August 15, 1996

THE TIMELINE FOR IMPLEMENTING THE NEW WELFARE LAW

by Jocelyn Guyer, Cindy Mann and David A. Super

This piece does not reflect changes made to some food stamp and legal immigrant provisions made in legislation passed since this analysis was completed. The Center is working to update this piece to reflect those changes and should have this completed shortly.

Introduction

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 includes nine titles, affecting most major low-income programs, including AFDC, food stamps, Medicaid, Supplemental Security Income (SSI), child welfare and child support. The scope and potential impact of the changes in low-income programs in this bill are unprecedented. Some of the changes are effective upon or soon after enactment of the bill. Other changes will be implemented over the course of the next fiscal year or later, and still other changes are subject to state discretion — when and how these changes are made are matters left largely to the states.

This paper reviews the dates by which the major changes in welfare, Medicaid and the food stamp program must be implemented, or could be implemented at state option. While many of the changes required by this bill must be put into effect quickly, states have time for a thoughtful implementation process in some key areas, including most of the basic decisions about the design and direction of their welfare programs. Given the scope and potential consequences of the changes that are about to occur, it is imperative that states take full advantage of every opportunity for careful consideration of the policy choices and implementation issues presented by this historic legislation.

Overview of the Effective Dates for the Key Welfare, Medicaid and Food Stamp Provisions

Welfare and Medicaid Provisions

States have until July 1, 1997 to submit a new state plan to the Secretary of Health and Human Services outlining how they intend to run the programs funded under the Temporary Assistance to Needy Families block grant ("TANF"). Submission of a new state plan signals a state's entrance into the new block grant system. States have the option of entering the new system early by submitting their state plans prior to July 1, 1997. The date of plan submission is the effective date for most of the welfare-related provisions in the new law, including the 60-month lifetime limit on receipt of federally funded assistance.

The TANF block grant will begin to affect all states during federal fiscal year 1997, which runs from October 1, 1996 through September 30, 1997. During federal fiscal year 1997, states cannot receive more assistance than they are due under the bill's block grant funding formula, but they also are not guaranteed their full block grant allocations unless they spend the entire federal fiscal year under the new system.

Because of caseload declines, the block grant allocations for most states, which are based on historic spending levels, will be higher than the federal payments the state would receive in federal fiscal year 1997 under the AFDC program. Most states, therefore, will not experience fiscal pressure in fiscal year 1997 to make changes to keep spending below their block grant allocations; they can take time to consider how they want to structure their new programs and implement program changes. (For example, the states must be ready when they enter the new system to track the months of receipt of aid under the new time limit.) On the other hand, these same states have a financial incentive to enter the new system at the earliest possible date in order to capture "surplus" block grant allocation dollars for as much of federal fiscal year 1997 as possible. States may be able to resolve the tension between needing time to plan and implement major changes and wanting to maximize federal funding in fiscal year 1997 by submitting state plans that largely keep their current systems intact and perhaps amending their state plans at a later date.

There are caveats to the rule that most of the welfare-related provisions in the bill go into effect when a state submits a new state plan. States have at least an additional six-month grace period after the date of submission of their plans to comply with selected provisions of the law, including the work requirements. Additionally, the Secretary of Health and Human Services has limited or no explicit authority to enforce many provisions in the law. Consequently, states may not face adverse consequences for not having their programs conform to all of the new requirements by the operative effective date.

States that currently have an AFDC waiver — and states that secure approval from the Secretary of Health and Human Services for a pending or new waiver submitted prior to the date of enactment of the law — may follow the terms of their waivers even if they are inconsistent with provisions in the law. States whose waivers are submitted prior to the date of enactment but approved after that date must, however, follow the work requirements established by the new law.

States must have new Medicaid procedures in place when they enter the new system to ensure that any changes made in their welfare programs will not affect children and parents' eligibility for Medicaid.

The entitlement of any person to AFDC under Parts A and F of Title IV of the Social Security Act is terminated on October 1, 1996 or earlier in any state that enters the new system before this date. Individuals may continue to be entitled to AFDC under the existing state plan or pursuant to state law.

Effective immediately upon enactment, states are prohibited from using federal block grant funds to provide aid — and they also are prohibited from providing Medicaid — to most legal immigrants who enter the country on or after the date on which the bill becomes law. The ban extends five years after an immigrant's date of entry. States have the option to grant or to deny assistance under TANF or Medicaid to legal immigrants already residing in the United States, although the earliest date on which they can terminate aid to legal immigrants currently receiving benefits is January 1, 1997. States are required to indicate in their state plans whether or not they intend to continue to provide benefits under TANF to legal immigrants already residing in the United States.

Food Stamp Provisions

Most legal immigrants not currently receiving food stamp benefits are ineligible for food stamps as of the date the bill becomes law. For legal immigrants currently receiving food stamps, states must terminate their benefits at the time of their next scheduled recertifications, but not later than a year after the date of enactment. (Similar rules apply to the SSI program.)

Several other changes in the food stamp program are effective upon enactment, including changes in income exclusions and pro-rating rules. The quality control system, however, will not count errors states make under these provisions until 60 days after they receive an implementation memo from the USDA.

States have up to three months after the date of enactment to notify those unemployed food stamp recipients between the ages of 18 and 50 who are subject to a new three-month time limit on the receipt of benefits during any 36-month period. The clock on the three-month limit on benefits does not begin to run until notice has been provided. States can immediately request waivers for areas with unemployment rates over 10 percent or for other areas in which insufficient jobs exist for people affected by this provision.

Many of the major provisions in the law that reduce food stamp benefits are effective when states would otherwise be adjusting food stamp benefit calculations in October, 1996 or January, 1997. Thus, the inflation adjustments scheduled for October 1, 1996 will be modified according to provisions in the law, the adjustments in the standard deduction will be canceled, while the adjustments in the basic benefit level (the "thrifty food plan") and the limit on the value of vehicles that households may own will both be curtailed. On January 1, 1997, instead of removing the cap on the shelter deduction, states will raise the cap by $3 to $250.

At any time after enactment, states can exercise numerous new state options created by the law, including the option to adopt "simplified" food stamp program rules that are consistent with TANF program rules.

Implementation Dates for the Welfare and Welfare-related Medicaid Provisions, in General

The date on which a state first submits its state plan is the date on which it enters the new system and on which most of the TANF provisions and the related Medicaid changes in the law go into effect for that state. States must submit a plan by July 1, 1997. They have the option, however, to enter the new system earlier, at any time after the date of enactment.

Most of the TANF provisions go into effect on the date that a state submits its plan. Beginning on that date, for example, a state must track the number of months that families with an adult receive assistance funded under the block grant in order to apply the bill's 60-month lifetime limit on receipt of federally funded welfare assistance.

There are caveats to the general rule that the TANF provisions in the new law go into effect on the date that a state submits its plan. First, the new law terminates individuals' entitlement to AFDC under Part A and F of Title IV of the Social Security Act on October 1, 1996, although nothing in the law precludes a state from guaranteeing assistance to all individuals eligible for aid under its TANF program. ¹ Second, as described in the next section, states have a grace period of at least six months after they enter the new system during which they cannot be financially penalized for non-compliance with selected welfare provisions. Most significantly, states will be given at least six months after they submit their state plans to come into compliance with the work participation requirements. And finally, as described in the financing section, block grant financing limits begin to take effect on October 1, 1996 regardless of when the state files its state plan.

Submitting a State Plan

To enter the new welfare system, a state must submit a new state plan to the Secretary of Health and Human Services. The Secretary must determine that a plan is complete before the state can receive TANF funds, but she has no authority to disapprove a state's plan as long as the plan contains the required elements. The plan must include a set of certifications and provide an outline of how the state intends to run its TANF program(s). For example, plans must describe how the state intends to meet the work requirements, and it must set forth the objective criteria the state will use to determine eligibility and deliver benefits. States also must certify in their plans that they have consulted local governments and "private sector organizations" about the plan and allowed them at least 45 days to submit comments.²

The Role of State Legislatures

Federal TANF funds received by a state must be subject to appropriation by the state's legislature. States, therefore, cannot spend their block grant dollars without allowing the legislature a role in determining how those dollars will be spent. It is unclear, however, whether further legislative action is required during the first year (federal fiscal year 1997) in states where legislatures have already passed their budgets appropriating funds under the AFDC system. The extent to which legislative involvement is required with respect to the fiscal year 1997 appropriation and the development of the TANF state plan may depend on the laws in an individual state.

Effective Dates for Specific Welfare and Related Medicaid Provisions

The new law contains a number of restrictions on states' use of federal block grant dollars. ³ While the federal government has no clearly defined authority to enforce many of the new restrictions, the Secretary of Health and Human Services is directed to reduce the block grant allocations of states that fail to comply with specific provisions of the new law. ⁴ This section briefly describes the various requirements and restrictions imposed on states, beyond the general requirement that they submit a state plan by July 1, 1997, organized with reference to the date on which the provision becomes effective and whether the provision is clearly enforceable by the Secretary. ⁵

Provisions Enforceable Beginning on the Date a State Submits Its New Plan

The following provisions go into effect on the date a state submits its new state plan. For states that wait until the deadline to enter the new system, that date will be July 1, 1997. These provisions are clearly enforceable in the sense that the Secretary of Health and Human Services is specifically directed to reduce the block grant allocations of states that fail to comply with them. ⁶ The related Medicaid provision is enforceable by the Secretary under the current rules governing the Medicaid program.

Time limit. The bill prohibits states from providing any aid using federal block grant dollars to a family that includes an adult who has received assistance for 60 months (not necessarily consecutive) except for families granted a hardship exemption. ⁷ A state must start the 60-month clock for recipients on the date that the state enters the new system. The federal time limit is prospective — a state may not count toward the time limit any months that a family spent on welfare prior to the date on which the state filed its initial state plan. ⁸

States that fail to comply with the 60-month limit will have their basic block grant allocations reduced by five percent. One implication of the 60-month time limit and the penalty that attaches to a state's failure to comply with this provision is that states are at risk if they enter the new system before having the capacity to track the number of months spent on welfare, including the cumulative receipt of aid by families who move on and off of programs funded under TANF.

Prohibition on sanctioning parents who cannot obtain care for a child under age six. In applying the work requirements (discussed below), states cannot reduce or deny assistance under the block grant to a single-parent with a child under age six who is unable to comply with these requirements because she cannot find child care. The Secretary is directed to reduce the federal block grant allocations of states that violate this provision by up to five percent. Note that the lack of child care does not stop the time-limit clock from running, although states may decide to treat lack of child care as a basis for granting a hardship exemption from the time limit.

Medicaid for children and parents who qualify based on current AFDC rules. Current state AFDC income and asset rules as well as the standards that largely limit AFDC to single-parent families with children (i.e., the "deprivation rules") are carried over to the Medicaid program to assure that welfare changes do not affect Medicaid eligibility for children and parents who currently receive Medicaid as well as for those who apply in the future. ⁹ As of the date a state submits its state plan under the block grant, a state must cover under Medicaid families who meet the deprivation rules and whose income and assets are below the state's AFDC standards as of July 16, 1996. ¹⁰ Eligibility for Medicaid will not be linked to receipt of aid under the block grant. ¹¹ States must also assure that transitional Medicaid assistance is provided to families who would otherwise become ineligible for Medicaid due to earnings or child support.

Provisions Enforceable No Earlier Than Six Months After a State Submits Its Plan

The following provisions also are technically effective on the date that a state enters the new system and can be enforced by the Secretary with financial penalties. They will, however, be enforced with respect to conduct that occurs no earlier than six months after a state submits its plan. Specifically, they will be enforced beginning six months after the date on which a plan is submitted unless a state enters the new system early. States that enter early will have six months or until July 1, 1997, whichever is later, before they will face financial penalties for failing to comply with these provisions.

Thus, states that enter the new system between the date the bill is enacted and January 1, 1997 will have until July 1, 1997 to comply with these provisions; states that enter the system between January 1, 1997 and June 30, 1997 will have six months from the date the plan is submitted to comply with these provisions; and states that enter the new system on the latest allowable date, July 1, 1997, will have until January 1, 1998 to comply.

Work program participation rates. States are required to have a growing portion of their caseloads in work activities over the next several years, according to the schedule provided below.¹² States must meet two separate work participation requirements — one for all families and one for two-parent families.¹³ The new law defines what constitutes a countable work activity and prescribes the number of hours a week an individual must be engaged in such an activity to be counted as a work "participant." For example, during fiscal year 1998, a single-parent will qualify as "participating" only if she is engaged in a countable work activity for at least 20 hours per week, while the worker in a two-parent family must be engaged in a work activity for at least 35 hours per week.¹⁴

				All Families									Two-Parent Families
Fiscal Year				Participation Rate				Hours of Work Required						Participation Rate				Hours of work required
1997 (not enforced unless state enters early)				25%				20						75%				35
1998 (enforced beginning 1/1/98 or earlier if state enters the new system early)				30%				20						75%				35
1999 (enforced)				35%				25						90%				35
2000 (enforced)				40%				30						90%				35
2001 (enforced)				45%				30						90%				35
2002 (enforced)				50%				30						90%				35

In practice, lower participation rate requirements than those listed in the table above may apply in individual states in light of a provision known as the "caseload reduction credit." The credit reduces a state's required work participation rates by the extent to which a state's caseload has declined relative to federal fiscal year 1995 levels. Specifically, a state's participation rates are reduced by the number of percentage points by which the number of families receiving assistance under TANF fell below the number that received assistance under the AFDC program in fiscal year 1995. For example, if a state's caseload fell by eight percent between fiscal year 1995 and fiscal year 1996, in fiscal year 1997, the state would be required to meet a work participation rate for all families of 17 percent (25 percent - eight percentage points), instead of the standard 25 percent. Caseload declines attributable to federal restrictions and changes in state eligibility criteria, however, are not allowed to be counted toward this caseload reduction credit.

Sanctions for failure to cooperate in collecting child support. Under the new system, states are required to impose harsher sanctions than allowed under current law on families where the parent does not cooperate fully in establishing paternity and collecting child support. States must reduce by at least 25 percent the payments made to any family not cooperating fully, as well as eliminate assistance for an entire family if the head of the family declines to assign support rights to the state.

Additional Provisions. States also may face financial penalties, subject to the grace period, if they do not comply with new data reporting requirements; if they do not operate a system to verify the accuracy of information they receive from applicants about their income, citizenship status and other issues affecting their eligibility for TANF assistance; and if they do not satisfy child support enforcement standards.

Major Requirements for Which There is No Specified Federal Penalty

The effective date of the provisions listed below is the date on which a state enters the new system. The Secretary of Health and Human Services has not been given any specific authority to impose penalties to enforce these requirements, although there is a general penalty clause in the bill that allows the Secretary to reduce a state's block grant allocation if an audit establishes that it has used federal funds "in violation" of the requirements in the new law. The Secretary's enforcement authority is particularly unclear with respect to the first requirement regarding work that is listed below. States must indicate in their state plans how they intend to comply with this requirement, but the law does not directly impose this requirement on states.

States must include in their state plans a description of how they intend to require adults to engage in work after receiving TANF assistance for 24 months (not necessarily consecutive).

States may not use federal block grant funds to aid unmarried minor parents who are not living at home or under the supervision of another adult relative or legal guardian or who are not attending high school or an alternative education program.

States must make an initial assessment of the skills, work experience, and employability of most TANF recipients.

The Effect of Waivers on Implementation Requirements

States that have AFDC waivers, and states that secure approval from the Secretary of Health and Human Services for a pending or new waiver request prior to the date of enactment of the bill, can operate their programs under the terms of these waivers until their waivers expire. States that have applied for a waiver prior to enactment of the bill whose waivers are approved after enactment — but before July 1, 1997 — also may follow the terms of those waivers, except that these states must comply with the work requirements in the new law.

Within these parameters, the law specifically provides that amendments to the title of the law pertaining to TANF shall not apply to the extent such amendments are inconsistent with a state's waiver. ¹⁵ Thus, although the language is somewhat vague, it appears that states with waivers do not need to change their systems to conform with specific features of the law to the extent that the state's waiver already addresses the issue. For example, if a state has already imposed a time limit on the receipt of aid and has adopted exemptions and extensions applicable to its time limit, it would appear that the 20 percent cap on exemptions to the 60-month time limit would not apply to that state. Instead, the state's exemptions would be based on the exemption criteria included in its waiver. ¹⁶

Financing Provisions

In general, states will receive block grant allocations from the federal government that are based on historical spending and are frozen over the next six years, regardless of the actual cost of serving needy families. The financing provisions may bear significantly on the decisions a state makes about how quickly to enter the new system.

Block Grant Allocations - General Rules

Under the new system, states will receive a fixed block grant allocation from the federal government to help finance their programs for low-income families with children. Unlike under the AFDC matching system, the federal government's contribution to a state will not rise when a state's spending rises, nor fall when a state's spending declines as long as a state meets its maintenance-of-effort requirement (see below).

Each state will receive an amount equal to the highest of its federal payments for AFDC, JOBS, and Emergency Assistance during (1) fiscal year 1995, (2) fiscal year 1994, or (3) the average of federal payments for these programs during federal fiscal years 1992 through 1994. Each state's basic block grant allocation will remain unchanged beginning in federal fiscal year 1997 and continuing through federal fiscal year 2002.

Block Grant Allocations - Federal Fiscal Year 1997

The amount of federal assistance that states can receive during federal fiscal year 1997 will be capped at the level of their block grant allocations. ¹⁷ States, however, are not guaranteed their full block grant allocations in fiscal year 1997. The actual amount of federal funds a state receives in fiscal year 1997 will depend on when the state enters the new system.

So long as states operate their welfare systems under the old AFDC rules, their federal payments will be based on the AFDC matching formula. Once a state enters the new system by submitting a state plan, it will receive its block grant allocation prorated according to the number of days left in the fiscal year. Thus, a state that enters the new system on March 1, 1997 will receive federal AFDC matching payments from October 1, 1996 through April 30, 1997 plus half of its federal fiscal year 1997 block grant allocation. Under no circumstances, however, can the combination of payments under the old and new system exceed a state's block grant allocation for federal fiscal year 1997 as a whole.

For the majority of states, the full federal block grant allocation for fiscal year 1997 may be greater than the amount of federal funds they would have received under the AFDC matching rate system. This is because AFDC caseloads, and, to a lesser extent, AFDC-related expenditures, have been declining since the base year(s) used to determine the states' block grant allocations.

As Table 1 (attached at the end of this paper) indicates, AFDC caseloads in the most recent period for which preliminary data for all states are available — the first eight months of federal fiscal year 1996 — are lower than they were during the base year(s) used to determine all but two states' block grant allocations. Although national expenditure data are not yet available on a state-by-state basis for recent years, expenditures in most states appear to have declined along with caseloads although not always as steeply. ¹⁸

The implications of states' declining caseloads and expenditures relative to the block grant base year(s) are two-fold. On one hand, many states will not need to reduce benefits or restrict eligibility to keep spending within the confines of their block grant allocations in the near future. Thus, most states do not have to rush to submit a state plan and enter into the new system in order to make major changes that would keep spending below federal block grant levels. States have time to consider the implications of making any changes, assure broad input in the decision-making process, and make all necessary system adjustments. This is particularly important given the many questions that will need to be resolved about the meaning of various provisions in the legislation, the interrelationship between the welfare changes and the changes in food stamps, Medicaid, SSI and other programs, and the profound consequences for needy families and low-income communities of the changes that might be made.

At the same time, the phenomena of declining caseloads and expenditures may create incentives for states to enter the new system at the earliest possible date. As noted above, the length of time during federal fiscal year 1997 that states are operating their programs under the new system will determine how much of their 1997 block grant allocations they will receive in addition to any matching payments they get while operating under the old system. Some states where block grant allocations are expected to bring in more federal funds in federal fiscal year 1997 than the state would receive under the AFDC matching system may want to spend as much of the year under the new system as possible. ¹⁹

States may be able to resolve the tension between the need to proceed thoughtfully and the desire to maximize federal payments in federal fiscal year 1997 by submitting a state plan that initiates the block grant payment but that does not make significant changes in the current system. Then, after the state has considered alternatives and solicited input from affected parties, the state plan could be amended if necessary to reflect additional program changes. There are no specific limitations or requirements imposed on states with respect to the state plan amendment process.

In addition, as noted above, a state may be able to continue to operate its current system based on waivers submitted prior to the enactment of the new law, even if those waivers are inconsistent with provisions of the law. In such cases, a state may be able to submit a state plan based on the waivers and receive all or most of its federal fiscal year 1997 block grant allocation.

Maintenance-of-Effort Requirement

Beginning in federal fiscal year 1997, states must maintain spending at no less than 80 percent of 1994 levels on AFDC benefits and administration, Emergency Assistance, JOBS, and selected child care programs. The Secretary of Health and Human Services is directed to reduce a state's block grant allocation during the following federal fiscal year by the amount a state comes up short.²⁰ States that comply with the work participation rates will be subject to a lower, 75 percent, maintenance-of-effort requirement.

Contingency Fund

Beginning in federal fiscal year 1997, states may be eligible to receive additional federal payments worth up to 20 percent of their block grant allocations if they experience particularly severe economic conditions (as evidenced by high unemployment rates or large increases in food stamp caseloads ²¹). The fund contains $2 billion for federal fiscal year 1997 through federal fiscal year 2001. States cannot access the contingency fund unless they maintain state spending on welfare at 100 percent of base year levels.

Additional Sources of Funds for States

The bill contains four other sources of funds for states that may provide them with very modest amounts of additional federal assistance. They are: (1) supplemental grants for states with relatively rapid population growth and/or a history of low spending on their AFDC programs, available to states beginning in federal fiscal year 1998; (2) grants to states deemed by the Secretary of Health and Human Services to qualify as "high performing" states based on the quality of their TANF programs, available to states beginning in fiscal year 1999; 3) grants to the five states that experience the largest decline in their out-of-wedlock birth ratios, available beginning in federal fiscal year 1999; and 4) a loan fund from which states that have never been penalized for failing an audit of their TANF programs may borrow money beginning in fiscal year 1997.

Limits on Eligibility for Aid under TANF and Medicaid for Legal Immigrants

Effective immediately upon enactment of the bill, states are prohibited from providing aid under the AFDC program and from using TANF block grant funds to aid most legal immigrants who enter the country on or after the date the bill is enacted. The prohibition remains in effect for the immigrants' first five years in the country. ²² These same rules apply to the Medicaid program. States can, but are not required to, use state funds to aid these immigrants.

Limitations on providing aid under AFDC, TANF or Medicaid to most legal immigrants who entered the country before the date of enactment are left to the states to decide. States have the option to grant or deny welfare or Medicaid to legal immigrants already residing in the United States on the date the bill is enacted into law. They must indicate whether they will provide aid in their state plans under TANF. If states opt to terminate aid to immigrants now in the country, they must wait at least until January 1, 1997 before eliminating assistance for those legal immigrants receiving welfare or Medicaid on the date of enactment. However, states may deny AFDC, aid under TANF, or Medicaid at any time after the date of enactment to those already in the United States who are not receiving aid on that date. ²³

Food Stamp Program Changes

This section briefly describes the major changes in the food stamp program included in the new law. It is organized generally around the dates on which states must implement these changes, beginning with provisions that states must start to implement on the date of enactment. The section then describes changes to the arithmetic formula for computing benefits and eligibility that will affect the adjustments that states already are scheduled to make on October 1, 1996 and January 1, 1997. It concludes with the timeline for implementing the new limit on benefits for certain unemployed recipients and with a section on the new option to adopt simplified food stamp program rules.

Required Food Stamp Provisions Effective Upon Enactment

States are required to begin implementing the following changes upon enactment of the bill. Although they are required to implement these changes immediately, the food stamp quality control (QC) system does not penalize states for mistakes made in the first 60 days following USDA's issuance of an implementing memorandum. This effectively gives states 60 days after issuance of the implementing memorandum to bring local offices into full compliance.

Among the mandatory changes that will require specific action from states to implement are the following:

Ending the income exclusions for state energy assistance, certain vendor payments for homeless households, and the earnings of high school students between the ages of 18 and 22.

Increasing the penalties on people violating various food stamp work rules as well as rules in other programs.

Pro-rating the food stamps of households (other than migrant farm workers) who reapply after having been off of the program for periods of less than one month.

The food stamp rules for new legal immigrants also begin to apply on the date the bill is enacted. ²⁴ New legal immigrants who enter the country on or after the day of enactment, and any legal immigrants already residing in the country who are not on that day receiving food stamps, will not be eligible for food stamps upon enactment. The remaining group of legal immigrants — those who are already residing in the United States on the date of enactment and who are receiving food stamps on that date — will lose their food stamps at the time they are scheduled for their regular food stamp eligibility recertification but no later than a year after the bill's enactment.²⁵

Required Food Stamp Changes Effective October 1, 1996 and January 1, 1997

Many of the major food stamp changes made by the bill involve changes to the arithmetic formula for computing benefits that will affect the adjustments that states are scheduled to make under current law on October 1, 1996 and January 1, 1997. As a result of these changes, on October 1, 1996 states will not make scheduled adjustments in the standard deduction and the homeless shelter deduction. These adjustments are canceled permanently by the bill. Also, the adjustments in the basic benefit level (the "thrifty food plan") and the limit on the value of vehicles that households may own will both be curtailed. States will not remove the cap on the excess shelter deduction on January 1, 1997 as previously scheduled. Instead, they will increase the cap from $247 to $250 on that date; then it will remain frozen at $250 for 21 months.

Time Limit on Benefits for Unemployed Recipients

The bill imposes a new three-month time limit within any 36-month period on certain unemployed food stamp recipients between the ages of 18 and 50 who are not caring for a dependent child. (Under some circumstances a recipient could qualify for one additional three-month spell of benefits). The time limit goes into effect once a recipient has received notice of it, but no later than three months after the date of enactment. Therefore, states in effect have three months from the date of enactment to provide notice. Thus, if the bill is signed on September 1, 1996, states could notify food stamp recipients affected by this provision at any time between September 1 and December 1, 1996 that they are subject to the new time limit. Once notification is provided, the clock starts to run and aid is limited to three months in any 36-month period. ²⁶

At any time after the date of enactment, states can request waivers from this provision for areas in which unemployment rates are over 10 percent or other areas in which there are insufficient jobs available for this population. The lack of sufficient jobs can be measured in numerous ways from a range of available data or from the experience of a state agency in assessing conditions in local communities.

State Option to "Simplify" Rules

The bill gives the states an option to implement a "simplified food stamp program" under which similar rules on matters such as calculating income are used for both welfare and food stamps. The simplified food stamp program can be applied to households "in which all members receive assistance under a State program funded under part A of title IV of the Social Security Act," and, if USDA approves, to households in which some but not all members receive such aid. Since both AFDC and TANF exist under subtitle IV-A of the Social Security Act, the simplified food stamp program can be applied to both; a state need not have implemented TANF before opting into the simplified food stamp program.

On the other hand, since the simplified food stamp program allows states to conform food stamp rules with welfare rules, states planning significant changes in those rules when they move from AFDC to TANF will probably prefer to wait to implement the simplified food stamp program until they have made the transition to TANF. There is no limit on when a state can opt to apply simplified rules from AFDC or TANF.

Footnotes

26. If a person subject to this provision has returned to work for at least a month during which he or she averaged 20 hours per week, after using up the three months of benefits and then loses the work, the person may return to the program for an additional three months out of the 36-month period. This exception, however, may be used only once by an individual during any 36-month period.