September 1, 1998
State Choices on Time Limit Policies in TANF-Funded Programs
by Liz Schott
Table Of Contents
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 imposes lifetime time limits on assistance provided under the Temporary Assistance for Needy Families block grant. In general, a family with an adult is limited to 60 months of TANF-funded assistance. In all states, the federal TANF clock is ticking now. In a number of states, families are already reaching a shorter state time limit. By the end of this year, families will be reaching welfare time limits in at least 12 states.
Three aspects of the federal welfare law shape the choices that a state can make in designing its time limit policies. First, the law allows a state to set time limits shorter than 60 months.(1) Second, a state may use federal TANF funds to aid up to 20 percent of its caseload beyond the 60-month limit based on hardship or if the family includes an individual who has been subject to domestic violence. Third, the law requires a state to continue to spend state dollars in an amount equal to at least 80 percent (or in some cases, 75 percent) of its historic state welfare spending, but states are not required to impose time limits on the assistance provided with these "maintenance of effort" (MOE) funds.(2)
Because TANF funds can be used to provide assistance to 20 percent of the families in a state's TANF-funded program beyond 60 months and because state MOE funds are not subject to federal time limit restrictions, states have broad flexibility to shape their own time limit policies and to establish time limit exemptions and extensions. A number of states have identified groups of families for whom the state's time clock does not run; these families are exempt from the time limit. In addition, many states have set criteria under which assistance is extended or provided through another program when a family reaches the state's time limit. While some states have developed detailed time limit policies, including exemption and extension rules, other states are simply utilizing the time limit framework that applies to federal TANF funds. The states adopting the federal framework are generally applying a lifetime limit of 60 months and stating in their policy that up to 20 percent of the caseload may receive extensions once the 60-month time limit is reached. These states have not yet established the circumstances under which assistance would be extended beyond 60 months. Most of these states also have not addressed whether some families should be classified as exempt from time limits.
There are several reasons why some states have not yet filled in the details of their time limit policies. A state may not see any urgency in addressing the details since a 60-month time limit will not be reached for a few years. Also a state may believe that such details would dilute the message that everyone is expected to prepare themselves for work. And, in some instances, a state may not fully understand the degree to which it has flexibility under the federal TANF framework to establish time limit exemption and extension policies. These states are not making use of the flexibility Congress provided in the welfare law to shape their own time limit policies.
This paper examines some of the time limit approaches, including exemption and extension policies, that various states have adopted and the policy bases for such choices. The paper also explains how states can structure the financing for their programs to meet their policy objectives consistent with the requirements of the federal law and considers the advantages of addressing these issues now rather than waiting until families begin to reach the time limit.
II. The Difference Between a Time Limit Exemption and a Time Limit Extension
The federal welfare law and most state laws recognize that time limits on welfare receipt may not be appropriate for all welfare families and provide some exceptions to cutting off all aid to a family based on a time limit. When a state decides it does not want to impose a welfare time limit on a family, it typically can either exempt the family from the state's time limit or extend the period for which a family can receive assistance once the time limit has been reached. In general, and as used in this paper, an exemption stops the time limit clock from running by establishing circumstances under which a family's receipt of aid for a month will not count toward the state's time limit. In contrast, an extension does not stop the clock. Rather it continues assistance even though a family has reached the state's time limit.(3)
- Exemptions: An exemption stops the time limit clock from running on a family based on particular sometimes temporary circumstances of the family that exist at the time the clock is stopped. For example, a state might determine that a parent or caretaker who is unable to work due to obligations to care for a disabled family member should be exempt from the time limit. If so, the state would not count toward the time limit aid provided in any month during which the family met the state's exemption criteria. Stopping the time limit clock for a family based on the family's circumstances during a month recognizes that, because of the family's current circumstances, receipt of aid during that month should not count against the family's time limit.
- Extensions: Under an extension, families that are subject to and have reached a time limit are provided ongoing aid if they meet certain criteria. Extensions might be based on hardship circumstances particular to a family at the time the time limit is reached or they may be based on external circumstances, such as high unemployment in a local area. Time limit extension policies generally look at the circumstances of the family or the local area at the time that the time limit is reached.
Because extensions generally consider current rather than past circumstances, it is important for states to consider when an exemption, rather than an extension, would further state policy objectives. Consider the example of a woman who is unable to work or prepare for work for two years due to recurring family violence but is finally able to participate in work activities just as her family reaches a 60-month time limit. An exemption based on domestic violence could have stopped the time limit clock during the time she was unable to work. However, an extension policy that only looks at her circumstances at the time the family reaches the time limit may not adequately take the past circumstances into account. If a state only allows for extensions and does not permit contemporaneous exemptions, the family in this example could be disadvantaged relative to other families that had the full 60-month period during which to prepare for or participate in work activities.(4)
A state that waits until families approach the time limit to set exemption policies will have missed the opportunity to determine that receipt of aid for a month should not count against a particular family's time limit contemporaneously with the occurrence of the circumstances that are the basis for the determination. While a state can consider past as well as current circumstances in deciding not to stop aid to a family that has reached a time limit, it often will be administratively more difficult to establish and verify past circumstances. For example, if a state decides in 2001 that it will not count toward a time limit any months in which an adult was physically or mentally unable to work or child care was not available, it may be difficult to reconstruct retroactively which months of aid should count toward the time clock and which months of aid should not count. The most comprehensive way for a state to implement a state policy that a month of aid should not count against a time limit is to consider those circumstances as they arise.
III. Examples of Policy Options States Have Adopted in Designing Time Limit Exemptions and Extensions
Many states that have established detailed time limit exemption and extension policies have made thoughtful choices about time limits. They have considered when it is appropriate to run time clocks on a family's receipt of cash aid and when benefits should continue to a family even though a time limit has been reached.(5) These states are taking steps to act on the general recognition that time limits are not appropriate for all families at all times.
Below are examples of some of the reasons that states have chosen to stop the time clock for groups of families and to extend assistance when the time limit is reached for other groups of families.(6) The examples listed do not cover all aspects of every states' policies; most of the states noted here also have additional exemption or extension policies. Nor do these examples of time limit policies cite every state that has adopted the policies discussed. For example many states stop the clock for persons who are incapacitated but only a few state examples are listed here.
Stopping the time limit clock for families in which the
adult is not required to participate in work activities
Many states have carried over their work program exemption policies to their time limits. These states stop the family's time limit clock if the adult is exempt from participation in work activities. In these states, the same circumstances that lead a state to exempt the adult from work activities also trigger a time limit exemption.
Adults who are incapacitated or caring for an incapacitated family member
Incapacity is the most common basis for a time limit exemption. About one-third of the states do not run the time limit clock for a family in which the adult is incapacitated or is caring for an incapacitated child or household member. This reflects state policy decisions that time limits are not appropriate for families during a time when the parent or caretaker is unable to work either due to his or her own disability or because she is needed to care for a disabled household member.(7)
- In California, months in which parents or caretakers are exempt from welfare-to-work activities because of disability or advanced age, or because they are caring for an ill or incapacitated family member do not count toward the state's 60-month time limit.
- In Massachusetts, the state's 24-month time clock does not run for families in which the parent or caretaker meets the state disability standard or is caring for a disabled child or spouse.(8) (Two-parent families qualify for the exemption if both parents are disabled.)
Adults caring for young children
Most states recognize that persons caring for very young children should not be required to work or participate in work preparation activities, but states vary on the age of the child for which such recognition is given.(9) Consistent with this recognition, some states also stop the time clock during the period when a parent is caring for a very young child. This is particularly significant in states with short time limits in which the time limit can be reached while a child is still very young.
- In Massachusetts, one adult caring for a child under the age of two is exempt from the state's 24-month time clock.(10)
- In Virginia, the state's 24-month time limit clock does not run on an adult caring for a child under the age of 18 months.(11)
Stopping the time clock when an adult is working
substantial hours but the family still is poor
Most states have adopted policies in their TANF-funded programs that "make work pay" by allowing families receiving assistance to keep a greater portion of their earnings than was permitted under prior AFDC policies. These policies disregard a designated amount or percentage of the earnings before the remaining earnings are counted in the calculation that reduces welfare benefits. The "disregard" policies result in smaller reductions in assistance and help to provide ongoing support to working families with low earnings.
One consequence of these earnings disregard policies is that families with earnings may continue to receive assistance for a longer period, although the family may receive only a small grant. A tension results when these "make work pay" policies apply in time-limited benefit programs: a family with a low-wage worker may qualify for a small amount of benefits to supplement its low earnings, yet by receiving assistance the family may be using up months on the time clock they may need during a subsequent bout of unemployment. Early results from states where families have reached time limits indicate that a significant percentage of families reaching the time limit have earnings.(12)
When a wage-earner works a substantial number of hours but the family is still poor enough to qualify for assistance, a state may wish to continue to provide assistance but to stop the time limit clock. This represents a decision that time limits, which are generally viewed as a way to push a parent into the workforce, are not necessary or appropriate when a parent is working but earning very low wages. It also allows low-income working families to save time on the TANF clock for future periods of unemployment while also allowing them to continue to receive modest cash assistance that can aid in family stability and job retention.
- Illinois stops the 60-month time limit clock for any month in which a parent has at least 20 hours of earnings per week.(13)
- Maine stops the 60-month time clock in half of its counties for families with earnings.(14)
- In Missouri, the state stops the 60-month time limit clock for those families participating in the state's subsidized employment program. In this program, the worker's paycheck is partially subsidized by welfare funds.
Stopping the time clock for families in which
the adult faces barriers to work participation
Some states are stopping time limit clocks when the adult who is required to participate in work faces barriers that prevent immediate participation in work activities and delay entry into the workforce. Stopping the state time limit clock until the barriers are removed reflects a policy choice that it is not appropriate to run time clocks on families until the adult can actually participate in work activities.
Persons who are not receiving needed services
Time limits arose, in part, from the notion that recipients need a certain period of time to find work or prepare themselves for work. Then they are expected to become employed and self-sufficient. Following that philosophy, some states have established time limit exemptions for periods during which services that a recipient needs to prepare for or support work, such as child care or transportation, are not available to the recipient through no fault of his or her own.(15) Stopping the clock at the time and for the duration that the needed services are not available is the most feasible way to acknowledge the delay the family faces in achieving self-sufficiency.
- South Carolina provides that a participant is exempt from the state 24-month (in a 10-year period) time limit for the period of time the agency is unable to provide needed child care or transportation support services.
- Tennessee does not count months against the state's 18-month time limit during which the state fails to provide necessary support services or work activities to make full participation possible.(16)
Stopping Time Limit Clocks for Victims of Domestic Violence
Congress and many states have recognized that time limits may not always be appropriate for victims of domestic violence. The Family Violence Option of the federal welfare law permits a state to waive program requirements, including time limits, where compliance with the requirement would make it more difficult for individuals to escape domestic violence or would unfairly penalize individuals who have been victims of domestic violence. 42 U.S.C. § 602(a)(7). At least one-third of the states explicitly recognize that time limits should not apply to victims of domestic violence in certain circumstances.
Many states have not yet addressed what happens to a family's time limit clock when the family has been granted a waiver of TANF requirements based on domestic violence. States generally appear to consider domestic violence as a basis for continuing or extending assistance when a family reaches a time limit. Such an approach may be too narrow as it only protects from time limits those families whose circumstances support a domestic violence waiver of time limits at the time the time limit is reached. This approach could exclude families in which a woman may have been unable to work or prepare for work due to domestic violence during a past period of time. It ignores the disadvantaged position of the family due to the past circumstances. Stopping the time limit clock for the family of a domestic violence victim during the time that the adult is not able to participate in work or work preparation activities avoids unfairly penalizing a family because of past domestic violence. This may need to be done retroactively in some cases.
States may have delayed addressing the details of the interaction of domestic violence waivers with time limit clocks to see how HHS will treat this issue. In November of 1997, HHS proposed federal TANF regulations which set forth the agency's approach to the Family Violence Option and time limits. Under HHS's proposal, a state would not be penalized for providing TANF-funded assistance to more than 20 percent of the caseload beyond 60 months if the state's failure to meet the 20 percent limit is attributable to its use of good cause domestic violence waivers. However, the proposed HHS rule would only recognize a "good cause domestic violence" waiver of a time limit that was made based on circumstances existing at the time the family reached the 60-month TANF time limit. See further discussion at fn. 33.
HHS's failure to take a "stop the clock" approach to family violence waivers of time limits in the proposed rules has been widely criticized by women's groups, lawmakers, and a number of state and national organizations, all generally arguing that the narrow approach of only looking at the circumstances at the time the time limit is reached fails to take into account the woman's past inability to work or to prepare for work. Even if HHS continues its narrow interpretation of domestic violence waivers in the final TANF regulations, states can approach the issue differently. Using the flexibility Congress gave states over MOE funds, states can take a "stop the clock" approach to implement time limit exemptions based on family violence waivers contemporaneously with the granting of the waivers. See further discussion at section IV, below.
Persons not yet at the "starting gate" of employability
Several states recognize that some groups of persons are functionally unemployable because of very low basic skills or illiteracy. While the state may require them to participate in activities to develop basic skills and prepare for work, these families are not yet at the "starting gate" of basic employability. Stopping the time limit clock for such families until they reach a minimum skill level is a way to implement the concept that time clocks should run only when parents or caretakers are reasonably expected to work.
- Tennessee exempts families from the state's time limit if the caretaker is an adult whose functional literacy or math level is at the 8.9 grade level or less so long as she or he is enrolled and making satisfactory progress in a basic education program. The exemption ceases when the recipient reaches the 9th grade level.(17)
Extending benefits once the time limit is reached
States also are setting policies extending benefits for families that reach a time limit under limited circumstances. While exemption policies generally recognize that time limits should not apply for certain groups of families based on circumstances that exist during the period of welfare receipt, extension policies generally identify circumstances usually related to hardship under which benefits to families to whom time limits do apply should continue even though the time clock has run out.(18) States' extension policies are generally based on circumstances that exist at the time that the time limit is reached. These may be circumstances unique to the family (e.g. completing a training program) or they may be external circumstances applicable to all families in a geographic area (e.g. high rate of unemployment in the county).
While most states have time limit extension policies based on hardship, many of these states have not yet identified what circumstances will constitute hardship. Instead they use general language similar to the federal TANF language permitting extensions for up to 20 percent of the caseload based on hardship or domestic violence without any further guidance or elaboration.(19) Other states have set extension criteria that define what constitutes hardship and may include other reasons for extensions (e.g. completion of training) as well. Generally this latter group of states makes an extension available whenever a family meets the relevant criteria and would not deny an extension solely because the 20 percent limit has been reached.
Persons in high unemployment areas
The local economy has a direct impact on the ability of a welfare recipient to obtain and retain employment and leave assistance permanently. Even in states with low unemployment rates, there may be pockets of very high unemployment. These may be in remote rural areas or in economically depressed areas nearer to population centers. Several states have recognized that aid should be extended beyond the time limit for families residing in areas with high unemployment relative to the rest of the state or the nation.(20)
- Texas provides extensions of up to six months at a time if a family lives in an area of economic hardship, which is defined as a county with more than 10 percent unemployment.(21)
- In Delaware, the state's 48-month time limit does not apply when the state unemployment rate exceeds the national average by two percent or when the state unemployment rate exceeds 7.5 percent.
- Extensions of Tennessee's 18-month time limit for an additional six months are available to a family residing in an "economic hardship county," which is defined by the state as a county in which the unadjusted unemployment rate for the month is twice the unadjusted rate for the state as a whole.
Persons completing education or training
Recent research shows that job training that ends in a certificate or degree is more likely to increase the earnings potential of welfare recipients.(22) Several states allow short extensions of time limits when the extension would enable a person actively participating in an education or training program to complete the program and thus increase the family's ability to achieve economic stability.
- South Carolina allows an extension of the state's 24-month time limit for up to six months in order to complete an approved training program leading to self-sufficiency.
- Arizona allows a maximum of two four-month extensions to its state time limit of 24 months (in a 60-month period) to allow completion of an education or job training program leading to self-sufficiency.
Parent has "played by the rules"
A number of states provide "good faith" extensions of benefits when a time limit is reached and the parent has fully cooperated with program requirements and still cannot find a job. Some of these states will also provide these "good faith" extensions when the parent has a job but has earnings so low that the family still qualifies for aid.(23) These states generally require that a family seeking such an extension demonstrate good faith compliance with work activities and often do not allow the good faith extensions when a parent has been sanctioned for failing to follow through on all work requirements. Some states with "good faith" extension policies, however, allow recipients to demonstrate current good faith and "cure" instances of past non-compliance.
- In Connecticut, extensions of the state's 21-month lifetime limit are available if the family demonstrates past good faith effort participating in work activities or if the family demonstrates unique circumstances beyond its control necessitating ongoing assistance. The state allows families that are at risk of not qualifying for an extension because of past sanctions to "restore good faith" by complying with requirements of a new individualized performance contract.(24)
- In Texas, extensions are available if the person has demonstrated a significant job search effort, has not "failed to substantially comply with a work-related requirement," and has not failed to accept a bona fide job offer (defined as one paying at least $168 per month).
- South Carolina allows an extension of its 24-month time limit for up to twelve months if the parent has made diligent efforts to seek available employment including cooperation with all state agency work requirements, demonstrated a willingness to relocate, and there is no employment or other means of support reasonably available. The extension can continue beyond 12 months if approved by the county welfare director.(25)
- In a variant on this approach, recipients in Florida may "earn" extensions of benefits through participation in unsubsidized private employment. Specifically state law provides that a participant may earn one month of eligibility for extended TANF benefits, up to a maximum of 12 additional months, for each month (beginning in October 1996) in which the participant complied with work participation through unsubsidized employment in the private sector.
Persons Unable to Achieve Self-Sufficiency
Some states recognize that there are some persons who are functionally unable to work although they may not meet more rigorous disability tests. These chronically unemployable persons may have diligently complied with program requirements and yet have been unable to find or retain work. Their inability to secure or retain a job during the time that the time limit clock has been running despite their efforts demonstrates the significant barriers to employment that they face.
- New Jersey exempts persons who are identified as chronically unemployable from the state's 60-month time limit. Under the state policy an individual cannot be identified as chronically unemployable until he or she has spent at least 36 months in the state's Work First program. After that time, the state considers the individual's lack of success at employment or work activity participation despite good faith effort. It also will consider other factors such as a history of chronic substance abuse, mental health problems, borderline mental retardation or severe learning disabilities.(26)
Continuing to provide some aid to a family
that has reached a time limit
Some states have established policies to assure that children or families receive aid in some form once the time limit (including available extensions) is reached. For example, the three states with the largest TANF caseloads that serve over one-third of the welfare families in the nation New York, Texas and California continue some type of assistance either to the children or (in the case of New York) to the whole family once the time limit is reached.
Continue benefits to children
A stated purpose of the federal welfare law is to assist needy families so that children can be cared for in their homes. Policies aimed at the behavior of parents could result in hurting the children. None is more dramatic than a total termination of assistance to a family with no other source of support. Some states recognize that basic assistance to provide for the needs of the children should continue when the state time limit is reached.
- California provides safety net assistance to the children after a family reaches the state 60-month time limit for adults. The aid can be either in cash or, at the county's option, in vendor or voucher payments.
- Rhode Island's 60-month time limit applies only to the adults in the family. A child in need of assistance can continue to receive benefits beyond 60 months even if the parent is excluded from assistance due to the time limit.
- Texas does not terminate benefits to the children when a family reaches the state's time limit. Adults are subject to a 12, 24 or 36-month time limit depending upon their education and work experience but there is no time limit on benefits to the children.
Safety net assistance for a family
Some states have chosen to continue to provide some basic assistance for a family that has exhausted time-limited aid and extensions, although the aid may not always be in cash. These policies recognize that a state's time limit policies may not provide sufficient protection for all families and that other back-up aid may be needed under certain circumstances.
- In Connecticut, which has a 21-month time limit, families that do not qualify for extensions of cash assistance may qualify for "safety net assistance." Aid must be provided but the agency has discretion about the level and type of aid that is made available; it may include food, clothing, employment services, eviction prevention, intensive case management, and monitoring for child abuse and neglect.
- New York has a state-funded "Safety Net Assistance" program for families that can no longer receive assistance under its TANF-funded program due to the state's 60-month time limit. The benefit levels are the same as those in the state's TANF program, but the benefits are provided primarily by vendor payments rather than in cash. Specifically, the shelter and utilities portions of the benefits are provided through vouchers to the landlord and utility company; a small amount of the benefit (no more than 20 percent) is available to the family in cash. The balance is paid through an electronic benefit transfer system which allows the recipient to purchase needed items at participating businesses.
IV. Structuring the Financing of a State's TANF Program to Implement State Policy Choices around Time Limit Exemptions and Extensions
States can implement any of the time limit policy options discussed above while complying fully with the time limit requirements of the federal welfare law. The federal welfare law affords states considerable flexibility to establish exemption and extension policies and to shape their time limit rules to promote state priorities. The federal welfare law limits the use of federal TANF funds for assistance to a family with an adult that has received TANF-funded assistance for 60 months.(27) But it also allows states to use TANF funds to aid up to 20 percent of the state's TANF caseload beyond the 60-month limit based on hardship or if the family includes an individual who has been battered or subject to extreme cruelty. States have broad discretion to define the circumstances under which a hardship exception would be allowed.
The 60-month lifetime limit applies only to assistance provided with federal TANF funds.(28) There are no federal time limit restrictions on funds states must spend to meet their "maintenance of effort" (MOE) requirement. Under the MOE requirement, states must spend state funds each year equaling at least 80 percent of the amount the state spent in 1994 on welfare-related programs.(29) 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.(30) This provision is the result of a deliberate Congressional decision to allow states great flexibility to use their own funds without regard to the time limit restrictions that apply to federal TANF funds.
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.(31) Instead, it can choose to use federal TANF funds but no state 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. A state thus can structure its TANF and MOE funds in a manner that implements its time limit exemption and extension policies while ensuring compliance with federal requirements relating to TANF funds.(32)
A state can stop the TANF time clock for a family
that a state wants to exempt from the time limit.
Since the federal TANF clock does not run for any month in which the state has not used TANF funds for the case, a state can stop the TANF clock for any given family by using its state maintenance of effort dollars to provide assistance to that family for that month. This design allows a state to exempt categories of recipients from its time limit and to simultaneously stop running that family's federal TANF time clock. This approach does not require a state to spend any more money. Rather, the state simply segregates its funding streams. It uses state MOE funds to provide assistance to families that are exempt from time limits and federal TANF funds to provide assistance to families that are subject to the time limits. In contrast, if the state commingles the funds, the federal TANF time limits apply to any case that is even partially-funded with federal TANF dollars.
- In Illinois and in eight counties in Maine, the state provides assistance with segregated state MOE funds within its TANF-funded program to stop the TANF time clock for a family for any month in which an adult works substantial hours but the family still qualifies for aid. Because the family does not receive any TANF-funded assistance for a given month, that month does not count toward the 60-month TANF time limit.
- Massachusetts uses segregated state MOE funds within its TANF-funded program to stop the TANF time clock for a family for any month during which it is exempt from the state's 24-month time limit (e.g. families in which the parent or caretaker meets state disability standards or cares for a child under age two). Because the family does not receive any TANF-funded assistance for a given month, that month does not count toward the 60-month TANF time limit.
The state can segregate the state MOE and federal TANF funding streams within its TANF-funded program. It does not need to set up a separate state program funded only with MOE dollars to stop the TANF time limit clock.
A state can extend benefits beyond 60 months
for more than 20 percent of the state's caseload.
A state can use TANF funds to provide more than 60 months of benefits to a family that includes an adult for 20 percent of its caseload. Beyond that, it can simply provide assistance to those families that otherwise would exceed the 20 percent limit by using only state maintenance of effort funds. Rather than commingling the federal TANF and the state MOE dollars, the state can segregate the funds and use state MOE
funds to provide assistance to families receiving assistance beyond 60 months to the extent that the number of such families exceeds 20 percent of the caseload. The result is that a state can decide its extension policy based on substantive policy choices rather than be driven by the 20 percent lid on extensions that applies to the TANF dollars. This option is specifically allowed by the federal TANF law.(33)
For example, a state may adopt a policy providing extensions for families in which the adult has "played by the rules" but is still unemployed. If the families that meet these criteria constitute 30 percent of a state's caseload, the state can still follow its policies and use state MOE funds for those cases that exceed the 20 percent of caseload limit on the use of federal TANF funds.
Similarly, if a state decides (as some states have) to continue benefits for children when a family that contains an adult reaches the TANF time limit, the state can use segregated MOE funds to provide assistance to these children.
State MOE Funds Do Not Need to Be Used in
a Separate State Program to Stop the TANF Time Clock
A state that provides assistance to a family that is exempt from time limits solely with state MOE funds can stop the federal TANF time clock from running. Federal time limit requirements do not apply to assistance provided with state MOE funds regardless of whether that assistance is provided through a program that also receives federal TANF funds or through a separate state program that does not use TANF funds. HHS has explicitly recognized that time clocks do not apply to assistance provided with MOE funds within a TANF-funded program so long as the MOE funds are "segregated" from the TANF funds. Indeed, HHS suggests that a state might properly choose to operate a "segregated" TANF program structure for this reason.
In the proposed federal TANF regulations, HHS expresses concerns that states might use state MOE funds in separate state programs to evade the work participation requirements or child support enforcement provisions. (If a state provides assistance with segregated MOE funds within the TANF program, the child support rules and work participation rates would apply.) HHS proposes to deny states relief from penalties in certain situations if the state uses MOE funds in a separate state program for the purpose of avoiding federal work rates or child support requirements. This proposal has been widely criticized by groups arguing that states are free under the federal welfare law to use their own state dollars in programs that are not subject to these federal work and child support requirements. The final regulations have not yet been issued.
HHS's disfavor or discouragement of separate state programs in the proposed regulations has nothing to do with the issue discussed here using MOE funds to provide assistance so that federal TANF time limit restrictions need not apply. HHS's concerns with separate state programs do not relate to time limit provisions. The proposed regulations do not in any way limit, deter, or call into question state flexibility to use segregated MOE funds to stop the TANF clock for some groups of families or to provide assistance beyond 60 months to more than 20 percent of the caseload.
Why states should make time limit exemption choices and
structure TANF and MOE funds to further such choices now
States today are faced with many uncertainties as they design their TANF programs. While many fully expect to be able to move a substantial portion of the welfare population off cash assistance, states also recognize that there will be some families that will continue to need assistance beyond 60 months. States that anticipate that only 20 percent of the caseload will need extensions beyond 60 months may be surprised. First, if caseload declines continue, the number of families constituting 20 percent of the state's caseload for whom federal TANF funds can be provided beyond 60 months will be smaller. Second, as a state's TANF caseload declines, those families with the greatest barriers are likely to constitute a larger percentage of the remaining caseload. Many of the families that still will need assistance when they reach a 60-month lifetime limit are likely to be those with the most barriers to employment including those who may meet the state's criteria for hardship extensions. These families are more likely to reach time limits because they will have longer periods of welfare receipt and fewer periods of employment. States cannot rely upon the 20 percent hardship exception being adequate to cover the number of families that, despite good faith efforts, will not have jobs or other means to support themselves.
A state that makes its time limit exemption and extension choices now and structures the state and federal funding in its TANF-funded programs to implement these policy choices will have more fiscal and policy options available as the 60-month TANF time limit approaches than a state that delays these decisions. A state that has commingled federal TANF and state MOE funds to provide assistance to each family will have many more families facing the TANF 60-month time limit. Because the 60-month time limit for TANF assistance is a lifetime limit, states will have limited ability to use federal TANF funds to provide assistance to families that have received TANF-funded assistance for 60 months. If a state later decides that it wishes to continue benefits for certain groups of families beyond 60 months, it can only provide such assistance with TANF funds for 20 percent of the caseload.
If a state acts now and uses segregated MOE funds now to provide assistance to some groups of families, fewer families will have received TANF-funded assistance for the 60-month lifetime limit. A state that targets its MOE funds now to stop the clock for a period for those families most likely to need assistance beyond 60 months (such as parents who are exempt from work requirements or are caring for young children) will postpone those families exhausting the TANF clock. A state that has provided assistance with segregated MOE funds to such families will have the flexibility to switch back to using TANF funds to provide assistance to these families without counting these cases toward the 20 percent limit on extensions beyond 60 months. Particularly during this initial phase of the TANF block grant these first 60 months states are missing an opportunity that will never return to limit the number of families that run out the TANF clock. By commingling TANF and MOE funds, as most states are now doing, states are needlessly running out the TANF clock on more families and limiting the state's ability to use TANF funds for these families in the future.
States can use the broad authority Congress has given them to decide for which families time limits should run and for which families extensions should be provided when the time limit has run and the families are still in need. Many of the examples cited here illustrate thoughtful approaches taken by states when facing these questions.
Other states are missing an opportunity to use the flexibility provided to states in the federal welfare law to shape time limit policies and to structure state TANF programs to further the state's policy choices.
1. Nineteen states, most of which had set time limits through waivers under the prior AFDC program, are imposing time limits on receipt of benefits that are shorter than 60 months.
2. In addition, a fourth aspect of the federal welfare law applies to states with an approved waiver granted under the former AFDC program. States that continue waiver-based time limits can use TANF funds to provide assistance pursuant to the terms of the waiver, even if providing such assistance would otherwise be inconsistent with the time limit restrictions that the federal law places on use of TANF funds.
3. Usage of the terms "exemption" and "extension" in the context of time limits on welfare receipt sometimes varies and may create confusion. For example, the federal welfare law uses the term "exemption" when authorizing use of TANF funds to provide assistance to families beyond 60 months for 20 percent of the caseload. As a conceptual and practical matter, continuing benefits beyond 60 months is an extension. The key issue is not a state's terminology but a state's approach to providing exceptions to time-limited welfare receipt.
4. For this reason a state should consider past circumstances, whether labeled as a retroactive exemption or as a basis for an extension, in deciding whether to continue aid when a family has reached a time limit. Even if a state had an exemption policy in place, the state may not have received the information that would have qualified a family for an exception at the time the qualifying circumstances were occurring. For example, a victim of domestic violence may not feel safe to disclose her circumstances at the time the violence is occurring. Yet she would be unfairly penalized if benefits could not continue past the time limit based on her past inability to prepare for work while the clock was running. In addition, a state may not have acted on information at the time it was received. While it would be better if the state identified these circumstances as they arose and provided needed services as well as the exemption at that time, a recipient should not be further penalized by the agency's failure to consider past circumstances when deciding whether to provide ongoing assistance when the family reaches a time limit.
5. As a practical matter, some states or counties with explicit "stop the clock" exemption approaches to time limits are still in the process of implementing the policy or conforming their computer systems. Thus time clocks are not always formally stopped for families that meet the exemption criteria. Such states may need to reconstruct, in retrospect, the running and the stopping of the state time limit clock.
6. The examples below include states that set time limit exemption and extension policies pursuant to a waiver of prior AFDC law before the passage of the federal welfare law and states without waivers that have set such policies subsequent to the passage of the federal law. As further explained in fn. 32 below, any of the approaches adopted by states with waiver-based time limits are also available to states that do not have waiver-based time limits.
7. In some families, the adults may be able and required to participate in some work or work preparation activities, but this may be for fewer hours than generally required, because of disability or caretaking obligations. While families with a disabled parent, caretaker or child should not be excluded from an opportunity to participate in work activities, a reasonable accommodation of the disability may be recognizing that certain services will be needed, that a longer period of assistance to prepare for work may be required, and that the time clock should not run. An exemption from a time limit based on incapacity should not mean that the person can be denied services to become employable.
8. Massachusetts has a limit of 24 months of assistance in a 60-month period; this often is called a "fixed period" time limit. Most state time limits that are shorter than 60 months are not lifetime limits but have "fixed period" time limits that instead allow the family to receive assistance again after a period of time off assistance. While some of these states have a 60-month lifetime limit in addition to the fixed period time limit, Massachusetts has no lifetime limit.
9. The federal welfare law recognizes that states may wish to exempt parents caring for young children from work activities and allows states to exempt persons caring for children under the age of one year in calculating the state's compliance with the work participation rates. 42 U.S.C. § 607(b)(5).
10. Some of the states that stop the clock for families with young children use a younger age cut-off for children who are conceived after the family first begins receiving welfare, so-called family cap children. In Massachusetts, the clock stops for a family cap child only until the child is three months old.
11. In Virginia, a family is ineligible for 24 months after receiving 24 months of assistance. The Virginia state clock stops for a family cap child only until the child is six weeks old.
12. In early demonstration counties in Florida, half of the families reaching the time limit had earnings. Similarly in Connecticut, where large numbers of families have been reaching time limits, about half of the families reaching the time limit have earnings. Manpower Demonstration Research Corporation, The Family Transition Program: Implementation and Interim Impacts of Florida's Initial Time-Limited Welfare Program, April 1998; Manpower Demonstration Research Corporation, Jobs First: Early Implementation of Connecticut's Welfare Reform Initiative, July 1998.
13. Illinois disregards two of every three dollars of earnings so many families in which the parent works more than 20 hours per week can still qualify for assistance. A 20-hour per week threshold would be too high in a state in which families are ineligible for aid with 20 hours per week of earnings, even at very low wages.
14. In these counties, Maine disregards the first 150 dollars plus one-half of the remainder of monthly earned income.
15. This approach is analogous to a recognition that a family should not be punished through a sanction if services needed for employment are not available. The federal law recognizes that a family should not be penalized when lack of child care prevents a parent from working. The law prohibits states from imposing sanctions on single parents with a child under age six for failure to participate in work activities if needed child care is not available. 42 U.S.C. § 607(e)(2).
16. Tennessee has an 18-month time limit followed by a three-month period of ineligibility and a 60-month lifetime limit. This exemption stops both the 18-month and the 60-month clocks.
17. A recent Issue Brief from the National Governors' Association Center for Best Practices highlights Tennessee's policy on exemptions from work programs and time limits for recipients testing below ninth-grade level while they are enrolled in vocational rehabilitation programs. See Brown and Ganzglass, Serving Welfare Recipients with Learning Disabilities in a "Work First" Environment, July 1998 (available at http://www.nga.org/Pubs/IssueBriefs/1998/980728Learning.asp).
18. In some states an extension is available either when the family reaches the time limit or if the family seeks assistance at some time in the future. For example, a family may not seek or qualify for an extension when the time limit is reached but a future change in family circumstances may compel the family to seek aid even though it had previously reached the state's time limit. In other states an extension is not available for future changes in circumstances once the family leaves assistance due to a time limit. This may be unintentional rather than deliberate and may result, in some instances, from an oversight in drafting state statutory language.
19. 42 U.S.C. § 608(a)(7).
20. Such policies are similar to approaches 38 states have taken in the food stamp program under which time limits on food stamp benefits for able-bodied persons without children are waived in areas with high unemployment. These states have generally relied on the U.S. Department of Labor's annual listing of "labor surplus areas" to identify areas of high unemployment, although other measures may be used in some circumstances to reflect local conditions.
21. In Texas families are assigned a 12, 24 or 36-month time limit depending upon education and work experience. The time limit applies only to adults and benefits continue for the children. It is not a lifetime limit; after reaching the time limit, an adult can receive assistance again after 60 months. (If a family qualifies for an extension, the adult would continue to receive assistance along with the children even though the relevant time limit has been reached.)
22. Strawn, Beyond Job Search or Basic Education: Rethinking the Role of Skills in Welfare Reform, April 1998.
23. These states may limit, however, the amount of earnings that are disregarded once the time limit is reached so that the earnings cut-off that applies to families seeking a "good faith" extension is often lower than the earnings cut-off that applies to families receiving assistance that have not yet reached the time limit.
24. In Connecticut, an extension can only be provided to a family with earnings if the earnings do not exceed the monthly welfare grant after a disregard of $90 for work expenses. State data on extensions indicates that about 90 percent of the denials of requests for extensions are because the family has earnings in excess of this cut-off. Time-limited rental assistance is available to low wage workers with high housing costs who do not qualify for an extension because their earnings exceed the monthly welfare grant amount by more than the $90 work expense allowance.
25. In South Carolina, a family in which an adult is employed can receive an extension if its monthly earnings (after a general earnings disregard of $90) do not exceed the monthly TANF benefit that a family with no earnings would receive.
26. Persons identified as chronically unemployable are "exempt" from time limits under New Jersey state law. This approach is listed with extension policies here, however, because the manner in which the state plans to implement the policy is more akin to an extension than an exemption. The state does not stop the time limit clock at the outset as persons cannot be identified as chronically unemployable until they have spent at least 36 months in state's TANF-funded program.
27. Under the federal law, the TANF time clock does not run for a family that does not include an adult. In addition, the months that a parent received TANF assistance as a minor child are generally disregarded when calculating if a family has reached a time limit. The number of 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 are also disregarded. 42 U.S.C. § 608(a)(7).
28. 42 U.S.C. §608(a)(7).
29. 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).
30. 42 U.S.C. § 609(a)(7)(B)(i)(IV).
31. For further discussion see Center on Budget and Policy Priorities, State Funding Requirements Under the New Welfare Law, April 1997.
32. Some of the time limit exemption and extension examples discussed in this paper were developed as part of a state's waiver-based time limit policy. States with waiver-based time limits have flexibility to use TANF funds to stop time clocks or to provide assistance beyond 60 months to more than 20 percent of the caseload beyond the methods described here. Under the federal welfare law, a state with a waiver-based time limit policy may, for the period of the waiver, use TANF funds to provide benefits under the waiver even if this would otherwise be inconsistent with the welfare law's restrictions on the use of TANF funds. However, a state without a waiver or whose waiver has expired can reach the same result by using methods described here segregating state maintenance of effort (MOE) funds to provide assistance to a family for a month that does not count toward the TANF time clock or to provide assistance to a family that has already reached the TANF lifetime limit.
33. 42 U.S.C. § 609(a)(7)(B)(i)(IV). In addition, the Family Violence Option of the federal welfare law may provide an additional way for states to provide extensions beyond 20 percent of the caseload to victims of domestic violence. In the proposed federal TANF regulations, HHS has stated that it will not impose a penalty on a state which has used TANF funds beyond 60 months for more than 20 percent of the caseload if the state exceeded the 20 percent limit because of good cause waivers provided to victims of domestic violence. Proposed 45 C.F.R. §274.3(b). See discussion in box on p. 9.
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