SUBJECT: Guidance Concerning Maintenance of Effort (MOE) for State TANF Programs

REFERENCES: Title I of Public Law 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)

Section 409(a)(7) of title IV-A of the Social Security Act (the Act), as amended by PRWORA

TANF-ACF-PA-97-1, dated January 31, 1997

PURPOSE: A number of States have inquired whether State funds given to an Indian tribe with an approved Tribal Family Assistance plan may count toward the State's required MOE.

POLICY: State funds paid to an Indian tribe with an approved Tribal Family Assistance plan may meet the definition of a qualified State expenditure for purposes of a State's required MOE subject to the caveats contained in this policy announcement. The contribution will count toward a State's MOE in the fiscal year in which the expenditures are made.

This flexibility will allow States to assist Indian tribes with Family Assistance Grants, which are limited to Federal funds, in providing adequate welfare-related services to those served by the Tribal Family Assistance plan.

BACKGROUND: Once an Indian tribe, or a consortium of Indian tribes residing in a State, has an approved Tribal Family Assistance plan for which a Federal Family Assistance Grant is payable, the State's Family Assistance Grant will be reduced. The State's MOE level will also be reduced proportionately pursuant to section 409(a)(7)(B)(iii) of the Act.

The State is no longer obligated to expend State funds on behalf of eligible families served by an approved Tribal Family Assistance plan. In effect, there is a fiscal gain to the State each time an Indian tribe or consortium of Indian tribes in the State submits and receives approval for a Tribal Family Assistance plan. However, for the Indian tribe, or consortium of Indian tribes, the Tribal Family Assistance Grant is the only means to provide welfare-related services to families residing in its service area.

Under the maintenance of effort requirement, States must expend their own funds to provide services to families which include a child living with a custodial parent or adult relative, and which are financially needy per the income and resource standards established by the State under its Family Assistance plan. Many tribal families will also meet these requirements and will also need services to help them attain self- sufficiency. States can assist in this effort by contributing State funds to Indian tribes with an approved Tribal Family Assistance plan for use in the tribe's TANF program.

This is a win-win arrangement for the State: a reduced MOE AND a countable expenditure toward meeting the reduced MOE level by helping tribal families receive the services they need to move toward economic self-sufficiency.

DISCUSSION: Pursuant to section 409(a)(7)(B)(i)(I) of the Act, to count toward a State's required MOE, State expenditures must involve one of the following activities: cash assistance, child care assistance, certain educational activities, or any other use of funds allowable under section 404(a)(1) of the Act, i.e., any use that is reasonably calculated to accomplish the purpose of the TANF program. Payments from State funds to an Indian tribe with an approved Tribal Family Assistance plan are reasonably calculated to assist that Indian tribe in accomplishing the purpose of the TANF program.

State expenditures must also be made on behalf of "eligible families" to count toward the required MOE. Pursuant to section 409(a)(7)(B)(i)(III) of the Act eligible families are those families eligible for assistance under the State program funded under this part (TANF). TANF-ACF-PA-97-1 interpreted this provision to mean families in which there is a child living with a parent or other adult relative (or individuals expecting a child) and who are needy under the income and resource standards established by the State in its TANF plan. Thus, State funds paid to an Indian tribe or a consortium of Indian tribes operating an approved Tribal Family Assistance plan will count toward the State's MOE requirement provided the tribe or consortium expends the funds on behalf of families in its TANF program who would also meet the State's TANF income and resource standards. If the Tribal TANF criteria are broader than the State's, then the Indian tribe will need to track expenditures or otherwise demonstrate to the State that the funding from the State was expended for families who would be income and resource eligible under the State's criteria. Conversely, if the Indian tribe's criteria are the same as or narrower than the State's, Tribal TANF families should automatically meet the State criteria.

State MOE expenditures can be made either as part of the State's TANF program or in a separate State program. If the State wishes to make the expenditures for the Tribal program as part of the State's TANF program, the expenditures must meet three other Federal requirements that apply to any families which receive assistance from funds which are part of a State TANF program. Therefore, in addition to meeting a State's TANF income and resource standards, a family must assign its child support rights to the State, must cooperate with the State in child support enforcement, and must be included as part of the State's work program under section 407 of the Act. These three additional requirements may make it impractical to have expenditures made on behalf of Tribal TANF families flow through the State's TANF program.

The State's expenditures may be made under a separate (non-TANF) State program without the three additional requirements. If the expenditures are under a separate State or local program, pursuant to section 409(a)(7)(B)(II) of the Act, they may be counted to the extent they exceed the amount expended in fiscal year 1995. As Tribal TANF programs are new, the State's baseline expenditure in FY 1995 would have been "$0" and the entire expenditure made by a State would count toward MOE.

INQUIRIES: Inquiries should be directed to the appropriate ACF Regional Administrator.

/s/

Donald Sykes, Director
Office of Community Services Office of Family Assistance

Lavinia Limón, Director
Office of Family Assistance