SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Workfare Incentive Act''.

SEC. 2. AMENDMENT.

    Section 403 of the Social Security Act (42 U.S.C. 603) is amended 
by inserting after subsection (b) the following new subsection:
    ``(c)(1)(A) If the Secretary determines--
            ``(i) that a State is operating a general welfare 
        assistance program described in paragraph (3) during a calendar 
        quarter, or
            ``(ii) that more than 20 percent of the local governments 
        within a State that provide general welfare assistance are 
        operating programs described in paragraph (3) during a calendar 
        quarter,
the Secretary shall reduce by 50 percent the amount that such State 
would otherwise receive under subsection (a) or (l) with respect to 
expenditures made by such State during such quarter for the 
administration of the aid to families with dependent children program 
under this part.
    ``(B) If a State receives a reduced payment in a calendar quarter 
as a result of a determination by the Secretary under subparagraph 
(A)(ii)--
            ``(i) such State shall reduce for such quarter the payments 
        made to each State office administering the aid to families 
        with dependent children program which is located within the 
        jurisdiction of the local governments described in subparagraph 
        (A)(ii) by an amount equal to 50 percent of the Federal share 
        of the administrative expenses of such office; and
            ``(ii) such State shall not, as a result of such reduced 
        payment, reduce for such quarter the payments made to any State 
        office administering the aid to families with dependent 
        children program which is not located within the jurisdiction 
        of the local governments described in subparagraph (A)(ii).
    ``(2) If the Secretary determines that any local government within 
a State that is not described in paragraph (1)(A) is operating a 
general welfare assistance program described in paragraph (3) during a 
calendar quarter, the State shall reduce for such quarter the payments 
made to any State office administering the aid to families with 
dependent children program which is located within the jurisdiction of 
such local government by an amount equal to 50 percent of the Federal 
share of the administrative expenses of such office and such amount 
shall be paid by the State to the Secretary.
    ``(3) A general welfare assistance program described in this 
paragraph is a general welfare assistance program that--
            ``(A) provides benefits to able-bodied individuals (as 
        determined by the Secretary) who have attained age 18 and who 
        have no dependents (hereafter referred to in this subsection as 
        `able-bodied individuals');
            ``(B) does not have a workfare program that meets the 
        participation rate requirements of paragraph (4); and
            ``(C) does not meet any other requirements set forth in 
        regulations issued by the Secretary.
    ``(4)(A) The participation rate requirements of this paragraph are 
as follows:
            ``(i) In the case of a workfare program which is first 
        implemented after the date of the enactment of this subsection, 
        the participation rate for such program shall be--
                    ``(I) for the second year that the program is 
                operated, 10 percent; and
                    ``(II) for any succeeding year that the program is 
                operated, the program's participation rate for the 
                preceding year plus 2 percent.
            ``(ii) In the case of a workfare program which is operating 
        on the date of the enactment of this subsection, the 
        participation rate for such program shall be--
                    ``(I) for 1995--
                            ``(aa) in the case of a program with a 
                        participation rate below 10 percent for 1994, 
                        10 percent; and
                            ``(bb) in the case of a program with a 
                        participation rate between 10 percent and 50 
                        percent for 1994, the program's participation 
                        rate for 1994 plus 2 percent; and
                    ``(II) for any succeeding year that the program is 
                operated, the program's participation rate for the 
                preceding year plus 2 percent.
    ``(B) The participation rates required under clauses (i) and (ii) 
of subparagraph (A) shall not exceed 50 percent.
    ``(C) For purposes of this subsection, the term `participation 
rate' means the percentage of able-bodied individuals receiving general 
welfare assistance who are participating in a workfare program.
    ``(5) Within 5 years after the date of the enactment of this 
subsection, the Secretary shall conduct a review of State and local 
participation rates and submit to Congress a report containing any of 
the Secretary's recommendations with respect to the participation rate 
requirements of paragraph (4).''.

SEC. 3. APPLICATION OF AMENDMENT.

    (a) Except as provided in subsection (b), the amendment made by 
section 2 shall apply to calendar quarters beginning on or after July 
1, 1995.
    (b) In the case of a State which the Secretary determines requires 
State legislation (other than legislation authorizing or appropriating 
funds) in order to comply with the amendments made by section 2, the 
State shall not be regarded as failing to comply with such amendments 
solely on the basis of its failure to meet the requirements of such 
amendments before the first day of the first calendar quarter beginning 
after the close of the first regular session of the State legislature 
that begins after the date of the enactment of this Act. For purposes 
of the preceding sentence, in the case of a State that has a 2-year 
legislative session, each year of such session shall be deemed to be a 
separate regular session of the State legislature.
Workfare Incentive Act - Amends part A (Aid to Families with Dependent Children) (AFDC) of title IV of the Social Security Act to require States, to avoid a 50 percent reduction in Federal funding for AFDC administrative expenses, to implement workfare programs for able-bodied residents on welfare aged 18 or over with no dependents.
Workfare Incentive Act