WAG 25-06-03-a: Budgeting Methods

The following are the budgeting methods used for AFDC and TANF purposes since July 1979.

Use the appropriate method(s) to compute amounts of past AFDC and TANF overpayments.

  1. Effective July 1979: Income was budgeted based on an earnings and payment month. The earnings month was the month the income was received and the payment month was the month immediately following the earnings month. Weekly and biweekly income was equalized using 4.3 and 2.15. Effective May 1980, cents were to be dropped. The equalized gross monthly income was then compared to the Standard Expense/Exemption Charts to determine the amount of pay to be budgeted. Unearned income was budgeted in the same manner.
  2. Effective October 1981: Actual income was budgeted prospectively and retrospectively. If case was ineligible prospectively, assistance was to be canceled for the month of receipt of income. Actual income received in a budget month was budgeted for the payment month. The budget month is the month income is received and the payment month is the 2nd month following the budget month. A 3-step calculation was made to compare income 1) prospectively to 150% of the Standard of Need, 2) prospectively to the payment level, and 3) retrospectively to the payment level. For earned income, income disregards of $75 for full-time employment or $60 for part-time employment and the $30 and 1/3 were deducted from the gross income. If earned income was not reported, the $30 and 1/3 were not allowed. Day care costs were not allowed as a deduction. The 30 and 1/3 was limited to 4 consecutive months.
  3. Effective May 1982: Same as #2 above with one exception: If earned income was not reported the $75 income disregard was not allowed.
  4. Effective September 1982: Same as #2 and #3 above with one exception: An income disregard for day care costs of $160 maximum for each child for persons employed full-time and $128 maximum for each child for persons employed part-time was allowed.
  5. Effective October 1984: The standard used to determine eligibility at Step 1 of the eligibility and budgeting process increased from 150% to 185% of the Standard of Need. For earned income cases, when a client has received 30 and 1/3 for 4 consecutive months, the $30 portion of the disregard was allowed for 8 consecutive months.
  6. Effective October 1989: The income disregard for employment expenses was increased from $75 to $90. The income disregard for day care costs was revised from up to $160 per child for persons employed full-time and employed throughout the month and $128 per child for persons not employed full-time or not employed throughout the month, to up to $200 per child for each child under the age of 2 and up to $175 per child for each child age 2 and over. In addition, the order in which the earned income disregards are allowed was revised from employment expense, day care disregard, and $30 and 1/3 earned income exemption; to employment expense, $30 and 1/3 earned income exemption, and then the day care disregard.

    Earned income credit (EIC) payments, received deleted textas part of a federal income tax refund, were considered exempt both as income and as asset. 

  7. Effective November 1993:

    • Income Budgeting Demonstration Project

    • The benefit amount is computed prospectively for the first 2 payment months in which earnings are actually budgeted. Income is then budgeted retrospectively until such time as earnings are lost.
    • When earnings are lost, the benefit amount is computed prospectively for the first 2 payment months that a paycheck is not received.
    • Eligibility for a Reconciliation Payment is determined for the first 2 prospectively budgeted months and for the first 2 months following the loss of earnings, when necessary.
    • This policy applies statewide except for all cases in Champaign County and for control cases in Rock Island County. In these instances the budgeting policy that was in place prior this demonstration project is used. That policy is that income is always budgeted retrospectively. The only exception to this is at Intake when the IPE and the first regular roll month are budgeted prospectively. The IPE and first regular roll month are budgeted retrospectively if the client reapplies in the month of cancellation.

    • Work Pays

    • The first and 2nd eligibility determinations were revised. The eligibility test against the $185% Standard of Need no longer applies.
    • The 2/3 earned income disregard replaced the $90 employment expense and $30 and 1/3 earned income exemption.
    • These policy changes are statewide except for control group cases in Champaign and Lake Counties. In these instances the budgeting policy in place prior to this demonstration project is used. That policy was that:
      • The first eligibility test compares nonexempt income to 185% of the Standard of Need.
      • The earned income deductions consisted of $90 and $30 and 1/3. The $30 was allowed for 12 months and the 1/3 exemption allowed for only 4 months.

    • Child Care

    • The child care policy changes were statewide.
    • Direct payments for employment related child care began.
    • The adult/teen/child care disregard was created. This deduction is only allowed in specific situations. The specific situations are:
    • for the IPE period at Intake or SWAPS to AFDC cash when the client has paid for child care in advance;
      • when care is provided for an incapacitated adult;
      • when care is provided for a child age 13 or older and the care is not provided because of a physical or psychological condition or court-ordered supervision; or
      • when the client received the child care disregard in October of 1988 and the policy change to direct payment makes the case ineligible. This exception is required by federal regulations.
  8. Effective July 1999: The first eligibility test for active cases was obsoleted. That test compared the family's gross nonexempt income to the Poverty Level. If the income was greater than the Poverty Level, the case was ineligible.

    The Poverty Level is a statistical guideline prepared by the Federal Department of Health and Human Services that is used in determining the number of people in poverty. The Poverty Level is updated annually. 

  9. Effective January 2002: Effective 01/02 retrospective budgeting became obsolete in determining eligibility or benefit level except for overpayments computed for periods prior to 01/02 in which retrospective budgeting was used to determine the level of benefits.

    Effective January 2002, prospective budgeting began to be used for all eligibility determinations and benefit calculations. 

  10. Effective January 2004: Lump sum income is considered as unearned income for the month of receipt and any remaining amount as an asset for the following month. Ineligibility periods based on the receipt of a lump sum payment no longer apply.
  11. Effective July 2010: The Work Pays Earned income disregard was increased from 2/3 to 3/4. The $90 initial employment deduction was replaced with a variable amount which represents the difference between 50% of the Federal Poverty Level and the TANF payment level for the family size.