SECTION 1. ALTERNATIVE PENALTY PROCEDURE FOR CHILD SUPPORT DATA 
              PROCESSING REQUIREMENTS.

    (a) In General.--Section 455(a) of the Social Security Act (42 
U.S.C. 655(a)) is amended by adding at the end the following:
    ``(4)(A) If--
            ``(i) the Secretary determines that a State plan under 
        section 454 would (in the absence of this paragraph) be 
        disapproved for the failure of the State to comply with section 
        454(24)(A), and that the State has made and is continuing to 
        make a good faith effort to so comply; and
            ``(ii) the State has submitted to the Secretary a 
        corrective compliance plan that describes how, by when, and at 
        what cost the State will achieve such compliance, which has 
        been approved by the Secretary,
then the Secretary shall not disapprove the State plan under section 
454, and the Secretary shall reduce the amount otherwise payable to the 
State under paragraph (1)(A) of this subsection for the fiscal year by 
the penalty amount.
    ``(B) In this paragraph:
            ``(i) The term `penalty amount' means, with respect to a 
        failure of a State to comply with section 454(24)--
                    ``(I) 4 percent of the penalty base, in the case of 
                the 1st fiscal year in which such a failure by the 
                State occurs;
                    ``(II) 8 percent of the penalty base, in the case 
                of the 2nd such fiscal year;
                    ``(III) 16 percent of the penalty base, in the case 
                of the 3rd such fiscal year; or
                    ``(IV) 20 percent of the penalty base, in the case 
                of the 4th or any subsequent such fiscal year.
            ``(ii) The term `penalty base' means, with respect to a 
        failure of a State to comply with section 454(24) during a 
        fiscal year, the amount otherwise payable to the State under 
        paragraph (1)(A) of this subsection for the preceding fiscal 
        year, minus the applicable share of such amount which would 
        otherwise be payable to any county to which the Secretary 
        granted a waiver under the Family Support Act of 1988 (Public 
        Law 100-485; 102 Stat. 2343) for 90 percent enhanced Federal 
        funding to develop an automated data processing and information 
        retrieval system provided that such system was implemented 
        prior to October 1, 1997.
    ``(C)(i) The Secretary shall waive a penalty under this paragraph 
for any failure of a State to comply with section 454(24)(A) during 
fiscal year 1998 if--
            ``(I) by December 31, 1997, the State has submitted to the 
        Secretary a request that the Secretary certify the State as 
        having met the requirements of such section;
            ``(II) the Secretary has provided the certification as a 
        result of a review conducted pursuant to the request; and
            ``(III) the State has not failed such a review.
    ``(ii) If a State with respect to which a reduction is made under 
this paragraph for a fiscal year achieves compliance with section 
454(24)(A) by the beginning of the succeeding fiscal year, the 
Secretary shall increase the amount otherwise payable to the State 
under paragraph (1)(A) of this subsection for the succeeding fiscal 
year by an amount equal to 75 percent of the reduction for the fiscal 
year.
    ``(D) The preceding provisions of this paragraph (except for 
subparagraph (C)(i)) shall apply, separately and independently, to a 
failure to comply with section 454(24)(B) in the same manner in which 
the preceding provisions apply to a failure to comply with section 
454(24)(A).''.
    (b) Inapplicability of Penalty Under TANF Program.--Section 
409(a)(8)(A)(i)(III) of such Act (42 U.S.C. 609(a)(8)(A)(i)(III)) is 
amended by inserting ``(other than section 454(24))'' before the 
semicolon.

SEC. 2. AUTHORITY TO WAIVE SINGLE STATEWIDE AUTOMATED DATA PROCESSING 
              AND INFORMATION RETRIEVAL SYSTEM REQUIREMENT.

    (a) In General.--Section 452(d)(3) of the Social Security Act (42 
U.S.C. 652(d)(3)) is amended to read as follows:
    ``(3) The Secretary may waive any requirement of paragraph (1) or 
any condition specified under section 454(16), and shall waive the 
single statewide system requirement under sections 454(16) and 454A, 
with respect to a State if--
            ``(A) the State demonstrates to the satisfaction of the 
        Secretary that the State has or can develop an alternative 
        system or systems that enable the State--
                    ``(i) for purposes of section 409(a)(8), to achieve 
                the paternity establishment percentages (as defined in 
                section 452(g)(2)) and other performance measures that 
                may be established by the Secretary;
                    ``(ii) to submit data under section 454(15)(B) that 
                is complete and reliable;
                    ``(iii) to substantially comply with the 
                requirements of this part; and
                    ``(iv) in the case of a request to waive the single 
                statewide system requirement, to--
                            ``(I) meet all functional requirements of 
                        sections 454(16) and 454A;
                            ``(II) ensure that the calculation of 
                        distribution of collected support is according 
                        to the requirements of section 457;
                            ``(III) ensure that there is only 1 point 
                        of contact in the State for all interstate case 
                        processing and coordinated intrastate case 
                        management;
                            ``(IV) ensure that standardized data 
                        elements, forms, and definitions are used 
                        throughout the State; and
                            ``(V) complete the alternative system in no 
                        more time than it would take to complete a 
                        single statewide system that meets such 
                        requirement;
            ``(B)(i) the waiver meets the criteria of paragraphs (1), 
        (2), and (3) of section 1115(c); or
            ``(ii) the State provides assurances to the Secretary that 
        steps will be taken to otherwise improve the State's child 
        support enforcement program; and
            ``(C) in the case of a request to waive the single 
        statewide system requirement, the State has submitted to the 
        Secretary separate estimates of the total cost of a single 
        statewide system that meets such requirement, and of any such 
        alternative system or systems, which shall include estimates of 
        the cost of developing and completing the system and of 
        operating the system for 5 years, and the Secretary has agreed 
        with the estimates.''.
    (b) Payments to States.--Section 455(a)(1) of such Act (42 U.S.C. 
655(a)(1)) is amended--
            (1) by striking ``and'' at the end of subparagraph (B);
            (2) by striking the semicolon at the end of subparagraph 
        (C) and inserting ``, and''; and
            (3) by inserting after subparagraph (C) the following:
            ``(D) equal to 66 percent of the sums expended by the State 
        during the quarter for an alternative statewide system for 
        which a waiver has been granted under section 452(d)(3), but 
        only to the extent that the total of the sums so expended by 
        the State on or after the date of the enactment of this 
        subparagraph does not exceed the least total cost estimate 
        submitted by the State pursuant to section 452(d)(3)(C) in the 
        request for the waiver.''.
Amends part D (Child Support and Establishment of Paternity) of title IV of the Social Security Act to prescribe alternative penalty reductions in its Federal payments for a State that would otherwise have its child support data processing system plan disapproved for noncompliance, if it has an approved corrective compliance plan and makes a good faith effort to comply with the requirements for such a system.  Instructs the Secretary of Health and Human Services to waive the noncompliance penalty during FY 1998 for any State which meets certain criteria. 
Authorizes the Secretary to waive the single statewide automated data processing and information retrieval system requirement if a State demonstrates that it has or can develop an alternative system or systems that meet specified requirements.
A bill to provide for an alternative penalty procedure for States that fail to meet Federal child support data processing requirements.