```

[Journal of the House of Representatives, 1995]
[Thursday, March 23, 1995 (49), Para 49.12 Recorded Vote]
[Pages 438-480]
[From the U.S. Government Publishing Office, www.gpo.gov]

para.49.12  recorded vote

  A recorded vote by electronic device was ordered in the Committee of 
the Whole on the following amendment in the nature of a substitute 
submitted by Mr. DEAL:

       Strike out all after the enacting clause and insert:

     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.

[[Page 439]]

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

[[Page 440]]

       ``(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 1114 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 cal

[[Page 441]]

     endar 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

[[Page 442]]

     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 para

[[Page 443]]

     graph (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

[[Page 444]]

       (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 
     re

[[Page 445]]

     fuses 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.

[[Page 446]]

       ``(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.--

[[Page 447]]

       ``(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

[[Page 448]]

     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 em

[[Page 449]]

     ployed 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--

[[Page 450]]

       ``(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

[[Page 451]]

       ``(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

[[Page 452]]

       ``(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--

[[Page 453]]

       ``(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--

[[Page 454]]

       ``(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

[[Page 455]]

       ``(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

[[Page 456]]

     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 pur

[[Page 457]]

     poses 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):

[[Page 458]]

       ``(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);

[[Page 459]]

       (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

[[Page 460]]

       ``(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 gov

[[Page 461]]

     erning 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).

[[Page 462]]

     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

[[Page 463]]

     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.--

[[Page 464]]

       (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,

[[Page 465]]

     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--

[[Page 466]]

       (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);

[[Page 467]]

       (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.''.

[[Page 468]]

       (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.

[[Page 469]]

       (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.''

[[Page 470]]

     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 in

[[Page 471]]

     ventory, 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.''.

[[Page 472]]

       (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.

[[Page 473]]

     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:

[[Page 474]]

       ``(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. BASIS 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

[[Page 475]]

     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

[[Page 476]]

     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

[[Page 477]]

     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.

[[Page 478]]

       (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.

[[Page 479]]

       (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.

[[Page 480]]

It was decided in the

Yeas

205

negative

Nays

228
```