SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Children First 
Child Support Reform Act of 2001''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Modification of rule requiring assignment of support rights as 
                            a condition of receiving TANF.
Sec. 3. Increasing child support payments to families and simplifying 
                            child support distribution rules.
Sec. 4. State option to discontinue certain support assignments.
Sec. 5. Effective date.

SEC. 2. MODIFICATION OF RULE REQUIRING ASSIGNMENT OF SUPPORT RIGHTS AS 
              A CONDITION OF RECEIVING TANF.

    Section 408(a)(3) of the Social Security Act (42 U.S.C. 608(a)(3)) 
is amended to read as follows:
            ``(3) No assistance for families not assigning certain 
        support rights to the state.--A State to which a grant is made 
        under section 403 shall require, as a condition of paying 
        assistance to a family under the State program funded under 
        this part, that a member of the family assign to the State any 
        rights the family member may have (on behalf of the family 
        member or of any other person for whom the family member has 
        applied for or is receiving such assistance) to support from 
        any other person, not exceeding the total amount of assistance 
        so paid to the family, which accrues during the period that the 
        family receives assistance under the program.''.

SEC. 3. INCREASING CHILD SUPPORT PAYMENTS TO FAMILIES AND SIMPLIFYING 
              CHILD SUPPORT DISTRIBUTION RULES.

    (a) Distribution Rules.--
            (1) In general.--Section 457(a) of the Social Security Act 
        (42 U.S.C. 657(a)) is amended to read as follows:
    ``(a) In General.--Subject to subsections (e) and (f), the amounts 
collected on behalf of a family as support by a State under a plan 
approved under this part shall be distributed as follows:
            ``(1) Families receiving assistance.--In the case of a 
        family receiving assistance from the State, the State shall--
                    ``(A) pay to the Federal Government the Federal 
                share of the amount collected, subject to paragraph 
                (3)(A);
                    ``(B) retain, or pay to the family, the State share 
                of the amount collected, subject to paragraph (3)(B); 
                and
                    ``(C) pay to the family any remaining amount.
            ``(2) Families that formerly received assistance.--In the 
        case of a family that formerly received assistance from the 
        State:
                    ``(A) Current support.--To the extent that the 
                amount collected does not exceed the current support 
                amount, the State shall pay the amount to the family.
                    ``(B) Arrearages.--Except as otherwise provided in 
                the State plan approved under section 454, to the 
                extent that the amount collected exceeds the current 
                support amount, the State--
                            ``(i) shall first pay to the family the 
                        excess amount, to the extent necessary to 
                        satisfy support arrearages not assigned under 
                        section 408(a)(3);
                            ``(ii) if the amount collected exceeds the 
                        amount required to be paid to the family under 
                        clause (i), shall--
                                    ``(I) pay to the Federal 
                                Government, the Federal share of the 
                                excess amount described in this clause, 
                                subject to paragraph (3)(A); and
                                    ``(II) retain, or pay to the 
                                family, the State share of the excess 
                                amount described in this clause, 
                                subject to paragraph (3)(B); and
                            ``(iii) shall pay to the family any 
                        remaining amount.
            ``(3) Limitations.--
                    ``(A) Federal reimbursements.--The total of the 
                amounts paid by the State to the Federal Government 
                under paragraphs (1) and (2) with respect to a family 
                shall not exceed the Federal share of the amount 
assigned with respect to the family under section 408(a)(3).
                    ``(B) State reimbursements.--The total of the 
                amounts retained by the State under paragraphs (1) and 
                (2) with respect to a family shall not exceed the State 
                share of the amount assigned with respect to the family 
                under section 408(a)(3).
            ``(4) Families that never received assistance.--In the case 
        of any other family, the State shall pay the amount collected 
        to the family.
            ``(5) Families under certain agreements.--Notwithstanding 
        paragraphs (1) through (4), 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 
        collected under the terms of the agreement.
            ``(6) State financing options.--To the extent that the 
        State share of the amount payable to a family under paragraph 
        (2)(B) exceeds the amount that the State estimates (under 
        procedures approved by the Secretary) would have been payable 
        to the family under former section 457(a)(2)(B) (as in effect 
        for the State immediately before the date on which this 
        subsection, as amended by the Children First Child Support 
        Reform Act of 2001, first applies to the State) if such former 
        section had remained in effect, the State may elect to use the 
        grant made to the State under section 403(a) to pay the amount, 
        or to have the payment considered a qualified State expenditure 
        for purposes of section 409(a)(7), but not both.
            ``(7) State option to pass through additional support with 
        federal financial participation.--
                    ``(A) In general.--Notwithstanding paragraphs (1) 
                and (2), a State shall not be required to pay to the 
                Federal Government the Federal share of an amount 
                collected on behalf of a family that is not a recipient 
                of assistance under the State program funded under part 
                A, to the extent that the State pays the amount to the 
                family.
                    ``(B) Recipients of tanf for less than 5 years.--
                            ``(i) In general.--Notwithstanding 
                        paragraphs (1) and (2), a State shall not be 
                        required to pay to the Federal Government the 
                        Federal share of an amount collected on behalf 
                        of a family that is a recipient of assistance 
                        under the State program funded under part A 
                        and, if the family includes an adult, that has 
                        received the assistance for not more than 5 
                        years after the date of enactment of this 
                        paragraph, to the extent that--
                                    ``(I) the State pays the amount to 
                                the family; and
                                    ``(II) subject to clause (ii), the 
                                amount is disregarded in determining 
                                the amount and type of the assistance 
                                provided to the family.
                            ``(ii) Limitation.--Of the amount 
                        disregarded as described in clause (i)(II), the 
                        maximum amount that may be taken into account 
                        for purposes of clause (i) shall not exceed 
                        $400 per month, except that, in the case of a 
                        family that includes 2 or more children, the 
                        State may elect to increase the maximum amount 
                        to not more than $600 per month.
            ``(8) States with demonstration waivers.--Notwithstanding 
        the preceding paragraphs, a State with a waiver under section 
        1115 that became effective on or before October 1, 1997, the 
        terms of which allow passthrough of child support payments, may 
pass through such payments in accordance with such terms with respect 
to families subject to the waiver.''.
            (2) State plan to include election as to which rules to 
        apply in distributing child support arrearages collected on 
        behalf of families formerly receiving assistance.--Section 454 
        of the Social Security Act (42 U.S.C. 654) is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (32);
                    (B) by striking the period at the end of paragraph 
                (33) and inserting ``; and''; and
                    (C) by inserting after paragraph (33) the 
                following:
            ``(34) include an election by the State to apply section 
        457(a)(2)(B) or former section 457(a)(2)(B) (as in effect for 
        the State immediately before the date this paragraph, as 
        amended by the Children First Child Support Reform Act of 2001, 
        first applies to the State) to the distribution of the amounts 
        which are the subject of such sections, and for so long as the 
        State elects to so apply such former section, the amendments 
        made by section 2 of the Children First Child Support Reform 
        Act of 2001 shall not apply with respect to the State, 
        notwithstanding section 6(a) of such Act.''.
            (3) Approval of estimation procedures.--Not later than 
        October 1, 2002, the Secretary of Health and Human Services, in 
        consultation with the States (as defined for purposes of part D 
        of title IV of the Social Security Act (42 U.S.C. 651 et 
        seq.)), shall establish the procedures to be used to make the 
        estimate described in section 457(a)(6) of such Act (42 U.S.C. 
        657(a)(6)).
    (b) Current Support Amount Defined.--Section 457(c) of the Social 
Security Act (42 U.S.C. 657(c)) is amended by adding at the end the 
following:
            ``(5) Current support amount.--The term `current support 
        amount' means, with respect to amounts collected as support on 
        behalf of a family, the amount designated as the monthly 
        support obligation of the noncustodial parent in the order 
        requiring the support.''.
    (c) Conforming Amendments.--
            (1) Section 404(a) of the Social Security Act (42 U.S.C. 
        604(a)) is amended--
                    (A) by striking ``or'' at the end of paragraph (1);
                    (B) by striking the period at the end of paragraph 
                (2) and inserting ``; or''; and
                    (C) by adding at the end the following:
            ``(3) to fund payment of an amount under section 
        457(a)(2)(B), but only to the extent that the State properly 
        elects under section 457(a)(6) to use the grant to fund the 
        payment.''.
            (2) Section 409(a)(7)(B)(i) of the Social Security Act (42 
        U.S.C. 609(a)(7)(B)(i)) is amended--
                    (A) in subclause (I)(aa), by striking 
                ``457(a)(1)(B)'' and inserting ``457(a)(1)''; and
                    (B) by adding at the end the following:
                                    ``(V) Portions of certain child 
                                support payments collected on behalf of 
                                and distributed to families no longer 
                                receiving assistance.--Any amount paid 
                                by a State under section 457(a)(2)(B), 
                                but only to the extent that the State 
                                properly elects under section 457(a)(6) 
                                to have the payment considered a 
                                qualified State expenditure.''.

SEC. 4. STATE OPTION TO DISCONTINUE CERTAIN SUPPORT ASSIGNMENTS.

    Section 457(b) of the Social Security Act (42 U.S.C. 657(b)) is 
amended by striking ``shall'' and inserting ``may''.

SEC. 5. EFFECTIVE DATE.

    (a) In General.--The amendments made by this section shall take 
effect on October 1, 2005, and shall apply to payments under parts A 
and D of title IV of the Social Security Act (42 U.S.C. 601 et seq. and 
651 et seq.) for calendar quarters beginning on or after such date, and 
without regard to whether regulations to implement the amendments (in 
the case of State programs operated under such part D) are promulgated 
by such date.
    (b) State Option To Accelerate Effective Date.--In addition, a 
State may elect to have the amendments made by section 2 or 3 apply to 
the State and to amounts collected by the State, on and after such date 
as the State may select that is after the date of enactment of this 
Act, by including an election to that effect in the State plan under 
part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.).
Children First Child Support Reform Act of 2001 - Amends parts A (Temporary Assistance for Needy Families) (TANF) and D (Child Support and Establishment of Paternity) of title IV of the Social Security Act to: (1) modify the rule requiring assignment of support rights as a condition of receiving TANF; (2) increase child support payments to families; (3) revise child support distribution rules; and (4) change from mandatory to discretionary the authority of States to retain certain support rights assignments after a certain date (thus giving them the option to discontinue such assignments).
A bill to provide more child support money to families leaving welfare, and for other purposes.