, several commenters noted that we presented this policy only in the preamble, not in the regulation itself. Response: While we do not want our rules to distort State choices about how to deliver services or divert State resources unnecessarily to cost accounting activities, we do not believe it would be consistent with the intent of the ack water administrative cost cap provisions for States to be spending new states entending large amounts of money on eligibility determinations rather than program services. We have a statutory responsibility them not bay that for protecting against misuse of funds, and we know that money diverted to administrative activities could decrease the availability of benefits and services for needy action does other dhiy hmartin Pais a for families. GWt isn't eligibiling a condiner necessar futting + gernies? benefits them Also, we are not convinced by State arguments about the significant burden they would face in identifying the costs associated with eligibility determination activities. but systemic again, Welfare agencies have a long history of identifying the costs of eligibility determinations and allocating these costs as administrative activities. A variety of other ,479 That states are likely (i) There an argument to ensure link, less difibility for cant then elisibilit programs determin we as admin significant, related programs-such as Medicaid, the Child Health Insurance Program (CHIP), and Food Stamps--continue to follow this practice. Thus, this kind of cost allocation has been standard operating procedure in a number of programs and has been accepted as a normal part of doing business. We also believe that a clear policy on eligibility determinations might produce more consistent penalty determinations and reduce audit disputes, appeals, and litigation regarding application of the misuse of funds anexarple? weadd penalty. state has a wancer who peyams a vanchy of funchars of Ifa whol eligibility assessment, diveropment in including Leart plan, and monitaing of participation individual work achulles, Then state wd allorate just for Mat elifib share of costs Based on these considerations, we have decided to add x admin. eligibility determinations to the list of administrative activities at $263.0 (b) More specifically, this rule reflects the basic definition that was in the proposed regulation at $273.0(b) (with the same basic examples of administrative cost activities), but adds the NPRM preamble policy that required eligibility determination to be treated as an administrative cost. We recognize that this is a significant policy decision that merits inclusion directly in the regulatory text; we agree with commenters that it should not be relegated to the preamble. 480

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    "ocrText": "Direct\nDirect Admin\nIndirect Admin\nSub- Recipient Costs\nProgram\nCosts\nCosts\nServices Costs\n(incurred by\n(incurred by\n(incurred by\nFor\nTotal costs for\nCost Categories\nState Agency(s)\nState Agency(s)\nState Agencies\nperforming\nperforming\nadministering\nadministering\nproviding\nadmin\ndirect program\nTANF grant)\nTANF grant)\nsupport to TANF\nservices for\nservices\nAgency(s))\nState\nincluding the\nAgency\nsub-recipient's\nown admin costs\nCosts for General\nNotapplicable\nIncluded in 15%\nIncluded in 15%\nIncluded in\nSub-recipient's\nProgram\ncap\ncap\n15% cost\nassociated admin\nAdministration\ncap\ncosts not\nand Coordination\nincluded in 15%\n(see examples (I)-\ncap\n(xii)\nSalaries and\nAre program\nNot included in\nNotapplicable\nNot\nNot included in\nBenefits of Staff\nservices costs\n15% cap\nApplicable\n15% cap\nProviding\nServices and\nOther Costs\nDirectly\nAssociated with\nProviding\nProgram Services\nto Individuals\n[sec. 263.0 (b)(1)]\nManagement\nAre not\nBased on\nNot included in\nNot\nNot applicable\nInformation\nprogram\nstatutory\n15% admin costs\nincluded In\nSystems Costs for\nservices costs,\nexception, are\ncap\n15% admin\nTracking and\nbut are\nnot included in\ncost cap\nMonitoring\nstatutorily\n15% cap\nTANF\nremoved from\nRequirements\n15% cap\nSome comments\nSub-\ncorr plant that\nrecipient\ncase management\nmeans\nfunctions thatwere\nsub-\ncontracted out\nwere trextal differently\nthem thes Ion\nkind of any\nin house. & Batthe?\nwas it true in NPR M but\n(publec, nonproft)? private\nfixed here\nINCLUSIONS BASED ON DEFINITION\nEXCLUSIONS BASED ON DEFINITION\nOF ADMINISTRATIVE COSTS:\nOF ADMINISTRATIVE COSTS:\nCosts of general administration and\nCosts directly associated with providing\ncoordination of programs\nprogram services (such as diversion\nassistance, screening and assessments,\nAll indirect (or overhead) costs\nemployability plans, work activities,\npost-employment services, supports,\nSalaries and benefits not directly\nand case management), including:\nassociated with providing program\nservices\nSalaries and benefits of staff\ndirectly providing services\nActivities related to eligibility\ndetermination\nAdministrative costs directly\nassociated with providing program\nPreparation of program plans, budgets,\nservices, such as supplies,\nand schedules\nequipment, and travel\nMonitoring of programs and projects\nCosts of fraud and abuse units\nProcurement activities\nPublic relations\nServices related to accounting, litigation,\naudits, management of property, payroll\nand personnel\nPreparing reports and other documents\nConference travel\nTraining\nNOTE: We believe changes are required to the regulation and preamble to make these\npolicies clear.\nINCLUSIONS BASED ON SYSTEMS\nEXCLUSIONS BASED ON SYSTEMS\nEXCLUSION PROVISION\nEXCLUSION PROVISION\nSystems costs not related to required\nDirect expenditures on information\nmonitoring or tracking activities (e.g.,\ntechnology and computerization needed\nrelated to general State program\nfor tracking and monitoring required by\nmanagement and reporting\nTANF, such as:\nresponsibilities, payroll and budget\nfunctions)\nPurchase or lease of hardware or\nsoftware dedicated to required\nAll indirect (or overhead) costs\nmonitoring or tracking activities\nCosts of developing software for\nCosts related to required monitoring and\nrequired monitoring or tracking,\ntracking, but not directly related to\nincluding IEVS matching and\ninformation technology or\ntransmission of required TANF\ncomputerization (e.g., costs associated\nreports\nwith follow-up on data match findings)\nSalaries and benefits of staff\nperforming automated monitoring or\ntracking functions, including data\ninput and generation of\ncomputerized tracking reports\nSalaries and benefits of staff\nresponsible for maintaining the\nhardware or software needed for\nmonitoring and tracking\nCharges for computer time related\nto monitoring and tracking activities\nAdministrative costs (such as\nequipment purchase or rental,\nsupplies, and training) directly\nassociated with performing this\nfunction\nIssue 7: Fiscal Issues\nGeneral: Discuss why there is a different standard for assessing whether expenditure can count\ntowards MOE (outside the TANF program) versus whether expenditures count as \"assistance\"\n(within the TANF program.) For example, the MOE standard is tied to furthering the purposes\nof the TANF program, however, this standard is not used in assessing whether a state\nexpenditure on a specific service falls within the definition of assistance.\nHow much of this difference in the two standards is generated by specific differences in the\nstatutory language, and how much is generated by HHS regulatory interpretation? What is the\npolicy rationale for having difffering standards?\nP. 472, 2nd full para: please clarify whether the \"compromise\" approach is new --does reference\nto \"this rule\" include the NPRM, or just the final rule?\nP. 479, 2nd full para: Should you acknowledge in your response the many comments about the\nno\nchanging nature, and increasingly blended function, of eligibility/case management/service\n(concerred\nwes\nprovision? Similarly, in last para, the response that welfare agencies have a long history of\nundern\nidentifying eligibility costs seems to ignore the changing nature of the work. It's much easier to\nonpt\nidentify and allocate costs when there are separate staff doing the work. What do we know about\nno\nhow many states have integrated eligibility and case management/employment functions?\ndata\nOn this issue: roughly what percent of a case manager's time would be spent on eligibility\ndetermination? Roughly what kind of burden would a State be incur to allocate these costs?\nWhat would be the proportion of costs devoted to eligibility determination (in other words,\nwould a large burden be incurred to track a small proportion of costs? Len than before\nP. 480, last para and 481, 1st para: how do you envision this working i.e., states developing\nown definition. Are you asking them to describe the definition and submit it to you? How will\nthis be enforced/audited? stat will have defendion, Fave at normable for andators\nP. 482, 2nd full para: How do States sort out diversion and assessment activities from eligibility\ndetermination?\n(mage at A of am cort)\nwill do chart\npolicy:-\nP. 485, 1st para: Please explain how this distinction between not excluding systems costs from\nadmin\ndefinition of admin costs, but excluding them from determining whether state has exceeded cap,\ncoats\nwill play out for reporting purposes is the State supposed to track and report systems costs as\nunder\nadmin costs until they hit 15% cap?\np-490- performance contracts\nPP. 491-493: Please clarify the policy on contract costs is an (ys entire contract to be classified as\neither admin or program in function and reported accordingly, or is there an expectation that\ncontracts which cover a variety of services are to be broken out accordingly? If the latter (as\ndontacts\nimplied on p. 493, 2nd full para), then the response on p. 491 may need to be clarified.\nM purpox\npurpos is\nTotal Admin wits and Systems admin)\nis program,\nboth admint\nprogramm,then\nTotal TANF - transfers\nTienal No\nprogram\nmust devide\n(everal 80me\nadm parancents\nConcerns ') how toestimate foregor sevemen\n2) could provide the herefits to\n3) MOE'S\nmiddle 11-2000 the pays\nP. 494, 1st full para: What is the specific reference to part 92 of the regulations?\nP. 498, 1st full para: Just to clarify, did you use the revised definition of adjusted SFAG,\nexcluding transfers to SSBG and CCDF, to compute participation rate penalties for 97?\nP. 499, 1st para: What is the admin cap in SSBG and CCDBG?\nP. 499, 2nd para: On average, how much of a transfer would create a problem in using the post-\ntransfer amount? What do the data show about how much is being transferred, relative to the\npre- and post-transfer amount and the admin percentages under each? upto10'h-11%\nnew about 8%\nP. 506, 1st full para: Were there any Hill comments on this issue? No\nNPRM?\nP. 510, 1st full para: Please after walk through example of how this works. Is this a change from yes\nPremime 8090\nstilrcom Submi part into to shaw They\nhave meet 75% (even states not 1-g to report\nP. 525, 2nd para and 569, 1st para: Please discuss the rationale here and in the NPRM for pmt\nonly counting refundable state EITCs. Why should Federal rules provide a disincentive to States rate)\nfrom choosing a credit, which does not require sending money out to the recipient and has the\nsame net effect as a cash expenditure on both the State Treasury and the taxpayer? This is\nespecially true in light of the allowance for public transit reimbursement (p. 576, 1st para), since\nthese lead to lower \"revenues\" as well.\n$175 the liability $20,000,1+ The $25 avail MOE\nforegore revenue\" not experition\nthe credit higherthan liability\nP. 527, last para: What evidence does HHS have to show that Congress intended spending on\nmoral\njuvenile justice to be allowable with Federal funds but not with State MOE funds?\nTwo related questions: on pp. 540-41, HHS notes that juvenile justice services \"do not meet any\nof the purposes of the TANF program\". How is this consistent with the allowable spending\ndiscussed on p. 527?\nIn contrast, there are likely to be many families where a troubled child is the reason a needy\nparent needs government assistance and cannot spend time on job preparation or work. Juvenile\njustice services may be precisely what is needed to fulfill \"purpose 2\" and thus make this an\nallowable MOE expenditure, although HHS concludes differently in the first paragraph of p. 541.\nWhy?\nP. 531, 3rd para, Response: What is the status of CMIA guidance being developed by ACF and\nTreasury?\nP. 538, 1st full para: Has this discussion that certain IV-A services, e.g. EA/ juvenile justice, may your\nnot qualify as MOE changed from the NPRM? Are there certain expenditures that also are not\nallowable uses of federal TANF funds? If so, what are implications for states how are they\nnow paying for such services?\n408 of 115 statute PROWERA has prohibition\nP. 538, 2nd para: What happens if a child lives with a non-relative legal guardian and that family\n569- all state\nadopt\nParent\nswer\nyes\nmeets income and resource (if applicable) standards -- is that an eligible family? If yes, please\nclarify. If no, why not?\nNCPcan\nseceive\nP. 549, last para: Should HHS clarify that months in which an NCP receives TANF assistance\nShones\nwould count toward the NCP's time limit, if applicable? the limitallous\nnot\nnot worstinu cuother\nassistance\nPP. 551, 555: What are the implications for time limits, work requirements, and reporting\nregarding spending on \"non-assistance\" activities in 401?\nStates\nWill get financell report by caty\nno reporting /Card record\nP. 563, last para: What is the purpose of stating what HHS would \"prefer\" in a State plan? Since\nthis information will come in the annual report, at which time more will be known about what is\nactually in the programs, why make this nonbinding request? Don't have auth to require\n581- do IDA contributions count as \"Noodonce\"\nP. 605, 2nd para: Should HHS's sound explanation of \"generally available\" educational services\nas those \"without cost and without regard to their income\" be included in the reg text?\nP. 639, 1st para: Do the OMB Circulars not require reporting of program income?\nnot refund reprting\nkeepy\nP. 645, last para: Did OMB make an active, on-the-record determination that the circulars apply?\nm NPR/ I land In JMB t An program gift before Pat\nP. 660, 2nd full para: What is the statutory basis for only allowing earned income into an IDA?\nSa 404(h)12)(c)\nP. 928, (x): Are all travel costs considered admin costs, or only those related to administrative\nfunctions (for example, are a job developer's travel costs administrative or program expenses)?\nyeo Jen than 1/10 of19.\nP. 928/Section 263.0 generally: While classification of contract costs are discussed quite a bit in\nthe preamble, should they also be mentioned in the regulatory language? No\nWhy start the section with \".0\" as opposed to the usual \".1\"?\n584= 1st full pan: is this enployment welen\nMMg itself (No)\n602-605 : what educational etpt litures count?\nwellook\nwhy use spenal class\nAKto dage\nAdministrative Costs\nBackground\nUnder the TANF statute, states may not spend more than 15 percent of either their Federal TANF\nfunds or their State MOE dollars on administrative costs. The statute excludes from this 15\npercent expenditures for \"information technology and computerization needed for tracking or\nmonitoring.\"\nNPRM\nUnder the proposed rule administrative costs means costs for general administration and\ncoordination of the TANF and separate state programs, including indirect (or overhead) costs. It\nprovided examples of eleven types of activities that would be classified as \"administrative costs,\"\nsuch as salaries and benefits not associated with providing program services, plan and budget\npreparation, procurement, accounting, and payroll. The preamble provided further clarification\nthat eligibility determination would be considered administrative costs, but that case\nmanagement could be treated as program cost. The NPRM required further that portions of a\nworker's time be allocated based on this distinction. Finally, the preamble indicated that\nadministrative costs incurred by subgrantees, contractors, community service providers, and third\nparties would be considered part of the total administrative cost cap.\nFinal Rule\nThe final rule makes one basic change to the regulatory framework with additional detail added\nin the preamble -- it explicitly includes eligibility determination within the definition of\nadministrative costs in the regulatory text. The preamble provides the following additional\nchanges/clarifications:\nallows states to determine an entire contract to be for administrative or programmatic\nservice, depending on the initial determination, without need to further itemize or\nconsider individual cost components;\nincludes in the systems exclusion items that would normally be administrative costs, but\nare needed for monitoring or tracking purposes under TANF (such as data collection\ninput activities, and preparation of reports required under the Act).\n1/26/99\nCOUNTY\nRec 2/9/98\n#23\nCOUNTY OF ONONDAGA\nAN 15 PM 2: 14\nOFFICE OF THE COUNTY EXECUTIVE\nJAMES A. ALBANESE\nNICHOLAS J. PIRRO\nADMINISTRATOR - PHYSICAL SERVICES\nCOUNTY EXECUTIVE\nJOHN H. MULROY CIVIC CENTER\n421 MONTGOMERY STREET - 14TH FLOOR\nLYNN A. SHEPARD\nEDWARD KOCHIAN\nADMINISTRATOR - HUMAN SERVICES\nDEPUTY COUNTY EXECUTIVE\nSYRACUSE, NEW YORK 13202-2995\nSUSAN J. TORMEY\nMARTIN A. FARRELL\n315 . 435-3516\nRESEARCH & COMMUNICATIONS OFFICER\nEXECUTIVE COMMUNICATIONS DIRECTOR\nTELECOPIER: 315 . 435-8582\nJanuary 15, 1998\nSenator Alfonse D'Amato\nHart Senate Office Building\nRoom 520\nWashington, D.C. 20510\nRE: FEDERAL DEFINITION OF TANF EXPENDITURES\nDear Senator D'Am\nThe purpose of this letter is to request your intervention to the preliminary definition of TANF\nexpenditures that has been promulgated by the federal government in 45 CFR part 270.\nAt the local level we understand that case management functions that are purchased fall within an\nadministrative category while those same functions, if performed by government employees, would be\nclassified as programmatic. We strongly believe that this interpretation would put Onondaga County\nand other county governments over the 15% administrative cap level and thereby jeopardize our local\nwelfare reform efforts.\nContracting with the private sector has become an accepted tool for local governments as they\nreengineer programs to control local costs. To include contracting costs as an administrative cost\nunfairly penalizes local governments who have been proactive in reducing mandated program costs\nwhich benefit federal, state, and local taxpayers To reverse this course of action would only mean\nhigher costs for all taxpayers.\nAs you know, the Onondaga County Department of Social Services has delegated responsibility for\nJOBS activities to the local community college When we designed this program wc believed, and still\nbelieve today, that associating with the community college has given us the flexibility to operate\nsuccessfully.\n100% RECYCLED PAPER\nDefining this program and those case management activities as administrative expenses as proposed,\nwould cause undue financial hardship and jeopardize our continued success in reforming the welfare\nsystem.\nWe wanted to alert you to this federal proposal and ask for your help in developing a federal position\nthat is consistent with the spirit of welfare reform.\nVery truly yours,\nNicholas Nickdes Jhins\nCounty Executive\nAssisting Those In Need - Independence With Disnity\nAFSCME\n2/98\npenalty reduction for not meeting the work requirements only if states prove they have\nnot diverted cases to a separate state program to avoid the work participation rates. The\nregulations emphasize the potential improper motives to the exclusion of other goals state\nmight have to operate state-funded programs. Under § 271.51, HHS can waive the\npenalty if HHS determines that a state had reasonable cause for failure to comply with the\nwork requirements. A pre-requisite for this wavier is a demonstration that a state has not\ndiverted cases to a separate state program to avoid work participation rates. Again, states\nwill be deterred from setting up separate state-funded programs if they have to prove their\nintent to HHS. Thus, innovative state-funded programs become suspect.\nUnder § 272.5, HHS would not forgive a state penalty, even based on reasonable\ncause, if they \"detect a significant pattern of diversion of families to a separate State\nprogram that achieves the effect of avoiding the work participation rates...\" This is a far\nreaching rule. HHS would be viewing virtually all state funded programs with suspicion.\nThe tone of the regulations might have a chilling effect on states experimenting with\ninnovative programs requiring work activities distinct from those required by the federal\nmandatory participation rates.\nAFSCME Recommendations: HHS should base its calculation of meeting work\nparticipation requirements on a state's TANF program only and eliminate the effects test\nfrom the regulations on reasonable cause exceptions to the penalties.\nAdministrative Costs § 273.0 (b) Administrative Costs\nThe Preamble states that the 15% cap on administrative costs would apply to\nsubgrantees, contractors, community service providers and other third parties. However,\nthere is no reference to this in the proposed regulations. The final regulations should\nmake clear the 15% cap applies to all costs and it is irrelevant whether costs are incurred\nby the TANF agency directly or by other parties.\nThe Preamble also recognizes there may be instances where individuals are\nperforming work that is administrative (i.e. eligibility determination) and also work that\nshould be viewed as a program cost (Le. case-management functions or delivering\nservices to clients). The Preamble indicates that costs could be allocated to respective\ncategories. This guidance should be in the final regulations.\nFamily Violence Option (FVO) Э 271.52(b)(1)\nAFSCME applauds HHS for clearly outlining the problem of domestic violence\nand encouraging states to adopt the family violence option The proposed regulations help\nstates with this mission by ensuring that they will not face penalties for using this option.\nHowever, there are several areas in the proposed regulations which need to be modified in\n6\nFEB-18-1998 17:06\n202 429 1284\nIf the first assumption is not true, I would expect the market clearing price for regulation to\nrise and if the second assumption is not true, I would expect adjustments between the\nenergy and regulation markets that could tend to depress energy prices and raise\nregulation prices. Exhibit JSH_4 indicates that the marginal unit could expect to earn\nabout $40,000 to $50,000 per year on an AGC investment of $100,000 if regulation prices\nwere sustained at a level of 5 percent higher than the competitive market. Such an\ninvestment has a short 2 to 2.5 year payback period and clearly could be undertaken by a\ncompetitor in response to an exercise of market power. Furthermore, I understand that\nAGC equipment could be installed on an existing unit in significantly less time than the\nDOJ two-year benchmark. This calculation is indicative and an actual investment\nanalysis would be more detailed, of course. Nonetheless, it suggests that AGC\ninvestment is likely to respond quickly to any profit potential, including that created\nthrough any attempted exercise of market power. Because of the ease with which entry\ncan occur, I conclude that the existing AES units would be unable to sustain a significant\nincrease in the price of Regulation services.\nExcess Capacity\nAnother way of assessing market power is to examine AES's Regulation capacity\nin relation to the amount of Regulation needed by the ISO and the Regulation capacity of\nother suppliers in the market. I have modeled the electricity market in California to mimic\nconditions during the peak hour. I have calculated the requirements for Regulation\nservice based upon the standards in the ISO Tariff, using the sum of the peak demands\nPage 14\ncompatibility with child care providers may be more\nimportant.\nIn the NPRM, we noted that our proposed definition was\nclosely related to the JTPA definition and thus should\nfacilitate the coordination of WTW and TANF activities and\nsupport the transition of hard-to-employ TANF recipients\ninto the workforce. As caseloads decline and the proportion\nof hard-to-serve clients rises, coordination between these\ntwo programs may become even more critical.\nWhile adopting the CCDF definition might facilitate TANF and\nCCDF coordination, we do not believe that this coordination\ndepends upon a uniform definition. Also, given the\ndifferences in the caps of the two programs (15 percent\nversus 5 percent) and the different legislative histories,\nthere is little reason to believe that Congress intended a\nuniform definition.\ndef\nww?\n(e) Treatment of Eligibility Determinations\nComment: Many of those commenting on this issue objected to\nour proposed inclusion of eligibility determination within\nthe administrative costs definition. Some argued that\neligibility determination was not an administrative activity\nand was not easily or logically separable from case\nQ: what do 4m Q 98 spending reports indicate\nNeed to about admin 475 spending levels ?\nThis as part of justification of not,\nto ohill well below 15%, weshald we - shd menhan take\nThat into condideration. y\nmanagement. Still others commented on the burden associated\nwith our proposal, the general need for State flexibility in\nthis area, and the potential negative effects on a State's\nability to fund critical staff who work directly with\nclients.\nOne State agency indicated that the distinction in our\nproposal was not burdensome, and would require only a slight\nchange in its Random Moment Study.\nMany commenters took strong exception to our\ncharacterization of any portion of the eligibility\ndetermination process as administrative. They argued that\n(1) the classification of eligibility determination as an\nadministrative activity contravened existing State practice;\nwe should honor the State's division of staff in the agency\ninto administration and service categories and not force\nStates that implemented their TANF programs in good faith to\nre-examine this relationship; (2) the nature of work with\nfamilies is undergoing significant change (a change recently\nnoted in a study by the Manpower Demonstration Research\nCorporation entitled \"View from the Field\") ; traditional\napproaches under the old AFDC program are entirely\ninappropriate to the new program; the dichotomy between\neligibility determinations and case management is an\noutdated one; (3) because eligibility determination is part\n476\nof the case management function, it would more appropriately\nbe categorized as a program or service function than\nadministration; (4) staff performing functions such as\nsubstance abuse screening and assessment for domestic\nviolence services may have some administrative duties, but\nthese duties are integral to providing services; and (5)\nfront-line eligibility determinations is arguably a direct\nservice, under the first statutory goal of the TANF program.\nCommenters further argued that: (1) the differentiation\nbetween eligibility and service delivery would be virtually\nimpossible for States; (2) because the same employee has\nintegrated the determination of eligibility, screening and\napproving applicants for diversion, assessing and developing\nemployability plans and work activities, counseling and\nproviding pre-employment and post-employment supports, it\nwould be impractical and unnecessary to separate these\nlatter duties from eligibility functions; (3) determining\neligibility and providing employment and other needed\nservices are not two distinct processes; a case manager may\ncollect information for the purpose of providing or\narranging supportive services, but use that same information\nto determine the family's eligibility; (4) in States that\nhave merged the eligibility determination and case\nmanagement functions, it would be costly and cumbersome to\nisolate these costs; and (5) States have computerized much\n477\nof the eligibility determination process.\nA couple of commenters indicated that our regulations needed\nto draw a clearer line between administrative and program\ncosts. One commenter provided several specific examples of\nsituations where the line between administrative and program\ncosts that we drew in the proposed rule was unclear. For\nexample: (1) determining whether a family qualifies for\ndiversion or supportive services may also involve\ndetermining if the family qualifies for assistance; and (2)\ndeciding whether to impose a sanction, grant a hardship\nexception to the time limit, and determine compliance with a\nschool attendance requirement all may have both programmatic\nand eligibility implications.\nA significant number of commenters spoke to the burden of\nthe proposed requirement on TANF agencies. They argued that\nState and local systems are geared towards allocating\nexpenses among a wide variety of Federal and State programs\nor trying to focus on innovation and results. They do not\nwant to direct resources to prorating the expenses of front-\nline workers who are simultaneously engaged in eligibility\ndetermination, case management, and service provision to\nTANF beneficiaries.\nCommenters also made a general plea for flexibility, saying\n478\nthat States need flexibility in order \"for the role of front\nline staff to continue to evolve to best meet the goals of\nwelfare reform\" and to enable States to build partnerships\nwith local service providers.\nFinally, several commenters noted that we presented this\npolicy only in the preamble, not in the regulation itself.\nResponse: While we do not want our rules to distort State\nchoices about how to deliver services or divert State\nresources unnecessarily to cost accounting activities, we do\nnot believe it would be consistent with the intent of the\nack\nwater\nadministrative cost cap provisions for States to be spending\nnew states entending\nlarge amounts of money on eligibility determinations rather\nthan program services. We have a statutory responsibility\nthem not bay that\nfor protecting against misuse of funds, and we know that\nmoney diverted to administrative activities could decrease\nthe availability of benefits and services for needy\naction does other dhiy hmartin Pais a for\nfamilies.\nGWt isn't eligibiling a\ncondiner\nnecessar futting + gernies? benefits\nthem\nAlso, we are not convinced by State arguments about the\nsignificant burden they would face in identifying the costs\nassociated with eligibility determination activities.\nbut systemic again,\nWelfare agencies have a long history of identifying the\ncosts of eligibility determinations and allocating these\ncosts as administrative activities. A variety of other\n,479\nThat states are likely\n(i) There an argument\nto ensure link, less difibility\nfor cant then elisibilit programs determin we\nas admin\nsignificant, related programs-such as Medicaid, the Child\nHealth Insurance Program (CHIP), and Food Stamps--continue\nto follow this practice. Thus, this kind of cost allocation\nhas been standard operating procedure in a number of\nprograms and has been accepted as a normal part of doing\nbusiness.\nWe also believe that a clear policy on eligibility\ndeterminations might produce more consistent penalty\ndeterminations and reduce audit disputes, appeals, and\nlitigation regarding application of the misuse of funds\nanexarple?\nweadd\npenalty. state has a wancer who peyams a vanchy of funchars of\nIfa whol eligibility assessment, diveropment in\nincluding Leart plan, and monitaing of participation\nindividual work achulles, Then state wd allorate just for Mat elifib share of costs\nBased on these considerations, we have decided to add x\nadmin.\neligibility determinations to the list of administrative\nactivities at $263.0 (b) More specifically, this rule\nreflects the basic definition that was in the proposed\nregulation at $273.0(b) (with the same basic examples of\nadministrative cost activities), but adds the NPRM preamble\npolicy that required eligibility determination to be treated\nas an administrative cost. We recognize that this is a\nsignificant policy decision that merits inclusion directly\nin the regulatory text; we agree with commenters that it\nshould not be relegated to the preamble.\n480"
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