Title of Regulation: 22VAC40-901. Community Services Block Grant Program (amending 22VAC40-901-10, 22VAC40-901-50, 22VAC40-901-60, 22VAC40-901-70).

Statutory Authority: §§ 2.2-5402 and 63.2-217 of the Code of Virginia; 42 USC § 9909.

Public Hearing Information: No public hearing is currently scheduled.

Public Comment Deadline: March 2, 2022.

Effective Date: March 17, 2022.

Agency Contact: Matt Fitzgerald, Community Service Program Manager, Department of Social Services, 801 East Main Street, Richmond, VA 23219, telephone (804) 726-7088, FAX (800) 726-7088, or email matt.fitzgerald@dss.virgnia.gov.

Basis: Section 63.2-217 of the Code of Virginia authorizes the State Board of Social Services to promulgate regulations necessary to carry out Title 63.2 of the Code of Virginia. The regulatory changes are promulgated under Department of Social Services authority as the designated Community Action Act agency, as set out in § 2.2-5401 of the Code of Virginia.

Purpose: This chapter sets parameters for evaluation, recommendation, and designation of community action agencies. The rationale for the changes is aligning sections for uniformity and clarity and removing provisions not appropriate for a regulation. The Community Services Block Grant (CSBG) Program provides services that are essential to protect the welfare of citizens, and the chapter sets out clear framework for administration of the program.

Rationale for Using Fast-Track Rulemaking Process: The rulemaking is considered noncontroversial for two reasons. One, the main changes were deemed by the Office of Attorney General (OAG) to be an alignment to all of the other language that required final approval by the Secretary and Governor, and to the Virginia Community Action Act (which lists the Secretary and Governor in the process for expansion approval). Although 22VAC40-901-50 did not previously detail the requirement for approval beyond the department level, which was the process being followed, as the expansion of an existing agency into a service area does require the modification of funding allocation and changing of a designation letter to include the localities served. Second, the other changes were removals of language OAG deemed better for guidance than regulation, as it included some criteria for review that wasn't required, but more helpful.

Substance: This regulatory change clarifies and aligns regulations that detail the process for evaluation, recommendation, and designation of a community action agency. The amendments ensure that language in 22VAC40-901-50, 22VAC40-901-60, and 22VAC40-901-70 align with 22VAC40-901-80. Specifically, language was modified in 22VAC40-901-50 to make clear that the department evaluates and makes a recommendation to the Secretary of Health and Human Resources, for preparation of a recommendation to the Governor for designation. Beyond this language alignment, the remaining changes were to remove two statements that strongly encouraged those seeking designation to pursue technical assistance prior to seeking designation. These items were removed, as they are more guidance than regulation.

Issues: The primary advantage to the public is having a regulation that is uniform and aligned with statute and consistent and that does not include nonregulatory guidance. The primary advantage to the agency is also uniformity and alignment, in evaluating requests for designation. There are no disadvantages to the action.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. Pursuant to a periodic review, and recommendations by the Office of the Attorney General (OAG), the State Board of Social Services (Board) proposes to make a number of changes in order to align sections of the regulation that detail the process for evaluation, recommendation, and designation of a community action agency (CAA) with the Code of Virginia (Code).

Background. CAAs are local organizations with the mission of reducing poverty through locally-designed and delivered programs and services that are targeted to the specific needs of the community. CAAs receive funding from the federal Community Services Block Grant (CSBG) and General Assembly appropriations.¹ 22VAC40-901 sets out the framework for the allocation formula, expansion of CAA service areas, designation of community agencies and localities as CAAs, and the process for evaluating requests for designation.

During a periodic review initiated in May 2019, the OAG identified and recommended a number of changes that would align the regulation with Code §2.2-5400 et al (Community Action Act) that the Board seeks to implement through this action.² Specifically, in 22VAC40-901-50, Expansion of a community action agency service area, the Board proposes to add language saying the department is responsible for evaluating and making recommendations to the Governor on any request for the designation of an existing community action agency in a previously unserved locality. Upon completion of this evaluation, the department will forward to the Secretary of Health and Human Resources a recommendation on what action the Governor should take regarding designation of the existing community action agency. If the Governor designates the existing community action agency in the locality, the locality will be added to the service area of the existing community action agency. This language reflects the current process, since the expansion of an existing CAA into a new service area requires the modification of funding allocation and the changing of a Designation letter to include the localities served.

Further, the Board proposes to simplify and clarify the requirements contained in 22VAC40-901-50, Expansion of a community action agency service area, 22VAC40-901-60, Designation of a community organization as a community action agency and 22VAC40-901-70, Designation of a locality or group of localities as a community action agency. The proposed changes in language would serve to align these sections with the Community Action Act and more accurately reflect the process currently being followed by the Department of Social Services (DSS).³

Lastly, the Board seeks to remove two statements that "strongly encouraged" organizations and localities seeking designation to pursue technical assistance from DSS. This language was deemed better for guidance than regulation by the OAG, as it included some criteria for review that was not required.⁴

Estimated Benefits and Costs. To the extent that the proposed changes serve to clarify the process for evaluation, recommendation, and designation of a community action agency, readers of the regulation including current and new CAAs would likely benefit from greater clarity and alignment with the Code.

Businesses and Other Entities Affected. There are currently 28 local CAAs and three statewide CAAs. The proposed amendments do not appear to affect businesses since most CAAs are either public entities or private nonprofits.

Small Businesses⁵ Affected. The proposed amendment would not affect small businesses.

Localities⁶ Affected.⁷ The proposed amendment would not affect local governments. DSS has indicated that the following localities are currently unserved by a local CAA: Chesterfield, Colonial Heights, Harrisonburg, Henrico, Highland, Loudon, Poquoson, Rockingham, Winchester, and York. If the proposed changes lead to any of these localities being served by a CAA, then that locality would benefit from the proposed changes.

Projected Impact on Employment. The proposed amendments would not affect employment by DSS, its local departments, or by CAAs.

Effects on the Use and Value of Private Property. The proposed amendments are unlikely to affect the use and value of private property. Real estate development costs are not affected.

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¹The CSBG was enacted under the CSBG Act in 1981 and authorizes block grants to states. It is administered by the Office of Community Services within the U.S. Department of Health and Human Services. States are required to pass through 90% of their block grant allotments to CAAs, and may keep up to five percent of allotments for administrative costs. The remainder is used for statewide activities. See https://www.vacap.org/who-we-are/.

²See https://townhall.virginia.gov/l/ViewPReview.cfm?PRid=1799.

³This includes adding a definition of low-income person in Section 10 that is identical to the definition in the Code.

⁴See the Agency Background Document https://townhall.virginia.gov/l/GetFile.cfm?File=73\5694\9220\AgencyStatement_DSS_9220_v6.pdf.

⁵Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

⁶"Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

⁷§ 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency's Response to Economic Impact Analysis: The Department of Social Services reviewed the economic impact analysis prepared by the Department of Planning and Budget and has no comments.

Summary:

The amendments align regulation text found in 22VAC40-901-50, 22VAC40-901-60, and 22VAC40-901-70 with that found in 22VAC40-901-80. The amendments detail the process for evaluation, recommendation, and designation of a community action agency, including (i) clarifying that the Department of Social Services evaluates and makes a recommendation for designation to the Secretary of Health and Human Resources for preparation of a recommendation to the Governor and (ii) removing two statements (nonregulatory in nature) that strongly encouraged organizations and localities seeking designation to pursue technical assistance from the department.

22VAC40-901-10. Definitions.

The following words and terms when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise:

"Community action agency" means a local subdivision of the Commonwealth, a combination of political subdivisions, a separate public agency, or a private, nonprofit agency that has the authority under its applicable charter or laws to receive funds to support community action activities and other appropriate measures designed to identify and deal with the causes of poverty in the Commonwealth, and that is designated as a community action agency by federal law, federal regulations, or the Governor.

"Community action statewide organization" means community action programs, organized on a statewide basis, to enhance the capability of community action agencies.

"Community organization" means a private nonprofit organization, including faith-based organizations.

"Department" means the Virginia Department of Social Services.

"Local share" means cash or in-kind goods and services donated to community action agencies or community action statewide organizations to carry out their responsibilities.

"Locality" means a county or city in the Commonwealth.

"Low-income person" means a person who is a member of a household with a gross annual income equal to or less than 125% of the poverty standard accepted by the federal agency designated to establish poverty guidelines.

22VAC40-901-50. Expansion of community action agency service area.

A. A locality that is not served by a designated community action agency may reach an agreement develop a request with an existing community action agency for the provision of services in that locality. The locality and the community action agency may submit a proposal to the department that includes plans for the expansion of services into the locality and a provision describing how the locality will be represented on the board of the community action agency. Upon department approval of the proposal, the governing body of the locality may adopt a resolution designating the community action agency as their community action agency and forward this resolution to the Department of Social Services. In adopting the resolution, the governing body must have allowed the opportunity for public comment. Upon receipt of the resolution, the locality will be included in the community action agency's service area. The request will include:

1. A description of the way in which the locality will be represented on the board of the existing community action agency.

2. A resolution adopted by the locality requesting the designation of the existing community action agency as the community action agency for the locality. In adopting the resolution, the governing body must have allowed the opportunity for public comment.

3. A description of the existing community action agency's history of successfully providing a variety of services to low-income individuals. Examples would include operating four or more programs aimed at various segments of the low-income population and can include community and economic development.

4. Documentation that the low-income population in the proposed designated service area is large enough to justify funding a variety of programs.

5. Documentation that demonstrates the financial stability of the existing community action agency.

6. The detailed financial procedures that demonstrate how the existing community action agency meets generally accepted accounting principles (GAAP).

7. The existing community action agency plan for providing Community Services Block Grant funded services within the proposed service area. This plan must be developed with input from a variety of sources, including the low-income population of the proposed service area.

B. The department is responsible for evaluating and making recommendations to the Governor on any request for the designation of an existing community action agency in a previously unserved locality. Upon completion of this evaluation, the department will forward to the Secretary of Health and Human Resources a recommendation on what action the Governor should take regarding designation of the existing community action agency. If the Governor designates the existing community action agency in the locality, the locality will be added to the service area of the existing community action agency.

22VAC40-901-60. Designation of a community organization as a community action agency.

A. To be designated as a community action agency, a community organization's purpose shall include working for the reduction of poverty and the revitalization of low-income communities through the identification of local needs and the provision of a broad range of services to meet those needs. The organization must have the recommendation of the governing body of the localities to be served, must be financially viable, and must meet administrative standards, financial management standards, and other requirements established by federal and state laws and regulations. In order for the department to support the designation of a community organization to become a community action agency, the following conditions should exist:

1. The organization's governing board must meet, or be in the process of changing to meet, the requirements of federal and state law related to community action agency boards.

2. Each locality in the proposed service area must have approved a resolution recommending the designation of the organization as a community action agency. In adopting the resolution, the governing body must have allowed the opportunity for public comment.

3. The organization and its management should have a history of successfully providing a variety of services to low-income individuals. Examples would include operating four or more programs aimed at various segments of the low-income population. This can include community and economic development. Services currently being provided by the community organization should not be limited to a single segment of the population.

4. The low-income population in the proposed designated service area should be large enough to justify funding a variety of programs.

5. The organization should be financially stable must be able to demonstrate financial stability. This would include funding from a variety of federal and/or state sources as well as private and/or local government funding. The organization should have a sufficient reserve of unrestricted funds to avoid cash flow problems; for example, a reserve equal to or exceeding three months' operating expenses.

6. The organization must have financial procedures in place to meet Generally Accepted Accounting Principles generally accepted accounting principles (GAAP). This would normally be supported by a review of prior independent audits.

7. The organization must have developed a plan for providing Community Services Block Grant funded services within the proposed service area. This plan must have been be developed with input from a variety of sources including the low-income population of the proposed service area.

B. A community organization wishing to be designated as a community action agency must submit a written request to the department. The request must include documentation verifying that all of the criteria listed in this section are met. Any community organization wishing to become a community action agency is strongly encouraged to contact the department and request technical assistance in this process. The request will be evaluated per 22VAC40-901-80.

22VAC40-901-70. Designation of a locality or group of localities as a community action agency.

If no existing community action agency or other community organization is willing and able to provide services, a locality or group of localities can request that the department designate recommend one or more localities for designation as a community action agency. Any locality or group of localities wishing to become a community action agency are strongly encouraged to contact the department and request technical assistance in this process. This request must include the following documentation:

1. A description of the efforts made to obtain services through an existing community action agency or a community organization that could have been designated as a community action agency.

2. A resolution adopted by the locality or each of a group of localities requesting that it be designated as a community action agency. In adopting the resolution, the governing body or bodies must have allowed the opportunity for public comment.

3. A resolution adopted by the locality or each of a group of localities establishing a community action board that meets the requirements of federal and state law related to public community action agencies.

4. A plan for providing CSBG-funded services within the proposed service area. This plan must have been be developed with input from a variety of sources including the low-income population of the proposed service area.

The request submitted to the department will be evaluated per 22VAC40-901-80.