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OCR Page 1 of 41We agree with the commenters and are amending paragraph (j)(2) to incorporate
into current regulations much of the Department's July 14, 1999, guidance on categorical
eligibility, with modifications. It has come to our attention that this policy has allowed
State agencies to use categorical eligibility beyond the scope of what was originally
intended. The original intent of categorical eligibility was to reduce the administrative
burden on State agencies by simplifying the certification process and eliminating the need
for the eligibility worker to apply two different income eligibility tests for a household
applying for public assistance and food stamps. Therefore, Congress allowed the State
agency to apply the public assistance income and resource tests to applicants of both
programs, thus eliminating the need to satisfy a second income eligibility test for the
Food Stamp Program. However, the context for categorical eligibility changed after
PRWORA, particularly because TANF is a block grant and can be used to support in-
kind and non-cash benefits and services to low-income working families who may or may
not be required to meet income eligibility criteria. The four purposes of the TANF block
grant are to (1) provide assistance to needy families so that children may be cared for in
their own homes or in the homes of relatives; (2) end the dependence of needy parents on
government benefits by promoting job preparation, work, and marriage; (3) prevent and
reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals
for preventing and reducing the incidence of these pregnancies; and (4) encourage the
formation and maintenance of two-parent families. Funds spent to meet the first and
second purposes of the block grant must be spent on "needy" families, as defined by the
State, and thus applicants must meet the State's definition of "needy. Funds spent to
meet the third and fourth purposes of the block grant are not limited to "needy families."
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