Waivers Related to the Temporary Assistance for Needy Families Block Grant

Published by the Government Accountability Office on 2012-09-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States Government Accountability Office
Washington, DC 20548

           September 19, 2012

           The Honorable Orrin G. Hatch
           Ranking Member
           Committee on Finance
           United States Senate

           The Honorable Dave Camp
           Committee on Ways and Means
           House of Representatives

           Subject: Waivers Related to the Temporary Assistance for Needy Families Block Grant

           The Temporary Assistance for Needy Families (TANF) block grant, administered by the U.S.
           Department of Health and Human Services (HHS), provides federal funding to states for
           both traditional welfare cash assistance as well as a variety of other benefits and services to
           meet the needs of low-income families and children. 1 In December 2011, 1.9 million low-
           income families nationwide received cash assistance through states’ TANF programs. While
           states have some flexibility in implementing and administering their state TANF programs,
           there are numerous federal requirements and guidelines that states must meet. For
           example, under section 402 of the Social Security Act, in order to be eligible to receive
           TANF funds, a state must submit to HHS a written plan outlining, among other things, how it
           will implement various aspects of its TANF program. 2 More specifically, under section
           402(a)(1)(A)(iii) of the Social Security Act, the written plan must outline how the state will
           ensure that TANF recipients engage in work activities. 3 Under section 407 of the Social
           Security Act, states must also ensure that a specified percentage of their TANF recipients
           engage in work activities as defined by federal law. 4 Compared with its predecessor
           program, Aid to Families with Dependent Children (AFDC), TANF increased the percentage
           of welfare recipients expected to prepare for work, imposed stronger sanctions against
           individuals who did not participate as required by states, and placed time limits on the
           receipt of cash assistance for many TANF recipients, among other changes.

           In its July 12, 2012, Information Memorandum, 5 HHS notified states of HHS’ willingness to
           exercise its waiver authority under section 1115 of the Social Security Act. 6 Under section
               See 42 U.S.C. § 601.
               Codified at 42 U.S.C. § 602.
               Codified at 42 U.S.C. § 602(a)(1)(A)(iii).
               Codified at 42 U.S.C. § 607.
               Transmittal No. TANF-ACF-IM-2012-03.
               Codified at 42 U.S.C. § 1315.

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1115, HHS has the authority to waive compliance with the requirements of section 402 in
the case of experimental, pilot, or demonstration projects which the Secretary determines
are likely to assist in promoting the objectives of TANF. 7 In its Information Memorandum,
HHS asserted that it has the authority to waive the requirement in section 402(a)(1)(A)(iii)
and authorize states to “test approaches and methods other than those set forth in section
407,” including definitions of work activities and the calculation of participation rates. 8 HHS
informed states that it would use this waiver authority to allow states to test various
strategies, policies, and procedures designed to improve employment outcomes for needy
families. 9 The Information Memorandum sets forth requirements that must be met for a
waiver request to be considered by HHS, including an evaluation plan, a set of performance
measures that states will track to monitor ongoing performance and outcomes, and a budget
including the costs of program evaluation. In addition, the Information Memorandum
provides that states must seek public input on the proposal prior to approval by HHS.

In response to your request, we are providing information on any waivers related to TANF.
To gather this information, we reviewed relevant federal laws and regulations, TANF policy
documents available on HHS’s website, including TANF Policy Announcements, Program
Instructions, and Information Memoranda, and documents provided to us by HHS.
Specifically, we asked HHS to provide all documentation of state interest in TANF waivers
since TANF’s creation, as well as HHS’s responses to such states, statements of prior HHS
Secretaries on TANF waiver authority, and information on AFDC-granted waivers that
continued after TANF was created. We also interviewed HHS officials. HHS provided
documents that included letters signed at the levels of HHS Secretary and Assistant
Secretary as well as email correspondence from program staff. We did not analyze whether
HHS has the authority to issue waivers related to TANF work requirements. Rather, this
report provides some background information on HHS and the issue of waivers related to

We conducted our work from August 2012 to September 2012 in accordance with all
sections of GAO’s Quality Assurance Framework that are relevant to our objectives. The
framework requires that we plan and perform the engagement to obtain sufficient and
appropriate evidence to meet our stated objectives and to discuss any limitations in our
work. We believe that the information and data obtained, and the analysis conducted,
provide a reasonable basis for any findings and conclusions.

In response to your request for information on waivers related to TANF, we addressed the
following questions:

1. Since TANF was created in 1996, has HHS granted any TANF waivers or previously
indicated it has the authority to waive TANF work requirements?

Since the creation of TANF, HHS has not granted any section 1115 waivers related to
TANF. Many states received section 1115 waivers under AFDC, and they were allowed to

 Section 1115 also authorizes the Secretary to waive compliance with certain other requirements of the Social
Security Act not related to TANF.
  Questions have been raised about the extent of HHS’s authority under Section 1115 and TANF with respect to
the Information Memorandum; however, neither this report nor our recently issued product, B-323772, Sept. 4,
2012, address whether the Information Memorandum is a valid interpretation of statutes or regulations.
  On September 4, 2012, we held that this Information Memorandum constitutes a rule and is subject to the
Congressional Review Act’s requirement that it be submitted to Congress and the Comptroller General before
taking effect. See B-323772, Sept. 4, 2012.

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continue these until their expiration, the last of which expired in 2007. 10 No provision in law
allowed these AFDC waivers to be extended.

Based on our discussions with HHS officials and our review of HHS documents, we did not
find any evidence that HHS stated that it has the authority to issue waivers related to TANF
work requirements, before the July 12, 2012, Information Memorandum. However, in an
HHS document prepared in 2008 on program flexibilities available during times of disaster,
HHS stated that section 1115 allows for waivers of state plan requirements in several
programs, including TANF. HHS also said that section 1115 waivers are not disaster specific
and are better for long-term situations due to approval time.

2. Have any states requested waivers of TANF work requirements or any other
provision of TANF since 1996?

In the 16 years since TANF was created, several states have expressed interest in TANF

Specifically, from 2000 through 2009, evidence shows that five states asked HHS about the
availability of waivers under TANF. Generally, states were not asking for waivers to test new
approaches through experimental, pilot, or demonstration projects, which would be
necessary in order to get a waiver under section 1115; instead, they were asking to be
excused from specific requirements. 11

•    Two states sent letters to HHS requesting waivers of various federal TANF requirements
     to address unanticipated circumstances each faced. First, in 2001, a state asked HHS
     about various waivers due to the emergency situation caused by the terrorist attacks.
     The state was concerned about meeting TANF requirements related to, for example, the
     use of funds, data reporting, cost allocation, and work participation. Second, in 2004, a
     state asked HHS about various waivers after its legislature provided a portion of the
     state’s federal TANF block grant to two tribes operating their own TANF cash assistance
     programs. In both cases, states thought that the unanticipated circumstances could
     result in their noncompliance with certain federal TANF requirements. The Assistant
     Secretary for Children and Families responded to each state that he did not have
     authority to provide waivers. He did, however, offer to work with the states to address
     their concerns through other flexibilities allowed under the law.

•    Three other states asked HHS more informally through email about waivers of particular
     TANF provisions. Specifically, states asked about waivers related to the limit on the
     maximum percentage of TANF families participating in vocational education that count
     toward a state’s work participation rate, the use of TANF funds for purposes other than
     the four purposes prescribed in federal law, and the eligibility of certain populations for
     TANF cash assistance. To each of these states, HHS TANF program staff generally
     responded that the requested waiver authority was not available.

In addition to responding directly to individual states about waiver issues, HHS discussed
these issues when it provided general information to help answer states’ questions about
TANF under disaster conditions. Two TANF policy documents issued by HHS in 2005 and

   The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which created TANF,
allowed states to continue these waivers until their expiration.
  Two states also asked HHS in 2003 if it would extend waivers that had been approved under AFDC. However,
HHS Secretary Thompson indicated in his responses to these states that there was no provision of law that
would permit HHS to extend such waivers.

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2007 discussed various aspects of administering TANF for families affected by disasters,
including, for example, application procedures and work requirements. In these documents,
HHS stated that all applicable programmatic requirements apply to a family that is provided
TANF-funded cash assistance, and the Department does not have authority to waive any of
the provisions. HHS also discussed certain flexibilities allowed under TANF that states might
use to assist these families. 12

States also expressed their interest in waivers under TANF and other related programs in a
2005 letter to the Congress on TANF reauthorization. Specifically, 28 states expressed
support for a Senate reauthorization bill that included increased waiver authority to
coordinate across multiple programs serving low-income families, including TANF, as well
as certain amendments to TANF work requirements. However, when TANF was
reauthorized through the Deficit Reduction Act of 2005, this waiver authority was not
included in the act.

In 2011, some states expressed interest in TANF waivers when HHS solicited ideas on
areas in which increased administrative flexibility could lead to improved TANF outcomes.
Specifically, HHS held conversations with TANF officials from all states in response to the
President’s February 2011 Memorandum directing executive agencies to work closely with
state, local, and tribal governments to identify administrative, regulatory, and legislative
barriers in federally funded programs that prevent the efficient use of tax dollars to achieve
results for constituents. Following these conversations, HHS documents show that six states
expressed interest in TANF waivers, with five of those states specifically indicating their
interest in waivers related to TANF work requirements, and the sixth asking about TANF
waivers in general. 13 In response, HHS officials generally indicated that the Department was
in the process of reviewing its TANF waiver authority.

Since HHS issued the July 12, 2012 Information Memorandum indicating the Secretary’s
willingness to exercise section 1115 waiver authority related to TANF work requirements,
HHS documents show that eight states have expressed interest in pursuing these waivers.
As of September 6, 2012, no state had formally submitted a request for a waiver related to
TANF work requirements to HHS.

Agency Comments

We provided a draft of this correspondence to HHS for its review and comment. HHS
provided technical comments, which we have incorporated as appropriate.

As agreed with your office, unless you publicly announce the contents of this report earlier,
we plan no further distribution until 30 days from the report date. At that time, we will send
copies of this correspondence to the Secretary of Health and Human Services, appropriate

   See TANF-ACF-PI-2005-06, Subject: Using Federal TANF and State Maintenance of Effort Funds for Families
Affected by Hurricane Katrina and TANF-ACF-PI-2007-08, Subject: Using Federal TANF and State Maintenance
of Effort Funds for Families in Areas Covered by a Federal or State Disaster Declaration.
  HHS officials indicated that during the conversations, a major focus of state comments was state interest in
various modifications to the TANF work requirements. Further, in follow-up comments submitted by states to
HHS, 26 states expressed interest in various modifications to the TANF work requirements. This is consistent
with the findings of our 2010 report on TANF work requirements, in which we discussed challenges states had
implementing the changes made to the TANF work requirements by the Deficit Reduction Act of 2005. See
GAO, Temporary Assistance for Needy Families: Implications of Recent Legislative and Economic Changes for
State Programs and Work Participation Rates, GAO-10-525 (Washington, D.C.: May 28, 2010).

Page 4                                                                    GAO-12-1028R TANF Waivers
congressional committees, and other interested parties. The report is also available at no
charge on the GAO website at http://www.gao.gov.

If you or your staff members have any questions about this report, please contact me at
(202) 512-7215 or brownke@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this correspondence. Other
key contributors to this correspondence included Gale C. Harris and Rachel Frisk. Jessica
Botsford, Alex Galuten, and Janet Mascia also contributed to this product.

Kay E. Brown
Director, Education, Workforce,
   and Income Security Issues


Page 5                                                        GAO-12-1028R TANF Waivers
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