45 CFR § 233.31 - Budgeting methods for AFDC.
(a) Requirements for State plans. A State plan for AFDC shall specify that all factors of eligibility shall be determined prospectively and the amount of the assistance for any month for all assistance units required to file a monthly report for the month designated as the budget month under the State's retrospective budgeting procedures shall be determined using retrospective budgeting as provided in §§ 233.31–233.37 except as provided in § 233.34. The State plan shall specify whether the State uses prospective or retrospective budgeting to determine the amount of the assistance payments for recipients not required to report monthly. Budgeting methods for OAA, AB, APTD, and AABD are described in §§ 233.21–233.29.
(b) Definitions. The following definitions apply to §§ 233.31 through 233.37:
(1) Prospective budgeting means that the agency shall determine eligibility (and compute the amount of assistance for the first one or two months) based on its best estimate of income and circumstances which will exist in that month. This estimate shall be based on the agency's reasonable expectation and knowledge of current, past or future circumstances.
(2) Retrospective budgeting means that the agency shall compute the amount of assistance for a payment month based on actual income or circumstances which existed in a previous month, the “budget month.”
(3) Budget month means the fiscal or calendar month from which the agency shall use income or circumstances of the family to compute the amount of assistance.
(4) Payment month means the fiscal or calendar month for which an agency shall pay assistance. Payment is based upon income or circumstances in the budget month. In prospective budgeting, the budget month and the payment month are the same. In retrospective budgeting, the payment month follows the budget month.
(5) Recent work history means the individual received earned income in any one of the two months prior to the budget month.