Cost Allocation Methodology Applicable to the Temporary Assistance for Needy Families Program, 42718-42721 [E8-16854]
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Federal Register / Vol. 73, No. 142 / Wednesday, July 23, 2008 / Rules and Regulations
on the relationship between the national
government and the States or tribal
governments, or on the distribution of
power and responsibilities among the
various levels of government or between
the Federal Government and Indian
tribes. Thus, the Agency has determined
that Executive Order 13132, entitled
Federalism (64 FR 43255, August 10,
1999) and Executive Order 13175,
entitled Consultation and Coordination
with Indian Tribal Governments (65 FR
67249, November 9, 2000) do not apply
to this final rule. In addition, this final
rule does not impose any enforceable
duty or contain any unfunded mandate
as described under Title II of the
Unfunded Mandates Reform Act of 1995
(UMRA) (Public Law 104–4).
This action does not involve any
technical standards that would require
Agency consideration of voluntary
consensus standards pursuant to section
12(d) of the National Technology
Transfer and Advancement Act of 1995
(NTTAA), Public Law 104–113, section
12(d) (15 U.S.C. 272 note).
VIII. Congressional Review Act
The Congressional Review Act, 5
U.S.C. 801 et seq., generally provides
that before a rule may take effect, the
agency promulgating the rule must
submit a rule report to each House of
the Congress and to the Comptroller
General of the United States. EPA will
submit a report containing this rule and
other required information to the U.S.
Senate, the U.S. House of
Representatives, and the Comptroller
General of the United States prior to
publication of this final rule in the
Federal Register. This final rule is not
a ‘‘major rule’’ as defined by 5 U.S.C.
804(2).
List of Subjects in 40 CFR Part 180
Environmental protection,
Administrative practice and procedure,
Agricultural commodities, Pesticides
and pests, Reporting and recordkeeping
requirements.
Dated: July 9, 2008.
Donald R. Stubbs,
Acting Director, Registration Division, Office
of Pesticide Programs.
Therefore, 40 CFR chapter I is
amended as follows:
I
PART 180—[AMENDED]
1. The authority citation for part 180
continues to read as follows:
I
Authority: 21 U.S.C. 321(q), 346a and 371.
2. Section 180.516 is amended by
revising the table in paragraph (b) to
read as follows:
I
§ 180.516 Fludioxonil; tolerances for
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*
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[FR Doc. E8–16876 Filed 7–22–08; 8:45 am]
BILLING CODE 6560–50–S
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Administration for Children and
Families
45 CFR Part 263
RIN 0970–AC15
Cost Allocation Methodology
Applicable to the Temporary
Assistance for Needy Families
Program
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This rule is effective
July 23, 2008.
FOR FURTHER INFORMATION CONTACT:
SUMMARY: This final rule applies to the
Temporary Assistance for Needy
Families (TANF) program and requires
States, the District of Columbia and the
Territories (hereinafter referred to as the
‘‘States’’) to use the ‘‘benefiting
program’’ cost allocation methodology
in U.S. Office of Management and
Budget (OMB) Circular A–87 (2 CFR
part 225). It is the judgment and
determination of HHS/ACF that the
‘‘benefiting program’’ cost allocation
methodology is the appropriate
VerDate Aug<31>2005
methodology for the proper use of
Federal TANF funds. The Personal
Responsibility and Work Opportunity
Reconciliation Act (PRWORA) of 1996
gave federally-recognized Tribes the
opportunity to operate their own Tribal
TANF programs. Federally-recognized
Indian tribes operating approved Tribal
TANF programs have always followed
the ‘‘benefiting program’’ cost allocation
methodology in accordance with OMB
Circular A–87 (2 CFR part 225) and the
applicable regulatory provisions at 45
CFR 286.45(c) and (d). This final rule
contains no substantive changes to the
proposed rule published on September
27, 2006.
EFFECTIVE DATE:
Administration for Children
and Families (ACF), Department of
Health and Human Services (HHS).
ACTION: Final rule.
AGENCY:
Robert Shelbourne, Director, State
TANF Policy Division at (202) 401–
5150, rshelbourne@acf.hhs.gov.
On
September 27, 2006, ACF published a
Notice of Proposed Rulemaking (NPRM)
to add section 263.14 to 45 CFR part
263, requiring a State or Territory to use
a benefiting program cost allocation
methodology consistent with the general
requirements of OMB Circular A–87 to
allocate TANF costs. We provided a 60day comment period that ended on
November 27, 2006. We offered the
public the opportunity to submit
SUPPLEMENTARY INFORMATION:
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Expiration/revocation date
12/31/10
comments by surface mail, e-mail, or
electronically via our Web site.
Comment Overview
After accounting for duplication, we
received one comment on the NPRM.
We have summarized the public
comment and our response to it in
Section II of the preamble to this final
rule.
Table of Contents
I. Statutory Authority
II. Background
III. Discussion of Regulatory Provisions
IV. Paperwork Reduction Act of 1995
V. Regulatory Flexibility Analysis
VI. Regulatory Impact Analysis
VII. Unfunded Mandates Reform Act of 1995
VIII. Congressional Review
IX. Assessment of Federal Regulation and
Policies on Families
X. Executive Order 13132
I. Statutory Authority
We are issuing this regulation under
the authority granted to the Secretary of
Health and Human Services (HHS) by
42 U.S.C. 1302(a). Section 1302(a)
authorizes the Secretary to make and
publish such rules as may be necessary
for the efficient administration of
functions with which he is charged
under the Social Security Act.
42 U.S.C. 617 limits the authority of
the Federal government to regulate State
conduct or enforce the TANF provisions
of the Social Security Act, except as
expressly provided. We interpret this
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provision to allow us to regulate the use
of a permissible cost allocation
methodology because States and the
Territories need to know what they may
and may not do to avoid potential
misuse of funds penalties under 42
U.S.C. 609(a)(1).
Pursuant to 42 U.S.C. 609(a)(1), we
may impose a financial penalty
whenever a State misuses Federal TANF
funds. The TANF regulations at 45 CFR
263.11 address the proper and improper
uses of Federal TANF funds. Section
263.11(b) sets forth the circumstances
that constitute misuse of Federal funds.
Use of Federal TANF funds in violation
of any of the provisions in OMB
Circular A–87 (2 CFR part 225) is one
such circumstance. Accordingly, we are
specifying that the ‘‘benefiting program’’
cost allocation methodology is the
appropriate methodology for the proper
use of Federal TANF funds.
II. Background
The Office of Management and Budget
(OMB) has issued government-wide
standards for allocating the costs of
government programs. Specifically,
OMB Circular A–87 (2 CFR part 225),
‘‘Cost Principles for State, Local and
Indian Tribal Governments,’’ provides
that ‘‘A cost is allocable to a particular
cost objective if the goods or services
involved are chargeable or assignable to
such cost objective in accordance with
relative benefits received.’’ Thus, costs
that benefit multiple programs may not
be allocated to a single program. An
illustrative way to determine whether
multiple programs benefit from a cost
objective is to ask, for example: In the
absence of the TANF program, would
another program still have to undertake
the function? If the answer is yes, there
is a benefit to each program and the
costs should be allocated using the
‘‘benefiting programs’’ cost allocation
method.
The ‘‘benefiting program’’ cost
allocation method applies to all Federal
programs, unless there is a statutory or
OMB-approved exception. Prior to
enactment of the TANF program, HHS
allowed States, the District of Columbia,
and the Territories to charge the
common administrative costs of
determining eligibility and case
maintenance activities for the Food
Stamp and Medicaid programs to the
AFDC program—a so-called ‘‘primary
program’’ allocation method. This
exception to the ‘‘benefiting program’’
cost allocation requirement of OMB
Circular A–87 (2 CFR part 225) was
consistent with Conference Committee
language indicating AFDC might pay for
these common costs because families
who were eligible for AFDC (the
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primary program) were also
automatically eligible for Medicaid and
met the categorical, but not necessarily
the income, requirements of Food
Stamps.
The Personal Responsibility and Work
Opportunity Reconciliation Act of 1996
(PRWORA) (Pub. L. 104–193) was
enacted on August 22, 1996. Title I of
PRWORA repealed the AFDC program
and replaced it with the TANF program.
Unlike AFDC, TANF eligibility no
longer automatically makes a family
eligible for Medicaid, and eligibility for
certain TANF services and benefits do
not lead to categorical eligibility for
Food Stamps.
As a result, HHS issued guidance
prohibiting States from continuing to
use the ‘‘primary program’’ allocation
methodology. On September 30, 1998,
the Office of Grants and Acquisition
Management (OGAM) in HHS issued
OGAM Action Transmittal (AT) 98–2
which required States to allocate costs
to each ‘‘benefiting program’’ in
accordance with the provisions in OMB
Circular A–87 (2 CFR part 225).
According to the instructions and
rationale in OGAM AT 98–2, ‘‘Cost
shifting (to a primary program) is not
permitted by most program statutes,
except where there is a specific
legislative provision allowing such cost
shifting. While the former AFDC
program allowed such an exception, the
TANF legislation that replaced AFDC
does not permit it being designated as
the sole benefiting or primary program.’’
All States submitted revised cost
allocation plans to comply with this
policy and since then have continued to
allocate Medicaid, Food Stamp and
TANF costs in accordance with a
‘‘benefiting’’ methodology.
Six States filed suit in District Court
to prevent HHS from enforcing OGAM
AT 98–2 (Arizona v. Thompson, 281
F.3d 248 (DC Cir. 2002). The States
alleged that they incur common
administrative costs that benefit the
TANF, Medicaid, and Food Stamp
programs and contended that the
‘‘grandfather provision’’ under 42 U.S.C.
604(a)(2) permits them to use TANF
grants as they did under the AFDC
program. Section 604(a)(2) allows States
to use Federal TANF funds in any
manner that the State was authorized to
use Federal funds received under the
State’s former AFDC program, the Job
Opportunities and Basic Skills Training
(JOBS) program or the Emergency
Assistance program in effect as of either
September 30, 1995 or August 21, 1996,
whichever date the State has elected.
The United States District Court for
the District of Columbia upheld the
Department’s position. However, the
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States appealed to the United States
Court of Appeals for the District of
Columbia Circuit (Court of Appeals).
The Court of Appeals decided, on
March 5, 2002, that the TANF
legislation does not require HHS to
conclude that States are prohibited from
using the ‘‘primary program’’ cost
allocation methodology (281 F.3d at
256). The Appeals Court noted that:
‘‘The background against which
Congress enacted the Welfare Reform
Act included both Circular A–87’s
general principle of benefiting program
allocation and its well-recognized
exception for the AFDC program.’’ Id.
However, the Court left open the
possibility that HHS could, in the
exercise of its rulemaking discretion,
prospectively prescribe that States use
the ‘‘benefiting program’’ method to
allocate common costs among programs.
Id. The case was ultimately remanded to
HHS for further consideration. After
considerable deliberation, we have
determined that the benefiting program
cost allocation methodology is the
appropriate cost allocation rule to apply
to the TANF program.
Comment: A national association
requested that we reconsider our
proposal, because it restricts State
flexibility and State options. It
maintains that the ties between the
TANF program and the Food Stamp
program are strong and numerous in
most States. It points to the 2002 Farm
Bill as an example of legislation which
enables States to align the definition of
income and/or resources under the Food
Stamp program to that used in the
TANF or Medicaid program. As another
example, it points to the close
connection between the Food Stamp
program and the TANF program set
forth in the interim final TANF rule
published in the Federal Register on
June 29, 2006. A provision in the rule
urges States to implement a Simplified
Food Stamp Program, for purposes of
considering the required hours of work
participation in a work experience or
community service program. It argues
that the widespread adoption of such
conformity options has led States to
combine staff, automated systems, and
other administrative functions when
operating these programs.
Response: The 2002 Farm Bill
provisions and the Simplified Food
Stamp Program give States the option to
align certain Food Stamp and TANF
program eligibility rules. But, this
flexibility did not alter or affect in any
way the required cost principles
applicable to both programs. The Food
Stamp program, administered by the
U.S. Department of Agriculture’s Food
and Nutrition Service, is subject to the
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same Common Rule cost principles as
the TANF program. In using Federal
Food Stamp program funds or Federal
TANF program funds, States have been
and continue to be required to follow
the uniform cost principles for
determining allowable costs in OMB
Circular A–87 (2 CFR part 255).
OMB Circular A–87 (2 CFR part 225)
states that program costs must be
necessary, reasonable, and allocable. A
cost must also be allowable under OMB
Circular A–87 cost principles and the
program’s laws, terms and conditions of
the Federal award, or governing
regulations. An allowable cost is
allocable to a particular program in
accordance with the relative benefits
received by that program. Thus,
allowable shared costs must be allocated
in accordance with the ‘‘benefiting
program’’ cost allocation methodology
and no changes have been made in this
final rule.
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III. Discussion of Regulatory Provisions
We have added the following new
section to part 263, subpart B of the
TANF regulations.
Section 263.14 What methodology
shall States use to allocate Federal
TANF costs?
This section provides that States shall
use only the ‘‘benefiting program’’ cost
allocation methodology. Requiring a
‘‘benefiting program’’ cost allocation
methodology is consistent with the
TANF final rules which make the TANF
program subject to 45 CFR part 92 and
includes the cost principles of OMB
Circular A–87 (2 CFR part 225).
One of the fundamental Federal
appropriation principles at 31 U.S.C.
1301(a) states that appropriations can
only be used for the purposes for which
they were appropriated, unless
otherwise provided by law. OMB
Circular A–87 (2 CFR part 225) reflects
this principle by requiring ‘‘benefiting
program’’ cost allocation. The overall
purpose of OMB Circular A–87 (2 CFR
part 225) is to achieve more efficient
and uniform administration of Federal
awards and to provide the foundation
for greater uniformity in the costing
procedures of non-Federal governments.
Without an explicit legislative provision
permitting ‘‘primary program’’ cost
allocation, we believe it would be
inconsistent with and contrary to these
appropriation principles to allow TANF
funds to be used to pay for costs
allocable to other programs.
Since the decision of the Appeals
Court, no State has submitted a revised
‘‘primary program’’ cost allocation plan
for allocating the common costs of
determining eligibility or case
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maintenance for TANF, Food Stamps
and Medicaid to HHS for approval.
These were the primary common costs
previously claimed and allowed under a
‘‘primary program’’ cost allocation
methodology under the former AFDC
program.
Under the President’s Management
Agenda of improved accountability,
each program needs to know its full
costs using consistent and comparable
data to assess program trends and
measure performance. Appropriate
program and funding decisions, both
now and in the future, must be based on
the knowledge and accounting of total
program costs, including those costs
incurred under a consistent benefiting
program methodology. Under this rule,
we will not permit an exception to the
benefiting program cost allocation
methodology generally required under
OMB Circular A–87 (as permitted for
the AFDC program prior to the
enactment of the TANF program). Thus,
HHS will disapprove any TANF cost
allocation amendments proposing a
‘‘primary program’’ cost allocation
methodology.
Therefore, the Secretary is exercising
his discretion to require a ‘‘benefiting
program’’ cost allocation methodology
under TANF in accordance with OMB
Circular A–87 (2 CFR part 225). This
final rule requires States to make no
changes to their TANF cost allocation
plans, but instead will affirm and lock
in place, current cost allocation
practice.
Readers should note that we revised
the title of this section to be more
concise. ‘‘States’’ has already been
defined in 45 CFR 260.30 to mean the
50 States, the District of Columbia, and
the Territories.
This final rule does not affect
federally-recognized Indian tribes
operating approved Tribal TANF
programs. Prior to enactment of
PRWORA of 1996, needy families in a
federally-recognized Indian tribe
received assistance under the State’s
former Aid to Families with Dependent
Children (AFDC) program. PRWORA
gave federally-recognized Tribes the
opportunity to operate their own Tribal
TANF programs. These Tribes have
always followed the ‘‘benefiting
program’’ cost allocation methodology
in accordance with OMB Circular A–87
and the applicable Tribal TANF
regulatory provisions at 45 CFR
286.45(c) and (d).
IV. Paperwork Reduction Act of 1995
This rule contains no new
information collection activities that are
subject to review and approval by the
Office of Management and Budget
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(OMB) under the Paperwork Reduction
Act of 1995, codified at 44 U.S.C. 3507.
V. Regulatory Flexibility Analysis
The Secretary certifies, under 5 U.S.C.
605(b), as enacted by the Regulatory
Flexibility Act (Pub. L. 96–354), that
this rule will not result in a significant
impact on a substantial number of small
entities. The primary impact is on State
governments. State governments are not
considered small entities under the
Regulatory Flexibility Act.
VI. Regulatory Impact Analysis
Executive Order 12866 requires that
regulations be reviewed to ensure that
they are consistent with the priorities
and principles set forth in the Executive
Order. The Department has determined
that this rule is consistent with these
priorities and principles. This rule is
considered a ‘‘significant regulatory
action’’ under the Executive Order, and
therefore has been reviewed by the
Office of Management and Budget.
Since all States should be using a
‘‘benefiting program’’ cost allocation
methodology under TANF, we believe
the impact of this final rule is minimal.
We do not believe this rule will have a
significant negative impact or reduce
potential Federal reimbursement, as
States receive a fixed Federal block
grant amount.
VII. Unfunded Mandates Reform Act of
1995
Section 202 of the Unfunded
Mandates Reform Act of 1995 requires
that a covered agency prepare a
budgetary impact statement before
promulgating a rule that includes any
Federal mandate that may result in the
expenditure by State, local, and Tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
in any one year.
The Department has determined that
this rule would not impose a mandate
that will result in the expenditure by
State, local, and Tribal governments, in
the aggregate, or by the private sector, of
more than $100 million in any one year.
VIII. Congressional Review
This regulation is not a major rule as
defined in 5 U.S.C. Chapter 8.
IX. Assessment of Federal Regulation
and Policies on Families
Section 654 of The Treasury and
General Government Appropriations
Act of 1999 requires Federal agencies to
determine whether a proposed policy or
regulation may affect family well-being.
If the agency’s determination is
affirmative, then the agency must
prepare an impact assessment
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addressing seven criteria specified in
the law. These regulations will not have
an impact on family well-being as
defined in the legislation.
DEPARTMENT OF COMMERCE
X. Executive Order 13132
50 CFR Part 679
Executive Order 13132 ‘‘Federalism’’
requires that Federal agencies consult
with State and local government
officials in the development of
regulatory policies with Federalism
implications. In the NPRM, we did
solicit comments from State and local
government officials, consistent with
this Executive Order. We did not receive
any comments from State and local
government officials.
[Docket No. 071106671–8010–02]
List of Subjects in 45 CFR part 263
Grant programs—Federal aid
programs, Penalties, Public assistance
programs—Welfare programs.
Approved: May 16, 2008.
Daniel C. Schneider,
Acting Assistant Secretary for Children and
Families.
Michael O. Leavitt,
Secretary of Health and Human Services.
For the reasons set forth in the
preamble, the Administration for
Children and Families amends 45 CFR
chapter II to read as follows:
I
PART 263—EXPENDITURES OF STATE
AND FEDERAL TANF FUNDS
1. The authority citation for 45 CFR
part 263 continues to read as follows:
I
Authority: 42 U.S.C. 604, 607, 609, and
862a.
2. Add § 263.14 to subpart B to read
as follows:
I
§ 263.14 What methodology shall States
use to allocate TANF costs?
States shall use a benefiting program
cost allocation methodology consistent
with the general requirements of OMB
Circular A–87 (2 CFR part 225) to
allocate TANF costs.
[FR Doc. E8–16854 Filed 7–22–08; 8:45 am]
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National Oceanic and Atmospheric
Administration
RIN 0648–XJ16
Fisheries of the Exclusive Economic
Zone Off Alaska; Pelagic Shelf
Rockfish in the West Yakutat District of
the Gulf of Alaska
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Temporary rule; closure.
AGENCY:
SUMMARY: NMFS is prohibiting directed
fishing for pelagic shelf rockfish by
catcher processors participating in the
limited access or opt-out fisheries that
are subject to sideboard limits
established under the Central GOA
Rockfish Program in the West Yakutat
District of the Gulf of Alaska (GOA).
This action is necessary to prevent
exceeding the 2008 sideboard limits of
pelagic shelf rockfish established for
catcher processors participating in the
limited access or opt-out fisheries in the
West Yakutat District of the GOA.
DATES: Effective 1200 hrs, Alaska local
time (A.l.t.), July 17, 2008, through 1200
hrs, A.l.t., July 31, 2008.
FOR FURTHER INFORMATION CONTACT:
Jennifer Hogan, 907–586–7228.
SUPPLEMENTARY INFORMATION: NMFS
manages the groundfish fishery in the
GOA exclusive economic zone
according to the Fishery Management
Plan for Groundfish of the Gulf of
Alaska (FMP) prepared by the North
Pacific Fishery Management Council
under authority of the MagnusonStevens Fishery Conservation and
Management Act. Regulations governing
fishing by U.S. vessels in accordance
with the FMP appear at subpart H of 50
CFR part 600 and 50 CFR part 679.
The 2008 pelagic shelf rockfish
sideboard limit established for catcher
processors participating in the limited
access or opt-out fisheries that are
subject to sideboard limits under the
Central GOA Rockfish Program in the
West Yakutat District of the GOA is 180
mt. The sideboard limit is established
by the 2008 and 2009 harvest
specifications for groundfish of the GOA
(73 FR 10562, February 27, 2008) and as
posted as the 2008 Rockfish Program
Catcher Processor Sideboards at https://
alaskafisheries.noaa.gov/
sustainablefisheries/goarat/default.htm.
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In accordance with
§ 679.82(d)(7)(i)(A), the Administrator,
Alaska Region, NMFS (Regional
Administrator), has determined that the
2008 pelagic shelf rockfish sideboard
limit established for catcher processors
participating in the limited access or
opt-out fisheries in the West Yakutat
District of the GOA will soon be
reached. Therefore, the Regional
Administrator is establishing a directed
fishing allowance of 180 mt, and is
setting aside the remaining 0 mt as
bycatch to support other anticipated
groundfish fisheries. In accordance with
§ 679.82(d)(7)(ii), the Regional
Administrator finds that this directed
fishing allowance has been reached.
Consequently, NMFS is prohibiting
directed fishing for the pelagic shelf
rockfish sideboard limit established for
catcher processors participating in the
limited access or opt-out fisheries in the
West Yakutat District of the GOA.
After the effective date of this closure
the maximum retainable amounts at
§ 679.20(e) and (f) apply at any time
during a trip.
Classification
This action responds to the best
available information recently obtained
from the fishery. The Assistant
Administrator for Fisheries, NOAA,
(AA), finds good cause to waive the
requirement to provide prior notice and
opportunity for public comment
pursuant to the authority set forth at 5
U.S.C. 553(b)(B) as such requirement is
impracticable and contrary to the public
interest. This requirement is
impracticable and contrary to the public
interest as it would prevent NMFS from
responding to the most recent fisheries
data in a timely fashion and would
delay the closure of pelagic shelf
rockfish sideboard limit for catcher
processors participating in the limited
access or opt-out fisheries in the West
Yakutat District of the GOA. NMFS was
unable to publish a notice providing
time for public comment because the
most recent, relevant data only became
available as of July 16, 2008.
The AA also finds good cause to
waive the 30-day delay in the effective
date of this action under 5 U.S.C.
553(d)(3). This finding is based upon
the reasons provided above for waiver of
prior notice and opportunity for public
comment.
This action is required by § 679.82
and is exempt from review under
Executive Order 12866.
Authority: 16 U.S.C. 1801 et seq.
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[Federal Register Volume 73, Number 142 (Wednesday, July 23, 2008)]
[Rules and Regulations]
[Pages 42718-42721]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-16854]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
45 CFR Part 263
RIN 0970-AC15
Cost Allocation Methodology Applicable to the Temporary
Assistance for Needy Families Program
AGENCY: Administration for Children and Families (ACF), Department of
Health and Human Services (HHS).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule applies to the Temporary Assistance for Needy
Families (TANF) program and requires States, the District of Columbia
and the Territories (hereinafter referred to as the ``States'') to use
the ``benefiting program'' cost allocation methodology in U.S. Office
of Management and Budget (OMB) Circular A-87 (2 CFR part 225). It is
the judgment and determination of HHS/ACF that the ``benefiting
program'' cost allocation methodology is the appropriate methodology
for the proper use of Federal TANF funds. The Personal Responsibility
and Work Opportunity Reconciliation Act (PRWORA) of 1996 gave
federally-recognized Tribes the opportunity to operate their own Tribal
TANF programs. Federally-recognized Indian tribes operating approved
Tribal TANF programs have always followed the ``benefiting program''
cost allocation methodology in accordance with OMB Circular A-87 (2 CFR
part 225) and the applicable regulatory provisions at 45 CFR 286.45(c)
and (d). This final rule contains no substantive changes to the
proposed rule published on September 27, 2006.
EFFECTIVE DATE: This rule is effective July 23, 2008.
FOR FURTHER INFORMATION CONTACT: Robert Shelbourne, Director, State
TANF Policy Division at (202) 401-5150, rshelbourne@acf.hhs.gov.
SUPPLEMENTARY INFORMATION: On September 27, 2006, ACF published a
Notice of Proposed Rulemaking (NPRM) to add section 263.14 to 45 CFR
part 263, requiring a State or Territory to use a benefiting program
cost allocation methodology consistent with the general requirements of
OMB Circular A-87 to allocate TANF costs. We provided a 60-day comment
period that ended on November 27, 2006. We offered the public the
opportunity to submit comments by surface mail, e-mail, or
electronically via our Web site.
Comment Overview
After accounting for duplication, we received one comment on the
NPRM. We have summarized the public comment and our response to it in
Section II of the preamble to this final rule.
Table of Contents
I. Statutory Authority
II. Background
III. Discussion of Regulatory Provisions
IV. Paperwork Reduction Act of 1995
V. Regulatory Flexibility Analysis
VI. Regulatory Impact Analysis
VII. Unfunded Mandates Reform Act of 1995
VIII. Congressional Review
IX. Assessment of Federal Regulation and Policies on Families
X. Executive Order 13132
I. Statutory Authority
We are issuing this regulation under the authority granted to the
Secretary of Health and Human Services (HHS) by 42 U.S.C. 1302(a).
Section 1302(a) authorizes the Secretary to make and publish such rules
as may be necessary for the efficient administration of functions with
which he is charged under the Social Security Act.
42 U.S.C. 617 limits the authority of the Federal government to
regulate State conduct or enforce the TANF provisions of the Social
Security Act, except as expressly provided. We interpret this
[[Page 42719]]
provision to allow us to regulate the use of a permissible cost
allocation methodology because States and the Territories need to know
what they may and may not do to avoid potential misuse of funds
penalties under 42 U.S.C. 609(a)(1).
Pursuant to 42 U.S.C. 609(a)(1), we may impose a financial penalty
whenever a State misuses Federal TANF funds. The TANF regulations at 45
CFR 263.11 address the proper and improper uses of Federal TANF funds.
Section 263.11(b) sets forth the circumstances that constitute misuse
of Federal funds. Use of Federal TANF funds in violation of any of the
provisions in OMB Circular A-87 (2 CFR part 225) is one such
circumstance. Accordingly, we are specifying that the ``benefiting
program'' cost allocation methodology is the appropriate methodology
for the proper use of Federal TANF funds.
II. Background
The Office of Management and Budget (OMB) has issued government-
wide standards for allocating the costs of government programs.
Specifically, OMB Circular A-87 (2 CFR part 225), ``Cost Principles for
State, Local and Indian Tribal Governments,'' provides that ``A cost is
allocable to a particular cost objective if the goods or services
involved are chargeable or assignable to such cost objective in
accordance with relative benefits received.'' Thus, costs that benefit
multiple programs may not be allocated to a single program. An
illustrative way to determine whether multiple programs benefit from a
cost objective is to ask, for example: In the absence of the TANF
program, would another program still have to undertake the function? If
the answer is yes, there is a benefit to each program and the costs
should be allocated using the ``benefiting programs'' cost allocation
method.
The ``benefiting program'' cost allocation method applies to all
Federal programs, unless there is a statutory or OMB-approved
exception. Prior to enactment of the TANF program, HHS allowed States,
the District of Columbia, and the Territories to charge the common
administrative costs of determining eligibility and case maintenance
activities for the Food Stamp and Medicaid programs to the AFDC
program--a so-called ``primary program'' allocation method. This
exception to the ``benefiting program'' cost allocation requirement of
OMB Circular A-87 (2 CFR part 225) was consistent with Conference
Committee language indicating AFDC might pay for these common costs
because families who were eligible for AFDC (the primary program) were
also automatically eligible for Medicaid and met the categorical, but
not necessarily the income, requirements of Food Stamps.
The Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 (PRWORA) (Pub. L. 104-193) was enacted on August 22, 1996.
Title I of PRWORA repealed the AFDC program and replaced it with the
TANF program. Unlike AFDC, TANF eligibility no longer automatically
makes a family eligible for Medicaid, and eligibility for certain TANF
services and benefits do not lead to categorical eligibility for Food
Stamps.
As a result, HHS issued guidance prohibiting States from continuing
to use the ``primary program'' allocation methodology. On September 30,
1998, the Office of Grants and Acquisition Management (OGAM) in HHS
issued OGAM Action Transmittal (AT) 98-2 which required States to
allocate costs to each ``benefiting program'' in accordance with the
provisions in OMB Circular A-87 (2 CFR part 225). According to the
instructions and rationale in OGAM AT 98-2, ``Cost shifting (to a
primary program) is not permitted by most program statutes, except
where there is a specific legislative provision allowing such cost
shifting. While the former AFDC program allowed such an exception, the
TANF legislation that replaced AFDC does not permit it being designated
as the sole benefiting or primary program.'' All States submitted
revised cost allocation plans to comply with this policy and since then
have continued to allocate Medicaid, Food Stamp and TANF costs in
accordance with a ``benefiting'' methodology.
Six States filed suit in District Court to prevent HHS from
enforcing OGAM AT 98-2 (Arizona v. Thompson, 281 F.3d 248 (DC Cir.
2002). The States alleged that they incur common administrative costs
that benefit the TANF, Medicaid, and Food Stamp programs and contended
that the ``grandfather provision'' under 42 U.S.C. 604(a)(2) permits
them to use TANF grants as they did under the AFDC program. Section
604(a)(2) allows States to use Federal TANF funds in any manner that
the State was authorized to use Federal funds received under the
State's former AFDC program, the Job Opportunities and Basic Skills
Training (JOBS) program or the Emergency Assistance program in effect
as of either September 30, 1995 or August 21, 1996, whichever date the
State has elected.
The United States District Court for the District of Columbia
upheld the Department's position. However, the States appealed to the
United States Court of Appeals for the District of Columbia Circuit
(Court of Appeals). The Court of Appeals decided, on March 5, 2002,
that the TANF legislation does not require HHS to conclude that States
are prohibited from using the ``primary program'' cost allocation
methodology (281 F.3d at 256). The Appeals Court noted that: ``The
background against which Congress enacted the Welfare Reform Act
included both Circular A-87's general principle of benefiting program
allocation and its well-recognized exception for the AFDC program.''
Id. However, the Court left open the possibility that HHS could, in the
exercise of its rulemaking discretion, prospectively prescribe that
States use the ``benefiting program'' method to allocate common costs
among programs. Id. The case was ultimately remanded to HHS for further
consideration. After considerable deliberation, we have determined that
the benefiting program cost allocation methodology is the appropriate
cost allocation rule to apply to the TANF program.
Comment: A national association requested that we reconsider our
proposal, because it restricts State flexibility and State options. It
maintains that the ties between the TANF program and the Food Stamp
program are strong and numerous in most States. It points to the 2002
Farm Bill as an example of legislation which enables States to align
the definition of income and/or resources under the Food Stamp program
to that used in the TANF or Medicaid program. As another example, it
points to the close connection between the Food Stamp program and the
TANF program set forth in the interim final TANF rule published in the
Federal Register on June 29, 2006. A provision in the rule urges States
to implement a Simplified Food Stamp Program, for purposes of
considering the required hours of work participation in a work
experience or community service program. It argues that the widespread
adoption of such conformity options has led States to combine staff,
automated systems, and other administrative functions when operating
these programs.
Response: The 2002 Farm Bill provisions and the Simplified Food
Stamp Program give States the option to align certain Food Stamp and
TANF program eligibility rules. But, this flexibility did not alter or
affect in any way the required cost principles applicable to both
programs. The Food Stamp program, administered by the U.S. Department
of Agriculture's Food and Nutrition Service, is subject to the
[[Page 42720]]
same Common Rule cost principles as the TANF program. In using Federal
Food Stamp program funds or Federal TANF program funds, States have
been and continue to be required to follow the uniform cost principles
for determining allowable costs in OMB Circular A-87 (2 CFR part 255).
OMB Circular A-87 (2 CFR part 225) states that program costs must
be necessary, reasonable, and allocable. A cost must also be allowable
under OMB Circular A-87 cost principles and the program's laws, terms
and conditions of the Federal award, or governing regulations. An
allowable cost is allocable to a particular program in accordance with
the relative benefits received by that program. Thus, allowable shared
costs must be allocated in accordance with the ``benefiting program''
cost allocation methodology and no changes have been made in this final
rule.
III. Discussion of Regulatory Provisions
We have added the following new section to part 263, subpart B of
the TANF regulations.
Section 263.14 What methodology shall States use to allocate Federal
TANF costs?
This section provides that States shall use only the ``benefiting
program'' cost allocation methodology. Requiring a ``benefiting
program'' cost allocation methodology is consistent with the TANF final
rules which make the TANF program subject to 45 CFR part 92 and
includes the cost principles of OMB Circular A-87 (2 CFR part 225).
One of the fundamental Federal appropriation principles at 31
U.S.C. 1301(a) states that appropriations can only be used for the
purposes for which they were appropriated, unless otherwise provided by
law. OMB Circular A-87 (2 CFR part 225) reflects this principle by
requiring ``benefiting program'' cost allocation. The overall purpose
of OMB Circular A-87 (2 CFR part 225) is to achieve more efficient and
uniform administration of Federal awards and to provide the foundation
for greater uniformity in the costing procedures of non-Federal
governments. Without an explicit legislative provision permitting
``primary program'' cost allocation, we believe it would be
inconsistent with and contrary to these appropriation principles to
allow TANF funds to be used to pay for costs allocable to other
programs.
Since the decision of the Appeals Court, no State has submitted a
revised ``primary program'' cost allocation plan for allocating the
common costs of determining eligibility or case maintenance for TANF,
Food Stamps and Medicaid to HHS for approval. These were the primary
common costs previously claimed and allowed under a ``primary program''
cost allocation methodology under the former AFDC program.
Under the President's Management Agenda of improved accountability,
each program needs to know its full costs using consistent and
comparable data to assess program trends and measure performance.
Appropriate program and funding decisions, both now and in the future,
must be based on the knowledge and accounting of total program costs,
including those costs incurred under a consistent benefiting program
methodology. Under this rule, we will not permit an exception to the
benefiting program cost allocation methodology generally required under
OMB Circular A-87 (as permitted for the AFDC program prior to the
enactment of the TANF program). Thus, HHS will disapprove any TANF cost
allocation amendments proposing a ``primary program'' cost allocation
methodology.
Therefore, the Secretary is exercising his discretion to require a
``benefiting program'' cost allocation methodology under TANF in
accordance with OMB Circular A-87 (2 CFR part 225). This final rule
requires States to make no changes to their TANF cost allocation plans,
but instead will affirm and lock in place, current cost allocation
practice.
Readers should note that we revised the title of this section to be
more concise. ``States'' has already been defined in 45 CFR 260.30 to
mean the 50 States, the District of Columbia, and the Territories.
This final rule does not affect federally-recognized Indian tribes
operating approved Tribal TANF programs. Prior to enactment of PRWORA
of 1996, needy families in a federally-recognized Indian tribe received
assistance under the State's former Aid to Families with Dependent
Children (AFDC) program. PRWORA gave federally-recognized Tribes the
opportunity to operate their own Tribal TANF programs. These Tribes
have always followed the ``benefiting program'' cost allocation
methodology in accordance with OMB Circular A-87 and the applicable
Tribal TANF regulatory provisions at 45 CFR 286.45(c) and (d).
IV. Paperwork Reduction Act of 1995
This rule contains no new information collection activities that
are subject to review and approval by the Office of Management and
Budget (OMB) under the Paperwork Reduction Act of 1995, codified at 44
U.S.C. 3507.
V. Regulatory Flexibility Analysis
The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the
Regulatory Flexibility Act (Pub. L. 96-354), that this rule will not
result in a significant impact on a substantial number of small
entities. The primary impact is on State governments. State governments
are not considered small entities under the Regulatory Flexibility Act.
VI. Regulatory Impact Analysis
Executive Order 12866 requires that regulations be reviewed to
ensure that they are consistent with the priorities and principles set
forth in the Executive Order. The Department has determined that this
rule is consistent with these priorities and principles. This rule is
considered a ``significant regulatory action'' under the Executive
Order, and therefore has been reviewed by the Office of Management and
Budget.
Since all States should be using a ``benefiting program'' cost
allocation methodology under TANF, we believe the impact of this final
rule is minimal. We do not believe this rule will have a significant
negative impact or reduce potential Federal reimbursement, as States
receive a fixed Federal block grant amount.
VII. Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that a covered agency prepare a budgetary impact statement before
promulgating a rule that includes any Federal mandate that may result
in the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector, of $100 million or more in any one
year.
The Department has determined that this rule would not impose a
mandate that will result in the expenditure by State, local, and Tribal
governments, in the aggregate, or by the private sector, of more than
$100 million in any one year.
VIII. Congressional Review
This regulation is not a major rule as defined in 5 U.S.C. Chapter
8.
IX. Assessment of Federal Regulation and Policies on Families
Section 654 of The Treasury and General Government Appropriations
Act of 1999 requires Federal agencies to determine whether a proposed
policy or regulation may affect family well-being. If the agency's
determination is affirmative, then the agency must prepare an impact
assessment
[[Page 42721]]
addressing seven criteria specified in the law. These regulations will
not have an impact on family well-being as defined in the legislation.
X. Executive Order 13132
Executive Order 13132 ``Federalism'' requires that Federal agencies
consult with State and local government officials in the development of
regulatory policies with Federalism implications. In the NPRM, we did
solicit comments from State and local government officials, consistent
with this Executive Order. We did not receive any comments from State
and local government officials.
List of Subjects in 45 CFR part 263
Grant programs--Federal aid programs, Penalties, Public assistance
programs--Welfare programs.
Approved: May 16, 2008.
Daniel C. Schneider,
Acting Assistant Secretary for Children and Families.
Michael O. Leavitt,
Secretary of Health and Human Services.
0
For the reasons set forth in the preamble, the Administration for
Children and Families amends 45 CFR chapter II to read as follows:
PART 263--EXPENDITURES OF STATE AND FEDERAL TANF FUNDS
0
1. The authority citation for 45 CFR part 263 continues to read as
follows:
Authority: 42 U.S.C. 604, 607, 609, and 862a.
0
2. Add Sec. 263.14 to subpart B to read as follows:
Sec. 263.14 What methodology shall States use to allocate TANF costs?
States shall use a benefiting program cost allocation methodology
consistent with the general requirements of OMB Circular A-87 (2 CFR
part 225) to allocate TANF costs.
[FR Doc. E8-16854 Filed 7-22-08; 8:45 am]
BILLING CODE 4184-01-P
