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[Senate Report 110-467]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 972
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-467
======================================================================
 
 IMPROVED ADOPTION INCENTIVES AND RELATIVE GUARDIANSHIP SUPPORT ACT OF 
                                  2008

                                _______
                                

               September 16, 2008.--Ordered to be printed

                                _______
                                

   Mr. Baucus, from the Committee on Finance, submitted the following

                              R E P O R T

                         [To accompany S. 3038]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, to which was referred the bill 
(S. 3038) to amend part E of title IV of the Social Security 
Act to extend the adoption incentives program, to authorize 
States to establish a relative guardianship program, to promote 
the adoption of children with special needs, and for other 
purposes, reports favorably thereon with an amendment in the 
nature of a substitute and recommends the bill, as amended, do 
pass.

                             I. BACKGROUND

Child Welfare Services

    The Child Welfare Services program was established in 
1935--as part of the original Social Security Act (P.L. 74-
271)--to provide grants to State agencies for the ``protection 
and care of homeless, dependent, and neglected children, and 
children in danger of becoming delinquent'' and for 
``developing State services for the encouragement and 
assistance of adequate methods of community child welfare 
organization.'' Child Welfare Services funding is authorized on 
a discretionary basis and is distributed, by formula, to 
States, territories, and tribes. The program authorization has 
been amended numerous times and is currently included in the 
Social Security Act as part of Title IV-B, subpart 1, under 
which competitive grants for child welfare training and support 
for some child welfare related research projects are also 
authorized. The Child and Family Services Improvement Act of 
2006 (P.L. 109-288) clarified the purposes of that subpart as 
being to ``promote State flexibility in the development and 
expansion of a coordinated child and family services program 
that utilizes community based agencies and ensures all children 
are raised in safe, loving families'' by--protecting and 
promoting the welfare of all children and preventing their 
neglect, abuse, or exploitation; supporting at-risk families to 
allow children to remain safely in their own homes, or to 
return safely to those homes; promoting the safety, permanence 
and well-being of children in foster care and in adoptive 
homes; and providing training, professional development and 
support to ensure a well-qualified child welfare workforce.

Title IV-E foster care and adoption assistance

    Federal support for children placed in foster care was 
first authorized on a temporary open-ended entitlement basis in 
1961 (P.L. 87-31) as part of the prior law cash welfare 
program, Aid to Dependent Children (ADC). The 1961 law gave 
States the option to seek reimbursement for a part of the cost 
of maintaining in foster care any child who had been eligible 
for cash assistance in his or her home but who--because of a 
judicial determination that the home was ``contrary to the 
welfare'' of the child--needed to be removed to foster care. 
One year later, as part of the Public Welfare Amendments of 
1962, Congress renamed the cash welfare program, Aid to 
Families with Dependent Children (AFDC), and authorized 
reimbursement of eligible State foster care costs on a 
permanent basis (P.L. 87-543). The Social Security Amendment of 
1967 (P.L. 90-248, enacted in January 1968) required States, as 
part of the AFDC (cash welfare) program, to provide foster care 
support to eligible children, and it broadened eligibility for 
Federal foster care assistance to include any child who would 
have been eligible for AFDC assistance in his or her own home 
if an application had been made on the child's behalf.
    Eligibility for Title IV-E. In 1980, the Adoption 
Assistance and Child Welfare Act (P.L. 96-272) created Title 
IV-E of the Social Security Act to continue, on an independent 
basis, open-ended Federal reimbursement of a part of all 
eligible State foster care costs, and to newly authorize open-
ended Federal reimbursement to States for a part of the cost of 
providing monthly subsidies for eligible adopted children who 
are determined by the State to have ``special needs.'' The new 
Title IV-E program, however, retained the eligibility link to 
the cash welfare program by limiting Federal eligibility for 
both foster care and (in most cases) adoption assistance to 
children who were removed from homes in which they were (or 
would have been if application had been made) eligible for cash 
welfare under the AFDC program. With the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA, P.L. 104-193) Congress repealed the AFDC program 
(replacing it with Temporary Assistance to Needy Families, 
TANF). At the same time, it maintained the prior law AFDC 
eligibility rules for purposes of determining a child's 
eligibility for Federal foster care or adoption assistance 
under Title IV-E, and those rules (as they existed on July 16, 
1996) continue to apply today.
    Placement with Relatives and Legal Guardianship. Amendments 
to the Child Welfare Services (Title IV-B, Subpart 1) and 
foster care programs that were made as part of the same 1980 
law that created Title IV-E (P.L. 96-272) sought to reduce 
unnecessary entries to foster care and to ensure, primarily 
through case planning and review, that a child's stay in foster 
care was temporary. In 1994 (P.L. 103-432), Congress authorized 
the U.S. Department of Health and Human Services (HHS) to waive 
requirements under Title IV-E or Title IV-B to enable States to 
demonstrate alternative ways of providing effective child 
welfare services to children and their families. Under this 
authority, as many as 12 States have, or are implementing, 
assisted guardianship programs that provide subsidies (using 
Title IV-E funds) to children who leave foster care for 
placement with legal (primarily relative) guardians. In 1996, 
PRWORA (P.L. 104-193) amended the Title IV-E foster care 
program to require that States ``consider giving preference to 
an adult relative over a non-related caregiver when determining 
a placement for a child'' in foster care--provided that the 
relative caregiver meets all relevant safety standards for the 
child's protection. In 1997, the Adoption and Safe Families Act 
(ASFA, P.L. 105-89) again amended the Title IV-E foster care 
program to clearly establish that States must make safety the 
pre-eminent concern of all child welfare decision-making and it 
required them to take other actions intended to expedite a 
child's placement in an appropriate permanent living 
arrangement. ASFA established that for any child for whom 
returning home was not appropriate, the State must seek to 
place the child with an adoptive family, a legal guardian, a 
``fit and willing'' relative, or, if none of these options is 
in the child's best interest, in another planned permanent 
living arrangement. As amended by ASFA, a ``legal guardian'' is 
defined in Title IV-E as the caretaker in a ``legal 
guardianship,'' which is defined as ``a judicially created 
relationship between child and caretaker which is intended to 
be permanent and self-sustaining as evidenced by the transfer 
to the caretaker of the following parental rights with respect 
to the child: protection, education, care and control of the 
person, custody of the person, and decisionmaking.'' After 
expanding and renewing the authority for HHS to grant new child 
welfare waivers, Congress permitted it to expire at the end of 
March 2006. However, States with previously approved waivers to 
operate demonstration programs may continue to operate under 
those waivers (generally for a limited time) and some States 
continued to provide assisted guardianship with Title IV-E 
dollars under this authority.

Adoption incentives

    As part of encouraging States to find permanent homes for 
children in foster care who cannot return to their birth 
parents, ASFA (P.L. 105-89) established the Adoption Incentives 
program in Section 473A of the Social Security Act. The program 
provides a bonus to the State child welfare agency when it 
increases the number of children it places out of foster care 
and into adoptive families. States receive an enhanced bonus 
amount if the child is determined to have ``special needs.'' 
The Adoption Promotion Act of 2003 (P.L. 108-145) amended the 
program to provide separate bonuses to States for increasing 
the number of older children (age nine or above) who are placed 
out of foster care and into adoptive families.

Independent living

    In recognition of research demonstrating the many unmet 
needs of youth who upon reaching the State age of majority are 
legally ``emancipated'' from foster care custody (typically at 
age 18), Congress, in 1986 (P.L. 99-272), authorized a new 
capped entitlement to States for provision of independent 
living services to such youth before their exit from foster 
care. Youth were eligible for these services if they were 
between the ages 16 to 18 and met all the Title IV-E foster 
care eligibility criteria. In 1988, P.L. 100-647 expanded 
independent living program eligibility to include funding for 
services to youth who did not meet the Title IV-E eligibility 
criteria and to permit States to provide services to youth for 
up to 6 months after their emancipation from foster care (P.L. 
100-647). That same 1988 law also amended the Title IV-E foster 
care program to stipulate that, ``where appropriate,'' for any 
child in foster care who is at least age 16, the State must 
include in the child's required case plan a written description 
of the ``programs and services which will help such child 
prepare for the transition from foster care to independent 
living.'' In 1990, P.L. 101-508 further provided that States 
could use these funds to offer services to youth who had 
emancipated from foster care until their 21st birthday. As 
research continued to demonstrate poor outcomes for children 
emancipating from foster care, the Chafee Foster Care 
Independence Act (P.L. 106-169) doubled the program's annual 
entitlement to $140 million and made other changes intended to 
ensure that State child welfare agencies and foster youth 
planned for and achieved independent living. As part of the 
Promoting Safe and Stable Families Amendments of 2001 (P.L. 
107-133), Congress authorized discretionary funding for 
Education and Training Vouchers to enable youth who leave 
foster care without a permanent home (or those adopted from 
foster care at age 16 or older) to receive vouchers worth up to 
$5,000 annually to attend college or an equivalent post-
secondary education training program.

   II. CHAIRMAN'S SUBSTITUTE TO S. 3038, THE ``IMPROVED ADOPTION AND 
              RELATIVE GUARDIANSHIP SUPPORT ACT OF 2008''

                           PROMOTING ADOPTION

Adoption incentives

    The Committee finds that the Adoption Incentive Program has 
successfully increased the number of adoptions and should be 
extended and improved. The Committee bill includes an updated 
and improved extension of the Adoption Incentive Program 
through FY 2013.

Adoption Assistance

    The Committee finds that more should be done to increase 
the number of adoptions out of foster care. Under current law, 
to qualify for Federal adoption assistance a child must meet 
the income eligibility requirement for the former Aid to 
Families with Dependent Children (AFDC). Since AFDC was 
eliminated in 1996 as part of the Personal Responsibility and 
Work Opportunity Act (PRWORA), commonly known as welfare 
reform, the Committee finds that it is an inappropriate 
eligibility factor for Federal Adoption Assistance. Therefore, 
the Committee bill phases out the Aid to Families with 
Dependent Children (AFDC) income eligibility standard.

                             TRIBAL ACCESS

    The Committee finds that tribes, tribal consortia, and 
tribal organizations may provide higher quality and more 
culturally appropriate care for Indian children. Therefore, the 
Committee bill allows qualified tribes, tribal consortia, and 
tribal organizations the authority to administer tribal foster 
care and adoption assistance programs for Indian children and 
to receive direct Federal funding for that purpose. To ensure 
the success of Federal administration and tribal implementation 
of this new authority the committee provides for the 
establishment of a child welfare resource center solely 
dedicated to improving outcomes for Indian children whether 
served by tribes or States.

                              GUARDIANSHIP

    The Committee finds that child welfare waivers and several 
academic studies have demonstrated that children in 
guardianship and kinship placements tend to experience fewer 
placements and have school stability. The Committee finds that 
surveys also show that children are more likely to report 
liking their placement and wanting it to become their permanent 
placement. Children also are less likely to run away. The 
Committee finds that in addition to the benefits of a 
permanency option for children, a guardianship option for 
States would reduce administrative oversight and caseworker 
visits which would reduce Federal payments for States. The 
Committee notes that no child would be eligible for a Federal 
guardianship payment that is not currently eligible for the 
entitlement provided for under Title IV-E of the Social 
Security Act. Therefore, the Committee bill allows States to 
receive Federal reimbursement, at a level not to exceed the 
foster care maintenance payment, for children eligible for 
assistance under Title IV-E of the Social Security Act who are 
placed with a relative in a guardianship arrangement.

                              FOSTER CARE

    The Committee finds that approximately 20,000 youth age out 
of foster care each year. The Committee notes that the Midwest 
Evaluation of the Adult Functioning of Former Foster Youth has 
tracked outcomes for a sample of youth. The Committee notes 
that the study has found that still being in care, as opposed 
to having left care, and having certain other characteristics 
(i.e., having aspirations to graduate from college, feeling 
close to at least one family member, and expressing 
satisfaction with their experience in foster care) more than 
doubled the odds of the teen working or being in school at age 
19. Therefore the Committee bill will encourage States to 
continue support and assistance for youth up to age 21 for 
youth involved in education, training or employment. Youth with 
medical problems or disability can also stay in care. States 
will also be required to help youth prior to their emancipation 
to develop a transition plan to outline options for education, 
training, housing, health care and the range of supports.
    It is the view of the Committee that the Committee bill 
will promote the goals of permanency in a range of ways 
including adoption, guardianship and kinship care. The 
Committee finds that the Committee bill provides that for youth 
who do not gain permanency, States will be encouraged to 
continue support beyond age 18 to promote better outcomes on 
education, training and employment.

                    III. SECTION-BY-SECTION ANALYSIS

        Committee Bill (S. 3038 as approved September 10, 2008)

       TITLE I--EXTENSION AND IMPROVEMENT OF ADOPTION INCENTIVES

         Section 101--Extension of Adoption Incentives Program

5-year extension

                              CURRENT LAW

    Provides that a State may be eligible for Adoption 
Incentive awards for increasing the number of children who are 
adopted out of foster care in each of FY1998-FY2007. Authorizes 
appropriations of $43 million in each of FY2004-FY2008 to make 
those awards, and stipulates that funds appropriated for 
Adoption Incentives may not be expended after FY2008. As a 
condition of eligibility for these awards, in each of FY2001-
FY2007, requires States to provide health insurance coverage to 
any child who has special needs (as determined by the State) 
and for whom the State has an adoption assistance agreement in 
place. Requires the U.S. Department of Health and Human 
Services (HHS) to use State-reported data to determine the 
number of incentive eligible adoptions that the State has 
finalized for each of FY2002-FY2007.

                             COMMITTEE BILL

    The Committee Bill provides that States may be eligible for 
Adoption Incentive awards for adoptions finalized in each of 
FY2008-FY2012. The Committee Bill extends the funding 
authorization for the Adoption Incentive Program for five years 
(through FY2013) at the current annual authorization level ($43 
million) and provides that funds appropriated for Adoption 
Incentives may not be expended after FY2013. Further, the 
Committee Bill extends to each fiscal year the current State 
eligibility criteria regarding provision of health insurance 
for special needs adoptees and the requirement for HHS to 
determine the number of adoptions eligible under the program by 
State.

Additional incentive payment for exceeding the highest ever foster 
        child adoption rate

                              CURRENT LAW

    States may earn Adoption Incentive awards if they increase 
the number of children who are adopted out of foster care.

                             COMMITTEE BILL

    In addition, the Committee Bill permits States to earn an 
Adoption Incentive award for an increase in their rate of 
foster child adoptions. Awards for an increase in the rate of 
these adoptions are made available in any year beginning with 
FY2009, provided that funds appropriated for Adoption 
Incentives exceed the amount needed to make any awards earned 
for increases in the number of adoptions.
    Under the Committee Bill, a State's foster child adoption 
rate would be determined by dividing the number of foster child 
adoptions finalized in the State in a given fiscal year by the 
number of children in that State's foster care caseload on the 
last day of the previous year. (For example: If a State 
finalizes 150 adoptions in a given fiscal year and on the last 
day of the previous fiscal year it had 1,500 children in its 
foster care caseload, its foster child adoption rate for the 
given fiscal year is 10 percent.) A State earns an award if it 
achieves a foster child adoption rate that is above its 
``highest ever foster child adoption rate''--meaning the 
highest foster child adoption rate that the State achieved in 
any year beginning with FY1998 and before the award year. The 
amount of this award would be equal to $1,000 multiplied by the 
number of adoptions that occurred as a result of the State 
exceeding its highest ever foster child adoption rate (and 
holding the foster care caseload constant). (For example: If 
the State in the example above had previously achieved a 
highest ever foster child adoption rate of 9 percent, then, 
when it achieved the rate of 10 percent, its award for this 
increased rate would be calculated as follows: Multiplying that 
highest rate (9 percent) by the 1,500 children in its caseload 
on the last day of the fiscal year prior to the award year, 
subtracting this number (135) from the actual number of foster 
child adoptions achieved in the award year (150) and 
multiplying the difference (15) by $1,000 to determine the 
award amount of $15,000.) The Committee Bill permits HHS to 
make pro rata adjustments to these amounts if funds 
appropriated are insufficient to cover the full awards earned.

Increase in incentive payments for special needs adoptions and older 
        child adoptions

                              CURRENT LAW

    A State earns Adoption Incentive awards for increasing the 
number of adoptions out of foster care in the following 
amounts: $4,000 for each foster child adoption that is above 
its base number of adoptions in this category; $4,000 for each 
adoption of a child from foster care who is age 9 or older that 
is above its base number of adoptions in this category; and 
(provided the State has also earned either a foster child or 
older child adoption award), $2,000 for each special needs 
adoption of a child (who is under the age of 9) that is above 
its base number of adoptions in this category.

                             COMMITTEE BILL

    The Committee Bill raises the award amount for each 
increase in older child adoption to $8,000, and for adoption of 
a child with special needs (who is under age 9) to $3,000. (The 
Committee Bill maintains the current law award of $4,000 for 
each increase in foster child adoptions overall.)

Updating of fiscal year used in determining base number of adoptions

                              CURRENT LAW

    A State has a ``base number'' of adoptions for each 
category of adoptions under which it may earn an Adoption 
Incentive award--foster child adoptions, older child adoptions 
and adoptions of special needs children (who are under the age 
of 9). Those base numbers are equal to the number of adoptions 
the State finalized in each of those categories in FY2002 OR 
any year after that in which it achieved a higher number.

                             COMMITTEE BILL

    The Committee Bill establishes the base number of adoptions 
as the number of adoptions achieved by a State in each Adoption 
Incentive category (foster child, older child, and special 
needs children under age 9) by that State in FY2007.

24-month availability of payments to states

                              CURRENT LAW

    States may spend Adoption Incentive awards in the fiscal 
year for which they are awarded and in the following fiscal 
year.

                             COMMITTEE BILL

    The Committee Bill gives States 24 months, beginning with 
the month in which the awards are made, to spend these funds.

   Section 102--Promotion of Adoption of Children With Special Needs

Elimination of eligibility based on AFDC and SSI income standards

                              CURRENT LAW

    A child who has ``special needs'' (as determined by each 
State) is eligible for Federal adoption assistance if the child 
meets the requirements of at least one of the following 
eligibility pathways:
    (1) AFDC: The child was removed from the home of a parent 
or other relative under a voluntary placement agreement or 
because a judge found the home of the parent or other relative 
to be ``contrary to the welfare'' of that child, AND, if while 
living in that home, the child would have met all income, 
family structure, and other eligibility requirements necessary 
to be determined a ``needy'' child under the Aid to Families 
with Dependent Children (AFDC) program (as that program existed 
on July 16, 1996).
    (2) SSI: The child meets all the eligibility criteria for 
Supplemental Security Income (SSI), including those related to 
income and medical/physical disability.
    (3) Child of a minor parent: The child lives with his/her 
minor parent who is in foster care, and the minor parent meets 
either the AFDC or SSI eligibility criteria and is receiving 
Federal foster care maintenance payments that includes funds to 
cover costs of the child.

                             COMMITTEE BILL

    The Committee Bill removes all income and resource tests 
included in each of these eligibility pathways. Further, with 
regard to the child's removal from his/her home (under the 
current AFDC eligibility pathway) the Committee Bill requires a 
State to make the determination that continuation of the child 
in the home would be contrary to the safety or welfare of the 
child and permits the State to make this determination pursuant 
to its own criteria, which may or may not require this 
determination to be made by a judge.

Eligibility if initial adoption fails

                              CURRENT LAW

    If a child was eligible for Federal adoption assistance in 
a previous adoption, ensures continued eligibility for this 
assistance in a subsequent adoption provided the child is 
determined by the State to have special needs and is available 
for adoption because the previous adoption was dissolved (with 
adoptive parents' rights terminated) or because the adoptive 
parents died. This provision was included in the Adoption and 
Safe Families Act and became effective for any child adopted on 
or after October 1, 1997.

                             COMMITTEE BILL

    The Committee Bill extends this same provision to any child 
whose adoption occurred before the October 1, 1997 effective 
date of the Adoption and Safe Families Act and who would have 
been found eligible if the ASFA provision was enacted at that 
time.

Exception (related to intercountry adoption)

                              CURRENT LAW

    Children adopted in another country, or who are brought to 
this country for the purposes of adoption (i.e., intercountry 
adoptees) may not be categorically excluded from Federal 
adoption assistance. However, they are generally found 
ineligible for monthly Federal adoption assistance because they 
do not meet the eligibility criteria for Federal adoption 
assistance. (For example, they can not meet the requirements of 
the prior law AFDC program, which was a domestic program and 
available only to children living in this country.) At the same 
time, the adoptive parents of an intercountry adoptee may claim 
reimbursement of non-recurring adoption expenses (up to $2,000) 
if the State determines that the intercountry adoptee has 
special needs and the adoptive parents request the payment 
before the adoption is finalized.

                             COMMITTEE BILL

    In general, the Committee Bill makes intercountry adoptees 
categorically ineligible for Federal adoption assistance of any 
kind--that is, they may not be eligible for monthly assistance 
payments nor for payment of non-recurring adoption expenses. 
However, an intercountry adoptee who the State determines to 
have special needs and who is placed in foster care because the 
initial intercountry adoption failed (as determined by the 
State) may be eligible for Federal adoption assistance.

Requirement for use of State savings

                              CURRENT LAW

    Not applicable.

                             COMMITTEE BILL

    The Committee Bill provides that any State savings that may 
be achieved because of the expanded Federal eligibility for 
adoption assistance permitted by the Committee Bill must be 
spent on child welfare purposes.

Determination of a child with special needs

                              CURRENT LAW

    A child is considered to have ``special needs'' if the 
State determines that: (1) the child cannot or should not be 
returned to his/her home; (2) because of a factor defined by 
the State and specific to the child--e.g., the child's age, 
race/ethnicity, membership in a sibling group, physical, mental 
or emotional disabilities or medical conditions--he or she is 
unlikely to be adopted without provision of medical assistance 
or adoption assistance; and (3) it has made efforts (unless 
this is against the best interests of the child) to place the 
child for adoption without providing medical or adoption 
assistance on the child's behalf, but these efforts have been 
unsuccessful.

                             COMMITTEE BILL

    The Committee Bill provides that a State must consider any 
child who meets all the medical or disability requirements 
related to eligibility for SSI to be a child with special needs 
(provided that the State has also determined that the child 
cannot or should not be returned home and the State has tried 
unsuccessfully to place the child for adoption without medical 
or adoption assistance).

                             EFFECTIVE DATE

    In general, the Committee Bill makes the provisions of this 
section, ``Promotion of Adoption of Children with Special 
Needs,'' effective with FY2013 and applicable only to adoption 
assistance agreements entered into on or after the first day of 
that fiscal year (October 1, 2012). However, the Committee Bill 
phases in earlier implementation of these amendments for 
children who have attained a certain age. Specifically, it 
stipulates that the amendments of the section apply beginning 
with the first day of FY2011 (October 1, 2010) for any adoption 
assistance agreement entered into during that year that is done 
on behalf of a child who is 12 years of age or older on the 
date the agreement is executed; and that it applies as of the 
first day of FY2012 (October 1, 2011) for any adoption 
assistance agreement entered into during that year that is done 
on behalf of a child who is 6 years of age or older on the date 
the agreement is executed.

              TITLE II--SUPPORT FOR RELATIVE GUARDIANSHIP

  Section 201--Relative Guardianship Assistance Payments for Children

Option for States to enhance and subsidize a relative guardianship 
        program

                              CURRENT LAW

    Under Title IV-E of the Social Security Act, States with an 
approved foster care and adoption assistance plan are entitled 
to receive Federal reimbursement for a part of the cost of 
providing foster care and adoption assistance to every eligible 
child.

                             COMMITTEE BILL

    The Committee Bill provides that any State that elects to 
offer relative guardianship assistance under its Title IV-E 
foster care and adoption assistance plan is additionally 
entitled to Federal support for a part of the cost of providing 
this assistance on behalf of each eligible child.

Requirements

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    Relative Guardianship Agreements: The Committee Bill 
provides that to receive this Federal support, a State must 
negotiate and enter into a written and binding agreement with 
the relative guardian of an eligible child that at a minimum, 
specifies: (1) the amount of each relative guardianship 
assistance payment and how it will be provided; (2) additional 
services and assistance that the child and relative guardian 
will be eligible for under the agreement; (3) the procedure the 
relative guardian may use to apply for additional services (if 
agreed to); and (4) that the State will pay up to $2,000 of the 
non-recurring expenses associated with obtaining legal 
guardianship of the child.
    Interstate Application: The Committee Bill provides that a 
relative guardianship assistance agreement must remain in 
effect regardless of the State in which the relative guardian 
resides.
    Federal Reimbursement of Nonrecurring Expenses: The 
Committee Bill stipulates that the Federal government must pay 
one-half (50 percent) of a State's cost of covering 
nonrecurring guardianship expenses (up to $2,000).
    Relative Guardianship Assistance Payments: The Committee 
Bill provides that the amount of a child's relative 
guardianship assistance payment must be based on a 
consideration of the circumstances of the relative and the 
needs of the child, but must not be less than the amount the 
State would pay on behalf of the child if he or she was 
adopted, nor can it be more than the amount the State would pay 
on the child's behalf if the child remained in a foster family 
home. The amount of the relative guardianship assistance 
payment may be readjusted periodically, with the concurrence of 
the relative guardian, depending upon changes in the 
circumstances of the relative guardian or the needs of the 
child.
    Child's Eligibility for a Relative Guardianship Assistance 
Payment: Under the Committee Bill, a child is eligible for a 
Federal relative guardianship assistance payment if the State 
agency determines that: (1) in the month before the legal 
guardianship was established the child was in foster care and 
eligible for a Federal foster care maintenance payment; (2) 
being returned home or adopted are not appropriate permanency 
options for the child and, in the case of a child for whom 
removal from the home was associated primarily with parental 
substance abuse and addiction, that attempts to engage the 
family in residential, comprehensive family treatment programs 
are inappropriate or have been unsuccessful, or such programs 
are unavailable; (3) the child demonstrates a strong attachment 
to the relative guardian; (4) the relative guardian has a 
strong commitment to caring for the child and satisfies other 
requirements (specified below); and (5) if the child is age 14 
or older, the child has been consulted about the relative 
guardianship arrangement.
    Requirements for Relative Guardians: Under the Committee 
Bill, a relative guardian must: (1) be a grandparent or other 
relative of the child on whose behalf the relative guardianship 
assistance payment is being made; (2) have satisfied the same 
criminal background and child abuse and neglect registry checks 
that are required of prospective foster and adoptive parents of 
children on whose behalf Federal foster care or adoption 
assistance payments are made; (3) have met the State's 
licensing requirements for a foster family home; and (4) assume 
legal guardianship of the child and commit to caring for the 
child on a permanent basis.
    Treatment of Siblings: The Committee Bill provides that a 
child who meets the eligibility requirements for Federal 
relative guardianship assistance payments must be placed in the 
same relative guardianship arrangement with any sibling(s), 
unless it can be shown that this is inappropriate, and, further 
that Federal relative guardianship assistance payments may be 
paid for each sibling placed in the same relative guardianship 
arrangement.

Payments to States

                              CURRENT LAW

    States are entitled to receive Federal reimbursement of 75 
percent of their cost of providing short-term training to 
eligible individuals (including current and prospective foster 
and adoptive parents and staff of certain child care 
institutions) provided those individuals care for children who 
are eligible for Federal foster care or adoption assistance.
    Every State has a Federal Medical Assistance Percentage 
(FMAP) that is calculated annually and may range from 50 
percent (for higher per capita income States) to 83 percent 
(for lower per capita income States).

                             COMMITTEE BILL

    Under the Committee Bill, States are additionally entitled 
to Federal reimbursement of 75 percent of the cost of providing 
short-term training for current or prospective relative 
guardians, provided those relative guardians care for children 
receiving Federal foster care, relative guardianship 
assistance, or adoption assistance.
    Under the Committee Bill, States are entitled to Federal 
reimbursement at their FMAP for the cost of providing relative 
guardianship assistance payments to eligible children.

Incentive payments for relative guardianship placement

                              CURRENT LAW

    Funds are authorized to be appropriated for Adoption 
Incentives to States that increase the number of children 
adopted out of foster care.

                             COMMITTEE BILL

    The Committee Bill requires HHS to make Relative 
Guardianship Incentive Awards in any fiscal year in which the 
funds appropriated for the Adoption Incentive program exceeds 
the amount needed to provide all adoption-related awards earned 
by the States under that program. In the first year that a 
State establishes a relative guardianship assistance program 
(under Title IV-E), the Committee Bill provides that the 
State's relative guardianship incentive award is equal to the 
total number of relative guardianship assistance agreements it 
enters into during that year multiplied by $1,000. In any 
succeeding year, the award amount is equal to $1,000 multiplied 
by any increase in the number of relative guardianship 
assistance agreements that a State entered into that is above 
its ``base number'' of such agreements. A State's base number 
of relative guardianship assistance agreements is equal to the 
highest number of those agreements it enters into in any year 
before the award year. HHS may make pro rata adjustments to 
these award amounts if funds appropriated are insufficient to 
cover the full awards earned.

Conforming amendment (use of funds)

                              CURRENT LAW

    States may only spend Adoption Incentive awards for 
provision to children and families of any service (including 
post-adoption services) that is now authorized under Title IV-B 
(Child and Family Services) and Title IV-E (Foster Care and 
Adoption Assistance) of the Social Security Act.

                             COMMITTEE BILL

    The Committee Bill maintains the current provisions for use 
of Adoption Incentive funds while explicitly adding that 
``relative navigator and support services'' may also be funded 
by the awards.

Maintaining eligibility for adoption assistance and Medicaid

                              CURRENT LAW

    Children who are eligible for adoption assistance or for 
Federal foster care maintenance payments are categorically 
eligible for Medicaid.

                             COMMITTEE BILL

    Medicaid eligibility: The Committee Bill ensures that 
children who move to Federal relative guardianship assistance--
all of whom must by definition have been eligible for Federal 
foster care assistance--maintain their eligibility for 
Medicaid.
    Adoption Assistance eligibility: The Committee Bill 
separately provides that for purposes of determining a child's 
eligibility for Federal adoption assistance, any child who has 
received Federal relative guardianship assistance payments, and 
who is determined by the State to have special needs, must be 
eligible for Federal adoption assistance. The Committee Bill 
stipulates that the State must make payments of nonrecurring 
adoption expenses to the adoptive parents of such a child.

Eligibility for independent living services and education and training 
        vouchers for children who exit foster care for relative 
        guardianship or adoption after age 16

                              CURRENT LAW

    Under the Chafee Foster Care Independence Program, States 
design and conduct independent living programs to help youth 
who are expected to remain in foster care until their 18th 
birthday, and those who have aged out of foster care (up to age 
21) to transition to independent adulthood. Also authorizes 
Education and Training Vouchers for these same youth to attend 
college (or an equivalent level training program) and provides 
that any youth who is adopted from foster care after his/her 
16th birthday is eligible for Education and Training Vouchers.

                             COMMITTEE BILL

    The Committee Bill also permits States to design and 
provide Chafee independent living services for any youth who 
leaves foster care after his/her 16th birthday for adoption or 
relative guardianship. The Committee Bill further extends 
eligibility for Education and Training Vouchers to any youth 
who leaves foster care for relative guardianship after his/her 
16th birthday.

Notice requirements

                              CURRENT LAW

    Provides that a State must ``consider'' giving preference 
to an adult relative over a non-related caregiver when 
determining the placement of a child, if the adult relative 
meets State child protection standards.

                             COMMITTEE BILL

    Notice to relatives of child's removal from parental 
custody: The Committee Bill additionally requires the State 
child welfare agency to ``exercise due diligence'' to identify 
any adult grandparents or other adult relatives of a child 
within 60 days of a child's removal from parental custody. It 
also requires the State to give these relatives notice of the 
imminent or recent removal of the child and to explain the 
relative's options to participate in the child's care and 
placement--including a description of State licensing 
requirements and associated supports and benefits, and how to 
enter into a relative guardianship assistance agreement 
(provided the State has opted to provide this kind of 
assistance). The Committee Bill permits exceptions to this 
notice requirement due to family or domestic violence.
    Notice to non-parent caregivers of children receiving TANF 
benefits: The Committee Bill also requires the State child 
welfare agency to give notice of these same care and placement 
options to any non-parent relative caretaker who, after an 
interaction with the child welfare agency, is providing a home 
for a child receiving Temporary Assistance to Needy Families 
(TANF) benefits.

TANF penalty for failure to provide notice

                              CURRENT LAW

    Under the TANF block grant (Title IV-A of the Social 
Security Act), States are entitled to receive an annual grant 
for family assistance. The amount of this grant may be reduced 
if HHS determines that the State has failed to comply with 
certain Federal requirements related to the receipt and use of 
the funds. A State may avoid such a penalty if it can show 
reasonable cause for the noncompliance, or if it enters into a 
corrective compliance plan with HHS.

                             COMMITTEE BILL

    The Committee Bill requires HHS to reduce the amount of a 
State's TANF grant if it determines that the State is not 
complying with the notice provisions for non-parent caretakers 
of children receiving TANF benefits. If a non-complying State 
cannot give reasonable cause or does not enter into a 
corrective compliance plan with HHS, the penalty amount must be 
based on the State's degree of noncompliance. However, it must 
be no less than 1 percent nor more than 3.5 percent of the 
State's total TANF family assistance grant.

Notice requirements (adoption tax credit)

                              CURRENT LAW

    The Internal Revenue Code permits taxpayers who adopt a 
child to claim a tax credit for all qualifying adoption costs 
up to the maximum credit. (The maximum credit was equal to 
$11,390 in tax year 2007.) It also provides that any taxpayer 
who adopts a child meeting the State's definition of ``special 
needs'' may claim the full credit amount (without having to 
show any qualifying costs).

                             COMMITTEE BILL

    The Committee Bill requires States to provide information 
to prospective adoptive parents about their potential 
eligibility for the Federal adoption tax credit, including the 
fact that if they adopt a special needs child, they may receive 
the maximum credit without having to show any qualifying 
adoption costs.

Case plan requirements

                              CURRENT LAW

    Every child in foster care must have a written case plan.

                             COMMITTEE BILL

    The Committee Bill requires that if the permanency goal for 
a child in foster care is placement with a relative guardian 
who is to receive a Federal relative guardianship assistance 
payment on the child's behalf, that child's case plan must 
describe--(1) the steps the agency has taken to determine that 
it is not appropriate for the child to return home or be 
adopted; (2) the reasons why a permanent placement with a fit 
and willing relative through a relative guardianship assistance 
arrangement is in the child's best interests; (3) the ways in 
which the child meets the eligibility requirements for relative 
guardianship assistance payments; (4) the efforts the agency 
has made to discuss adoption by the child's relative guardian 
and, if the relative guardian chose not to pursue adoption, the 
reasons why this is so; and (5) the efforts made by the State 
agency to secure the consent of the child's parent(s) to the 
relative guardianship assistance arrangement (or the reason why 
those efforts were not made).

Requirement to conduct criminal records and child abuse and neglect 
        registry checks

                              CURRENT LAW

    States are required to conduct fingerprint-based FBI checks 
of prospective foster and adoptive parents and must also 
conduct child abuse registry checks of any prospective foster 
or adoptive parents, as well as any other adult living in the 
home. A State may not approve the placement of a child for whom 
Federal foster care or adoption assistance is claimed with any 
individual for whom the criminal record check reveals certain 
felony convictions.

                             COMMITTEE BILL

    The Committee Bill would require these same criminal 
background checks, child abuse and neglect registry checks, and 
placement approval procedures for prospective relative 
guardians.

                             EFFECTIVE DATE

    The Committee Bill makes the amendments in this section, 
``Relative Guardianship Assistance Payments for Children,'' 
effective on October 1, 2008, and applicable only to relative 
guardianship assistance agreements made on or after that date.

 Section 202--Demonstration Projects Regarding Licensing of Immediate 
                        Relative Foster Parents

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill requires HHS to establish not more than 
10 demonstration projects (at least 2 in rural States, 1 in a 
State where counties primarily administer the Title IV-E foster 
care program, and 1 in a tribe that directly operates a Title 
IV-E foster care program) to determine the extent to which 
flexibility in the application of licensing standards for the 
homes of immediate relative foster parents results in improved 
well-being and permanency outcomes for children in foster care. 
A State (including any of the 50 States or the District of 
Columbia) or tribe selected to conduct such a demonstration 
(under the Title IV-E foster care program) may modify the 
extent to which the home of an immediate foster parent relative 
(grandparent, aunt, uncle or adult sibling) meets any of the 
State's foster family home licensing standards that concern--
(1) the number or size of bedrooms in the home (with 
appropriate safeguards for age and sex of the children); (2) 
the number of bathrooms in the home (with appropriate 
safeguards for age and sex of the children); and (3) the 
overall square footage of the home. The Committee Bill requires 
that the licensing demonstrations must begin no later than one 
year after the date of the bill's enactment and must be 
conducted for two years. It also requires, that, not later than 
one year after completion of the projects, HHS must submit to 
the Senate Finance and House Ways and Means Committees a report 
that evaluates the impact of the projects on the well-being of 
children in foster care and on their permanency outcomes--which 
must be based on the State's performance before the 
demonstration compared to its performance during the 
demonstration. The report must also include any recommendations 
for administrative or legislative action HHS determines to be 
appropriate.

      Section 203--Grants To Carry Out Kinship Navigator Programs

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill appropriates $5 million in each of 
FY2009-FY2013 to fund competitive grants to (1) establish 
kinship navigator programs in States, large metropolitan areas 
and tribal areas; and (2) promote effective partnerships among 
public and private agencies to more effectively serve kinship 
care families. The Committee Bill requires grantees to use 
funds received under the grant program to establish information 
and referral systems that link kinship caregivers to the full 
range of supports available to them; conduct outreach 
activities in collaboration with other relevant organizations 
to link kinship care families to the kinship navigator program; 
prepare, distribute, and updating kinship care resource guides, 
websites or other relevant outreach materials; and promote 
partnerships between public and private agencies to help those 
agencies better meet the needs of kinship care families and to 
familiarize them with the special needs of those families. 
Additional activities that the Committee Bill permits grant 
funds to be used for include establishment and support of a 
``kinship care ombudsman,'' as well as, to provide support for 
``other activities'' designed to assist caregivers in obtaining 
benefits and services and those intended to improve their care 
giving.
    As provided by the Committee Bill, entities eligible to 
apply for kinship navigator grants are tribal organizations, 
and public or private agencies of a State, or those serving a 
large metropolitan area, that have experience addressing the 
needs of kinship caregivers or children. The Committee Bill 
requires entities seeking kinship navigator grant funds to 
include specific information in their grant application 
concerning planning for, providing, and reporting on services 
and activities under the kinship navigator program. It further 
stipulates that any grant funds received must not generally be 
used to provide direct services to children or their kinship 
caregivers. And also that not more than 50 percent of any non-
Federal share of the program costs, may be provided by grantees 
in-kind and fairly evaluated (including plant, equipment, or 
services).
    The Committee Bill provides that the kinship navigator 
grants are to be administered by the Administration for 
Children and Families (ACF) within the HHS and that in doing so 
ACF must periodically consult with the Administration on Aging 
(of HHS). In addition, the Committee Bill stipulates that ACF 
must use no less than 50 percent of the funds appropriated for 
kinship navigator programs to award grants to State agencies 
and, also requires ACF to give preference for grants to 
applicants that demonstrate the capacity to offer the full 
range of services and activities for which funds may be used. 
As part of a final report to ACF on services and activities 
funded by the grant, a grantee must describe to ACF its plans 
for continuing the kinship navigator program after the 
expiration of the Federal grant. ACF would be permitted to 
reserve up to 1 percent of any of the funds appropriated to 
provide technical assistance to grantees related to the 
purposes of the kinship navigator program. The Committee Bill 
establishes this grant authority and funding in a new Section 
427 of the Social Security Act.

 Section 204--Authority for Comparisons and Disclosures of Information 
 in the Federal Parent Locator Service for Child Welfare, Foster Care 
                    and Adoption Assistance Purposes

                              CURRENT LAW

    The Federal Parent Locator Service (FPLS) is a national 
computerized locator system that consists of the National 
Directory of New Hires and the Federal Child Support Case 
Registry. It also can provide access to certain information 
stored in other agencies including the Internal Revenue 
Service, the Social Security Administration, the Department of 
Veterans Affairs, the Department of Defense, the Federal Bureau 
of Investigation, the National Personnel Records Center and the 
State Employment Securities Agencies. HHS is required to 
compare information in the multiple components of the FPLS to 
find instances in which a comparison reveals a match to an 
individual, and to disclose such information (e.g., addresses 
and employer information) to the agencies that administer Child 
Support Enforcement (under Title IV-D) and the Temporary 
Assistance for Needy Families (TANF) block grant (under Title 
IV-A). HHS is permitted to make these comparisons to the 
extent, and with the frequency, it determines to be effective 
in assisting States in administering those programs.

                             COMMITTEE BILL

    The Committee Bill additionally requires HHS to provide 
this same assistance to State child welfare agencies (that 
administer programs under Title IV-B or Title IV-E).

           TITLE III--TRIBAL FOSTER CARE AND ADOPTION ACCESS

Section 301--Equitable Access for Foster Care and Adoption Services for 
                    Indian Children in Tribal Areas

Authority for direct payment of Federal Title IV-E funds for programs 
        operated by Indian tribal organizations

                              CURRENT LAW

    States with a Title IV-E foster care and adoption 
assistance plan that is approved by HHS are entitled to receive 
Federal reimbursement for eligible costs associated with 
operating those programs. Tribes are not permitted to submit 
such a plan to HHS and may not receive direct Federal funding 
under Title IV-E.

                             COMMITTEE BILL

    The Committee Bill establishes direct access to tribes for 
Federal foster care and adoption assistance funding by 
permitting an Indian tribe, tribal organization, or tribal 
consortium to submit a Title IV-E foster care and adoption 
assistance plan to HHS for approval. The Committee Bill creates 
a new Section 479B of the Social Security Act, which sets out 
the following law with regard to the tribal foster care and 
adoption assistance programs:

Definitions

                              CURRENT LAW

    The Indian Self Determination and Education Assistance Act 
(Section 4) defines an Indian tribe as any Federally recognized 
band, nation, or other organized group or community (including 
certain Alaska Native Villages or regional or village 
corporations) that is recognized as eligible for the special 
programs and services provided by the United States to Indians 
because of their status as Indians. And it defines a ``tribal 
organization'' as the recognized governing body of any Indian 
tribe.

                             COMMITTEE BILL

    The Committee Bill defines ``Indian tribe'' and ``tribal 
organization'' as they are defined in the Indian Self 
Determination and Assistance Act.

Authority

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    Unless explicitly spelled out differently in the tribal 
provisions of Title IV-E (which the Committee Bill creates in 
Section 479B), the Committee Bill makes all aspects of Title 
IV-E applicable to any Indian tribe, tribal organization, or 
tribal consortium, in the same manner as they apply to States, 
provided that the tribal entity is operating a Title IV-E 
foster care and adoption assistance program under a plan 
approved by HHS.

Plan requirements

                              CURRENT LAW

    A State's Title IV-E foster care and adoption assistance 
plan must meet numerous requirements, which are specified in 
Section 471 of the Social Security Act. Among these are 
requirements related to provision of foster care and adoption 
assistance to eligible children and Statewide operation of the 
program. Under Federal regulations States may not use 
affadavits or nunc pro tunc orders to retroactively establish 
that a child's removal from his or her home was a result of a 
judicial determination that the home was ``contrary to the 
welfare'' of that child. Further, as part of seeking Federal 
reimbursement for the foster care and adoption assistance 
program, States are required by Federal regulation to have an 
HHS-approved cost allocation plan that details the costs that 
will be assigned to the program and how Federal reimbursement 
will be sought. States are not permitted to claim Title IV-E 
costs based on in-kind expenditures from third party sources.

                             COMMITTEE BILL

    The Committee Bill requires an eligible tribal entity 
seeking to operate a Federal foster care and adoption 
assistance plan to submit a plan for approval to HHS that meets 
the requirements of Section 471 with the following 
modifications and addition.
    Financial Management: An Indian tribe, tribal organization, 
or tribal consortium seeking to operate a foster care and 
adoption assistance program must include in its plan evidence 
that that it has not had any uncorrected significant or 
material audit exceptions under Federal grants or contracts 
that directly relate to the administration of social services 
for the 3-year period before the date on which it submits the 
plan.
    Service Area: The tribal entity's plan must also describe 
the service area or areas and populations to be served under 
that plan and include an assurance that the plan will be in 
effect in all those areas and for all populations to be served.
    Eligibility: The tribal entity's plan must include an 
assurance that it will make foster care maintenance payments, 
adoption assistance payments, and (at the option of the tribal 
entity) relative guardianship assistance payments only on 
behalf of children who meet the Federal eligibility 
requirements. The Committee Bill further specifies that the 
AFDC rules that apply for a child that will be served under a 
tribal plan are the same rules that applied in the State in 
which the child resided when he or she was removed from the 
home. Further, for only the first 12 months in which a tribal 
entity operates a Title IV-E foster care and adoption 
assistance program under a plan approved by HHS, the tribe may 
use either affidavits or nunc pro tunc orders to retroactively 
verify that a child's removal from his/her home occurred 
because of a judge's determination that the home was contrary 
to the welfare of the child.
    In-Kind Expenditure Claims: For FY2010 through FY2014 only, 
the tribal entity's plan must include a list of the in-kind 
expenditures and their third party sources that the tribal 
entity may claim for purposes of seeking Federal reimbursement 
of administrative costs under the foster care and adoption 
assistance plan, including training costs. The Committee Bill 
prohibits any interpretation of its tribal in-kind claiming 
rules that would prevent a tribal entity from making an in-kind 
expenditure claim that a State with an HHS-approved foster care 
and adoption assistance plan can make. After this stipulation, 
the Committee Bill establishes the following special rules 
related to in-kind expenditures from third party sources for 
tribal entities operating an HHS-approved foster care and 
adoption assistance plan: (1) For expenditures in FY2010 and 
FY2011, a tribal entity may claim not more than 25 percent of 
its total foster care and adoption assistance program 
administrative costs (excluding training costs) and not more 
than 12 percent of its total program training costs, as in-kind 
expenditures from third party sources. (2) For expenditures in 
FY2010 and FY2011, with regard to training costs only, the 
third party sources of the in-kind expenditures must be listed 
in the tribal entity's plan and those sources must be limited 
to one or more of the following entities: a State or local 
government, a tribal entity other than the one making the claim 
under Title IV-E, a public institution of higher education, a 
tribal college or university, and a private charitable 
organization. (3) In general, for expenditures in FY2012, 
FY2013, and FY2014, a tribal entity may only claim 
reimbursement for in-kind expenditures from third party sources 
in accordance with regulations promulgated by HHS and those 
regulations must specify the allowable third party sources and 
the applicable share of tribal program costs that may be made 
as in-kind expenditures of third party sources. However, a 
tribal entity with a foster care and adoption assistance 
program plan that was approved by HHS for FY2010 or FY2011 must 
not be required to comply with any regulations on this issue 
before the first day of FY2013. (4) If HHS does not produce 
regulations on tribal claiming of in-kind expenditures from 
third party sources by FY2013, and no legislation has been 
enacted specifying otherwise, then for FY2012, FY2013 and 
FY2014, the special rules that applied for FY2010 and FY2011 
claims apply. However, beginning in FY2015, no claims for in-
kind expenditures from third party sources may be made by any 
tribal entity (unless a State could make such a claim).

Clarification of tribal authority to establish standards for tribal 
        foster family homes and tribal child care institutions

                              CURRENT LAW

    Each State is required, as a part of its foster care and 
adoption assistance program, to designate or create an 
authority (or authorities) to establish standards for licensing 
or approving any foster family homes or child care institution 
that receives Federal Title IV-E or Title IV-B funds for the 
care of a foster child.

                             COMMITTEE BILL

    The Committee Bill clarifies that in complying with this 
requirement, the Indian tribe, tribal organization, or tribal 
consortium must establish a tribal authority (or authorities), 
which are responsible to maintain tribal standards for tribal 
foster family homes and tribal child care institutions.

Consortium

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill provides that participating Indian 
tribes or tribal organizations of a tribal consortium may 
develop and submit a single Title IV-E foster care and adoption 
assistance plan that meets the requirements for HHS approval.

Determination of Federal Medical Assistance Percentage for foster care 
        maintenance and adoption assistance payments

                              CURRENT LAW

    In general, each State has a Federal Medical Assistance 
Percentage (FMAP)--sometimes called the ``Medicaid matching 
rate''--which is used to determine the share of a State's 
eligible foster care maintenance and adoption assistance 
payments that will be reimbursed by the Federal Government. A 
State's FMAP may range from 50 percent (for States with highest 
per capita income) to 83 percent (for States with lowest per 
capita income).

                             COMMITTEE BILL

    The Committee Bill provides that the per capita income of 
the service population of a tribal entity operating a plan 
under Title IV-E must be used to determine that tribal entity's 
Federal reimbursement rate (or FMAP) for foster care 
maintenance, adoption assistance, and relative guardianship 
assistance payments. However, in no case may the reimbursement 
rate of the tribal entity be less then the FMAP of any State in 
which it is located. Further, HHS must consider any information 
submitted by a tribal entity as relevant to the calculation of 
that tribal entity's per capita income.

Non-application to cooperative agreements and contracts

                              CURRENT LAW

    States that operate Title IV-E foster care and adoption 
assistance programs may enter into agreements with other public 
agencies to provide foster care to children. (As of March 2008, 
there were approximately 86 tribal-State Title IV-E agreements 
in effect, involving 11 States.)

                             COMMITTEE BILL

    The Committee Bill provides that any cooperative agreement 
or contract entered into between a State and tribal entity for 
the administration of foster care and adoption assistance 
program, or payment of funds under Title IV-E, must remain in 
full force and effect upon enactment of the Committee Bill 
(subject to the right of either party to revoke or modify the 
agreement according to the terms of the agreement). The 
Committee Bill also prohibits any interpretation of its 
provisions of its section related to ``Tribal Access to Foster 
Care and Adoption'' that affects the authority of a tribal 
entity and a State to enter into a cooperative agreement or 
contract for the administration of foster care and adoption 
assistance program or payment of Title IV-E funds.

Rule of construction (application of Medicaid eligibility)

                              CURRENT LAW

    Children who are eligible for assistance under the Title 
IV-E foster care and adoption assistance program are made 
categorically eligible for Medicaid.

                             COMMITTEE BILL

    The Committee Bill ensures that categorical eligibility for 
Medicaid continues to be available to children who are eligible 
for a Federal foster care maintenance payment, adoption 
assistance payment, or relative guardianship assistance payment 
under a tribal entity's Title IV-E foster care and adoption 
assistance plan approved by HHS.

Conforming amendment (eligibility of children under tribal care and 
        placement)

                              CURRENT LAW

    To be eligible to receive Federal foster care assistance, a 
child's care and placement must be the responsibility of (1) 
the State child welfare agency, which administers the Title IV-
E foster care and adoption assistance program, or (2) any other 
public agency with which the State child welfare agency has an 
agreement.

                             COMMITTEE BILL

    The Committee Bill additionally permits eligibility for any 
child whose care and placement is the responsibility of an 
Indian tribe, tribal organization, or tribal consortium that 
has a Title IV-E foster care and adoption assistance plan 
approved by HHS.

John H. Chafee Foster Care Independence Program

                              CURRENT LAW

    States receive a share of capped mandatory funding to 
provide independent living services to youth who are expected 
to remain in foster care until their 18th birthday and to youth 
who have emancipated from foster care (until their 21st 
birthday). They also receive a share of any discretionary 
appropriations provided for Education and Training Vouchers to 
support the postsecondary education (or comparable training) of 
older foster youth. A State must apply to receive funding under 
the Chafee Foster Care Independence Program and must meet 
certain planning requirements and certifications as a part of 
the applications. HHS must pay to each State, the lesser of 80 
percent of its Chafee Program cost (including those for 
Education and Training Vouchers) or the State's full allotment 
under these funding streams. A State's allotment of funds out 
of the mandatory Chafee funding ($140 million annually) is 
based on its relative share of the national foster child 
population, except that no State may receive less then $500,000 
or the amount of funding they received for independent living 
services in FY1998. A State's allotment of any discretionary 
funding appropriated for Education and Training Vouchers 
(FY2008 funding = $45 million) is based entirely on its 
relative share of the national foster care caseload.

                             COMMITTEE BILL

    The Committee Bill provides that the Title IV-E provisions 
related to the Chafee Foster Care Independence Program 
(including the associated Education and Training Vouchers) do 
not apply to tribes except as described in the Committee Bill.
    Application of Chafee Foster Care Independence Program to 
Tribes: An Indian tribe, tribal organization, or tribal 
consortium with a Title IV-E foster care and adoption 
assistance plan approved by HHS, or one that is receiving 
funding to provide foster care pursuant to a tribal-State Title 
IV-E agreement or contract, may apply directly to HHS for an 
allotment of Chafee Foster Care Independence Program funds and/
or Education and Training Voucher funds. The tribal entity's 
application must include a plan for providing independent 
living services that satisfies the planning and certification 
requirements made of States that HHS determines appropriate for 
the tribal entity. In addition, the application must describe 
the tribal entity's consultation process with all relevant 
State(s). In particular, it must include the results of the 
consultation with regard to determining Indian children's 
eligibility for benefits and services under a tribal entity's 
program and the process for ensuring continuity of benefits and 
services for children who will transition from State-planned 
independent living benefits and services to tribal-planned 
independent living benefits and services.
    Payment and Allotment: The Committee Bill requires HHS to 
make payments to each tribal entity with an approved 
application in the same manner that it makes these payments to 
States, unless the agency determines that another manner is 
more appropriate. (However, in no case may a tribal entity 
receive less than 80 percent of its program costs.) The 
allotment amount for each tribal entity is based on the share 
of children in the tribal entity's foster care population 
relative to the total number of children in foster care in the 
State (whether under the care and placement responsibility of 
the State or of any tribal entity in the State with an approved 
application for general Chafee independent living funds and/or 
Education and Training Voucher funds. (For example if there are 
1,000 children in foster care in the State and 50 of those 
children are in the tribal entity's care and placement 
responsibility, then 5 percent of the State allotment of Chafee 
and/or Education and Training Voucher funds must be allotted to 
the tribal entity.) The Committee Bill provides that any 
allotment amount for a tribal entity under the general Chafee 
program and/or Education and Training Vouchers program must be 
considered a part of a State's allotment of those program 
funds.

State and tribal cooperation

                              CURRENT LAW

    There is no foster care and adoption assistance State plan 
requirement (under Title IV-E) that a State and tribe must 
cooperate in the provision of services to eligible children. 
Under the Chafee Foster Care Independence Program, however, a 
State must certify that it has consulted with each Indian tribe 
located within its borders about its planned independent living 
programs, that efforts to coordinate the programs with these 
tribe(s) have been made, and that the benefits and services it 
provides under the programs will be made available to Indian 
children in the State on the same basis as to other children.

                             COMMITTEE BILL

    The Committee Bill requires a State, as part of its Title 
IV-E foster care and adoption assistance plan, to provide that 
it will negotiate in good faith with any Indian tribe, tribal 
organization, or tribal consortium that asks to develop an 
agreement with the State under which (1) Federal (Title IV-E) 
payments would be available for children who are under tribal 
authority and who are placed for adoption, in foster family 
homes licensed by tribes, or with relative guardians; and (2) 
the tribe, organization, or consortium also has access to 
Federal Title IV-E resources for related program 
administration, training, and data costs.
    In addition to the current certification related to Indian 
tribes, the Committee Bill requires a State as part of its 
application for Chafee Foster Care Independence Program funds 
to further certify that it will negotiate in good faith with 
any Indian tribe, tribal organization, or tribal consortium 
that does not receive a direct allotment of Federal funding 
under the program, but which seeks to develop an agreement of 
contract with the State to administer, supervise, or oversee 
Chafee independent living services for eligible children under 
tribal authority and to receive an appropriate portion of the 
State's allotment for this purpose.

Rule of construction

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill prohibits any interpretation of its 
provisions on ``Tribal Foster Care and Adoption Access'' that 
permits termination of funding to any Indian or Indian family 
receiving foster care or adoption assistance payments on a 
child's behalf, if those payments are being received as of the 
date of enactment of the bill and the State is claiming Federal 
reimbursement for a part of those payments. This rule of 
construction must remain true without regard to whether a 
cooperative agreement between the State and the tribe is in 
effect on the date of the bill's enactment or whether the 
tribal entity chooses, after the date of enactment, to directly 
operate a Title IV-E foster care and adoption assistance 
program.
    The Committee Bill further prohibits any interpretation of 
its Tribal Foster Care and Adoption Access provisions that 
affects the responsibility of a State as part of its Title IV-E 
foster care and adoption assistance plan to provide Federal 
foster care maintenance payments, adoption assistance payments, 
and if it elects, relative guardianship assistance payments, 
for Indian children who are eligible for such payments and who 
are not otherwise being served by a tribal entity (either 
pursuant to a cooperative agreement with the State or under an 
HHS-approved foster care and adoption assistance plan of the 
tribal entity). Neither may it be interpreted as affecting the 
responsibility of a State to administer, supervise or oversee 
independent living programs under the Chafee Foster Care 
Independence Program on behalf of eligible Indian children who 
are not otherwise being served by a tribal entity with an 
approved Chafee plan or under a cooperative agreement or 
contract with the State.

Regulations

                              CURRENT LAW

    No provisions.

                             COMMITTEE BILL

    General Regulations: Except with regard to the in-kind 
claiming provisions (see below), the Committee Bill requires 
HHS to consult with Indian tribes, tribal organizations, tribal 
consortia and affected States and, within one year of their 
enactment, to promulgate interim final regulations to carry out 
the Tribal Foster Care and Adoption Access provisions of the 
Committee Bill. These regulations must include procedures that 
ensure that a transfer of a child from State care and placement 
responsibility to tribal care and responsibility (whether under 
that tribal entity's foster care and adoption assistance plan 
approved by HHS or via a cooperative agreement with a State) 
affects neither that child's eligibility for Medicaid nor his 
or her eligibility for Federal payments or any services under 
Title IV-E.
    Regulations for In-Kind Expenditures: Not later than 
September 30, 2010, the Committee Bill requires HHS, in 
consultation with Indian tribes, tribal organizations, and 
tribal consortia, to promulgate interim final regulations to 
specify the types of in-kind expenditures, and the third-party 
sources for such in-kind expenditures, that may be claimed by 
tribal entities operating an approved foster care and adoption 
assistance plan under Title IV-E. Those regulations must also 
specify the share of non-Federal Title IV-E funds that tribal 
entities may claim as in-kind expenditures from third-party 
sources for purposes of receiving Federal reimbursement of 
Title IV-E administrative costs, including training costs. The 
Committee Bill adds that the regulations regarding in-kind 
expenditures may not be in effect before the first day of 
FY2011 (October 1, 2010). Finally, the Committee Bill includes 
a ``Sense of the Senate'' that if HHS fails to formally publish 
these required regulations, Congress should enact legislation 
to specify the in-kind expenditures from third-party sources, 
and the share of non-Federal program costs those expenditures 
may represent and that tribal entities operating an HHS-
approved foster care and adoption assistance program may claim.

                             EFFECTIVE DATE

    The Tribal Foster Care and Adoption Access section of the 
Committee Bill is effective as of the first day of FY2010 
(October 1, 2009), without regard to whether the regulations 
required by the section have been promulgated by that date.

 Section 302--Grants to States That Successfully Collaborate With and 
   Support Tribes To Improve Permanency Outcomes for Indian Children

                              CURRENT LAW

    States are required as part of their plan for Child Welfare 
Services (Title IV-B, subpart 1) to consult with tribal 
organizations and to describe the specific measures taken to 
comply with the Indian Child Welfare Act. Under the Chafee 
Foster Care Independence Program (Section 477), States must 
certify that they have consulted with and sought to cooperate 
with tribes in the provision of independent living services.

                             COMMITTEE BILL

    Grant Authority and Definition of Indian Children: The 
Committee Bill creates a new Section 479C of the Social 
Security Act that requires HHS, in each of FY2010 through 
FY2014, to make grants to States that successfully collaborate 
with tribes to improve the services and permanency outcomes for 
Indian children and their families. For purposes of this grant, 
Indian children are defined as those children who are members 
of, enrolled in, or affiliated with a tribe, OR children who 
are eligible for membership, enrollment, or affiliation with a 
tribe.
    Eligible States: The Committee Bill provides that any State 
seeking a Successful Collaboration and Tribal Support grant 
must submit to HHS the following (in the manner and form 
requested by the agency): (1) Evidence of collaboration by the 
State with Indian tribes, tribal organizations, or tribal 
consortia to plan for and ensure access to services and 
supports for Indian children and their families. At a minimum 
this must include evidence of consultation with tribal 
organizations and specific measures taken to comply with the 
Indian Child Welfare Act (as now required under Title IV-B), 
and evidence of the consultation and good faith negotiation 
efforts required under the State foster care and adoption 
assistance plan (as added by the Committee Bill) and the State 
application for the Chafee Foster Care Independence Program (as 
amended by the Committee Bill); (2) Evidence that the State has 
obtained from HHS, or is engaged in accessing technical 
assistance (including through the National Child Welfare 
Resource Center for Tribes, established in the Committee Bill) 
to improve services and permanency outcomes for Indian children 
and their families through improved identification of Indian 
children, increased recruitment of Indian foster family homes, 
and improved rates of family reunification, legal or relative 
guardianships, or adoptive homes; and (3) Evidence of improved 
outcomes for Indian children and their families and any other 
data HHS may require for verification that an improvement, 
appropriate for Indian children and their families, has been 
achieved.
    Amount of Grant: The Committee Bill provides that based on 
this evidence, every State found eligible by HHS for a 
Successful Collaboration and Tribal Support Grant (in a given 
grant year) must receive a portion of the total grant funding 
provided. And that the amount for each eligible State must be 
based on the number of Indian children in the State relative to 
the number of Indian children in all of the States found to be 
eligible for a Successful Collaboration and Tribal Support 
grant.
    Appropriation: The Committee Bill appropriates $5 million 
to HHS to make these grants in each of FY2010 through FY2014.

 Section 303--Establishment of National Child Welfare Resource Center 
                               for Tribes

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill creates a new Section 479D of the Social 
Security Act that requires HHS to establish a National Child 
Welfare Resource Center for Tribes that is ``specifically and 
exclusively'' dedicated to meeting the needs of Indian tribes, 
tribal organizations, tribal consortia and States in improving 
services and permanency outcomes for Indian children and their 
families.
    The Committee Bill provides that this resource center 
must--(1) provide information, advice, educational materials, 
and technical assistance to Indian tribes and tribal 
organizations regarding the types of services, administrative 
functions, data collection, program management, and reporting 
that are provided for under the child and family services 
programs of Title IV-B and the foster care and adoption 
assistance program of Title IV-E; (2) assist and provide 
technical information to tribes, organization or consortia 
seeking to operate programs under Title IV-B or Title IV-E; and 
(3) assist and provide technical assistance to those tribal 
entities and States seeking to develop cooperative agreements 
under Title IV-E or to meet the requirements (included in Title 
IV-B or Title IV-E) that are related to State and tribal 
consultation or good faith negotiations (as added by the 
Committee Bill).
    The Committee Bill permits HHS to directly establish the 
National Child Welfare Resource Center for Tribes, or to 
establish it through a grant or contract with a public or 
private organization that is knowledgable in the field of 
Indian tribal affairs and child welfare. The Committee Bill 
appropriates $1 million in each of FY2009 through FY2013 for 
this resource center.

     TITLE IV--SUPPORT FOR OLDER CHILDREN IN FOSTER CARE AND OTHER 
                               PROVISIONS

Section 401--State Option for Children in Foster Care or in an Adoptive 
       or Relative Guardianship Placement After Attaining Age 18

Definition of child

                              CURRENT LAW

    There is no definition of ``child'' for purposes of the 
child welfare programs authorized under Title IV-E or Title IV-
B of the Social Security Act. In general, a child may no longer 
be eligible for Federal foster care maintenance payments or 
adoption assistance payments once he or she has attained 18 
years of age. However, in the case of a foster care maintenance 
payment, a child who at his or her 18th birthday is still a 
fulltime high school student (and who can reasonably be 
expected to complete this degree) may remain eligible until his 
or her 19th birthday. Further, in the case of a child on whose 
behalf adoption assistance payments are being made, if a State 
determines that the child has a ``mental or physical handicap'' 
that warrants continued assistance, it may continue to provide 
these payments until the child's 21st birthday.

                             COMMITTEE BILL

    The Committee Bill defines a child, for purposes of Title 
IV-E or Title IV-B, as an individual who has not reached his or 
her 18th birthday--except for certain individuals (as described 
in the following sentences). The Committee Bill permits States 
to define as a ``child,''--and thus to provide Federal foster 
care maintenance payments, adoption assistance payments, and/or 
relative guardianship payments to--otherwise eligible 
individuals who have reached their 18th birthdays but who have 
not yet reached their 19th, 20th or 21st birthday (whichever 
highest age the State chooses). The Committee Bill provides, 
however that to be eligible for continued adoption assistance 
or relative guardianship assistance agreements under this 
definition, the child must have been adopted or placed in 
guardianship out of foster after reaching his/her 16th 
birthday. Further, to be defined as a ``child'' (and thus to 
remain eligible for Federal foster care maintenance, adoption 
assistance, or relative guardianship assistance payments) after 
reaching his or her 18th birthday, the individual must be--(1) 
completing high school; (2) enrolled in college (or equivalent 
vocational education); (3) participating in a program or 
activity designed to promote employment or remove barriers to 
employment; (4) employed at least 80 hours per month; or (5) 
determined by the State to be ``particularly vulnerable'' or 
``a high-risk individual.''

Conforming amendment to definition of child care institution

                              CURRENT LAW

    To be eligible for Federal foster care maintenance 
payments, a child must be living in a foster family home or in 
a ``child-care institution.''

                             COMMITTEE BILL

    The Committee Bill amends the definition of ``child care 
institution'' to include--but only in the case of a child in 
foster care who is at least 18 years of age--a ``supervised 
setting in which the individual is living independently'' in 
accordance with the conditions that HHS must establish in 
regulation.

Conforming amendments to age limits applicable to children eligible for 
        adoption assistance ore relative guardianship

                              CURRENT LAW

    Prohibits payment of Federal adoption assistance to any 
child who has reached age 18, unless the State determines that 
the assistance is warranted due to the child's physical or 
mental handicap. Further prohibits payment of Federal adoption 
assistance on behalf of a child, if the State determines that 
the parents are no longer legally responsible for the child or 
the child is no longer receiving support from the parents. 
Parents who are receiving adoption assistance on behalf of a 
child are required to keep the State or local child welfare 
agency informed of circumstances that would make them 
ineligible to receive further adoption assistance on the 
child's behalf or which would make them eligible to receive 
adoption assistance payments for the child in a different 
amount.

                             COMMITTEE BILL

    In general, the Committee Bill restates all of these 
provisions so that they also apply to relative guardianship 
payments (or to relative guardians as applicable). However, 
consistent with the new definition of child, the Committee Bill 
also notes that a State may elect to provide adoption 
assistance and relative guardianship assistance payments to a 
child after his or her 18th birthday (and before his/her 21st 
birthday) consistent with the rules described above (see 
``Definition of Child'').

                             EFFECTIVE DATE

    The Committee Bill makes the provisions related to the 
``State Option for Children in Foster Care or in Adoptive or 
Relative Guardianship After Attaining Age 18'' effective with 
the first day of FY2011 (October 1, 2010).

   Section 402--Transition Plan for Children Aging Out of Foster Care

                              CURRENT LAW

    A State is required to have in place a case review system 
for each child in foster care to, among other things, 
periodically review the child's status in foster care and to 
develop and carry out a permanency plan for the child.

                             COMMITTEE BILL

    The Committee Bill amends the definition of a case review 
system to require that--during the 90-day period immediately 
before a child legally emancipates (whether during that period 
the child is receiving a foster care maintenance payment, or 
benefits or services under Section 477)--the child's 
caseworker, and other representatives as appropriate, must help 
the child develop a personal transition plan. The plan must be 
as detailed as the child chooses and include specific options 
on housing, health insurance, education, local opportunities 
for mentoring, continuing support services, work force supports 
and employment services.

                             EFFECTIVE DATE

    In general, the amendments made regarding a ``Transition 
Plan for Children Aging Out of Foster Care'' are effective on 
October 1, 2008. However HHS may delay required compliance for 
any State that it determines must enact legislation (other then 
legislation to appropriate funds) to meet this additional 
requirement.

                   Section 403--Educational Stability

Educational stability

                              CURRENT LAW

    A State is required to maintain an individual written case 
plan for each child in foster care. Among other things, this 
case plan must include the child's health and education records 
with an assurance that the child's placement in foster care 
takes into account proximity to the school in which the child 
is enrolled at the time of the placement.

                             COMMITTEE BILL

    The Committee Bill maintains all of these current law 
requirements but additionally requires the State child welfare 
agency to include in each child's case plan an assurance that 
it has coordinated with local educational agencies to ensure 
that the child remains in the school where he/she is enrolled 
at the time of placement into foster care OR, if remaining in 
that school is not in the child's best interests, assurances 
that the State child welfare agency and the local educational 
agencies provide immediate and appropriate enrollment in a new 
school, with all of the educational records of the child 
provided to that school.

Transportation to school of origin

                              CURRENT LAW

    Under Title IV-E, States are entitled to receive Federal 
reimbursement at their Federal Medical Assistance Percentage 
(FMAP), which ranges from 50 percent in States with the highest 
per capita incomes to 83 percent in States with the lowest per 
capita income, for the cost of providing foster care 
maintenance payments on behalf of an eligible child. The 
definition of a ``foster care maintenance payment'' includes 
payments for ``food, clothing, shelter, daily supervision, 
school supplies, a child's personal incidentals, liability 
insurance with respect to a child, and reasonable travel to the 
child's home for visitation.''
    States are also entitled to receive Federal reimbursement 
of 50 percent of their costs related to the ``proper and 
efficient'' administration of their Title IV-E foster care 
program. (HHS has recently provided guidance to States 
indicating that transportation of a child in foster care to and 
from his/her school of origin is a Title IV-E administrative 
function and, thus, that 50 percent of the costs of this 
transportation may be claimed as a Title IV-E administrative 
cost.

                             COMMITTEE BILL

    The Committee Bill would amend the definition of ``foster 
care maintenance payment'' to permit States to claim 
reimbursement (for eligible children), at their FMAP, for the 
cost of ``reasonable travel for the child to remain in the 
school in which the child is enrolled at the time of 
placement'' in foster care.

Educational attendance

                              CURRENT LAW

    The law requires each child on whose behalf Federal foster 
care maintenance payments or adoption assistance payments are 
made to meet certain Federal eligibility requirements.

                             COMMITTEE BILL

    The Committee Bill adds a new condition of eligibility for 
Federal foster care maintenance payments, adoption assistance 
payments, or relative guardianship assistance payments (as 
authorized by the Committee Bill). The Committee Bill requires 
a State to provide assurances that each child who has reached 
the minimum age of compulsory school attendance in his/her 
State and who is receiving a foster care maintenance payment, 
adoption assistance payment, or relative guardianship payment 
is a full-time elementary or secondary school student, or has 
completed high school. The Committee Bill defines a full-time 
elementary or secondary school student to include a child who 
is enrolled at a secondary, or elementary school, or one who is 
receiving home school instruction or participating in 
independent study, provided that enrollment, home schooling or 
independent study is done in accordance with the law of the 
State or relevant jurisdiction. Finally, the Committee Bill 
defines a full-time elementary and secondary student to include 
children who are incapable of attending school on a full-time 
basis due to a medical condition, if this fact is supported by 
regularly updated information in the child's required case 
plan.

                             EFFECTIVE DATE

    The Committee Bill makes the provisions of the section on 
``Educational Stability'' effective on the first day of FY2009 
(October 1, 2008). However, HHS may delay required compliance 
for any State that it determines must enact legislation (other 
then legislation to appropriate funds) to meet this additional 
requirement.

                      TITLE V--REVENUE PROVISIONS

       Section 501--Clarification of Uniform Definition of Child

Child must be younger than claimant

                              CURRENT LAW

    The Internal Revenue Code provides a uniform definition of 
``qualifying child for purposes of the dependency exemption, 
the child credit, the earned income credit, the dependent care 
credit, and head of household filing status. There are four 
basic criteria to determine if an individual is the qualifying 
child of a taxpayer: (1) the individual must have a specific 
relationship to the taxpayer (son, daughter, foster child, 
stepchild, brother, sister, stepbrother, stepsister, half 
brother, half sister, or descendant of any of them); (2) the 
individual must be less than 19 years of age at the end of the 
year, unless the individual is a full-time student, in which 
case the individual must be less than 24 at the end of the 
year; (3) the individual must have lived with the taxpayer for 
more than one-half the tax year; and (4) the individual must 
not have provided more than one-half of his or her own support 
for the tax year. There is no current law requirement that a 
qualifying child of a taxpayer be younger than the taxpayer.

                             COMMITTEE BILL

    The Committee Bill provides that for an individual to be 
the qualifying child of a taxpayer, the child must (in addition 
to meeting the current law age requirements) be younger than 
the taxpayer.

Marital status of the child

                              CURRENT LAW

    There is no requirement in the Internal Revenue Code that 
an individual be unmarried to be the qualifying child of a 
taxpayer.

                             COMMITTEE BILL

    The Committee Bill provides that for an individual to be 
the qualifying child of a taxpayer, the individual must have 
not filed a joint tax return with another taxpayer, other than 
to file a refund claim.

Child credit available only if qualifying child is dependent of the 
        taxpayer

                              CURRENT LAW

    The Internal Revenue Code provides that a taxpayer may 
claim a child tax credit (of up to $1,000) for each qualifying 
child of the taxpayer. There is no requirement that the 
qualifying child be a dependent of the taxpayer.

                             COMMITTEE BILL

    The Committee Bill requires that for purposes of claiming 
the child tax credit a qualifying child must be a dependent of 
the taxpayer.

Persons other than parents claiming qualifying child

                              CURRENT LAW

    Under the Internal Revenue Code, the following rules apply 
with regard to who may claim an individual as a qualifying 
child: (1) In cases where the individual is claimed as the 
qualifying child of two or more taxpayers, the individual is 
the qualifying child of the parent; (2) If both taxpayers 
claiming the individual as a qualifying child are the 
individual's parents, the individual is claimed as the 
qualifying child of the parent the individual resided with the 
longest during the tax year; (3) If the individual resided with 
both parents for the same amount of time, the individual is the 
qualifying child of the parent with the higher adjusted gross 
income; (4) If neither of the taxpayers claiming the individual 
as a qualifying child are the individual's parents, the 
individual is the qualifying child of the taxpayer with the 
highest adjusted gross income.

                             COMMITTEE BILL

    The Committee Bill provides that for an individual to be 
claimed as the qualifying child of a taxpayer who is not the 
individual's parent, the taxpayer must have an adjusted gross 
income that is higher than the highest adjusted gross income of 
each of the individual's parents.

                             EFFECTIVE DATE

    The Committee Bill makes the amendments in this section 
related to ``Clarification of Uniform Definition of Child,'' 
effective with tax year 2009 (beginning after December 31, 
2008).

 Section 502--Collection Of Unemployment Compensation Debts Resulting 
                               From Fraud

Collection of unemployment compensation debts resulting from fraud

                              CURRENT LAW

    Section 6402 of the Internal Revenue Code (I.R.C.) allows 
the Treasury Department to credit overpayments (and interest) 
against any liability with respect to an internal revenue tax 
on the part of the person who made the overpayment (subject to 
credits against estimated tax under certain circumstances. 
These circumstances are the following: to offset past-due child 
support payments that have been assigned to the State; 
collection of debts owed to Federal agencies; and collection of 
past-due and legally enforceable State income tax obligations).

                             COMMITTEE BILL

    The Committee Bill allows the Treasury Department, under 
certain circumstances, to reduce any Federal income tax 
overpayments by the collection of covered State unemployment 
compensation (UC) debts if the debt is on account of fraud and 
to pay the State by the amount of such debts. The Treasury 
Department would notify the State of such person's name, 
taxpayer identification number, address, and the amount 
collected. The Treasury Department would also notify the person 
making such overpayment that the overpayment had been reduced 
by an amount necessary to satisfy a covered unemployment 
compensation debt. If an offset is made to a joint return, the 
notice would include information related to the rights of a 
spouse of a person subject to such an offset.
    The Committee Bill sets the priority order of the 
reductions as: internal revenue tax liability; past due child 
support; Federal agency debt; and, finally, the collection of 
past-due and legally enforceable State income tax obligations 
and covered UC debts on account of fraud. The reductions would 
occur before any such overpayment would be credited to future 
Federal internal revenue tax.
    The Committee Bill requires that the reduction on account 
of UC debt apply only to those persons whose address shown on 
the Federal return is an address within the State seeking the 
offset.
    The Committee Bill requires that States must:
           notify the individual of the debt by 
        certified mail with return receipt;
           allow 60 days for the individual to present 
        evidence that the individual does not have a legally 
        enforceable debt that is due to fraud;
           consider the evidence presented by the 
        individual; and
           satisfy such other conditions as the 
        Treasury Department may prescribe to ensure that the 
        determination is valid and that the State has made 
        reasonable efforts to obtain payment of such covered UC 
        debt.
    The Committee Bill defines covered UC debt to be any of the 
following items: past-due debt for erroneous payment of UC due 
to fraud which has become final under the State's law and which 
remains uncollected; contributions due to the State's 
unemployment fund on account of fraud; and, any penalties and 
interest assessed on such debt.
    The Committee Bill allows the Treasury Department to issue 
regulations on the time and manner for States to submit notices 
of UC debts due to fraud. These regulations would be authorized 
to include:
           the setting of a minimum amount of debt for 
        the reduction procedure to be applied;
           a required fee paid to the Treasury for the 
        cost of applying such reduction procedure and used to 
        reimburse the appropriations account that bore the cost 
        of applying such procedure; and
           a requirement that States submit notices of 
        covered UC debt to the Treasury Department via the 
        Labor Department in accordance with procedures 
        established by the Labor Department where the 
        procedures may require States to pay a fee to the Labor 
        Department; those fees may be deducted from amounts 
        collected and used to reimburse the appropriations 
        account that bore the cost of collecting the notices of 
        covered UC debt.
    The Committee Bill requires that erroneous payments to the 
State must be promptly paid back to the Treasury.

Disclosure of certain information to States requesting refund offsets 
        for legally enforceable State unemployment compensation debt 
        resulting from fraud

                              CURRENT LAW

    Paragraph (3) of section 6103(a) of the I.R.C. describes 
the confidentiality and disclosure of Federal tax returns and 
return information. Paragraph (3) of section 6103(a) requires 
returns and return information to be confidential. Among other 
items, Section 6103 authorizes the conditions under which 
authorized persons, employees, or officers (who are not 
Department of the Treasury officers or employees) may have 
access to Federal tax returns or return information.

                             COMMITTEE BILL

    The Committee Bill allows the disclosure of information to 
officers and employees of the Department of Labor for purposes 
of facilitating the exchange of data in connection with a 
request made under its proposed changes in section 6402 of the 
I.R.C. The Committee Bill also allows access to the information 
to the Department of Labor's agents who maintain and provide 
technological support to the Department of Labor's Interstate 
Connection Network (ICON) solely for the purpose of providing 
such maintenance and support.

Expenditures from the State fund

                              CURRENT LAW

    Paragraph (4) of section 3304(a) of the I.R.C requires that 
all money withdrawn from a State's account in the Federal 
Unemployment Trust Fund be used solely for the payment of UC 
benefits. Exceptions to this include sums erroneously paid into 
the fund and refunds paid in accordance with the provisions of 
section 3305(b). Other exceptions include (a) the amount of 
employee payments into the unemployment fund of a State used in 
the payment of cash benefits to individuals with respect to 
their disability, exclusive of administration expenses, (b) 
certain expenses incurred by the State for administration of 
its unemployment compensation law and public employment 
offices, (c) deduction of health insurance payments and for tax 
withholding, (d) repayment of overpayments as provided in 
section 303(g) of the Social Security Act, (e) payment for 
short-time compensation under a plan approved by the Secretary 
of Labor, and (f) the self-employed assistance program benefit.

                             COMMITTEE BILL

    The Committee Bill authorizes that the fees from collecting 
covered UC debt be deducted and that the penalties and interest 
from the collections be transferred to the appropriate State 
fund into which the State would have deposited such amounts had 
the person owing the debt paid such amounts directly to the 
State. The remainder of the collected UC debt is deposited into 
the appropriate State account within the Federal Unemployment 
Trust Fund.

Conforming amendments

                              CURRENT LAW

    Not applicable.

                             COMMITTEE BILL

    The Committee Bill amends section 6402 of the I.R.C. to 
reflect the changes created by the Committee Bill.

                             EFFECTIVE DATE

    The amendments made by the Committee Bill in the section, 
``Collection of Unemployment Compensation Debts Resulting From 
Fraud,'' apply to refunds payable on or after the date of its 
enactment.

               Section 503--Investment Of Operating Cash

                              CURRENT LAW

    The Treasury Department is responsible for short-term 
management of excess Federal operating cash, which it can 
invest in short-term obligations of the United States 
government or collateralized obligations of certain financial 
institutions that maintain Federal Treasury tax and loan 
accounts. The Treasury Department is not permitted to require 
the sale of obligations by a particular person, dealer, or 
financial institution.

                             COMMITTEE BILL

    In addition to the current investment options, the 
Committee Bill permits the Treasury Department to invest excess 
operating cash, for not more than 90 days, in repurchase 
agreements. The Committee Bill eliminates the provision that 
bars the Treasury Department from requiring the sale of 
obligations by a particular person, dealer, or financial 
institution. Finally, the Committee Bill requires the Treasury 
Department to submit to the Senate Finance and House Ways and 
Means Committees, for each fiscal year, a report detailing the 
investment of operating cash in obligations or repurchase 
agreements, the Department's considerations of risks associated 
with those investments, and actions taken to manage those 
risks.

                             EFFECTIVE DATE

    The Committee Bill makes the amendments in this section, 
``Investment of Operating Cash,'' effective with the first day 
of FY2009 (October 1, 2008).

                       III. VOTE OF THE COMMITTEE

    In compliance with paragraph 7(b) of rule XXVI of Standing 
Rules of the Senate, the following statements are made 
concerning the vote in the Committee's consideration of the 
bill.

Motion to report the bill

    The bill was ordered favorably reported by a unanimous 
voice vote on September 10, 2008. A quorum was present. No 
amendments were voted upon.

          IV. REGULATORY IMPACT STATEMENT AND RELATED MATTERS

                          A. Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact of the ``Improved 
Adoption Incentives and Relative Guardianship Support Act of 
2008.''

                  IMPACT ON INDIVIDUALS AND BUSINESSES

    This bill extends funding for adoption incentive awards; 
expands eligibility for Federal adoption assistance for 
children with special needs; establishes Federal support for 
States providing relative guardianship assistance; authorizes a 
demonstration project for States regarding the licensing of 
immediate relative foster family homes; appropriates funding 
for grants to support ``Kinship Navigator'' program.
    The bill also gives the Department of Health and Human 
Services (DHHS) the Authority to use the Federal Parent Locator 
Service for child welfare purposes; authorizes tribes to apply 
for direct Federal funding under Title IV-E of the Social 
Security Act; appropriates funds to establish a national child 
welfare resource center for tribes and for grants to States 
that successfully collaborate with tribes to improve outcomes 
for Indian children. The bill provides States an option to 
continue Federal support for children in placement after age 
eighteen (18) but up to age twenty-one (21); and authorizes 
additional activities on behalf of children in or leaving 
foster care.
    The bill clarifies the uniform definition of a child under 
the Internal Revenue Code. Authorizes collection of 
unemployment debts resulting from fraud and permits the 
Treasury Department to invest excess operating cash for not 
more than 90 days.
    These provisions do not impose any additional paperwork or 
regulatory burden on individuals or businesses.

                       IMPACT ON PERSONAL PRIVACY

    The bill provides for services to children and families. In 
the context of seeking assistance, families may be asked about 
personal circumstances. The bill should not increase the amount 
of personal information and paperwork required.

                            V. COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 15, 2008.
Hon. Max Baucus,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the attached table summarizing the effects on direct 
spending and revenues of S. 3038, the Improved Adoption 
Incentives and Relative Guardianship Support Act of 2008, as 
ordered reported by the Committee on Finance on September 10, 
2008. CBO and the Joint Committee on Taxation estimate that the 
effects of the bill on direct spending and revenues would 
reduce budget deficits by $856 million over the 2009-2013 
period and by $7 million over the 2009-2018 period. In 
addition, enacting the bill would increase discretionary 
spending by an estimated $175 million over the 2009-2013 
period, subject to appropriation of the authorized amounts.
    Pursuant to section 311 of S. Con. Res. 70, CBO estimates 
that changes in direct spending and revenues from enacting S. 
3038 would cause an increase in the on-budget deficit greater 
than $5 billion in at least one of the 10-year periods between 
2018 and 2057.
    CBO has reviewed the nontax provisions of the bill (titles 
I-IV and section 503) and determined that the bill would impose 
intergovernmental mandates as defined in the Unfunded Mandates 
Reform Act (UMRA) because it would increase the stringency of 
conditions of assistance under the Foster Care and Adoption 
Assistance Programs. CBO estimates, however, that the costs to 
States to comply with the mandates would not exceed the 
threshold established in UMRA ($68 million in 2008, as adjusted 
by inflation). The nontax provisions contain no private-sector 
mandates as defined in UMRA.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Jonathan 
Morancy.
            Sincerely,
                                           Peter R. Orszag,
                                                          Director.
    Attachment.

       ESTIMATED EFFECTS ON DIRECT SPENDING AND REVENUES OF S. 3038, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FINANCE ON SEPTEMBER 10, 2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        By fiscal year, in millions of dollars--
                               -------------------------------------------------------------------------------------------------------------------------
                                  2009      2010      2011      2012      2013      2014      2015      2016      2017      2018    2009-2013  2009-2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Promotion of Adoption:
    Estimated Budget Authority         0         0         5        30        95       196       309       437       580       739        131      2,392
    Estimated Outlays.........         0         0         5        27        88       184       295       421       562       719        120      2,302
 Uniform Definition of a Child
               1
    Estimated Budget Authority        -6      -175      -167      -138      -142      -146      -150      -154      -159      -164       -628     -1,402
    Estimated Outlays.........        -6      -175      -167      -138      -142      -146      -150      -154      -159      -164       -628     -1,402
Guardianship Assistance:
    Estimated Budget Authority         1         0        -7       -21       -40       -72      -116      -153      -191      -229        -67       -828
    Estimated Outlays.........         1         0        -6       -19       -37       -67      -110      -147      -185      -223        -60       -791
Extend Programs to Age 21:
    Estimated Budget Authority         0         0        35        66        84       106       106       104       101        97        184        699
    Estimated outlays.........         0         0        31        61        81       103       105       104       102        98        172        685
Unemployment Compensation
 Debts 1
    Estimated Budget Authority       -11       -44       -58       -59       -59       -60       -60       -61       -62       -62       -231       -535
    Estimated Outlays.........       -11       -44       -58       -59       -59       -60       -60       -61       -62       -62       -231       -535
Education:
    Estimated Budget Authority       -41       -42       -44       -46       -48       -50       -52       -54       -57       -60       -221       -494
    Estimated Outlays.........       -34       -42       -44       -46       -48       -50       -52       -54       -57       -60       -214       -486
Tribal Foster Care:
    Estimated Budget Authority         1         8        10        15        19        27        33        44        53        56         54        266
    Estimated Outlays.........         0         4         8        14        19        27        35        45        52        55         44        257
Family Caregivers:
    Estimated Budget Authority         9        14        13         9         8         1         1         0         0         0         53         55
    Estimated Outlays.........         5        12        16        11         8         2         1         0         0         0         52         55
Investment of Operating Cash:
    Estimated Budget Authority       -10       -10       -10       -10       -10       -10       -10       -10       -10       -10        -50       -100
    Estimated Outlays.........       -10       -10       -10       -10       -10       -10       -10       -10       -10       -10        -50       -100
Total Changes in Direct
 Spending:
    Estimated Budget Authority       -56      -249      -222      -155       -93        -7        60       153       255       368       -775         54
    Estimated Outlays.........       -55      -255      -226      -159      -101       -17        56       145       243       354       -796        -15

                                                                   CHANGES IN REVENUES

Uniform Definition of a Child          1        23        36        31        32        34        35        37        38        40        123        307
 1............................
Unemployment Compensation              0        -1        -8       -20       -34       -44       -50       -52       -53       -53        -63       -315
 Debts........................
    Total Revenue Changes.....         1        22        28        11        -2       -10       -15       -15       -15       -13         60         -8

                                                                 NET BUDGETARY IMPACT 3

Estimated Increase or Decrease       -56      -277      -254      -170       -99        -7        71       160       258       367       -856        -7
 (-) in Deficits 2............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not sum to totals due to rounding.
1 Estimates prepared by the Joint Committee on Taxation; all other provisions estimated by the Congressional Budget Office.
2 Negative numbers reflect decreases in the deficit (or increases in the surplus); positive numbers reflect increases in the deficit (or decreases in
  the surplus).
3 In addition, enacting the bill would increase discretionary spending by an estimated $175 million over the 2009-2013 period, subject to appropriation
  of the authorized amounts.
SOURCE: Congressional Budget Office and the Joint Committee on Taxation.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    Pursuant to the requirements of paragraph 12 of rule XXVI 
of the Standing Rules of the Senate, 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 A--BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY 
FAMILIES

           *       *       *       *       *       *       *

                               PENALTIES

    Sec. 409. (a) In General.--Subject to this section:
          (1) Use of grant in violation of this part.--

           *       *       *       *       *       *       *

          (15) Penalty for failure to establish or comply with 
        work participation verification procedures.--

           *       *       *       *       *       *       *

          (16) Penalty for noncompliance with notice 
        requirements for relatives under part e.--
                  (A) In general.--If the Secretary determines 
                that a State to which a grant is made under 
                section 403 in a fiscal year has not exercised 
                the due diligence required under section 
                471(a)(19)(C) during the fiscal year, the 
                Secretary shall reduce the grant payable to the 
                State under section 403(a)(1) for the 
                immediately succeeding fiscal year by an amount 
                equal to not less than 1 percent and not more 
                than 3.5 percent of the State family assistance 
                grant.
                  (B) penalty based on severity of failure.--
                the Secretary shall impose reductions under 
                subparagraph (A) with respect to a fiscal year 
                based on the degree of noncompliance.

                   Part B--CHILD AND FAMILY SERVICES

Subpart 1--Child Welfare Services

           *       *       *       *       *       *       *

             LIMITATIONS ON AUTHORIZATION OF APPROPRIATIONS

    Sec. 425. To carry out this subpart (other than sections 
426, 427, and 429), there are authorized to be appropriated to 
the Secretary not more than $325,000,000 for each of fiscal 
years 2007 through 2011.

           *       *       *       *       *       *       *

SEC. 427. GRANTS TO CARRY OUT KINSHIP NAVIGATOR PROGRAMS.

    (a) Purpose.--The purposes of this section are--
          (1) to establish kinship navigator programs in 
        States, large metropolitan areas, and tribal areas to 
        assist kinship caregivers in navigating their way 
        through programs and services, to help the caregivers 
        learn about and obtain assistance to meet the needs of 
        the children they are raising and their own needs; and
          (2) to promote effective partnerships among public 
        and private agencies, including community-based and 
        faith-based agencies, to help the agencies described in 
        this paragraph more effectively and efficiently serve 
        kinship care families and address the fragmentation 
        that creates barriers to meeting the needs of those 
        families.
    (b) Definitions.--In this section:
          (1) Assistant secretary.--The term ``Assistant 
        Secretary'' means the Assistant Secretary for Children 
        and Families of the Department of Health and Human 
        Services.
          (2) Large metropolitan area.--The term ``large 
        metropolitan area'' means a metropolitan statistical 
        area, as defined by the Bureau of the Census, with a 
        population of not less than 1,000,000.
          (3) Metropolitan agency.--The term ``metropolitan 
        agency'' means an agency serving a large metropolitan 
        area, or a county or political subdivision of a large 
        metropolitan area.
          (4) Tribal area.--The term ``tribal area'' means the 
        area served by a tribal organization.
          (5) Tribal organization.--The term ``tribal 
        organization''--
                  (A) has the meaning given that term in 
                section 479B(a); and
                  (B) includes a consortium of tribal 
                organizations described in subparagraph (A).
    (c) Grants.--
          (1) In general.--The Assistant Secretary may make 
        grants to eligible entities to pay for the Federal 
        share (as determined by the Assistant Secretary) of the 
        cost of carrying out kinship navigator programs.
          (2) Eligible entities.--To be eligible to receive a 
        grant under this section, an entity shall be a State 
        agency, metropolitan agency, or tribal organization, 
        with experience in--
                  (A) addressing the needs of kinship 
                caregivers or children; and
                  (B) connecting the children or caregivers 
                with appropriate services and assistance, such 
                as services and assistance provided by--
                          (i) an area agency on aging under the 
                        Older Americans Act of 1965 (42 U.S.C. 
                        3001 et seq.); or
                          (ii) an agency with jurisdiction over 
                        child welfare, income-based financial 
                        assistance, human services, or health 
                        matters, or a public entity that links 
                        family resource and support programs, 
                        for the State, large metropolitan area, 
                        or Indian tribe involved.
          (3) Allocation of grants.--Of the funds made 
        available for grants under this section for each fiscal 
        year, the Assistant Secretary shall use not less than 
        50 percent to make grants to State agencies.
    (d) Non-Federal Share.--The non-Federal share of the cost 
may be provided in cash. Not more than 50 percent of the non-
Federal share of the cost may be provided in kind, fairly 
evaluated, including plant, equipment, or services.
    (e) Applications.--
          (1) In general.--To be eligible to receive a grant 
        under this section, an entity shall submit an 
        application to the Assistant Secretary at such time, in 
        such manner, and containing such information as the 
        Assistant Secretary may require, including, at a 
        minimum, the information described in paragraph (2).
          (2) Contents.--The application shall include the 
        following:
                  (A) A description of the steps the entity 
                will take during the first 6 months of the 
                grant period to--
                          (i) identify gaps in services for 
                        kinship care families in the State, 
                        large metropolitan area, or tribal area 
                        to be served and the specific 
                        activities that are needed to bridge 
                        the gaps;
                          (ii) convene a group of partners to 
                        assist in the operation of the kinship 
                        navigator program funded through the 
                        grant;
                          (iii) utilize or develop relevant 
                        technology;
                          (iv) conduct outreach to kinship 
                        caregivers about the kinship navigator 
                        program; and
                          (v) develop a plan for reaching 
                        kinship caregivers, ensuring that the 
                        caregivers can access the kinship 
                        navigator program, and following up to 
                        ensure that the caregivers actually 
                        receive necessary services and 
                        supports.
                  (B) An assurance that the entity will provide 
                at least the core activities specified in 
                subparagraphs (A) and (B) of subsection (f)(2) 
                for kinship care families through the kinship 
                navigator program.
                  (C) A description of the activities the 
                entity expects to offer over the grant period 
                and the entity's initial projection of the 
                number of children and kinship caregivers 
                likely to be served.
                  (D) A description of how the entity will 
                involve in the planning and operation of the 
                kinship navigator program, on an ongoing 
                basis--
                          (i) kinship caregivers;
                          (ii) youth raised or being raised by 
                        kinship caregivers;
                          (iii) representatives of kinship care 
                        support organizations;
                          (iv) relevant government agencies 
                        (including agencies with jurisdiction 
                        over matters relating to aging, mental 
                        health, mental retardation or 
                        developmental disabilities, substance 
                        abuse treatment, criminal justice, 
                        health, youth services, human services, 
                        education, income-based financial 
                        assistance, child welfare, child 
                        custody, guardianship, adoption, or 
                        child support enforcement);
                          (v)(I) not-for-profit service 
                        providers, including community-based 
                        and faith-based agencies; and
                          (II) educational institutions; and
                          (vi) other State or local agencies or 
                        systems that promote service 
                        coordination or provide information and 
                        referral services, including the 
                        entities that provide the 2-1-1 or 3-1-
                        1 information systems where applicable.
                  (E) A description of--
                          (i) how the entity will coordinate 
                        its activities with other State or 
                        local agencies or systems that promote 
                        service coordination or provide 
                        information and referral services for 
                        children, families, or older 
                        individuals, including the entities 
                        that provide the 2-1-1 or 3-1-1 
                        information systems where applicable, 
                        so as to avoid duplication of services 
                        and the fragmentation of services that 
                        prevents kinship care families from 
                        getting the help the families need; and
                          (ii) how the entity will encourage 
                        regional cooperation among agencies, 
                        particularly agencies serving border 
                        communities that may cross 
                        jurisdictional lines, to ensure that 
                        kinship care families will get help.
                  (F) An assurance that the entity will report 
                at least annually to the Assistant Secretary, 
                in a manner prescribed by the Assistant 
                Secretary, to ensure comparability of data 
                across States, on--
                          (i) activities established with the 
                        funds made available through grants 
                        made under this section;
                          (ii) the numbers and ages of the 
                        children and caregivers assisted 
                        through the grants;
                          (iii) the types of the assistance 
                        provided;
                          (iv) the outcomes achieved with the 
                        assistance; and
                          (v) the barriers identified to 
                        meeting the needs of kinship care 
                        families and plans for addressing the 
                        barriers.
                  (G) An assurance that the entity, not later 
                than 3 months after the end of the final year 
                of the grant period, will submit a final report 
                to the Administration for Children and Families 
                that describes--
                          (i) the numbers and ages of the 
                        children and caregivers assisted 
                        through the grants;
                          (ii) the types of assistance 
                        provided;
                          (iii) the outcomes achieved with the 
                        assistance;
                          (iv) the barriers to meeting the 
                        needs of kinship care families that 
                        were addressed through the grants;
                          (v) the plans of the entity to 
                        continue the kinship navigator program 
                        after the grant period has ended;
                          (vi) lessons learned during the grant 
                        period; and
                          (vii) recommendations about the 
                        considerations that should be taken 
                        into account as the program carried out 
                        under this section is expanded 
                        throughout the United States.
          (3) Preference.--In awarding grants under this 
        section, the Assistant Secretary shall give preference 
        to agencies or organizations that can demonstrate that 
        the agencies and organizations will offer the full 
        array of activities described in subsection (f)(2).
    (f) Use of Grant Funds.--
        (1) In general.--An entity that receives a grant under 
        this title may use the funds made available through the 
        grant directly, or through grants or contracts with 
        other public or private agencies, including community-
        based or faith-based agencies, that have experience in 
        connecting kinship caregivers with appropriate services 
        and assistance.
        (2) Use of funds.--An entity that receives a grant 
        under this title may use the funds made available 
        through the grant for activities that help to connect 
        kinship caregivers with the services and assistance 
        required to meet the needs of the children the 
        caregivers are raising and their own needs, such as--
                  (A) establishing and maintaining information 
                and referral systems that--
                          (i) assist, through toll free access 
                        that includes access to a live 
                        operator, kinship caregivers, kinship 
                        care service providers, kinship care 
                        support group facilitators, and others 
                        to learn about and link to--
                                  (I) local kinship care 
                                service providers, support 
                                groups, respite care programs, 
                                and special services for 
                                incarcerated parents;
                                  (II) eligibility and 
                                enrollment information for 
                                Federal, State, and local 
                                benefits, such as--
                                          (aa) education 
                                        (including preschool, 
                                        elementary, secondary, 
                                        postsecondary, and 
                                        special education);
                                          (bb) family support 
                                        services, early 
                                        intervention services, 
                                        mental health services, 
                                        substance abuse 
                                        prevention and 
                                        treatment services, 
                                        services to address 
                                        domestic violence 
                                        problems, services to 
                                        address HIV or AIDS, 
                                        legal services, child 
                                        support, housing 
                                        assistance, and child 
                                        care;
                                          (cc) the disability 
                                        insurance benefits 
                                        program established 
                                        under title II;
                                          (dd) the program of 
                                        block grants to States 
                                        for temporary 
                                        assistance for needy 
                                        families established 
                                        under part A;
                                          (ee) the supplemental 
                                        security income program 
                                        established under title 
                                        XVI;
                                          (ff) the medicaid 
                                        program established 
                                        under title XIX;
                                          (gg) the State 
                                        children's health 
                                        insurance program 
                                        established under title 
                                        XXI;
                                          (hh) the program of 
                                        Federal payments for 
                                        foster care and 
                                        adoption assistance 
                                        established under part 
                                        E, including the 
                                        program of relative 
                                        guardianship assistance 
                                        payments for children 
                                        established under 
                                        section 473(d); and
                                          (ii) the supplemental 
                                        nutrition assistance 
                                        program established 
                                        under the Food and 
                                        Nutrition Act of 2008 
                                        (7 U.S.C. 2011 et 
                                        seq.);
                                  (III) relevant training to 
                                assist kinship caregivers in 
                                obtaining benefits and services 
                                and performing their caregiving 
                                activities; and
                                  (IV) relevant legal 
                                assistance and help in 
                                obtaining access to legal 
                                services, including access to 
                                legal aid service providers and 
                                statewide elder law hotlines;
                          (ii) provide outreach to kinship care 
                        families, in collaboration with 
                        schools, pediatric care clinics, 
                        kinship care organizations, senior 
                        citizen centers, agencies with 
                        jurisdiction over child welfare or 
                        human services, and others to link the 
                        families to the kinship navigator 
                        program and to services and assistance; 
                        and
                          (iii) establish, distribute, and 
                        regularly update kinship care resource 
                        guides, websites, or other relevant 
                        outreach materials;
                  (B) promoting partnerships between public and 
                private agencies, including community-based and 
                faith-based agencies--
                          (i) to help the agencies described in 
                        this paragraph more effectively and 
                        efficiently meet the needs of kinship 
                        care families; and
                          (ii) to familiarize the agencies 
                        about the special needs of kinship care 
                        families, policies that affect their 
                        eligibility for a range of education, 
                        health, mental health, social, child 
                        care, and child welfare services, 
                        income-based financial assistance, 
                        legal assistance, and other services 
                        and benefits, and the means for making 
                        policies more supportive of kinship 
                        care families;
                  (C) establishing and supporting a kinship 
                care ombudsman who has the authority to 
                actively intervene with State agency staff or 
                service providers with which the State agency 
                contracts to help ensure, through various 
                appropriate means including working with 
                individual families in an ongoing manner, that 
                kinship caregivers get the services they need 
                and for which they are eligible; and--
                  (D) supporting other activities that are 
                designed to assist kinship caregivers in 
                obtaining benefits, services, and activities 
                designed to improve their caregiving.
          (3) Limitation.--Except as provided in paragraph 
        (2)(D), the entity may not use any of the funds made 
        available through the grant for direct services to 
        children in kinship care families or to kinship 
        caregivers.
    (g) Administration of the Program.--In administering the 
program carried out under this section, the Assistant Secretary 
for Children and Families shall periodically consult with the 
Assistant Secretary for Aging of the Department of Health and 
Human Services.
    (h) Reservation.--The Assistant Secretary may reserve not 
more than 1 percent of the funds made available under this 
section for a fiscal year to provide technical assistance to 
the recipients of grants under this section related to the 
purposes of the grants.
    (i) Appropriation.--Out of any money in the Treasury of the 
United States not otherwise appropriated, there are 
appropriated to the Secretary for purposes of making grants 
under this section, $5,000,000 for each of fiscal years 2009 
through 2013.

Part D--Child Support and Establishment of Paternity

           *       *       *       *       *       *       *

                     FEDERAL PARENT LOCATOR SERVICE

    Sec. 453. (a) Establishment; Purpose.--

           *       *       *       *       *       *       *

    (j) Information Comparisons and Other Disclosures.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Information comparisons and disclosures of 
        information in all registries for title iv program 
        Purposes.--To the extent and with the frequency that 
        the Secretary determines to be effective in assisting 
        States to carry out their responsibilities under 
        programs operated under this part, part B, part E, and 
        programs funded under part A, the Secretary shall--

           *       *       *       *       *       *       *

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) provides (A) for foster care maintenance payments 
        in accordance with section 472 and for adoption 
        assistance in accordance with section 473; and
                  (B) at the option of the State, provides for 
                relative guardianship assistance payments in 
                accordance with subsection (d) of section 473;

           *       *       *       *       *       *       *

          (18) not later than January 1, 1997, provides that 
        neither the State nor any other entity in the State 
        that receives funds from the Federal Government and is 
        involved in adoption or foster care placements may--
                  (A) deny to any person the opportunity to 
                become an adoptive or a foster parent, on the 
                basis of the race, color, or national origin of 
                the person, or of the child, involved; or
                  (B) delay or deny the placement of a child 
                for adoption or into foster care, on the basis 
                of the race, color, or national origin of the 
                adoptive or foster parent, or the child, 
                involved;
          (19) provides [that the State] ``that--
                  ``(A) the State''; and
                          (ii) by adding at the end the 
                        following:
                  (B) within 60 days of the removal of the 
                child from the custody of the child's parent or 
                parents, the State shall exercise due diligence 
                to identify and provide notice to all adult 
                grandparents and other adult relatives of the 
                child (including any other adult relatives 
                suggested by the parents), subject to 
                exceptions due to family or domestic violence, 
                that--
                          (i) specifies that the child has been 
                        or is being removed from the custody of 
                        the child's parent or parents;
                          (ii) explains the options the 
                        relative has under Federal, State, and 
                        local law to participate in the child's 
                        care and placement, including any 
                        options that may be lost by failing to 
                        respond to the notice;
                          (iii) describes the requirements 
                        under paragraph (10) to become a foster 
                        family home and the additional services 
                        and supports that are available for 
                        children placed in such a home; and
                          (iv) if the State has elected the 
                        option to make relative guardianship 
                        assistance payments under paragraph 
                        (1)(B), describes how the relative may 
                        enter into an agreement with the State 
                        under section 473(d) to receive such 
                        payments; and
                  (C) with respect to any minor child 
                (excluding minor heads of households and their 
                spouses) receiving assistance under the State 
                program funded under part A (or under a State 
                program funded with qualified State 
                expenditures (as defined in section 
                409(a)(7)(B)(i)) who is in the care of a 
                nonparent caretaker relative as a result of 
                interaction with the State agency responsible 
                for administering the program authorized under 
                this part, and who does not have a parent in 
                the home, the State shall provide the nonparent 
                caretaker relative with notice that--
                          (i) explains the options the relative 
                        has under Federal, State, and local law 
                        to participate in the child's care and 
                        placement, including any options that 
                        may be lost by failing to respond to 
                        the notice;
                          (ii) describes the requirements under 
                        section 471(a)(10) to become a foster 
                        family home and the additional services 
                        and supports that are available for 
                        children placed in such a home; and
                          (iii) if the State has elected the 
                        option to make relative guardianship 
                        assistance payments under paragraph 
                        (1)(B), describes how the relative may 
                        enter into an agreement under section 
                        473(d) with the State to receive such 
                        payments; shall consider giving 
                        preference to an adult relative over a 
                        non-related caregiver when determining 
                        a placement for a child, provided that 
                        the relative caregiver meets all 
                        relevant State child protection 
                        standards;
          (20)(A) unless an election provided for in 
        subparagraph (B) is made with respect to the State, 
        provides procedures for criminal records checks, 
        including fingerprint-based checks of national crime 
        information databases (as defined in section 
        534(e)(3)(A) of title 28, United States Code), for any 
        prospective [foster or adoptive parent before the 
        foster or adoptive parent may be finally approved for 
        placement of a child regardless of whether foster care 
        maintenance payments or adoption assistance payments] 
        foster parent, adoptive parent, or relative guardian 
        before the foster parent, adoptive parent, or relative 
        guardian may be finally approved for placement of a 
        child regardless of whether foster care maintenance 
        payments, adoption assistance payments, or relative 
        guardianship assistance payments are to be made on 
        behalf of the child under the State plan under this 
        part, including procedures requiring that--

           *       *       *       *       *       *       *

          (26) provides that--
                  (A)(i) within 60 days after the State 
                receives from another State a request to 
                conduct a study of a home environment for 
                purposes of assessing the safety and 
                suitability of placing a child in the home, the 
                State shall, directly or by contract--

           *       *       *       *       *       *       *

                  (C) the State shall not impose any 
                restriction on the ability of a State agency 
                administering, or supervising the 
                administration of, a State program operated 
                under a State plan approved under this part to 
                contract with a private agency for the conduct 
                of a home study described in subparagraph (A); 
                [and]
          (27) provides that, with respect to any child in 
        foster care under the responsibility of the State under 
        this part or part B and without regard to whether 
        foster care maintenance payments are made under section 
        472 on behalf of the child, the State has in effect 
        procedures for verifying the citizenship or immigration 
        status of the child[.];
          (28) provides that the State will inform any 
        individual who is adopting, or whom the State is made 
        aware is considering adopting, a child who is in foster 
        care under the responsibility of the State of the 
        potential eligibility of the individual for a Federal 
        tax credit under section 23 of the Internal Revenue 
        Code of 1986 (without the need to document any 
        adoption-related expenses, in the case of the adoption 
        of a child with special needs (as defined in section 
        23(d)(3) of such Code);
          (29) provides that the State will negotiate in good 
        faith with any Indian tribe, tribal organization or 
        tribal consortium in the State that requests to develop 
        an agreement with the State to provide for payments 
        under this part on behalf of Indian children who are 
        under the authority of the tribe, organization, or 
        consortium, including foster care maintenance payments 
        on behalf of children who are placed in tribally 
        licensed foster family homes, adoption assistance 
        payments, and, if the State has elected to provide such 
        payments, relative guardianship assistance payments, 
        and tribal access to resources for administration, 
        training, and data collection under this part; and
          (30) provides assurances that each child who has 
        attained the minimum age for compulsory school 
        attendance under State law and with respect to whom 
        there is eligibility for a payment under the State plan 
        is a full-time elementary or secondary school student 
        or has completed secondary school, and for purposes of 
        this paragraph, the term ``elementary or secondary 
        school student'' means, with respect to a child, that 
        the child is--
                  (A) enrolled (or in the process of enrolling) 
                in an institution which provides elementary or 
                secondary education, as determined under the 
                law of the State or other jurisdiction in which 
                the institution is located;
                  (B) instructed in elementary or secondary 
                education at home in accordance with a home 
                school law of the State or other jurisdiction 
                in which the home is located;
                  (C) in an independent study elementary or 
                secondary education program in accordance with 
                the law of the State or other jurisdiction in 
                which the program is located, which is 
                administered by the local school or school 
                district; or
                  (D) incapable of attending school on a full-
                time basis due to the medical condition of the 
                child, which incapability is supported by 
                regularly updated information included in the 
                case plan of the child.

           *       *       *       *       *       *       *

                FOSTER CARE MAINTENANCE PAYMENTS PROGRAM

    Sec. 472. (a) In General.--
          (1) Eligibility.--Each State with a plan approved 
        under this part shall make foster care maintenance 
        payments on behalf of each child who has been removed 
        from the home of a relative specified in section 406(a) 
        (as in effect on July 16, 1996) into foster care if--

           *       *       *       *       *       *       *

          (2) Removal and foster care placement requirements.--
        The removal and foster care placement of a child meet 
        the requirements of this paragraph if--

           *       *       *       *       *       *       *

                  (B) the child's placement and care are the 
                responsibility of--
                          (i) the State agency administering 
                        the State plan approved under section 
                        471; [or]
                          (ii) any other public agency with 
                        which the State agency administering or 
                        supervising the administration of the 
                        State plan has made an agreement which 
                        is in effect; [and] or
                          (iii) an Indian tribe or a tribal 
                        organization (as defined in section 
                        479B(a)) or a tribal consortium that 
                        has a plan approved under section 471 
                        in accordance with section 479B;

           *       *       *       *       *       *       *

    (c) For the purposes of this part, (1) the term ``foster 
family home'' means a foster family home for children which is 
licensed by the State in which it is situated or has been 
approved, by the agency of such State having responsibility for 
licensing homes of this type, as meeting the standards 
established for such licensing; and (2) the term ``child-care 
institution'' means a private child-care institution, or a 
public child-care institution which accommodates no more than 
twenty-five children, which is licensed by the State in which 
it is situated or has been approved, by the agency of such 
State responsible for licensing or approval of institutions of 
this type, as meeting the standards established for such 
licensing, but the term shall not include detention facilities, 
forestry camps, training schools, or any other facility 
operated primarily for the detention of children who are 
determined to be delinquent, except, in the case of a child who 
has attained 18 years of age, the term shall include a 
supervised setting in which the individual is living 
independently, in accordance with such conditions as the 
Secretary shall establish in regulations.

           *       *       *       *       *       *       *

                      ADOPTION ASSISTANCE PROGRAM

    Sec.  473. (a)(1)(A) Each State having a plan approved 
under this part shall enter into adoption assistance agreements 
(as defined in section 475(3)) with the adoptive parents of 
children with special needs.

           *       *       *       *       *       *       *

    (2)(A) For purposes of paragraph (1)(B)(ii), a child meets 
the requirements of this paragraph if the child--
          [(i)(I)(aa) was removed from the home of a relative 
        specified in section 406(a) (as in effect on July 16, 
        1996) and placed in foster care in accordance with a 
        voluntary placement agreement with respect to which 
        Federal payments are provided under section 474 (or 
        section 403, as such section was in effect on July 16, 
        1996), or in accordance with a judicial determination 
        to the effect that continuation in the home would be 
        contrary to the welfare of the child; and
          [(bb) met the requirements of section 472(a)(3) with 
        respect to the home referred to in item (aa) of this 
        subclause
          [(II) meets all of the requirements of title XVI with 
        respect to eligibility for supplemental security income 
        benefits; or
          [(III) is a child whose costs in a foster family home 
        or child-care institution are covered by the foster 
        care maintenance payments being made with respect to 
        the minor parent of the child as provided in section 
        475(4)(B); and
          [(ii) has been determined by the State, pursuant to 
        subsection (c) of this section, to be a child with 
        special needs.]
          (i)(I) at the time of termination of parental rights 
        was in the care of a public or licensed private child 
        placement agency or Indian tribal organization pursuant 
        to a voluntary placement agreement, relinquishment, or 
        involuntary removal of the child from the home, and the 
        State has determined, pursuant to criterion or criteria 
        established by the State (which may, but need not, 
        include a judicial determination), that continuation in 
        the home would be contrary to the safety or welfare of 
        such child;
          (II) meets all medical or disability requirements of 
        title XVI with respect to eligibility for supplemental 
        security income benefits; or
          (III) was residing in a foster family home or child 
        care institution with the child's minor parent, 
        provided that the child's minor parent was in such 
        foster family home or child care institution pursuant 
        to a voluntary placement agreement, relinquishment, or 
        involuntary removal of the child from the home, and the 
        State has determined, pursuant to criterion or criteria 
        established by the State (which may, but need not, 
        include judicial determination), that continuation in 
        the home would be contrary to the safety or welfare of 
        such child; and
          (ii) has been determined by the State, pursuant to 
        subsection (c), to be a child with special needs.
    (B) Section 472(a)(4) shall apply for purposes of 
subparagraph (A) of this paragraph, in any case in which the 
child is an alien described in such section.
    [(C) A child shall be treated as meeting the requirements 
of this paragraph for the purpose of paragraph (1)(B)(ii) if 
the child--
          [(i) meets the requirements of subparagraph (A)(ii);
          [(ii) was determined eligible for adoption assistance 
        payments under this part with respect to a prior 
        adoption;
          [(iii) is available for adoption because--
                  [(I) the prior adoption has been dissolved, 
                and the parental rights of the adoptive parents 
                have been terminated; or
                  [(II) the child's adoptive parents have died; 
                and
                  [(iv) fails to meet the requirements of 
                subparagraph (A) but would meet such 
                requirements if--
                  [(I) the child were treated as if the child 
                were in the same financial and other 
                circumstances the child was in the last time 
                the child was determined eligible for adoption 
                assistance payments under this part; and
                  [(II) the prior adoption were treated as 
                never having occurred.]
    (C) A child who meets the requirements of subparagraph 
(A)(ii), who was determined eligible for adoption assistance 
payments under this part with respect to a prior adoption (or 
who would have been determined eligible for such payments had 
the Adoption and Safe Families Act of 1997 been in effect at 
the time that such determination would have been made), and who 
is available for adoption because the prior adoption has been 
dissolved and the parental rights of the adoptive parents have 
been terminated or because the child's adoptive parents have 
died, shall be treated as meeting the requirements of this 
paragraph for purposes of paragraph (1)(B)(ii).
    (3) The amount of the payments to be made in any case under 
clauses (i) and (ii) of paragraph (1)(B) shall be determined 
through agreement between the adoptive parents and the State or 
local agency administering the program under this section, 
which shall take into consideration the circumstances of the 
adopting parents and the needs of the child being adopted, and 
may be readjusted periodically, with the concurrence of the 
adopting parents (which may be specified in the adoption 
assistance agreement), depending upon changes in such 
circumstances. However, in no case may the amount of the 
adoption assistance payment made under clause (ii) of paragraph 
(1)(B) exceed the foster care maintenance payment which would 
have been paid during the period if the child with respect to 
whom the adoption assistance payment is made had been in a 
foster family home.
    [(4) Notwithstanding the preceding paragraph, (A) no 
payment may be made to parents with respect to any child who 
has attained the age of eighteen (or, where the State 
determines that the child has a mental or physical handicap 
which warrants the continuation of assistance, the age of 
twenty-one), and (B) no payment may be made to parents with 
respect to any child if the State determines that the parents 
are no longer legally responsible for the support of the child 
or if the State determines that the child is no longer 
receiving any support from such parents. Parents who have been 
receiving adoption assistance payments under this section shall 
keep the State or local agency administering the program under 
this section informed of circumstances which would, pursuant to 
this subsection, make them ineligible for such assistance 
payments, or eligible for assistance payments in a different 
amount.]
    (4)(A) Notwithstanding any other provision of this section, 
a payment may not be made pursuant to this section to parents 
or relative guardians with respect to a child--
          (i) who has attained--
                  (I) 18 years of age, or such greater age as 
                the State may elect under section 
                475(8)(B)(iii); or
                  (II) 21 years of age, if the State determines 
                that the child has a mental or physical 
                handicap which warrants the continuation of 
                assistance;
          (ii) who has not attained 18 years of age, if the 
        State determines that the parents or relative 
        guardians, as the case may be, are no longer legally 
        responsible for the support of the child; or
          (iii) if the State determines that the child is no 
        longer receiving any support from the parents or 
        relative guardians, as the case may be.
    (B) Parents or relative guardians who have been receiving 
adoption assistance payments or relative guardianship 
assistance payments under this section shall keep the State or 
local agency administering the program under this section 
informed of circumstances which would, pursuant to this 
subsection, make them ineligible for the payments, or eligible 
for the payments in a different amount.
    (6)(A) For purposes of paragraph (1)(B)(i), the term 
``nonrecurring adoption expenses'' means reasonable and 
necessary adoption fees, court costs, attorney fees, and other 
expenses which are directly related to the legal adoption of a 
child with special needs and which are not incurred in 
violation of State or Federal law.
    (B) A State's payment of nonrecurring adoption expenses 
under an adoption assistance agreement shall be treated as an 
expenditure made for the proper and efficient administration of 
the State plan for purposes of section 474(a)(3)(E).
    (7)(A) Notwithstanding any other provision of this 
subsection, no payment may be made to parents with respect to 
any child that--
          (i) would be considered a child with special needs 
        under subsection (c);
          (ii) is not a citizen or resident of the United 
        States; and
          (iii) was adopted outside of the United States or was 
        brought into the United States for the purpose of being 
        adopted.
    (B) Subparagraph (A) shall not be construed as prohibiting 
payments under this part for a child described in subparagraph 
(A) that is placed in foster care subsequent to the failure, as 
determined by the State, of the initial adoption of such child 
by the parents described in such subparagraph.
    (8) A State shall spend an amount equal to the amount of 
savings (if any) in State expenditures under this part 
resulting from the application of paragraph (2) on and after 
the effective date of the amendments to such paragraph made by 
section 102(a) of the Improved Adoption Incentives and Relative 
Guardianship Support Act of 2008 to provide to children or 
families any service (including post-adoption services) that 
may be provided under this part or part B.
    (9) A child on whose behalf relative guardianship 
assistance payments have been made under section 473(d) and who 
pursuant to subsection (c) has been determined to be a child 
with special needs, shall be eligible for adoption assistance 
as if no relative guardianship assistance agreement or payments 
had been made. The State shall make payments of nonrecurring 
adoption expenses under this section to the adoptive parents of 
such a child.
    (b)(1) For purposes of title XIX, any child who is 
described in paragraph (3) is deemed to be a dependent child as 
defined in section 406 (as in effect as of July 16, 1996) and 
deemed to be a recipient of aid to families with dependent 
children under part A of this title (as so in effect) in the 
State where such child resides.
    (2) For purposes of title XX, any child who is described in 
paragraph (3) is deemed to be a minor child in a needy family 
under a State program funded under part A of this title and 
deemed to be a recipient of assistance under such part.
    (3) A child described in this paragraph is any child--
          (A)(i) who is a child described in subsection (a)(2), 
        and
          (ii) with respect to whom an adoption assistance 
        agreement is in effect under this section (whether or 
        not adoption assistance payments are provided under the 
        agreement or are being made under this section), 
        including any such child who has been placed for 
        adoption in accordance with applicable State and local 
        law (whether or not an interlocutory or other judicial 
        decree of adoption has been issued), [or]
          (B) with respect to whom foster care maintenance 
        payments are being made under section 472[.] , or
          (C) with respect to whom relative guardianship 
        assistance payments are being made under subsection 
        (d).
    (4) For purposes of paragraphs (1) and (2), a child whose 
costs in a foster family home or child-care institution are 
covered by the foster care maintenance payments being made with 
respect to the child's minor parent, as provided in section 
475(4)(B), shall be considered a child with respect to whom 
foster care maintenance payments are being made under section 
472.
    [(c) For purposes of this section, a child shall not be 
considered a child with special needs unless--
          [(1) the State has determined that the child cannot 
        or should not be returned to the home of his parents; 
        and
          [(2) the State had first determined (A) that there 
        exists with respect to the child a specific factor or 
        condition (such as his ethnic background, age, or 
        membership in a minority or sibling group, or the 
        presence of factors such as medical conditions or 
        physical, mental, or emotional handicaps) because of 
        which it is reasonable to conclude that such child 
        cannot be placed with adoptive parents without 
        providing adoption assistance under this section or 
        medical assistance under title XIX, and (B) that, 
        except where it would be against the best interests of 
        the child because of such factors as the existence of 
        significant emotional ties with prospective adoptive 
        parents while in the care of such parents as a foster 
        child, a reasonable, but unsuccessful, effort has been 
        made to place the child with appropriate adoptive 
        parents without providing adoption assistance under 
        this section or medical assistance under title XIX.]
    (c) For purposes of this section, a child shall not be 
considered a child with special needs unless--
          (1) the State has determined, pursuant to a criterion 
        or criteria established by the State (which may, but 
        need not, include a judicial determination), that the 
        child cannot or should not be returned to the home of 
        his parents; and
          (2) the State has determined--
                  (A) that there exists with respect to the 
                child a specific factor or condition (such as 
                ethnic background, age, or membership in a 
                minority or sibling group, or the presence of 
                factors such as medical conditions or physical, 
                mental, or emotional handicaps) because of 
                which it is reasonable to conclude that the 
                child cannot be placed with adoptive parents 
                without providing adoption assistance under 
                this section and medical assistance under title 
                XIX; and
                  (B) that except where it would be against the 
                best interests of the child because of such 
                factors as the existence of significant 
                emotional ties with prospective adoptive 
                parents while in the care of such parents as a 
                foster child, a reasonable, but unsuccessful, 
                effort has been made to place the child with 
                appropriate adoptive parents without providing 
                adoption assistance under this section or 
                medical assistance under title XIX.
A child who meets all medical or disability requirements of 
title XVI with respect to eligibility for supplemental security 
income benefits shall be deemed to be a child for whom the 
determination required by subparagraph (A) of paragraph (2) has 
been made.
    (d) Relative Guardianship Assistance Payments for 
Children.--
          (1) Relative guardianship assistance agreement.--
                  (A) In general--In order to receive payments 
                under section 474(a)(5), a State shall--
                          (i) negotiate and enter into a 
                        written, binding relative guardianship 
                        assistance agreement with the relative 
                        guardian of a child who meets the 
                        requirements of paragraph (3)(B); and
                          (ii) provide the relative guardian 
                        with a copy of the agreement.
                  (B) Minimum requirements.--The agreement 
                shall specify, at a minimum--
                          (i) the amount of, and manner in 
                        which, each relative guardianship 
                        assistance payment will be provided 
                        under the agreement;
                          (ii) the additional services and 
                        assistance that the child and relative 
                        guardian will be eligible for under the 
                        agreement;
                          (iii) the procedure by which the 
                        relative guardian may apply for 
                        additional services as needed, provided 
                        the agency and relative guardian agree 
                        on the additional services as specified 
                        in the agreement; and
                          (iv) that the State will pay up to 
                        $2,000 of nonrecurring expenses 
                        associated with obtaining legal 
                        guardianship of the child.
                  (C) Interstate application.--The agreement 
                shall provide that the agreement shall remain 
                in effect without regard to the State residency 
                of the relative guardian.
                  (D) Federal reimbursement of non-recurring 
                expenses.--A State's payment of nonrecurring 
                guardianship expenses under a relative 
                guardianship assistance agreement in accordance 
                with subparagraph (B) (iv) shall be treated as 
                a direct expenditure made for the proper and 
                efficient administration of the State plan for 
                purposes of section 474(a)(3)(E).
          (2) Relative guardianship assistance payment.--
                  (A) In general.--Subject to subparagraphs (B) 
                and (C), the relative guardianship assistance 
                payment shall be based on consideration of the 
                circumstances of the relative guardian and the 
                needs of the child.
                  (B) Minimum and maximum payment.--A relative 
                guardianship assistance payment shall not be 
                less than the adoption assistance payment the 
                State would have made on behalf of the child 
                under an adoption assistance agreement entered 
                into under subsection (a) and shall not exceed 
                the foster care maintenance payment which would 
                have been paid if the child had remained in a 
                foster family home.
                  (C) Periodic adjustments.--A relative 
                guardianship assistance payment may be 
                readjusted periodically, with the concurrence 
                of the relative guardian (which may be 
                specified in the relative guardianship 
                assistance agreement), depending upon changes 
                in the circumstances of the relative guardian 
                and the needs of the child.
          (3) Child's eligibility for a relative guardianship 
        assistance payment.--
                  (A) In general.--A child is eligible for a 
                relative guardianship assistance payment under 
                this subsection if the State agency determines 
                the following:
                          (i) The child--
                                  (I) has been removed from his 
                                or her home pursuant to a 
                                voluntary placement agreement 
                                or as a result of a judicial 
                                determination to the effect 
                                that continuation in the home 
                                would be contrary to the 
                                welfare of the child; and
                                  (II) in the month prior to 
                                the establishment of the legal 
                                guardianship, is eligible for 
                                foster care maintenance 
                                payments under section 472.
                          (ii)(I) Being returned home or 
                        adopted are not appropriate permanency 
                        options for the child.
                          (II) In the case of a child who has 
                        been removed from the home for reasons 
                        primarily associated with parental 
                        substance abuse and addiction, attempts 
                        to engage the family in residential, 
                        comprehensive family treatment programs 
                        are inappropriate or have been 
                        unsuccessful or such programs are 
                        unavailable.
                          (iii) The child demonstrates a strong 
                        attachment to the relative guardian and 
                        the relative guardian has a strong 
                        commitment to caring permanently for 
                        the child.
                          (iv) The relative guardian satisfies 
                        the requirements of subparagraph (B).
                          (v) With respect to a child who has 
                        attained 14 years of age, the child has 
                        been consulted regarding the relative 
                        guardianship arrangement.
                  (B) Requirements for relative guardians.--A 
                relative guardian satisfies the requirements of 
                this subparagraph if the relative--
                          (i) is the grandparent or other 
                        relative of a child on whose behalf 
                        relative guardianship assistance 
                        payments are to be made;
                          (ii) has satisfied the background 
                        checks required under section 
                        471(a)(20);
                          (iii) has met the State's 
                        requirements established under section 
                        471(a)(10) to be a foster family home; 
                        and
                          (iv) assumes legal guardianship of 
                        such child and commits to caring for 
                        the child on a permanent basis.
                  (C) Treatment of siblings.--With respect to a 
                child described in subparagraph (A) whose 
                sibling or siblings are not so described--
                          (i) the child and any sibling of the 
                        child shall be placed in the same 
                        relative guardianship arrangement 
                        unless it can be demonstrated that it 
                        is inappropriate to do so; and
                          (ii) relative guardianship assistance 
                        payments may be paid for the child and 
                        each sibling so placed.

                      ADOPTION INCENTIVE PAYMENTS

    Sec. 473A. (a) Grant Authority.--Subject to the 
availability of such amounts as may be provided in advance in 
appropriations Acts for this purpose, the Secretary shall make 
a grant to each State that is an incentive-eligible State for a 
fiscal year in an amount equal to the adoption incentive 
payment payable to the State under this section for the fiscal 
year, which shall be payable in the immediately succeeding 
fiscal year.
    (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)(A) 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; [or]
                  (B) the number of older child adoptions in 
                the State during the fiscal year exceeds the 
                base number of older child adoptions for the 
                State for the fiscal year; or
                  (C) the State's foster child adoption rate 
                for the fiscal year exceeds the highest ever 
                foster child adoption rate determined for the 
                State;
          (3) the State is in compliance with subsection (c) 
        for the fiscal year;
          (4) [in the case of fiscal years 2001 through 2007,] 
        the State provides health insurance coverage to any 
        child with special needs (as determined under section 
        473(c)) for whom there is in effect an adoption 
        assistance agreement between a State and an adoptive 
        parent or parents; and
          (5) the fiscal year is any of fiscal years [1998 
        through 2007]. 2008 through 2012.
    (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)--
                  (A) for fiscal years 1995 through 1997 (or, 
                if the first fiscal year for which the State 
                seeks a grant under this section is after 
                fiscal year 1998, the fiscal year that precedes 
                such first fiscal year); and
                  (B) for each succeeding fiscal year that 
                precedes the fiscal year.
          (2) Determination of numbers of adoptions based on 
        afcars data.--The Secretary shall determine the numbers 
        of foster child adoptions, of special needs adoptions 
        that are not older child adoptions, and of older child 
        adoptions in a State during [each of fiscal years 2002 
        through 2007] a fiscal year, and the foster child 
        adoption rate for the State for the fiscal year, 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 and approved by 
        the Secretary by August 1 of the succeeding fiscal 
        year.
          (3) No waiver of afcars requirements.--This section 
        shall not be construed to alter or affect any 
        requirement of section 479 or of any regulation 
        prescribed under such section with respect to reporting 
        of data by States, or to waive any penalty for failure 
        to comply with such a requirement.
    (d) Adoption Incentive Payment--
          (1) In general.--Except as provided in [paragraph 
        (2)] paragraphs (2) and (3), 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 the 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;
                  (B) [2,000] $3,000 multiplied by the amount 
                (if any) by which the number of special needs 
                adoptions that are not older child adoptions in 
                the State during the fiscal year exceeds the 
                base number of special needs adoptions that are 
                not older child adoptions for the State for the 
                fiscal year; and
                  (C) [4,000] $8,000 multiplied by the amount 
                (if any) by which the number of older child 
                adoptions in the State during the fiscal year 
                exceeds the base number of older child 
                adoptions for the State for the fiscal year.
          (2) Pro rata adjustment if insufficient funds 
        available.--For any fiscal year, if the total amount of 
        adoption incentive payments otherwise payable under 
        [this section] paragraph (1) for a fiscal year exceeds 
        the amount appropriated pursuant to subsection (h) for 
        the fiscal year, the amount of the adoption incentive 
        payment payable to each State under [this section] 
        paragraph (1) 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] paragraph (1) for 
                the fiscal year; multiplied by
                  (B) the percentage represented by the amount 
                so appropriated for the fiscal year, divided by 
                the total amount of adoption incentive payments 
                otherwise payable under [this section] 
                paragraph (1) for the fiscal year.
          (3) Increased incentive payment for exceeding the 
        highest ever foster child adoption rate.--
                  (A) In general.--If--
                                  (i) for fiscal year 2009 or 
                                any fiscal year thereafter the 
                                total amount of adoption 
                                incentive payments payable 
                                under paragraph (1) is less 
                                than the amount appropriated 
                                under subsection (h) for the 
                                fiscal year; and
                                  (ii) a State's foster child 
                                adoption rate for that fiscal 
                                year exceeds the highest ever 
                                foster child adoption rate 
                                determined for the State,
                then the adoption incentive payment otherwise 
                determined under paragraph (1) for the State 
                shall be increased, subject to subparagraph 
                (C), by the amount determined for the State 
                under subparagraph (B).
                  (B) Amount of increase.--For purposes of 
                subparagraph (A), the amount determined under 
                this subparagraph with respect to a State and a 
                fiscal year is the amount equal to the product 
                of--
                          (i) $1,000; and
                          (ii) the excess of--
                                  (I) the number of foster 
                                child adoptions in the State in 
                                the fiscal year; over
                                  (II) the product (rounded to 
                                the nearest whole number) of--
                                          (aa) the highest ever 
                                        foster child adoption 
                                        rate determined for the 
                                        State; and
                                          (bb) the number of 
                                        children in foster care 
                                        under the supervision 
                                        of the State on the 
                                        last day of the 
                                        preceding fiscal year.
                  (C) Pro rata adjustment if insufficient funds 
                available.--For any fiscal year, if the total 
                amount of increases in adoption incentive 
                payments otherwise payable under this paragraph 
                for a fiscal year exceeds the amount available 
                for such increases for the fiscal year, the 
                amount of the increase payable to each State 
                under this paragraph for the fiscal year shall 
                be--
                          (i) the amount of the increase that 
                        would otherwise be payable to the State 
                        under this paragraph for the fiscal 
                        year; multiplied by
                          (ii) the percentage represented by 
                        the amount so available for the fiscal 
                        year, divided by the total amount of 
                        increases otherwise payable under this 
                        paragraph for the fiscal year.
    (e) [2-Year] 24-month 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] for a period of 24 months beginning 
with the month in which the payments are made.
    (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 and relative navigator and 
support 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 sections 424, 
434, and 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--
                  [(A) with respect to fiscal year 2003, the 
                number of foster child adoptions in the State 
                in fiscal year 2002; and
                  [(B) with respect to any subsequent fiscal 
                year, the number of foster child adoptions in 
                the State in the fiscal year for which the 
                number is the greatest in the period that 
                begins with fiscal year 2002 and ends with the 
                fiscal year preceding that subsequent fiscal 
                year.]
          means, with respect to any fiscal year, the number of 
        foster child adoptions in the State in fiscal year 
        2007.
          (4) Base number of special needs adoptions that are 
        not older child adoptions.--The term ``base number of 
        special needs adoptions that are not older child 
        adoptions for a State [means--
                  [(A) with respect to fiscal year 2003, the 
                number of special needs adoptions that are not 
                older child adoptions in the State in fiscal 
                year 2002; and
                  [(B) with respect to any subsequent fiscal 
                year, the number of special needs adoptions 
                that are not older child adoptions in the State 
                in the fiscal year for which the number is the 
                greatest in the period that begins with fiscal 
                year 2002 and ends with the fiscal year 
                preceding that subsequent fiscal year.] means, 
                with respect to any fiscal year, the number of 
                special needs adoptions that are not older 
                child adoptions in the State in fiscal year 
                2007.
                  (5) Base number of older child adoptions.--
                The term ``base number of older child adoptions 
                for a State'' [means--
                  [(A) with respect to fiscal year 2003, the 
                number of older child adoptions in the State in 
                fiscal year 2002; and
                  [(B) with respect to any subsequent fiscal 
                year, the number of older child adoptions in 
                the State in the fiscal year for which the 
                number is the greatest in the period that 
                begins with fiscal year 2002 and ends with the 
                fiscal year preceding that subsequent fiscal 
                year.] means, with respect to any fiscal year, 
                the number of older child adoptions in the 
                State in fiscal year 2007.
          (6) Older child adoptions.--The term ``older child 
        adoptions'' means the final adoption of a child who has 
        attained 9 years of age if--
                  (A) at the time of the adoptive placement, 
                the child was in foster care under the 
                supervision of the State; or (B) an adoption 
                assistance agreement was in effect under 
                section 473 with respect to the child.
          (7) Highest ever foster child adoption rate.--The 
        term ``highest ever foster child adoption rate'' means, 
        with respect to any fiscal year, the highest foster 
        child adoption rate determined for any fiscal year in 
        the period that begins with fiscal year 1998 and ends 
        with the preceding fiscal year.
          (8) Foster child adoption rate.--The term ``foster 
        child adoption rate'' means, with respect to a State 
        and a fiscal year, the percentage determined by 
        dividing--
                  (A) the number of foster child adoptions 
                finalized in the State during the fiscal year; 
                by
                  (B) the number of children in foster care 
                under the supervision of the State on the last 
                day of the preceding fiscal year.
          (9) Base number of relative guardianship assistance 
        agreements.--The term ``base number of relative 
        guardianship assistance agreements'' means, with 
        respect to a fiscal year, the number of relative 
        guardianship assistance agreements entered into under 
        section 473(d) in the State in the fiscal year for 
        which the number is the greatest in the period that 
        begins with the first fiscal year in which the State 
        establishes a relative guardianship assistance program 
        under section 471(a)(1)(B) and ends with the preceding 
        fiscal year.
    (h) Limitations on Authorization of Appropriations.----
          (1) In general.--For grants under subsection (a), 
        there are authorized to be appropriated to the 
        Secretary--
                  (A) $20,000,000 for fiscal year 1999;
                  (B) $43,000,000 for fiscal year 2000;
                  (C) $20,000,000 for each of fiscal years 2001 
                through 2003, and
                  (D) $43,000,000 for each of fiscal years 2004 
                through [2008] 2013
          (2) Availability.--Amounts appropriated under 
        paragraph (1), or under any other law for grants under 
        subsection (a), are authorized to remain available 
        until expended, but not after fiscal year [2008] 2013.

           *       *       *       *       *       *       *

    (j) Incentive payments for relative guardianship 
placements.--
          (1) Use of unawarded adoption incentive funds to make 
        relative guardianship incentive payments.--If in any 
        fiscal year the total amount of adoption incentive 
        payments payable under subsection (d) are less than the 
        amount appropriated under subsection (h) for the fiscal 
        year, States that have established a relative 
        guardianship assistance program under section 
        471(a)(1)(B) shall be awarded, in addition to any 
        adoption incentive payments made to such States under 
        subsection (d), relative guardianship incentive 
        payments from the portion of such amount that is in 
        excess of the total amount of adoption incentive 
        payments to be made under such subsection for such 
        fiscal year.
          (2) Payment amount.--Subject to paragraph (3), the 
        relative guardianship incentive payment payable to a 
        State for a fiscal year under this subsection shall be 
        equal to--
                  (A) in the case of the first fiscal year in 
                which the State establishes a relative 
                guardianship assistance program under section 
                471(a)(1)(B), the product of $1,000 and the 
                number of relative guardianship assistance 
                agreements entered into under section 473(d) in 
                the State during that fiscal year; and
                  (B) in the case of any succeeding fiscal 
                year, the product of $1,000 and the amount (if 
                any) by which the number of relative 
                guardianship assistance agreements entered into 
                under section 473(d) in the State for the 
                fiscal year exceed the base number of relative 
                guardianship assistance agreements in the State 
                for the fiscal year.
          (3) Pro rata adjustment if insufficient funds 
        available.--For any fiscal year, if the total amount of 
        relative guardianship incentive payments otherwise 
        payable under this subsection for a fiscal year exceeds 
        the amount available for such payments for the fiscal 
        year, the amount of the relative guardianship incentive 
        payment payable to each State under this subsection for 
        the fiscal year shall be--
                  (A) the amount of the relative guardianship 
                incentive payment that would otherwise be 
                payable to the State under this subsection for 
                the fiscal year; multiplied by
                  (B) the percentage represented by the amount 
                so available for the fiscal year, divided by 
                the total amount of relative guardianship 
                incentive payments otherwise payable under this 
                section for the fiscal year.

           *       *       *       *       *       *       *

                PAYMENTS TO STATES; ALLOTMENTS TO STATES

    Sec. 474. (a) For each quarter beginning after September 
30, 1980, each State which has a plan approved under this part 
shall be entitled to a payment equal to the sum of--

           *       *       *       *       *       *       *

          (3) subject to section 472(i) an amount equal to the 
        sum of the following proportions of the total amounts 
        expended during such quarter as found necessary by the 
        Secretary for the provision of child placement services 
        and for the proper and efficient administration of the 
        State plan--

           *       *       *       *       *       *       *

                  (B) 75 percent of so much of such 
                expenditures (including travel and per diem 
                expenses) are for the short-term training of 
                current or prospective [foster or adoptive 
                parents and the members of the staff of State-
                licensed or State-approved child care 
                institutions providing care to foster and 
                adopted children receiving assistance under 
                this part, in ways that increase the ability of 
                such current or prospective parents, staff 
                members, and institutions to provide support 
                and assistance to foster and adopted children,] 
                foster parents, adoptive parents, or relative 
                guardians and the members of the staff of 
                State-licensed or State-approved child care 
                institutions providing care to foster children, 
                adoptive children, or children living with a 
                relative guardian, who are receiving assistance 
                under this part, in ways that increase the 
                ability of such current or prospective parents, 
                relative guardians, staff members, and 
                institutions to provide support and assistance 
                to foster children, adoptive children, or 
                children living with a relative guardian, 
                whether incurred directly by the State or by 
                contract,

           *       *       *       *       *       *       *

          (4) an amount equal to the amount (if any) by which--
                  (A) the lesser of--

           *       *       *       *       *       *       *

                  (B) the total amount of any penalties 
                assessed against the State under section 477(e) 
                during the fiscal year in which the quarter 
                occurs[.]; plus
          (5) an amount equal to the Federal medical assistance 
        percentage (as defined in section 1905(b)) of the total 
        amount expended during such quarter as relative 
        guardianship assistance payments under section 473(d) 
        pursuant to relative guardianship assistance 
        agreements.

           *       *       *       *       *       *       *

                              DEFINITIONS

          Sec. 475. As used in this part or part B of this 
        title:
          (1) The term ``case plan'' means a written document 
        which includes at least the following:

           *       *       *       *       *       *       *

                  (C) To the extent available and accessible, 
                the health and education records of the child, 
                including--
                          (i) the names and addresses of the 
                        child's health and educational 
                        providers;
                          (ii) the child's grade level 
                        performance;
                          (iii) the child's school record;
                          [(iv) assurances that the child's 
                        placement in foster care takes into 
                        account proximity to the school in 
                        which the child is enrolled at the time 
                        of placement;]
                          [(v)](iv) a record of the child's 
                        immunizations;
                          [(vi)](v) the child's known medical 
                        problems;
                          [(vii)](vi) the child's medications; 
                        and
                          [(viii)](vii) any other relevant 
                        health and education information 
                        concerning the child determined to be 
                        appropriate by the State agency.

           *       *       *       *       *       *       *

                  (F) In the case of a child with respect to 
                whom the permanency plan is placement with a 
                relative and receipt of relative guardianship 
                assistance payments under section 473(d), a 
                description of--
                          (i) the steps that the agency has 
                        taken to determine that it is not 
                        appropriate for the child to be 
                        returned home or adopted;
                          (ii) the reasons why a permanent 
                        placement with a fit and willing 
                        relative through a relative 
                        guardianship assistance arrangement is 
                        in the child's best interests;
                          (iii) the ways in which the child 
                        meets the eligibility requirements for 
                        a relative guardianship assistance 
                        payment;
                          (iv) the efforts the agency has made 
                        to discuss adoption by the child's 
                        relative guardian who is to receive 
                        such payments as a more permanent 
                        alternative to legal guardianship and, 
                        in the case of such a relative guardian 
                        who has chosen not to pursue adoption, 
                        documentation of the reasons therefor; 
                        and
                          (v) the efforts made by the State 
                        agency to secure the consent of the 
                        child's parent or parents to the 
                        relative guardianship assistance 
                        arrangement, or the reasons why the 
                        efforts were not made.
                  (G) A plan for ensuring the educational 
                stability of the child while in foster care, 
                including--
                          (i) assurances that the placement of 
                        the child in foster care takes into 
                        account the appropriateness of the 
                        current educational setting and the 
                        proximity to the school in which the 
                        child is enrolled at the time of 
                        placement; and
                          (ii)(I) an assurance that the State 
                        agency has coordinated with appropriate 
                        local educational agencies (as defined 
                        under section 9101 of the Elementary 
                        and Secondary Education Act of 1965) to 
                        ensure that the child remains in the 
                        school in which the child is enrolled 
                        at the time of placement; or
                          (II) if remaining in such school is 
                        not in the best interests of the child, 
                        assurances by the State agency and the 
                        local educational agencies to provide 
                        immediate and appropriate enrollment in 
                        a new school, with all of the 
                        educational records of the child 
                        provided to the school.
          (2) in the 1st sentence of paragraph (4)(A)--

           *       *       *       *       *       *       *

          (4)(A) The term ``foster care maintenance payments'' 
        means payments to cover the cost of (and the cost of 
        providing) food, clothing, shelter, daily supervision, 
        school supplies, a child's personal incidentals, 
        liability insurance with respect to a child, [and 
        reasonable] reasonable travel to the child's home for 
        visitation. In the case of institutional care, such 
        term shall include the reasonable costs of 
        administration and operation of such institution as are 
        necessarily required to provide the items described in 
        the preceding sentence, and reasonable travel for the 
        child to remain in the school in which the child is 
        enrolled at the time of placement.

           *       *       *       *       *       *       *

          (5) The term ``case review system'' means a procedure 
        for assuring that--
                  (A) each child has a case plan designed to 
                achieve placement in a safe setting that is the 
                least restrictive (most family like) and most 
                appropriate setting available and in close 
                proximity to the parents' home, consistent with 
                the best interest and special needs of the 
                child, which--

           *       *       *       *       *       *       *

                  (F) a child shall be considered to have 
                entered foster care on the earlier of--
                          (i) the date of the first judicial 
                        finding that the child has been 
                        subjected to child abuse or neglect; or
                          (ii) the date that is 60 days after 
                        the date on which the child is removed 
                        from the home; [and]
                  (G) the foster parents (if any) of a child 
                and any preadoptive parent or 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 require that any 
                foster parent, preadoptive parent, or relative 
                providing care for the child be made a party to 
                such a review or hearing solely on the basis of 
                such notice and opportunity to be heard[.]; and
                  (H) during the 90-day period immediately 
                prior to the date of the legal emancipation of 
                a child, whether during that period foster care 
                maintenance payments are being made on the 
                child's behalf or the child is receiving 
                benefits or services under section 477, a 
                caseworker on the staff of the State agency, 
                and, as appropriate, other representatives of 
                the child provide the child with assistance and 
                support in developing a transition plan that is 
                personalized at the direction of the child, 
                includes specific options on housing, health 
                insurance, education, local opportunities for 
                mentors and continuing support services, and 
                work force supports and employment services, 
                and is as detailed as the child may elect.

           *       *       *       *       *       *       *

          (8)(A) Subject to subparagraph (B), the term 
        ``child'' means an individual who has not attained 18 
        years of age.
                  (B) At the option of a State, the term shall 
                include an individual--
                          (i)(I) who is in foster care under 
                        the responsibility of the State;
                                  (II) with respect to whom an 
                                adoption assistance agreement 
                                is in effect under section 473 
                                if the child had attained 16 
                                years of age before the 
                                agreement became effective; or
                                  (III) with respect to whom a 
                                relative guardianship 
                                assistance agreement is in 
                                effect under section 473(d) if 
                                the child had attained 16 years 
                                of age before the agreement 
                                became effective;
                          (ii) who has attained 18 years of 
                        age;
                          (iii) who has not attained 19, 20, or 
                        21 years of age, as the State may 
                        elect; and
                          (iv) who--
                                  (I) is completing secondary 
                                education or a program leading 
                                to an equivalent credential;
                                  (II) is enrolled in an 
                                institution which provides 
                                post-secondary or vocational 
                                education;
                                  (III) is participating in a 
                                program or activity designed to 
                                promote, or remove barriers to, 
                                employment;
                                  (IV) is employed for at least 
                                80 hours per month; or
                                  (V) the State determines is 
                                particularly vulnerable or a 
                                high-risk individual.

            JOHN H. CHAFEE FOSTER CARE INDEPENDENCE PROGRAM

    Sec. 477. (a) Purpose.--The purpose of this section is to 
provide States with flexible funding that will enable programs 
to be designed and conducted--
          (1) to identify children who are likely to remain in 
        foster care until 18 years of age and to help these 
        children make the transition to self-sufficiency by 
        providing services such as assistance in obtaining a 
        high school diploma, career exploration, vocational 
        training, job placement and retention, training in 
        daily living skills, training in budgeting and 
        financial management skills, substance abuse 
        prevention, and preventive health activities (including 
        smoking avoidance, nutrition education, and pregnancy 
        prevention);

           *       *       *       *       *       *       *

          (5) to provide financial, housing, counseling, 
        employment, education, and other appropriate support 
        and services to former foster care recipients between 
        18 and 21 years of age to complement their own efforts 
        to achieve self-sufficiency and to assure that program 
        participants recognize and accept their personal 
        responsibility for preparing for and then making the 
        transition from adolescence to adulthood; [and]
          (6) to make available vouchers for education and 
        training, including postsecondary training and 
        education, to youths who have aged out of foster 
        care[.]; and
          (7) to provide the services referred to in this 
        subsection to children who, after attaining 16 years of 
        age, have left foster care for relative guardianship or 
        adoption.
    (b) Applications.--
          (1) In general.--A State may apply for funds from its 
        allotment under subsection (c) for a period of five 
        consecutive fiscal years by submitting to the 
        Secretary, in writing, a plan that meets the 
        requirements of paragraph (2) and the certifications 
        required by paragraph (3) with respect to the plan.

           *       *       *       *       *       *       *

          (3) Certifications.--The certifications required by 
        this paragraph with respect to a plan are the 
        following:
                  (A) A certification by the chief executive 
                officer of the State that the State will 
                provide assistance and services to children who 
                have left foster care because they have 
                attained 18 years of age, and who have not 
                attained 21 years of age.

           *       *       *       *       *       *       *

                  (G) A certification by the chief executive 
                officer of the State that each Indian tribe in 
                the State has been consulted about the programs 
                to be carried out under the plan; that there 
                have been efforts to coordinate the program 
                with such tribes; [and that] that benefits and 
                services under the programs will be made 
                available to Indian children in the State on 
                the same basis as to other children in the 
                State[.]; and that the State will negotiate in 
                good faith with any Indian tribe, tribal 
                organization, or tribal consortium in the State 
                that does not receive an allotment under 
                subsection (j)(4) for a fiscal year and that 
                requests to develop an agreement with the State 
                to administer, supervise, or oversee the 
                programs to be carried out under the plan with 
                respect to the Indian children who are eligible 
                for such programs and who are under the 
                authority of the tribe, organization, or 
                consortium and to receive from the State an 
                appropriate portion of the State allotment 
                under subsection (c) for the cost of such 
                administration, supervision, or oversight.

           *       *       *       *       *       *       *

    (i) Educational and Training Vouchers.--The following 
conditions shall apply to a State educational and training 
voucher program under this section:
          (1) Vouchers under the program may be available to 
        youths otherwise eligible for services under the State 
        program under this section.
          (2) For purposes of the voucher program, youths 
        adopted [from foster care after attaining age 16] or 
        entering relative guardianship from foster care after 
        attaining 16 years of age may be considered to be 
        youths otherwise eligible for services under the State 
        program under this section.

           *       *       *       *       *       *       *

    (j) Authority for an Indian Tribe, Tribal Organization, or 
Tribal Consortium To Receive an Allotment.--
          (1) In general.--An Indian tribe, tribal 
        organization, or tribal consortium with a plan approved 
        under section 479B, or which is receiving funding to 
        provide foster care under this part pursuant to a 
        cooperative agreement or contract with a State, may 
        apply for an allotment out of any funds authorized by 
        paragraph (1) or (2) (or both) of subsection (h).
          (2) Application.--A tribe, organization, or 
        consortium desiring an allotment under paragraph (1) 
        shall submit an application to the Secretary to 
        directly receive such allotment that includes a plan 
        which--
                  (A) satisfies such requirements of paragraphs 
                (2) and (3) of subsection (b) as the Secretary 
                determines are appropriate;
                  (B) contains a description of the tribe's, 
                organization's, or consortium's consultation 
                process regarding the programs to be carried 
                out under the plan with each State for which a 
                portion of an allotment under subsection (c) 
                would be redirected to the tribe, organization, 
                or consortium; and
                  (C) contains an explanation of the results of 
                such consultation, particularly with respect 
                to--
                                  (i) determining the 
                                eligibility for benefits and 
                                services of Indian children to 
                                be served under the programs to 
                                be carried out under the plan; 
                                and
                                  (ii) the process for 
                                consulting with the State in 
                                order to ensure the continuity 
                                of benefits and services for 
                                such children who will 
                                transition from receiving 
                                benefits and services under 
                                programs carried out under a 
                                State plan under subsection (b) 
                                (2) to receiving benefits and 
                                services under programs carried 
                                out under a plan under this 
                                subsection.
          (3) Payments.--The Secretary shall pay an Indian 
        tribe, tribal organization, or tribal consortium with 
        an application and plan approved under this subsection 
        from the allotment determined for the tribe, 
        organization, or consortium under paragraph (4) in the 
        same manner as is provided in section 474(a)(4) (and, 
        where requested, and if funds are appropriated, section 
        474(e)) with respect to a State, or in such other 
        manner as is determined appropriate by the Secretary, 
        except that in no case shall an Indian tribe, a tribal 
        organization, or a tribal consortium receive a lesser 
        proportion of such funds than a State is authorized to 
        receive under those sections.
          (4) Allotment.--From the amounts allotted to a State 
        under subsection (c) for a fiscal year, the Secretary 
        shall allot to each Indian tribe, tribal organization, 
        or tribal consortium with an application and plan 
        approved under this subsection for that fiscal year an 
        amount equal to the tribal foster care ratio determined 
        under paragraph (5) for the tribe, organization, or 
        consortium multiplied by the allotment amount of the 
        State within which the tribe, organization, or 
        consortium is located. The allotment determined under 
        this paragraph is deemed to be a part of the allotment 
        determined under section 477(c) for the State in which 
        the Indian tribal organization, or tribal consortium is 
        located.
          (5) Tribal foster care ratio.--For purposes of 
        paragraph (4), the tribal foster care ratio means, with 
        respect to an Indian tribe, tribal organization, or 
        tribal consortium, the ratio of--
                  (A) the number of children in foster care 
                under the responsibility of the Indian tribe, 
                tribal organization, or tribal consortium 
                (either directly or under supervision of the 
                State), in the most recent fiscal year for 
                which the information is available; to
                  (B) the sum of--
                                  (i) the total number of 
                                children in foster care under 
                                the responsibility of the State 
                                within which the Indian tribe, 
                                tribal organization, or tribal 
                                consortium is located; and
                                  (ii) the total number of 
                                children in foster care under 
                                the responsibility of all 
                                Indian tribes, tribal 
                                organizations, or tribal 
                                consortia in the State (either 
                                directly or under supervision 
                                of the State) that have a plan 
                                approved under this subsection.

           *       *       *       *       *       *       *

SEC. 479A. ANNUAL REPORT.

    The Secretary, in consultation with Governors, State 
legislatures, State and local public officials responsible for 
administering child welfare programs, and child welfare 
advocates, shall--

           *       *       *       *       *       *       *

SEC. 479B. PROGRAMS OPERATED BY INDIAN TRIBAL ORGANIZATIONS.

    (a) Definitions of Indian Tribe; Tribal Organizations.--In 
this section, the terms ``Indian tribe'' and ``tribal 
organization'' have the meanings given those terms in section 4 
of the Indian Self-Determination and Education Assistance Act 
(25 U.S.C. 450b).
    (b) Authority.--Except as otherwise provided in this 
section, this part shall apply in the same manner as this part 
applies to a State to an Indian tribe, tribal organization, or 
tribal consortium that elects to operate a program under this 
part and has a plan approved by the Secretary under section 471 
in accordance with this section.
    (c) Plan Requirements.--
          (1) In general.--An Indian tribe, tribal 
        organization, or tribal consortium that elects to 
        operate a program under this part shall include with 
        its plan submitted under section 471 the following:
                  (A) Financial management.--Evidence 
                demonstrating that the tribe, organization, or 
                consortium has not had any uncorrected 
                significant or material audit exceptions under 
                Federal grants or contracts that directly 
                relate to the administration of social services 
                for the 3-year period prior to the date on 
                which the plan is submitted.
                  (B) Service areas and populations.--For 
                purposes of complying with section 471(a)(3), a 
                description of the service area or areas and 
                populations to be served under the plan and an 
                assurance that the plan shall be in effect in 
                all service area or areas and for all 
                populations served by the tribe, organization, 
                or consortium.
                  (C) Eligibility.--
                          (i) In general.--Subject to clause 
                        (ii), an assurance that the plan will 
                        provide--
                                  (I) foster care maintenance 
                                payments under section 472 only 
                                on behalf of children who 
                                satisfy the eligibility 
                                requirements of subsection (a) 
                                of that section;
                                  (II) adoption assistance 
                                payments under section 473 
                                pursuant to adoption assistance 
                                agreements only on behalf of 
                                children who satisfy the 
                                eligibility requirements for 
                                such payments under that 
                                section; and
                                  (III) at the option of the 
                                tribe, organization, or 
                                consortium, relative 
                                guardianship assistance 
                                payments in accordance with 
                                section 473(d) only on behalf 
                                of children who meet the 
                                requirements of paragraph 
                                (3)(B) of that section.
                          (ii) Satisfaction of foster care 
                        eligibility requirements.--For purposes 
                        of determining whether a child whose 
                        placement and care are the 
                        responsibility of an Indian tribe, 
                        tribal organization, or tribal 
                        consortium with a plan approved under 
                        section 471 in accordance with this 
                        section satisfies the requirements of 
                        section 472(a), the following shall 
                        apply:
                                  (I) Use of affidavits, etc.--
                                Only with respect to the first 
                                12 months for which such plan 
                                is in effect, the requirement 
                                in paragraph (1) of section 
                                472(a) shall not be interpreted 
                                so as to prohibit the use of 
                                affidavits or nunc pro tunc 
                                orders as verification 
                                documents in support of the 
                                reasonable efforts and contrary 
                                to the welfare of the child 
                                judicial determinations 
                                required under that paragraph.
                                  (II) AFDC eligibility 
                                requirement.--The State plan 
                                approved under section 402 (as 
                                in effect on July 16, 1996) of 
                                the State in which the child 
                                resides at the time of removal 
                                from the home shall apply to 
                                the determination of whether 
                                the child satisfies paragraph 
                                (3) of section 472(a).
                  (D) Option to claim in-kind expenditures from 
                third-party sources for non-Federal share of 
                administrative and training costs during 
                initial implementation period.--Only for fiscal 
                year quarters beginning after September 30, 
                2009, and before October 1, 2014, a list of the 
                in-kind expenditures (which shall be fairly 
                evaluated, and may include plants, equipment, 
                administration, or services) and the third-
                party sources of such expenditures that the 
                tribe, organization, or consortium may claim as 
                part of the non-Federal share of administrative 
                or training expenditures attributable to such 
                quarters for purposes of receiving payments 
                under section 474(a)(3). The Secretary shall 
                permit a tribe, organization, or consortium to 
                claim in-kind expenditures from third party 
                sources for such purposes during such quarters 
                subject to the following:
                          (i) No effect on authority for 
                        tribes, organizations, or consortia to 
                        claim in-kind expenditures to the same 
                        extent States may claim in-kind 
                        expenditures.--Nothing in this 
                        subparagraph shall be construed as 
                        preventing a tribe, organization, or 
                        consortium from claiming any in-kind 
                        expenditures for purposes of receiving 
                        payments under section 474(a) that a 
                        State with a plan approved under 
                        section 471(a) could claim for such 
                        purposes.
                          (ii) Fiscal year 2010 or 2011.--
                                  ``(I) Expenditures other than 
                                for training.--With respect to 
                                amounts expended during a 
                                fiscal year quarter beginning 
                                after September 30, 2009, and 
                                before October 1, 2011, for 
                                which the tribe, organization, 
                                or consortium is eligible for 
                                payments under subparagraph 
                                (C), (D), or (E) of section 
                                474(a)(3), not more than 25 
                                percent of such amounts may 
                                consist of in-kind expenditures 
                                from third-party sources 
                                specified in the list required 
                                under this subparagraph to be 
                                submitted with the plan.
                                  (I) Training expenditures.--
                                With respect to amounts 
                                expended during a fiscal year 
                                quarter beginning after 
                                September 30, 2009, and before 
                                October 1, 2011, for which the 
                                tribe, organization, or 
                                consortium is eligible for 
                                payments under subparagraph (A) 
                                or (B) of section 474(a)(3), 
                                not more than 12 percent of 
                                such amounts may consist of in-
                                kind expenditures from third-
                                party sources that are 
                                specified in such list and 
                                described in subclause (III).
                                  (III) Sources described.--For 
                                purposes of subclause (II), the 
                                sources described in this 
                                subclause are the following:
                                          (aa) A State or local 
                                        government.
                                          (bb) An Indian tribe, 
                                        tribal organization, or 
                                        tribal consortium other 
                                        than the tribe, 
                                        organization, or 
                                        consortium submitting 
                                        the plan.
                                          (cc) A public 
                                        institution of higher 
                                        education.
                                          (dd) A Tribal College 
                                        or University (as 
                                        defined in section 316 
                                        of the Higher Education 
                                        Act of 1965 (20 U.S.C. 
                                        1059c)).
                                          (ee) A private 
                                        charitable 
                                        organization.
                          (iii) Fiscal year 2012, 2013, or 
                        2014.--
                                  (I) In general.--Except as 
                                provided in subclause (II) and 
                                clause (v), with respect to 
                                amounts expended during any 
                                fiscal year quarter beginning 
                                after September 30, 2011, and 
                                before October 1, 2014, for 
                                which the tribe, organization, 
                                or consortium is eligible for 
                                payments under any subparagraph 
                                of section 474(a)(3), the only 
                                in-kind expenditures from 
                                third-party sources that may be 
                                claimed by the tribe, 
                                organization, or consortium for 
                                purposes of determining the 
                                non-Federal share of such 
                                expenditures (without regard to 
                                whether the expenditures are 
                                specified on the list required 
                                under this subparagraph to be 
                                submitted with the plan) are 
                                in-kind expenditures that are 
                                specified in regulations 
                                promulgated by the Secretary 
                                under section 301(e)(2) of the 
                                Improved Adoption Incentives 
                                and Relative Guardianship 
                                Support Act of 2008 and are 
                                from an applicable third-party 
                                source specified in such 
                                regulations, and do not exceed 
                                the applicable percentage for 
                                claiming such in-kind 
                                expenditures specified in the 
                                regulations.
                                  (II) Transition period for 
                                early approved tribes, 
                                organizations, or consortia.--
                                Subject to clause (v), if the 
                                tribe, organization, or 
                                consortium is an early approved 
                                tribe, organization, or 
                                consortium (as defined in 
                                subclause (III)), the Secretary 
                                shall not require the tribe, 
                                organization, or consortium to 
                                comply with such regulations 
                                before October 1, 2013. Until 
                                the earlier of the date such 
                                tribe, organization, or 
                                consortium comes into 
                                compliance with such 
                                regulations or October 1, 2013, 
                                the limitations on the claiming 
                                of in-kind expenditures from 
                                third-party sources under 
                                clause (ii) shall continue to 
                                apply to such tribe, 
                                organization, or consortium 
                                (without regard to fiscal 
                                limitation) for purposes of 
                                determining the non-Federal 
                                share of amounts expended by 
                                the tribe, organization, or 
                                consortium during any fiscal 
                                year quarter that begins after 
                                September 30, 2011, and before 
                                such date of compliance or 
                                October 1, 2013, whichever is 
                                earlier.
                                  (III) Definition of early 
                                approved tribe, organization, 
                                or consortium.--For purposes of 
                                subclause (II), the term 
                                ``early approved tribe, 
                                organization, or consortium'' 
                                means an Indian tribe, tribal 
                                organization, or tribal 
                                consortium that had a plan 
                                approved under section 471 in 
                                accordance with this section 
                                for any quarter of fiscal year 
                                2010 or 2011.
                          (iv) Fiscal year 2015 and 
                        thereafter.--Subject to clause (v), 
                        with respect to amounts expended during 
                        any fiscal year quarter beginning after 
                        September 30, 2014, for which the 
                        tribe, organization, or consortium is 
                        eligible for payments under any 
                        subparagraph of section 474(a)(3), in-
                        kind expenditures from third-party 
                        sources may be claimed for purposes of 
                        determining the non-Federal share of 
                        expenditures under any subparagraph of 
                        section 474(a)(3) only in accordance 
                        with the regulations promulgated by the 
                        Secretary under section 301(e)(2) of 
                        the Improved Adoption Incentives and 
                        Relative Guardianship Support Act of 
                        2008.
                          (v) Contingency rule.--If at the time 
                        expenditures are made for a fiscal year 
                        quarter beginning after September 30, 
                        2011, and before October 1, 2014, for 
                        which a tribe, organization, or 
                        consortium may receive payments for 
                        under section 474(a)(3), no regulations 
                        required to be promulgated under 
                        section 301(e) (2) of the Improved 
                        Adoption Incentives and Relative 
                        Guardianship Support Act of 2008 are in 
                        effect, and no legislation has been 
                        enacted specifying otherwise--
                                  (I) in the case of any 
                                quarter of fiscal year 2012, 
                                2013, or 2014, the limitations 
                                on claiming in-kind 
                                expenditures from third-party 
                                sources under clause (ii) shall 
                                apply (without regard to fiscal 
                                limitation) for purposes of 
                                determining the non-Federal 
                                share of such expenditures; and
                                  (II) in the case of any 
                                quarter of fiscal year 2015 or 
                                any fiscal year thereafter, no 
                                tribe, organization, or 
                                consortium may claim in-kind 
                                expenditures from third-party 
                                sources for purposes of 
                                determining the non-Federal 
                                share of such expenditures if a 
                                State with a plan approved 
                                under section 471(a) could not 
                                claim in-kind expenditures from 
                                third-party sources for such 
                                purposes.
          (2) Clarification of tribal authority to establish 
        standards for tribal foster family homes and tribal 
        child care institutions.--For purposes of complying 
        with section 471(a)(10), an Indian tribe, tribal 
        organization, or tribal consortium shall establish and 
        maintain a tribal authority or authorities which shall 
        be responsible for establishing and maintaining tribal 
        standards for tribal foster family homes and tribal 
        child care institutions.
          (3) Consortium.--The participating Indian tribes or 
        tribal organizations of a tribal consortium may develop 
        and submit a single plan under section 471 that meets 
        the requirements of this section.
    (d) Determination of Federal Medical Assistance Percentage 
for Foster Care Maintenance and Adoption Assistance Payments.--
          (1) Per capita income.--For purposes of determining 
        the Federal medical assistance percentage applicable to 
        an Indian tribe, a tribal organization, or a tribal 
        consortium under paragraphs (1), (2), and (5) of 
        section 474(a), the calculation of the per capita 
        income of the Indian tribe, tribal organization, or 
        tribal consortium shall be based upon the service 
        population of the Indian tribe, tribal organization, or 
        tribal consortium, except that in no case shall an 
        Indian tribe, a tribal organization, or a tribal 
        consortium receive less than the Federal medical 
        assistance percentage for any State in which the tribe, 
        organization, or consortium is located.
          (2) Consideration of other information.--Before 
        making a calculation under paragraph (1), the Secretary 
        shall consider any information submitted by an Indian 
        tribe, a tribal organization, or a tribal consortium 
        that the Indian tribe, tribal organization, or tribal 
        consortium considers relevant to making the calculation 
        of the per capita income of the Indian tribe, tribal 
        organization, or tribal consortium.
    (e) Nonapplication to Cooperative Agreements and 
Contracts.--Any cooperative agreement or contract entered into 
between an Indian tribe, a tribal organization, or a tribal 
consortium and a State for the administration or payment of 
funds under this part that is in effect as of the date of 
enactment of this section shall remain in full force and 
effect, subject to the right of either party to the agreement 
or contract to revoke or modify the agreement or contract 
pursuant to the terms of the agreement or contract. Nothing in 
this section shall be construed as affecting the authority for 
an Indian tribe, a tribal organization, or a tribal consortium 
and a State to enter into a cooperative agreement or contract 
for the administration or payment of funds under this part.
    (f) John H. Chafee Foster Care Independence Program.--
Except as provided in section 477(j), subsection (b) of this 
section shall not apply with respect to the John H. Chafee 
Foster Care Independence Program established under section 477 
(or with respect to payments made under section 474(a)(4) or 
grants made under section 474(e)).
    (g) Rule of Construction.--Nothing in this section shall be 
construed as affecting the application of subsection (h) of 
section 472 to a child on whose behalf payments are paid under 
such section, or the application of subsection (b) of section 
473 to a child on whose behalf payments are made under that 
section pursuant to an adoption assistance agreement or a 
relative guardianship assistance agreement, by an Indian tribe, 
tribal organization, or tribal consortium that elects to 
operate a foster care and adoption assistance program in 
accordance with this section.

SEC. 479C. GRANTS TO STATES THAT SUCCESSFULLY COLLABORATE WITH AND 
                    SUPPORT TRIBES TO IMPROVE PERMANENCY OUTCOMES FOR 
                    INDIAN CHILDREN.

    (a) Definitions.--In this section:
          (1) Grant year.--The term ``grant year'' means each 
        of fiscal years 2010, 2011, 2012, 2013, and 2014.
          (2) Indian children.--The term ``Indian children'' 
        means children who are members of, enrolled in, or 
        affiliated with, or eligible for membership, 
        enrollment, or affiliation with, an Indian tribe.
          (3) Indian tribe, tribal organization, tribal 
        consortium.--The terms ``Indian tribe, tribal 
        organization, and tribal consortium'' have the meaning 
        given those terms in section 479B(a).
           (4) State.--The term ``State'' means any of the 50 
        States or the District of Columbia with State plans 
        approved under part B and this part that elect to apply 
        for a grant under this section.
          (5) Successful collaboration and tribal support 
        state.--The term ``Successful Collaboration and Tribal 
        Support State'' means, with respect to any grant year, 
        a State that the Secretary determines has demonstrated 
        significant evidence of successful collaboration and 
        Tribal support (as determined under subsection (c)) for 
        the fiscal year preceding the grant year.
    (b) Grants.--The Secretary shall make a grant pursuant to 
this paragraph to each State for each grant year for which the 
Secretary determines that the State is a Successful 
Collaboration and Tribal Support State.
    (c) Significant Evidence of Successful Collaboration and 
Tribal Support.--
          (1) In general.--For purposes of subsection (a)(5), 
        significant evidence of successful collaboration and 
        Tribal support shall be demonstrated through submission 
        by a State of the following evidence to the Secretary:
                  (A) Evidence of collaboration by the State 
                with an Indian tribe, tribal organization, or 
                tribal consortium to plan for and ensure access 
                to services and supports for Indian children 
                and their families which includes, at a 
                minimum, evidence of the measures and 
                activities required under sections 422(b)(9), 
                471(a)(29), and 477(b)(3)(G).
                  (B) Evidence that the State has obtained from 
                the Secretary, or is engaged in accessing 
                (including through the National Child Welfare 
                Resource Center for Tribes established under 
                section 479D), technical assistance to improve 
                services and permanency outcomes for Indian 
                children and their families, such as through 
                improved identification of Indian children, 
                increased recruitment of Indian foster family 
                homes, and, consistent with the requirements of 
                the Indian Child Welfare Act of 1978 (25 U.S.C. 
                1901 et seq.), improved rates of family 
                reunification, legal or relative guardianships, 
                or adoptive homes.
                  (C) Evidence of improved outcomes for Indian 
                children and their families and such other data 
                as the Secretary may require to verify that an 
                improvement in outcomes appropriate for Indian 
                children and their families have been achieved.
          (2) Form and manner.--The Secretary shall establish 
        the form and manner in which a State that elects to 
        apply for a grant under this section shall submit the 
        evidence described in each subparagraph of paragraph 
        (1). To the extent practicable, the requirements for 
        such evidence shall be consistent with data 
        requirements under the Indian Child Welfare Act of 1978 
        (25 U.S.C. 1901 et seq.).
    (d) Amount of Grant.--The amount of the grant payable under 
this section to a Successful Collaboration and Tribal Support 
State for a grant year is equal to the product of--
          (1) the amount appropriated under subsection (e) for 
        that year; and
          (2) the ratio of--
                  (A) the number of Indian children in t he 
                State (as determined for purposes of making 
                payments under section 428; to
                  (B) the sum of the number of such children 
                determined for all Successful Collaboration and 
                Tribal Support States for the grant year.
    (e) Appropriation.--Out of any money in the Treasury of the 
United States not otherwise appropriated, there are 
appropriated to the Secretary for purposes of making payments 
under this section, $5,000,000 for each of fiscal years 2010 
through 2014.

SEC. 479D. NATIONAL CHILD WELFARE RESOURCE CENTER FOR TRIBES.

    (a) Establishment.--The Secretary shall establish a 
National Child Welfare Resource Center for Tribes that is--
          (1) specifically and exclusively dedicated to meeting 
        the needs of Indian tribes, tribal organizations, (as 
        defined in section 479B(a)), tribal consortia, and 
        States in improving services and permanency outcomes 
        for Indian children and their families through the 
        provision of assistance described in subsection (b); 
        and
          (2) not part of any existing national child welfare 
        resource center.
    (b) Assistance Provided.--
          (1) In general.--The National Child Welfare Resource 
        Center for Tribes shall--
                  (A) provide information, advice, educational 
                materials, and technical assistance to Indian 
                tribes and tribal organizations with respect to 
                the types of services, administrative 
                functions, data collection, program management, 
                and reporting that are provided for under State 
                plans under part B and this part; and
                  (B) assist and provide technical assistance 
                to--
                          (i) Indian tribes, tribal 
                        organizations, and tribal consortia 
                        seeking to operate a program under part 
                        B or this part through direct 
                        application to the Secretary under 
                        section 479B; and
                          (ii) Indian tribes, tribal 
                        organizations, tribal consortia, and 
                        States seeking to develop cooperative 
                        agreements to provide for payments 
                        under this part or satisfy the 
                        requirements of section 422(b)(9), 
                        471(a)(29), or 477(b)(3)(G).
                          (2) Implementation authority.--The 
                        Secretary may provide the assistance 
                        described in paragraph (1) either 
                        directly or through a grant or contract 
                        with public or private organizations 
                        knowledgeable and experienced in the 
                        field of Indian tribal affairs and 
                        child welfare.
    (c) Appropriations.--There is appropriated to the 
Secretary, out of any money in the Treasury of the United 
States not otherwise appropriated, $1,000,000 for each of 
fiscal years 2009 through 2013 to carry out this section.

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

               EFFECT OF FAILURE TO CARRY OUT STATE PLAN

    Sec. 1130A. In an action brought to enforce a provision of 
the Social Security Act, such provision is not to be deemed 
unenforceable because of its inclusion in a section of the Act 
requiring a State plan or specifying the required contents of a 
State plan. This section is not intended to limit or expand the 
grounds for determining the availability of private actions to 
enforce State plan requirements other than by overturning any 
such grounds applied in Suter v. Artist M., 112 S. Ct. 1360 
(1992), but not applied in prior Supreme Court decisions 
respecting such enforceability: Provided, however, That this 
section is not intended to alter the holding in Suter v. Artist 
M. that section 471(a)(15) of the Act is not enforceable in a 
private right of action.

SEC. 1130B. DEMONSTRATION PROJECTS REGARDING LICENSING OF IMMEDIATE 
                    RELATIVE FOSTER PARENTS.

    (a) Definitions.--In this section:
          (1) Children in foster care.--The term ``children in 
        foster care'' means children who are placed in foster 
        family homes receiving funds under part B or E of title 
        IV.
          (2) Demonstration projects.--The term ``demonstration 
        projects'' means the projects conducted under this 
        section.
          (3) Directly funded tribal iv-e program.--The term 
        ``directly funded tribal IV-E program'' means a program 
        established under section 479B by an Indian tribe, 
        tribal organization, or tribal consortium (as defined 
        in subsection (a) of such section).
          (4) Immediate relative foster parent.--The term 
        ``immediate relative foster parent'' means, with 
        respect to a child in foster care, a foster parent of 
        the child who is an adult sibling, grandparent, aunt, 
        or uncle of the child.
          (5) State.--The term ``State'' means any of the 50 
        States or the District of Columbia with a State plan 
        approved under section 471(a).
    (b) Establishment.--The Secretary shall establish not more 
than 10 demonstration projects to determine the extent to which 
flexibility in the application of certain licensing standards 
to foster family homes of immediate relative foster parents 
results in improved well-being and permanency outcomes for 
children in foster care.
    (c) Requirements.--
          (1) Number of projects.--Of the demonstration 
        projects conducted under this section, at least----
                  ``(A) 2 projects shall be conducted in States 
                with a large number of rural areas, as 
                determined by the Secretary;
                  (B) 1 project shall be conducted in a State 
                in which the State plan under this part is 
                administered by a political subdivision of the 
                State; and
                  (2) 1 project shall be conducted by a 
                directly funded tribal IV-E program
          (2) Application to certain licensing standards.--For 
        purposes of placing a child in foster care in the home 
        of an immediate relative foster parent of the child, 
        and determining whether the home satisfies standards 
        established by a State or directly funded tribal IV-E 
        program for purposes of complying with section 
        471(a)(10), a State or directly funded tribal IV-E 
        program selected to conduct a demonstration project 
        under this section may modify the extent to which the 
        home is required to comply with any or all of the 
        following standards in order to be a licensed foster 
        family home for the child:
                  (A) Standards relating to the number or size 
                of bedrooms in the home, but only if the State 
                or tribal program applies appropriate 
                safeguards for age and gender.
                  (B) Standards relating to the number of 
                bathrooms in the home, but only if the State or 
                tribal program applies appropriate safeguards 
                for age and gender.
                  (C) Standards relating to overall square 
                footage of the home.
          (3) Implementation; duration.--The demonstration 
        projects shall--
                  (A) begin not later than 1 year after the 
                date of enactment of this section; and
                  (B) be conducted for a 2-year period.
    (d) Report.--Not later than 1 year after the date on which 
the projects are completed, the Secretary shall submit to the 
Committee on Ways and Means of the House of Representatives and 
the Committee on Finance of the Senate a report that--
          (1) evaluates, with respect to each State or directly 
        funded tribal IV-E program conducting a project, the 
        impact of the projects on the well-being of children in 
        foster care and the extent to which the projects result 
        in improved permanency outcomes for children in foster 
        care, based on the past performance of the State (or, 
        in the case of a directly funded tribal IV-E program, 
        based on the past performance of each State in which 
        the program is conducted); and
          (2) includes such recommendations for administrative 
        or legislative action as the Secretary determines 
        appropriate.

           *       *       *       *       *       *       *

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *

                        Subtitle A--Income Taxes

                  CHAPTER 1--NORMAL TAXES AND SURTAXES

              Subchapter A--Determination of Tax Liability

                      PART IV--CREDITS AGAINST TAX

Subpart A--Nonrefundable Personal Credits

           *       *       *       *       *       *       *

SEC. 24. CHILD TAX CREDIT.

    (a) Allowance of Credit.--There shall be allowed as a 
credit against the tax imposed by this chapter for the taxable 
year with respect to each qualifying child of the taxpayer for 
which the taxpayer is allowed a deduction under section 151 an 
amount equal to $1,000.

           *       *       *       *       *       *       *

              Subchapter B--Computation of Taxable Income

PART V--DEDUCTIONS FOR PERSONAL EXEMPTIONS

           *       *       *       *       *       *       *

SEC. 152. DEPENDENT DEFINED.

           *       *       *       *       *       *       *

    (c) Qualifying Child.--For purposes of this section--
          (1) In general.--The term ``qualifying child'' means, 
        with respect to any taxpayer for any taxable year, an 
        individual--
                  (A) who bears a relationship to the taxpayer 
                described in paragraph (2),
                  (B) who has the same principal place of abode 
                as the taxpayer for more than one-half of such 
                taxable year,
                  (C) who meets the age requirements of 
                paragraph (3), [and]
                  (D) who has not provided over one-half of 
                such individual's own support for the calendar 
                year in which the taxable year of the taxpayer 
                begins[.], and
                  (E) who has not filed a joint return (other 
                than only for a claim of refund) with the 
                individual's spouse under section 6013 for the 
                taxable year beginning in the calendar year in 
                which the taxable year of the taxpayer begins.

           *       *       *       *       *       *       *

          (2) Relationship.--For purposes of paragraph (1)(A), 
        an individual bears a relationship to the taxpayer 
        described in this paragraph if such individual is--
                  (A) a child of the taxpayer or a descendant 
                of such a child, or
                  (B) a brother, sister, stepbrother, or 
                stepsister of the taxpayer or a descendant of 
                any such relative.
          (3) Age requirements.--
                  (A) In general.--For purposes of paragraph 
                (1)(C), an individual meets the requirements of 
                this paragraph if such individual is younger 
                than the taxpayer claiming such individual as a 
                qualifying child and--

           *       *       *       *       *       *       *

          (4) Special rule relating to 2 or more [claiming] who 
        can claim the same qualifying child.--
                  (A) In general.--[Except as provided in 
                subparagraph (B), if (but for this paragraph) 
                an individual may be and is claimed as a 
                qualifying child by 2 or more taxpayers] Except 
                as provided in subparagraphs (B) and (C), if 
                (but for this paragraph) an individual may be 
                claimed as a qualifying child by 2 or more 
                taxpayers for a taxable year beginning in the 
                same calendar year, such individual shall be 
                treated as the qualifying child of taxpayer who 
                is--
                          (i) a parent of the individual, or

           *       *       *       *       *       *       *

                  (C) No parent claiming qualifying child.--If 
                the parents of an individual may claim such 
                individual as a qualifying child but no parent 
                so claims the individual, such individual may 
                be claimed as the qualifying child of another 
                taxpayer but only if the adjusted gross income 
                of such taxpayer is higher than the highest 
                adjusted gross income of any parent of the 
                individual.

                Subtitle F--Procedure and Administration

                  CHAPTER 61--INFORMATION AND RETURNS

Subchapter B--Miscellaneous Provisions

           *       *       *       *       *       *       *

SEC. 6103. CONFIDENTIALITY AND DISCLOSURE OF RETURNS AND RETURN 
                    INFORMATION

    (a) General Rule.--Returns and return information shall be 
confidential, and except as authorized by this title--
          (1) no officer or employee of the United States,
          (2) no officer or employee of any State, any local 
        law enforcement agency receiving information under 
        subsection (i)(7)(A), any local child support 
        enforcement agency, or any local agency administering a 
        program listed in subsection (1)(7)(D) who has or had 
        access to returns or return information under this 
        section, and (3) no other person (or officer or 
        employee thereof) who has or had access to returns or 
        return information under subsection (e) (1)(D)(iii), 
        paragraph (6), (10), (12), (16), (19), or (20) of 
        subsection (1), paragraph (2) or (4)(B) of subsection 
        (m), or subsection (n),
shall disclose any return or return information obtained by him 
in any manner in connection with his service as such an officer 
or an employee or otherwise or under the provisions of this 
section. For purposes of this subsection, the term ``officer or 
employee'' includes a former officer or employee.

           *       *       *       *       *       *       *

          (10) Disclosure of certain information to agencies 
        requesting a reduction under subsection [(c), (d) or 
        (e)] (c), (d), (e) or (f) of section 6402.
                  (A) Return information from internal revenue 
                service.--The Secretary may, upon receiving a 
                written request, disclose to officers and 
                employees of any agency seeking a reduction 
                under subsection [(c), (d), or (e)] (c), (d), 
                (e) or (f) of section 6402, to officers and 
                employees of the Department of Labor for 
                purposes of facilitating the exchange of data 
                in connection with a request made under 
                subsection (f)(5) of section 6402, and to 
                officers and employees of the Department of the 
                Treasury.
                  (B)(i) Restriction on use of disclosed 
                information.--Any officers and employees of an 
                agency receiving return information under 
                subparagraph (A) shall use such information 
                only for the purposes of, and to the extent 
                necessary in, establishing appropriate agency 
                records, locating any person with respect to 
                whom a reduction under subsection [(c), (d), or 
                (e)] (c), (d), (e) or (f) of section 6402 is 
                sought for purposes of collecting the debt with 
                respect to which the reduction is sought, or in 
                the defense of any litigation or administrative 
                procedure ensuing from a reduction made under 
                subsection [(c), (d), or (e)] (c), (d), (e) or 
                (f) of section 6402.
                  (ii) Notwithstanding clause (i), return 
                information disclosed to officers and employees 
                of the Department of Labor may be accessed by 
                agents who maintain and provide technological 
                support to the Department of Labor's Interstate 
                Connection Network (ICON) solely for the 
                purpose of providing such maintenance and 
                support.

           *       *       *       *       *       *       *

    (p) Procedure and Recordkeeping.--
          (1) Manner, time, and place of inspections.--

           *       *       *       *       *       *       *

          (4) Safeguards.--Any Federal agency described in 
        subsection (h)(2), (h)(5), (i)(1), (2), (3), (5), or 
        (7), (j)(1), (2), or (5), (k)(8), (1)(1), (2), (3), 
        (5), (10), (11), (13), (14), or (17) or (o)(1), the 
        Government Accountability Office, the Congressional 
        Budget Office, or any agency, body, or commission 
        described in subsection (d), (i)(3)(B)(i) or 7(A)(ii), 
        or (l)(6), (7), (8), (9), (12), (15), or (16) or any 
        other person described in subsection [(l)(16),] 
        (l)(10), (16), (18), (19), or (20) shall, as a 
        condition for receiving returns or return information--

           *       *       *       *       *       *       *

                  (F) Upon completion of use of such returns or 
                return information.--
                          (i) in the case of an agency, body, 
                        or commission described in subsection 
                        (d), (i)(3)(B)(i), or (l)(6), (7), (8), 
                        (9), or (16), or any other person 
                        described in subsection [(l)(16),] 
                        (l)(10), (16), (18), (19), or (20) 
                        return to the Secretary such returns or 
                        return information (along with any 
                        copies made therefrom) or make such 
                        returns or return information 
                        undisclosable in any manner and furnish 
                        a written report to the Secretary 
                        describing such manner,

           *       *       *       *       *       *       *

                          (iii) in the case of the Department 
                        of Health and Human Services for 
                        purposes of subsection (m)(6), destroy 
                        all such return information upon 
                        completion of its use in providing the 
                        notification for which the information 
                        was obtained, so as to make such 
                        information undisclosable; except that 
                        the conditions of subparagraphs (A), 
                        (B), (C), (D), and (E) shall cease to 
                        apply with respect to any return or 
                        return information if, and to the 
                        extent that, such return or return 
                        information is disclosed in the course 
                        of any judicial or administrative 
                        proceeding and made a part of the 
                        public record thereof. If the Secretary 
                        determines that any such agency, body, 
                        or commission, including an agency or 
                        any other person described in 
                        subsection [(l)(16),] (l)(10), (16), 
                        (18), (19), or (20), or the Government 
                        Accountability Office or the 
                        Congressional Budget Office, has failed 
                        to, or does not, meet the requirements 
                        of this paragraph, he may, after any 
                        proceedings for review established 
                        under paragraph (7), take such actions 
                        as are necessary to ensure such 
                        requirements are met, including 
                        refusing to disclose returns or return 
                        information to such agency, body, or 
                        commission, including an agency or any 
                        other person described in subsection 
                        [(l)(16),] (l)(10), (16), (18), (19), 
                        or (20), or the Government 
                        Accountability Office or the 
                        Congressional Budget Office, until he 
                        determines that such requirements have 
                        been or will be met. In the case of any 
                        agency which receives any mailing 
                        address under paragraph (2), (4), (6), 
                        or (7) of subsection (m) and which 
                        discloses any such mailing address to 
                        any agent or which receives any 
                        information under paragraph (6)(A), 
                        (10), (12)(B), or (16) of subsection 
                        (l) and which discloses any such 
                        information to any agent, or any person 
                        including an agent described in 
                        subsection [(l)(16),] (l)(10) or (16) 
                        paragraph shall apply to such agency 
                        and each such agent or other person 
                        (except that, in the case of an agent, 
                        or any person 11 including an agent 
                        described in subsection [(l)(16),] 
                        (l)(10) or (16) any report to the 
                        Secretary or other action with respect 
                        to the Secretary shall be made or taken 
                        through such agency). For purposes of 
                        applying this paragraph in any case to 
                        which subsection (m)(6) applies, the 
                        term ``return information'' includes 
                        related blood donor records (as defined 
                        in section 1141(h)(2) of the Social 
                        Security Act).

           *       *       *       *       *       *       *

                      Subtitle C--Employment Taxes

CHAPTER 23--FEDERAL UNEMPLOYMENT TAX ACT

           *       *       *       *       *       *       *

SEC. 3304. APPROVAL OF STATE LAWS

    (a) Requirements.--The Secretary of Labor shall approve any 
State law submitted to him, within 30 days of such submission, 
which he finds provides that--
          (1) all compensation is to be paid through public 
        employment offices or such other agencies as the 
        Secretary of Labor may approve;

           *       *       *       *       *       *       *

          (4) all money withdrawn from the unemployment fund of 
        the State shall be used solely in the payment of 
        unemployment compensation, exclusive of expenses of 
        administration, and for refunds of sums erroneously 
        paid into such fund and refunds paid in accordance with 
        the provisions of section 3305(b); except that--
                  (A) an amount equal to the amount of employee 
                payments into the unemployment fund of a State 
                may be used in the payment of cash benefits to 
                individuals with respect to their disability, 
                exclusive of expenses of administration;

           *       *       *       *       *       *       *

                  (E) amounts may be withdrawn for the payment 
                of short-time compensation under a plan 
                approved by the Secretary of Labor; [and]
                   (F) amounts may be withdrawn for the payment 
                of allowances under a self-employment 
                assistance program (as defined in section 
                3306(t); and
                  (G) with respect to amounts of covered 
                unemployment compensation debt (as defined in 
                section 6402(f)(4)) collected under section 
                6402(f)--
                          (i) amounts may be deducted to pay 
                        any fees authorized under such section; 
                        and
                          (ii) the penalties and interest 
                        described in section 6402(f)(4)(B) may 
                        be transferred to the appropriate State 
                        fund into which the State would have 
                        deposited such amounts had the person 
                        owing the debt paid such amounts 
                        directly to the State;

           *       *       *       *       *       *       *

                Subtitle F--Procedure and Administration

              CHAPTER 65--ABATEMENTS, CREDITS, AND REFUNDS

Subchapter A--Procedure in General

           *       *       *       *       *       *       *

SEC. 6402. AUTHORITY TO MAKE CREDITS OR REFUNDS.

    (a) General rule.--In the case of any overpayment, the 
Secretary, within the applicable period of limitations, may 
credit the amount of such overpayment, including any interest 
allowed thereon, against any liability in respect of an 
internal revenue tax on the part of the person who made the 
overpayment and shall, subject to subsections [(c), (d), and 
(e)] (c), (d), (e), and (f) refund any balance to such person.
    (b) Credits against estimated tax.--

           *       *       *       *       *       *       *

    (d) Collection of Debts Owed to Federal Agencies.--
          (1) In general.--

           *       *       *       *       *       *       *

          (2) Priorities for offset.--Any overpayment by a 
        person shall be reduced pursuant to this subsection 
        after such overpayment is reduced pursuant to 
        subsection (c) with respect to past-due support 
        collected pursuant to an assignment under section 
        402(a)(26) (!1) of the Social Security Act [and before 
        such overpayment is reduced pursuant to subsection (e)] 
        and before such overpayment is reduced pursuant to 
        subsections (e) and (f) and before such overpayment is 
        credited to the future liability for tax of such person 
        pursuant to subsection (b). If the Secretary receives 
        notice from a Federal agency or agencies of more than 
        one debt subject to paragraph (1) that is owed by a 
        person to such agency or agencies, any overpayment by 
        such person shall be applied against such debts in the 
        order in which such debts accrued.

           *       *       *       *       *       *       *

    (e) Collection of Past-Due, Legally Enforceable State 
Income Tax Obligations.--
          (1) In general.--

           *       *       *       *       *       *       *

          (3) Priorities for offset.--Any overpayment by a 
        person shall be reduced pursuant to this subsection--
                  (A) after such overpayment is reduced 
                pursuant to--
                          (i) subsection (a) with respect to 
                        any liability for any internal revenue 
                        tax on the part of the person who made 
                        the overpayment;
                          (ii) subsection (c) with respect to 
                        past-due support; and
                          (iii) subsection (d) with respect to 
                        any past-due, legally enforceable debt 
                        owed to a Federal agency; and
                  (B) before such overpayment is credited to 
                the future liability for any Federal internal 
                revenue tax of such person pursuant to 
                subsection (b).
If the Secretary receives notice from one or more agencies of 
the State of more than one debt subject to paragraph (1) or 
subsection (f) that is owed by such person to such an agency, 
any overpayment by such person shall be applied against such 
debts accrued.

           *       *       *       *       *       *       *

    (f) Collection of Unemployment Compensation Debts Resulting 
From Fraud.--
          (1) In general. Upon receiving notice from any State 
        that a named person owes a covered unemployment 
        compensation debt to such State, the Secretary shall, 
        under such conditions as may be prescribed by the 
        Secretary--
                  (A) reduce the amount of any overpayment 
                payable to such person by the amount of such 
                covered unemployment compensation debt;
                  (B) pay the amount by which such overpayment 
                is reduced under subparagraph (A) to such State 
                and notify such State of such person's name, 
                taxpayer identification number, address, and 
                the amount collected; and
                  (C) notify the person making such overpayment 
                that the overpayment has been reduced by an 
                amount necessary to satisfy a covered 
                unemployment compensation debt.
    If an offset is made pursuant to a joint return, the notice 
under subparagraph (C) shall include information related to the 
rights of a spouse of a person subject to such an offset.
          (2) Priorities for offset.--Any overpayment by a 
        person shall be reduced pursuant to this subsection--
                  (A) after such overpayment is reduced 
                pursuant to--
                          (i) subsection (a) with respect to 
                        any liability for any internal revenue 
                        tax on the part of the person who made 
                        the overpayment;
                          (ii) subsection (c) with respect to 
                        past-due support; and
                          (iii) subsection (d) with respect to 
                        any past-due, legally enforceable debt 
                        owed to a Federal agency; and
                  (B) before such overpayment is credited to 
                the future liability for any Federal internal 
                revenue tax of such person pursuant to 
                subsection (b).
    If the Secretary receives notice from a State or States of 
more than one debt subject to paragraph (1) or subsection (e) 
that is owed by a person to such State or States, any 
overpayment by such person shall be applied against such debts 
in the order in which such debts accrued.
          (3) Offset permitted only against residents of state 
        seeking offset.--Paragraph (1) shall apply to an 
        overpayment by any person for a taxable year only if 
        the address shown on the Federal return for such 
        taxable year of the overpayment is an address within 
        the State seeking the offset.
          (4) Notice; consideration of evidence.--No State may 
        take action under this subsection until such State--
                  (A) notifies by certified mail with return 
                receipt the person owing the covered 
                unemployment compensation debt that the State 
                proposes to take action pursuant to this 
                section;
                  (B) provides such person at least 60 days to 
                present evidence that all or part of such 
                liability is not legally enforceable or due to 
                fraud;
                  (C) considers any evidence presented by such 
                person and determines that an amount of such 
                debt is legally enforceable and due to fraud; 
                and
                  (D) satisfies such other conditions as the 
                Secretary may prescribe to ensure that the 
                determination made under subparagraph (C) is 
                valid and that the State has made reasonable 
                efforts to obtain payment of such covered 
                unemployment compensation debt.
          (5) Covered unemployment compensation debt.--For 
        purposes of this subsection, the term ``covered 
        unemployment compensation debt'' means a debt which 
        resulted from a judgment rendered by a court of 
        competent jurisdiction and which is no longer subject 
        to judicial review in an amount equal to--
                  (A) a past-due debt for erroneous payment of 
                unemployment compensation due to fraud which 
                has become final under the law of a State 
                certified by the Secretary of Labor pursuant to 
                section 3304 and which remains uncollected;
                  (B) contributions due to the unemployment 
                fund of a State for which the State has 
                determined the person to be liable due to 
                fraud; and
                  (C) any penalties and interest assessed on 
                such debt.
          (6) Regulations.--
                  (A) In general.--The Secretary may issue 
                regulations prescribing the time and manner in 
                which States must submit notices of covered 
                unemployment compensation debt and the 
                necessary information that must be contained in 
                or accompany such notices. The regulations may 
                specify the minimum amount of debt to which the 
                reduction procedure established by paragraph 
                (1) may be applied.
                  (B) Fee payable to secretary.--The 
                regulations may require States to pay a fee to 
                the Secretary, which may be deducted from 
                amounts collected, to reimburse the Secretary 
                for the cost of applying such procedure. Any 
                fee paid to the Secretary pursuant to the 
                preceding sentence shall be used to reimburse 
                appropriations which bore all or part of the 
                cost of applying such procedure.
                  (C) Submission of notices through secretary 
                of labor.--The regulations may include a 
                requirement that States submit notices of 
                covered unemployment compensation debt to the 
                Secretary via the Secretary of Labor in 
                accordance with procedures established by the 
                Secretary of Labor. Such procedures may require 
                States to pay a fee to the Secretary of Labor 
                to reimburse the Secretary of Labor for the 
                costs of applying this subsection. Any such fee 
                shall be established in consultation with the 
                Secretary of the Treasury. Any fee paid to the 
                Secretary of Labor may be deducted from amounts 
                collected and shall be used to reimburse the 
                appropriation account which bore all or part of 
                the cost of applying this subsection.
          (7) Erroneous payment to state.--Any State receiving 
        notice from the Secretary that an erroneous payment has 
        been made to such State under paragraph (1) shall pay 
        promptly to the Secretary, in accordance with such 
        regulations as the Secretary may prescribe, an amount 
        equal to the amount of such erroneous payment (without 
        regard to whether any other amounts payable to such 
        State under such paragraph have been paid to such 
        State).
    [(f)](g) Review of Reductions.--No court of the United 
States shall have jurisdiction to hear any action, whether 
legal or equitable, brought to restrain or review a reduction 
authorized by subsection [(c), (d), or (e)](c), (d), (e), or 
(f). No such reduction shall be subject to review by the 
Secretary in an administrative proceeding. No action brought 
against the United States to recover the amount of any such 
reduction shall be considered to be a suit for refund of tax. 
This subsection does not preclude any legal, equitable, or 
administrative action against the Federal agency or State to 
which the amount of such reduction was paid or any such action 
against the Commissioner of Social Security which is otherwise 
available with respect to recoveries of overpayments of 
benefits under section 204 of the Social Security Act.
    [(g)](h) Federal Agency.--For purposes of this section, the 
term ``Federal agency'' means a department, agency, or 
instrumentality of the United States, and includes a Government 
corporation (as such term is defined in section 103 of title 5, 
United States Code).
    [(h)](i) Treatment of Payments to States.--The Secretary 
may provide that, for purposes of determining interest, the 
payment of any amount withheld under [subsection (c) or 
(e)]subsection (c), (e), or (f) to a State shall be treated as 
a payment to the persons making the overpayment.
    [(i)](j) Cross Reference.--For procedures relating to 
agency notification of the Secretary, see section 3721 of title 
31, United States Code.
    [(j)](k) Refunds to Certain Fiduciaries of Insolvent 
Members of Affiliated Groups.--Notwithstanding any other 
provision of law, in the case of an insolvent corporation which 
is a member of an affiliated group of corporations filing a 
consolidated return for any taxable year and which is subject 
to a statutory or court-appointed fiduciary, the Secretary may 
by regulation provide that any refund for such taxable year may 
be paid on behalf of such insolvent corporation to such 
fiduciary to the extent that the Secretary determines that the 
refund is attributable to losses or credits of such insolvent 
corporation.
    [(k)](l) Explanation of Reason for Refund Disallowance.--In 
the case of a disallowance of a claim for refund, the Secretary 
shall provide the taxpayer with an explanation for such 
disallowance.

           *       *       *       *       *       *       *

                      TITLE 31--MONEY AND FINANCE

                          SUBTITLE I--GENERAL

                 CHAPTER 3--DEPARTMENT OF THE TREASURY

SUBCHAPTER II--ADMINISTRATIVE

           *       *       *       *       *       *       *

[SEC. 323. INVESTMENT OF OPERATING CASH

    [(a) To manage United States cash, the Secretary of the 
Treasury may invest any part of the operating cash of the 
Treasury for not more than 90 days. Investments may be made in 
obligations of--
          [(1) depositories maintaining Treasury tax and loan 
        accounts secured by pledged collateral acceptable to 
        the Secretary; and
          [(2) the United States Government.
    (b) Subsection (a) of this section does not--
          [(1) require the Secretary to invest a cash balance 
        held in a particular account; or
          [(2) permit the Secretary to require the sale of 
        obligations by a particular person, dealer, or 
        financial institution.
          [(c) The Secretary shall consider the prevailing 
        market in prescribing rates of interest for investments 
        under subsection (a)(1) of this section.]

SEC. 323. INVESTMENT OF OPERATING CASH

    (a) To manage United States cash, the Secretary of the 
Treasury may invest any part of the operating cash of the 
Treasury for not more than 90 days. The Secretary may invest 
the operating cash of the Treasury in--
          (1) obligations of depositories maintaining Treasury 
        tax and loan accounts secured by pledged collateral 
        acceptable to the Secretary;
          (2) obligations of the United States Government; and
          (3) repurchase agreements with parties acceptable to 
        the Secretary.
    (b) Subsection (a) of this section does not require the 
Secretary to invest a cash balance held in a particular 
account.
    (c) The Secretary shall consider the prevailing market in 
prescribing rates of interest for investments under subsection 
(a)(1) of this section.
    (d)(1) The Secretary of the Treasury shall submit each 
fiscal year to the appropriate committees a report detailing 
the investment of operating cash under subsection
    (a) for the preceding fiscal year. The report shall 
describe the Secretary's consideration of risks associated with 
investments and the actions taken to manage such risks.
          (2) For purposes of paragraph (1), the term 
        ``appropriate committees'' means the Committee on Ways 
        and Means of the House of Representatives and the 
        Committee on Finance of the Senate.''

           *       *       *       *       *       *       *

                                  
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