Last Updated: 09/13/2023

A state can reduce its target work participation rates (50 percent for all families and 90 percent for two-parent families) with a “caseload reduction credit” based on the number of percentage points by which the size of the state’s caseload has falls from an earlier year (specified in statute). What that means is that a state can help achieve its work rate by shrinking its caseload, as well as — or instead of — engaging more families in work activities.

Currently, the caseload reduction credit is calculated based on a comparison of the current number of families receiving TANF cash assistance with the caseload in 2005. The Fiscal Responsibility Act of 2023 changed the comparison year for calculation of the credit from 2005 to 2015. While this change will reduce the caseload reduction credit for most states, because TANF caseloads have declined substantially since 2015, only a few states will face a substantially higher work rate than they have had to meet in the past.

With this new provision in place, a state’s caseload reduction credit will be determined by two factors: (1) the change in the caseload the state reports to HHS from 2015 and (2) the amount of excess MOE the state reports on its financial reporting form (ACF-196 R). The caseload reduction credit for FY 2026 – the first year the new 2015 base year will be used– will be determined by the caseload and spending reported to HHS for FY 2025. Any caseload decline that occurred because of a policy change (e.g., implementation of a shorter time limit) has to be netted out of the caseload reduction credit (i.e., states cannot get caseload reduction credit for implementing harsher policies to reduce the caseload.) States have the option to use the caseload reduction credit for the full caseload or a separate calculation based on just the caseload reduction for two-parent caseload to adjust the work rate for two parent families.

HHS uses the caseload reduction credit to determine the state’s “Adjusted Standard” (i.e., the state’s target work rate) which is equal to the 50 percent minus the caseload reduction credit for all families and 90 percent minus the caseload reduction credit for two-parent families.

You can find the details of how OFA calculates the caseload reduction credit in this program instruction: TANF-ACF-PI-2020-05 (Renewed Form ACF-202, Caseload Reduction Report) | The Administration for Children and Families (hhs.gov). The program instruction also includes a link to a spreadsheet which will allow you to calculate the credit for your state. (HHS will need to put out revised guidance once the new base year goes into effect.)

You can find the caseload reduction credit for previous years in Table 2 of the Work Participation Rate Data at this link: State TANF Data and Reports | The Administration for Children and Families (hhs.gov). You can find the state’s adjusted standard in Table 1.