Proposed Rule2026-06632
Work Participation Rate Calculation Changes: Recalibration of the Caseload Reduction Credit and Prohibition of Small Checks in Work Participation Rate Calculation
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 6, 2026
Issuing agencies
Health and Human Services DepartmentChildren and Families Administration
Abstract
ACF proposes to make changes to the Temporary Assistance for Needy Families (TANF) program regulations to reset the base year of the caseload reduction credit from fiscal year (FY) 2005 to the new year established by Congress, which is currently FY 2015, and to exclude from the TANF work participation rate calculations certain cases that receive assistance payments benefits of less than $35 for a month. These changes are required by the Fiscal Responsibility Act (FRA) of 2023. The docket on https://www.regulations.gov will include a plain language summary of the NPRM as required by 5 U.S.C. 553(b)(4).
Full Text
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<title>Federal Register, Volume 91 Issue 65 (Monday, April 6, 2026)</title>
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[Federal Register Volume 91, Number 65 (Monday, April 6, 2026)]
[Proposed Rules]
[Pages 17230-17235]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-06632]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
45 CFR Part 261
RIN 0970-AD07
Work Participation Rate Calculation Changes: Recalibration of the
Caseload Reduction Credit and Prohibition of Small Checks in Work
Participation Rate Calculation
AGENCY: Office of Family Assistance (OFA), Administration for Children
and Families (ACF), Department of Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: ACF proposes to make changes to the Temporary Assistance for
Needy Families (TANF) program regulations to reset the base year of the
caseload reduction credit from fiscal year (FY) 2005 to the new year
established by Congress, which is currently FY 2015, and to exclude
from the TANF work participation rate calculations certain cases that
receive assistance payments benefits of less than $35 for a month.
These changes are required by the Fiscal Responsibility Act (FRA) of
2023. The docket on <a href="https://www.regulations.gov">https://www.regulations.gov</a> will include a plain
language summary of
[[Page 17231]]
the NPRM as required by 5 U.S.C. 553(b)(4).
DATES: Comments must be received by May 6, 2026.
ADDRESSES: ACF encourages the public to submit comments electronically
to ensure they are received in a timely manner. You may submit
comments, identified by docket number ACF-2026-0265 or Regulatory
Information Number (RIN) 0970-AD07, by any of the following methods:
<bullet> Federal eRulemaking Portal: <a href="http://www.regulations.gov">http://www.regulations.gov</a>.
Follow the instructions for submitting comments.
<bullet> Email comments to: <a href="/cdn-cgi/l/email-protection#4511040b0334302036312c2a2b36052426236b2d2d366b222a33"><span class="__cf_email__" data-cfemail="7420353a3205011107001d1b1a07341517125a1c1c075a131b02">[email protected]</span></a>.
<bullet> Instructions: All submissions received must include the
agency name and docket number (ACF-2026-0265) or RIN 0970-AD07 for this
rulemaking. All comments received will be posted without change to
<a href="https://www.regulations.gov">https://www.regulations.gov</a>, including any personal information
provided. For further information concerning submitting comments, see
``Comments Invited'' in the SUPPLEMENTARY INFORMATION section of this
document.
FOR FURTHER INFORMATION CONTACT: Deborah List, Office of Family
Assistance, ACF, at <a href="/cdn-cgi/l/email-protection#560217181027233325223f39382516373530783e3e2578313920"><span class="__cf_email__" data-cfemail="683c29262e191d0d1b1c0107061b28090b0e4600001b460f071e">[email protected]</span></a> or 202-401-9275. Deaf and
hard of hearing individuals may call 202-401-9275 through their chosen
relay service or 711 between 8 a.m. and 7 p.m. Eastern Time.
SUPPLEMENTARY INFORMATION:
Summary
In response to statutory changes in the Fiscal Responsibility Act
of 2023 (FRA), ACF is proposing to amend the Temporary Assistance for
Needy Families (TANF) program regulations to make changes to the
caseload reduction credit and work participation rate calculations.
More specifically, the FRA resets the base year for the caseload
reduction credit that is part of TANF's work participation rate
calculations from FY 2005 to FY 2015, effective October 1, 2025.
Second, the FRA requires HHS to exclude from the TANF work
participation rate calculations cases that receive assistance payments
benefits of less than $35 for a month funded with separate state
program (SSP) funds. This statutory provision also takes effect October
1, 2025.
Background
The Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 created the TANF program, repealing the Aid to Families with
Dependent Children program and related programs. The TANF program
provides a fixed block grant of about $16.5 billion annually to states,
certain territories (Guam, the Virgin Islands, and Puerto Rico), and
the District of Columbia (hereafter ``states''). Additionally,
federally recognized American Indian tribes and Alaska Native
organizations may elect to operate their own TANF programs.
The regulatory changes proposed in this rulemaking are applicable
to the TANF programs of states. Tribal TANF programs are not impacted
by these proposed changes.
States use federal TANF funds to provide cash assistance to low-
income families, as well as to provide a wide range of services (e.g.,
work-related activities, child care, and refundable tax credits)
designed to accomplish the program's four broad purposes. These
statutory purposes are to:
1. Provide assistance to needy families so that children can be cared
for in their own homes or in the homes of relatives
2. End the dependence of needy parents on government benefits by
promoting job preparation, work, and marriage
3. Prevent and reduce the incidence of out-of-wedlock pregnancies
4. Encourage the formation and maintenance of two-parent families
The statute provides some eligibility requirements for families
that receive TANF benefits, such as that the benefits can only go to US
citizens and certain qualified aliens, that cash assistance in which an
adult receives federally funded assistance generally has a five-year
time limit, and that families receiving federal cash assistance must
assign their child support rights to the state. However, states have
flexibility to set economic and other eligibility requirements for
their cash assistance and other TANF-funded benefits and services.
In order to receive their full federal block grant, states must
meet a maintenance-of-effort (MOE) requirement, which means that,
consistent with Subpart A of 45 CFR 263, they must expend state funds
on ``eligible families'' for benefits and services related to TANF
purposes in amounts based on historical spending in TANF's predecessor
programs. States may spend their MOE funds in three different ways:
<bullet> Commingled with federal funds and expended in the state's
TANF program. These expenditures are subject to federal funding
restrictions, all TANF requirements, and MOE limitations.
<bullet> Segregated from federal funds but spent in the state's
TANF program. These expenditures are subject to many TANF requirements,
but not all.
<bullet> Separate State Programs (SSPs) are operated outside of the
state's TANF program. These expenditures are somewhat more flexible,
although they must be consistent with the goals of the TANF statute and
other MOE requirements. Families receiving assistance through SSPs are
not subject to federal requirements regarding child support assignment,
the federal five-year time limit, and various other federal rules.
However, the Deficit Reduction Act of 2005 (DRA) that reauthorized the
TANF program extended work participation requirements to SSP families
with a work-eligible individual, beginning in FY 2007.
The TANF statute at 42 U.S.C. 607 requires HHS to calculate and
issue TANF work participation rates for states. Work participation
rates measure the degree to which a state engages families with a work-
eligible individual receiving assistance in work activities specified
under federal law. Each state must meet both an overall (or ``all
families'') work participation rate and a separate two-parent work
participation rate or face a potential financial penalty to their
annual TANF block grant imposed by HHS. The statutorily required work
participation rate performance levels are a rate of 50 percent for
``all families'' and a rate of 90 percent for two-parent families;
however, states may receive credits for reducing their caseload of
families receiving assistance, and these credits can be applied to a
state's target for each of the statutory rates.
A state's caseload reduction credit for a fiscal year equals the
percentage point decline in its average monthly caseload of families
receiving assistance between the previous fiscal year and a base fiscal
year established by Congress. For a caseload reduction credit toward
the two-parent work participation rate, the state has the option of
using its overall caseload reduction credit or a separate one
calculated using the decline in its two-parent caseload. In calculating
the caseload reduction credit, HHS excludes any caseload reduction
resulting from changes in state or federal eligibility requirements
since the base year established by Congress. In addition, TANF
regulations allow a state that is investing state MOE funds in excess
of the required basic MOE amount to only include the pro rata share of
caseloads receiving assistance that is required to meet basic MOE
requirements. In other words, it may exclude from its comparison-year
caseload the share of cases funded with ``excess MOE'' in
[[Page 17232]]
order to reward states for spending their own funds on benefits and
services to eligible families beyond what is required.
We also note that some states provide assistance to low-income
families through solely state-funded (SSF) programs, which are not
funded by either TANF or MOE funds. Families that receive assistance
from SSF programs are not subject to any TANF requirements, including
federal work participation requirements. Many states serve all two-
parent families that apply for assistance through a SSF program so that
they do not have to achieve the 90 percent WPR target for those
families, which many states find difficult to meet even after
reductions from the caseload reduction credit and ``excess MOE.''
The FRA changes the base year for the caseload reduction credit
calculation and institutes a new requirement for HHS to exclude from
the TANF work participation rate calculations cases that receive
assistance payments benefits of less than $35 for a month funded with
SSP funds.
Statutory Authority
We publish this notice of proposed rulemaking (NPRM) under the
authority granted to the Secretary of Health and Human Services by 42
U.S.C. 607(b)(3)(A) and (i)(1)(A). This proposed rule implements
sections 301 and 303 of the FRA. Section 301 recalibrates the caseload
reduction base year and the Secretary has authority to prescribe
regulations implementing the caseload reduction credit. See 42 U.S.C.
607(b)(3)(A) (providing that the Secretary shall prescribe regulations
for reducing the minimum participation rate by the caseload reduction
credit). Section 303 of the FRA requires HHS to exclude from the TANF
work participation rate calculations certain cases that receive monthly
benefits of less than $35. The Secretary has authority to prescribe
regulations governing the work participation rate. See 42 U.S.C.
607(i)(A)(1) (providing that the Secretary promulgate regulations for
determining whether activities may be counted as work activities, how
to count and verify reported hours of work, and determine who is a
work-eligible individual).
Note that here and below we use the term ``we'' in the regulatory
text and preamble. The term ``we'' is synonymous with the Secretary of
the Department of Health and Human Services or any of the following
individuals or agencies acting on his behalf: the Assistant Secretary
for Children and Families, the Department of Health and Human Services
(HHS), and the Administration for Children and Families.
Section-by-Section Discussion of the Proposed Regulatory Provisions
1. Recalibration of the Caseload Reduction Credit
As required by section 301 of the FRA, we propose to change the
base year for purposes of calculating a state's caseload reduction
credit from FY 2005 to the year that has been established by Congress,
which as of October 1, 2025, is FY 2015. As described above, the
statutory requirement for work participation rates for states are 50
percent for all families (the overall rate) and 90 percent for two-
parent families. However, a state's work participation rate targets
equal the statutory rates minus a credit for reducing its caseload. A
state's caseload reduction credit for a fiscal year equals the
percentage point decline in its average monthly caseload between the
previous fiscal year (the comparison year) and a base year established
by Congress, net of caseload declines due to changes in eligibility
criteria. This means that we exclude the impact of eligibility changes
made after the base year from the credit calculation.
2. Elimination of the Small Checks Scheme
Section 303 of the FRA requires HHS to exclude from the TANF work
participation rate calculations certain cases that receive monthly
benefits of less than $35. Specifically, the law provides that we must
determine work participation rates ``without regard to any individual
engaged in work in a family that receives no assistance under this part
and less than $35 in assistance funded with qualified State
expenditures (as defined in section 409(a)(7)(B)(i) [of the Social
Security Act]).'' We interpret this wording to mean that we must
exclude from both the numerator and denominator of the work
participation rate calculation a family receiving a benefit of less
than $35 for the month only if it is funded with SSP funds. We come to
this conclusion by considering the two types of funding described in
the provision, ``assistance under this part'' and ``qualified State
expenditures.''
There is a longstanding interpretation of the phrase ``under this
part'' to mean the TANF program, which includes benefits funded with
federal funds and with segregated state MOE, i.e., MOE claimed under
the TANF program, as well as comingled funds. The preamble discussion
of the original TANF final rule made this clear: ``Requirements in the
statute that use the terms `under the program,' `under the program
funded under this part,' and `under the State program funded under this
part' apply to the State's TANF program, regardless of the funding
source. That is, they apply to segregated Federal programs, commingled
State/Federal programs, and segregated State programs.'' (64 FR 17816,
April 12, 1999)
``Qualified state expenditures'' are the state funds expended
during a fiscal year that count for MOE purposes. We refer to them as
broadly as MOE spending. As discussed above, state expenditures can be
part of the TANF program in the form of segregated MOE expenditures or
commingled with federal funds, or they can be expended in a SSP,
meaning a program operated outside of TANF in which the expenditures of
state funds count for MOE purposes. We have already discussed the fact
that the term ``under this part'' covers segregated MOE and commingled
funds, therefore the only form of qualified state expenditures not
covered by that term is SSP.
Thus, under section 303 of the FRA, we must exclude from the work
participation rate calculation a family that receives no assistance
funded with TANF--be it from federal, commingled, or segregated MOE
funds--and receives less than $35 funded with SSP for a month. Since
the work participation rate only includes families receiving
assistance, the calculation already excludes families receiving no
assistance funded with TANF (unless they receive assistance from SSP
funds). That means that the only families the new provision excludes
are ones receiving less than $35 in SSP for the month.
The ``small checks scheme'' noted in the title of Section 303
refers to a strategy some states have used to help meet their work
participation rate targets. In this strategy, states provide a very low
(around $10) monthly benefit of SSP-funded assistance to families where
a work-eligible individual is working full-time in unsubsidized
employment. Because of that monthly benefit, the state includes them in
the work participation rate calculations. This strategy allows a state
to count individuals already in the workforce toward its WPR target,
even if they were not previously part of the TANF caseload, thus
inflating a state's official work numbers without effectively helping
families move toward self-sufficiency.
After October 1, 2025, when Section 303 goes into effect, states
using this strategy will have to revise their assistance payment
structures or will no
[[Page 17233]]
longer be able to count the families receiving these ``small checks''
for work participation rate purposes. Depending on the individual state
characteristics and choices, there may be an interaction between how
the state response to the provisions of Section 303 and the impact of
Section 301 on the state's work participation target. For example, if a
state had the ``small checks'' program prior to FY 2016, and chooses to
eliminate it in FY 2026, the elimination would be considered an
eligibility change and the state would not receive credit for that
caseload decline. If the state created the ``small checks'' program
after FY 2015, these cases would not be in the base year caseload but
likely would have increased the caseload over time. If the state
chooses to raise the ``small checks'' payment to $35, there would be no
adjustment to caseloads as only the amount of the payment changed, not
eligibility.
We propose to implement the requirement of Section 303 of the FRA
by adding a provision to the regulatory sections that describe the
overall and two-parent work participation rate calculations. The
proposed additional paragraph would make clear that cases receiving
less than $35 in assistance funded exclusively with SSP funds would not
be included in the applicable rate calculation for the month.
Severability
The provisions of this proposed rule are intended to be severable,
such that, in the event a court were to invalidate any particular
provision or deem it to be unenforceable, HHS intends for all other
parts of the final rule that are capable of operating in the absence of
the specific portion that has been invalidated to remain in effect.
None of the provisions in the final rule contained herein are central
to an overall intent of the final rule, nor are any provisions
dependent on the validity of other, separate provisions. For example,
OFA expects that if a court were to invalidate the elimination of the
small checks scheme, the recalibration of the caseload reduction credit
may continue to operate and should remain operative independently of
the invalidated subpart.
Regulatory Impact Analysis
Introduction
We have examined the impacts of this proposed rule under Executive
Order 12866, Executive Order 13563, Executive Order 14192, the
Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4).
Executive Orders 12866 and 13563 direct us to assess all benefits
and costs of available regulatory alternatives and, when regulation is
necessary, to select regulatory approaches that maximize net benefits.
This rule was determined to be significant under Section 3(f) of
Executive Order 12866. Rules determined to be significant under Section
3(f) of Executive Order 12866 are subject to review by the Office of
Management and Budget (OMB). This proposed rule, if finalized as
proposed, is not expected to be a regulatory action under Executive
Order 14192 because it results in income transfers and does not impose
any more than de minimis regulatory costs.
The Unfunded Mandates Reform Act of 1995 (UMRA) generally requires
that each agency conduct a cost-benefit analysis; identify and consider
a reasonable number of regulatory alternatives; and select the least
costly, most cost-effective, or least burdensome alternative that
achieves the objectives of the rule before promulgating any proposed or
final rule that includes a Federal mandate that may result in
expenditures of more than $100 million (adjusted for inflation) in at
least one year by State, local, and tribal governments, in the
aggregate, or by the private sector. Each agency issuing a rule with
relevant effects over that threshold must also seek input from State,
local, and tribal governments. The current threshold after adjustment
for inflation using the Implicit Price Deflator for the Gross Domestic
Product is $187 million, reported in 2024 dollars. The proposed rule
would not result in an unfunded mandate in any year that meets or
exceeds this amount.
Statement of Need
This NPRM would fulfill requirements of statutory provisions in the
Fiscal Responsibility Act of 2023.
Summary of Impacts
In a previous analysis of the federal fiscal impacts of policies
addressed in this proposed rule, the Congressional Budget Office (CBO)
reported the following:
``Title I of division C would set the benchmark year for the
caseload reduction to 2015 (rather than 2005) and would prevent people
who receive less than $35 in state funding within a period determined
by the Secretary of HHS from being included in a state's accounting for
the work requirement. CBO estimates that HHS would reduce state grants
slightly because some states would not meet the work requirement and
would not comply with a corrective plan, and HHS would not approve
their reason for not meeting the standard.
CBO estimates that the resulting reduction in block grants would
reduce direct spending by $5 million over the 2023-2033 period.'' \1\
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\1\ <a href="https://www.cbo.gov/system/files/2023-05/hr3746_Letter_McCarthy.pdf">https://www.cbo.gov/system/files/2023-05/hr3746_Letter_McCarthy.pdf</a>.
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The CBO cost analysis reports economic impacts over a decade that
are far below the monetary threshold for significance under section
3(f)(1) of Executive Order 12866. HHS estimates that the economic
impacts may be even less than CBO describes. Based on the latest data
and assumptions consistent with that data, we do not expect the
statutory changes to affect a state's ability to meet its work
participation rate target. In other words, we do not expect more states
to be subject to a financial penalty as a direct result of these
statutory changes. Further, if any state were to be subject to a
financial penalty due to failing to meet their WPR target, it may enter
corrective compliance and still avoid a penalty if the state meets the
terms of its corrective compliance plan. HHS's experience has been that
states typically comply with corrective compliance plans: of the
approximately 85 instances a penalty was assessed for the period of FY
2013 to FY 2019, fewer than 15 have resulted in a financial penalty for
the state to date.
We anticipate most states will continue to meet their work
participation rate targets even after these statutory changes take
effect. As discussed below, in response to these changes, states may
focus on better strategies for engaging WEIs in work, invest more in
each case, and/or incur costs to train staff and amend systems, but
overall, we expect the impact of implementing any of these changes to
be minimal.
The recalibration of the caseload reduction credit's base year may
raise work participation rate targets for some states because they will
receive a smaller caseload reduction credit, but most states will
likely still receive some amount of credit, as there has been a
significant decline in TANF/SSP caseloads since FY 2015, and HHS does
not have reason to expect current caseload levels to increase. Higher
work participation rate targets may encourage states to undertake
better strategies for engaging WEIs in work activities.
States do not report on the use of the ``small checks'' approach
directly, but we believe about five states currently use it to meet
their WPR target and about a dozen states have used the
[[Page 17234]]
strategy at one point. States currently relying on this strategy have
typically provided nominal payments of less than $35. They may respond
to the statutory change by increasing the amount of the ``small
checks'' (i.e., the cost-per-case) to $35. Alternatively, these states
may respond by discontinuing this practice, and instead choosing to
focus their efforts on engaging WEIs in work activities. Any of these
changes will require minimal adoption costs to train staff on the
changes and possibly amend systems.
Federal TANF Spending
There is no direct impact on Federal spending.
MOE Spending
Some states may report additional MOE expenditures to increase the
``excess MOE'' component of the caseload reduction credit formula in
order to counteract the impact of the change in base year. MOE spending
could feasibly increase or decrease in response to the elimination of
the ``small checks scheme,'' depending on whether states opt to
eliminate that portion of their caseload or increase their benefit
amounts.
Administrative Costs to States and Other Jurisdictions Administering
TANF Programs
The recalibration of the caseload reduction credit's base year will
reduce administrative costs for states, as the number of eligibility
changes that they have to account for will be reduced. Some of these
calculations are extremely complicated and require considerable staff
time. By changing the base year, states will no longer have to account
for all eligibility changes between FY 2006 and FY 2015, therefore
reducing staff time.
Analysis of Regulatory Alternatives
There are no regulatory alternatives as the FRA specifically
requires the two proposed changes.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies
to analyze the impact of rulemaking on small entities and consider
alternatives that would minimize any significant impacts on a
substantial number of small entities. For purposes of the RFA, states
and individuals are not considered small entities. As the rule directly
and primarily impacts states and indirectly impacts families, it has
been determined, and the Secretary certifies that this proposed rule
would not have a significant impact on a substantial number of small
entities.
Paperwork Reduction Act
Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq., as
amended), all Departments are required to submit to OMB for review and
approval any reporting or recordkeeping requirements inherent in a
proposed or final rule. As required by this Act, we will submit any
proposed revised data collection requirements to OMB for review and
approval.
Executive Order 13132
Executive Order 13132 requires federal agencies to consult with
state and local government officials if they develop regulatory
policies with federalism implications. Federalism is rooted in the
belief that issues that are not national in scope or significance are
most appropriately addressed by the level of government closest to the
people. While the Department has not identified this rule to have
federalism implications as defined in the Executive Order, consistent
with Executive Order 13132, the Department specifically solicits and
welcomes comments from state and local government officials on this
proposed rule.
Assessment of Federal Regulation and Policies on Families
Assessment of Federal Regulations and Policies on Families Section
654 of the Treasury and General Government Appropriations Act of 2000
requires Federal agencies to determine whether a policy or regulation
may negatively affect family well-being. If the agency determines a
policy or regulation negatively affects family well-being, then the
agency must prepare an impact assessment addressing seven criteria
specified in the law. ACF believes it is not necessary to prepare a
family policymaking assessment (see Pub. L. 105-277) because the action
it takes in this NPRM would not have any impact on the autonomy or
integrity of the family as an institution.
List of Subjects in 45 CFR Part 261
Administrative practice and procedure, Employment, Grant programs--
social programs, Public assistance programs, Reporting and record
keeping requirements.
For the reasons set forth in the preamble, we propose to amend 45
CFR subtitle B, chapter II, as follows:
PART 261--ENSURING THAT RECIPIENTS WORK
0
1. The authority citation for part 261 continues to read as follows:
Authority: 42 U.S.C. 601, 602, 607, and 609; Pub. L. 109-171.
0
2. Amend Sec. 261.22, by revising the introductory text in paragraph
(b) and adding paragraph (b)(4) to read as follows:
Sec. 261.22 How will we determine a State's overall work rate?
* * * * *
(b) Subject to paragraph (4), we determine a State's overall
participation rate for a month as follows:
* * * * *
(4) We will determine the overall work participation rate without
regard to any work-eligible individual engaged in work in a family that
receives less than $35 in assistance funded exclusively with SSP-MOE
funds.
0
3. Amend Sec. 261.24, by revising the introductory text in paragraph
(b) and adding paragraph (b)(4) to read as follows:
Sec. 261.24 How will we determine a State's two-parent work rate?
* * * * *
(b) Subject to paragraph (4), we determine a State's two-parent
participation rate for a month as follows:
* * * * *
(4) We will determine the two-parent work participation rate
without regard to any work-eligible individual engaged in work in a
two-parent family that receives less than $35 in assistance funded
exclusively with SSP-MOE funds.
0
4. Amend Sec. 261.40 by revising paragraph (a) to read as follows:
Sec. 261.40 Is there a way for a State to reduce the work
participation rates?
(a)(1) If the average monthly number of cases receiving assistance,
including assistance under a separate State program (as provided at
Sec. 261.42(b)), in a State in the preceding fiscal year was lower
than the average monthly number of cases that received assistance,
including assistance under a separate State program in that State in
the base year established by Congress, the minimum overall
participation rate the State must meet for the fiscal year (as provided
at Sec. 261.21) decreases by the number of percentage points the
prior-year caseload fell in comparison to the caseload in the base year
established by Congress.
(2) * * *
(i) The number of percentage points the prior-year two-parent
caseload, including two-parent cases receiving assistance under a
separate State program (as provided at Sec. 261.42(b)), fell in
comparison to the two-parent
[[Page 17235]]
caseload in the base year established by Congress, including two-parent
cases receiving assistance under a separate State program; or
(ii) The number of percentage points the prior-year overall
caseload, including assistance under a separate State program (as
provided at Sec. 261.42(b)), fell in comparison to the overall
caseload in the base year established by Congress, including cases
receiving assistance under a separate State program.
* * * * *
0
5. Revise paragraph (b)(1) of Sec. 261.40 to read as follows:
Sec. 261.40 Is there a way for a State to reduce the work
participation rates?
* * * * *
(b)(1) The calculations in paragraph (a) of this section must
disregard caseload reductions due to requirements of Federal law and to
changes that a State has made in its eligibility criteria in comparison
to its criteria in effect in the base year established by Congress.
* * * * *
0
6. Revise paragraph (c) of Sec. 261.40 to read as follows:
Sec. 261.40 Is there a way for a State to reduce the work
participation rates?
* * * * *
(c)(1) To establish the caseload base and to determine the
comparison-year caseload, we will use the combined TANF and separate
State program caseload figures reported on Form ACF-199, TANF Data
Report, and Form ACF-209, SSP-MOE Data Report, respectively.
(2) To qualify for a caseload reduction, a State must have reported
monthly caseload information, including cases in separate State
programs, for the base year and the comparison year for cases receiving
assistance as defined at Sec. 261.43.
* * * * *
0
7. Revise paragraphs (d)(2) and (e) of Sec. 261.40 to read as follows:
Sec. 261.40 Is there a way for a State to reduce the work
participation rates?
* * * * *
(d) * * *
(2) We will adjust both the baseline and the comparison-year
caseload information, as appropriate, based on these State submissions.
(e) We refer to the number of percentage points by which a caseload
falls, disregarding the cases described in paragraph (b) of this
section and cases described in paragraph (b) of Sec. 261.43, as a
caseload reduction credit.
0
8. Amend Sec. 261.42(a)(1) by revising the first sentence to read as
follows:
Sec. 261.42 Which reductions count in determining the caseload
reduction credit?
(a)(1) A State's caseload reduction credit must not include
caseload decreases due to Federal requirements or State changes in
eligibility rules since the base year that directly affect a family's
eligibility for assistance.
* * * * *
0
9. Revise Sec. Sec. 261.42(a)(2) and (3) to read as follows:
Sec. 261.42 Which reductions count in determining the caseload
reduction credit?
* * * * *
(a) * * *
(2) At State option, a State's caseload reduction credit may
include caseload increases due to Federal requirements or State changes
in eligibility rules since the base year if used to offset caseload
decreases in paragraph (a)(1) of this section.
(3) A State may not receive a caseload reduction credit that
exceeds the actual caseload decline between the base year and the
comparison year, other than as a result of Sec. 261.43(b).
* * * * *
0
10. Amend Sec. 261.42(b) by revising the first sentence to read as
follows:
Sec. 261.42 Which reductions count in determining the caseload
reduction credit?
(b) A State must include cases receiving assistance in separate
State programs as part of its base year caseload and comparison-year
caseload.
* * * * *
0
11. Revise Sec. 261.43(b)(2)(iv) to read as follows:
Sec. 261.43 What is the definition of a ``case receiving
assistance'' in calculating the caseload reduction credit?
* * * * *
(b) * * *
(2) * * *
(iv) All financial data must agree with data reported on the TANF
Financial Report (form ACF-196R) and all caseload data must agree with
data reported on the TANF Data and SSP-MOE Data Reports (forms ACF-199
and ACF-209).
* * * * *
Dated: April 2, 2026.
Robert F. Kennedy, Jr.,
Secretary, Department of Health and Human Services.
[FR Doc. 2026-06632 Filed 4-3-26; 8:45 am]
BILLING CODE 4184-36-P
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