State and Local Fiscal Recovery Funds Cannot Be TANF MOE
May states count expenditures of certain funds from the SLFRF program toward the maintenance-of-effort (MOE) requirement in the Temporary Assistance for Needy Families (TANF) program?
On January 7, 2022, the U.S. Department of the Treasury issued a Final Rule providing that certain funds from the State and Local Fiscal Recovery Funds (SLFRF) program could be used to fulfill matching or cost sharing requirements in other federal programs. SLFRF is a $350 billion program to help state, local, and tribal governments support their response to and recovery from the COVID-19 pandemic. May states count expenditures of certain funds from the SLFRF program toward the maintenance-of-effort (MOE) requirement in the Temporary Assistance for Needy Families (TANF) program?
No, expenditures of SLFRF program funds cannot be used toward the TANF MOE requirement because the TANF statute prohibits any funds made available by the federal government from counting towards MOE. The TANF statute specifies that “qualified state expenditures” for MOE do not include “any expenditure from amounts made available by the Federal Government.” (42 U.S.C. § 609(a)(7)(B)(iv) (emphasis added). Thus, the Treasury Final Rule does not affect TANF state spending requirements and federal funds continue to be an unallowable source of MOE spending.
The preamble to the SLFRF Final Rule recognized that the flexibility it was providing would not be applicable to a federal program’s match or cost-sharing requirements if there were a statutory or regulatory impediment applicable to the receiving program’s match or cost sharing requirement. Specifically, Treasury noted in the preamble that:
If a recipient seeks to use SLFRF funds to satisfy match or cost-share requirements for a federal grant program, it should first confirm with the relevant awarding agency that no waiver has been granted for that program, that no other circumstances enumerated under 2 CFR 200.306(b) would limit the use of SLFRF funds to meet the match or cost-share requirement, and that there is no other statutory or regulatory impediment to using the SLFRF funds for the match or cost-share requirement. (https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf, p.369).