NEW-ACF-PI-2004-02 (Effect on Native Employment Works (NEW) grantees of statutory amendment permitting carryover of unobligated balances with no fiscal year limitation – revised program instruction)

Publication Date: July 26, 2004
Current as of:

TO:   

INDIAN TRIBES, ALASKA NATIVE ORGANIZATIONS, AND TRIBAL CONSORTIA ADMINISTERING THE NATIVE EMPLOYMENT WORKS (NEW) PROGRAM

SUBJECT:    

Effect on Native Employment Works (NEW) grantees of statutory amendment permitting carryover of unobligated balances with no fiscal year limitation — revised program instruction

REFERENCES:  

Section 404(e) of the Social Security Act, as amended by the Foster Care Independence Act of 1999 (Public Law 106-169); section 412(a)(2) of the Social Security Act, as amended by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Public Law 104-193) and the Balanced Budget Act of 1997 (Public Law 105-33); 45 CFR Part 287 (the NEW program regulations).

PURPOSE:    

To provide revised instructions to NEW program grantees on implementing section 404(e) of the Social Security Act, regarding effective date of carryover authority, uses of carryover funds, and submission of reports. As amended, section 404(e) permits NEW grantees to reserve and carry forward unobligated NEW fund balances without fiscal year limitation, for the purpose of providing assistance.

BACKGROUND:   

The Native Employment Works program was created by amendments made to title IV-A of the Social Security Act by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The NEW program began on July 1, 1997. Each NEW funding period (program year) begins on July 1 and ends the following June 30.

Public Law 106-169 (the Foster Care Independence Act of 1999, enacted December 14, 1999) amended section 404(e) of the Social Security Act, providing authority to NEW grantees to reserve and carry forward unobligated NEW grant fund balances under certain conditions. Section 401(l) of Public Law 106-169 says, “Effective on the date of the enactment of this Act, section 404(e) of the Social Security Act (42 U.S.C. 604(e)) is amended by inserting ’or tribe’ after ’State’ the first and second places it appears, and by inserting ’or tribal’ after ’State’ the third place it appears.” Section 404(e), as amended, provides:

AUTHORITY TO RESERVE CERTAIN AMOUNTS FOR ASSISTANCE. — A State or tribe may reserve amounts paid to the State or tribe under this part for any fiscal year for the purpose of providing, without fiscal year limitation, assistance under the State or tribal program funded under this part.

NEW program instruction NEW-ACF-PI-01-01 (dated March 28, 2001) gave instructions to NEW grantees on implementation of section 404(e), as amended.

Based on reevaluation of relevant statutory and regulatory provisions, legislative history, and precedents, we are revising the instructions to NEW grantees on implementation of section 404(e), with regard to the effective date of carryover authority, uses of carryover funds, and submission of certain grantees’ reports.

INSTRUCTION:    

This program instruction (PI) provides revised guidance to Native Employment Works grantees on implementation of section 404(e) of the Social Security Act, as amended, which gives authority to NEW grantees to reserve and carry forward unobligated NEW grant fund balances under certain conditions. This PI applies to all NEW grantees, including grantees whose NEW programs are included in projects under Public Law 102-477 (the Indian Employment, Training and Related Services Demonstration Act of 1992). This revised PI replaces NEW-ACF-PI-01-01.

Summary of Revised Instructions

Native Employment Works grantees may reserve and carry forward unobligated NEW fund balances for use in subsequent fiscal years, without fiscal year limitation, beginning with NEW program funds awarded for the period July 1, 1999 — June 30, 2000. Carryover authority for the NEW program is effective for NEW program funds awarded on or after July 1, 1999.

Until June 30, 2007, NEW program funds carried forward for obligation and expenditure in future fiscal years must be used to provide:

  •  Activities, services, and benefits allowable under the NEW program, consistent with section 412(a)(2)(C) of the Social Security Act and the NEW program regulations at 45 CFR Part 287; and administrative costs associated with providing these activities, services, and benefits; and/or
  •  “Assistance” as defined for State Temporary Assistance for Needy Families (TANF) programs at 45 CFR 260.31 and/or as defined for Tribal TANF programs at 45 CFR 286.10; and administrative costs associated with providing this assistance.

Beginning July 1, 2007, NEW program funds carried forward for obligation and expenditure in future fiscal years must be used to provide:

  • Activities, services, and benefits allowable under the NEW program, consistent with section 412(a)(2)(C) of the Social Security Act and the NEW program regulations at 45 CFR Part 287; and administrative costs associated with providing these activities, services, and benefits.

NEW program carryover funds also may be used for indirect costs chargeable to the NEW grant under an approved indirect cost agreement.

Activities, services, and benefits provided with NEW program carryover funds must be provided to NEW program clients. They must be covered in, and provided consistent with, the grantee’s approved NEW program plan for the period during which they are provided.

Grantees that reserve and carry forward unobligated NEW fund balances must include information on uses of these carryover funds in their required annual program reports, and they must include information on obligation and expenditure of these carryover funds in their required annual financial reports. Grantees that do not include their NEW programs in projects under Public Law 102-477 submit these reports to the Department of Health and Human Services (HHS)/Administration for Children and Families (ACF). Grantees that include their NEW programs in P.L. 102-477 projects submit these reports to the Department of the Interior.

Effective Date of Carryover Authority

Carryover authority for the NEW program began with NEW grant funds awarded for the period July 1, 1999 — June 30, 2000. Carryover authority for the NEW program is effective for NEW funds awarded on or after July 1, 1999.

Discussion:

Section 404(e) of the Social Security Act, as amended by Public Law 106-169, provides that “[a] State or tribe may reserve amounts paid to the State or tribe under this part for any fiscal year for the purpose of providing, without fiscal year limitation, assistance under the State or tribal program funded under this part.” P.L. 106-169 specifies that the amendment to section 404(e) providing carryover authority to tribes was “[e]ffective on the date of the enactment of this Act…” P.L. 106-169 was enacted on December 14, 1999.

This amendment provided carryover authority to Tribal TANF grantees as well as NEW grantees. Under the Tribal TANF final regulations, carryover authority for Tribal TANF grantees was effective with funds awarded for the funding period during which P.L. 106-169 was enacted — that is, with funds awarded for the period October 1, 1999 — September 30, 2000. (The funding period for the Tribal TANF program is October 1 through the following September 30.)

NEW-ACF-PI-01-01 said that carryover authority for NEW grantees was effective with funds awarded for the period July 1, 2000 — June 30, 2001 — that is, with funds awarded for the funding period following the funding period during which P.L. 106-169 was enacted. This is not consistent with the implementation of the effective date for the Tribal TANF program.

We conclude that the language in P.L. 106-169 regarding the effective date of the amendment — “[e]ffective on the date of the enactment of this Act,” December 14, 1999 — should be understood for both the Tribal TANF program and the NEW program to mean that the amendment became effective on December 14, 1999, for the funding period/program year during which P.L. 106-169 was enacted. We conclude that carryover authority for NEW grantees was effective for funds awarded for the period July 1, 1999, through June 30, 2000 — the funding period during which P.L. 106-169 was enacted. If a NEW grantee has an unobligated balance from this funding period and/or from later funding periods, it may carry these funds forward for obligation and expenditure consistent with this PI.

Because the amendment to section 404(e) was effective on the date of enactment, we conclude that NEW grantees do not have authority to carry forward unobligated NEW funds awarded for the first two NEW program funding periods/program years (July 1, 1997 — June 30, 1998, and July 1, 1998 — June 30, 1999), which ended before the amendment’s effective date.

Section 404(e) states that unobligated reserved amounts may be used “without fiscal year limitation.” Grantees must implement effective fiscal and accounting controls for obligation and expenditure of carryover funds. They should not carry unobligated funds forward indefinitely and should follow “first in, first out” guidelines as appropriate. They should obligate funds and liquidate obligations in a timely manner. (Obligations made during the program year in which the funds are awarded should be liquidated within one year after the end of this program year.)

Uses of Carryover Funds and Definition of “Assistance”

Until (through) June 30, 2007, NEW program funds that are reserved and carried forward for obligation and expenditure in future fiscal years must be used to provide:

  •  Activities, services, and benefits allowable under the NEW program, consistent with requirements for uses of NEW funds in section 412(a)(2)(C) of the Social Security Act and the NEW regulations at 45 CFR Part 287; and administrative costs associated with providing these activities, services, and benefits; and/or
  •  Benefits and services included as “assistance” as defined for State Temporary Assistance for Needy Families (TANF) programs at 45 CFR 260.31 and/or as defined for Tribal TANF programs at 45 CFR 286.10; and administrative costs associated with providing this assistance.

Beginning July 1, 2007, NEW program funds that are reserved and carried forward for obligation and expenditure in future fiscal years must be used to provide:

  •  Activities, services, and benefits allowable under the NEW program, consistent with requirements for uses of NEW funds in section 412(a)(2)(C) of the Social Security Act and the NEW regulations at 45 CFR Part 287; and administrative costs associated with providing these activities, services, and benefits.

NEW program carryover funds also may be used for indirect costs chargeable to the NEW grant under an approved indirect cost agreement.

Activities, services, and benefits provided with NEW carryover funds must be provided to NEW program clients. They must be covered in, and provided consistent with, the grantee’s approved NEW program plan for the period during which they are provided. Grantees do not need to request specific approval from HHS to carry forward unobligated NEW program funds consistent with section 404(e) and this PI.

Discussion:

Section 404(e) of the Social Security Act, as amended, provides that “[a] State or tribe may reserve amounts paid to the State or tribe under this part … for the purpose of providing … assistance under the State or tribal program funded under this part.” As noted, section 404(e) applies to the TANF program as well as the NEW program.

NEW-ACF-PI-01-01 said that “a single definition of assistance would insure that Title IV-A provisions are implemented as intended,” and “NEW grant funds subject to this PI must be expended on ’assistance’ as defined at 45 C.F.R. Part 260.31 and 45 C.F.R. Part 286.10” — that is, on assistance as defined by the state and tribal TANF regulations, for the state and tribal TANF programs. After reconsideration, we conclude this is not the best or most appropriate interpretation in the context of the NEW program.

Section 412(a)(2)(C) of the Social Security Act establishes the purpose of the NEW program and use of NEW funds: “USE OF GRANT. — Each Indian tribe to which a grant is made under this paragraph shall use the grant for the purpose of operating a program to make work activities available to such population and such service areas or areas as the tribe specifies.” Consistent with the underlying program legislation, the NEW regulations describe allowable work activities (including educational, training, job readiness, and employment activities), allowable supportive and job retention services, and other allowable activities and services to assist NEW program participants to prepare for and obtain permanent unsubsidized employment. (Provisions from the NEW regulations describing activities, services, and benefits that may be provided with NEW funds are an attachment to this PI.)

The definitions of “assistance” in the state and tribal TANF regulations exclude most activities, services, and benefits provided by NEW programs to NEW clients under section 412(a)(2) and the NEW regulations. (The complete definition of “assistance” from the Tribal TANF regulations is an attachment to this PI.)

The first part of the definitions of “assistance” in the state and tribal TANF regulations includes “cash, payments, vouchers, and other forms of benefits designed to meet a family’s ongoing basic needs (i.e., for food, clothing, shelter, utilities, household goods, personal care items, and general incidental expenses).” Providing benefits to meet families’ ongoing basic needs is consistent with the authorized statutory purpose of the TANF program and is appropriate for the TANF program. This is not consistent with the authorized statutory purpose of the NEW program and generally would not be allowable under the NEW program. Also, using NEW funds to meet ongoing basic needs rather than for work activities reduces the NEW program’s effectiveness in helping clients to prepare for and obtain employment.

The second part of the TANF regulatory definitions of assistance includes limited “supportive services such as transportation and child care provided to families who are not employed,” under specified conditions. Such supportive services generally could be provided for NEW program clients consistent with section 412(a)(2) and the NEW regulations. However, under section 412(a)(2) and the NEW regulations, a much broader range of activities, services, and benefits — including a broader range of supportive and job retention services — may be provided by NEW grantees to meet the needs of NEW clients.

The NEW program is separate and distinct from the TANF program. We do not find statutory language or legislative history to indicate congressional intent that NEW grantees must use NEW carryover funds for benefits and services associated with and provided under a different program (the TANF program) and must not use them for most regular NEW program activities, services, and benefits. We find no overarching discussion concerning P.L. 104-193 or P.L. 106-169 regarding any definition of “assistance” that would subsume the NEW program.

We conclude that — without statutory language or legislative history demonstrating congressional intent that the TANF regulatory definition must be used — the term “assistance” should be interpreted in the context of the particular use of the term and the particular program involved. For example, the State TANF regulations at 45 CFR Part 260 provide that the definition of “assistance” at 45 CFR 260.31 (a) and (b) “[d]oes not apply to the use of the term assistance” in two specified subparts of Part 260; the context in those subparts calls for a different definition/interpretation of the term. In addition, ACF narrowly defines TANF “assistance paid to the family” for child support enforcement collection purposes, using only the part of the State TANF regulatory definition of “assistance” that is appropriate in the context of the child support enforcement program. ACF concluded that a distinction must be made between “assistance” under the TANF program purposes and “assistance paid to the family” for child support distribution purposes.

We conclude that the definition of “assistance” provided in the TANF regulations for the TANF program is not the most appropriate definition in the context of the NEW program. Appropriate NEW program services, benefits, and activities should be provided under the NEW program, consistent with the NEW program authorizing statute and implementing regulations. We make a distinction between assistance provided under the TANF program to TANF clients for TANF purposes, and assistance provided under the NEW program to NEW clients for NEW purposes.

Imposing the TANF definition of “assistance” on the NEW program — requiring NEW grantees to use NEW carryover funds to provide TANF assistance rather than NEW program activities, services, and benefits — does not appear to be logical or consistent with reason. We believe this was not congressional intent. We conclude that the best interpretation is that assistance for NEW program carryover purposes means activities, services, and benefits allowable under the NEW program, consistent with the authorizing statutory provisions (section 412(a)(2)) and the NEW program regulations (45 CFR Part 287).

“Assistance” as defined for TANF is one possible (though not the preferred) definition/interpretation for NEW program carryover purposes. Grantees have used NEW program carryover consistent with this definition since NEW-ACF-PI-01-01 was issued, and some grantees plan to provide such “assistance” to NEW clients under their current NEW plans. Most NEW grantees’ plans are approved for the period ending June 30, 2007 (subject to the availability of funding). Grantees therefore may continue to use NEW carryover for “assistance” as defined in the TANF regulations, if they choose, until June 30, 2007, the date until which most NEW grantees’ current plans are approved (subject to the availability of funding).

Reporting Requirements

NEW program grantees must submit required program reports and financial reports. Grantees that do not include their NEW programs in P.L. 102-477 projects submit these reports to HHS/ACF (one copy to the appropriate ACF regional office and one copy to the ACF central office). Grantees that include their NEW programs in P.L. 102-477 projects submit these reports to the Department of the Interior, which provides copies to HHS/ACF.

Program (statistical and narrative) reports must be submitted annually. Program reports for each funding period/program year (PY) must cover activities, services, and benefits provided during that PY, using NEW funds awarded during that PY as well as NEW funds carried forward from previous PYs (if any). Grantees that do not include their NEW programs in P.L. 102-477 projects submit these reports within 90 days after the end of the covered PY (by September 30 following the June 30 end of the PY), consistent with 45 CFR 287.155 and NEW-ACF-PI-03-01, using the OMB-approved NEW program report form. Grantees that include their NEW programs in P.L. 102-477 projects submit program reports to the Interior Department covering all programs they administer under P.L. 102-477, consistent with 45 CFR 287.165, using a similar OMB-approved form.

Financial reports must be submitted annually. Grantees that do not include their NEW programs in P.L. 102-477 projects use the standard OMB-approved Financial Status Report form (SF 269A — short form, or SF 269 — long form). They submit an initial financial report within 30 days after the end of the funding period/program year during which the funds were awarded (the initial obligation period) — that is, by July 30 (or July 31) following the June 30 end of the PY. Grantees must continue to submit financial reports until each year’s funding is obligated and expended; these reports are due within 90 days after the end of each succeeding PY (reports due by September 30). Separate financial reports must be submitted annually for each program year’s funds until all of the funds awarded for that PY are obligated and expended. The final financial report for each year’s funding is due 90 days after the end of the PY in which these funds are liquidated.

Grantees that include their NEW programs in P.L. 102-477 projects submit financial reports to the Interior Department covering all programs they administer under P.L. 102-477, consistent with 45 CFR 287.165, using a similar OMB-approved form. They must continue to report annually on NEW carryover funds until these funds are obligated and expended.

Discussion:

NEW-ACF-PI-01-01 included a requirement that all grantees report to HHS/ACF on uses, obligation, and liquidation of NEW carryover funds. In January 2002, terms and conditions of ACF’s NEW grant awards to 102-477 grantees were amended to remove a requirement for 102-477 grantees to report directly to ACF. Consistent with section 11 of P.L. 102-477 and with 45 CFR 287.165, this revised program instruction confirms that grantees that include their NEW programs in 102-477 projects submit their program and financial reports to the Department of the Interior, using the appropriate OMB-approved forms.

Inquiries: 

Inquiries should be directed to the appropriate ACF regional office, or to the ACF central office at 202-401-5308.

                   

     /s/
Andrew S. Bush
Director
Office of Family Assistance

ATTACHMENTS: Provisions under 45 CFR Part 287 Describing Activities and Services That May Be Provided with NEW Program Funds Definition of “assistance” under 45 CFR 286.10