November 26, 2002		2002-R-0883
STATES THAT PAY MOTHERS TO CARE FOR THEIR OWN CHILDREN
By: Helga Niesz, Principal Analyst

You asked what states pay low-income or welfare mothers to stay home and care for their own children up to age two rather than put them in child care and go to work. You also want to know how this is possible given the constraints of the federal Temporary Assistance to Needy Families (TANF) law.

SUMMARY

Minnesota and Montana are the only two states we identified with programs similar to what you asked about. These state-funded programs allow a low-income parent who would otherwise be eligible for state child care assistance to stay home with an infant and receive payments almost equal to what the state would have paid for child care. Montana's program is available to parents of children up to age two, but Minnesota's program is available only to parents with children up to age one. These programs are aimed at low-income parents with recent work histories and preclude participants from also receiving welfare cash assistance.

These two programs do not use federal TANF money; they use exclusively state money (but that expenditure can apparently be counted toward required state “maintenance of effort” funding under the federal TANF law).

Although they do not have programs that pay parents to stay home with their children, most states exempt single parents with infants from the federal TANF work requirements for a limited time. (Federal law allows single parents with children up to age one to be exempt and still receive their welfare checks.) The age limit for the exemptions ranges from three months old to three years in different states, but those whose exemptions extend beyond one year use state funds for that purpose. Connecticut's exemption covers parents of children up to age one. Montana is one of the few states that do not allow such an exemption. Additionally, federal law prohibits states from penalizing parents with children under age six who can prove that they cannot work because they cannot find adequate child care and allows other good cause reasons for not working.

Federal welfare reform law generally requires states to make welfare recipients find work as soon as possible or engage in various work-related activities to prepare for finding a job, but gives the states considerable flexibility in how to accomplish these goals. It gives states block grants of federal TANF money to help subsidize states' efforts to place welfare recipients in jobs, including out-of-home child care while parents work, engage in certain job search related activities, or engage in limited education activities. While not actually prohibiting use of federal TANF funds to pay for parents to take care of their own children at home, federal law discourages such use by requiring people in such a program to be counted as not working when the state calculates whether it has met federal minimum work participation ratios. This is most likely why the few states that have such programs fund them with state money.

MINNESOTA

Minnesota established the At-Home Infant Care (AHIC) program in 1997. The county-administered program helps low-income parents cover the costs of staying home with their infants during some or all of their first year of life. To qualify, parents must be working, looking for work, or going to school before the child is born and meet certain income requirements (less than 75% of state median income based on family size). Families on the State Sliding Fee Child Care Subsidy program with a child less than one year old can participate in AHIC while on maternity or paternity leave, but they may not simultaneously use the child care subsidy program. The AHIC payment can be up to 90% of what the state would pay a child care provider to care for the infant minus the sliding fee scale amount the family would have to pay for the child to participate in child care outside the home. For example, in one county that currently equals $139.50 per week (90% of $155), minus the family's co-payment. Only one parent qualifies in a two-parent home and the parent who stays at home must also care for any other children in the home.

AHIC sets a lifetime limit of 12 months of assistance, but over two-thirds of all families participate for less than three months. People who qualify for this program cannot also be on the state's TANF-funded welfare reform program, the Minnesota Family Investment Program (MFIP). In fact, time spent on AHIC is deducted from any time someone participating in MFIP could otherwise be exempt from that program's work requirements (Minnesota law allows a maximum one year exemption for a parent of a child up to age one.)

AHIC is funded exclusively out of state child care dollars. Between the program's start in July 1998 and January 2002, it has served 761 families at an overall cost to the state of about $1.77 million.

Minnesota established the program to address two concerns: (1) lack of sufficient infant care in the state to meet expanding demand and (2) a growing body of research showing the importance of an infant's first year for enhancing brain development.

The Minnesota statute (Minn. Stat. § 119B: 61) is available at:

http://www.revisor.leg.state.mn.us/stats/119B/061.html.

MONTANA

Montana's "At-Home Infant Care Program (AHIC),” was established administratively, without legislation, as a two-year, limited pilot in December 2001. It gives low-income parents with incomes up to 150% of the poverty line up to $384 a month, 90% of what the state pays child-care providers to do the same work, to stay home with their infants for up to two years.

AHIC is administered by the Montana Department of Public Health and Human Services and is funded with solely state funds (but apparently these funds count as part of the state's “maintenance of effort” funding for purposes of TANF). The department set aside $250,000 to fund 60 families for the first two years.

Program participants are limited to a lifetime total of 24 months, but this time can be used in varying combinations. Families are not permitted to receive TANF cash assistance while on AHIC, even if they are income eligible. Families may access work or education while on AHIC, but do not qualify for child care assistance. To qualify for the program, families must have worked one of the three months before applying at the rate of 120 hours per month for two-parent families, 60 hours for single parent families, and 40 hours for single parent families who are attending post secondary education or training.

The parent must be at least age 18, or if younger, must have a high school diploma or general equivalency degree. A teen parent currently in high school may participate in the program during summer breaks. Parents must also complete a parent-directed child development education plan, which may include activities in health, child development, nutrition, or other related areas.

Administrative authorization for the program can be found in Montana Administrative Regulations, Sec. 37.80.204.

FEDERAL TANF LAW: BACKGROUND

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 (PL 104-193, 42 U.S.C. § 601 etc.), more commonly known as the federal welfare reform law, changed the nation's welfare system into one that requires work in exchange for time-limited assistance. It repealed the existing cash assistance program (Aid to Families with Dependent Children (AFDC)) and replaced it with Temporary Assistance for Needy Families (TANF). It also consolidated several sources of federal child care funding into one program, known as the Child Care and Development Fund (CCDF), which provides Child Care and Development Block Grants to the states.

Federal law gives states considerable flexibility to structure their TANF programs in ways that promote work, responsibility, and self-sufficiency, and strengthen families. States may use TANF funding in any manner "reasonably calculated to accomplish the purposes of TANF”(42 U.S.C. § 604). States can spend TANF money on a broad range of benefits and services for low-income families (1) that directly lead to (or can be expected to lead to) achievement of a TANF purpose or (2) whose relationship to a purpose, while not obvious, is supported by evidence showing that it achieves the purpose. These approved purposes are: to provide assistance to needy families so that children can be cared for in their own homes; to reduce dependency by promoting job preparation, work and marriage; to prevent out-of-wedlock pregnancies; and to encourage the formation and maintenance of two-parent families (12 U.S.C. § 601).

The federal law requires a state that receives a TANF grant to achieve a minimum work participation rate for the fiscal year for all families receiving “assistance” under the TANF-funded state program. Currently, that required rate is 50% overall and 90% for two-parent families (42 U.S.C. § 607).

To obtain their full TANF block grant allocations, states must also maintain a historical level of state spending known as “maintenance of effort” (MOE). They must maintain their MOE spending on TANF-related programs at a percentage of what they spent on federal welfare programs before that law passed. To receive their full allocation, states must demonstrate they are spending on activities related to TANF 80% of the amount of non-federal funds they spent in FY 1994 on AFDC and related programs. If they meet minimum work participation requirements, their required MOE is reduced to 75% (42 U.S.C. § 609(a)(7)(b)(ii)).

Participants who receive “assistance" (cash and other payments for ongoing basic needs) are subject to time limits, work participation requirements, and child support requirements. Those who receive "nonassistance" (non-cash services) are not subject to time limits (45 CFR § 260.31). People who receive MOE-funded services are not subject to these federal restrictions.

TANF LAW AND AT-HOME INFANT CARE FUNDING

It appears that the federal TANF law theoretically does not prohibit use of federal TANF money for programs such as Minnesota's and Montana's. But it does set up a barrier to such use, because if a state used federal TANF funds for such programs that pay the parents to care for their own children, it would have to include those people as not working in the calculation of the state's work participation rate. If the state does not reach required work participation rates, it is in danger of losing some of its federal TANF block grant. Until now, such restrictions have barred states from using any of that federal money for AHIC programs. The same restrictions do not apply to state MOE funds, which explains why Montana could use them for that purpose.

Federal TANF law permits states to assist eligible families by expending MOE under state programs. Families assisted through a separate state program are not generally subject to TANF requirements, such as work participation, child support collection requirements, the time limit on receipt of assistance, and data collection and reporting. In other words, by definition, states operating separate programs avoid TANF requirements and have more flexibility in how they use the funds (42 U.S.C. § 609(a)(7)).

TANF WORK EXEMPTIONS

States have the option under the federal law to exempt single parents with children up to one year of age from work requirements, and to disregard them from the calculation of the work participation rates for a cumulative lifetime total of 12 months. They also have the flexibility to provide exemptions to other families. However, all other families with an adult or minor head of household are included in the state's participation rate calculations.

Most states exempt parents with infants from welfare reform work requirements for a limited time, thus allowing them to still receive welfare cash assistance for that period without having to go to work. The age limit for the exemptions ranges from three months old to three years in different states. (The states with an exemption for longer than one year use state funding for this.) Connecticut has an exemption for parents of children under one year old (CGS § 17b-112(b)).

Also, federal law prohibits states from penalizing single parents with a child under age six who cannot find child care for failure to meet the work requirements (45 CFR §§ 261.15, 261.56, 261.57).

In addition, most states specify various other categories of adult recipients who will not be required to participate in TANF work activities. Separate and apart from exemption categories, states frequently identify "good cause" criteria that temporarily excuse a recipient from participation in an activity to which he or she has been assigned.

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