May 27, 1999
States Must Act Immediately to Retain
Time-Limit Flexibility Under their Waivers
by Liz Schott
Under the Temporary Assistance for Needy Families block grant, states have a great deal of flexibility to set their own welfare policies including time limit policies. States that had implemented welfare reform approaches under waivers of the prior AFDC law have even greater flexibility because they can continue using those welfare reform approaches instead of following any inconsistent federal law requirement.
The recently issued final TANF regulations clarify the extent of the state flexibility to continue waiver-based approaches that are inconsistent with federal TANF requirements. It turns out that states have a great deal more flexibility than has been commonly understood.
There is only a short window of opportunity, however, for states with waivers to decide how to exercise the extra flexibility provided to them under the federal welfare law. If a state wishes to follow its waiver-based program instead of any inconsistent federal TANF law provisions, the governor of the state must provide certification of this choice to HHS no later than October 1, 1999. (HHS encourages states to submit such certification by July 1.) To meet this deadline, states with waiver-based approaches to welfare reform will need immediately to analyze which waiver-based policies they want to continue and whether to claim that these policies are inconsistent with TANF requirements.
This paper addresses the specific issue of the relationship between state waiver policies imposing time limits and the 60-month TANF time limit set by the federal welfare law and explains how the final TANF regulations clarify this issue. In short:
- States need not count any month of assistance provided under the waiver to a family exempt from a state waiver-based time limit toward the federal 60-month limit. In addition, states with waiver-based adult-only time limits need not count any month of assistance provided to any family under the waiver toward the federal 60-month limit.
- To claim this flexibility, states with waiver-based time limits must act before October 1 to certify and in some cases modify their policies on when a month of TANF assistance provided during the period of the waiver counts toward the 60-month TANF time limit.
- While the federal 60-month time limit does apply to families after expiration of a state's waiver, states have flexibility to continue their own time limit approaches including exemption and extension policies even after their waivers expire.
II. Background on state time limit waivers and federal time limit requirements
In the years leading up to the passage of the 1996 federal welfare law, a number of states adopted state-based welfare reform approaches imposing time limits on welfare receipt. In order to do so, a state needed to receive a waiver of certain provisions of the prior AFDC law from the U.S. Department of Health and Human Services. In enacting the federal welfare law, Congress decided that these states should be able to continue their waiver-based approaches to welfare reform. Therefore, the federal law provides that, for the duration of the waiver, states may choose to follow their waiver programs rather than any inconsistent requirements of the federal law.
The time limit set by the federal welfare law is one of the requirements that may be inconsistent with a state's waiver. Under the federal law, a family with an adult is subject to a lifetime limit of 60 months of TANF-funded assistance, although a state can provide TANF assistance beyond 60 months for 20 percent of the caseload based on hardship or domestic violence. The federal TANF time clock generally runs for all families that receive TANF-funded assistance except for families in which no adult receives assistance.(1) When a family reaches the time limit, federal TANF assistance can not be provided to the family not even the children unless that family is included in the up to 20 percent of a state's caseload that can receive federal TANF assistance beyond 60 months.
Most of the states that implemented waiver-based time limits prior to the passage of the federal welfare law took a different approach to several aspects of the time limit. While the waiver-based time limits often are shorter than 60 months, they generally are not lifetime limits. Rather, the family may be ineligible for a fixed period of time but then can requalify. For example, a family that loses assistance due to a 24-month time limit may be able to get assistance again after a 36-month period off of aid. In addition, waiver-based time limits often apply only to families that a state considers "work-ready." State waivers often exempt families from the time limit for a number of reasons, most typically if the parent is unable to work due to incapacity or is needed to care for a family member who is disabled. Some state waivers also set policies for extending benefits when time limits are reached that differ from the 20 percent limit on extensions set by the federal welfare law. Finally, some state waivers only impose time limits on the adults in the family and continue benefits to the children when the time limit is reached. Thus, even if a state has a waiver-based time limit that is shorter than 60 months, some families could receive assistance for more than 60 months because of these aspects of the state policies.
Since the passage of the federal law there has been some uncertainty about the relationship between the TANF 60-month time limit and states' waiver-based time limits. It has not been clear whether, or how, states with waiver-based time limits are subject to the 60-month TANF restriction. Recently, HHS published final TANF regulations which, among many other provisions, provide clear guidance on this issue.(2) Officials in states with waiver-based time limits need to consider how the final rules apply in their states and what steps are required if they wish to retain their states' waiver-based approach. In addition, states retaining their waiver-based time limits may now need to modify any policies counting a family's receipt of aid toward the 60-month time limit to conform to the approach taken in the final TANF regulations.
III. How the 60-month TANF time limit applies if a state has a waiver-based time limit
Under the final TANF regulations, a state can follow its waiver-based approach to time limits in lieu of the TANF 60-month time limit during the period of the waiver. The state approach, however, must be a time limit that terminates assistance to families or individuals when the time limit is reached. This means that, during the waiver period, a state can provide TANF-funded assistance under its time limit policies even if the result is that more than 20 percent of the caseload receives assistance beyond 60 months. Until the waiver has expired, the 60-month time limit should not be a reason to terminate assistance that would otherwise have continued under the state's waiver-based approach.
Once its waiver has expired, however, a state cannot provide TANF-funded assistance to a family that includes an adult that has received TANF for more than 60 months except to 20 percent of the caseload. Much of the clarification provided by the final TANF regulations centers on how months of aid received during the period of the waiver count toward the 60-month time limit which applies after the waiver expires. The general rule is that months during which a head of household (or spouse) subject to the time limit receives TANF-funded assistance during the waiver will count toward the 60-month time limit just as they would if the state did not have an approved waiver. There are, however, several key exceptions to counting receipt of TANF-funded assistance during the waiver toward the 60-month TANF time limit.
- A state need not count any month in which the family is exempt from the state's time limit under the waiver.
- The three states with adult-only time limits under a waiver Texas, Indiana and Arizona need not count any months during which the adult receives assistance under the waiver toward the federal TANF time limit. In addition, once the adult is removed from the grant due to the state time limit on an adult's receipt of assistance, the months in which only the children receive assistance do not count toward the federal TANF time limits.
- If a state is continuing research for an impact evaluation of a waiver under an experimental design, it may follow the waiver policies in lieu of inconsistent TANF policies. Under this provision, months of TANF assistance provided during the period of the waiver to experimental and control group cases that were not otherwise exempt would not count toward the TANF 60-month time limit.(3)
These key exceptions mean that when a state's waiver expires, some families will not have used any months of the federal TANF 60-month limit. For example, if a state's waiver-based time limit does not apply to families in which the adult is disabled, then any assistance provided to these families with TANF funds during the period of the waiver will not count toward the family's federal 60-month time limit. This also will be true for all families in a state with an adult-only time limit. Consider, for example, a state that imposes a 24-month time limit on adults but continues benefits for the children when the state 24-month time limit is reached. During the entire period of the waiver, none of the months of assistance provided to the family with federal TANF funds neither the first 24 months during which the adult and the children receive assistance nor the subsequent months during which only the children receive assistance count toward the federal 60-month time clock.
As a result of the clarifications in the final regulations, many families will not begin to accrue months that count toward the federal 60-month clock until after the waiver expires. These provisions provide states with waiver-based time limits tremendous flexibility to continue their waiver-based approach to time limits without also having to graft a 60-month federal time limit onto the state approach.
IV. What does this mean for states with waiver-based time limits?
Now that the federal regulations have provided clarification, there are a number of steps for states with waiver-based time limits to take. First, a state must certify that it is continuing to follow the waiver-based time limit that it claims is inconsistent with the TANF 60-month limit. A state claiming any inconsistencies between its waiver-based policies and TANF requirements must submit a certification from the governor by October 1, 1999 to clearly identify which waiver policies it wishes to continue that are inconsistent with TANF requirements.(4) HHS encourages states to submit the certification by July 1, 1999 in order to resolve any issues or questions that might arise before October 1.(5)
Until now there has been no single binding method for how a state must identify which waivers it is continuing and whether or not it claims waiver provisions are inconsistent with TANF requirements. Moreover, there has been no clear requirement that a state identify how it is counting months of assistance received by families under waiver-based time limits toward the federal TANF time limit. Indeed, many states have been waiting for clarification from HHS to make these decisions. Now, states must certify by October 1 that they are not counting certain cases toward the federal TANF time limit (for example, families exempt from the state time limit). A state that does not certify these policies by the deadline will forever lose the flexibility to exclude those cases from the federal 60-month limit. It is therefore important that states with waiver-based time limits carefully consider and clearly identify their policies on counting months of assistance toward the 60-month TANF time limit in light of the final federal regulations.
The regulations also require that a state that is claiming a waiver inconsistency have continually applied the policy in operating its TANF program. This means that a state that abandoned its waiver-based time limit policy and adopted a different time limit in its stead cannot now claim a waiver inconsistency. However, a state that continued its waiver-based time limit, but also grafted on the federal 60-month time limit, can claim that it has continually applied its waiver provision. Since the passage of the welfare law, states with waiver-based time limits have been understandably uncertain about whether they also were required to graft a 60-month time limit on top of their waiver-based time limit and whether months of TANF receipt under the waiver counted toward the 60-month time limit. Now it is clear that states are not required to impose the 60-month time limit during the waiver and are not required to count assistance provided to certain families toward the 60-month time limit. Any state that may have included such provisions in manuals or policies may wish to revisit its policies. And, as explained above, a state that does not modify any grafted-on 60-month time limit to claim the flexibility allowed under the federal regulations will lose that flexibility.
States with waiver-based time limits will need to track months of TANF receipt for some families during the period of the waiver. Many states, however, may be counting months of TANF receipt toward a family's 60-month time limit in a manner that does not follow the final federal regulations. As discussed above, after the waiver expires, HHS will measure a state's compliance with the federal time limit requirement but, if a state has so certified, will not count any month of TANF receipt in which the adult was exempt from the state's time limit or any months in which children (with or without adults) received assistance under an adult-only time limit. If states are counting these months when they are not required to do so, they are limiting their ability to use federal TANF funds for these families in the future.
V. State Options for Time Limit Policies After the Waiver Expires
The approach taken in the final regulations makes it easier for states to continue their waiver-based approaches to time limits even after the waiver expires. While states cannot renew their waivers there are no new waivers allowed under the welfare law they can continue the same state time limit policies and also comply with the federal law's time limit requirements. They can do so for two independent reasons:
- The federal time clock will start for exempt families only after the waiver expires. This means some families will not reach the federal 60-month limit until five years after the waiver ends. Given this lengthy period, many such families will not stay on assistance so long as to reach this federal time limit.
- Even without a waiver, states have flexibility to set their own time limit policies because federal time limits do not apply to assistance provided with funds that states must spend to meet the state maintenance-of-effort (MOE) requirement of the federal law. States can thus continue their waiver approaches to time limits by providing assistance to families with MOE funds.
The first reason that states can continue their time limit approaches is that, as discussed above, federal time clocks will only start for some or all families after the waiver ends. The impact of the final TANF rules thus extends beyond the period of the waiver. Consider, for example, a state with a waiver expiring on December 31, 2002 that exempts families with a parent with a disability from its waiver-based time limit. Such a state can use federal TANF funds to provide assistance to families with exempt parents during the waiver and for 60 additional months beginning January, 2003. After a family has received TANF assistance for 60 months after the expiration of the waiver, the state could provide assistance beyond 60 months with federal TANF funds (for 20 percent of families) or with state MOE funds. Given this flexibility, the state would never need to stop benefits at 60 months for a family with a parent who is disabled and would not need to limit exceptions to the time limit to 20 percent of the caseload.
The three states with waiver-based adult-only time limits that are shorter than 60 months have even greater flexibility to continue their time limit approach. As discussed above, such a state can use federal TANF funds during the period of the waiver for all families. The federal 60-month time clock only begins after the waiver expires and only runs for families that include an adult. Once an adult is removed from the grant under a state time limit that is less than 60 months, the state can continue to use federal TANF funds to provide assistance to the children without regard to the federal 60-month limit. In these states, the circumstances in which an adult might receive assistance for more than 60 months are typically those relating to families in which an adult is exempt from the state time limit. This is unlikely to occur for 20 percent of the state's caseload (the portion of the caseload which the federal law permits states to assist with TANF funds beyond 60 months), particularly as the state's caseload will continue to include cases in which the adults have been removed due to the time limit but benefits continue for the children.
The second reason that states can continue their time limit approaches is that federal time limits do not apply to state maintenance-of-effort funds. (6) The 60-month lifetime limit applies only to assistance provided with federal TANF funds. The federal law specifically allows a state to count towards its MOE requirement funds paid to a family that is not eligible for federally-funded TANF assistance because the family has reached the 60-month TANF time limit.(7) This allows all states to provide benefits to needy families under their own policy choices without any limitation on the numbers of families receiving benefits beyond 60 months.
Because federal TANF time limit requirements do not apply to state MOE funds, states have much greater flexibility to shape their time limit policies than is commonly assumed. However, states will need to structure the financing of their TANF programs differently than they structured the financing of their AFDC programs to take full advantage of this flexibility. Under the former AFDC system, the assistance provided to each family that received AFDC was paid partly with state funds and partly with federal matching funds. Under the TANF block grant, a state does not need to structure the funding of its program in the old way. Instead, it can choose to use federal TANF funds (or commingled federal TANF and state MOE funds) to provide assistance to those families subject to the time clock, and use state MOE funds but no federal funds to provide assistance to those families on whom the state does not wish to run a time clock.(8)
The bottom line is that a state that wants to continue its own state policies need not change its state-based approach to time limits either during or after the period of the waiver.
States with waiver-based time limits have additional flexibility to maintain those policies instead of the federal TANF time limit, but must act before October 1, 1999 to claim this flexibility. States now are faced with a time-limited window of opportunity to assess how they should approach the relationship between their waiver-based time limits and the federal 60-month TANF time limit.
A state need not count toward the TANF 60-month time limit months of assistance it provides to certain families under a waiver-based time limit. States can exclude these cases from the 60-month TANF clock, however, only if they explicitly identify the state's policies for which cases count, and which cases do not count, toward the 60-month time clock in the Governor's certification.
Thus states need to consider how they are counting months of assistance toward the 60-month TANF time clock in light of the guidance provided in the final TANF regulations. Some states may need to revisit and revise the interim policies they have put in place on this issue.
1. However, months for which an adult received TANF assistance while living on an Indian reservation or in an Alaskan Native village with more than 50 percent unemployment do not count toward the TANF 60-month limit. 42 U.S.C. § 608(a)(7)(D).
2. The regulations are published at 64 Fed. Reg. 17720-19931 (April 12, 1999). The regulations, an index, a fact sheet, and HHS's executive summary are available at the HHS ACF Office of Family Assistance web site at http://www.acf.dhhs.gov/programs/ofa/. For analyses of the regulations, see Center on Budget and Policy Priorities, Highlights of the Final TANF Regulations, April 29, 1999, and Center on Law and Social Policy, The Final TANF Regulations: A Preliminary Analysis, May 1999, available at http://www.clasp.org. The provisions addressing waivers are §§ 260.70-76 and, in particular, § 260.74 addresses time limits and waivers. The preamble discussion of waivers is found at 64 Fed. Reg. 17731-9.
3. 45 C.F.R. § 260.76.
4. For time limit waivers, the certification must identify the inconsistencies between the state's waiver policy and the TANF time limit requirement, specify the standards that will apply in determining which families will count toward the federal time limit, identify which standards will apply in determining time limit extensions for a family, and state that the applicable policies have operated continuously in the state's TANF program.
5. Preamble discussion at 64 Fed. Reg. 17739.
6. Under the federal law, states are required to maintain at least 80 percent of historic state expenditures; this amount is reduced to 75 percent for states that meet the work participation rates. States that do not meet their MOE requirement will have their federal TANF funds reduced by the amount of any state shortfall. 42 U.S.C. § 609(a)(7).
7. 42 U.S.C. § 609(a)(7)(B)(i)(IV); 45 C.F.R. § 263.2(b)(1)(ii).
8. For further discussion of using state MOE funds segregated from TANF funds in a TANF-funded program, see Department of Health and Human Services, Helping Families Achieve Self-Sufficiency: A Guide on Funding Services for Children and Families through the TANF Program (available through http://www.acf.dhhs.gov), and Schott, State Choices on Time Limit Policies in TANF-Funded Programs (September 1, 1998).