Does the “new spending test” apply to maintenance-of-effort expenditures (MOE) that come from non-governmental, third-party organizations?
A1: The TANF rules (at 45 CFR 263.5) include a provision known as the “new spending test,” which is intended to ensure that States maintain a meaningful financial commitment to TANF. Adopted as part of the original TANF rules in 1999 to implement the statutory provision contained in the 1996 law, the provision prevents a State from counting toward the maintenance-of-effort (MOE) requirement expenditures that were not part of the State’s IV-A (AFDC and related) programs unless they are higher than the State’s spending on that program in FY 1995. We have determined that this provision does not apply to funds expended by non-governmental entities that a State counts as MOE. It only applies to State or local governmental programs. Thus, if a State wishes to include third party expenditures among its expenditures for purposes of qualifying for the Emergency Contingency Fund, the third party expenditures need not be in excess of a FY 1995 level of spending.
