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PA Bulletin, Doc. No. 01-1915

PROPOSED RULEMAKING

DEPARTMENT OF PUBLIC WELFARE

[55 PA. CODE CHS. 105, 125, 133, 140, 141, 145, 151, 153, 165, 177, 178, 181, 183 AND 187]

TANF Program

[31 Pa.B. 5875]

Statutory Authority

   The Department of Public Welfare (Department) proposes to amend the regulations set forth in Annex A under the authority of sections 201(2) and 403(b) of the Public Welfare Code (62 P. S. §§ 201(2) and 403(b)) (code); the Support Law (62 P. S. §§ 1971--1977); Title I of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Pub. L. No. 104-193) (PRWORA) creating the Temporary Assistance for Needy Families (TANF) Program, and amending 42 U.S.C.A. §§ 601--619, 651--669(b) and 1396u-1; section 5543 of the Balanced Budget Act of 1997 (Pub. L. No. 105-33) (42 U.S.C.A. § 653(p); section 1902(a)(10)(A) and (C) of the Social Security Act, 42 U.S.C.A. § 1396a(a)(10)(A) and (C)); section 4372(b) of the Domestic Relations Code, 23 Pa. C.S. § 4372(b); and the Federal TANF regulations found in 45 CFR 260.10--265.10.

Purpose

   The purpose of this rulemaking is to codify rules that implement a welfare reform program focused on moving needy families and individuals from dependency to work and self-sufficiency. This proposed rulemaking implements the TANF Program and provisions of State welfare reform, which could not be implemented under the predecessor Aid to Families with Dependent Children (AFDC) Program, as more fully described in this Preamble.

Background

   Title I of the PRWORA, enacted on August 22, 1996, eliminated the AFDC Program under Part A of Title IV of the Social Security Act and replaced it with the TANF Program (42 U.S.C.A. §§ 601--619). Federal TANF regulations found in 45 CFR 260.10--265.10, which govern the TANF Program, became effective October 1, 1999.

   The act of May 16, 1996 (P. L. 175, No. 35) (Act 35) amended certain sections of the code which govern eligibility for cash and Medical Assistance (MA) benefits. At the time Act 35 was enacted, some of the provisions could not be implemented in the AFDC Program without Federal approval because they were inconsistent with Federal statutes and regulations. Section 19 of Act 35 (62 P. S. § 403 note) directed the Department to seek these waivers of Federal law and regulations, or any other Federal approval, necessary to implement the provisions of Act 35. Section 20 of Act 35 (62 P. S. § 403 note) further directed the Department to implement changes upon receipt of Federal approval.

   A request to waive certain Federal requirements was submitted to the appropriate Federal agencies, including the Department of Health and Human Services (DHHS). While the waiver request was pending, the PRWORA was enacted, eliminating the AFDC Program and replacing it with TANF.

   With the enactment of the PRWORA, Federal waivers for Act 35 changes were no longer necessary. Having already been given statutory authority to implement Act 35 changes by notice of rulemaking change (NORC), the Department proceeded to implement the provisions of both Act 35 and the PRWORA at the same time. In combination, they provided the framework for a complete and integrated Cash and MA Program for needy families. Consequently, these amendments were implemented by a NORC published at 27 Pa.B. 1092 (March 1, 1997), effective March 3, 1997, in accordance with the Joint Committee on Documents (JCD) Resolution 1996-1. In addition, these amendments reflect most of the Family Violence Option (FVO) provisions of the PRWORA as implemented by a NORC published at 30 Pa.B. 2957 (June 10, 2000), based on Federal TANF regulations found in 45 CFR 260.50--260.59.

   Under the PRWORA, Federal approval to implement the provisions of State law applicable to TANF is obtained through acceptance of the Commonwealth's TANF State Plan and a determination by the Federal agency that the Commonwealth is eligible for block grant funding for its TANF Program. The Department submitted its initial TANF State Plan, published at 27 Pa.B. 342 (January 18, 1997) to the DHHS and was authorized to implement TANF effective March 3, 1997. An updated TANF State Plan, published at 29 Pa.B. 5658 (October 30, 1999), was submitted to the DHHS on November 1, 1999.

   Section 22 of the act of December 16, 1997 (P. L. 549, No. 58) (Act 58) repealed sections 432.6, 432.7, 432.7A, 432.8, 432.9 and 432.11 of the code. Act 58 placed in 23 Pa.C.S. §§ 4371--4381 (relating to Title IV-D program and related maters) the substance of sections formerly found in the code and made amendments to these sections to conform to the PRWORA. The provisions requiring cooperation with the Child Support Enforcement Program established under Title IV-D of the Social Security Act (42 U.S.C.A. §§ 651--679a) as a condition of eligibility for the TANF Program and the General Assistance (GA) Program, are found in Act 58. Act 58 also amended 23 Pa.C.S. § 5103(c) (relating to the acknowledgment and claim of paternity) by removing the requirement that the signatures of the birth parents be notarized. Now, 23 Pa.C.S. § 5103(c) requires only that the signatures be witnessed and subject to the penalties for unsworn falsification to authorities. See 18 Pa.C.S. § 4904 (relating to unsworn falsification to authorities). For a more in-depth discussion of the changes in child support cooperation requirements from Act 35 to Act 58, refer to Section I, Item 48, of this Preamble which outlines amendments to Chapter 187 (relating to support from relatives not living with the client). Act 58 also provides for a new support pass-through program which the Department implemented on October 1, 1998. See 23 Pa.C.S. § 4374 (relating to State disbursement unit).

   Section 402(a)(7) of the Social Security Act (42 U.S.C.A. § 602(a)(7)), gives states the option to include in their TANF State Plan provisions to screen and identify victims of domestic violence, refer these individuals to counseling and supportive services, and waive certain program requirements for these individuals as needed. This option in the Federal statute is known as the FVO. Federal regulations governing this option are found in 45 CFR 260.50--260.59. Since the Commonwealth elected to implement the FVO, the approved TANF State Plan contains an optional certification that the Department will establish and enforce standards to screen and identify victims of domestic violence; refer those individuals to counseling and supportive services; and waive, under a determination of good cause, other program requirements when compliance with those requirements would make it more difficult for individuals receiving assistance to escape domestic violence or unfairly penalize those individuals who are or have been victimized or individuals who are at risk of further violence.

   In April 1997, the Secretary of the Department convened the Domestic Violence/ TANF Task Force to develop policies, procedures and strategies needed to implement the FVO. This task force is comprised of staff from the Department, the Pennsylvania Coalition Against Domestic Violence (PCADV), the Women's Law Project and other advocate groups. As a result of the collaborative efforts of the task force, a NORC was published at 30 Pa.B. 2957 (June 10, 2000) which revised the standards and process for establishing good cause and waiving child/spousal support requirements when the good cause claim is based on domestic violence. Although the FVO permits states to waive additional program requirements that may affect persons who are or have been victims of domestic violence, the task force concentrated its efforts on revising child support requirements when Federal child support regulations found in 45 CFR Part 232 (relating to contract financing), which had been the basis for child support regulations in this Commonwealth, were rescinded in December 1997. These revised requirements were implemented July 3, 2000, and are included in this proposed rulemaking. The Department is continuing to collaborate with the task force on the service plan provision as published in the NORC of June 10, 2000. The plan must be developed by a person with domestic violence training and be designed to lead to work to the extent that work is consistent with helping the individual achieve safety. This provision will be incorporated into a proposed rulemaking package to follow this proposed rulemaking.

Need for Proposed Rulemaking

   The Department is required to comply with Federal and State law. This proposed rulemaking is needed for consistency between Department regulations and legislative changes and to have a complete and integrated Cash and MA Program for families.

   Other changes in this proposed rulemaking include editorial corrections and changes needed to make TANF a complete Cash Assistance Program. Because the changes, both Federal and State, were so comprehensive, it is necessary to also change other provisions to make cash assistance regulations integrated and cohesive.

   This proposed rulemaking supports the Department's comprehensive welfare reform plan that changes the direction of the public assistance program from one that fosters dependence on the system to one that promotes self-sufficiency through work. The over-riding principle embodied in the regulations is that assistance is temporary and must be seen as a transition to self-sufficiency. Amendments supporting the efforts of persons to become self-sufficient through employment include disregarding 50% of gross earned income and disregarding the value of one motor vehicle when determining eligibility. Implementing requirements that focus on moving needy families from dependence to self-sufficiency has an increased importance given the imposition of the Federally-mandated 5-year limit on receipt of TANF cash assistance.

   This proposed rulemaking incorporates stringent work requirements and the Federal 60-month time limit on receipt of TANF cash assistance. The proposed rulemaking reflects substantial revisions evincing the fundamental change in Federal and State law governing eligibility for cash assistance. With the passage of TANF and Act 35, individuals are required to work toward becoming self-sufficient as a condition of eligibility for cash assistance. Essential to assisting applicants and recipients in becoming self-sufficient is the establishment of the Road to Economic Self-Sufficiency through Employment and Training (RESET) Program. Among other requirements, RESET establishes minimum work requirements as conditions of eligibility for and continued receipt of cash assistance.

   After 24 months of receiving cash assistance, recipients are required to work at least 20 hours per week, and more if they are able to do so. This minimum 20-hour-per-week work requirement is a threshold requirement for nonexempt individuals unless they establish good cause. However, if an individual has an opportunity to work more than 20 hours per week, but willfully, without good cause, fails to do so, that individual is subject to sanction under section 432.3(a)(iii) of the code (62 P. S. § 432.3(a)(iii)), for failure to ''accept referral to and work in and retain employment in which the applicant or recipient is able to engage.'' Act 35 requires an individual to work at least 20 hours per week, and more, if possible, up to full-time employment or self-sufficiency. The Department refers to this requirement as ''maximizing employment.'' This requirement to maximize employment is consistent with the goal of TANF and Act 35 that a recipient transition from dependency through increased employment to self-sufficiency in 60 months.

   Moreover, nonexempt recipients who willfully, and without good cause, fail to comply with these requirements are subject to sanction, as RESET requires. Consistent with TANF and Act 35, recipients subject to sanction can minimize the duration of their sanction by demonstrating that they are willing to comply with RESET as soon as the minimum period expires. However, equally consistent with TANF and Act 35 is the notion that once a nonexempt recipient has willfully failed, without good cause, to comply with work or work-related requirements, he cannot stop the sanction from ever occurring by agreeing to comply before the Department imposes it. The Department revised § 165.51 (renamed ''Compliance Review'') to ensure that only willfully noncompliant recipients (without good cause for noncompliance) are sanctioned. The caseworker will develop a new AMR with those recipients who are not subject to sanction.

   Provisions establishing exemptions based on hardship or domestic violence whereby certain recipients may continue to receive TANF beyond the 60-month limit prescribed by Federal law will be incorporated into a separate proposed rulemaking package which will follow this rulemaking.

Summary of Requirements

I.  The following are regulations that apply to the TANF and GA Cash Assistance Programs:

   A.  The following revisions relating to the use and disclosure of information about applicants and recipients are being made to Chapter 105 (relating to safeguarding information):

   1.  Sections 105.1(c)(3) and 105.3(g) (relating to policy; and requirements).  Section 105.1(c)(3) is revised and § 105.3(g) is added to provide that information may be released to law enforcement officers in accordance with Federal and State law. This information is generally limited to an address but may include other identifying information which enables the State Police and Board of Probation and Parole to have access to the records of the Assistance Recipient Identification Program under section 414 of the code (62 P. S. § 414) within the Department to fulfill the objectives of section 414 of the code, as specified in § 105.4(c)(2) (relating to procedures). See 62 P. S. §§ 414 and 432(9); 42 U.S.C.A. § 608(a)(9)(B).

   2.  Section 105.4(c)(1).  This subsection and paragraph are added to specify that the Department may provide information to a Federal, State or local law enforcement officer regarding the address of a fugitive felon, parole or probation violator and the address of a person who may have information that the officer needs to conduct his official duties if the location or apprehension of the recipient is within his official duties. See 42 U.S.C.A. § 608(a)(9)(B).

   Note:  The NORC published at 27 Pa.B. 1092 provided an incorrect citation (§ 105.4(d)) for this requirement. The citation is correct as specified previously.

   3.  Section 105.4(c)(2).  This paragraph is added to specify that the Department will have access to the central repository within the State Police for purposes of identifying persons who have been sentenced for a felony or misdemeanor and have not satisfied the penalty imposed by law. The State Police and the Board of Probation and Parole will have access to the records of the Department's Assistance Recipient Identification Program (finger-imaging file to fulfill the objectives of section 414 of the code). See 62 P. S. §§ 414 and 432(9); 42 U.S.C.A. § 608(a)(9)(A).

   Note:  The NORC published at 27 Pa.B. 1092 provided an incorrect citation (§ 105.4(d)) for this requirement. The citation is correct as specified previously.

   4.  Subsections 105.4(c)--(e) have been relettered (d)--(f) respectively as a result of the change to subsection (c).  

   B.  The following revisions relating to applying for benefits are being made to Chapter 125 (relating to application process):

   1.  Section 125.1(f) (relating to policy).  This subsection is revised to specify that each applicant or recipient of cash assistance and other persons who are required to sign an application for assistance shall be required, as a condition of eligibility, to sign an Agreement of Mutual Responsibility (AMR) that is approved by the Department. The AMR includes the individual responsibilities and obligations to be undertaken by the recipient to achieve self-sufficiency, the time frames within which each obligation is to be completed, the penalties for failure to comply and the actions to be taken by the Department to support the efforts of the applicant or recipient. See 62 P. S. § 405.3(a); 42 U.S.C.A. § 608(b).

   2.  Sections 125.1(f)(1)--(4), and 133.23(a)(1)(vi)(A), (B)(I)--(VI), (C) and (D)(I) and (II) (relating to requirements).  These sections are added to specify the obligations of applicants and recipients for the receipt of benefits. These individuals are obligated to remain free of illegal drugs and alcohol if substance abuse is determined to be a barrier to employment. Those persons must participate in, maintain compliance with and satisfactorily complete an approved drug and alcohol treatment program. Applicants and recipients are also obligated to provide timely and accurate information; cooperate in establishing paternity and obtaining support; seek and participate in an educational program leading to a high school diploma or its equivalent, approved job training or work-related activities; and seek, accept, maximize and maintain employment, accept referral to, participate in and continue to participate in an available work or work-related activity, whichever is applicable, including those specified on the AMR, and not reduce earnings. See 62 P. S. §§ 405.1(a.2), 405.3 and 432.3.

   A person who is required to sign an application for assistance and fails or refuses to complete and sign an AMR without good cause is ineligible for assistance until the person completes and signs the approved AMR. Failure to cooperate with child support requirements will result in penalties described in § 141.21(e). Failure to comply with work or work-related requirements, whichever are applicable, will result in the penalties described in § 165.61 (relating to sanctions).

   3.  Section 125.1(g).  This subsection contains the provision formerly found in § 125.1(f) relating to applicant notices regarding eligibility.

   C.  The following revision relating to the treatment of earned and unearned income is being made to Chapter 133 (relating to redetermining eligibility):

   1.  Section 133.23(a)(1)(i)(A).  Clause (A) is deleted. The income of a recipient will no longer be subject to the gross income eligibility limit (185% test). Application of this test to recipients was eliminated to provide an incentive for recipients to accept and retain employment. The gross income test applies to applicants only.

   D.  The following revisions relating to general eligibility requirements for the TANF and GA programs are being made to Chapter 141 (relating to general eligibility provisions):

   1.  Section 141.1(b)(5) (relating to policy).  This paragraph is deleted because the provision that permits a specified relative of the only dependent child in the budget group to continue to receive cash assistance when the child is under a sanction is no longer consistent with State law. State law requires that when a disqualification occurs after a person has received cash assistance for more than 24 months, the disqualification is imposed on the entire budget group. See 62 P. S. § 432.3(a)(1) and (2) and (b).

   2.  Section 141.21(e) (relating to policy).  This subsection is revised. No protective payment will be imposed. Act 58 removed this requirement. Failure to cooperate in establishing paternity or obtaining support without good cause will result in a reduction of the cash assistance allowance by 25%. See 23 Pa.C.S. § 4380(b)(2) (relating to enforcement of cooperation requirements).

   Note:  The NORC published at 27 Pa.B. 1092 provided an incorrect citation (§ 141.21) for this requirement. The citation is correct as specified previously.

   3.  Section 141.21(s).  This subsection is revised to delete the specific reference to GA applicants or recipients, as the provision applies to all categories of cash assistance. An applicant or recipient of GA or TANF who has been convicted of violating section 481(a) of the code (62 P. S. § 481(a)), a crime commonly referred to as welfare fraud, is ineligible for cash assistance for 6 months from the date of a first conviction, 12 months from the date of a second conviction and permanently from the date of a third conviction. See 62 P. S. § 481(f).

   4.  Section 141.21(t).  This subsection is amended because § 141.21(s) as amended (see No. 3 above) makes the provision of § 141.21(t), which applies to TANF applicants or recipients, redundant and unnecessary.

   This subsection is amended to specify that a person is ineligible for assistance if the person is fleeing to avoid prosecution, or custody or confinement following conviction for a felony, or as felonies are classified in the State of New Jersey, a high misdemeanor. See 62 P. S. § 403(b); 42 U.S.C.A. § 608(a)(9).

   5.  Section 141.21(u).  This subsection is added to specify that cash assistance payments will not be made to a person for 10 years from the date of conviction, in a Federal or State court, of fraudulent misrepresentation of residence to receive TANF, GA, MA, Food Stamps or SSI simultaneously in two or more states. See 62 P. S. § 403(b); 42 U.S.C.A. § 608(a)(8).

   6.  Sections 141.41(e) and 141.61(a)(1)(xv) (relating to policy).  These provisions are added to specify that cash assistance applicants and recipients must, among other requirements specified in these sections, agree to seek employment, accept any bona fide offer of employment, and maximize and maintain employment as a condition of eligibility unless they are exempt (such as, by reason of a verified disability). Refer to section 405.1(a.3) of the code (62 P. S. § 405.1(a.3)) for specific exemptions. For the first 24 months of receipt of cash assistance, whether continuous or interrupted, nonexempt applicants and recipients who are not employed for an average of 20 hours per week must participate in an available and approved work-related activity as a condition of eligibility for cash assistance. After the first 24 months of receipt of cash assistance, whether receipt is continuous or interrupted, nonexempt recipients must participate in unsubsidized employment, subsidized employment, work experience, on-the-job training, community service or workfare for at least 20 hours a week, averaged monthly. See 62 P. S. §§ 405.1(a.2), 405.3 and 432.3.

   E.  The following revisions relating to the deprivation of a TANF child due to the absence or unemployment of a parent are being made to Chapter 153 (relating to deprivation of support or care):

   1.  Section 153.42 (relating to definitions).  This section is revised to add the definition of ''cash assistance allowance,'' a term which is used in Act 58 but not defined at 23 Pa.C.S. § 4380 (relating to enforcement of cooperation requirements).

   2.  Section 153.44(a)(1) (relating to procedures).  This paragraph is deleted since it addresses a now obsolete requirement under the AFDC Program.

   3.  Section 153.44(a)(2).  This paragraph is revised to delete a sentence that relates to the deleted material in § 153.44(a)(1).

   4.  Section 153.44(a)(3).  This paragraph is revised to delete an obsolete reference to a section within Chapter 187.

   5.  Section 153.44(a)(11).  This paragraph is revised to include a reference to a putative father as an individual from whom support must be sought in accordance with support requirements outlined in Chapter 187.

   6.  Section 153.44(b)(2)(i)(A).  This clause is amended to correct the cross reference to a section that has been revised within Chapter 187.

   7.  Section 153.44(b)(2)(i)(C).  Based upon Act 58, this clause is revised to specify that the penalty imposed for noncooperation is now a reduction in the cash assistance allowance by 25%. No protective payment will be imposed. Act 58 removed this requirement. See 23 Pa.C.S. § 4380.

   8.  Section 153.44(d)(1)(vi).  This subparagraph is deleted because the provision that provides for a penalty to be imposed against both parents in a household is no longer applicable. State law now provides that, during the first 24 months that assistance is received, a penalty is imposed only on the person who commits the violation. After the receipt of 24 months of benefits, a penalty is imposed on the entire household if the county assistance office (CAO) determines that the violation is willful and without good cause. See 62 P. S. § 432.3(a)(1) and (2) and (b).

   9.  Section 153.44(e)(1)(i).  This subparagraph is revised to delete the obsolete form number. The Acknowledgment of Paternity Form is now Form PA/CS 611.

   10.  Section 153.44(e)(1)(i)(A).  This clause is revised to delete the requirement that the signatures of both the putative father and the mother that appear on the Acknowledgment of Paternity Form must be notarized. In accordance with Act 58, the provision that the signatures need only be witnessed by a third party is added. See 23 Pa.C.S. § 5103(c) (relating to acknowledgment and claim of paternity).

   11.  Section 153.44(e)(1)(i)(B).  Based upon Act 58, this clause is revised to delete the word ''notarized'' since the Acknowledgment of Paternity Form no longer must be notarized prior to sending it to the Bureau of Child Support Enforcement. See 23 Pa.C.S. § 5103(c).

   F.  The following revisions relating to work requirements, conditions of eligibility for cash assistance, compliance review, good cause, penalties and notifications are being made to Chapter 165 including a change in the chapter title from ''Employment and Training Program'' to ''Road to Economic Self-Sufficiency Through Employment and Training (RESET) Program'':

   1.  Section 165.1(a) (relating to general).  This subsection is revised to delete the reference to the Employment and Training Program (ETP) and replace it with a reference to the RESET Program as specified in State law. A provision is added that requires all nonexempt applicants to agree to comply with the requirements of RESET and all nonexempt recipients, among other requirements, to participate in RESET and to seek employment, accept any bona fide offer of employment and maximize and maintain employment. This subsection is also revised to remove the statement that gives priority for services to volunteers for the program. The setting of those priorities is no longer appropriate because all nonexempt recipients are required by State law to participate in activities that promote self-sufficiency. The Department wants to assure that there are sufficient resources to serve those individuals. See 62 P. S. §§ 405.1, 405.2, 405.3 and 432.3.

   2.  Section 165.1(b).  This subsection is revised to delete the reference to the ETP and replace it with the phrase, ''The Department.'' This change broadens the Department's role to provide case management and identify resources.

   3.  Section 165.2 (relating to definitions).  This section is revised to delete the obsolete term ''EDP--Employment Development Plan'' and to replace it with the term ''AMR--Agreement of Mutual Responsibility.'' The work and work-related activities of RESET are now included in the AMR. This section is also revised to add the definitions of ''RESET--Road to economic self-sufficiency through employment and training,'' ''bona fide offer of employment,'' ''grant diversion'' and ''maximize employment'' and to delete the definition of ''ETP--Employment and Training Program.'' See 62 P. S. §§ 402, 405.1(a.4)(3)(c)(1)--(4), 405.3 and 432.3.

   4.  Section 165.11 (relating to verification of exemption).  This section is reserved. The information relating to verification of exemptions which was previously found in this section has been relocated to § 165.22 (relating to verification of exemption) and amended as described in the discussion of § 165.22.

   5.  Section 165.21(c)(1) (relating to enrollment).  This paragraph is revised to specify that a mental or physical disability does not provide for an automatic exemption from the RESET Program. State law requires that to be exempt from RESET due to a physical or mental disability, the disability must temporarily or permanently preclude any form of employment or work-related activity. See 62 P. S. § 405.1(a.3)(1).

   6.  Section 165.21(c)(1)(i).  This subparagraph is revised to remove the reference to licensed midwife as a source of verification of the period of recuperation after childbirth because State law permits disability to be verified only by a physician or psychologist. See 62 P. S. § 405.1(a.3)(1).

   7.  Section 165.21(c)(1)(iii).  This subparagraph is added to require an applicant or recipient with a verified mental or physical disability, including drug or alcohol dependency, to pursue appropriate treatment to restore or improve the individual's ability to work as a condition of receiving assistance if the individual is exempt from the RESET Program. See 62 P. S. § 405.1(a.3)(1).

   8.  Section 165.21(c)(1)(iv).  This subparagraph is added to reflect the Department's authority to require an applicant or recipient to submit to an independent examination as a condition of receiving assistance if the individual is exempt from the RESET Program. See 62 P. S. § 405.1(a.3)(1).

   9.  Section 165.21(c)(2)--(4).  The exemptions previously found in these paragraphs are deleted because their content contained exemption criteria which have been altered by State law. Therefore, persons 60 years of age or older, persons incapacitated due to drug or alcohol dependency and persons needed in the home because of the illness or incapacity of another household member are no longer automatically exempt from participation in RESET. However, those persons have the opportunity in accordance with § 165.52 (relating to good cause) to establish good cause for not meeting a work requirement. See 62 P. S. § 405.1(a.3)(1)--(3).

   10.  Section 165.21(c)(5).  This paragraph is renumbered (2) and revised to provide an exemption for a parent or other caretaker who is personally providing care for a child under 6 years of age for whom alternate child care arrangements are not available. See 62 P. S. § 405.1(a.3)(2).

   11.  Sections 165.21(c)(6) and (7).  The exemptions described in these paragraphs are deleted because State law has changed the exemption criteria for the RESET Program. Therefore, parents or other caretakers personally providing care for a child 3 years of age or older and 5 years of age or younger unless appropriate child care is guaranteed and persons working at least 30 hours per week are no longer exempt from participation in the RESET Program for these reasons. See 62 P. S. § 405.1(a.3).

   12.  Section 165.21(c)(8).  This paragraph is renumbered (3) and is revised to provide an exemption from participation in the RESET Program for a child under age 18. If the child is of school age, he must be pursuing education leading to a high school diploma or certificate of high school equivalency. See 62 P. S. § 405.1(a.3)(3).

   13.  Section 165.21(c)(9).  The exemption described in this paragraph is deleted because State law has changed the exemption criteria for the RESET Program. Therefore, a pregnant woman is no longer exempt from participation in RESET unless it can be appropriately documented that her pregnancy incapacitates her to the extent that she is precluded from any form of employment. This paragraph is also renumbered (4) and provides a new exemption for a custodial parent in a one-parent household who is caring for a child who has not attained 12 months of age. This exemption is limited to a maximum of 12 months in the parent's lifetime. See 62 P. S. § 405.1(a.3)(1); 42 U.S.C.A. § 607(b)(5).

   14.  Sections 165.21(c)(10) and (11).  The exemptions described in these paragraphs are deleted because State law has changed the exemption criteria for the RESET Program. Therefore, persons serving full-time in the Volunteers In Service To America (VISTA) Program and persons residing more than 2 hours round trip from a RESET site are no longer exempt from participation in RESET. See 62 P. S. § 405.1(a.3)(1).

   15.  Section 165.21(d).  This subsection is deleted because State law has changed the participation requirements for the RESET Program. Therefore, the provision requiring a custodial parent between 16 and 20 years of age to participate in the RESET Program is no longer applicable and is being removed. See 62 P. S. § 405.1(a.3)(1) and (2).

   16.  Section 165.22(a) (relating to verification of exemption).  This subsection is added to provide that cooperation requirements for providing information about and verification of exempt status apply to applicants as well as to recipients and that the CAO will help to obtain verification of an exemption when needed. See 62 P. S. § 405.1(a.3).

   17.  Section 165.22(a)(1).  This paragraph is added to specify that the Department may require an applicant or recipient claiming an exemption from work requirements based on a physical or mental disability to submit to an independent examination as a condition of receiving assistance if exempt under the RESET Program. See 62 P. S. § 405.1 (a.3).

   18.  Section 165.22(a)(2).  This paragraph is added to require an applicant or recipient with a verified physical or mental disability which temporarily precludes any form of employment to pursue appropriate treatment to restore or improve the individual's ability to work as a condition of receiving assistance if exempt under the RESET Program. See 62 P. S. § 405.1(a.3)(1).

   19.  Section 165.22(b).  This subsection is added to clarify how an exemption from RESET can be verified and the consequences of failure to verify the basis for an exemption. See 62 P. S. § 405.1(a.3)(1).

   20.  Section 165.25 (relating to enrollment after an exemption).  This section is added to clarify how quickly a person who was formerly exempt from the RESET Program is required to participate in work or a work-related activity when the exemption ends. See 62 P. S. § 405.1(a.4).

   21.  Section 165.25(1)(i) and (ii).  This section added to provide that an individual who is exempt from participation in the RESET Program due to a physical or mental disability is required to participate immediately if the condition ceases within the first 22 months that the person receives cash assistance or within 8 weeks if the condition ceases after the person has received cash assistance for 22 months or more, as required by State law. See 62 P. S. § 405.1(a.4)(1)(i) and (ii).

   22.  Section 165.25(2).  This paragraph is added to specify that a person who is exempt from participation in the RESET Program due to providing care for a child under age 6 is required to participate as soon as alternate child care arrangements become available or when the child reaches age 6, whichever occurs first, as required by State law. See 62 P. S. § 405.1(a.4)(2).

   23.  Section 165.25(3)(i)--(iii).  This paragraph and subparagraphs are added to specify that an individual who is under 18 years of age is required to participate in the RESET Program upon reaching 18 years of age, attaining a high school diploma or a certificate of high school equivalency or ceasing to pursue a high school diploma or a certificate of high school equivalency. Paragraph (3)(i) further defines that a client who reaches age 18 may continue to pursue a high school or equivalency program after age 18 as a work-related activity during the first 24 months of receipt of cash assistance. Additionally, if under age 22, the individual may have good cause for not meeting the 20-hour work requirement after 24 months while working to complete a high school or equivalency program for at least 20 hours per week. See 62 P. S. § 405.1(a.4)(3).

   24.  Section 165.25(4)(i)--(iii).  This paragraph and subparagraphs are added to specify that a custodial parent in a one-parent household who is exempt from participation in the RESET Program due to caring for a child under 12 months of age is required to participate when the child reaches 12 months of age, when the custodial parent has claimed the exemption for the maximum 12-month period in the parent's life-time, or if the custodial parent chooses not to claim this exemption. See 42 U.S.C.A. § 607(b)(5).

   25.  Section 165.31(a) (relating to RESET participation requirements).  The provisions previously found in this subsection relating to voluntary participation by persons who are exempt have been deleted, except the provision that exempt individuals may volunteer to participate in RESET is relocated to subsection (h). See 62 P. S. § 405.1(a.1).

   26.  Section 165.31(b).  The provisions previously found in this subsection relating to voluntary participation by persons who are nonexempt are revised and relocated to subsection (g).

   27.  Section 165.31(c).  The previous content of this subsection which concerned priority of educational activities for custodial parents is deleted. This subsection, now (b) contains RESET participation requirements that apply to all nonexempt individuals. Among other requirements, those individuals are required to seek and accept any bona fide offer of employment and maximize and maintain employment as a condition of eligibility or continuing eligibility for cash assistance. See 62 P. S. §§ 405.1 (a.2), 405.4 and 432.3.

   28.  Section 165.31(d).  The provisions previously found in this subsection relating to the EDP are revised and relocated to subsection (e). The requirements that apply in the first 24 months that a nonexempt individual is receiving cash assistance are added. These requirements are in addition to those in subsection (b). See 62 P. S. § 405.1(a.2)(2)

   29.  Section 165.31(c)(1).  This paragraph is added to specify that the initial work-related activity is an initial job search of up to 8 weeks, except for those 18 years of age or older but under 22 years of age who are pursuing a high school diploma or its equivalent. See 62 P. S. § 405.1(a.2)(3).

   30.  Section 165.31(c)(1)(i).  This subparagraph is added to clarify that for applicants, the initial job search is required upon authorization of cash assistance. See 62 P. S. § 405.1(a.2)(3).

   31.  Section 165.31(c)(1)(iii).  This subparagraph is added to clarify that individuals must document job search efforts and present that documentation to the CAO upon request. Failure to comply with the requirements of this section, without good cause, shall result in sanctions under § 165.61 (relating to sanctions). See 62 P. S. §§ 405.1(a.2)(3) and 432.3.

   32.  Section 165.31(c)(2)(i)--(xi).  This paragraph and subparagraphs are added to list the activities which, after the initial job search, a recipient may participate in to fulfill the work-related activity requirement, if approved, during the first 24 months, whether consecutive or interrupted, that a recipient receives cash assistance. According to State law, the activities are subsidized employment, work experience, on-the-job training, community service, workfare, vocational education, general education, English-as-a-second-language, job skills training, job search and job readiness/ preparation activities subject to the limits found in subsection (c)(3) and (4). See 62 P. S. §§ 402, 405.1(a.2)(5) and 405.3.

   33.  Section 165.31(c)(3).  This paragraph is added to specify that participation in approved vocational education, general education, English-as-a-second-language and job skills meets the work-related activity requirement for a maximum of 12 months, whether consecutive or interrupted, during the first 24 months that an individual receives cash assistance. See 62 P. S. § 405.1(a.2)(5).

   34.  Section 165.31(c)(4).  This paragraph is added to permit recipients who are 18 years of age or older but under 22 years of age who do not have a high school diploma or its equivalent to fulfill the work-related activity requirement by pursuing a high school diploma or its equivalent. Se 62 P. S. § 405.1(a.2)(5).

   35.  Section 165.31(d)(1)--(6).  These provisions are added to list the approvable work activities in which nonexempt recipients, after receiving cash assistance for 24 months, whether or not the months are consecutive or interrupted, must participate to fulfill the work requirement. Participating in an available work activity for an average of at least 20 hours per week in any one or a combination of the following activities is required by State law: unsubsidized employment, subsidized employment, work experience, community service, on-the-job training or workfare. Willful failure to comply with this section shall result in the imposition of sanctions under § 165.61 unless good cause for noncompliance is established. See 62 P. S. §§ 405.1 (a.2)(6), 405.3 and 432.3.

   36.  Section 165.31(d).  The provisions, previously found in this subsection, relating to the self-initiated education and training are relocated to subsection (f). The requirements that apply to nonexempt individuals who have received cash assistance benefits for more than 24 months are added. See 62 P. S. § 405.1(a.2)(6).

   37.  Section 165.31(e).  The provisions of this subsection are relocated from subsection (d) and revised to refer to the AMR which has replaced the EDP used in the AFDC Program. Final approval of the work, training and education activities listed on the AMR rests with the Department. The AMR is not considered a contract.

   38.  Section 165.31(f).  The provisions of this subsection are relocated from subsection (e) and revised to delete the reference to EDP and replace it with a reference to the AMR. See 62 P. S. § 405.3.

   39.  Section 165.31(f)(4).  This paragraph is added to specify that after 12 months of participation in any self-initiated education or training activity as specified in subsection (f), nonexempt individuals must also fulfill the work-related activity requirements as specified in subsections (a) and (b) during the first 24 months of receiving cash assistance. See 62 P. S.§ 405.1(a.2)(5).

   40.  Section 165.31(f)(5).  This paragraph is added to specify that after receiving cash assistance for 24 months, individuals participating in self-initiated activities as specified in subsection (f) must also fulfill the work requirements as specified in subsection (d). See 62 P. S. § 405.1(a.2)(6).

   41.  Section 165.31(g).  This provision relating to voluntary participation has been relocated from subsection (a). This subsection also provides that exempt volunteers are not required to conduct an initial job search before enrolling in RESET. The rest of the provision is deleted. See 62 P. S. § 405.1(a.4)(3)(b).

   42.  Sections 165.51(a)--(c).  Subsections (a) and (b) are revised and subsection (c) is added. These subsections clarify that information indicating noncompliance will result in a partial review of eligibility that focuses on compliance with work requirements. This review is renamed ''Compliance Review.'' In a compliance review, a recipient who apparently is not complying with work or work-related requirements has an opportunity to establish that the recipient has been compliant, or if noncompliant, that the noncompliance was not willful and without good cause. Although this represents changes to the process formerly called ''conciliation,'' by defining its primary purpose and procedure as a determination of facts surrounding an recipient's apparent noncompliance, this change is entirely consistent with TANF and Act 35. In fact, the former regulation is directly at odds with TANF and Act 35, which require imposition of a penalty for willful failure to comply with work/work-related requirements unless the recipient is exempt or establishes good cause for noncompliance.

   As revised, the compliance review is designed to ensure that a sanction is not imposed unless the recipient has willfully, and without good cause, failed to comply with work/work-related requirements. The compliance review may be conducted in person or by telephone, according to the recipient's preference. If a sanction is not imposed, the caseworker will develop a new AMR with the recipient, if necessary, and review program requirements. The Department implemented this change in policy in the March 1, 1997, NORC. Therefore, the revised section reflects the Department's policy and practice since that time. These subsections are also revised to delete the reference to the EDP and replace it with reference to the AMR. See 62 P. S. §§ 405.1, 405.2, 405.3 and 432.3.

   43.  Section 165.61(a) (relating to sanctions).  This subsection is revised to add that the willful failure of a nonexempt recipient to cooperate, without good cause, in fulfilling the work or work-related activity requirements specified in the AMR or statutory work or work-related requirements even when those requirements are not specified in the AMR, will result in a sanction. This subsection incorporates the requirements found in 62 P. S. §§ 405.1, 405.3 and 432.3.

   44.  Section 165.61(b).  The requirements previously found in this subsection have been redesignated as subsection (e), relating to the caretaker continuing to receive benefits when the only TANF child in the budget group is under sanction. This subsection now contains the periods of sanction for failure to cooperate with the requirements of the RESET Program, as required by State law. For the first occurrence, the sanction is 30 days or until the recipient is willing to comply, whichever is longer. For the second occurrence, the sanction is 60 days or until the recipient is willing to comply, whichever is longer. For the third occurrence, the sanction is permanent. See 62 P. S. § 432.3(a)(1) and (2); 42 U.S.C.A. § 607(e)(1).

   45.  Section 165.61(c)(1) and (2).  The provision that both parents would be sanctioned if one parent fails to enroll in or participate in the RESET Program is deleted because State law has changed the sanction requirements. Paragraphs are added to specify the applicability of sanctions as required by State law. During the first 24 months that assistance is received, the sanction is imposed only on the person who fails to comply. After 24 months, the sanction is imposed on the entire budget group. See 62 P. S. § 432.3(a)(1) and (2) and (b); 42 U.S.C.A. § 607(e)(1).

   46.  Sections 165.61(d).  The requirements previously found in this subsection have been redesignated as subsection (b), relating to sanction periods. This subsection now contains the provision that, in lieu of the durational sanctions listed in subsection (b) and subsection (c)(1) and (2), the grant of a budget group will be reduced if an employed member of the budget group voluntarily and without good cause reduces his earnings during the first 24 months that assistance is received by not working an average of at least 20-hours-per-week. The reduction will be the dollar value of the income that would have been earned if the recipient had not voluntarily reduced the hours of employment to less than an average of 20 hours per week. The reduction continues until the minimum 20-hour-per-week work requirement is met. See 62 P. S. § 432.3(a)(1) and (2) and (b).

   47.  Section 165.61(e).  The requirements previously found in this subsection have been redesignated as subsection (f), relating to protective payee payments. Regulations are added regarding the caretaker continuing to receive benefits when the only TANF child in the budget group is under sanction. See 62 P. S. § 432.3(a)(2).

   48.  Section 165.61(f).  The provisions of this subsection are relocated from subsection (e) and revised to clarify that if an individual under sanction during the first 24 months of cash assistance is a parent or other caretaker, protective payments for the remaining budget group members will be made to the caretaker under sanction.

   49.  Section 165.71(b).  This subsection is revised to delete the 3-month time frame for sending a reminder letter to an individual under sanction as the Department now provides that clients receive notification prior to the end of the minimum durational sanction period.

   G.  The following revisions relating to resources are being made to Chapter 177 (relating to resources):

   1.  Section 177.21(a)(2) (relating to personal property).  This paragraph is revised to specify that the full value of one automobile per TANF or GA budget group is excluded as a resource. The equity value of all other vehicles is counted and applied toward the resource limit applicable to the budget group. See 62 P. S. § 432.5(c)(4).

   2.  Section 177.21(a)(11).  A phrase is added to this paragraph to specify that funds withdrawn from education savings accounts shall be used to pay for education expenses.

   Note:  That the NORC, published at 27 Pa.B. 1092, announced that education savings accounts would be exempt as individual development accounts (IDAs) under TANF as long as contributions were from earned income only. In these regulations, education savings accounts are exempt if they meet the requirements of State law, see 62 P. S. § 408.2(a), which does not require that the contributions to the account come from earned income. After careful analysis of the option to exempt IDAs permitted under the PRWORA, the Department has decided not to implement this option. The requirements for implementation as specified in section 404(h) of the PRWORA are complex, restrictive and not beneficial to clients.

   3.  Section 177.21(a)(11)(iii).  This subparagraph is revised to clarify that only moneys withdrawn to pay for educational expenses are exempt. See 62 P. S. § 408.2.

   4.  Section 177.21(a)(13).  This paragraph is added to specify that student financial assistance in the form of loans, grants and scholarships is excluded as a resource.

   5.  Section 177.21(a)(14).  This paragraph is added to specify that the face and cash value of a life insurance policy is exempt from consideration as a resource.

   6.  Section 177.21(a)(15).  This paragraph is added to specify that Family Savings Accounts established under the Job Enhancement Act (73 P. S. §§ 400.2101--400.2103), are exempt from consideration as a resource. This exemption was not included in the NORC published at 27 Pa.B. 1092 and, consequently, will not be effective retroactively. It will be effective upon publication.

   7.  Section 177.22(b)(3)(ii).  This subparagraph is revised to specify that in cases where a budget group has been unable to sell nonresident property for reasons beyond their control, the 9-month time limit for disposing of property is extended for additional 9-month periods as long as the budget group is making a good-faith effort to sell the property.

   8.  Section 177.22(b)(4).  This paragraph is revised to clarify that the budget group is ineligible for cash assistance if it cannot substantiate for each 9-month exemption period that it has made or is making a good-faith effort to sell the nonresident real property.

   9.  Section 177.24(1)(ii), (A) and (B).  This subparagraph and clauses are deleted because they relate to life insurance which is now excluded as a resource.

   H.  The following revisions relating to the treatment of earned and unearned income are being made to Chapter 183 (relating to income):

   1.  Section 183.23 (relating to income in-kind).  This section is deleted and reserved. Income-in-kind for services rendered is now excluded when determining eligibility and payment amount. See 62 P. S. § 401(a).

   2.  Section 183.38 (relating to educational assistance).  This section is revised to clarify that Federally-funded student financial assistance, including college work-study income, is excluded as income. This section is also revised to clarify that all other student financial assistance provided for educational expenses in the form of loans, grants and scholarships is excluded as income unless the assistance is provided solely to meet basic living needs. See 62 P. S. § 401(a).

   3.  Section 183.71 (relating to gross income test).  This section is revised to specify that the income of a recipient will no longer be subject to the gross income eligibility limit (185% test). This test applies to applicants only.

   4.  Section 183.81(3)(i).  The provisions of this subparagraph are deleted and replaced by the provision that Federally-funded student financial assistance, including college work-study income, is excluded as income. All other student financial assistance provided for educational expenses in the form of loans, grants or scholarships is excluded as income unless the assistance is provided solely to meet basic living needs.

   5.  Sections 183.81(3)(iii) and (iv). These subparagraphs are deleted as unnecessary and duplicative.

   6.  Section 183.81(29).  The support pass-through disregard as codified in § 183.81(29) is reinstated as amended by Act 58. Former section 432.7(g) of the code specified that the Department continue payment of support pass-through payments to cash assistance recipients as required by Federal law. There was no Departmental regulation that required payment of the support pass-through. Section 183.81(29) required the Department to disregard receipt of up to the first $50 per budget month of current court-ordered or voluntary support. The PRWORA, enacted on August 22, 1996, eliminated the Federal requirement to pay the support pass-through. As a result, the Department announced its intention to discontinue payment of the support pass-through with publication of a NORC, which was effective March 3, 1997. See 27 Pa.B. 1092. At that time, the Department announced it would delete § 183.81(29) as well. On April 1, 1997, a lawsuit, Success Against All Odds, et al. v. Department of Public Welfare, 700 A.2d 1340 (Pa. Cmlth. 1997), was filed in Commonwealth Court challenging the Department's cessation of the support pass-through. Effective May 1, 1997, the Commonwealth Court ordered the Department to reinstate the support pass-through payment and income disregard pending a determination on the merits. On August 20, 1997, Commonwealth Court ruled that the Department was acting within its statutory mandate when it discontinued support pass-through payments. Plaintiffs appealed to the Pennsylvania Supreme Court. Pass-through payments were then discontinued effective November 1, 1997. On November 13, 1997, the Pennsylvania Supreme Court entered an order, staying the August 20, 1997, Commonwealth Court Order, requiring the Department to resume support pass-through payments and the income disregard pending further order of that Court. Success Against All Odds et al. v. DPW, No. 122 M.D. Appeal Dkt. 1997. Effective December 1, 1997, support pass-through payments were again issued to cash assistance recipients and the income was disregarded for eligibility purposes.

   Act 58, enacted on December 16, 1997, added 23 Pa.C.S. § 4374(c)(1)(ii) (relating to State disbursement unit) to require the Department to first, pay to the Federal government the Federal share of current support collected, and then, from the amount remaining, pass through to the budget group the first $50 per month of current support collected without decreasing the amount of cash assistance.

   Effective January 1, 1998, Act 58 also repealed section 432.7(g) of the code (62 P. S. § 432.7(g)), the statutory provision upon which the litigation was founded. However, the pass-through requirement under Act 58 was temporarily suspended because of the stay entered by the Pennsylvania Supreme Court on November 13, 1997. On May 20, 1998, the Pennsylvania Supreme Court affirmed Commonwealth Court's ruling of August 20, 1997, thereby ending the stay.

   The Department implemented the new Support Pass-Through Program mandated by Act 58 on October 1, 1998.

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