Employment and Training Administration
Washington, D. C. 20210






May 8, 1998















Office of Regional Management




Joint Guidance on the Use of Temporary Assistance for Needy Families and Welfare-to-Work Funds to Provide Transportation Services to Welfare Recipients

  1. Purpose. To provide joint, coordinated guidance to encourage States and communities to take full advantage of existing resources to address the transportation challenge of moving people from welfare to work and to develop seamless, integrated transportation services. This guidance has been developed jointly by the Departments of Health and Human Services (HHS), Labor (DOL), and Transportation (DOT), and is intended to augment the current regulatory and statutory provisions.

  2. Authorities and References. Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 (Public L. 104-193) and Balanced Budget Act of 1997 (Public L. 105-33) amending Title IV-A of the Social Security Act. Temporary Assistance for Needy Families (TANF) Proposed Rule (62 Fed. Reg. 62124 (proposed Nov. 20, 1997)). TANF Policy Announcement No. TANF-ACF-PA-97-1, dated January 31, 1997. Welfare-to-Work Grants Interim Final Rule, 20 CFR 645 (62 Fed. Reg. 61588 (Nov. 18, 1997)).

  3. Background. Transportation is one of the main challenges facing people making the transition from welfare to work. A mismatch exists between the location of available entry level and service sector jobs and the residences of most welfare recipients. Two-thirds of new jobs are in the suburbs, but three of four welfare recipients live in rural areas or central cities, with few recipients owning cars. Many entry level jobs require evening or weekend hours in areas that are poorly served by existing transit routes or are not within a reasonable commute time. Many parents going to work also need transportation in order to access child care, which further complicates getting to and from work. The transportation barrier is magnified for low-income Americans living in rural counties, 40 percent of which have no public transportation services.

    Historically, HHS and DOL have defined transportation in terms of the individual client. As a result, funds were used to directly reimburse clients for transportation rather than to develop and support transportation services necessary to meet their needs. Welfare reform calls for a more systemic approach to break down the transportation barriers. For example, supporting and developing services such as connector services to mass transit, vanpools, sharing buses with elderly and youth programs, coordinating with existing human services transportation resources, employer provided transportation, or guaranteed ride home programs may be necessary to address the transportation problems for welfare recipients and other low income persons.

  4. Information. It is essential for all Federal, State, and local entities to collaborate to ensure and maintain success in moving families from welfare to work. This collaboration will help to provide the right mix of transportation services necessary to meet the needs of welfare recipients as well as deliver the most efficient use of existing resources and services.

    States should encourage local agencies to ensure that services provided to welfare recipients are developed in consultation with other appropriate agencies providing transportation services at the local level. In addition, in consultations with transportation providers to develop solutions to the difficult problems faced by welfare recipients, public agencies should be mindful of their obligations not to interfere with collective bargaining rights or agreements or to displace employees.

    Many States are already working to break down the transportation barriers for welfare recipients. For example, Kentucky has taken a comprehensive approach to providing coordinated transportation. Four cabinet offices -- Families and Children, Health Services, Workforce Development, and Transportation -- combined transportation resources to develop a new coordinated transportation system for all their participants. North Carolina and New Jersey are helping counties to bring together the transportation, social services, and employment programs to address client mobility needs and are identifying underutilized transportation resources -- including school buses -- for employment transportation. In Ventura County California, the local transit agency has extended its hours of service, re-routed some lines, and developed new service to some remote locations being used as work experience sites. These and many other examples are included in Access To Jobs, A Guide to Innovative Practices in Welfare-to-Work Transportation developed by DOT and the Community Transportation Association of America. The guide features innovative transportation approaches to meet the needs of welfare recipients and other low income persons, as well as a list of available resources. It is attached and available on the Internet at http://www.ctaa.org/welfare.

    5. Resources. Existing funding for welfare reform -- both the Temporary Assistance for Needy Families (TANF) block grants established in the PRWORA of 1996 and the Welfare-to-Work (WtW) grants authorized by the Balanced Budget Act of 1997 -- provides considerable flexibility to help States and communities provide transportation to individuals transitioning from welfare to work. At the same time, these funding streams have certain limitations and leave significant gaps that the Administration hopes to address through programmatic initiatives and proposed legislation.

    1. Proposed Resources. To help meet the tremendous need for transportation services, President Clinton has asked Congress to authorize and appropriate through the Federal transportation program a six-year, $600 million Access to Jobs competitive grant program, to assist States and localities in developing flexible transportation solutions for people moving from welfare to work. Funds could be used for both capital and operating expenses for new services. Local transportation and human service systems will be strongly encouraged to collaborate. Funding would also provide transportation to training and to support services such as child care.

      If funded, these resources will also work to ensure that agencies responsible for designing State and local transportation systems -- State DOTs, transit authorities, etc. -- are attending to this important need. These new Federal funds require a dollar for dollar match, and other Federal funds could be used as part of the local match, if not prohibited by specific statute and regulations.

    2. The Temporary Assistance for Needy Families (TANF) Program. TANF block grants to States total $16.4 billion annually through FY 2002. In addition, States must maintain their own spending at no less than 80 percent of historic spending levels (or 75 percent if they meet the work participation rates). Guidance about State spending requirements, known as maintenance of effort (MOE), is contained in a January 31, 1997 policy announcement issued by the Office of Family Assistance (For detailed guidance on this issue, refer to TANF-ACF-PA-97-1 and the Notice of Proposed Rulemaking (NPRM) for TANF). The policy announcement and the NPRM are available on the Internet at http://www.acf.dhhs.gov/news/welfare/.

      State, local, and Tribal TANF agencies, or private organizations providing services under contract with the TANF agency, may use TANF funds for a range of transportation services so long as the expenditure reasonably accomplishes a purpose of the TANF program, such as promoting job preparation and work. Work and responsibility are the cornerstones of the TANF program. Thus, it is critical that States involve appropriate State and local agencies (transportation, housing, child care), businesses, and community organizations to develop strategies and provide the supportive services that eligible individuals need to attain and maintain employment.

      1. Program Purposes and Choices. The purposes of the TANF program as described in section 401 of the Social Security Act (Act) are as follows:

        • provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives;

        • end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage;

        • prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies;

        • encourage the formation and maintenance of two-parent families.

        To accomplish these purposes, the State TANF agency may use TANF funds to provide support services including child care and transportation. Some examples of the ways in which TANF funds can be utilized to provide necessary transportation services to TANF eligible families include but are not limited to:

        • reimbursement in whole or part to TANF eligible individuals for work-related transportation expenses (e.g., mileage, gas, public transit fare, auto repairs/insurance, or a basic cash allowance for transportation needs);

        • a contract for shuttles, buses, car pools, or other transportation services for TANF eligible individuals;

        • the purchase of vans/shuttles/minibuses by State or locale for the provision of transportation services to TANF eligible individuals (refer to the discussion below about the parameters on the use of TANF funds and cost allocation);

        • the purchase of rider "slots," "passes," or vouchers on a public or private transit system;

        • financial assistance in the form of loans to eligible individuals for the lease or purchase of a vehicle to travel to/from work or work related activities;

        • facilitating the donation and repair of previously owned or reconditioned vehicles to eligible families;

        • as an alternative to ongoing assistance, one-time, short-term "diversion" payments can be made to assist individuals with transportation needs such as automobile repair/insurance to secure or maintain employment;

        • payment of start up costs for new or expanded transportation services benefitting eligible families provided that such costs are necessary and reasonable, as well as allocated to cover only those costs associated with TANF eligible individuals (refer to the discussion below about the parameters on the use of TANF funds and cost allocation);

        • establishing an Individual Development Account that a TANF eligible individual could use to cover qualified business capitalization expenses to establish a transportation service such as a van, shuttle, or door-to-door transportation service (Section 404(h) of the Social Security Act).

        • the transfer of TANF funds to the Social Services Block Grant (SSBG) to address the lack of transportation infrastructure in many rural and inner city areas; SSBG may be used to serve families and children up to 200% of the poverty level, allowing States to address the needs of the disadvantaged population with a blend of transportation services;

        • payment of costs incurred by State, local, or Tribal TANF agency staff involved singularly or with other agencies in the planning of transportation services for TANF eligible individuals;

        State MOE funds under the TANF program or State funds separate from the TANF program that qualify under the MOE requirement may also be used to assist TANF eligible individuals in similar ways.

        Many States are also easing restrictions that deter TANF eligible recipients from owning cars. Some States are increasing the excluded value or discounting entirely the value of a motor vehicle in determining TANF eligibility. Such action also promotes job preparation and work.

      2. Parameters on the Use of TANF Funds. In order to take advantage of resources provided through the TANF block grants, it is necessary to understand three key requirements of the statute related to eligible families, assistance, and time limits. First, Federal TANF funds, along with State MOE funds, must be spent on eligible families in which the minor child resides with the family (or on individuals who are expecting a child). States define who is eligible for TANF.

        Second, funds or services received by eligible families are generally labeled as "assistance." The term "assistance" has been defined in TANF-ACF-PA-97-1 to mean every form of support provided to families under TANF except for: (1) services that have no direct monetary value to an individual family and do not involve implicit or explicit income support; and (2) one-time, short term assistance (e.g., automobile repair to retain employment). Under this definition, a transit pass given to a family each month to cover transportation costs constitutes "assistance." The definition, with slight modification, was included in the Administration for Children and Families' (ACF) proposed TANF rules published in the Federal Register on November 20, 1997. The comment period on the proposed rule closed February 18, 1998. ACF expects to issue a Final Rule by the end of the Federal Fiscal Year 1998.

        Third, Federal assistance paid to a family counts toward the lifetime limit on the receipt of TANF benefits. Under the statute, Federal assistance can only be given to a family for a maximum period of 60 months, whether or not consecutive; States can set shorter limits or provide assistance past the 60 month limit with State funds. This means that each month of assistance issued to a family counts toward the family's time limit. It is important that, when planning a transportation strategy to enable a TANF family to travel to work, States assess the impact of such assistance on the family's time limit and advise the family of this impact.

        When planning for transportation services, States should also be aware of certain statutory requirements, restrictions, and cost principles that apply to the use of TANF funds. OMB Circular A-87 describes the principles that apply for determining allowable costs. Generally, OMB Circular A-87 provides that costs must be both "reasonable and necessary." The cost principles of OMB Circular A-87 are designed to ensure the fair and equitable expenditure of both Federal and State funds.

        A primary requirement is that TANF funds be used in a manner that reasonably accomplishes the purposes of the TANF program (discussed in the preceding section). In addition, funds from one Federally funded program cannot be used to overcome a shortfall in another Federally funded program. Thus, decisions regarding the use of TANF funds must fulfill one or more purposes of the TANF program, but cannot be used to remedy a deficit in another Federally funded program.

        For example, it would be improper to use TANF funds to fund another entity's project(s), or to carry out other responsibilities of a State or local government that benefit the non-TANF public (e.g., extension/expansion of a public transportation system). This limitation is particularly relevant if such expenses are otherwise covered under another specific appropriation or statutory funding mechanism. However, TANF funds may be used for transit projects benefitting eligible families within the purposes of the TANF program (e.g., contracting with a transit company, including a public transit service, to provide additional transportation so that eligible individuals have access to jobs that are clustered in areas where there is little or no transit service). Such an arrangement does not preclude other "non-TANF" individuals from also using the service but TANF funds may not pay for or subsidize use by non-TANF individuals. As non-TANF ridership and fare income increases the arrangement may be less costly to the TANF program.

        The OMB guidelines also provide the requirement and basis for allocating costs that may be associated with more than one Federal program or non-Federal program. For example, the TANF agency may arrange with another agency or program to use the vans or buses of the other agency or to share in the purchase of transportation services. Such costs must be allocated using a methodology that accurately divides the costs in accordance with the relative benefits received by each program.

        It is also important to note that TANF funds may not be used to match another Federal grant program unless such double matching is authorized by the statute of the program. State expenditures may not count toward the MOE level if they were spent as a condition of receiving other Federal funds (Section 409(a)(7)(B)(iv)(IV) of the Social Security Act).

        Finally, TANF funds may not be used to construct or purchase facilities or buildings. This restriction is based on the general rule, in a long line of Comptroller General decisions, that in the absence of specific legislative authority, appropriated funds may not be used for the permanent improvement of property, including construction and purchase. For example, see the decision at 42 Comp. Gen. 480 (1960).

    3. Welfare-to-Work Grants.  The U.S. Department of Labor provides WtW grants to States and local communities to create additional job opportunities for the hardest-to-employ TANF recipients. The grants total $3 billion for Fiscal Years 1998 and 1999. There are two kinds of grants: Formula Grants to States (75%) and Competitive Grants to local communities (25%). Generally, WtW funds can be used for job readiness activities, employment activities, job placement, post-employment services, and job retention and supportive services -- including transportation assistance -- which are designed to move hard-to-employ welfare recipients into unsubsidized employment. The following outlines some key features of the WtW program:

      1. Eligible Participants.  WtW funds can only be spent on eligible participants. WtW participants are a targeted group of welfare recipients. This group includes those who have received welfare for at least 30 months or are within 12 months of hitting their time limit on receipt of TANF assistance, and who have barriers to employment, specifically defined by statute, related to education, work history, or substance abuse. Certain individuals who appear likely to become long-term recipients are also eligible, as are certain non-custodial parents. Eligibility criteria for the WtW program are described in the Interim Final Rule at 20 CFR 645.212 and 213.

      2. Formula grants.  Seventy-five percent of WtW funds (less small set-asides for specific statutory purposes) are available to States in amounts based on the statutory formula set forth in Section 403 (a)(5)(A)(v) of the Social Security Act. States must provide one dollar of non-Federal matching funds for every two dollars of Federal WtW funds. States are required to pass through at least 85 percent of the money to local Private Industry Councils (PICs) (unless the Secretary of Labor approves a waiver to permit an alternate entity to administer funds in a particular area) and may retain up to 15 percent of the funds for Welfare-to-Work projects that focus on helping long-term welfare recipients enter unsubsidized employment. As part of their WtW Formula Grant Plan, States are required to describe strategies to promote and encourage coordination with the State Department of Transportation, Metropolitan Planning Organizations, transit operators and other transportation providers at the State and local levels. The portion of funds contributed to these efforts by non-Federal funding sources that go toward the service of WtW eligible individuals may be counted toward the State WtW match requirement.

      3. Competitive grants.  The remaining 25 percent of funds will be available through competitive grants to local communities as described at Section 403 (a)(5)(B) of the Social Security Act. The Department of Labor will award WtW competitive grants directly to political subdivisions (cities and counties) and PICs, as well as to private entities (such as community development corporations and community-based organizations, community action agencies, and other public and private organizations) which apply in conjunction with a PIC or political subdivision. The Secretary of Labor will give special consideration to rural areas and cities with large concentrations of poverty. For the purposes of the competitive grants only, a public transit system may apply for a competitive grant as a private entity in conjunction with the local PIC or political subdivision. As part of their competitive grant proposal, applicants are asked to describe the coordination and contributions of local housing and transportation authorities, in addition to other organizations. Competitive grant solicitation for grant applications will be available through the WtW Internet website at http://wtw.doleta.gov.

      4. Program Design Choices and Limitations.  Because the WtW grants are part of the same subtitle of the Social Security Act as TANF, the broad purposes of the WtW program are the same as those outlined above for TANF. The Welfare-to-Work program is, however, more narrowly targeted to specifically provide transitional employment assistance to "move individuals into and keep individuals in lasting unsubsidized employment" by means of the six allowable activities listed in the statute (Section 403(a)(5)(C)(i) of the Social Security Act).

        With a few exceptions, the allowable activities under WtW are similar to the activities permitted under TANF, and all of the same requirements discussed above, including OMB Circular A-87, apply to the WtW Grants program. The exceptions, with regard to transportation services, are:

        • WtW funds can be used only for transportation services that are not otherwise available to the participant (refer to section 403 (a)(5)(C)(i)(VI) of the Social Security Act and 20 CFR 645.220(e));

        • WtW funds can only be spent on transportation services for individuals participating in an allowable WtW employment activity;

        • In addition to the general prohibitions on double match described above, the Social Security Act specifically prohibits the use of WtW grant funds, and State WtW matching funds, to fulfill match requirements under TANF or any other Federal law (Section 403(a)(5)(C)(vi) of the Social Security Act);

        • Under WtW, up to 50% of matching funds may be in the form of third-party in-kind contributions.

        PICs are expected to coordinate local community resources to provide transitional employment assistance (particularly supportive services such as child care and transportation) to the WtW eligible population. Local communities have considerable flexibility in how they use the WtW funds, but the Department of Labor encourages States to facilitate collaboration with local transportation organizations to help WtW participants reach their new job opportunities. States should also encourage local WtW service providers to work with transportation providers to develop employment opportunities for welfare recipients in transportation services, including appropriate self-employment opportunities.

      5. Other Resources. In addition to TANF and WtW, a variety of other Federal, State, and local programs or services can assist in providing transportation services to low-income families. Under such programs as Medicaid and the Job Training Partnership Act, the provision of transportation is allowable as a supportive service. Other ideas can be found in Access To Jobs, A Guide to Innovative Practices in Welfare-to-Work Transportation. States should encourage local agencies to utilize all available transportation services in their area to facilitate access to good jobs for low income Americans.

  5. Action. Please share this joint guidance, as well as the joint Secretarial memorandum, with State and local staff who are involved in providing services, especially transportation, to welfare recipients. This guidance is being issued simultaneously through the policy guidance systems of the three agencies involved.

  6. Inquiries. Inquiries on this joint guidance should be addressed to the Regional Offices of the Administration for Children and Families (HHS), the Federal Transit Administration (DOT) or the Employment and Training Administration (DOL). Lists of these Regional Contacts are attached.

  7. Attachments. 

    1. Joint letter from Secretaries of Health and Human Services, Labor, and Transportation.

    2. Access To Jobs, A Guide to Innovative Practices in Welfare-to-Work Transportation

    3. Contact Lists:

        Administration for Children and Families Regional Offices


        Federal Transit Administration Regional Offices


        Employment and Training Administration Regional Offices