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[House Report 105-77]
[From the U.S. Government Publishing Office]

                                                                       
105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                     105-77
_______________________________________________________________________

 
                     ADOPTION PROMOTION ACT OF 1997
                                _______
                                

 April 28, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Archer, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 867]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Ways and Means, to whom was referred the 
bill (H.R. 867) to promote the adoption of children in foster 
care, having considered the same, report favorably thereon with 
an amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Introduction.....................................................7
          A. Purpose and Scope...................................     7
          B. Background and Need for Legislation.................     7
          C. Legislative History.................................     9
 II. Explanation of Provisions........................................9
III. Votes of the Committee..........................................20
 IV. Budget Effects of the Bill......................................20
          A. Committee Estimate of Budgetary Effects.............    20
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures.......................................    20
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    20
  V. Other Matters Required to Be Discussed under the Rules of the 
     House...........................................................26
          A. Committee Oversight Findings and Recommendations....    26
          B. Summary of Findings and Recommendations of the 
              Government Reform and Oversight Committee..........    26
          C. Constitutional Authority Statement..................    26
 VI. Applicability of Federal Advisory Committee Act.................27
VII. Changes in Existing Laws Made by the Bill, as Reported..........27

      The amendment is as follows:
      Strike out all after the enacting clause and insert in 
lieu thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Adoption Promotion 
Act of 1997''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Clarification of the reasonable efforts requirement.
Sec. 3. States required to initiate or join proceedings to terminate 
parental rights for certain children in foster care.
Sec. 4. Adoption incentive payments.
Sec. 5. Earlier status reviews and permanency hearings.
Sec. 6. Notice of reviews and hearings; opportunity to be heard.
Sec. 7. Documentation of reasonable efforts to adopt.
Sec. 8. Kinship care.
Sec. 9. Use of the Federal Parent Locator Service for child welfare 
services.
Sec. 10. Performance of States in protecting children.
Sec. 11. Authority to approve more child protection demonstration 
projects.
Sec. 12. Technical assistance.
Sec. 13. Coordination of substance abuse and child protection services.
Sec. 14. Clarification of eligible population for independent living 
services.
Sec. 15. Effective date.

SEC. 2. CLARIFICATION OF THE REASONABLE EFFORTS REQUIREMENT.

  (a) In General.--Section 471(a)(15) of the Social Security Act (42 
U.S.C. 671(a)(15)) is amended to read as follows:
          ``(15)(A) provides that--
                  ``(i) except as provided in clauses (ii) and (iii), 
                reasonable efforts shall be made--
                          ``(I) before a child is placed in foster 
                        care, to prevent or eliminate the need to 
                        remove the child from the child's home; and
                          ``(II) to make it possible for the child to 
                        return home;
                  ``(ii) if continuation of reasonable efforts of the 
                type described in clause (i) is determined to be 
                inconsistent with the permanency plan for the child, 
                reasonable efforts of the type required by clause 
                (iii)(II) shall be made;
                  ``(iii) if a court of competent jurisdiction has 
                determined that the child has been subjected to 
                aggravated circumstances (as defined by State law, 
                which definition may include abandonment, torture, 
                chronic abuse, and sexual abuse) or parental conduct 
                described in section 106(b)(2)(A)(xii) of the Child 
                Abuse Prevention and Treatment Act, or that the 
                parental rights of a parent with respect to a sibling 
                of the child have been terminated involuntarily--
                          ``(I) reasonable efforts of the type 
                        described in clause (i) shall not be required 
                        to be made with respect to any parent of the 
                        child who has been involved in subjecting the 
                        child to such circumstances or such conduct, or 
                        whose parental rights with respect to a sibling 
                        of the child have been terminated 
                        involuntarily; and
                          ``(II) if reasonable efforts of the type 
                        described in clause (i) are not made or are 
                        discontinued, reasonable efforts shall be made 
                        to place the child for adoption, with a legal 
                        guardian, or (if adoption or legal guardianship 
                        is determined not to be appropriate for the 
                        child) in some other planned, permanent living 
                        arrangement; and
                  ``(iv) reasonable efforts of the type described in 
                clause (iii)(II) may be made concurrently with 
                reasonable efforts of the type described in clause (i); 
                and
                  ``(B) in determining the reasonable efforts to be 
                made with respect to a child and in making such 
                reasonable efforts, the child's health and safety shall 
                be of paramount concern;''.
  (b) Conforming Amendment.--Section 472(a)(1) of such Act (42 U.S.C. 
672(a)(1)) is amended by inserting ``for a child'' before ``have been 
made''.

SEC. 3. STATES REQUIRED TO INITIATE OR JOIN PROCEEDINGS TO TERMINATE 
                    PARENTAL RIGHTS FOR CERTAIN CHILDREN IN FOSTER 
                    CARE.

  (a) In General.--Section 475(5) of the Social Security Act (42 U.S.C. 
675(5)) is amended--
          (1) by striking ``and'' at the end of subparagraph (C);
          (2) by striking the period at the end of subparagraph (D) and 
        inserting ``; and''; and
          (3) by adding at the end the following:
                  ``(E) in the case of a child who has not attained 10 
                years of age and has been in foster care under the 
                responsibility of the State for 18 months of the most 
                recent 24 months, the State shall file a petition to 
                terminate the parental rights of the child's parents 
                (or, if such a petition has been filed by another 
                party, seek to be joined as a party to the petition), 
                unless--
                          ``(i) at the option of the State, the child 
                        is being cared for by a relative;
                          ``(ii) a State court or State agency has 
                        documented a compelling reason for determining 
                        that filing such a petition would not be in the 
                        best interests of the child; or
                          ``(iii) the State has not provided to the 
                        family of the child such services as the State 
                        deems appropriate, if reasonable efforts of the 
                        type described in section 471(a)(15)(A)(i) are 
                        required to be made with respect to the 
                        child.''.
  (b) Limitation on Applicability.--The amendments made by subsection 
(a) shall apply only to children entering foster care on or after 
October 1, 1997.

SEC. 4. ADOPTION INCENTIVE PAYMENTS.

  Part E of title IV of the Social Security Act (42 U.S.C. 670-679) is 
amended by inserting after section 473 the following:

``SEC. 473A. ADOPTION INCENTIVE PAYMENTS.

  ``(a) Grant Authority.--Each State that is an incentive-eligible 
State for a fiscal year shall be entitled to receive from the Secretary 
in the immediately succeeding fiscal year a grant in an amount equal to 
the adoption incentive payment.
  ``(b) Incentive-Eligible State.--A State is an incentive-eligible 
State for a fiscal year if--
          ``(1) the State has a plan approved under this part for the 
        fiscal year;
          ``(2) the number of foster child adoptions in the State 
        during the fiscal year exceeds the base number of foster child 
        adoptions for the State for the fiscal year;
          ``(3) the State is in compliance with subsection (c) for the 
        fiscal year; and
          ``(4) the fiscal year is any of fiscal years 1998 through 
        2002.
  ``(c) Data Requirements.--
          ``(1) In general.--A State is in compliance with this 
        subsection for a fiscal year if the State has provided to the 
        Secretary the data described in paragraph (2) for fiscal year 
        1997 (or, if later, the fiscal year that precedes the 1st 
        fiscal year for which the State seeks a grant under this 
        section) and for each succeeding fiscal year.
          ``(2) Determination of numbers of adoptions.--
                  ``(A) Determinations based on afcars data.--Except as 
                provided in subparagraph (B), the Secretary shall 
                determine the numbers of foster child adoptions and of 
                special needs adoptions in a State during each of 
                fiscal years 1997 through 2002, for purposes of this 
                section, on the basis of data meeting the requirements 
                of the system established pursuant to section 479, as 
                reported by the State in May of the fiscal year and in 
                November of the succeeding fiscal year, and approved by 
                the Secretary by April 1 of the succeeding fiscal year.
                  ``(B) Alternative data sources permitted for fiscal 
                year 1997.--For purposes of the determination described 
                in subparagraph (A) for fiscal year 1997, the Secretary 
                may use data from a source or sources other than that 
                specified in subparagraph (A) that the Secretary finds 
                to be of equivalent completeness and reliability, as 
                reported by a State by November 30, 1997, and approved 
                by the Secretary by March 1, 1998.
          ``(3) No waiver of afcars requirements.--This section shall 
        not be construed to alter or affect any requirement of section 
        479 or any regulation prescribed under such section with 
        respect to reporting of data by States, or to waive any penalty 
        for failure to comply with the requirements.
  ``(d) Adoption Incentive Payment.--
          ``(1) In general.--Except as provided in paragraph (2), the 
        adoption incentive payment payable to a State for a fiscal year 
        under this section shall be equal to the sum of--
                  ``(A) $4,000, multiplied by amount (if any) by which 
                the number of foster child adoptions in the State 
                during the fiscal year exceeds the base number of 
                foster child adoptions for the State for the fiscal 
                year; and
                  ``(B) $2,000, multiplied by the amount (if any) by 
                which the number of special needs adoptions in the 
                State during the fiscal year exceeds the base number of 
                special needs adoptions for the State for the fiscal 
                year.
          ``(2) Pro rata adjustment if insufficient funds available.--
        If the total amount of adoption incentive payments otherwise 
        payable under this section for a fiscal year exceeds the amount 
        then available for grants under this section, the amount of the 
        adoption incentive payment payable to each State under this 
        section for the fiscal year shall be--
                  ``(A) the amount of the adoption incentive payment 
                that would otherwise be payable to the State under this 
                section for the fiscal year; multiplied by
                  ``(B) the percentage represented by the amount then 
                available for grants under this section, divided by the 
                total amount of adoption incentive payments otherwise 
                payable under this section for the fiscal year.
  ``(e) 2-Year Availability of Incentive Payments.--Payments to a State 
under this section in a fiscal year shall remain available for use by 
the State through the end of the succeeding fiscal year.
  ``(f) Limitations on Use of Incentive Payments.--A State shall not 
expend an amount paid to the State under this section except to provide 
to children or families any service (including post adoption services) 
that may be provided under part B or E. Amounts expended by a State in 
accordance with the preceding sentence shall be disregarded in 
determining State expenditures for purposes of Federal matching 
payments under section 474.
  ``(g) Definitions.--As used in this section:
          ``(1) Foster child adoption.--The term `foster child 
        adoption' means the final adoption of a child who, at the time 
        of adoptive placement, was in foster care under the supervision 
        of the State.
          ``(2) Special needs adoption.--The term `special needs 
        adoption' means the final adoption of a child for whom an 
        adoption assistance agreement is in effect under section 473.
          ``(3) Base number of foster child adoptions.--The term `base 
        number of foster child adoptions for a State' means, with 
        respect to a fiscal year, the largest number of foster child 
        adoptions in the State in fiscal year 1997 (or, if later, the 
        1st fiscal year for which the State has furnished to the 
        Secretary the data described in subsection (c)(2)) or in any 
        succeeding fiscal year preceding the fiscal year.
          ``(4) Base number of special needs adoptions.--The term `base 
        number of special needs adoptions for a State' means, with 
        respect to a fiscal year, the largest number of special needs 
        adoptions in the State in fiscal year 1997 (or, if later, the 
        1st fiscal year for which the State has furnished to the 
        Secretary the data described in subsection (c)(2)) or in any 
        succeeding fiscal year preceding the fiscal year.
  ``(h) Appropriation.--
          ``(1) In general.--Out of any money in the Treasury of the 
        United States not otherwise appropriated, there are 
        appropriated for fiscal years 1999 through 2003 such sums as 
        are necessary for grants under this section, in a total amount 
        not to exceed $108,000,000.
          ``(2) Availability.--Amounts appropriated under paragraph (1) 
        shall remain available until expended, but not after fiscal 
        year 2003.''.

SEC. 5. EARLIER STATUS REVIEWS AND PERMANENCY HEARINGS.

  Section 475(5)(C) of the Social Security Act (42 U.S.C. 675(5)(C)) is 
amended--
          (1) by striking ``eighteen months after'' and inserting ``12 
        months after'';
          (2) by striking ``dispositional'' and inserting 
        ``permanency''; and
          (3) by striking ``future status of'' and all that follows 
        through ``long-term basis)'' and inserting ``permanency plan 
        for the child (including whether (and, if applicable, when) the 
        child will be returned to the parent, the child will be placed 
        for adoption and the State will file a petition to terminate 
        the parental rights of the parent, a legal guardian will be 
        appointed for the child, or the child will be placed in some 
        other planned, permanent living arrangement, including in the 
        custody of another fit and willing relative)''.

SEC. 6. NOTICE OF REVIEWS AND HEARINGS; OPPORTUNITY TO BE HEARD.

  Section 475(5) of the Social Security Act (42 U.S.C. 675(5)), as 
amended by section 3 of this Act, is amended--
          (1) by striking ``and'' at the end of subparagraph (D);
          (2) by striking the period at the end of subparagraph (E) and 
        inserting ``; and''; and
          (3) by adding at the end the following:
                  ``(F) the foster parents (if any) of a child and any 
                relative providing care for the child are provided with 
                notice of, and an opportunity to be heard in, any 
                review or hearing to be held with respect to the child, 
                except that this subparagraph shall not be construed to 
                make any foster parent a party to such a review or 
                hearing.''.

SEC. 7. DOCUMENTATION OF REASONABLE EFFORTS TO ADOPT.

  Section 475(5) of the Social Security Act (42 U.S.C. 675(5)), as 
amended by sections 3 and 6 of this Act, is amended--
          (1) by striking ``and'' at the end of subparagraph (E);
          (2) by striking the period at the end of subparagraph (F) and 
        inserting ``; and''; and
          (3) by adding at the end the following:
                  ``(G) in the case of a child with respect to whom the 
                State's goal is adoption or placement in another 
                permanent home, the steps taken by the State agency to 
                find an adoptive family or other permanent living 
                arrangement for the child, to place the child with an 
                adoptive family, a legal guardian, or in another 
                planned permanent living arrangement (including in the 
                custody of another fit and willing relative), and to 
                finalize the adoption or legal guardianship are 
                documented, and such documentation shall include 
                documentation of child specific recruitment efforts 
                such as the use of State, regional, and national 
                adoption information exchanges, including electronic 
                information exchange systems.''.

SEC. 8. KINSHIP CARE.

  (a) Report.--
          (1) In general.--The Secretary of Health and Human Services 
        shall--
                  (A) not later than March 1, 1998, convene the 
                advisory panel provided for in subsection (b)(1) and 
                prepare and submit to the advisory panel an initial 
                report on the extent to which children in foster care 
                are placed in the care of a relative (in this section 
                referred to as ``kinship care''); and
                  (B) not later than November 1, 1998, submit to the 
                Committee on Ways and Means of the House of 
                Representatives and the Committee on Finance of the 
                Senate a final report on the matter described in 
                subparagraph (A), which shall--
                          (i) be based on the comments submitted by the 
                        advisory panel pursuant to subsection (b)(2) 
                        and other information and considerations; and
                          (ii) include the policy recommendations of 
                        the Secretary with respect to the matter.
          (2) Required contents.--Each report required by paragraph (1) 
        shall--
                  (A) include, to the extent available for each State, 
                information on--
                          (i) the policy of the State regarding kinship 
                        care;
                          (ii) the characteristics of the kinship care 
                        providers (including age, income, ethnicity, 
                        and race);
                          (iii) the characteristics of the household of 
                        such providers (such as number of other persons 
                        in the household and family composition);
                          (iv) how much access to the child is afforded 
                        to the parent from whom the child has been 
                        removed;
                          (v) the cost of, and source of funds for, 
                        kinship care (including any subsidies such as 
                        medicaid and cash assistance);
                          (vi) the goal for a permanent living 
                        arrangement for the child and the actions being 
                        taken by the State to achieve the goal;
                          (vii) the services being provided to the 
                        parent from whom the child has been removed; 
                        and
                          (viii) the services being provided to the 
                        kinship care provider; and
                  (B) specifically note the circumstances or conditions 
                under which children enter kinship care.
  (b) Advisory Panel.--
          (1) Establishment.--The Secretary of Health and Human 
        Services, in consultation with the Chairman of the Committee on 
        Ways and Means of the House of Representatives and the Chairman 
        of the Committee on Finance of the Senate, shall convene an 
        advisory panel which shall include parents, foster parents, 
        former foster children, State and local public officials 
        responsible for administering child welfare programs, private 
        persons involved in the delivery of child welfare services, 
        representatives of tribal governments and tribal courts, 
        judges, and academic experts.
          (2) Duties.--The advisory panel convened pursuant to 
        paragraph (1) shall review the report prepared pursuant to 
        subsection (a), and, not later than July 1, 1998, submit to the 
        Secretary comments on the report.

SEC. 9. USE OF THE FEDERAL PARENT LOCATOR SERVICE FOR CHILD WELFARE 
                    SERVICES.

  Section 453 of the Social Security Act (42 U.S.C. 653) is amended--
          (1) in subsection (a)--
                  (A) by striking ``or enforcing child custody or 
                visitation orders'' and inserting ``or making or 
                enforcing child custody or visitation orders''; and
                  (B) in paragraph (1)--
                          (i) by striking the comma at the end of 
                        subparagraph (C) and inserting ``; or''; and
                          (ii) by inserting after subparagraph (C) the 
                        following:
                  ``(D) who has or may have parental rights with 
                respect to a child,''; and
          (2) in subsection (c)--
                  (A) by striking the period at the end of paragraph 
                (3) and inserting ``; and''; and
                  (B) by adding at the end the following:
          ``(4) a State agency that is administering a program operated 
        under a State plan under subpart 1 of part B, or a State plan 
        approved under subpart 2 of part B or under part E.''.

SEC. 10. PERFORMANCE OF STATES IN PROTECTING CHILDREN.

  The Secretary of Health and Human Services, in consultation with the 
American Public Welfare Association, the National Governors' 
Association, and persons or organizations devoted to child advocacy, 
shall--
          (1) develop a set of outcome measures (including length of 
        stay in foster care, number of foster care placements, and 
        number of adoptions) that can be used to assess the performance 
        of States in operating child protection and child welfare 
        programs pursuant to parts B and E of title IV of the Social 
        Security Act to ensure the safety of children;
          (2) to the maximum extent possible, the outcome measures 
        should be developed from data available from the Adoption and 
        Foster Care Analysis and Reporting System;
          (3) develop a system for rating the performance of States 
        with respect to the outcome measures, and provide to the States 
        an explanation of the rating system and how scores are 
        determined under the rating system;
          (4) prescribe such regulations as may be necessary to ensure 
        that States provide to the Secretary the data necessary to 
        determine State performance with respect to each outcome 
        measure, as a condition of the State receiving funds under part 
        E of title IV of the Social Security Act;
          (5) on May 1, 1999, and annually thereafter, prepare and 
        submit to the Congress a report on the performance of each 
        State on each outcome measure, which shall examine the reasons 
        for high performance and low performance and, where possible, 
        make recommendations as to how State performance could be 
        improved.

SEC. 11. AUTHORITY TO APPROVE MORE CHILD PROTECTION DEMONSTRATION 
                    PROJECTS.

  Section 1130(a) of the Social Security Act (42 U.S.C. 1320a-9(a)) is 
amended by striking ``10'' and inserting ``15''.

SEC. 12. TECHNICAL ASSISTANCE.

  (a) In General.--The Secretary of Health and Human Services may, 
directly or through grants or contracts, provide technical assistance 
to assist States and local communities to reach their targets for 
increased numbers of adoptions and, to the extent that adoption is not 
possible, alternative permanent placements, for children in foster 
care.
  (b) Limitations.--The technical assistance provided under subsection 
(a) shall support the goal of encouraging more adoptions out of the 
foster care system, when adoptions promote the best interests of 
children, and shall include the following:
          (1) The development of best practice guidelines for 
        expediting termination of parental rights.
          (2) Models to encourage the use of concurrent planning.
          (3) The development of specialized units and expertise in 
        moving children toward adoption as a permanency goal.
          (4) The development of risk assessment tools to facilitate 
        early identification of the children who will be at risk of 
        harm if returned home.
          (5) Models to encourage the fast tracking of children who 
        have not attained 1 year of age into pre-adoptive placements.
          (6) Development of programs that place children into pre-
        adoptive families without waiting for termination of parental 
        rights.
  (c) Limitations on Authorization of Appropriations.--To carry out 
this section, there are authorized to be appropriated to the Secretary 
of Health and Human Services not to exceed $10,000,000 for each of 
fiscal years 1998 through 2000.

SEC. 13. COORDINATION OF SUBSTANCE ABUSE AND CHILD PROTECTION SERVICES.

  Within 1 year after the date of the enactment of this Act, the 
Secretary of Health and Human Services, based on information from the 
Substance Abuse and Mental Health Services Administration and the 
Administration for Children and Families in the Department of Health 
and Human Services, shall prepare and submit to the Committee on Ways 
and Means of the House of Representatives and the Committee on Finance 
of the Senate a report which describes the extent and scope of the 
problem of substance abuse in the child welfare population, the types 
of services provided to such population, and the outcomes resulting 
from the provision of such services to such population. The report 
shall include recommendations for any legislation that may be needed to 
improve coordination in providing such services to such population.

SEC. 14. CLARIFICATION OF ELIGIBLE POPULATION FOR INDEPENDENT LIVING 
                    SERVICES.

  Section 477(a)(2)(A) of the Social Security Act (42 U.S.C. 
677(a)(2)(A)) is amended by inserting ``(including children with 
respect to whom such payments are no longer being made because the 
child has accumulated assets, not to exceed $5,000, which are otherwise 
regarded as resources for purposes of determining eligibility for 
benefits under this part)'' before the comma.

SEC. 15. EFFECTIVE DATE.

  (a) In General.--The amendments made by this Act shall take effect on 
October 1, 1997.
  (b) Delay Permitted if State Legislation Required.--In the case of a 
State plan under part B or E of title IV of the Social Security Act 
which the Secretary of Health and Human Services determines requires 
State legislation (other than legislation appropriating funds) in order 
for the plan to meet the additional requirements imposed by the 
amendments made by this Act, the State plan shall not be regarded as 
failing to comply with the requirements of such part solely on the 
basis of the failure of the plan to meet such additional requirements 
before the 1st day of the 1st calendar quarter beginning after the 
close of the 1st regular session of the State legislature that begins 
after the date of the enactment of this Act. For purposes of the 
previous 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.

                            I. INTRODUCTION

                          A. Purpose and Scope

    The Committee bill is expected to increase the number of 
adoptions in the United States. Three major provisions of the 
bill were designed to produce this increase in adoptions. 
First, under current law, States must engage in ``reasonable 
efforts'' to help families that have abused or neglected their 
children. Some observers have argued that uncertainty about the 
reasonable efforts standard sometimes delays State action in 
making children available for adoption. In response to this 
problem, the bill requires States to define ``aggravated 
circumstances'' in State law, such as child torture or sexual 
abuse, that would permit the State to bypass the Federal 
reasonable efforts criterion and move expeditiously to 
terminate parental rights and make a child available for 
adoption. In addition, States would not be required to reunite 
families in cases where a parent has murdered another child or 
lost their parental rights to a sibling. Second, the bill 
provides States with a $4,000 ($6,000 for special needs 
children) incentive payment for each adoption above the number 
of adoptions during the previous year. Third, in the case of 
children under age 10 who have been in foster care for at least 
18 of the past 24 months, the bill requires States to move 
toward terminating parental rights under most circumstances. 
Taken together, these provisions and associated provisions of 
the Committee bill can be expected to produce a substantial 
increase in adoptions in the years ahead.

                 B. Background and Need for Legislation

    After many years of growth, especially in the late 1980s 
and early 1990s, the nation's foster care caseload is now 
almost 500,000. Recent studies have shown that in some States, 
the average child removed from the home because of family 
problems spends almost three years in foster care. Many of 
these children will never return home; many more will return 
home one or more times before it becomes evident that their 
families will not be able to take care of them permanently. And 
yet, testimony before the Committee, as well as scientific 
studies, have shown that adoption is an effective way to assure 
that children grow up in loving families and that they become 
happy and productive citizens as adults.
    There seems to be almost universal agreement that adoption 
is preferable to foster care and that the nation's children 
would be well served by a policy that increases adoption rates. 
Over the past several years, however, witnesses before the 
Committee have testified that there are a variety of barriers 
to adoption, some of them Federal. One barrier is the 
``reasonable efforts'' criterion in the Federal statute. This 
criterion requires States to make reasonable efforts to prevent 
removing a child from its home and to facilitate returning 
children to their homes if removal has been necessary. The 
intent of this policy is to provide services to families so 
that they can continue to fulfill their child rearing function.
    However, there seems to be a growing belief that Federal 
statutes, the social work profession, and the courts sometimes 
err on the side of protecting the rights of parents. As a 
result, too many children are subjected to long spells of 
foster care or are returned to families that reabuse them.
    The bipartisan group that wrote this legislation recognized 
the importance and essential fairness of the reasonable efforts 
criterion. What is needed is not a wholesale reversal of 
reasonable efforts or of the view that government has a 
responsibility to help troubled families solve the problems 
that lead to child abuse or neglect. The Federal government now 
spends well over $4.5 billion dollars helping these families 
and their children and the money is well spent. Rather than 
abandoning the Federal policy of helping troubled families, 
what is needed is a measured response to allow States to adjust 
their statutes and practices so that in some circumstances 
States will be able to move more efficiently toward terminating 
parental rights and placing children for adoption.
    Thus, the Committee bill would require States to define 
``aggravated circumstances,'' such as child torture, chronic 
abuse, or sexual abuse, in which States are allowed to bypass 
the Federal reasonable efforts criteria and instead would be 
required to make efforts to place the child for adoption. In 
addition, States would be required to bypass reasonable efforts 
to provide services to families if the parent has murdered a 
child, committed manslaughter in the death of a child, or has 
another child for whom parental rights were involuntarily 
terminated.
    In addition to the reasonable effort criterion, another 
barrier to adoption has been that States often move slowly in 
moving children toward permanent settings. Child protective 
case workers are often consumed by providing immediate 
protection to endangered children. Especially in States that 
require their caseworkers to handle large caseloads, workers 
are forced to attend to cases with immediate, often life-
threatening, difficulties. As a result, children already in a 
foster care placement and assumed to be safe from immediate 
harm sometimes get less attention than they deserve. Thus, a 
second provision of the Committee bill would promote adoption 
by requiring States to initiate action to terminate parental 
rights in the case of children under age 10 who have been in 
foster care for 18 of the past 24 months. This provision would 
move States toward establishing timeframes and deadlines in 
their attempts to provide reasonable help to families.
    A third major provision of the Committee bill, would reward 
States with a $4,000 ($6,000 in the case of special needs 
adoptions) incentive payment for every adoption out of foster 
care above the number achieved over the previous year. If 
States and localities can develop their own solutions tailored 
to their own traditions and practices and thereby increase 
adoption rates, they will receive financial rewards.
    The bill continues the Committee's strong commitment to 
helping some of the nation's most unfortunate children by 
facilitating their placement in loving families through 
adoption. Previously, the Committee approved legislation that 
is just now beginning to exert an influence on adoption rates. 
Specifically, in the 104th Congress, the Committee approved 
legislation that provided adopting families with a tax credit 
of $5,000 and outlawed delays in the placement of children for 
the purpose of promoting same-race or same-ethnic group 
placement (Public Law 104-188).

                         C. Legislative History

                             committee bill

    On April 16, 1997 the Subcommittee on Human Resources 
ordered favorably reported to the full Committee, as amended, 
H.R. 867, the ``Adoption Promotion Act of 1997,'' by a voice 
vote, with a quorum present. On April 23, 1997, the full 
Committee ordered favorably reported, as amended, H.R. 867 by a 
voice vote, with a quorum present.

                          legislative hearings

    The Subcommittee on Human Resources held a hearing on 
encouraging adoption on February 27, 1997, that included 
testimony from the U.S. General Accounting Office, State child 
welfare administrators, foundation officials, legal scholars, 
and child advocates. The Subcommittee also held a hearing on 
April 8, 1997 on H.R. 867, the ``Adoption Promotion Act of 
1997,'' that included testimony from Rep. Dave Camp (R-MI) and 
Rep. Barbara Kennelly (D-CT), co-sponsors of the legislation, 
as well as from Senator Mike DeWine (R-OH), the Department of 
Health and Human Services, and other interested outside 
organizations.

                     II. EXPLANATION OF PROVISIONS

1. Short title; table of contents

            Present law
    No provision.
            Explanation of provision
    The Act is named the ``Adoption Promotion Act of 1997.''
            Reason for change
    Not applicable.
            Effective date
    Upon introduction.

2. Clarification of the reasonable efforts requirement

            Present law
    ``Reasonable efforts'' must be made:
         prior to the placement of a child in foster care, to 
        prevent or eliminate the need for removal of the child 
        from his home; and
         to make it possible for the child to return to his 
        home. (Sec. 471(a)(15))
            Explanation of provision
    Provides that States are not required to make reasonable 
efforts in cases in which a court of competent jurisdiction has 
found that a child has been subjected to aggravated 
circumstances, as defined in State law. These circumstances 
could include cases of abandonment, torture, chronic abuse, and 
sexual abuse. However, this list of circumstances is 
illustrative. The bill allows States to define aggravated 
circumstances tailored to their own community standards.
    Mandatory circumstances in which reasonable efforts would 
not be required of the State include involuntary termination of 
parental rights with siblings or when a parent has been found 
by a court of competent jurisdiction:
         to have committed murder of another child of such 
        parent;
         to have committed voluntary manslaughter of another 
        child of such parent;
         to have aided or abetted, attempted, conspired, or 
        solicited to commit such murder or voluntary 
        manslaughter or to have committed a felony assault that 
        results in the serious bodily injury to the surviving 
        child or another child of such parent. State laws must 
        include these four circumstances.
    The provision continues to require States to make 
reasonable efforts on behalf of non-offending parents. In 
specific cases in which a parent exists who has not been 
involved in the abuse of the child, then reasonable efforts 
must be made to reunify the child with that parent.
    In cases in which States choose to bypass or discontinue 
reasonable efforts, as allowed above, then States are required 
to make reasonable efforts to place children for adoption, with 
a legal guardian, or in another planned permanent living 
arrangement. In addition, in cases in which reasonable efforts 
have been required, but continuation of such efforts is no 
longer consistent with the child's permanency goal, States are 
required to make reasonable efforts to place children for 
adoption, with a legal guardian, or in another planned 
permanent living arrangement. The provision allows for 
concurrent planning in which both family reunification and 
adoption planning are simultaneously pursued.
    In determining the reasonable efforts to be made, the 
child's health and safety must be the paramount concern.
            Reason for change
    Under current law, states are required to make ``reasonable 
efforts'' prior to the placement of a child in foster care, to 
prevent or eliminate the need for removal, or to make it 
possible to reunify the child with the family. States can lose 
Federal foster care and adoption funds if they fail to provide 
such efforts. In fact, for a state to claim Federal subsidies, 
the court must make a judicial determination that reasonable 
efforts have been made. However, ``reasonable efforts'' are not 
defined in statute nor have final regulations been issued to 
clarify what steps a state or a court has to take to satisfy 
the requirement that ``reasonable efforts'' to reunify families 
are made. The result has been considerable confusion among the 
states about what constitutes reasonable efforts. Committee 
Members recognize that in certain extreme cases, no efforts to 
reunite the family are reasonable. In addition, in cases in 
which reasonable efforts are required, the Committee 
understands that such efforts should reflect the child's needs 
for a permanent family as timely as possible. Further, the 
provision allows for concurrent planning, in which both family 
reunification and adoption planning are simultaneously pursued. 
For example, while family reunification might be the preferred 
goal for a particular child, caseworkers could also begin 
adoption planning, so that if family reunification is 
unsuccessful then termination of parental rights can be started 
immediately. The Committee believes that concurrent planning 
will promote efficiency and timely planning to move more 
children toward permanency. Committee Members recognize that in 
all decisions regarding a child's future placement, the child's 
health and safety are of primary concern.
            Effective date
    October 1, 1997.

3. States required to initiate or join proceedings to terminate 
        parental rights for certain children in foster care

            Present law
    No provision.
            Explanation of provision
    States are required to file a termination of parental 
rights petition with the court (or join any existing petition) 
in the case of a child under age 10 who has spent 18 out of the 
past 24 months in State foster care, with the following three 
exceptions: (1) the child is being cared for by a relative; (2) 
a State court or agency documents a compelling reason why doing 
so would not be in the best interests of the child; or (3) in 
cases in which reasonable efforts are required, services the 
State deems appropriate for the family have not been provided. 
This provision will only apply to children who enter foster 
care on or after Oct. 1, 1997.
            Reason for change
    Children are experiencing increasingly longer stays in 
foster care. The median length of stay for children is now more 
than 2 years. Moreover, the percentage of children who exit 
foster care through adoption has decreased. While adoption was 
the permanency goal for 15% of foster children in 1990, only 8% 
of the children who left care in that year were adopted. In 
addition, the median age of children in foster care has dropped 
to 8.6 years in 1990 from 12.6 years at the end of 1982. The 
emerging statistical picture shows that young children are 
spending substantial portions of their childhood in a system 
that is designed to be temporary. This provision addresses 
these long stays in foster care by requiring that a State file 
a termination of parental rights petition when a child under 10 
has spent 18 of the past 24 months in State foster care. The 
three exceptions to this requirement are included because the 
Committee recognizes that there are circumstances in which 
foster care stays of longer than 18 months are necessary. For 
example, termination of parental rights may not be in the best 
interests of a child who is being safely cared for by a 
relative under State supervision. In such a case the child may 
be better served by protecting the familial bonds that exist 
between the child and their relatives. In addition, there may 
be cases in which the State court or agency finds compelling 
reasons not to pursue termination of parental rights at 18 
months, such as when a family is successfully completing 
treatment. Finally, the Committee believes that the termination 
of parental rights is such a serious intervention that it 
should not be undertaken without some effort to offer services 
to the family. However, the State retains the discretion to 
determine what services, if any, are appropriate, and of 
sufficient quality, intensity and duration in individual cases. 
None of these exceptions should be interpreted to preclude 
States from pursuing termination of parental rights within the 
18 month time frame or earlier.
            Effective date
    October 1, 1997.

4. Adoption incentive payments

            Present law
    No provision.
            Explanation of provision
    A per child incentive payment will be awarded to each State 
that increases its annual number of finalized adoptions from 
the foster care system above the base year. Qualifying States 
are eligible to receive $4,000 for each foster child with a 
finalized adoption, and an additional $2,000 for each special 
needs adoption. At the beginning of the program, the base year 
would be Fiscal Year 1997, and after that, the base year would 
rise as the State's adoptions rise. The incentive payments 
would be paid beginning in 1999. Incentive payments are 
available for use by States for any activity or service 
allowable under title IV-B or IV-E of the Social Security Act. 
The funding for incentive payments will be provided through a 
mandatory capped entitlement equal to a total of $108 million, 
payable over 5 years.
            Reason for change
    Under current law, there are no financial incentives to 
move children from foster care to adoption. States continue to 
receive Federal subsidies on an open-ended basis as long as 
children remain in care. This provision would provide a per-
child incentive payment to each State that increases its annual 
number of adoptions from the foster care system, thereby 
offsetting the incentives of the current system by giving 
States additional money for each child adopted. The extra cash 
provided for adoption of special needs children provides extra 
incentive for States to find adoptive homes for these children.
            Effective date
    October 1, 1997.

5. Earlier status reviews and permanency hearings

            Present law
    Children in foster care are entitled to a dispositional 
hearing at 18 months to determine the child's future status, 
including whether the child should be returned to the parent, 
continued in foster care for a specified period, placed for 
adoption, or continued in permanent or long-term foster care. 
(Sec. 475(5))
            Explanation of provision
    The timetable for the initial hearing is shortened to 12 
months. In addition, the name of the hearing is changed from 
``dispositional'' to ``permanency'' to emphasize the goal of 
early permanent placements. Further, the listing of possible 
permanency outcomes is revised to include: whether, and if 
applicable when, the child will be returned to the parent, 
placed for adoption and referred for termination of parental 
rights, referred for legal guardianship, or referred for other 
permanent living arrangements, including the transfer of 
custody to another fit and willing relative.
            Reason for change
    This provision recognizes that 18 months is a very long 
time in the life of a young child and that no child should 
experience unnecessarily prolonged stays in foster care. A 
shortened timetable for the permanency hearing responds to the 
young child's need for a stable, permanent home. The General 
Accounting Office has found that almost half of the States have 
already moved to a 12 month hearing. The Committee fully 
expects that final permanency decisions, including adoption and 
transfer of custody to a fit and willing relative, will be made 
at the 12 month hearing. The amendment also requires States to 
make specific choices about the appropriate permanent placement 
by specifying the desired permanent outcomes. The Committee 
intentionally deleted non-relative long term foster care from 
this list to emphasize that such an arrangement should be 
rarely used and should not be considered a permanent placement.
            Effective date
    October 1, 1997.

6. Notice of reviews and hearings; opportunity to be heard

            Present law
    The administrative review is open to the participation of 
the parents of the child. (Sec. 475(6))
            Explanation of provision
    Foster parents and relatives providing foster care must be 
notified of reviews and permanency hearings regarding child 
placement and be given the opportunity to be heard at these 
proceedings. However, foster parents are not granted a Federal 
private right of action.
            Reason for change
    Testimony before the Committee indicated that as the 
child's primary caregivers, foster parents and relatives caring 
for the child often have information about the child that is 
relevant to placement proceedings. According to those 
witnesses, foster parents and relative caregivers are 
frequently denied access to both case reviews and hearings. The 
amendment solves this problem by requiring States to notify 
foster parents and relatives of the hearing and allow them to 
be heard. The Committee has also heard testimony that 
biological relatives, including fathers, have not been given 
notice of reviews and hearings. The Committee notes that under 
current law, the administrative review is open to the 
participation of parents of the child.
            Effective date
    October 1, 1997.

Sec. 7. Documentation of reasonable efforts to adopt

            Present law
    No provision.
            Explanation of provision
    In the case of children with a permanency goal of adoption 
or other permanent placement, States must document steps taken 
both to find an adoptive or other permanent home for the child 
including placement in the custody of another fit and willing 
relative and to finalize the adoption or placement. At a 
minimum, such documentation must include child-specific 
recruitment efforts such as use of State, regional, and 
national adoption exchanges, including electronic exchange 
systems.
            Reason for change
    This provision emphasizes the State's responsibility for 
taking specific actions to find and finalize adoptive families. 
The Committee provision also encourages the use of state-of-
the-art technology to recruit families for specific children 
through the use of State, regional, and national adoption 
exchanges. The Committee encourages States to utilize the 
expertise and resources of private agencies to recruit 
potential adoptive families for children in foster care and to 
finalize adoptive placements. The Committee recognizes that 
some States are already utilizing private agencies through 
contracting out and managed care arrangements.
            Effective date
    October 1, 1997.

Sec. 8. Kinship care

            Present law
    No provision.
            Explanation of provision
    An Advisory Panel on Kinship Care, composed of parents, 
foster parents, former foster children, State and local public 
officials involved in child welfare, private citizens involved 
in child welfare services, representatives of tribal 
governments and tribal courts, judges, and academic experts, 
must be appointed by the Secretary in consultation with the 
Chairmen of the Committees on Ways and Means and Finance not 
later than March 1, 1998. The Secretary must also prepare a 
report on kinship care, based on available information from 
States, that addresses several issues:
          the policy of States regarding kinship care,
          the characteristics of kinship care providers,
          the frequency of access between children in kinship 
        care and their biological parents,
          the cost of kinship care and the source of funds to 
        pay these costs,
          the services provided to biological parents and 
        kinship care providers while children are in kinship 
        care, and
          the circumstances or conditions under which children 
        enter kinship care.
The Secretary's report must be submitted to the Panel by March 
1, 1998.
    The duties of the Advisory Panel on Kinship Care are to:
          review the Secretary's report, and
          submit recommendations to the Secretary for needed 
        changes in public policy on kinship care.
    The Panel's report must be submitted to the Secretary by 
July 1, 1998.
    Based on her initial report, the Panel's review of the 
report, the Panel's recommendations, and other information and 
considerations, the Secretary of HHS must submit a final 
report, that includes policy recommendations, to the Committees 
on Ways and Means and Finance by November 1, 1998.
            Reason for change
    Many children entering foster care in recent years have 
been placed with their own relatives, in a form of substitute 
care known as ``kinship'' care. Between 1986 and 1990, half the 
states reported an increase in use of relatives as foster care 
providers. In the average State, kinship care rose from 18% of 
the foster care caseload to 31% of the caseload, with New York, 
Illinois, and California accounting for much of this increase. 
By 1993, relatives cared for a third of the foster children in 
New York, about 40% in California, and half in Illinois. 
Despite the explosion of kinship care placements, very little 
is known about the nature of these placements. The Committee 
wants to know more about these placements before deciding 
whether Federal action is required to improve the well-being 
and long-term prospects of these children. The Committee 
anticipates that the Advisory Panel will include such 
representatives as volunteer guardians ad litem, members of 
both foster care review panels and citizen review panels, and 
academic experts representing such fields as mental health, 
child development and family dynamics.
            Effective date
    October 1, 1997.

9. Use of the Federal Parent Locator Service for Child Welfare Services

            Present law
    The Child Support Enforcement Program requires the 
establishment of a Federal Parent Locator Service to be used to 
find absent parents in order to secure and enforce child 
support and custody and visitation obligations (P.L. 93-647).
            Explanation of provision
    The Federal Parent Locator Service (FPLS) is authorized to 
be used to locate parents for the purpose of making or 
enforcing child custody or visitation orders. State child 
welfare agencies are authorized to have access to information 
in the FPLS.
            Reason for change
    This provision assists States in making timely and informed 
decisions about permanency by allowing State child welfare 
agencies to access the Federal Parent Locator Service to 
identify and locate parents or other relatives who may be 
interested in providing a permanent home for a child in foster 
care. Even if a parent or other relative is unable to provide a 
home for the child, ruling out this alternative early in a 
child's placement will allow the agency and court to move 
expeditiously towards adoption or another permanent 
alternative. The Committee understands that under current law, 
the FPLS can also be used specifically to provide notice of 
termination of parental rights proceedings.
            Effective date
    October 1, 1997.

10. Performance of States in protecting children

            Present law
    No provision.
            Explanation of provision
    The Secretary of Health and Human Services, after 
consultation with the National Governors' Association, the 
American Public Welfare Association, and persons or 
organizations devoted to child welfare, must develop a set of 
outcome measures that can be used to assess the performance of 
States in operating child protection and child welfare 
programs.
    The outcome measures should be based on data currently 
collected by the States under the Adoption and Foster Care 
Analysis and Reporting System (AFCARS). Based on these outcome 
measures, the Secretary must develop a rating system and 
provide States with an explanation of the rating system.
    By May 1, 1999 and annually thereafter, the Secretary must 
prepare and submit to Congress a State report card which will 
include a rating for every state, an analysis of the reasons 
for high and low performance by States, and recommendations for 
how State performance could be improved.
            Reason for change
    This provision is an attempt to develop meaningful child-
based outcome measures and to recognize successful State 
performance in achieving these outcomes. The provision would 
emphasize the importance of achieving positive outcomes for 
children without increasing mandated procedures. Both positive 
publicity about good programs and negative publicity about 
inferior programs will serve as an incentive for States to 
maintain or improve their programs. The Committee expects that 
the consultation process will include such individuals as child 
development experts, foster care and citizen review board 
members, juvenile justice experts, and representatives of 
county governments.
            Effective date
    October 1, 1997.

11. Authority to approve more child protection demonstration projects

            Present law
    The Secretary may authorize not more than 10 States to 
conduct demonstration projects to waive compliance with 
requirements of part IV-B or IV-E (Sec. 1130).
            Explanation of provision
    Secretary's authority to grant waiver projects is expanded 
from 10 States to 15 States.
            Reason for change
    Currently six states (Oregon, North Carolina, Delaware, 
Illinois, Ohio, Maryland) have been granted waivers. These 
waivers encourage state flexibility to undertake innovative 
approaches to improving child welfare programs and practices. 
Given the increasing interest in undertaking these innovative 
reforms, as well as the potential for developing successful new 
programs and practices that can be used effectively throughout 
the Nation, allowing more States to undertake demonstration 
programs is good policy.
            Effective date
    October 1, 1997.

12. Technical assistance

            Present law
    No provision.
            Explanation of provision
    The Secretary is authorized to spend $10 million annually 
for 3 years (Fiscal Years 1998-2000) to provide technical 
assistance to States to promote adoption. The technical 
assistance must support the goal of encouraging more adoptions 
out of the foster care system when adoption promotes the best 
interests of children. Topics for technical assistance include:
          development of best practice guidelines for 
        expediting termination of parental rights;
          creation of methods of concurrent planning so that 
        family preservation and adoption can be pursued 
        simultaneously;
          development of specialized local administrative units 
        and expertise in moving children toward adoption;
          development of risk assessment tools to facilitate 
        early identification of children at risk of harm if 
        returned home;
          promotion of arrangements to encourage fast tracking 
        children under the age of 1 into pre-adoptive 
        placements; and
          development of programs that place children in pre-
        adoptive families without waiting for termination of 
        parental rights.
            Reason for change
    Technical assistance can help States and communities 
increase adoptions and alternative permanent placements for 
children in foster care by promoting policies and practices 
that have worked well in other locations. The Committee expects 
that the Department of Health and Human Services will 
disseminate information and provide technical assistance based 
on best practices that have already been evaluated.
            Effective date
    October 1, 1997.

13. Coordination of Substance Abuse and Child Protection Services

            Present law
    No provision.

Explanation of provision

    The Secretary of the Department of Health and Human 
Services must submit a report to the Committees on Ways and 
Means and Finance on the coordination of substance abuse and 
child protection services. The report must be based on 
information from the Substance Abuse and Mental Health Services 
Administration and the Administration for Children and 
Families. The report addresses the following issues: the extent 
and scope of the problems of substance abuse in the child 
welfare population; the types of services and the outcome of 
services delivered to this population; and legislative 
recommendations to the Committees on Ways and Means and 
Finance. The report is due 1 year after enactment.
            Reason for change
    Substance abuse has been cited by child welfare agencies as 
one of the three most common reasons for children entering 
foster care, together with abuse and neglect and economic 
stress, and appears in up to 80% of substantiated abuse and 
neglect cases. This provision would encourage collaboration 
between the Federal agency responsible for substance abuse 
prevention and treatment and the agency responsible for child 
welfare services.
            Effective date
    October 1, 1997.

14. Clarification of eligible population for Independent Living 
        Services

            Present law
    Independent Living Initiatives assist States and localities 
in establishing programs to help children in foster care who 
have attained the age of 16 in making the transition from 
foster care to independent living. (Sec. 477)
            Explanation of provision
    The amendment clarifies that the population eligible for 
Independent Living Services is children who are or have been in 
foster care, who are 16 years of age and who are making the 
transition from foster care to independent living. Eligibility 
for Independent Living Services is not dependent on eligibility 
for Title IV-E.
            Reason for change
    There is considerable State variation in applying the 
eligibility criteria, specifically with regard to the $1,000 
asset limit. The Committee clarifies that children who are or 
have been in foster care, who are 16 years of age or older, are 
eligible for Independent Living Services, regardless of whether 
they are eligible for Title IV-E foster care subsidies.
            Effective date
    October 1, 1997.

15. Effective date

            Present law
    No provision.
            Explanation of provision
    The amendments made by this Act take effect on October 1, 
1997. State plans under Title IV-B and IV-E of the Social 
Security Act will not be considered as failing to comply with 
the Act's provisions until after the close of the first regular 
session of the State legislature that begins after the date of 
enactment.
            Reason for change
    States must change their laws in order to comply with the 
provisions of this Act. Thus, States need to know the deadline 
for enacting the necessary laws and the timetable for beginning 
to implement their programs.
            Effective date
    October 1, 1997.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 2(l)(2)(B) of rule XI of the 
Rules of the House of Representatives, the following statements 
are made concerning the votes of the Committee in its 
consideration of the bill, H.R. 867.

                       motion to report the bill

    The bill, H.R. 867, as amended, was ordered favorably 
reported by voice vote on April 24, 1997, with a quorum 
present.

                     IV. BUDGET EFFECTS OF THE BILL

               A. Committee Estimate of Budgetary Effects

    In compliance with clause 7(a) of rule XIII of the Rules of 
the House of Representatives, the following statement is made:
    The Committee agrees with the estimate prepared by the 
Congressional Budget office (CBO) which is included below.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee states 
that the provisions in the Committee bill, if enacted, would 
decrease direct spending by $34 million over the budget period 
Fiscal Years 1997-2002.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives requiring a cost estimate 
prepared by the Congressional Budget Office (CBO), the follow 
report prepared by CBO is provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 25, 1997.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 867, the Adoption 
Promotion Act of 1997.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Justin 
Latus (for federal budgetary impacts), Marc Nicole (for state 
and local government impacts), and Julia Matson (for private-
sector impacts).
            Sincerely,
                                         June E. O'Neill, Director.

H.R. 867--Adoption Promotion Act of 1997

    Summary: H.R. 867 would make changes to Title IV, Part E of 
the Social Security Act, which deals with federal payments for 
foster care and adoption assistance. The bill has several 
provisions designed to reduce the amount of time spent by 
children in foster care settings and to move these children 
more quickly into permanent settings such as adoptive homes.
    CBO estimates that three provisions of this bill would 
increase or speed up adoptions and would produce budgetary 
savings by moving children from foster care to less expensive 
adoption placements. These provisions would require states to 
make reasonable efforts to move children toward adoption, 
require that termination of parental rights be initiated for 
children under 10 who have been in foster care for 18 of the 
previous 24 months, and provide incentive payments to states 
that increase adoptions. CBO estimates that these provisions 
would produce savings in foster care and adoption assistance 
totaling $34 million over the 1998-2002 period.
    H.R. 867 would also increase authorizations of 
appropriations for technical assistance to states to increase 
adoptions by $30 million over the 1998-2002 period.
    The legislation would affect direct spending; therefore, 
pay-as-you-go procedures would apply. H.R. 867 contains 
intergovernmental mandates, as defined in the Unfunded Mandates 
Reform Act of 1995 (UMRA), but CBO estimates that the net 
effect of the bill's provisions would be to save states money. 
H.R. 867 does not include any private-sector mandates as 
defined in UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of HR. 867 is shown in the following table.

                                                                                                                
----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal years, in millions of dollars--  
                                                                 -----------------------------------------------
                                                                   1997    1998    1999    2000    2001    2002 
----------------------------------------------------------------------------------------------------------------
                                                 DIRECT SPENDING                                                
                                                                                                                
Spending for Foster Care and Adoption Assistance under Current                                                  
 Law:                                                                                                           
    Budget authority............................................   3,966   4,275   4,693   5,129   5,556   5,978
    Estimated outlays...........................................   3,904   4,222   4,621   5,054   5,482   5,905
Proposed Changes:                                                                                               
    Section 2. Clarification of reasonable efforts:                                                             
        Estimated budget authority..............................       0      -2      -3      -5      -5      -5
        Estimated outlays.......................................       0      -2      -3      -5      -5      -5
    Section 3. States required to initiate termination of                                                       
     parental rights for certain children in foster care:                                                       
        Estimated budget authority..............................       0       0   (\1\)      -2      -3      -5
        Estimated outlays.......................................       0       0   (\1\)      -2      -3      -5
    Section 4. Adoption incentive payment for states:                                                           
        Estimated budget authority..............................       0      -1       7      -1      -1      -8
        Estimated outlays.......................................       0      -1       7      -1      -1      -8
    Section 5. Earlier status reviews and permanency hearings:                                                  
        Estimated budget authority..............................       0   (\1\)       0       0       0       0
        Estimated outlays.......................................       0   (\1\)       0       0       0       0
    Total--Proposed Changes:                                                                                    
        Estimated budget authority..............................       0      -3       4      -8      -9     -18
        Estimated outlays.......................................       0      -3       4      -8      -9     -18
    Spending for Foster Care and Adoption Assistance under H.R.                                                 
     867:                                                                                                       
        Estimated budget authority..............................   3,966   4,272   4,697   5,121   5,547   5,960
        Estimated outlays.......................................   3,904   4,219   4,625   5,046   5,473   5,887
                                                                                                                
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
Spending under Current Law:                                                                                     
    Budget authority............................................       0       0       0       0       0       0
    Estimated outlays...........................................       0       0       0       0       0       0
Proposed Changes:                                                                                               
    Authorization level.........................................       0      10      10      10       0       0
    Estimated outlays...........................................       0       1       7       9       9       3
Spending under H.R. 867:                                                                                        
    Authorization level.........................................       0      10      10      10       0       0
    Estimated outlays...........................................       0       1       7       9       9       3
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                         

    The costs of this legislation fall within budget function 
500 (education, training, employment, and social services).
    Basis of estimate: The estimate assumes that the bill would 
be enacted by October, 1, 1997, which is also the effective 
date.

Direct spending

    CBO estimates that the bill would lead to savings in 
federal spending for foster care and adoption assistance 
because some of its provisions would help to move children from 
foster care to adoption placements. Because federal costs of 
administration (for example, monitoring a child's placement, 
recruiting foster families, and completing necessary paperwork) 
and maintenance payments (payments to cover housing and food 
expenses for the child) for a child who has been adopted are 
about $5,000 less a year than for a child who is in foster 
care, the bill would result in savings to the federal 
government.
    Section 2--Clarification of Reasonable Efforts. Section 2 
of the bill would clarify the requirement that reasonable 
efforts be made to keep a child with his or her family before 
the child is placed in foster care or to return a child to his 
or her parents after removal from the home. Reasonable efforts 
would not have to be made in cases where a court has determined 
that a child has been subjected to aggravated circumstances, 
such as abandonment, torture, or sexual abuse. This program 
would have no budgetary effect because it merely clarifies 
current law.
    Section 2 would also require states to make reasonable 
efforts to place a child for adoption or in some other 
permanent placement, in all cases where it is determined that 
reunification with the parent is not in the best interests of 
the child (not just those in which the child has been subjected 
to aggravated circumstances). This provision would express the 
federal government's position that states should move children 
to adoption if reunification is not appropriate. Although some 
states have recently taken steps to increase adoptions, CBO 
assumes that others would respond to this signal by speeding up 
adoptions.
    CBO estimates that this provision would save $2 million in 
1998, $3 million in 1999, and $5 million a year in 2000 and 
thereafter. Savings would total $20 million over the 1998-2002 
period. This estimate takes account of a slight initial 
increase in administrative costs as states work to move 
children to adoption. There are currently about 20,000 
adoptions of children from foster care each year, of which 65 
percent are eligible for the Title IV-E program. The estimate 
assumes that 15 percent, or 2000, of these adoptions would be 
sped up by an average of six months.
    Section 3--Initiation of Termination of Parental Rights. 
Section 3 would require states to initiate termination of 
parental rights (TPR) if a child is under ten and has been in 
foster care for 18 of the previous 24 months. Termination of 
parental rights of the biological parent to the child must 
occur before a child can be adopted. There is currently no 
federal requirement stating when TPR must be initiated. This 
new provision would not apply if the child is being taken care 
of by a relative (at the option of the state), if a court or 
state agency rules that it is not in the best interests of the 
child to initiate TPR, or if reasonable efforts to reunify the 
child with his or her parent have not been made.
    State adoption officials and other experts indicate that 
this provision has the potential to move children out of foster 
care more quickly. In some cases under current law, once a 
child is placed in foster care, the state may not have the 
opportunity to work toward a more permanent placement for the 
child because of competing demands on caseworkers' time. This 
provision would establish a clear, definite timetable for 
beginning to terminate parental rights.
    CBO estimates that this provision, when its effects would 
be fully realized in 2002, would save $5 million a year. 
Savings would total $10 million over the 1998-2002 period. As 
with section 2, the estimate assumes that 15 percent of 
adoptions would be sped up by six months. However, this 
provision produces savings later than section 2 because the 18-
month timetable would apply only to children who would enter a 
state's child welfare system on or after October 1, 1997. 
Faster terminations of parental rights as a result of this 
provision could not begin until mid-1999. The TPR process takes 
anywhere from 90 days to several years, with the median length 
of time being about a year. Once TPR is completed, it takes 
further time for the child to be adopted. No savings under this 
provision would occur until fiscal year 2000.
    Section 4--Adoption Incentive Payments. Section 4 would 
provide an adoption incentive payment to states that increase 
adoptions from their foster care system over the base-year 
level. The incentive payment would be $4,000 for each adoption 
above the base year, plus $2,000 for each special needs (i.e., 
IV-E eligible) adoption. The base year would be 1997 or a later 
year if the state succeeds in increasing its adoptions. For 
example, a state that increases adoptions from 1,000 in 1997 to 
1,100 in 1998 would receive an incentive payment for the 100 
adoptions above the 1997 level. For 1999, the new base year 
would be 1998, and the state would receive an incentive payment 
only if it increased its adoptions in 1999 above 1,100.
    CBO estimates that this provision would save approximately 
$4 million over the 1998-2002 period. Costs of providing 
incentive payments would be offset by savings from increasing 
the number of adoptions. The savings would rise over time as 
the number of additional adoptions increases.
    State adoption directors have indicated that the incentive 
payment, even if it would not represent a big increase in the 
state's total foster care budget, would draw attention to a 
state's child welfare system and assist in efforts to increase 
adoption. CBO estimates that these adoption incentive payments 
would increase adoptions by 500 children a year over what they 
would be without the incentive payment program, and that 65 
percent of these would be children eligible for IV-E payments. 
Under the bill, incentive payments could not exceed a total of 
$108 million for fiscal years 1999 through 2003. CBO estimates 
that only about $25 million would be needed for the incentive 
payments resulting from a cumulative increase of about 5,000 in 
the number of adoptions over the period.
    The proposal for incentive payments would interact with the 
other provisions in this bill that would increase adoption. The 
5,000 additional adoptions includes those that would result 
from sections 2 and 3 of the bill. Incentive payments would 
also be paid to states that would increase their adoptions even 
without any changes in federal policy.
    Other Provisions.--Other provisions that are designed to 
streamline the adoptive process would not yield any budgetary 
savings. Section 5, for example, would require states to hold 
the first permanency hearing for a child removed from his or 
her home 12 months after removal, rather than 18 months. 
Twenty-six states already have some type of review before 18 
months, so this proposal's impact would be limited. Further, it 
is not clear that earlier reviews have expedited the adoption 
process. In some states, earlier hearings have little effect on 
a child's movement through the state's child welfare system. In 
other states, because of court backlogs, requirements for 
earlier hearings are not met.
    Other provisions would change the name of ``dispositional 
hearings'' to ``permanency hearings,'' require that foster 
parents be notified and given the chance to be heard in 
hearings dealing with their foster child, require documentation 
of reasonable efforts to adopt, and allow the use of the parent 
locator service for child welfare services. This bill would 
also require the Secretary of Health and Human Services to 
write a report on kinship care and to develop a system for 
rating states' child protection systems, permit five more cost-
neutral child protection demonstration projects, and clarify 
that states can provide services to youth in the Independent 
Living program who are no longer in foster care and who have 
assets greater than $1,000.

Amounts subject to appropriation

    Section 12 would authorize appropriations of $10 million a 
year from 1998 through 2000 for technical assistance to states 
to increase adoptions. Increases in budget authority would 
total $30 million, and outlays would total $29 million over the 
1998-2002 period.
    Pay-as-you-go considerations: Section 252 of the Balanced 
Budget and Emergency Deficit Control Act of 1985 sets up pay-
as-you-go procedures for legislation affecting direct spending 
and receipts through 1998. CBO estimates that enacting H.R. 867 
would decrease direct spending in fiscal year 1998 by $3 
million.
    Estimated impact on State, local, and tribal governments: 
H.R. 867 contains intergovernmental mandates, as defined in 
UMRA, but CBO estimates that the bill would save states money, 
on balance. In total, we estimate states would save 
approximately $25 million and would receive additional funding 
totaling $50 million between fiscal years 1998 and 2002.

Mandates

    The bill would require states to enact new foster care laws 
and to take certain actions related to permanency hearings and 
termination of parental rights sooner than under current law. 
These new requirements would result in a small increase in 
administrative costs, but such costs would be more than offset 
by reductions in state foster care payments. The costs and 
savings from the new requirements would be shared between the 
federal government and the states. States receive an open-ended 
federal match equal to the Medicaid match rate (which averages 
55 percent) for foster care assistance payments and an open-
ended match equal to 50 percent for most foster care 
administrative costs. Based on information from states and 
interest groups, and the methodology discussed in the federal 
cost section of this estimate, CBO estimates that net savings 
to states would total $1 million in fiscal year 1998 and 
approximately $25 million from 1998 to 2002.

Other impacts

    The bill would allow states to collect adoption incentive 
payments from the federal government for increasing the number 
of adoptions over base year levels. CBO estimates that states 
would collect an additional $9 million in fiscal year 1999 and 
$25 million from 1999 to 2003. In addition, assuming that 
amounts authorized in the bill are appropriated, states would 
receive $10 million a year for technical assistance in fiscal 
years 1998 to 2000.
    Finally, enactment of the bill could result in some 
additional costs to state and local court systems. These costs 
would arise from hearing more cases dealing with the 
termination of parental rights. Based on information from 
states, we expect that the costs would not be significant.
    Estimated impact on the private sector: H.R. 867 does not 
include any private-sector mandates as defined in the Unfunded 
Mandates Reform Act.
    Estimate prepared by: Federal Cost: Justin Latus. Impact on 
State, Local, and Tribal Governments: Marc Nicole. Impact on 
the Private Sector: Julia Matson.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

 V. OTHER MATTERS REQUIRED TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

          A. Committee Oversight Findings and Recommendations

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the need for this legislation was confirmed by the 
oversight hearings of the Subcommittee on Human Resources. In 
the 104th Congress, the Subcommittee on Human Resources held a 
total of 3 hearings on adoption and child welfare. The hearings 
were as follows:
    On February 3, 1995, the Subcommittee on Human Resources 
held a hearing jointly with the Subcommittee on Early 
Childhood, Youth, and Families of the Committee on Economic and 
Educational Opportunities on child care and child welfare.
    On May 10, 1995, the Subcommittee on Human Resources held a 
hearing on Federal adoption policy.
    On June 27, 1995, the Subcommittee on Human Resources held 
a hearing on barriers to adoption.
    In the 105th Congress, the Subcommittee held a hearing on 
encouraging adoption on February 27, 1997, that included 
testimony from the U.S. General Accounting Office, State child 
welfare administrators, foundation officials, legal scholars, 
and child advocates. The Subcommittee also held a hearing on 
April 8, 1997 on H.R. 867, the ``Adoption Promotion Act of 
1997,'' that included testimony from Rep. Dave Camp (R-MI) and 
Rep. Barbara Kennelly (D-CT), co-sponsors of the legislation, 
as well as from Senator Mike DeWine (R-OH), the Department of 
Health and Human Services, and other interested outside 
organizations.

B. Summary of Findings and Recommendations of the Government Reform and 
                          Oversight Committee

    In compliance with clause 2(l)(3)(D) of rule XI of the 
Rules of the House of Representatives, the Committee states 
that no oversight findings or recommendations have been 
submitted to the Committee on Government Reform and Oversight 
regarding the subject of the bill.

                 C. Constitutional Authority Statement

    With respect to clause 2(l)(4) of rule XI of the Rules of 
the House of Representatives, relating to Constitutional 
Authority, the Committee states that the Committee's action in 
reporting the bill is derived from Article I of the 
Constitution, Section 8 (``The Congress shall have power to lay 
and collect taxes, duties, imposts and excises, to pay the 
debts and to provide for * * * the general Welfare of the 
United States * * *'').

          VI. APPLICABILITY OF FEDERAL ADVISORY COMMITTEE ACT

    Pursuant to the Federal Advisory Committee Act (5 U.S.C., 
App., section 5(b)), the Committee states that any advisory 
bodies created by the bill, such as the Advisory Panel on 
Kinship Care in section 8(b)(1), are consciously created, and 
are deemed appropriate and necessary to carry out the purposes 
of the bill. It is the view of the Committee that the functions 
of any such advisory bodies are not being and could not be 
performed by one or more agencies or by an advisory committee 
already in existence, or by enlarging the mandate of an 
existing advisory committee.

      VII. CHANGES IN EXISTING LAWS MADE BY THE BILL, AS REPORTED

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                          SOCIAL SECURITY ACT

          * * * * * * *

TITLE IV--GRANTS TO STATES FOR AID AND SERVICES TO NEEDY FAMILIES WITH 
                CHILDREN AND FOR CHILD-WELFARE SERVICES

          * * * * * * *

          Part D--Child Support and Establishment of Paternity

          * * * * * * *

                     FEDERAL PARENT LOCATOR SERVICE

  Sec. 453. (a) The Secretary shall establish and conduct a 
Federal Parent Locator Service, under the direction of the 
designee of the Secretary referred to in section 452(a), which 
shall be used to obtain and transmit to any authorized person 
(as defined in subsection (c)), for the purpose of establishing 
parentage, establishing, setting the amount of, modifying, or 
enforcing child support obligations, [or enforcing child 
custody or visitation orders] or making or enforcing child 
custody or visitation orders--
          (1) information on, or facilitating the discovery of, 
        the location of any individual--
                  (A) who is under an obligation to pay child 
                support or provide child custody or visitation 
                rights;
                  (B) against whom such an obligation is 
                sought;
                  (C) to whom such an obligation is owed[,]; or
                  (D) who has or may have parental rights with 
                respect to a child,
        including the individual's social security number (or 
        numbers), most recent address, and the name, address, 
        and employer identification number of the individual's 
        employer;
          * * * * * * *
  (c) As used in subsection (a), the term ``authorized person'' 
means--
          (1) * * *
          * * * * * * *
          (3) the resident parent, legal guardian, attorney, or 
        agent of a child (other than a child receiving aid 
        under part A of this title) (as determined by 
        regulations prescribed by the Secretary) without regard 
        to the existence of a court order against a 
        noncustodial parent who has a duty to support and 
        maintain any such child[.]; and
          (4) a State agency that is administering a program 
        operated under a State plan under subpart 1 of part B, 
        or a State plan approved under subpart 2 of part B or 
        under part E.
          * * * * * * *

    Part E--Federal Payments for Foster Care and Adoption Assistance

          * * * * * * *

           STATE PLAN FOR FOSTER CARE AND ADOPTION ASSISTANCE

  Sec. 471. (a) In order for a State to be eligible for 
payments under this part, it shall have a plan approved by the 
Secretary which--
          (1) * * *
          * * * * * * *
          [(15) effective October 1, 1983, provides that, in 
        each case, reasonable efforts will be made (A) prior to 
        the placement of a child in foster care, to prevent or 
        eliminate the need for removal of the child from his 
        home, and (B) to make it possible for the child to 
        return to his home;]
          (15)(A) provides that--
                  (i) except as provided in clauses (ii) and 
                (iii), reasonable efforts shall be made--
                          (I) before a child is placed in 
                        foster care, to prevent or eliminate 
                        the need to remove the child from the 
                        child's home; and
                          (II) to make it possible for the 
                        child to return home;
                  (ii) if continuation of reasonable efforts of 
                the type described in clause (i) is determined 
                to be inconsistent with the permanency plan for 
                the child, reasonable efforts of the type 
                required by clause (iii)(II) shall be made;
                  (iii) if a court of competent jurisdiction 
                has determined that the child has been 
                subjected to aggravated circumstances (as 
                defined by State law, which definition may 
                include abandonment, torture, chronic abuse, 
                and sexual abuse) or parental conduct described 
                in section 106(b)(2)(A)(xii) of the Child Abuse 
                Prevention and Treatment Act, or that the 
                parental rights of a parent with respect to a 
                sibling of the child have been terminated 
                involuntarily--
                          (I) reasonable efforts of the type 
                        described in clause (i) shall not be 
                        required to be made with respect to any 
                        parent of the child who has been 
                        involved in subjecting the child to 
                        such circumstances or such conduct, or 
                        whose parental rights with respect to a 
                        sibling of the child have been 
                        terminated involuntarily; and
                          (II) if reasonable efforts of the 
                        type described in clause (i) are not 
                        made or are discontinued, reasonable 
                        efforts shall be made to place the 
                        child for adoption, with a legal 
                        guardian, or (if adoption or legal 
                        guardianship is determined not to be 
                        appropriate for the child) in some 
                        other planned, permanent living 
                        arrangement; and
                  (iv) reasonable efforts of the type described 
                in clause (iii)(II) may be made concurrently 
                with reasonable efforts of the type described 
                in clause (i); and
                  (B) in determining the reasonable efforts to 
                be made with respect to a child and in making 
                such reasonable efforts, the child's health and 
                safety shall be of paramount concern;
          * * * * * * *

                FOSTER CARE MAINTENANCE PAYMENTS PROGRAM

  Sec. 472. (a) Each State with a plan approved under this part 
shall make foster care maintenance payments (as defined in 
section 475(4)) under this part with respect to a child who 
would meet the requirements of section 406(a) or of section 407 
but for his removal from the home of a relative (specified in 
section 406(a)), if--
          (1) the removal from the home occurred pursuant to a 
        voluntary placement agreement entered into by the 
        child's parent or legal guardian, or was the result of 
        a judicial determination to the effect that 
        continuation therein would be contrary to the welfare 
        of such child and (effective October 1, 1983) that 
        reasonable efforts of the type described in section 
        471(a)(15) for a child have been made;
          * * * * * * *

SEC. 473A. ADOPTION INCENTIVE PAYMENTS.

  (a) Grant Authority.--Each State that is an incentive-
eligible State for a fiscal year shall be entitled to receive 
from the Secretary in the immediately succeeding fiscal year a 
grant in an amount equal to the adoption incentive payment.
  (b) Incentive-Eligible State.--A State is an incentive-
eligible State for a fiscal year if--
          (1) the State has a plan approved under this part for 
        the fiscal year;
          (2) the number of foster child adoptions in the State 
        during the fiscal year exceeds the base number of 
        foster child adoptions for the State for the fiscal 
        year;
          (3) the State is in compliance with subsection (c) 
        for the fiscal year; and
          (4) the fiscal year is any of fiscal years 1998 
        through 2002.
  (c) Data Requirements.--
          (1) In general.--A State is in compliance with this 
        subsection for a fiscal year if the State has provided 
        to the Secretary the data described in paragraph (2) 
        for fiscal year 1997 (or, if later, the fiscal year 
        that precedes the 1st fiscal year for which the State 
        seeks a grant under this section) and for each 
        succeeding fiscal year.
          (2) Determination of numbers of adoptions.--
                  (A) Determinations based on afcars data.--
                Except as provided in subparagraph (B), the 
                Secretary shall determine the numbers of foster 
                child adoptions and of special needs adoptions 
                in a State during each of fiscal years 1997 
                through 2002, for purposes of this section, on 
                the basis of data meeting the requirements of 
                the system established pursuant to section 479, 
                as reported by the State in May of the fiscal 
                year and in November of the succeeding fiscal 
                year, and approved by the Secretary by April 1 
                of the succeeding fiscal year.
                  (B) Alternative data sources permitted for 
                fiscal year 1997.--For purposes of the 
                determination described in subparagraph (A) for 
                fiscal year 1997, the Secretary may use data 
                from a source or sources other than that 
                specified in subparagraph (A) that the 
                Secretary finds to be of equivalent 
                completeness and reliability, as reported by a 
                State by November 30, 1997, and approved by the 
                Secretary by March 1, 1998.
          (3) No waiver of afcars requirements.--This section 
        shall not be construed to alter or affect any 
        requirement of section 479 or any regulation prescribed 
        under such section with respect to reporting of data by 
        States, or to waive any penalty for failure to comply 
        with the requirements.
  (d) Adoption Incentive Payment.--
          (1) In general.--Except as provided in paragraph (2), 
        the adoption incentive payment payable to a State for a 
        fiscal year under this section shall be equal to the 
        sum of--
                  (A) $4,000, multiplied by amount (if any) by 
                which the number of foster child adoptions in 
                the State during the fiscal year exceeds the 
                base number of foster child adoptions for the 
                State for the fiscal year; and
                  (B) $2,000, multiplied by the amount (if any) 
                by which the number of special needs adoptions 
                in the State during the fiscal year exceeds the 
                base number of special needs adoptions for the 
                State for the fiscal year.
          (2) Pro rata adjustment if insufficient funds 
        available.--If the total amount of adoption incentive 
        payments otherwise payable under this section for a 
        fiscal year exceeds the amount then available for 
        grants under this section, the amount of the adoption 
        incentive payment payable to each State under this 
        section for the fiscal year shall be--
                  (A) the amount of the adoption incentive 
                payment that would otherwise be payable to the 
                State under this section for the fiscal year; 
                multiplied by
                  (B) the percentage represented by the amount 
                then available for grants under this section, 
                divided by the total amount of adoption 
                incentive payments otherwise payable under this 
                section for the fiscal year.
  (e) 2-Year Availability of Incentive Payments.--Payments to a 
State under this section in a fiscal year shall remain 
available for use by the State through the end of the 
succeeding fiscal year.
  (f) Limitations on Use of Incentive Payments.--A State shall 
not expend an amount paid to the State under this section 
except to provide to children or families any service 
(including post adoption services) that may be provided under 
part B or E. Amounts expended by a State in accordance with the 
preceding sentence shall be disregarded in determining State 
expenditures for purposes of Federal matching payments under 
section 474.
  (g) Definitions.--As used in this section:
          (1) Foster child adoption.--The term ``foster child 
        adoption'' means the final adoption of a child who, at 
        the time of adoptive placement, was in foster care 
        under the supervision of the State.
          (2) Special needs adoption.--The term ``special needs 
        adoption'' means the final adoption of a child for whom 
        an adoption assistance agreement is in effect under 
        section 473.
          (3) Base number of foster child adoptions.--The term 
        ``base number of foster child adoptions for a State'' 
        means, with respect to a fiscal year, the largest 
        number of foster child adoptions in the State in fiscal 
        year 1997 (or, if later, the 1st fiscal year for which 
        the State has furnished to the Secretary the data 
        described in subsection (c)(2)) or in any succeeding 
        fiscal year preceding the fiscal year.
          (4) Base number of special needs adoptions.--The term 
        ``base number of special needs adoptions for a State'' 
        means, with respect to a fiscal year, the largest 
        number of special needs adoptions in the State in 
        fiscal year 1997 (or, if later, the 1st fiscal year for 
        which the State has furnished to the Secretary the data 
        described in subsection (c)(2)) or in any succeeding 
        fiscal year preceding the fiscal year.
  (h) Appropriation.--
          (1) In general.--Out of any money in the Treasury of 
        the United States not otherwise appropriated, there are 
        appropriated for fiscal years 1999 through 2003 such 
        sums as are necessary for grants under this section, in 
        a total amount not to exceed $108,000,000.
          (2) Availability.--Amounts appropriated under 
        paragraph (1) shall remain available until expended, 
        but not after fiscal year 2003.
          * * * * * * *

                              DEFINITIONS

  Sec. 475. As used in this part or part B of this title:
          (1) * * *
          * * * * * * *
          (5) The term ``case review system'' means a procedure 
        for assuring that--
                  (A) * * *
          * * * * * * *
                  (C) with respect to each such child, 
                procedural safeguards will be applied, among 
                other things, to assure each child in foster 
                care under the supervision of the State of a 
                [dispositional] permanency hearing to be held, 
                in a family or juvenile court or another court 
                (including a tribal court) of competent 
                jurisdiction, or by an administrative body 
                appointed or approved by the court, no later 
                than [eighteen months after] 12 months after 
                the original placement (and not less frequently 
                than every 12 months thereafter during the 
                continuation of foster care), which hearing 
                shall determine the [future status of the child 
                (including, but not limited to, whether the 
                child should be returned to the parent, should 
                be continued in foster care for a specified 
                period, should be placed for adoption, or 
                should (because of the child's special needs or 
                circumstances) be continued in foster care on a 
                permanent or long-term basis)] permanency plan 
                for the child (including whether (and, if 
                applicable, when) the child will be returned to 
                the parent, the child will be placed for 
                adoption and the State will file a petition to 
                terminate the parental rights of the parent, a 
                legal guardian will be appointed for the child, 
                or the child will be placed in some other 
                planned, permanent living arrangement, 
                including in the custody of another fit and 
                willing relative) and, in the case of a child 
                described in subparagraph (A)(ii), whether the 
                out-of-State placement continues to be 
                appropriate and in the best interests of the 
                child, and, in the case of a child who has 
                attained age 16, the services needed to assist 
                the child to make the transition from foster 
                care to independent living; and procedural 
                safeguards shall also be applied with respect 
                to parental rights pertaining to the removal of 
                the child from the home of his parents, to a 
                change in the child's placement, and to any 
                determination affecting visitation privileges 
                of parents; [and]
                  (D) a child's health and education record (as 
                described in paragraph (1)(A)) is reviewed and 
                updated, and supplied to the foster parent or 
                foster care provider with whom the child is 
                placed, at the time of each placement of the 
                child in foster care[.];
                  (E) in the case of a child who has not 
                attained 10 years of age and has been in foster 
                care under the responsibility of the State for 
                18 months of the most recent 24 months, the 
                State shall file a petition to terminate the 
                parental rights of the child's parents (or, if 
                such a petition has been filed by another 
                party, seek to be joined as a party to the 
                petition), unless--
                          (i) at the option of the State, the 
                        child is being cared for by a relative;
                          (ii) a State court or State agency 
                        has documented a compelling reason for 
                        determining that filing such a petition 
                        would not be in the best interests of 
                        the child; or
                          (iii) the State has not provided to 
                        the family of the child such services 
                        as the State deems appropriate, if 
                        reasonable efforts of the type 
                        described in section 471(a)(15)(A)(i) 
                        are required to be made with respect to 
                        the child;
                  (F) the foster parents (if any) of a child 
                and any relative providing care for the child 
                are provided with notice of, and an opportunity 
                to be heard in, any review or hearing to be 
                held with respect to the child, except that 
                this subparagraph shall not be construed to 
                make any foster parent a party to such a review 
                or hearing; and
                  (G) in the case of a child with respect to 
                whom the State's goal is adoption or placement 
                in another permanent home, the steps taken by 
                the State agency to find an adoptive family or 
                other permanent living arrangement for the 
                child, to place the child with an adoptive 
                family, a legal guardian, or in another planned 
                permanent living arrangement (including in the 
                custody of another fit and willing relative), 
                and to finalize the adoption or legal 
                guardianship are documented, and such 
                documentation shall include documentation of 
                child specific recruitment efforts such as the 
                use of State, regional, and national adoption 
                information exchanges, including electronic 
                information exchange systems.
          * * * * * * *

                     INDEPENDENT LIVING INITIATIVES

  Sec. 477. (a)(1) * * *
  (2) A program established and carried out under paragraph 
(1)--
          (A) shall be designed to assist children with respect 
        to whom foster care maintenance payments are being made 
        by the State under this part (including children with 
        respect to whom such payments are no longer being made 
        because the child has accumulated assets, not to exceed 
        $5,000, which are otherwise regarded as resources for 
        purposes of determining eligibility for benefits under 
        this part),
          * * * * * * *

     TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE 
                             SIMPLIFICATION

          * * * * * * *

                       Part A--General Provisions

          * * * * * * *

                         demonstration projects

  Sec. 1130. (a) In General.--The Secretary may authorize not 
more than [10] 15 States to conduct demonstration projects 
pursuant to this section which the Secretary finds are likely 
to promote the objectives of part B or E of title IV.
          * * * * * * *
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