Issue Briefs

House Approves Restrictions on TANF Cash Benefits

On February 1, 2012, the House approved the Welfare Integrity Now for Children and Families Act (H.R. 3567), which would require states to prevent Temporary Assistance for Needy Families (TANF) electronic benefit transfer (EBT) transactions in liquor stores, casinos, or adult-entertainment establishments. The bill would impose a penalty on any state that fails to implement policies within two years of enactment. This marks the second time in the past few months that the House has approved such a restriction. A similar bill, S. 943, was introduced in the Senate last year. 

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DOL Encourages States to Spend Remaining UI Modernization Funds

On January 5, 2012, the Department of Labor (DOL) published guidance informing states of the unspent state administrative funds for Unemployment Insurance (UI) Modernization Incentive Grants made available under the American Recovery and Reinvestment Act (ARRA, P.L. 111-5). Of the $500 million appropriated by ARRA, states have spent only $170.6 million. This Issue Brief provides information on total state administration funds and states’ remaining unspent funds. 

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HHS Releases Remaining FY 2012 LIHEAP Funds

On January 19, 2012, the Department of Health and Human Services (HHS), Administration for Children and Families (ACF) released more than $863 million in Low-Income Home Energy Assistance Program (LIHEAP) block grant funds. In the first quarter of federal fiscal year (FY) 2012, states received $2.6 billion in funds. With this release, states have received their entire allocation of $3.472 billion for FY 2012.

Overall, states experienced a -23% reduction in funding for the LIHEAP block grant in FY 2012. The impact of the reduction on individual states varies because Congress modified the formula to distribute all but $497 million on the basis of FY 1984 state shares (the old LIHEAP formula). Moreover, the final FY 2012 budget did not provide emergency contingency funds, which totaled $200 million in FY 2011.

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President Signs Two-Month Extension for TANF, UI, QI, TMA

On December 23, 2011, the president signed legislation (H.R. 3765) to extend the payroll tax cut and other programs for two months. Specifically, the law temporarily extends unemployment insurance (UI) benefits, Temporary Assistance for Needy Families (TANF) and related programs, and Qualified Individual (QI) and Transitional Medical Assistance (TMA). This Issue Brief provides details on these extensions.

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Trade Adjustment Assistance Expansion Authorizes Increased Funding

On October 21, 2011, Congress enacted and the president signed the Trade Adjustment Assistance Extension Act of 2011 (TAAEA, P.L. 112-40), which restores the expanded certification criteria, benefits, and services provided under the Trade and Globalization Adjustment Assistance Act of 2009 (TGAAA, P.L. 111-5). TAAEA also sets up a new funding structure and increases the funding cap for the Trade Adjustment Assistance (TAA) program through December 31, 2013.

This Issue Brief outlines the funding changes and new provisions for TAA included in P.L. 112-40.

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UI Update: Credit Reductions and New Legislative Proposals

On November 10, 2011, states that borrowed from the federal Unemployment Trust Fund (UTF) account in 2009 were required to pay off the outstanding balances on those loans. Employers in states that did not make this payment or did not qualify for credit reduction avoidance will receive a 0.3 percentage point reduction to the credit applied to their Federal Unemployment Tax Act (FUTA) tax rate for 2011.

This Issue Brief provides information on the 2011 credit reductions and new legislative proposals to reform Unemployment Insurance (UI) solvency.

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Senate Makes Headway on ESEA Reauthorization

On October 20, 2011, the Senate Committee on Health, Education, Labor, and Pensions (HELP) approved a bill to reauthorize the Elementary and Secondary Education Act (ESEA; P.L. 89-10) through federal fiscal year (FY) 2016.  Unlike the House’s efforts to reauthorize ESEA in a series of smaller bills, the Senate HELP committee chose to reauthorize ESEA in one large, comprehensive bill. The Senate legislation would consolidate a number of existing programs, create a few new grant programs, and make a variety of formula changes to current K-12 programs.

This Issue Brief provides a brief overview of the major changes and provisions in the Senate’s ESEA reauthorization bill.

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UI Update: States Make First Interest Payments, Borrowing Continues

On September 30, 2011, states that had taken out loans from the Federal Unemployment Account (FUA) to pay for Unemployment Compensation (UC) benefits in their state were required to make interest payments on those loans. This was the first time states made interest payments on FUA loans since the enactment of the American Recovery and Reinvestment Act (ARRA; P.L. 111-5), which waived the interest payments and accrual of interest for two years. Though every state either made a full interest payment or qualified for a deferral, state Unemployment Trust Fund (UTF) loan balances still remain at more than $38.7 billion.

This Issue Brief reports on states’ September 30 interest payments, remaining loan balances, potential future penalties, and continued UTF solvency proposals.

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President Signs Short-Term TANF Extension; TANF Supplemental Funds Excluded

On September 30, 2011, the president signed the Short-Term TANF Extension Act (P.L. 112-35), which extends the Temporary Assistance for Needy Families (TANF) block grant and related programs through December 31, 2011. While most programs are funded at federal fiscal year (FY) 2011 levels, the law does not extend or provide funding for TANF supplemental grants, which expired on June 30, 2011. In addition, it does not address the TANF Contingency Fund because funding was previously authorized and appropriated through FY 2012.

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Final FY 2013 FMAPs

On September 22, 2011, the Bureau of Economic Analysis (BEA) released state personal income and per capita personal income data for 2010 and revised data for prior years. The federal government uses state per capita personal income to calculate each state’s reimbursement rate for Medicaid and other grant programs such as Title IV-E adoption assistance and foster care. This matching rate, calculated annually, is known as the Federal Medical Assistance Percentage (FMAP). The BEA release permits calculation of the final fiscal year (FY) 2013 FMAPs, which are based on per capita personal incomes for calendar years 2008-2010.

This Issue Brief summarizes the BEA data and provides FFIS’s estimates of the final FY 2013 FMAPs. These FMAPs reflect both personal income changes and, for the first time, the impact of the 2010 decennial census. Based on the new data, only 12 states will receive increased FMAPs in FY 2013 while 24 states will see decreases.

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HHS, USDA Announce Cost Allocation Flexibility

On August 10, 2011, the departments of Health and Human Services (HHS) and Agriculture (USDA) issued a joint letter to notify states of a time-limited, specific exception to the cost allocation requirements in section C.3 of OMB Circular A-87. Specifically, the exception allows federally funded human services programs to benefit from the investments in state eligibility systems being made by state-operated Exchanges, Medicaid, and the Children’s Health Insurance Program (CHIP). This means that programs, such as Temporary Assistance for Needy Families (TANF), the Child Care Development Fund (CCDF), and the Supplemental Nutrition Assistance Program (SNAP), can utilize these systems without having to share in the common system development costs. However, these programs would still be required to pay for the costs associated with features that are relevant for human services programs only, as well as share in maintenance and operational costs.

HHS and USDA are making this change to encourage states to develop more integrated eligibility determination systems as they implement the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152). While extensive coordination and collaboration is required between Health Benefit Exchanges and Medicaid systems, many states are considering ways to coordinate system changes with the eligibility determination systems used for other programs. Many individuals who are eligible for Medicaid are eligible for other programs as well.  Moreover, many uninsured individuals who will become eligible for health subsidy programs under ACA may already be receiving assistance under human services programs.

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House Committee Embarks on ESEA Reauthorization

The Elementary and Secondary Education Act (ESEA, P.L. 89-10), which first passed in 1965, governs spending on the nation’s K-12 education programs. The last reauthorization of ESEA was enacted in 2002 with No Child Left Behind (NCLB, P.L. 107-110). While P.L. 107-110 expired in 2007, Congress has continued to fund K-12 programs through the annual appropriations process. However, both the administration and members of Congress have pushed for reauthorization of the law before the start of the 2011-2012 school year. The House Committee on Education and Workforce plans to reauthorize ESEA through a series of smaller bills. Thus far, it has passed three bills, which would eliminate 42 programs, restructure the charter school grant program, and provide states with flexibility to transfer funds among programs. To date, there has been little activity in the Senate on ESEA reauthorization.

This Issue Brief provides background on ESEA and details on the current reauthorization proposals.

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House and Senate Bills Overhaul Federal Reporting, Repeal FFATA

The Federal Funding Accountability and Transparency Act (FFATA, P.L. 109-282), which included new reporting requirements for recipients of federal grants and contracts, was fully implemented on October 1, 2010 (see Issue Brief 10-40). Since then, bills have been introduced in both the House and Senate that would repeal FFATA and overhaul recipient reporting requirements.

The Digital Accountability and Transparency Act of 2011 (H.R. 2146, DATA Act) was introduced in the House on June 13, 2011, and it passed the House Committee on Oversight and Government Reform a week later. It would mandate full multi-tier recipient reporting and require recipients to report on the use of funds. The bill also establishes the Federal Accountability and Spending Transparency Board (FAST Board), mirrored after the Recovery Accountability and Transparency Board, to coordinate and oversee grant and contracts reporting; create common data elements and data standards for use across all federal spending information systems; and focus on reducing fraud, waste, and abuse. The FAST Board would create at least one new website for federal spending data. In addition, the bill would eliminate USAspending.gov and the Census Bureau’s Consolidated Federal Funds Report, and require that the new website(s) contain the information reported by these systems. The House bill would sunset on September 30, 2018.

On the same day that the House bill was introduced, the administration issued an executive order that establishes a new oversight board to monitor all government spending, focusing on transparency of federal spending and efforts to reduce fraud, waste, and abuse. In addition, on June 16, 2011, a companion bill to House bill was introduced in the Senate, although no further action on that bill has been taken. This Issue Brief focuses on the House committee-passed bill.

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DOT MOE Requirement Affects Redistribution of ARRA Funds

The American Recovery and Reinvestment Act of 2009 (P.L. 111-5, ARRA) established a transportation maintenance-of-effort (MOE) requirement for states to ensure that they did not use ARRA funds to replace state funding for transportation. In November 2010, the Department of Transportation (DOT) collected preliminary data regarding states’ compliance with the MOE requirement. This data indicated that numerous states did not meet their MOE amounts and, depending on final data, may be ineligible for the August 2011 redistribution of unobligated ARRA transportation funds.

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Labor Releases FY 2011 Unemployment Insurance Assessment Grants

On June 20, 2011, the Department of Labor’s (DOL) Employment and Training Administration (ETA) released the federal fiscal year (FY) 2011 allocations for Unemployment Insurance Reemployment and Eligibility Assessment (UI REA) grants. The FY 2011 grants, totaling $48.7 million, will be awarded to 37 states and the District of Columbia. This Issue Brief provides a brief overview of UI REA grants and the FY 2011 state allocations.

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HHS Releases FY 2011 LIHEAP Funding, Guidance

On May 19, 2011, the Department of Health and Human Services (HHS) announced final federal fiscal year (FY) 2011 allocations for the Low-Income Home Energy Assistance Program (LIHEAP), including the third and fourth quarter grant awards to states. It also provided guidance to states on the LIHEAP provisions included in the Full-Year Continuing Appropriations Act, 2011 (P.L. 112-10).

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DHS Announces FY 2011 Preparedness Grants

The Department of Homeland Security (DHS) released its fiscal year (FY) 2011 preparedness grant programs overview for 16 programs on May 19, 2011. Total funding for these programs totals $2,191 million in FY 2011, a -23.7% reduction from the $2,872 million provided in FY 2010. In contrast to FY 2010, funding was not provided for the Interoperable Emergency Communications Program or the Buffer Zone Protection Program (see Budget Brief 11-08). Fifty-state allocations were released for four programs: SHSGP, Citizens Corps, EMPG, and REAL ID. Local allocations were released for UASI, MMRS, Regional Catastrophic Preparedness Grants, and Port Security Grants. This Issue Brief includes the allocations for six of these programs.

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CMS Proposes New State Process to Ensure Access to Medicaid Services

On May 6, 2011, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule in the Federal Register that would require states to implement a new standardized review process to ensure compliance with statutory Medicaid access requirements. The proposal relies on the framework recently developed by the Medicaid and CHIP Payment and Access Commission (MACPAC), which focuses on three categories: enrollee needs, the availability of care and providers, and service utilization. States would have flexibility to determine the appropriate measures to demonstrate and monitor access to care within each category. In addition, the proposal would only apply to Medicaid services paid through a state plan under fee-for-service, not services provided through managed care arrangements. It also would not apply to the Children’s Health Insurance Program (CHIP). HHS is seeking feedback on the proposal, with comments due by July 5, 2011.  

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Most States Meet FY 2009 TANF Work Participation Requirements

On April 22, 2011, the Administration for Children and Families (ACF) released data on state Temporary Assistance for Needy Families (TANF) work participation rates for federal fiscal year (FY) 2009. The data revealed that nine states, the District of Columbia, and two territories failed to meet one or both of their required FY 2009 work participation rates. For eight of these jurisdictions, this marks at least the third consecutive year of missing the target. While failing to meet work participation rates rates can result in financial penalties for states, there are several courses of action states can undertake to avoid fines. In addition, ACF may reduce penalties if certain conditions are met.

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Medicare Part D Parameters, Clawback Estimates for CY 2012

The Centers for Medicare & Medicaid Services (CMS) has announced the parameters that will guide calendar year (CY) 2012 individual and state costs for the Medicare Part D drug benefit. These data, as well as enrollment data for persons dually eligible for Medicare and Medicaid, and FFIS projections of Federal Medical Assistance Percentages—FMAPs—for federal fiscal year (FY) 2013, permit preliminary estimates of state clawback costs for CY 2012.

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FY 2013 FMAP Projections - A Moving Target

On March 23, 2011, the Bureau of Economic Analysis (BEA) released preliminary per capita personal income data for 2010 as well as preliminary personal income data for 2010 and revisions for prior years. The federal government uses state per capita personal income to calculate each state’s reimbursement rate for Medicaid and other grant programs such as Title IV-E adoption assistance and foster care. This matching rate, calculated annually, is known as the Federal Medical Assistance Percentage (FMAP). The BEA release of the 2010 preliminary data permits projection of the fiscal year (FY) 2013 FMAPs, which are based on per capita personal incomes for calendar years 2008-2010.

This Issue Brief summarizes the BEA data and provides FFIS’s estimates of the preliminary FY 2013 FMAPs. These FMAPs reflect both personal income changes as well as the impact of the 2010 decennial census. However, data issues resulting from the slow processing of the 2010 census make these projections even less certain than in previous years. That said, FFIS projects that the FMAPs will increase in 13 states and decline in 23 states. Some states could see substantial changes in their FMAPs compared to FY 2012.

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Final FY 2011 FMAPs Under ARRA Extension

P.L. 111-226 provided a two-quarter extension, through June 30, 2011, of the increased Federal Medical Assistance Percentages (FMAPs) included in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). The provisions in the extension were slightly different from those in ARRA and included a phased-down across-the-board increase, modifications to the unemployment adjustment, and a new governor-certification requirement (see Issue Brief 10-33 for a detailed description of P.L. 111-226).

This Issue Brief estimates the final FMAPs under the extension period (the second and third quarter of federal fiscal year (FY) 2011) based on state unemployment data released by the Bureau of Labor Statistics (BLS) on March 10, 2011. P.L. 111-226 required that the unemployment adjustment for the extension period rely on data for the three consecutive-month period beginning December 2009 and ending before January 2011, resulting in the highest FMAP increase. The BLS release provided final unemployment data for December 2010. It also included historical revisions that affect prior monthly data, including the lowest average monthly unemployment rate (base rate) used in the calculation.

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Is Health Care Reform Funding in Jeopardy?

The Affordable Care Act (ACA; P.L. 111-148 and P.L. 111-152) included more than 100 funding opportunities of interest to states. For some programs, the law included both authorizations and appropriations, thereby providing funding at the specified levels for the years cited in the law. The majority of programs, however, received only an authorization in the law. These discretionary programs require funding through the appropriations process. As such, Congress will determine if or when (and at what levels) these programs will be funded.

Some members of Congress have indicated their desire to eliminate funding for health care reform. It is those programs subject to the appropriations process that would be at most risk under such proposals. To eliminate funding for programs receiving a direct appropriation, Congress would need to amend the underlying law or specifically rescind the funding. Such legislation must be passed by both houses and signed by the president.

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Unemployment Compensation: Most States Insolvent, Federal Loans Accrue Interest

As a fundamental component of unemployment insurance (UI) programs, state-operated unemployment compensation (UC) offers benefits to unemployed workers across the country. The state portion of UC is financed through state payroll taxes deposited in the state’s Unemployment Trust Fund (UTF) account. As an entitlement program, states are required to pay UC benefits even if revenue from state payroll taxes does not cover benefit payments. As a result, many states are forced to borrow funds from the Federal Unemployment Account (FUA) to cover the difference between UC benefit payments and state payroll tax revenues.

As of January 18, 2011, 30 states have outstanding balances on loans from the FUA. Moreover, these loans are now accruing interest as of January 1, 2011, and states must make interest payments by September 30, 2011. Employers in states that fail to make interest payments or pay off the outstanding balance of their loans within the designated timeframe will face an effective federal tax increase.

This Issue Brief outlines the provisions associated with loans to states from the FUA and their effect on states and employer tax rates.

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Program and Funding Changes Included in Child Nutrition Reauthorization

The president signed the Healthy, Hungry-Free Kids Act of 2010 (P.L. 111-296) on December 13, 2010, reauthorizing child nutrition programs through federal fiscal year (FY) 2015.  P.L. 111-296 provides for a significant increase in funding for school lunches for schools that meet certain nutrition standards. It also provides funding for several new demonstration and performance-based programs. However, the law is paid for, in part, by reducing future benefit payments through the Supplemental Nutrition Assistance Program (SNAP), and replacing the nutrition education component of SNAP administrative costs with a fixed grant. It also includes a provision that prohibits state budget limitations, such as furloughs, hiring freezes, and travel restrictions from applying to state employees funded by the law.

This Issue Brief outlines the major funding and program changes included in reauthorization. Table 1 highlights new funding opportunities of interest to states.

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