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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1267 Introduced in House (IH)]

104th CONGRESS
  1st Session
                                H. R. 1267

 To reconnect families to the world of work, make work pay strengthen 
     families, require personal responsibility, and support State 
                              flexibility.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 21, 1995

    Mr. Deal of Georgia (for himself, Mr. Clement, Mr. Tanner, Mr. 
   Stenholm, Mrs. Lincoln, Mrs. Thurman, and Mr. Payne of Virginia) 
 introduced the following bill; which was referred to the Committee on 
    Economic and Educational Opportunities, and in addition to the 
 Committees on the Judiciary, Commerce, National Security, Banking and 
 Financial Services, and Agriculture, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
 To reconnect families to the world of work, make work pay strengthen 
     families, require personal responsibility, and support State 
                              flexibility.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Individual Responsibility Act of 
1995''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents of this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Amendment of the Social Security Act.
             TITLE I--TIME-LIMITED TRANSITIONAL ASSISTANCE

Sec. 101. Limitation on duration of AFDC benefits.
Sec. 102. Establishment of Federal data base.
                        TITLE II--MAKE WORK PAY

                        Subtitle A--Health Care

Sec. 201. Transitional medicaid benefits.
                  Subtitle B--Earned Income Tax Credit

Sec. 211. Notice of availability required to be provided to applicants 
                            and former recipients of AFDC, food stamps, 
                            and medicaid.
Sec. 212. Notice of availability of earned income tax credit and 
                            dependent care tax credit to be included on 
                            W-4 form.
Sec. 213. Advance payment of earned income tax credit through State 
                            demonstration programs.
                         Subtitle C--Child Care

Sec. 221. Dependent care credit to be refundable; high-income taxpayers 
                            ineligible for credit.
Sec. 222. Funding of child care services.
                    Subtitle D--AFDC Work Disregards

Sec. 231. Option to increase disregard of earned income.
Sec. 232. State option to establish voluntary diversion program.
Sec. 233. Elimination of quarters of coverage requirement for married 
                            teens under AFDC-UP program.
                   Subtitle E--AFDC Asset Limitations

Sec. 241. Increase in resource thresholds; separate threshold for 
                            vehicles.
Sec. 242. Limited disregard of amounts saved for post-secondary 
                            education, the purchase of a first home, or 
                            the establishment or operation of a 
                            microenterprise.
                   TITLE III--THE WORK FIRST PROGRAM

Sec. 301. Work first program.
Sec. 302. Regulations.
Sec. 303. Applicability to States.
Sec. 304. Sense of the Congress relating to availability of work first 
                            program in rural areas.
Sec. 305. Grants to community-based organizations.
 TITLE IV--FAMILY RESPONSIBILITY AND IMPROVED CHILD SUPPORT ENFORCEMENT

Subtitle A--Eligibility and Other Matters Concerning Title IV-D Program 
                                Clients

Sec. 401. State obligation to provide paternity establishment and child 
                            support enforcement services.
Sec. 402. Distribution of payments.
Sec. 403. Due process rights.
Sec. 404. Privacy safeguards.
             Subtitle B--Program Administration and Funding

Sec. 411. Federal matching payments.
Sec. 412. Performance-based incentives and penalties.
Sec. 413. Federal and State reviews and audits.
Sec. 414. Required reporting procedures.
Sec. 415. Automated data processing requirements.
Sec. 416. Director of CSE program; staffing study.
Sec. 417. Funding for secretarial assistance to State programs.
Sec. 418. Reports and data collection by the Secretary.
                  Subtitle C--Locate and Case Tracking

Sec. 421. Central State and case registry.
Sec. 422. Centralized collection and disbursement of support payments.
Sec. 423. Amendments concerning income withholding.
Sec. 424. Locator information from interstate networks.
Sec. 425. Expanded Federal Parent Locator Service.
Sec. 426. Use of social security numbers.
         Subtitle D--Streamlining and Uniformity of Procedures

Sec. 431. Adoption of uniform State laws.
Sec. 432. Improvements to full faith and credit for child support 
                            orders.
Sec. 433. State laws providing expedited procedures.
                  Subtitle E--Paternity Establishment

Sec. 441. Sense of the Congress.
Sec. 442. Availability of parenting social services for new fathers.
Sec. 443. Cooperation requirement and good cause exception.
Sec. 444. Federal matching payments.
Sec. 445. Performance-based incentives and penalties.
Sec. 446. State laws concerning paternity establishment.
Sec. 447. Outreach for voluntary paternity establishment.
      Subtitle F--Establishment and Modification of Support Orders

Sec. 451. National Child Support Guidelines Commission.
Sec. 452. Simplified process for review and adjustment of child support 
                            orders.
               Subtitle G--Enforcement of Support Orders

Sec. 461. Federal income tax refund offset.
Sec. 462. Internal Revenue Service collection of arrears.
Sec. 463. Authority to collect support from Federal employees.
Sec. 464. Enforcement of child support obligations of members of the 
                            Armed Forces.
Sec. 465. Motor vehicle liens.
Sec. 466. Voiding of fraudulent transfers.
Sec. 467. State law authorizing suspension of licenses.
Sec. 468. Reporting arrearages to credit bureaus.
Sec. 469. Extended statute of limitation for collection of arrearages.
Sec. 470. Charges for arrearages.
Sec. 471. Denial of passports for nonpayment of child support.
Sec. 472. International child support enforcement.
Sec. 473. Seizure of lottery winnings, settlements, payouts, awards, 
                            and bequests, and sale of forfeited 
                            property, to pay child support arrearages.
Sec. 474. Liability of grandparents for financial support of children 
                            of their minor children.
Sec. 475. Sense of the Congress regarding programs for noncustodial 
                            parents unable to meet child support 
                            obligations.
                      Subtitle H--Medical Support

Sec. 481. Technical correction to ERISA definition of medical child 
                            support order.
Sec. 482. Extension of medicaid eligibility for families losing AFDC 
                            due to increased child support collections.
                    Subtitle I--Effect of Enactment

Sec. 491. Effective dates.
Sec. 492. Severability.
              TITLE V--TEEN PREGNANCY AND FAMILY STABILITY

                        Subtitle A--Federal Role

Sec. 501. State option to deny AFDC for additional children.
Sec. 502. Minors receiving AFDC required to live under responsible 
                            adult supervision.
Sec. 503. National clearinghouse on adolescent pregnancy.
Sec. 504. Incentive for teen parents to attend school.
Sec. 505. State option to disregard 100-hour rule under AFDC-UP 
                            program.
Sec. 506. State option to disregard 6-month limitation on AFDC-UP 
                            benefits.
Sec. 507. Elimination of quarters of coverage requirement under AFDC-UP 
                            program for families in which both parents 
                            are teens.
Sec. 508. Denial of Federal housing benefits to minors who bear 
                            children out-of-wedlock.
Sec. 509. State option to deny AFDC to minor parents.
                         Subtitle B--State Role

Sec. 511. Teenage pregnancy prevention and family stability.
Sec. 512. Availability of family planning services.
                    TITLE VI--PROGRAM SIMPLIFICATION

                Subtitle A--Increased State Flexibility

Sec. 601. State option to provide AFDC through electronic benefit 
                            transfer systems.
Sec. 602. Deadline for action on application for waiver of requirement 
                            applicable to program of aid to families 
                            with dependent children.
        Subtitle B--Coordination of AFDC and Food Stamp Programs

Sec. 611. Amendments to part A of title IV of the Social Security Act.
Sec. 612. Amendments to the Food Stamp Act of 1977.
                      Subtitle C--Fraud Reduction

Sec. 631. Sense of the Congress in support of the efforts of the 
                            administration to address the problems of 
                            fraud and abuse in the supplemental 
                            security income program.
Sec. 632. Study on feasibility of single tamper-proof identification 
                            card to serve programs under both the 
                            Social Security Act and health reform 
                            legislation.
                   Subtitle D--Additional Provisions

Sec. 641. State options regarding unemployed parent program.
Sec. 642. Definition of essential person.
Sec. 643. ``Fill-the-gap'' budgeting.
Sec. 644. Repeal of requirement to make certain supplemental payments 
                            in States paying less than their needs 
                            standards.
Sec. 645. Collection of AFDC overpayments from Federal tax refunds.
Sec. 646. Territories.
Sec. 647. Disregard of student income.
Sec. 648. Lump-sum income.
            TITLE VII--CHILD PROTECTION BLOCK GRANT PROGRAM

Sec. 701. Establishment of programs.
Sec. 702. Repeals and conforming amendments.
Sec. 703. Effective date.
                         TITLE VIII--SSI REFORM

            Subtitle A--Eligibility of Children for Benefits

Sec. 801. Restrictions on eligibility.
Sec. 802. Continuing disability reviews for certain children.
Sec. 803. Disability review required for SSI recipients who are 18 
                            years of age.
Sec. 804. Applicability.
  Subtitle B--Denial of SSI Benefits by Reason of Disability to Drug 
                         Addicts and Alcoholics

Sec. 811. Denial of SSI benefits by reason of disability to drug 
                            addicts and alcoholics.
                          TITLE IX--FINANCING

                    Subtitle A--Treatment of Aliens

Sec. 901. Extension of deeming of income and resources under AFDC, SSI, 
                            and food stamp programs.
Sec. 902. Requirements for sponsor's affidavits of support.
Sec. 903. Extending requirement for affidavits of support to family-
                            related and diversity immigrants.
      Subtitle B--Limitation on Emergency Assistance Expenditures

Sec. 911. Limitation on expenditures for emergency assistance.
                       Subtitle C--Tax Provisions

Sec. 921. Certain Federal assistance includible in gross income.
Sec. 922. Earned income tax credit denied to individuals not authorized 
                            to be employed in the United States.
Sec. 923. Phaseout of earned income credit for individuals having more 
                            than $2,500 of taxable interest and 
                            dividends.
Sec. 924. AFDC and food stamp benefits not taken into account for 
                            purposes of the earned income tax credit.
                    TITLE X--FOOD ASSISTANCE REFORM

          Subtitle A--Food Stamp Program Integrity and Reform

Sec. 1001. Authority to establish authorization periods.
Sec. 1002. Specific period for prohibiting participation of stores 
                            based on lack of business integrity.
Sec. 1003. Information for verifying eligibility for authorization.
Sec. 1004. Waiting period for stores that initially fail to meet 
                            authorization criteria.
Sec. 1005. Bases for suspensions and disqualifications.
Sec. 1006. Authority to suspend stores violating program requirements 
                            pending administrative and judicial review.
Sec. 1007. Disqualification of retailers who are disqualified from the 
                            WIC program.
Sec. 1008. Permanent debarment of retailers who intentionally submit 
                            falsified applications.
Sec. 1009. Expanded civil and criminal forfeiture for violations of the 
                            Food Stamp Act.
Sec. 1010. Expanded authority for sharing information provided by 
                            retailers.
Sec. 1011. Expanded definition of ``coupon''.
Sec. 1012. Doubled penalties for violating food stamp program 
                            requirements.
Sec. 1013. Mandatory claims collection methods.
Sec. 1014. Reduction of basic benefit level.
Sec. 1015. Pro-rating benefits after interruptions in participation.
Sec. 1016. Work requirement for able-bodied recipients.
Sec. 1017. Extending current claims retention rates.
Sec. 1018. Coordination of employment and training programs.
Sec. 1019. Promoting expansion of electronic benefits transfer.
Sec. 1020. One-year freeze of standard deduction.
Sec. 1021. Nutrition assistance for Puerto Rico.
Sec. 1022. Other amendments to the Food Stamp Act of 1977.
                   Subtitle B--Commodity Distribution

Sec. 1051. Short title.
Sec. 1052. Availability of commodities.
Sec. 1053. State, local and private supplementation of commodities.
Sec. 1054. State plan.
Sec. 1055. Allocation of commodities to States.
Sec. 1056. Priority system for State distribution of commodities.
Sec. 1057. Initial processing costs.
Sec. 1058. Assurances; anticipated use.
Sec. 1059. Authorization of appropriations.
Sec. 1060. Commodity supplemental food program.
Sec. 1061. Commodities not income.
Sec. 1062. Prohibition against certain State charges.
Sec. 1063. Definitions.
Sec. 1064. Regulations.
Sec. 1065. Finality of determinations.
Sec. 1066. Relationship to other programs.
Sec. 1067. Settlement and adjustment of claims.
Sec. 1068. Repealers; amendments.
                      TITLE XI--DEFICIT REDUCTION

Sec. 1101. Dedication of savings to deficit reduction.
                       TITLE XII--EFFECTIVE DATE

Sec. 1201. Effective date.

SEC. 3. AMENDMENT OF THE SOCIAL SECURITY ACT.

    Except as otherwise expressly provided, wherever in this Act an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Social Security Act.

             TITLE I--TIME-LIMITED TRANSITIONAL ASSISTANCE

SEC. 101. LIMITATION ON DURATION OF AFDC BENEFITS.

    Section 402(a) (42 U.S.C. 602(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (44);
            (2) by striking the period at the end of paragraph (45) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (45) the following:
            ``(46) in the case of a State that has exercised the option 
        provided for in paragraph (52), provide that--
                    ``(A) a family shall not be eligible for aid under 
                the State plan if a member of the family is--
                            ``(i) prohibited from participating in the 
                        State program established under subpart 1 of 
                        part G by reason of section 497(b); or
                            ``(ii) prohibited from participating in the 
                        State program established under subpart 2 of 
                        part G by reason of section 499(a)(4); and
                    ``(B) each member of the family shall be considered 
                to be receiving such aid for purposes of eligibility 
                for medical assistance under the State plan approved 
                under title XIX for so long as the family would be 
                eligible for such aid but for subparagraph (A).''.

SEC. 102. ESTABLISHMENT OF FEDERAL DATA BASE.

    Section 402 (42 U.S.C. 602) is amended by inserting after 
subsection (c) the following:
    ``(d) The Secretary shall establish and maintain a data base of 
participants in State programs established under parts F and G which 
shall be made available to the States for use in administering 
subsection (a)(46).''.

                        TITLE II--MAKE WORK PAY

                        Subtitle A--Health Care

SEC. 201. TRANSITIONAL MEDICAID BENEFITS.

    (a) Extension of Medicaid Enrollment for Former AFDC Recipients for 
1 Additional Year.--
            (1) In general.--Section 1925(b)(1) (42 U.S.C. 1396r-
        6(b)(1)) is amended by striking the period at the end and 
        inserting the following: ``, and that the State shall offer to 
        each such family the option of extending coverage under this 
        subsection for any of the first 2 succeeding 6-month periods, 
        in the same manner and under the same conditions as the option 
        of extending coverage under this subsection for the first 
        succeeding 6-month period.''.
            (2) Conforming amendments.--Section 1925(b) (42 U.S.C. 
        1396r-6(b)) is amended--
                    (A) in the heading, by striking ``Extension'' and 
                inserting ``Extensions'';
                    (B) in the heading of paragraph (1), by striking 
                ``Requirement'' and inserting ``In general'';
                    (C) in paragraph (2)(B)(ii)--
                            (i) in the heading, by striking ``period'' 
                        and inserting ``periods'', and
                            (ii) by striking ``in the period'' and 
                        inserting ``in each of the 6-month periods'';
                    (D) in paragraph (3)(A), by striking ``the 6-month 
                period'' and inserting ``any 6-month period'';
                    (E) in paragraph (4)(A), by striking ``the 
                extension period'' and inserting ``any extension 
                period''; and
                    (F) in paragraph (5)(D)(i), by striking ``is a 3-
                month period'' and all that follows and inserting the 
                following: ``is, with respect to a particular 6-month 
                additional extension period provided under this 
                subsection, a 3-month period beginning with the 1st or 
                4th month of such extension period.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to calendar quarters beginning on or after October 1, 1997, 
without regard to whether or not final regulations to carry out such 
amendments have been promulgated by such date.

                  Subtitle B--Earned Income Tax Credit

SEC. 211. NOTICE OF AVAILABILITY REQUIRED TO BE PROVIDED TO APPLICANTS 
              AND FORMER RECIPIENTS OF AFDC, FOOD STAMPS, AND MEDICAID.

    (a) AFDC.--Section 402(a) (42 U.S.C. 602(a)), as amended by 
sections 101 and 102 of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (46);
            (2) by striking the period at the end of paragraph (47) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (47) the following:
            ``(48) provide that the State agency must provide written 
        notice of the existence and availability of the earned income 
        credit under section 32 of the Internal Revenue Code of 1986 
        to--
                    ``(A) any individual who applies for aid under the 
                State plan, upon receipt of the application; and
                    ``(B) any individual whose aid under the State plan 
                is terminated, in the notice of termination of 
                benefits.''.
    (b) Food Stamps.--Section 11(e) of the Food Stamp Act of 1977 (7 
U.S.C. 2020(e)) is amended--
            (1) in paragraph (24) by striking ``and'' at the end;
            (2) in paragraph (25) by striking the period at the end and 
        inserting ``; and''; and
            (3) by inserting after paragraph (25) the following:
            ``(26) that whenever a household applies for food stamp 
        benefits, and whenever such benefits are terminated with 
        respect to a household, the State agency shall provide to each 
        member of such household notice of--
                    ``(A) the existence of the earned income tax credit 
                under section 32 of the Internal Revenue Code of 1986; 
                and
                    ``(B) the fact that such credit may be applicable 
                to such member.''.
    (c) Medicaid.--Section 1902(a) (42 U.S.C. 1396a(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (61);
            (2) by striking the period at the end of paragraph (62) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(63) provide that the State shall provide notice of the 
        existence and availability of the earned income tax credit 
        under section 32 of the Internal Revenue Code of 1986 to each 
        individual applying for medical assistance under the State plan 
        and to each individual whose eligibility for medical assistance 
        under the State plan is terminated.''.

SEC. 212. NOTICE OF AVAILABILITY OF EARNED INCOME TAX CREDIT AND 
              DEPENDENT CARE TAX CREDIT TO BE INCLUDED ON W-4 FORM.

    Section 11114 of the Omnibus Budget Reconciliation Act of 1990 (26 
U.S.C. 21 note), relating to program to increase public awareness, is 
amended by adding at the end the following new sentence: ``Such means 
shall include printing a notice of the availability of such credits on 
the forms used by employees to determine the proper number of 
withholding exemptions under chapter 24 of the Internal Revenue Code of 
1986.''.

SEC. 213. ADVANCE PAYMENT OF EARNED INCOME TAX CREDIT THROUGH STATE 
              DEMONSTRATION PROGRAMS.

    (a) In General.--Section 3507 of the Internal Revenue Code of 1986 
(relating to the advance payment of the earned income tax credit) is 
amended by adding at the end the following:
    ``(g) State Demonstrations.--
            ``(1) In general.--In lieu of receiving earned income 
        advance amounts from an employer under subsection (a), a 
        participating resident shall receive advance earned income 
        payments from a responsible State agency pursuant to a State 
        Advance Payment Program that is designated pursuant to 
        paragraph (2).
            ``(2) Designations.--
                    ``(A) In general.--From among the States submitting 
                proposals satisfying the requirements of subsection 
                (g)(3), the Secretary (in consultation with the 
                Secretary of Health and Human Services) may designate 
                not more than 4 State Advance Payment Demonstrations. 
                States selected for the demonstrations may have, in the 
                aggregate, no more than 5 percent of the total number 
                of household participating in the program under the 
                Food Stamp program in the immediately preceding fiscal 
                year, Administrative costs of a State in conducting a 
                demonstration under this section may be included for 
                matching under section 403(a) of the Social Security 
                Act and section 16(a) of the Food Stamp Act of 1977.
                    ``(B) When designation may be made.--Any 
                designation under this paragraph shall be made no later 
                than December 31, 1995.
                    ``(C) Period for which designation is in effect.--
                            ``(i) In general.--Designations made under 
                        this paragraph shall be effective for advance 
                        earned income payments made after December 31, 
                        1995, and before January 1, 1999.
                            ``(ii) Special rules.--
                                    ``(I) Revocation of designations.--
                                The Secretary may revoke the 
                                designation under this paragraph if the 
                                Secretary determines that the State is 
                                not complying substantially with the 
                                proposal described in paragraph (3) 
                                submitted by the State.
                                    ``(II) Automatic termination of 
                                designations.--Any failure by a State 
                                to comply with the reporting 
                                requirements described in paragraphs 
                                (3)(F) and (3)(G) has the effect of 
                                immediately terminating the designation 
                                under this paragraph (2) and rendering 
                                paragraph (5)(A)(ii) inapplicable to 
                                subsequent payments.
            ``(3) Proposals.--No State may be designated under 
        subsection (g)(2) unless the State's proposal for such 
        designation--
                    ``(A) identifies the responsible State agency,
                    ``(B) describes how and when the advance earned 
                income payments will be made by that agency, including 
                a description of any other State or Federal benefits 
                with which such payments will be coordinated,
                    ``(C) describes how the State will obtain the 
                information on which the amount of advance earned 
                income payments made to each participating resident 
                will be determined in accordance with paragraph (4),
                    ``(D) describes how State residents who will be 
                eligible to receive advance earned income payments will 
                be selected, notified of the opportunity to receive 
                advance earned income payments from the responsible 
                State agency, and given the opportunity to elect to 
                participate in the program,
                    ``(E) describes how the State will verify, in 
                addition to receiving the certifications and statement 
                described in paragraph (7)(D)(iv), the eligibility of 
                participating residents for the earned tax credit,
                    ``(F) commits the State to furnishing to each 
                participating resident and to the Secretary by January 
                31 of each year a written statement showing--
                            ``(i) the name and taxpayer identification 
                        number of the participating resident, and
                            ``(ii) the total amount of advance earned 
                        income payments made to the participating 
                        resident during the prior calendar year,
                    ``(G) commits the State to furnishing to the 
                Secretary by December 1 of each year a written 
                statement showing the name and taxpayer identification 
                number of each participating resident,
                    ``(H) commits the State to treat the advanced 
                earned income payments as described in subsection 
                (g)(5) and any repayments of excessive advance earned 
                income payments as described in subsection (g)(6),
                    ``(I) commits the State to assess the development 
                and implementation of its State Advance Payment 
                Program, including an agreement to share its findings 
                and lessons with other interested States in a manner to 
                be described by the Secretary, and
                    ``(J) is submitted to the Secretary on or before 
                June 30, 1995.
            ``(4) Amount and timing of advance earned income 
        payments.--
                    ``(A) Amount.--
                            ``(i) In general.--The method for 
                        determining the amount of advance earned income 
                        payments made to each participating resident is 
                        to conform to the full extent possible with the 
                        provisions of subsection (c).
                            ``(ii) Special rule.--A State may, at its 
                        election, apply the rules of subsection 
                        (c)(2)(B) by substituting `between 60 percent 
                        and 75 percent of the credit percentage in 
                        effect under section 32(b)(1) for an individual 
                        with the corresponding number of qualifying 
                        children' for `60 percent of the credit 
                        percentage in effect under section 32(b)(1) for 
                        such an eligible individual with 1 qualifying 
                        child' in clause (i) and `the same percentage 
                        (as applied in clause (i))' for `60 percent' in 
                        clause (ii).
                    ``(B) Timing.--The frequency of advance earned 
                income payments may be made on the basis of the payroll 
                periods of participating residents, on a single 
                statewide schedule, or on any other reasonable basis 
prescribed by the State in its proposal; however, in no event may 
advance earned income payments be made to any participating resident 
less frequently than on a calendar-quarter basis.
            ``(5) Payments to be treated as payments of withholding and 
        fica taxes.--
                    ``(A) In general.--For purposes of this title, 
                advance earned income payments during any calendar 
                quarter--
                            ``(i) shall neither be treated as a payment 
                        of compensation nor be included in gross 
                        income, and
                            ``(ii) shall be treated as made out of--
                                    ``(I) amounts required to be 
                                deducted by the State and withheld for 
                                the calendar quarter by the State under 
                                section 3401 (relating to wage 
                                withholding), and
                                    ``(II) amounts required to be 
                                deducted for the calendar quarter under 
                                section 3102 (relating to FICA employee 
                                taxes), and
                                    ``(III) amounts of the taxes 
                                imposed on the State for the calendar 
                                quarter under section 3111 (relating to 
                                FICA employer taxes),
                        as if the State had paid to the Secretary, on 
                        the day on which payments are made to 
                        participating residents, an amount equal to 
                        such payments.
                    ``(B) Advance payments exceed taxes due.--If for 
                any calendar quarter the aggregate amount of advance 
                earned income payments made by the responsible State 
                agency under a State Advance Payment Program exceeds 
                the sum of the amounts referred to in subparagraph 
                (A)(ii) (without regard to paragraph (6)(A)), each such 
                advance earned income payment shall be reduced by an 
                amount which bears the same ratio to such excess as 
                such advance earned income payment bears to the 
                aggregate amount of all such advance earned income 
                payments.
            ``(6) State repayment of excessive advance earned income 
        payments.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, in the case of an excessive advance 
                earned income payment a State shall be treated as 
                having deducted and withheld under section 3401 
                (relating to wage withholding), and therefore is 
                required to pay to the United States, the repayment 
                amount during the repayment calendar quarter.
                    ``(B) Excessive advance earned income payment.--For 
                purposes of this section, an excessive advance income 
                payment is that portion of any advance earned income 
                payment that, when combined with other advance earned 
                income payments previously made to the same 
                participating resident during the same calendar year, 
                exceeds the amount of earned income tax credit to which 
                that participating resident is entitled under section 
                32 for that year.
                    ``(C) Repayment amount.--The repayment amount is 
                equal to 50 percent of the excess of--
                            ``(i) excessive advance earned income 
                        payments made by a State during a particular 
                        calendar year, over
                            ``(ii) the sum of--
                                    ``(I) 4 percent of all advance 
                                earned income payments made by the 
                                State during that calendar year, and
                                    ``(II) the excessive advance earned 
                                income payments made by the State 
                                during that calendar year that have 
                                been collected from participating 
                                residents by the Secretary.
                    ``(D) Repayment calendar quarter.--The repayment 
                calendar quarter is the second calendar quarter of the 
                third calendar year after the calendar year in which an 
                excessive earned income payment is made.
            ``(7) Definitions.--For purposes of this section--
                    ``(A) State advance payment program.--The term 
                `State Advance Payment Program' means the program 
                described in a proposal submitted for designation under 
                paragraph (1) and designated by the Secretary under 
                paragraph (2).
                    ``(B) Responsible state agency.--The term 
                `responsible State agency' means the single State 
                agency that will be making the advance earned income 
                payments to residents of the State who elect to 
                participate in a State Advance Payment Program.
                    ``(C) Advance earned income payments.--The term 
                `advance earned income payments' means an amount paid 
                by a responsible State agency to residents of the State 
                pursuant to a State Advance Payment Program.
                    ``(D) Participating resident.--The term 
                `participating resident' means an individual who--
                            ``(i) is a resident of a State that has in 
                        effect a designated State Advance Payment 
                        Program,
                            ``(ii) makes the election described in 
                        paragraph (3)(C) pursuant to guidelines 
                        prescribed by the State,
                            ``(iii) certifies to the State the number 
                        of qualifying children the individual has, and
                            ``(iv) provides to the State the 
                        certifications and statement set forth in 
                        subsections (b)(1), (b)(2), (b)(3), and (b)(4) 
                        (except that for purposes of this clause (iv), 
                        the term `any employer' shall be substituted 
                        for `another employer' in subsection (b)(3)), 
                        along with any other information required by 
                        the State.''.
    (b) Technical Assistance.--The Secretaries of Treasury and Health 
and Human Services shall jointly ensure that technical assistance is 
provided to State Advance Payment Programs and that these programs are 
rigorously evaluated.
    (c) Annual Reports.--The Secretary shall issue annual reports 
detailing the extent to which--
            (1) residents participate in the State Advance Payment 
        Programs,
            (2) participating residents file Federal and State tax 
        returns,
            (3) participating residents report accurately the amount of 
        the advance earned income payments made to them by the 
        responsible State agency during the year, and
            (4) recipients of excessive advance earned income payments 
        repaid those amounts.
The report shall also contain an estimate of the amount of advance 
earned income payments made by each responsible State agency but not 
reported on the tax returns of a participating resident and the amount 
of excessive advance earned income payments.
    (d) Authorization of Appropriations.--For purposes of providing 
technical assistance described in subsection (b), preparing the reports 
described in subsection (c), and providing grants to States in support 
of designated State Advance Payment Programs, there are authorized to 
be appropriated in advance to the Secretary of the Treasury and the 
Secretary of Health and Human Services a total of $1,400,000 for fiscal 
years 1996 through 1999.

                         Subtitle C--Child Care

SEC. 221. DEPENDENT CARE CREDIT TO BE REFUNDABLE; HIGH-INCOME TAXPAYERS 
              INELIGIBLE FOR CREDIT.

    (a) Credit To Be Refundable.--
            (1) In general.--Section 21 of the Internal Revenue Code of 
        1986 (relating to expenses for household and dependent care 
        services necessary for gainful employment) is hereby moved to 
        subpart C of part IV of subchapter A of chapter 1 of such Code 
        (relating to refundable credits) and inserted after section 34.
            (2) Technical amendments.--
                    (A) Section 35 of such Code is redesignated as 
                section 36.
                    (B) Section 21 of such Code is redesignated as 
                section 35.
                    (C) Paragraph (1) of section 35(a) of such Code (as 
                redesignated by subparagraph (B)) is amended by 
                striking ``this chapter'' and inserting ``this 
                subtitle''.
                    (D) Subparagraph (C) of section 129(a)(2) of such 
                Code is amended by striking ``section 21(e)'' and 
                inserting ``section 35(e)''.
                    (E) Paragraph (2) of section 129(b) of such Code is 
                amended by striking ``section 21(d)(2)'' and inserting 
                ``section 35(d)(2)''.
                    (F) Paragraph (1) of section 129(e) of such Code is 
                amended by striking ``section 21(b)(2)'' and inserting 
                ``section 35(b)(2)''.
                    (G) Subsection (e) of section 213 of such Code is 
                amended by striking ``section 21'' and inserting 
                ``section 35''.
                    (H) Paragraph (2) of section 1324(b) of title 31, 
                United States Code, is amended by inserting before the 
                period ``, or from section 35 of such Code''.
                    (I) The table of sections for subpart C of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 35 and inserting 
                the following:

                              ``Sec. 35. Expenses for household and 
                                        dependent care services 
                                        necessary for gainful 
                                        employment.
                              ``Sec. 36. Overpayments of tax.''.
                    (J) The table of sections for subpart A of such 
                part IV is amended by striking the item relating to 
                section 21.
    (b) Higher-Income Taxpayers Ineligible for Credit.--Subsection (a) 
of section 35 of such Code, as redesignated by subsection (a), is 
amended by adding at the end the following new paragraph:
            ``(3) Phaseout of credit for higher-income taxpayers.--The 
        amount of the credit which would (but for this paragraph) be 
        allowed by this section shall be reduced (but not below zero) 
        by an amount which bears the same ratio to such amount of 
        credit as the excess of the taxpayer's adjusted gross income 
        for the taxable year over $60,000 bears to $20,000. Any 
        reduction determined under the preceding sentence which is not 
        a multiple of $10 shall be rounded to the nearest multiple of 
        $10.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

SEC. 222. FUNDING OF CHILD CARE SERVICES.

    (a) Elimination of Child Care Programs.--
            (1) AFDC and transitional child care programs.--
                    (A) Repealer.--Section 402(g) (42 U.S.C. 602(g)) is 
                hereby repealed.
                    (B) Conforming amendments.--
                            (i) Section 403(a)(3) (42 U.S.C. 603(a)(3)) 
                        is amended by striking ``other than services 
                        furnished pursuant to section 402(g)''.
                            (ii) Section 403(e) (42 U.S.C. 603(e)) is 
                        amended--
                                    (I) by striking ``, 402(a)(43), and 
                                402(g)(1),'' and inserting ``and 
                                402(a)(43)''; and
                                    (II) by striking the 2nd sentence.
            (2) At-risk child care program.--Sections 402(i) and 403(n) 
        (42 U.S.C. 602(i) and 603(n)) are hereby repealed.
            (3) Child care programs under the child care and 
        development block grant act of 1990.--The Child Care and 
        Development Block Grant Act of 1990 (42 U.S.C. 9858 et seq.) is 
        hereby repealed.
    (b) Funding of Child Care Services Through Social Services Block 
Grant Program.--Title XX (42 U.S.C. 1397-1397f) is amended by adding at 
the end the following:

``SEC. 2008. CHILD CARE.

    ``(a) Conditional Entitlement.--In addition to any payment under 
section 2002 or 2007, each State with a plan approved under this 
section for a fiscal year shall be entitled to payment of an amount 
equal to the special allotment of the State for the fiscal year.
    ``(b) State Plans.--
            ``(1) Content.--A plan meets the requirements of this 
        paragraph if the plan--
                    ``(A) identifies an appropriate State agency to be 
                the lead agency responsible for administering at the 
                State level, and coordinating with local governments, 
                the activities of the State pursuant to this section;
                    ``(B) describes the activities the State will carry 
                out with funds provided under this section;
                    ``(C) provides assurances that the funds provided 
                under this section will be used to supplement, not 
                supplant, State and local funds as well as Federal 
                funds provided under any Act and applied to child care 
                activities in the State during fiscal year 1989;
                    ``(D) provides assurances that the State will not 
                expend more than 7 percent of the funds provided to the 
                States under this section for the fiscal year for 
                administrative expenses;
                    ``(E) provides assurances that, in providing child 
                care assistance, the State will give priority to 
                families with low income and families living in a low-
                income geographical area;
                    ``(F) ensures that child care providers reimbursed 
                under this section meet applicable standards of State 
                and local law;
                    ``(G) provides assurances that the lead agency will 
                coordinate the use of funds provided under this section 
                with the use of other Federal resources for child care 
                provided under this Act, and with other Federal, State, 
                or local child care and preschool programs operated in 
                the State;
                    ``(H) provides for the establishment of such fiscal 
                and accounting procedures as may be necessary to--
                            ``(i) ensure a proper accounting of Federal 
                        funds received by the State under this section; 
                        and
                            ``(ii) ensure the proper verification of 
                        the reports submitted by the State under 
                        subsection (f)(2);
                    ``(I) provides assurances that the State will not 
                impose more stringent standards and licensing or 
                regulatory requirements on child care providers 
                receiving funds provided under this section than those 
                imposed on other child care providers in the State;
                    ``(J) provides assurances that the State will not 
                implement any policy or practice which has the effect 
                of significantly restricting parental choice by--
                            ``(i) expressly or effectively excluding 
                        any category of care or type of provider within 
                        a category of care;
                            ``(ii) limiting parental access to or 
                        choices from among various categories of care 
                        or types of providers; or
                            ``(iii) excluding a significant number of 
                        providers in any category of care; and
                    ``(K) provides assurances that parents will be 
                informed regarding their options under this section, 
                including the option of receiving a child care 
                certificate or voucher.
            ``(2) Form.--A State may submit a plan that meets the 
        requirements of paragraph (1) in the form of amendments to the 
        State plan submitted pursuant to section 658E of the Child Care 
        and Development Block Grant Act of 1990, as in effect before 
        the effective date of section 222 of the Individual 
        Responsibility Act of 1995.
            ``(3) Approval.--Not later than 90 days after the date the 
        State submits a plan to the Secretary under this subsection, 
        the Secretary shall either approve or disapprove the plan. If 
        the Secretary disapproves the plan, the Secretary shall provide 
        the State with an explanation and recommendations for changes 
        in the plan to gain approval.
    ``(c) Special Allotments.--
            ``(1) In general.--The special allotment of a State for a 
        fiscal year equals the amount that bears the same ratio to the 
        amount specified in paragraph (2) for the fiscal year, as the 
        number of children who have not attained 13 years of age and 
        are residing with families in the State bears to the total 
        number of such children in all States with plans approved under 
        this section for the fiscal year, determined on the basis of 
        the most recent data available from the Department of Commerce 
        at the time the special allotment is determined.
            ``(2) Amount specified.--The amount specified in this 
        paragraph is--
                    ``(A) $1,400,000,000 for fiscal year 1997; and
                    ``(B) $1,450,000,000 for each of fiscal years 1998, 
                1999, and 2000.
    ``(d) Payments to States.--
            ``(1) Payments.--The Secretary shall provide funds to each 
        State with a plan approved under this section for a fiscal year 
        from the special allotment of the State for the fiscal year, in 
        accordance with section 6503 of title 31, United States Code.
            ``(2) Expenditure of funds by states.--Except as provided 
        in paragraph (3)(A), each State to which funds are paid under 
        this section for a fiscal year shall expend such funds in the 
        fiscal year or in the immediately succeeding fiscal year.
            ``(3) Redistribution of unexpended special allotments.--
                    ``(A) Remittance to the secretary.--Each State to 
                which funds are paid under this section for a fiscal 
                year shall remit to the Secretary that part of such 
                funds which the State intends not to, or does not, 
                expend in the fiscal year or in the immediately 
                succeeding fiscal year.
                    ``(B) Redistribution.--The Secretary shall increase 
                the special allotment of each State with a plan 
                approved under this part for a fiscal year that does 
                not remit any amount to the Secretary for the fiscal 
                year by an amount equal to--
                            ``(i) the aggregate of the amounts remitted 
                        pursuant to subparagraph (A) for the fiscal 
                        year; multiplied by
                            ``(ii) the adjusted State share for the 
                        fiscal year.
                    ``(C) Adjusted state share.--As used in 
                subparagraph (B)(ii), the term `adjusted State share' 
                means, with respect to a fiscal year--
                            ``(i) the special allotment of the State 
                        for the fiscal year (before any increase under 
                        subparagraph (B)); divided by
                            ``(ii)(I) the sum of the special allotments 
                        of all States with plans approved under this 
                        part for the fiscal year; minus
                            ``(II) the aggregate of the amounts 
                        remitted to the Secretary pursuant to 
                        subparagraph (A) for the fiscal year.
    ``(e) Use of Funds.--
            ``(1) In general.--Funds provided under this section shall 
        be used to expand parent choices in selecting child care, to 
        address deficiencies in the supply of child care, and to expand 
        and improve child care services, with an emphasis on providing 
        such services to low-income families and geographical areas. 
        Subject to the approval of the Secretary, States to which funds 
        are paid under this section shall use such funds to carry out 
        child care programs and activities through cash grants, 
        certificates, or contracts with families, or public or private 
        entities as the State determines appropriate. States shall take 
        parental preference into account to the maximum extent possible 
        in carrying out child care programs.
            ``(2) Specific uses.--Each State to which funds are paid 
        under this section may expend such funds for--
                    ``(A) child care services for infants, sick 
                children, children with special needs, and children of 
                adolescent parents;
                    ``(B) after-school and before-school programs and 
                programs during nontraditional hours for the children 
                of working parents;
                    ``(C) programs for the recruitment and training of 
                day care workers, including older Americans;
                    ``(D) grant and loan programs to enable child care 
                workers and providers to meet State and local standards 
                and requirements;
                    ``(E) child care programs developed by public and 
                private sector partnerships;
                    ``(F) State efforts to provide technical assistance 
                designed to help providers improve the services offered 
                to parents and children; and
                    ``(G) other child care-related programs consistent 
                with the purpose of this section and approved by the 
                Secretary.
            ``(3) Limitations on use of funds.--A State to which funds 
        are paid under this section for a fiscal year shall use not 
        less than 80 percent of such funds to provide direct child care 
        assistance to low-income parents through child care 
        certificates or vouchers, contracts, or grants.
            ``(4) Methods of funding.--Funds for child care services 
        under this title shall be for the benefit of parents and shall 
        be provided through child care vouchers or certificates 
        provided directly to parents or through contracts or grants 
        with public or private providers.
            ``(5) Parental rights of choice.--Any parent who receives a 
        child care certificate under this title may use such 
        certificate with any child care provider, including those 
        providers which have religious activities, if such provider is 
        freely chosen by the parent from among the available 
        alternatives.
            ``(6) Child care certificates.--
                    ``(A) In general.--For purposes of this title, a 
                child care certificate is a certificate issued by a 
                State directly to a parent or legal guardian for use 
                only as payment for child care services in any child 
                care facility eligible to receive funds under this Act.
                    ``(B) Redemption.--If the demand for child care 
                services of families qualified to receive such services 
                from a State under this Act exceeds the available 
                supply of such services, the State shall ration 
                assistance to obtain such services using procedures 
                that do not disadvantage parents using child care 
                certificates, relative to other methods of financing, 
                in either the waiting period or the pecuniary value of 
                such services.
                    ``(C) Commencement of certificate program.--
                Beginning not later than 1 year after the date of the 
                enactment of this section, each State that receives 
                funds under this title shall offer a child care 
                certificate program in accordance with this section.
                    ``(D) Authority to use child care funds for 
                certificate program.--Each State to which funds are 
                paid under this title may use the funds provided to the 
                State under this title which are required to be used 
                for child care activities to plan and establish the 
                State's child care certificate program.
            ``(7) Option of receiving a child care certificate.--Each 
        parent or legal guardian who receives assistance pursuant to 
        this title shall be provided with the option of enrolling their 
        child with an eligible child care provider that receives funds 
        through grants, contracts, or child care certificates provided 
        under this title. Such parent shall have the right to use such 
        certificates to purchase child care services from an eligible 
        provider of their choice. The State shall ensure that parental 
        preference is considered to the maximum extent possible in 
        awarding grants or contracts.
            ``(8) Rights of religious child care providers.--
        Notwithstanding any other provision of law, a religious child 
        care provider who receives funds under this Act may require 
        adherence by employees to the religious tenets or teachings of 
        the provider.
            ``(9) Eligible child care providers.--Any child care 
        provider who meets applicable standards of State and local law 
        shall be eligible to receive funds under this section. As used 
        in this paragraph, the term `child care provider' includes--
                    ``(A) proprietary for-profit entities, relatives, 
                informal day care homes, religious child care 
                providers, day care centers, and any other entities 
                that the State determines appropriate subject to 
                approval of the Secretary;
                    ``(B) nonprofit organizations under subsections (c) 
                and (d) of section 501 of the Internal Revenue Code of 
                1986;
                    ``(C) professional or employee associations;
                    ``(D) consortia of small businesses; and
                    ``(E) units of State and local governments, and 
                elementary, secondary, and post-secondary educational 
                institutions.
            ``(10) Prohibited uses.--Any State to which funds are paid 
        under this section may not use such funds--
                    ``(A) to satisfy any State matching requirement 
                imposed under any Federal grant;
                    ``(B) for the purchase or improvement of land, or 
                the purchase, construction, or permanent improvement 
                (other than minor remodeling) of any building or other 
                facility; or
                    ``(C) to provide any service which the State makes 
                generally available to the residents of the State 
                without cost to such residents and without regard to 
                the income of such residents.
    ``(f) Reporting Requirements.--
            ``(1) Notice to secretary of unexpended funds.--Each State 
        which has not completely expended the funds paid to the State 
        under this section for a fiscal year in the fiscal year or the 
        immediately succeeding fiscal year shall notify the Secretary 
        of any amount not so expended.
            ``(2) State reports on use of funds.--Not later than 18 
        months after the date of the enactment of this section, and 
        each year thereafter, the State shall prepare and submit to the 
        Secretary, in such form as the Secretary shall prescribe, a 
        report describing the State's use of funds paid to the State 
        under this section, including--
                    ``(A) the number, type, and distribution of 
                services and programs under this section;
                    ``(B) the average cost of child care, by type of 
                provider;
                    ``(C) the number of children serviced under this 
                section;
                    ``(D) the average income and distribution of 
                incomes of the families being served;
                    ``(E) efforts undertaken by the State pursuant to 
                this section to promote and ensure health and safety 
                and improve quality; and
                    ``(F) such other information as the Secretary 
                considers appropriate.
            ``(3) Guidelines for state reports; coordination with 
        reports under section 2006.--Within 6 months after the date of 
        the enactment of this section, the Secretary shall establish 
        guidelines for State reports under paragraph (2). To the extent 
        feasible, the Secretary shall coordinate such reporting 
        requirement with the reports required under section 2006 and, 
        as the Secretary deems appropriate, with other reporting 
        requirements placed on States as a condition of receipt of 
        other Federal funds which support child care.
            ``(4) Reports by the secretary.--
                    ``(A) Reports to the congress of summary of state 
                reports.--The Secretary shall annually summarize the 
                information reported to the Secretary pursuant to 
                paragraph (2) and provide such summary to the Congress.
                    ``(B) Reports to the states on effective 
                practices.--The Secretary shall annually provide the 
                States with a report on particularly effective 
                practices and programs supported by funds paid to the 
                State under this section, which ensure the health and 
                safety of children in care, promote quality child care, 
                and provide training to all types of providers.
    ``(g) Administration and Enforcement.--
            ``(1) Administration.--The Secretary shall--
                    ``(A) coordinate all activities of the Department 
                of Health and Human Services relating to child care, 
                and, to the maximum extent practicable, coordinate such 
                activities with similar activities of other Federal 
                entities;
                    ``(B) collect, publish, and make available to the 
                public a listing of State child care standards at least 
                once every 3 years; and
                    ``(C) provide technical assistance to assist States 
                to carry out this section, including assistance on a 
                reimbursable basis.
            ``(2) Enforcement.--
                    ``(A) Review of compliance with state plan.--The 
                Secretary shall review and monitor State compliance 
                with this section and the plans approved under this 
                section for the State, and shall have the power to 
                terminate payments to the State in accordance with 
                subparagraph (B).
                    ``(B) Noncompliance.--
                            ``(i) In general.--If the Secretary, after 
                        reasonable notice to a State and opportunity 
                        for a hearing, finds that--
                                    ``(I) there has been a failure by 
                                the State to comply substantially with 
                                any provision or requirement set forth 
                                in the plan approved under this section 
                                for the State; or
                                    ``(II) in the operation of any 
                                program for which assistance is 
                                provided under this section there is a 
                                failure by the State to comply 
                                substantially with any provision of 
                                this section;
                        the Secretary shall notify the State of the 
                        findings and that no further payments may be 
                        made to such State under this section (or, in 
                        the case of noncompliance in the operation of a 
                        program or activity, that no further payments 
                        to the State will be made with respect to such 
                        program or activity) until the Secretary is 
                        satisfied that there is no longer any such 
                        failure to comply or that the noncompliance 
                        will be promptly corrected.
                            ``(ii) Additional sanctions.--In the case 
                        of a finding of noncompliance made pursuant to 
                        clause (i), the Secretary may, in addition to 
                        imposing the sanctions described in such 
                        subparagraph, impose the other appropriate 
                        sanctions, including recoupment of money 
                        improperly expended for purposes prohibited or 
                        not authorized by this section, and 
                        disqualification from the receipt of financial 
                        assistance under this section.
                            ``(iii) Notice.--The notice required under 
                        subparagraph (A) shall include a specific 
                        identification of any additional sanction being 
                        imposed under clause (ii).
                    ``(C) Issuance of rules.--The Secretary shall 
                establish by rule procedures for--
                            ``(i) receiving, processing, and 
                        determining the validity of complaints 
                        concerning any failure of a State to comply 
                        with the State plan or any requirement of this 
                        section; and
                            ``(ii) imposing sanctions under this 
                        subsection.

``SEC. 2009. CHILD CARE DURING PARTICIPATION IN EMPLOYMENT, EDUCATION, 
              AND TRAINING; EXTENDED ELIGIBILITY.

    ``(a) Child Care Guarantee.--
            ``(1) In general.--Each State agency referred to in section 
        2008(b)(1)(A) shall guarantee child care in accordance with 
        section 2008--
                    ``(A) for any individual who is participating in an 
                education or training activity (including participation 
                in a program established under part G of title IV) if 
                the State agency approves the activity and determines 
                that the individual is participating satisfactorily in 
                the activity;
                    ``(B) for each family with a dependent child 
                requiring such care to the extent that such care is 
                determined by the State agency to be necessary for an 
                individual in the family to accept employment or remain 
                employed, including in a community service job under 
                part H of title IV; and
                    ``(C) to the extent that the State agency 
                determines that such care is necessary for the 
                employment of an individual, if the family of which the 
                individual is a member has ceased to receive aid under 
                the State plan approved under part A of title IV by 
                reason of increased hours of, or income from, such 
                employment or by reason of section 
                402(a)(8)(B)(ii)(II), subject to paragraph (2) of this 
                subsection.
            ``(2) Limitations on eligibility for transitional child 
        care.--A family shall not be eligible for child care under 
        paragraph (1)(C)--
                    ``(A) for more than 12 months after the last month 
                for which the family received aid described in such 
                paragraph;
                    ``(B) if the family did not receive such aid in at 
                least 3 of the most recent 6 months in which the family 
                received such aid;
                    ``(C) if the family does not include a child who is 
                (or, if needy, would be) a dependent child (within the 
                meaning of part A of title IV);
                    ``(D) for any month beginning after the caretaker 
                relative (within the meaning of such part) in the 
                family has terminated his or her employment without 
                good cause; or
                    ``(E) with respect to a child, for any month 
                beginning after the caretaker relative in the family 
                has refused to cooperate with the State in establishing 
                or enforcing the obligation of any parent of the child 
                to provide support for the child, without good cause as 
                determined by the State agency in accordance with 
                standards prescribed by the Secretary which shall take 
                into consideration the best interests of the child.
    ``(b) State Entitlement to Payments.--Each State with a plan 
approved under section 2008 shall be entitled to receive from the 
Secretary for any fiscal year an amount equal to--
            ``(1) the total amount expended by the State to carry out 
        subsection (a) during the fiscal year; multiplied by
            ``(2) the greater of--
                    ``(A) 70 percent; or
                    ``(B) the Federal medical assistance percentage (as 
                defined in the last sentence of section 1118, increased 
                by 10 percentage points.''.
    (c) Effective Date.--The amendments and repeals made by this 
section shall take effect on October 1, 1996.

                    Subtitle D--AFDC Work Disregards

SEC. 231. OPTION TO INCREASE DISREGARD OF EARNED INCOME.

    Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)) is amended--
            (1) by striking ``and'' at the end of clause (vii); and
            (2) by adding at the end the following:
                    ``(ix) if electing to disregard clauses (ii) and 
                (iv), shall disregard from the earned income of any 
                child, relative, or other individual specified in 
                clause (ii) an amount equal to not less than the first 
                $120 and not more than the first $225 of the total of 
                such earned income not disregarded under any other 
                clause of this subparagraph, plus not more than one 
                third of the remainder of such earned income; and''.

SEC. 232. STATE OPTION TO ESTABLISH VOLUNTARY DIVERSION PROGRAM.

    Section 402(a) (42 U.S.C. 602(a)), as amended by sections 101, 102, 
and 211(a) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (47);
            (2) by striking the period at the end of paragraph (48) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (48) the following:
            ``(49) at the option of the State, and in such part or 
        parts of the State as the State may select, provide that--
                    ``(A) upon the recommendation of the caseworker who 
                is handling the case of a family eligible for aid under 
                the State plan, the State shall, in lieu of any other 
                payment under the State plan to a family during a time 
                period of not more than 3 months, make a lump-sum 
                payment to the family for the time period in an amount 
                not to exceed--
                            ``(i) the amount of the monthly benefit to 
                        which the family is entitled under the State 
                        plan; multiplied by
                            ``(ii) the number of months in the time 
                        period;
                    ``(B) a lump-sum payment pursuant to subparagraph 
                (A) shall not be made more than once to any family; and
                    ``(C) if, during a time period for which the State 
                has made a lump-sum payment to a family pursuant to 
                subparagraph (A), the family applies for and (but for 
                the lump-sum payment) would be eligible for aid under 
                the State plan for a greater monthly benefit than the 
                monthly benefit to which the family was entitled under 
                the State plan at the time of the calculation of the 
                lump sum payment, then, notwithstanding subparagraph 
                (A), the State shall, for that part of the time period 
                that remains after the family becomes eligible for the 
                greater monthly benefit, provide monthly benefits to 
                the family in an amount not to exceed--
                            ``(i) the amount by which the greater 
                        monthly benefit exceeds the former monthly 
                        benefit, multiplied by the number of months in 
                        the time period; divided by
                            ``(ii) the whole number of months remaining 
                        in the time period.''.

SEC. 233. ELIMINATION OF QUARTERS OF COVERAGE REQUIREMENT FOR MARRIED 
              TEENS UNDER AFDC-UP PROGRAM.

    (a) In General.--Section 407(b)(1)(A)(iii)(I) (42 U.S.C. 
607(b)(1)(A)(iii)(I)) is amended by inserting ``except in the case of a 
family in which the parents are married and neither parent has attained 
20 years of age,'' after ``(I)''.
    (b) Extension of AFDC-UP Program.--Section 401(h) of the Family 
Support Act of 1988 (42 U.S.C. 602 and note, 607) is amended by 
striking ``1998'' and inserting ``2000''.

                   Subtitle E--AFDC Asset Limitations

SEC. 241. INCREASE IN RESOURCE THRESHOLDS; SEPARATE THRESHOLD FOR 
              VEHICLES.

    Section 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)) is amended--
            (1) by striking ``$1,000 or such lower amount as the State 
        may determine'' and inserting ``$2,000''; and
            (2) in clause (i), by striking ``such amount as the 
        Secretary may prescribe'' and inserting ``the dollar amount 
        prescribed by the Secretary of Agriculture under section 5(g) 
        of the Food Stamp Act of 1977''.

SEC. 242. LIMITED DISREGARD OF AMOUNTS SAVED FOR POST-SECONDARY 
              EDUCATION, THE PURCHASE OF A FIRST HOME, OR THE 
              ESTABLISHMENT OR OPERATION OF A MICROENTERPRISE.

    (a) Disregard From Resources.--Section 402(a)(7)(B) (42 U.S.C. 
602(a)(7)(B)) is amended--
            (1) by striking ``or'' before ``(iv)''; and
            (2) by inserting ``, or (v) any amount not exceeding $8,000 
        in 1 qualified asset account (as defined in section 406(i)) of 
        1 member of such family'' before ``; and''.
    (b) Disregard From Income.--
            (1) In general.--Section 402(a)(8)(A) (42 U.S.C. 
        602(a)(8)(A)), as amended by section 231 of this Act, is 
        amended--
                    (A) by striking ``and'' at the end of clause 
                (viii); and
                    (B) by inserting after clause (ix) the following 
                new clause:
                            ``(x) shall disregard any interest or 
                        income earned on a qualified asset account (as 
                        defined in section 406(i)) and paid into the 
                        account, to the extent that the total amount in 
                        the account, after such payment, does not 
                        exceed $8,000; and''.
            (2) Nonrecurring lump sum exempt from lump sum rule.--
        Section 402(a)(17) (42 U.S.C. 602(a)(17)) is amended by adding 
        at the end the following: ``; and that this paragraph shall not 
        apply to earned or unearned income received in a month on a 
        nonrecurring basis to the extent that such income is placed in 
        a qualified asset account (as defined in section 406(i)) the 
        total amount in which, after such placement, does not exceed 
        $8,000;''.
            (3) Treatment as income.--Section 402(a)(7) (42 U.S.C. 
        602(a)(7)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (B);
                    (B) by striking the semicolon at the end of 
                subparagraph (C) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(D) shall treat as income any distribution from a 
                qualified asset account (as defined in section 
                406(i)(1)) that is not a qualified distribution (as 
                defined in section 406(i)(2));''.
    (c) Definitions.--Section 406 (42 U.S.C. 606) is amended by adding 
at the end the following:
    ``(i)(1) The term `qualified asset account' means a mechanism 
approved by the State (such as individual retirement accounts, escrow 
accounts, or savings bonds) that allows savings of an individual 
receiving aid to families with dependent children to be used for a 
purpose described in paragraph (2).
    ``(2) The term `qualified distribution' means a distribution for 
expenses directly related to 1 or more of the following purposes:
            ``(A) The attendance of a member of the family at any 
        postsecondary education program.
            ``(B) The purchase of residential real property for the 
        family that the family intends to occupy, if no member of the 
        family has an ownership interest in such a property.
            ``(C) The establishment or operation of a microenterprise 
        owned by a member of the family.
    ``(j) The term `microenterprise' means a commercial enterprise 
which has 5 or fewer employees, 1 or more of whom owns the 
enterprise.''.

                   TITLE III--THE WORK FIRST PROGRAM

SEC. 301. WORK FIRST PROGRAM.

    (a) State Plan Requirement.--Section 402(a) (42 U.S.C. 602(a)), as 
amended by sections 101, 102, 211(a), and 232 of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (48);
            (2) by striking the period at the end of paragraph (49) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (49) the following:
            ``(50) provide that the State--
                    ``(A) shall develop an individual responsibility 
                plan in accordance with part F for each applicant for, 
                or recipient of, aid under the State plan who--
                            ``(i) has attained 18 years of age; or
                            ``(ii) has not completed high school or 
                        obtained a certificate of high school 
                        equivalency, and is not attending secondary 
                        school;
                    ``(B) has in effect and operation--
                            ``(i) a work first program that meets the 
                        requirements of subpart 1 of part G (or, for 
                        any fiscal year for which the Secretary has 
                        approved a State plan under subpart 2 of part 
                        G, such subpart 2); and
                            ``(ii) a community service program that 
                        meets the requirements of part H, or a job 
                        placement voucher program that meets the 
                        requirements of part I, but not both;
                    ``(C) shall provide a position in the workfare 
                program established by the State under part H, or a job 
                placement voucher under the job placement voucher 
                program established by the State under part I to any 
                individual who, by reason of section 497(b), is 
                prohibited from participating in the work first program 
                operated by the State, and shall not provide such a 
                position or such a voucher to any other individual; and
                    ``(D) shall provide to participants in such 
                programs such case management services as are necessary 
                to ensure the integrated provision of benefits and 
                services under such programs.''.
    (b) Establishment and Operation of Program.--Title IV (42 U.S.C. 
601 et seq.) is amended by striking part F and inserting the following:

                ``Part F--Individual Responsibility Plan

``SEC. 481. ASSESSMENT.

    ``The State agency referred to in section 402(a)(3) shall make an 
initial assessment of the skills, prior work experience, and 
employability of each individual for whom section 402(a)(50)(A) 
requires the State to develop an individual responsibility plan.

``SEC. 482. INDIVIDUAL RESPONSIBILITY PLANS.

    ``(a) In General.--On the basis of the assessment made under 
section 481 with respect to an individual, the State agency, in 
consultation with the individual, shall develop an individual 
responsibility plan for the individual, which--
            ``(1) shall provide that participation by the individual in 
        job search activities shall be a condition of eligibility for 
        aid under the State plan approved under part A, except during 
        any period for which the individual is employed full-time in an 
        unsubsidized job in the private sector;
            ``(2) sets forth an employment goal for the individual and 
        a plan for moving the individual immediately into private 
        sector employment;
            ``(3) sets forth the obligations of the individual, which 
        may include a requirement that the individual attend school, 
        maintain certain grades and attendance, keep school age 
        children of the individual in school, immunize children, attend 
        parenting and money management classes, or do other things that 
        will help the individual become and remain employed in the 
        private sector; and
            ``(4) may require that the individual enter the State 
        program established under part G, if the caseworker determines 
        that the individual will need education, training, job 
        placement assistance, wage enhancement, or other services to 
        become employed in the private sector.
    ``(b) Timing.--The State agency shall comply with subsection (a) 
with respect to an individual--
            ``(1) within 90 days (or, at the option of the State, 180 
        days) after the effective date of this part, in the case of an 
        individual who, as of such effective date, is a recipient of 
        aid under the State plan approved under part A; or
            ``(2) within 30 days (or, at the option of the State, 90 
        days) after the individual is determined to be eligible for 
        such aid, in the case of any other individual.

``SEC. 483. PROVISION OF PROGRAM AND EMPLOYMENT INFORMATION.

    ``The State shall inform all applicants for and recipients of aid 
under the State plan approved under part A of all available services 
under the State plan for which they are eligible.

``SEC. 484. REQUIREMENT THAT RECIPIENTS ENTER THE WORK FIRST PROGRAM.

    ``(a) In General.--Beginning with fiscal year 2004, the State shall 
place recipients of aid under the State plan approved under part A, who 
have not become employed in the private sector within 1 year after 
signing an individual responsibility plan, in the first available slot 
in the State program established under part G, except as provided in 
subsection (b).
    ``(b) Exceptions.--A State may not be required to place a recipient 
of such aid in the State program established under part G if the 
recipient--
            ``(1) is ill, incapacitated, or of advanced age;
            ``(2) has not attained 18 years of age;
            ``(3) is caring for a child or parent who is ill or 
        incapacitated; or
            ``(4) is enrolled in school or in educational or training 
        programs that will lead to private sector employment.

``SEC. 485. PENALTIES.

    ``(a) State not Operating a Work First Program Under a State Model 
or a Workfare Program.--In the case of a State that is not operating a 
program under subpart 2 of part G or under part H:
            ``(1) Failure to comply with individual responsibility plan 
        or agreement of mutual responsibility.--
                    ``(A) Progressive reductions in aid for 1st and 2nd 
                failures.--The amount of aid otherwise payable under 
                the State plan approved under part A to a family that 
                includes an individual who fails without good cause to 
                comply with an individual responsibility plan (or, if 
                the State has established a program under subpart 1 of 
                part G and the individual is required to participate in 
                the program, an agreement of mutual responsibility) 
                signed by the individual (other than by reason of 
                conduct described in paragraph (2)) shall be reduced 
                by--
                            ``(i) 33 percent for the 1st such act of 
                        noncompliance; or
                            ``(ii) 66 percent for the 2nd such act of 
                        noncompliance.
                    ``(B) Denial of aid for 3rd failure.--In the case 
                of the 3rd such act of noncompliance, the family of 
                which the individual is a member shall not thereafter 
                be eligible for aid under the State plan approved under 
                part A.
                    ``(C) Acts of noncompliance.--For purposes of this 
                paragraph, a 1st act of noncompliance by an individual 
                continues for more than 1 calendar month shall be 
                considered a 2nd act of noncompliance, and a 2nd act of 
                noncompliance that continues for more than 3 calendar 
                months shall be considered a 3rd act of noncompliance.
            ``(2) Denial of afdc to adults refusing to work, look for 
        work, or accept a bona fide offer of employment.--
                    ``(A) Refusal to work or look for work.--If an 
                unemployed individual who has attained 18 years of age 
                refuses to work or look for work--
                            ``(i) in the case of the 1st such refusal, 
                        aid under the State plan approved under part A 
                        shall not be payable with respect to the 
                        individual until the later of--
                                    ``(I) a period of not less than 6 
                                months after the date of the first such 
                                refusal; or
                                    ``(II) the first date the 
                                individual agrees to work or look for 
                                work.
                            ``(ii) in the case of the 2nd such refusal, 
                        the family of which the individual is a member 
                        shall not thereafter be eligible for aid under 
                        the State plan approved under part A.
                    ``(B) Refusal to accept a bona fide offer of 
                employment.--If an unemployed individual who has 
                attained 18 years of age refuses to accept a bona fide 
                offer of employment, the family of which the individual 
                is a member shall not thereafter be eligible for aid 
                under the State plan approved under part A.
    ``(b) Other States.--In the case of any other State, the State 
shall reduce, by such amount as the State considers appropriate, the 
amount of aid otherwise payable under the State plan approved under 
part A to a family that includes an individual who fails without good 
cause to comply with an individual responsibility plan signed by the 
individual.

                      ``Part G--Work First Program

                       ``Subpart 1--Federal Model

``SEC. 491. ESTABLISHMENT AND OPERATION OF STATE PROGRAMS.

    ``A work first program meets the requirements of this subpart if 
the program meets the following requirements:
            ``(1) Objective.--The objective of the program is for each 
        program participant to find and hold a full-time unsubsidized 
        paid job, and for this goal to be achieved in a cost-effective 
        fashion.
            ``(2) Method.--The method of the program is to connect 
        recipients of aid to families with dependent children with the 
        private sector labor market as soon as possible and offer them 
        the support and skills necessary to remain in the labor market. 
        Each component of the program should be permeated with an 
        emphasis on employment and with an understanding that minimum 
        wage jobs are a stepping stone to more highly paid employment.
            ``(3) Job creation.--The creation of jobs, with an emphasis 
        on private sector jobs, shall be a component of the program and 
        shall be a priority for each State office with responsibilities 
        under the program.
            ``(4) Use of incentives.--The State shall use incentives to 
        change the culture of each State office with responsibilities 
        under the State plan approved under part A, improve the 
        performance of employees, and ensure that the objective of each 
        employee of each such State office is to find an unsubsidized 
        paid job for each program participant.
            ``(5) Caseworker training.--The State may provide such 
        training to caseworkers and related personnel (including 
        through the use of incentives) as may be necessary to ensure 
        successful job placements that result in full-time public or 
        private employment (outside the State agencies with 
        responsibilities under part A) for program participants. The 
        State shall reward any caseworker who enters an agreement of 
        mutual responsibility with a program participant that provides 
        for education or training activities as well as work.
            ``(6) Reports.--Each office with responsibility for 
        operating the program shall make monthly statistical reports to 
        the governing body of the State, county, and city in which 
        located, of job placements and the number of program 
        participants who are no longer receiving aid under the State 
        plan approved under part A as a result of participation in the 
        program.
            ``(7) Case management teams.--
                    ``(A) Duties.--The program requires the State to 
                assign to each individual required or allowed to 
                participate in the program a case management team that 
                shall meet with the program participant and develop an 
                agreement of mutual responsibility for the individual.
                    ``(B) Deadline.--
                            ``(i) In general.--The case management team 
                        shall comply with subparagraph (A) with respect 
                        to a program participant within 30 days (or, at 
                        the option of the State, within a period not 
                        exceeding 90 days) after the later of--
                                    ``(I) the date the application of 
                                the program participant for aid under 
                                the State plan approved under part A 
                                was approved; or
                                    ``(II) the date this subpart first 
                                applies to the State.
                            ``(ii) Repeat participants.--Within 30 days 
                        after the State makes a determination under 
                        section 497(b)(2) to allow an individual to 
                        participate in the program, the case management 
                        team shall meet with the individual and develop 
                        an agreement of mutual responsibility for the 
                        individual.
            ``(8) Agreements of mutual responsibility.--The agreement 
        of mutual responsibility for a participant shall--
                    ``(A) contain an individualized comprehensive plan, 
                developed by the team and the participant, to move the 
                participant into a full-time unsubsidized job, through 
                activities under section 492, 493, 494, 495, or 496;
                    ``(B) to the greatest extent possible, be designed 
                to move the participant as quickly as possible into 
                whatever type and amount of work as the participant is 
                capable of handling, and increases the responsibility 
                and amount of work over time until the participant is 
                able to work full-time;
                    ``(C) where necessary, provide for education or 
                training of the participant;
                    ``(D) provide that aid under the State plan is to 
                be paid to the participant based on the number of hours 
                that the participant spends in activities provided for 
                in the agreement;
                    ``(E) provide that the participant shall spend at 
                least 30 hours per week (or, at State option, at least 
20 hours per week during fiscal years 1997 and 1998, and at least 25 
hours per week during fiscal year 1999) in activities provided for in 
the agreement;
                    ``(F) provide that the participant shall accept any 
                bona fide offer of unsubsidized full-time employment, 
                unless the participant has good cause for not doing so;
                    ``(G) at the option of the State, require the 
                participant to undergo appropriate substance abuse 
                treatment; and
                    ``(H) at the option of the State, require the 
                participant to have his or her children receive 
                appropriate immunizations against disease.
            ``(9) Options for participants.--The case manager for a 
        program participant shall present the participant with each 
        option offered under the State program through which the 
        participant will, over time, be moved into full-time 
        unsubsidized employment.
            ``(10) One-stop employment shops.--
                    ``(A) In general.--In carrying out the program, the 
                State shall utilize and make available to each program 
                participant, through the establishment and operation or 
                utilization of appropriate Federal or State one-stop 
                employment shops, services under programs carried out 
                under the following provisions of law:
                            ``(i) Part A of title II of the Job 
                        Training Partnership Act (29 U.S.C. 1601 et 
                        seq.) (relating to the adult training program).
                            ``(ii) Part B of title II of such Act (29 
                        U.S.C. 1630 et seq.) (relating to the summer 
                        youth employment and training programs).
                            ``(iii) Part C of title II of such Act (29 
                        U.S.C. 1641 et seq.) (relating to the youth 
                        training program).
                            ``(iv) Title III of such Act (29 U.S.C. 
                        1651 et seq.) (relating to employment and 
                        training assistance for dislocated workers).
                            ``(v) Part B of title IV of such Act (29 
                        U.S.C. 1691 et seq.) (relating to the Job 
                        Corps).
                            ``(vi) The Carl D. Perkins Vocational and 
                        Applied Technology Education Act (20 U.S.C. 
                        2301 et seq.).
                            ``(vii) The Adult Education Act (20 U.S.C. 
                        1201 et seq.).
                            ``(viii) Part B of chapter 1 of title I of 
                        the Elementary and Secondary Education Act of 
                        1965 (20 U.S.C. 2741 et seq.) (relating to Even 
                        Start family literacy programs).
                            ``(ix) Subtitle A of title VII of the 
                        Stewart B. McKinney Homeless Assistance Act (42 
                        U.S.C. 11421) (relating to adult education for 
                        the homeless).
                            ``(x) Subtitle B of title VII of such Act 
                        (42 U.S.C. 11431 et seq.) (relating to 
                        education for homeless children and youth).
                            ``(xi) Subtitle C of title VII of such Act 
                        (42 U.S.C. 11441) (relating to job training for 
                        the homeless).
                            ``(xii) The School-to-Work Opportunities 
                        Act of 1994.
                            ``(xiii) The National and Community Service 
                        Act of 1990 (42 U.S.C. 12501 et seq.).
                            ``(xiv) The National Skill Standards Act of 
                        1994.
                    ``(B) Coordination.--In utilizing appropriate 
                Federal or State one-stop employment shops described in 
                subparagraph (A), the State shall ensure coordination 
                between the caseworker of each program participant and 
                the administrators of the programs carried out under 
                the provisions of law described in such subparagraph.
            ``(11) Nondisplacement.--The program may not be operated in 
        a manner that results in--
                    ``(A) the displacement of a currently employed 
                worker or position by a program participant;
                    ``(B) the replacement of an employee who has been 
                terminated with a program participant; or
                    ``(C) the replacement of an individual who is on 
                layoff from the same position given to a program 
                participant or any equivalent position.

``SEC. 492. REVAMPED JOBS PROGRAM.

    ``A State that establishes a program under this subpart may operate 
a program similar to the program known as the `GAIN Program' that has 
been operated by Riverside County, California, under Federal law in 
effect immediately before the date this subpart first applies to the 
State of California.

``SEC. 493. USE OF PLACEMENT COMPANIES.

    ``(a) In General.--A State that establishes a program under this 
subpart may enter into contracts with private companies (whether 
operated for profit or not for profit) for the placement of 
participants in the program in positions of full-time employment, 
preferably in the private sector, for wages sufficient to eliminate the 
need of such participants for cash assistance.
    ``(b) Required Contract Terms.--Each contract entered into under 
this section with a company shall meet the following requirements:
            ``(1) Provision of job readiness and support services.--The 
        contract shall require the company to provide, to any program 
        participant who presents to the company a voucher issued under 
        subsection (d) intensive personalized support and job readiness 
        services designed to prepare the individual for employment and 
        ensure the continued success of the individual in employment.
            ``(2) Payments.--
                    ``(A) In general.--The contract shall provide for 
                payments to be made to the company with respect to each 
                program participant who presents to the company a 
                voucher issued under subsection (d).
                    ``(B) Structure.--The contract shall provide for 
                the majority of the amounts to be paid under the 
                contract with respect to a program participant, to be 
                paid after the company has placed the participant in a 
                position of full-time employment and the participant 
                has been employed in the position for such period of 
                not less than 5 months as the State deems appropriate.
    ``(c) Competitive Bidding Required.--Contracts under this section 
shall be awarded only after competitive bidding.
    ``(d) Vouchers.--The State shall issue a voucher to each program 
participant whose agreement of mutual responsibility provides for the 
use of placement companies under this section, indicating that the 
participant is eligible for the services of such a company.

``SEC. 494. TEMPORARY SUBSIDIZED JOB CREATION.

    ``A State that establishes a program under this subpart may 
establish a program similar to the program known as `JOBS Plus' that 
has been operated by the State of Oregon under Federal law in effect 
immediately before the date this subpart first applies to the State of 
Oregon.

``SEC. 495. MICROENTERPRISE.

    ``(a) Grants and Loans to Nonprofit Organizations for the Provision 
of Technical Assistance, Training, and Credit to Low Income 
Entrepreneurs.--A State that establishes a program under this subpart 
may make grants and loans to nonprofit organizations to provide 
technical assistance, training, and credit to low income entrepreneurs 
for the purpose of establishing microenterprises.
    ``(b) Microenterprise Defined.--For purposes of this subsection, 
the term `microenterprise' means a commercial enterprise which has 5 or 
fewer employees, 1 or more of whom owns the enterprise.

``SEC. 496. WORK SUPPLEMENTATION PROGRAM.

    ``(a) In General.--A State that establishes a program under this 
subpart may institute a work supplementation program under which the 
State, to the extent it considers appropriate, may reserve the sums 
that would otherwise be payable to participants in the program as aid 
to families with dependent children and use the sums instead for the 
purpose of providing and subsidizing jobs for the participants (as 
described in subsection (c)(3)(A) and (B)), as an alternative to the 
aid to families with dependent children that would otherwise be so 
payable to the participants.
    ``(b) State Flexibility.--
            ``(1) Nothing in this subpart, or in any State plan 
        approved under part A, shall be construed to prevent a State 
        from operating (on such terms and conditions and in such cases 
        as the State may find to be necessary or appropriate) a work 
        supplementation program in accordance with this section and 
        section 494 (as in effect immediately before the date this 
        subpart first applies to the State).
            ``(2) Notwithstanding section 402(a)(23) or any other 
        provision of law, a State may adjust the levels of the 
        standards of need under the State plan as the State determines 
        to be necessary and appropriate for carrying out a work 
        supplementation program under this section.
            ``(3) Notwithstanding section 402(a)(1) or any other 
        provision of law, a State operating a work supplementation 
        program under this section may provide that the need standards 
        in effect in those areas of the State in which the program is 
        in operation may be different from the need standards in effect 
        in the areas in which the program is not in operation, and the 
        State may provide that the need standards for categories of 
        recipients may vary among such categories to the extent the 
        State determines to be appropriate on the basis of ability to 
        participate in the work supplementation program.
            ``(4) Notwithstanding any other provision of law, a State 
        may make such further adjustments in the amounts of the aid to 
        families with dependent children paid under the plan to 
        different categories of recipients (as determined under 
        paragraph (3)) in order to offset increases in benefits from 
        needs-related programs (other than the State plan approved 
        under part A) as the State determines to be necessary and 
        appropriate to further the purposes of the work supplementation 
        program.
            ``(5) In determining the amounts to be reserved and used 
        for providing and subsidizing jobs under this section as 
        described in subsection (a), the State may use a sampling 
        methodology.
            ``(6) Notwithstanding section 402(a)(8) or any other 
        provision of law, a State operating a work supplementation 
        program under this section--
                    ``(A) may reduce or eliminate the amount of earned 
                income to be disregarded under the State plan as the 
                State determines to be necessary and appropriate to 
                further the purposes of the work supplementation 
                program; and
                    ``(B) during 1 or more of the first 9 months of an 
                individual's employment pursuant to a program under 
                this subpart, may apply to the wages of the individual 
                the provisions of subparagraph (A)(iv) of section 
                402(a)(8) without regard to the provisions of 
                subparagraph (B)(ii)(II) of such section.
    ``(c) Rules Relating to Supplemented Jobs.--
            ``(1) A work supplementation program operated by a State 
        under this section may provide that any individual who is an 
        eligible individual (as determined under paragraph (2)) shall 
        take a supplemented job (as defined in paragraph (3)) to the 
        extent that supplemented jobs are available under the program. 
        Payments by the State to individuals or to employers under the 
        work supplementation program shall be treated as expenditures 
        incurred by the State for aid to families with dependent 
        children except as limited by subsection (d).
            ``(2) For purposes of this section, an eligible individual 
        is an individual who is in a category which the State 
        determines should be eligible to participate in the work 
        supplementation program, and who would, at the time of 
        placement in the job involved, be eligible for aid to families 
        with dependent children under an approved State plan if the 
        State did not have a work supplementation program in effect.
            ``(3) For purposes of this subsection, a supplemented job 
        is--
                    ``(A) a job provided to an eligible individual by 
                the State or local agency administering the State plan 
                under part A; or
                    ``(B) a job provided to an eligible individual by 
                any other employer for which all or part of the wages 
                are paid by the State or local agency.
        A State may provide or subsidize under the program any job 
        which the State determines to be appropriate.
            ``(4) At the option of the State, individuals who hold 
        supplemented jobs under a State's work supplementation program 
        shall be exempt from the retrospective budgeting requirements 
        imposed pursuant to section 402(a)(13)(A)(ii) (and the amount 
        of the aid which is payable to the family of any such 
        individual for any month, or which would be so payable but for 
        the individual's participation in the work supplementation 
        program, shall be determined on the basis of the income and 
        other relevant circumstances in that month).
    ``(d) Cost Limitation.--The amount of the Federal payment to a 
State under section 403 for expenditures incurred in making payments to 
individuals and employers under a work supplementation program under 
this subsection shall not exceed an amount equal to the amount which 
would otherwise be payable under such section if the family of each 
individual employed in the program established in the State under this 
section had received the maximum amount of aid to families with 
dependent children payable under the State plan to such a family with 
no income (without regard to adjustments under subsection (b)) for the 
lesser of--
            ``(1) 9 months; or
            ``(2) the number of months in which the individual was 
        employed in the program.
    ``(e) Rules of Interpretation.--
            ``(1) This section shall not be construed as requiring the 
        State or local agency administering the State plan to provide 
        employee status to an eligible individual to whom the State or 
        local agency provides a job under the work supplementation 
        program (or with respect to whom the State or local agency 
        provides all or part of the wages paid to the individual by 
        another entity under the program), or as requiring any State or 
        local agency to provide that an eligible individual filling a 
        job position provided by another entity under the program be 
        provided employee status by the entity during the first 13 
        weeks the individual fills the position.
            ``(2) Wages paid under a work supplementation program shall 
        be considered to be earned income for purposes of any provision 
        of law.
    ``(f) Preservation of Medicaid Eligibility.--Any State that chooses 
to operate a work supplementation program under this section shall 
provide that any individual who participates in the program, and any 
child or relative of the individual (or other individual living in the 
same household as the individual) who would be eligible for aid to 
families with dependent children under the State plan approved under 
part A if the State did not have a work supplementation program, shall 
be considered individuals receiving aid to families with dependent 
children under the State plan approved under part A for purposes of 
eligibility for medical assistance under the State plan approved under 
title XIX.

``SEC. 497. PARTICIPATION RULES.

    ``(a) In General.--Except as provided in subsection (b), a State 
that establishes a program under this part may require any individual 
receiving aid under the State plan approved under part A to participate 
in the program.
    ``(b) 2-Year Limitation on Participation.--
            ``(1) In general.--Except as provided in paragraph (2), an 
        individual may not participate in a State program established 
        under this part if the individual has participated in the State 
        program established under this part for 24 months after the 
        date the individual first signed an agreement of mutual 
        responsibility under this part, excluding any month during 
        which the individual worked for an average of at least 25 hours 
        per week in a private sector job.
            ``(2) Authority to allow repeat participation.--
                    ``(A) In general.--Subject to subparagraph (B) of 
                this paragraph, a State may allow an individual who, by 
                reason of paragraph (1), would be prohibited from 
                participating in the State program established under 
                this part to participate in the program for such 
                additional period or periods as the State determines 
                appropriate.
                    ``(B) Limitation on percentage of repeat 
                participants.--
                            ``(i) In general.--Except as provided in 
                        clause (ii) of this subparagraph, the number of 
                        individuals allowed under subparagraph (A) to 
                        participate during a program year in a State 
                        program established under this part shall not 
                        exceed--
                                    ``(I) 10 percent of the total 
                                number of individuals who participated 
                                in the State program established under 
                                this part or the State program 
                                established under part H during the 
                                immediately preceding program year; or
                                    ``(II) in the case of fiscal year 
                                2004 or any succeeding fiscal year, 15 
                                percent of such total number of 
                                individuals.
                            ``(ii) Authority to increase limitation.--
                                    ``(I) Petition.--A State may 
                                request the Secretary to increase to 
                                not more than 15 percent the percentage 
                                limitation imposed by clause (i)(I) for 
                                a fiscal year before fiscal year 2004.
                                    ``(II) Authority to grant 
                                request.--The Secretary may approve a 
                                request made pursuant to subclause (I) 
                                if the Secretary deems it appropriate. 
                                The Secretary shall develop 
                                recommendations on the criteria that 
                                should be applied in evaluating 
                                requests under subclause (I).

``SEC. 498. CASELOAD PARTICIPATION RATES; PERFORMANCE MEASURES.

    ``(a) Participation Rates.--
            ``(1) Requirement.--A State that operates a program under 
        this part shall achieve a participation rate for the following 
        fiscal years of not less than the following percentage:

``Fiscal year:                                              Percentage:
    1997..........................................                   16
    1998..........................................                   20
    1999..........................................                   24
    2000..........................................                   28
    2001..........................................                   32
    2002..........................................                   40
    2003 or later.................................                  52.
            ``(2) Participation rate defined.--
                    ``(A) In general.--As used in this subsection, the 
                term `participation rate' means, with respect to a 
                State and a fiscal year, an amount equal to--
                            ``(i) the average monthly number of 
                        individuals who, during the fiscal year, 
                        participate in the State program established 
                        under this part or the State program (if any) 
                        established under part H; divided by
                            ``(ii) the average monthly number of 
                        individuals for whom an individual 
                        responsibility plan is in effect under section 
                        482 during the fiscal year.
                    ``(B) Special rule.--For each of the 1st 12 months 
                after an individual ceases to receive aid under a State 
                plan approved under part A by reason of having become 
                employed for more than 25 hours per week in an 
                unsubsidized job in the private sector, the individual 
                shall be considered to be participating in the State 
                program established under this part, and to be an adult 
                recipient of such aid, for purposes of subparagraph 
                (A).
            ``(3) State compliance reports.--Each State that operates a 
        program under this part for a fiscal year shall submit to the 
        Secretary a report on the participation rate of the State for 
        the fiscal year.
            ``(4) Effect of failure to meet participation rates.--
                    ``(A) In general.--If a State reports that the 
                State has failed to achieve the participation rate 
                required by paragraph (1) for the fiscal year, the 
Secretary may make recommendations for changes in the State program 
established under this part and (if the State has established a program 
under part H) the State program established under part H. The State may 
elect to follow such recommendations, and shall demonstrate to the 
Secretary how the State will achieve the required participation rates.
                    ``(B) Second consecutive failure.--Notwithstanding 
                subparagraph (A), if a State fails to achieve the 
                participation rate required by paragraph (1) for 2 
                consecutive fiscal years, the Secretary may--
                            ``(i) require the State to make changes in 
                        the State program established under this part 
                        and (if the State has established a program 
                        under part H) the State program established 
                        under part H; and
                            ``(ii) reduce by 5 percent the amount 
                        otherwise payable to the State under paragraph 
                        (1) or (2) (whichever applies to the State) of 
                        section 403(a).
    ``(b) Performance Standards.--The Secretary shall develop standards 
to be used to measure the effectiveness of the programs established 
under this part and part H in moving recipients of aid under the State 
plan approved under part A into full-time unsubsidized employment.
    ``(c) Performance-Based Measures.--
            ``(1) Establishment.--The Secretary shall, by regulation, 
        establish measures of the effectiveness of the State programs 
        established under this part and under part H in moving 
        recipients of aid under the State plan approved under part A 
        into full-time unsubsidized employment, based on the 
        performance of such programs.
            ``(2) Annual compliance reports.--Each State that operates 
        a program under this part shall submit to the Secretary annual 
        reports that compare the achievements of the program with the 
        performance-based measures established under paragraph (1).

                   ``Subpart 2--Optional State Plans

``SEC. 499. STATE ROLE.

    ``(a) Program Requirements.--Any State may establish and operate a 
work first program that meets the following requirements, unless the 
State is operating a work first program under subpart 1:
            ``(1) Objective.--The objective of the program is for each 
        program participant to find and hold a full-time unsubsidized 
        paid job, and for this goal to be achieved in a cost-effective 
        fashion.
            ``(2) Method.--The method of the program is to connect 
        recipients of aid to families with dependent children with the 
        private sector labor market as soon as possible and offer them 
        the support and skills necessary to remain in the labor market. 
        Each component of the program should be permeated with an 
        emphasis on employment and with an understanding that minimum 
        wage jobs are a stepping stone to more highly paid employment. 
        The program shall provide recipients with education, training, 
        job search and placement, wage supplementation, temporary 
        subsidized jobs, or such other services that the State deems 
        necessary to help a recipient obtain private sector employment.
            ``(3) Job creation.--The creation of jobs, with an emphasis 
        on private sector jobs, shall be a component of the program and 
        shall be a priority for each State office with responsibilities 
        under the program.
            ``(4) Forms of assistance.--The State shall provide 
        assistance to participants in the program in the form of 
        education, training, job placement services (including vouchers 
        for job placement services), work supplementation programs, 
        temporary subsidized job creation, job counseling, assistance 
        in establishing microenterprises, or other services to provide 
        individuals with the support and skills necessary to obtain and 
        keep employment in the private sector.
            ``(5) 2-year limitation on participation.--The program 
        shall comply with section 497(b).
            ``(6) Agreements of mutual responsibility.--
                    ``(A) In general.--The State agency shall develop 
                an agreement of mutual responsibility for each program 
                participant, which will be an individualized 
                comprehensive plan, developed by the team and the 
                participant, to move the participant into a full-time 
                unsubsidized job. The agreement should detail the 
                education, training, or skills that the individual will 
                be receiving to obtain a full-time unsubsidized job, 
                and the obligations of the individual.
                    ``(B) Hours of participation requirement.--The 
                agreement shall provide that the individual shall 
                participate in activities in accordance with the 
                agreement for--
                            ``(i) not fewer than 20 hours per week 
                        during fiscal years 1997 and 1998;
                            ``(ii) not fewer than 25 hours per week 
                        during fiscal year 1999; and
                            ``(iii) not fewer than 30 hours per week 
                        thereafter.
            ``(7) Caseload participation rates.--The program shall 
        comply with section 498.
            ``(8) Nondisplacement.--The program shall comply with 
        section 491(11).
    ``(b) Annual Reports.--
            ``(1) Compliance with performance measures.--Each State 
        that operates a program under this subpart shall submit to the 
        Secretary annual reports that compare the achievements of the 
        program with the performance-based measures established under 
        section 490(b).
            ``(2) Compliance with participation rates.--Each State that 
        operates a program under this subpart for a fiscal year shall 
        submit to the Secretary a report on the participation rate of 
        the State for the fiscal year.

``SEC. 500. FEDERAL ROLE.

    ``(a) Approval of State Plans.--
            ``(1) In general.--Within 60 days after the date a State 
        submits to the Secretary a plan that provides for the 
        establishment and operation of a work first program that meets 
        the requirements of section 499, the Secretary shall approve 
        the plan.
            ``(2) Authority to extend approval deadline.--The 60-day 
        deadline established in paragraph (1) with respect to a State 
        may be extended in accordance with an agreement between the 
        Secretary and the State.
    ``(b) Performance-Based Measures.--The Secretary shall, by 
regulation, establish measures of the effectiveness of the State 
program established under this subpart and (if the State has 
established a program under part H) the State program established under 
part H in moving recipients of aid under the State plan approved under 
part A into full-time unsubsidized employment, based on the performance 
of such programs.
    ``(c) Effect of Failure To Meet Participation Rates.--
            ``(1) In general.--If a State reports that the State has 
        failed to achieve the participation rate required by section 
        499(a)(7) for the fiscal year, the Secretary may make 
        recommendations for changes in the State program established 
        under this subpart and (if the State has established a program 
        under part H) the State program established under part H. The 
        State may elect to follow such recommendations, and shall 
        demonstrate to the Secretary how the State will achieve the 
        required participation rates.
            ``(2) Second consecutive failure.--Notwithstanding 
        paragraph (1), if the State has failed to achieve the 
        participation rates required by section 499(a)(7) for 2 
        consecutive fiscal years, the Secretary may require the State 
        to make changes in the State program established under this 
        subpart and (if the State has established a program under part 
        H) the State program established under part H.

                       ``Part H--Workfare Program

``SEC. 500A. ESTABLISHMENT AND OPERATION OF PROGRAM.

    ``(a) In General.--A State that establishes a work first program 
under a subpart of part G may establish and carry out a workfare 
program that meets the requirements of this part, unless the State has 
established a job placement voucher program under part I.
    ``(b) Objective.--The objective of the workfare program is for each 
program participant to find and hold a full-time unsubsidized paid job, 
and for this goal to be achieved in a cost-effective fashion.
    ``(c) Case Management Teams.--The State shall assign to each 
program participant a case management team that shall meet with the 
participant and assist the participant to choose the most suitable 
workfare job under subsection (e), (f), or (g) and to eventually obtain 
a full-time unsubsidized paid job.
    ``(d) Provision of Jobs.--The State shall provide each participant 
in the program with a community service job that meets the requirements 
of subsection (e) or a subsidized job that meets the requirements of 
subsection (f) or (g).
    ``(e) Community Service Jobs.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), each participant shall work for not fewer than 30 hours 
        per week (or, at the option of the State, 20 hours per week 
        during fiscal years 1997 and 1998, not fewer than 25 hours per 
        week during fiscal year 1999, not fewer than 30 hours per week 
        during fiscal years 2000 and 2001, and not fewer than 35 hours 
        per week thereafter) in a community service job, and be paid at 
        a rate which is not greater than 75 percent (or, at the option 
        of the State, 100 percent) of the maximum amount of aid payable 
        under the State plan approved under part A to a family of the 
        same size and composition with no income.
            ``(2) Exception.--(A) If the participant has obtained 
        unsubsidized part-time employment in the private sector, the 
        State shall provide the participant with a part-time community 
        service job.
            ``(B) If the State provides a participant a part-time 
        community service job under subparagraph (A), the State shall 
        ensure that the participant works for not fewer than 30 hours 
        per week.
            ``(3) Wages not considered earned income.--Wages paid under 
        a workfare program shall not be considered to be earned income 
        for purposes of any provision of law.
            ``(4) Community service job defined.--For purposes of this 
        section, the term `community service job' means--
                    ``(A) a job provided to a participant by the State 
                administering the State plan under part A; or
                    ``(B) a job provided to a participant by any other 
                employer for which all or part of the wages are paid by 
                the State.
        A State may provide or subsidize under the program any job 
        which the State determines to be appropriate.
    ``(f) Temporary Subsidized Job Creation.--A State that establishes 
a workfare program under this part may establish a program similar to 
the program operated by the State of Oregon, which is known as `JOBS 
Plus'.
    ``(g) Work Supplementation Program.--
            ``(1) In general.--A State that establishes a workfare 
        program under this part may institute a work supplementation 
        program under which the State, to the extent it considers 
        appropriate, may reserve the sums that would otherwise be 
        payable to participants in the program as a community service 
        minimum wage and use the sums instead for the purpose of 
        providing and subsidizing private sector jobs for the 
        participants.
            ``(2) Employer agreement.--An employer who provides a 
        private sector job to a participant under paragraph (1) shall 
        agree to provide to the participant an amount in wages equal to 
        the poverty threshold for a family of three.
    ``(h) Job Search Requirement.--The State shall require each 
participant to spend a minimum of 5 hours per week on activities 
related to securing unsubsidized full-time employment in the private 
sector.
    ``(i) Duration of Participation.--
            ``(1) In general.--Except as provided in paragraph (2), an 
        individual may not participate for more than 2 years in a 
        workfare program under this part.
            ``(2) Authority to allow repeated participation.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                State may allow an individual who, by reason of 
                paragraph (1), would be prohibited from participating 
                in the State program established under this part to 
                participate in the program for such additional period 
                or periods as the State determines appropriate.
                    ``(B) Limitation on percentage of repeat 
                participants.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the number of individuals allowed 
                        under subparagraph (A) to participate during a 
                        program year in a State program established 
                        under this part shall not exceed 10 percent of 
                        the total number of individuals who 
                        participated in the program during the 
                        immediately preceding program year.
                            ``(ii) Authority to increase limitation.--
                                    ``(I) Petition.--A State may 
                                request the Secretary to increase the 
                                percentage limitation imposed by clause 
                                (i) to not more than 15 percent.
                                    ``(II) Authority to grant 
                                request.--The Secretary may approve a 
                                request made pursuant to subclause (I) 
                                if the Secretary deems it appropriate. 
                                The Secretary shall develop 
                                recommendations on the criteria that 
                                should be applied in evaluating 
                                requests under subclause (I).
    ``(j) Use of Placement Companies.--A State that establishes a 
workfare program under this part may enter into contracts with private 
companies (whether operated for profit or not for profit) for the 
placement of participants in the program in positions of full-time 
employment, preferably in the private sector, for wages sufficient to 
eliminate the need of such participants for cash assistance in 
accordance with section 493.
    ``(k) Maximum of 3 Community Service Jobs.--A program participant 
may not receive more than 3 community service jobs under the program.

                ``Part I--Job Placement Voucher Program

``SEC. 500B. JOB PLACEMENT VOUCHER PROGRAM.

    ``A State that is not operating a workfare program under part H may 
establish a job placement voucher program that meets the following 
requirements:
            ``(1) The program shall offer each program participant a 
        voucher which the participant may use to obtain employment in 
        the private sector.
            ``(2) An employer who receives a voucher issued under the 
        program from an individual may redeem the voucher at any time 
        after the individual has been employed by the employer for 6 
        months, unless another employee of the employer was displaced 
        by the employment of the individual.
            ``(3) Upon presentation of a voucher by an employer to the 
        State agency responsible for the administration of the program, 
        the State agency shall pay to the employer an amount equal to 
        50 percent of the total amount of aid paid under the State plan 
        approved under part A to the family of which the individual is 
        a member for the most recent 12 months for which the family was 
        eligible for such aid.''.
    (c) Funding.--Section 403 (42 U.S.C. 603) is amended by inserting 
after subsection (b) the following:
    ``(c)(1) Each State that is operating a program in accordance with 
subpart 1 of part G (or in accordance with a plan approved under 
subpart 2 of part G), and a program in accordance with part H or I 
shall be entitled to payments under subsection (d) for any fiscal year 
in an amount equal to the sum of the applicable percentages (specified 
in such subsection) of its expenditures to carry out such programs 
(subject to limitations prescribed by or pursuant to such parts or this 
section on expenditures that may be included for purposes of 
determining payment under subsection (d)), but such payments for any 
fiscal year in the case of any State may not exceed the limitation 
determined under paragraph (2) with respect to the State.
    ``(2) The limitation determined under this paragraph with respect 
to a State for any fiscal year is the amount that bears the same ratio 
to the amount specified in paragraph (3) for such fiscal year as the 
average monthly number of adult recipients (as defined in paragraph 
(4)) in the State in the preceding fiscal year bears to the average 
monthly number of such recipients in all the States for such preceding 
year.
    ``(3)(A) The amount specified in this paragraph is--
            ``(i) $1,500,000,000 for fiscal year 1997;
            ``(iii) $2,000,000,000 for fiscal year 1998;
            ``(iv) $2,600,000,000 for fiscal year 1999;
            ``(v) $3,100,000,000 for fiscal year 2000; and
            ``(vi) the amount determined under subparagraph (B) for 
        fiscal year 2001 and each succeeding fiscal year.
    ``(B) The amount determined under this subparagraph for a fiscal 
year is the product of the following:
            ``(i) The amount specified in this paragraph for the 
        immediately preceding fiscal year.
            ``(ii) 1.00 plus the percentage (if any) by which--
                    ``(I) the average of the Consumer Price Index (as 
                defined in section 1(f)(5) of the Internal Revenue Code 
                of 1986) for the most recent 12-month period for which 
                such information is available; exceeds
                    ``(II) the average of the Consumer Price Index (as 
                so defined) for the 12-month period ending on June 30 
                of the 2nd preceding fiscal year.
            ``(iii) The amount that bears the same ratio to the amount 
        specified in this paragraph for the immediately preceding 
        fiscal year as the number of individuals whom the Secretary 
        estimates will participate in programs operated under part G, 
        H, or I during the fiscal year bears to the total number of 
        individuals who participated in such programs during such 
        preceding fiscal year.
    ``(4) For purposes of this subsection, the term `adult recipient' 
in the case of any State means an individual other than a dependent 
child (unless such child is the custodial parent of another dependent 
child) whose needs are met (in whole or in part) with payments of aid 
to families with dependent children.
    ``(d)(1) In lieu of any payment under subsection (a), the Secretary 
shall pay to each State that is operating a program in accordance with 
subpart 1 of part G (or in accordance with a plan approved under 
subpart 2 of part G), and a program in accordance with part H or I, and 
to which section 1108 does not apply, with respect to expenditures by 
the State to carry out such programs, an amount equal to 70 percent, or 
the Federal medical assistance percentage (as defined in section 
1905(b)) increased by 10 percentage points, whichever is the greater, 
of the total amount expended during the quarter for the operation and 
administration of such programs.
    ``(2) In lieu of any payment under subsection (a), the Secretary 
shall pay to each State that is operating a program in accordance with 
subpart 1 of part G (or in accordance with a plan approved under 
subpart 2 of part G), and a program in accordance with part H or I, and 
to which section 1108 applies, with respect to expenditures by the 
State to carry out such programs (including expenditures for child care 
under section 402(g)(1)(A)), an amount equal to--
            ``(A) with respect to so much of such expenditures in a 
        fiscal year as do not exceed the State's expenditures in the 
        fiscal year 1987 with respect to which payments were made to 
        such State from its allotment for such fiscal year pursuant to 
        part C of this title as then in effect, 90 percent; and
            ``(B) with respect to so much of such expenditures in a 
        fiscal year as exceed the amount described in subparagraph 
        (A)--
                    ``(i) 50 percent, in the case of expenditures for 
                administrative costs made by a State in operating such 
                programs for such fiscal year (other than the personnel 
                costs for staff employed full-time in the operation of 
                such program) and the costs of transportation and other 
                work-related supportive services under section 
                402(g)(2); and
                    ``(ii) 70 percent or the Federal medical assistance 
                percentage (as defined in the last sentence of section 
                1118) increased by 10 percentage points, whichever is 
                the greater, in the case of expenditures made by a 
                State in operating such programs for such fiscal year 
                (other than for costs described in clause (i)).
    ``(3) With respect to the amount for which payment is made to a 
State under paragraph (2)(A), the State's expenditures for the costs of 
operating such programs may be in cash or in kind, fairly evaluated.
    ``(4) Not more than 10 percent of the amount payable to a State 
under this subsection for a quarter may be for expenditures made during 
the quarter with respect to program participants who are not eligible 
for aid under the State plan approved under part A.''.
    (d) Secretary's Special Adjustment Fund.--Section 403 (42 U.S.C. 
603) is amended by adding at the end the following:
    ``(p)(1) There shall be available to the Secretary from the amount 
appropriated for payments under subsection (c) for States' programs 
under parts G and H for fiscal year 1996, $300,000,000 for special 
adjustments to States' limitations on Federal payments for such 
programs.
    ``(2) A State may, not later than March 1 and September 1 of each 
fiscal year, submit to the Secretary a request to adjust the limitation 
on payments under this section with respect to its program under part G 
(and, in fiscal years after 1997) its program under part H for the 
following fiscal year. The Secretary shall only consider such a request 
from a State which has, or which demonstrates convincingly on the basis 
of estimates that it will, submit allowable claims for Federal payment 
in the full amount available to it under subsection (c) in the current 
fiscal year and obligated 95 percent of its full amount in the prior 
fiscal year. The Secretary shall by regulation prescribe criteria for 
the equitable allocation among the States of Federal payments pursuant 
to adjustments of the limitations referred to in the preceding sentence 
in the case where the requests of all States that the Secretary finds 
reasonable exceed the amount available, and, within 30 days following 
the dates specified in this paragraph, will notify each State whether 
one or more of its limitations will be adjusted in accordance with the 
State's request and the amount of the adjustment (which may be some or 
all of the amount requested).
    ``(3) The Secretary may adjust the limitation on Federal payments 
to a State for a fiscal year under subsection (c), and upon a 
determination by the Secretary that (and the amount by which) a State's 
limitation should be raised, the amount specified in either such 
subsection, or both, shall be considered to be so increased for the 
following fiscal year.
    ``(4) The amount made available under paragraph (1) for special 
adjustments shall remain available to the Secretary until expended. 
That amount shall be reduced by the sum of the adjustments approved by 
the Secretary in any fiscal year, and the amount shall be increased in 
a fiscal year by the amount by which all States' limitations under 
subsection (c) of this section and section 2008 for a fiscal year 
exceeded the sum of the Federal payments under such provisions of law 
for such fiscal year, but for fiscal years after 1997, such amount at 
the end of such fiscal year shall not exceed $400,000,000.''.
    (e) Conforming Amendments.--
            (1) Section 402(a) (42 U.S.C. 602(a)) is amended by 
        striking paragraph (19).
            (2) Section 403 (42 U.S.C. 603) is amended by striking 
        subsections (k) and (l).
            (3) Section 407(b)(1)(B) (42 U.S.C. 607(b)(1)(B)) is 
        amended--
                    (A) by adding ``and'' at the end of clause (iii);
                    (B) by striking ``; and'' at the end of clause (iv) 
                and inserting a period; and
                    (C) by striking clause (v).
            (4) Section 407(b)(2)(B)(ii)(I) (42 U.S.C. 
        607(b)(2)(B)(ii)(I)) is amended by striking ``under section 
        402(a)(19) or''.
            (5) Section 407(b)(2)(C) (42 U.S.C. 607(b)(2)(C)) is 
        amended by striking ``section 402(a)(19) and''.
            (6) Section 1115(b)(2)(A) (42 U.S.C. 1315(b)(2)(A)) is 
        amended by striking ``, and 402(a)(19) (relating to the work 
        incentive program)''.
            (7) Section 1108 (42 U.S.C. 1308) is amended--
                    (A) in subsection (a), by striking ``or, in the 
                case of part A of title IV, section 403(k)''; and
                    (B) in subsection (d), by striking ``(exclusive of 
                any amounts on account of services and items to which, 
                in the case of part A of such title, section 403(k) 
                applies)''.
            (8) Section 1902(a)(19)(A)(i)(I) (42 U.S.C. 
        1396a(a)(19)(A)(i)(I)) is amended by striking ``482(e)(6)'' and 
        inserting ``486(f)''.
            (9) Section 1928(a)(1) (42 U.S.C. 1396s(a)(1)) is amended 
        by striking ``482(e)(6)'' and inserting ``486(f)''.
    (f) Intent of the Congress.--The Congress intends for State 
activities under section 494 of the Social Security Act (as added by 
the amendment made by section 301(b) of this Act) to emphasize the use 
of the funds that would otherwise be used to provide individuals with 
aid to families with dependent children under part A of title IV of the 
Social Security Act and with food stamp benefits under the Food Stamp 
Act of 1977, to subsidize the wages of such individuals in temporary 
jobs.
    (g) Sense of the Congress.--It is the sense of the Congress that 
States should target individuals who have not attained 25 years of age 
for participation in the program established by the State under part G 
of title IV of the Social Security Act (as added by the amendment made 
by section 301(b) of this section) in order to break the cycle of 
welfare dependency.

SEC. 302. REGULATIONS.

    The Secretary of Health and Human Services shall prescribe such 
regulations as may be necessary to implement the amendments made by 
this title.

SEC. 303. APPLICABILITY TO STATES.

    (a) State Option To Accelerate Applicability.--If a State formally 
notifies the Secretary of Health and Human Services that the State 
desires to accelerate the applicability to the State of the amendments 
made by this title, the amendments shall apply to the State on and 
after such earlier date as the State may select.
    (b) State Option To Delay Applicability Until Waivers Expire.--The 
amendments made by this title shall not apply to a State with respect 
to which there is in effect a waiver issued under section 1115 of the 
Social Security Act for the State program established under part G of 
title IV of such Act, until the waiver expires, if the State formally 
notifies the Secretary of Health and Human Services that the State 
desires to so delay such effective date.
    (c) Authority of the Secretary of Health and Human Services To 
Delay Applicability to a State.--If a State formally notifies the 
Secretary of Health and Human Services that the State desires to delay 
the applicability to the State of the amendments made by this title, 
the amendments shall apply to the State on and after any later date 
agreed upon by the Secretary and the State.

SEC. 304. SENSE OF THE CONGRESS RELATING TO AVAILABILITY OF WORK FIRST 
              PROGRAM IN RURAL AREAS.

    It is the sense of the Congress that the Secretary of Health and 
Human Services and the States should consider the needs of rural areas 
in designing State plans under part G of title IV of the Social 
Security Act.

SEC. 305. GRANTS TO COMMUNITY-BASED ORGANIZATIONS.

    (a) In General.--The Secretary of Health and Human Services may 
make grants in accordance with this section to community-based 
organizations that move recipients of aid to families with dependent 
children under a State plan approved under part A of title IV of the 
Social Security Act or under other public assistance programs into 
private sector work.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $25,000,000 for fiscal year 1996 
and $50,000,000 for fiscal years 1997, 1998, 1999, and 2000.
    (c) Eligible Organizations.--The Secretary of Health and Human 
Services shall award grants to community-based organizations that--
            (1) receive at least 5 percent of their funding from local 
        government sources; and
            (2) move recipients referred to in subsection (a) in the 
        direction of unsubsidized private employment by integrating and 
        co-locating at least 5 of the following services--
                    (A) case management;
                    (B) job training;
                    (C) child care;
                    (D) housing;
                    (E) health care services;
                    (F) nutrition programs;
                    (G) life skills training; and
                    (H) parenting skills.
    (d) Awarding of Grants.--
            (1) In general.--The Secretary shall award grants based on 
        the quality of applications, subject to paragraphs (2) and (3).
            (2) Preference in awarding grants.--In awarding grants 
        under this section, the Secretary shall give preference to 
        organizations which receive more than 50 percent of their 
        funding from State government, local government or private 
        sources.
            (3) Distribution of grant.--The Secretary shall award at 
        least 1 grant to each State from which the Secretary received 
        an application.
            (4) Limitation on size of grant.--The Secretary shall not 
        award any grants under this section of more than $1,000,000.
    (e) Issuance of Regulations.--Not less than 6 months after the date 
of the enactment of this section, the Secretary shall prescribe such 
regulations as may be necessary to implement this section.

 TITLE IV--FAMILY RESPONSIBILITY AND IMPROVED CHILD SUPPORT ENFORCEMENT

Subtitle A--Eligibility and Other Matters Concerning Title IV-D Program 
                                Clients

SEC. 401. STATE OBLIGATION TO PROVIDE PATERNITY ESTABLISHMENT AND CHILD 
              SUPPORT ENFORCEMENT SERVICES.

    (a) State Law Requirements.--Section 466(a) (42 U.S.C. 666(a)) is 
amended by inserting after paragraph (11) the following:
            ``(12) Use of central case registry and centralized 
        collections unit.--Procedures under which--
                    ``(A) every child support order established or 
                modified in the State on or after October 1, 1998, is 
                recorded in the central case registry established in 
                accordance with section 454A(e); and
                    ``(B) child support payments are collected through 
                the centralized collections unit established in 
                accordance with section 454B--
                            ``(i) on and after October 1, 1998, under 
                        each order subject to wage withholding under 
                        section 466(b); and
                            ``(ii) on and after October 1, 1999, under 
                        each other order required to be recorded in 
                        such central case registry under this paragraph 
                        or section 454A(e), except as provided in 
                        subparagraph (C); and
                    ``(C)(i) parties subject to a child support order 
                described in subparagraph (B)(ii) may opt out of the 
                procedure for payment of support through the 
                centralized collections unit (but not the procedure for 
                inclusion in the central case registry) by filing with 
                the State agency a written agreement, signed by both 
                parties, to an alternative payment procedure; and
                    ``(ii) an agreement described in clause (i) becomes 
                void whenever either party advises the State agency of 
                an intent to vacate the agreement.''.
    (b) State Plan Requirements.--Section 454 (42 U.S.C. 654) is 
amended--
            (1) by striking paragraph (4) and inserting the following:
            ``(4) provide that such State will undertake--
                    ``(A) to provide appropriate services under this 
                part to--
                            ``(i) each child with respect to whom an 
                        assignment is effective under section 
                        402(a)(26), 471(a)(17), or 1912 (except in 
                        cases where the State agency determines, in 
                        accordance with paragraph (25), that it is 
                        against the best interests of the child to do 
                        so); and
                            ``(ii) each child not described in clause 
                        (i)--
                                    ``(I) with respect to whom an 
                                individual applies for such services; 
                                and
                                    ``(II) (on and after October 1, 
                                1998) each child with respect to whom a 
                                support order is recorded in the 
                                central State case registry established 
                                under section 454A, regardless of 
                                whether application is made for 
                                services under this part; and
                    ``(B) to enforce the support obligation established 
                with respect to the custodial parent of a child 
                described in subparagraph (A) unless the parties to the 
                order which establishes the support obligation have 
                opted, in accordance with section 466(a)(12)(C), for an 
                alternative payment procedure.''; and
            (2) in paragraph (6)--
                    (A) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) services under the State plan shall be made 
                available to nonresidents on the same terms as to 
                residents;'';
                    (B) in subparagraph (B)--
                            (i) by inserting ``on individuals not 
                        receiving assistance under part A'' after 
                        ``such services shall be imposed''; and
                            (ii) by inserting ``but no fees or costs 
                        shall be imposed on any absent or custodial 
                        parent or other individual for inclusion in the 
                        central State registry maintained pursuant to 
                        section 454A(e)''; and
                    (C) in each of subparagraphs (B), (C), and (D)--
                            (i) by indenting such subparagraph and 
                        aligning its left margin with the left margin 
                        of subparagraph (A); and
                            (ii) by striking the final comma and 
                        inserting a semicolon.
    (c) Conforming Amendments.--
            (1) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is 
        amended by striking ``454(6)'' each place it appears and 
        inserting ``454(4)(A)(ii)''.
            (2) Section 454(23) (42 U.S.C. 654(23)) is amended, 
        effective October 1, 1998, by striking ``information as to any 
        application fees for such services and''.
            (3) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is 
        amended by striking ``in the case of overdue support which a 
        State has agreed to collect under section 454(6)'' and 
        inserting ``in any other case''.
            (4) Section 466(e) (42 U.S.C. 666(e)) is amended by 
        striking ``or (6)''.

SEC. 402. DISTRIBUTION OF PAYMENTS.

    (a) Distributions Through State Child Support Enforcement Agency to 
Former Assistance Recipients.--Section 454(5) (42 U.S.C. 654(5)) is 
amended--
            (1) in subparagraph (A)--
                    (A) by inserting ``except as otherwise specifically 
                provided in section 464 or 466(a)(3),'' after ``is 
                effective,''; and
                    (B) by striking ``except that'' and all that 
                follows through the semicolon; and
            (2) in subparagraph (B), by striking ``, except'' and all 
        that follows through ``medical assistance''.
    (b) Distribution to a Family Currently Receiving AFDC.--Section 457 
(42 U.S.C. 657) is amended--
            (1) by striking subsection (a) and redesignating subsection 
        (b) as subsection (a);
            (2) in subsection (a), as redesignated--
                    (A) in the matter preceding paragraph (2), to read 
                as follows:
    ``(a) In the Case of a Family Receiving AFDC.--Amounts collected 
under this part during any month as support of a child who is receiving 
assistance under part A (or a parent or caretaker relative of such a 
child) shall (except in the case of a State exercising the option under 
subsection (b)) be distributed as follows:
            ``(1) an amount equal to the amount that will be 
        disregarded pursuant to section 402(a)(8)(A)(vi) shall be taken 
        from each of--
                    ``(A) amounts received in a month which represent 
                payments for that month; and
                    ``(B) amounts received in a month which represent 
                payments for a prior month which were made by the 
                absent parent in the month when due;
        and shall be paid to the family without affecting its 
        eligibility for assistance or decreasing any amount otherwise 
        payable as assistance to such family during such month;'';
                    (B) in paragraph (4), by striking ``or (B)'' and 
                all that follows and inserting ``; then (B) from any 
                remainder, amounts equal to arrearages of such support 
                obligations assigned, pursuant to part A, to any other 
                State or States shall be paid to such other State or 
                States and used to pay any such arrearages (with 
appropriate reimbursement of the Federal Government to the extent of 
its participation in the financing); and then (C) any remainder shall 
be paid to the family.''.
            (3) by inserting after subsection (a), as redesignated, the 
        following new subsection:
    ``(b) Alternative Distribution in Case of Family Receiving AFDC.--
In the case of a State electing the option under this subsection, 
amounts collected as described in subsection (a) shall be distributed 
as follows:
            ``(1) an amount equal to the amount that will be 
        disregarded pursuant to section 402(a)(8)(A)(vi) shall be taken 
        from each of--
                    ``(A) amounts received in a month which represent 
                payments for that month; and
                    ``(B) amounts received in a month which represent 
                payments for a prior month which were made by the 
                absent parent in the month when due;
        and shall be paid to the family without affecting its 
        eligibility for assistance or decreasing any amount otherwise 
        payable as assistance to such family during such month;
            ``(2) second, from any remainder, amounts equal to the 
        balance of support owed for the current month shall be paid to 
        the family;
            ``(3) third, from any remainder, amounts equal to 
        arrearages of such support obligations assigned, pursuant to 
        part A, to the State making the collection shall be retained 
        and used by such State to pay any such arrearages (with 
        appropriate reimbursement of the Federal Government to the 
        extent of its participation in the financing);
            ``(4) fourth, from any remainder, amounts equal to 
        arrearages of such support obligations assigned, pursuant to 
        part A, to any other State or States shall be paid to such 
        other State or States and used to pay any such arrearages (with 
        appropriate reimbursement of the Federal Government to the 
        extent of its participation in the financing); and
            ``(5) fifth, any remainder shall be paid to the family.''.
    (c) Distribution to a Family Not Receiving AFDC.--
            (1) In general.--Section 457(c) (42 U.S.C. 657(c)) is 
        amended to read as follows:
    ``(c) In Case of Family Not Receiving AFDC.--Amounts collected by a 
State agency under this part during any month as support of a child who 
is not receiving assistance under part A (or of a parent or caretaker 
relative of such a child) shall (subject to the remaining provisions of 
this section) be distributed as follows:
            ``(1) first, amounts equal to the total of such support 
        owed for such month shall be paid to the family;
            ``(2) second, from any remainder, amounts equal to 
        arrearages of such support obligations for months during which 
        such child did not receive assistance under part A shall be 
        paid to the family;
            ``(3) third, from any remainder, amounts equal to 
        arrearages of such support obligations assigned to the State 
        making the collection pursuant to part A shall be retained and 
        used by such State to pay any such arrearages (with appropriate 
        reimbursement of the Federal Government to the extent of its 
        participation in the financing);
            ``(4) fourth, from any remainder, amounts equal to 
        arrearages of such support obligations assigned to any other 
        State pursuant to part A shall be paid to such other State or 
        States, and used to pay such arrearages, in the order in which 
        such arrearages accrued (with appropriate reimbursement of the 
        Federal Government to the extent of its participation in the 
        financing).''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 1999.
    (d) Distribution to a Child Receiving Assistance Under Part E.--
Section 457(d) (42 U.S.C. 657(d)) is amended, in the matter preceding 
paragraph (1), by striking ``Notwithstanding the preceding provisions 
of this section, amounts'' and inserting the following:
    ``(d) In Case of a Child Receiving Assistance Under Part E.--
Amounts''.
    (e) Suspension or Cancellation of Debts Upon Marriage of Parents.--
Section 457 (42 U.S.C. 657) is amended by adding at the end the 
following:
    ``(e) Suspension or Cancellation of Debts to State Upon Marriage of 
Parents.--
            ``(1) Circumstances requiring suspension or cancellation.--
        In any case in which a State has been assigned rights to 
        support owed with respect to a child who is receiving or has 
        received assistance under part A and--
                    ``(A) the parent owing such support marries (or 
                remarries) the parent with whom such child is living 
                and to whom such support is owed and applies to the 
                State for relief under this subsection;
                    ``(B) the State determines (in accordance with 
                procedures and criteria established by the Secretary) 
                that the marriage is not a sham marriage entered into 
                solely to satisfy this subsection; and
                    ``(C) the combined income of such parents is less 
                than twice the Federal poverty line,
        the State shall afford relief to the parent owing such support 
        in accordance with paragraph (2).
            ``(2) Suspension or cancellation.--In the case of a 
        marriage or remarriage described in paragraph (1), the State 
        shall either--
                    ``(A) cancel all debts owed to the State pursuant 
                to such assignment; or
                    ``(B) suspend collection of such debts for the 
                duration of such marriage, and cancel such debts if 
                such duration extends beyond the end of the period with 
                respect to which support is owed.
            ``(3) Notice required.--The State shall notify custodial 
        parents of children who are receiving aid under part A of the 
        relief available under this subsection to individuals who marry 
        (or remarry).''.
    (f) State Options To Pass Through and To Disregard Child Support 
Amounts.--
            (1) State option to pass through child support.--Section 
        457(b)(1) (42 U.S.C. 657(b)(1)) is amended to read as follows:
            ``(1) at State option, an amount determined by the State, 
        equal to all or a portion of the monthly support obligation, 
        may be paid to the family from each of--
                    ``(A) amounts received in a month which represent 
                payments for that month; and
                    ``(B) amounts received in a month which represent 
                payments for a prior month which were made by the 
                absent parent in the month when due;''.
            (2) State option to disregard child support.--Section 
        402(a)(8)(A)(vi) (42 U.S.C 602(a)(8)(A)(vi)) is amended--
                    (A) by striking ``shall disregard the first $50'' 
                and inserting ``may disregard all or any portion'';
                    (B) by striking ``the first $50'' and inserting 
                ``and all or any portion''; and
                    (C) by striking ``section 457(b)'' and inserting 
                ``section 457(a)''.
    (g) Pass Through and Disregard of Support Collected on Behalf of a 
Family Subject to the Family Cap.--
            (1) Pass through.--Section 457 (42 U.S.C. 657), as amended 
        by subsection (e) of this section, is amended by adding at the 
        end the following:
    ``(f) Pass Through of Support Collected on Behalf of a Family 
Subject to the Family Cap.--Amounts collected by a State agency under 
this part during any month as support of a child who is a member of a 
1-parent family subject to section 402(a)(51) shall be distributed to 
the family.''.
            (2) Disregard.--Section 402(a)(8)(A)(vi) (42 U.S.C. 
        602(a)(8)(A)(vi)) is amended by inserting ``, except that, in 
        the case of a 1-parent family subject to paragraph (51), all 
        support payments collected and paid to the family under section 
        457(f) shall be disregarded'' before the semicolon.
    (h) Regulations.--The Secretary of Health and Human Services shall 
promulgate regulations--
            (1) under part D of title IV of the Social Security Act, 
        establishing a uniform nationwide standard for allocation of 
        child support collections from an obligor owing support to more 
        than one family; and
            (2) under part A of such title, establishing standards 
        applicable to States electing the alternative formula under 
        section 457(b) of such Act for distribution of collections on 
        behalf of families receiving Aid to Families with Dependent 
        Children, designed to minimize irregular monthly payments to 
        such families.
    (i) Clerical Amendment.--Section 454 (42 U.S.C. 654) is amended--
            (1) in paragraph (11), by striking ``(11)'' and inserting 
        ``(11)(A)''; and
            (2) by redesignating paragraph (12) as subparagraph (B) of 
        paragraph (11).

SEC. 403. DUE PROCESS RIGHTS.

    (a) In General.--Section 454 (42 U.S.C. 654), as amended by section 
402(f) of this Act, is amended by inserting after paragraph (11) the 
following new paragraph:
            ``(12) provide for procedures to ensure that--
                    ``(A) individuals who are applying for or receiving 
                services under this part, or are parties to cases in 
                which services are being provided under this part--
                            ``(i) receive notice of all proceedings in 
                        which support obligations might be established 
                        or modified; and
                            ``(ii) receive a copy of any order 
                        establishing or modifying a child support 
                        obligation, or (in the case of a petition for 
                        modification) a notice of determination that 
                        there should be no change in the amount of the 
                        child support award, within 14 days after 
                        issuance of such order or determination;
                    ``(B) individuals applying for or receiving 
                services under this part have access to a fair hearing 
                that meets standards established by the Secretary and 
                ensures prompt consideration and resolution of 
                complaints (but the resort to such procedure shall not 
                stay the enforcement of any support order); and
                    ``(C) individuals adversely affected by the 
                establishment or modification of (or, in the case of a 
                petition for modification, the determination that there 
                should be no change in) a child support order shall be 
                afforded not less than 30 days after the receipt of the 
                order or determination to initiate proceedings to 
                challenge such order or determination;''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
become effective on October 1, 1997.

SEC. 404. PRIVACY SAFEGUARDS.

    (a) State Plan Requirement.--Section 454 (42 U.S.C. 454) is 
amended--
            (1) by striking ``and'' at the end of paragraph (23);
            (2) by striking the period at the end of paragraph (24) and 
        inserting ``; and''; and
            (3) by adding after paragraph (24) the following:
            ``(25) will have in effect safeguards applicable to all 
        sensitive and confidential information handled by the State 
        agency designed to protect the privacy rights of the parties, 
        including--
                    ``(A) safeguards against unauthorized use or 
                disclosure of information relating to proceedings or 
                actions to establish paternity, or to establish or 
                enforce support;
                    ``(B) prohibitions on the release of information on 
                the whereabouts of one party to another party against 
                whom a protective order with respect to the former 
                party has been entered; and
                    ``(C) prohibitions on the release of information on 
                the whereabouts of one party to another party if the 
                State has reason to believe that the release of the 
                information may result in physical or emotional harm to 
                the former party.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
become effective on October 1, 1997.

             Subtitle B--Program Administration and Funding

SEC. 411. FEDERAL MATCHING PAYMENTS.

    (a) Increased Base Matching Rate.--Section 455(a)(2) (42 U.S.C. 
655(a)(2)) is amended to read as follows:
            ``(2) The applicable percent for a quarter for purposes of 
        paragraph (1)(A) is--
                    ``(A) for fiscal year 1997, 69 percent,
                    ``(B) for fiscal year 1998, 72 percent, and
                    ``(C) for fiscal year 1999 and succeeding fiscal 
                years, 75 percent.''.
    (b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is 
amended--
            (1) in subsection (a)(1), in the matter preceding 
        subparagraph (A), by striking ``From'' and inserting ``Subject 
        to subsection (c), from''; and
            (2) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Maintenance of Effort.--Notwithstanding the provisions of 
subsection (a), total expenditures for the State program under this 
part for fiscal year 1997 and each succeeding fiscal year, reduced by 
the percentage specified for such fiscal year under subsection 
(a)(2)(A), (B), or (C)(i), shall not be less than such total 
expenditures for fiscal year 1996, reduced by 66 percent.''.

SEC. 412. PERFORMANCE-BASED INCENTIVES AND PENALTIES.

    (a) Incentive Adjustments to Federal Matching Rate.--Section 458 
(42 U.S.C. 658) is amended to read as follows:

                ``incentive adjustments to matching rate

    ``Sec. 458. (a) Incentive Adjustment.--(1) In General.--In order to 
encourage and reward State child support enforcement programs which 
perform in an effective manner, the Federal matching rate for payments 
to a State under section 455(a)(1)(A), for each fiscal year beginning 
on or after October 1, 1998, shall be increased by a factor reflecting 
the sum of the applicable incentive adjustments (if any) determined in 
accordance with regulations under this section with respect to 
Statewide paternity establishment and to overall performance in child 
support enforcement.
    ``(2) Standards.--(A) In General.--The Secretary shall specify in 
regulations--
            ``(i) the levels of accomplishment, and rates of 
        improvement as alternatives to such levels, which States must 
        attain to qualify for incentive adjustments under this section; 
        and
            ``(ii) the amounts of incentive adjustment that shall be 
        awarded to States achieving specified accomplishment or 
        improvement levels, which amounts shall be graduated, ranging 
        up to--
                    ``(I) 5 percentage points, in connection with 
                Statewide paternity establishment; and
                    ``(II) 10 percentage points, in connection with 
                overall performance in child support enforcement.
    ``(B) Limitation.--In setting performance standards pursuant to 
subparagraph (A)(i) and adjustment amounts pursuant to subparagraph 
(A)(ii), the Secretary shall ensure that the aggregate number of 
percentage point increases as incentive adjustments to all States do 
not exceed such aggregate increases as assumed by the Secretary in 
estimates of the cost of this section as of June 1995, unless the 
aggregate performance of all States exceeds the projected aggregate 
performance of all States in such cost estimates.
    ``(3) Determination of Incentive Adjustment.--The Secretary shall 
determine the amount (if any) of incentive adjustment due each State on 
the basis of the data submitted by the State pursuant to section 
454(15)(B) concerning the levels of accomplishment (and rates of 
improvement) with respect to performance indicators specified by the 
Secretary pursuant to this section.
    ``(4) Fiscal Year Subject to Incentive Adjustment.--The total 
percentage point increase determined pursuant to this section with 
respect to a State program in a fiscal year shall apply as an 
adjustment to the applicable percent under section 455(a)(2) for 
payments to such State for the succeeding fiscal year.
    ``(5) Recycling of Incentive Adjustment.--A State shall expend in 
the State program under this part all funds paid to the State by the 
Federal Government as a result of an incentive adjustment under this 
section.
    ``(b) Meaning of Terms.--For purposes of this section--
            ``(1) the term `Statewide paternity establishment 
        percentage' means, with respect to a fiscal year, the ratio 
        (expressed as a percentage) of--
                    ``(A) the total number of out-of-wedlock children 
                in the State under one year of age for whom paternity 
                is established or acknowledged during the fiscal year, 
                to
                    ``(B) the total number of children born out of 
                wedlock in the State during such fiscal year; and
            ``(2) the term `overall performance in child support 
        enforcement' means a measure or measures of the effectiveness 
        of the State agency in a fiscal year which takes into account 
        factors including--
                    ``(A) the percentage of cases requiring a child 
                support order in which such an order was established;
                    ``(B) the percentage of cases in which child 
                support is being paid;
                    ``(C) the ratio of child support collected to child 
                support due; and
                    ``(D) the cost-effectiveness of the State program, 
                as determined in accordance with standards established 
                by the Secretary in regulations.''.
    (b) Adjustment of Payments Under Part D of Title IV.--Section 
455(a)(2) (42 U.S.C. 655(a)(2)), as amended by section 411(a) of this 
Act, is amended--
            (1) by striking the period at the end of subparagraph 
        (C)(ii) and inserting a comma; and
            (2) by adding after and below subparagraph (C), flush with 
        the left margin of the subsection, the following:
``increased by the incentive adjustment factor (if any) determined by 
the Secretary pursuant to section 458.''.
    (c) Conforming Amendments.--Section 454(22) (42 U.S.C. 654(22)) is 
amended--
            (1) by striking ``incentive payments'' the first place it 
        appears and inserting ``incentive adjustments''; and
            (2) by striking ``any such incentive payments made to the 
        State for such period'' and inserting ``any increases in 
        Federal payments to the State resulting from such incentive 
        adjustments''.
    (d) Calculation of IV-D Paternity Establishment Percentage.--(1) 
Section 452(g)(1) (42 U.S.C. 652(g)(1)) is amended in the matter 
preceding subparagraph (A) by inserting ``its overall performance in 
child support enforcement is satisfactory (as defined in section 458(b) 
and regulations of the Secretary), and'' after ``1994,''.
    (2) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended--
            (A) in subparagraph (A), in the matter preceding clause 
        (i)--
                    (i) by striking ``paternity establishment 
                percentage'' and inserting ``IV-D paternity 
                establishment percentage''; and
                    (ii) by striking ``(or all States, as the case may 
                be)'';
            (B) in subparagraph (A)(i), by striking ``during the fiscal 
        year'';
            (C) in subparagraph (A)(ii)(I), by striking ``as of the end 
        of the fiscal year'' and inserting ``in the fiscal year or, at 
        the option of the State, as of the end of such year'';
            (D) in subparagraph (A)(ii)(II), by striking ``or (E) as of 
        the end of the fiscal year'' and inserting ``in the fiscal year 
        or, at the option of the State, as of the end of such year'';
            (E) in subparagraph (A)(iii)--
                    (i) by striking ``during the fiscal year''; and
                    (ii) by striking ``and'' at the end; and
            (F) in the matter following subparagraph (A)--
                    (i) by striking ``who were born out of wedlock 
                during the immediately preceding fiscal year'' and 
                inserting ``born out of wedlock'';
                    (ii) by striking ``such preceding fiscal year'' 
                both places it appears and inserting ``the preceding 
                fiscal year''; and
                    (iii) by striking ``or (E)'' the second place it 
                appears.
    (3) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is amended--
            (A) by striking subparagraph (A) and redesignating 
        subparagraphs (B) and (C) as subparagraphs (A) and (B), 
        respectively;
            (B) in subparagraph (A), as redesignated, by striking ``the 
        percentage of children born out-of-wedlock in the State'' and 
        inserting ``the percentage of children in the State who are 
        born out of wedlock or for whom support has not been 
        established''; and
            (C) in subparagraph (B), as redesignated--
                    (i) by inserting ``and overall performance in child 
                support enforcement'' after ``paternity establishment 
                percentages''; and
                    (ii) by inserting ``and securing support'' before 
                the period.
    (e) Reduction of Payments Under Part D of Title IV.--
            (1) New requirements.--Section 455 (42 U.S.C. 655) is 
        amended by inserting after subsection (b) the following:
    ``(c)(1) If the Secretary finds, with respect to a State program 
under this part in a fiscal year beginning on or after October 1, 
1997--
            ``(A)(i) on the basis of data submitted by a State pursuant 
        to section 454(15)(B), that the State program in such fiscal 
        year failed to achieve the IV-D paternity establishment 
        percentage (as defined in section 452(g)(2)(A)) or the 
        appropriate level of overall performance in child support 
        enforcement (as defined in section 458(b)(2)), or to meet other 
        performance measures that may be established by the Secretary, 
        or
            ``(ii) on the basis of an audit or audits of such State 
        data conducted pursuant to section 452(a)(4)(C), that the State 
        data submitted pursuant to section 454(15)(B) is incomplete or 
        unreliable; and
            ``(B) that, with respect to the succeeding fiscal year--
                    ``(i) the State failed to take sufficient 
                corrective action to achieve the appropriate 
                performance levels as described in subparagraph (A)(i) 
                of this paragraph, or
                    ``(ii) the data submitted by the State pursuant to 
                section 454(15)(B) is incomplete or unreliable,
the amounts otherwise payable to the State under this part for quarters 
following the end of such succeeding fiscal year, prior to quarters 
following the end of the first quarter throughout which the State 
program is in compliance with such performance requirement, shall be 
reduced by the percentage specified in paragraph (2).
    ``(2) The reductions required under paragraph (1) shall be--
            ``(A) not less than 6 nor more than 8 percent, or
            ``(B) not less than 8 nor more than 12 percent, if the 
        finding is the second consecutive finding made pursuant to 
        paragraph (1), or
            ``(C) not less than 12 nor more than 15 percent, if the 
        finding is the third or a subsequent consecutive such finding.
    ``(3) For purposes of this subsection, section 402(a)(27), and 
section 452(a)(4), a State which is determined as a result of an audit 
to have submitted incomplete or unreliable data pursuant to section 
454(15)(B), shall be determined to have submitted adequate data if the 
Secretary determines that the extent of the incompleteness or 
unreliability of the data is of a technical nature which does not 
adversely affect the determination of the level of the State's 
performance.''.
            (2) Conforming amendments.--
                    (A) Section 403 (42 U.S.C. 603) is amended by 
                striking subsection (h).
                    (B) Section 452(a)(4) (42 U.S.C. 652(a)(4)) is 
                amended by striking ``403(h)'' each place such term 
                appears and inserting ``455(c)''.
                    (C) Subsections (d)(3)(A), (g)(1), and (g)(3)(A) of 
                section 452 (42 U.S.C. 652) are each amended by 
                striking ``403(h)'' and inserting ``455(c)''.
    (f) Effective Dates.--
            (1) Incentive adjustments.--(A) The amendments made by 
        subsections (a), (b), and (c) shall become effective October 1, 
        1997, except to the extent provided in subparagraph (B).
            (B) Section 458 of the Social Security Act, as in effect 
        prior to the enactment of this section, shall be effective for 
        purposes of incentive payments to States for fiscal years prior 
        to fiscal year 1999.
            (2) Penalty reductions.--(A) The amendments made by 
        subsection (d) shall become effective with respect to calendar 
        quarters beginning on and after the date of enactment of this 
        Act.
            (B) The amendments made by subsection (e) shall become 
        effective with respect to calendar quarters beginning on and 
        after the date one year after the date of enactment of this 
        Act.

SEC. 413. FEDERAL AND STATE REVIEWS AND AUDITS.

    (a) State Agency Activities.--Section 454 (42 U.S.C. 654) is 
amended--
            (1) in paragraph (14), by striking ``(14)'' and inserting 
        ``(14)(A)'';
            (2) by redesignating paragraph (15) as subparagraph (B) of 
        paragraph (14); and
            (3) by inserting after paragraph (14) the following new 
        paragraph:
            ``(15) provide for--
                    ``(A) a process for annual reviews of and reports 
                to the Secretary on the State program under this part, 
                which shall include such information as may be 
                necessary to measure State compliance with Federal 
                requirements for expedited procedures and timely case 
                processing, using such standards and procedures as are 
                required by the Secretary, under which the State agency 
                will determine the extent to which such program is in 
                conformity with applicable requirements with respect to 
                the operation of State programs under this part 
                (including the status of complaints filed under the 
                procedure required under paragraph (12)(B)); and
                    ``(B) a process of extracting from the State 
                automated data processing system and transmitting to 
                the Secretary data and calculations concerning the 
                levels of accomplishment (and rates of improvement) 
                with respect to applicable performance indicators 
                (including IV-D paternity establishment percentages and 
                overall performance in child support enforcement) to 
                the extent necessary for purposes of sections 452(g) 
                and 458.''.
    (b) Federal Activities.--Section 452(a)(4) (42 U.S.C. 652(a)(4)) is 
amended to read as follows:
            ``(4)(A) review data and calculations transmitted by State 
        agencies pursuant to section 454(15)(B) on State program 
        accomplishments with respect to performance indicators for 
        purposes of section 452(g) and 458, and determine the amount 
        (if any) of penalty reductions pursuant to section 455(c) to be 
        applied to the State;
            ``(B) review annual reports by State agencies pursuant to 
        section 454(15)(A) on State program conformity with Federal 
        requirements; evaluate any elements of a State program in which 
        significant deficiencies are indicated by such report on the 
        status of complaints under the State procedure under section 
        454(12)(B); and, as appropriate, provide to the State agency 
        comments, recommendations for additional or alternative 
        corrective actions, and technical assistance; and
            ``(C) conduct audits, in accordance with the government 
        auditing standards of the United States Comptroller General--
                    ``(i) at least once every 3 years (or more 
                frequently, in the case of a State which fails to meet 
                requirements of this part, or of regulations 
                implementing such requirements, concerning performance 
                standards and reliability of program data) to assess 
                the completeness, reliability, and security of the 
                data, and the accuracy of the reporting systems, used 
                for the calculations of performance indicators 
                specified in subsection (g) and section 458;
                    ``(ii) of the adequacy of financial management of 
                the State program, including assessments of--
                            ``(I) whether Federal and other funds made 
                        available to carry out the State program under 
                        this part are being appropriately expended, and 
                        are properly and fully accounted for; and
                            ``(II) whether collections and 
                        disbursements of support payments and program 
                        income are carried out correctly and are 
                        properly and fully accounted for; and
                    ``(iii) for such other purposes as the Secretary 
                may find necessary;''.
    (c) Effective Date.--The amendments made by this section shall be 
effective with respect to calendar quarters beginning on or after the 
date one year after enactment of this section.

SEC. 414. REQUIRED REPORTING PROCEDURES.

    (a) Establishment.--Section 452(a)(5) (42 U.S.C. 652(a)(5)) is 
amended by inserting ``, and establish procedures to be followed by 
States for collecting and reporting information required to be provided 
under this part, and establish uniform definitions (including those 
necessary to enable the measurement of State compliance with the 
requirements of this part relating to expedited processes and timely 
case processing) to be applied in following such procedures'' before 
the semicolon.
    (b) State Plan Requirement.--Section 454 (42 U.S.C. 654), as 
amended by section 404(a) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (24);
            (2) by striking the period at the end of paragraph (25) and 
        inserting ``; and''; and
            (3) by adding after paragraph (25) the following:
            ``(26) provide that the State shall use the definitions 
        established under section 452(a)(5) in collecting and reporting 
        information as required under this part.''.

SEC. 415. AUTOMATED DATA PROCESSING REQUIREMENTS.

    (a) Revised Requirements.--(1) Section 454(16) (42 U.S.C. 654(16)) 
is amended--
            (A) by striking ``, at the option of the State,'';
            (B) by inserting ``and operation by the State agency'' 
        after ``for the establishment'';
            (C) by inserting ``meeting the requirements of section 
        454A'' after ``information retrieval system'';
            (D) by striking ``in the State and localities thereof, so 
        as (A)'' and inserting ``so as'';
            (E) by striking ``(i)''; and
            (F) by striking ``(including'' and all that follows and 
        inserting a semicolon.
    (2) Part D of title IV (42 U.S.C. 651-669) is amended by inserting 
after section 454 the following new section:

                      ``automated data processing

    ``Sec. 454A. (a) In General.--In order to meet the requirements of 
this section, for purposes of the requirement of section 454(16), a 
State agency shall have in operation a single statewide automated data 
processing and information retrieval system which has the capability to 
perform the tasks specified in this section, and performs such tasks 
with the frequency and in the manner specified in this part or in 
regulations or guidelines of the Secretary.
    ``(b) Program Management.--The automated system required under this 
section shall perform such functions as the Secretary may specify 
relating to management of the program under this part, including--
            ``(1) controlling and accounting for use of Federal, State, 
        and local funds to carry out such program; and
            ``(2) maintaining the data necessary to meet Federal 
        reporting requirements on a timely basis.
    ``(c) Calculation of Performance Indicators.--In order to enable 
the Secretary to determine the incentive and penalty adjustments 
required by sections 452(g) and 458, the State agency shall--
            ``(1) use the automated system--
                    ``(A) to maintain the requisite data on State 
                performance with respect to paternity establishment and 
                child support enforcement in the State; and
                    ``(B) to calculate the IV-D paternity establishment 
                percentage and overall performance in child support 
                enforcement for the State for each fiscal year; and
            ``(2) have in place systems controls to ensure the 
        completeness, and reliability of, and ready access to, the data 
        described in paragraph (1)(A), and the accuracy of the 
        calculations described in paragraph (1)(B).
    ``(d) Information Integrity and Security.--The State agency shall 
have in effect safeguards on the integrity, accuracy, and completeness 
of, access to, and use of data in the automated system required under 
this section, which shall include the following (in addition to such 
other safeguards as the Secretary specifies in regulations):
            ``(1) Policies restricting access.--Written policies 
        concerning access to data by State agency personnel, and 
        sharing of data with other persons, which--
                    ``(A) permit access to and use of data only to the 
                extent necessary to carry out program responsibilities;
                    ``(B) specify the data which may be used for 
                particular program purposes, and the personnel 
                permitted access to such data; and
                    ``(C) ensure that data obtained or disclosed for a 
                limited program purpose is not used or redisclosed for 
                another, impermissible purpose.
            ``(2) Systems controls.--Systems controls (such as 
        passwords or blocking of fields) to ensure strict adherence to 
        the policies specified under paragraph (1).
            ``(3) Monitoring of access.--Routine monitoring of access 
        to and use of the automated system, through methods such as 
        audit trails and feedback mechanisms, to guard against and 
        promptly identify unauthorized access or use.
            ``(4) Training and information.--The State agency shall 
        have in effect procedures to ensure that all personnel 
        (including State and local agency staff and contractors) who 
        may have access to or be required to use sensitive or 
        confidential program data are fully informed of applicable 
        requirements and penalties, and are adequately trained in 
        security procedures.
            ``(5) Penalties.--The State agency shall have in effect 
        administrative penalties (up to and including dismissal from 
        employment) for unauthorized access to, or disclosure or use 
        of, confidential data.''.
    (3) Regulations.--Section 452 (42 U.S.C. 652) is amended by adding 
at the end the following:
    ``(j) The Secretary shall prescribe final regulations for 
implementation of the requirements of section 454A not later than 2 
years after the date of the enactment of this subsection.''.
    (4) Implementation Timetable.--Section 454(24) (42 U.S.C. 654(24)), 
as amended by sections 404(a)(2) and 414(b)(1) of this Act, is amended 
to read as follows:
            ``(24) provide that the State will have in effect an 
        automated data processing and information retrieval system--
                    ``(A) by October 1, 1995, meeting all requirements 
                of this part which were enacted on or before the date 
                of enactment of the Family Support Act of 1988; and
                    ``(B) by October 1, 1999, meeting all requirements 
                of this part enacted on or before the date of enactment 
                of the Individual Responsibility Act of 1995 (but this 
                provision shall not be construed to alter earlier 
                deadlines specified for elements of such system), 
                except that such deadline shall be extended by 1 day 
                for each day (if any) by which the Secretary fails to 
                meet the deadline imposed by section 452(j);''.
    (b) Special Federal Matching Rate for Development Costs of 
Automated Systems.--Section 455(a) (42 U.S.C. 655(a)) is amended--
            (1) in paragraph (1)(B)--
                    (A) by striking ``90 percent'' and inserting ``the 
                percent specified in paragraph (3)'';
                    (B) by striking ``so much of''; and
                    (C) by striking ``which the Secretary'' and all 
                that follows and inserting ``, and''; and
            (2) by adding at the end the following new paragraph:
    ``(3)(A) The Secretary shall pay to each State, for each quarter in 
fiscal year 1996, 90 percent of so much of State expenditures described 
in subparagraph (1)(B) as the Secretary finds are for a system meeting 
the requirements specified in section 454(16), or meeting such 
requirements without regard to clause (D) thereof.
    ``(B)(i) The Secretary shall pay to each State, for each quarter in 
fiscal years 1997 through 2001, the percentage specified in clause (ii) 
of so much of State expenditures described in subparagraph (1)(B) as 
the Secretary finds are for a system meeting the requirements specified 
in section 454(16) and 454A, subject to clause (iii).
    ``(ii) The percentage specified in this clause, for purposes of 
clause (i), is the higher of--
            ``(I) 80 percent, or
            ``(II) the percentage otherwise applicable to Federal 
        payments to the State under subparagraph (A) (as adjusted 
        pursuant to section 458).''.
    (c) Conforming Amendment.--Section 123(c) of the Family Support Act 
of 1988 (102 Stat. 2352; Public Law 100-485) is repealed.
    (d) Additional Provisions.--For additional provisions of section 
454A, as added by subsection (a) of this section, see the amendments 
made by sections 421, 422(c), and 433(d) of this Act.

SEC. 416. DIRECTOR OF CSE PROGRAM; STAFFING STUDY.

    (a) Reporting to Secretary.--Section 452(a) (42 U.S.C. 652(a)) is 
amended in the matter preceding paragraph (1) by striking ``directly''.
    (b) Staffing Studies.--
            (1) Scope.--The Secretary of Health and Human Services 
        shall, directly or by contract, conduct studies of the staffing 
        of each State child support enforcement program under part D of 
        title IV of the Social Security Act. Such studies shall include 
        a review of the staffing needs created by requirements for 
        automated data processing, maintenance of a central case 
        registry and centralized collections of child support, and of 
        changes in these needs resulting from changes in such 
        requirements. Such studies shall examine and report on 
        effective staffing practices used by the States and on 
        recommended staffing procedures.
            (2) Frequency of studies.--The Secretary shall complete the 
        first staffing study required under paragraph (1) by October 1, 
        1997, and may conduct additional studies subsequently at 
        appropriate intervals.
            (3) Report to the congress.--The Secretary shall submit a 
        report to the Congress stating the findings and conclusions of 
        each study conducted under this subsection.

SEC. 417. FUNDING FOR SECRETARIAL ASSISTANCE TO STATE PROGRAMS.

    Section 452 (42 U.S.C. 652), as amended by section 415(a)(3) of 
this Act, is amended by adding at the end the following new subsection:
    ``(k) Funding for Federal Activities Assisting State Programs.--(1) 
There shall be available to the Secretary, from amounts appropriated 
for fiscal year 1996 and each succeeding fiscal year for payments to 
States under this part, the amount specified in paragraph (2) for the 
costs to the Secretary for--
            ``(A) information dissemination and technical assistance to 
        States, training of State and Federal staff, staffing studies, 
        and related activities needed to improve programs (including 
        technical assistance concerning State automated systems);
            ``(B) research, demonstration, and special projects of 
        regional or national significance relating to the operation of 
        State programs under this part; and
            ``(C) operation of the Federal Parent Locator Service under 
        section 453, to the extent such costs are not recovered through 
        user fees.
    ``(2) The amount specified in this paragraph for a fiscal year is 
the amount equal to a percentage of the reduction in Federal payments 
to States under part A on account of child support (including 
arrearages) collected in the preceding fiscal year on behalf of 
children receiving aid under such part A in such preceding fiscal year 
(as determined on the basis of the most recent reliable data available 
to the Secretary as of the end of the third calendar quarter following 
the end of such preceding fiscal year), equal to--
            ``(A) 1 percent, for the activities specified in 
        subparagraphs (A) and (B) of paragraph (1); and
            ``(B) 2 percent, for the activities specified in 
        subparagraph (C) of paragraph (1).''.

SEC. 418. REPORTS AND DATA COLLECTION BY THE SECRETARY.

    (a) Annual Report to Congress.--(1) Section 452(a)(10)(A) (42 
U.S.C. 652(a)(10)(A)) is amended--
            (A) by striking ``this part;'' and inserting ``this part, 
        including--''; and
            (B) by adding at the end the following indented clauses:
                            ``(i) the total amount of child support 
                        payments collected as a result of services 
                        furnished during such fiscal year to 
                        individuals receiving services under this part;
                            ``(ii) the cost to the States and to the 
                        Federal Government of furnishing such services 
                        to those individuals; and
                            ``(iii) the number of cases involving 
                        families--
                                    ``(I) who became ineligible for aid 
                                under part A during a month in such 
                                fiscal year; and
                                    ``(II) with respect to whom a child 
                                support payment was received in the 
                                same month;''.
    (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is amended--
            (A) in the matter preceding clause (i)--
                    (i) by striking ``with the data required under each 
                clause being separately stated for cases'' and 
                inserting ``separately stated for (1) cases'';
                    (ii) by striking ``cases where the child was 
                formerly receiving'' and inserting ``or formerly 
                received'';
                    (iii) by inserting ``or 1912'' after 
                ``471(a)(17)''; and
                    (iv) by inserting ``(2)'' before ``all other'';
            (B) in each of clauses (i) and (ii), by striking ``, and 
        the total amount of such obligations'';
            (C) in clause (iii), by striking ``described in'' and all 
        that follows and inserting ``in which support was collected 
        during the fiscal year;'';
            (D) by striking clause (iv); and
            (E) by redesignating clause (v) as clause (vii), and 
        inserting after clause (iii) the following new clauses:
                            ``(iv) the total amount of support 
                        collected during such fiscal year and 
                        distributed as current support;
                            ``(v) the total amount of support collected 
                        during such fiscal year and distributed as 
                        arrearages;
                            ``(vi) the total amount of support due and 
                        unpaid for all fiscal years; and''.
    (3) Section 452(a)(10)(G) (42 U.S.C. 652(a)(10)(G)) is amended by 
striking ``on the use of Federal courts and''.
    (4) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended by 
striking all that follows subparagraph (I).
    (b) Data Collection and Reporting.--Section 469 (42 U.S.C. 669) is 
amended--
            (1) by striking subsections (a) and (b) and inserting the 
        following:
    ``(a) The Secretary shall collect and maintain, on a fiscal year 
basis, up-to-date statistics, by State, with respect to services to 
establish paternity and services to establish child support 
obligations, the data specified in subsection (b), separately stated, 
in the case of each such service, with respect to--
            ``(1) families (or dependent children) receiving aid under 
        plans approved under part A (or E); and
            ``(2) families not receiving such aid.
    ``(b) The data referred to in subsection (a) are--
            ``(1) the number of cases in the caseload of the State 
        agency administering the plan under this part in which such 
        service is needed; and
            ``(2) the number of such cases in which the service has 
        been provided.''; and
            (2) in subsection (c), by striking ``(a)(2)'' and inserting 
        ``(b)(2)''.
    (c) Effective Date.--The amendments made by this section shall be 
effective with respect to fiscal year 1996 and succeeding fiscal years.

                  Subtitle C--Locate and Case Tracking

SEC. 421. CENTRAL STATE AND CASE REGISTRY.

    Section 454A, as added by section 415(a)(2) of this Act, is amended 
by adding at the end the following:
    ``(e) Central Case Registry.--(1) In General.--The automated system 
required under this section shall perform the functions, in accordance 
with the provisions of this subsection, of a single central registry 
containing records with respect to each case in which services are 
being provided by the State agency (including, on and after October 1, 
1998, each order specified in section 466(a)(12)), using such 
standardized data elements (such as names, social security numbers or 
other uniform identification numbers, dates of birth, and case 
identification numbers), and containing such other information (such as 
information on case status) as the Secretary may require.
    ``(2) Payment Records.--Each case record in the central registry 
shall include a record of--
            ``(A) the amount of monthly (or other periodic) support 
        owed under the support order, and other amounts due or overdue 
        (including arrears, interest or late payment penalties, and 
        fees);
            ``(B) the date on which or circumstances under which the 
        support obligation will terminate under such order;
            ``(C) all child support and related amounts collected 
        (including such amounts as fees, late payment penalties, and 
        interest on arrearages);
            ``(D) the distribution of such amounts collected; and
            ``(E) the birth date of the child for whom the child 
        support order is entered.
    ``(3) Updating and Monitoring.--The State agency shall promptly 
establish and maintain, and regularly monitor, case records in the 
registry required by this subsection, on the basis of--
            ``(A) information on administrative actions and 
        administrative and judicial proceedings and orders relating to 
        paternity and support;
            ``(B) information obtained from matches with Federal, 
        State, or local data sources;
            ``(C) information on support collections and distributions; 
        and
            ``(D) any other relevant information.
    ``(f) Data Matches and Other Disclosures of Information.--The 
automated system required under this section shall have the capacity, 
and be used by the State agency, to extract data at such times, and in 
such standardized format or formats, as may be required by the 
Secretary, and to share and match data with, and receive data from, 
other data bases and data matching services, in order to obtain (or 
provide) information necessary to enable the State agency (or Secretary 
or other State or Federal agencies) to carry out responsibilities under 
this part. Data matching activities of the State agency shall include 
at least the following:
            ``(1) Data bank of child support orders.--Furnish to the 
        Data Bank of Child Support Orders established under section 
        453(h) (and update as necessary, with information including 
        notice of expiration of orders) minimal information (to be 
        specified by the Secretary) on each child support case in the 
        central case registry.
            ``(2) Federal parent locator service.--Exchange data with 
        the Federal Parent Locator Service for the purposes specified 
        in section 453.
            ``(3) AFDC and medicaid agencies.--Exchange data with State 
        agencies (of the State and of other States) administering the 
        programs under part A and title XIX, as necessary for the 
        performance of State agency responsibilities under this part 
        and under such programs.
            ``(4) Intra- and interstate data matches.--Exchange data 
        with other agencies of the State, agencies of other States, and 
        interstate information networks, as necessary and appropriate 
        to carry out (or assist other States to carry out) the purposes 
        of this part.''.

SEC. 422. CENTRALIZED COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.

    (a) State Plan Requirement.--Section 454 (42 U.S.C. 654), as 
amended by sections 404(a) and 414(b) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (25);
            (2) by striking the period at the end of paragraph (26) and 
        inserting ``; and''; and
            (3) by adding after paragraph (26) the following new 
        paragraph:
            ``(27) provide that the State agency, on and after October 
        1, 1998--
                    ``(A) will operate a centralized, automated unit 
                for the collection and disbursement of child support 
                under orders being enforced under this part, in 
                accordance with section 454B; and
                    ``(B) will have sufficient State staff (consisting 
                of State employees), and (at State option) contractors 
                reporting directly to the State agency to monitor and 
                enforce support collections through such centralized 
                unit, including carrying out the automated data 
                processing responsibilities specified in section 
                454A(g) and to impose, as appropriate in particular 
                cases, the administrative enforcement remedies 
                specified in section 466(c)(1).''.
    (b) Establishment of Centralized Collection Unit.--Part D of title 
IV (42 U.S.C. 651-669) is amended by adding after section 454A the 
following new section:

     ``centralized collection and disbursement of support payments

    ``Sec. 454B. (a) In General.--In order to meet the requirement of 
section 454(27), the State agency must operate a single centralized, 
automated unit for the collection and disbursement of support payments, 
coordinated with the automated data system required under section 454A, 
in accordance with the provisions of this section, which shall be--
            ``(1) operated directly by the State agency (or by two or 
        more State agencies under a regional cooperative agreement), or 
        by a single contractor responsible directly to the State 
        agency; and
            ``(2) used for the collection and disbursement (including 
        interstate collection and disbursement) of payments under 
support orders in all cases being enforced by the State pursuant to 
section 454(4).
    ``(b) Required Procedures.--The centralized collections unit shall 
use automated procedures, electronic processes, and computer-driven 
technology to the maximum extent feasible, efficient, and economical, 
for the collection and disbursement of support payments, including 
procedures--
            ``(1) for receipt of payments from parents, employers, and 
        other States, and for disbursements to custodial parents and 
        other obligees, the State agency, and the State agencies of 
        other States;
            ``(2) for accurate identification of payments;
            ``(3) to ensure prompt disbursement of the custodial 
        parent's share of any payment; and
            ``(4) to furnish to either parent, upon request, timely 
        information on the current status of support payments.''.
    (c) Use of Automated System.--Section 454A, as added by section 
415(a)(2) of this Act and as amended by section 421 of this Act, is 
amended by adding at the end the following new subsection:
    ``(g) Centralized Collection and Distribution of Support 
Payments.--The automated system required under this section shall be 
used, to the maximum extent feasible, to assist and facilitate 
collections and disbursement of support payments through the 
centralized collections unit operated pursuant to section 454B, through 
the performance of functions including at a minimum--
            ``(1) generation of orders and notices to employers (and 
        other debtors) for the withholding of wages (and other 
        income)--
                    ``(A) within two working days after receipt (from 
                the directory of New Hires established under section 
                453(i) or any other source) of notice of and the income 
                source subject to such withholding; and
                    ``(B) using uniform formats directed by the 
                Secretary;
            ``(2) ongoing monitoring to promptly identify failures to 
        make timely payment; and
            ``(3) automatic use of enforcement mechanisms (including 
        mechanisms authorized pursuant to section 466(c)) where 
        payments are not timely made.''.
    (d) Effective Date.--The amendments made by this section shall 
become effective on October 1, 1998.

SEC. 423. AMENDMENTS CONCERNING INCOME WITHHOLDING.

    (a) Mandatory Income Withholding.--(1) Section 466(a)(1) (42 U.S.C. 
666(a)(1)) is amended to read as follows:
            ``(1) Income withholding.--(A) Under orders enforced under 
        the state plan.--Procedures described in subsection (b) for the 
        withholding from income of amounts payable as support in cases 
        subject to enforcement under the State plan.
            ``(B) Under certain orders predating change in 
        requirement.--Procedures under which all child support orders 
        issued (or modified) before October 1, 1996, and which are not 
        otherwise subject to withholding under subsection (b), shall 
        become subject to withholding from wages as provided in 
        subsection (b) if arrearages occur, without the need for a 
        judicial or administrative hearing.''.
    (2) Section 466(a)(8) (42 U.S.C. 666(a)(8)) is repealed.
    (3) Section 466(b) (42 U.S.C. 666(b)) is amended--
            (A) in the matter preceding paragraph (1), by striking 
        ``subsection (a)(1)'' and inserting ``subsection (a)(1)(A)'';
            (B) in paragraph (5), by striking all that follows 
        ``administered by'' and inserting ``the State through the 
        centralized collections unit established pursuant to section 
        454B, in accordance with the requirements of such section 
        454B.'';
            (C) in paragraph (6)(A)(i)--
                    (i) by inserting ``, in accordance with timetables 
                established by the Secretary,'' after ``must be 
                required''; and
                    (ii) by striking ``to the appropriate agency'' and 
                all that follows and inserting ``to the State 
                centralized collections unit within 5 working days 
                after the date such amount would (but for this 
                subsection) have been paid or credited to the employee, 
                for distribution in accordance with this part.'';
            (D) in paragraph (6)(A)(ii), by inserting ``be in a 
        standard format prescribed by the Secretary, and'' after 
        ``shall''; and
            (E) in paragraph (6)(D)--
                    (i) by striking ``employer who discharges'' and 
                inserting ``employer who--(A) discharges'';
                    (ii) by relocating subparagraph (A), as designated, 
                as an indented subparagraph after and below the 
                introductory matter;
                    (iii) by striking the period at the end; and
                    (iv) by adding after and below subparagraph (A) the 
                following new subparagraph:
                    ``(B) fails to withhold support from wages, or to 
                pay such amounts to the State centralized collections 
                unit in accordance with this subsection.''.
    (b) Conforming Amendment.--Section 466(c) (42 U.S.C. 666(c)) is 
repealed.
    (c) Definition of Terms.--The Secretary shall promulgate 
regulations providing definitions, for purposes of part D of title IV 
of the Social Security Act, for the term ``income'' and for such other 
terms relating to income withholding under section 466(b) of such Act 
as the Secretary may find it necessary or advisable to define.

SEC. 424. LOCATOR INFORMATION FROM INTERSTATE NETWORKS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by section 423(a)(2) 
of this Act, is amended by inserting after paragraph (7) the following:
            ``(8) Locator information from interstate networks.--
        Procedures ensuring that the State will neither provide funding 
        for, nor use for any purpose (including any purpose unrelated 
        to the purposes of this part), any automated interstate network 
        or system used to locate individuals--
                    ``(A) for purposes relating to the use of motor 
                vehicles; or
                    ``(B) providing information for law enforcement 
                purposes (where child support enforcement agencies are 
                otherwise allowed access by State and Federal law),
        unless all Federal and State agencies administering programs 
        under this part (including the entities established under 
        section 453) have access to information in such system or 
        network to the same extent as any other user of such system or 
        network.''.

SEC. 425. EXPANDED FEDERAL PARENT LOCATOR SERVICE.

    (a) Expanded Authority to Locate Individuals and Assets.--Section 
453 (42 U.S.C. 653) is amended--
            (1) in subsection (a), by striking all that follows 
        ``subsection (c))'' and inserting the following:
``, for the purpose of establishing parentage, establishing, setting 
the amount of, modifying, or enforcing child support obligations--
            ``(1) information on, or facilitating the discovery of, the 
        location of any individual--
                    ``(A) who is under an obligation to pay child 
                support;
                    ``(B) against whom such an obligation is sought; or
                    ``(C) to whom such an obligation is owed, including 
                such individual's social security number (or numbers), 
                most recent residential address, and the name, address, 
                and employer identification number of such individual's 
                employer; and
            ``(2) information on the individual's wages (or other 
        income) from, and benefits of, employment (including rights to 
        or enrollment in group health care coverage); and
            ``(3) information on the type, status, location, and amount 
        of any assets of, or debts owed by or to, any such 
        individual.''; and
            (2) in subsection (b)--
                    (A) in the matter preceding paragraph (1), by 
                striking ``social security'' and all that follows 
                through ``absent parent'' and inserting ``information 
                specified in subsection (a)''; and
                    (B) in paragraph (2), by inserting before the 
                period ``, or from any consumer reporting agency (as 
                defined in section 603(f) of the Fair Credit Reporting 
                Act (15 U.S.C. 1681a(f))'';
            (3) in subsection (e)(1), by inserting before the period 
        ``, or by consumer reporting agencies''.
    (b) Reimbursement for Data From Federal Agencies.--Section 
453(e)(2) (42 U.S.C. 653(e)(2)) is amended in the fourth sentence by 
inserting before the period ``in an amount which the Secretary 
determines to be reasonable payment for the data exchange (which amount 
shall not include payment for the costs of obtaining, compiling, or 
maintaining the data)''.
    (c) Access to Consumer Reports Under Fair Credit Reporting Act.--
(1) Section 608 of the Fair Credit Reporting Act (15 U.S.C. 1681f) is 
amended--
            (A) by striking ``, limited to'' and inserting ``to a 
        governmental agency (including the entire consumer report, in 
        the case of a Federal, State, or local agency administering a 
        program under part D of title IV of the Social Security Act, 
        and limited to''; and
            (B) by striking ``employment, to a governmental agency'' 
        and inserting ``employment, in the case of any other 
        governmental agency)''.
    (2) Reimbursement for Reports by State Agencies and Credit 
Bureaus.--Section 453 (42 U.S.C. 653) is amended by adding at the end 
the following new subsection:
    ``(g) The Secretary is authorized to reimburse costs to State 
agencies and consumer credit reporting agencies the costs incurred by 
such entities in furnishing information requested by the Secretary 
pursuant to this section in an amount which the Secretary determines to 
be reasonable payment for the data exchange (which amount shall not 
include payment for the costs of obtaining, compiling, or maintaining 
the data).''.
    (d) Disclosure of Tax Return Information.--(1) Section 
6103(1)(6)(A)(ii) of the Internal Revenue Code of 1986 is amended by 
striking ``, but only if'' and all that follows and inserting a period.
    (2) Section 6103(1)(8)(A) of the Internal Revenue Code of 1986 is 
amended by inserting ``Federal,'' before ``State or local''.
    (e) Technical Amendments.--
            (1) Sections 452(a)(9), 453(a), 453(b), 463(a), and 463(e) 
        (42 U.S.C. 652(a)(9), 653(a), 653(b), 663(a), and 663(e)) are 
        each amended by inserting ``Federal'' before ``Parent'' each 
        place it appears.
            (2) Section 453 (42 U.S.C. 653) is amended in the heading 
        by adding ``federal'' before ``parent''.
    (f) New Components.--Section 453 (42 U.S.C. 653), as amended by 
subsection (c)(2) of this section, is amended by adding at the end the 
following:
    ``(h) Data Bank of Child Support Orders.--
            ``(1) In general.--Not later than October 1, 1998, in order 
        to assist States in administering their State plans under this 
        part and parts A, F, and G, and for the other purposes 
        specified in this section, the Secretary shall establish and 
        maintain in the Federal Parent Locator Service an automated 
        registry to be known as the Data Bank of Child Support Orders, 
        which shall contain abstracts of child support orders and other 
        information described in paragraph (2) on each case in each 
        State central case registry maintained pursuant to section 
        454A(e), as furnished (and regularly updated), pursuant to 
        section 454A(f), by State agencies administering programs under 
        this part.
            ``(2) Case information.--The information referred to in 
        paragraph (1), as specified by the Secretary, shall include 
        sufficient information (including names, social security 
        numbers or other uniform identification numbers, and State case 
        identification numbers) to identify the individuals who owe or 
        are owed support (or with respect to or on behalf of whom 
        support obligations are sought to be established), and the 
        State or States which have established or modified, or are 
        enforcing or seeking to establish, such an order.
    ``(i) Directory of New Hires.--
            ``(1) In general.--Not later than October 1, 1998, In order 
        to assist States in administering their State plans under this 
        part and parts A, F, and G, and for the other purposes 
        specified in this section, the Secretary shall establish and 
        maintain in the Federal Parent Locator Service an automated 
        directory to be known as the directory of New Hires, 
        containing--
                    ``(A) information supplied by employers on each 
                newly hired individual, in accordance with paragraph 
                (2); and
                    ``(B) information supplied by State agencies 
                administering State unemployment compensation laws, in 
                accordance with paragraph (3).
            ``(2) Employer information.--
                    ``(A) Information required.--Subject to 
                subparagraph (D), each employer shall furnish to the 
                Secretary, for inclusion in the directory established 
                under this subsection, not later than 10 days after the 
                date (on or after October 1, 1998) on which the 
                employer hires a new employee (as defined in 
                subparagraph (C)), a report containing the name, date 
                of birth, and social security number of such employee, 
                and the employer identification number of the employer.
                    ``(B) Reporting method and format.--The Secretary 
                shall provide for transmission of the reports required 
                under subparagraph (A) using formats and methods which 
                minimize the burden on employers, which shall include--
                            ``(i) automated or electronic transmission 
                        of such reports;
                            ``(ii) transmission by regular mail; and
                            ``(iii) transmission of a copy of the form 
                        required for purposes of compliance with 
                        section 3402 of the Internal Revenue Code of 
                        1986.
                    ``(C) Employee defined.--For purposes of this 
                paragraph, the term `employee' means any individual 
                subject to the requirement of section 3402(f)(2) of the 
                Internal Revenue Code of 1986.
                    ``(D) Paperwork reduction requirement.--As required 
                by the information resources management policies 
                published by the Director of the Office of Management 
                and Budget pursuant to section 3504(b)(1) of title 44, 
                United States Code, the Secretary, in order to minimize 
                the cost and reporting burden on employers, shall not 
                require reporting pursuant to this paragraph if an 
                alternative reporting mechanism can be developed that 
                either relies on existing Federal or State reporting or 
                enables the Secretary to collect the needed information 
                in a more cost-effective and equally expeditious 
                manner, taking into account the reporting costs on 
                employers.
                    ``(E) Civil money penalty on noncomplying 
                employers.--(i) Any employer that fails to make a 
                timely report in accordance with this paragraph with 
                respect to an individual shall be subject to a civil 
                money penalty, for each calendar year in which the 
                failure occurs, of the lesser of $500 or 1 percent of 
                the wages or other compensation paid by such employer 
                to such individual during such calendar year.
                    ``(ii) Subject to clause (iii), the provisions of 
                section 1128A (other than subsections (a) and (b) 
                thereof) shall apply to a civil money penalty under 
                clause (i) in the same manner as they apply to a civil 
money penalty or proceeding under section 1128A(a).
                    ``(iii) Any employer with respect to whom a penalty 
                under this subparagraph is upheld after an 
                administrative hearing shall be liable to pay all costs 
                of the Secretary with respect to such hearing.
            ``(3) Employment security information.--
                    ``(A) Reporting requirement.--Each State agency 
                administering a State unemployment compensation law 
                approved by the Secretary of Labor under the Federal 
                Unemployment Tax Act shall furnish to the Secretary of 
                Health and Human Services extracts of the reports to 
                the Secretary of Labor concerning the wages and 
                unemployment compensation paid to individuals required 
                under section 303(a)(6), in accordance with 
                subparagraph (B).
                    ``(B) Manner of compliance.--The extracts required 
                under subparagraph (A) shall be furnished to the 
                Secretary of Health and Human Services on a quarterly 
                basis, with respect to calendar quarters beginning on 
                and after October 1, 1996, by such dates, in such 
                format, and containing such information as required by 
                that Secretary in regulations.
    ``(j) Data Matches and Other Disclosures.--
            ``(1) Verification by social security administration.--(A) 
        The Secretary shall transmit data on individuals and employers 
        maintained under this section to the Social Security 
        Administration to the extent necessary for verification in 
        accordance with subparagraph (B).
            ``(B) The Social Security Administration shall verify the 
        accuracy of, correct or supply to the extent necessary and 
        feasible, and report to the Secretary, the following 
        information in data supplied by the Secretary pursuant to 
        subparagraph (A):
                    ``(i) the name, social security number, and birth 
                date of each individual; and
                    ``(ii) the employer identification number of each 
                employer.
            ``(2) Child support locator matches.--For the purpose of 
        locating individuals for purposes of paternity establishment 
        and establishment and enforcement of child support, the 
        Secretary shall--
                    ``(A) match data in the directory of New Hires 
                against the child support order abstracts in the Data 
                Bank of Child Support Orders not less often than every 
                2 working days; and
                    ``(B) report information obtained from such a match 
                to concerned State agencies operating programs under 
                this part not later than 2 working days after such 
                match.
            ``(3) Data matches and disclosures of data in all 
        registries for title iv program purposes.--The Secretary 
        shall--
                    ``(A) perform matches of data in each component of 
                the Federal Parent Locator Service maintained under 
                this section against data in each other such component 
                (other than the matches required pursuant to paragraph 
                (1)), and report information resulting from such 
                matches to State agencies operating programs under this 
                part and parts A, F, and G; and
                    ``(B) disclose data in such registries to such 
                State agencies,
        to the extent, and with the frequency, that the Secretary 
        determines to be effective in assisting such States to carry 
        out their responsibilities under such programs.
    ``(k) Fees.--
            ``(1) For ssa verification.--The Secretary shall reimburse 
        the Commissioner of Social Security, at a rate negotiated 
        between the Secretary and the Commissioner, the costs incurred 
        by the Commissioner in performing the verification services 
        specified in subsection (j).
            ``(2) For information from sesas.--The Secretary shall 
        reimburse costs incurred by State employment security agencies 
        in furnishing data as required by subsection (j)(3), at rates 
        which the Secretary determines to be reasonable (which rates 
        shall not include payment for the costs of obtaining, 
        compiling, or maintaining such data).
            ``(3) For information furnished to state and federal 
        agencies.--State and Federal agencies receiving data or 
        information from the Secretary pursuant to this section shall 
        reimburse the costs incurred by the Secretary in furnishing 
        such data or information, at rates which the Secretary 
        determines to be reasonable (which rates shall include payment 
        for the costs of obtaining, verifying, maintaining, and 
        matching such data or information).
    ``(l) Restriction on Disclosure and Use.--Data in the Federal 
Parent Locator Service, and information resulting from matches using 
such data, shall not be used or disclosed except as specifically 
provided in this section.
    ``(m) Retention of Data.--Data in the Federal Parent Locator 
Service, and data resulting from matches performed pursuant to this 
section, shall be retained for such period (determined by the 
Secretary) as appropriate for the data uses specified in this section.
    ``(n) Information Integrity and Security.--The Secretary shall 
establish and implement safeguards with respect to the entities 
established under this section designed to--
            ``(1) ensure the accuracy and completeness of information 
        in the Federal Parent Locator Service; and
            ``(2) restrict access to confidential information in the 
        Federal Parent Locator Service to authorized persons, and 
        restrict use of such information to authorized purposes.
    ``(o) Limit on Liability.--The Secretary shall not be liable to 
either a State or an individual for inaccurate information provided to 
a component of the Federal Parent Locator Service section and disclosed 
by the Secretary in accordance with this section.''.
    (g) Conforming Amendments.--
            (1) To part d of title iv of the social security act.--
        Section 454(8)(B) (42 U.S.C. 654(8)(B)) is amended to read as 
        follows:
                    ``(B) the Federal Parent Locator Service 
                established under section 453;''.
            (2) To federal unemployment tax act.--Section 3304(16) of 
        the Internal Revenue Code of 1986 is amended--
                    (A) by striking ``Secretary of Health, Education, 
                and Welfare'' each place such term appears and 
                inserting ``Secretary of Health and Human Services'';
                    (B) in subparagraph (B), by striking ``such 
                information'' and all that follows and inserting 
                ``information furnished under subparagraph (A) or (B) 
                is used only for the purposes authorized under such 
                subparagraph;'';
                    (C) by striking ``and'' at the end of subparagraph 
                (A);
                    (D) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (E) by inserting after subparagraph (A) the 
                following new subparagraph:
                    ``(B) wage and unemployment compensation 
                information contained in the records of such agency 
                shall be furnished to the Secretary of Health and Human 
                Services (in accordance with regulations promulgated by 
                such Secretary) as necessary for the purposes of the 
                directory of New Hires established under section 453(i) 
                of the Social Security Act, and''.
            (3) To state grant program under title iii of the social 
        security act.--Section 303(a) (42 U.S.C. 503(a)) is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (8);
                    (B) by striking the period at the end of paragraph 
                (9) and inserting ``; and''; and
                    (C) by adding after paragraph (9) the following new 
                paragraph:
            ``(10) The making of quarterly electronic reports, at such 
        dates, in such format, and containing such information, as 
        required by the Secretary of Health and Human Services under 
        section 453(i)(3), and compliance with such provisions as such 
        Secretary may find necessary to ensure the correctness and 
        verification of such reports.''.

SEC. 426. USE OF SOCIAL SECURITY NUMBERS.

    (a) State Law Requirement.--Section 466(a) (42 U.S.C. 666(a)), as 
amended by section 401(a) of this Act, is amended by inserting after 
paragraph (12) the following:
            ``(13) Social security numbers required.--Procedures 
        requiring the recording of social security numbers--
                    ``(A) of both parties on marriage licenses and 
                divorce decrees; and
                    ``(B) of both parents, on birth records and child 
                support and paternity orders.''.
    (b) Clarification of Federal Policy.--Section 205(c)(2)(C)(ii) (42 
U.S.C. 405(c)(2)(C)(ii)) is amended by striking the third sentence and 
inserting ``This clause shall not be considered to authorize disclosure 
of such numbers except as provided in the preceding sentence.''.

         Subtitle D--Streamlining and Uniformity of Procedures

SEC. 431. ADOPTION OF UNIFORM STATE LAWS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 401(a) 
and 426(a) of this Act, is amended inserting after paragraph (13) the 
following:
            ``(14) Interstate enforcement.--(A) Adoption of uifsa.--
        Procedures under which the State adopts in its entirety (with 
        the modifications and additions specified in this paragraph) 
        not later than January 1, 1997, and uses on and after such 
        date, the Uniform Interstate Family Support Act, as approved by 
        the National Conference of Commissioners on Uniform State Laws 
        in August, 1992.
            ``(B) Expanded application of uifsa.--The State law adopted 
        pursuant to subparagraph (A) shall be applied to any case--
                    ``(i) involving an order established or modified in 
                one State and for which a subsequent modification is 
                sought in another State; or
                    ``(ii) in which interstate activity is required to 
                enforce an order.
            ``(C) Jurisdiction to modify orders.--The State law adopted 
        pursuant to subparagraph (A) of this paragraph shall contain 
        the following provision in lieu of section 611(a)(1) of the 
        Uniform Interstate Family Support Act described in such 
        subparagraph (A):
            ```(1) the following requirements are met:
                    ```(i) the child, the individual obligee, and the 
                obligor--
                            ```(I) do not reside in the issuing State; 
                        and
                            ```(II) either reside in this State or are 
                        subject to the jurisdiction of this State 
                        pursuant to section 201; and
                    ```(ii) (in any case where another State is 
                exercising or seeks to exercise jurisdiction to modify 
                the order) the conditions of section 204 are met to the 
                same extent as required for proceedings to establish 
                orders; or'.
            ``(D) Service of process.--The State law adopted pursuant 
        to subparagraph (A) shall recognize as valid, for purposes of 
        any proceeding subject to such State law, service of process 
        upon persons in the State (and proof of such service) by any 
        means acceptable in another State which is the initiating or 
        responding State in such proceeding.
            ``(E) Cooperation by employers.--The State law adopted 
        pursuant to subparagraph (A) shall provide for the use of 
        procedures (including sanctions for noncompliance) under which 
        all entities in the State (including for-profit, nonprofit, and 
        governmental employers) are required to provide promptly, in 
        response to a request by the State agency of that or any other 
        State administering a program under this part, information on 
        the employment, compensation, and benefits of any individual 
        employed by such entity as an employee or contractor.''.

SEC. 432. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD SUPPORT 
              ORDERS.

    Section 1738B of title 28, United States Code, is amended--
            (1) in subsection (a)(2), by striking ``subsection (e)'' 
        and inserting ``subsections (e), (f), and (i)'';
            (2) in subsection (b), by inserting after the 2nd 
        undesignated paragraph the following:
            ```child's home State' means the State in which a child 
        lived with a parent or a person acting as parent for at least 
        six consecutive months immediately preceding the time of filing 
        of a petition or comparable pleading for support and, if a 
        child is less than six months old, the State in which the child 
        lived from birth with any of them. A period of temporary 
        absence of any of them is counted as part of the six-month 
        period.'';
            (3) in subsection (c), by inserting ``by a court of a 
        State'' before ``is made'';
            (4) in subsection (c)(1), by inserting ``and subsections 
        (e), (f), and (g)'' after ``located'';
            (5) in subsection (d)--
                    (A) by inserting ``individual'' before 
                ``contestant''; and
                    (B) by striking ``subsection (e)'' and inserting 
                ``subsections (e) and (f)'';
            (6) in subsection (e), by striking ``make a modification of 
        a child support order with respect to a child that is made'' 
        and inserting ``modify a child support order issued'';
            (7) in subsection (e)(1), by inserting ``pursuant to 
        subsection (i)'' before the semicolon;
            (8) in subsection (e)(2)--
                    (A) by inserting ``individual'' before 
                ``contestant'' each place such term appears; and
                    (B) by striking ``to that court's making the 
                modification and assuming'' and inserting ``with the 
                State of continuing, exclusive jurisdiction for a court 
                of another State to modify the order and assume'';
            (9) by redesignating subsections (f) and (g) as subsections 
        (g) and (h), respectively;
            (10) by inserting after subsection (e) the following:
    ``(f) Recognition of Child Support Orders.--If one or more child 
support orders have been issued in this or another State with regard to 
an obligor and a child, a court shall apply the following rules in 
determining which order to recognize for purposes of continuing, 
exclusive jurisdiction and enforcement:
            ``(1) If only one court has issued a child support order, 
        the order of that court must be recognized.
            ``(2) If two or more courts have issued child support 
        orders for the same obligor and child, and only one of the 
        courts would have continuing, exclusive jurisdiction under this 
        section, the order of that court must be recognized.
            ``(3) If two or more courts have issued child support 
        orders for the same obligor and child, and only one of the 
        courts would have continuing, exclusive jurisdiction under this 
        section, an order issued by a court in the current home State 
        of the child must be recognized, but if an order has not been 
        issued in the current home State of the child, the order most 
        recently issued must be recognized.
            ``(4) If two or more courts have issued child support 
        orders for the same obligor and child, and none of the courts 
        would have continuing, exclusive jurisdiction under this 
        section, a court may issue a child support order, which must be 
        recognized.
            ``(5) The court that has issued an order recognized under 
        this subsection is the court having continuing, exclusive 
        jurisdiction.'';
            (11) in subsection (g) (as so redesignated)--
                    (A) by striking ``Prior'' and inserting 
                ``Modified''; and
                    (B) by striking ``subsection (e)'' and inserting 
                ``subsections (e) and (f)'';
            (12) in subsection (h) (as so redesignated)--
                    (A) in paragraph (2), by inserting ``including the 
                duration of current payments and other obligations of 
                support'' before the comma; and
                    (B) in paragraph (3), by inserting ``arrears 
                under'' after ``enforce''; and
            (13) by adding at the end the following:
    ``(i) Registration for Modification.--If there is no individual 
contestant or child residing in the issuing State, the party or support 
enforcement agency seeking to modify, or to modify and enforce, a child 
support order issued in another State shall register that order in a 
State with jurisdiction over the nonmovant for the purpose of 
modification.''.

SEC. 433. STATE LAWS PROVIDING EXPEDITED PROCEDURES.

    (a) State Law Requirements.--Section 466 (42 U.S.C. 666) is 
amended--
            (1) in subsection (a)(2), in the first sentence, to read as 
        follows: ``Expedited administrative and judicial procedures 
        (including the procedures specified in subsection (c)) for 
        establishing paternity and for establishing, modifying, and 
        enforcing support obligations.''; and
            (2) by adding after subsection (b) the following new 
        subsection:
    ``(c) Expedited Procedures.--The procedures specified in this 
subsection are the following:
            ``(1) Administrative action by state agency.--Procedures 
        which give the State agency the authority (and recognize and 
        enforce the authority of State agencies of other States), 
        without the necessity of obtaining an order from any other 
        judicial or administrative tribunal (but subject to due process 
        safeguards, including (as appropriate) requirements for notice, 
        opportunity to contest the action, and opportunity for an 
        appeal on the record to an independent administrative or 
        judicial tribunal), to take the following actions relating to 
        establishment or enforcement of orders:
                    ``(A) Genetic testing.--To order genetic testing 
                for the purpose of paternity establishment as provided 
                in section 466(a)(5).
                    ``(B) Default orders.--To enter a default order, 
                upon a showing of service of process and any additional 
                showing required by State law--
                            ``(i) establishing paternity, in the case 
                        of any putative father who refuses to submit to 
                        genetic testing; and
                            ``(ii) establishing or modifying a support 
                        obligation, in the case of a parent (or other 
                        obligor or obligee) who fails to respond to 
                        notice to appear at a proceeding for such 
                        purpose.
                    ``(C) Subpoenas.--To subpoena any financial or 
                other information needed to establish, modify, or 
                enforce an order, and to sanction failure to respond to 
                any such subpoena.
                    ``(D) Access to personal and financial 
                information.--To obtain access, subject to safeguards 
                on privacy and information security, to the following 
                records (including automated access, in the case of 
                records maintained in automated data bases):
                            ``(i) records of other State and local 
                        government agencies, including--
                                    ``(I) vital statistics (including 
                                records of marriage, birth, and 
                                divorce);
                                    ``(II) State and local tax and 
                                revenue records (including information 
                                on residence address, employer, income 
                                and assets);
                                    ``(III) records concerning real and 
                                titled personal property;
                                    ``(IV) records of occupational and 
                                professional licenses, and records 
                                concerning the ownership and control of 
                                corporations, partnerships, and other 
                                business entities;
                                    ``(V) employment security records;
                                    ``(VI) records of agencies 
                                administering public assistance 
                                programs;
                                    ``(VII) records of the motor 
                                vehicle department; and
                                    ``(VIII) corrections records; and
                            ``(ii) certain records held by private 
                        entities, including--
                                    ``(I) customer records of public 
                                utilities and cable television 
                                companies; and
                                    ``(II) information (including 
                                information on assets and liabilities) 
                                on individuals who owe or are owed 
                                support (or against or with respect to 
                                whom a support obligation is sought) 
                                held by financial institutions (subject 
                                to limitations on liability of such 
                                entities arising from affording such 
                                access).
                    ``(E) Income withholding.--To order income 
                withholding in accordance with subsection (a)(1) and 
                (b) of section 466.
                    ``(F) Change in payee.--(In cases where support is 
                subject to an assignment under section 402(a)(26), 
                471(a)(17), or 1912, or to a requirement to pay through 
                the centralized collections unit under section 454B) 
                upon providing notice to obligor and obligee, to direct 
                the obligor or other payor to change the payee to the 
                appropriate government entity.
                    ``(G) Secure assets to satisfy arrearages.--For the 
                purpose of securing overdue support--
                            ``(i) to intercept and seize any periodic 
                        or lump-sum payment to the obligor by or 
                        through a State or local government agency, 
                        including--
                                    ``(I) unemployment compensation, 
                                workers' compensation, and other 
                                benefits;
                                    ``(II) judgments and settlements in 
                                cases under the jurisdiction of the 
                                State or local government; and
                                    ``(III) lottery winnings;
                            ``(ii) to attach and seize assets of the 
                        obligor held by financial institutions;
                            ``(iii) to attach public and private 
                        retirement funds in appropriate cases, as 
                        determined by the Secretary; and
                            ``(iv) to impose liens in accordance with 
                        paragraph (a)(4) and, in appropriate cases, to 
                        force sale of property and distribution of 
                        proceeds.
                    ``(H) Increase monthly payments.--For the purpose 
                of securing overdue support, to increase the amount of 
                monthly support payments to include amounts for 
                arrearages (subject to such conditions or restrictions 
                as the State may provide).
                    ``(I) Suspension of drivers' licenses.--To suspend 
                drivers' licenses of individuals owing past-due 
                support, in accordance with subsection (a)(16).
            ``(2) Substantive and procedural rules.--The expedited 
        procedures required under subsection (a)(2) shall include the 
        following rules and authority, applicable with respect to all 
        proceedings to establish paternity or to establish, modify, or 
        enforce support orders:
                    ``(A) Locator information; presumptions concerning 
                notice.--Procedures under which--
                            ``(i) the parties to any paternity or child 
                        support proceedings are required (subject to 
                        privacy safeguards) to file with the tribunal 
                        before entry of an order, and to update as 
                        appropriate, information on location and 
                        identity (including Social Security number, 
                        residential and mailing addresses, telephone 
                        number, driver's license number, and name, 
                        address, and telephone number of employer); and
                            ``(ii) in any subsequent child support 
                        enforcement action between the same parties, 
                        the tribunal shall be authorized, upon 
                        sufficient showing that diligent effort has 
                        been made to ascertain such party's current 
                        location, to deem due process requirements for 
                        notice and service of process to be met, with 
                        respect to such party, by delivery to the most 
                        recent residential or employer address so filed 
                        pursuant to clause (i).
                    ``(B) Statewide jurisdiction.--Procedures under 
                which--
                            ``(i) the State agency and any 
                        administrative or judicial tribunal with 
                        authority to hear child support and paternity 
                        cases exerts statewide jurisdiction over the 
                        parties, and orders issued in such cases have 
                        statewide effect; and
                            ``(ii) (in the case of a State in which 
                        orders in such cases are issued by local 
                        jurisdictions) a case may be transferred 
                        between jurisdictions in the State without need 
                        for any additional filing by the petitioner, or 
                        service of process upon the respondent, to 
                        retain jurisdiction over the parties.''.
    (c) Exceptions from State Law Requirements.--Section 466(d) (42 
U.S.C. 666(d)) is amended--
            (1) by striking ``(d) If'' and inserting the following:
    ``(d) Exemptions From Requirements.--
            ``(1) In general.--Subject to paragraph (2), if''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Nonexempt requirements.--The Secretary shall not 
        grant an exemption from the requirements of--
                    ``(A) subsection (a)(5) (concerning procedures for 
                paternity establishment);
                    ``(B) subsection (a)(10) (concerning modification 
                of orders);
                    ``(C) subsection (a)(12) (concerning recording of 
                orders in the central State case registry);
                    ``(D) subsection (a)(13) (concerning recording of 
                Social Security numbers);
                    ``(E) subsection (a)(14) (concerning interstate 
                enforcement); or
                    ``(F) subsection (c) (concerning expedited 
                procedures), other than paragraph (1)(A) thereof 
                (concerning establishment or modification of support 
                amount).''.
    (d) Automation of State Agency Functions.--Section 454A, as added 
by section 415(a)(2) of this Act and as amended by sections 421 and 
422(c) of this Act, is amended by adding at the end the following new 
subsection:
    ``(h) Expedited Administrative Procedures.--The automated system 
required under this section shall be used, to the maximum extent 
feasible, to implement any expedited administrative procedures required 
under section 466(c).''.

                  Subtitle E--Paternity Establishment

SEC. 441. SENSE OF THE CONGRESS.

    It is the sense of the Congress that social services should be 
provided in hospitals to women who have become pregnant as a result of 
rape or incest.

SEC. 442. AVAILABILITY OF PARENTING SOCIAL SERVICES FOR NEW FATHERS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 401(a), 
426(a), and 431 of this Act, is amended by inserting after paragraph 
(14) the following:
            ``(15) Procedures for providing new fathers with positive 
        parenting counseling that stresses the importance of paying 
        child support in a timely manner, in accordance with 
        regulations prescribed by the Secretary.''.

SEC. 443. COOPERATION REQUIREMENT AND GOOD CAUSE EXCEPTION.

    (a) Child Support Enforcement Requirements.--Section 454 (42 U.S.C. 
654) is amended--
            (1) by striking ``and'' at the end of paragraph (23);
            (2) by striking the period at the end of paragraph (24) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (24) the following:
            ``(25) provide that the State agency administering the plan 
        under this part--
                    ``(A) will make the determination specified under 
                paragraph (4), as to whether an individual is 
                cooperating with efforts to establish paternity and 
                secure support (or has good cause not to cooperate with 
                such efforts) for purposes of the requirements of 
                sections 402(a)(26) and 1912;
                    ``(B) will advise individuals, both orally and in 
                writing, of the grounds for good cause exceptions to 
                the requirement to cooperate with such efforts;
                    ``(C) will take the best interests of the child 
                into consideration in making the determination whether 
                such individual has good cause not to cooperate with 
                such efforts;
                    ``(D)(i) will make the initial determination as to 
                whether an individual is cooperating (or has good cause 
                not to cooperate) with efforts to establish paternity 
                within 10 days after such individual is referred to 
                such State agency by the State agency administering the 
                program under part A of title XIX;
                    ``(ii) will make redeterminations as to cooperation 
                or good cause at appropriate intervals; and
                    ``(iii) will promptly notify the individual, and 
                the State agencies administering such programs, of each 
                such determination and redetermination;
                    ``(E) with respect to any child born on or after 
                the date 10 months after enactment of this provision, 
                will not determine (or redetermine) the mother (or 
                other custodial relative) of such child to be 
                cooperating with efforts to establish paternity unless 
                such individual furnishes--
                            ``(i) the name of the putative father (or 
                        fathers); and
                            ``(ii) sufficient additional information to 
                        enable the State agency, if reasonable efforts 
                        were made, to verify the identity of the person 
                        named as the putative father (including such 
                        information as the putative father's present 
                        address, telephone number, date of birth, past 
                        or present place of employment, school 
                        previously or currently attended, and names and 
                        addresses of parents, friends, or relatives 
                        able to provide location information, or other 
                        information that could enable service of 
                        process on such person), and
                    ``(F)(i) (where a custodial parent who was 
                initially determined not to be cooperating (or to have 
                good cause not to cooperate) is later determined to be 
                cooperating or to have good cause not to cooperate) 
                will immediately notify the State agencies 
                administering the programs under part A of title XIX 
that this eligibility condition has been met; and
                    ``(ii) (where a custodial parent was initially 
                determined to be cooperating (or to have good cause not 
                to cooperate)) will not later determine such individual 
                not to be cooperating (or not to have good cause not to 
                cooperate) until such individual has been afforded an 
                opportunity for a hearing.''.
    (b) AFDC Amendments.--
            (1) Section 402(a)(11) (42 U.S.C. 602(a)(11)) is amended by 
        striking ``furnishing of'' and inserting ``application for''.
            (2) Section 402(a)(26) (42 U.S.C. 602(a)(26)) is amended--
                    (A) in each of subparagraphs (A) and (B), by 
                redesignating clauses (i) and (ii) as subclauses (I) 
                and (II);
                    (B) by indenting and redesignating subparagraphs 
                (A), (B), and (C) as clauses (i), (ii), and (iv), 
                respectively;
                    (C) in clause (ii), as redesignated--
                            (i) by striking ``is claimed, or in 
                        obtaining any other payments or property due 
                        such applicant or such child,'' and inserting 
                        ``is claimed;''; and
                            (ii) by striking ``unless'' and all that 
                        follows through ``aid is claimed; and'';
                    (D) by adding after clause (ii) the following new 
                clause:
                            ``(iii) to cooperate with the State in 
                        obtaining any other payments or property due 
                        such applicant or such child; and'';
                    (E) in the matter preceding clause (i) (as so 
                redesignated) to read as follows:
            ``(26) provide--
                    ``(A) that, as a condition of eligibility for aid, 
                each applicant or recipient will be required (subject 
                to subparagraph (C))--'';
                    (F) in subparagraph (A)(iv), as redesignated, by 
                striking ``, unless such individual'' and all that 
                follows through ``individuals involved'';
                    (G) by adding at the end the following new 
                subparagraphs:
                    ``(B) that the State agency will immediately refer 
                each applicant requiring paternity establishment 
                services to the State agency administering the program 
                under part D;
                    ``(C) that an individual will not be required to 
                cooperate with the State, as provided under 
                subparagraph (A), if the individual is found to have 
                good cause for refusing to cooperate, as determined in 
                accordance with standards prescribed by the Secretary, 
                which standards shall take into consideration the best 
                interests of the child on whose behalf aid is claimed--
                            ``(i) to the satisfaction of the State 
                        agency administering the program under part D, 
                        as determined in accordance with section 
                        454(25), with respect to the requirements under 
                        clauses (i) and (ii) of subparagraph (A); and
                            ``(ii) to the satisfaction of the State 
                        agency administering the program under this 
                        part, with respect to the requirements under 
                        clauses (iii) and (iv) of subparagraph (A);
                    ``(D) that (except as provided in subparagraph (E)) 
                an applicant requiring paternity establishment services 
                (other than an individual eligible for emergency 
                assistance as defined in section 406(e)) shall not be 
                eligible for any aid under a State plan approved under 
                this part until such applicant--
                            ``(i) has furnished to the agency 
                        administering the State plan under part D the 
                        information specified in section 454(25)(E); or
                            ``(ii) has been determined by such agency 
                        to have good cause not to cooperate;
                    ``(E) that the provisions of subparagraph (D) shall 
                not apply--
                            ``(i) if the State agency specified in such 
                        subparagraph has not, within 10 days after such 
                        individual was referred to such agency, 
                        provided the notification required by section 
                        454(25)(D)(iii), until such notification is 
                        received; and
                            ``(ii) if such individual appeals a 
                        determination that the individual lacks good 
                        cause for noncooperation, until after such 
                        determination is affirmed after notice and 
                        opportunity for a hearing; and''; and
                    (H)(i) by relocating and redesignating as 
                subparagraph (F) the text at the end of subparagraph 
                (A)(ii) beginning with ``that, if the relative'' and 
all that follows through the semicolon;
                    (ii) in subparagraph (F), as so redesignated and 
                relocated, by striking ``subparagraphs (A) and (B) of 
                this paragraph'' and inserting ``subparagraph (A)''; 
                and
                    (iii) by striking ``and'' at the end of 
                subparagraph (a)(ii).
    (c) Medicaid Amendments.--Section 1912(a) (42 U.S.C. 1396k(a)) is 
amended--
            (1) in paragraph (1)(B), by inserting ``(except as provided 
        in paragraph (2))'' after ``to cooperate with the State'';
            (2) in subparagraphs (B) and (C) of paragraph (1) by 
        striking ``, unless'' and all that follows and inserting a 
        semicolon; and
            (3) by redesignating paragraph (2) as paragraph (5), and 
        inserting after paragraph (1) the following new paragraphs:
            ``(2) provide that the State agency will immediately refer 
        each applicant or recipient requiring paternity establishment 
        services to the State agency administering the program under 
        part D of title IV;
            ``(3) provide that an individual will not be required to 
        cooperate with the State, as provided under paragraph (1), if 
        the individual is found to have good cause for refusing to 
        cooperate, as determined in accordance with standards 
        prescribed by the Secretary, which standards shall take into 
        consideration the best interests of the individuals involved--
                    ``(A) to the satisfaction of the State agency 
                administering the program under part D, as determined 
                in accordance with section 454(25), with respect to the 
                requirements to cooperate with efforts to establish 
                paternity and to obtain support (including medical 
                support) from a parent; and
                    ``(B) to the satisfaction of the State agency 
                administering the program under this title, with 
                respect to other requirements to cooperate under 
                paragraph (1);
            ``(4) provide that (except as provided in paragraph (5)) an 
        applicant requiring paternity establishment services (other 
        than an individual eligible for emergency assistance as defined 
        in section 406(e), or presumptively eligible pursuant to 
        section 1920) shall not be eligible for medical assistance 
        under this title until such applicant--
                    ``(i) has furnished to the agency administering the 
                State plan under part D of title IV the information 
                specified in section 454(25)(E); or
                    ``(ii) has been determined by such agency to have 
                good cause not to cooperate; and
            ``(5) provide that the provisions of paragraph (4) shall 
        not apply with respect to an applicant--
                    ``(i) if such agency has not, within 10 days after 
                such individual was referred to such agency, provided 
                the notification required by section 454(25)(D)(iii), 
                until such notification is received); and
                    ``(ii) if such individual appeals a determination 
                that the individual lacks good cause for 
                noncooperation, until after such determination is 
                affirmed after notice and opportunity for a hearing.''.
    (d) Effective Date.--The amendments made by this section shall be 
effective with respect to applications filed in or after the first 
calendar quarter beginning 10 months or more after the date of the 
enactment of this Act (or such earlier quarter as the State may select) 
for aid under a State plan approved under part A of title IV or for 
medical assistance under a State plan approved under title XIX.

SEC. 444. FEDERAL MATCHING PAYMENTS.

    (a) Increased Base Matching Rate.--Section 455(a)(2) (42 U.S.C. 
655(a)(2)) is amended to read as follows:
            ``(2) The applicable percent for a quarter for purposes of 
        paragraph (1)(A) is--
                    ``(A) for fiscal year 1996, 69 percent;
                    ``(B) for fiscal year 1997, 72 percent; and
                    ``(C) for fiscal year 1998 and succeeding fiscal 
                years, 75 percent.''.
    (b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is 
amended--
            (1) in subsection (a)(1), in the matter preceding 
        subparagraph (A), by striking ``From'' and inserting ``Subject 
        to subsection (c), from''; and
            (2) by inserting after subsection (b) the following:
    ``(c) Maintenance of Effort.--Notwithstanding subsection (a), total 
expenditures for the State program under this part for fiscal year 1996 
and each succeeding fiscal year, reduced by the percentage specified 
for such fiscal year under subparagraph (A), (B), or (C)(i) of 
paragraph (2), shall not be less than such total expenditures for 
fiscal year 1995, reduced by 66 percent.''.

SEC. 445. PERFORMANCE-BASED INCENTIVES AND PENALTIES.

    (a) Incentive Adjustments to Federal Matching Rate.--Section 458 
(42 U.S.C. 658) is amended to read as follows:

                ``incentive adjustments to matching rate

    ``Sec. 458. (a) Incentive Adjustment.--
            ``(1) In general.--In order to encourage and reward State 
        child support enforcement programs which perform in an 
        effective manner, the Federal matching rate for payments to a 
        State under section 455(a)(1)(A), for each fiscal year 
        beginning on or after October 1, 1997, shall be increased by a 
        factor reflecting the sum of the applicable incentive 
        adjustments (if any) determined in accordance with regulations 
        under this section with respect to Statewide paternity 
        establishment and the overall performance of the State in child 
        support enforcement.
            ``(2) Standards.--
                    ``(A) In general.--The Secretary shall specify in 
                regulations--
                            ``(i) the levels of accomplishment, and 
                        rates of improvement as alternatives to such 
                        levels, which States must attain to qualify for 
incentive adjustments under this section; and
                            ``(ii) the amounts of incentive adjustment 
                        that shall be awarded to States achieving 
                        specified accomplishment or improvement levels, 
                        which amounts shall be graduated, ranging up 
                        to--
                                    ``(I) 5 percentage points, in 
                                connection with Statewide paternity 
                                establishment; and
                                    ``(II) 10 percentage points, in 
                                connection with overall performance in 
                                child support enforcement.
                    ``(B) Limitation.--In setting performance standards 
                pursuant to subparagraph (A)(i) and adjustment amounts 
                pursuant to subparagraph (A)(ii), the Secretary shall 
                ensure that the aggregate number of percentage point 
                increases as incentive adjustments to all States do not 
                exceed such aggregate increases as assumed by the 
                Secretary in estimates of the cost of this section as 
                of June 1994, unless the aggregate performance of all 
                States exceeds the projected aggregate performance of 
                all States in such cost estimates.
            ``(3) Determination of incentive adjustment.--
                    ``(A) Use of performance indicators.--The Secretary 
                shall, for fiscal year 1998 and each succeeding fiscal 
                year, determine the amount (if any) of incentive 
                adjustment for each State on the basis of the data 
                submitted by the State pursuant to section 454(15)(B) 
                with respect to performance indicators established by 
                the Secretary.
                    ``(B) Minimum performance required.--
                            ``(i) In general.--The Secretary shall not 
                        determine an incentive adjustment for a State 
                        for a fiscal year if the level of performance 
                        of the State for the fiscal year with respect 
                        to such performance indicators is below the 
                        performance threshold established by the 
                        Secretary for the State for the fiscal year.
                            ``(ii) Establishment of state performance 
                        threshold.--The performance threshold with 
                        respect to such performance indicators for a 
                        State and a fiscal year shall be at or above 
                        the greater of--
                                    ``(I) the national average level of 
                                performance with respect to such 
                                indicators, as of the date of the 
                                enactment of this section; or
                                    ``(II) the level of performance of 
                                the State with respect to such 
                                indicators for the immediately 
                                preceding fiscal year.
                    ``(C) Deadline for issuance of regulations.--Within 
                90 days after the date of the enactment of this 
                section, the Secretary shall issue regulations setting 
                forth the criteria for awarding incentive adjustments.
            ``(4) Fiscal year subject to incentive adjustment.--The 
        total percentage point increase determined pursuant to this 
        section with respect to a State program in a fiscal year shall 
        apply as an adjustment to the percent applicable under section 
        455(a)(2) for payments to such State for the succeeding fiscal 
        year.
    ``(b) Definitions.--As used in subsection (a):
            ``(1) Statewide paternity establishment percentage.--The 
        term `Statewide paternity establishment percentage' means, with 
        respect to a fiscal year, the ratio (expressed as a percentage) 
        of--
                    ``(A) the total number of out-of-wedlock children 
                in the State under one year of age for whom paternity 
                is established or acknowledged during the fiscal year, 
                to
                    ``(B) the total number of children born out of 
                wedlock in the State during such fiscal year.
            ``(2) Overall performance of the state in child support 
        enforcement.--The term `overall performance of the State in 
        child support enforcement' means a measure or measures of the 
        effectiveness of the State agency in a fiscal year which takes 
        into account factors including--
                    ``(A) the percentage of cases requiring a child 
                support order in which such an order was established;
                    ``(B) the percentage of cases in which child 
                support is being paid;
                    ``(C) the ratio of child support collected to child 
                support due; and
                    ``(D) the cost-effectiveness of the State program, 
                as determined in accordance with standards established 
                by the Secretary in regulations.''.
    (b) Title IV-D Payment Adjustment.--Section 455(a)(2) (42 U.S.C. 
655(a)(2)), as amended by section 415(a) of this Act, is amended--
            (1) by striking the period at the end of subparagraph (C) 
        and inserting a semicolon; and
            (2) by adding after and below subparagraph (C), flush with 
        the left margin of the subsection, the following:
``increased by the incentive adjustment factor (if any) determined by 
the Secretary pursuant to section 458.''.
    (c) Conforming Amendments.--Section 454(22) (42 U.S.C. 654(22)) is 
amended--
            (1) by striking ``incentive payments'' the 1st place such 
        term appears and inserting ``incentive adjustments''; and
            (2) by striking ``any such incentive payments made to the 
        State for such period'' and inserting ``any increases in 
        Federal payments to the State resulting from such incentive 
        adjustments''.
    (d) Calculation of IV-D Paternity Establishment Percentage.--
            (1) Section 452(g)(1) (42 U.S.C. 652(g)(1)) is amended in 
        the matter preceding subparagraph (A) by inserting ``its 
        overall performance in child support enforcement is 
        satisfactory (as defined in section 458(b) and regulations of 
        the Secretary), and'' after ``1994,''.
            (2) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is 
        amended in the matter preceding clause (i)--
                    (A) by striking ``paternity establishment 
                percentage'' and inserting ``IV-D paternity 
                establishment percentage''; and
                    (B) by striking ``(or all States, as the case may 
                be)''.
            (3) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is amended--
                    (A) by striking subparagraph (A) and redesignating 
                subparagraphs (B) and (C) as subparagraphs (A) and (B), 
                respectively;
                    (B) in subparagraph (A) (as so redesignated), by 
                striking ``the percentage of children born out-of-
                wedlock in a State'' and inserting ``the percentage of 
                children in a State who are born out of wedlock or for 
                whom support has not been established''; and
                    (C) in subparagraph (B) (as so redesignated)--
                            (i) by inserting ``and overall performance 
                        in child support enforcement'' after 
                        ``paternity establishment percentages''; and
                            (ii) by inserting ``and securing support'' 
                        before the period.
    (e) Title IV-A Payment Reduction.--Section 403 (42 U.S.C. 603) is 
amended--
            (1) in subsection (a), by striking ``1958--'' and inserting 
        ``1958--'' (subject to subsection (h))--'';
            (2) in subsection (h), by striking all that precedes 
        paragraph (3) and inserting the following:
    ``(h)(1) If the Secretary finds, with respect to a State program 
under this part in a fiscal year beginning on or after October 1, 
1996--
            ``(A)(i) on the basis of data submitted by a State pursuant 
        to section 454(15)(B), that the State program in such fiscal 
        year failed to achieve the IV-D paternity establishment 
        percentage (as defined in section 452(g)(2)(A)) or the 
        appropriate level of overall performance in child support 
        enforcement (as defined in section 458(b)(2)), or to meet other 
        performance measures that may be established by the Secretary, 
        or
            ``(ii) on the basis of an audit or audits of such State 
        data conducted pursuant to section 452(a)(4)(C), that the State 
        data submitted pursuant to section 454(15)(B) is incomplete or 
        unreliable; and
            ``(B) that, with respect to the succeeding fiscal year--
                    ``(i) the State failed to take sufficient 
                corrective action to achieve the appropriate 
                performance levels as described in subparagraph (A)(i), 
                or
                    ``(ii) the data submitted by the State pursuant to 
                section 454(15)(B) is incomplete or unreliable,
the amounts otherwise payable to the State under this part for quarters 
following the end of such succeeding fiscal year, prior to quarters 
following the end of the first quarter throughout which the State 
program is in compliance with such performance requirement, shall be 
reduced by the percentage specified in paragraph (2).
    ``(2) The reductions required under paragraph (1) shall be--
            ``(A) not less than 1 nor more than 2 percent, or
            ``(B) not less than 2 nor more than 3 percent, if the 
        finding is the 2nd consecutive finding made pursuant to 
        paragraph (1), or
            ``(C) not less than 3 nor more than 5 percent, if the 
        finding is the 3rd or a subsequent consecutive such finding.''; 
        and
            (3) in subsection (h)(3), by striking ``not in full 
        compliance'' and all that follows and inserting ``determined as 
        a result of an audit to have submitted incomplete or unreliable 
        data pursuant to section 454(15)(B), shall be determined to 
        have submitted adequate data if the Secretary determines that 
        the extent of the incompleteness or unreliability of the data 
        is of a technical nature which does not adversely affect the 
        determination of the level of the State's performance.''.
    (f) Effective Dates.--
            (1) Incentive adjustments.--(A) The amendments made by 
        subsections (a), (b), and (c) shall become effective October 1, 
        1996, except to the extent provided in subparagraph (B).
            (B) Section 458 of the Social Security Act, as in effect 
        immediately before the date of the enactment of this section, 
        shall be effective for purposes of incentive payments to States 
        for fiscal years before fiscal year 1998.
            (2) Penalty reductions.--(A) The amendments made by 
        subsection (d) shall become effective with respect to calendar 
        quarters beginning on and after the date of enactment of this 
        Act.
            (B) The amendments made by subsection (e) shall become 
        effective with respect to calendar quarters beginning on and 
        after the date that is 1 year after the date of enactment of 
        this Act.

SEC. 446. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT.

    (a) State Laws Required.--Section 466(a)(5) (42 U.S.C. 666(a)(5)) 
is amended--
            (1) by striking ``(5)'' and inserting the following:
            ``(5) Procedures concerning paternity establishment.--'';
            (2) in subparagraph (A)--
                    (A) by striking ``(A)(i)'' and inserting the 
                following:
                    ``(A) Establishment process available from birth 
                until age eighteen.--(i)''; and
                    (B) by indenting clauses (i) and (ii) so that the 
                left margin of such clauses is 2 ems to the right of 
                the left margin of paragraph (4);
            (3) in subparagraph (B)--
                    (A) by striking ``(B)'' and inserting the 
                following:
                    ``(B) Procedures concerning genetic testing.--
                (i)'';
                    (B) in clause (i), as redesignated, by inserting 
                before the period ``, where such request is supported 
                by a sworn statement (I) by such party alleging 
                paternity setting forth facts establishing a reasonable 
                possibility of the requisite sexual contact of the 
                parties, or (II) by such party denying paternity 
                setting forth facts establishing a reasonable 
                possibility of the nonexistence of sexual contact of 
                the parties;'';
                    (C) by inserting after and below clause (i) (as 
                redesignated) the following new clause:
                    ``(ii) Procedures which require the State agency, 
                in any case in which such agency orders genetic 
                testing--
                            ``(I) to pay costs of such tests, subject 
                        to recoupment (where the State so elects) from 
                        the putative father if paternity is 
                        established; and
                            ``(II) to obtain additional testing in any 
                        case where an original test result is disputed, 
                        upon request and advance payment by the 
                        disputing party.'';
            (4) by striking subparagraphs (C) and (D) and inserting the 
        following:
                    ``(C) Paternity acknowledgment.--(i) Procedures for 
                a simple civil process for voluntarily acknowledging 
                paternity under which the State must provide that, 
                before a mother and a putative father can sign an 
                acknowledgment of paternity, the putative father and 
                the mother must be given notice, orally, in writing, 
                and in a language that each can understand, of the 
                alternatives to, the legal consequences of, and the 
                rights (including, if 1 parent is a minor, any rights 
                afforded due to minority status) and responsibilities 
                that arise from, signing the acknowledgment.
                    ``(ii) Such procedures must include a hospital-
                based program for the voluntary acknowledgment of 
                paternity focusing on the period immediately before or 
                after the birth of a child.
                    ``(iii) Such procedures must require the State 
                agency responsible for maintaining birth records to 
                offer voluntary paternity establishment services.
                    ``(iv) The Secretary shall prescribe regulations 
                governing voluntary paternity establishment services 
                offered by hospitals and birth record agencies. The 
                Secretary shall prescribe regulations specifying the 
                types of other entities that may offer voluntary 
                paternity establishment services, and governing the 
                provision of such services, which shall include a 
                requirement that such an entity must use the same 
                notice provisions used by, the same materials used by, 
                provide the personnel providing such services with the 
                same training provided by, and evaluate the provision 
                of such services in the same manner as, voluntary 
                paternity establishment programs of hospitals and birth 
                record agencies.
                    ``(v) Such procedures must require the State and 
                those required to establish paternity to use only the 
                affidavit developed under section 452(a)(7) for the 
                voluntary acknowledgment of paternity, and to give full 
                faith and credit to such an affidavit signed in any 
                other State.
                    ``(D) Status of signed paternity acknowledgment.--
                (i) Procedures under which a signed acknowledgment of 
                paternity is considered a legal finding of paternity, 
                subject to the right of any signatory to rescind the 
                acknowledgment within 60 days.
                    ``(ii)(I) Procedures under which, after the 60-day 
                period referred to in clause (i), a signed 
                acknowledgment of paternity may be challenged in court 
                only on the basis of fraud, duress, or material mistake 
                of fact, with the burden of proof upon the challenger, 
                and under which the legal responsibilities (including 
                child support obligations) of any signatory arising 
                from the acknowledgment may not be suspended during the 
                challenge, except for good cause shown.
                    ``(II) Procedures under which, after the 60-day 
                period referred to in clause (i), a minor who signs an 
                acknowledgment of paternity other than in the presence 
                of a parent or court-appointed guardian ad litem may 
                rescind the acknowledgment in a judicial or 
                administrative proceeding, until the earlier of--
                            ``(aa) attaining the age of majority; or
                            ``(bb) the date of the first judicial or 
                        administrative proceeding brought (after the 
                        signing) to establish a child support 
                        obligation, visitation rights, or custody 
                        rights with respect to the child whose 
                        paternity is the subject of the acknowledgment, 
                        and at which the minor is represented by a 
                        parent, guardian ad litem, or attorney.'';
            (5) by striking subparagraph (E) and inserting the 
        following:
                    ``(E) Bar on acknowledgment ratification 
                proceedings.--Procedures under which no judicial or 
                administrative proceedings are required or permitted to 
                ratify an unchallenged acknowledgment of paternity.'';
            (6) by striking subparagraph (F) and inserting the 
        following:
                    ``(F) Admissibility of genetic testing results.--
                Procedures--
                            ``(i) requiring that the State admit into 
                        evidence, for purposes of establishing 
                        paternity, results of any genetic test that 
                        is--
                                    ``(I) of a type generally 
                                acknowledged, by accreditation bodies 
                                designated by the Secretary, as 
                                reliable evidence of paternity; and
                                    ``(II) performed by a laboratory 
                                approved by such an accreditation body;
                            ``(ii) that any objection to genetic 
                        testing results must be made in writing not 
                        later than a specified number of days before 
                        any hearing at which such results may be 
                        introduced into evidence (or, at State option, 
                        not later than a specified number of days after 
                        receipt of such results); and
                            ``(iii) that, if no objection is made, the 
                        test results are admissible as evidence of 
                        paternity without the need for foundation 
                        testimony or other proof of authenticity or 
                        accuracy.''; and
            (7) by adding after subparagraph (H) the following new 
        subparagraphs:
                    ``(I) No right to jury trial.--Procedures providing 
                that the parties to an action to establish paternity 
                are not entitled to jury trial.
                    ``(J) Temporary support order based on probable 
                paternity in contested cases.--Procedures which require 
                that a temporary order be issued, upon motion by a 
                party, requiring the provision of child support 
pending an administrative or judicial determination of parentage, where 
there is clear and convincing evidence of paternity (on the basis of 
genetic tests or other evidence).
                    ``(K) Proof of certain support and paternity 
                establishment costs.--Procedures under which bills for 
                pregnancy, childbirth, and genetic testing are 
                admissible as evidence without requiring third-party 
                foundation testimony, and shall constitute prima facie 
                evidence of amounts incurred for such services and 
                testing on behalf of the child.
                    ``(L) Waiver of state debts for cooperation.--At 
                the option of the State, procedures under which the 
                tribunal establishing paternity and support has 
                discretion to waive rights to all or part of amounts 
                owed to the State (but not to the mother) for costs 
                related to pregnancy, childbirth, and genetic testing 
                and for public assistance paid to the family where the 
                father cooperates or acknowledges paternity before or 
                after genetic testing.
                    ``(M) Standing of putative fathers.--Procedures 
                ensuring that the putative father has a reasonable 
                opportunity to initiate a paternity action.''.
    (b) National Paternity Acknowledgment Affidavit.--Section 452(a)(7) 
(42 U.S.C. 652(a)(7)) is amended by inserting ``, and develop an 
affidavit to be used for the voluntary acknowledgment of paternity 
which shall include the social security account number of each parent'' 
before the semicolon.
    (c) Technical Amendment.--Section 468 (42 U.S.C. 668) is amended by 
striking ``a simple civil process for voluntarily acknowledging 
paternity and''.

SEC. 447. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT.

    (a) State Plan Requirement.--Section 454(23) (42 U.S.C. 654(23)) is 
amended by adding at the end the following new subparagraph:
                    ``(C) publicize the availability and encourage the 
                use of procedures for voluntary establishment of 
                paternity and child support through a variety of means, 
                which--
                            ``(i) include distribution of written 
                        materials at health care facilities (including 
                        hospitals and clinics), and other locations 
                        such as schools;
                            ``(ii) may include pre-natal programs to 
                        educate expectant couples on individual and 
                        joint rights and responsibilities with respect 
                        to paternity (and may require all expectant 
                        recipients of assistance under part A to 
                        participate in such pre-natal programs, as an 
                        element of cooperation with efforts to 
                        establish paternity and child support);
                            ``(iii) include, with respect to each child 
                        discharged from a hospital after birth for whom 
                        paternity or child support has not been 
                        established, reasonable follow-up efforts 
                        (including at least one contact of each parent 
                        whose whereabouts are known, except where there 
                        is reason to believe such follow-up efforts 
                        would put mother or child at risk), providing--
                                    ``(I) in the case of a child for 
                                whom paternity has not been 
                                established, information on the 
                                benefits of and procedures for 
                                establishing paternity; and
                                    ``(II) in the case of a child for 
                                whom paternity has been established but 
                                child support has not been established, 
                                information on the benefits of and 
                                procedures for establishing a child 
                                support order, and an application for 
                                child support services;''.
    (b) Enhanced Federal Matching.--Section 455(a)(1)(C) (42 U.S.C. 
655(a)(1)(C)) is amended--
            (1) by inserting ``(i)'' before ``laboratory costs'', and
            (2) by inserting before the semicolon ``, and (ii) costs of 
        outreach programs designed to encourage voluntary 
        acknowledgment of paternity''.
    (c) Effective Dates.--(1) The amendments made by subsection (a) 
shall become effective October 1, 1997.
    (2) The amendments made by subsection (b) shall be effective with 
respect to calendar quarters beginning on and after October 1, 1996.

      Subtitle F--Establishment and Modification of Support Orders

SEC. 451. NATIONAL CHILD SUPPORT GUIDELINES COMMISSION.

    (a) Establishment.--There is hereby established a commission to be 
known as the ``National Child Support Guidelines Commission'' (in this 
section referred to as the ``Commission'').
    (b) General Duties.--The Commission shall develop a national child 
support guideline for consideration by the Congress that is based on a 
study of various guideline models, the benefits and deficiencies of 
such models, and any needed improvements.
    (c) Membership.--
            (1) Number; appointment.--
                    (A) In general.--The Commission shall be composed 
                of 12 individuals appointed jointly by the Secretary of 
                Health and Human Services and the Congress, not later 
                than January 15, 1997, of which--
                            (i) 2 shall be appointed by the Chairman of 
                        the Committee on Finance of the Senate, and 1 
                        shall be appointed by the ranking minority 
                        member of the Committee;
                            (ii) 2 shall be appointed by the Chairman 
                        of the Committee on Ways and Means of the House 
                        of Representatives, and 1 shall be appointed by 
                        the ranking minority member of the Committee; 
                        and
                            (iii) 6 shall be appointed by the Secretary 
                        of Health and Human Services.
                    (B) Qualifications of members.--Members of the 
                Commission shall have expertise and experience in the 
                evaluation and development of child support guidelines. 
                At least 1 member shall represent advocacy groups for 
                custodial parents, at least 1 member shall represent 
                advocacy groups for noncustodial parents, and at least 
                1 member shall be the director of a State program under 
                part D of title IV of the Social Security Act.
            (2) Terms of office.--Each member shall be appointed for a 
        term of 2 years. A vacancy in the Commission shall be filled in 
        the manner in which the original appointment was made.
    (d) Commission Powers, Compensation, Access to Information, and 
Supervision.--The first sentence of subparagraph (C), the first and 
third sentences of subparagraph (D), subparagraph (F) (except with 
respect to the conduct of medical studies), clauses (ii) and (iii) of 
subparagraph (G), and subparagraph (H) of section 1886(e)(6) of the 
Social Security Act shall apply to the Commission in the same manner in 
which such provisions apply to the Prospective Payment Assessment 
Commission.
    (e) Report.--Not later than 2 years after the appointment of 
members, the Commission shall submit to the President, the Committee on 
Ways and Means of the House of Representatives, and the Committee on 
Finance of the Senate, a recommended national child support guideline 
and a final assessment of issues relating to such a proposed national 
child support guideline.
    (f) Termination.--The Commission shall terminate 6 months after the 
submission of the report described in subsection (e).

SEC. 452. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF CHILD SUPPORT 
              ORDERS.

    (a) In General.--Section 466(a)(10) (42 U.S.C. 666(a)(10)) is 
amended to read as follows:
            ``(10) Procedures for modification of support orders.--
                    ``(A)(i) Procedures under which--
                            ``(I) every 3 years, at the request of 
                        either parent subject to a child support order, 
                        the State shall review and, as appropriate, 
                        adjust the order in accordance with the 
                        guidelines established under section 467(a) if 
                        the amount of the child support award under the 
                        order differs from the amount that would be 
                        awarded in accordance with such guidelines, 
                        without a requirement for any other change in 
                        circumstances; and
                            ``(II) upon request at any time of either 
                        parent subject to a child support order, the 
                        State shall review and, as appropriate, adjust 
                        the order in accordance with the guidelines 
                        established under section 467(a) based on a 
                        substantial change in the circumstances of 
                        either such parent.
                    ``(ii) Such procedures shall require both parents 
                subject to a child support order to be notified of 
                their rights and responsibilities provided for under 
                clause (i) at the time the order is issued and in the 
                annual information exchange form provided under 
                subparagraph (B).
                    ``(B) Procedures under which each child support 
                order issued or modified in the State after the 
                effective date of this subparagraph shall require the 
                parents subject to the order to provide each other with 
                a complete statement of their respective financial 
                condition annually on a form which shall be established 
                by the Secretary and provided by the State. The 
                Secretary shall establish regulations for the 
                enforcement of such exchange of information.''.

               Subtitle G--Enforcement of Support Orders

SEC. 461. FEDERAL INCOME TAX REFUND OFFSET.

    (a) Changed Order of Refund Distribution Under Internal Revenue 
Code.--Section 6402(c) of the Internal Revenue Code of 1986 is amended 
by striking the 3rd sentence.
    (b) Elimination of Disparities in Treatment of Assigned and Non-
Assigned Arrearages.--(1) Section 464(a) (42 U.S.C. 664(a)) is 
amended--
            (A) by striking ``(a)'' and inserting ``(a) Offset 
        Authorized.--'';
            (B) in paragraph (1)--
                    (i) in the first sentence, by striking ``which has 
                been assigned to such State pursuant to section 
                402(a)(26) or section 471(a)(17)''; and
                    (ii) in the second sentence, by striking ``in 
                accordance with section 457 (b)(4) or (d)(3)'' and 
                inserting ``as provided in paragraph (2)'';
            (C) in paragraph (2), to read as follows:
            ``(2) The State agency shall distribute amounts paid by the 
        Secretary of the Treasury pursuant to paragraph (1)--
                    ``(A) in accordance with section 457 (a)(4) or 
                (d)(3), in the case of past-due support assigned to a 
                State pursuant to section 402(a)(26) or section 
                471(a)(17); and
                    ``(B) to or on behalf of the child to whom the 
                support was owed, in the case of past-due support not 
                so assigned.'';
            (D) in paragraph (3)--
                    (i) by striking ``or (2)'' each place it appears; 
                and
                    (ii) in subparagraph (B), by striking ``under 
                paragraph (2)'' and inserting ``on account of past-due 
                support described in paragraph (2)(B)''.
            (2) Section 464(b) (42 U.S.C. 664(b)) is amended--
                    (A) by striking ``(b)(1)'' and inserting ``(b) 
                Regulations.--''; and
                    (B) by striking paragraph (2).
            (3) Section 464(c) (42 U.S.C. 664(c)) is amended--
                    (A) by striking ``(c)(1) Except as provided in 
                paragraph (2), as'' and inserting ``(c) Definition.--
                As''; and
                    (B) by striking paragraphs (2) and (3).
    (c) Treatment of Lump-Sum Tax Refund Under AFDC.--
            (1) Exemption from lump-sum rule.--Section 402(a)(17) (42 
        U.S.C. 602(a)(17)) is amended by adding at the end the 
        following: ``but this paragraph shall not apply to income 
        received by a family that is attributable to a child support 
        obligation owed with respect to a member of the family and that 
        is paid to the family from amounts withheld from a Federal 
        income tax refund otherwise payable to the person owing such 
        obligation, to the extent that such income is placed in a 
        qualified asset account (as defined in section 406(j)) the 
        total amounts in which, after such placement, does not exceed 
        $10,000;''.
            (2) Qualified asset account defined.--Section 406 (42 
        U.S.C. 606), as amended by section 402(g)(2) of this Act, is 
        amended by adding at the end the following:
    ``(j)(1) The term `qualified asset account' means a mechanism 
approved by the State (such as individual retirement accounts, escrow 
accounts, or savings bonds) that allows savings of a family receiving 
aid to families with dependent children to be used for qualified 
distributions.
    ``(2) The term `qualified distribution' means a distribution from a 
qualified asset account for expenses directly related to 1 or more of 
the following purposes:
            ``(A) The attendance of a member of the family at any 
        education or training program.
            ``(B) The improvement of the employability (including self-
        employment) of a member of the family (such as through the 
        purchase of an automobile).
            ``(C) The purchase of a home for the family.
            ``(D) A change of the family residence.''.
    (d) Effective Date.--The amendments made by this section shall 
become effective October 1, 1999.

SEC. 462. INTERNAL REVENUE SERVICE COLLECTION OF ARREARS.

    (a) Amendment to Internal Revenue Code.--Section 6305(a) of the 
Internal Revenue Code of 1986 is amended--
            (1) in paragraph (1), by inserting ``except as provided in 
        paragraph (5)'' after ``collected'';
            (2) by striking ``and'' at the end of paragraph (3);
            (3) by striking the period at the end of paragraph (4) and 
        inserting a comma;
            (4) by adding after paragraph (4) the following new 
        paragraph:
            ``(5) no additional fee may be assessed for adjustments to 
        an amount previously certified pursuant to such section 452(b) 
        with respect to the same obligor.''; and
            (5) by striking ``Secretary of Health, Education, and 
        Welfare'' each place it appears and inserting ``Secretary of 
        Health and Human Services''.
    (b) Effective Date.--The amendments made by this section shall 
become effective October 1, 1997.

SEC. 463. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL EMPLOYEES.

    (a) Consolidation and Streamlining of Authorities.--
            (1) Section 459 (42 U.S.C. 659) is amended in the caption 
        by inserting ``income withholding,'' before ``garnishment''.
            (2) Section 459(a) (42 U.S.C. 659(a)) is amended--
                    (A) by striking ``(a)'' and inserting ``(a) Consent 
                To Support Enforcement.--
                    (B) by striking ``section 207'' and inserting 
                ``section 207 of this Act and 38 U.S.C. 5301''; and
                    (C) by striking all that follows ``a private 
                person,'' and inserting ``to withholding in accordance 
                with State law pursuant to subsections (a)(1) and (b) 
                of section 466 and regulations of the Secretary 
                thereunder, and to any other legal process brought, by 
                a State agency administering a program under this part 
                or by an individual obligee, to enforce the legal 
                obligation of such individual to provide child support 
                or alimony.''.
            (3) Section 459(b) (42 U.S.C. 659(b)) is amended to read as 
        follows:
    ``(b) Consent to Requirements Applicable to Private Person.-- 
Except as otherwise provided herein, each entity specified in 
subsection (a) shall be subject, with respect to notice to withhold 
income pursuant to subsection (a)(1) or (b) of section 466, or to any 
other order or process to enforce support obligations against an 
individual (if such order or process contains or is accompanied by 
sufficient data to permit prompt identification of the individual and 
the moneys involved), to the same requirements as would apply if such 
entity were a private person.''.
            (4) Section 459(c) (42 U.S.C. 659(c)) is redesignated and 
        relocated as paragraph (2) of subsection (f), and is amended--
                    (A) by striking ``responding to interrogatories 
                pursuant to requirements imposed by section 461(b)(3)'' 
                and inserting ``taking actions necessary to comply with 
                the requirements of subsection (A) with regard to any 
                individual''; and
                    (B) by striking ``any of his duties'' and all that 
                follows and inserting ``such duties.''.
            (5) Section 461 (42 U.S.C. 661) is amended by striking 
        subsection (b), and section 459 (42 U.S.C. 659) is amended by 
        inserting after subsection (b) (as added by paragraph (3) of 
        this subsection) the following:
    ``(c) Designation of Agent; Response to Notice or Process.--(1) The 
head of each agency subject to the requirements of this section shall--
            ``(A) designate an agent or agents to receive orders and 
        accept service of process; and
            ``(B) publish (i) in the appendix of such regulations, (ii) 
        in each subsequent republication of such regulations, and (iii) 
        annually in the Federal Register, the designation of such agent 
        or agents, identified by title of position, mailing address, 
        and telephone number.''.
            (6) Section 459 (42 U.S.C. 659) is amended by striking 
        subsection (d) and by inserting after subsection (c)(1) (as 
        added by paragraph (5) of this subsection) the following:
    ``(2) Whenever an agent designated pursuant to paragraph (1) 
receives notice pursuant to subsection (a)(1) or (b) of section 466, or 
is effectively served with any order, process, or interrogatories, with 
respect to an individual's child support or alimony payment 
obligations, such agent shall--
            ``(A) as soon as possible (but not later than fifteen days) 
        thereafter, send written notice of such notice or service 
        (together with a copy thereof) to such individual at his duty 
        station or last-known home address;
            ``(B) within 30 days (or such longer period as may be 
        prescribed by applicable State law) after receipt of a notice 
        pursuant to subsection (a)(1) or (b) of section 466, comply 
        with all applicable provisions of such section 466; and
            ``(C) within 30 days (or such longer period as may be 
        prescribed by applicable State law) after effective service of 
        any other such order, process, or interrogatories, respond 
        thereto.''.
            (7) Section 461 (42 U.S.C. 661) is amended by striking 
        subsection (c), and section 459 (42 U.S.C. 659) is amended by 
        inserting after subsection (c) (as added by paragraph (5) and 
        amended by paragraph (6) of this subsection) the following:
    ``(d) Priority of Claims.--In the event that a governmental entity 
receives notice or is served with process, as provided in this section, 
concerning amounts owed by an individual to more than one person--
            ``(1) support collection under section 466(b) must be given 
        priority over any other process, as provided in section 
        466(b)(7);
            ``(2) allocation of moneys due or payable to an individual 
        among claimants under section 466(b) shall be governed by the 
        provisions of such section 466(b) and regulations thereunder; 
        and
            ``(3) such moneys as remain after compliance with 
        subparagraphs (A) and (B) shall be available to satisfy any 
        other such processes on a first-come, first-served basis, with 
        any such process being satisfied out of such moneys as remain 
        after the satisfaction of all such processes which have been 
        previously served.''.
            (8) Section 459(e) (42 U.S.C. 659(e)) is amended by 
        striking ``(e)'' and inserting the following:
    ``(e) No Requirement To Vary Pay Cycles.--''.
            (9) Section 459(f) (42 U.S.C. 659(f)) is amended by 
        striking ``(f)'' and inserting the following:
    ``(f) Relief From Liability.--(1)''.
            (10) Section 461(a) (42 U.S.C. 661(a)) is redesignated and 
        relocated as section 459(g), and is amended--
                    (A) by striking ``(g)'' and inserting the 
                following:
    ``(g) Regulations.--''; and
                    (B) by striking ``section 459'' and inserting 
                ``this section''.
            (11) Section 462 (42 U.S.C. 662) is amended by striking 
        subsection (f), and section 459 (42 U.S.C. 659) is amended by 
        inserting the following after subsection (g) (as added by 
        paragraph (10) of this subsection):
    ``(h) Moneys Subject to Process.--(1) Subject to subsection (i), 
moneys paid or payable to an individual which are considered to be 
based upon remuneration for employment, for purposes of this section--
            ``(A) consist of--
                    ``(i) compensation paid or payable for personal 
                services of such individual, whether such compensation 
                is denominated as wages, salary, commission, bonus, 
                pay, allowances, or otherwise (including severance pay, 
                sick pay, and incentive pay);
                    ``(ii) periodic benefits (including a periodic 
                benefit as defined in section 228(h)(3)) or other 
                payments--
                            ``(I) under the insurance system 
                        established by title II;
                            ``(II) under any other system or fund 
                        established by the United States which provides 
                        for the payment of pensions, retirement or 
                        retired pay, annuities, dependents' or 
                        survivors' benefits, or similar amounts payable 
                        on account of personal services performed by 
                        the individual or any other individual;
                            ``(III) as compensation for death under any 
                        Federal program;
                            ``(IV) under any Federal program 
                        established to provide `black lung' benefits; 
                        or
                            ``(V) by the Secretary of Veterans Affairs 
                        as pension, or as compensation for a service-
                        connected disability or death (except any 
                        compensation paid by such Secretary to a former 
                        member of the Armed Forces who is in receipt of 
                        retired or retainer pay if such former member 
                        has waived a portion of his retired pay in 
                        order to receive such compensation); and
                    ``(iii) worker's compensation benefits paid under 
                Federal or State law; but
            ``(B) do not include any payment--
                    ``(i) by way of reimbursement or otherwise, to 
                defray expenses incurred by such individual in carrying 
                out duties associated with his employment; or
                    ``(ii) as allowances for members of the uniformed 
                services payable pursuant to chapter 7 of title 37, 
                United States Code, as prescribed by the Secretaries 
                concerned (defined by section 101(5) of such title) as 
                necessary for the efficient performance of duty.''.
            (12) Section 462(g) (42 U.S.C. 662(g)) is redesignated and 
        relocated as section 459(i) (42 U.S.C. 659(i)).
            (13)(A) Section 462 (42 U.S.C. 662) is amended--
                    (i) in subsection (e)(1), by redesignating 
                subparagraphs (A), (B), and (C) as clauses (i), (ii), 
                and (iii); and
                    (ii) in subsection (e), by redesignating paragraphs 
                (1) and (2) as subparagraphs (A) and (B).
            (B) Section 459 (42 U.S.C. 659) is amended by adding at the 
        end the following:
    ``(j) Definitions.--For purposes of this sec- tion--''.
            (C) Subsections (a) through (e) of section 462 (42 U.S.C. 
        662), as amended by subparagraph (A) of this paragraph, are 
        relocated and redesignated as paragraphs (1) through (4), 
        respectively of section 459(j) (as added by subparagraph (B) of 
        this paragraph, (42 U.S.C. 659(j)), and the left margin of each 
        of such paragraphs (1) through (4) is indented 2 ems to the 
        right of the left margin of subsection (i) (as added by 
        paragraph (12) of this subsection).
    (b) Conforming Amendments.--
            (1) To part d of title iv.--Sections 461 and 462 (42 U.S.C. 
        661), as amended by subsection (a) of this section, are 
        repealed.
            (2) To title 5, united states code.--Section 5520a of title 
        5, United States Code, is amended, in subsections (h)(2) and 
        (i), by striking ``sections 459, 461, and 462 of the Social 
        Security Act (42 U.S.C. 659, 661, and 662)'' and inserting 
        ``section 459 of the Social Security Act (42 U.S.C. 659)''.
    (c) Military Retired and Retainer Pay.--(1) Definition of Court.--
Section 1408(a)(1) of title 10, United States Code, is amended--
            (A) by striking ``and'' at the end of subparagraph (B);
            (B) by striking the period at the end of subparagraph (C) 
        and inserting ``; and''; and
            (C) by adding after subparagraph (C) the following new 
        paragraph:
                    ``(D) any administrative or judicial tribunal of a 
                State competent to enter orders for support or 
                maintenance (including a State agency administering a 
                State program under part D of title IV of the Social 
                Security Act).'';
    (2) Definition of Court Order.--Section 1408(a)(2) of such title is 
amended by inserting ``or a court order for the payment of child 
support not included in or accompanied by such a decree or 
settlement,'' before ``which--''.
    (3) Public Payee.--Section 1408(d) of such title is amended--
            (A) in the heading, by striking ``to spouse'' and inserting 
        ``to (or for benefit of)''; and
            (B) in paragraph (1), in the first sentence, by inserting 
        ``(or for the benefit of such spouse or former spouse to a 
        State central collections unit or other public payee designated 
        by a State, in accordance with part D of title IV of the Social 
        Security Act, as directed by court order, or as otherwise 
        directed in accordance with such part D)'' before ``in an 
        amount sufficient''.
    (4) Relationship to Part D of Title IV.--Section 1408 of such title 
is amended by adding at the end the following new subsection:
    ``(j) Relationship to Other Laws.--In any case involving a child 
support order against a member who has never been married to the other 
parent of the child, the provisions of this section shall not apply, 
and the case shall be subject to the provisions of section 459 of the 
Social Security Act.''.
    (d) Effective Date.--The amendments made by this section shall 
become effective 6 months after the date of the enactment of this Act.

SEC. 464. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEMBERS OF THE 
              ARMED FORCES.

    (a) Availability of Locator Information.--
            (1) Maintenance of address information.--The Secretary of 
        Defense shall establish a centralized personnel locator service 
        that includes the address of each member of the Armed Forces 
        under the jurisdiction of the Secretary. Upon request of the 
        Secretary of Transportation, addresses for members of the Coast 
        Guard shall be included in the centralized personnel locator 
        service.
            (2) Type of address.--
                    (A) Residential address.--Except as provided in 
                subparagraph (B), the address for a member of the Armed 
                Forces shown in the locator service shall be the 
                residential address of that member.
                    (B) Duty address.--The address for a member of the 
                Armed Forces shown in the locator service shall be the 
                duty address of that member in the case of a member--
                            (i) who is permanently assigned overseas, 
                        to a vessel, or to a routinely deployable unit; 
                        or
                            (ii) with respect to whom the Secretary 
                        concerned makes a determination that the 
                        member's residential address should not be 
                        disclosed due to national security or safety 
                        concerns.
            (3) Updating of locator information.--Within 30 days after 
        a member listed in the locator service establishes a new 
        residential address (or a new duty address, in the case of a 
        member covered by paragraph (2)(B)), the Secretary concerned 
        shall update the locator service to indicate the new address of 
        the member.
            (4) Availability of information.--The Secretary of Defense 
        shall make information regarding the address of a member of the 
        Armed Forces listed in the locator service available, on 
        request, to the Federal Parent Locator Service.
    (b) Facilitating Granting of Leave for Attendance at Hearings.--
            (1) Regulations.--The Secretary of each military 
        department, and the Secretary of Transportation with respect to 
        the Coast Guard when it is not operating as a service in the 
        Navy, shall prescribe regulations to facilitate the granting of 
        leave to a member of the Armed Forces under the jurisdiction of 
        that Secretary in a case in which--
                    (A) the leave is needed for the member to attend a 
                hearing described in paragraph (2);
                    (B) the member is not serving in or with a unit 
                deployed in a contingency operation (as defined in 
                section 101 of title 10, United States Code); and
                    (C) the exigencies of military service (as 
                determined by the Secretary concerned) do not otherwise 
                require that such leave not be granted.
            (2) Covered hearings.--Paragraph (1) applies to a hearing 
        that is conducted by a court or pursuant to an administrative 
        process established under State law, in connection with a civil 
        action--
                    (A) to determine whether a member of the Armed 
                Forces is a natural parent of a child; or
                    (B) to determine an obligation of a member of the 
                Armed Forces to provide child support.
            (3) Definitions.--For purposes of this subsection:
                    (A) The term ``court'' has the meaning given that 
                term in section 1408(a) of title 10, United States 
                Code.
                    (B) The term ``child support'' has the meaning 
                given such term in section 462 of the Social Security 
                Act (42 U.S.C. 662).
    (c) Payment of Military Retired Pay in Compliance With Child 
Support Orders.--
            (1) Date of certification of court order.--Section 1408 of 
        title 10, United States Code, is amended--
                    (A) by redesignating subsection (i) as subsection 
                (j); and
                    (B) by inserting after subsection (h) the following 
                new subsection (i):
    ``(i) Certification Date.--It is not necessary that the date of a 
certification of the authenticity or completeness of a copy of a court 
order or an order of an administrative process established under State 
law for child support received by the Secretary concerned for the 
purposes of this section be recent in relation to the date of receipt 
by the Secretary.''.
            (2) Payments consistent with assignments of rights to 
        states.--Section 1408(d)(1) of such title is amended by 
        inserting after the first sentence the following: ``In the case 
of a spouse or former spouse who, pursuant to section 402(a)(26) of the 
Social Security Act (42 U.S.C. 602(26)), assigns to a State the rights 
of the spouse or former spouse to receive support, the Secretary 
concerned may make the child support payments referred to in the 
preceding sentence to that State in amounts consistent with that 
assignment of rights.''.
            (3) Arrearages owed by members of the uniformed services.--
        Section 1408(d) of such title is amended by adding at the end 
        the following new paragraph:
    ``(6) In the case of a court order or an order of an administrative 
process established under State law for which effective service is made 
on the Secretary concerned on or after the date of the enactment of 
this paragraph and which provides for payments from the disposable 
retired pay of a member to satisfy the amount of child support set 
forth in the order, the authority provided in paragraph (1) to make 
payments from the disposable retired pay of a member to satisfy the 
amount of child support set forth in a court order or an order of an 
administrative process established under State law shall apply to 
payment of any amount of child support arrearages set forth in that 
order as well as to amounts of child support that currently become 
due.''.

SEC. 465. MOTOR VEHICLE LIENS.

    Section 466(a)(4) (42 U.S.C. 666(a)(4)) is amended--
            (1) by striking ``(4) Procedures'' and inserting the 
        following:
            ``(4) Liens.--
                    ``(A) In general.--Procedures''; and
            (2) by adding at the end the following new subparagraph:
                    ``(B) Motor vehicle liens.--Procedures for placing 
                liens for arrears of child support on motor vehicle 
                titles of individuals owing such arrears equal to or 
                exceeding two months of support, under which--
                            ``(i) any person owed such arrears may 
                        place such a lien;
                            ``(ii) the State agency administering the 
                        program under this part shall systematically 
                        place such liens;
                            ``(iii) expedited methods are provided 
                        for--
                                    ``(I) ascertaining the amount of 
                                arrears;
                                    ``(II) affording the person owing 
                                the arrears or other titleholder to 
                                contest the amount of arrears or to 
                                obtain a release upon fulfilling the 
                                support obligation;
                            ``(iv) such a lien has precedence over all 
                        other encumbrances on a vehicle title other 
                        than a purchase money security interest; and
                            ``(v) the individual or State agency owed 
                        the arrears may execute on, seize, and sell the 
                        property in accordance with State law.''.

SEC. 466. VOIDING OF FRAUDULENT TRANSFERS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 401(a), 
426(a), 431, and 442 of this Act, is amended by inserting after 
paragraph (15) the following:
            ``(16) Fraudulent transfers.--Procedures under which--
                    ``(A) the State has in effect--
                            ``(i) the Uniform Fraudulent Conveyance Act 
                        of 1981,
                            ``(ii) the Uniform Fraudulent Transfer Act 
                        of 1984, or
                            ``(iii) another law, specifying indicia of 
                        fraud which create a prima facie case that a 
                        debtor transferred income or property to avoid 
                        payment to a child support creditor, which the 
                        Secretary finds affords comparable rights to 
                        child support creditors; and
                    ``(B) in any case in which the State knows of a 
                transfer by a child support debtor with respect to 
                which such a prima facie case is established, the State 
                must--
                            ``(i) seek to void such transfer; or
                            ``(ii) obtain a settlement in the best 
                        interests of the child support creditor.''.

SEC. 467. STATE LAW AUTHORIZING SUSPENSION OF LICENSES.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 401(a), 
426(a), 431, 442, and 466 of this Act, is amended by inserting after 
paragraph (16) the following:
            ``(17) Authority to withhold or suspend licenses.--
        Procedures under which the State has (and uses in appropriate 
        cases) authority (subject to appropriate due process 
        safeguards) to withhold or suspend, or to restrict the use of 
        driver's licenses, and professional and occupational licenses 
        of individuals owing overdue child support or failing, after 
        receiving appropriate notice, to comply with subpoenas or 
        warrants relating to paternity or child support proceedings.''.

SEC. 468. REPORTING ARREARAGES TO CREDIT BUREAUS.

    Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended to read as 
follows:
            ``(7) Reporting arrearages to credit bureaus.--(A) 
        Procedures (subject to safeguards pursuant to subparagraph (B)) 
        requiring the State to report periodically to consumer 
        reporting agencies (as defined in section 603(f) of the Fair 
        Credit Reporting Act (15 U.S.C. 1681a(f)) the name of any 
        absent parent who is delinquent by 90 days or more in the 
        payment of support, and the amount of overdue support owed by 
        such parent.
            ``(B) Procedures ensuring that, in carrying out 
        subparagraph (A), information with respect to an absent parent 
        is reported--
                    ``(i) only after such parent has been afforded all 
                due process required under State law, including notice 
                and a reasonable opportunity to contest the accuracy of 
                such information; and
                    ``(ii) only to an entity that has furnished 
                evidence satisfactory to the State that the entity is a 
                consumer reporting agency.''.

SEC. 469. EXTENDED STATUTE OF LIMITATION FOR COLLECTION OF ARREARAGES.

    (a) Amendments.--Section 466(a)(9) (42 U.S.C. 666(a)(9)) is 
amended--
            (1) by striking ``(9) Procedures'' and inserting the 
        following:
            ``(9) Legal treatment of arrears.--
                    ``(A) Finality.--Procedures'';
            (2) by redesignating subparagraphs (A), (B), and (C) as 
        clauses (i), (ii), and (iii), respectively, and by indenting 
        each of such clauses 2 additional ems to the right; and
            (3) by adding after and below subparagraph (A), as 
        redesignated, the following new subparagraph:
                    ``(B) Statute of limitations.--Procedures under 
                which the statute of limitations on any arrearages of 
                child support extends at least until the child owed 
                such support is 30 years of age.''.
    (b) Application of Requirement.--The amendment made by this section 
shall not be read to require any State law to revive any payment 
obligation which had lapsed prior to the effective date of such State 
law.

SEC. 470. CHARGES FOR ARREARAGES.

    (a) State Law Requirement.--Section 466(a) (42 U.S.C. 666(a)), as 
amended by sections 401(a), 426(a), 431, 442, 466, and 467 of this Act, 
is amended by inserting after paragraph (17) the following:
            ``(18) Charges for arrearages.--Procedures providing for 
        the calculation and collection of interest or penalties for 
        arrearages of child support, and for distribution of such 
        interest or penalties collected for the benefit of the child 
        (except where the right to support has been assigned to the 
        State).''.
    (b) Regulations.--The Secretary of Health and Human Services shall 
establish by regulation a rule to resolve choice of law conflicts 
arising in the implementation of the amendment made by subsection (a).
    (c) Conforming Amendment.--Section 454(21) (42 U.S.C. 654(21)) is 
repealed.
    (d) Effective Date.--The amendments made by this section shall be 
effective with respect to arrearages accruing on or after October 1, 
1998.

SEC. 471. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD SUPPORT.

    (a) HHS Certification Procedure.--
            (1) Secretarial responsibility.--Section 452 (42 U.S.C. 
        652), as amended by sections 415(a)(3) and 417 of this Act, is 
        amended by adding at the end the following new subsection:
    ``(l) Certifications for Purposes of Passport Restrictions.--
            ``(1) In general.--Where the Secretary receives a 
        certification by a State agency in accordance with the 
        requirements of section 454(28) that an individual owes 
        arrearages of child support in an amount exceeding $5,000 or in 
        an amount exceeding 24 months' worth of child support, the 
        Secretary shall transmit such certification to the Secretary of 
        State for action (with respect to denial, revocation, or 
        limitation of passports) pursuant to section 471(b) of the 
        Individual Responsibility Act of 1995.
            ``(2) Limit on liability.--The Secretary shall not be 
        liable to an individual for any action with respect to a 
        certification by a State agency under this section.''.
            (2) State cse agency responsibility.--Section 454 (42 
        U.S.C. 654), as amended by sections 404(a), 414(b), and 422(a) 
        of this Act, is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (26);
                    (B) by striking the period at the end of paragraph 
                (27) and inserting ``; and''; and
                    (C) by adding after paragraph (27) the following 
                new paragraph:
            ``(28) provide that the State agency will have in effect a 
        procedure (which may be combined with the procedure for tax 
        refund offset under section 464) for certifying to the 
        Secretary, for purposes of the procedure under section 452(l) 
        (concerning denial of passports) determinations that 
        individuals owe arrearages of child support in an amount 
        exceeding $5,000 or in an amount exceeding 24 months' worth of 
        child support, under which procedure--
                    ``(A) each individual concerned is afforded notice 
                of such determination and the consequences thereof, and 
                an opportunity to contest the determination; and
                    ``(B) the certification by the State agency is 
                furnished to the Secretary in such format, and 
                accompanied by such supporting documentation, as the 
                Secretary may require.''.
    (b) State Department Procedure for Denial of Passports.--
            (1) In general.--The Secretary of State, upon certification 
        by the Secretary of Health and Human Services, in accordance 
        with section 452(l) of the Social Security Act, that an 
        individual owes arrearages of child support in excess of 
        $5,000, shall refuse to issue a passport to such individual, 
        and may revoke, restrict, or limit a passport issued previously 
        to such individual.
            (2) Limit on liability.--The Secretary of State shall not 
        be liable to an individual for any action with respect to a 
        certification by a State agency under this section.
    (c) Effective Date.--This section and the amendments made by this 
section shall become effective October 1, 1996.

SEC. 472. INTERNATIONAL CHILD SUPPORT ENFORCEMENT.

    (a) Sense of the Congress That the United States Should Ratify the 
United Nations Convention of 1956.--It is the sense of the Congress 
that the United States should ratify the United Nations Convention of 
1956.
    (b) Treatment of International Child Support Cases as Interstate 
Cases.--Section 454 (42 U.S.C. 654), as amended by sections 404(a), 
414(b), 422(a), and 471(a)(2) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (27);
            (2) by striking the period at the end of paragraph (28) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (28) the following:
            ``(29) provide that the State must treat international 
        child support cases in the same manner as the State treats 
        interstate child support cases.''.

SEC. 473. SEIZURE OF LOTTERY WINNINGS, SETTLEMENTS, PAYOUTS, AWARDS, 
              AND BEQUESTS, AND SALE OF FORFEITED PROPERTY, TO PAY 
              CHILD SUPPORT ARREARAGES.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 401(a), 
426(a), 431, 442, 466, 467, and 470(a) of this Act, is amended by 
inserting after paragraph (18) the following:
            ``(19) Procedures, in addition to other income withholding 
        procedures, under which a lien is imposed against property with 
        the following effect:
                    ``(A) The distributor of the winnings from a State 
                lottery or State-sanctioned or tribal-sanctioned 
                gambling house or casino shall--
                            ``(i) suspend payment of the winnings from 
                        the person otherwise entitled to the payment 
                        until an inquiry is made to and a response is 
                        received from the State child support 
                        enforcement agency as to whether the person 
                        owes a child support arrearage; and
                            ``(ii) if there is such an arrearage, 
                        withhold from the payment the lesser of the 
                        amount of the payment or the amount of the 
                        arrearage, and pay the amount withheld to the 
                        agency for distribution.
                    ``(B) The person required to make a payment under a 
                policy of insurance or a settlement of a claim made 
                with respect to the policy shall--
                            ``(i) suspend the payment until an inquiry 
                        is made to and a response received from the 
                        agency as to whether the person otherwise 
                        entitled to the payment owes a child support 
                        arrearage; and
                            ``(ii) if there is such an arrearage, 
                        withhold from the payment the lesser of the 
                        amount of the payment or the amount of the 
                        arrearage, and pay the amount withheld to the 
                        agency for distribution.
                    ``(C) The payor of any amount pursuant to an award, 
                judgment, or settlement in any action brought in 
                Federal or State court shall--
                            ``(i) suspend the payment of the amount 
                        until an inquiry is made to and a response is 
                        received from the agency as to whether the 
                        person otherwise entitled to the payment owes a 
                        child support arrearage; and
                            ``(ii) if there is such an arrearage, 
                        withhold from the payment the lesser of the 
                        amount of the payment or the amount of the 
                        arrearage, and pay the amount withheld to the 
                        agency for distribution.
                    ``(D) If the State seizes property forfeited to the 
                State by an individual by reason of a criminal 
                conviction, the State shall--
                            ``(i) hold the property until an inquiry is 
                        made to and a response is received from the 
                        agency as to whether the individual owes a 
                        child support arrearage; and
                            ``(ii) if there is such an arrearage, sell 
                        the property and, after satisfying the claims 
of all other private or public claimants to the property and deducting 
from the proceeds of the sale the attendant costs (such as for towing, 
storage, and the sale), pay the lesser of the remaining proceeds or the 
amount of the arrearage directly to the agency for distribution.
                    ``(E) Any person required to make a payment in 
                respect of a decedent shall--
                            ``(i) suspend the payment until an inquiry 
                        is made to and a response received from the 
                        agency as to whether the person otherwise 
                        entitled to the payment owes a child support 
                        arrearage; and
                            ``(ii) if there is such an arrearage, 
                        withhold from the payment the lesser of the 
                        amount of the payment or the amount of the 
                        arrearage, and pay the amount withheld to the 
                        agency for distribution.''.

SEC. 474. LIABILITY OF GRANDPARENTS FOR FINANCIAL SUPPORT OF CHILDREN 
              OF THEIR MINOR CHILDREN.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 401(a), 
426(a), 431, 442, 466, 467, 470(a), and 473 of this Act, is amended by 
inserting after paragraph (19) the following:
            ``(20) Procedures under which each parent of an individual 
        who has not attained 18 years of age is liable for the 
        financial support of any child of the individual to the extent 
        that the individual is unable to provide such support. The 
        preceding sentence shall not apply to the State if the State 
        plan explicitly provides for such inapplicability.''.

SEC. 475. SENSE OF THE CONGRESS REGARDING PROGRAMS FOR NONCUSTODIAL 
              PARENTS UNABLE TO MEET CHILD SUPPORT OBLIGATIONS.

    It is the sense of the Congress that the States should develop 
programs, such as the program of the State of Wisconsin known as the 
``Children's First Program'', that are designed to work with 
noncustodial parents who are unable to meet their child support 
obligations.

                      Subtitle H--Medical Support

SEC. 481. TECHNICAL CORRECTION TO ERISA DEFINITION OF MEDICAL CHILD 
              SUPPORT ORDER.

    (a) In General.--Section 609(a)(2)(B) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1169(a)(2)(B)) is amended--
            (1) by striking ``issued by a court of competent 
        jurisdiction'';
            (2) by striking the period at the end of clause (ii) and 
        inserting a comma; and
            (3) by adding, after and below clause (ii), the following:
                ``if such judgment, decree, or order (I) is issued by a 
                court of competent jurisdiction or (II) is issued by an 
                administrative adjudicator and has the force and effect 
                of law under applicable State law.''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        take effect on the date of the enactment of this Act.
            (2) Plan amendments not required until january 1, 1996.--
        Any amendment to a plan required to be made by an amendment 
        made by this section shall not be required to be made before 
        the first plan year beginning on or after January 1, 1996, if--
                    (A) during the period after the date before the 
                date of the enactment of this Act and before such first 
                plan year, the plan is operated in accordance with the 
                requirements of the amendments made by this section, 
                and
                    (B) such plan amendment applies retroactively to 
                the period after the date before the date of the 
                enactment of this Act and before such first plan year.
        A plan shall not be treated as failing to be operated in 
        accordance with the provisions of the plan merely because it 
        operates in accordance with this paragraph.

SEC. 482. EXTENSION OF MEDICAID ELIGIBILITY FOR FAMILIES LOSING AFDC 
              DUE TO INCREASED CHILD SUPPORT COLLECTIONS.

    Section 402(a) (42 U.S.C. 602(a)), as amended by the other 
provisions of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (55);
            (2) by striking the period at the end of paragraph (56) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (56) the following:
            ``(57) provide that each member of a family which would be 
        eligible for aid under the State plan but for the receipt of 
        child support payments shall be considered to be receiving such 
        aid for purposes of eligibility for medical assistance under 
the State plan approved under title XIX for so long as the family would 
(but for such receipt) be eligible for such aid.''.

                    Subtitle I--Effect of Enactment

SEC. 491. EFFECTIVE DATES.

    (a) In General.--Except as otherwise specifically provided (but 
subject to subsections (b) and (c))--
            (1) provisions of this title requiring enactment or 
        amendment of State laws under section 466 of the Social 
        Security Act, or revision of State plans under section 454 of 
        such Act, shall be effective with respect to periods beginning 
        on and after October 1, 1996; and
            (2) all other provisions of this title shall become 
        effective upon enactment.
    (b) Grace Period for State Law Changes.--The provisions of this 
title shall become effective with respect to a State on the later of--
            (1) the date specified in this title, or
            (2) the effective date of laws enacted by the legislature 
        of such State implementing such provisions,
but in no event later than the first day of the first calendar quarter 
beginning after the close of the first regular session of the State 
legislature that begins after the date of enactment of this Act. For 
purposes of the previous sentence, in the case of a State that has a 2-
year legislative session, each year of such session shall be deemed to 
be a separate regular session of the State legislature.
    (c) Grace Period for State Constitutional Amendment.--A State shall 
not be found out of compliance with any requirement enacted by this 
title if it is unable to comply without amending the State constitution 
until the earlier of--
            (1) the date one year after the effective date of the 
        necessary State constitutional amendment, or
            (2) the date five years after enactment of this title.

SEC. 492. SEVERABILITY.

    If any provision of this title or the application thereof to any 
person or circumstance is held invalid, the invalidity shall not affect 
other provisions or applications of this title which can be given 
effect without regard to the invalid provision or application, and to 
this end the provisions of this title shall be severable.

              TITLE V--TEEN PREGNANCY AND FAMILY STABILITY

                        Subtitle A--Federal Role

SEC. 501. STATE OPTION TO DENY AFDC FOR ADDITIONAL CHILDREN.

    (a) In General.--Section 402(a) (42 U.S.C. 602(a)), as amended by 
sections 101, 102, 211(a), 232, and 301(a) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (49);
            (2) by striking the period at the end of paragraph (50) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (50) the following:
            ``(51) at the option of the State, provide that--
                    ``(A)(i) notwithstanding paragraph (7)(A), the 
                needs of a child will not be taken into account in 
                making the determination under paragraph (7) with 
                respect to the family of the child if the child was 
                born (other than as a result of rape or incest) to a 
                member of the family--
                            ``(I) while the family was a recipient of 
                        aid under the State plan; or
                            ``(II) during the 6-month period ending 
                        with the date the family applied for such aid; 
                        and
                    ``(ii) if the amount of aid payable to a family 
                under the State plan is reduced by reason of 
                subparagraph (A), each member of the family shall be 
                considered to be receiving such aid for purposes of 
                eligibility for medical assistance under the State plan 
                approved under title XIX for so long as such aid would 
                otherwise not be so reduced; and
            ``(B) if the State exercises the option, the State may 
        provide the family with vouchers, in amounts not exceeding the 
        amount of any such reduction in aid, that may be used only to 
        pay for particular goods and services specified by the State as 
        suitable for the care of the child of the parent (such as 
        diapers, clothing, or school supplies).''.
    (b) Applicability.--The amendments made by subsection (a) shall 
apply to payments under a State plan approved under part A of title IV 
of the Social Security Act for months beginning after the date of the 
enactment of this Act, and to payments to States under such part for 
quarters beginning after such date.

SEC. 502. MINORS RECEIVING AFDC REQUIRED TO LIVE UNDER RESPONSIBLE 
              ADULT SUPERVISION.

    Section 402(a)(43) (42 U.S.C. 602(a)(43)) is amended by striking 
``at the option of the State,''.

SEC. 503. NATIONAL CLEARINGHOUSE ON ADOLESCENT PREGNANCY.

    (a) In General.--Title XX (42 U.S.C. 1397-1397f), as amended by 
section 222(b) of this Act, is amended by adding at the end the 
following:

``SEC. 2010. NATIONAL CLEARINGHOUSE ON ADOLESCENT PREGNANCY.

    ``(a) National Clearinghouse on Adolescent Pregnancy.--
            ``(1) Establishment.--The responsible Federal officials 
        shall establish, through grant or contract, a national center 
        for the collection and provision of programmatic information 
        and technical assistance that relates to adolescent pregnancy 
        prevention programs, to be known as the `National Clearinghouse 
        on Adolescent Pregnancy Prevention Programs'.
            ``(2) Functions.--The national center established under 
        paragraph (1) shall serve as a national information and data 
        clearinghouse, and as a training, technical assistance, and 
        material development source for adolescent pregnancy prevention 
        programs. Such center shall--
                    ``(A) develop and maintain a system for 
                disseminating information on all types of adolescent 
                pregnancy prevention program and on the state of 
                adolescent pregnancy prevention program development, 
                including information concerning the most effective 
                model programs;
                    ``(B) develop and sponsor a variety of training 
                institutes and curricula for adolescent pregnancy 
                prevention program staff;
                    ``(C) identify model programs representing the 
                various types of adolescent pregnancy prevention 
                programs;
                    ``(D) develop technical assistance materials and 
                activities to assist other entities in establishing and 
                improving adolescent pregnancy prevention programs;
                    ``(E) develop networks of adolescent pregnancy 
                prevention programs for the purpose of sharing and 
                disseminating information; and
                    ``(F) conduct such other activities as the 
                responsible Federal officials find will assist in 
                developing and carrying out programs or activities to 
                reduce adolescent pregnancy.
    ``(b) Funding.--The responsible Federal officials shall make grants 
to eligible entities for the establishment and operation of a National 
Clearinghouse on Adolescent Pregnancy Prevention Programs under 
subsection (a) so that in the aggregate the expenditures for such 
grants do not exceed $2,000,000 for fiscal year 1996, $4,000,000 for 
fiscal year 1997, $8,000,000 for fiscal year 1998, and $10,000,000 for 
fiscal year 1999 and each subsequent fiscal year.
    ``(c) Definitions.--As used in this section:
            ``(1) Adolescents.--The term `adolescents' means youth who 
        are ages 10 through 19.
            ``(2) Eligible entity.--The term `eligible entity' means a 
        partnership that includes--
                    ``(A) a local education agency, acting on behalf of 
                one or more schools, together with
                    ``(B) one or more community-based organizations, 
                institutions of higher education, or public or private 
                agencies or organizations.
            ``(3) Eligible area.--The term `eligible area' means a 
        school attendance area in which--
                    ``(A) at least 75 percent of the children are from 
                low-income families as that term is used in part A of 
                title I of the Elementary and Secondary Education Act 
                of 1965; or
                    ``(B) the number of children receiving Aid to 
                Families with Dependent Children under part A of title 
                IV is substantial as determined by the responsible 
                Federal officials; or
                    ``(C) the unmarried adolescent birth rate is high, 
                as determined by the responsible Federal officials.
            ``(4) School.--The term `school' means a public elementary, 
        middle, or secondary school.
            ``(5) Responsible federal officials.--The term `responsible 
        Federal officials' means the Secretary of Education, the 
        Secretary of Health and Human Services, and the Chief Executive 
        Officer of the Corporation for National and Community 
        Service.''.
    (b) Effective Date.--The amendment made by this section shall 
become effective October 1, 1994.

SEC. 504. INCENTIVE FOR TEEN PARENTS TO ATTEND SCHOOL.

    Section 402(a) (42 U.S.C. 602(a)), as amended by sections 101, 102, 
211(a), 232, 301(a), and 501(a) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (50);
            (2) by striking the period at the end of paragraph (51) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (51) the following:
            ``(52) provide that the amount of aid otherwise payable 
        under the plan for a month to a family that includes a parent 
        who has not attained 20 years of age and has not completed 
        secondary school (or received a certificate of high school 
        equivalency) may be reduced by 25 percent if, during the 
        immediately preceding month, the parent has failed without good 
        cause (as defined by the State in consultation with the 
        Secretary) to maintain minimum attendance (as defined by the 
        State in consultation with the Secretary) at an educational 
        institution.''.

SEC. 505. STATE OPTION TO DISREGARD 100-HOUR RULE UNDER AFDC-UP 
              PROGRAM.

    Section 407(a) (42 U.S.C. 607(a)) is amended--
            (1) by inserting ``(1)'' after ``(a)''; and
            (2) by adding at the end the following:
    ``(2) A standard prescribed pursuant to paragraph (1) that imposes 
a limit on the amount of time during which a parent who is the 
principal earner in a family in which both parents are married may be 
employed during a month shall not apply to a State if the State plan 
under this part explicitly provides for such inapplicability.''.

SEC. 506. STATE OPTION TO DISREGARD 6-MONTH LIMITATION ON AFDC-UP 
              BENEFITS.

    Section 407(b)(2)(B) (42 U.S.C. 607(b)(2)(B)) is amended by adding 
at the end the following:
    ``(iv) A regulation prescribed by the Secretary that limits the 
length of time with respect to which a family of a dependent child in 
which both parents are married may receive aid to families with 
dependent children by reason of this section shall not apply to a State 
if the State plan under this part explicitly provides for such 
inapplicability.''.

SEC. 507. ELIMINATION OF QUARTERS OF COVERAGE REQUIREMENT UNDER AFDC-UP 
              PROGRAM FOR FAMILIES IN WHICH BOTH PARENTS ARE TEENS.

    Section 407(b)(1)(A)(iii) (42 U.S.C. 607(b)(1)(A)(iii)) is amended 
by striking ``(iii)(I)'' and inserting ``(iii) neither of the child's 
parents have attained 20 years of age, and (I)''.

SEC. 508. DENIAL OF FEDERAL HOUSING BENEFITS TO MINORS WHO BEAR 
              CHILDREN OUT-OF-WEDLOCK.

    (a) Prohibition of Assistance.--Notwithstanding any other provision 
of law, a household whose head of household is an individual who has 
borne a child out-of-wedlock before attaining 18 years of age may not 
be provided Federal housing assistance for a dwelling unit until 
attaining such age, unless--
            (1) after the birth of the child--
                    (A) the individual marries an individual who has 
                been determined by the relevant State to be the 
                biological father of the child; or
                    (B) the biological parent of the child has legal 
                custody of the child and marries an individual who 
                legally adopts the child;
            (2) the individual is a biological and custodial parent of 
        another child who was not born out-of-wedlock; or
            (3) eligibility for such Federal housing assistance is 
        based in whole or in part on any disability or handicap of a 
        member of the household.
    (b) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Covered program.--The term ``covered program'' means--
                    (A) the program of rental assistance on behalf of 
                low-income families provided under section 8 of the 
                United States Housing Act of 1937 (42 U.S.C. 1437f);
                    (B) the public housing program under title I of the 
                United States Housing Act of 1937 (42 U.S.C. 1437 et 
                seq.);
                    (C) the program of rent supplement payments on 
                behalf of qualified tenants pursuant to contracts 
                entered into under section 101 of the Housing and Urban 
                Development Act of 1965 (12 U.S.C. 1701s);
                    (D) the program of interest reduction payments 
                pursuant to contracts entered into by the Secretary of 
                Housing and Urban Development under section 236 of the 
                National Housing Act (12 U.S.C. 1715z-1);
                    (E) the program for mortgage insurance provided 
                pursuant to sections 221(d) (3) or (4) of the National 
                Housing Act (12 U.S.C. 1715l(d)) for multifamily 
                housing for low- and moderate-income families;
                    (F) the rural housing loan program under section 
                502 of the Housing Act of 1949 (42 U.S.C. 1472);
                    (G) the rural housing loan guarantee program under 
                section 502(h) of the Housing Act of 1949 (42 U.S.C. 
                1472(h));
                    (H) the loan and grant programs under section 504 
                of the Housing Act of 1949 (42 U.S.C. 1474) for repairs 
                and improvements to rural dwellings;
                    (I) the program of loans for rental and cooperative 
                rural housing under section 515 of the Housing Act of 
                1949 (42 U.S.C. 1485);
                    (J) the program of rental assistance payments 
                pursuant to contracts entered into under section 
                521(a)(2)(A) of the Housing Act of 1949 (42 U.S.C. 
                1490a(a)(2)(A));
                    (K) the loan and assistance programs under sections 
                514 and 516 of the Housing Act of 1949 (42 U.S.C. 1484, 
                1486) for housing for farm labor;
                    (L) the program of grants and loans for mutual and 
                self-help housing and technical assistance under 
                section 523 of the Housing Act of 1949 (42 U.S.C. 
                1490c);
                    (M) the program of grants for preservation and 
                rehabilitation of housing under section 533 of the 
                Housing Act of 1949 (42 U.S.C. 1490m); and
                    (N) the program of site loans under section 524 of 
                the Housing Act of 1949 (42 U.S.C. 1490d).
            (2) Covered project.--The term ``covered project'' means 
        any housing for which Federal housing assistance is provided 
        that is attached to the project or specific dwelling units in 
        the project.
            (3) Federal housing assistance.--The term ``Federal housing 
        assistance'' means--
                    (A) assistance provided under a covered program in 
                the form of any contract, grant, loan, subsidy, 
                cooperative agreement, loan or mortgage guarantee or 
                insurance, or other financial assistance; or
                    (B) occupancy in a dwelling unit that is--
                            (i) provided assistance under a covered 
                        program; or
                            (ii) located in a covered project and 
                        subject to occupancy limitations under a 
                        covered program that are based on income.
            (4) State.--The term ``State'' means the States of the 
        United States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Commonwealth of the Northern Mariana Islands, 
        Guam, the Virgin Islands, American Samoa, and any other 
        territory or possession of the United States.
    (c) Limitations on Applicability.--Subsection (a) shall not apply 
to Federal housing assistance provided for a household pursuant to an 
application or request for such assistance made by such household 
before the effective date of this Act if the household was receiving 
such assistance on the effective date of this Act.

SEC. 509. STATE OPTION TO DENY AFDC TO MINOR PARENTS.

    (a) In General.--Section 402(a) (42 U.S.C. 602(a)), as amended by 
sections 101, 102, 211(a), 232, 301(a), 501(a), and 504 of this Act, is 
amended--
            (1) by striking ``and'' at the end of paragraph (51);
            (2) by striking the period at the end of paragraph (52) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (52) the following:
            ``(53)(A) at the option of the State, provide that--
                    ``(i) in making the determination under paragraph 
                (7) with respect to a family, the State may disregard 
                the needs of any family member who is a parent and has 
                not attained 18 years of age or such lesser age as the 
                State may prescribe; and
                    ``(ii) if the amount of aid payable to a family 
                under the State plan is reduced by reason of 
                subparagraph (A), each member of the family shall be 
                considered to be receiving such aid for purposes of 
                eligibility for medical assistance under the State plan 
                approved under title XIX for so long as such aid would 
                otherwise not be so reduced; and
            ``(B) if the State exercises the option, the State may 
        provide the family with vouchers, in amounts not exceeding the 
        amount of any such reduction in aid, that may be used only to 
        pay for--
                    ``(i) particular goods and services specified by 
                the State as suitable for the care of the child of the 
                parent (such as diapers, clothing, or cribs); and
                    ``(ii) the costs associated with a maternity home, 
                foster home, or other adult-supervised supportive 
                living arrangement in which the parent and the child 
                live.''.
    (b) Applicability.--The amendments made by subsection (a) shall 
apply to payments under a State plan approved under part A of title IV 
of the Social Security Act for months beginning on or after January 1, 
1998, and to payments to States under such part for quarters beginning 
after such date.

                         Subtitle B--State Role

SEC. 511. TEENAGE PREGNANCY PREVENTION AND FAMILY STABILITY.

    (a) Findings.--The Congress finds that--
            (1) long-term welfare dependency is increasing driven by 
        illegitimate births;
            (2) too many teens are becoming parents and too few are 
        able to responsibly care for and nurture their children;
            (3) new research has shown that spending time in a single-
        parent family puts children at substantially increased risk of 
        dropping out of high school, having a child out-of-wedlock, or 
        being neither in school nor at work; and
            (4) between 1986 and 1991, the rate of births to teens aged 
        15 to 19 rose 24 percent, from 50.2 to 62.1 births per 1,000 
        females.
    (b) Sense of the Congress.--It is the sense of the Congress that--
            (1) children should be educated about the risks involved in 
        choosing parenthood at an early age;
            (2) reproductive family planning and education should be 
        made available to every potential parent so as to give such 
        parents the opportunity to avoid unintended births;
            (3) States should use funds provided under title XX of the 
        Social Security Act to provide comprehensive services to youth 
        in high risk neighborhoods, through community organizations, 
        churches, and schools; and
            (4) States should work with schools for the early 
        identification and referral of children at risk for parenthood 
        at an early age.

SEC. 512. AVAILABILITY OF FAMILY PLANNING SERVICES.

    Section 402(a)(15)(A) (42 U.S.C. 602(a)(15)(A)) is amended by 
striking ``out of wedlock''.

                    TITLE VI--PROGRAM SIMPLIFICATION

                Subtitle A--Increased State Flexibility

SEC. 601. STATE OPTION TO PROVIDE AFDC THROUGH ELECTRONIC BENEFIT 
              TRANSFER SYSTEMS.

    Section 402(a) (42 U.S.C. 602(a)), as amended by sections 101, 102, 
211(a), 232, 301(a), 501(a), 504, and 509(a) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (52);
            (2) by striking the period at the end of paragraph (53) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (53) the following:
            ``(54) at the option of the State, provide for the payment 
        of aid under the State plan through the use of electronic 
        benefit transfer systems.''.

SEC. 602. DEADLINE FOR ACTION ON APPLICATION FOR WAIVER OF REQUIREMENT 
              APPLICABLE TO PROGRAM OF AID TO FAMILIES WITH DEPENDENT 
              CHILDREN.

    Section 1115 (42 U.S.C. 1315) is amended by adding at the end the 
following:
    ``(e) The Secretary shall approve or deny an application for a 
waiver under this section with respect to a requirement of section 402, 
not later than 90 days after the Secretary receives the application, 
unless otherwise agreed upon by the Secretary and the applicant.''.

        Subtitle B--Coordination of AFDC and Food Stamp Programs

SEC. 611. AMENDMENTS TO PART A OF TITLE IV OF THE SOCIAL SECURITY ACT.

    (a) State Option to Use Income and Eligibility Verification 
System.--Section 1137(b) (42 U.S.C. 1320b-7(b)) is amended--
            (1) by striking paragraphs (1) and (4), and redesignating 
        paragraphs (2), (3), and (5) as paragraphs (1), (2), and (3), 
        respectively; and
            (2) in paragraph (2) (as so redesignated), by adding ``or'' 
        at the end.
    (b) State Option To Use Retrospective Budgeting Without Monthly 
Reporting.--Section 402(a)(13) (42 U.S.C. 602(a)(13)) is amended--
            (1) by striking all that precedes subparagraph (A) and 
        inserting the following:
            ``(13) provide, at the option of the State and with respect 
        to such category or categories as the State may select and 
        identify in the State plan, that--''; and
            (2) in each of subparagraphs (A) and (B), by striking ``, 
        in the case of families who are required to report monthly to 
        the State agency pursuant to paragraph (14)''.
    (c) Exclusion From Income of All Income of Dependent Child Who is a 
Student.--Section 402(a)(8)(A)(i) (42 U.S.C. 602(a)(8)(A)(i)) is 
amended--
            (1) by striking ``earned''; and
            (2) by inserting ``applying for or'' before ``receiving''.
    (d) Exclusion From Income of Certain Energy Assistance Payments 
Based on Need.--
            (1) In general.--Section 402(a)(8)(A) (42 U.S.C. 
        602(a)(8)(A)), as amended by sections 231 and 242(b)(1) of this 
        Act, is amended--
                    (A) by striking ``and'' at the end of clause (ix); 
                and
                    (B) by adding at the end the following:
                    ``(xi) shall disregard any energy or utility-cost 
                assistance payment based on need, that is paid to any 
                member of the family under--
                            ``(I) a State or local general assistance 
                        program; or
                            ``(II) another basic assistance program 
                        comparable to general assistance (as determined 
                        by the Secretary); and''.
            (2) Inclusion of energy assistance provided under the 
        liheap program.--Section 402(a)(8)(B) (42 U.S.C. 602(a)(8)(B)) 
        is amended--
                    (A) by striking ``and'' at the end of clause (i); 
                and
                    (B) by adding at the end the following:
                            ``(iii) shall not disregard any assistance 
                        provided directly to, or indirectly for the 
                        benefit of, any person described in 
                        subparagraph (A)(ii) under the Low-Income Home 
                        Energy Assistance Act of 1981, notwithstanding 
                        section 2605(f)(1) of such Act; and''.
    (e) Applicability to AFDC of Future Income Exclusions Under Food 
Stamp Program.--Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)), as 
amended by sections 231, 242(b)(1) of this Act and by subsection (d)(1) 
of this section, is amended--
            (1) by striking ``and'' at the end of clause (x); and
            (2) by adding at the end the following:
                    ``(xii) shall disregard from the income of any 
                child, relative, or other individual described in 
                clause (ii) applying for aid under the State plan, any 
                child, relative, or other individual so described 
                receiving such aid, or both, any funds that a Federal 
statute (enacted after the date of the enactment of this clause) 
excludes from income for purposes of determining eligibility for 
benefits under the food stamp program under the Food Stamp Act of 1977, 
the level of benefits under the program, or both, respectively.''.
    (f) Periodic Reviews.--Section 402(a) (42 U.S.C. 602(a)), as 
amended by sections 101, 102, 211(a), 232, 301(a), 501(a), 504, 509(a), 
and 601 of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (53);
            (2) by striking the period at the end of paragraph (54) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (54) the following:
            ``(55) provide that the State shall, not less frequently 
        than annually review each determination made under the State 
        plan with respect to the eligibility of each recipient of aid 
        under the State plan;''.
    (g) Exclusion From Resources of Es- sential Employment-Related 
Property.--Section 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)), as amended by 
section 242(a) of this Act, is amended--
            (1) by striking ``or'' at the end of clause (iv); and
            (2) by inserting ``, or (vi) the value of real and tangible 
        personal property (other than currency, commercial paper, and 
        similar property) of a family member that is essential to the 
        employment or self-employment of the member, until the 
        expiration of the 1-year period beginning on the date the 
        member ceases to be so employed or so self-employed'' before 
        the semicolon.
    (h) Exclusion From Resources of Equity in Certain Income-Producing 
Real Property.--Section 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)), as 
amended by section 242(a) of this Act and by subsection (g) of this 
section, is amended--
            (1) by striking ``or'' at the end of clause (v); and
            (2) by inserting ``, or (vii) the equity of any member of 
        the family in real property to which 1 or more members of the 
        family have sole and clear title, that the State agency 
        determines is producing income consistent with the fair market 
        value of the property'' before the semicolon.
    (i) Exclusion From Resources of Life Insurance Policies.--Section 
402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)), as amended by section 242(a) of 
this Act and by subsections (g) and (h) of this section, is amended--
            (1) by striking ``or'' at the end of clause (vi); and
            (2) by inserting ``, or (viii) any life insurance policy'' 
        before the semicolon.
    (j) Exclusion From Resources of Real Property That the Family Is 
Making a Good Faith Effort to Sell.--Section 402(a)(7)(B)(iii) (42 
U.S.C. 602(a)(7)(B)(iii)) is amended--
            (1) by striking ``for such period or periods of time as the 
        Secretary may prescribe''; and
            (2) by striking ``any such period'' and inserting ``any 
        period during which the family is making such an effort''.
    (k) Prompt Restoration of Benefits Wrongfully Denied.--Section 
402(a) (42 U.S.C. 602(a)), as amended by sections 101, 102, 211(a), 
232, 301(a), 501(a), 504, 509(a), and 601 of this Act and by subsection 
(f) of this section, is amended--
            (1) by striking ``and'' at the end of paragraph (54);
            (2) by striking the period at the end of paragraph (55) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (55) the following:
            ``(56) provide that, upon receipt of a request from a 
        family for the payment of any amount of aid under the State 
        plan the payment of which to the family has been wrongfully 
        denied or terminated, the State shall promptly pay the amount 
        to the family if the wrongful denial or termination occurred 
        not more than 1 year before the date of the request or the date 
        the State agency is notified or otherwise discovers the 
        wrongful denial or termination.''.

SEC. 612. AMENDMENTS TO THE FOOD STAMP ACT OF 1977.

    (a) Certification Period.--(1) Section 3(c) of the Food Stamp Act 
of 1977 (7 U.S.C. 2012(c)) is amended to read as follows:
    ``(c) `Certification period' means the period specified by the 
State agency for which households shall be eligible to receive 
authorization cards, except that such period shall be--
            ``(1) 24 months for households in which all adult members 
        are elderly or disabled; and
            ``(2) not more than 12 months for all other households.''.
    (2) Section 6(c)(1)(C) of the Food Stamp Act of 1977 (7 U.S.C. 
2015(c)(1)(C)) is amended--
            (A) in clause (ii) by adding ``and'' at the end;
            (B) in clause (iii) by striking ``; and'' at the end and 
        inserting a period; and
            (C) by striking clause (iv).
    (b) Inclusion of Energy Assistance in Income.--
            (1) Amendments to the Food Stamp Act of 1977.--Section 5 of 
        the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended--
            (A) in subsection (d)--
                    (i) by striking paragraph (11); and
                    (ii) by redesignating paragraphs (12) through (16) 
                as paragraphs (11) through (15), respectively; and
            (B) in subsection (k)--
                    (i) in paragraph (1)(B) by striking ``, not 
                including energy or utility-cost assistance,''; and
                    (ii) in paragraph (2)--
                            (I) by striking subparagraph (C); and
                            (II) by redesignating subparagraphs (D) 
                        through (H) as subparagraphs (C) through (J), 
                        respectively.
            (2) Amendments to the Low-Income Home Energy Assistance Act 
        of 1981.--Section 2605(f) of the Low-Income Home Energy 
        Assistance Act of 1981 (42 U.S.C. 8624(f)) is amended--
                    (A) in paragraph (1) by striking ``food stamps,''; 
                and
                    (B) by amending paragraph (2) to read as follows:
    ``(2) Paragraph (1) shall not apply for any purpose under the Food 
Stamp Act of 1977.''.
    (c) Exclusion of Certain JTPA Income.--Section 5(d) of the Food 
Stamp Act of 1977 (7 U.S.C. 2014(d)), as amended by subsection (b), is 
amended--
            (1) by striking ``and (15)'' and inserting ``(15)''; and
            (2) by inserting before the period the following:
``, and (16) income received under the Job Training Partnership Act by 
a household member who is less than 19 years of age''.
    (d) Exclusion of Educational Assistance From Income.--Section 5(d) 
of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)) is amended--
    (1) by amending paragraph (3) to read as follows: ``(3) all 
educational loans on which payment is deferred (including any loan 
origination fees or insurance premiums associated with such loans), 
grants, scholarships, fellowships, veterans' educational benefits, and 
the like awarded to a household member enrolled at a recognized 
institution of post-secondary education, at a school for the 
handicapped, in a vocational education program, or in a program that 
provides for completion of a secondary school diploma or obtaining the 
equivalent thereof,''; and
    (2) in paragraph (5) by striking ``and no portion'' and all that 
follows through ``reimbursement''.
    (e) Limitation on Additional Earned Income Deduction.--The 3rd 
sentence of section 5(e) of the Food Stamp Act of 1977 (7 U.S.C. 
2014(e)) is amended by striking ``earned income that'' and all that 
follows through ``report'', and inserting ``determining an overissuance 
due to the failure of a household to report earned income''.
    (f) Exclusion of Essential Employment-Related Property.--Section 
5(g)(3) of the Food Stamp Act of 1977 (7 U.S.C. 2014(g)(3)) is amended 
to read as follows:
    ``(3) The value of real and tangible personal property (other than 
currency, commercial paper, and similar property) of a household member 
that is essential to the employment or self-employment of such member 
shall be excluded by the Secretary from financial resources until the 
expiration of the 1-year period beginning on the date such member 
ceases to be so employed or so self-employed.''.
    (g) Exclusion of Life Insurance Policies.--Section 5(g) of the Food 
Stamp Act of 1977 (7 U.S.C. 2014(g)) is amended by adding at the end 
the following:
    ``(6) The Secretary shall exclude from financial resources the cash 
value of any life insurance policy owned by a member of a household.''.
    (h) In-Tandem Exclusions From Income.--Section 5 of the Food Stamp 
Act of 1977 (7 U.S.C. 2014) is amended by adding at the end the 
following:
    ``(n) Whenever a Federal statute enacted after the date of the 
enactment of this Act excludes funds from income for purposes of 
determining eligibility, benefit levels, or both under State plans 
approved under part A of title IV of the Social Security Act, then such 
funds shall be excluded from income for purposes of determining 
eligibility, benefit levels, or both, respectively, under the food 
stamp program of households all of whose members receive benefits under 
a State plan approved under part A of title IV of the Social Security 
Act.''.
    (i) Application of Amendments.--The amendments made by this section 
shall not apply with respect to certification periods beginning before 
the effective date of this section.

                      Subtitle C--Fraud Reduction

SEC. 631. SENSE OF THE CONGRESS IN SUPPORT OF THE EFFORTS OF THE 
              ADMINISTRATION TO ADDRESS THE PROBLEMS OF FRAUD AND ABUSE 
              IN THE SUPPLEMENTAL SECURITY INCOME PROGRAM.

    The Congress hereby expresses support for the efforts of the Social 
Security Administration to reduce fraud and abuse in the supplemental 
security income program under title XVI of the Social Security Act by 
implementing a structured approach to disability decisionmaking that 
takes into consideration the large number of disability claims received 
while providing a basis for consistent, equitable decisionmaking by 
claims adjudicators at each level, that provides for the following:
            (1) A simplification of the monetary guidelines for 
        determining whether an individual (except those filing for 
        benefits based on blindness) is engaging in substantial gainful 
        activity.
            (2) The replacement of a threshold severity requirement for 
        determining whether a claimant has a medically determinable 
        impairment with a threshold inquiry as to whether the claimant 
        has a medically determinable physical or mental impairment that 
        can be demonstrated by acceptable clinical and laboratory 
        diagnostic techniques.
            (3) The comparison of an impairment referred to in 
        paragraph (2) with an index of disabling impairments that 
        contains fewer impairments, has less detail and complexity, and 
        does not rely on the concept of ``medical equivalence''.
            (4)(A) The consideration of whether an individual has the 
        ability to perform substantial gainful activity despite any 
        functional loss caused by a medically determinable physical or 
        mental impairment.
            (B) The definition of the physical and mental requirements 
        of substantial gainful activity.
            (C) The objective measurement, to the extent possible, of 
        whether an individual meets such requirements.
            (D) The development, with the assistance of the medical 
        community and other outside experts from disability programs, 
        of standardized criteria which can be used to measure an 
        individual's functional ability.
            (E) The assumption by the Social Security Administration of 
        primary responsibility for documenting functional ability using 
        the standardized measurement criteria, with the goal of 
        developing functional assessment instruments that are 
        standardized, accurately measure an individual's functional 
        abilities, and are universally accepted by the public, the 
        advocacy community, and health care professionals.
            (F) The use of the results of the standardized functional 
        measurement with a new standard to describe basic physical and 
        mental demands of a baseline of work that represents 
        substantial gainful activity and that exists in significant 
        numbers in the national economy.
            (5)(A) An evaluation of whether a child is engaging in 
        substantial gainful activity, whether a child has a medically 
        determinable physical or mental impairment that will meet the 
        duration requirement, and whether a child has an impairment 
        that meets the criteria in the index of disabling impairments.
            (B) The development, with the assistance of the medical 
        community and educational experts, of standardized criteria 
        which can be used to measure a child's functional ability to 
        perform a baseline of functions that are comparable to the 
        baseline of occupational demands for an adult.
            (C) The conduct of research to specifically identify a 
        skill acquisition threshold to measure broad areas required to 
        develop the ability to perform substantial gainful activity.

SEC. 632. STUDY ON FEASIBILITY OF SINGLE TAMPER-PROOF IDENTIFICATION 
              CARD TO SERVE PROGRAMS UNDER BOTH THE SOCIAL SECURITY ACT 
              AND HEALTH REFORM LEGISLATION.

    (a) Study.--As soon as practicable after the date of the enactment 
of this Act, the Commissioner of Social Security shall conduct a study 
of the feasibility of issuing, in counterfeit-resistant form, a single 
identification card which would combine the features of the social 
security card now issued pursuant to section 205 of the Social Security 
Act and any health security card which may be provided for in health 
reform legislation enacted in the 104th Congress. In such study, the 
Commissioner shall devote particular consideration to--
            (1) employment in such card of finger-print identification, 
        bar code validation, a photograph, a hologram, or any other 
        identifiable feature,
            (2) the efficiencies and economies which may be achieved by 
        combining the features of the social security card as currently 
        issued and the features of any health security card which might 
        be issued under health reform legislation, and
            (3) any costs and risks which might result from combining 
        such features in a single identification card and possible 
        means of alleviating any such costs and risks.
    (b) Report.--The Commissioner of Social Security shall, not later 
than 1 year after the date of the enactment of this Act, transmit a 
report to each House of the Congress setting forth the Commissioner's 
findings from the study conducted pursuant to subsection (a). Such 
report may include such recommendations for administrative or 
legislative changes as the Commissioner considers appropriate.

                   Subtitle D--Additional Provisions

SEC. 641. STATE OPTIONS REGARDING UNEMPLOYED PARENT PROGRAM.

    (a) Duration of Unemployment and Recency-of-Work Tests.--Section 
407(b)(1)(A) (42 U.S.C. 607(b)(1)(A)), as amended by section 507 of 
this Act, is amended--
            (1) by striking the matter preceding clause (i) and 
        inserting the following:
            ``(A) subject to paragraph (2), shall provide for the 
        payment of aid to families with dependent children with respect 
        to a dependent child within the meaning of subsection (a)--''.
            (2) in clause (i), by striking ``whichever'' and inserting 
        ``when, if the State chooses to so require (and specifies in 
        its State plan), whichever'';
            (3) in clause (ii), by inserting ``when'' before such 
        parent; and
            (4) in clause (iii), by inserting ``when, if the State 
        chooses to so require (and so specifies in its State plan)'' 
        after ``(iii)''.
    (b) State Option To Expand Program.--Section 407(a) (42 U.S.C. 
607(a)) is amended by inserting ``or the unemployment (as defined (if 
at all) by the State in the State plan approved under section 402)'' 
before ``of the parent''.
    (c) Effective Date.--Subsection (b) and the amendments made by 
subsection (a) shall become effective October 1, 1996.

SEC. 642. DEFINITION OF ESSENTIAL PERSON.

    (a) General Requirement.--Section 402 (42 U.S.C. 602), as amended 
by section 222(a)(1)(A) of this Act, is amended by inserting after 
subsection (f) the following:
    ``(g) In order that the State may include the needs of an 
individual in determining the needs of the dependent child and relative 
with whom the child is living, such individual must be living in the 
same home as such child and relative, and--
            ``(1) furnishing personal services required because of the 
        relative's physical or mental inability to provide care 
        necessary for herself or himself or for the dependent child 
        (which, for purposes of this subsection only, includes a child 
        receiving supplemental security income benefits under title 
        XVI); or
            ``(2) furnishing child care services, or care for an 
        incapacitated member of the family, that is necessary to permit 
        the caretaker relative--
                    ``(A) to engage in full or part-time employment 
                outside the home, or
                    ``(B) to attend a course of education designed to 
                lead to a high school diploma (or its equivalent) or a 
                course of training on a full or part-time basis, or to 
                participate in the program under part G on a full or 
                part-time basis.''.

SEC. 643. ``FILL-THE-GAP'' BUDGETING.

    (a) In General.--Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)), as 
amended by sections 231, 242(b)(1), and 611(d)(1) of this Act, is 
amended--
            (1) by striking ``and'' at the end of clause (xi); and
            (2) by adding at the end the following:
                    ``(xiii) in addition to any other amounts required 
                or permitted by this paragraph to be disregarded in a 
                month, may exempt countable income identified in the 
                State plan by type or source and by amount, but in an 
                amount not exceeding the difference between the State's 
                standard of need applicable to the family and the 
                amount from which all remaining nonexempt income is 
                subtracted to determine the amount of aid payable under 
                the State plan to a family of the same size with no 
                other income;''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on October 1, 1997.

SEC. 644. REPEAL OF REQUIREMENT TO MAKE CERTAIN SUPPLEMENTAL PAYMENTS 
              IN STATES PAYING LESS THAN THEIR NEEDS STANDARDS.

    Section 402(a)(28) (42 U.S.C. 602(a)(28)) is hereby repealed.

SEC. 645. COLLECTION OF AFDC OVERPAYMENTS FROM FEDERAL TAX REFUNDS.

    (a) Authority To Intercept Tax Refund.--(1) Part A of title IV (42 
U.S.C. 601-617) is amended by adding at the end the following:

         ``collection of overpayments from federal tax refunds

    ``Sec. 418. (a) Upon receiving notice from a State agency 
administering a plan approved under this part that a named individual 
has been overpaid under the State plan approved under this part, the 
Secretary of the Treasury shall determine whether any amounts as 
refunds of Federal taxes paid are payable to such individual, 
regardless of whether such individual filed a tax return as a married 
or unmarried individual. If the Secretary of the Treasury finds that 
any such amount is payable, he shall withhold from such refunds an 
amount equal to the overpayment sought to be collected by the State and 
pay such amount to the State agency.
    ``(b) The Secretary of the Treasury shall issue regulations, 
approved by the Secretary of Health and Human Services, that provide--
            ``(1) that a State may only submit under subsection (a) 
        requests for collection of overpayments with respect to 
        individuals (A) who are no longer receiving aid under the State 
        plan approved under this part, (B) with respect to whom the 
        State has already taken appropriate action under State law 
        against the income or resources of the individuals or families 
        involved as required under section 402(a)(22) (B), and (C) to 
        whom the State agency has given notice of its intent to request 
        withholding by the Secretary of the Treasury from their income 
        tax refunds;
            ``(2) that the Secretary of the Treasury will give a timely 
        and appropriate notice to any other person filing a joint 
        return with the individual whose refund is subject to 
        withholding under subsection (a); and
            ``(3) the procedures that the State and the Secretary of 
        the Treasury will follow in carrying out this section which, to 
        the maximum extent feasible and consistent with the specific 
        provisions of this section, will be the same as those issued 
        pursuant to section 464(b) applicable to collection of past-due 
        child support.''.
    (2) Section 6402 of the Internal Revenue Code of 1986 (as amended 
by section 443(a) of this Act) is amended--
            (A) in subsection (a), by striking ``(c) and (d)'' and 
        inserting ``(c), (d), and (e)'';
            (B) by redesignating subsections (e) through (i) as 
        subsections (f) through (j), respectively; and
            (C) by inserting after subsection (d) the following:
    ``(g) Collection of Overpayments Under Title IV-A of the Social 
Security Act.--The amount of any overpayment to be refunded to the 
person making the overpayment shall be reduced (after reductions 
pursuant to subsections (c) and (d), but before a credit against future 
liability for an internal revenue tax) in accordance with section 418 
of the Social Security Act (concerning recovery of overpayments to 
individuals under State plans approved under part A of title IV of such 
Act).''.
    (b) Conforming Amendment.--Section 552a(a)(8)(B)(iv)(III) of title 
5, United States Code, is amended by striking ``section 464 or 1137 of 
the Social Security Act'' and inserting ``section 419, 464, or 1137 of 
the Social Security Act.''

SEC. 646. TERRITORIES.

    (a) In General.--Section 1108(a) (42 U.S.C. 1308(a)) is amended by 
striking paragraphs (1), (2), and (3) and inserting the following:
            ``(1) for payment to Puerto Rico shall not exceed--
                    ``(A) $82,000,000 with respect to fiscal years 
                1994, 1995, and 1996, and
                    ``(B) $102,500,000 or, if greater, such amount 
                adjusted by the CPI (as prescribed in subsection (f)) 
                for fiscal year 1997 and each fiscal year thereafter;
            ``(2) for payment to the Virgin Islands shall not exceed--
                    ``(A) $2,800,000 with respect to fiscal years 1994, 
                1995, and 1996, and
                    ``(B) $3,500,000 or, if greater, such amount 
                adjusted by the CPI (as prescribed in subsection (f)) 
                for fiscal year 1997 and each fiscal year thereafter; 
                and
            ``(3) for payment to Guam shall not exceed--
                    ``(A) $3,800,000 with respect to fiscal year 1994, 
                1995, and 1996, and
                    ``(B) $4,750,000 or, if greater, such amount 
                adjusted by the CPI (as prescribed in subsection (f)), 
                for fiscal year 1997 and each fiscal year 
                thereafter.''.
    (b) CPI Adjustment.--Section 1108 (42 U.S.C. 1308) is amended by 
adding at the end the following:
    ``(f) For purposes of subsection (a), an amount is `adjusted by the 
CPI' for months in calendar year by multiplying that amount by the 
ratio of the Consumer Price Index as prepared by the Department of 
Labor for--
            ``(1) the third quarter of the preceding calendar year, to
            ``(2) the third quarter of calendar year 1996, and rounding 
        the product, if not a multiple of $10,000, to the nearer 
        multiple of $10,000.''.

SEC. 647. DISREGARD OF STUDENT INCOME.

    (a) In General.--Section 402(a)(8)(A)(i) (42 U.S.C. 
602(a)(8)(A)(i)) is amended by striking ``dependent child'' and all 
that follows and inserting ``individual who has not attained 19 years 
of age and is an elementary or secondary school student''.
    (b) Conforming Amendments.--Section 402(a) (42 U.S.C. 602(a)) is 
amended--
            (1) in paragraph (8)(A)(vii)--
                    (A) by striking ``a dependent child who is a full-
                time student'' and inserting ``an individual who has 
                not attained 19 years of age and is an elementary or 
                secondary school student''; and
                    (B) by striking ``such child'' and inserting ``such 
                individual''; and
            (2) in paragraph (18), by striking ``of a dependent child'' 
        and inserting ``of an individual under age 19''.

SEC. 648. LUMP-SUM INCOME.

    Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)), as amended by 
sections 231, 242(b)(1), 611(d)(1), and 643(a) of this Act, is 
amended--
            (1) by striking ``and'' at the end of clause (xii); and
            (2) by adding at the end the following:
                    ``(xiv) shall disregard from the income of any 
                family member any amounts of income received in the 
                form of nonrecurring lump-sum payments other than 
                payments made pursuant to an order for child or spousal 
                support being enforced by the agency administering the 
                State plan approved under part D;''.

            TITLE VII--CHILD PROTECTION BLOCK GRANT PROGRAM

SEC. 701. ESTABLISHMENT OF PROGRAMS.

    Part B of title IV (42 U.S.C. 620-635) is amended to read as 
follows:

              PART B--CHILD PROTECTION BLOCK GRANT PROGRAM

``SEC. 420. PURPOSES; AUTHORIZATIONS OF APPROPRIATIONS.

    ``The purpose of this part is to enable States to carry out a 
program of child welfare and child protection services which includes--
            ``(1) child protection services for children who are, or 
        are suspected of being or at risk of becoming, victims of abuse 
        or neglect;
            ``(2) preventive services and activities, including 
        community-based family support services, designed to strengthen 
        and preserve families and to prevent child abuse and neglect; 
        and
            ``(3) permanency planning services and activities to 
        achieve planned, permanent living arrangements (including 
        family reunification, adoption, and independent living) for 
        children who have been removed from their families.

``SEC. 421. STATE PLANS.

    ``(a) In General.--In order to be eligible for payment under this 
part, a State must have an approved plan (developed jointly by the 
Secretary and the State agency, after consultation with persons and 
entities specified in subsection (b)) for the provision of services to 
children and families which meet the requirements of subsection (c).
    ``(b) Consultation With Appropriate Entities.--A State, in 
developing its plan for approval under this part, shall consult with 
concerned persons and entities, including--
            ``(1) public and nonprofit private agencies and community-
        based organizations with experience in administering programs 
        of child welfare services for children and families; and
            ``(2) representatives of and advocates for children and 
        families.
    ``(c) State Plan Requirements.--A State plan under this part 
shall--
            ``(1) describe the services and activities to be performed, 
        and the service delivery mechanisms (including service 
        providers and statewide distribution of services) to be used, 
        to provide--
                    ``(A) child protection services described in 
                section 420(1) (including such services provided under 
                this part and part E);
                    ``(B) preventive services described in section 
                420(2) (and shall provide for delivery of such services 
                through a statewide network of local nonprofit 
                community-based family support programs, in 
                collaboration with existing health, mental health, 
                education, employment, training, child welfare, and 
                other social services agencies); and
                    ``(C) permanency planning services described in 
                section 420(3) (including family reunification, 
                adoption, and independent living);
            ``(2)(A)(i) declare the State's goals for accomplishments 
        under the plan is in operation in the State, and (ii) be 
        updated periodically to declare the State's goals for 
        accomplishments under the plan by the end of each fifth fiscal 
        year thereafter;
            ``(B) describe the methods to be used in measuring progress 
        toward accomplishment of the goals; and
            ``(C) contain a commitment that the State--
            ``(i) will perform an interim review of its progress toward 
        accomplishment of the goals after the end of each of the first 
        4 fiscal years covered by the goals, and on the basis of such 
        interim review will revise the statement of goals in the plan, 
        if necessary, to reflect changed circumstances or other 
        relevant factors; and
            ``(ii) will perform, after the end of the last fiscal year 
        covered by the goals, a final review of its progress toward 
        accomplishment of the goals and prepare a report to the 
        Secretary on the basis of such final review;
            ``(3) provide assurances that reasonable amounts will be 
        expended under this part to carry out each of the purposes 
        specified in paragraphs (1) through (3) of section 420; and
            ``(4) provide assurances that the State has in effect a 
        program of foster care safeguards meeting the requirements of 
        section 425.
    ``(d) Secretarial Approval.--The Secretary shall approve a State 
plan that meets the requirements of this section.

``SEC. 422. RESERVATIONS; ALLOTMENTS TO STATES.

    ``(a) In General..--The Secretary shall allot the amount specified 
in subsection (b) for each fiscal year in accordance with subsections 
(c) through (f).
    ``(b) Federal Funding.--The amount specified for purposes of this 
section shall be--
            ``(1) $653,000,000 for fiscal year 1996;
            ``(1) $682,000,000 for fiscal year 1997;
            ``(1) $713,000,000 for fiscal year 1998;
            ``(1) $737,000,000 for fiscal year 1999; and
            ``(1) $763,000,000 for fiscal year 2000.
    ``(c) Projects of National Significance.--Two percent of the amount 
specified under subsection (b) for each fiscal year shall be reserved 
for expenditure by the Secretary for projects of national significance 
related to the purposes of this part.
    ``(d) Training and Technical Assistance.--Two percent of the amount 
specified under subsection (b) for each fiscal year shall be reserved 
for expenditure by the Secretary for training and technical assistance 
to State and local public and nonprofit private entities related to the 
program under this part.
    ``(e) Indian Tribes.--One percent of the amount specified under 
subsection (b) for each fiscal year shall be reserved for allotment to 
Indian tribes in accordance with section 424.
    ``(f) States.--From the balance of the amount specified for each 
fiscal year under subsection (b) remaining after the application of 
subsections (c), (d), and (e), the Secretary shall allot to each State 
an amount which bears the same ratio to the amount specified as the 
total amount that would have been allotted to the State for such fiscal 
year under this part, as in effect on September 30, 1995, bears to the 
total amount that would have been so allotted to all States for such 
fiscal year.

``SEC. 423. PAYMENTS TO STATES.

    ``(a) Entitlement to Payment; Federal Share of Costs.--Each State 
which has a plan approved under this part shall be entitled to payment, 
equal to its allotment under section 422 for a fiscal year, for use in 
payment by the State of 75 percent of the costs of activities under the 
State plan during such fiscal year. The remaining 25 percent of such 
costs shall be paid by the State with funds from non-Federal sources.
    ``(b) Payment Installments.--The Secretary shall make payments in 
accordance with section 6503 of title 31, United States Code, to each 
State from its allotment for use under this part.

``SEC. 424. PAYMENTS TO INDIAN TRIBES.

    ``(a) In General.--The Secretary shall make payments under this 
part for a fiscal year directly to the tribal organization of an Indian 
tribe with a plan approved under this part, except that such plan need 
not meet any requirement under such section that the Secretary 
determines is inappropriate with respect to such Indian tribe.
    ``(b) Allotment.--From the amount reserved pursuant to section 
422(e) for any fiscal year, the Secretary shall allot to each Indian 
tribe meeting the conditions specified in subsection (a), an amount 
bearing the same ratio to such reserved amount as the number of 
children in all Indian tribes with State plans so approved, as 
determined by the Secretary on the basis of the most current and 
reliable information available to the Secretary.

``SEC. 425. FOSTER CARE PROTECTION.

    ``In order to meet the requirements of this section, for purposes 
of section 421(c)(4), a State shall--
            ``(1) since June 17, 1980, have completed an inventory of 
        all children who, before the inventory, had been in foster care 
        under the responsibility of the State for 6 months or more, 
        which determined--
                    ``(A) the appropriateness of, and necessity for, 
                the foster care placement;
                    ``(B) whether the child could or should be returned 
                to the parents of the child or should be freed for 
                adoption or other permanent placement; and
                    ``(C) the services necessary to facilitate the 
                return of the child or the placement of the child for 
                adoption or legal guardianship;
            ``(2) be operating, to the satisfaction of the Secretary--
                    ``(A) a statewide information system from which can 
                be readily determined the status, demographic 
                characteristics, location, and goals for the placement 
                of every child who is (or, within the immediately 
                preceding 12 months, has been) in foster care;
                    ``(B) a case review system (as defined in section 
                475(5)) for each child receiving foster care under the 
                supervision of the State;
                    ``(C) a service program designed to help children--
                            ``(i) where appropriate, return to families 
                        from which they have been removed; or
                            ``(ii) be placed for adoption, with a legal 
                        guardian, or, if adoption or legal guardianship 
                        is determined not to be appropriate for a 
                        child, in some other planned, permanent living 
                        arrangement; and
                    ``(D) a replacement preventive services program 
                designed to help children at risk of foster care 
                placement remain with their families; and
            ``(3)(A) have reviewed (or by October 31, 1995 will have 
        reviewed) State policies and administrative and judicial 
        procedures in effect for children abandoned at or shortly after 
        birth (including policies and procedures providing for legal 
        representation of such children); and
            ``(B) be implementing (or by October 31, 1996, will be 
        implementing) such policies and procedures as the State 
        determines, on the basis of the review described in clause (i), 
        to be necessary to enable permanent decisions to be made 
        expeditiously with respect to the placement of such children.

SEC. 702. REPEALS AND CONFORMING AMENDMENTS.

    (a) Abandoned Infants Assistance.--
            (1) Repeal.--The Abandoned Infants Assistance Act of 1988 
        (42 U.S.C. 670 note) is repealed.
            (2) Conforming amendment.--Section 421(7) of the Domestic 
        Violence Service Act of 1973 (42 U.S.C. 5061(7)) is amended to 
        read as follows:
            ``(7) the term `boarder baby' means an infant who is 
        medically cleared for discharge from an acute-care hospital 
        setting, but remains hospitalized because of a lack of 
        appropriate out-of-hospital placement alternatives.''.
    (b) Child Abuse Prevention and Treatment.--
            (1) Repeal.--The Child Abuse Prevention and Treatment Act 
        (42 U.S.C. 5101 et seq.) is repealed.
            (2) Conforming amendments.--The Victims of Crime Act of 
        1984 (42 U.S.C. 10601 et seq.) is amended by striking section 
        1404A.
    (c) Adoption Opportunities.--The Child Abuse Prevention and 
Treatment and Adoption Reform Act of 1978 (42 U.S.C. 5111 et seq.) is 
repealed.
    (d) Family Support Centers.--Subtitle F of title VII of the Stewart 
B. McKinney Homeless Assistance Act (42 U.S.C. 11481-11489) is 
repealed.
    (e) Foster Care.--Section 472(d) (42 U.S.C. 672(d)) is amended by 
striking ``422(b)(9)'' and inserting ``425''.

SEC. 703. EFFECTIVE DATE.

    The amendments and repeals made by this title shall take effect on 
October 1, 1995, and shall apply with respect to activities under State 
programs on and after that date.

                         TITLE VIII--SSI REFORM

            Subtitle A--Eligibility of Children for Benefits

SEC. 801. RESTRICTIONS ON ELIGIBILITY.

    (a) In General.--Section 1614(a)(3)(A) (42 U.S.C. 1382c(a)(3)(A)) 
is amended--
            (1) by inserting ``(i)'' after ``(3)(A)'';
            (2) by inserting ``who has attained 18 years of age'' 
        before ``shall be considered'';
            (3) by striking ``he'' and inserting ``the individual'';
            (4) by striking ``(or, in the case of an individual under 
        the age of 18, if he suffers from any medically determinable 
        physical or mental impairment of comparable severity)''; and
            (5) by adding after and below the end the following:
    ``(ii) An individual who has not attained 18 years of age shall be 
considered to be disabled for purposes of this title for a month if the 
individual has any medically determinable physical or mental impairment 
(or combination of impairments) that meets the requirements, applicable 
to individuals who have not attained 18 years of age, of the Listings 
of Impairments set forth in appendix 1 of subpart P of part 404 of 
title 20, Code of Federal Regulations, or the individual has a 
combination of impairments the effect of which should be considered 
disabling for purposes of this title. In applying this clause, such 
Listings shall not include maladaptive behavior or psychoactive 
substance dependence disorder (as specified in the appendix setting 
forth such Listings).''.
    (b) Transition to New Eligibility Criteria.--Within 3 months after 
the date of the enactment of this Act, the Commissioner of Social 
Security shall establish a functional equivalency standard separate 
from the Listing of Impairments (set forth in appendix 1 of subpart P 
of part 404 of title 20, Code of Federal Regulations (revised as of 
April 1, 1994)) under which a child with a combination of impairments 
should be considered disabled for purposes of the supplemental security 
income program under title XVI of the Social Security Act. Within 10 
months after the date of the enactment of this Act, the Commissioner 
shall review the case of each individual who, immediately before such 
date of enactment, qualified for benefits under such program by reason 
of an individualized functional assessment in order to determine 
eligibility under such Listings and the criteria established under such 
standard.

SEC. 802. CONTINUING DISABILITY REVIEWS FOR CERTAIN CHILDREN.

    Section 1614(a)(3)(G) (42 U.S.C. 1382c(a)(3)(G)) is amended--
            (1) by inserting ``(i)'' after ``(G)''; and
            (2) by adding at the end the following:
    ``(ii)(I) Not less frequently than once every 3 years, the 
Commissioner shall redetermine the eligibility for benefits under this 
title of each individual who has not attained 18 years of age and is 
eligible for such benefits by reason of disability.
    ``(II) Subclause (I) shall not apply to an individual if the 
individual has an impairment (or combination of impairments) which is 
(or are) not expected to improve.
    ``(III) Subject to recommendations made by the Commissioner, 
parents or guardians of recipients whose cases are reviewed under this 
clause shall present, at the time of review, evidence demonstrating 
that funds provided under this title have been used to assist the 
recipient in improving the condition which was the basis for providing 
benefits under this title.''.

SEC. 803. DISABILITY REVIEW REQUIRED FOR SSI RECIPIENTS WHO ARE 18 
              YEARS OF AGE.

    (a) In General.--Section 1614(a)(3)(G) (42 U.S.C. 1382c(a)(3)(G)), 
as amended by section 802 of this subtitle, is amended by adding at the 
end the following:
    ``(iii)(I) The Commissioner shall redetermine the eligibility of a 
qualified individual for supplemental security income benefits under 
this title by reason of disability, by applying the criteria used in 
determining eligibility for such benefits of applicants who have 
attained 18 years of age.
    ``(II) The redetermination required by subclause (I) with respect 
to a qualified individual shall be conducted during the 1-year period 
that begins on the date the qualified individual attains 18 years of 
age.
    ``(III) As used in this clause, the term `qualified individual' 
means an individual who attains 18 years of age and is a recipient of 
benefits under this title by reason of disability.
    ``(IV) A redetermination under subclause (I) of this clause shall 
be considered a substitute for a review required under any other 
provision of this subparagraph.''.
    (b) Report to the Congress.--Not later than October 1, 1998, the 
Commissioner of Social Security shall submit to the Committee on Ways 
and Means of the House of Representatives and the Committee on Finance 
of the Senate a report on the activities conducted under section 
1614(a)(3)(G)(iii) of the Social Security Act.
    (c) Conforming Repeal.--Section 207 of the Social Security 
Independence and Program Improvements Act of 1994 (42 U.S.C. 1382 note; 
108 Stat. 1516) is hereby repealed.

SEC. 804. APPLICABILITY.

    (a) New Eligibility Standards and Disability Reviews for 
Children.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by sections 801 and 802 shall apply to benefits 
        for months beginning more than 9 months after the date of the 
        enactment of this Act, without regard to whether regulations 
        have been issued to implement such amendments.
            (2) Transitional rule.--
                    (A) In general.--For months beginning after the 
                date of the enactment of this Act and before the first 
                month to which the amendments made by section 801 apply 
                under paragraph (1) and subject to subparagraph (B), no 
                individual who has not attained 18 years of age shall 
                be considered to be disabled for purposes of the 
                supplemental security income program under title XVI of 
                the Social Security Act solely on the basis of 
                maladaptive behavior or psychoactive substance 
                dependence disorder.
                    (B) Exception for current beneficiaries.--
                Subparagraph (A) shall not apply in the case of an 
                individual who is a recipient of supplemental security 
                income benefits under such title for the month in which 
                this Act becomes law.
    (b) Disability Reviews for 18-Year Old Recipients.--The amendments 
made by section 803 shall apply to benefits for months beginning after 
the date of the enactment of this Act.

  Subtitle B--Denial of SSI Benefits by Reason of Disability to Drug 
                         Addicts and Alcoholics

SEC. 811. DENIAL OF SSI BENEFITS BY REASON OF DISABILITY TO DRUG 
              ADDICTS AND ALCOHOLICS.

    (a) In General.--Section 1614(a)(3) (42 U.S.C. 1382c(a)(3)) is 
amended by adding at the end the following:
    ``(I) Notwithstanding subparagraph (A), an individual shall not be 
considered to be disabled for purposes of this title if alcoholism or 
drug addiction would (but for this subparagraph) be a contributing 
factor material to the Commissioner's determination that the individual 
is disabled.''.
    (b) Conforming Amendments.--
            (1) Section 1611(e) (42 U.S.C. 1382(e)) is amended by 
        striking paragraph (3).
            (2) Section 1631(a)(2)(A)(ii) (42 U.S.C. 1383(a)(2)(A)(ii)) 
        is amended--
                    (A) by striking ``(I)''; and
                    (B) by striking subclause (II).
            (3) Section 1631(a)(2)(B) (42 U.S.C. 1383(a)(2)(B)) is 
        amended--
                    (A) by striking clause (vii);
                    (B) in clause (viii), by striking ``(ix)'' and 
                inserting ``(viii)'';
                    (C) in clause (ix)--
                            (i) by striking ``(viii)'' and inserting 
                        ``(vii)''; and
                            (ii) in subclause (II), by striking all 
                        that follows ``15 years'' and inserting a 
                        period;
                    (D) in clause (xiii)--
                            (i) by striking ``(xii)'' and inserting 
                        ``(xi)''; and
                            (ii) by striking ``(xi)'' and inserting 
                        ``(x)''; and
                    (E) by redesignating clauses (viii) through (xiii) 
                as clauses (vii) through (xii), respectively.
            (4) Section 1631(a)(2)(D)(i)(II) (42 U.S.C. 
        1383(a)(2)(D)(i)(II)) is amended by striking all that follows 
        ``$25.00 per month'' and inserting a period.
            (5) Section 1634 (42 U.S.C. 1383c) is amended by striking 
        subsection (e).
            (6) Section 201(c)(1) of the Social Security Independence 
        and Program Improvements Act of 1994 (42 U.S.C. 425 note) is 
        amended--
                    (A) by striking ``--'' and all that follows through 
                ``(A)'' the 1st place such term appears;
                    (B) by striking ``and'' the 3rd place such term 
                appears;
                    (C) by striking subparagraph (B);
                    (D) by striking ``either subparagraph (A) or 
                subparagraph (B)'' and inserting ``the preceding 
                sentence''; and
                    (E) by striking ``subparagraph (A) or (B)'' and 
                inserting ``the preceding sentence''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on October 1, 1995, and shall apply with respect to months 
beginning on or after such date.
    (d) Funding of Certain Programs for Drug Addicts and Alcoholics.--
Out of any money in the Treasury of the United States not otherwise 
appropriated, the Secretary of the Treasury shall pay to the Director 
of the National Institute on Drug Abuse--
            (1) $95,000,000, for each of fiscal years 1997, 1998, 1999, 
        and 2000, for expenditure through the Federal Capacity 
        Expansion Program to expand the availability of drug treatment; 
        and
            (2) $5,000,000 for each of fiscal years 1997, 1998, 1999, 
        and 2000 to be expended solely on the medication development 
        project to improve drug abuse and drug treatment research.

                          TITLE IX--FINANCING

                    Subtitle A--Treatment of Aliens

SEC. 901. EXTENSION OF DEEMING OF INCOME AND RESOURCES UNDER AFDC, SSI, 
              AND FOOD STAMP PROGRAMS.

    (a) In General.--Except as provided in subsections (b) and (c), in 
applying sections 415 and 1621 of the Social Security Act and section 
5(i) of the Food Stamp Act of 1977, the period in which each respective 
section otherwise applies with respect to an alien shall be extended 
through the date (if any) on which the alien becomes a citizen of the 
United States (under chapter 2 of title III of the Immigration and 
Nationality Act).
    (b) Exception.--Subsection (a) shall not apply to an alien if--
            (1) the alien has been lawfully admitted to the United 
        States for permanent residence, has attained 75 years of age, 
        and has resided in the United States for at least 5 years;
            (2) the alien--
                    (A) is a veteran (as defined in section 101 of 
                title 38, United States Code) with a discharge 
                characterized as an honorable discharge,
                    (B) is on active duty (other than active duty for 
                training) in the Armed Forces of the United States, or
                    (C) is the spouse or unmarried dependent child of 
                an individual described in subparagraph (A) or (B);
            (3) the alien is the subject of domestic violence by the 
        alien's spouse and a divorce between the alien and the alien's 
        spouse has been initiated through the filing of an appropriate 
        action in an appropriate court; or
            (4) there has been paid with respect to the self-employment 
        income or employment of the alien, or of a parent or spouse of 
        the alien, taxes under chapter 2 or chapter 21 of the Internal 
        Revenue Code of 1986 in each of 20 different calendar quarters.
    (c) Hold Harmless for Medicaid Eligibility.--Subsection (a) shall 
not apply with respect to determinations of eligibility for benefits 
under part A of title IV of the Social Security Act or under the 
supplemental income security program under title XVI of such Act but 
only insofar as such determinations provide for eligibility for medical 
assistance under title XIX of such Act.
    (d) Effective Date.--This section shall take effect on October 1, 
1995.

SEC. 902. REQUIREMENTS FOR SPONSOR'S AFFIDAVITS OF SUPPORT.

    (a) In General.--Title II of the Immigration and Nationality Act is 
amended by inserting after section 213 the following new section:

           ``requirements for sponsor's affidavit of support

    ``Sec. 213A. (a) Enforceability.--
            ``(1) In general.--No affidavit of support may be accepted 
        by the Attorney General or by any consular officer to establish 
        that an alien is not excludable under section 212(a)(4) unless 
        such affidavit is executed as a contract--
                    ``(A) which is legally enforceable against the 
                sponsor by the Federal Government, by a State, or by 
                any political subdivision of a State, providing cash 
                benefits under a public cash assistance program (as 
                defined in subsection (f)(2)), but not later than 5 
                years after the date the alien last receives any such 
                cash benefit; and
                    ``(B) in which the sponsor agrees to submit to the 
                jurisdiction of any Federal or State court for the 
                purpose of actions brought under subsection (e)(2).
            ``(2) Expiration of liability.--Such contract shall only 
        apply with respect to cash benefits described in paragraph 
        (1)(A) provided to an alien before the earliest of the 
        following:
                    ``(A) Citizenship.--The date the alien becomes a 
                citizen of the United States under chapter 2 of title 
                III.
                    ``(B) Veteran.--The first date the alien is 
                described in section 901(b)(2)(A).
                    ``(C) Payment of social security taxes.--The first 
                date as of which the condition described in section 
                901(b)(4) is met with respect to the alien.
            ``(3) Nonapplication during certain periods.--Such contract 
        also shall not apply with respect to cash benefits described in 
        paragraph (1)(A) provided during any period in which the alien 
        is described in section 901(b)(2)(B) or 901(b)(2)(C).
    ``(b) Forms.--Not later than 90 days after the date of enactment of 
this section, the Attorney General, in consultation with the Secretary 
of State and the Secretary of Health and Human Services, shall 
formulate an affidavit of support consistent with the provisions of 
this section.
    ``(c) Notification of Change of Address.--
            ``(1) Requirement.--The sponsor shall notify the Federal 
        Government and the State in which the sponsored alien is 
        currently resident within 30 days of any change of address of 
        the sponsor during the period specified in subsection 
        (a)(1)(A).
            ``(2) Enforcement.--Any person subject to the requirement 
        of paragraph (1) who fails to satisfy such requirement shall be 
        subject to a civil penalty of--
                    ``(A) not less than $250 or more than $2,000, or
                    ``(B) if such failure occurs with knowledge that 
                the sponsored alien has received any benefit under any 
                means-tested public benefits program, not less than 
                $2,000 or more than $5,000.
    ``(d) Reimbursement of Government Expenses.--
            ``(1) Request for reimbursement.--
                    ``(A) In general.--Upon notification that a 
                sponsored alien has received any cash benefits 
                described in subsection (a)(1)(A), the appropriate 
                Federal, State, or local official shall request 
                reimbursement by the sponsor in the amount of such cash 
                benefits.
                    ``(B) Regulations.--The Attorney General, in 
                consultation with the Secretary of Health and Human 
                Services, shall prescribe such regulations as may be 
                necessary to carry out subparagraph (A).
            ``(2) Initiation of action.--If within 45 days after 
        requesting reimbursement, the appropriate Federal, State, or 
        local agency has not received a response from the sponsor 
        indicating a willingness to commence payments, an action may be 
        brought against the sponsor pursuant to the affidavit of 
        support.
            ``(3) Failure to abide by repayment terms.--If the sponsor 
        fails to abide by the repayment terms established by such 
        agency, the agency may, within 60 days of such failure, bring 
        an action against the sponsor pursuant to the affidavit of 
        support.
            ``(4) Limitation on actions.--No cause of action may be 
        brought under this subsection later than 5 years after the date 
        the alien last received any cash benefit described in 
        subsection (a)(1)(A).
    ``(f) Definitions.--For the purposes of this section:
            ``(1) Sponsor.--The term `sponsor' means an individual 
        who--
                    ``(A) is a citizen or national of the United States 
                or an alien who is lawfully admitted to the United 
                States for permanent residence;
                    ``(B) is 18 years of age or over; and
                    ``(C) is domiciled in any State.
            ``(2) Public cash assistance program.--The term `public 
        cash assistance program' means a program of the Federal 
        Government or of a State or political subdivision of a State 
        that provides direct cash assistance for the purpose of income 
        maintenance and in which the eligibility of an individual, 
        household, or family eligibility unit for cash benefits under 
        the program, or the amount of such cash benefits, or both are 
        determined on the basis of income, resources, or financial need 
        of the individual, household, or unit. Such term does not 
        include any program insofar as it provides medical, housing, 
        education, job training, food, or in-kind assistance or social 
        services.''.
    (b) Clerical Amendment.--The table of contents of such Act is 
amended by inserting after the item relating to section 213 the 
following:

``Sec. 213A. Requirements for sponsor's affidavit of support.''.
    (c) Effective Date.--Subsection (a) of section 213A of the 
Immigration and Nationality Act, as inserted by subsection (a) of this 
section, shall apply to affidavits of support executed on or after a 
date specified by the Attorney General, which date shall be not earlier 
than 60 days (and not later than 90 days) after the date the Attorney 
General formulates the form for such affidavits under subsection (b) of 
such section 213A.

SEC. 903. EXTENDING REQUIREMENT FOR AFFIDAVITS OF SUPPORT TO FAMILY-
              RELATED AND DIVERSITY IMMIGRANTS.

    (A) In General.--Section 212(a)(4) of the Immigration and 
Nationality Act (8 U.S.C. 1182(a)(4)) is amended to read as follows:
            ``(4) Public charge and affidavits of support.--
                    ``(A) Public charge.--Any alien who, in the opinion 
                of the consular officer at the time of application for 
                a visa, or in the opinion of the Attorney General at 
                the time of application for admission or adjustment of 
                status, is likely at any time to become a public charge 
                is excludable.
                    ``(B) Affidavits of support.--Any immigrant who 
                seeks admission or adjustment of status as any of the 
                following is excludable unless there has been executed 
                with respect to the immigrant an affidavit of support 
                pursuant to section 213A:
                            ``(i) As an immediate relative (under 
                        section 201(b)(2)).
                            ``(ii) As a family-sponsored immigrant 
                        under section 203(a) (or as the spouse or child 
                        under section 203(d) of such an immigrant).
                            ``(iii) As the spouse or child (under 
                        section 203(d)) of an employment-based 
                        immigrant under section 203(b).
                            ``(iv) As a diversity immigrant under 
                        section 203(c) (or as the spouse or child under 
                        section 203(d) of such an immigrant).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to aliens with respect to whom an immigrant visa is issued (or 
adjustment of status is granted) after the date specified by the 
Attorney General under section 902(c).

      Subtitle B--Limitation on Emergency Assistance Expenditures

SEC. 911. LIMITATION ON EXPENDITURES FOR EMERGENCY ASSISTANCE.

    (a) In General.--Section 403(a)(5) (42 U.S.C. 602(a)(5)) is amended 
to read as follows:
            ``(5) in the case of any State, an amount equal to the 
        lesser of--
                    ``(A) 50 percent of the total amount expended under 
                the State plan during such quarter as emergency 
                assistance to needy families with children; or
                    ``(B) the greater of--
                            ``(i) the total amount expended under the 
                        State plan during the fiscal year that 
                        immediately precedes the fiscal year in which 
                        the quarter occurs; multiplied by
                                    ``(I) 4 percent, if the national 
                                unemployment rate for the United States 
                                (as determined by the Secretary of 
                                Labor) for the 3rd or 4th quarter of 
                                the immediately preceding fiscal year 
                                is at least 7 percent; or
                                    ``(II) 3 percent, otherwise; or
                            ``(ii) the total amount expended under the 
                        State plan during fiscal year 1995 as emergency 
                        assistance to needy families with children.''.
    (b) Authority of States To Define Emergency Assistance.--Section 
406(e)(1) (42 U.S.C. 606(e)(1)) is amended to read as follows:
    ``(e)(1)(A) The term `emergency assistance to needy families with 
children' means emergency assistance furnished by an eligible State 
with respect to an eligible needy child to avoid destitution of the 
child or to provide living arrangements in a home for the child.
    ``(B) As used in this paragraph:
            ``(i) The term `emergency assistance' means emergency 
        assistance as provided for in the State plan approved under 
        section 402 of an eligible State, but shall not include care 
        for an eligible needy child or other member of the household in 
        which the child is living to the extent that the child or other 
        member is entitled to such care as medical assistance under the 
        State plan under title XIX.
            ``(ii) The term `eligible needy child' means a needy 
        child--
                    ``(I) who has not attained 21 years of age;
                    ``(II) who is or (within such period as the 
                Secretary may specify) has been living with any 
                relative specified in subsection (a)(1) in a place of 
                residence maintained by 1 or more of such relatives as 
                the home of the relative or relatives;
                    ``(III) who is without available resources; and
                    ``(IV) whose requirement for emergency assistance 
                did not arise because the child or relative refused 
                without good cause to accept employment or training for 
                employment.
            ``(iii) The term ``eligible State'' means a State whose 
        State plan approved under section 402 includes provision for 
        emergency assistance.''.

                       Subtitle C--Tax Provisions

SEC. 921. CERTAIN FEDERAL ASSISTANCE INCLUDIBLE IN GROSS INCOME.

    (a) In General.--Part II of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically included 
in gross income) is amended by adding at the end the following new 
section:

``SEC. 91. CERTAIN FEDERAL ASSISTANCE.

    ``(a) In General.--Gross income shall include an amount equal to 
the specified Federal assistance received by the taxpayer during the 
taxable year.
    ``(b) Specified Federal Assistance.--For purposes of this section--
            ``(1) In general.--The term `specified Federal assistance' 
        means--
                    ``(A) aid provided under a State plan approved 
                under part A of title IV of the Social Security Act 
                (relating to aid to families with dependent children), 
                and
                    ``(B) assistance provided under any food stamp 
                program.
            ``(2) Special rule.--In the case of assistance provided 
        under a program described in subsection (d)(2), such term shall 
        include only the assistance required to be provided under 
        section 21 or 22 (as the case may be) of the Food Stamp Act of 
        1977.
    ``(c) Individuals Subject To Tax.--For purposes of this section--
            ``(1) AFDC.--Aid described in subsection (b)(1)(A) shall be 
        treated as received by the relative with whom the dependent 
        child is living (within the meaning of section 406(c) of the 
        Social Security Act).
            ``(2) Food stamps.--In the case of assistance described in 
        subsection (b)(1)(B)--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), such assistance shall be treated as 
                received ratably by each of the individuals taken into 
                account in determining the amount of such assistance 
                for the benefit of such individuals.
                    ``(B) Assistance to children treated as received by 
                parents, etc.--The amount of assistance which would 
                (but for this subparagraph) be treated as received by a 
                child shall be treated as received as follows:
                            ``(i) If there is an includible parent, 
                        such amount shall be treated as received by the 
                        includible parent (or if there is more than 1 
                        includible parent, as received ratably by each 
                        includible parent).
                            ``(ii) If there is no includible parent and 
                        there is an includible grandparent, such amount 
                        shall be treated as received by the includible 
                        grandparent (or if there is more than 1 
                        includible grandparent, as received ratably by 
                        each includible grandparent).
                            ``(iii) If there is no includible parent or 
                        grandparent, such amount shall be treated as 
                        received ratably by each includible adult.
                    ``(C) Definitions.--For purposes of subparagraph 
                (B)--
                            ``(i) Child.--The term `child' means any 
                        individual who has not attained age 16 as of 
                        the close of the taxable year. Such term shall 
                        not include any individual who is an includible 
                        parent of a child (as defined in the preceding 
                        sentence).
                            ``(ii) Adult.--The term `adult' means any 
                        individual who is not a child.
                            ``(iii) Includible.--The term `includible' 
                        means, with respect to any individual, an 
                        individual who is included in determining the 
                        amount of assistance paid to the household 
                        which includes the child.
                            ``(iv) Parent.--The term `parent' includes 
                        the stepfather and stepmother of the child.
                            ``(v) Grandparent.--The term `grandparent' 
                        means any parent of a parent of the child.
    ``(d) Food Stamp Program.--For purposes of subsection (b), the term 
`food stamp program' means--
            ``(1) the food stamp program (as defined in section 3(h) of 
        the Food Stamp Act of 1977), and
            ``(2) the portion of the program under sections 21 and 22 
        of such Act which provides food assistance.''
    (b) Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of such Code is amended by adding at the end the 
        following new section:

``SEC. 6050Q. PAYMENTS OF CERTAIN FEDERAL ASSISTANCE.

    ``(a) Requirement of Reporting.--The appropriate official shall 
make a return, according to the forms and regulations prescribed by the 
Secretary, setting forth--
            ``(1) the aggregate amount of specified Federal assistance 
        paid to any individual during any calendar year, and
            ``(2) the name, address, and TIN of such individual.
    ``(b) Statements To Be Furnished to Persons With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each individual whose name is re- 
quired to be set forth in such return a written statement showing--
            ``(1) the name of the agency making the payments, and
            ``(2) the aggregate amount of payments made to the 
        individual which are required to be shown on such return.
The written statement required under the preceding sentence shall be 
furnished to the individual on or before January 31 of the year 
following the calendar year for which the return under subsection (a) 
was required to be made.
    ``(c) Definitions and Special Rule.--For purposes of this section--
            ``(1) Appropriate official.--The term `appropriate 
        official' means--
                    ``(A) in the case of specified Federal assistance 
                described in section 91(b)(1)(A), the head of the State 
                agency administering the plan under which such 
                assistance is provided,
                    ``(B) in the case of specified Federal assistance 
                described in section 91(b)(1)(B), the head of the State 
                agency administering the program under which such 
                assistance is provided, and
                    ``(C) in the case of specified Federal assistance 
                described in section 91(b)(1)(C), the head of the State 
                pubic housing agency administering the program under 
                which such assistance is provided.
            ``(2) Specified federal assistance.--The term `specified 
        Federal assistance' has the meaning given such term by section 
        91(b).
            ``(3) Amounts treated as paid.--The rules of section 91(c) 
        shall apply for purposes of determining to whom specified 
        Federal assistance is paid.''
            (2) Penalties.--
                    (A) Subparagraph (B) of section 6724(b)(1) of such 
                Code is amended by redesignating clauses (ix) through 
                (xiv) as clauses (x) through (xv), respectively, and by 
                inserting after clause (viii) the following new clause:
                            ``(ix) section 6050Q (relating to payments 
                        of certain Federal assistance),''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by redesignating subparagraphs (Q) through 
                (T) as subparagraphs (R) through (U), respectively, and 
                by inserting after subparagraph (P) the following new 
                subparagraph:
                    ``(Q) section 6050Q(b) (relating to payments of 
                certain Federal assistance),''.
    (c) Clerical Amendments.--
            (1) The table of sections for part II of subchapter B of 
        chapter 1 of such Code is amended by adding at the end the 
        following new item:

                              ``Sec. 91. Certain Federal assistance.''
            (2) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 of such Code is amended by adding at 
        the end the following new item:
                              ``Sec. 6050Q. Payments of certain Federal 
                                        assistance.''
    (d) Effective Date.--The amendments made by this section shall 
apply to benefits received after December 31, 1995.

SEC. 922. EARNED INCOME TAX CREDIT DENIED TO INDIVIDUALS NOT AUTHORIZED 
              TO BE EMPLOYED IN THE UNITED STATES.

    (a) In General.--Section 32(c)(1) of the Internal Revenue Code of 
1986 (relating to individuals eligible to claim the earned income tax 
credit) is amended by adding at the end the following new subparagraph:
                    ``(F) Identification number requirement.--The term 
                `eligible individual' does not include any individual 
                who does not include on the return of tax for the 
                taxable year--
                            ``(i) such individual's taxpayer 
                        identification number, and
                            ``(ii) if the individual is married (within 
                        the meaning of section 7703), the taxpayer 
                        identification number of such individual's 
                        spouse.''
    (b) Special Identification Number.--Section 32 of such Code is 
amended by adding at the end the following new subsection:
    ``(k) Identification Numbers.--Solely for purposes of subsections 
(c)(1)(F) and (c)(3)(D), a taxpayer identification number means a 
social security number issued to an individual by the Social Security 
Administration (other than a social security number issued pursuant to 
clause (II) (or that portion of clause (III) that relates to clause 
(II)) of section 205(c)(2)(B)(i) of the Social Security Act).''
    (c) Extension of Procedures Applicable To Mathematical or Clerical 
Errors.--Section 6213(g)(2) of such Code (relating to the definition of 
mathematical or clerical errors) is amended by striking ``and'' at the 
end of subparagraph (D), by striking the period at the end of 
subparagraph (E) and inserting ``, and'', and by inserting after 
subparagraph (E) the following new subparagraph:
                    ``(F) an omission of a correct taxpayer 
                identification number required under section 32 
                (relating to the earned income tax credit) to be 
                included on a return.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 923. PHASEOUT OF EARNED INCOME CREDIT FOR INDIVIDUALS HAVING MORE 
              THAN $2,500 OF TAXABLE INTEREST AND DIVIDENDS.

    (a) In General.--Section 32 of the Internal Revenue Code of 1986 is 
amended by redesignating subsections (i) and (j) as subsections (j) and 
(k), respectively, and by inserting after subsection (h) the following 
new subsection:
    ``(i) Phaseout of Credit for Individuals Having More Than $2,500 of 
Taxable Interest and Dividends.--If the aggregate amount of interest 
and dividends includible in the gross income of the taxpayer for the 
taxable year exceeds $2,500, the amount of the credit which would (but 
for this subsection) be allowed under this section for such taxable 
year shall be reduced (but not below zero) by an amount which bears the 
same ratio to such amount of credit as such excess bears to $650.''
    (b) Inflation Adjustment.--Subsection (j) of section 32 of such 
Code (relating to inflation adjustments), as redesignated by subsection 
(a), is amended by striking paragraph (2) and by inserting the 
following new paragraphs:
            ``(2) Interest and dividend income limitation.--In the case 
        of a taxable year beginning in a calendar year after 1996, each 
        dollar amount contained in subsection (i) shall be increased by 
        an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 1995' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(3) Rounding.--If any amount as adjusted under paragraph 
        (1) or (2) is not a multiple of $10, such dollar amount shall 
        be rounded to the nearest multiple of $10.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 924. AFDC AND FOOD STAMP BENEFITS NOT TAKEN INTO ACCOUNT FOR 
              PURPOSES OF THE EARNED INCOME TAX CREDIT.

    (a) In General.--Section 32 of the Internal Revenue Code of 1986 
(relating to the earned income tax credit), as amended by section 
932(b) of this Act, is amended by adding at the end the following new 
subsection:
    ``(l) Adjusted Gross Income Determined Without Regard to Certain 
Federal Assistance.--For purposes of this section, adjusted gross 
income shall be determined without regard to any amount which is 
includible in gross income solely by reason of section 91.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1995.

                    TITLE X--FOOD ASSISTANCE REFORM

          Subtitle A--Food Stamp Program Integrity and Reform

SEC. 1001. AUTHORITY TO ESTABLISH AUTHORIZATION PERIODS.

    Section 9(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2018(a)(1)) 
is amended by adding at the end the following: ``The Secretary is 
authorized to issue regulations establishing specific time periods 
during which authorization to accept and redeem coupons under the food 
stamp program shall be valid.''.

SEC. 1002. SPECIFIC PERIOD FOR PROHIBITING PARTICIPATION OF STORES 
              BASED ON LACK OF BUSINESS INTEGRITY.

    Section 9(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 
2018(a)(1)), as amended by section 1001, is amended by adding at the 
end the following: ``The Secretary is authorized to issue regulations 
establishing specific time periods during which a retail food store or 
wholesale food concern that has an application for approval to accept 
and redeem coupons denied or that has such an approval withdrawn on the 
basis of business integrity and reputation cannot submit a new 
application for approval. Such periods shall reflect the severity of 
business integrity infractions that are the basis of such denials or 
withdrawals.''.

SEC. 1003. INFORMATION FOR VERIFYING ELIGIBILITY FOR AUTHORIZATION.

    Section 9(c) of the Food Stamp Act of 1977 (7 U.S.C. 2018(c)) is 
amended--
            (1) in the first sentence by inserting ``, which may 
        include relevant income and sales tax filing documents,'' after 
        ``submit information'' ; and
            (2) by inserting after the first sentence the following: 
        ``The regulations may require retail food stores and wholesale 
        food concerns to provide written authorization for the 
        Secretary to verify all relevant tax filings with appropriate 
        agencies and to obtain corroborating documentation from other 
        sources in order that the accuracy of information provided by 
        such stores and concerns may be verified.''.

SEC. 1004. WAITING PERIOD FOR STORES THAT INITIALLY FAIL TO MEET 
              AUTHORIZATION CRITERIA.

    Section 9(d) of the Food Stamp Act of 1977 (7 U.S.C. 2018(d)) is 
amended by adding at the end the following: ``Regulations issued 
pursuant to this Act shall prohibit a retail food store or wholesale 
food concern that has an application for approval to accept and redeem 
coupons denied because it does not meet criteria for approval 
established by the Secretary in regulations from submitting a new 
application for six months from the date of such denial.''.

SEC. 1005. BASES FOR SUSPENSIONS AND DISQUALIFICATIONS.

    Section 12(a) of the Food Stamp Act of 1977 (7 U.S.C. 2021(a)) is 
amended by adding at the end the following: ``Regulations issued 
pursuant to this Act shall provide criteria for the finding of 
violations and the suspension or disqualification of a retail food 
store or wholesale food concern on the basis of evidence which may 
include, but is not limited to, facts established through on-site 
investigations, inconsistent redemption data, or evidence obtained 
through transaction reports under electronic benefit transfer 
systems.''.

SEC. 1006. AUTHORITY TO SUSPEND STORES VIOLATING PROGRAM REQUIREMENTS 
              PENDING ADMINISTRATIVE AND JUDICIAL REVIEW.

    (a) Section 12(a) of the Food Stamp Act of 1977 (7 U.S.C. 2021(a)), 
as amended by section 1005, is amended by adding at the end the 
following: ``Such regulations may establish criteria under which the 
authorization of a retail food store or wholesale food concern to 
accept and redeem coupons may be suspended at the time such store or 
concern is initially found to have committed violations of program 
requirements. Such suspension may coincide with the period of a review 
as provided in section 14. The Secretary shall not be liable for the 
value of any sales lost during any suspension or disqualification 
period.''.
    (b) Section 14(a) of the Food Stamp Act of 1977 (7 U.S.C. 2023(a)) 
is amended--
            (1) in the first sentence by inserting ``suspended,'' 
        before ``disqualified or subjected'';
            (2) in the fifth sentence by inserting before the period at 
        the end the following: ``, except that in the case of the 
        suspension of a retail food store or wholesale food concern 
        pursuant to section 12(a), such suspension shall remain in 
        effect pending any administrative or judicial review of the 
        proposed disqualification action, and the period of suspension 
        shall be deemed a part of any period of disqualification which 
        is imposed.''; and
            (3) by striking the last sentence.

SEC. 1007. DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED FROM THE 
              WIC PROGRAM.

    Section 12 of the Food Stamp Act of 1977 (7 U.S.C. 2021) is amended 
by adding at the end the following:
    ``(g) The Secretary shall issue regulations providing criteria for 
the disqualification of approved retail food stores and wholesale food 
concerns that are otherwise disqualified from accepting benefits under 
the Special Supplemental Nutrition Program for Women, Infants and 
Children (WIC) authorized under section 17 of the Child Nutrition Act 
of 1966. Such disqualification--
            ``(1) shall be for the same period as the disqualification 
        from the WIC Program;
            ``(2) may begin at a later date; and
            ``(3) notwithstanding section 14 of this Act, shall not be 
        subject to administrative or judicial review.''.

SEC. 1008. PERMANENT DEBARMENT OF RETAILERS WHO INTENTIONALLY SUBMIT 
              FALSIFIED APPLICATIONS.

    Section 12 of the Food Stamp Act of 1977 (7 U.S.C. 2021), as 
amended by section 1007, is amended by adding at the end the following:
    ``(h) The Secretary shall issue regulations providing for the 
permanent disqualification of a retail food store or wholesale food 
concern that is determined to have knowingly submitted an application 
for approval to accept and redeem coupons which contains false 
information about one or more substantive matters which were the basis 
for providing approval. Any disqualification imposed under this 
subsection shall be subject to administrative and judicial review 
pursuant to section 14, but such disqualification shall remain in 
effect pending such review.''.

SEC. 1009. EXPANDED CIVIL AND CRIMINAL FORFEITURE FOR VIOLATIONS OF THE 
              FOOD STAMP ACT.

    (a) Forfeiture of Items Exchanged in Food Stamp Trafficking.--
Section 15(g) of the Food Stamp Act of 1977 (7 U.S.C. 2024(g)) is 
amended by striking ``or intended to be furnished''.
    (b) Civil and Criminal Forfeiture.--Section 15 of the Food Stamp 
Act of 1977 (7 U.S.C. 2024)) is amended by adding at the end the 
following:
    ``(h)(1) Civil Forfeiture for Food Stamp Benefit Violations.--
            ``(A) Any food stamp benefits and any property, real or 
        personal--
                    ``(i) constituting, derived from, or traceable to 
                any proceeds obtained directly or indirectly from, or
                    ``(ii) used, or intended to be used, to commit, or 
                to facilitate,
        the commission of a violation of subsection (b) or subsection 
        (c) involving food stamp benefits having an aggregate value of 
        not less than $5,000, shall be subject to forfeiture to the 
        United States.
            ``(B) The provisions of chapter 46 of title 18, relating to 
        civil forfeitures shall extend to a seizure or forfeiture under 
        this subsection, insofar as applicable and not inconsistent 
        with the provisions of this subsection.
    ``(2) Criminal Forfeiture for Food Stamp Benefit Violations.--
            ``(A)(i) Any person convicted of violating subsection (b) 
        or subsection (c) involving food stamp benefits having an 
        aggregate value of not less than $5,000, shall forfeit to the 
        United States, irrespective of any State law--
                    ``(I) any food stamp benefits and any property 
                constituting, or derived from, or traceable to any 
                proceeds such person obtained directly or indirectly as 
                a result of such violation; and
                    ``(II) any food stamp benefits and any of such 
                person's property used, or intended to be used, in any 
                manner or part, to commit, or to facilitate the 
                commission of such violation.
            ``(ii) In imposing sentence on such person, the court shall 
        order that the person forfeit to the United States all property 
        described in this subsection.
            ``(B) All food stamp benefits and any property subject to 
        forfeiture under this subsection, any seizure and disposition 
        thereof, and any administrative or judicial proceeding relating 
        thereto, shall be governed by subsections (b), (c), (e), and 
        (g) through (p) of section 413 of the Comprehensive Drug Abuse 
        Prevention and Control Act of 1970 (21 U.S.C. 853), insofar as 
        applicable and not inconsistent with the provisions of this 
        subsection.
    ``(3) This subsection shall not apply to property specified in 
subsection (g) of this section.
    ``(4) The Secretary may prescribe such rules and regulations as may 
be necessary to carry out this subsection.''.

SEC. 1010. EXPANDED AUTHORITY FOR SHARING INFORMATION PROVIDED BY 
              RETAILERS.

    (a) Section 205(c)(2)(C)(iii) (42 U.S.C. 405(c)(2)(C)(iii)) (as 
amended by section 316(a) of the Social Security Administrative Reform 
Act of 1994 (Public Law 103-296; 108 Stat. 1464) is amended--
            (1) by inserting in the first sentence of subclause (II) 
        after ``instrumentality of the United States'' the following: 
        ``, or State government officers and employees with law 
        enforcement or investigative responsibilities, or State 
        agencies that have the responsibility for administering the 
        Special Supplemental Nutrition Program for Women, Infants and 
        Children (WIC)'';
            (2) by inserting in the last sentence of subclause (II) 
        immediately after ``other Federal'' the words ``or State''; and
            (3) by inserting ``or a State'' in subclause (III) 
        immediately after ``United States''.
    (b) Section 6109(f)(2) of the Internal Revenue Code of 1986 (26 
U.S.C. 6109(f)(2)) (as added by section 316(b) of the Social Security 
Administrative Reform Act of 1994 (Public Law 103-296; 108 Stat. 1464)) 
is amended--
            (1) by inserting in subparagraph (A) after 
        ``instrumentality of the United States'' the following: ``, or 
        State government officers and employees with law enforcement or 
        investigative responsibilities, or State agencies that have the 
        responsibility for administering the Special Supplemental 
        Nutrition Program for Women, Infants and Children (WIC)'';
            (2) in the last sentence of subparagraph (A) by inserting 
        ``or State'' after ``other Federal''; and
            (3) in subparagraph (B) by inserting ``or a State'' after 
        ``United States''.

SEC. 1011. EXPANDED DEFINITION OF ``COUPON''.

    Section 3(d) of the Food Stamp Act of 1977 (7 U.S.C. 2012(d)) is 
amended by striking ``or type of certificate'' and inserting ``type of 
certificate, authorization cards, cash or checks issued of coupons or 
access devices, including, but not limited to, electronic benefit 
transfer cards and personal identification numbers''.

SEC. 1012. DOUBLED PENALTIES FOR VIOLATING FOOD STAMP PROGRAM 
              REQUIREMENTS.

    Section 6(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2015(b)(1)) 
is amended--
            (1) in clause (i)--
                    (A) by striking ``six months'' and inserting ``1 
                year''; and
                    (B) by adding ``and'' at the end; and
            (2) striking clauses (ii) and (iii) and inserting the 
        following:
            ``(ii) permanently upon--
                    ``(I) the second occasion of any such 
                determination; or
                    ``(II) the first occasion of a finding by a 
                Federal, State, or local court of the trading of a 
                controlled substance (as defined in section 102 of the 
                Controlled Substances Act (21 U.S.C. 802)), firearms, 
                ammunition, or explosives for coupons.''.

SEC. 1013. MANDATORY CLAIMS COLLECTION METHODS.

    (a) Section 11(e)(8) of the Food Stamp Act of 1977 (7 U.S.C. 
2020(e)(8)) is amended by inserting ``or refunds of Federal taxes as 
authorized pursuant to 31 U.S.C. 3720A'' before the semicolon at the 
end.
    (b) Section 13(d) of the Food Stamp Act of 1977 (7 U.S.C. 2022(d)) 
is amended--
            (1) by striking ``may'' and inserting ``shall''; and
            (2) by inserting ``or refunds of Federal taxes as 
        authorized pursuant to 31 U.S.C. 3720A'' before the period at 
        the end.
    (c) Section 6103(1) of the Internal Revenue Code (26 U.S.C. 
6103(1)) is amended--
            (1) by striking ``officers and employees'' in paragraph 
        (10)(A) and inserting ``officers, employees or agents, 
        including State agencies''; and
            (2) by striking ``officers and employees'' in paragraph 
        (10)(B) and inserting ``officers, employees or agents, 
        including State agencies''.

SEC. 1014. REDUCTION OF BASIC BENEFIT LEVEL.

    Section 3(o) of the Food Stamp Act of 1977 (7 U.S.C. 2012(o)) is 
amended--
            (1) by striking ``and (11)'' and inserting ``(11)'';
            (2) in clause (11) by inserting ``through October 1, 1994'' 
        after ``each October 1 thereafter''; and
            (3) by inserting before the period at the end the 
        following:
``, and (12) on October 1, 1995, and on each October 1 thereafter, 
adjust the cost of such diet to reflect 102 percent of the cost, in the 
preceding June (without regard to any previous adjustment made under 
this clause or clauses (4) through (11) of this subsection) and round 
the result to the nearest lower dollar increment for each household 
size''.

SEC. 1015. PRO-RATING BENEFITS AFTER INTERRUPTIONS IN PARTICIPATION.

    Section 8(c)(2)(B) of the Food Stamp Act of 1977 (7 U.S.C. 
2017(c)(2)(B)) is amended by striking ``of more than one month''.

SEC. 1016. WORK REQUIREMENT FOR ABLE-BODIED RECIPIENTS.

    (a) Work Requirement.--Section 6(d) of the Food Stamp Act of 1977 
(7 U.S.C. 2015(d)) is amended by adding at the end the following:
    ``(5)(A) Except as provided in subparagraphs (B), (C), and (D), an 
individual who has received an allotment for six consecutive months 
during which such individual has not been employed a minimum of an 
average of 20 hours per week shall be disqualified if such individual 
is not employed at least an average of 20 hours per week, participating 
in a workfare program under section 20 (or a comparable State or local 
workfare program), or participating in and complying with the 
requirements of an approved employment and training program under 
paragraph (4).
    ``(B) The provisions of subparagraph (A) shall not apply in the 
case of an individual who--
            ``(i) is under eighteen or over fifty years of age;
            ``(ii) is certified by a physician as physically or 
        mentally unfit for employment;
            ``(iii) is a parent or other member of a household that 
        includes a minor child;
            ``(iv) is participating a minimum of an average of 20 hours 
        per week and is in compliance with the requirements of--
                    ``(I) a program under the Job Training Partnership 
                Act (29 U.S.C. 1501 et seq.);
                    ``(II) a program under section 236 of the Trade Act 
                of 1974 (19 U.S.C. 2296); or
                    ``(III) another program for the purpose of 
                employment and training operated by a State or local 
                government, as determined appropriate by the Secretary; 
                or
            ``(v) or would otherwise be exempt under subsection (d)(2).
    ``(C) The Secretary may waive the requirements of subparagraph (A) 
in the case of some or all individuals within all or part of State if 
the Secretary finds that such area--
            ``(i) has an unemployment rate of over 7 percent; or
            ``(ii) does not have a sufficient number of jobs to provide 
        employment for individuals subject to this paragraph. The 
        Secretary shall report to the Committee on Agriculture of the 
        House of Representatives and the Committee on Agriculture, 
        Nutrition, and Forestry of the Senate on the basis in which the 
        Secretary made this decision.
    ``(D) An individual who has been disqualified from the food stamp 
program by reason of subparagraph (A) may reestablish eligibility for 
assistance--
            ``(i) by meeting the requirements of subparagraph (A);
            ``(ii) by becoming exempt under subparagraph (B); or
            ``(iii) if the Secretary grants a waiver under subparagraph 
        (C).
    ``(E) A household (as defined in section 3(i) of the Food Stamp Act 
of 1977 (7 U.S.C. 2015(i)) that includes an individual who refuses to 
work, refuses to look for work, turns down a job, or refuses to 
participate in the State program if the State places the individual in 
such program shall be ineligible to receive food stamp benefits. The 
State agency shall reduce, by such amount the State considers 
appropriate, the amount otherwise payable to a household that includes 
an individual who fails without good cause to comply with other 
requirements of the individual responsibility plan signed by the 
individual.
    ``(F) The State agency shall make an initial assessment of the 
skills, prior work experience, and employability of each participant 
not exempted under subparagraph (B) within six months of initial 
certification. The State agency shall use such assessment, in 
consultation with the program participant, to develop an Individual 
Responsibility Plan for the participant. Such plan--
            ``(i) shall provide that participation in food stamp 
        employment and training activities shall be a condition of 
        eligibility for food stamp benefits, except during any period 
        of unsubsidized full-time employment in the private sector;
            ``(ii) shall establish an employment goal and a plan for 
        moving the individual into private sector employment 
        immediately;
            ``(iii) shall establish the obligations of the participant, 
        which shall include actions that will help the individual 
        obtain and keep private sector employment; and
            ``(iv) may require that the individual enter the State 
        program approved under part G or part H of title IV of the 
        Social Security Act if the caseworker determines that the 
        individual will need education, training, job placement 
        assistance, wage enhancement, or other services to obtain 
        private sector employment.''.
    (b) Enhanced Employment and Training Program.--Section 16(h)(1) of 
the Food Stamp Act of 1977 (7 U.S.C. 2025 (h)(1)) is amended--
            (1) in subparagraph (A)--
                    (A) by striking ``$75,000,000'' and inserting 
                ``$150,000,000''; and
                    (B) by striking ``1991 through 1995'' and inserting 
                ``1996 through 2000'';
            (2) by striking subparagraphs (B), (C), (E) and (F) and 
        redesignating subparagraph (D) as subparagraph (B); and
            (3) in subparagraph (B) (as so redesignated), by striking 
        ``for each'' and all that follows through ``of $60,000,000'' 
        and inserting ``the Secretary shall allocate funding''.
    (c) Required Participation in Work and Training Programs.--Section 
6(d)(4) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(4)), is amended 
by adding at the end the following:
    ``(O) The State agency shall provide an opportunity to participate 
in the employment and training program under this paragraph to any 
individual who would otherwise become subject to disqualification under 
paragraph (5)(A).''.
    (d) Coordinating Work Requirements in AFDC and Food Stamp 
Programs.--Section 6(d)(4) of the Food Stamp Act of 1977 (7 U.S.C. 
2015(d)(4)), as amended by subsection (c), is amended by adding at the 
end the following:
    ``(P)(i) Notwithstanding any other provision of this paragraph, a 
State agency that meets the participation requirements of paragraph 
(ii) may operate its employment and training program for persons 
receiving allotments under this Act as part of its Work First Program 
under part F of title IV of the Social Security Act (42 U.S.C. 681 et 
seq.), except that sections 487(b) and 489(a)(4) shall not apply to any 
months during which a person participates in such program while not 
receiving income under part A of subtitle IV of the Social Security Act 
(42 U.S.C. 601 et seq.). If a State agency exercises the option 
provided under this subparagraph, the operation of this program shall 
be subject to the requirements of such part F, except that any 
reference to `aid to families with dependent children' in such part 
shall be deemed a reference to food stamp benefits for purposes of any 
person not receiving income under such part A.
    ``(ii) A State may exercise the option provided under clause (i) if 
it provides any persons subject to the requirements of paragraph (5) 
who is not employed at least an average of 20 hours per week or 
participating in a workfare program under section 20 (or a comparable 
State or local program) with the opportunity to participate in an 
approved employment and training program. A State agency shall be 
considered to have complied with the requirements of this subparagraph 
in any area for which a waiver under subsection (5)(4)(C) is in 
effect.''.

SEC. 1017. EXTENDING CURRENT CLAIMS RETENTION RATES.

    Section 16(a) of the Food Stamp Act of 1977 (7 U.S.C. 2025(a)) is 
amended by striking ``September 30, 1995'' each place it appears and 
inserting ``September 30, 2000''.

SEC. 1018. COORDINATION OF EMPLOYMENT AND TRAINING PROGRAMS.

    (a) Section 8(d) of the Food Stamp Act of 1977 (7 U.S.C. 2019(d)) 
is amended--
            (1) by inserting ``or any work requirement under such 
        program'' after ``assistance program''; and
            (2) by adding at the end the following:
``If a household fails to comply with a work requirement in the program 
under part A of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.), the household shall not receive an increased allotment under 
this Act as a result of a decrease in the household's income caused by 
a penalty imposed under such Act, and the State agency is authorized to 
reduce the household's allotment by no more than 25 percent.''.

SEC. 1019. PROMOTING EXPANSION OF ELECTRONIC BENEFITS TRANSFER.

    Section 7(i) of the Food Stamp Act of 1977 (7 U.S.C. 2016(i)(1)) is 
amended--
            (1) by amending paragraph (1) to read:
    ``(1)(A) State agencies are encouraged to implement an on-line 
electronic benefit transfer system in which household benefits 
determined under section 8(a) are issued from and stored in a central 
data bank and electronically accessed by household members at the 
point-of-sale.
    ``(B) Subject to paragraph (2), a State agency is authorized to 
procure and implement an electronic benefit transfer system under the 
terms, conditions, and design that the State agency deems appropriate.
    ``(C) The Secretary shall, upon request of a State agency, waive 
any provision of this subsection prohibiting the effective 
implementation of an electronic benefit transfer system consistent with 
the purposes of this Act. The Secretary shall act upon any request for 
such a waiver within 90 days of receipt of a complete application.'';
            (2) in paragraph (2), by striking ``for the approval''; and
            (3) in paragraph (3), by striking ``the Secretary shall not 
        approve such a system unless'' and inserting ``the State agency 
        shall ensure that''.

SEC. 1020. ONE-YEAR FREEZE OF STANDARD DEDUCTION.

    Section 5(e) of the Food Stamp Act of 1977 (7 U.S.C. 2014(e)) is 
amended in the second sentence by inserting ``except October 1, 1995'' 
after ``thereafter''.

SEC. 1021. NUTRITION ASSISTANCE FOR PUERTO RICO.

    Section 19(a)(1)(A) of the Food Stamp Act of 1977 (7 U.S.C. 
2028(a)(1)(A)) is amended--
            (1) by striking ``1994, and'' and inserting ``1994,''; and
            (2) by inserting ``and $1,143,000,000 for fiscal year 
        1996,'' before ``to finance''.

SEC. 1022. OTHER AMENDMENTS TO THE FOOD STAMP ACT OF 1977.

    (a) Certification Period.--(1) Section 3(c) of the Food Stamp Act 
of 1977 (7 U.S.C. 2012(c)) is amended to read as follows:
    ``(c) `Certification period' means the period specified by the 
State agency for which households shall be eligible to receive 
authorization cards, except that such period shall be--
            ``(1) 24 months for households in which all adult members 
        are elderly or disabled; and
            ``(2) not more than 12 months for all other households.''.
    (2) Section 6(c)(1)(C) of the Food Stamp Act of 1977 (7 U.S.C. 
2015(c)(1)(C)) is amended--
            (A) in clause (ii) by adding ``and'' at the end;
            (B) in clause (iii) by striking ``; and'' at the end and 
        inserting a period; and
            (C) by striking clause (iv).
    (b) Inclusion of Energy Assistance in Income.--
            (1) Amendments to the food stamp act of 1977.--Section 5 of 
        the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended--
                    (A) in subsection (d)--
                            (i) by striking paragraph (11); and
                            (ii) by redesignating paragraphs (12) 
                        through (16) as paragraphs (11) through (15), 
                        respectively; and
                    (B) in subsection (k)--
                            (i) in paragraph (1)(B) by striking ``, not 
                        including energy or utility-cost assistance,''; 
                        and
                            (ii) in paragraph (2)--
                                    (I) by striking subparagraph (C); 
                                and
                                    (II) by redesignating subparagraphs 
                                (D) through (H) as subparagraphs (C) 
                                through (J), respectively.
            (2) Amendments to the low-income home energy assistance act 
        of 1981.--Section 2605(f) of the Low-Income Home Energy 
        Assistance Act of 1981 (42 U.S.C. 8624(f)) is amended--
                    (A) in paragraph (1) by striking ``food stamps,''; 
                and
                    (B) by amending paragraph (2) to read as follows:
    ``(2) Paragraph (1) shall not apply for any purpose under the Food 
Stamp Act of 1977.''.
    (c) Exclusion of Certain JTPA Income.--Section 5(d) of the Food 
Stamp Act of 1977 (7 U.S.C. 2014(d)), as amended by subsection (b), is 
amended--
            (1) by striking ``and (15)'' and inserting ``(15)''; and
            (2) by inserting before the period the following:
``, and (16) income received under the Job Training Partnership Act by 
a household member who is less than 19 years of age''.
    (d) Exclusion of Educational Assistance From Income.--Section 5(d) 
of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)) is amended--
            (1) by amending paragraph (3) to read as follows: ``(3) all 
        educational loans on which payment is deferred (including any 
        loan origination fees or insurance premiums associated with 
        such loans), grants, scholarships, fellowships, veterans' 
        educational benefits, and the like awarded to a household 
        member enrolled at a recognized institution of post-secondary 
        education, at a school for the handicapped, in a vocational 
        education program, or in a program that provides for completion 
        of a secondary school diploma or obtaining the equivalent 
        thereof,''; and
            (2) in paragraph (5) by striking ``and no portion'' and all 
        that follows through ``reimbursement''.
    (e) Limitation on Additional Earned Income Deduction.--The 3rd 
sentence of section 5(e) of the Food Stamp Act of 1977 (7 U.S.C. 
2014(e)) is amended by striking ``earned income that'' and all that 
follows through ``report'', and inserting ``determining an overissuance 
due to the failure of a household to report earned income''.
    (f) Exclusion of Essential Employment-Related Property.--Section 
5(g)(3) of the Food Stamp Act of 1977 (7 U.S.C. 2014(g)(3)) is amended 
to read as follows:
    ``(3) The value of real and tangible personal property (other than 
currency, commercial paper, and similar property) of a household member 
that is essential to the employment or self-employment of such member 
shall be excluded by the Secretary from financial resources until the 
expiration of the 1-year period beginning on the date such member 
ceases to be so employed or so self-employed.''.
    (g) Exclusion of Life Insurance Policies.--Section 5(g) of the Food 
Stamp Act of 1977 (7 U.S.C. 2014(g)) is amended by adding at the end 
the following:
    ``(6) The Secretary shall exclude from financial resources the cash 
value of any life insurance policy owned by a member of a household.''.
    (h) In-Tandem Exclusions From Income.--Section 5 of the Food Stamp 
Act of 1977 (7 U.S.C. 2014) is amended by adding at the end the 
following:
    ``(n) Whenever a Federal statute enacted after the date of the 
enactment of this Act excludes funds from income for purposes of 
determining eligibility, benefit levels, or both under State plans 
approved under part A of title IV of the Social Security Act, then such 
funds shall be excluded from income for purposes of determining 
eligibility, benefit levels, or both, respectively, under the food 
stamp program of households all of whose members receive benefits under 
a State plan approved under part A of title IV of the Social Security 
Act.''.
    (i) Application of Amendments.--The amendments made by this section 
shall not apply with respect to certification periods beginning before 
the effective date of this section.

                   Subtitle B--Commodity Distribution

SEC. 1051. SHORT TITLE.

    This subtitle may be cited as the ``Commodity Distribution Act of 
1995''.

SEC. 1052. AVAILABILITY OF COMMODITIES.

    (a) Notwithstanding any other provision of law, the Secretary of 
Agriculture (hereinafter in this subtitle referred to as the 
``Secretary'') is authorized during fiscal years 1996 through 2000 to 
purchase a variety of nutritious and useful commodities and distribute 
such commodities to the States for distribution in accordance with this 
subtitle.
    (b) In addition to the commodities described in subsection (a), the 
Secretary may expend funds made available to carry out the section 32 
of the Act of August 24, 1935 (7 U.S.C. 612c), which are not expended 
or needed to carry out such sections, to purchase, process, and 
distribute commodities of the types customarily purchased under such 
section to the States for distribution in accordance to this subtitle.
    (c) In addition to the commodities described in subsections (a) and 
(b), agricultural commodities and the products thereof made available 
under clause (2) of the second sentence of section 32 of the Act of 
August 24, 1935 (7 U.S.C. 612c), may be made available by the Secretary 
to the States for distribution in accordance with this subtitle.
    (d) In addition to the commodities described in subsections (a), 
(b), and (c), commodities acquired by the Commodity Credit Corporation 
that the Secretary determines, in the discretion of the Secretary, are 
in excess of quantities needed to--
            (1) carry out other domestic donation programs;
            (2) meet other domestic obligations;
            (3) meet international market development and food aid 
        commitments, and
            (4) carry out the farm price and income stabilization 
        purposes of the Agricultural Adjustment Act of 1938, the 
        Agricultural Act of 1949, and the Commodity Credit Corporation 
        Charter Act; shall be made available by the Secretary, without 
        charge or credit for such commodities, to the States for 
        distribution in accordance with this subtitle.
    (e) During each fiscal year, the types, varieties, and amounts of 
commodities to be purchased under this subtitle shall be determined by 
the Secretary. In purchasing such commodities, except those commodities 
purchased pursuant to section 1060, the Secretary shall, to the extent 
practicable and appropriate, make purchases based on--
            (1) agricultural market conditions;
            (2) the preferences and needs of States and distributing 
        agencies; and
            (3) the preferences of the recipients.

SEC. 1053. STATE, LOCAL AND PRIVATE SUPPLEMENTATION OF COMMODITIES.

    (a) The Secretary shall establish procedures under which State and 
local agencies, recipient agencies, or any other entity or person may 
supplement the commodities distributed under this subtitle for use by 
recipient agencies with nutritious and wholesome commodities that such 
entities or persons donate for distribution, in all or part of the 
State, in addition to the commodities otherwise made available under 
this subtitle.
    (b) States and eligible recipient agencies may use--
            (1) the funds appropriated for administrative cost under 
        section 1059(b);
            (2) equipment, structures, vehicles, and all other 
        facilities involved in the storage, handling, or distribution 
        of commodities made available under this subtitle; and
            (3) the personnel, both paid or volunteer, involved in such 
        storage, handling, or distribution; to store, handle or 
        distribute commodities donated for use under subsection (a).
    (c) States and recipient agencies shall continue, to the maximum 
extent practical, to use volunteer workers, and commodities and other 
foodstuffs donated by charitable and other organizations, in the 
distribution of commodities under this subtitle.

SEC. 1054. STATE PLAN.

    (a) A State seeking to receive commodities under this subtitle 
shall submit a plan of operation and administration every four years to 
the Secretary for approval. The plan may be amended at any time, with 
the approval of the Secretary.
    (b) The State plan, at a minimum, shall--
            (1) designate the State agency responsible for distributing 
        the commodities received under this subtitle;
            (2) set forth a plan of operation and administration to 
        expeditiously distribute commodities under this subtitle in 
        quantities requested to eligible recipient agencies in 
        accordance with sections 1056 and 1060;
            (3) set forth the standards of eligibility for recipient 
        agencies; and
            (4) set forth the standards of eligibility for individual 
        or household recipients of commodities, which at minimum shall 
        require--
                    (A) individuals or households to be comprised of 
                needy persons; and
                    (B) individual or household members to be residing 
                in the geographic location served by the distributing 
                agency at the time of application for assistance.
    (c) The Secretary shall encourage each State receiving commodities 
under this subtitle to establish a State advisory board consisting of 
representatives of all interested entities, both public and private, in 
the distribution of commodities received under this subtitle in the 
State.
    (d) A State agency receiving commodities under this subtitle may--
            (1)(A) enter into cooperative agreements with State 
        agencies of other States to jointly provide commodities 
        received under this subtitle to eligible recipient agencies 
        that serve needy persons in a single geographical area which 
        includes such States; or
            (B) transfer commodities received under this subtitle to 
        any such eligible recipient agency in the other State under 
        such agreement; and
            (2) advise the Secretary of an agreement entered into under 
        this subsection and the transfer of commodities made pursuant 
        to such agreement.

SEC. 1055. ALLOCATION OF COMMODITIES TO STATES.

    (a) In each fiscal year, except for those commodities purchased 
under section 1060, the Secretary shall allocate the commodities 
distributed under this subtitle as follows:
            (1) 60 percent of such total value of commodities shall be 
        allocated in a manner such that the value of commodities 
        allocated to each State bears the same ratio to 60 percent of 
        such total value as the number of persons in households within 
        the State having incomes below the poverty line bears to the 
        total number of persons in households within all States having 
        incomes below such poverty line. Each State shall receive the 
        value of commodities allocated under this paragraph.
            (2) 40 percent of such total value of commodities shall be 
        allocated in a manner such that the value of commodities 
        allocated to each State bears the same ratio to 40 percent of 
        such total value as the average monthly number of unemployed 
        persons within the State bears to the average monthly number of 
        unemployed persons within all States during the same fiscal 
        year. Each State shall receive the value of commodities 
        allocated to the State under this paragraph.
    (b)(1) The Secretary shall notify each State of the amount of 
commodities that such State is allotted to receive under subsection (a) 
or this subsection, if applicable. Each State shall promptly notify the 
Secretary if such State determines that it will not accept any or all 
of the commodities made available under such allocation. On such a 
notification by a State, the Secretary shall reallocate and distribute 
such commodities in a manner the Secretary deems appropriate and 
equitable. The Secretary shall further establish procedures to permit 
States to decline to receive portions of such allocation during each 
fiscal year in a manner the State determines is appropriate and the 
Secretary shall reallocate and distribute such allocation as the 
Secretary deems appropriate and equitable.
    (2) In the event of any drought, flood, hurricane, or other natural 
disaster affecting substantial numbers of persons in a State, county, 
or parish, the Secretary may request that States unaffected by such a 
disaster consider assisting affected States by allowing the Secretary 
to reallocate commodities from such unaffected State to States 
containing areas adversely affected by the disaster.
    (c) Purchases of commodities under this subtitle shall be made by 
the Secretary at such times and under such conditions as the Secretary 
determines appropriate within each fiscal year. All commodities so 
purchased for each such fiscal year shall be delivered at reasonable 
intervals to States based on the allocations and reallocations made 
under subsections (a) and (b), and or carry out section 1060, not later 
than December 31 of the following fiscal year.

SEC. 1056. PRIORITY SYSTEM FOR STATE DISTRIBUTION OF COMMODITIES.

    (a) In distributing the commodities allocated under subsections (a) 
and (b) of section 1055, the State agency, under procedures determined 
by the State agency, shall offer, or otherwise make available, its full 
allocation of commodities for distribution to emergency feeding 
organizations.
    (b) If the State agency determines that the State will not exhaust 
the commodities allocated under subsections (a) and (b) of section 1055 
through distribution to organizations referred to in subsection (a), 
its remaining allocation of commodities shall be distributed to 
charitable institutions described in section 1063(3) not receiving 
commodities under subsection (a).
    (c) If the State agency determines that the State will not exhaust 
the commodities allocated under subsections (a) and (b) of section 1055 
through distribution to organizations referred to in subsections (a) 
and (b), its remaining allocation of commodities shall be distributed 
to any eligible recipient agency not receiving commodities under 
subsections (a) and (b).

SEC. 1057. INITIAL PROCESSING COSTS.

    The Secretary may use funds of the Commodity Credit Corporation to 
pay the costs of initial processing and packaging of commodities to be 
distributed under this subtitle into forms and in quantities suitable, 
as determined by the Secretary, for use by the individual households or 
eligible recipient agencies, as applicable. The Secretary may pay such 
costs in the form of Corporation-owned commodities equal in value to 
such costs. The Secretary shall ensure that any such payments in kind 
will not displace commercial sales of such commodities.

SEC. 1058. ASSURANCES; ANTICIPATED USE.

    (a) The Secretary shall take such precautions as the Secretary 
deems necessary to ensure that commodities made available under this 
subtitle will not displace commercial sales of such commodities or the 
products thereof. The Secretary shall submit to the Committee on 
Agriculture of the House of Representatives and the Committee on 
Agriculture, Nutrition, and Forestry of the Senate by December 31, 
1997, and not less than every two years thereafter, a report as to 
whether and to what extent such displacements or substitutions are 
occurring.
    (b) The Secretary shall determine that commodities provided under 
this subtitle shall be purchased and distributed only in quantities 
that can be consumed without waste. No eligible recipient agency may 
receive commodities under this subtitle in excess of anticipated use, 
based on inventory records and controls, or in excess of its ability to 
accept and store such commodities.

SEC. 1059. AUTHORIZATION OF APPROPRIATIONS.

    (a) Purchase of Commodities.--To carry out this subtitle, there are 
authorized to be appropriated $260,000,000 for each of the fiscal years 
1996 through 2000 to purchase, process, and distribute commodities to 
the States in accordance with this subtitle.
    (b) Administrative Funds.--
            (1) There are authorized to be appropriated $40,000,000 for 
        each of the fiscal years 1996 through 2000 for the Secretary to 
        make available to the States for State and local payments for 
        costs associated with the distribution of commodities by 
        eligible recipient agencies under this subtitle, excluding 
        costs associated with the distribution of those commodities 
        distributed under section 1060. Funds appropriated under this 
        paragraph for any fiscal year shall be allocated to the States 
        on an advance basis dividing such funds among the States in the 
        same proportions as the commodities distributed under this 
        subtitle for such fiscal year are allocated among the States. 
        If a State agency is unable to use all of the funds so 
        allocated to it, the Secretary shall reallocate such unused 
        funds among the other States in a manner the Secretary deems 
        appropriate and equitable.
            (2)(A) A State shall make available in each fiscal year to 
        eligible recipient agencies in the State not less than 40 
        percent of the funds received by the State under paragraph (1) 
        for such fiscal year, as necessary to pay for, or provide 
        advance payments to cover, the allowable expenses of eligible 
        recipient agencies for distributing commodities to needy 
        persons, but only to the extent such expenses are actually so 
        incurred by such recipient agencies.
            (B) As used in this paragraph, the term ``allowable 
        expenses'' includes--
                    (i) costs of transporting, storing, handling, 
                repackaging, processing, and distributing commodities 
                incurred after such commodities are received by 
                eligible recipient agencies;
                    (ii) costs associated with determinations of 
                eligibility, verification, and documentation;
                    (iii) costs of providing information to persons 
                receiving commodities under this subtitle concerning 
                the appropriate storage and preparation of such 
                commodities; and
                    (iv) costs of recordkeeping, auditing, and other 
                administrative procedures required for participation in 
                the program under this subtitle.
            (C) If a State makes a payment, using State funds, to cover 
        allowable expenses of eligible recipient agencies, the amount 
        of such payment shall be counted toward the amount a State must 
        make available for allowable expenses of recipient agencies 
        under this paragraph.
            (3) States to which funds are allocated for a fiscal year 
        under this subsection shall submit financial reports to the 
        Secretary, on a regular basis, as to the use of such funds. No 
        such funds may be used by States or eligible recipient agencies 
        for costs other than those involved in covering the expenses 
        related to the distribution of commodities by eligible 
        recipient agencies.
            (4)(A) Except as provided in subparagraph (B), to be 
        eligible to receive funds under this subsection, a State shall 
        provide in cash or in kind (according to procedures approved by 
        the Secretary for certifying these in-kind contributions) from 
        non-Federal sources a contribution equal to the difference 
        between--
                    (i) the amount of such funds so received; and
                    (ii) any part of the amount allocated to the State 
                and paid by the State--
                            (I) to eligible recipient agencies; or
                            (II) for the allowable expenses of such 
                        recipient agencies;for use in carrying out this 
                        subtitle.
            (B) Funds allocated to a State under this section may, upon 
        State request, be allocated before States satisfy the matching 
        requirement specified in subparagraph (A), based on the 
        estimated contribution required. The Secretary shall 
        periodically reconcile estimated and actual contributions and 
        adjust allocations to the State to correct for overpayments and 
        underpayments.
            (C) Any funds distributed for administrative costs under 
        section 1060(b) shall not be covered by this paragraph.
            (5) States may not charge for commodities made available to 
        eligible recipient agencies, and may not pass on to such 
        recipient agencies the cost of any matching requirements, under 
        this subtitle.
    (c) Value of Commodities.--The value of the commodities made 
available under subsections (c) and (d) of section 1052, and the funds 
of the Corporation used to pay the costs of initial processing, 
packaging (including forms suitable for home use), and delivering 
commodities to the States shall not be charged against appropriations 
authorized by this section.

SEC. 1060. COMMODITY SUPPLEMENTAL FOOD PROGRAM.

    (a) From the funds appropriated under section 1059(a), $94,500,000 
shall be used for each fiscal year to purchase and distribute 
commodities to supplemental feeding programs serving woman, infants, 
and children or elderly individuals (hereinafter in this section 
referred to as the ``commodity supplemental food program"), or serving 
both groups wherever located.
    (b) Not more than 20 percent of the funds made available under 
subsection (a) shall be made available to the States for State and 
local payments of administrative costs associated with the distribution 
of commodities by eligible recipient agencies under this section. 
Administrative costs for the purposes of the commodity supplemental 
food program shall include, but not be limited to, expenses for 
information and referral, operation, monitoring, nutrition education, 
start-up costs, and general administration, including staff, warehouse 
and transportation personnel, insurance, and administration of the 
State or local office.
    (c)(1) During each fiscal year the commodity supplemental food 
program is in operation, the types, varieties, and amounts of 
commodities to be purchased under this section shall be determined by 
the Secretary, but, if the Secretary proposes to make any significant 
changes in the types, varieties, or amounts from those that were 
available or were planned at the beginning of the fiscal year the 
Secretary shall report such changes before implementation to the 
Committee on Agriculture of the House of Representatives and the 
Committee on Agriculture, Nutrition, and Forestry of the Senate.
    (2) Notwithstanding any other provision of law, the Commodity 
Credit Corporation shall, to the extent that the Commodity Credit 
Corporation inventory levels permit, provide not less than 9,000,000 
pounds of cheese and not less than 4,000,000 pounds of nonfat dry milk 
in each of the fiscal years 1996 through 2000 to the Secretary. The 
Secretary shall use such amounts of cheese and nonfat dry milk to carry 
out the commodity supplemental food program before the end of each 
fiscal year.
    (d) The Secretary shall, in each fiscal year, approve applications 
of additional sites for the program, including sites that serve only 
elderly persons, in areas in which the program currently does not 
operate, to the full extent that applications can be approved within 
the appropriations available for the program for the fiscal year and 
without reducing actual participation levels (including participation 
of elderly persons under subsection (e)) in areas in which the program 
is in effect.
    (e) If a local agency that administers the commodity supplemental 
food program determines that the amount of funds made available to the 
agency to carry out this section exceeds the amount of funds necessary 
to provide assistance under such program to women, infants, and 
children, the agency, with the approval of the Secretary, may permit 
low-income elderly persons (as defined by the Secretary) to participate 
in and be served by such program.
    (f)(1) If it is necessary for the Secretary to pay a significantly 
higher than expected price for one or more types of commodities 
purchased under this section, the Secretary shall promptly determine 
whether the price is likely to cause the number of persons that can be 
served in the program in a fiscal year to decline.
    (2) If the Secretary determines that such a decline would occur, 
the Secretary shall promptly notify the State agencies charged with 
operating the program of the decline and shall ensure that a State 
agency notify all local agencies operating the program in the State of 
the decline.
    (g) Commodities distributed to States pursuant to this section 
shall not be considered in determining the commodity allocation to each 
State under section 1055 or priority of distribution under section 
1056.

SEC. 1061. COMMODITIES NOT INCOME.

    Notwithstanding any other provision of law, commodities distributed 
under this subtitle shall not be considered income or resources for 
purposes of determining recipient eligibility under any Federal, State, 
or local means-tested program.

SEC. 1062. PROHIBITION AGAINST CERTAIN STATE CHARGES.

    Whenever a commodity is made available without charge or credit 
under this subtitle by the Secretary for distribution within the States 
to eligible recipient agencies, the State may not charge recipient 
agencies any amount that is in excess of the State's direct costs of 
storing, and transporting to recipient agencies the commodities minus 
any amount the Secretary provides the State for the costs of storing 
and transporting such commodities.

SEC. 1063. DEFINITIONS.

    As used in this subtitle:
            (1) The term ``average monthly number of unemployed 
        persons'' means the average monthly number of unemployed 
        persons within a State in the most recent fiscal year for which 
        such information is available as determined by the Bureau of 
        Labor Statistics of the Department of Labor.
            (2) The term ``elderly persons'' means individuals 60 years 
        of age or older.
            (3) The term ``eligible recipient agency'' means a public 
        or nonprofit organization that administers--
                    (A) an institution providing commodities to 
                supplemental feeding programs serving women, infants, 
and children or serving elderly persons, or serving both groups;
                    (B) an emergency feeding organization;
                    (C) a charitable institution (including hospitals 
                and retirement homes and excluding penal institutions) 
                to the extent that such institution serves needy 
                persons;
                    (D) a summer camp for children, or a child 
                nutrition program providing food service;
                    (E) a nutrition project operating under the Older 
                Americans Act of 1965, including such projects that 
                operate a congregate nutrition site and a project that 
                provides home-delivered meals; or
                    (F) a disaster relief program; and that has been 
                designated by the appropriate State agency, or by the 
                Secretary, and approved by the Secretary for 
                participation in the program established under this 
                subtitle.
            (4) The term ``emergency feeding organization'' means a 
        public or nonprofit organization that administers activities 
        and projects (including the activities and projects of a 
        charitable institution, a food bank, a food pantry, a hunger 
        relief center, a soup kitchen, or a similar public or private 
        nonprofit eligible recipient agency) providing nutrition 
        assistance to relieve situations of emergency and distress 
        through the provision of food to needy persons, including low-
        income and unemployed persons.
            (5) The term ``food bank'' means a public and charitable 
        institution that maintains an established operation involving 
        the provision of food or edible commodities, or the products 
        thereof, to food pantries, soup kitchens, hunger relief 
        centers, or other food or feeding centers that, as an integral 
        part of their normal activities, provide meals or food to feed 
        needy persons on a regular basis.
            (6) The term ``food pantry'' means a public or private 
        nonprofit organization that distributes food to low-income and 
        unemployed households, including food from sources other than 
        the Department of Agriculture, to relieve situations of 
        emergency and distress.
            (7) The term ``needy persons'' means--
                    (A) individuals who have low incomes or who are 
                unemployed, as determined by the State (in no event 
                shall the income of such individual or household exceed 
                185 percent of the poverty line);
                    (B) households certified as eligible to participate 
                in the food stamp program under the Food Stamp Act of 
                1977 (7 U.S.C. 2011 et seq.); or
                    (C) individuals or households participating in any 
                other Federal, or federally assisted, means-tested 
                program.
            (8) The term ``poverty line'' has the same meaning given 
        such term in section 673(2) of the Community Services Block 
        Grant Act (42 U.S.C. 9902(2)).
            (9) The term ``soup kitchen'' means a public and charitable 
        institution that, as integral part of its normal activities, 
        maintains an established feeding operation to provide food to 
        needy homeless persons on a regular basis.

SEC. 1064. REGULATIONS.

    (a) The Secretary shall issue regulations within 120 days to 
implement this subtitle.
    (b) In administering this subtitle, the Secretary shall minimize, 
to the maximum extent practicable, the regulatory, recordkeeping, and 
paperwork requirements imposed on eligible recipient agencies.
    (c) The Secretary shall as early as feasible but not later than the 
beginning of each fiscal year, publish in the Federal Register a 
nonbinding estimate of the types and quantities of commodities that the 
Secretary anticipates are likely to be made available under the 
commodity distribution program under this subtitle during the fiscal 
year.
    (d) The regulations issued by the Secretary under this section 
shall include provisions that set standards with respect to liability 
for commodity losses for the commodities distributed under this 
subtitle in situations in which there is no evidence of negligence or 
fraud, and conditions for payment to cover such losses. Such provisions 
shall take into consideration the special needs and circumstances of 
eligible recipient agencies.

SEC. 1065. FINALITY OF DETERMINATIONS.

    Determinations made by the Secretary under this subtitle and the 
facts constituting the basis for any donation of commodities under this 
subtitle, or the amount thereof, when officially determined in 
conformity with the applicable regulations prescribed by the Secretary, 
shall be final and conclusive and shall not be reviewable by any other 
officer or agency of the Government.

SEC. 1066. RELATIONSHIP TO OTHER PROGRAMS.

    (a) Section 4(b) of the Food Stamp Act of 1977 (7 U.S.C. 2013(b)) 
shall not apply with respect to the distribution of commodities under 
this subtitle.
    (b) Except as otherwise provided in section 1057, none of the 
commodities distributed under this subtitle shall be sold or otherwise 
disposed of in commercial channels in any form.

SEC. 1067. SETTLEMENT AND ADJUSTMENT OF CLAIMS.

    (a) The Secretary may--
            (1) determine the amount of, settle, and adjust any claim 
        arising under this subtitle; and
            (2) waive such a claim if the Secretary determines that to 
        do so will serve the purposes of this subtitle.
    (b) Nothing contained in this section shall be construed to 
diminish the authority of the Attorney General of the United States 
under section 516 of title 28, United States Code, to conduct 
litigation on behalf of the United States.

SEC. 1068. REPEALERS; AMENDMENTS.

    (a) Repealer.--The Emergency Food Assistance Act of 1983 (7 U.S.C. 
612c note) is repealed.
    (b) Amendments.--
            (1) The Hunger Prevention Act of 1988 (7 U.S.C. 612c note) 
        is amended--
                    (A) by striking section 110; and
                    (B) by striking section 502.
            (2) The Commodity Distribution Reform Act and WIC 
        Amendments of 1987 (7 U.S.C. 612c note) is amended by striking 
        section 4.
            (3) The Charitable Assistance and Food Bank Act of 1987 (7 
        U.S.C. 612c note) is amended by striking section 3.
            (4) The Food Security Act of 1985 (7 U.S.C. 612c note) is 
        amended--
                    (A) by striking section 1562(a) and section 1571; 
                and
                    (B) in section 1562(d), by striking ``section 4 of 
                the Agricultural and Consumer Protection Act of 1973'' 
                and inserting ``section 1060 of the Commodity 
                Distribution Act of 1995''.
            (5) The Agricultural and Consumer Protection Act of 1973 (7 
        U.S.C. 612c note) is amended--
                    (A) in section 4(a), by striking ``institutions 
                (including hospitals and facilities caring for needy 
                infants and children), supplemental feeding programs 
                serving women, infants and children or elderly persons, 
                or both, wherever located, disaster areas, summer camps 
                for children,'';
                    (B) in subsection 4(c), by striking ``the Emergency 
                Food Assistance Act of 1983'' and inserting ``the 
                Commodity Distribution Act of 1995''; and
                    (C) by striking section 5.
            (6) The Food, Agriculture, Conservation, and Trade Act of 
        1990 (7 U.S.C. 612c note) is amended by striking section 
        1773(f).

                      Title XI--DEFICIT REDUCTION

SEC. 1101. DEDICATION OF SAVINGS TO DEFICIT REDUCTION.

    (a) Upon the enactment of this Act, the Director of the Office of 
Management and Budget shall make downward adjustments in the 
discretionary spending limits (new budget authority and outlays), as 
adjusted, set forth in 601(a)(2) of the Congressional Budget Act of 
1974 for each of fiscal years 1996 through 1998 as follows:
            (1) For fiscal year 1996, reduce new budget authority by 
        $1,420,000,000 and reduce outlays by $1,420,000,000.
            (2) For fiscal year 1997, reduce new budget authority by 
        $1,420,000,000 and reduce outlays by $1,420,000,000.
            (3) For fiscal year 1998, reduce new budget authority by 
        $1,470,000,000 and reduce outlays by $1,470,000,000.
    (b) Reductions in outlays resulting from the enactment of this Act 
shall not be taken into account for purposes of section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985.

                       TITLE XII--EFFECTIVE DATE

SEC. 1201. EFFECTIVE DATE.

    Except as otherwise provided in this Act, this Act and the 
amendments made by this Act shall take effect on October 1, 1996.
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