This letter is to inform you that a five-year review has been conducted on the rules listed below, in accordance with Section 119.032 of the Ohio Revised Code. As a result, all of the rules in the packet have been revised to incorporate "plain language." This is clear, simply stated language, written with the reader in mind. These revisions will allow for better clarity and more efficient administration of the cash and food assistance programs.

Currently in both the cash and food assistance rules the client must verify all self-employment expenses to accurately determine the benefit amount. This is complex and burdensome for both the client and the county agency. The proposed rules provide clients the option of using actual expenses or a 50 percent standard deduction. In the cash assistance rules the term "CDJFS" has also been changed to "county agency" to align with the food assistance rules.

If no revisions are made to the proposed rules prior to their finalization by the Joint Committee on Agency Rule Review (JCARR), they will become effective on August 1, 2010. If changes are necessary, a copy of the revised rules will be forwarded to you at that time.

Rules reviewed include the following: 5101:4-4-19, 5101:4-6-11 and 5101:1-23-20. As a result of this review, parts of the policy from current rule 5101:1-23-20 have been removed, and two new rules, 5101:1-23-20.1 and 5101:1-23-20.2, have been created.

Proposed Policy

For the Food Assistance program, 7 CFR 273.11 (b)(3)(iv) allows state agencies to elect to use actual costs for allowable self-employment expenses or determine self-employment expenses using various methods. One of the methods is to use the standard deduction the state uses for its Temporary Assistance for Needy Families (TANF) program. Currently, for the Ohio cash and food assistance programs, actual verified expenses are used for all self-employment cases except for self-employed child care providers, where 50 percent of the gross earnings is used as the standard deduction.

We are proposing to provide clients the choice of either claiming 50 percent of the gross profit or the use of actual expenses. If the client chooses to claim actual expenses, the client must provide verification of the expenses. If the client chooses the standard deduction, the client does not have to verify any expenses but must still verify the gross profits.

In considering this change, we completed an analysis of self-employed assistance groups in the Food Assistance, Ohio Works First (OWF) and Disability Financial Assistance (DFA) programs. For the cash assistance programs we reviewed data for the month of January 2009; a total of 1,078 OWF assistance groups and 85 DFA assistance groups reported self-employment. We sampled a portion of those cases to ensure that a deduction of 50 percent was a reasonable standard. We also reviewed the budgeting methodology that other states currently use, which varied from a 25 percent deduction to a 50 percent deduction.

For Food Assistance we reviewed data for the month of March 2009 and found that a total of 23,094 assistance groups reported being self-employed. According to the Public Assistance Monthly Statistics report, 618,255 assistance groups were receiving food assistance for the same time period. Self-employment cases made up approximately 3.74 percent of Ohio's Food Assistance assistance groups that month. To establish the self-employment standard deduction, the Office of Families and Children pulled cases to review the self-employment deductions. After reviewing cases with expenses, we found the average cost of doing business was 50.14 percent.

In 2007, the Office of Families and Children conducted eight Food Assistance Focus Groups, at which time the complexity of completing a self-employment budget was a common theme. To alleviate some of the complexity, the Rushmore Consulting Group recommended that we move toward a self-employment standard deduction. In January 2010, we presented the self-employment standard deduction option to the TANF/Food Assistance policy workgroup, which consisted of representatives from the Cash and Food Assistance policy sections at the Ohio Department of Job and Family Services, the Job and Family Services Directors Association, and seven county agencies. The workgroup recommended allowing the 50 percent self-employment standard deduction option, which would align with the current standard for child care providers and would not require CRIS-E programming.

New Policy: Cash Assistance

Rule 5101:1-23-20 - Ohio Works First: income and eligibility

This rule has been rescinded, and three new rules have been created. New rule 5101:1-23-20 contains the definitions of income, availability and exploration of income, calculation of benefits, and the standards in the OWF program. The 50 percent self-employment standard deduction has been added to the rule.

Section 5107.04 of the Ohio Revised Code authorizes an annual OWF grant increase based upon the cost-of-living adjustment (COLA) issued by the United States Department of Health and Human Services in the previous year. When the COLA is announced, there is insufficient time to amend the rule to include the increase. Therefore, we have removed the standards from the rules and will align with the Food Assistance program in notifying counties through the issuance of an action change transmittal letter when the standards change.

5101:1-23-20.1 - Ohio Works First: excluded income.

This new rule contains policy on the types of excluded income that were previously included in rule 5101:1-23-20. We also included the supplemental weekly unemployment compensation payments under the Worker, Homeownership, and Business Assistance Act of 2009 (Public Law 1115-5). The issuance of this rule obsoletes Action Change Transmittal #247.

5101:1-23-20.2 - Ohio Works First: allocation of income.

This new rule contains policy on the allocation of income and the calculation of allocation of income that were previously in rule 5101:1-23-20. It makes no substantive changes to policy.

New Policy: Food Assistance

5101:4-4-19 - Food Assistance: countable income.

This rule has been rescinded and filed as new. The rule was rewritten to explain in detail the different types of countable income. The Volunteers in Service to America (VISTA) income section has been updated to ensure clear understanding of when this income is countable. If the assistance group member was receiving food assistance or public assistance at the time they joined the Title I program, then the VISTA income is considered excluded income.

5101:4-6-11 - Food Assistance: determining eligibility of assistance groups with income from self-employment.

This rule has been rescinded and filed as new. This rule was changed to include the new 50 percent self-employment standard deduction. Assistance groups now have an option to claim the 50 percent standard deduction or actual expenses. Verification of the deductions will have to be obtained only if the assistance group is claiming actual costs.

Implementation

The existing cases with self-employment will have the opportunity to use the self-employment standard deduction at the next recertification. New reports of self-employment will follow this new methodology effective August 1, 2010.

Instructions:

The following chart identifies the material that should be removed from the Cash and Food Assistance Handbooks and the material that should be added.