Welfare Reform

Pursuant to a congressional request, GAO provided information on the Department of Health and Human Services' (HHS) proposed requirement mandating that states maintain their spending for needy families at a specified level in order to receive their full Temporary Assistance for Needy Families (TANF) block grant, focusing on whether: (1) the proposed regulations' guidance on which expenditures count for maintenance of effort (MOE) purposes is clear and consistent with the statute; and (2) adequate mechanisms are in place for HHS to determine whether states are complying with the MOE requirement.

GAO noted that: (1) the proposed regulations' guidance on which expenditures count for MOE purposes is unclear with regard to expenditures that are not related to prior Aid to Families with Dependent Children (AFDC) programs; (2) HHS officials acknowledged the problem and said that it would be addressed in the final regulations, which they expect to be issued by January 1999; (3) the proposed regulations, as interpreted by HHS officials, appear to be inconsistent with the statute regarding how expenditures related to prior AFDC programs may be counted toward the requirement; (4) to determine whether states are complying with the MOE requirement, HHS officials told GAO that it plans to rely primarily on the audit mechanism established in the Single Audit Act to verify the accuracy of the information states report to HHS on their MOE expenditures; (5) GAO believes that this is the appropriate approach because the Single Audit Act established systematic procedures that may appropriately be used to test compliance with MOE provisions in federal programs, including TANF; and (6) HHS plans to clarify TANF MOE guidance in the final regulations.