Title of Proposed Rule: Rule-making#: Office/Division or Program: OES / Employment and Benefits Division

Exclusion of Work-Study Income for Colorado Works 16-5-16-1 Rule Author: Kathryn Morrison

Phone: 303-866-5050 E-Mail: [email protected]

STATEMENT OF BASIS AND PURPOSE Summary of the basis and purpose for the rule or rule change. (State what the rule says or does, explain why the rule or rule change is necessary and what the program hopes to accomplish through this rule. How do these rule changes align with the outcomes that we are trying to achieve, such as those measured in C-Stat?)

The Colorado Works Program currently excludes most, but not all educational income. Specifically, college workstudy income that exceeds the amount specified in a needs-based package is currently considered countable earned income, but Federal rule specifically requires all financial assistance provided under Title IV to be disregarded. Based on this, current State rule conflicts with Federal rule when Colorado Works customers receive Federal work-study income. Additionally, current rule only allows for U.S. Commission of Education administered work-study income to be excluded so any State administered work-study income is considered countable. In reviewing a student’s educational income and expenses, verification of the financial aid and school expenses must be collected, which typically occurs through the school’s financial aid office. This results in a cumbersome and extensive process of collecting verification for students. Most students performing work-study are doing so under federally administered programs and do not exceed the amount specified in their needs-based package, but verification, as required under current rule, must still be pursued to confirm. Disregarding all work-study income would eliminate this requirement immediately. Federal rule and State statute do not specify State administered work-study programs must be considered countable income so this rule is not required and creates a heavy verification burden on customers as well as significant time delays for the county worker to gather the information which rarely has an impact on the customer’s eligibility. Finally, Colorado Works rule needs to be updated to remove misdirection regarding how to calculate any countable portion of Veterans Affairs (VA) educational assistance (G.I. Bill) that exceeds expenses necessary for school attendance as rule states ‘specific instructions for determining the countable amount are contained in the section on “Educational Loans and Grants”, but there is no ‘Educational Loans and Grants’ section in rule. This is confusing for anyone attempting to interpret and comply with Colorado Works rule and must be modified for clarity. The purpose of these rule changes is to minimize the verification burden for Colorado Works customers, clarify existing rule and to ensure compliance with Federal rule requiring all financial assistance provided under Title IV of the Higher Education Act of 1965 to be disregarded as income. Authority for Rule: State Board Authority: 26-1-107, C.R.S. (2016) - State Board to promulgate rules; 26-1-109, C.R.S. (2016) - state department rules to coordinate with federal programs; 26-1-111, C.R.S. (2016) - state department to promulgate rules for public assistance and welfare activities. Program Authority: (give federal and/or state citations and a summary of the language authorizing the rule-making) 45 CFR 233.20(a)(4)(ii)(p) requires any Title IV student financial assistance to be excluded as income for TANF. 26-2-703 (5.7) (10.5) C.R.S and 26-2-709 (II) C.R.S do not specify that any student financial assistance must be considered countable income, requires criteria to be established as to what constitutes countable and excludable income and allows for the state board to specify what is considered ‘Countable income’.

Document 17 Page 1 of 5

Title of Proposed Rule: Rule-making#:

Exclusion of Work-Study Income for Colorado Works 16-5-16-1

Office/Division or Program: OES / Employment and Benefits Division

Rule Author: Kathryn Morrison

Phone: 303-866-5050 E-Mail: [email protected]

Does the rule incorporate material by reference?

Yes

X

No

Yes

X

No

Does this rule repeat language found in statute? If yes, please explain.

The program has sent this proposed rule-making package to which stakeholders? County Human Services Directors Association; Colorado Legal Services; The Legal Center; All Families Deserve a Chance (AFDC) Coalition; Economic Security Sub-PAC; Legal Aid of Metropolitan Denver; Colorado Center on Law and Policy; Colorado Department of Human Services Food and Energy Assistance Division; and, Colorado Department of Health Care Policy and Financing [Note: Changes to rule text are identified as follows: deletions are shown as “strikethrough”, additions are in “all caps”, and changes made between initial review and final adoption are in brackets.] Attachments: Regulatory Analysis Overview of Proposed Rule Stakeholder Comment Summary

Page 2 of 5

Title of Proposed Rule: Rule-making#:

Exclusion of Work-Study Income for Colorado Works 16-5-16-1

Office/Division or Program: OES / Employment and Benefits Division

Rule Author: Kathryn Morrison

Phone: 303-866-5050 E-Mail: [email protected]

REGULATORY ANALYSIS (complete each question; answers may take more than the space provided)

1. List of groups impacted by this rule: Which groups of persons will benefit, bear the burdens or be adversely impacted by this rule?

All individuals who are concurrently applying for or receiving Colorado Works while attending school and performing work-study will be impacted by these proposed rules because they will no longer have to provide verification of income that is most often exempt. Additionally, county department Colorado Works eligibility workers will be impacted by eliminating the time-consuming process of verifying student workstudy income. 2. Describe the qualitative and quantitative impact: How will this rule-making impact those groups listed above? How many people will be impacted? What are the short-term and long-term consequences of this rule?

These rules will benefit Colorado Works households that include a student by minimizing their verification burden and excluding income received from state work-study programs. These rules will also benefit county departments by eliminating the time-consuming and confusing evaluation of educational income and expenses plus cleaning up rule to no longer direct readers to a non-existent section (“Educational Loans and Grants”) generating time savings and allowing for quicker eligibility decisions. There are approximately 95 Colorado Works student recipients currently who are also receiving work-study income. These recipients will no longer need to provide verification of this income because it will be totally excluded. Annually since 2014, the average number of Colorado Works recipients also performing workstudy has been 90.33 individuals so these individuals will also no longer have to provide verification of their work-study income as a condition of eligibility which will increase access to the program for eligible students. 3. Fiscal Impact: For each of the categories listed below explain the distribution of dollars; please identify the costs, revenues, matches or any changes in the distribution of funds even if such change has a total zero effect for any entity that falls within the category. If this rule-making requires one of the categories listed below to devote resources without receiving additional funding, please explain why the rule-making is required and what consultation has occurred with those who will need to devote resources.

State Fiscal Impact (Identify all state agencies with a fiscal impact, including any Colorado Benefits Management System (CBMS) change request costs required to implement this rule change) Colorado Department of Human Services Food and Energy Assistance Division is paying for the CBMS changes necessary as they are proposing similar rules concurrently

Page 3 of 5

Title of Proposed Rule: Rule-making#:

Exclusion of Work-Study Income for Colorado Works 16-5-16-1

Office/Division or Program: OES / Employment and Benefits Division

Rule Author: Kathryn Morrison

Phone: 303-866-5050 E-Mail: [email protected]

County Fiscal Impact No County funds utilized Federal Fiscal Impact No Federal funds utilized Other Fiscal Impact (such as providers, local governments, etc.) No other fiscal impacts as no other funds utilized 4. Data Description: List and explain any data, such as studies, federal announcements, or questionnaires, which were relied upon when developing this rule?

Internal queries were done to identify students currently receiving Colorado Works and performing workstudy plus the average number of annual Colorado Works recipients since January 2014 who are also eligible students performing work-study. Data reflects that 95 current program participants are also receiving work-study income and that the annual average since 2014 is 90.33 individuals.

5. Alternatives to this Rule-making: Describe any alternatives that were seriously considered. Are there any less costly or less intrusive ways to accomplish the purpose(s) of this rule? Explain why the program chose this rule-making rather than taking no action or using another alternative.

There is no other option that allows the Colorado Works Program to comply with Federal rules and to streamline the process of how educational income for students is considered when determining eligibility for the Program.

OVERVIEW OF PROPOSED RULE Compare and/or contrast the content of the current regulation and the proposed change.

Section Numbers

Current Regulation

Proposed Change

3.605.2.F.9

Countable Earned Income

Remove completely to exempt all income received through college work-study

__

Yes

X

No

3.605.3.A.1.d

Countable Unearned Income

Remove completely because all education loans and grants are exempt per 3.605.3.D.26

__

Yes

X

No

3.605.3.A.1.e

Countable Unearned Income

Technical clean-up to no longer direct to a non-existent section in rule (“Educational Loans and Grants”) and to adjust specific rule cite lettering to account for removal of 3.605.3.A.1.d

__

Yes

X

No

3.605.3.A.1.f-u

Countable Unearned Income

Adjust specific rule cite lettering to account for removal of 3.605.3.A.1.d

__

Yes

X

No

3.605.3.D.24.a

General Income Exemptions

Revise rule to exempt all income received through college work-study

__

Yes

X

No

Page 4 of 5

Stakeholder Comment

Title of Proposed Rule:

Exclusion of Work-Study Income for Colorado Works

Rule-making#:

16-5-16-1

Office/Division or Program: OES / Employment and Benefits Division

Rule Author: Kathryn Morrison

Phone: 303-866-5050 E-Mail: [email protected]

STAKEHOLDER COMMENT SUMMARY DEVELOPMENT The following individuals and/or entities were included in the development of these proposed rules (such as other Program Areas, Legislative Liaison, and Sub-PAC): Food and Nutrition section.

THIS RULE-MAKING PACKAGE The following individuals and/or entities were contacted and informed that this rule-making was proposed for consideration by the State Board of Human Services: County Human Services Directors Association; Colorado Legal Services; The Legal Center; All Families Deserve a Chance (AFDC) Coalition; Economic Security Sub-PAC; Legal Aid of Metropolitan Denver; Colorado Center on Law and Policy; Colorado Department of Human Services Food and Energy Assistance Division; and, Colorado Department of Health Care Policy and Financing Are other State Agencies (such as Colorado Department of Health Care Policy and Financing) impacted by these rules? If so, have they been contacted and provided input on the proposed rules? Food and Energy Division will now be able to exempt all financial aid and work-study for their program because it will be in alignment with Colorado Works. They are proposing rule changes for their programs concurrently with Colorado Works. X

Yes

No

Have these rules been reviewed by the appropriate Sub-PAC Committee? X

Yes

No

Date presented to be presented July 7, 2016. Were there any issues raised? ____ Yes _X__ No If not, why. Comments were received from stakeholders on the proposed rules: Yes

X

No

If “yes” to any of the above questions, summarize and/or attach the feedback received, including requests made by the State Board of Human Services, by specifying the section and including the Department/Office/Division response. Provide proof of agreement or ongoing issues with a letter or public testimony by the stakeholder.

Page 5 of 5

(9 CCR 2503-6) === 3.605.2

Income [Rev. eff. 7/1/15]

***************************************************************** F.

Countable Earned Income

***************************************************************** 9.

Work Study Income Work Study income that exceeds the basic cash assistance grant is earned income in the month received.

***************************************************************** 3.605.3

Unearned Income [Rev. eff. 7/1/13]

For the purpose of determining eligibility for Colorado Works, the following shall be exempt from consideration as income: A.

Countable Unearned Income Consideration of Unearned Income Against Program Income Standards Unless otherwise specified, any unearned income is countable and together with all other countable income of the applicant, recipient, or assistance unit it must be considered against the applicable assistance program need and/or grant standards specified in the regulations covering the different programs. 1.

Countable Unearned Income Countable unearned income includes, but is not limited to the following, as well as other payments from any source, which can be construed to be a gain or benefit to the applicant or recipient and which are not earned income: a.

Veteran’s Compensation and pension.

b.

Income from rental property is considered as unearned income where the applicant or recipient is not actively managing the property on an average of at least twenty (20) hours a week. Rental income is countable to the extent it exceeds allowable expenses. Allowable expenses are maintenance, taxes, management fees, interest on mortgage, and utilities paid. This shall not include the purchase of the rental property and payments on the principal of loans for rental property.

c.

Support and alimony payments including all child support and alimony payments shall be used to determine eligibility. Child support excluding arrears from child support that is returned to families in a county that exercises the option to pass through the state and county share of current child support collection shall be disregarded when determining the Colorado Works grant amount.

1

d.

Educational loans and grants which are not exempt; the countable amount, after deduction of expenses necessary for school attendance, must be prorated over the period of months intended to be covered by the loan or grant.

eD.

VA educational assistance (G.I.Bill) payments or any other benefits which are conditional upon school attendance are income to the extent that they exceed expenses necessary for school attendance; specific instructions for determining the countable amount are contained in the section on “Educational Loans and Grants.”

fE.

Proceeds of a life insurance policy to the extent that they exceed the amount expended by the beneficiary for the purpose of the insured recipient's last illness and burial which are not covered by other benefits.

gF.

Proceeds of a health insurance policy or personal injury lawsuit to the extent that they exceed the amount to be expended or required to be expended for medical care.

hG.

Strike benefits.

iH.

Income from jointly owned property - in a percentage at least equal to the percentage of ownership or, if receiving more than percentage of ownership, the actual amount received.

jI.

Lease bonuses (oil or mineral) received by the lesser as an inducement to lease land for exploration are income in the month received.

kJ.

Oil or mineral royalties received by the lesser are income in the month received.

lK.

Stepparent and non-citizens' sponsors' attributable income for Colorado Works cases.

mL.

Amounts withheld from unearned income because of a garnishment are countable as unearned income.

nM.

Loans or inheritances.

oN.

Gifts or prizes.

pO.

Dividends and interest received on savings bonds, leases, etc.

qP.

Annuities, pensions, or retirements payments.

rQ.

Disability or survivor's benefits.

sR.

Worker's Compensation payments.

tS.

Unemployment Compensation.

uT.

Social Security benefits.

***************************************************************** D. General Income Exemptions – Exemptions from Consideration as Income

2

For the purpose of determining eligibility for Colorado Works, the following shall be exempt from consideration as income herein incorporated by reference; no later amendments or editions are incorporated. Copies of these federal laws are available from the Colorado Department of Human Services, Director of the Colorado Works Division, 1575 Sherman Street, Denver, Colorado 80203, or at any State Publications Library: ***************************************************************** 24. Income of an applicant or participant who is attending school (student in a secondary education or undergraduate degree program) shall be considered as follows: a.

Income received from a college work-study program grant shall be exempt when it is part of a “needs-based” package administered by the U.S. Commission of Education. Work-study income that exceeds the amount specified in a needsbased package shall be considered earned income.

b.

All earned income, including earned income from WIA, that is received by a dependent child who is a full-time student or a part-time student who is not a full-time employee shall be disregarded.

*****************************************************************

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