7110 Prospective Budgeting - A prospective budgeting methodology is used to determine eligibility and the amount of benefits/family share for all programs. Prospective budgeting is based on an estimate reflecting the income received and/or expected to be received in the calendar month and the deductions which will be billed to the household in that month (see 7210 and 7220 and subsections). The basis for any estimate (including tips) must be documented. For self-employment and other intermittent income and deductions, the estimate shall be determined as outlined in 7120 . A prospectively estimated budget may be recomputed if information is received that the estimate is no longer correct (e.g., income that was estimated to be received in a month is reduced or terminated). The client must request a new budget computation and the change shall be applied to the case in a month subsequent to the month in which it is requested in accordance with provisions in 9121.1.

 

Earned income information must be analyzed to accurately prospect income. Past information must be evaluated to determine if it represents the future. Paystubs provided must be evaluated to determine if any are not reflective of future earnings, such as a high check due to one-time overtime or a bonus, a low check due to illness or missed work, or a first partial check. If overtime, bonuses, or commissions are on the pay stub, these must be evaluated to determine whether this income is recurring. If the person is employed where tips are paid, it must be determined if tips are actual or allocated. (Certain employers must allocate tips if the percentage of tips reported by employees falls below a required minimum percentage of gross sales. To "allocate tips" means to assign an additional amount as tips to each employee whose reported tips are below the required percentage.) Pay information provided must be evaluated to determine if there was a recent pay raise that will impact future earnings. Paystubs should also be evaluated to determine if there are any discrepancies in the year-to-date amounts. If so, the missing information must be obtained.

 

If the recent past 30 days is reflective of the future, that information should be used and documented to support the determination. If the past 30 days are not reflective of future earnings due to fluctuating income, more paystubs will need to be obtained to project future income. When using paystubs, the most recent should be used and they should be consecutive. If one or more checks are not reflective (high due to a one-time bonus, or low due to illness, for example) they should not be used in the calculation.

 

Documentation must be in the case file why any paystubs are not used in the computation. When income is from a new source, the pay rate has increased (or decreased) or when the numbers of hours to be worked has increased or decreased, the income should be projected from the best information available. Weekly and biweekly income must be converted to a monthly amount. See (2) below. Refer to 1322 for earned income verification requirements for the TANF, Food Assistance, and Child Care Program.

 

Budgeting rules are also dependent upon the frequency and regularity of income. The case record is to be documented as the method of computation. The following rules apply:

 

  1. Regular Earned or Unearned Income and Deductions - Once the full monthly amount is determined, that same amount of income shall be budgeted providing the individual anticipates continued regular income and deductions. A new budget is required prior to redetermination only if regular income becomes irregular, there is no longer any income (not applicable to a job change if earnings remain regular), or there is a change in the monthly amount of regular income.
     

  2. Irregular Earned or Unearned Income and Deductions - For income and expenses received or billed more frequently than on a monthly basis (i.e., weekly, biweekly, etc.), the amount to be budgeted shall be based on converting a "representative" amount to a standard amount of anticipated monthly income or deductions. "Representative" is defined as a month in which the amount reflects a full month's benefits or wages, or deductions.

    1. Income and deductions in the same weekly amount are to be multiplied by 4.3. If the income or deduction amount received is in differing weekly amounts, a representative amount shall be determined and then multiplied by 4.3.
       

    2. Income and deductions in the same amount every 2 weeks are to be multiplied by 2.15. If the income or deduction amount received is in differing amounts every 2 weeks, a representative amount shall be determined and then multiplied by 2.15.

    3. Income and deductions in the same amount twice per month are to be added together to obtain a monthly amount. If the income or deduction is in differing amounts twice per month, a representative amount shall be determined and then multiplied by 2.

      NOTE:       To prospectively estimate semi-monthly income from a new job, (when paychecks are not available to average) pay periods with varying hours must be taken into account. The easiest and most accurate way to make this determination is to calculate a weekly estimate, times 2.15 times 2. Multiplying the weekly amount times 2.15 will take into account pay periods that have fluctuating hours. For example, a person working 40 hours a week will have more than 80 hours in a pay period when paid semi-monthly. Taking 40 X the hourly rate X 2.15 X 2 will get a closer anticipation of projected income than taking 40 X the hourly rate X 2 X 2.
       

  1. Irregular and Intermittent Income - Irregular and intermittent income received on a monthly basis in differing amounts or deductions billed monthly in differing amounts shall be averaged (see 7120). (E.g., fluctuating SSI (due to earned income) would be averaged for food assistance.)
     

  2. Child Support Income/Deduction - Child Support (and alimony) income is averaged for purposes of the Food Assistance and Child Care Programs. See 7124. The child support deduction (food assistance only) is budgeted as described in 7225.
     

    Actual income shall be used for all programs in computing any month in which the amount of income is not representative.

 

Once a standard monthly amount is established, it may continue to be budgeted through the redetermination period. However, a new budget is required:
 

  1. for cash, child care and food assistance when changes are reported in accordance with 9121 or 9122 ;
     

  2. for food assistance simplified reporting cases, when the IR is processed;