The Personal Responsibility and Work Opportunity Reconciliation Act was passed by Congress in 1996 and signed into law by President Bill Clinton (D) on August 22, 1996. Among its provisions, the law eliminated three prior federal assistance program and replaced them with Temporary Assistance to Needy Families (TANF), a block grant program. Receipt of TANF benefits came with work requirements, and states were granted flexibility in designing their TANF programs. The law also made lawful permanent residents ineligible to receive federal means-tested benefits for five years after being granted permanent residency.[1]
Background
The Personal Responsibility and Work Opportunity Reconciliation Act was introduced in the United States House of Representatives by Representative John Kasich (R-Ohio) on June 27, 1996. The House passed the bill by a vote of 256-170 on July 18, 1996. The United States Senate passed the bill on July 23, 1996 by a vote of 74-24. The bill was then moved to conference committee; the House agreed to the conference report 328-101, and the Senate agreed 78-21. President Bill Clinton (D) signed the bill into law on August 22, 1996.[1]
Provisions
Temporary Assistance to Needy Families
The Personal Responsibility and Work Opportunity Reconciliation Act eliminated three prior federal assistance programs and created the Temporary Assistance to Needy Families (TANF) block grant in their place. The block grant was provided to states to administer for the following purposes:[2]
- financial assistance for needy families
- promotion of work and marriage
- prevention of out-of-wedlock pregnancies
- encouragement of two-parent families
States were given flexibility to design their TANF programs, such as eligibility and benefit levels, although they were required to use objective criteria for program design.[2]
The law also established work requirements for receiving TANF benefits:[2]
- unemployed adult recipients were required to participate in community service within two months of receiving benefits
- adult recipients were required to start work within two years after receiving benefits
Parents with children younger than 12 months were exempt from these work requirements, as well as parents with children under six years unable to find childcare.
Under the law, eligibility for Medicaid was no longer linked to the receipt of federal assistance benefits. Medicaid eligibility was instead required to be based on income and available resources.[2]
In order to receive the TANF block grant, states were required to establish a child support enforcement program. Individuals receiving TANF assistance or Medicaid were required to cooperate with such enforcement efforts. Failure to do so would result in a 25 percent reduction in benefits, and states that failed to enforce this measure would see a 5 percent reduction in their block grant.[2]
Supplemental Security Income
The Personal Responsibility and Work Opportunity Reconciliation Act amended the eligibility of children to receive Supplemental Security Income. Under the law, children were required to have a "medically determinable physical or mental impairment, which results in marked and severe functional limitations," and was expected to last at least one year or result in death.[2]
Benefits for immigrants
The Personal Responsibility and Work Opportunity Reconciliation Act rescinded the eligibility of legal immigrants for food stamp assistance and Supplemental Security Income. States retained the authority to determine the eligibility of legal immigrants for Medicaid, TANF, and the Social Services Block Grant. However, states were prohibited from denying benefits for the following classes of immigrants:[2]
- refugees and asylees
- lawful permanent residents who had worked in the United States for 10 years
- veterans and active military personnel or their spouses and dependent children
Lawful permanent residents entering the country after the effective date of the law were made ineligible for federal means-tested benefits for five years after being granted permanent residency. After they had held such status for five years, they could then apply for benefits.[2]
Children
The Personal Responsibility and Work Opportunity Reconciliation Act made amendments to foster care rules, child care funding, and child nutrition programs. The law allowed states to use federal dollars to pay for-profit foster care providers and required states to give preference to relatives when deciding foster care placements. The law also consolidated multiple funding sources for child care with the Child Care and Development Block Grant distributed to states. States were required to use 70 percent of these funds for families receiving or transitioning off of TANF benefits. Finally, federal reimbursements under the Child and Adult Care Food Program, which provided meals in high-poverty areas, were converted to a two-tier system: funding levels would be maintained for family or group day care homes in neighborhoods where 50 percent of children lived in households earning incomes below 185 percent of the federal poverty level. All other family or group day care homes would receive reduced meal reimbursements.[2]
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 The purpose of this Regulatory Alert is to bring to your attention the subject legislation that requires all financial institutions to comply with state-enforced child support enforcement programs. Public Law 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), also known as the Welfare Reform Act, was signed into law on August 22, 1996. Its primary goal is to move families off public assistance by helping them become self-sufficient. To this end, PRWORA provides a much strengthened child support enforcement program. One provision of PRWORA requires all states to enter into agreements with Financial Institutions conducting business within their state for the purpose of conducting a quarterly data match. This data match is intended to identify accounts belonging to parents who are delinquent in their child support obligations. When a match is identified, state child support programs may issue liens or levies on the accounts of that delinquent parent to collect the past-due child support. The Federal Office of Child Support Enforcement (OCSE), working together with State and local child support programs, is responsible for implementing a nationwide child support enforcement strategy. OCSE has developed the Financial Institution Data Match (FIDM) as a tool to support this strategy. Many states are already certified and have functioning data match agreements with their financial institutions, but there remain several states that have not yet implemented their programs. The law requires that each state meet all the title IV-D requirements enacted under the PRWORA by October 1, 2000. We hope you find this information useful. You can obtain additional information from your State Revenue Office or from the Office of Child Support Enforcement website at //www.acf.dhhs.gov/programs/cse/.BACKGROUND
What must my credit union do?
What are the goals of the FIDM?
Who decided how FIDM should work?
What legislation established the FIDM program?
What Financial Institutions must participate in the data match program?
Who enforces the data match program and what penalties for noncompliance may apply?
What types of accounts are subject to the data match program?
How often must the data match be conducted?
What data is returned to the child support program for use in collecting delinquent child support obligations?
Where can I get a copy of the data specifications?
Will a levy from the State Revenue Office supercede any liens on shares held by the credit union for a share secured loan?
Will credit unions be reimbursed for expenses incurred in complying with the data match programs?
Does compliance with the data match expose a credit union to suits brought under the Right to Financial Privacy Act?
Sincerely,
/s/
Norman E. D’Amours
Chairman, National Credit Union Administration Board
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