Several States Have Not Properly Implemented Certain AFDC Provisions of the Omnibus Budget Reconciliation Act of 1981

HRD-83-56: Published: Jun 8, 1983. Publicly Released: Jun 8, 1983.

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GAO reviewed the implementation of provisions of title XXIII of the Omnibus Budget Reconciliation Act of 1981, which affects the Aid to Families with Dependent Children (AFDC) Program.

GAO found variances in the way some states implemented the following provisions: (1) the 150-percent income limit for eligibility; (2) the treatment of lump-sum income tax refunds as either a resource or income for eligibility or benefit payment amount purposes; and (3) special-need allowances for pregnant women. The administration expected these provisions to save the government about $22 million in fiscal year 1982. The variances that GAO found in implementation could result in the government's not realizing the full savings anticipated and may result in inequitable treatment of segments of the AFDC population.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: SSA issued a memorandum, in August 1983, advising that failure to document the need for pregnancy allowances in the case files would be counted as an error by quality control reviewers beginning with the October 1983 through March 1984 period and feasibly subject states to fiscal sanctions.

    Recommendation: The Secretary of HHS should direct the Commissioner of Social Security to advise the states that failure to specify in their state plans the circumstances under which the special-need allowances for pregnancy will be granted and to determine that a need actually exists in each case for the first and subsequent pregnancies will result in their state's plans being out of compliance with federal requirements and could result in the withholding of federal financial participation.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: A provision covering this matter is included in a package of regulations that HHS issued in March 1986.

    Recommendation: The Secretary of HHS should direct the Commissioner of Social Security to issue regulations after litigation has been completed on the issue of whether income tax refunds are to be considered as income for AFDC purposes describing how income tax refunds are to be treated under the lump-sum payment provision by the states, or to seek appropriate clarifying legislation if final court decisions are not consistent.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Implemented

    Comments: SSA regional review of all state policy and procedure manuals showed some interpretation problems. SSA issued a program instruction in August 1983 providing clarification and required annual regional review of state manuals to ensure compliance.

    Recommendation: The Secretary of HHS should direct the Commissioner of Social Security to determine whether other states, those not covered by the GAO review, are applying the 150-percent income limit improperly and correct any problems found.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Implemented

    Comments: New York issued a directive in September 1983 that actual rent paid rather than the maximum allowance be used. In December 1983, SSA verified that the directive was being followed.

    Recommendation: The Secretary of HHS should direct the Commissioner of Social Security to require New York to comply with its state regulations by using actual rent paid by a client in computing the 150-percent income limit when such rent is less than the maximum regional shelter allowances and removing from the rolls those with income that exceeds the reduced income limit.

    Agency Affected: Department of Health and Human Services

  5. Status: Closed - Implemented

    Comments: Needed State legislation was enacted in July 1983 and New York issued a program instruction in September 1983 to carry out this recommendation. In December 1983, the Social Security Administration (SSA) verified that the instruction was being followed.

    Recommendation: The Secretary of HHS should direct the Commissioner of Social Security to monitor New York's compliance with federal requirements to include special-need allowances in computing the 150-percent income limit to ensure that compliance is achieved.

    Agency Affected: Department of Health and Human Services

  6. Status: Closed - Implemented

    Comments: In late 1983, Illinois, New Mexico, and Wisconsin amended their operating procedures to carry out this recommendation. In January 1984, Pennsylvania obtained a needed State law change and issued revised regulations in June 1984 to carry out this recommendation.

    Recommendation: The Secretary of Health and Human Services (HHS) should direct the Commissioner of Social Security to require Illinois, New Mexico, Pennsylvania, and Wisconsin to include special-need allowances in computing the 150-percent income limit for determining AFDC eligibility and to advise applicants previously denied assistance that they may be eligible and can reapply.

    Agency Affected: Department of Health and Human Services

  7. Status: Closed - Not Implemented

    Comments: The SSA inquiry disclosed that Minnesota's practice of advancing funds to its counties each quarter for estimated special-need allowances was viewed as limiting the amount that could be spent. Settlement after each quarter results in counties being reimbursed for the actual special-need allowances provided. Thus, there is no ceiling for the total amount to be spent each year.

    Recommendation: The Secretary of HHS should direct the Commissioner of Social Security to advise Minnesota that, since it has chosen to provide special-need allowances, it is not in compliance with federal requirements by placing a ceiling on the total amount it will spend each year for all special-need allowances.

    Agency Affected: Department of Health and Human Services

 

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