SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Children First Child Support Reform 
Act of 1998''.

SEC. 2. DISTRIBUTION AND TREATMENT OF CHILD SUPPORT COLLECTED BY OR ON 
              BEHALF OF FAMILIES RECEIVING ASSISTANCE UNDER TANF.

    (a) Requirement to Pass All Child Support Collected Directly to the 
Family.--
            (1) In general.--Section 457 of the Social Security Act (42 
        U.S.C. 657) is amended--
                    (A) by striking all that precedes subsection (f) 
                and inserting the following:

``SEC. 457. DISTRIBUTION OF COLLECTED SUPPORT.

    ``(a) Distribution to Family.--
            ``(1) In General.--Subject to paragraph (2) and subsection 
        (f), any amount collected on behalf of a family as support by a 
        State pursuant to a plan approved under this part shall be 
        distributed to the family.
            ``(2) Families under certain agreements.--In the case of an 
        amount collected for a family in accordance with a cooperative 
        agreement under section 454(33), the State shall distribute the 
        amount so collected pursuant to the terms of the agreement.
    ``(b) Hold Harmless Provision.--If the amounts collected which 
could be retained by the State in the fiscal year (to the extent 
necessary to reimburse the State for amounts paid to families as 
assistance by the State) are less than the State share of the amounts 
collected in fiscal year 1995, the State share for the fiscal year 
shall be an amount equal to the State share in fiscal year 1995.'';
                    (B) by redesignating subsection (f) as subsection 
                (c); and
                    (C) in subsection (c) (as so redesignated), by 
                striking ``Notwithstanding'' and inserting ``Amounts 
                Collected On Behalf of Children in Foster Care.--
                Notwithstanding''.
            (2) Conforming amendments.--
                    (A) Section 409(a)(7)(B)(i)(I))(aa) of the Social 
                Security Act (42 U.S.C. 609(a)(7)(B)(i)(I)(aa)) is 
                amended by striking ``457(a)(1)(B)'' and inserting 
                ``457''.
                    (B) Section 454B(c) of such Act (42 U.S.C. 654b(c)) 
                is amended by striking ``457(a)'' and inserting 
                ``457''.
    (b) Disregard of Child Support Collected For Purposes of 
Determining Amount of TANF Assistance.--Section 408(a) of the Social 
Security Act (42 U.S.C. 608(a)) is amended by adding at the end the 
following:
            ``(12) Requirement to disregard child support in 
        determining amount of assistance.--
                    ``(A) In general.--A State to which a grant is made 
                under section 403 shall disregard any amount received 
                by a family as a result of a child support obligation 
                in determining the amount or level of assistance that 
                the State will provide to the family under the State 
                program funded under this part.
                    ``(B) Option to include child support for purposes 
                of determining eligibility.--A State may include any 
                amount received by a family as a result of a child 
                support obligation in determining the family's income 
                for purposes of determining the family's eligibility 
                for assistance under the State program funded under 
                this part.''.
    (c) Elimination of TANF Requirement to Assign Support to the 
State.--
            (1) In general.--Section 408(a) of the Social Security Act 
        (42 U.S.C. 608(a)) is amended by striking paragraph (3).
            (2) Conforming amendments.--
                    (A) Section 452 of the Social Security Act (42 
                U.S.C. 652) is amended--
                            (i) in subsection (a)(10)(C), by striking 
                        ``section 408(a)(3) or under''; and
                            (ii) in subsection (h), by striking ``or 
                        with respect to whom an assignment pursuant to 
                        section 408(a)(3) is in effect''.
                    (B) Section 454(5) of such Act (42 U.S.C. 654(5)) 
                is amended by striking ``(A) in any case'' and all that 
                follows through ``the support payments collected, and 
                (B)''.
                    (C) Section 456(a) of such Act (42 U.S.C. 656(a)) 
                is amended--
                            (i) in paragraph (1), by striking 
                        ``assigned to the State pursuant to section 
                        408(a)(3) or''; and
                            (ii) in paragraph (2)(A), by striking 
                        ``assigned''.
                    (D) Section 464(a)(1) of such Act (42 U.S.C. 
                654(a)(1)) is amended by striking ``section 408(a)(3) 
                or ''.
                    (E) Section 466(a)(3)(B) of such Act (42 U.S.C. 
                666(a)(3)(B)) is amended by striking ``408(a)(3) or ''.
                    (F) Section 458A(b)(5)(C)(i)(I) of the Social 
                Security Act (42 U.S.C. 658a(b)(5)(C)(i)(I)), as added 
                by the Child Support Performance and Incentive Act of 
                1998 (Public Law 105-200; 112 Stat. 645) is amended by 
                striking ``A or''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section take effect on October 1, 1998.
            (2) Child support performance and incentive act conforming 
        amendment.--The amendment made by subsection (c)(2)(F) shall 
        take effect on October 2, 1999.
Children First Child Support Reform Act of 1998 - Amends part D (Child Support and Establishment of Paternity) of title IV of the Social Security Act (SSA) to require States to pass through directly to families on assistance under SSA title IV part A (Temporary Assistance for Needy Families) (TANF) all child support collected by the State on behalf of such families on TANF assistance. 
Amends SSA title IV part A to require a State to disregard child support collected for purposes of determining the amount of TANF assistance; but allows the State to include such support in family income for purposes of determining TANF eligibility.  Repeals the TANF requirement that families assign certain support rights to the State.
Children First Child Support Reform Act of 1998