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[Senate Report 107-221]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 518
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-221

======================================================================

 
       WORK, OPPORTUNITY, AND RESPONSIBILITY FOR KIDS ACT OF 2002

                                _______
                                

                 July 25, 2002.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 4737]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, to which was referred the bill 
(H.R. 4737) to reauthorize and improve the program of block 
grants to States for temporary assistance for needy families, 
improve access to quality child care, and for other purposes, 
reports favorably thereon with an amendment and refers the bill 
to the full Senate with a recommendation that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Background.......................................................2
 II. Explanation of the Bill..........................................7
      Title I--Funding...........................................     8
          Section 101--Reauthorization of State family assistance 
              grants.............................................     8
          Section 102--Contingency fund..........................     9
          Section 103--Child care................................    10
          Section 104--State option to assist legal immigrant 
              families...........................................    12
          Section 105--Use of funds..............................    12
          Section 106--Definition of assistance..................    14
          Section 107--Maintenance of effort.....................    14
          Section 108--Funding for families assisted by a 
              territory program..................................    15
          Section 109--Repeal of Federal loan fund for State 
              welfare programs...................................    15
          Section 110--Social Services Block Grant (SSBG)........    16
          Section 111--Technical corrections.....................    16
      Title II--Work.............................................    16
          Section 201--Universal engagement......................    16
          Section 202--Work participation requirements...........    18
      Title III--Family Promotion and Support....................    22
          Section 301--Healthy marriage promotion grants.........    22
          Section 302--Abstinence education......................    24
          Section 303--Teen pregnancy prevention resource center.    25
          Section 304--Responsible fatherhood....................    26
          Section 305--Second chance homes.......................    28
      Title IV--Health Coverage..................................    29
          Section 401--5-year extension and simplification of the 
              transitional medical assistance program (TMA)......    29
          Section 402--Optional coverage of legal immigrants 
              under the medicaid program and title XXI...........    30
          Section 403--Clarification of authority of States and 
              local authorities to provide health care to 
              immigrants.........................................    31
      Title V--Child Support and Child Welfare...................    32
          Section 501--Distribution of child support collected by 
              States.............................................    32
          Section 502--Mandatory review and adjustment of child 
              support orders for families receiving TANF.........    35
          Section 503--Decrease in amount of child support 
              arrearage triggering passport denial...............    35
          Section 504--Use of tax refund intercept program to 
              collect past-due child support on behalf of 
              children who are not minors........................    36
          Section 505--Financing review and administrative 
              funding............................................    36
          Section 506--Adoption of uniform State laws............    37
          Section 507--Tribal child support enforcement programs.    37
          Section 508--Report on undistributed child support 
              payments...........................................    38
          Section 509--Use of new hire information to assist in 
              administration of unemployment compensation 
              programs...........................................    38
          Section 510--Annual report on performance of State 
              child support programs.............................    39
          Section 511--Extension of authority to approve 
              demonstration projects.............................    40
          Section 512--Prohibition of limit on the number of 
              demonstration projects or waivers that may be 
              granted to a single State..........................    40
      Title VI--Tribal Issues....................................    40
          Section 601--Tribal TANF programs......................    40
          Section 602--Authority of Indian tribes to receive 
              Federal funds for foster care and adoption 
              assistance.........................................    44
      Title VII--Innovation, Flexibility, and Accountability.....    47
          Section 701--Data collection; performance measures.....    47
          Section 702--State plan................................    49
          Section 703--Research..................................    51
          Section 704--Innovative business link partnership 
              grants for employers and non-profit organizations..    52
          Section 705--Grants to improve access to transportation    54
          Section 706--At-home infant care.......................    54
          Section 707--Grants to conduct demonstration projects 
              on housing with services for families with multiple 
              barriers to work...................................    55
          Section 708--Transitional compliance for teen parents..    55
          Section 709--TANF programs mandatory partners with one-
              stop employment training centers; State opt-out....    56
          Section 710--Advanced planning document process for 
              information management systems procurement approval    56
          Section 711--Waviers...................................    57
          Section 712--Antidiscrimination........................    57
      Title VIII--Budgetary Savings..............................    59
          Section 801--Review of State agency blindness and 
              disability determinations..........................    59
          Section 802--Extension of customs user fees............    59
      Title IX--Effective Date...................................    59
III. Regulatory Impact Statement and Related Matters.................60
 IV. Budget Effects..................................................64
  V. Votes of the Committee..........................................95
VII. Changes in Existing Law.........................................96

                             I. BACKGROUND

    Federal welfare policy dates back to the 1930's when the 
Aid to Dependent Children (ADC)--later Aid to Families with 
Dependent Children (AFDC)--was created as part of the Social 
Security Act of 1935. ADC was a relatively small-scale element 
in President Roosevelt's New Deal policies to provide a social 
safety net for America's disadvantaged, but it was a true 
national effort to assist children in poverty. The original 
intent was to provide a national program of so-called 
``mothers' pensions,'' which a few States had already begun to 
provide. These programs offered a small monthly benefit to 
single mothers raising children and ADC provided federal 
matching funds for all States to do so, with substantial State 
discretion about the policies for providing aid.
    As time passed, the societal expectations for mothers to 
work outside the home shifted. Initially, ADC was meant to 
allow a single mother with children, typically a widow, not to 
have to work outside the home. As more married mothers 
participated in the workforce while rearing children, this 
aspect of ADC--by then known as AFDC--had less support. In 
addition, by the 1960s the proportion of single mothers who had 
never married and were receiving AFDC had grown--and support 
for public assistance for widowed mothers was greater than 
support for aid to never-married mothers. Finally, the Civil 
Rights Movement led to a growing concern that State flexibility 
in setting AFDC rules was being used--often in the South, but 
not only there--to discriminate against African-American 
families. This led to a stronger Federal role in determining 
program rules.
    The interaction of these trends--growing workforce 
participation among all mothers, an increase in the proportion 
of never-married mothers among those receiving AFDC, and more 
Federal intervention to assure even-handed treatment--led to 
numerous attempts to ``reform'' welfare, such as President 
Nixon's Family Assistance Program, proposed originally in 1969 
and debated in Congress for some years thereafter. Some efforts 
were to require work from welfare recipients; others to further 
increase the Federal role. The conflicting pressures led to a 
stalemate.
    It was not until the Family Support Act of 1988 that 
comprehensive legislation to reform AFDC was enacted. Under the 
Family Support Act, States were required to have some welfare 
recipients participating in job training programs and funds for 
child care were provided to help look after their children 
while they did so. Yet after 1988, AFDC caseloads actually 
increased--perhaps in part because of the troubled economy of 
the early 1990s--and there was continued interest in a further 
reform of welfare. Some influential governors sought waivers of 
AFDC rules to test out innovative strategies and soon others 
followed suit. By 1992, Bill Clinton was running for President 
on a campaign platform that called for ``ending welfare as we 
know it.'' The stage was set for the most sweeping and intense 
debate on Federal welfare policy yet.
    President Clinton first offered a welfare reform bill in 
1994. It retained AFDC, but imposed a limit on how long a 
recipient could receive aid without working. In 1995, members 
of Congress, particularly conservatives, proposed ending AFDC 
and replacing it with a new block grant as well as establishing 
an overall five-year time limit on assistance. The discussion 
was heated. For more than 2 years Congress engaged in a far-
reaching discussion of how best to aid low-income families and 
move families from welfare to work. The final version of the 
bill passed the Senate 78 to 21, with support from members of 
both parties.
    The 1996 welfare reform law, the Personal Responsibility 
and Work Opportunity Reconciliation Act (PRWORA), was a 
landmark, a fundamental shift in welfare policy. PRWORA, signed 
into law by President Clinton on August 22, 1996, generally 
applies to fiscal years 1997 through 2002. Therefore, the 
Congress is required to act by the beginning of fiscal year 
2003, or October 1, 2002, to reauthorize the bulk of PRWORA. It 
is for this reason that the Finance Committee considered 
welfare policy and reported out a reauthorization bill.
    PRWORA ended the AFDC program, the Job Opportunities and 
Basic Skills (JOBS) training program, and the Emergency 
Assistance program and replaced them with a new Temporary 
Assistance for Needy Families (TANF) program. Unlike AFDC, TANF 
is a block grant, with States receiving a fixed sum each year 
to provide cash aid to low-income families with children as 
well as welfare-to-work services and activities to prevent 
welfare dependency, such as discouraging births to unmarried 
teenagers. In addition, cash assistance from TANF is generally 
limited to five years, while under AFDC there was no such limit 
on assistance. States are given great flexibility to design 
welfare-to-work programs under TANF and are required to reach 
specified work participation rates among their recipients of 
cash aid.
    The TANF program has brought substantial change to welfare 
policy. With the new flexibility of TANF, States were able to 
create their own programs for moving families from welfare to 
work. Many have shifted to a ``work first'' philosophy, which 
involves an emphasis on quick employment of welfare recipients 
and applicants for assistance. Some have expanded supports for 
low-income working families, such as child care, to better 
enable these families to maintain employment and prevent them 
from needing to turn to cash assistance. PRWORA increased 
funding for the Child Care and Development Block Grant (CCDBG) 
and provided transitional Medicaid coverage to help welfare 
families make the move to employment.
    The results under PRWORA have been striking. From 1996 to 
2000, the TANF cash assistance caseload fell by 50 percent, 
from 4.55 million families to 2.26 million families. While the 
strong economy of the late 1990s certainly helped, previous 
eras of economic growth have not seen similar declines in 
welfare caseloads. At the same time, the poverty rate for 
children under 6 has declined from 22.7 percent in 1996 to 16.9 
percent in 2000, a decline of more than 25 percent. This is the 
lowest rate of poverty among young children since 1974. (It 
should be noted that studies of welfare ``leavers'' confirm 
what these percentages suggest--that substantial numbers of 
welfare recipients have left the rolls for employment but some 
are not earning enough to leave poverty.)
    These positive trends mean that a central question for 
reauthorization is how to continue making progress--how to 
build on the successful aspects of PRWORA and how to address 
those areas where improvements can be made. The change from 
AFDC to TANF is no longer so controversial.
    The Finance Committee conducted a thorough review of PRWORA 
and its effects. In 2001, the Committee began a series of 
bipartisan ``forums'' to generate dialogue between staff of 
Committee members and important outside experts, such as 
representatives of State organizations. This year, the 
Committee has held 3 full committee hearings and 2 subcommittee 
hearings to take testimony on how PRWORA has been implemented 
to date and how best to improve it during the reauthorization 
process.
    The first full committee hearing, on March 12, was 
``Welfare Reform: What Have We Learned?'' It heard testimony 
assessing the changes PRWORA has brought. Witnesses included:
           HHS Secretary Tommy Thompson;
           Robin Arnold-Williams, executive director, 
        Utah Department of Human Services; and
           Rodney Carroll, president and CEO, Welfare-
        to-Work Partnership.
    The second full committee hearing, on April 10, was 
``Issues in TANF Reauthorization: Requiring and Supporting 
Work.'' It heard testimony concerning welfare to work 
strategies. Witnesses included:
           Governors John Engler (R-MI) and Howard Dean 
        (D-VT);
           Lawrence Mead, professor, New York 
        University; and
           Cynthia Fagnoni, Director of Education, 
        Workforce Development, and Welfare Reform, General 
        Accounting Office.
    The third and final full committee hearing, on May 16, was 
``Issues in TANF Reauthorization: Building Stronger Families.'' 
It heard testimony concerning family policy, and how stronger 
families could reduce welfare dependency. Witnesses included:
           HHS Assistant Secretary Wade Horn;
           Dr. Isabel Sawhill, president, National 
        Campaign to Prevent Teen Pregnancy; and
           Kate Kahan, director, Working for Equality 
        and Economic Liberation.
    In addition, the Finance Social Security and Family Policy 
Subcommittee, chaired by Senator Breaux, had 2 welfare 
reauthorization hearings. The First, on March 19, concerned 
child care, and was held jointly with the Health, Education, 
Labor, and Pensions Subcommittee on Children and Families. The 
second, on April 25 concerned hard to employ families on TANF 
and strategies to aid them.
    Members of the Finance Committee introduced legislation 
related to reauthorization of PRWORA. Senator Rockefeller 
introduced the most comprehensive welfare reauthorization bill 
by a member of the Committee, the Personal Responsibility and 
Work Opportunity Reconciliation Act Amendments of 2002 (S. 
2052) on March 21. Many of the reauthorization proposals 
offered by the Bush Administration are incorporated in the 
Working Toward Independence Act (S. 2648), introduced on June 
19, which has been co-sponsored by five members of the Finance 
Committee. Several other members of the Committee, including 
Senators Snowe, Bingaman, Kerry, Breaux, and Lincoln, also 
sponsored bills addressing issues related to welfare 
reauthorization, including child care and child support 
legislation.
    While the Committee was conducting hearings and members 
were developing bills, a group of Finance Committee members 
developed a ``bipartisan consensus'' framework for a potential 
compromise across party lines and among alternative proposals. 
Members of the group were Senators Breaux, Rockefeller, Hatch, 
Jeffords, Snowe, and Lincoln. Their proposals, summarized in a 
letter to Chairman Baucus and Ranking Member Grassley, provided 
the basis for several key provisions in the Committee bill. 
They include ideas drawn from the Administration proposal as 
well as from individual measures introduced by members of the 
group and other Senators.
    The Committee bill takes as its starting point proposals 
made by the President. It increases the work participation 
requirements States must achieve from 50 percent to 70 percent 
by FY 2007. It also eliminates the current ``caseload reduction 
credit'' States can use to meet the rates through simply 
assisting fewer families and replaces it with an employment 
credit, to reward States with effective programs to move 
welfare recipients into employment. (The employment credit 
provisions in the Committee bill owe much to a version 
developed by Senator Lincoln). The Committee also increases the 
number of hours required per week in priority activities from 
20 to 24, as does the Administration plan. As Secretary 
Thompson said when he testified on March 12, the goal is to 
``maximize self-sufficiency through work.''
    The Committee bill also includes an important ``universal 
engagement'' requirement, also based on an Administration 
proposal and suggestions from Senator Hatch. Particularly now 
that aid is time-limited, it is important that families 
receiving assistance be engaged in activities to move towards 
self-sufficiency. The Committee bill requires States to have 
plans for each welfare family with an adult, a map to guide 
them off the rolls and towards work and self-sufficiency. The 
Committee bill seeks to move state TANF programs in the 
direction of that of Utah, as described by Robin Arnold-
Williams at the March 12 hearing, of ``moving families off of 
welfare and into work through an individualized case 
assessment, diversion assistance, employment and training, and 
ongoing case management.'' The Committee bill also funds an 
effort to develop state-specific indicators of child well-
being, to build upon the Administration's interest in 
increasing the focus on child well-being in TANF programs.
    The Committee bill includes grants to experiment with 
approaches to encouraging healthy marriages, another 
Administration priority. It provides $200 million per year for 
demonstration grants for activities like voluntary counseling 
of unwed expectant parents on relationship skills. A rigorous 
evaluation is included to help better understand if Federal 
funding of these activities can improve family formation, 
family stability, and child well-being in the long run. As 
Assistant Secretary Horn testified at the May 16 hearing, the 
goal is to ``increase the number of children who grow up in 
healthy marriages, and decrease the number of children who grow 
up in unhappy marriages.''
    Finally, the Committee bill includes important reforms of 
the rules governing the distribution of child support 
collections, based upon proposals from the Administration and 
Senator Snowe. These reforms both simplify program 
administration and result in more collections going to 
custodial parents. As Vicki Turetsky, a Senior Staff Attorney 
at the Center for Law and Social Policy, noted at the May 16 
hearing, ``Research indicates that single parents who receive 
regular child support payments are likely to find work more 
quickly and to hold jobs longer than those who do not receive 
child support. When families receive regular support, they are 
less likely to return to welfare.''
    However, the Committee bill reflects 2 concerns with the 
Administration's approach and with the House-passed measure, 
the original H.R. 4737, which includes much of the 
Administration's plan. First, these similar proposals both 
unduly limit state flexibility in the operation of a TANF 
program. For example, the current list of ``priority'' 
activities for work participation purposes is actually narrowed 
under the Administration proposal and House-passed measure. 
Given the success of States under welfare reform to date, it 
makes more sense to the Committee to allow States additional 
options, not to reduce them. As Governor Dean of Vermont 
testified at the April 10 hearing, ``The Administration's 
proposed work requirements will significantly erode the primary 
TANF purpose of increasing States' flexibility to operate a 
program designed to meet the four TANF purposes.'' Instead, the 
Committee bill permits States more flexibility, such as the 
ability to design longer training programs for a subset of 
their recipients. This flexibility better allows States to 
individualize the strategies they design for each family under 
the universal engagement requirement.
    Second, both the Administration proposal and House-passed 
measure have too few resources to support the low-income 
working poor, particularly in the area of child care. The 
Administration, for example, proposed no new funding for the 
Child Care and Development Block Grant (CCDBG). Given the role 
that child care subsidies can play in preventing families from 
needing to go on welfare--by enabling single mothers to work--
this struck the Committee as a huge error. The Committee bill 
increases CCDBG funding by $5.5 billion over the next five 
years. As Mark Greenberg, a Senior Staff Attorney at the Center 
for Law and Social Policy testified at the March 19 
subcommittee hearing, ``[I]t will be impossible for States to 
make significant progress, or even maintain current levels of 
assistance to families, if [TANF] reauthorization does not 
provide adequate child care funding.''
    All in all, the Committee bill reflects a balanced 
approach, with provisions drawn from the Administration and 
from members of both parties in the Senate. It works with the 
States, offering a challenge to them to improve their 
performance but also providing them with new options and 
additional resources to help meet the challenge. It will 
continue the success of welfare reform and provide greater 
assistance to low-income families as they move to self-
sufficiency.

                      II. DESCRIPTION OF THE BILL

    The legislation reported by the Finance Committee consists 
of the following provisions:

Section 1--Findings

                              PRESENT LAW

    The Personal Responsibility and Work Opportunity 
Reconciliation Act (PRWORA) of 1996 (P.L. 104-193), made a 
series of findings related to marriage, responsible parenthood, 
trends in welfare receipt and the relationship between welfare 
receipt and non-marital parenthood, and trends in, and negative 
consequences of, non-martial and teen births.

                        EXPLANATION OF PROVISION

    The bill makes several findings: PRWORA was a fundamental 
change. Cash caseloads are down by about 50 percent, and about 
two-thirds of former recipients have left for work. More than 
one-half of TANF spending now goes for work supports and 
efforts to prevent welfare dependency, not traditional cash 
aid. More investments in quality child care will allow parents 
to enter and remain in the workforce. Although employment has 
increased, many families struggle in low-wage jobs and have 
difficulty obtaining promised work supports. Although child 
poverty rates are improving, they remain high compared to those 
of other developed nations and more must be done to lower U.S. 
child poverty. Many TANF parents face multiple barriers to 
employment and need a range of services. States should have 
self-sufficient plans for each family receiving TANF and the 
plans should consider the children's well-being. Children 
deserve supportive homes, preferably with 2 parents, and 
discrimination against 2-parent families in welfare programs 
should end. Welfare reform has been successful because it is a 
flexible partnership with the States. States have had to assume 
new responsibilities and need to upgrade skills of workers. 
Studies indicate disparate racial treatment.

                           REASONS FOR CHANGE

    The new findings represent observations on implementation 
of welfare reform to date and priorities to address in moving 
ahead.

                            TITLE I--FUNDING

Section 101--Reauthorization of State family assistance grants

                              PRESENT LAW

    The law provided $16.5 billion annually for family 
assistance grants to the States for FY1997-FY2002. Basic grants 
were computed from Federal expenditures for TANF's predecessor 
programs during FY1992 through FY1995. The law also provided 
supplemental grants for 17 States with low historic Federal 
grants per poor person and/or high population growth. These 
grants were originally for FY1998-FY2001 and then extended 
through September 30, 2002 at FY2001 funding level of $319 
million by P.L. 107-147. Supplemental grants grew each year 
(except for FY2002), from $79 million in FY1998 to $319 million 
in FY2001. The FY2002 TANF funding total for basic and 
supplemental grants is about $16.8 billion.

                        EXPLANATION OF PROVISION

    The bill extends TANF funding through FY2007 and provides 
$16.5 billion annually for basic grants to the States. It also 
extends and expands TANF supplemental grants so as to qualify 
24 States (an increase of seven States) at a total cost of $441 
million per year. The new supplemental grants are folded into 
the main TANF block grant, not continued as separate funding. 
The result is to appropriate a total of $16.9 billion annually 
for augmented basic grants. States currently receiving a 
supplemental grant would receive at least their current amount 
of funding. States with per capita incomes for calendar years 
1998, 1999, and 2000 at least 10 percent below the national 
average would receive a 5 percent increase in TANF funding; 
States with per capita incomes at least 20 percent below the 
national average would receive a 10 percent increase in TANF 
funding. Appropriated by section 101 is $17.044 billion for 
FY2003, consisting of augmented basic grants, $16.929 billion; 
family assistance grants to territories (see section 108), $78 
million; and research (see sections 703-707), $37 million. For 
FY2004-FY2007, the funding is $17.042 billion per year because 
research funding for those years is $35 million. (In addition, 
the bill creates TANF grants for healthy marriage promotion; 
business link partnerships, implementation of universal 
engagement requirement, second chance homes, and transportation 
grants.)

                           REASONS FOR CHANGE

    While cash assistance caseloads are lower than in 1996, the 
flexible nature of TANF means that States can use the funds for 
a variety of work supports and prevention activities which 
continue to be priorities. So the Committee bill continues 
basic TANF funding to States at its current level. The TANF 
supplemental grants are an important step to addressing 
disparities in State TANF allocations. The evolution of TANF 
into work supports and prevention activities means that the 
base TANF allocations--derived from prior spending for cash 
assistance--are less meaningful and the Committee expands the 
supplemental grants to continue to address these disparities 
without reducing funding for any State. States with low per 
capita incomes have a higher proportion of low-income working 
families and less fiscal capacity to support them. It 
consolidates supplemental grants with the base TANF grants to 
reflect their importance and to streamline and simplify 
administration of the supplemental.

Section 102--Contingency fund

                              PRESENT LAW

    PRWORA provided capped matching grants ($2 billion) in a 
``contingency fund'' to increase TANF funding for States in 
case of recession. These grants were originally for FY1997-
FY2001 and extended through September 30, 2002 by P.L. 107-147. 
States must match the contingency grants at their Medicaid 
matching rate (FY2003 State matching rates range from 23.4 
percent to 50 percent). To qualify for contingency dollars, 
States must spend under the TANF program a sum of their own 
dollars equal to their pre-TANF spending and must have been 
``needy'' in the most recent 3-month period. To qualify as 
needy the State's total unemployment rate (seasonally adjusted) 
must be at least 6.5 percent and up 10 percent from the 
corresponding rate in at least one of the 2 preceding years or 
its food stamp average monthly caseload must be up 10 percent, 
compared to what enrollment would have been in the 
corresponding period of FY1994 or FY1995, as determined by the 
Secretary of Agriculture, if changes made in the 1996 welfare 
law to food stamp rules and alien eligibility had been in 
effect throughout FY1994 and FY1995.

                        EXPLANATION OF PROVISION

    The bill reauthorizes the contingency fund with several 
changes. It reduces the State maintenance-of-effort (MOE) 
requirement for the fund from 100 percent of historic spending 
levels to the standard TANF MOE requirement (75 percent in 
general but 80 percent if the State fails work participation 
standards). In order to bed eligible for contingency funds, a 
State must have expended 70 percent of total TANF grants (other 
than welfare-to-work grants) received by it. The bill bases a 
needy State's contingency grant on the estimated benefit cost 
of the TANF caseload increase, measured from either of the 2 
fiscal years immediately preceding the year in which it 
qualifies as needy. For contingency grants, it reduces the 
maximum State matching rate from 50 percent to 40 percent, but 
provides reimbursement for only the portion of the State's 
caseload increase that exceeds 4 percent (thus, for 96 percent 
of the increase), and it limits a State's total contingency 
grant to 10 percent of its annual family assistance grant.
    The bill also revises ``needy'' State unemployment and food 
stamp triggers. To qualify as needy, 1 of the following 
criteria must be met: (a) a State's total unemployment rate 
must rise by the lesser of 1.5 percentage points or 50 percent; 
or its average insured unemployment rate must rise by 1 
percentage point, compared with the corresponding 3-month 
period in either of the 2 most recent preceding fiscal years; 
(b) the monthly average number of food stamp households (as of 
the last day of each month) must rise 10 percent above the 
number in the corresponding 3-month period in either of the 2 
most recent preceding fiscal years; or (c) the monthly average 
number of families receiving assistance under the TANF program 
or under a State-funded program must rise 10 percent above the 
number in the 3-month corresponding period in either of the 2 
most recent preceding fiscal years. In the 2 latter cases, the 
Secretaries of Agriculture and HHS, respectively, must 
determine that the increased caseload was caused, in large 
measure, by economic conditions, not by governmental policy 
changes. The bill reserves $25 million for contingency grants 
to Indian tribes (see section 601).

                           REASONS FOR CHANGE

    The TANF contingency fund represents an important tool in 
assisting States suffering through severe economic distress. 
However, based on the experience since 1996, the design of the 
fund, particularly the triggers and payment mechanism have been 
demonstrated to be ineffective. The Committee bill updates the 
fund's design to better enable it to serve its intended 
function.

Section 103--Child care

                              PRESENT LAW

    The law entitles States to a basic mandatory block grant 
(``guaranteed'') for child care, based on FY1992-FY1995 
expenditures in welfare-related child care. Additional 
mandatory funds above this amount are provided to States on a 
matching basis. PRWORA provides these entitlement (mandatory) 
funds for FY1997 through FY2002, and requires that they be 
spent under the rules of the Child Care and Development Block 
Grant (CCDBG). Mandatory child care funds provided for FY2002 
totaled $2.717 billion. Under current law, Puerto Rico is not 
entitled to any mandatory child care funding.
    In addition to these mandatory funds provided under PRWORA 
for child care, States may spend their TANF family assistance 
grants for child care. No provision in TANF requires child care 
providers funded directly within TANF to be in compliance with 
any designated health and safety requirements. However, the law 
also allows States to transfer TANF funds to the CCDBG, and 
such funds must be spent in accordance with CCDBG rules. CCDBG 
requires that child care providers comply with applicable State 
and local health and safety requirements, which must include 
prevention and control of infectious diseases (including 
immunizations), building and premises safety, and minimum 
health and safety training appropriate to the provider setting.

                        EXPLANATION OF PROVISION

    The bill provides mandatory child care funding at the 
following levels: $3.717 billion in each of FY2003-FY2005; and 
$3.967 billion in each of FY2006 and FY2007. The increases up 
to the $3.717 billion level in each of the 5 fiscal years is 
applied to the ``guaranteed'' portion of mandatory funding 
(requiring no match and allocated to States according to the 
same proportion of guaranteed funds received in FY2002); the 
increase beyond that (i.e., the additional $250 million in each 
of FY2006 and FY2007) requires a State match and is allocated 
based on States' relative share of children under age 13. All 
increases above the FY2002 mandatory funding level are to 
supplement and no supplant State funding for child care. Of the 
new funding that requires no match, $10 million is to be 
reserved for Puerto Rico in each of FY2003-FY2007.
    In addition, States are required to certify in their State 
TANF plans that procedures are in effect to ensure that any 
child care provider delivering child care services funded by 
TANF complies with the health and safety requirements 
applicable to the CCDBG.

                           REASONS FOR CHANGE

    The Committee bill increases work requirements. To meet 
these higher requirements without reducing the child care 
resources available to assist low-income working families, the 
Committee increases funding for CCDBG. In addition, the 
Committee increases CCDBG funding above what is the estimated 
cost of the higher work requirements to address the need for 
child care subsidies among low-income working families who are 
not on TANF. Given the current difficult situation of State 
budgets, the higher funding levels are mostly provided without 
a required State match. This also ensures that all States, 
including relatively poor ones, will be able to use the funds. 
(There is a requirement that these funds supplement, not 
supplant, current State spending for child care.) In addition, 
the Committee bill provides an additional $10 million per year 
in CCDBG funding for Puerto Rico to improve child care 
assistance and aid welfare reform efforts there. The Committee 
bill also applies CCDBG rules to child care directly funded by 
TANF to help ensure children are safe in all child care 
settings.

Section 104--State option to assist legal immigrant families

                              PRESENT LAW

    Most legal permanent residents (LPRs) who came to the 
United States after the enactment of PRWORA (August 22, 1996) 
are ineligible for Federally funded TANF for the first 5 years 
after their entry into the United States, with special 
immigrant cases excepted in the law. The States have the option 
of providing TANF to all LPRs after 5 years in the United 
States. After LPRs have worked 40 quarters or become U.S. 
citizens they are otherwise eligible. When an LPR seeks to 
receive TANF, the eligibility determination process deems the 
income of the person who sponsored the immigrant petition to be 
available to the LPR until the LPR becomes a citizen or has 
earned 40 quarters of work history.

                        EXPLANATION OF PROVISION

    The bill would give States the option to use TANF funds to 
assist all LPRs, including those who have arrived on or after 
August 22, 1996. It requires States taking this option to deem 
immigrants' income to include income of sponsors for purposes 
of determining eligibility for only 3 years after entry, 
essentially making the deeming rules for the post-PRWORA 
immigrants comparable those for pre-PRWORA immigrants. These 
deeming rules would not apply to minor alien children of 
sponsored immigrants, indigents, battered spouses, and battered 
children.

                           REASONS FOR CHANGE

    Under TANF, States receive a fixed sum each year. The 
Committee bill increases State flexibility by providing States 
the option to use the funds to assist legal immigrants who have 
come to the United States since 1996. Such immigrants pay taxes 
and came to the United States legally. States do not receive 
additional funding but are allowed to use current funding to 
assist these immigrant families, if they choose to do so. The 
Committee bill does require that the income of an immigrant's 
sponsor be ``deemed'' to the immigrant for 3 years, to help 
enforce sponsor responsibility.

Section 105--Use of funds

                              PRESENT LAW

    The law permits TANF funds to be used ``in any manner 
reasonably calculated'' to promote any of the program's goals. 
States also may use TANF funds to continue other activities 
that they were authorized to undertake in individual State 
plans under TANF-predecessor programs. No more than 15 percent 
of funds can be used for administrative purposes (but this 
limit does not apply to spending for information technology and 
computerization needed for required tracking or monitoring). 
Funds may not be used to finance the construction or purchase 
of a building or to provide medical services.
    TANF funds may be carried over from fiscal year to fiscal 
year for ``assistance,'' defined in regulations as benefits 
designed to meet a family's ongoing basic needs, plus 
supportive services for families who are not employed. Funds 
used for ``nonassistance'' must be obligated by the end of the 
fiscal year for which they are awarded and spent by the end of 
the next year. States may transfer up to 30 percent of TANF 
funds to CCDBG and Social Services Block Grant (SSBG). Within 
the 30 percent cap, funds may serve as State match for Job 
Access/Reverse Commute grants.

                        EXPLANATION OF PROVISION

    The bill permits carryover of TANF funds for any benefit or 
service, including nonassistance, without fiscal year spending 
limit. It also permits transfer of TANF funds to Job Access/
Reverse Commute projects. It clarifies that the general 15 
percent cap on administrative expenditures applies to the full 
TANF allocation, no matter how much funding is transferred. It 
explicitly permits States to use TANF grants for a 2- or 4-year 
degree post-secondary educational program, subject to the 
overall time limit, and for supplemental housing benefits for 
families with earnings. The bill specifies that enrollment in 
the post-secondary degree program must be required by the 
person's Individual Responsibility Plan (IRP) and that 
participants must engage in a combination of educational and 
other activities for an average of at least 24 hours weekly 
during the first 24 months and thereafter must work at least 15 
hours weekly or engage in a combination of educational and 
other activities for at least 30 hours. The State may give 
``work'' credit for study time, at the rate of at least 1 hour, 
and not more than 2 hours, for each hour of class time. TANF 
funds could be used to provide support services other than 
tuition for students. The bill allows use of TANF funds to 
provide supplemental housing benefits (defined as payments made 
to, or on behalf of, a person to reduce or reimburse his/her 
costs for housing), and to pay minor rehabilitation costs, as 
defined by the State, for housing owned or rented by TANF-
eligible persons. Supplemental housing benefits could not 
supplant existing State spending on housing-related programs, 
and the bill specifies that these benefits are not to be 
considered assistance. (See section 106 for bill's new 
definition of assistance.)

                           REASONS FOR CHANGE

    As TANF has shifted to providing more work supports, States 
have found that current distinctions between ``assistance'' and 
``nonassistance'' have made the provision of aid to low-income 
working families more complicated. The Committee bill provides 
States additional flexibility in the use of funds carried over 
from one fiscal year to the next to better aid low-income 
working families.
    In addition, under an amendment offered by Senator Snowe, 
the Committee bill allows States the option to create post-
secondary education programs for TANF recipients, but caps the 
number of participants in such a program who can be counted 
towards meeting the work participation requirements at 10 
percent. In doing so, the Committee is using a Maine ``Parents 
as Scholars'' program as a model. A recent study found that 
participants in this program earned a median wage of $11.71 per 
hour afterwards, substantially higher than the average wage of 
most recent welfare leavers. The bill permits States to allow a 
subset of recipients to benefit from such a post-secondary 
strategy while maintaining an overall work orientation. 
Finally, the Committee bill allows States to provide 
supplemental housing benefits to low-income families with 
earnings as ``nonassistance'' to give States another tool in 
supporting these families in employment. This provision is 
drawn from S. 2116, introduced by Senator Kerry.

Section 106--Definition of assistance

                              PRESENT LAW

    Parents and other caretakers who receive assistance are 
subject to work requirements and time limits, and they are 
required to assign child support payments to the States. (In 
addition, States are subject to detailed reporting requirements 
about recipients of assistance, including their financial and 
demographic characteristics and their work activities.) The law 
does not define ``assistance.'' Regulations define it as 
ongoing aid to meet basic needs, plus support services such as 
child care and transportation subsidies for unemployed 
recipients. Assistance does not include short-term benefits.

                        EXPLANATION OF PROVISION

    The bill establishes a definition of ``assistance'' 
different from that adopted by regulation. The new definition 
is payment, by cash, voucher, or other means, to a person or 
family for the purpose of meeting a subsistence need (including 
food, clothing, shelter, and related items). It explicitly 
excludes all costs of transportation, child care, and (as 
defined in Section 105) supplemental housing benefits. At the 
request of the Agriculture Committee, the bill includes a 
provision to ensure that States can continue to use the June 1, 
2002 TANF assistance definition in exercising their option to 
use TANF vehicle asset rules in the food stamp program when 
TANF rules are more liberal.

                           REASONS FOR CHANGE

    As TANF has provided more work support aid to low-income 
working families, the distinction between ``assistance'' and 
``nonassistance'' has become more important. The Committee bill 
allows States to treat additional forms of work support, short 
of traditional cash aid, as ``nonassistance.'' This provides 
additional flexibility in designing work support programs. It 
also, to some extent, codifies current regulations.

Section 107--Maintenance of effort

                              PRESENT LAW

    To receive a full TANF grant, State spending under all 
State programs in the previous year on behalf of TANF-eligible 
families (defined to include those ineligible because of the 5-
year time limit or the Federal ban on benefits to new 
immigrants) must equal at least 75 percent of the State's 
historic level (sum spent in FY 1994 on AFDC and related 
programs). If a State fails work participation requirements, 
the required spending level rises to 80 percent. State 
expenditures that qualify for maintenance-of-effort credit are 
cash aid, child care, educational activities designed to 
increase self-sufficiency, job training, and work (but not 
generally available to non-TANF families), administrative costs 
(15 percent limit), child support collection passed through to 
a TANF recipient family without benefit reduction, and any 
other use of funds reasonably calculated to accomplish a TANF 
purpose.

                        EXPLANATION OF PROVISION

    The bill extends the maintenance-of-effort requirement for 
five years, through FY2007. It allows a State to count as a 
qualifying MOE expenditure amounts of child support arrearages 
distributed to former TANF families.

                           REASONS FOR CHANGE

    The Committee bill continues the import MOE requirement but 
adds 1 additional allowable spending activity, related to the 
distribution of child support collections to families.

Section 108--Funding for families assisted by a territory program

                              PRESENT LAW

    The combined annual Federal funding for public assistance 
programs for Puerto Rico, Guam, the Virgin Islands, and 
American Samoa is capped at a maximum dollar amount. The cap, 
which totals $116.5 million, covers the combined Federal TANF 
family assistance grants ($77.9 million annually) plus funds 
available for adult assistance, child protection, and Section 
1108(b) matching grants ($38.6 million annually). Funds above 
the TANF family assistance grant level are available on a 75 
percent matching basis for adult public assistance, TANF, or 
Title IV-E programs (foster care, adoption assistance, and 
independent living).

                        EXPLANATION OF PROVISION

    The bill increases the total annual cap on Federal funding 
for public assistance programs for the territories from $116.5 
million to $119.6 million. New caps, compared with current 
ones: Puerto Rico, $109,936,375 ($107,255,000); Guam $4,803,150 
($4,686,000); Virgin Islands, $3,642,850 ($3,554,000); and 
American Samoa, $1,250,000 ($1,000,000). The bill also extends 
appropriations for 1108(b) matching grants through FY2007. (For 
new child care funding for Puerto Rico, see section 103).

                           REASONS FOR CHANGE

    The Committee provides an increase in funding for the 
territories to assist their implementation of welfare reform.

Section 109--Repeal of Federal loan fund for State welfare programs

                              PRESENT LAW

    The law provided an interest-bearing loan fund for State 
TANF programs, capped at $1.7 billion.

                        EXPLANATION OF PROVISION

    The bill repeals the loan fund.

                           REASONS FOR CHANGE

    The loan fund has not been used and States in economic 
distress can avail themselves of the improved Contingency Fund 
(see Section 102).

 Section 110--Social Services Block Grant (SSBG)

                              PRESENT LAW

    Under a provision of the law making appropriations for the 
Department of Health and Human Services (P.L. 107-116), States 
maintained the authority to transfer up to 10 percent of their 
annual TANF allotments to SSBG in FY2002. This superceded the 
provision of the Transportation Equity Act (P.L. 105-178), 
which had scheduled the transfer authority to be reduced to 
4.25 percent beginning in FY2001.
    The SSBG was permanently authorized at a level of $1.7 
billion beginning in FY2001. Although actual appropriations for 
the SSBG have in some years exceeded the authorized level, $1.7 
billion were appropriated in FY2002.

                        EXPLANATION OF PROVISION

    The bill permanently restores States' authority to transfer 
up to 10 percent of their annual TANF allotments to the SSBG, 
beginning in FY2003.
    The bill funds SSBG at a level of $1.952 billion for 
FY2005, an increase of $252 million above the FY2002 level. 
(Separately, as recently approved by the Committee, H.R. 7, the 
CARE Act, funds SSBG at $1.975 billion for FY2003 and $2.8 
billion for FY2004.

                           REASONS FOR CHANGE

    The Committee adopted an amendment offered by Senator 
Rockefeller to restore the 10 percent transfer authority and 
increase the funding for SSBG in FY2005. This increases State 
flexibility and resources available for assisting low-income 
families. (The Committee recently addressed funding for SSBG in 
FY2003-2004 as part of H.R. 7, the CARE Act.)

Section 111--Technical corrections

                       EXPLANATION OF PROVISIONS

    Because it was ruled to be unconstitutional, the bill 
strikes a provision that allowed a TANF program to treat 
interstate immigrants under rules of their former State. Other 
changes correct punctuation and spelling.

                             TITLE II--WORK

Section 201--Universal engagement

                              PRESENT LAW

    State TANF plans must require that a parent or caretaker 
engage in work (as defined by the State) after, at most, 24 
months of assistance. (This requirement is not enforced by a 
specific penalty.) States must make an initial assessment of 
the skills, prior work experience, and employability of each 
recipient 18 years or older or those who have not completed 
high school within 30 days. States may, but need not, establish 
an individual responsibility plan (IRP) for each TANF recipient 
in consultation with the recipient. The State may reduce the 
benefit payable to a family that includes a person who fails 
without good cause to comply with a responsibility plan signed 
by the recipient.

                        EXPLANATION OF PROVISION

    The bill requires States to screen and assess the 
education, skills, prior work experience, work readiness, and 
barriers to employment of adult or minor head of household 
receiving assistance who has reached age 18 or has not 
completed high school or obtained a certificate of high school 
equivalency, and is not attending secondary school. States also 
must assess the well-being of children in the family and 
services for which families are eligible. The bill requires an 
IRP for each parent/minor head of household described above and 
requires recipient parents or caretakers to participate with 
the State in this process. The IRP must detail required work 
activities and needed work supports, address the issue of child 
well-being and, if appropriate, adolescent well-being. IRPs 
also must include a section making available to the family 
information concerning work supports for which they may be 
eligible. Recipient parents or minor heads of household are 
required to participate in activities in accordance with IRP, 
and States are required to monitor their participation and 
review their progress. Before imposing a sanction, States must 
review the person's IRP.
    Beginning in FY2004, new families with adults receiving 
assistance must have an IRP within 60 days of enrollment, and 
IRPs for current recipients must be completed by September 30, 
2004. The bill also requires the HHS Secretary to develop and 
disseminate model screening tools to assist States in 
identifying barriers to employment or program compliance. These 
tools are to be developed in consultation with individuals and 
groups with expertise in circumstances such as physical or 
mental impairments, including mental illness, substance abuse, 
learning disability, limited English proficiency, or the need 
to care for a child with a disability. To help States implement 
the new universal engagement rules, $120 million is provided to 
States over 4 years (FY2003-FY2006) for: training to improve 
caseworkers' ability to identify barriers to work and 
indicators of child well-being, communication of information 
concerning program requirements to recipients of (and 
applicants for) assistance, coordination of support programs 
for low-income families, conduct of outreach to promote 
enrollment among eligible families, and advisory panels, 
charged with reviewing policies and procedures for helping 
persons with work barriers. Nothing in this section shall be 
construed as conveying a private right or cause of action 
against the State or as limiting claims that may be available 
under other Federal or State laws.
    The bill requires HHS to consult with the National 
Governors Association, American Public Human Services 
Association, and National Conference of State Legislators in 
development of these implementation efforts, including the 
development of regulations and in the provision of technical 
assistance. It also requires the General Accounting Office 
(GAO) to assess implementation of these provisions and to 
submit a report by September 30, 2005 to the Senate Finance and 
House Ways and Means Committees.

                           REASONS FOR CHANGE

    In a proposal based on the administration's plan, the 
Committee bill requires States to develop IRPs for each family 
with an adult recipient or minor head of household. These plans 
are to provide a map guiding the recipient toward self-
sufficiency. There are several required aspects of the IRP to 
ensure appropriate assessment of a family's need, barriers to 
employment, participation in required activities, and 
connection to appropriate other sources of aid. This provision 
is central to the Committee's bill and the goal of ``universal 
engagement'' of welfare recipients in activities to promote 
self-sufficiency. To assist States in implementing the new 
requirement, funding is provided for training of staff and 
other related expenses. This will help improve the ability of 
welfare agencies to identify barriers to employment so that 
IRPs can be designed to appropriately address the needs of a 
family.

Section 202--Work participation requirements

            Work participation rates

                              PRESENT LAW

    Fifyt percent of all families with an adult recipient 
(including 90 percent of 2-parent families other than those 
with a disabled parent) must engage in listed work activities 
for specified minimum hours (see below). (Participation rates 
began at 25 percent for FY 1997 and reached the 50 percent peak 
in FY2002. For 2-parent families they began at 75 percent and 
rose to 90 percent in FY1999.) States may exempt single parents 
caring for a child under 1 year old and exclude them from 
calculation of participation rates. For first failure to meet 
the participation rate, the penalty is 5 percent of the State's 
basic grant (penalty may be reduced for degree of failure). The 
State must replace penalty funds with its own. For successive 
failures, the penalty rate rises.

                        EXPLANATION OF PROVISION

    The bill eliminates the separate 2-percent participation 
rate. It increases the work participation rate by 5 percentage 
points yearly until FY2007, as follows: 55 percent in FY2004, 
60 percent in FY2005, 65 percent in FY2006, and 70 percent in 
FY2007. The current penalties are maintained.

                           REASONS FOR CHANGE

    The Committee bill increases work participation 
requirements to move toward universal engagement policies under 
which States actively engage all welfare recipients in moving 
toward self-sufficiency. The bill ends the separate 2-parent 
rate, which appears to have discourage some States from working 
with 2-parent families in TANF.
            Employment credit

                              PRESENT LAW

    A caseload reduction credit reduces a State's required 
participation rate by 1 percentage point for each percent 
decline (not attributable to eligibility and other rule 
changes) in the caseload from its FY1995 level.

                        EXPLANATION OF PROVISION

    The bill eliminates the caseload reduction credit and 
substitutes an employment credit. (For FY2003, States will have 
the option to delay the new work participation standards and 
work hour requirements and have their work participation 
targets calculated on the basis of both the current caseload 
reduction credit and the new employment credit (one-half credit 
rate for each).) The employment credit reduces the required 
participation rate for recipients who leave the rolls and are 
employed. The percentage point reduction is calculated by 
dividing (a) twice the unduplicated number of families who 
ceased receiving TANF for at least 2 months in the preceding 
year (and did not receive aid from a separate State-funded 
program during those 2 months) and were employed in the next 
quarter by (b) the average monthly number of families with an 
adult cash recipient in the preceding year. The bill also gives 
States extra credit (as 1.5 families) for a family that leaves 
and has earnings equal to at lease 33 percent of the average 
wage in the State. It also gives States the option to receive 
credit for those whom it ``divert'' from joining TANF rolls 
with a short-term non-recurring benefit and who are employed in 
the next quarter after diversion, earning at least $1,000.
    In calculating work participation rates, the bill allows 
partial credit for recipients who work part-time, so long as 
they work at least 50 percent of the time required of them, 
allows States to count as ``engaged in work'' persons receiving 
``substantial'' child care or transportation assistance, as 
defined by the Secretary of HHS in consultation with directors 
of State TANF programs (specifying for each type of assistance 
a dollar threshold or a length of time over which the 
assistance is received), and removes from work participation 
calculations TANF recipients who become eligible for SSI during 
the year.
    Required work participation rates cannot be reduced by the 
employment credit (and by counting persons who receive 
substantial child care or transportation assistance as 
participants) below these levels: 20 percent in FY2004; 30 
percent in FY2005; 40 percent in FY2006, and 50 percent in 
FY2007. however, these caps do not apply to States that have 
met 2 of the triggers for access to the TANF contingency fund 
(see section 102).

                           REASONS FOR CHANGE

    The current caseload reduction credit contains a flawed 
incentive, under which a State may receive credit toward the 
work participation requirements for families who leave 
assistance but do not become employed. The Committee bill 
substitutes an employment credit, limiting the credit States 
receive for those families who leave assistance and are 
employed. The extra credit for families who leave assistance 
and find higher-paying employment is intended to reward States 
making effective use of the new training and education options 
provided elsewhere in the bill. Research suggests that those 
recipients starting in higher-paying jobs are less likely to 
return to welfare in the long run. The Committee bill also 
provides States with ``partial credit'' for families with 
substantial activity but not enough to meet the overall 
requirement so as to better value all work effort. The 
Committee bill also refines the measurement of work 
participation rates by excluding certain families, such as 
those found eligible for disability benefits, from the 
calculation of the rates.
            Work hours

                              PRESENT LAW

    Adult recipients generally must work in a countable 
activity for an average of 30 hours weekly (20 hours if the 
single caretaker of a child under age 6; at least 35 hours if a 
2-parent family). Parents with a 30-hour requirement must spend 
20 hours in priority activities (see below). Teen parents 
without high school diplomas meet work obligation by education 
directly related to work for 20 hours weekly or by satisfactory 
school attendance. (Except for teen parents, single parents 
with a child under 6, and participants in a tribal program with 
different hour requirements, families must work an average of 
at least 30 hours weekly to be counted as working.)

                        EXPLANATION OF PROVISION

    The bill ends the separate rule for 2-parent families. It 
maintains the general requirement for 30 hours of weekly work 
participation by most adults, but increases from 20 hours to 24 
hours the share of time that must be spend in priority 
activities. It retains the provision deeming single parents of 
children under 6 to meet the work requirement by engaging 20 
hours weekly in a priority activity.

                           REASONS FOR CHANGE

    The Committee bill increases the weekly work requirement 
for ``priority'' activities. This sends a signal to States to 
improve performance and maintain a focus on work. The overall 
requirement is maintained at 30 hours, allowing States the 
flexibility to set the overall hours requirements at 30 or 35 
or 40 hours, allowing States the flexibility to set the overall 
hours requirements at 30 or 35 or 40 hours as they best see fit 
and to maximize the effective use of limited resources.
            Priority activities, other countable activities

                              PRESENT LAW

    The law lists nine priority activities that can be counted 
toward the first 20 hours of the general work requirement:
           Unsubsidized job;
           Subsidized private or public job;
           Work experience;
           On-the-job training;
           Job search (generally limited to 6 weeks per 
        year);
           Community service;
           Vocational educational training (12 month 
        lifetime limit); and
           Providing care for child or community 
        service participant.
    Three other activities are countable for the other 10 hours 
required of adult recipients: job skills training related to 
work and (for high school dropouts only) education directly 
related to work and attendance at secondary school. Teen 
parents are deemed engaged in work by satisfactory school 
attendance or by participation in education directly related to 
work for at least 20 hours weekly. Together with these teens, 
persons participating in vocational educational training can 
account for only 30 percent of all persons credited with work.

                        EXPLANATION OF PROVISION

    The bill increases priority work activity hours to 24 per 
week and expands the list of priority activities by:
           Vocational educational training, with a 24 
        month limit (not 12 months); and
           Job search, with an 8 week limit (not 6 
        weeks).
    Time-limited additions to the list of priority activities 
(for the 24-hour weekly work requirement) are:
           Rehabilitative services, provided they are 
        required by the recipient's IRP. As examples, the bill 
        lists adult basic education, limited English 
        proficiency program, or in the case of an individual 
        determined by a qualified medical, mental health, or 
        social services professional as having a physical or 
        mental disability, substance abuse problem or other 
        problem requiring rehabilitative services, substance 
        abuse treatment, mental health treatment, or other such 
        services (countable for 3 months within 24 months; or--
        if a longer time is required in the person's IRP--for 
        up to 6 months, combined with work or job readiness in 
        final 3 months).
    Additions to the list of other activities (for the 
remaining 6 hours) are:
           Rehabilitative services (as described above) 
        until successful completion.
    Under the bill, vocational educational training can account 
for no more than 30 percent of persons credited with work (teen 
parents deemed to be engaged in work are removed from the cap).
    The bill provides that if a State has set up a 2- to 4-year 
degree postsecondary program described in Section 404(1) (see 
section 105 above), it may count participants in such programs 
as engaged in work for the month, up to a limit of 10 percent 
of the average monthly number of recipient families during the 
fiscal year or the immediately preceding fiscal year. This 10 
percent is not included in calculations of the 30 percent 
vocational educational training cap.

                           REASONS FOR CHANGE

    Job search is a key element in ``work first'' employment-
focused strategies. The Committee bill increases the time 
period such activities count toward the work participation 
rates to permit States to require participants to look for work 
full-time until an IRP must be finalized for a family. This 
will allow States to focus IRP development on those families in 
need of more intensive services. In addition, the Committee 
bill allows States to count additional full-time vocational 
training towards the work requirements to give States 
flexibility in designing longer-term programs for a subset of 
recipients, if they wish to do so. The Committee bill also 
removes teen parents completing school from the 30 percent cap 
on vocational educational training since this is a different 
type of activity. Finally, the Committee bill permits full-time 
rehabilitative services to count toward the work participation 
rates for 3 months, to better enable States to individualize 
self-sufficiency strategies for TANF families, subject to 
certain specified conditions. The services can count for an 
additional 3 months when combined with work or work readiness 
activities, and included in the IRP.
            Work exemptions

                              PRESENT LAW

    A State may exempt from work a single parent caring for a 
child under age 1, and for a maximum of 12 months, the State 
may disregard the exempted parent in calculating the State's 
work participation rate.

                        EXPLANATION OF PROVISION

    The Committee bill allows--but does not require--a State to 
exempt from work the full-time caregiver of a family member who 
is disabled and to exclude this family in calculating the 
State's work participation rate. The number of families 
excluded from the work participation rate calculations cannot 
exceed 10 percent of the average monthly number of families 
receiving TANF during the fiscal year or the immediately 
preceding fiscal year. There must be no other able-bodied 
adults in the family and the exempted adult must be the primary 
caregiver of a child or other family member with a physical or 
mental disability or chronic illness. The recipient's IRP must 
specify the need to provide care.

                           REASONS FOR CHANGE

    The Committee adopted an amendment offered by Senator 
Conrad to give States flexibility in addressing the needs of 
recipients with disabled family members in need of full-time 
care. Requiring such recipients to work could, in some 
circumstances, severely disrupt current caregiving arrangements 
and result in more costly new arrangements being required, 
which may not even be available.

                TITLE III--FAMILY PROMOTION AND SUPPORT

Section 301--Healthy marriage promotion grants

                              PRESENT LAW

    States are eligible to receive a share of a $100 million 
per year bonus fund (for FY 1999-FY 2002) if they demonstrate a 
reduction in the non-marital birth ratio while also reducing 
abortions. A maximum of five States may be awarded this 
``illegitimacy'' reduction bonus in any year. If fewer than 
five States qualify, the bonus to them is increased to $25 
million each.

                        EXPLANATION OF PROVISION

    The bill repeals ``illegitimacy'' reduction bonus funding. 
It is replaced by a new Healthy Marriage Promotion grant 
program to support demonstration projects to promote stronger 
families, with a focus on the promotion of healthy marriages. 
The bill provides $200 million per year for FY2003-FY2007. The 
grants would be available to States, tribes, and non-profit 
organizations for a specified list of activities. A 25 percent 
match would be required with ``in-kind'' contributions 
allowable toward the match. The following activities may be 
awarded grants:
           Public advertising campaigns on the value of 
        marriage and the skills needed to increase marital 
        stability and health;
           Voluntary marriage education and marriage 
        skills programs for non-married pregnant women and non-
        married expectant fathers;
           Voluntary pre-marital education and marriage 
        skills training for engaged couples and for couples 
        interested in marriage;
           Voluntary marriage enhancement and marriage 
        skills training programs for married couples;
           Marriage mentoring programs that use married 
        couples as role models and mentors in at-risk 
        communities;
           Teen pregnancy prevention programs;
           Broad-based income support and 
        supplementation strategies that provide increased 
        assistance to low-income working parents, such as 
        housing, transportation, transitional benefits, and are 
        not limited to one or to two parent families; and
           Development and dissemination of best 
        practices for addressing domestic and sexual violence 
        as a barrier to economic security, including caseworker 
        training, technical assistance, and voluntary services 
        for victims.
    HHS is required to make public the criteria for awarding 
grants and the application of all grant proposals funded. All 
organizations receiving funding must consult with national, 
State, local or tribal organizations with demonstrated 
expertise aiding victims of domestic violence. They must also 
agree to participate in the evaluation of the program.
    The bill requires the National Academy of Sciences to 
conduct, or contract for, a comprehensive evaluation of a 
representative sample of programs funded. The bill reserves $5 
million per year from the grant program to support this 
evaluation, which shall include measures of family structure, 
conflict, and child well-being. A report describing initial 
evaluation findings is required from the National Academy of 
Sciences on or before September 30, 2006.
    The bill requires an initial report describing the programs 
funded by the Secretary of HHS on or before September 30, 2005. 
Final reports from both HHS and the National Academy of 
Sciences are due on or before September 30, 2008.
    In addition, the General Accounting Office is required to 
submit a report to the Chairman and Ranking Members of the 
Senate Finance and House Ways and Means Committees describing 
the process HHS used to distribute the funds, the activities 
supported by the funds, and the results of the programs that 
were supported. This report is due on or before September 30, 
2006.

                           REASONS FOR CHANGE

    The Committee has been advised that there appears to be 
little connection between State activity to reduce out-of-
wedlock childbearing and States which have been awarded 
bonuses. In light of this, the Committee bill includes a new 
grant program, funded in part by the elimination of the bonus, 
to promote healthy marriages, based upon a proposal made by the 
administration. The funds can be used to support a variety of 
counseling programs and certain other activities likely to 
support stronger relationships. The Committee bill allows the 
funds to be used for a broad-based income supplementation 
strategy so that a replication of the Minnesota Family 
Investment Program (MFIP) may be attempted. MFIP is the only 
large-scale welfare reform found to have a pro-marriage effect, 
yet the House bill would not fund a replication to test whether 
its income supplementation strategy is effective in other 
States. It is important to the Committee that these counseling 
activities be voluntary and conducted by organizations which 
have consulted with experts in the area of domestic violence. A 
comprehensive evaluation is required so that the relative 
effectiveness of these activities will be better understood in 
future welfare policy discussion.

Section 302--Abstinence education

                              PRESENT LAW

    PRWORA provided $250 million in Federal funds for 
abstinence education within the Maternal and Child Health Block 
Grant ($50 million per year for 5 years, FY1998-FY2002). Funds 
must be requested by States when they solicit Maternal and 
Child Health (MCH) block grant funds (Title V--Section 510 of 
the Social Security Act), and must be used exclusively for the 
teaching of abstinence. To receive Federal funding, a State 
must match every $4 in Federal funds with $3 in State funds.

                        EXPLANATION OF PROVISION

    The bill reauthorizes the abstinence education program 
exactly as under current law, including the $50 million per 
year funding level, for FY2003-FY2007.
    In addition, another $50 million each year for FY2003-
FY2007 is provided for grants to implement ``abstinence first'' 
teen pregnancy prevention strategies (also under the Maternal 
and Child Health Block Grant). The HHS Secretary is authorized 
to award grants to States and Indian tribes to implement teen 
pregnancy prevention strategies that (1) are abstinence-first, 
a strategy that strongly emphasizes abstinence as the best and 
only certain way to avoid pregnancy and sexually transmitted 
infections and that discuss the scientifically proven 
effectiveness, benefits, and limitations of contraception 
technologies in a manner that is medically accurate, (2) 
replicate or substantially incorporate the elements of 1 or 
more teen pregnancy prevention programs that have been proven 
(on the basis of rigorous scientific research), such as service 
learning activities and certain youth development programs, (3) 
delay or decrease sexual intercourse or sexual activity and 
increase contraceptive use among sexually active teens or 
reduce teen pregnancy without increasing risky behavior, and 
(4) incorporate outreach or media programs.
    The bill requires the Secretary of HHS to reserve up to $5 
million over FY2003-FY2007 for the purposes of conducting by 
contract an independent comparative evaluation of the 
abstinence education and abstinence-first programs and to 
report to Congress on the results of the evaluation no later 
than 5 years after enactment of this provision. The bill also 
requires the Secretary of HHS to reserve an amount equal to 
$750,000 each year for awarding grants to Indian tribes.

                           REASONS FOR CHANGE

    Current ``abstinence-only'' funding is continued. In 
addition, under an amendment offered by the Chairman, a 
separate funding stream to support ``abstinence-first'' teen 
pregnancy programs is created. Such programs promote abstinence 
but also provide more comprehensive and science-based pregnancy 
and disease prevention information. This will offer States more 
flexibility in the methods they employ to meet the national 
goal of teen pregnancy reduction (see Section 701) and increase 
the amount of medically accurate information used in teen 
pregnancy prevention programs.

Section 303--Teen pregnancy prevention resource center

                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    The bill requires the Secretary of HHS to make a $5 million 
grant for each year FY2003-FY2007 to a nationally recognized, 
nonpartisan, nonprofit organization (that meets stipulated 
requirements) to establish and operate a national teen 
pregnancy prevention resource center. The purposes of the 
resource center are to provide information and technical 
assistance to States, Indian tribes, local communities, and 
other public or private organizations seeking to reduce rates 
of teen pregnancy; and assist such entities to work through all 
forms of media to communicate effective messages about 
preventing teen pregnancy, including messages that focus on 
abstinence, responsible behavior, family communication, 
relationships, and values. The resource center must carry out 
the purposes through the following activities;
           Synthesizing and disseminating research and 
        information regarding effective and promising practices 
        to prevent teen pregnancy;
           Developing and providing information on how 
        to design and implement effective programs to prevent 
        teen pregnancy.
           Helping States, local communities, and other 
        organizations increase their knowledge of existing 
        resources that can be used to advance teen pregnancy 
        prevention efforts;
           Linking organizations working to reduce teen 
        pregnancy with experts and peer groups, including the 
        creation of technical assistance networks;
           Providing consultation and resources on how 
        to reduce teen pregnancy through a broad array of 
        strategies, including enlisting the help of parents and 
        other adults, community or faith-based groups, the 
        entertainment and news media, business, and other 
        teens; and
           Working directly with individuals and 
        organizations in the entertainment industry to provide 
        consultation and serve as a resource of factual 
        information on issues related to teen pregnancy 
        prevention.
    The Secretary is required to make the grant to a nationally 
recognized, nonpartisan, nonprofit organization that has (1) at 
least 5 years of experience in working with diverse sectors of 
society to reduce teen pregnancy; (2) a demonstrated ability to 
work with and provide assistance to a broad range of 
individuals and entities, including teens, parents, the 
entertainment and news media, State, tribal, and local 
organizations, networks of teen pregnancy prevention 
practitioners, businesses, faith and community leaders, and 
researchers; (3) a research focus and is capable of performing 
scientific analysis and evaluation; (4) comprehensive knowledge 
and data about teen pregnancy prevention strategies; and (5) 
experiences in operating a resource center that carries out 
activities similar to the activities mentioned above (in 
bulleted form).
    The bill requires the organization operating the resource 
center to collaborate with other nonprofit organizations that 
have expertise and interest in teen pregnancy prevention.

                           REASONS FOR CHANGE

    A national teen pregnancy prevention resource center will 
provide a useful intermediary to work with many elements of 
society to discourage teen pregnancies. It will help achieve 
the national goal of reducing teen pregnancy (see section 701).

Section 304--Responsible fatherhood

                              PRESENT LAW

    PRWORA required States to have laws under which the State 
has the authority to issue an order or request that a court or 
administrative process issue an order that requires non-
custodial parents who were unable to pay their child support 
obligation for a child receiving TANF benefits to participate 
in TANF work activities.
    In addition, PRWORA authorized grants to States to 
establish and operate access and visitation programs. These 
programs are to facilitate non-custodial parents access/
visitation to their children. An annual entitlement of $10 
million is available to States for these grants. Eligible 
activities include but are not limited to mediation, 
counseling, education, development of parenting plans, 
visitation enforcement, and development of guidelines for 
visitation and alternative custody arrangements. States may use 
the grants to create their own programs or to fund programs 
operated by courts, local public agencies, or nonprofit 
organizations. The allotment formula is based on the ratio of 
the number of children in the State living with only 1 
biological parent in relation to the total number of such 
children in all States.

                        EXPLANATION OF PROVISION

    The bill creates a grant program to support expansion or 
replication of court-supervised or Child Support Enforcement-
administered employment programs for low-income non-custodial 
parents to assist them in meeting their child support 
obligations. The bill authorizes the Secretary of HHS and the 
Secretary of Labor to jointly award $25 million per year in 
grant funds for FY2004-2007 to eligible States for the purpose 
of establishing, in coordination with counties and other local 
governments, supervised employment programs for non-custodial 
parents (including ex-offenders) who have a history of 
nonpayment or irregular payment of child support obligations, 
and who are determined by the court or Child Support 
Enforcement (CSE) agency to be in need of employment services 
in order to meet child support obligations. A 25 percent non-
Federal match would be required with ``in-kind'' contributions 
allowable toward the match.
    An eligible State that receives a non-custodial parent 
employment grant may contract with a public, private, faith-
based or community-based organization to administer (in 
conjunction with the court or CSE agency) the supervised 
employment program. A supervised employment program must 
include the following goals: to assist specified non-custodial 
parents to establish a pattern of regular child support 
payments by helping them obtain and maintain unsubsidized 
employment; to increase the dollar amount and total number of 
child support orders with collections; and to help specified 
non-custodial parents improve relationships with their 
children.
    The following types of services may be provided under a 
supervised employment program: job development; supervised job 
search; job placement; case management; court and child support 
liaison services; educational assessment; educational 
referrals; vocational assessment; counseling on responsible 
fatherhood and effective parenting; support funds for services 
such as transportation or short-term training; referral for 
support services; employment retention services; outreach to 
community agencies that provide bonding programs; and domestic 
violence services and health services.
    The bill requires the Secretaries to determine the amount 
of each grant to be awarded taking into account the number of 
counties participating in an eligible State and the population 
of the non-custodial parents to be served by the employment 
programs in the State. The Secretaries are required to give 
priority to States with programs designed to target non-
custodial parents whose income does not exceed 150 percent of 
the poverty line. The bill prohibits supervised employment 
programs from allowing a non-custodial parent who is placed in 
the program to graduate from the program and avoid penalties 
for failure to pay a child support obligation until the non-
custodial parent completes at least 6 months of continuous, 
timely payment of his or her child support obligations.
    The bill also creates a grant program to conduct policy 
reviews and demonstration projects to coordinate services for 
low-income non-custodial parents. The bill authorizes $25 
million for each of FY2004-FY2007 for States to conduct these 
policy reviews and demonstration projects.
    The HHS Secretary shall make grants to States to conduct 
policy reviews and develop recommendations with the goals of 
(1) obtaining and retaining employment for low-income non-
custodial parents, increasing child support payments, and 
increasing the involvement of low-income non-custodial parents 
with their children; and (2) coordinating services for low-
income non-custodial parents among the different systems or 
programs in which such parents are involved, including the 
criminal justice system, the TANF program, the Child Support 
Enforcement program, and job training or employment programs.
    In addition, the HHS Secretary shall make grants to States 
to conduct a demonstration project for the purpose of (1) 
testing innovative policies and to better coordinate policies 
and services for low-income non-custodial parents to accomplish 
the goals noted above, or (2) to implement recommendations that 
were based on a policy review funded under this section.
    The bill provides that demonstration funds may be used to 
provide a wide variety of services to low-income non-custodial 
parents, including providing economic incentives (with or 
without penalty) to increase the employment of such parents or 
to increase the amount of child support paid by such parents.

                           REASONS FOR CHANGE

    The Committee bill includes 2 provisions to assist low-
income non-custodial parents better meet child support 
obligations, both based upon provisions in S. 2524, introduced 
by Senators Bayh and Carper. Non-custodial parents who meet 
child support obligations can reduce the need for custodial 
parents to use government assistance programs and are more 
likely to have positive relationships with their children.

Section 305--Second chance homes

                              PRESENT LAW

    Teen parents must live in adult-supervised settings to be 
eligible for TANF, and a group home for unwed teen mothers--a 
``second chance'' home--qualifies as such a setting. Second 
chance homes generally offer access to child care, education, 
job training, counseling, and advice on parenting and life 
skills, provided teen parents abide by rules concerning 
behavior and continue their education or seek employment.

                        EXPLANATION OF PROVISION

    The bill authorizes the Secretary of HHS to award $33 
million per year for FY2004-FY2007 for competitive grants to 
States, local governments, Indian tribes, or public or private 
nonprofit agencies, organizations or institutions, including 
nonprofit Indian organizations to establish, expand, or enhance 
a second chance home. The bill defines a second chance home as 
a community-based, adult-supervised group home that provides 
young mothers and their children with a supportive and 
supervised living arrangement in which such mothers are 
required to learn parenting skills, including child 
development, family budgeting, health and nutrition, and other 
skills to promote their long-term economic independence and the 
well-being of their children.
    The bill limits services provided by the grant funds to 
mothers who are not more than 23 years old and their children. 
Eligible entities would be required to contribute a 20 percent 
non-Federal match, which could include ``in-kind'' 
contributions. Second chance home grants would be awarded for 
period of 5 years. The bill requires the Secretary to give 
priority to an eligible entity that submits an application (1) 
proposing to establish a new second chance home, especially in 
a rural area or tribal community; (2) proposing to collaborate 
with a nonprofit entity in establishing, expanding, or 
enhancing a second chance home; or (3) demonstrating that the 
entity will use TANF funds to support a portion of the 
operating cost of the applicable second chance home.
    The bill requires the Secretary to enter into a contract 
with a public or private entity to evaluate the second chance 
homes supported by grants funded under this section. The entity 
conducting the evaluation must submit to the Congress an 
interim report due not later than 2 years after the date on 
which the entity signs the contract to conduct the evaluation, 
and it must submit a final report not later than 5 years after 
the date on which it signs the contract. The bill requires the 
Secretary to reserve $1 million for FY2004 for the evaluation. 
The bill allows the Secretary to use up to $500,000 to enter 
into contract with a public or private entity that will provide 
technical assistance to the entities that receive grant funds.

                           REASONS FOR CHANGE

    The Committee bill authorizes a grant program to create or 
expand ``second chance'' homes since they may reduce the number 
of second out-of-wedlock births to teen mothers by removing 
them from inappropriate homes and providing structure for the 
mothers to engage in positive activities to move toward self-
sufficiency.

                       TITLE IV--HEALTH COVERAGE

Section 401--5-year extension and simplification of the transitional 
        medical assistance program (TMA)

                              PRESENT LAW

    The laws require States to make transitional (extended) 
benefits available to families who lose Medicaid eligibility 
because of increased hours of employment, increased earnings, 
or loss of a time-limited earned income disregard for at least 
6, and up to 12, months. To be eligible for transitional 
medical assistance (TMA), a family must have received Medicaid 
in at least 3 of the 6 months immediately preceding the month 
in which eligibility is lost. Families who meet reporting 
requirements and whose average gross monthly earnings are below 
185 percent of the Federal poverty guideline (less work-needed 
child care costs) are eligible for the additional 6 months of 
transitional benefits coverage (for a total of 12 months of 
coverage). During the second 6 months, States may impose a 
premium, limit the scope of benefits, and/or use an alternative 
delivery system. The law does not require States to collect 
data on monthly enrollment or monthly participation in TMA. 
Authorization for TMA expires on September 30, 2002.
    The law also permanently extends coverage of transitional 
Medicaid benefits for 4 months to families who lost eligibility 
for Medicaid due to increased child or spousal support 
payments.

                        EXPLANATION OF PROVISION

    The bill extends TMA for 5 years. It permits States to 
provide continuous eligibility for TMA for 12 months by 
removing the reporting requirements for families, and to extend 
benefits for another year (a total 24 months) to families with 
average gross monthly earnings (less work-needed child care) 
below 185 percent of the Federal poverty guideline after the 
first 12 months of TMA coverage. The bill also permits States 
to drop the requirement that families must have received 
Medicaid for 3 of the preceding 6 months in order to be 
eligible for TMA. For States who extend Medicaid eligibility to 
families with average gross monthly earnings (less work-needed 
child care) of up to 185 percent of the Federal poverty 
guideline, the bill allows such States the option of providing 
TMA, as this extended Medicaid eligibility would fulfill the 
Federal requirement to provide TMA. It requires States to 
provide notice to families whose eligibility for TANF is 
terminated with notice of their eligibility for medical 
assistance, or if the State determines a member of the family 
is not eligible, a 1-page letter describing how they may 
qualify and apply for medical assistance (including an 
explanation that the family does not have to receive TANF or 
Federally-subsidized foster care or adoption assistance to 
qualify) along with information on how to apply for the State 
Children's Health Insurance Program (SCHIP). The bill also 
requires States to extend use of outstationed workers (who 
accept applications for Medicaid at locations other than TANF 
offices) to also accept applications for Medicaid under section 
1931 of the Social Security Act. It also requires States to 
collect information on average monthly enrollment and average 
monthly participation rates for adults and children in TMA, and 
requires the CMS Administrator for TMA to coordinate with the 
Assistant Secretary for the Administration of Children and 
Families to develop guidance for States on best practices to 
guarantee access to TMA. The requirements to collect TMA 
information and coordinate guidance for the States take effect 
6 months after enactment of the bill. The Bill allows States 
such time as needed to approve amendments to their Medicaid 
State plan required by the State legislations for compliance 
with TMA provisions.

                           REASONS FOR CHANGE

    The Committee bill includes provisions based on S. 1269, 
introduced by Senator Breaux, to continue transitional Medicaid 
for five years and to make administrative simplifications in 
how it is administered. Health coverage can be an important 
support for low-income working families and families leaving 
welfare for employment should not become uninsured as a result, 
since this both puts child well-being at risk and reduces the 
efficacy of work promotion strategies.

Section 402--Optional coverage of legal immigrants under the Medicaid 
        program and title XXI

                              PRESENT LAW

    ``Qualified aliens'' who entered the United States after 
the enactment of PRWORA (August 22, 1996) are not eligible to 
receive Federally funded Medicaid or SCHIP benefits for 5 
years. Qualified aliens who entered the United States prior to 
the enactment of PRWORA are eligible for Federally funded 
Medicaid at State option, as are qualified aliens arriving 
after August 22, 1996 who have been present in the United 
States for more than 5 years.
    A person who executed an affidavit of support for an alien 
under section 213A of the Immigration and Nationality Act (INA) 
is liable to reimburse the Federal or State government for 
public benefits received by the sponsored alien until the alien 
naturalizes or has accumulated 40 quarters of work. Section 
213A was enacted as part of PRWORA on August 22, 1996.

                        EXPLANATION OF PROVISION

    The bill lifts the 5-year waiting period and allows States 
to elect to provide medical assistance through Medicaid or 
SCHIP programs for certain populations. Covered persons could 
include lawfully residing individuals who are pregnant women 
(including the 60 day-period after delivery), or children as 
defined by the State for Medicaid and SCHIP purposes. If the 
benefit is provided under the Medicaid program, the alien's 
sponsor is not liable to reimburse the Federal or State 
government for these benefits. This provision takes effect on 
October 1, 2002.

                           REASONS FOR CHANGE

    The Committee bill includes this provision as the result of 
an amendment offered by Senator Graham. It increases State 
flexibility by allowing States the option to include post-1996 
legal immigrant children and pregnant women in Medicaid and 
SCHIP without the 5-year waiting period.

Section 403--Clarification of authority of States and local authorities 
        to provide health care to immigrants

                              PRESENT LAW

    States may only provide public benefits to aliens who are 
``qualified aliens,'' nonimmigrants under the INA, or are 
paroled into the United States for less than 1 year. States may 
provide the following types of public benefits to any alien: 
(1) health care for emergency medical conditions excluding 
transplants; (2) short-term, non-cash, in-kind emergency 
disaster assistance; (3) public health assistance for 
immunizations against and treatment of communicable diseases; 
and (4) programs, services, or assistance specified by the 
Attorney General.

                        EXPLANATION OF PROVISION

    The bill removes from the list of allowable State and local 
public benefits for all aliens emergency medical care and 
immunizations and treatment of communicable diseases, but 
changes the definition of State and local public benefits so 
that any health benefits provided by State and local 
governments with funds from the State or local government are 
not considered public benefits.

                           REASONS FOR CHANGE

    The Committee adopted an amendment offered by Senator 
Bingaman to clarify this authority.

Section 404--Clarification of no verification requirement for non-
        profit charitable organizations

                        EXPLANATION OF PROVISION

    The Committee bill includes a clarification of the 
statutory language allowing non-profit charitable organizations 
to not perform immigration status verification in certain 
circumstances.

                TITLE V--CHILD SUPPORT AND CHILD WELFARE

Section 501--Distribution of child support collected by States

            Assignment rule

                              PRESENT LAW

    Federal law requires that as a condition of receiving TANF 
funds, the parent or caretaker relative must assign her or his 
rights to child support to the State. The assignment covers any 
child support that accrues (or had already accrued before the 
family enrolled in TANF) before the date the family leaves the 
TANF program. The assignment must not exceed the total amount 
of assistance paid to the family. Any child support assignment 
to the State in effect on September 30, 1997 (or at State 
option, an earlier date not before August 22, 1996) must remain 
assigned after such date.

                        EXPLANATION OF PROVISION

    The bill limits the child support assignment to the period 
in which the family receives TANF benefits. Any child support 
assignment to the State in effect on September 30, 1997 (or at 
State option, an earlier date not before August 22, 1996) may, 
at State option, remain assigned after such date.

                           REASONS FOR CHANGE

    All of the provisions in this section are based upon S. 
918, introduced by Senator Snowe and long co-sponsored by 
Senator Kohl. They permit States to follow the lead of 
Wisconsin, which has pioneered distribution reform. The 
Committee bill simplifies the rules for assigning child support 
to increase the funds provided to custodial parents and to ease 
administration of the program for States.
            Families receiving TANF

                              PRESENT LAW

    While the family receives TANF benefits, the State is 
permitted to retain any current child support payments and any 
assigned arrearages it collects up to the cumulative amount of 
TANF benefits that have been paid to the family. In other 
words, the State can decide how much, if any, of the State 
share of the child support payment collected on behalf of TANF 
families to send to the family. However, the State is required 
to pay the Federal government the Federal share of the child 
support collected.

                        EXPLANATION OF PROVISION

    The bill maintains current law on assignment rules for 
families on TANF. However, if a State has a Section 1115 waiver 
(that became effective on or before October 1, 1997) that 
allows for pass through of child support payments, the State 
may ``pass through'' those payments in accordance with its 
waiver.
    For families receiving TANF benefits (for not more than 5 
years after enactment of this bill), the bill requires the 
Federal government to share in the cost of child support 
collections passed through to TANF families by the State and 
disregarded by the State in determining the family's TANF 
benefit, up to $400 per month in the case of a family with less 
than 2 children, and up to $600 per month in the case of a 
family with 2 or more children.

                           REASONS FOR CHANGE

    The Committee bill provides incentives to States to ``pass 
through'' child support collections to families on assistance. 
Early research (from Wisconsin) suggests that this increases 
child support payments. Under PRWORA, States are, in effect, 
discouraged from adopting ``pass through'' policies, because of 
the non-participation of the Federal government in the 
financing of costs. The Committee bill requires the Federal 
government to participate when States choose to ``pass 
through'' funds.
            Families who formerly received TANF

                              PRESENT LAW

    Current child support payments must be paid to the family 
if the family is no longer on TANF. Since October 1, 1997, 
child support arrearages that accrue after the family leaves 
TANF also are required to be paid to the family before any 
monies may be retained by the State. Since October 1, 2000, 
child support arrearages that accrued before the family began 
receiving TANF also are required to be distributed to the 
family first. However, if child support arrearages are 
collected through the Federal income tax refund offset program, 
the family does not have first claim on the arrearage payments. 
Such arrearage payments are retained by the State and the 
Federal government.

                        EXPLANATION OF PROVISION

    The bill simplifies child support distribution rules to 
give States the option of providing families that have left 
TANF the full amount of the child support collected on their 
behalf (i.e., both current child support and child support 
arrearages). The Federal government would share with the States 
the costs of paying child support arrearages to the family 
first.

                           REASONS FOR CHANGE

    PRWORA generally applied a ``family first'' rule for the 
distribution of child support collections for families formerly 
on welfare to better help these families establish themselves 
financially after leaving welfare. The Committee bill allows 
States to conform the distribution of funds collected through 
the interception of tax refunds to this general rule. This 
would simplify collection rules and increase funds available to 
custodial parents.
            Financing options

                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Under the bill, to the extent that the arrearage amount 
payable to a former TANF family in any given month exceeds the 
amount that would have been payable to the family under current 
law, the State may elect to use TANF funds to provide the 
amount to the family or the State can elect to have the amount 
paid to the family considered an expenditure for MOE purposes. 
The State can elect 1 of the 2 options, but not both. Also, the 
bill amends the Child Support Enforcement State Plan to include 
an election by the State to include whether it is using the new 
option to pass through all arrearage payments to former TANF 
families without paying the Federal government its share of 
such collections or maintain the old distribution method.

                           REASONS FOR CHANGE

    States which provide more child support collections to 
families reduce the amount they can keep themselves. In some 
States, these funds are an important source of financing the 
operations of the child support enforcement program. The 
Committee bill offers options to States to recoup forgone child 
support collection revenue.
            Ban on recovery of Medicaid costs for certain births

                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    The bill prohibits States, effective October 1, 2004, from 
using the Child Support Enforcement program to collect monthly 
from noncustodial parents in an attempt to recoup birthing 
costs paid by the Medicaid program.

                           REASONS FOR CHANGE

    The Committee bill prohibits States from attempting to 
recover Medicaid costs associated with a child's birth through 
child support enforcement. This practice can result in 
substantial initial child support obligations, discouraging 
noncustodial parents from cooperating in the collection of on-
going support payments.
            Effective date

                              PRESENT LAW

    Not applicable.

                         EXPLANATION OF CHANGE

    The amendments made by this section of the bill would take 
effect on October 1, 2006, and shall apply to payments under 
parts A and D of title IV of the Social Security Act for 
calendar quarters beginning on or after such date. States may 
elect to have the amendments take effect earlier--at any date 
that is after enactment and before October 1, 2006.

                           REASON FOR CHANGE

    The Committee bill provides States a number of years to 
consider the new options and to adapt automated systems used in 
child support enforcement to reflect those they choose to 
exercise.

Section 502--Mandatory review and adjustment of child support orders 
        for families receiving TANF

                              PRESENT LAW

    Federal law requires that the State have procedures under 
which every 3 years the State review and adjust (if 
appropriate) child support orders at the request of either 
parent, and that in the case of TANF families, the State review 
and adjust (if appropriate) child support orders at the request 
of the State CSE agency or of either parent.

                        EXPLANATION OF PROVISION

    The bill requires States to review and adjust (if 
appropriate) child support orders in TANF cases every 3 years 
and at the request of either parent. This provision would take 
effect on October 1, 2004.

                           REASONS FOR CHANGE

    The Committee bill requires regular review and adjustment 
of child support orders in TANF cases so that they more 
correctly reflect the financial circumstances of noncustodial 
parents.

Section 503--Decrease in amount of child support arrearage triggering 
        passport denial

                              PRESENT LAW

    Federal law stipulates that the HHS Secretary is required 
to submit to the Secretary of State the names of noncustodial 
parents who have been certified by the State CSE agency as 
owing more than $5,000 in past-due child support. The Secretary 
of State has authority to deny, revoke, restrict, or limit 
passports to noncustodial parents whose child support 
arrearages exceed $5,000.

                        EXPLANATION OF PROVISION

    The bill authorizes the denial, revocation, or restriction 
of passports to noncustodial parents whose child support 
arrearages exceed $2,500, rather than $5,000 as under current 
law.

                           REASONS FOR CHANGE

    The ability to deny a passport has been found to be an 
effective tool in collecting unpaid child support obligations 
in some cases. The Committee bill allows it to be used in more 
cases.

Section 504--Use of tax refund intercept program to collect past-due 
        child support on behalf of children who are not minors

                              PRESENT LAW

    Federal law prohibits the use of the Federal income tax 
offset program to recover past-due child support on behalf of 
non-welfare cases in which the child is not a minor, unless the 
child was determined disabled while he or she was a minor and 
for whom the child support order is still in effect. (Since its 
enactment in 1981, the Federal income tax offset program has 
been used to collect child support arrearages on behalf of 
welfare families regardless of whether the children were still 
minors--as long as the child support order was in effect.)

                        EXPLANATION OF PROVISION

    The bill permits the Federal income tax refund offset 
program to be used to collect arrearages on behalf of non-
welfare children who are no longer minors.

                           REASONS FOR CHANGE

    The income tax refund offset program has been an effective 
way to collect past-due child support in some cases. The 
Committee bill allows it to be used in more cases.

Section 505--Financing review and administrative funding

                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    The bill provides States with $50 million in FY2003 for any 
of the following: (1) review policies on collecting fees; (2) 
review the new distribution options and, if a State elects such 
options, to prepare for implementation of the options; (3) 
update automated systems for policy changes; (4) improve 
customer service; (5) examine causes and solutions of 
undistributed collections; (6) examine the buildup of arrears 
and approaches to arrears management; (7) examine approaches to 
improving interstate collections; (8) developing approaches to 
improving percentage of cases with orders; and (9) reviewing 
the review and adjustment policies for families on TANF. A 
State's allotment would be based on its share of the national 
Child Support Enforcement caseload. Every State would receive 
at least $750,000.

                           REASONS FOR CHANGE

    The Committee bill includes numerous changes and new 
options for State child support programs. In light of current 
State fiscal constraints, the bill provides 1-time funding for 
States to implement changes and to generally improve child 
support program performance.

Section 506--Adoption of uniform State laws

                              PRESENT LAW

    PRWORA required that on and after January 1, 1998, each 
State must have in effect the Uniform Interstate Family Support 
Act (UFISA), as approved by the American Bar Association on 
February 9, 1993, and as in effect on August 22, 1996, 
including any amendments officially adopted as of such date by 
the National Conference of Commissioners on Uniform State Laws.
    Federal law requires States to treat past-due child support 
obligations as final judgments that are entitled to full faith 
and credit in every State. This means that a person who has a 
child support order in one State does not have to obtain a 
second order in another State to obtain child support due 
should the noncustodial parent move from the issuing court's 
jurisdiction. P.L. 103-383 restricts a State court's ability to 
modify a child support order issued by another State unless the 
child and the custodial parent have moved to the State where 
the modification is sought or have agreed to the modification. 
PRWORA clarified the definition of a child's home State, makes 
several revisions to ensure that the full faith and credit laws 
can be applied consistently with UFISA, and clarifies the rules 
regarding which child support orders States must honor when 
there is more than one order.

                        EXPLANATION OF PROVISION

    The bill requires that on and after October 1, 2004, each 
State must have in effect the Uniform Interstate Family Support 
Act, as in effect on January 2, 2002.
    In addition, the bill clarifies current law by stipulating 
that a court of a State that has established a child support 
order has continuing, exclusive jurisdiction to modify its 
order if the order is the controlling order and the State is 
the child's State or the residence of any individual 
contestant; or if the State is not the residence of the child 
or an individual contestant, the contestant's consent in a 
record or in open court that the court may continue to exercise 
jurisdiction to modify its order. It also modifies the current 
rules regarding the enforcement of modified orders, and makes 
some other technical changes.

                           REASONS FOR CHANGE

    Since PRWORA, the American Bar Association has updated the 
Uniform Interstate Family Support Act, and the Committee bill 
requires States to update their laws accordingly, including in 
the area of ``full faith and credit.''

Section 507--Tribal child support enforcement programs

                              PRESENT LAW

    The Administration for Children and Families (ACF) issued 
an interim final rule on August 21, 2000 to implement direct 
funding to Indian tribes and tribal organizations under Section 
455(f) of the Social Security Act. The interim final rule 
enables tribes and tribal organizations currently operating a 
comprehensive tribal CSE program directly or through agreement, 
resolution, or contract, to apply for and receive tribal CSE 
funding. While this interim final rule makes certain tribes and 
tribal organizations immediately eligible for direct funding 
upon approval of their applications by the HHS Secretary, the 
proposed rule, upon publication in final form, would apply to a 
wider range of tribes and tribal organizations, i.e., tribes 
and tribal organizations that do not already operate 
comprehensive CSE programs and need program development funding 
for start-up CSE programs.

                        EXPLANATION OF PROVISION

    The bill requires HHS to promulgate final regulations 
concerning tribal child support program within 1 year of 
enactment.

                           REASONS FOR CHANGE

    The Committee bill requires HHS to move forward on the rule 
so that tribal child support programs can be further developed, 
which is an important step in furthering tribal sovereignty.

Section 508--Report on undistributed child support payments

                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    The bill requires the HHS Secretary to submit to the House 
Committee on Ways and Means and the Senate Committee on Finance 
a report on the procedures States use to locate custodial 
parents for whom child support has been collected but not yet 
distributed within 6 months of enactment. The report is to 
include an estimate of the total amount of such undistributed 
child support and the average length of time it takes for such 
child support to be distributed. To the extent that the 
Secretary deems appropriate, the Secretary shall include 
recommendations on whether additional procedures should be 
established at the Federal or State level to expedite the 
payment of undistributed child support.

                           REASONS FOR CHANGE

    The Committee bill requires a report to determine whether 
substantial amounts of child support collections are not being 
distributed to custodial parents and, if so, what can be done 
to change this situation to get the funds to custodial parents. 
Child support collections should be distributed.

Section 509--Use of new hire information to assist in administration of 
        unemployment compensation programs

                              PRESENT LAW

    Federal law requires all employers in the nation to report 
basic information on every newly-hired employee to the State. 
States are then required to collect this information in the 
State Directory of New Hires, to use it to locate noncustodial 
parents who owe child support and to send a wage withholding 
order to their employer, and (within 3 business days) to report 
all information in their State Directory of New Hires to the 
National Directory of New Hires. Information in the State 
Directory of New Hires is used by State Employment Security 
Agencies (the agency that operates the State unemployment 
compensation program) to match against unemployment 
compensation records to determine whether people drawing 
unemployment compensation benefits are actually working. 
(States currently have access to the new hire information for 
their own State.)

                        EXPLANATION OF PROVISION

    The bill authorizes State Employment Security Agencies to 
request and receive information from the National Directory of 
New Hires (which includes information from all of the State 
directories as well as Federal employers) to match against 
unemployment compensation records to determine whether people 
drawing unemployment compensation benefits are actually 
working. This provisions would take effect on October 1, 2002.

                           REASONS FOR CHANGE

    The Committee bill permits unemployment agencies to use the 
National Directory of New Hires to detect cases of fraud and 
abuse in the unemployment system. This has the effect of 
permitting States to check if unemployment compensation 
recipients are working in other States, not just their own, and 
has the potential to be an important program integrity tool.

Section 510--Annual report on performance of State child support 
        programs

                              PRESENT LAW

    Federal law requires States to make annual reports to the 
HHS Secretary on the Child Support Enforcement program, 
including such information as may be necessary to measure State 
compliance with Federal requirements for expedited procedures, 
using such standards and procedures as are required by the 
Secretary, under which the State Child Support Enforcement 
agency will determine the extent to which the program is 
operated in compliance with Child Support Enforcement law.

                        EXPLANATION OF PROVISION

    Beginning on January 1, 2003, the bill requires Secretary 
of HHS to submit to the House Committee on Ways and Means and 
the Senate Committee on Finance an annual report on the 
performance of State child support enforcement programs.

                           REASONS FOR CHANGE

    The Committee bill reinstates the requirement that HHS 
provide an annual report to Congress with information on the 
performance of child support programs, which would help inform 
oversight of child support programs and the new child support 
provisions of this bill.

Section 511--Extension of authority to approve demonstration projects

                              PRESENT LAW

    The HHS Secretary may allow States to conduct demonstration 
projects that are likely to promote the objectives of the child 
welfare programs authorized under title IV-B and title IV-E. 
Not more than 10 demonstration projects may be approved in each 
fiscal year; authority to approve the demonstration projects is 
granted for FY1998 through FY2002.

                        EXPLANATION OF PROVISION

    The bill extends the authority to grant these demonstration 
projects through FY2007.

                           REASONS FOR CHANGE

    The Committee bill continues demonstration authority for 
child welfare programs to support innovation. The current 
demonstration projects include an interesting and useful 
variety of efforts.

Section 512--Prohibition of limit on the number of demonstration 
        projects or waivers that may be granted to a single State

                              PRESENT LAW

    The Secretary may waive requirements under title IV-B and 
title IV-E to allow a State to effectively carry out an 
approved demonstration project (except that specified child 
protection and data collection requirements may not be waived). 
There is no current statutory provision related to the number 
of demonstration projects a single State may be approved to 
operate nor the number of waivers that may be granted to a 
single State. However, HHS has expressed a ``preference'' for 
projects ``that are submitted by States that have not 
previously been approved for a child welfare demonstration 
project.'' (See ACYF-CB-IM-2000-01 from Children's Bureau, 
dated February 4, 2000.)

                        EXPLANATION OF PROVISION

    The bill prohibits the HHS Secretary from limiting the 
number of demonstration projects or waivers that may be granted 
to a single State.

                           REASONS FOR CHANGE

    States interested in testing and evaluating innovative 
child welfare approaches should not be limited in how many 
experiments they can attempt.

                        TITLE VI--TRIBAL ISSUES

Section 601--Tribal TANF programs

                              PRESENT LAW

    The law earmarks some TANF funds (subtracted from the TANF 
grant of the State containing the tribes' service area) for 
direct administration by applicant Indian tribes and Alaska 
Native organizations. The amount equals Federal AFDC payments 
to the State for FY1994 attributable to Indian families in the 
tribes' service areas. Annual Federal funding for 36 TANF 
tribal assistance programs covering about 24,000 families now 
totals $97.5 million. State funds contributed toward an 
approved tribal plan may be counted toward the TANF 
maintenance-of-effort spending requirement, but some tribes 
receive no State funds. The Secretary, with participation of 
tribes, establishes work participation rules, time limits for 
benefits, and penalties for these programs. In applying TANF's 
60-month limit on the use of Federal funds for ongoing 
assistance to an adult, the law requires disregard of months of 
assistance provided to adults living in Indian country or an 
Alaskan Native village in which at least 50 percent of the 
adults are unemployed. In general, tribal programs in Alaska 
must be comparable to those operated by the State of Alaska. 
Some tribes, those that operated their own JOBS work/training 
programs before TANF, also receive an annual appropriation of 
$7.6 million for work and training (renamed Native Employment 
Works). In addition, $28.6 million in welfare-to-work grants 
was awarded for FY1998 and FY1999 by the Labor Department to 
Indian and Native tribal governments.

                        EXPLANATION OF PROVISION

    The bill extends for 5 years (through FY2007) the 
earmarking of TANF funds (subtracted from State basic TANF 
grants) for direct administration by Indian tribes and Alaska 
Native organizations with approved tribal family assistance 
plans. The bill creates a Tribal TANF Improvement Fund, 
consolidates job training into a Tribal Employment Services 
Program, makes tribes eligible for TANF contingency funds, and 
makes other changes.
    Tribal TANF Improvement Fund.--Appropriated for this new 
fund is $75 million over 4 years, FY2003 through FY2006, to 
support 3 kinds of grants:
     Tribal capacity grants for tribal human services 
infrastructure ($35 million). The Secretary of HHS shall award 
grants, following priorities given in the bill, to Indian 
tribes for improving human services program infrastructure 
(defined as including management information systems, 
management information systems-related training, equipping 
offices and renovating, but not constructing, buildings).
     Tribal development grants to provide technical 
assistance in improving reservation economies ($35 million). 
The Secretary of HHS shall, through the Commissioner of the 
Administration for Native Americans, make grants to nonprofit 
organizations, Indian tribes, and tribal organizations to 
enable grantees to provide technical assistance to tribes and 
tribal organizations in these areas--development and 
improvement of uniform commercial codes; creation of expansion 
of small business or micro-enterprise programs; development and 
improvement of tort liability codes; creation or expansion of 
tribal marketing efforts; creation or expansion of for-profit 
collaborative; business networks; development of innovative 
uses of telecommunications to assist with distance learning to 
telecommuting; and the development of economic opportunities 
and job creation in high joblessness areas of Alaska;
     Technical assistance, including peer-learning and 
feasibility studies ($5 million). The Secretary of HHS shall 
make grants to Indian tribes for technical assistance in 
applying for or carrying out a grant under the tribal TANF 
improvement fund, in applying for or carrying out a tribal 
family assistance plan, or related to best practices for State 
and tribal coordination on the transfer of the administration 
of social services programs to Indian tribes. ($2.5 million of 
the technical assistance awards shall be used to support-peer-
learning programs among tribal administrators, and $1 million 
for feasibility studies of tribes' capacity to operate tribal 
family assistance plans.)
    Tribal Employment Services Program.--Appropriated for the 
new consolidated tribal job training program is $185 million 
($37 million per year for 5 years. FY2003-FY2007). It replaces 
Native Employment Works and Welfare-to-Work grants provided to 
tribes. The bill specifies that this new program must be 
administered in a manner consistent with the principles of the 
Indian Self-Determination and Education Assistance Act and the 
government-to-government relationship between the Federal 
Government and Indian tribal governments. Eligible participants 
in tribal employment programs are: Indians or Alaska Natives 
(a) receiving or eligible to receive cash benefits for 
themselves or their families from State TANF programs, tribal 
family assistance programs, or the General Assistance program 
of the Bureau of Indian Affairs; (b) transitioning from cash 
assistance to employment, (c) with a history of long term 
dependence (24 months, not necessarily consecutive on cash 
assistance from the above programs; (d) who are noncustodial 
parents or a minor child receiving or eligible to receive cash 
aid or who have an obligation to support the child; or (e) who 
are members of families at risk of becoming dependent on cash 
benefits or who have lost eligibility because of a time limit. 
The Secretary of Labor shall make grants for direct services 
under the tribal employment services program to Indian tribes, 
tribal organizations, and Alaska Native organizations on the 
basis of a formula that the Secretary is to adopt after 
consultation with the Indian groups (and, at the option of the 
Secretary, with an advisory committee whose members are 
nominated by Indian tribes and tribal organizations). Funds are 
to be available for obligation for 2 fiscal years after the 
year of award.
    Funds may be used to provide any services useful in 
preparing beneficiaries to enter or reenter the workforce, to 
hold a job, or to advance in the job. Permitted services 
include: assessment education, job readiness and placement, 
occupational training (including on-the-job training), work 
experience, wage subsidies; job retention; job creation 
specifically for eligible beneficiaries, case management, 
counseling, supportive services (including, but not limited to 
child care, transportation, mental health and substance abuse 
treatment and prevention service important to employability), 
and counseling and other services to promote marriage, 
discourage teen pregnancies, assist in formation and 
stabilization of 2-parent families and address situations 
involving domestic violence. Income or services received from 
the employment services program must be disregarded by any 
means-tested program for which Federal law establishes 
eligibility rules. The bill provides that 1.5 percent of 
employment services program funds ($555,000 yearly) are to be 
reserved for program support and awarded through grants or 
contracts to enhance the capacity of the Indian groups to 
deliver employment services and to test or demonstrate new or 
improved methods of providing the services.
    Under the bill, normal TANF time limit and work rules do 
not apply to the tribal employment services program, and 
expenditures by that program are not considered TANF 
expenditures. States, Indian tribes, or tribal organizations 
may exclude persons who participate in a direct employment 
services program from the calculation of work participation 
rates. The Secretary of Labor may issue regulations for the 
conduct of direct services and program support under the 
employment program, developed after consultation with Indian 
tribes, tribal organizations, and Alaska Native organizations. 
The Secretary must provide for an orderly closeout of 
activities under the current work program (NEW). In doing so, 
he shall allow NEW grantees to provide services under that 
program through June 30, 2003, and to spend funds on 
administrative activities related to the closeout for up to 6 
months after that date.
    Contingency funding.--The bill reserves $25 million of the 
$2 billion contingency fund (see Section 102) for grants to 
Indian tribes ``that are operating in situations of increased 
economic hardship.'' The Secretary of HHS, in consultation with 
Indian tribes that have approved tribal family assistance 
plans, shall determine the criteria for access to contingency 
grants and the extent to which Indian tribes who receive 
contingency grants must provide matching funds.
    Time limits and other provisions.--For purposes of the 5-
year time limit on provision of Federally funded TANF benefits, 
the bill requires the disregard of months of ongoing cash aid 
received by an adult while living in Indian country or an 
Alaskan Native village in which 20 percent of adult TANF 
recipients are jobless. The bill gives States authority to 
modify work activities for recipients in regular TANF State 
programs who live in these areas of ``high joblessness.'' The 
bill requires State TANF plans to certify that they will 
consult with Indian tribes located within the State to ensure 
equitable access to benefits for any tribal member who is not 
eligible for assistance under a tribal plan. The bill requires 
HHS to convene an advisory committee on the status of non-
reservation Indians and requires the HHS Office of Faith-Based 
and Community Initiatives to convene an advisory committee of 
Indians expert in social services and the spiritual aspects of 
traditional Indian cultures. It also requires the General 
Accounting Office (GAO) to study the demographics of Indians 
not residing on reservations, with information about their 
economic and health status and their access to public benefits, 
and to report findings to Congress by June 30, 2003. If an 
Indian tribe elects to incorporate services under TANF into a 
plan under Section 6 of the Indian Employment, Training, and 
Related Services Demonstration Act, the program conducted with 
grants made from the tribal TANF improvement fund shall be 
considered to be subject to Section 5 of that act and to the 
single plan, single budget requirements, and single report 
format required under that act.

                           REASONS FOR CHANGE

    PRWORA permitted, for the first time, Indian tribes to 
receive direct Federal funding to operate welfare programs. The 
Committee bill continues that authority and creates a Tribal 
TANF Improvement Fund to better enable more tribes to take up 
the option to operate TANF programs. States have previously 
received Federal funds for information technology, in 
particular, to assist in administering social service programs. 
The Committee bill provides modest funding to assist tribes in 
the same way. The Tribal TANF Improvement Fund is intended to 
encourage more tribes to exercise their option to operate TANF 
programs, as well as the new option to operate child welfare 
programs, and to improve the administration of tribal TANF 
programs already operating. The Committee bill also continues 
funding for tribal job training programs in a simplified 
fashion, with an expanded funding level to support additional 
services for Indians. The bill includes language clarifying 
that the provisions of P.L. 102-477, related to the ability of 
tribes to consolidate fundings streams apply to TANF. These 
consolidation provisions have been helpful to tribes in 
operating programs. In addition, to provide some parity with 
State TANF programs, the Committee bill reserves a small 
portion of the TANF Contingency Fund for payments to tribal 
programs. The Committee bill also allows States greater 
flexibility to design welfare programs in Indian areas of high 
joblessness; a flexibility tribal TANF programs already have to 
adapt to the unique difficulties of operating welfare to work 
programs in area with few employment opportunities. Finally, 
the Committee bill revises the joblessness threshold for 
disregarding months of assistance for time limit purposes to 
better reflect the hardship faced on many Indian reservations. 
In light of different legal circumstances in Alaska, certain 
exceptions to these policies are made for that State, and the 
requirement that only a specific list of entities be eligible 
to operate programs there is continued. At least 10 percent of 
the tribal development grants are reserved for Alaska-specific 
activities, but this does not make Alaska Native entities 
ineligible for the other tribal development grant activities. 
Much of this section is drawn from S. 2484, introduced by the 
Chairman. The provisions related to Alaska are based upon 
recommendations from Senator Murkowski.

Section 602--Authority of Indian tribes to receive Federal funds for 
        foster care and adoption assistance

                              PRESENT LAW

    Title IV-E foster care and adoption assistance programs may 
be operated by States. Indian tribes are not authorized to 
operate these Federal programs. A State's IV-E plan must be in 
effect in all its political subdivisions and standards 
established by the plan for approving foster care homes must be 
``reasonably'' in accord with recommended standards of national 
organizations concerned with foster placement.
    States receive Federal reimbursement for foster care 
maintenance and adoption assistance payments made on behalf of 
eligible children at the applicable Federal matching rate 
(i.e., the Federal medical assistance percentage); this 
matching rate is based on the State's per capita income and 
ranges from 50 percent to 83 percent. Specified State 
administrative costs related to serving Federally eligible 
foster care children or adoptees are generally matched at 50 
percent, while Federal matching of certain training costs is 
set at 75 percent. States must meet the remaining cost of 
serving Federally eligible children with non-Federal (i.e., 
State or local funds).
    State that operate a foster care program must make foster 
care maintenance payments on behalf of eligible children 
removed from their homes if the child's placement and care are 
the responsibility of the State child welfare agency or the 
responsibility of another public agency with whom the State 
child welfare agency has a currently effective agreement.
    The Indian Self-Determination and Education Assistance Act 
(25 U.S.C. 450b) defines ``Indian Tribe'' as ``any Indian 
tribe, band, nation, or other organized group or community, 
including any Alaska Native Village or regional or village 
corporation * * * which is recognized as eligible for the 
special programs and services provided by the United States to 
Indians because of their Status as Indians.'' With regard to 
the State of Alaska this definition includes each of the more 
than 200 Federally recognized Alaska Native villages 
separately. However, for the purposes of TANF, Section 419(4) 
of the Social Security Act includes a special rule defining 
Indian tribes in Alaska as the Metlakatla Indian Community of 
the Annette Islands Reserve and 12 Alaska Native regional 
nonprofit corporations (listed in the statute). With limited 
exceptions, this TANF definition does not include Federally 
recognized Alaska Native political entities; instead it 
includes Alaska Native regional nonprofit corporations.\1\ 
These regional corporations cover the entire State of Alaska 
and their shareholders are members of the Federally recognized 
Alaska Native villages; however, the regional corporations are 
not political governmental entities.
---------------------------------------------------------------------------
    \1\ The Metlakatla Indian Community of the Annette Islands Reserve 
and the Central Council of the Tlingit and Haida are Federally 
recognized Native entities that are included in the TANF definition.
---------------------------------------------------------------------------
    The Indian Self-Determination and Education Assistance Act 
defines ``tribal organization'' as the ``recognized governing 
body of any Indian tribe * * *'' and this definition further 
provides that in cases where a contract or grant is let to an 
organization to perform services benefiting more than 1 Indian 
tribe, the approval of each Indian tribe is a prerequisite to 
the making of the contract or grant.

                        EXPLANATION OF PROVISION

    Beginning in FY2004, the bill allows an Indian tribe, 
tribal organization or intertribal consortium to operate title 
IV-E foster care and adoption assistance programs under the 
same provisions as those applying to States (with certain 
specified exceptions). Tribal plans will be allowed to define 
service areas where a plan is in effect and (except for tribal 
programs in the State of Alaska) to grant approval of foster 
homes based on tribal standards that ensure the safety of, and 
accountability for, children place in foster care. The HHS 
Secretary, upon request of an Indian tribe, tribal 
organization(s) or consortia of tribes will be able to modify 
any title IV-E requirement if he determines the modification 
would ``advance the best interests and safety of the children'' 
served by the tribal plan.
    To establish the applicable Federal reimbursement rate for 
eligible foster care maintenance and adoption assistance 
payments made under a tribal plan, the HHS Secretary will be 
required to determine a tribe's Federal medical assistance 
percentage based on the per capita income of the service 
population defined in the tribal IV-E plan. (In making this 
determination, the HHS Secretary must also consider any other 
information that an Indian tribe or tribal organization 
considers relevant to the calculation of per capita income and 
which the tribe or tribal organization considers relevant to 
the calculation of per capita income and which the tribe or 
tribal organization chooses to submit to the Secretary). The 
HHS Secretary will be required to establish (in regulation) the 
Federal reimbursement rates for eligible tribal plan 
administrative costs (including training, data collection and 
other specified expenses), except that he may not establish any 
reimbursement rate lower than a corresponding reimbursement 
rate for State title IV-E administrative expenditures. An 
Indian tribe or tribal organization may use Federal or State 
funds to meet the non-Federal share of operating a tribal IV-E 
plan.
    The bill also permits an Indian tribe, tribal organization, 
or intertribal consortium and a State to enter into a 
cooperative agreement for administering or paying funds under 
title IV-E. Any cooperative agreement in effect prior to the 
enactment of this law remains in effect unless either party to 
the agreement chooses to revoke or modify the agreement, 
according to the terms of that agreement.
    The bill requires a State to make foster care payments on 
behalf of an eligible child whose placement and care is the 
responsibility of an Indian tribe or intertribal consortium if 
that tribe or consortium is not operating its own title IV-E 
foster care program and it has a cooperative agreement with the 
State or it has submitted to the HHS Secretary a description of 
the arrangements made between the tribe or consortium and State 
for provision of child welfare services and protections 
required under title IV-E.
    The HHS Secretary, ``in full consultation with Indian 
tribes and tribal organizations,'' is required to issue 
regulations to carry out provisions related to the tribal IV-E 
plan within 1 year after enactment.
    For this section, ``Indian tribe and tribal organization'' 
is defined as is currently provided in the Indian Self-
Determination and Education Assistance Act except that for the 
State of Alaska, the term ``Indian tribe'' is defined by 
currently title IV-A (section 419(4)) provisions.

                           REASONS FOR CHANGE

    PRWORA allowed tribes the option to receive direct Federal 
funding to operate welfare programs. The Committee bill 
continues this improved recognition of tribal sovereignty by 
allowing tribes to opt to receive direct Federal reimbursement 
for foster care and adoption assistance. It is also likely to 
result in more federal assistance to improve the lives of 
American Indian children who have suffered abuse or neglect. It 
incorporates provisions from S. 550, introduced by Senators 
Daschle and McCain. In Alaska, the new option is limited to the 
TANF list of eligible entities.

         TITLE VII--INNOVATION, FLEXIBILITY, AND ACCOUNTABILITY

Section 701--Data collection; performance measures

            Data collection

                              PRESENT LAW

    States are required to collect monthly, and report 
quarterly to HHS, disaggregated case record information (but 
may use sample case record information for this purpose) about 
recipient families. Required family information includes: (1) 
county of residence, (2) whether a member receives disability 
benefits, (3) members' ages, (4) family size and the relation 
of each member to the family head, (5) employment status and 
earnings of employed adults, (6) adults' present and past 
marital status, (7) race and educational level of each adult 
and child, (8) whether the family received subsidized housing, 
Medicaid, food stamps, or subsidized child care (and, if the 
latter 2, the amount received), and the number of months of 
assistance received, (9) the number of hours per week, if any, 
that adults participated in specified activities (education, 
subsidized private jobs, unsubsidized employment, public sector 
jobs, work experience, community service, job search, job 
skills training, on-the job training, vocational education), 
(10) information needed to calculate work requirement 
participation rates, (11) type and amount of TANF assistance 
received, including the amount of and reason for any reduction 
of assistance, (12) unearned income received, (13) citizenship 
of family members, (14) number of families and persons 
receiving aid under TANF (including the number of 2-parent and 
1-parent families), (15) the total dollar value of assistance 
given, (16) the number of families and persons aided by 
welfare-to-work grants (and the number whose participation 
ended during a month), (17) the number of noncustodial parents 
who participated in work activities, and (18) for each 
teenager, whether he/she is the parent of a child in the 
family. From a sample of closed cases, the quarterly report is 
to give the number of case closures because of employment, 
marriage, time limits, sanctions, or State policy. States also 
are required to report quarterly on the use of Federal TANF 
funds and State expenditures on programs for needy families.
    Annual reports to Congress by the Secretary of HHS must 
describe whether States are meeting: (1) work requirement 
participation rates, (2) the objectives of increasing 
employment, earnings of needy families, and child support 
collections, and (3) the objectives of decreasing out-of-
wedlock pregnancies and child poverty. They also must describe 
(1) the demographic and financial characteristics of families 
applying for assistance, families receiving assistance, and 
families becoming ineligible for assistance, (2) the 
characteristics of each State program, and (3) trends in 
employment and earnings of needy families with minor children 
living at home.

                        EXPLANATION OF PROVISION

    The bill deletes the requirement to report on the education 
level of each child. It adds a requirement to report on whether 
an ``individual responsibility plan'' has been established for 
each family. Under the bill, States also are required to make 
public all the financial, program, and recipient data submitted 
to HHS when the data is transmitted quarterly, including 
posting the information on the State agency's website.
    The bill further adds requirements that (1) States' 
quarterly reports include information on the demographics and 
caseload characteristics of Indians served by State programs; 
(2) the Secretary's annual reports include State-specific 
information on the demographics and caseload characteristics of 
Indians served by each State program; and (3) the Secretary's 
annual report include information regarding any complaints 
received (by the Federal Government or States) concerning fair 
and equitable treatment related to civil rights or labor laws.

                           REASONS FOR CHANGE

    The Committee bill includes a requirement for States to 
provide data demonstrating progress towards achieving universal 
engagement by keeping track of how many recipients have IRPs. 
It also promotes transparency by requiring States to make data 
public when transmitted to HHS, so that it is available without 
having to wait for HHS reports.
            Performance measures

                              PRESENT LAW

    For the purpose of the TANF High Performance Bonus, the 
Secretary of HHS developed a formula to measure State 
performance. For FY1999 through FY2001, bonuses were awarded 
based on job entry and retention rates, quarterly earnings, and 
earnings gain. Data on these measures was submitted by each 
State that wanted to compete for a High Performance Bonus. 
Beginning with FY2002, bonuses are awarded based on these 
employment-related measures, as well as measures relating to 
the share of children in married couple families, participation 
in other low-income assistance programs, and child care 
affordability.

                        EXPLANATION OF PROVISION

    The TANF High Performance Bonus is repealed and replaced 
with new ``Business Link Partnership Grants'' (see section 
704). Also repealed are (1) the related requirements for the 
Secretary to rank States in order of their success in placing 
TANF recipients in to long-term private sector jobs, reducing 
the overall welfare caseload, and diverting individuals from 
applying for/receiving TANF aid, and (2) the related 
requirement to annually rank States as to the proportion of 
out-of-wedlock births in their TANF populations.
    HHS is required (beginning on January 1, 2003) to annually 
report data (covering the preceding 2 years) for each State on 
its performance in assisting TANF recipients in becoming self-
sufficient through earnings from employment. The data must 
include job entry and retention rates and quarterly earnings 
and earnings gains. In addition, a national goal of reducing 
teen pregnancies by one-third (by 2008) is established. HHS is 
required to issue annual assessments of progress toward this 
goal, including State-level data on teen pregnancies and each 
State's progress toward achieving the goal.

                           REASONS FOR CHANGE

    The TANF High Performance Bonus has provided useful 
information concerning State success at moving welfare 
recipients into employment and how well the former recipients 
retain jobs. The Committee bill requires HHS to calculate this 
data on an annual basis for all States, to provide national 
information on program performance. The Committee bill also 
sets a national goal of reducing teen pregnancy, and requires 
HHS to report on the progress each State is making toward this 
goal. Births to teenagers, unwed teenagers in particular, are 
an important warning sign of future welfare dependency.

Section 702--State plan

                              PRESENT LAW

    Basic State plan requirements.--To receive TANF block grant 
funds, the Secretary of HHS must certify a State has submitted 
a State plan. Each State must outline, in a 27-month plan, how 
it ``intends'' to: (1) conduct a program providing 
``assistance'' to needy families with (or expecting) children 
and providing parents with work and support services, (2) 
require caretaker recipients to engage in work activities after 
24 months of aid, or sooner if judged work-ready, (3) ensure 
that parents/caretakers engage in work activities, (4) take 
steps to restrict use and disclosure of information about 
recipients, (5) establish goals and take action to prevent/
reduce the incidence of out-of-wedlock pregnancies, and (6) 
conduct a program providing education and training relating to 
statutory rape so that teenage pregnancy programs may be 
expanded to include men.
    Special State plan provisions.--In addition, the State plan 
must: (1) indicate the extent to which the State intends to 
treat families moving into the State differently from others, 
(2) indicate the extend to which the State intends to aid legal 
immigrants, (3) set forth objective criteria for benefit 
delivery and for fair and equitable treatment, and (4) provide 
that, unless the Governor opts out by notice to HHS, the State 
will require a parent who has received TANF for 2 months and is 
not work-exempt to participate in community service employment. 
In the plan the State must certify that it will operate a child 
support enforcement program and a foster care and adoption 
assistance program and provide equitable access to Indians 
ineligible for aid under a tribal plan. It must certify that it 
has established standards against program fraud and abuse and 
specify which State agency or agencies will administer and 
supervise TANF. It also must include assurances that local 
government and private sector organizations have been consulted 
regarding the plan so that services are provided in a manner 
appropriate to local populations and that local governments and 
private organizations have had at least 45 days to submit 
comments on the plan and the design of such services. In 
addition, the State may opt to certify that it has established 
and is enforcing procedures to screen and identify recipients 
with a history of domestic violence, to refer them to services, 
and to waive program rules for some of them. Finally, State 
plan amendments must be submitted to HHS within 30 days and 
made available publicly.

                        EXPLANATION OF PROVISION

    Basic State plan requirements.--Under the bill, each State 
must outline, in a 24-month plan, how it ``shall'': (1) conduct 
a program providing ``cash assistance'' to needy families with 
(or expecting) children and providing parents with work and 
support services, (2) require parents/caretakers receiving 
assistance to engage in work/work-readiness activities designed 
to move families into self-sufficiency (these activities are to 
be defined by States and may include efforts to eliminate 
barriers to work such as substance abuse, adult literacy, 
domestic violence, and housing), (3) ensure that parents/
caretakers engage in work activities (including those covered 
by ``individual responsibility plans''), (4) take steps to 
restrict use and disclosure of information about recipients, 
(5) establish a process for providing recipients with 
``individual responsibility plans,'' (6) ensure that adequate 
training and resources are made available to State 
administering agencies, and (7) ensure that equitable access to 
benefits and services are provided to Indians.
    Special State plan provisions.--In addition, the bill 
replaces the requirement that State plans report on the 
treatment of families moving into the State with a requirement 
that State plan include, for both its TANF and MOE programs: 
(1) the name of the program, (2) the goals of the program, (3) 
a description of the benefits and services provided by the 
program, (4) a description of the principal eligibility rules 
and populations served, and (5) for programs providing 
``assistance,'' descriptions of applicable work-related 
requirements, the process of providing recipients with 
``individual responsibility plans'' and how the State engages 
each family in the process, time limit policies, sanction 
policies and procedures. The bill also adds to the requirement 
that State plans set forth objective criteria for benefit 
delivery and fair and equitable treatment a further directive 
that they include information regarding any complaints received 
by the State concerning fair and equitable treatment. The bill 
further requires that, where States provide sub-State areas 
with significant policy-making authority, State plans include a 
summary of policies for each sub-State area.
    Additional State plan provisions.--The bill adds State-
plan-related provisions that (1) require certification that, if 
a State provides transportation aid under its TANF program, 
State and local transportation agencies and planning bodies 
have been consulted, (2) require certification that, if a State 
provides housing assistance under its TANF program, State and 
local housing agencies and authorities have been consulted and 
that the consultations have addressed potential cooperation 
between the TANF agency and the State and local housing 
agencies, (3) require the Secretary of HHS to develop a 
standard State plan form by February 1, 2003, and mandate that 
States submit a ``complete'' State plan using the standard plan 
form beginning October 1, 2003, (4) require States to make 
State plans and plan amendments publicly available (including 
on websites), to allow for public comment periods on plans/
amendments, and to make comments received publicly available 
(including on websites), and (4) stipulates that nothing in the 
State plan requirements is to be construed as establishing an 
individual or private cause of action against a State based 
solely on a State's failure to submit a plan or amendment in 
accordance with requirements or a State's failure to comply 
with the contents of its plan.
    Housing data.--The bill requires the Secretaries of HHS and 
HUD to jointly make available, to each State, State-level data 
from the 2000 Census concerning the housing problems of 
families receiving TANF assistance. The data are to be 
available October 1, 2003 (or as soon thereafter as is 
practicable) and updated biennially to the extent data are 
available.

                           REASONS FOR CHANGE

    The Committee bill includes several changes to State plan 
requirements to provide additional information about State 
programs and to increase transparency of State considerations 
of plans. A number of the changes are based on proposals from 
Senator Bingaman. The intent is to generate informed policy 
discussions at the State level.

Section 703--Research

                              PRESENT LAW

    The Secretary of HHS is required to conduct research on 
effects, costs, and benefits of State programs. The law also 
provides that the Secretary may help States develop and 
evaluate innovative approaches to establishing TANF recipients 
and shall evaluate them. PRWORA directly appropriated $15 
million yearly (through FY2002)--half for general/basic TANF 
research and novel approaches cited above, and half for State-
initiated TANF studies and completing pre-TANF waiver projects. 
In addition, under PRWORA, the Census Bureau was provided $10 
million annually (through FY2002) to continue information 
collection for panels of the Survey of Income and Program 
Participation (SIPP) to provide information on the status of 
low-income people during the course of welfare reform.

                        EXPLANATION OF PROVISION

    The bill requires the Secretary of HHS (in consultation 
with the Federal Interagency Forum on Child and Family 
Statistics) to develop comprehensive indicators of child well-
being--measures relating to their education, social and 
emotional development, and health and safety, as well as their 
family's well-being--and, using these indicators, assess child 
well-being in each State. It stipulates that the data collected 
for this assessment be statistically representative at the 
State and national levels, consistent across States, collected 
annually for at least five years before the assessment, 
expressed in terms of rates or percentages where applicable, 
measured with reliability, current, and over-sampled with 
respect to low-income children and families. It further directs 
that the Secretary establish an advisory panel to make 
recommendations regarding the appropriate measures and 
statistical tools necessary to make the assessment of child 
well-being. The panel is composed of members appointed by the 
Secretary, the Chairs and Ranking Members of the Senate Finance 
Committee and the House Ways and Means Committee, the Chair of 
the National Governors Association, the President of the 
National Conference of State Legislatures, and the Director of 
the National Academy of Sciences. Funding for the child well-
being assessment initiative is provided as a reservation of 
TANF funds--$15 million annually through FY2007.
    The bill also requires the Secretary of HHS to conduct 3 
additional research initiatives: (1) longitudinal studies of 
TANF applicants and recipients in at least 5, and not more than 
10 States or sub-State areas to determine the factors that 
contribute to positive employment and family outcomes 
(gathering information on family demographics, income, benefit 
receipt, reasons for leaving/returning to assistance programs, 
work status, sanction and time limit status, recipient views, 
and other measures of family well-being); (2) a random 
assignment study comparing the effects of full-family 
sanctions, partial sanctions, and other policies for increasing 
engagement in work activities; and (3) a study of a 
representative sample of teen parents who are TANF recipients 
to determine whether federal and State data on their number is 
accurate, what assessment procedures are used with these 
recipients that would detect an educational barrier, and 
service and eligibility requirements for these recipients.
    To fund the research initiatives mandated by current law 
(currently funded at $15 million a year) and the 3 new 
initiatives included in the bill (see above), the bill reserves 
TANF funding of $20 million annually (through FY2007). A 
separate direct appropriation (as under current law) is not 
made. Funding for the Census Bureau's SIPP research ($10 
million a year under current law) is not extended.
    The bill further requires the Secretary to conduct research 
on tribal family assistance programs and efforts to reduce 
poverty among Indians--with priority given to grant 
applications to conduct research in cooperation with tribal 
governments or tribally controlled colleges or universities. 
FY2003 TANF funds of $2 million are reserved for this research.

                           REASONS FOR CHANGE

    The Committee bill requires HHS to develop State-specific 
statistical indicators of child well-being so that, in the 
future, welfare policy can better track the outcomes for 
children, as well as the employment of current and former 
recipients. In the end, the real goal of welfare reform is to 
improve the lives and prospects of children in poverty. The 
Committee bill also requires certain other studies to address 
topics of interest to the Committee.

Section 704--Innovative business link partnership grants for employers 
        and non-profit organizations

                              PRESENT LAW

    The PRWORA appropriated an annual average of $200 million 
(a total of $1 billion over 5 years, FY1999-FY2003) for bonuses 
to ``high performing'' States, defined as those whose 
performance score in achieving TANF goals at least equals a 
threshold set for that year by the Secretary. State performance 
is measured by a formula developed by the Secretary in 
consultation with the National Governors Association and the 
American Public Human Services Association (see section 701, 
Performance Measures).

                        EXPLANATION OF PROVISION

    The bill repeals the current High Performance Bonus, 
replacing it with a competitive grant program called Business 
Link Partnership for Employers and Nonprofit Organizations. The 
program is appropriated $200 million a year (through FY2007). 
Grants (for 3-5 years) are to be awarded jointly by the 
Departments of Labor and HHS to nonprofit groups, local 
workforce investment boards, States, localities, tribes, and, 
for certain grants, employers, to fund new or expanded 
programs:
          (1) to promote business linkages that improve wages 
        of eligible individuals by improving job skills in 
        partnership with employers and providing supports and 
        services at or near work sites;
          (2) to provide ``transitional jobs''--for eligible 
        individuals (and a limited number of other low-income 
        individuals) who have been unemployed because of 
        limited skills, experience, or other barriers to 
        employment--that combine subsidized, time-limited, 
        wage-paying supported work in the public or nonprofit 
        sectors with skill development and activities to remove 
        barriers to employment; and
          (3) to develop ``capitalization'' procedures for the 
        delivery of self-sustaining social services.
    Eligible individuals include parents who are currently 
receiving or who have previously received TANF, individuals at 
risk of receiving TANF, individuals with disabilities, and 
noncustodial parents who are unemployed or having difficulty in 
meeting child support obligations. The maximum grant award is 
$10 million for (1) and (2); $3 million of the total funding is 
reserved for reports summarizing program outcomes and lessons 
learned and 1.5 percent of each year's funding is reserved for 
an evaluation of the programs; at least 40 percent of each 
year's funding is to be used for business linkage programs; and 
at least 40 percent of each year's funding is to be used for 
transitional jobs programs. Participants in business linkage or 
transitional jobs programs are to be considered as satisfying 
TANF work requirements and benefits or services provided to 
them are not to be considered ``assistance.''

                           REASONS FOR CHANGE

    The current High Performance Bonus has helped to develop 
measures of employment success, which the Committee bill 
institutionalizes elsewhere (see section 701). The Committee 
bill discontinues the bonus funds to target funding on 
innovative strategies to promote employment, wage-growth, and 
self-sufficiency for TANF families (and certain other low-
income individuals), particularly those with the most severe 
barriers to employment, through supported work, linkages with 
employers, and capitalization strategies. A capitalization 
strategy involves an up-front grant used to develop a program 
which generates its own source of on-going revenue while 
assisting low-income families, such as those operated by 
Goodwill. These provisions are based upon proposals offered by 
Senators Bingaman, Rockefeller, and Breaux.

Section 705--Grants to improve access to transportation

                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    The bill authorizes a competitive grant program to promote 
improving access to dependable, affordable automobiles by low-
income families with children eligible for TANF benefits or 
services. Grant awards may be used to assist families with 
automobile ownership, and maintenance of (or insurance for) 
automobiles, and the Secretary of HHS is required to evaluate 
the programs funded by the grants. Eligible grant applicants 
are States, Indian tribes, localities, and nonprofit 
organizations. The bill authorizes $15 million a year (FY2004-
2007).
    Separately, the bill gives States the option to make costs 
related to the purchase or maintenance of an automobile a 
permitted withdrawal under provisions governing Individual 
Development Accounts.

                           REASONS FOR CHANGE

    The role of transportation in allowing low-income families 
to work and maintain employment has become increasingly clear 
since 1996. However, in rural areas access to public transit 
programs is limited. The Committee bill authorizes funding for 
demonstration programs to test innovative approaches to 
assisting families with transportation needs related to 
automobiles. This provision is based upon recommendations from 
Senator Jeffords.

Section 706--At-home infant care

                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    The bill provides funding for demonstration grants to at 
least 5 and up to 10 States (including Indian tribes) to 
conduct ``at-home infant care'' programs providing child care 
benefits to families caring for their children (under age 2) at 
home. Participation is limited to families with income below 
limits under the Child Care and Development Block Grant and 
parents who meet State requirements for a recent work history. 
Benefits cannot exceed the applicable payment rate for infant 
care under the State's Child Care and Development Block Grant 
program. Benefits are not to be considered ``assistance'' under 
TANF programs, and they are not to be treated as earned income 
for other low-income assistance programs. An evaluation is 
required to assess State implementation experiences, the 
characteristics of families seeking to participate and 
participating in the programs, the length of participation (and 
reasons for ceasing to participate), the prior and subsequent 
employment of participants (and the effect of the program on 
employment), the costs and benefits of this approach, and the 
effectiveness of State/tribal efforts to improve the quality of 
infant care during the demonstration grant period. The bill 
provides $30 million per year for FY2003-FY2007, including 
$750,000 a year reserved for evaluation activities.

                           REASONS FOR CHANGE

    The Committee bill provides funding for demonstration 
programs to replicate and evaluate programs currently operating 
in Montana and Minnesota for at-home infant care. With infant 
care often prohibitively expensive, or of limited availability 
in rural areas, these programs can provide an alternative form 
of care, which may be more cost effective and provide richer 
developmental environments for infants.

Section 707--Grants to conduct demonstration projects on housing with 
        services for families with multiple barriers to work

                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    The bill authorizes competitive grants to be jointly 
awarded by the Secretaries of HHS and HUD. The grants are to be 
awarded to states and nonprofit organizations for the conduct 
and evaluation of demonstration projects providing housing 
together with services that promote employment of parents/
caretakers (including, to a limited degree, noncustodial 
parents) who are eligible for TANF benefits or services and 
have multiple barriers to work. Benefits or services provided 
are not to be considered TANF ``assistance.'' The Secretaries 
are required to publish an evaluation of the demonstrations. 
The bill authorizes appropriations of $50 million (for FY2004).

                           REASONS FOR CHANGE

    The Committee bill authorizes grants for innovative 
programs combining housing with employment services for 
families with barriers to employment. This could help model 
future collaborations between housing and welfare to work 
programs. It is based on a proposal by Senator Kerry.

Section 708--Transitional compliance for teen parents

                              PRESENT LAW

    States are prohibited from providing TANF-funded assistance 
to unwed parents under age 18 and their children unless they 
live in the home of an adult relative or another adult-
supervised arrangement (such as a ``second-chance'' home).

                        EXPLANATION OF PROVISION

    The bill allows States the option to provide TANF-funded 
assistance to teen parents for up to 60 days while aiding the 
parent in coming into compliance with the requirement that teen 
parents live in adult-supervised settings. In addition, 
transitional living youth projects, funded under the Runaway 
and Homeless Youth program, are added as an acceptable form of 
adult-supervised residential setting.

                           REASONS FOR CHANGE

    The Committee bill allows States flexibility to assist 
unwed teen parents for a limited period of time before 
requiring compliance with the requirement they live with 
adults.

Section 709--TANF programs mandatory partners with 1-stop employment 
        training centers; State opt-out

                              PRESENT LAW

    The Workforce Investment Act (WIA) requires each local 
Workforce Investment Board to develop a ``1-stop'' system to 
provide employment services. Some programs are required to be 
partners in the 1-stop system. TANF is an optional partner. 
Partners must enter into written agreements with local boards 
regarding services to be provided, funding, and methods of 
referring individuals among the partners.

                        EXPLANATION OF PROVISION

    The bill requires that TANF programs be partners in the WIA 
1-stop system unless the State opts out of the requirement.

                           REASONS FOR CHANGE

    The Committee bill requires greater collaboration between 
TANF and job training agencies, unless a State decides not to 
do so.

Section 710--Advanced planning document process for information 
        management systems procurement approval

                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    The bill requires that, within 1 year of enactment, the 
Secretaries of HHS, Agriculture, Labor, and Education, and the 
Director of the Office of Management and Budget, along with the 
heads of any other Federal agencies responsible for 
administering Federally funded social services programs, 
jointly review and submit to Congress a report with 
recommendations for improving Federal laws, regulations, and 
guidelines applicable to approval of ``human service 
information systems.'' The review and report are to be done in 
consultation with representatives of the National Governors 
Association, the American Public Human Services Association, 
and the National Conference of State Legislatures. The report 
is to review the Advanced Planning Documents (APD) process, 
consider the merits of developing a single Federal approval 
process for multi-program information system procurement and 
administration, include recommendations for improving current 
Federal cost allocation requirements, and consider the merits 
of allowing State procurement standards that meet or exceed 
Federal standards to be sufficient for purposes of Federal 
approval.

                           REASONS FOR CHANGE

    The process for procuring automated systems with Federal 
funds for State social service programs is complicated. The 
Committee bill requires the administration, in consultation 
with representatives of State organizations, to review the 
current system and provide recommendations for improvement. 
Information technology is increasingly important in the 
administration of social service programs and this provision is 
intended to generate discussion about how best to assist States 
in the purchasing of these systems.

Section 711--Waivers

                              PRESENT LAW

    Before the enactment of PRWORA, States applied for and 
received waivers of Federal requirements of the Aid to Families 
with Dependent Children (AFDC) program. TANF permitted waivers 
in effect on date of enactment of TANF to continue until their 
scheduled expiration, unless the State chooses to end them 
early. This permitted a State to continue its waiver policies 
even if they were inconsistent with TANF requirements until the 
expiration of the waiver. No extensions of pre-1996 waivers are 
permitted.

                        EXPLANATION OF PROVISION

    The bill permits States with waivers set to expire on or 
after October 1, 2002, to continue operating under them through 
the end of FY2007, so long as they comply with the TANF 
``universal engagement'' requirement (as described in section 
201). Unless the Secretary determines that approval would be 
inconsistent with the purposes of TANF, the bill also allows 
additional States to obtain waivers if their request is similar 
or identical to the terms of a waiver that is being extended 
under authority provided in the bill--provided that the State 
agrees to conduct an evaluation.

                           REASONS FOR CHANGE

    The Committee bill permits waivers expiring in FY2003 and 
beyond to continue, provided a State complies with the 
universal engagement provision. If a State is meeting that 
requirement, it should not have to alter previously designed 
welfare-to-work programs. In addition, under an amendment 
offered by Senator Bingaman, other States may adopt programs 
eligible to be continued under the waiver provisions. This 
provides additional flexibility to States and permits 
strategies found successful in 1 State to be tested in another 
State, to help determine if further replication would improve 
welfare to work policies.

Section 712--Antidiscrimination

                              PRESENT LAW

    Under TANF law, a TANF recipient may fill a vacant 
employment position. However, no adult in a work activity that 
is funded in whole or in part by Federal funds may be employed 
or assigned when another person is on layoff from the same or 
any substantially equivalent job, or if the employer has ended 
the employment of any regular employee or otherwise caused an 
involuntary reduction of its workforce in order to fill the 
vacancy created with a TANF recipient. These provisions do not 
preempt or supersede any provision of State or local law that 
provides greater protection against displacement. States are 
required to have a grievance procedure to resolve complaints of 
displacement of permanent employees.
    Under separate provisions of law, any program or activities 
provided under TANF must comply with the Age Discrimination Act 
of 1975; Section 504 of the Rehabilitation Act of 1973; the 
Americans with Disabilities Act of 1990; and Title VI of the 
Civil Rights Act of 1964.

                        EXPLANATION OF PROVISION

    The bill replaces the current nondisplacement provisions of 
TANF law. It provides that a recipient of TANF assistance 
cannot displace any employee or position (including partial 
displacement), fill any unfilled vacancy, or perform work when 
any individual is on layoff from the same job or a 
substantially equivalent job. TANF work activities cannot 
impair any existing contract for services, be inconsistent with 
any existing law, regulation or collective bargaining 
agreement, or infringe on the recall rights or promotional 
opportunities of any workers. TANF work activities must be in 
addition to any activity that would otherwise be available and 
not supplant the hiring of a non-TANF worker.
    The Committee bill also requires States to have a grievance 
procedure to resolve complaints of displacement, including the 
opportunity for a hearing, and sets time standards for the 
process. It provides that the remedies for a violation of the 
non-displacement requirements include termination or suspension 
of payments, prohibition of the placement of the participant, 
reinstatement of the employee, or other relief to make the 
aggrieved employee whole. The provisions do not preempt or 
supersede any local law providing greater protection from 
displacement. In addition, no funds provided under TANF are to 
be used to assist, promote, or deter organizing for purposes of 
collective bargaining.
    The bill applies workplace protection laws, including but 
not limited to, the Fair Labor Standards Act, the Occupational 
Safety and Health Act, Title VII of the Civil Rights Act, and 
the Americans with Disabilities Act to recipients of TANF 
assistance engaged in work activities in the same manner as 
they apply to other workers.
    The bill further requires the General Accounting Office to: 
(1) conduct a study to determine the extent of State compliance 
with current provisions of law requiring States to comply with 
provisions of the Age Discrimination Act, Section 504 of the 
Rehabilitation Act, the Americans with Disabilities Act, and 
Title VI of the Civil Rights Act; and (2) make recommendations 
for improving compliance.
    Additionally, for purposes of benefits or services provided 
with TANF or MOE funds, the bill bars States from applying an 
eligibility requirement on 2-parent families that they do not 
apply to 1-parent families.

                           REASONS FOR CHANGE

    In light of the higher work participation requirements, the 
Committee bill includes provisions strengthening prohibitions 
against welfare recipients displacing regular employees. In 
addition, the Committee bill includes provisions providing 
workplace protections to those welfare recipients engaged in 
work activities. The Committee bill also prohibits States from 
imposing tougher eligibility requirements on two-parent 
families since this can result in negative signals being sent 
about families with both parents present. AFDC may have 
unintentionally encouraged single parent families and this 
legacy must be overcome.

                      TITLE VIII--OTHER PROVISIONS

Section 801--Review of State agency blindness and disability 
        determinations

                              PRESENT LAW

    State agencies are required to conduct blindness and 
disability determinations to establish an individual's 
eligibility for: (1) Title II (Federal Old-Age, Survivors, and 
Disability Insurance (OASDI) benefits); and (2) Title XVI 
(Supplemental Security Income (SSI)). Disability determinations 
are made in accordance with disability criteria defined in 
statute as well as standards promulgated under regulations or 
other guidance.
    Under current law, the Commissioner of Social Security is 
required to review the State agencies' Title II initial 
blindness and disability determinations in advance of awarding 
payment to individuals determined eligible. This requirement 
for review is met when: (1) at least 50 percent of all such 
determinations have been reviewed, or (2) other such 
determinations have been reviewed as necessary to ensure a high 
level of accuracy.

                       EXPLANATION OF PROVISIONS

    After a 1-year phase-in, the bill aligns initial review 
requirements for Title XVI with those currently required under 
Title II. As under Title II, the Commissioner of Social 
Security is required to review initial Title XVI SSI blindness 
and disability determinations made by State agencies in advance 
of awarding payments. For FY2003, the SSI review is required 
for 25 percent of all State-determined allowances. In FY2004 
and thereafter, review is required for at least 50 percent of 
State-determined allowances. To the extent feasible, the bill 
requires the Commissioner to select for review those State 
agency determinations that are most likely to be incorrect.

                           REASONS FOR CHANGE

    The Committee bill includes a requirement that 
determinations in the SSI program be reviewed to improve 
program integrity.

Section 802--Extension of customs user fees

                       EXPLANATION OF PROVISIONS

    The Committee bill extends customs user fees by 17 months.

                        TITLE IX--EFFECTIVE DATE

                              PRESENT LAW

    Not applicable.

                        EXPLANATION OF PROVISION

    Unless provided otherwise, the bill's provisions take 
effect on October 1, 2002. The bill provides for a delayed 
effective date for those provisions where State law is needed 
to meet new State plan requirements under either Title IV-A or 
Title IV-D.

          III. REGULATORY IMPACT STATEMENT AND RELATED MATTERS

                          A. Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact of the Work, 
Opportunity, and Responsibility for Kids Act of 2002.

                  IMPACT ON INDIVIDUALS AND BUSINESSES

    In general, the bill provides grants to States and certain 
other entities to assist low-income families with children in 
moving toward self-sufficiency. Regulations are needed to 
implement these grants in specified areas but do not affect 
individuals or businesses, unless they choose to apply for such 
grants.

                IMPACT ON PERSONAL PRIVACY AND PAPERWORK

    The bill provides grants to States and certain other 
entities to assist low-income families with children in moving 
toward self-sufficiency. In the context of seeking assistance, 
families may be asked about personal circumstances and to 
provide applications, including paperwork associated with their 
financial situation. The bill should not increase the amount of 
personal information and paperwork required.

                     B. Unfunded Mandates Statement

        ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

    The act would extend funding for a number of state 
programs, most notably TANF, and it also would establish new 
grants that target a variety of worker and family programs. The 
act also would place new requirements and limitations on state 
programs as conditions for receiving federal assistance. A 
limit on amounts that states could retain for state child 
support enforcement programs could be an intergovernmental 
mandate as defined in the Unfunded Mandates Reform Act. 
Similarly, a limit on using the child support enforcement 
system to recoup the costs of certain births paid for by 
Medicaid could also be an intergovernmental mandate.
    CBO believes that H.R. 4737 probably would impose 
intergovernmental mandates, as defined in UMRA, on states 
because it is likely that not all states could offset the costs 
of the act's changes to the child support enforcement program. 
The costs of the mandates would depend on the degree to which 
states would be able to alter their responsibilities within the 
child support enforcement program and to compensate for the 
loss of receipts as a result of the act. In total, states would 
face losses ranging from $73 million in 2007 to $90 million in 
2011. To the extent that states are able to alter their 
programmatic responsibilities and offset some of these costs, 
the aggregate amounts may be lower than the threshold 
established in UMRA ($65 million in 2007, as adjusted for 
inflation).

Mandates

    Generally, conditions of federal assistance are not 
considered intergovernmental mandates as defined in UMRA. 
However, UMRA makes special provisions for identifying 
intergovernmental mandates in large entitlement grant programs 
(those that provide more than $500 million annually to state, 
local, or tribal governments), including TANF, Medicaid, and 
child support enforcement. Specifically, if a legislative 
proposal would increase the stringency of conditions of 
assistance, or cap or decrease the amount of federal funding 
for the program, such a change would be considered an 
intergovernmental mandate only if the state, local, or tribal 
government lacks authority to amend its financial or 
programmatic responsibilities to continue providing required 
services. The TANF and Medicaid programs allow states 
significant flexibility to alter their programs and accommodate 
new requirements. However, the rules for implementing the child 
support enforcement system do not afford states as much 
flexibility.
            Child support enforcement
    H.R. 4737 would reduce the amounts that states may retain 
from child support collections in order to reimburse themselves 
for public assistance spending, in particular for TANF and 
Medicaid. As a result, states would lose a total of about $60 
million in 2007 and about $320 million over the 2007-2011 
period. The act also would prohibit states from using the child 
support enforcement systems to collect costs associated with 
the birth of a child that are paid for by Medicaid after 
October 1, 2004. This provision would result in a loss of 
receipts to states of over $30 million beginning in 2005 and 
about $240 million over the 2005-2011 period. (States also 
would be required to conduct mandatory reviews of child support 
cases every three years, but this requirement is expected to 
result in net savings to states of about $50 million in the 
child support program and $44 million in Medicaid over the same 
period.)
            TANF and Medicaid
    The TANF program affords states broad flexibility to 
determine eligibility for benefits and to structure the 
programs offered as part of the state's family assistance 
program. Changes to the program as embodied in H.R. 4737 could 
alter the way in which states administer the program and 
provide benefits, and such changes could increase costs to 
states. States would continue to be able to make changes, 
however; for example by adjusting eligibility criteria or the 
structure of programs; to avoid or offset such costs. Because 
the TANF program affords states such broad flexibility, new 
requirements would not be considered intergovernmental mandates 
as defined by UMRA. Similarly, a large component of the 
Medicaid program includes optional services that states may 
alter to accommodate new requirements and additional costs in 
that program.

Other impacts

            Benefits
    Many provisions of the act would benefit state assistance 
programs by increasing funding, broadening flexibility, or 
providing new grants.
            TANF
    The act would reauthorize family assistance grants through 
2007 and increase grants for states that received supplemental 
grants in the past or have low per capita incomes. It also 
would alter the Contingency Fund program and increase the 
likelihood that states would qualify for funding. States would 
receive additional funds for TANF programs over the 2003-2012 
period, including $11.3 billion for childcare, $4.4 billion for 
supplemental grants, and $0.8 billion from the contingency 
fund.
    The act would broaden the uses of TANF funds to include 
assistance, benefits, and services for legal immigrants, some 
of the costs associated with post-secondary education programs, 
and supplemental housing benefits. Over the 2003-2007 period, 
it would authorize the appropriation of $15 million annually 
for grants to improve access to transportation and would 
authorize the appropriation of $50 million in 2004 for housing 
assistance grants to states and nonprofit organizations. It 
also would directly appropriate $30 million annually for at-
home infant care programs. It would allow states to use unspent 
funds from prior years to pay for services in addition to 
benefits. Finally, the act would increase the limit of TANF 
funds that may be specifically used for SSBG purposes from 4.25 
percent to 10 percent, and it would increase the appropriation 
for SSBG from $1.7 billion to $1.952 billion in fiscal year 
2005.
            Family promotion and support
    H.R. 4737 would extend and expand a number of existing 
grant programs and also would establish new grants for a 
variety of purposes, including programs for reducing 
illegitimacy and teenage pregnancy, promoting marriage, 
expanding abstinence education, increasing employment among 
noncustodial parents, and improving group homes for young 
mothers and their children.
            Child support
    In addition to the changes in collections and mandatory 
reviews discussed above under the ``Mandates'' section, the act 
would appropriate $50 million in 2003 for grants to states for 
a variety of child support collection activities. It also would 
give states the option of passing on the federal portion of 
child support collections to families that no longer receive 
TANF or that have received TANF for less than five years. 
Currently, some states use their own funds to pass on amounts 
to these families that total both the federal and state 
portions. This option would allow those states to use federal 
funds to pay for the portion of passthrough that is 
attributable to the federal share, thus resulting in savings to 
states. States may also request the Secretary of Treasury to 
withhold past-due child support for children who are not minors 
from the income tax refunds of noncustodial parents.
            Tribal issues
    The act would alter time limits for individuals who live in 
Indian country or a Native Alaskan village where joblessness is 
above 20 percent, allowing more individuals to receive benefits 
for a greater period of time.
    The act also would authorize direct agreements between 
tribal entities and the federal government regarding foster 
care services. Such agreements would allow tribes and states 
that have agreements with the tribes to receive higher matching 
rates for foster care services. CBO estimates that tribal 
entities and states would receive about $12 million in 2004 and 
$398 million over the 2004-2012 period as a result of this 
provision, but they also would have to use about $200 million 
of their own funds over the same period in order to receive 
those federal dollars.
    H.R. 4737 would replace work activity grants to tribes 
($7.6 million annually) with grants to tribes, tribal 
organizations, and native Alaskan organizations for employment 
services, and CBO estimates that tribes would receive about 
$330 million over the 2003-2012 period for those grants. The 
act also would appropriate $75 million for Tribal Capacity and 
Tribal Development grants to improve the infrastructure of 
human service programs and to foster business and economic 
development. Finally, the act would establish a contingency 
fund for grants to Indian tribes that experience economic 
hardship. CBO estimates that tribes would receive $2 million in 
2003 and $47 million over the 2003-2012 period for those 
grants.
            Other costs and additional requirements
    Some provisions of the act, while not intergovernmental 
mandates as defined in UMRA, would place additional conditions 
on state, local, and tribal governments or would result in 
additional spending as a result of meeting federal matching 
requirements.
            Medicaid
    The act would extend a requirement that states provide 
Transitional Medical Assistance for five more years. The act 
also would allow states to eliminate an income reporting 
requirement for families receiving TMA, ease the criteria for 
qualifying for TMA, and continue providing TMA for up to one 
year. These provisions would increase state spending for 
Medicaid by $120 million in 2003 and by about $1.8 billion over 
the 2003-2012 period. The act also would give states the option 
of providing Medicaid and SCHIP coverage to pregnant women and 
children who are legal immigrants that entered the United 
States after August 22, 1996. As a result of this option, CBO 
estimates that state spending for Medicaid would increase by 
$27 million in 2003 and by about $2 billion over the 2003-2012 
period. State spending for SCHIP would increase by $2 million 
in 2003 and $20 million over the 2003-2012 period.
            Other provisions
    The act would require state family assistance plans to be 
made available for public comment and submitted earlier than 
currently required. It also would require state TANF programs 
to participate in one-stop employment and assistance centers, 
and states would be required to establish and maintain 
grievance procedures to address allegations of worker 
displacement as a result of TANF work activities.

                 ESTIMATED IMPACT ON THE PRIVATE SECTOR

    Tital VIII of the act would extend the government's 
authority to collect certain customs user fees from its current 
expiration date of September 30, 2003, until February 28, 2005. 
This extension would impose a private-sector mandate as defined 
in UMRA. CBO cannot determine whether the direct cost of this 
mandate would exceed the annual threshold specified in UMRA 
($115 million in 2002, adjusted annually for inflation) because 
UMRA does not clearly specify how to determine the direct cost 
associated with extending an existing mandate that has not yet 
expired.
    Under one interpretation, UMRA requires the direct cost to 
be measured relative to a case that assumes that the current 
mandate will not exist beyond its current expiration date. 
Under that interpretation, CBO estimates that the direct cost 
of the mandate would be about $1.3 billion in 2004 and $650 
million in 2005. Both of those amounts would exceed the 
threshold for private-sector mandates specified in UMRA. Under 
the other interpretation, UMRA requires the direct cost to be 
measured relative to the current mandate. Under that 
interpretation, the direct cost would be zero.

                           IV. BUDGET EFFECTS

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 18, 2002.
Hon. Max Baucus,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4737, the Work, 
Opportunity, and Responsibility for Kids Act of 2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sheila Dacey.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

H.R. 4737--Work, Opportunity, and Responsibility for Kids Act of 2002

    Summary: H.R. 4737 would:
           Reauthorize the Temporary Assistance for 
        Needy Families (TANF) program at current funding 
        levels. It would increase funding for some grants and 
        establish several new grants, but also would eliminate 
        funding for other related grants;
           Increase funding for child care programs by 
        $1 billion or more annually;
           Extend by five years the requirement that 
        state Medicaid programs provide transitional medical 
        assistance (TMA) to certain Medicaid beneficiaries and 
        allow states to provide coverage under Medicaid and the 
        State Children's Health Insurance Program (SCHIP) to 
        certain pregnant women and children who are legal 
        immigrants;
           Make several changes to the child support 
        enforcement program, including allowing the 
        distribution to families of more collections from child 
        support payments;
           Increase funding for tribal welfare and 
        employment services programs;
           Require the Social Security Administration 
        (SSA) to change its system of reviewing awards to 
        certain disabled adults in the supplemental Security 
        Income (SSI) program; and
           Extend customs user fees through February 
        28, 2005.
    CBO estimates that enacting H.R. 4737 as approved by the 
Senate Finance Committee would increase mandatory spending by 
$1.2 billion in 2003 and by $23.2 billion over the 2003-2012 
period. It also would reduce revenues by $119 million over the 
2004-2012 period. Because the act would affect direct spending 
revenues, pay-as-you-go procedures would apply. The act would 
authorize the appropriation of $15 million in 2003 and $457 
million over the 2003-2007 period for new grant programs to aid 
noncustodial parents, teen mothers and low-income families 
lacking adequate transportation or housing. CBO estimates that 
appropriation of the authorized levels would result in $2 
million in outlays in 2003 and $457 million over the 2003-2012 
period.
    CBO believes that H.R. 4737 probably would impose 
intergovernmental mandates, as defined in the Unfunded Mandates 
Reform Act (UMRA), on states because it is likely that not all 
states could offset the costs of the act's changes to the child 
support enforcement program. The costs of the mandates would 
depend on the degree to which states would be able to alter 
their responsibilities within the child support enforcement 
program and to compensate for the loss of receipts as a result 
of the act. In total, states would face losses ranging from $73 
million in 2007 to $90 million in 2011. To the extent that 
states are able to alter their programmatic responsibilities 
and offset some of these costs, the aggregate amounts may be 
lower than the threshold established in UMRA ($65 million 2007, 
as adjusted for inflation).
    Other provisions of the act would significantly affect the 
way states administer their TANF and Medicaid programs, but 
because of the flexibility in those programs, the new 
requirements would not be intergovernmental mandates as defined 
in UMRA. In general, state, local, and tribal governments would 
benefit from the continuation of existing grants in TANF, the 
creation of new grant programs, and broader flexibility and 
options in some areas.
    By extending the government's authority to collect certain 
customs user fees, the act would impose a private-sector 
mandate as defined in UMRA. CBO cannot determine whether the 
direct cost of the mandate would exceed the annual threshold 
for private-sector mandates ($115 million in 2002, adjusted 
annually for inflation) because UMRA does not clearly specify 
how to determine the direct cost associated with extending an 
existing mandate that has not yet expired. Depending on how it 
is measured, the direct cost to the private sector could exceed 
the threshold.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 4737 is shown in Table 1. The costs of 
this legislation fall within budget functions 500 (education, 
training, employment, and social services), 550 (health), 600 
(income security), and 750 (administration of justice).

                     TABLE 1.--ESTIMATED COSTS OF H.R. 4737, THE WORK OPPORTUNITY, AND RESPONSIBILITY FOR KIDS ACT OF 2002, BY TITLE
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                  ------------------------------------------------------------------------------------------------------
                                                    2003      2004       2005     2006     2007     2008     2009     2010     2011     2012    2003-12
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Title I Funding:
    Estimated budget authority...................   1,522      1,520      1,770   1,767    1,767    1,766    1,766    1,767    1,767    1,768     17,181
    Estimated outlays............................     940      1,234      1,670   1,616    1,779    1,946    1,996    1,873    1,842    1,781     16,678
Title II: Work:
    Budget authority.............................     120          0          0       0        0        0        0        0        0        0        120
    Estimated outlays............................       6         24         30      30       24        6        0        0        0        0        120
Title III: Family Promotion and Support:
    Estimated budget authority...................     155        156        156     156      156       57       57       56       56       56      1,061
    Estimated outlays............................      27         85        171     197      184       71       53       75       65       56        984
Title IV: Health Coverage:
    Estimated budget authority...................     190        485        585     675      765      585      315      320      340      380      4,640
    Estimated outlays............................     186        473        584     666      754      588      345      325      345      385      4,650
Title V: Child Support and Child Welfare:
    Estimated budget authority...................     131        101        188     224      309      322      340      354      369      383      2,720
    Estimated outlays............................      60        113        208     246      333      306      339      359      373      385      2,720
Title VI: Tribal Issues:
    Estimated budget authority...................     129         44         54      64       75       87       89       92       94       97        829
    Estimated outlays............................      13         64         80      80       84       87       89       91       94       96        778
Title VII: Innovation, Flexibility and
 Accountability:
    Estimated budget authority...................     242         38         38      38       40       40       40       39       39       39        593
    Estimated outlays............................      16        138        164     128        7      -27        5       39       39       39        548
Title VIII: Other Provisions:
    Estimated budget authority...................      -6     -1,301       -705     -82     -109     -144     -176     -211     -253     -280     -3,267
    Estimated outlays............................      -6     -1,301       -705     -82     -109     -144     -176     -211     -253     -280     -3,267
Interactions:
    Estimated budget authority...................       0          0          0       0        0        0        0        0        0        0          0
    Estimated outlays............................       0          0       -181     -71       53      133       66        0        0        0          0
                                                  ------------------------------------------------------------------------------------------------------
    Total changes in direct spending:
    Estimated budget authority...................   2,484      1,043      2,087   2,842    3,004    2,713    2,432    2,417    2,412    2,444     23,877
    Estimated outlays............................   1,242        829      2,022   2,810    3,109    2,965    2,716    2,551    2,505    2,462     23,211

                                                                   CHANGES IN REVENUES

Estimated revenues...............................       0         -1         -3      -7      -13      -16      -18      -20      -20      -21       -119

                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

AuthorizatIon level..............................      15        148         98      98       98        0        0        0        0        0        457
Estimated outlays................................       2         40         83     139      110       61       22        0        0        0        457
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to totals because of rounding.

                           BASIS OF ESTIMATE

Direct spending and revenues

    CBO estimates that enacting H.R. 4737 would increase direct 
spending by $23.2 billion and reduce revenue by $119 million 
over the 2003-2012 period, for a net reduction in projected 
surpluses of about $23.3 billion over the next 10 years.
            Title I: Funding
    H.R. 4737 would reauthorize basic TANF grants through 2007 
at the current level of funding of $16.6 billion. The act would 
not alter current requirements on states to spend a certain 
percentage of their historic spending level (80 percent, or 75 
percent if the state meets the work participation requirements) 
and to limit assistance paid with federal funds to five years. 
It would alter the funding of some grants related to TANF and 
make several other changes to program rules and reporting 
requirements. CBO estimates title I would increase direct 
spending by $940 million in 2003 and $16.7 billion over the 
2003-2012 period (see Table 2).
            State family assistance grant
    Section 101 would extend the state family assistance grant 
through 2007 at the current funding level of $16.6 billion. CBO 
already assumes funding at that level in its baseline in 
accordance with rules for constructing baseline projections, as 
set forth in section 257 of the Balanced Budget and Emergency 
Deficit Control Act of 1985 (Deficit Control Act). Therefore, 
CBO estimates the provision would have no effect on direct 
spending over the 2003-2012 period, relative to the current-law 
baseline.
            Supplemental grants
    Section 101 also would provide additional funding totaling 
$441 million annually to certain states. It would extend the 
supplemental grants for population increases through 2007 at 
the 2002 funding level of $319 million and incorporate them 
into the state family assistance grants. Current law specifies 
that supplemental grants should not be assumed to continue in 
baseline projections after 2002, overriding the continuation 
rules specified in section 257 of the Deficit Control Act. 
Seventeen states that had lower-than-average TANF grants per 
poor person or had rapidly increasing populations would be 
eligible for supplemental grants. In addition, 17 states (10 of 
the states that now get a supplemental grant and seven 
additional states) would qualify for an increase in their state 
family assistance grant based on their low per-capita-income 
levels. Those increases would total $122 million a year.

                                                      TABLE 2.--ESTIMATED COSTS OF TITLE I: FUNDING
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By fiscal year, in millions of dollars--
                                                    ----------------------------------------------------------------------------------------------------
                                                       2003     2004     2005     2006     2007     2008     2009     2010     2011     2012    2013-12
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Extend and increase supplemental grants:
    Estimated budget authority.....................      441      441      441      441      441      441      441      441      441      441      4,410
    Estimated outlays..............................      176      265      397      485      507      540      573      496      496      452      4,388
Food stamp effect of supplemental grants:
    Estimated budget authority.....................       -2       -3       -5       -6       -6       -7       -7       -6       -6       -5        -53
    Estimated outlays..............................       -2       -3       -5       -6       -6       -7       -7       -6       -6       -5        -53
Expand contingency fund:
    Estimated budget authority.....................       80       80       80       80       80       80       80       80       80       80        800
    Estimated outlays..............................       32       48       72       88       92       98      104       90       90       82        796
Food stamp effect of contingency fund:
    Estimated budget authority.....................        0       -1       -1       -1       -1       -1       -1       -1       -1       -1         -9
    Estimated outlays..............................        0       -1       -1       -1       -1       -1       -1       -1       -1       -1         -9
Increase child care funding:
    Estimated budget authority.....................    1,000    1,000    1,000    1,250    1,250    1,250    1,250    1,250    1,250    1,250     11,750
    Estimated outlays..............................      750      910      970    1,178    1,228    1,243    1,248    1,250    1,250    1,250     11,276
TANF effect of new child care spending:
    Budget authority...............................        0        0        0        0        0        0        0        0        0        0          0
    Estimated outlays..............................     -198     -132      -33        0       37      159      116       41       10        0          0
Increase territory ceilings:
    Estimated budget authority.....................        3        3        3        3        3        3        3        3        3        3         31
    Estimated outlays..............................        1        2        3        4        3        3        3        3        3        3         28
Increase SSBG funding in 2005:
    Budget authority...............................        0        0      252        0        0        0        0        0        0        0        252
    Estimated outlays..............................        0        0      214       30        8        0        0        0        0        0        252
TANF effect of new SSBG funding:
    Budget authority...............................        0        0        0        0        0        0        0        0        0        0          0
    Estimated outlays..............................        0        0      -35       10        7        9        9        0        0        0          0
Increase transfer authority to SSBG:
    Budget authority...............................        0        0        0        0        0        0        0        0        0        0          0
    Estimated outlays..............................      181      145       89     -172      -96      -98      -49        0        0        0          0
                                                    ----------------------------------------------------------------------------------------------------
    Total changes in Title I:
        Estimated budget authority.................    1,522    1,520    1,770    1,767    1,767    1,766    1,766    1,767    1,767    1,768     17,181
        Estimated outlays..........................      940    1,234    1,670    1,616    1,779    1,946    1,996    1,873    1,842    1,781     16,678
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
Components may not sum to totals because of rounding.
SSBG=Social Services Block Grant.

    In all, 24 states would receive one or both of the 
increases to their basic grant amount and payments would total 
$441 million annually. Because many states have unspent 
balances from prior-year TANF grants, CBO assumes that many 
states would not spend the new funds quickly. CBO estimates 
that states would spend $176 million in 2003 and $4.4 billion 
over the 2003-2012 period. CBO expects some of the additional 
funding provided would be used to increase benefits to families 
that also receive food stamps. Additional TANF income would 
reduce Food Stamp benefits, lowering spending in the Food Stamp 
program by $53 million over the 2003-2012 period.
            Contingency fund
    Section 102 would significantly alter the Contingency Fund 
for State Welfare Programs. Under current law, the contingency 
fund provides additional federal funds to states with high and 
increasing unemployment rates or significant growth in Food 
Stamp participation. States are required to maintain state 
spending at 100 percent of their 1994 levels and to match 
federal payments. CBO estimates that states will draw federal 
funds totaling between $1 million and $4 million annually under 
current law. A major factor restraining spending in the current 
program is the requirement to maintain a high level of state 
spending. Most states currently spend well below their historic 
levels.
    Section 102 would change the eligibility conditions, grant 
determination, and state spending requirements of the 
contingency fund. A state would need to experience high growth 
in its unemployment rate, Food Stamp participation, or TANF 
caseload to qualify for funds. The amount of funding a state 
would receive would be based on the state's caseload increase 
over the level in the two years prior to its qualification and 
its Medicaid matching rate. A state with high unspent TANF 
balances from prior years would not be eligible for payments 
from the contingency fund. Unlike the current contingency fund, 
a state would not need to maintain a high level of historic 
spending or put up any matching funds in order to receive a 
contingency fund grant.
    Based on CBO's projections of unemployment, Food Stamp 
participation, TANF caseloads and state TANF spending, CBO 
estimates that states would qualify for an additional $80 
million annually from the fund. CBO estimates states would 
spend $32 million in 2003 and $796 million over the 2003-2012 
period. CBO expects some of the additional funding provided 
would be used to increase benefits to families that also 
receive food stamps. Additional TANF income would reduce Food 
Stamp benefits, lowering spending in the Food Stamp program by 
$9 million over the 2003-2012 period.
            Child care
    The child care entitlement to states program provides 
funding to states for child care subsidies to low-income 
families and for other activities. Section 103 would amend the 
program by appropriating a total of $19.1 billion over the 
2003-2007 period. It would appropriate $3.717 billion in years 
2003 through 2005 and $3.967 billion in 2006 and 2007. That is 
a total of $5.5 billion over the amounts assumed in baseline 
for the 2003-2007 period. CBO assumes funding would continue at 
the 2007 level in its baseline in accordance with the rules set 
forth in the Deficit Control Act. Based on recent spending 
patterns, CBO estimates that outlays would increase by $750 
million in 2003 and by $11.3 billion over the 10-year period.
    Under current law, the total mandatory child care 
appropriation is distributed by two separate formulas. First, a 
fixed amount based on historical spending--$1.235 billion in 
2002--is allocated to states and this amount requires no match. 
H.R. 4737 would increase this funding by $1.0 billion annually 
for the next five years. Second, the remaining funds--$1.482 
billion in 2002--are distributed under a formula based on 
states' relative share of children under age 13, but states are 
required to supply matching funds to access these grants. The 
act would increase this component of child care funding by $250 
million in both 2006 and 2007.
    CBO expects the additional child care funding would induce 
some states to reduce the amount of TANF spending on child care 
(either directly or through transfers to the Child Care and 
Development Fund) and result in a temporary slowing of TANF 
spending. CBO estimates TANF spending would slow by nearly $200 
million in 2003, but since states would find alternative ways 
to spend any funds no longer transferred, there would be no net 
impact on TANF spending over the 2003-2012 period.
            Territories
    Section 108 would increase the amount of funding available 
to Puerto Rico, Guam, the Virgin Islands, and American Samoa by 
$3 million per year. Based on historic rates of spending, CBO 
estimates those territories would spend $1 million in 2003 and 
$28 million over the 2003-2012 period.
            Social Services block grants (SSBG)
    Section 110 would increase the funding level for SSBG in 
2005 and raise the percentage of the TANF grant that states 
could transfer to SSBG.
    SSBG is permanently authorized at $1.7 billion annually. 
Section 110 would increase funding for one year only to $1.952 
billion in 2005. CBO estimates, based on current rates of 
spending, that states would spend $214 million in 2005 and $252 
million over the 2005-2012 period. Section 110 also would allow 
states to maintain the authority to transfer up to 10 percent 
of TANF funds to SSBG. That authority is scheduled to fall to 
4.25 percent in 2003 and after. In recent years, states have 
transferred about $1 billion annually.
    Those provisions would affect TANF spending in two ways. 
First, the additional SSBG spending would tend to reduce the 
need for TANF transfer to SSBG and slow TANF spending by an 
estimated $35 million in 2005. Second, maintaining the transfer 
authority at the higher level would make it easier for states 
to spend their TANF grants and would tend to accelerate 
spending relative to current law. (Based on recent state 
transfers, CBO expects that states would transfer an additional 
$600 million under the provision, but because some of this 
money would have been spent within the TANF program anyway, 
only $181 million of additional spending would occur in 2003.) 
The net effect of the provisions would be to increase TANF 
spending in 2003 through 2005 and reduce spending in later 
years. Overall, the provision would have no net impact over the 
2003-2012 period.
            Title II: Work
    Title II would establish a new grant program for states and 
revise requirements on states related to the participation in 
work and training of families receiving assistance. CBO 
estimates that enacting title II would increase direct spending 
by $120 million over the 2003-2012 period.
            Implementation grants
    Section 201 would make grants to states to train 
caseworkers, improve coordination of support programs, conduct 
outreach, and establish advisory panels to improve states' 
policies and procedures for assisting individuals with barriers 
to work. The act would provide $120 million to the Secretary of 
Health and Human Services (the Secretary) to award over the 
2003-2006 period. Because it would take states some time to 
plan how they would spend the funds, CBO assumes the money 
would be spent slowly. CBO estimates states would spend $6 
million in 2003 and $120 million over the 2003-2012 period (see 
Table 1).
            Work participation requirements
    Section 202 would require states to have an increasing 
percentage of TANF recipients participate in work activities 
while receiving cash assistance. It would maintain current 
penalties for the failure to meet those requirements. Those 
penalties can total up to 5 percent of the TANF block grant 
amount for the first failure to meet work requirements and 
increase with each subsequent failure. CBO expects most states 
would meet the requirements with little additional effort and 
no state would be subject to financial penalty for failing to 
meet the new requirements.
    Section 202 would require states to engage an increasing 
share of families receiving TANF in activities for 30 hours a 
week with at least 24 of those hours (up from 20 hours under 
existing law) in a limited set of activities. The required 
participation rate would rise by 5 percentage points a year 
from 50 percent in 2003 to 70 percent in 2007. The act also 
would eliminate a requirement in current law that sets even 
higher participation rates for two-parent families and would 
allow partial credit for recipients who participate for at 
least 15 hours against the participation standard.
    The act would expand the types of activities that would 
count toward meeting the work participation requirements and 
the allowed exclusions from the calculation of the work 
participation rate. It also would give states the option of 
including additional families receiving child care and 
transportation or nonrecurring benefits in the calculation.
    Another provision of H.R. 4737 could have a significant 
impact on the work requirements that states actually would 
face. Under current law, certain states have waivers that allow 
them to use different rules to determine whether they meet the 
work participation requirement. Section 711 would allow certain 
states to continue to operate under their waivers and allow 
other states to adopt the provisions of those waivers as long 
as they are consistent with the purposes of the TANF program. 
Provisions of those waivers would allow states to expand the 
types of activities, reduce the required hours of 
participation, and expand the number of families exempted from 
the work participation standards.
    Finally, section 202 would reduce the required 
participation rate of a state based on the number of families 
in the state who leave assistance for work. That replaces a 
provision in current law that bases such reductions on TANF 
caseload declines since 1995. The caseload reduction credit has 
reduced significantly the required participation rate in all 
states and reduced it to zero in more than 30 states. The new 
employment credit also would result in significant reductions 
in the required participation rates for some states. The new 
credit is capped and cannot reduce the standard by more than 20 
percentage points by 2007. However, the cap does not apply to 
states that meet at least two criteria for being a needy state 
for purposes of the contingency program (described under title 
I).
            Title III: Family Promotion and Support
    Title III would eliminate one grant program related to out-
of-wedlock birth rates and replace it with another directed at 
promoting marriage. It would reauthorize an existing abstinence 
education program and establish two new programs aimed at 
pregnancy prevention. CBO estimates that title III would 
increase direct spending by $27 million in 2003 and $984 
million over the 2003-2012 period (see Table 3).
            Healthy marriage promotion grants
    Section 301 would eliminate an out-of-wedlock birth grant 
program, but would create a new grant program to promote 
healthy marriages. CBO projects funding for out-of-wedlock 
birth grants at $100 million annually in accordance with the 
Deficit Control Act. We estimate that eliminating this program 
would reduce outlays by $900 million over the 2004-2012 period. 
The impact of the reduction in funding on outlays is delayed 
(no effect in 2003) because the grants are awarded in the last 
days of a fiscal year. CBO expects the reduced funding would 
cause states to decrease benefits to families that also receive 
food stamps. The reduced TANF income would increase Food Stamp 
benefits, increasing spending in the Food Stamp program by $11 
million over the 2003-2012 period.
    Section 301 also would establish a new competitive grant to 
states, Indian tribes, and non-profit entities for developing 
and implementing programs to promote stronger families, with an 
emphasis on promoting healthy marriages. The act would 
appropriate $200 million annually for grants that could be used 
for a variety of activities including public advertising 
campaigns, education programs on topics related to marriage, 
teen pregnancy prevention programs, income support programs, 
and development of best practices for addressing domestic 
violence. The grants could be used to cover up to 75 percent of 
the cost of the new programs. CBO expects grants would be spent 
slowly in the first few years because the Department of Health 
and Human Services (HHS) would need to set up a system for 
awarding grants and states would need to set up programs to use 
the funds. CBO projects that the grants would continue in 
baseline after 2007, in accordance with the Deficit Control 
Act. We estimate states would spend $11 million in 2003 and 
$1.8 billion over the 2003-2012 period.

                                          TABLE 3.--ESTIMATED COSTS OF TITLE III: FAMILY PROMOTION AND SUPPORT
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By fiscal year, in millions of dollars--
                                                    ----------------------------------------------------------------------------------------------------
                                                       2003     2004     2005     2006     2007     2008     2009     2010     2011     2012    2003-12
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPEDNING

Repeal out-of wedlock grant:
    Estimated budget authority.....................     -100     -100     -100     -100     -100     -100     -100     -100     -100     -100       -100
    Estimated outlays..............................        0      -42      -57      -94     -103     -169     -135     -100     -100     -100       -900
Food Stamp effect of repeal of grant:
    Estimated budget authority.....................        0        1        1        1        1        2        2        1        1        1         11
    Estimated outlays..............................        0        1        1        1        1        2        2        1        1        1         11
Establish health marriage grants:
    Estimated budget authority.....................      200      200      200      200      200      200      200      200      200      200      2,000
    Estimated outlays..............................       11       88      182      239      231      212      200      200      200      200      1,763
Continue abstinence education:
    Budget authority...............................        0        0        0        0        0      -50      -50      -50      -50      -50       -250
    Estimated outlays..............................        0        0        0        0        0      -14      -34      -41      -46      -50       -185
Establish abstinence first grants:
    Estimated budget authority.....................       50       50       50       50       50        0        0        0        0        0        250
    Estimated outlays..............................       15       35       40       45       50       35       15       10        5        0        250
Fund teen pregnancy prevention:
    Estimated budget authority.....................        5        5        5        5        5        5        5        5        5        5         50
    Estimated outlays..............................        1        3        5        6        5        5        5        5        5        5         45
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Total changes in title III:
    Estimated budget authority.....................      155      156      156      156      156       57       57       56       56       56      1,061
    Estimated outlays..............................       27       85      171      197      184       71       53       75       65       56        984
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to totals because of rounding.

            Abstinence education
    Section 302 would provide funding totaling $250 million for 
the abstinence education program, administered by the Health 
Resources and Services Administration (HRSA), through 2007. CBO 
estimates that outlays would total $185 million over the 2003-
2007 period (with the remainder of the $250 million to be spent 
after 2007). However, CBO already assumes mandatory 
appropriations for this program in its baseline, based on the 
provisions in the Deficit Control Act for projecting direct 
spending for expiring programs. Therefore, CBO estimates that 
the provision would have no direct spending effects through 
2007, relative to the current-law baseline.
    CBO estimates that outlays in 2007 would not exceed the $50 
million threshold, and therefore, we would not assume budget 
authority to continue in this program beyond the authorization 
ending in 2007. As a result, CBO estimates that implementing 
this provision would decrease outlays by $185 million from 
2008-2012, relative to the current-law baseline.
    H.R. 4737 also would make an additional $250 million in 
grants available to scientifically proven interventions that 
emphasize abstinence, but could include other strategies for 
prevention of teen pregnancy. The act also would require the 
Secretary to use some of the money to do an evaluation 
comparing the efficiency of abstinence-only and abstinence-
first programs. CBO estimates that spending for this provision 
would be similar to the current abstinence education program. 
We estimate outlays for this provision of $15 million in 2003, 
$185 million over the 2003-2007 period, and $250 million over 
the 2003-2012 period.
            Teen Pregnancy Prevention Research Center
    Section 303 would create a grant available to a nationally 
recognized, nonpartisan, nonprofit organization for the purpose 
of establishing and operating a resource center for issues of 
teen pregnancy prevention. The act would appropriate $5 million 
each year over the 2003-2007 period and CBO projects these 
grants would continue in baseline beyond 2007, as they are part 
of the overall TANF program. CBO estimates that $1 million 
would be spent in 2003 and $45 million over the 2003-2012 
period.
            Title IV: Health Coverage
    Title IV would make several changes to Medicaid and the 
State Children's Health Insurance Program. The act would extend 
by five years the requirement that state Medicaid programs 
provide transitional medical assistance to certain Medicaid 
beneficiaries (usually former welfare recipients) who otherwise 
would be ineligible because they have returned to work and have 
increased earnings. Title IV also would allow states to 
simplify aspects of TMA administration. Finally, it would give 
states the option of extending coverage under Medicaid and 
SCHIP to certain pregnant women and children who are legal 
immigrants.
    Overall, CBO estimates that enacting title IV would 
increase direct spending by $186 million in 2003 and by $4.7 
billion over the 2003-2012 period (see Table 4).

                                                 TABLE 4.--ESTIMATED COSTS OF TITLE IV: HEALTH COVERAGE
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year, in millions of dollars--
                                                                ----------------------------------------------------------------------------------------
                                                                  2003    2004    2005    2006    2007    2008    2009    2010    2011    2012   2003-12
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

       Extension of Transitional Medical Assistance (TMA)

Medicaid:
    Estimated budget authority.................................     130     320     345     390     425     280      10      10       0       0    1,910
    Estimated outlays..........................................     130     320     345     390     425     280      10      10       0       0    1,910
State Children's Health Insurance Coverage:
    Budget authority...........................................       0       0       0       0       0       0       0       0       0       0        0
    Estimated outlays..........................................      -8     -18      -4     -14     -16     -11      47       0       0       0      -24

                  Optional TMA Simplifications

Medicaid:
    Estimated budget authority.................................      30      75     110     125     130      55       5       0       0       0      530
    Estimated outlays..........................................      30      75     110     125     130      55       5       0       0       0      530
State Children's Health Insurance Coverage:
    Budget authority...........................................       0       0       0       0       0       0       0       0       0       0        0
    Estimated outlays..........................................      -1      -4      -2      -5      -5      -2      12       0       0       0       -7

         Optional Coverage of Certain Legal Immigrants

Medicaid:
    Estimated budget authority.................................      30      90     130     160     210     250     300     310     340     380    2,200
    Estimated outlays..........................................      30      90     130     160     210     250     300     310     340     380    2,200
State Children's Health Insurance Coverage:
    Budget authority...........................................       0       0       0       0       0       0       0       0       0       0        0
    Estimated outlays..........................................       5      10       5      10      10      15     -30       5       5       5       40
                                                                ----------------------------------------------------------------------------------------
    Total changes in Title IV:
        Estimated budget authority.............................     190     485     585     675     765     585     315     320     340     380    4,640
        Estimated outlays......................................     186     473     584     666     754     588     345     325     345     385    4,650
--------------------------------------------------------------------------------------------------------------------------------------------------------

            Extension of transitional medical assistance
    State Medicaid programs are required to temporarily provide 
Medicaid coverage, known as TMA, for certain individuals and 
their dependents who would otherwise become ineligible because 
their earnings have increased above the state's eligibility 
limits under section 1931 of the Social Security Act. (Section 
1931 is an eligibility category for families established under 
the 1996 welfare reform bill.) Many of these individuals are 
former welfare recipients who have returned to work. TMA 
recipients are guaranteed to remain eligible for Medicaid for 
six months; after that, they may remain eligible for another 
six months if they report their income periodically and have 
incomes below 185 percent of the poverty level.
    States are currently required to provide TMA to individuals 
who lose their eligibility under section 1931 prior to 
September 30, 2002. Section 401 of H.R. 4737 would extend the 
requirement through September 30, 2007. CBO estimates that this 
extension would increase federal Medicaid spending by $130 
million in 2003 and about $1.9 billion over the 2003-2012 
period. We estimate that federal SCHIP spending would decrease 
by $8 million in 2003 and by $24 million over the 2003-2012 
period.
    Number of beneficiaries.--Many families move on and off the 
Medicaid and TANF rolls as their family and employment 
circumstances change. Under current law, CBO anticipates that 
each year about 1.4 million families enrolled under section 
1931 will lose their Medicaid eligibility over the 2003-2007 
period. Many of those families will lose TANF benefits at the 
same time. Based in part on experience with welfare case 
closures, CBO projects that slightly more than one million 
families will leave the TANF rolls annually in those years. 
Loss of Medicaid eligibility will occur in most of those cases 
because TANF and Medicaid eligibility limits are similar in 
many states. The remaining families losing coverage under 
section 1931 will be Medicaid recipients who were not enrolled 
in TANF.
    Based on research on families leaving welfare, CBO 
anticipates that about 500,000 families annually would meet the 
basic requirements for TMA between 2003 and 2007. Recent TANF 
data on the number of recipients in each family suggest that 
there are about 500,000 adults and 900,000 children in those 
families. (Virtually all families that receive TANF and have an 
adult recipient are single-parent families.)
    From this eligible population, CBO estimates that under 
H.R. 4737 about 290,000 additional adults and 360,000 
additional children would enroll in TMA each year. Those 
estimates account for individuals who would remain enrolled in 
Medicaid under other eligibility categories after losing their 
section 1931 eligibility (and thus not receive TMA). CBO 
assumes only moderate participation in TMA, based on studies of 
families leaving welfare. Although children in families that 
lose their section 1931 eligibility typically remain eligible 
for Medicaid under other eligibility rules, studies suggest 
that many children drop off the rolls once their parents lose 
eligibility. Therefore, by extending TMA, the act would keep a 
significant share of those children enrolled in Medicaid.
    CBO anticipates that the act's effect on Medicaid 
enrollment would be much smaller when measured on a full-year-
equivalent basis. Under current law, families losing their 
eligibility under section 1931 would receive four months of 
eligibility--even without TMA--under a separate provision of 
Medicaid law. The act would therefore provide most families 
with another eight months of eligibility instead of 12. Even 
then, research on TMA recipients indicates that many people do 
not remain eligible for a full 12 months because they fail to 
report their incomes on a periodic basis.
    After accounting for these factors, CBO estimates that the 
act would increase Medicaid enrollment on a full-year-
equivalent basis by about 115,000 in 2003, between 260,000 and 
280,000 in 2004 through 2007, 170,000 in 2008, and smaller 
amounts in 2009 and 2010. The act's effects would extend beyond 
2007 because families who qualify for TMA at any point in that 
year would be entitled to as many as 12 months of additional 
eligibility, even if that period of eligibility runs beyond 
2007. (Families living in states that provide more than 12 
months of TMA through a waiver could remain eligible into 2009 
or 2010.)
    Per capita costs.--CBO estimates that the federal share of 
costs per full-year-equivalent enrollee would be about $1,350 
for an adult and $975 for a child in 2003, rising to about 
$1,750 and $1,275, respectively, by 2007. Those figures are 
lower than CBO's baseline figures for adults and children (by 
about 30 percent and 10 percent, respectively) because of a 
number of adjustments. First, CBO excluded pregnancy-related 
costs for adults. Pregnant women are typically eligible for 
Medicaid at higher income levels than under section 1931, so 
they would be unlikely to receive TMA. Second, we assume that 
adults and children in families receiving TMA would be somewhat 
healthier than other Medicaid recipients and thus have lower 
costs, on average. Finally, we assume that some TMA recipients 
would receive a more limited set of benefits than Medicaid 
usually provides since states do not have to provide nonacute-
care services to TMA recipients in their second six-month 
period of eligibility.
    Effects on SCHIP.--CBO anticipates that under current law 
about 10 percent of the families leaving welfare because of 
higher earnings would have incomes high enough to make their 
children ineligible for Medicaid, but some children in these 
families would enroll in SCHIP instead. The act's extension of 
TMA would make those children newly eligible for Medicaid, and 
therefore ineligible for SCHIP. Since children who are eligible 
for Medicaid cannot receive SCHIP, the act would lead to 
savings in SCHIP.
    CBO estimates that the act would reduce federal SCHIP 
outlays by a total of $71 million between 2003 and 2008. 
Because states generally have three years to spend their SCHIP 
allotments, those savings would free up funds that could be 
spent on benefits in later years, and CBO estimates that 
spending would increase by $47 million in 2009.
            Optional TMA simplifications
    Section 401 of H.R. 4737 also would allow states to waive 
or relax various requirements that currently apply to TMA. In 
particular, the act would allow states to expand TMA 
eligibility to individuals who have not been eligible for 
Medicaid under section 1931 for at least three of the previous 
six months (a requirement under current law), provide up to 12 
additional months of TMA eligibility, and eliminate some or all 
of the requirements for TMA recipients to report their incomes 
periodically. States with Medicaid eligibility for adults and 
children set at 185 percent of the poverty level or higher also 
would no longer be required to provide TMA.
    CBO anticipates that those provisions would boost federal 
Medicaid spending by $30 million in 2003 and by $530 million 
over the 2003-2012 period. Most of those costs would stem from 
the elimination of the income-reporting requirements. States 
already have the flexibility under section 1931 to effectively 
waive the three-out-of-six months requirements or provide more 
than 12 months of TMA by disregarding some or all of an 
individual's income when determining eligibility. Finally, only 
two small states cover adults and children up to 185 percent of 
the poverty level. Ending TMA in those states would reduce 
enrollment for beneficiaries with income above the limit in the 
six months after leaving Medicaid. However, savings would be 
limited because the states are small.
    CBO also estimates that the effect of those provisions 
would have a slight impact on SCHIP, decreasing outlays by $7 
million over the 2003-2012 period; By relaxing TMA rules, the 
act would make some children newly eligible for Medicaid, and 
therefore ineligible for SCHIP.
            Optional coverage of certain legal immigrants
    The 1996 welfare reform law restricted the eligibility of 
certain legal immigrants for Medicaid and SCHIP. Under the law, 
legal immigrants entering the United States after August 22, 
1996, are generally ineligible during their first five years in 
the country. After that, states have the option of providing 
Medicaid and SCHIP coverage. However, most immigrants will 
likely remain ineligible because the law requires that states 
include the income and resources of an immigrant's sponsor when 
determining eligibility, a procedure known as deeming. Deeming 
is required until the immigrant has naturalized or accumulated 
a significant work history. Despite these restrictions, legal 
immigrants can still receive emergency care services under 
Medicaid.
    Section 402 of H.R. 4737 would give states the option of 
providing coverage under Medicaid to two groups of legal 
immigrants--pregnant women and children--entering the United 
States after August 22, 1996. The act would allow states to 
cover one or both of these groups. States that provide Medicaid 
coverage also would have the option of providing SCHIP 
coverage. Immigrants who receive Medicaid or SCHIP under the 
act would be exempt from the five-year ban or eligibility and 
deeming.
    CBO estimates that this provision would increase federal 
Medicaid outlays by $30 million in 2003 and $2.2 billion over 
the 2003-2012 period. SCHIP outlays would rise by $5 million in 
2003 and $40 million over the 2003-2012 period. The following 
discussion details these effects.
    Number of beneficiaries.--CBO relied on data provided by 
the Immigration and Naturalization Service on the number of 
legal immigrants admitted to the United States each year and 
historical data on the number of immigrants enrolled in 
Medicaid to estimate the provision's cost. Our estimate 
reflects the fact that immigrants admitted as refugees are 
eligible under current law, and assumes that participation 
rates in Medicaid would be lower than they were prior to 
enactment of welfare reform in 1996. (A number of studies have 
indicated that Medicaid participation rates by immigrants have 
fallen since 1996.) CBO also anticipates that many immigrants 
would ultimately gain Medicaid eligibility under current law by 
becoming naturalized citizens.
    Although H.R. 4737 only would affect the Medicaid 
eligibility of legal immigrants, CBO expects the act would 
slightly increase Medicaid participation by the U.S.-born 
children of immigrant parents. As U.S. citizens, these children 
are not directly affected by the 1996 restrictions, but studies 
have suggested that their participation in Medicaid has fallen, 
probably because of confusion by their parents about 
eligibility rules. Once all these factors are taken into 
account, CBO estimates that Medicaid enrollment in 2003 would 
rise by about 155,000 children and 60,000 pregnant women on a 
full-year-equivalent basis, if all states provided Medicaid 
coverage under the act. The additional enrollment would reach 
170,000 children and 110,000 pregnant women by 2012. About 90 
percent of newly enrolled children would be legal immigrants.
    Per capita costs.--CBO estimates that federal Medicaid 
costs per full-year-equivalent enrollee in 2003 would be about 
$500 for an immigrant child, $800 for a citizen child, and 
$1,200 for a pregnant woman. Those figures are well below CBO's 
baseline figures of about $1,100 per child and $3,400 for a 
pregnant woman for several reasons. Studies indicate that 
immigrant children enrolled in Medicaid use significantly fewer 
services than Medicaid children generally. Furthermore, 
spending on emergency services for immigrants are covered under 
current law, which we anticipate would reduce per capita costs 
for immigrant children by about a third and exclude labor and 
delivery costs for pregnant women. Finally, CBO assumes that 
the average federal match rate for immigrants would be lower 
than the national average of 57 percent because a 
disproportionate number of immigrants live in states with lower 
match rates. By 2012, we expect that per capita costs would 
rise to about $900 for an immigrant child, $1,500 for a citizen 
child, and $2,200 for a pregnant woman.
    State participation.--CBO anticipates that under the act 
states with 25 percent of potential Medicaid costs would choose 
to cover children and pregnant women who are legal immigrants 
in 2003. After 2007, we expect that proportion to reach 90 
percent.
    CBO believes that many states would opt to cover legal 
immigrant children and pregnant women for two reasons. First, 
most states have extended optional Medicaid coverage to other 
groups of immigrants. Every state but Wyoming provides coverage 
to legal immigrants who entered the United States prior to the 
enactment of welfare reform, and 42 states provide coverage to 
legal immigrants who entered after enactment (subject to the 
five-year ban and deeming). Second, about 20 states--including 
many states with large immigrant populations, such as 
California and New York--currently provide Mediciad-like 
coverage to immigrant children and pregnant women using state 
funds. These states would save money under the act by using 
federal Medicaid funds to replace state funds.
    Effects on SCHIP.--CBO estimates that federal SCHIP 
spending under H.R. 4737 would increase by $5 million in 2003 
and by $40 million over the 2003-2012 period. CBO anticipates 
that fewer states, representing 75 percent of potential costs, 
would opt to provide SCHIP coverage under the act than those 
opting to expand Medicaid coverage. Many states have already 
committed available SCHIP funds to covering non-immigrant 
children and would not be able to expand under the act. Because 
total funding for the SCHIP program is capped, SCHIP spending 
would be shifted form later years to earlier years, and would 
result in a decrease in spending in 2009.
            Title V: Child Support and Child Welfare
    H.R. 4737 would change many aspects of the operation and 
financing of the child support program. It would allow (and in 
one case, require) states to share more child support 
collections wit current and former recipients of TANF, thereby 
reducing the amount the federal and state governments would 
recoup from previous TANF benefit payments. The federal 
government's share of child support collections is 55 percent, 
on average. The act also would provide a one-time grant to 
states to improve various state processes. It would require 
states to periodically update child support orders and expand 
the use of certain enforcement tools. Finally, H.R. 4737 would 
extend and expand a program of child welfare demonstrations. 
Overall, CBO estimates that enacting title V would increase 
direct spending by $60 million in 2003 and $2.7 billion over 
the 2003-2012 period. We also estimate that this title would 
reduce revenues by $119 million over the 2003-2012 period (see 
Table 5).
            Distribute more support to current TANF recipients
    When a family applies for TANF, it assigns any rights the 
family has to child support collections to the state. While the 
family receives assistance, the state uses any collections it 
receives to reimburse itself and the federal government for 
TANF payments. These reimbursements to the federal government 
are recorded as offsetting receipts (a credit against direct 
spending). States may choose to give some of the child support 
collected to families, but states must finance those payments 
out of their share of collections.
    Section 501 would allow states to increase the amount of 
child support they pay to families receiving assistance and 
would not require the state to pay the federal government share 
of the increased payments. The state could not count the child 
support as income in determining the families' benefits under 
the TANF program.

                                          TABLE 5.--ESTIMATED COSTS OF TITLE V: CHILD SUPPORT AND CHILD WELFARE
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year, in millions of dollars--
                                                                ----------------------------------------------------------------------------------------
                                                                  2003    2004    2005    2006    2007    2008    2009    2010    2011    2012   2003-12
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Distribute more support to current TANF families:
    Child support collections:
        Estimated budget authority.............................      72      82      97     113     130     134     139     144     149     154    1,214
        Estimated outlays......................................      72      82      97     113     130     134     139     144     149     154    1,214
    Food stamps:
        Estimated budget authority.............................      -2      -5     -11     -17     -23     -24     -25     -26     -27     -27     -187
        Estimated outlays......................................      -2      -5     -11     -17     -23     -24     -25     -26     -27     -27     -187
    TANF:
        Budget authority.......................................       0       0       0       0       0       0       0       0       0       0        0
        Estimated outlays......................................     -38     -23      -1      11      14      13      13       5       4       2        0
                                                                ----------------------------------------------------------------------------------------
        Subtotal:
            Estimated budget authority.........................      70      77      86      96     107     110     114     118     122     127    1,027
            Estimated outlays..................................      32      54      85     107     121     123     127     123     126     129    1,027
Distribute more past-due support to current and former TANF
 families:
    Child support collections:\1\
        Estimated budget authority.............................      18      37      77     120     210     219     227     236     245     255    1,643
        Estimated outlays......................................      18      37      77     120     210     219     227     236     245     255    1,643
    Food stamps:
        Estimated budget authority.............................      -1      -1      -3      -4      -6      -6      -6      -6      -6      -6      -46
        Estimated outlays......................................      -1      -1      -3      -4      -6      -6      -6      -6      -6      -6      -46
    TANF:
        Budget authority.......................................       0       0       0       0       0       0       0       0       0       0        0
        Estimated outlays......................................       4       7      12      11      10     -29     -14       0       0       0        0
                                                                ----------------------------------------------------------------------------------------
        Subtotal:
            Estimated budget authority.........................      17      36      74     116     204     213     221     230     239     248    1,597
            Estimated outlays..................................      21      43      86     127     214     184     207     230     239     248    1,597
Ban on recovery of Medicaid costs for certain births:
    Estimated budget authority.................................       0       0      41      43      44      46      48      50      52      54      378
    Estimated outlays..........................................       0       0      41      43      44      46      48      50      52      54      378
Mandatory 3-year update of child support orders:
    Administrative costs:
        Estimated budget authority.............................       0       2      14      14      12      12      12      13      13      13      105
    Estimated outlays..........................................       0       2      14      14      12      12      12      13      13      13      105
    Child support collections:
        Estimated budget authority.............................       0       0      -6     -14     -20     -21     -19     -20     -20     -20     -140
    Estimated outlays..........................................       0       0      -6     -14     -20     -21     -19     -20     -20     -20     -140
    Food stamps:
        Estimated budget authority.............................       0       0      -1      -2      -3      -3      -3      -3      -3      -4      -22
        Estimated outlays......................................       0       0      -1      -2      -3      -3      -3      -3      -3      -4      -22
    Medicaid:
        Estimated budget authority.............................       0       0      -3      -8     -13     -13     -10     -10     -10     -10      -77
        Estimated outlays......................................       0       0      -3      -8     -13     -13     -10     -10     -10     -10      -77
                                                                ----------------------------------------------------------------------------------------
        Subtotal:
            Estimated budget authority.........................       0       2       4     -10     -24     -25     -20     -20     -20     -21     -134
            Estimated outlays..................................       0       2       4     -10     -24     -25     -20     -20     -20     -21     -134
Reduced threshold for passport denial:
    Estimated budget authority.................................      -1      -2      -2      -2      -2      -2      -2      -2      -2      -2      -19
    Estimated outlays..........................................      -1      -2      -2      -2      -2      -2      -2      -2      -2      -2      -19
Financing review and administrative funding:
    Budget authority...........................................      50       0       0       0       0       0       0       0       0       0       50
    Estimated outlays..........................................      13      28       9       0       0       0       0       0       0       0       50
Use of new hire information for unemployment compensation:
    Estimated budget authority.................................      -5     -12     -15     -19     -20     -20     -21     -22     -22     -23     -179
    Estimated outlays..........................................      -5     -12     -15     -19     -20     -20     -21     -22     -22     -23     -179
    Total direct spending changes in title V:
        Estimated budget authority.............................     131     101     188     224     309     322     340     354     369     383    2,720
        Estimated outlays......................................      60     113     208     246     333     306     339     359     373     385    2,720

                                                                   CHANGES IN REVENUES

Use of new hire directory for Unemployment Compensation
 Program:
    Estimated revenues.........................................       0      -1      -3      -7     -13     -16     -18     -20     -20     -21     -119
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Breakdown of the effect on child support receipts of changes in distribution rules affecting past-due support:
        Assignment rules.......................................       3       7      14      21      73      75      78      81      84      86      522
        Federal tax refund offset..............................      12      25      53      83     115     121     126     132     139     145      951
        Distribution order.....................................       7      15      30      47      64      66      69      71      74      76      518
        Additional support to families.........................       1       2       4       6       9       9       9      10      10      10       70
        Interactions...........................................      -5     -11     -23     -37     -51     -53     -55     -58     -60     -63     -418
                                                                ----------------------------------------------------------------------------------------
            Total..............................................      18      37      77     120     210     219     227     236     245     255    1,643
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to totals because of rounding.

    In recent years, states with about 60 percent of child 
support collections shared some of those collections with 
families receiving TANF. CBO expects states will continue to 
share at least that amount and the federal government would 
share that cost. In addition, based on conversations with state 
child support officials and other policy experts, CBO expects 
that states with about two-thirds of collections would choose 
to institute a policy of sharing the first $50 collected, or, 
if they already have such a policy, to increase the amount of 
child support they share with families on assistance. CBO 
anticipates that those increases would be instituted slowly and 
would not be fully effective until 2007. Based on 
administrative data for child support and information supplied 
by state officials, CBO expect that states would increase 
payments to families by $100 million to a total of $235 million 
in 2007, when we assume the provision would be fully phased in. 
CBO estimates that federal offsetting receipts would fall by 
$72 million in 2003, $130 million in 2007, and $1.2 billion 
over the 2003-2012 period.
    Because additional child support income would reduce Food 
Stamp benefits, CBO estimates savings in the Food Stamp program 
totaling $2 million in 2003, $23 million in 2007, and $187 
million over the 2003-2012 period. In addition, the provision 
would have a small effect on the rate of TANF spending. States 
can count payment of child support to families out of their 
share of collection toward the TANF maintenance of effort (MOE) 
requirement (the requirement that states maintain funding at 
their 1994 level), if such payments are not counted as income 
in determining the TANF benefit. States that would spend less 
of their own funds because of the federal contribution would 
have less to count toward their MOE requirement. States that 
increased payments to families could count more toward the 
requirement. CBO estimates that the net effect would be smaller 
state contributions to child support payments, resulting in a 
deceleration in their use of federal TANF funds. CBO estimates 
that the provision would decrease estimated TANF outlays by $38 
million in 2003 but have no effect over the 2003-2012 period.
            Distribute more past-due support to current and former TANF 
                    recipients
    Section 501 also would require states to share more child 
support with families through a change in assignments rules and 
allow states to share more support with families through 
several other optional rule changes. Implementing those 
policies would reduce federal offsetting receipts by $18 
million in 2003 and $1.6 billion over the 2003-2012 period. It 
also would lower Food Stamp outlays by $46 million over the 
2003-2012 period and accelerate TANF spending by $43 million 
over the 2003-2007 period, but have no effect over the 10-year 
period.
    Change in assignment rules.--Under current law, families 
assign to the state the right to any child support due before 
and during the period the families received assistance. The act 
would eliminate the requirement that families assign support 
due in the period before the families received assistance. H.R. 
4737 would require states to implement the new policy by 
October 1, 2006, but would give states the option of 
implementing the policy sooner. CBO estimates that states with 
5 percent of child support collections would adopt the new 
policy in 2003, states with another 25 percent of collections 
would adopt it by 2006, and the remainder would institute the 
policy in 2007.
    Based on data from state child support officials, CBO 
expects the change in assignments rules would affect 5 percent 
of child support collections on behalf of current and former 
recipients of TANF assistance, when the policy is fully 
implemented. Based on CBO projections of those collections, 
families would receive an additional $6 million in 2003 and 
$950 million over the 2003-2012 period. CBO estimates that 
federal offsetting receipts would fall by $3 million in 2003 
and $522 million over the 2003-2012 period.
    Option to treat tax offset like other collections and 
change distribution order.--When a family ceases to receive 
public assistance, states continue to enforce the family's 
child support order. All amounts of child support collected on 
time are sent directly to the family. However, both the 
government and the family have a claim on collection of past-
due child support: the government claims the support owed for 
the period when the family was on assistance, up to the amount 
of the assistance paid, and the family claims the remainder. A 
set of distribution rules determines which claim is paid first 
when a collection is made. That order matters because, in many 
cases, past-due child support is never fully paid.
    Section 501 would give states the option to change the 
order of the distribution rules so that more money is paid to 
families first. Under current law, with two exceptions, the 
state pays the family all past-due support that was owed to the 
family before reimbursing itself for TANF benefits paid. The 
first exception is if the support is collected through the 
federal tax refund offset program. The second exception is 
past-due support that was owed, but not paid, during the time 
the family was on assistance, to the extent that the support 
owed exceeded the TANF benefits paid. H.R. 4737 would give 
states the option to remove those two exceptions so that all 
past-due support owed to the family would be paid to the family 
before the government reimburses itself for any previous 
benefit payments. Based on conversations with state child 
support officials and policy experts, CBO estimates that states 
with 5 percent of child support collections would adopt the new 
policy in 2003 and states with another 35 percent of 
collections would adopt it by 2007.
    Under the federal tax refund offset program, the Internal 
Revenue Service intercepts tax refunds going to noncustodial 
parents who owe past-due child support, and pays them to 
custodial parents as child support. CBO projects that the 
government will collect $1 billion from tax offsets on behalf 
of current and former welfare recipients in 2003 and that those 
collections will grow at about 5 percent a year. Based on data 
provided by federal and state child support officials, CBO 
estimates that two-thirds of those collections are on behalf of 
former recipients of assistance and that two-thirds of those 
collections would go to families instead of the government, 
under the legislation. In states opting for the policy, 
families would receive an additional $20 million in 2003, 
rising to $200 million in 2007, and $1.7 billion over the 2003-
2012 period. CBO estimates that federal offsetting receipts 
would fall by $12 million in 2003, $115 million in 2007, and 
$951 million over the 2003-2012 period.
    Section 501 also would give families more child support 
collections through changing the order in which they are 
distributed. Under current law, if a family has past-due child 
support from the period the family was on assistance that 
exceeds the total benefits paid to the family, then the family 
only receives those collections after the state has been fully 
reimbursed for welfare benefits paid. Based on a 1999 report to 
the Congress by HHS, CBO estimates that giving those 
collections to families first would result in a 20 percent 
decline in the amount of collections the state retains on 
behalf of former recipients in states opting for the policy. 
CBO estimates that families would receive an additional $15 
million in 2003, rising to $120 million by 2007, and $950 
million over the 2003-2012 period, as a result of this change. 
CBO estimates that federal offsetting receipts would fall by $7 
million in 2003, $64 million in 2007, and $518 million over the 
2003-2012 period.
    Option to share any additional child support with 
families.--Finally, H.R. 4737 would allow states to share any 
amount of additional support with families that they choose out 
of the amounts that had been assigned to states for the period 
the families were on assistance. CBO assumes states with 
collections totaling $130 million over the 2003-2012 period. 
CBO estimates that federal offsetting receipts would fall by $1 
million in 2003, $9 million in 2007, and $70 million over the 
2003-2012 period.
    Interactions.--Several of the provisions giving more past-
due support to families would interact, so the total amount 
going to families and total cost to the federal government are 
lower than the sum of the effects for all provisions. For 
example, collections from amounts assigned from the period 
before a family went on assistance may be collected after the 
family leaves assistance through the federal tax refund offset. 
Those interactions would reduce the amounts newly going to 
families by $10 million in 2003, $93 million in 2007, and $759 
million over the 2003-2012 period. The interactions would 
reduce the loss of federal offsetting receipts by $5 million in 
2003, $51 million in 2007, and $418 million over the 2003-2012 
period.
    Food Stamp benefits.--The new collections paid to former 
TANF recipients would affect spending in the Food Stamp 
program. CBO expects that one-third of the former TANF 
recipients with increased child support income would 
participate in the Food Stamp program, and that benefits would 
be reduced by 30 cents for every extra dollar of income. 
Increased income from the tax refund offset, which is paid as a 
lump sum, would not count as income for determining Food Stamp 
benefits. For purposes of calculating such benefits, incomes of 
former TANF recipients would increase by $7 million in 2003 and 
$470 million over the 2003-2012 period. Food Stamp savings 
would be about $1 million in 2003 and $46 million over the 
2003-2012 period.
            Temporary assistance for needy families
    H.R. 4737 would allow states to count increased state 
spending stemming from the new distribution policy towards 
their MOE requirement in the TANF program. Many states have 
unspent balances of federal TANF funds from prior years. Those 
states could reduce the amount of state money they spend on 
TANF by the amount that they pay to families under the new 
policy. To maintain TANF spending levels, those states then 
could accelerate spending of federal dollars. CBO estimates 
TANF spending would accelerate by $4 million in 2003 and $43 
million over the 2003-2007 period, but reduced spending in 
later years would result in no net effect on TANF spending over 
the 2003-2012 period.
            Ban on recovery of medicaid birth costs
    Effective in 2005, section 501 would prohibit states from 
using their child support programs to recoup costs for the 
birth of a child that were paid by Medicaid. Based on 
administrative data and data from state officials, CBO 
estimates that states now collect about $60 million annually 
from noncustodial parents to reimburse Medicaid. CBO expects 
those collections will grow at about 4 percent a year, based on 
the projected increase in wages. The federal government's share 
of Medicaid collections is 57 percent on average. As a result, 
CBO estimates the cost to the federal government would be $41 
million in 2005 and $378 million over the 2005-2012 period.
            Mandatory 3-year update of child support orders
    Section 502 would require states to adjust child support 
orders of families on TANF every three years. States could use 
one of three methods to adjust orders: full review and 
adjustment, cost-of-living adjustment (COLA), or automated 
adjustment. Under current law, nearly half of states perform 
periodic adjustments. Most perform a full review and the 
remainder apply a COLA. No state currently makes automated 
adjustments. The provision would take effect on October 1, 
2004, and CBO estimates that the net impact of this provision 
would be direct spending savings of $134 million over the 2003-
2012 period.
    CBO estimates that there are 700,000 TANF recipients with 
child support orders in states that do not periodically adjust 
orders and one-third of those orders would be adjusted each 
year. CBO assumes half the states not already adjusting orders 
would choose to perform full reviews and half would apply a 
COLA.
    Full review and adjustment.--When a state performs a full 
review of a child support order, it obtains current financial 
information from the custodial and noncustodial parents and 
determines whether any adjustment in the amount of ordered 
child support is indicated. The state also may revise an order 
to require the noncustodial parent to provide health insurance.
    Based on evaluations of review and modification programs, 
CBO estimates the average cost of a review would be about $180 
with the federal government paying 66 percent of such 
administrative costs. The average adjustment to a child support 
order of a family on TANF would be $90 a month and about 18 
percent of the orders reviewed would be adjusted.
    In addition, CBO expects some children would receive health 
insurance coverage from the noncustodial parent as a result of 
the new reviews. CBO estimates 40 percent of orders with a 
monetary adjustment also would be adjusted to include a 
requirement that the noncustodial parent provide health 
insurance for their child and that insurance would be provided 
in about half of those cases. After the first few years, we 
assume newly provided medical insurance would decline by half, 
because many families would have already had such insurance 
recently added to their order.
    Cost-of-living adjustment.--When a state makes a cost-of-
living adjustment it applies a percentage increase reflecting 
the rise in the cost of living to every order, regardless of 
how the financial circumstances of the individuals may have 
changed. The process is considerably less cumbersome and 
expensive than a full review but also results in smaller 
adjustments on average. Based on recent research on COLA 
programs, CBO estimates that the average cost would be $11 per 
case modified, and the average adjustment to a support order 
would be $6 per month. There would be no additional health 
insurance coverage.
    Summary.--Under either method of adjustment, CBO expects 
any increased collections for a family would continue for up to 
three years. While a family remains on TANF, the state would 
keep all the increased collections to reimburse itself and the 
federal government for welfare payments. The states would pay 
any increased collections stemming from reviews of child 
support orders to families once they leave assistance. That 
additional child support income for former recipients would 
result in savings in the Food Stamp program.
    Overall, CBO expects the federal share of child support 
administrative costs to rise by $2 million in 2004 and $105 
million over the 2004-2012 period. Federal collections would 
increase by $6 million in 2005 and $140 million over the 2005-
2012 period. Finally Food Stamp and Medicaid savings would 
total $22 million and $77 million respectively over the 2005-
2012 period.
            Denial of passports
    Under current law, the State Department denies a request 
for a passport for a noncustodial parent if he or she owes more 
than $5,000 in past-due child support. Effective upon 
enactment, section 503 would lower that threshold and deny a 
passport to a noncustodial parent owing $2,500 or more. 
Generally, when a noncustodial parent seeks to restore 
eligibility for a passport, he or she will arrange to pay the 
past-due amount down to the threshold level.
    The State Department currently denies about 15,000 passport 
requests annually. Data from HHS shows there are 4.2 million 
noncustodial parents owing more than $5,000 in past-due child 
support and an additional 1.0 million owing between $2,500 and 
$5,000. If noncustodial parents owing between $2,500 and $5,000 
apply for passports at the same rate as those owing more than 
$5,000, then the proposal would generate an additional 3,400 
denials annually.
    CBO assumes that 20 percent of noncustodial parents who 
have a passport request denied would make a payment to get 
their passport rather than just doing without one. (In a study 
by the State Department, for 85 percent of applications that 
were denied because of child support arrears, passports were 
not issued within the next three months.) A noncustodial parent 
owing more than $5,000 would have to pay an additional $2,500 
to receive a passport. On average, a noncustodial parent owing 
between $2,500 and $5,000 would have to pay $1,250 to receive a 
passport. As a result, CBO estimates the policy would result in 
new payments of child support of about $8 million annually. 
About one-third of those payments would be on behalf of current 
and former welfare families and would be retained by the 
government as reimbursement for welfare benefits. The federal 
share of such collections would be about $2 million a year and 
$19 million over the 2003-2012 period.
            Financing review and administrative funding
    Section 505 would establish a one-time grant to states 
totaling $50 million for 2003. The Secretary would allocate the 
money based on each state's number of child support cases. 
States could use the funds to review policies on fees and 
distribution, to update automated systems, to study 
undistributed collections or management of arrears, to develop 
approaches to improve interstate collections or establish of 
support orders, or to review state policies regarding periodic 
updates of child support orders. CBO estimates spending would 
total $13 million in 2003 and $50 million over the 2003-2005 
period.
            Use of new hire information
    Section 509 would allow states, beginning in fiscal year 
2003, to access information in the national database of new 
hires to help detect fraud in the unemployment compensation 
system. Currently, most states may access the information that 
they send to the national registry. However, without access to 
the national information, a state may not receive important 
data regarding recent hires by national corporations that may 
report in other states. Only a few states have examined 
potential savings that could be realized if they had access to 
the national data, and their estimates are small--less than 0.1 
percent of total outlays. Nevertheless, states generally 
believe that access to the national data would be a valuable 
tool in detecting fraud earlier, as the information on new 
hires is more current than that contained in quarterly wage 
reports on which many states now rely.
    Based on information provided by the National Association 
of State Workforce Agencies, CBO estimates that about 40 
percent of the states would make use of the national 
information in the year that it became available, and that 
another 40 percent would take advantage of the national 
information within the next few years. CBO estimates that this 
proposal would result in a reduction in spending for 
unemployment compensation of $5 million in 2003 and $179 
million over the 2003-2012 period. CBO assumes this reduction 
in spending would lead states to reduce their unemployment 
taxes. CBO estimates that such revenues would fall by an 
insignificant amount in 2003 and $119 million over the 2003-
2012 period. Because state spending and tax collection for 
unemployment compensation are reflected on the federal budget, 
enactment of this section would result in a net deficit 
reduction of $60 million over the 10-year period.
            Child welfare demonstrations
    Sections 511 and 512 would extend and expand a program of 
demonstration projects related to child welfare programs. 
Currently, 18 states are using waivers to test the efficiency 
of innovations in child welfare, such as subsidized 
guardianship, managed care, and substance abuse treatment. The 
demonstration projects are required to be cost-neutral to the 
federal government. However, it is possible that the 
demonstrations would lead to increased costs to the federal 
government because of measurement or methodological errors in 
the cost-neutrality calculation. CBO cannot estimate the likely 
level of such costs, but based on experience with the 
demonstrations, expects the federal budgetary impact would not 
be significant.
            Title VI: Tribal Issues
    Title VI would extend funding for tribal TANF programs, 
establish a grant to help tribes improve infrastructure and 
economic development, increase funding for tribal programs that 
provide employment services, and expand the ability of tribes 
to participate in the federally funded foster care program. CBO 
estimates that enacting title VI would increase direct spending 
by $13 million in 2003 and $778 million over the 2003-2012 
period (see Table 6).
            Tribal TANF programs
    Tribes may administer their own TANF programs, rather than 
participating in the state-run program. As of September 30, 
2001, the Secretary had approved 34 tribal TANF plans. Funds 
for tribal TANF programs are reserved from the state family 
assistance grant in the state where the tribe is located. 
Section 601 would reauthorize tribal TANF programs at current 
levels. CBO already assumes funding at that level in its 
baseline in accordance with the Deficit Control Act, as they 
are part of the overall TANF program. Therefore, CBO estimates 
the provision would have no effect on direct spending over the 
2003-2012 period.

                                                  TABLE 6.--ESTIMATED COSTS OF TITLE VI: TRIBAL ISSUES
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year, in millions of dollars--
                                                                ----------------------------------------------------------------------------------------
                                                                  2003    2004    2005    2006    2007    2008    2009    2010    2011    2012   2003-12
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Tribal TANF improvement fund:
    Budget authority...........................................      75       0       0       0       0       0       0       0       0       0       75
    Estimated outlays..........................................       8      25      24      12       5       1       0       0       0       0       75
Tribal contingency fund:
    Estimated budget authority.................................      25       0       0       0       0       5       5       5       5       5       50
    Estimated outlays..........................................       2       3       5       6       6       5       5       5       5       5       47
Establish tribal employment services grants:
    Estimated budget authority.................................      37      37      37      37      37      37      37      37      37      37      370
    Estimated outlays..........................................       4      30      35      37      37      37      37      37      37      37      328
Eliminate tribal work program funding:
    Estimated budget authority.................................      -8      -8      -8      -8      -8      -8      -8      -8      -8      -8       76
    Estimated outlays..........................................      -1      -6      -8      -8      -8      -8      -8      -8      -8      -8      -70
Expand participation of tribes in IV-E foster care:
    Estimated budget authority.................................       0      15      25      35      46      53      55      59      60      63      410
    Estimated outlays..........................................       3      12      23      33      44      52      55      57      60      62      398
                                                                ----------------------------------------------------------------------------------------
    Total changes in Title VI:
        Estimated budget authority.............................     129      44      54      64      75      87      89      92      92      97      829
        Estimated outlays......................................      13      64      80      80      84      87      89      91      94      96      778
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to totals because of rounding.

            Tribal TANF improvement fund
    Section 601 would provide $75 million for grants as 
follows: it would allocate $35 million for a program of grants 
to improve tribal human services infrastructure, $35 million 
for grants to provide technical assistance to tribes and tribal 
organizations on issues of economic development, and $5 million 
for the Secretary to provide technical assistance to tribes. 
Based on spending in similar program, CBO estimates that 
spending would total $8 million in 2003 and $75 million over 
the 2003-2008 period.
            Tribal contingency fund
    Section 601 also would establish a contingency fund of up 
to $25 million over the 2003-2007 period for grants to Indian 
tribes experiencing increased economic hardship. The criteria 
for access to the fund would be established by the Secretary in 
consultation with Indian tribes. CBO assumes that these grants 
would continue in baseline projections beyond 2007, as they are 
part of the overall TANF program, and we estimate that the 
Secretary would make $5 million available each year for such 
grants. Spending would total $2 million in 2003 and $47 million 
over the 2003-2012 period. (Title I appropriates the funds for 
the tribal contingency fund, but we show the costs in this 
title.)
            Tribal employment services
    Section 601 also would repeal an existing program of grants 
to Indian tribes to conduct work programs and replace it with 
an expanded program. Current law funds grants to Indian tribes 
to conduct work programs at $7.6 million annually and allocates 
grants based on tribes' participation in the former Job 
Opportunities and Basic Skills Training Program. This act would 
establish a new Tribal Employment Services program funded at 
$37 million each year 2003-2007, and CBO assumes the grants 
would continue in baseline after 2007, as they are part of the 
overall TANF program. The grants to Indian tribes, tribal 
organizations, and Alaska Native organizations would support 
comprehensive services to enable beneficiaries to support 
themselves through employment. Based on historic rates of 
spending, CBO estimates that spending would total $4 million in 
2003 and $328 million over the 2003-2012 period.
            Tribal foster care and adoption assistance
    Section 602 would permit tribal entities to participate in 
foster care and adoption assistance programs authorized under 
title IV-E of the Social Security Act, effective as of October 
1, 2003. Based on information from the Indian Child Welfare 
Assistance, CBO estimates that this provision could allow 
coverage of between 2,000 and 3,000 children per year. In 
addition, some states with tribal agreements could receive 
slightly higher match rates for children that they currently 
over under such agreements. CBO estimates that this section 
would increase costs by $12 million in 2004 and by $398 million 
over the 2004-2012 period.
            Title VII: Innovation, Flexibility, and Accountability
    Title VII would expand funding for research, replace a 
bonus to reward high-performing states with a program of grants 
to improve employment outcomes in partnership with employers, 
and establish a program of at-home infant care. The new grant 
programs would be authorized through 2007, but CBO assumes they 
would continue in baseline after 2007 as they are part of the 
overall TANF program. CBO estimates that enacting title VII 
would increase direct spending by $16 million in 2003 and $548 
million over the 2003-2012 period (see Table 7).
            Child well-being indicators
    Section 703 would direct the Secretary to develop 
comprehensive indicators to assess child well-being in each 
state through grants, contracts or interagency agreements. It 
would establish an advisory panel to help in the development 
and would provide $15 million annually. CBO estimates the 
provision would increase spending by $2 million in 2003 and 
$135 million over the 2003-2012 period.

                                   TABLE 7.--ESTIMATED COSTS OF TITLE VII: INNOVATION, FLEXIBILITY, AND ACCOUNTABILITY
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in million of dollars--
                                                     ---------------------------------------------------------------------------------------------------
                                                       2003     2004     2005     2006     2007     2008     2009     2010     2011     2012    2003-12
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Establish program to develop child well-being
 indicators:
    Estimated budget authority......................      15       15       15       15       15       15       15       15       15       15        150
    Estimated outlays...............................       2        9       16       17       16       15       15       15       15       15        135
Increase TANF research funding:
    Estimated budget authority......................       7        5        5        5        5        5        5        5        5        5        150
    Estimated outlays...............................       0        3        6        5        5        5        5        5        5        5         44
Elimimate census grant:
    Estimated budget authority......................     -10      -10      -10      -10      -10      -10      -10      -10      -10      -10       -100
    Estimated outlays...............................      -9      -10      -10      -10      -10      -10      -10      -10      -10      -10        -99
Establish innovative business link grants:
    Estimated budget authority......................     200      200      200      200      200      200      200      200      200      200      2,000
    Estimated outlays...............................      20      120      216      230      218      202      200      200      200      220      1,806
Repeal high-performance bonus:
    Estimated budget authority......................       0     -200     -200     -200     -200     -200     -200     -200     -200     -200      1,800
    Estimated outlays...............................       0        0      -94     -147     -255     -269     -235     -200     -200     -200     -1,600
Food stamp effect of bonus repeal:
    Estimated budget authority......................       0        0        1        2        3        3        3        2        2        2         18
    Estimated outlays...............................       0        0        1        2        3        3        3        2        2        2         18
Establish at-home infant care grants:
    Estimated budget authority......................      30       30       30       30       30       30       30       30       30       30        300
    Estimated outlays...............................       3       18       32       35       33       30       30       30       30       30        271
Food Stamp effect of at-home infant care grants:
    Estimated budget authority......................       0       -2       -3       -4       -3       -3       -3       -3       -3       -3        -27
    Estimated outlays...............................       0       -2       -3       -4       -3       -3       -3       -3       -3       -3        -27
                                                     ---------------------------------------------------------------------------------------------------
    Total changes in title VII:
    Estimated budget authority......................     242       38       38       38       38       40       40       40       39       39        593
    Estimated outlays...............................      16      138      164      128        7      -27        5       39       39       39        548
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to tools because of rounding.

            TANF research
    Section 703 also would increase the current funding for 
TANF-related studies from $15 million to $20 million annually 
and add several new areas of study. The new studies would 
include a longitudinal study of the factors that contribute to 
positive employment and family outcomes, a study on the effect 
of sanctions, and a study of teen parent recipients. In 
addition, it would add $2 million in 2003 only for the study of 
tribal welfare programs and poverty among Indians. CBO 
estimates research spending would increase by an insignificant 
amount in 2003, $3 million in 2004, and $44 million over the 
2003-2012 period.
    This section would not extend the current $10 million in 
annual funding for studies conducted by the Census Bureau. 
Currently, CBO assumes funding would continue at that level in 
its baseline projection (as part of the TANF program), in 
accordance with the Deficit Control Act. Based on historic 
rates of spending, CBO estimates that eliminating the studies 
would save $9 million in 2003 and $99 million over the 2003-
2012 period.
    The funds for child well-being indicators and research are 
appropriate in title I, but because they are reserved for this 
purpose, the costs are shown as part of title VII.
            Innovative business-link partnership grants
    Section 704 would establish a grant program for innovative 
business-link partnerships. The Secretaries of the Departments 
of Health and Human Services and Labor would jointly award 
grants to states, localities, Indian tribes, nonprofit 
organizations, and local workforce investment boards to promote 
business linkages and to provide for transitional jobs 
programs. These programs would be designed to increase wages of 
low-income individuals by working with employers to upgrade the 
skills of these workers. A transitional jobs program would 
combine subsidized employment with skill development activities 
for individuals with limited skills, experience, or other 
barriers to employment. The grants would be funded at $200 
million annually. CBO expects spending of the grants would 
initially be slow, but would speed up to match rates of 
spending in similar programs. CBO estimates that spending would 
be $20 million in 2003 and $1.8 billion over the 2003-2012 
period.
            Bonuses for high-performing states
    Section 705 would eliminate funding for a bonus to high-
performing states in 2004 and later. The bonus in current law 
rewards states for moving TANF recipients into jobs, providing 
support for low-income working families, and increasing the 
percentage of children who reside in married-couple families. 
Current law provides $1 billion for such bonuses, averaging 
$200 million annually, over the 1999-2003 period. CBO assumes 
in its baseline projections that funding will continue at $200 
million annually in accordance with the Deficit Control Act. 
Because the bonuses are usually granted in the following fiscal 
year and many states have prior-year balances of TANF funds 
that they can use to replace any grant reductions, CBO 
estimates that TANF spending would not be affected in 2004 and 
would fall by only $94 million in 2005. We estimate cumulative 
savings over the 2005-2012 period of $1.6 billion. CBO expects 
the reduced funding would cause states to decrease benefits to 
families that also receive food stamps. The reduced TANF income 
would increase Food Stamp benefits, increasing spending in the 
Food Stamp program by $18 million over the 2005-2012 period.
            At-home infant care
    Section 706 would fund demonstration projects for at-home 
infant care at $30 million annually. The Secretary would award 
grants to between five and 10 states to carry out demonstration 
projects at-home infant care benefits to low-income families. 
(A participating family could receive a payment up to the 
state-established payment for providers of infant care.) H.R. 
4737 specifies that the payments would count as earned income 
to the family in several means-tested programs, including the 
Food Stamp program. Based on data on state reimbursement levels 
and participation in the Food Stamp program among families with 
children, CBO estimates grants would result in Food Stamp 
savings of about $3 million annually.
            Title VIII: Other Provisions
    Title VIII would require SSA to change its system of 
reviewing awards to certain disabled adults in the SSI program 
and extend customs user fees through February 2005. In total, 
it would result in federal savings of $6 million in 2003 and 
$3.3 billion over the 2003-2012 period (See Table 8).
            Review of state agency blindness and disability 
                    determinations
    Section 801 would require the Social Security 
Administration to conduct reviews of initial decisions to award 
SSI benefits to certain disabled adults. The legislation 
mandates that the agency review at least 25 percent of all 
favorable adult disability determinations made by state-level 
Disability Determination Service (DDS) offices in 2003. Under 
the legislation, the agency would have to review at least half 
of the adult disability awards made by DDS offices in 2004 and 
beyond.
    CBO anticipates state DDS offices will approve between 
350,000 and 400,000 adult disability applications for SSI 
benefits annually between 2003 and 2012. Based on recent data 
for comparable reviews in the Social Security Disability 
Insurance program, CBO projects that by 2012, nearly 20,000 DDS 
awards will have been ultimately overturned, resulting in lower 
outlays for SSI and Medicaid (in most states SSI eligibility 
automatically confers entitlements to Medicaid benefits). CBO 
estimates that section 801 would reduce SSI benefits by $2 
million and Medicaid outlays by $4 million in 2003. Over the 
2003-2012 period, CBO estimates this provision would lower SSI 
outlays by $407 million and Medicaid spending by $936 million.

                                                TABLE 8.--ESTIMATED COSTS OF TITLE VIII: OTHER PROVISIONS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By fiscal year, in millions of dollars--
                                                    ----------------------------------------------------------------------------------------------------
                                                      2003      2004      2005    2006     2007     2008     2009     2010     2011     2012    2003-12
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Review of disability determinations:
    Supplemental security income:
        Estimated budget authority.................      -2        -10      -21     -28      -34      -46      -54      -63      -77      -72       -407
        Estimated outlays..........................      -2        -10      -21     -28      -34      -46      -54      -63      -77      -72       -407
    Medicaid:
        Estimated budget authority.................      -4        -17      -34     -54      -75      -98     -122     -148     -176     -208       -936
        Estimated outlays..........................      -4        -17      -34     -54      -75      -98     -122     -148     -176     -208       -936
        Subtotal:
            Estimated budget authority:............      -6        -27      -55     -82     -109     -144     -176     -211     -253     -280     -1,343
            Estimated outlays......................      -6        -27      -55     -82     -109     -144     -176     -211     -253     -280     -1,343
Customs user fees:
    Estimated budget authority.....................       0     -1,274     -650       0        0        0        0        0        0        0     -1,924
    Estimated outlays..............................       0     -1,274     -650       0        0        0        0        0        0        0     -1,924
                                                    ----------------------------------------------------------------------------------------------------
    Total changes in title VIII:
        Estimated budget authority.................      -6     -1,301     -705     -82     -109     -144     -176     -211     -253     -280     -3,267
        Estimated outlays..........................      -6     -1,301     -705     -82     -109     -144     -176     -211     -253     -280     -3,267
--------------------------------------------------------------------------------------------------------------------------------------------------------

            Customs user fees
    Under current law, customs user fees expire after September 
30, 2003. This legislation would extend these fees through 
February 28, 2005. CBO estimates that this provision would 
increase offsetting receipts (a credit against direct spending) 
by about $1.9 billion over the 2004-2005 period.
            Interactions
    CBO estimates that several provisions in H.R. 4737 would 
accelerate the rate of spending of prior-year balances in the 
TANF program. Provisions that would increase the transfer 
authority to SSBG, increase payments of child support to 
families, eliminate the out-of-wedlock grant, and eliminate the 
high-performance bonus (discussed in titles I, III, V, and VII) 
would induce states to spend uncommitted TANF funds from prior 
years sooner than under current law. However, those combined 
effects would exceed the amount of uncommitted TANF funds. 
Consequently, the budgetary effect of all the provisions 
enacted together would be smaller than the sum of the estimated 
effects for the individual provisions. CBO estimates that those 
interactions would lower TANF spending over the 2005-2006 
period by $252 million over the 2007-2009 period. Thus, there 
would be no net impact on TANF spending over the 10-year period 
as a whole.

Spending subject to appropriation

    H.R. 4737 would establish several new grant programs that 
would require annual appropriations. Assuming appropriation of 
the authorized amounts, CBO estimates implementing the 
legislation would cost $2 million in 2003, $374 million over 
the 2003-2012 period (see Table 9). For this estimate, CBO 
assumes that H.R. 4737 will be enacted by September 30, 2002. 
Estimated outlays are based on historical spending patterns for 
similar programs.
            Noncustodial parent employment grant
    Section 304 would authorize the appropriation of $25 
million each year for fiscal years 2004 through 2007 for the 
Departments of Health and Human Services and Labor to award 
grants to eligible states for the purpose of establishing a 
supervised employment program for noncustodial parents with a 
history of nonpayment of child support obligations. Grants only 
could be awarded to eligible states that contribute one dollar 
for every four dollars of federal funds provided. CBO estimates 
that implementing this provision would cost $8 million in 2004 
and $100 million over the 2004-2009 period, assuming the 
appropriation of the authorized amounts.
            Grants to coordinate services for low-income, noncustodial 
                    parents
    Section 304 also would authorize the appropriation of $25 
million each year for fiscal years 2004 through 2007 for grants 
to states to conduct policy reviews and develop recommendations 
to improve the delivery and coordination of services to low-
income, noncustodial parents. CBO estimates that implementing 
this provision would cost $8 million in 2004 and $100 million 
over the 2004-2009 period, assuming the appropriation of the 
authorized amounts.
            Second-chance homes
    Section 305 would authorize the appropriation of $33 
million each year for fiscal years 2004 through 2007 for the 
Secretary to award grants to eligible entities to promote 
second-chance homes. A second-change home is a community-based, 
adult-supervised group home that provides support for young 
mothers and their children. Mothers are required to learn 
parenting skills and other skills to promote their long-term 
economic independence and the well-being of their children. The 
grant would be only awarded to those entities that agree to 
contribute at least one dollar for every five dollars of the 
federal funds provided. The grant would be awarded for a period 
of five years. The Secretary would reserve $1 million for 
fiscal year 2004 to carry out an evaluation and could use up to 
$500,000 to provide technical assistance. CBO estimates that 
implementing this provision would cost $10 million if 2004 and 
$132 million over the 2004-2009 period, assuming the 
appropriation of the authorized amounts.

TABLE 9.--AUTHORIZATIONS OF APPROPRIATIONS FOR H.R. 4737, THE WORK, OPPORTUNITY, AND RESPONSIBILITY FOR KIDS ACT
                                                     OF 2002
----------------------------------------------------------------------------------------------------------------
                                                      By fiscal year, in millions of dollars--
                                  ------------------------------------------------------------------------------
                                    2003   2004   2005   2006   2007   2008   2009   2010   2011   2012  2003-12
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Noncustodial parent employment
 grant program:
    Authorization level..........      0     25     25     25     25      0      0      0      0      0      100
    Estimated outlays............      0      8     18     28     26     15      5      0      0      0      100
Grant to coordinate services for
 low-income noncustodial parents:
    Authorization level..........      0     25     25     25     25      0      0      0      0      0      100
    Estimated outlays............      0      8     18     28     26     15      5      0      0      0      100
Second-chance homes:
    Authorization level..........      0     33     33     33     33      0      0      0      0      0      132
    Estimated outlays............      0     10     23     36     35     20      8      0      0      0      132
Grants to improve access to
 transportation:
    Authorization level..........     15     15     15     15     15      0      0      0      0      0       75
    Estimated outlays............      2      9     16     17     16     11      4      0      0      0       75
Grants to conduct housing
 demonstration projects:
    Authorization level..........      0     50      0      0      0      0      0      0      0      0       50
    Estimated outlays............      0      5      8     30      7      0      0      0      0      0       50
    Total changes:
        Authorization level......     15    148     98     98     98      0      0      0      0      0      457
        Estimated outlays........      2     40     83    139    110     61     22      0      0      0      457
----------------------------------------------------------------------------------------------------------------

            Grants to provide transportation
    Section 705 would authorize the appropriation of $15 
million each year for fiscal years 2003 through 2007 for a 
program of grants to states, Indian tribes, localities, and 
nonprofit organizaitons to asist low-income families with 
children in buying automobiles. The program is designed to 
facilitate continuing work by providing earners in low-income 
families with more reliable transportation. CBO estiamtes that 
implementing this program would cost $2 million in 2003 and $75 
million over the 2003-2009 period assuming the appropiration of 
the authorized amounts.
            Grants to conduct housing demonstration projects
    Section 707 would authorize the appropriation of $50 
million in 2004 for grants to study different methods of 
combining housing assistance with other support and services. 
The demonstrations would be focused on services to promote the 
employment of parents and caretaker relatives who receive TANF 
services and who have multiple barreirs to work, including lack 
of adequate housing. CBO estimates that implementing this 
provision would cost $5 million in 2004 and $50 million over 
the 2004-2007 period, assuming the appropriation of the 
authorized amount.
    Pay-as-you-go considerations: The Balance Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
change in outlays and governmental receipts that are subject to 
pay-as-you-go procedures are shown in the following table. For 
the purposes of enforcing pay-as-you-go procedures, only the 
effects through fiscalyear 2006 are counted.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        By fiscal year, in millions of dollars--
                                                              ------------------------------------------------------------------------------------------
                                                                2002    2003    2004    2005    2006    2007    2008    2009    2010    2011      2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays...........................................       0   1,242     829   2,022   2,810   3,109   2,965   2,716   2,551   2,505     2,6462
Changes in receipts..........................................       0       0      -1      -3      -7     -13     -16     -18     -20     -20        -21
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Previous CBO estimates: On May 16, 2002, the House of 
Representatives passed H.R. 4737, which incorporated the 
provisions of four separate bills as well as additional 
amendments and provisions. CBO prepared cost estimates for 
those four bills:
           H.R. 4585, as ordered reported by the HOuse 
        Committee on Energy And Connerce on April 24, 2002 (CBO 
        estimate transmitted on May 2, 2002);
           H.R. 4092, as ordered reported by the House 
        Committee on Education and the Workforce on May 2, 2002 
        (CBO estimates transmitted on May 9, 2002;
           H.R. 4584, as ordered reported by the House 
        Committee on Energy and Commerce on April 24, 2002 (CBO 
        estimate transmitted on May 10, 2002); and
           H.R. 4090, as ordered reported by the House 
        Committee on Ways and Means on May 2, 2002 (CBO 
        estimate transmitted on May 13, 2002).
    H.R. 4737 as approved by the Senate Committee on Finance 
would increase budget authority by about $11 billion over the 
2003-2007 period compared to about $2 billion in the House-
passed version of the legislation. (CBO prepared detailed 
estimates of the provisions of the House-passed act only for 
the 2003-2007 period.) The Senate Finance Committee's version 
would reduce revenues by $24 million, in contrast to the 
version that passed the House which would increase revenues by 
$1.3 billion over the 2003-2007 period. The Finance Committee 
version of H.R. 4737 would increase authorizations of 
appropriations by $457 million above the current baseline over 
the 2003-2007 period, whereas the House-passed version would 
raise such authorizations by $2.5 billion.
    The areas of the legislation where the direct spending 
effects differ the most are TANF grants, child care funding, 
transitional medical assistance, child support enforcement, 
Medicaid eligibility for certain immigrants, Medicaid 
administrative expenses, and customs user fees. For activities 
subject to annual appropriations, the largest difference is in 
child care funding. Table 10 summarizes the major differences 
between the two versions of the legislation.

 TABLE 10.--MAJOR DIFFERENCES IN THE MANDATORY BUDGET AUTHORITY OF H.R.
                                  4737
------------------------------------------------------------------------
                                        Over the 2003-2007 period, in
                                            billions of dollars--
                                   -------------------------------------
                                    Finance Committee     House-passed
                                          version         version \1\
------------------------------------------------------------------------
TANF and related grants...........                4.4                1.4
Mandatory child care funding \2\..                5.5                1.0
Transitional medical assistance...                2.1                0.4
Customs user fees.................               -1.9                  0
Child support enforcement.........                1.0                0.1
Medicaid for immigrants...........                0.6                  0
Medicaid administrative expenses..                  0               -0.4
------------------------------------------------------------------------
\1\ House-passed version of H.R. 4737 also would increase revenues by
  $1.3 billion.
\2\ The House-passed version of H.R. 4737 authorized on additional $2.0
  billion in discretionary funds.

    Estimate prepared by: Federal costs: Sheila Dacey--TANF and 
Child Support, Christina Sadoti--Unemployment Compensation and 
Child Welfare, Donna Wong--Child Care, Geoffrey Gerhardt--
Supplemental Security Income, Jeanne De Sa and Eric Rollins--
Medicaid and SCHIP, Alexis Ahlstrom--Abstinence Education, Mark 
Grabowicz--Customs User Fees, Ken Johnson--Census Bureau, 
Alison Rebeck--Discretionary grants; impact on state, local, 
and tribal governments: Leo Lex; impact on the private sector: 
Kate Bloniarz.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                                V. VOTES

    On June 26, 2002, a substitute for H.R. 4737, entitled, 
``The Work, Opportunity and Responsibility for Kids (WORK) Act 
of 2002,'' was ordered favorably reported by rollcall vote, 13 
ayes, 8 nays. A quorum was present.
          Ayes: Baucus, Rockefeller, Breaux, Conrad, Graham, 
        Jeffords, Bingaman, Kerry (proxy), Torricelli (proxy), 
        Lincoln, Hatch, Murkowski (proxy), and Snowe.
          Nays: Daschle (proxy), Grassley, Nickles (proxy), 
        Gramm (proxy), Lott (proxy), Thompson (proxy), Kyl, 
        Thomas (proxy).
    The following amendments were offered:
    Amendment #11 (Graham #3) concerning Medicaid/SCHIP 
eligibility of legal immigrants, Agreed to by rollcall vote, 12 
ayes, 9 nays.
          Ayes: Rockefeller, Daschle (proxy), Breaux, Conrad, 
        Graham, Jeffords, Bingaman, Kerry, Torricelli (proxy), 
        Lincoln, Murkowski, Snowe.
          Nays: Baucus, Grassley, Hatch, Nickles, Gramm 
        (proxy), Lott, Thompson (proxy), Kyl, Thomas (proxy).
    Amendment #26 (Snowe #1) concerning post-secondary 
education as a work activity, approved by voice vote.
    Amendment #4 (Rockefeller #2) concerning funding for SSBG, 
approved by unanimous voice vote.
    Amendment #13 (Conrad #1) concerning exemptions for 
recipients providing full-time care to disabled family members, 
approved by unanimous voice vote.
    Amendment #27 (Kyl #1) concerning reimbursement of health 
care expenditures related to undocumented and legal immigrants, 
Failed by rollcall vote, 8 ayes, 12 nays.
          Ayes: Daschle (proxy), Graham, Jeffords, Bingaman, 
        Kerry (proxy), Torricelli (proxy), Snowe, Kyl.
          Nays: Baucus, Rockefeller, Breaux, Conrad, Lincoln, 
        Grassley, Hatch, Murkowski (proxy), Nickles (proxy), 
        Lott (proxy), Thompson (proxy), Thomas (proxy).
          Present: Gramm (proxy).
    Amendment #17 (Bingaman #3) concerning TANF waivers, 
accepted without objection.
    Amendment #22 (Bingaman #8), concerning State and local 
reimbursement of health care expenditures related to 
immigrants, Approved by rollcall vote, 13 ayes, 8 nays.
          Ayes: Rockefeller, Daschle (proxy), Breaux, Conrad, 
        Graham, Jeffords, Bingaman, Kerry (proxy), Torricelli 
        (proxy), Lincoln, Murkowski, Snowe, Kyl (proxy).
          Nays: Baucus, Grassley, Hatch, Nickles (proxy), Gramm 
        (proxy), Lott (proxy), Thompson (proxy), Thomas 
        (proxy).
    Amendment #2 (Baucus #2) concerning abstinence education 
funding, approved by voice vote.

                      VII. CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of the rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no changes 
are proposed is shown in roman):

SOCIAL SECURITY ACT

           *       *       *       *       *       *       *

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

   Part A--Block Grants to States for Temporary Assistance for Needy 
Families

           *       *       *       *       *       *       *

                      ELIGIBLE STATES; STATE PLAN

    Sec. 402. (a) In General.--As used in this part, the term 
``eligible State'' means, with respect to a fiscal year, a 
State that during the [27-month] 24-month period ending with 
the close of the 1st quarter of the fiscal year, has submitted 
to the Secretary a plan that the Secretary has found includes 
the following:
          (1) Outline of family assistance program.--
                  (A) General provisions.--A written document 
                that outlines how the State [intends to] shall 
                do the following:
                          (i) Conduct a program, designed to 
                        serve all political subdivisions in the 
                        State (not necessarily in a uniform 
                        manner), that provides cash assistance 
                        to needy families with (or expecting) 
                        children and provides parents with job 
                        preparation, work and support services 
                        to enable them to leave the program and 
                        become self-sufficient.
                          [(ii) Require a parent or caretaker 
                        receiving assistance under the program 
                        to engage in work (as defined by the 
                        State) once the State determines the 
                        parent or caretaker is ready to engage 
                        in work, or once the parent or 
                        caretaker has received assistance under 
                        the program for 24 months (whether or 
                        not consecutive), whichever is earlier, 
                        consistent with section 407(e)(2).]
                          (ii) Require a parent or caretaker 
                        receiving assistance under the program 
                        to engage in work or work readiness 
                        activities designed to move families 
                        receiving assistance into self-
                        sufficiency, consistent with section 
                        407(e)(2). Such activities may be 
                        determined by the State, and shall 
                        include, as appropriate, efforts 
                        eliminating barriers to work such as 
                        physical or mental disabilities, 
                        substance abuse, adult illiteracy, 
                        domestic violence, and lack of 
                        affordable housing.
                          (iii) Ensure that parents and 
                        caretakers receiving assistance under 
                        the program engage in work activities 
                        in accordance with section 407 and 
                        individual responsibility plans 
                        developed pursuant to section 408(b).
                          (iv) Establish the process for 
                        providing recipients with individual 
                        responsibility plans consistent with 
                        section 408(b), including a description 
                        of the screening and assessment 
                        procedures the State employs.
                          (iv) Ensure that training and 
                        resources are made available to the 
                        State agency administering the program 
                        so that each family receiving 
                        assistance under the program receives 
                        the support for which the families are 
                        eligible, including training related to 
                        civil rights and anti-discrimination 
                        laws.
                          (vi) Ensure the availability of a 
                        stable and professional workforce in 
                        the administration of the State program 
                        funded under this part.
                          (vii) Ensure equitable access to 
                        benefits and services provided under 
                        the program for each member of an 
                        Indian tribe or tribal organization, 
                        who is domiciled in the State and is 
                        not eligible for assistance under a 
                        tribal family assistance plan approved 
                        under section 421.
                          [(iv) (viii) Take such reasonable 
                        steps as the State deems necessary to 
                        restrict the use and disclosure of 
                        information about individuals and 
                        families receiving assistance under the 
                        program attributable to funds provided 
                        by the Federal Government.
                          [(v) Establish goals and take action 
                        to prevent and reduce the incidence of 
                        out-of-wedlock pregnancies, with 
                        special emphasis on teenage 
                        pregnancies, and establish numerical 
                        goals for reducing the illegitimacy 
                        ratio of the State (as defined in 
                        section 403(a)(2)(C)(iii)).
                          [(vi) Conduct a program, designed to 
                        reach State and local law enforcement 
                        officials, the education system, and 
                        relevant counseling services, that 
                        provides education and training on the 
                        problem of statutory rape so that 
                        teenage pregnancy prevention programs 
                        may be expanded in scope to include 
                        men.]
                  (B) Special provisions.--
                          [(i) The document shall indicate 
                        whether the State intends to treat 
                        families moving into the State from 
                        another State differently than other 
                        families under the program, and if so, 
                        how the State intends to treat such 
                        families under the program.]
                          (i) With respect to each program that 
                        will be funded under this part, or with 
                        qualified State expenditures claimed by 
                        the State to meet the requirements of 
                        section 409(a)(7), over the 24-month 
                        period for which the plan is being 
                        submitted--
                                  (I) the name of the program;
                                  (II) the goals of the 
                                program;
                                  (III) a description of the 
                                benefits and services provided 
                                in the program;
                                  (IV) a description of 
                                principal eligibility rules 
                                (financial and nonfinancial) 
                                and populations served under 
                                the program; and
                                  (V) if the program provides 
                                assistance--
                                          (aa) a description of 
                                        applicable work-related 
                                        requirements and the 
                                        State's definition of 
                                        each work activity in 
                                        section 407(d);
                                          (bb) a description of 
                                        time limit policies (if 
                                        applicable), including 
                                        the length of time 
                                        allowed, the policies 
                                        concerning exemptions 
                                        and extensions, and the 
                                        policies concerning aid 
                                        after the time limit; 
                                        and
                                          (cc) a description of 
                                        sanction policies and 
                                        procedures (if 
                                        applicable), including 
                                        the duration of the 
                                        sanctions, policies 
                                        concerning good cause 
                                        for failure to comply, 
                                        and procedures to 
                                        assist families with 
                                        barriers in complying 
                                        with requirements.
                          (ii) The document shall indicate 
                        whether the State intends to provide 
                        assistance under the program to 
                        individuals who are not citizens of the 
                        Untied States, and if so, shall include 
                        an overview of such assistance.
                          (iii) The document shall set forth 
                        objective criteria for the delivery of 
                        benefits and the determination of 
                        eligibility and for fair and equitable 
                        treatment, including an explanation of 
                        how the State will provide 
                        opportunities for recipients who have 
                        been adversely affected to be heard in 
                        a State administrative or appeal 
                        process, and information regarding any 
                        complaints received by the State 
                        concerning fair and equitable treatment 
                        related to civil rights or labor laws 
                        and a description of the procedures 
                        used by the State to respond to such 
                        complaints.
                          (iv) Not later than 1 year after the 
                        date of enactment of this section, 
                        unless the chief executive officer of 
                        the State opts out of this provision by 
                        notifying the Secretary, a State shall, 
                        consistent with the exception provided 
                        in section 407(e0(2), require a parent 
                        or caretaker receiving assistance under 
                        the program who, after receiving such 
                        assistance for 2 months is not exempt 
                        from work requirements and is not 
                        engaged in work, as determined under 
                        section 407(c), to participate in 
                        community service employment, with 
                        minimum hours per week and tasks to be 
                        determined by the State.
                          ``(v) In the case of a State that 
                        provides sub-State areas with 
                        significant policy-making authority, 
                        the document shall include a summary of 
                        policies for each sub-State area with 
                        such authority.

           *       *       *       *       *       *       *

          [(5) Certification that the state will provide 
        indians: with equitable access to assistance.--A 
        certification by the chief executive officer of the 
        State that, during the fiscal year, the state will 
        provide each member of an Indian tribe, who is 
        domiciled in the State and is not eligible for 
        assistance under a tribal family assistance plan 
        approved under section 412, with equitable access to 
        assistance under the State program funded under this 
        part attributable to funds provided by the Federal 
        government.]
          (5) Certification that the state will provide indians 
        with equitable access to assistance.--
                  (A) In general.--A certification by the chief 
                executive officer of the State that, during the 
                fiscal year, the State will--
                          (i) subject to subparagraph (B), 
                        consult with Indian tribes located 
                        within the State regarding the State 
                        plan in an effort to ensure equitable 
                        access to benefits or services provided 
                        under the plan for any member of such a 
                        tribe who is not eligible for 
                        assistance under a tribal family 
                        assistance plan approved under section 
                        412; and
                          (ii) provide each member of an Indian 
                        tribe, who is domiciled in the State 
                        and is not eligible for assistance 
                        under a tribal family assistance plan 
                        approved under section 412, with 
                        equitable access to assistance under 
                        the State program funded under this 
                        part attributable to funds provided by 
                        the Federal Government.
                  (B) Exception.--Clause (i) of subparagraph 
                (A) shall not apply to the State of Alaska.
          (6) Certification of standards and procedures to 
        ensure against program fraud and abuse.--A 
        certification by the chief executive officer of the 
        State that the State has established and is enforcing 
        standards and procedures to ensure against program 
        fraud and abuse, including standards and procedures 
        concerning nepotism, conflicts of interest among 
        individuals responsible for the administration and 
        supervision of the State program, kickbacks, and the 
        sue of political patronage.
          (7) Optional certification of standards and 
        procedures to ensure that the state will screen for and 
        identify domestic violence.--
                  (A) In general.--At the option of the State, 
                a certification by the chief executive officer 
                of the State that the State has established and 
                is enforcing standards and procedures to--
                          (i) screen and identify individuals 
                        receiving assistance under this part 
                        with a history of domestic violence 
                        while maintaining the confidentiality 
                        of such individuals;
                          (ii) refer such individuals to 
                        counseling and supportive services; and
                          (iii) waive, pursuant to a 
                        determination of good cause, other 
                        program requirements such as time 
                        limits (for so long as necessary) for 
                        individuals receiving assistance, 
                        residency requirements, child support 
                        co-operation requirements, and family 
                        cap provisions, in cases where 
                        compliance with such requirements would 
                        make it more difficult for individuals 
                        receiving assistance under this part to 
                        escape domestic violence or unfairly 
                        penalize such individuals who are or 
                        have been victimized by such violence, 
                        or individuals who are at risk of 
                        further domestic violence.
                  (B) Domestic violence defined.--For purposes 
                of this paragraph, the term ``domestic 
                violence'' has the same meaning as the term 
                ``battered or subjected to extreme cruelty'', 
                as defined in section 408(a)(7)(C)(iii).
          (8) Certification of procedures to ensure that child 
        care providers comply with applicable state or local 
        health and safety standards.--A certification by the 
        chief executive officer of the State that procedures 
        are in effect to ensure that any child care provider in 
        the State that provides services for which assistance 
        is provided under the State program funded under this 
        part complies with all applicable State or local health 
        and safety requirements as described in section 
        658E(c)(2)(F) of the Child Care and Development Block 
        Grant Act of 1990 (other than a relative excluded from 
        the definition of ``child care provider'' in section 
        98.41(e) of title 45 of the Code of Federal Regulations 
        (as in effect on June 1, 2002)).
          (9) Certification of consultation on provision of 
        transportation aid.--In the case of a State that 
        provides transportation aid under the State program, a 
        certification by the chief executive officer of the 
        State that State and local transportation agencies and 
        planning bodies have been consulted in the development 
        of the plan.
          (10) Certification of consultation on provision of 
        housing aid.--In the case of a State that provides 
        housing aid under the State program, a certification by 
        the chief executive officer of the State that State 
        housing agencies and authorities have been consulted in 
        the development of the plan and that such consultations 
        have addressed potential cooperation between agencies 
        administering the State program funded under this part 
        and housing agencies and groups in meeting the housing 
        needs of families receiving assistance under the State 
        program funded under this part and assisting such 
        families in achieving self-sufficiency.
          (11) Certification of equal treatment of 2-parent 
        families.--The chief executive officer of the State 
        shall submit to the Secretary a certification that in 
        conducting the State program funded under this part, 
        the State does not have rules or procedures that 
        discriminate against 2-parent families.
    (b) Plan Amendment.--Within 30 days after a State amends a 
plan submitted pursuant to subsection (a), the State shall 
notify the Secretary of the amendment.
    [(c) Public Availability of State Plan Summary.--The State 
shall make available to the public a summary of any plan or 
plan amendment section.]
    (c) Standard Format.--
          (1) Standard state plan format.--The Secretary shall, 
        after notice and public comment, develop a proposed 
        Standard State Plan Form to be used by States to submit 
        the plan required under this section. Such form shall 
        be finalized by the Secretary for use by the State not 
        later than February 1, 2003.
          (2) Requirement for completed plan using standard 
        state plan format by fiscal year 2004.--Notwithstanding 
        any other provision of law, each State shall submit a 
        complete State plan, using the Standard State Plan Form 
        developed under paragraph (1), not later than October 
        1, 2003.
    (d) Housing Data.--
          (1) In general.--Effective October 1, 2003 (or as 
        soon thereafter as is practicable), the Secretary and 
        the Secretary of Housing and Urban Development jointly 
        shall make available to each State State-level data 
        from the 2000 decennial census concerning the housing 
        problems of families receiving assistance under the 
        State program funded under this part.
          (2) Update.--The Secretary and the the Secretary of 
        Housing and Urban Development biennially shall make 
        available to each State updated data regarding such 
        problems, to the extent such data is available.
    (e) Public Availability.--
          (1) Notice and comment.--Prior to submitting a State 
        plan or an amendment of such plan based on a change in 
        policy to the Secretary under this section, the State 
        shall--
                  (A) make the proposed State plan or amendment 
                available to the public through an appropriate 
                State maintained Internet website and through 
                other means as the State determines 
                appropriate;
                  (B) allow for a reasonable public comment 
                period of not less than 45 days; and
                  (C) make comments received concerning such 
                plan or amendment or, at the discretion of the 
                State, a summary of the comments received 
                available to the public through such website 
                and through other means as the State determines 
                appropriate.
          (2) Public availability of state plan.--A State shall 
        ensure that the State plan, that is in effect for any 
        fiscal year, is available to the public through an 
        appropriate State maintained Internet website and 
        through other means as the State determines 
        appropriate.
    (f) No Cause of Action.--Nothing in this section shall be 
construed as establishing a cause of action against a State 
based solely on a State's failure to submit a State plan or an 
amendment to such plan in accordance with the requirements of 
this section or on a State's failure to comply with the 
contents of the State plan.
    Sec. 403. (a) Grants.--
          (1) Family assistance grant.--
                  (A) In general.--Each eligible State shall be 
                entitled to receive from the Secretary, for 
                each of fiscal year [1996, 1997, 1998, 1999, 
                2000, 2001, and 2002] 2003 through 2007, a 
                grant in an amount equal to the State family 
                assistance grant.
                  (B) State family assistance grant defined.--
                [As used] Subject to subparagraph (E), as used 
                in this part, the term ``State family 
                assistance grant'' means the greatest of--

           *       *       *       *       *       *       *

                  (E) Increase of grant for certain states.--
                          (i) In general.--With respect to a 
                        State family assistance grant made for 
                        each of fiscal years 2003 through 2007, 
                        in the case of a State that meets the 
                        criteria described in clause (ii) or 
                        (iii) (or both), the amount of the 
                        State family assistance grant 
                        determined under this paragraph for 
                        that State for each such fiscal year 
                        shall be increased by the applicable 
                        amount described in clause (iv).
                          (ii) Receipt of supplemental grant 
                        for fiscal year 2002.--For purposes of 
                        clause (i), the criteria described in 
                        this clause is that the State received 
                        a supplemental grant under paragraph 
                        (3) for fiscal year 2002 (as in effect 
                        with respect to such fiscal year).
                          (iii) State per capita income below 
                        the national average.--For purposes of 
                        clause (i), the criteria described in 
                        this clause is that, with respect to a 
                        State, the average State per capita 
                        income for calendar years 1998, 1999, 
                        and 2000, as published by the 
                        Department of Commerce in the May 2002 
                        Survey of Current Business--
                                  (I) exceeds 80 percent, but 
                                does not exceed 90 percent of 
                                the average per capita income 
                                determined for all States for 
                                such calendar years; or
                                  (II) does not exceed 80 
                                percent of the average per 
                                capita income determined for 
                                all States for such calendar 
                                years.
                          (iv) Applicable amount.--For purposes 
                        of clause (i), the applicable amount 
                        described in this clause is the 
                        following:
                                  (I) State with a supplemental 
                                grant in fiscal year 2002.--In 
                                the case of a State that meets 
                                the criteria described in 
                                clause (ii), the amount paid to 
                                the State under paragraph (3) 
                                for fiscal year 2002 (as in 
                                effect with respect to such 
                                fiscal year).
                                  (II) State with per capita 
                                income below national 
                                average.--In the case of a 
                                State that meets the criteria 
                                described in--
                                          (aa) clause (iii)(I), 
                                        the amount equal to 5 
                                        percent of the State 
                                        family assistance grant 
                                        determined for the 
                                        State for fiscal year 
                                        2003 (without regard to 
                                        this subparagraph, in 
                                        the case of a State 
                                        that meets the criteria 
                                        in clause (ii)); or
                                          (bb) clause 
                                        (iii)(II), the amount 
                                        equal to 10 percent of 
                                        the State family 
                                        assistance grant 
                                        determined for the 
                                        State for fiscal year 
                                        2003 (as so 
                                        determined).
                                  (III) State described in 
                                clauses (ii) and (iii).--In the 
                                case of a State that meets the 
                                criteria described in clauses 
                                (ii) and (iii), the amount 
                                equal to the sum of the amounts 
                                determined under subclauses (I) 
                                and (II) with respect to the 
                                State.
                          (v) Definition of state.--In this 
                        subparagraph, the term ``State'' means 
                        each of the 50 States and the District 
                        of Columbia.
                  [(E)] (F) Appropriation.--Out of any money in 
                the Treasury of the United States not otherwise 
                appropriated, there are appropriated [for 
                fiscal years 1996, 1997, 1998, 1999, 2000, 
                2001, and 2002 such sums as are necessary for 
                grants under this paragraph] for State family 
                assistance grants under this paragraph--
                          (i) for fiscal year 2003, 
                        $17,044,348,000; and
                          (ii) for each of fiscal years 2004 
                        through 2007, $17,042,348,000.

           *       *       *       *       *       *       *

          [(2) Bonus to reward decrease in illegitimacy 
        ratio.--
                  [(A) In general.--Each eligible State shall 
                be entitled to receive from the Secretary a 
                grant for each bonus year.
                  [(B) Amount of grant.--
                          [(i) In general.--If, for a bonus 
                        year, none of the eligible States is 
                        Guam, the Virgin Islands, or American 
                        Samoa, then the amount of the grant 
                        shall be--
                                  [(I) $20,000,000 if there are 
                                5 eligible States; or
                                  [(II) $25,000,000 if there 
                                are fewer than 5 eligible 
                                States.
                          [(ii) Amount if certain territories 
                        are eligible.--If, for a bonus year, 
                        Guam, the Virgin Islands, or American 
                        Samoa is an eligible State, then the 
                        amount of the grant shall be--
                                  [(I) in the case of such a 
                                territory, 25 percent of the 
                                mandatory ceiling amount (as 
                                defined in section 1108(c)(4)) 
                                with respect to the territory; 
                                and
                                  [(II) in the case of a State 
                                that is not such a territory--
                                          [(aa) if there are 5 
                                        eligible States other 
                                        than such territories, 
                                        $20,000,000, minus \1/
                                        5\ of the total amount 
                                        of the grants payable 
                                        under this paragraph to 
                                        such territories for 
                                        the bonus year; or
                                          [(bb) if there are 
                                        fewer than 5 such 
                                        eligible States, 
                                        $25,000,000, or such 
                                        lesser amount as may be 
                                        necessary to ensure 
                                        that the total amount 
                                        of grants payable under 
                                        this paragraph for the 
                                        bonus year does not 
                                        exceed $100,000,000.]
          ``(2) Healthy marriage promotion grants.--
                  ``(A) Authority.--
                          ``(i) In general.--The Secretary 
                        shall award grants to States, Indian 
                        tribes, and nonprofit entities for not 
                        more than 75 percent of the cost of 
                        developing and implementing 
                        demonstration projects to promote 
                        stronger families, with an emphasis on 
                        the promotion of healthy marriages, 
                        through the testing and evaluation of a 
                        wide variety of approaches to 
                        strengthening families.
                          ``(ii) Matching funds.--A State, 
                        Indian tribe, or nonprofit entity 
                        awarded a grant under this paragraph 
                        shall provide non-Federal contributions 
                        toward the costs of programs or 
                        activities supported with funds 
                        provided under the grant in an amount 
                        equal to not less than 25 percent of 
                        the Federal funds provided under the 
                        grant. Such contributions may be 
                        provided in cash or in kind, fairly 
                        valued, including plant, equipment, or 
                        services.
                  ``(B) Healthy marriage promotion 
                activities.--Funds provided under a grant 
                awarded under this paragraph shall be used to 
                support any of the following programs or 
                activities:
                          ``(i) Public advertising campaigns on 
                        the value of marriage and the skills 
                        needed to increase marital stability 
                        and health.
                          ``(ii) Voluntary marriage education 
                        and marriage skills programs for 
                        nonmarried pregnant women and 
                        nonmarried expectant fathers.
                          ``(iii) Voluntary premarital 
                        education and marriage skills training 
                        for engaged couples and for couples 
                        interested in marriage.
                          ``(iv) Voluntary marriage enhancement 
                        and marriage skills training programs 
                        for married couples.
                          ``(v) Marriage mentoring programs 
                        that use married couples as role models 
                        and mentors in at-risk communities.
                          ``(vi) Teen pregnancy prevention 
                        programs.
                          ``(vii) Broad-based income support 
                        and supplementation strategies, such as 
                        the strategies implemented under the 
                        demonstration project authorized under 
                        section 22 of the Food Stamp Act of 
                        1977 (7 U.S.C. 2031), that provide 
                        increased assistance to low-income 
                        working families, such as housing, 
                        transportation, and transitional 
                        benefits, and that do not exclude 
                        families from participation based on 
                        the number of parents in the household.
                          ``(viii) Development and 
                        dissemination of best practices for 
                        addressing domestic and sexual violence 
                        as a barrier to economic security, 
                        including caseworker training, 
                        technical assistance, and voluntary 
                        services for victims.
                  ``(C) Selection of grantees.--
                          ``(i) Requirement.--The Secretary may 
                        not award a grant under this paragraph 
                        unless the State, Indian tribe, or 
                        nonprofit entity receiving the grant--
                                  ``(I) consults with national, 
                                State, local, or tribal 
                                organizations with demonstrated 
                                expertise in working with 
                                survivors of domestic violence; 
                                and
                                  ``(II) agrees to participate 
                                in the evaluation conducted 
                                under subparagraph (D).
                          ``(ii) Public comment and 
                        availability.--
                                  ``(I) Selection criteria.--
                                The Secretary shall promulgate 
                                regulations detailing the 
                                criteria for awarding grants 
                                under this paragraph and shall 
                                make such regulations available 
                                for a period of public comment.
                                  ``(II) Funded applications.--
                                The Secretary shall make all 
                                grant applications funded under 
                                this paragraph available to the 
                                public.
                  ``(D) Evaluation.--
                          (i) In general.--The Director of the 
                        National Academy of Sciences shall 
                        conduct, directly or through contracts, 
                        a rigorous comprehensive evaluation of 
                        a representative sample of the programs 
                        and activities described in 
                        subparagraph (B) and carried out with 
                        funds provided under a grant made under 
                        this paragraph. The Director shall seek 
                        public input on both the methods and 
                        measures to be used in the evaluation.
                          (ii) Required information.--The 
                        evaluation conducted under this 
                        subparagraph shall, with respect to 
                        each program and activity described in 
                        subparagraph (B), include measures of 
                        family structure, levels of family 
                        conflict and violence, and child well-
                        being (including measures of health 
                        status, educational performance, food 
                        security, and family income).
                          (iii) Funding.--$5,000,000 of the 
                        amount appropriated under subparagraph 
                        (F) for each fiscal year shall be 
                        reserved for carrying out the 
                        evaluation required under this 
                        subparagraph.
                  (E) Reports.--
                          (i) Initial report on grants.--Not 
                        later than September 30, 2005, the 
                        Secretary shall submit an initial 
                        report to Congress describing the 
                        programs and activities funded under 
                        grants made under this paragraph.
                          (ii) Initial evaluation findings.--
                        Not later than September 30, 2006, the 
                        Director of the National Academy of 
                        Sciences shall submit a report to 
                        Congress describing the initial 
                        findings of the evaluation conducted 
                        under subparagraph (D).
                          (iii) Final reports.--Not later than 
                        September 30, 2008, the Secretary and 
                        the Director of the National Academy of 
                        Sciences shall each submit final 
                        reports on the grants made under this 
                        paragraph and the evaluation conducted 
                        under subparagraph (D), respectively.
                          (iv) GAO.--Not later than September 
                        30, 2006, the Comptroller General of 
                        the United States shall submit a report 
                        to the Chairman and Ranking Member of 
                        the Committee on Ways and Means of the 
                        House of Representatives and the 
                        Chairman and Ranking Member of the 
                        Committee on Finance of the Senate 
                        describing--
                                  (I) the process the Secretary 
                                used to award grants under this 
                                paragraph;
                                  (II) the programs and 
                                activities supported by such 
                                funds; and
                                  (III) the results of such 
                                programs and activities.
                  (F) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there is appropriated for each of 
                fiscal years 2003 through 2007, $200,000,000 
                for grants under this paragraph.

           *       *       *       *       *       *       *

          [(4) Bonus to reward high performance states.--
                  [(A) In general.--The Secretary shall make a 
                grant pursuant to this paragraph to each State 
                for each bonus year for which the State is a 
                high performing State.
                  [(B) Amount of grant.--
                          [(i) In general.--Subject to clause 
                        (ii) of this subparagraph, the 
                        Secretary shall determine the amount of 
                        the grant payable under this paragraph 
                        to a high performing State for a bonus 
                        year, which shall be based on the score 
                        assigned to the State under 
                        subparagraph (D)(i) for the fiscal year 
                        that immediately precedes the bonus 
                        year.
                          [(ii) Limitation.--The amount payable 
                        to a State under this paragraph for a 
                        bonus year shall not exceed 5 percent 
                        of the State family assistance grant.
                  [(C) Formula for measuring state 
                performance.--Not later than 1 year after the 
                date of the enactment of the Personal 
                Responsibility and Work Opportunity 
                Reconciliation Act of 1996, the Secretary, in 
                consultation with the National Governors' 
                Association and the American Public Welfare 
                Association, shall develop a formula for 
                measuring State performance in operating the 
                State program funded under this part so as to 
                achieve the goals set forth in section 401(a).
                  [(D) Scoring of state performance; setting of 
                performance thresholds.--For each bonus year, 
                the Secretary shall--
                          [(i) use the formula developed under 
                        subparagraph (C) to assign a score to 
                        each eligible State for the fiscal year 
                        that immediately precedes the bonus 
                        year; and
                          [(ii) prescribe a performance 
                        threshold in such a manner so as to 
                        ensure that--
                                  [(I) the average annual total 
                                amount of grants to be made 
                                under this paragraph for each 
                                bonus year equals $200,000,000; 
                                and
                                  [(II) the total amount of 
                                grants to be made under this 
                                paragraph for all bonus years 
                                equals $1,000,000,000.
                  [(E) Definitions.--As used in this paragraph:
                          [(i) Bonus year.--The term ``bonus 
                        year'' means fiscal years 1999, 2000, 
                        2001, 2002, and 2003.
                          [(ii) High performing state.--The 
                        term ``high performing State'' means, 
                        with respect to a bonus year, an 
                        eligible State whose score assigned 
                        pursuant to subparagraph (D)(i) for the 
                        fiscal year immediately preceding the 
                        bonus year equals or exceeds the 
                        performance threshold prescribed under 
                        subparagraph (D)(ii) for such preceding 
                        fiscal year.
                  [(F) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                years 1999 through 2003 $1,000,000,000 for 
                grants under this paragraph.]
          (4) Innovative business link partnership grants.--
                  (A) In general.--The Secretary and the 
                Secretary of Labor (in this paragraph referred 
                to as the ``Secretaries'') jointly shall award 
                grants in accordance with this paragraph for 
                projects proposed by eligible applicants based 
                on the following:
                          (i) The potential effectiveness of 
                        the proposed project in carrying out 
                        the activities described in 
                        subparagraph (E).
                          (ii) Evidence of the ability of the 
                        eligible applicant to leverage private, 
                        State, and local resources.
                          (iii) Evidence of the ability of the 
                        eligible applicant to coordinate with 
                        other organizations at the State and 
                        local level.
                  (B) Definition of eligible applicant.--
                          (i) In general.--In this paragraph, 
                        the term ``eligible applicant'' means a 
                        nonprofit organization, a local 
                        workforce investment board established 
                        under section 117 of the Workforce 
                        Investment Act of 1998 (29 U.S.C. 
                        2832), a State, a political subdivision 
                        of a State, or an Indian tribe.
                          (ii) Grants to promote business 
                        linkages.--
                                  (I) Additional eligible 
                                applicant.--Only for purposes 
                                of grants to carry out the 
                                activities described in 
                                subparagraph (E)(i), the term 
                                ``eligible applicant'' includes 
                                an employer.
                                  (II) Additional 
                                requirement.--In order to 
                                qualify as an eligible 
                                applicant for purposes of 
                                subparagraph (E)(i), the 
                                applicant must provide evidence 
                                that the application has been 
                                developed by and will be 
                                implemented by a local or 
                                regional consortium that 
                                includes, at minimum, employers 
                                or employer associations, and 
                                education and training 
                                providers, in consultation with 
                                local labor organizations and 
                                social service providers that 
                                work with low-income families 
                                or individuals with 
                                disabilities.
                  (C) Requirements.--
                          (i) In general.--In awarding grants 
                        under this paragraph, the Secretaries 
                        shall--
                                  (I) consider the needs of 
                                rural areas and cities with 
                                large concentrations of 
                                residents with an income that 
                                is less than 150 percent of the 
                                poverty line; and
                                  (II) ensure that--
                                          (aa) all of the funds 
                                        made available under 
                                        this paragraph (other 
                                        than funds reserved for 
                                        use by the Secretaries 
                                        under subparagraph (J)) 
                                        shall be used for 
                                        activities described in 
                                        subparagraph (E);
                                          (bb) not less than 40 
                                        percent of the funds 
                                        made available under 
                                        this paragraph (other 
                                        than funds so reserved) 
                                        shall be used for 
                                        activities described in 
                                        subparagraph (E)(i); 
                                        and
                                          (cc) not less than 40 
                                        percent of the funds 
                                        made available under 
                                        this paragraph (other 
                                        than funds so reserved) 
                                        shall be used for the 
                                        activities described in 
                                        subparagraph (E)(ii).
                          (ii) Continuation of availability.--
                        If any portion of the funds required to 
                        be used for activities referred to in 
                        item (bb) or (cc) of clause (i)(II) are 
                        not awarded in a fiscal year, such 
                        portion shall continue to be available 
                        in the subsequent fiscal year for the 
                        same activity, in addition to other 
                        amounts that may be available for such 
                        activities for that subsequent fiscal 
                        year.
                  (D) Determination of grant amount.--
                          ``(i) In general.--Subject to clause 
                        (ii), in determining the amount of a 
                        grant to be awarded under this 
                        paragraph for a project proposed by an 
                        eligible applicant, the Secretaries 
                        shall provide the eligible applicant 
                        with an amount sufficient to ensure 
                        that the project has a reasonable 
                        opportunity to be successful, taking 
                        into account--
                                  (I) the number and 
                                characteristics of the 
                                individuals to be served by the 
                                project;
                                  (II) the level of 
                                unemployment in the area to be 
                                served by the project;
                                  (III) the job opportunities 
                                and job growth in such area;
                                  (IV) the poverty rate for 
                                such area; and
                                  (V) such other factors as the 
                                Secretary deems appropriate in 
                                such area.
                          (ii) Maximum award for grants to 
                        promote business linkages or provide 
                        transitional jobs programs.--
                                  (I) In general.--In the case 
                                of a grant to carry out 
                                activities described in clause 
                                (i) or (ii) of subparagraph 
                                (E), an eligible applicant 
                                awarded a grant under this 
                                paragraph may not receive more 
                                than $10,000,000 per fiscal 
                                year under the grant.
                                  (II) Rule of construction.--
                                Nothing in subclause (I) shall 
                                be construed as precluding an 
                                otherwise eligible applicant 
                                from receiving separate grants 
                                to carry out activities 
                                described in clause (i) or (ii) 
                                of subparagraph (E).
                          (iii) Grant period.--The period in 
                        which a grant awarded under this 
                        paragraph may be used shall be 
                        specified for a period of not less than 
                        36 months and not more than 60 months.
                  (E) Allowable activities.--An eligible 
                applicant awarded a grant under this paragraph 
                shall use funds provided under the grant to do 
                the following:
                          (i) Promote business linkages.--
                                  (I) In general.--To promote 
                                business linkages in which 
                                funds shall be used to fund new 
                                or expanded programs that are 
                                designed to--
                                          (aa) substantially 
                                        increase the wages of 
                                        eligible individuals 
                                        (as defined in 
                                        subparagraph (F)), 
                                        whether employed or 
                                        unemployed, who have 
                                        limited English 
                                        proficiency or other 
                                        barriers to employment 
                                        by creating or 
                                        upgrading job and 
                                        related skills in 
                                        partnership with 
                                        employers, especially 
                                        by providing supports 
                                        and services at or near 
                                        work sites; and
                                          (bb) identify and 
                                        strengthen career 
                                        pathways by expanding 
                                        and linking work and 
                                        training opportunities 
                                        for such individuals in 
                                        collaboration with 
                                        employers.
                                  (II) Consideration of in-
                                kind, in-cash resources.--In 
                                determining which programs to 
                                fund under this clause, an 
                                eligible applicant awarded a 
                                grant under this paragraph 
                                shall consider the ability of a 
                                consortium to provide funds in-
                                kind or in-cash (including 
                                employer-provided, paid release 
                                time) to help support the 
                                programs for which funding is 
                                sought.
                                  (III) Priority.--In 
                                determining which programs to 
                                fund under this clause, an 
                                eligible applicant awarded a 
                                grant under this paragraph 
                                shall give priority to programs 
                                that include education or 
                                training for which participants 
                                receive credit toward a 
                                recognized credential, such as 
                                an occupational certificate or 
                                license.
                                  (IV) Use of funds.--
                                          (aa) In general.--
                                        Funds provided to a 
                                        program under this 
                                        clause may be used for 
                                        a comprehensive set of 
                                        employment and training 
                                        benefits and services, 
                                        including job 
                                        development, job 
                                        matching, workplace 
                                        supports and 
                                        accommodations, 
                                        curricula development, 
                                        wage subsidies, 
                                        retention services, and 
                                        such other benefits or 
                                        services as the program 
                                        deems necessary to 
                                        achieve the overall 
                                        objectives of this 
                                        clause.
                                          (bb) Provision of 
                                        services.--So long as a 
                                        program is principally 
                                        designed to assist 
                                        eligible individuals, 
                                        (as defined in 
                                        subparagraph (F)), 
                                        funds may be provided 
                                        to a program under this 
                                        clause that also serves 
                                        low-earning employees 
                                        of 1 or more employers 
                                        even if such 
                                        individuals are not 
                                        within the definition 
                                        of eligible individual 
                                        (as so defined).
                          (ii) Provide for transitional jobs 
                        programs.--
                                  (I) In general.--To provide 
                                for wage-paying transitional 
                                jobs programs which combine 
                                time-limited employment in the 
                                public or nonprofit private 
                                sector that is subsidized with 
                                public funds with skill 
                                development and activities to 
                                remove barriers to employment, 
                                pursuant to an individualized 
                                plan (or, in the case of an 
                                eligible individual described 
                                in subparagraph (F)(i), an 
                                individual responsibility plan 
                                developed for an individual 
                                under section 408(b)). Such 
                                programs also shall provide job 
                                development and placement 
                                assistance to individual 
                                participants to help them move 
                                from subsidized employment in 
                                transitional jobs into 
                                unsubsidized employment, as 
                                well as retention services 
                                after the transition to 
                                unsubsidized employment.
                                  (II) Eligible participants.--
                                The Secretary shall ensure that 
                                individuals who participate in 
                                transitional jobs programs 
                                funded under a grant made under 
                                this paragraph shall be 
                                individuals who have been 
                                unemployed because of limited 
                                skills, experience, or other 
                                barriers to employment, and who 
                                are eligible individuals (as 
                                defined in subparagraph (F)), 
                                provided that so long as a 
                                program is designed to, and 
                                principally serves, eligible 
                                individuals (as so defined), a 
                                limited number of individuals 
                                who are unemployed because of 
                                limited skills, experience, or 
                                other barriers to employment, 
                                and who have an income below 
                                100 percent of the Federal 
                                poverty line but who do not 
                                satisfy the definition of 
                                eligible individual (as so 
                                defined) may be served in the 
                                program to the extent the 
                                Secretaries determine that the 
                                inclusion of such individuals 
                                in the program is appropriate.
                                  (III) Use of funds.--Funds 
                                provided to a program under 
                                this clause may only be used in 
                                accordance with the following:
                                          (aa) To create 
                                        subsidized transitional 
                                        jobs in which work 
                                        shall be performed 
                                        directly for the 
                                        program operator or at 
                                        other public and non 
                                        profit organizations 
                                        (in this subclause 
                                        referred to as 
                                        ``worksite employers'') 
                                        in the community, and 
                                        in which 100 percent of 
                                        the wages shall be 
                                        subsidized, except as 
                                        described in item (gg) 
                                        regarding placements in 
                                        the private, for profit 
                                        sector.
                                          (bb) Participants 
                                        shall be paid at the 
                                        rate paid to 
                                        unsubsidized employees 
                                        of the worksite 
                                        employer who perform 
                                        comparable work at the 
                                        worksite where the 
                                        individual is placed. 
                                        If no other employees 
                                        perform the same or 
                                        comparable work then 
                                        wages shall be set, at 
                                        a minimum, at 50 
                                        percent of the Lower 
                                        Living Standard Income 
                                        Level (commonly 
                                        referred to as the 
                                        ``LLSIL''), as 
                                        determined under 
                                        section 101(24) of the 
                                        Workforce Investment 
                                        Act of 1998 (29 U.S.C. 
                                        2801(24)), for a family 
                                        of 3 based on 35 hours 
                                        per week.
                                          (cc) Transitional 
                                        jobs shall be limited 
                                        to not less than 6 
                                        months and not more 
                                        than 24 months, 
                                        however, nothing shall 
                                        preclude a participant 
                                        from moving into 
                                        unsubsidized employment 
                                        at a point prior to the 
                                        maximum duration of the 
                                        transitional job 
                                        placement. Participants 
                                        shall be paid wages 
                                        based on a workweek of 
                                        not less than 30 hours 
                                        per week or more than 
                                        40 hours per week, 
                                        except that a parent of 
                                        a child under the age 
                                        of 6, a child who is 
                                        disabled, or a child 
                                        with other special 
                                        needs, or an individual 
                                        who for other reasons 
                                        cannot successfully 
                                        participate for 30 to 
                                        40 hours per week, may 
                                        be allowed to 
                                        participate for more 
                                        limited hours, but not 
                                        less than 20 hours per 
                                        week. In any work week, 
                                        50 percent to 80 
                                        percent of hours shall 
                                        be spent in the 
                                        transitional job and 20 
                                        percent to 50 percent 
                                        of hours shall be spent 
                                        in education or 
                                        training, or other 
                                        services designed to 
                                        reduce or eliminate any 
                                        barriers.
                                          (dd) Program 
                                        operators shall provide 
                                        case management 
                                        services and ensure 
                                        access to appropriate 
                                        education, training, 
                                        and other services, 
                                        including job 
                                        accommodation, work 
                                        supports, and supported 
                                        employment, as 
                                        appropriate and 
                                        consistent with an 
                                        individual plan that is 
                                        based on the 
                                        individual's strengths, 
                                        resources, priorities, 
                                        concerns, abilities, 
                                        capabilities, career 
                                        interests, and informed 
                                        choice and that is 
                                        developed with each 
                                        participant. The goal 
                                        of each participant's 
                                        plan shall focus on 
                                        preparation for 
                                        unsubsidized jobs in 
                                        demand in the local 
                                        economy which offer the 
                                        potential for 
                                        advancement and growth. 
                                        Services shall also 
                                        include job placement 
                                        assistance and 
                                        retention services, 
                                        which may include 
                                        coaching and work place 
                                        supports, for 12 months 
                                        after entry into 
                                        unsubsidized placement. 
                                        Participants shall also 
                                        receive support 
                                        services such as 
                                        subsidized child care 
                                        and transportation, on 
                                        the same basis as those 
                                        services are made 
                                        available to recipients 
                                        of assistance under the 
                                        State program funded 
                                        under this part who are 
                                        engaged in work-related 
                                        activities.
                                          (ee) Providers shall 
                                        work with individual 
                                        recipients to determine 
                                        eligibility for other 
                                        employment-related 
                                        supports which may 
                                        include (but are not 
                                        limited to) supported 
                                        employment, other 
                                        vocational 
                                        rehabilitation 
                                        services, and programs 
                                        or services available 
                                        under the Workforce 
                                        Investment Act of 1998 
                                        (29 U.S.C. 2801 et 
                                        seq.), or the ticket to 
                                        work and self-
                                        sufficiency program 
                                        established under 
                                        section 1148, and, to 
                                        the extent possible, 
                                        shall provide 
                                        transitional employment 
                                        in collaboration with 
                                        entities providing, or 
                                        arranging for the 
                                        provision of, such 
                                        other supports.
                                          (ff) Not more than 20 
                                        percent of the 
                                        placements for a 
                                        grantee shall be with a 
                                        private for-profit 
                                        company, except that 
                                        such 20 percent limit 
                                        may be waived by the 
                                        Secretary for programs 
                                        in rural areas when the 
                                        grantee can demonstrate 
                                        insufficient public and 
                                        non-profit worksites. 
                                        When a placement is 
                                        made at a private for-
                                        profit company, the 
                                        company shall pay 50 
                                        percent of program 
                                        costs (including wages) 
                                        for each participant, 
                                        and the company shall 
                                        agree, in writing, to 
                                        hire each participant 
                                        into an unsubsidized 
                                        position at the 
                                        completion of the 
                                        agreed upon subsidized 
                                        placement, or sooner, 
                                        provided that the 
                                        participant's job 
                                        performance has been 
                                        satisfactory. Not more 
                                        than 5 percent of the 
                                        workforce of a private 
                                        for-profit company may 
                                        be composed of 
                                        transitional jobs 
                                        participants.
                                  (IV) Definition of 
                                transitional jobs program.--In 
                                this clause, the term 
                                ``transitional jobs program'' 
                                means a program that is 
                                intended to serve current and 
                                former recipients of assistance 
                                under a State or tribal program 
                                funded under this part and 
                                other low-income individuals 
                                who have been unable to secure 
                                employment through job search 
                                or other employment-related 
                                services because of limited 
                                skills, experience, or other 
                                barriers to employment.
                          (iii) Capitalization.--To develop 
                        capitalization procedures for the 
                        delivery of self-sustainable social 
                        services.
                          (iv) Administrative expenditures.--
                        Not more than 5 percent of the funds 
                        awarded to an eligible applicant under 
                        this paragraph may be used for 
                        administrative expenditures incurred in 
                        carrying out the activities described 
                        in clause (i), (ii), or (iii) or for 
                        expenditures related to carrying out 
                        the assessments and reports required 
                        under subparagraph (H).
                  (F) Definition of eligible individual.--In 
                this paragraph, the term ``eligible 
                individual'' means--
                          (i) an individual who is a parent who 
                        is a recipient of assistance under a 
                        State or tribal program funded under 
                        this part;
                          (ii) an individual who is a parent 
                        who has ceased to receive assistance 
                        under such a State or tribal program;
                          (iii) an individual who is at risk of 
                        receiving assistance under a State or 
                        tribal program funded under this part;
                          (iv) an individual with a disability; 
                        or
                          (v) a noncustodial parent who is 
                        unemployed, or is having difficulty in 
                        paying child support obligations, 
                        including such a parent who is a former 
                        criminal offender.
                  (G) Application.--Each eligible applicant 
                desiring a grant under this paragraph shall 
                submit an application to the Secretaries at 
                such time, in such manner, and accompanied by 
                such information as the Secretaries may 
                require.
                  (H) Assessments and reports by grantees.--
                          (i) In general.--An eligible 
                        applicant that receives a grant under 
                        this paragraph shall assess and report 
                        on the outcomes of programs funded 
                        under the grant, including the identity 
                        of each program operator, demographic 
                        information about each participant, 
                        including education level, literacy 
                        level, prior work experience and 
                        identified barriers to employment, the 
                        nature of education, training, or other 
                        services received by the participant, 
                        the reason for the participant's 
                        leaving the program, and outcomes 
                        related to the placement of the 
                        participant in an unsubsidized job, 
                        including 1-year employment retention, 
                        wage at placement, benefits, and 
                        earnings progression, as specified by 
                        the Secretaries.
                          (ii) Assistance.--The Secretaries 
                        shall--
                                  (I) assist grantees in 
                                conducting the assessment 
                                required under clause (i) by 
                                making available where 
                                practicable low-cost means of 
                                tracking the labor market 
                                outcomes of participants; and
                                  (II) encourage States to 
                                provide such assistance.
                  (I) Application to requirements of the state 
                program.--
                          (i) Work participation 
                        requirements.--With respect to any 
                        month in which a recipient of 
                        assistance under a State or tribal 
                        program funded under this part who 
                        satisfactorily participates in a 
                        business linkage or transitional jobs 
                        program described in subparagraph (E) 
                        that is paid for with funds made 
                        available under a grant made under this 
                        paragraph, such participation shall be 
                        considered to satisfy the work 
                        participation requirements of section 
                        407 and be included for purposes of 
                        determining monthly participation rates 
                        under subsection (b)(1)(B)(i) of that 
                        section.
                          (ii) Participation not considered 
                        assistance.--A benefit or service 
                        provided with funds made available 
                        under a grant made under this paragraph 
                        shall not be considered assistance for 
                        any purpose under a State or tribal 
                        program funded under this part.
                  (J) Assessments by the secretaries.--
                          (i) Reservation of funds.--Of the 
                        amount appropriated under subparagraph 
                        (L) for each of fiscal years 2003 and 
                        2004, $3,000,000 of such amount for 
                        each such fiscal year is reserved for 
                        use by the Secretaries to prepare an 
                        interim and final report summarizing 
                        and synthesizing outcomes and lessons 
                        learned from the programs funded 
                        through grants awarded under this 
                        paragraph.
                          (ii) Interim and final assessments.--
                        With respect to the reports prepared 
                        under clause (i), the Secretaries shall 
                        submit--
                                  (I) the interim report not 
                                later than 4 years after the 
                                date of enactment of the Work, 
                                Opportunity, and Responsibility 
                                for Kids Act of 2002; and
                                  (II) the final report not 
                                later than 6 years after such 
                                date of enactment.
                  (K) Evaluations.--
                          (i) Reservation of funds.--Of the 
                        amount appropriated under subparagraph 
                        (L) for a fiscal year, an amount equal 
                        to 1.5 percent of such amount for each 
                        such fiscal year shall be reserved for 
                        use by the Secretaries to conduct 
                        evaluations in accordance with the 
                        requirements of clause (ii).
                          (ii) Requirements.--The Secretaries--
                                  (I) shall develop a plan to 
                                evaluate the extent to which 
                                programs funded under grants 
                                made under this paragraph have 
                                been effective in promoting 
                                sustained, unsubsidized 
                                employment for each group of 
                                eligible participants, and in 
                                improving the skills and wages 
                                of participants in comparison 
                                to the participants' skills and 
                                wages prior to participation in 
                                the programs;
                                  (II) may evaluate the use of 
                                such a grant by a grantee, as 
                                the Secretaries deem 
                                appropriate, in accordance with 
                                an agreement entered into with 
                                the grantee after good-faith 
                                negotiations; and
                                  (III) shall include, as 
                                appropriate, the following 
                                outcome measures in the 
                                evaluation plan developed under 
                                subclause (I):
                                          (aa) Placements in 
                                        unsubsidized 
                                        employment.
                                          (bb) Retention in 
                                        unsubsidized employment 
                                        6 months and 12 months 
                                        after initial 
                                        placement.
                                          (cc) Earnings of 
                                        individuals at the time 
                                        of placement in 
                                        unsubsidized 
                                        employment.
                                          (dd) Earnings of 
                                        individuals 12 months 
                                        after placement in 
                                        unsubsidized 
                                        employment.
                                          (ee) The extent to 
                                        which unsubsidized job 
                                        placements include 
                                        access to affordable 
                                        employer-sponsored 
                                        health insurance and 
                                        paid leave benefits.
                                          (ff) Comparison of 
                                        pre- and post-program 
                                        wage rates of 
                                        participants.
                                          (gg) Comparison of 
                                        pre- and post-program 
                                        skill levels of 
                                        participants.
                                          (hh) Wage growth and 
                                        employment retention in 
                                        relation to occupations 
                                        and industries at 
                                        initial placement in 
                                        unsubsidized employment 
                                        and over the first 12 
                                        months after initial 
                                        placement.
                                          (ii) Recipient of 
                                        cash assistance under 
                                        the State program 
                                        funded under this part.
                                          (jj) Average 
                                        expenditures per 
                                        participant.
                          (iii) Reports to congress.--The 
                        Secretaries shall submit to Congress 
                        the following reports on the 
                        evaluations of programs funded under 
                        grants made under this paragraph:
                                  (I) Interim report.--An 
                                interim report not later than 4 
                                years after the date of 
                                enactment of the Work, 
                                Opportunity, and Responsibility 
                                for Kids Act of 2002.
                                  (II) Final report.--A final 
                                report not later than 6 years 
                                after such date of enactment.
                  (L) Appropriation.--
                          (i) In general.--Out of any money in 
                        the Treasury of the United States not 
                        otherwise appropriated, there is 
                        appropriated for grants under this 
                        section, $200,000,000 for each of 
                        fiscal years 2003 through 2007.
                          (ii) Availability.--Amounts 
                        appropriated under clause (i) for a 
                        fiscal year shall remain available for 
                        obligation for 5 fiscal years after the 
                        fiscal year in which the amount is 
                        appropriated.

           *       *       *       *       *       *       *

          (6) Grants to assist with implementation of universal 
        engagement requirements.--
                  (A) In general.--Each eligible State shall be 
                entitled to receive from the Secretary, for 
                each of fiscal years 2003 through 2006, a grant 
                under this paragraph to carry out any or all of 
                the following activities:
                          (i) To provide training for 
                        supervisory and non-supervisory staff 
                        of the State or local agency with 
                        responsibility for the administration 
                        of the State program funded under this 
                        part, including (but not limited to) 
                        training that is designed to improve 
                        the ability of such staff to identify 
                        barriers to employment and indicators 
                        of child well-being, and to improve the 
                        understanding of such staff of program 
                        requirements and services funded under 
                        this part and of nondiscrimination and 
                        employment laws for families receiving 
                        assistance under the State program.
                          (ii) To improve the communication of 
                        information concerning program 
                        requirements to recipients of, and 
                        applicants for, assistance, including 
                        services related to communicating such 
                        information to families with a primary 
                        language other than English.
                          (iii) To improve the quality of the 
                        agency workforce.
                          (iv) To improve the coordination of 
                        support programs for low-income 
                        families.
                          (v) To conduct outreach to promote 
                        the enrollment of eligible families in 
                        such programs.
                          (vi) To establish advisory review 
                        panels to advise States with respect to 
                        improving the State's policies and 
                        procedures for assisting individuals 
                        under the State program funded under 
                        this part who have barriers to work in 
                        accordance with the requirements of 
                        subparagraph (C).
                  (B) Amount of grant.--Of the amount 
                appropriated under subparagraph (E) for a 
                fiscal year, the Secretary shall pay each State 
                an amount equal to the same proportion of such 
                amount as the proportion of the number of 
                families receiving assistance under the State 
                program funded under this part to all such 
                families for all States.
                  (C) Requirements for advisory review 
                panels.--A State that uses funds provided under 
                a grant made under this paragraph to establish 
                an advisory review panel shall establish such 
                panels consistent with the following:
                          (i) Membership.--
                                  (I) In general.--The advisory 
                                review panel shall consist of 
                                the following:
                                          (aa) At least 1 
                                        member shall be a 
                                        representative of the 
                                        State or local agency 
                                        responsible for 
                                        administering the State 
                                        program funded under 
                                        this part.
                                          (bb) At least 1 
                                        member shall be an 
                                        employer.
                                          (cc) At least 1 
                                        member shall be a 
                                        representative of other 
                                        State or local agencies 
                                        with expertise in 
                                        providing services to 
                                        individuals with 
                                        disabilities or other 
                                        barriers to work, such 
                                        as vocational 
                                        rehabilitation 
                                        agencies, the State 
                                        workforce investment 
                                        board established under 
                                        section 111 of the 
                                        Workforce Investment 
                                        Act of 1998 (29 U.S.C. 
                                        2821), or mental health 
                                        agencies.
                                          (dd) At least 1 
                                        member shall be a 
                                        parent with a barrier 
                                        to work who is 
                                        receiving, or who has 
                                        ceased receiving, cash 
                                        assistance or support 
                                        services under the 
                                        State program funded 
                                        under this part.
                                          (ee) At least 1 
                                        member shall be an 
                                        individual or 
                                        representative of an 
                                        entity with expertise 
                                        in designing and 
                                        implementing policies 
                                        and programs to 
                                        successfully serve 
                                        individuals with 
                                        barriers to work.
                                          (ff) At least 1 
                                        member shall be a 
                                        representative of an 
                                        organization that 
                                        represent recipients of 
                                        assistance under the 
                                        State program funded 
                                        under this part or 
                                        individuals with 
                                        barriers to employment.
                                          (gg) At least 1 
                                        member shall be a 
                                        representative of non-
                                        supervisory employees 
                                        of the State or local 
                                        agency with 
                                        responsibility for the 
                                        administration of the 
                                        State program funded 
                                        under this part.
                                  (II) Chair.--
                                          (aa) In general.--
                                        Subject to item (bb), 
                                        the chair of the 
                                        advisory review panel 
                                        shall be appointed by 
                                        the chief executive 
                                        officer of the State.
                                          (bb) Limitation.--The 
                                        chair shall not be a 
                                        State employee.
                                  (III) Coordination with 
                                existing panels.--A State shall 
                                coordinate the establishment of 
                                an advisory review panel with 
                                other advisory panels 
                                established as of October 1, 
                                2002, that serve recipients of 
                                assistance under the State 
                                program funded under this part.
                          (ii) Duties and use of funds.--
                                  (I) In general.--In seeking 
                                to improve a State's policies 
                                and procedures for assisting 
                                individuals with barriers to 
                                work, an advisory review panel 
                                established with funds paid 
                                under a grant made under this 
                                paragraph may hold meetings, 
                                hire support staff, and enter 
                                into contracts for independent 
                                evaluations.
                                  (II) Site visits; public 
                                hearings.--To the extent it 
                                determines appropriate, an 
                                advisory review panel 
                                established under this 
                                paragraph may--
                                          (aa) conduct site 
                                        visits to State or 
                                        local agencies 
                                        responsible for 
                                        administering the State 
                                        program funded under 
                                        this part; and
                                          (bb) hold public 
                                        hearings.
                                  (III) Expenses.--At the 
                                option of the State, an 
                                advisory review panel 
                                established under this 
                                paragraph may reimburse a panel 
                                member who is a recipient, or a 
                                former recipient, of assistance 
                                under the State program funded 
                                under this part for reasonable 
                                travel expenses associated with 
                                the member's participation on 
                                the panel.
                                  (IV) Rule of construction.--
                                          (aa) In general.--
                                        Nothing in this 
                                        paragraph shall be 
                                        construed as 
                                        authorizing an advisory 
                                        review panel 
                                        established under this 
                                        paragraph to resolve 
                                        complaints filed by 
                                        individuals or entities 
                                        related to possible 
                                        violations of laws 
                                        protecting civil 
                                        rights, to review 
                                        specific individual's 
                                        claims against the 
                                        State agency 
                                        responsible for 
                                        administering the State 
                                        program funded under 
                                        this part, or to become 
                                        involved in advising 
                                        the State as to the 
                                        specific provisions 
                                        that should be included 
                                        in a specific 
                                        individual's individual 
                                        responsibility plan 
                                        under section 408(b).
                                          (bb) Recipient 
                                        participation.--Nothing 
                                        in item (aa) shall 
                                        prevent an individual 
                                        who is a recipient, or 
                                        a former recipient of 
                                        assistance under the 
                                        State program funded 
                                        under this part from 
                                        providing the advisory 
                                        review panel with 
                                        information that could 
                                        help inform the panel's 
                                        deliberations regarding 
                                        improvements that may 
                                        be needed in the 
                                        State's policies and 
                                        procedures to better 
                                        meet the needs of 
                                        individuals and 
                                        families with barriers 
                                        to employment.
                          (iii) Reports.--An advisory review 
                        panel established under this paragraph 
                        shall submit to the Secretary at least 
                        1 report that identifies areas in the 
                        State where improvement is needed with 
                        respect to the State's policies and 
                        procedures for assisting individuals 
                        under the State program funded under 
                        this part who have barriers to work.
                  (D) Inapplicability of section 404.--A grant 
                made under this paragraph shall not be 
                considered a grant made under this section for 
                purposes of section 404.
                  (E) Appropriations.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there is appropriated to carry 
                out this paragraph, $120,000,000 for the period 
                of fiscal years 2003 through 2006.
          (7) Grants to promote second chance homes.--
                  (A) Authority to award grants.--
                          (i) In general.--The Secretary may 
                        award grants to eligible entities to 
                        enable such eligible entities to carry 
                        out the activities described in 
                        subparagraph (D).
                          (ii) Process.--The Secretary shall 
                        award grants under this paragraph on a 
                        competitive basis, after reviewing all 
                        applications submitted under 
                        subparagraph (C).
                  (B) Eligible entities.--
                          (i) In general.--To be eligible to 
                        receive a grant under this paragraph, 
                        an entity shall be--
                                  (I) a State;
                                  (II) a unit of local 
                                government;
                                  (III) an Indian tribe; or
                                  (IV) a public or private 
                                nonprofit agency, organization, 
                                or institution, or other 
                                nonprofit entity, including a 
                                nonprofit urban Indian 
                                organization or an Indian group 
                                or community that is not an 
                                Indian tribe.
                          (ii) Definition of state.--In this 
                        paragraph, the term ``State'' means 
                        each of the 50 States, the District of 
                        Columbia, the Commonwealth of Puerto 
                        Rico, Guam, American Samoa, the United 
                        States Virgin Islands, and the 
                        Commonwealth of the Northern Mariana 
                        Islands.
                  (C) Application.--
                          (i) In general.--An eligible entity 
                        that desires a grant under this 
                        paragraph shall submit an application 
                        to the Secretary at such time, in such 
                        manner, and containing such information 
                        as the Secretary shall reasonably 
                        require.
                          (ii) Priority.--In awarding grants 
                        under this paragraph, the Secretary 
                        shall give priority to an eligible 
                        entity that submits an application--
                                  (I) proposing to establish a 
                                new second chance home, 
                                especially in a rural area or 
                                tribal community;
                                  (II) proposing to collaborate 
                                with a nonprofit entity in 
                                establishing, expanding, or 
                                enhancing a second chance home; 
                                or
                                  (III) demonstrating that the 
                                eligible entity will use funds 
                                provided under a grant made 
                                under this section (other than 
                                under this paragraph) to 
                                support a portion of the 
                                operating costs of the 
                                applicable second chance home.
                  (D) Use of funds.--
                          (i) In general.--An eligible entity 
                        that receives a grant under this 
                        paragraph shall use such grant funds to 
                        establish, expand, or enhance a second 
                        chance home.
                          (ii) Definition of second chance 
                        home.--In this paragraph, the term 
                        ``second chance home'' means a 
                        community-based, adult-supervised group 
                        home that provides young mothers and 
                        their children with a supportive and 
                        supervised living arrangement in which 
                        such mothers are required to learn 
                        parenting skills, including child 
                        development, family budgeting, health 
                        and nutrition, and other skills to 
                        promote their long-term economic 
                        independence and the well-being of 
                        their children.
                          (iii) Requirement.--A second chance 
                        home that receives grant funds under 
                        this paragraph shall provide services 
                        to mothers who are not more than 23 
                        years of age and their children.
                  (E) Matching funds.--The Secretary shall not 
                award a grant to an eligible entity under this 
                paragraph unless the eligible entity agrees 
                that, with respect to the costs to be incurred 
                in carrying out the activities for which the 
                grant was awarded, the eligible entity will 
                make available non-Federal contributions in an 
                amount equal to not less than 20 percent of the 
                Federal funds provided under the grant. Such 
                contributions may be provided in cash or in 
                kind, fairly valued, including plant, 
                equipment, or services.
                  (F) Duration.--A grant shall be awarded under 
                this paragraph for a period of 5 years.
                  (G) Contract for evaluation.--
                          (i) In general.--The Secretary shall 
                        enter into a contract with a public or 
                        private entity for the evaluation of 
                        the second chance homes that are 
                        supported by grants awarded under this 
                        paragraph.
                          (ii) Information.--The evaluation 
                        shall include the collection of 
                        information about the relevant 
                        characteristics of individuals who 
                        benefit from second chance homes such 
                        as those that are supported by grant 
                        funds under this paragraph and what 
                        services provided by such second chance 
                        homes are most beneficial to such 
                        individuals.
                          (iii) Report.--
                                  (I) In general.--The entity 
                                conducting the evaluation under 
                                this subparagraph shall submit 
                                to Congress an interim report 
                                and a final report in 
                                accordance with subclause (II) 
                                containing the results of the 
                                evaluation.
                                  (II) Date.--
                                          (aa) Interim 
                                        report.--The interim 
                                        report shall be 
                                        submitted not later 
                                        than 2 years after the 
                                        date on which the 
                                        entity enters into a 
                                        contract.
                                          (bb) Final report.--
                                        The final report shall 
                                        be submitted not later 
                                        than 5 years after the 
                                        date on which the 
                                        entity enters into a 
                                        contract.
                          (iv) Reservation of funds.--From 
                        amounts appropriated in accordance with 
                        subparagraph (I) for fiscal year 2004, 
                        the Secretary shall reserve $1,000,000 
                        to carry out the evaluation required 
                        under this subparagraph.
                  (H) Technical assistance.--
                          (i) In general.--From amounts 
                        appropriated under subparagraph (I)(i), 
                        the Secretary may use an amount not to 
                        exceed $500,000 to enter into a 
                        contract, with a public or private 
                        entity, for the provision of technical 
                        assistance to eligible entities 
                        receiving grant funds under this 
                        paragraph.
                          (ii) Conferences.--The technical 
                        assistance provided under this 
                        subparagraph may include conferences 
                        for the purpose of disseminating 
                        information concerning best practices 
                        for second chance homes.
                  (I) Authorization of appropriations.--
                          (i) In general.--There is authorized 
                        to be appropriated to carry out this 
                        paragraph, $33,000,000 for each of 
                        fiscal years 2004 through 2007.
                          (ii) Availability.--Any amounts 
                        appropriated under the authority of 
                        clause (i) shall remain available until 
                        expended.
          (8) Grant to improve access to transportation.--
                  (A) Purposes.--The purposes of this paragraph 
                are to--
                          (i) assist low-income families with 
                        children obtain dependable, affordable 
                        automobiles to improve their employment 
                        opportunities and access to training; 
                        and
                          (ii) provide incentives to States, 
                        Indian tribes, local governments, and 
                        nonprofit entities to develop and 
                        administer programs that provide 
                        assistance with automobile ownership 
                        for low-income families.
                  (B) Definitions.--In this paragraph:
                          (i) Locality.--The term ``locality'' 
                        means a municipality that does not 
                        administer a State program funded under 
                        this part.
                          (ii) Low-income family with 
                        children.--The term ``low-income family 
                        with children'' means a household that 
                        is eligible for benefits or services 
                        funded under the State program funded 
                        under this part or under a program 
                        funded with qualified State 
                        expenditures (as defined in section 
                        409(a)(7)(B)(i)).
                          (iii) Nonprofit entity.--The term 
                        ``nonprofit entity'' means a school, 
                        local agency, organization, or 
                        institution owned and operated by 1 or 
                        more nonprofit corporations or 
                        associations, no part of the net 
                        earnings of which inures, or may 
                        lawfully inure, to the benefit of any 
                        private shareholder or individual.
                  (C) Authority to award grants.--The Secretary 
                may award grants to States, Indian tribes, 
                counties, localities, and nonprofit entities to 
                promote improving access to dependable, 
                affordable automobiles by low-income families 
                with children.
                  (D) Grant approval criteria.--The Secretary 
                shall establish criteria for approval of an 
                application for a grant under this paragraph 
                that include consideration of--
                          (i) the extent to which the proposal, 
                        if funded, is likely to improve access 
                        to training and employment 
                        opportunities and child care services 
                        by low-income families with children by 
                        means of car ownership;
                          (ii) the level of innovation in the 
                        applicant's grant proposal; and
                          (iii) any partnerships between the 
                        public and private sector in the 
                        applicant's grant proposal.
                  (E) Use of funds.--
                          (i) In general.--A grant awarded 
                        under this paragraph shall be used to 
                        administer programs that assist low-
                        income families with children with 
                        dependable automobile ownership, and 
                        maintenance of, or insurance for, the 
                        purchased automobile.
                          (ii) Supplement not supplant.--Funds 
                        provided to a State, Indian tribe, 
                        county, or locality under a grant 
                        awarded under this paragraph shall be 
                        used to supplement and not supplant 
                        other State, county, or local public 
                        funds expended for car ownership 
                        programs.
                  (F) Application.--Each applicant desiring a 
                grant under this paragraph shall submit an 
                application to the Secretary at such time, in 
                such manner, and accompanied by such 
                information as the Secretary may reasonably 
                require.
                  (G) Reversion of funds.--Any funds not 
                expended by a grantee within 3 years after the 
                date the grant is awarded under this paragraph 
                shall be available for redistribution among 
                other grantees in such manner and amount as the 
                Secretary may determine, unless the Secretary 
                extends by regulation the time period to expend 
                such funds.
                  (H) Limitation on administrative costs of the 
                secretary.--Not more than an amount equal to 5 
                percent of the funds appropriated to make 
                grants under this paragraph for a fiscal year 
                shall be expended for administrative costs of 
                the Secretary in carrying out this paragraph.
                  (I) Evaluation.--The Secretary shall, by 
                grant, contract, or interagency agreement, 
                conduct an evaluation of the programs 
                administered with grants awarded under this 
                paragraph.
                  (J) Authorization of appropriations.--There 
                is authorized to be appropriated to the 
                Secretary to make grants under this paragraph, 
                $15,000,000 for each of fiscal years 2003 
                through 2007.
    (b) Contingency Fund.--
          [(1) Establishment.--There is hereby established in 
        the Treasury of the United States a fund which shall be 
        known as the ``Contingency Fund for State Welfare 
        Programs'' (in this section referred to as the 
        ``Fund'').
          [(2) Deposits into fund.--Out of any money in the 
        Treasury of the United States not otherwise 
        appropriated, there are appropriated for fiscal years 
        1997, 1998, 1999, 2000, and 2001 such sums as are 
        necessary for payment to the Fund in a total amount not 
        to exceed $2,000,000,000, reduced by the sum of the 
        dollar amounts specified in paragraph (6)(C)(ii). 
        (6)(C)(ii)'', effective November 19, 1997.
          [(3) Grants.--
                  [(A) Provisional payments.--If an eligible 
                State submits to the Secretary a request for 
                funds under this paragraph during an eligible 
                month, the Secretary shall, subject to this 
                paragraph, pay to the State, from amounts 
                appropriated pursuant to paragraph (2), an 
                amount equal to the amount of funds so 
                requested.
                  [(B) Payment priority.--The Secretary shall 
                make payments under subparagraph (A) in the 
                order in which the Secretary receives requests 
                for such payments.
                  [(C) Limitations.--
                          [(i) Monthly payment to a state.--The 
                        total amount paid to a single State 
                        under subparagraph (A) during a month 
                        shall not exceed \1/12\ of 20 percent 
                        of the State family assistance grant.
                          [(ii) Payments to all states.--The 
                        total amount paid to all States under 
                        subparagraph (A) during fiscal years 
                        1997 through 2001 shall not exceed the 
                        total amount appropriated pursuant to 
                        paragraph (2).]
          (1) Contingency fund grants.--
                  (A) Payments.--Subject to subparagraphs (C) 
                and (D), and out of funds appropriated under 
                subparagraph (E), each State shall receive a 
                contingency fund grant for each eligible month 
                in which the State is a needy State under 
                paragraph (3).
                  (B) Monthly contingency fund grant amount.--
                For each eligible month in which a State is a 
                needy State, the State shall receive a 
                contingency fund grant equal to the higher of 
                $0 and the applicable percentage (as defined in 
                subparagraph (E)(i)) of the product of--
                          (i) the applicable benefit level (as 
                        defined in subparagraph (E)(ii)); and
                          (ii) the adjusted increase in the 
                        number of families receiving assistance 
                        under the State program funded under 
                        this part and all programs funded with 
                        qualified State expenditures (as 
                        defined in subparagraph (E)(iii)).
                  (C) Limitation.--The total amount paid to a 
                single State under subparagraph (A) during a 
                fiscal year shall not exceed the amount equal 
                to 10 percent of the State family assistance 
                grant (as defined under subparagraph (B) of 
                subsection (a)(1) and increased under 
                subparagraph (E) of that subsection).
                  (D) Payments to indian tribes.--
                          (i) In general.--Of the total amount 
                        appropriated pursuant to subparagraph 
                        (F), $25,000,000 of such amount shall 
                        be reserved for making payments to 
                        Indian tribes with approved tribal 
                        family assistance plans that are 
                        operating in situations of increased 
                        economic hardship.
                          (ii) Determination of criteria for 
                        tribal access.--
                                  (I) In general.--Subject to 
                                subclause (II), the Secretary, 
                                in consultation with Indian 
                                tribes with approved tribal 
                                family assistance plans, shall 
                                determine the criteria for 
                                access by Indian tribes to the 
                                amount reserved under clause 
                                (i).
                                  (II) Inclusion of certain 
                                factors.--Such criteria shall 
                                include factors related to 
                                increases in unemployment and 
                                loss of employers.
                          (iii) Application of requirements for 
                        payments to states.--The Secretary, in 
                        consultation with Indian tribes with 
                        approved tribal family assistance plans 
                        located throughout the United States, 
                        shall determine the extent to which 
                        requirements of States for payments 
                        from the contingency fund established 
                        under this subsection shall apply to 
                        Indian tribes receiving payments under 
                        this subparagraph.
                  (E) Definitions.--In this paragraph:
                          (i) Applicable percentage.--The term 
                        ``applicable percentage'' means the 
                        higher of--
                                  (I) 60 percent; and
                                  (II) the Federal medical 
                                assistance percentage for the 
                                State (as defined in section 
                                1905(b)).
                          (ii) Applicable benefit level.--
                                  (I) In general.--Subject to 
                                subclause (II), the term 
                                ``applicable benefit level'' 
                                means the amount equal to the 
                                maximum cash assistance grant 
                                for a family consisting of 3 
                                individuals under the State 
                                program funded under this part.
                                  (II) Rule for states with 
                                more than 1 maximum level.--In 
                                the case of a State that has 
                                more than 1 maximum cash 
                                assistance grant level for 
                                families consisting of 3 
                                individuals, the basic 
                                assistance cost shall be the 
                                amount equal to the maximum 
                                cash assistance grant level 
                                applicable to the largest 
                                number of families consisting 
                                of 3 individuals receiving 
                                assistance under the State 
                                program funded under this part 
                                and all programs funded with 
                                qualified State expenditures 
                                (as defined in section 
                                409(a)(7)(B)(i)).
                          (iii) Adjusted increase in the number 
                        of families receiving assistance under 
                        the state program funded under this 
                        part and all programs funded with 
                        qualified state expenditures.--The term 
                        ``adjusted increase in the number of 
                        families receiving assistance under the 
                        State program funded under this part 
                        and all programs funded with qualified 
                        State expenditures'' means the increase 
                        in--
                                  (I) the unduplicated number 
                                of families receiving 
                                assistance under the State 
                                program funded under this part 
                                and all programs funded with 
                                qualified State expenditures 
                                (as defined in section 
                                409(a)(7)(B)(i)) in the most 
                                recent month for which data 
                                from the State are available; 
                                as compared to
                                  (II) the product of--
                                          (aa) the lower of the 
                                        average monthly number 
                                        of families receiving 
                                        such assistance in 
                                        either of the 2 
                                        completed fiscal years 
                                        immediately preceding 
                                        the fiscal year in 
                                        which the State 
                                        initially qualifies as 
                                        a needy State; and
                                          (bb) 1.04.
                  (F) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there is appropriated for the 
                period of fiscal years 2003 through 2007, such 
                sums as are necessary for making contingency 
                fund grants under this subsection in a total 
                amount not to exceed $2,000,000,000.
          [4] (2) Eligible month.--As used in paragraph 
        [(3)(A)](1), the term ``eligible month'' means, with 
        respect to a State, a month in the [2-month period that 
        begins with any] fiscal year quarter that includes a 
        month for which the State is a needy State.
          (3) Initial determination of whether a state 
        qualifies as a needy state.--
                  (A) In general.--For purposes of paragraph 
                (1), a State will be initially determined to be 
                a needy State for a month if the State 
                satisfies any of the following:
                          (i) The--
                                  (I) average rate of total 
                                unemployment in the State for 
                                the period consisting of the 
                                most recent 3 months for which 
                                data are available has 
                                increased by the lesser of 1.5 
                                percentage points or by 50 
                                percent over the corresponding 
                                3-month period in either of the 
                                2 most recent preceding fiscal 
                                years; or
                                  (II) average insured 
                                unemployment rate for the most 
                                recent 3 months for which data 
                                are available has increased by 
                                1 percentage point over the 
                                corresponding 3-month period in 
                                either of the 2 most recent 
                                preceding fiscal years.
                          (ii) As determined by the Secretary 
                        of Agriculture, the monthly average 
                        number of households (as of the last 
                        day of each month) that participated in 
                        the food stamp program in the State in 
                        the then most recently concluded 3-
                        month period for which data are 
                        available exceeds by at least 10 
                        percent the monthly average number of 
                        households (as of the last day of each 
                        month) in the State that participated 
                        in the food stamp program in the 
                        corresponding 3-month period in either 
                        of the 2 most recent preceding fiscal 
                        years, but only if the Secretary of 
                        Agriculture makes a determination that 
                        the State's increased caseload was due, 
                        in large measure, to economic 
                        conditions rather than changes in 
                        Federal or State policies related to 
                        the food stamp program.
                          (iii) As determined by the Secretary, 
                        the monthly average of the unduplicated 
                        number of families that received 
                        assistance under the State program 
                        funded under this part and all programs 
                        funded with qualified State 
                        expenditures (as defined in section 
                        409(a)(7)(B)(i)) in the most recently 
                        concluded 3-month period for which data 
                        are available from the State increased 
                        by at least 10 percent over the number 
                        of such families that received such 
                        benefits in the corresponding 3-month 
                        period in either of the 2 most recent 
                        preceding fiscal years, but only if the 
                        Secretary makes a determination that 
                        the State's increased caseload was due, 
                        in large measure, to economic 
                        conditions rather than State policy 
                        changes.
                  (B) Duration.--
                          (i) In general.--A State that 
                        qualifies as a needy State--
                                  (I) under subparagraph 
                                (A)(i), shall be considered a 
                                needy State until either the 
                                State's (seasonally adjusted) 
                                total unemployment rate or 
                                (seasonally adjusted) insured 
                                unemployment rate, whichever 
                                rate was used to meet the 
                                definition as a needy State 
                                under that subparagraph for the 
                                most recently concluded 3-month 
                                period for which data are 
                                available, falls below the 
                                level attained in the 3-month 
                                period that was used to first 
                                determine that the State 
                                qualified as a needy State 
                                under that subparagraph;
                                  (II) under subparagraph 
                                (A)(ii), shall be considered a 
                                needy State until the average 
                                monthly number of households 
                                participating in the food stamp 
                                program for the most recently 
                                concluded 3-month period for 
                                which data are available 
                                nationally falls below the food 
                                stamp base period level; and
                                  (III) under subparagraph 
                                (A)(iii), shall be considered a 
                                needy State until the 
                                unduplicated number of families 
                                receiving assistance under the 
                                State program funded under this 
                                part and all programs funded 
                                with qualified State 
                                expenditures (as defined in 
                                section 409(a)(7)(B)(i)) for 
                                the most recently concluded 3-
                                month period for which data are 
                                available falls below the TANF 
                                base period level.
                          (ii) Seasonal variations.--
                                  (I) In general.--Subject to 
                                subclause (II), notwithstanding 
                                subclauses (II) and (III) of 
                                clause (i), a State shall be 
                                considered a needy State--
                                          (aa) under 
                                        subparagraph (A)(ii), 
                                        if with respect to the 
                                        State, the monthly 
                                        average number of 
                                        households 
                                        participating in the 
                                        food stamp program for 
                                        the most recent 3-month 
                                        period for which data 
                                        are available 
                                        nationally falls below 
                                        the food stamp base 
                                        period level and the 
                                        Secretary determines 
                                        that this is due to 
                                        expected seasonal 
                                        variations in food 
                                        stamp receipt in the 
                                        State; and
                                          (bb) under 
                                        subparagraph (A)(iii), 
                                        if, with respect to a 
                                        State, the monthly 
                                        average of the number 
                                        of unduplicated 
                                        families receiving 
                                        assistance under the 
                                        State program funded 
                                        under this part and all 
                                        programs funded with 
                                        qualified State 
                                        expenditures (as 
                                        defined in section 
                                        409(a)(7)(B)(i)) for 
                                        the most recently 
                                        concluded 3-month 
                                        period for which data 
                                        are available 
                                        nationally falls below 
                                        the TANF base period 
                                        level and the Secretary 
                                        determines that this is 
                                        due to expected 
                                        seasonal variations in 
                                        assistance receipt in 
                                        the State.
                                  (II) Limitations.--A State 
                                shall not be considered a needy 
                                State pursuant to--
                                          (aa) item (aa) of 
                                        subclause (I), unless 
                                        the Secretary of 
                                        Agriculture determines 
                                        that the number of 
                                        households receiving 
                                        food stamps remained at 
                                        elevated levels largely 
                                        due to economic 
                                        factors; and
                                          (bb) item (bb) of 
                                        subclause (II), unless 
                                        the Secretary 
                                        determines that the 
                                        unduplicated number of 
                                        families receiving 
                                        assistance under the 
                                        State program funded 
                                        under this part and all 
                                        programs funded with 
                                        qualified State 
                                        expenditures (as 
                                        defined in section 
                                        409(a)(7)(B)(i)) 
                                        remained at elevated 
                                        levels largely due to 
                                        economic factors.
                          (iii) Food stamp base period level.--
                        In this subparagraph, the term ``food 
                        stamp base period level'' means the 
                        monthly average number of households 
                        participating in the food stamp program 
                        that corresponds to the most recent 3-
                        month period for which data are 
                        available at the time when the State 
                        first was determined to be a needy 
                        State under this paragraph.
                          (iv) TANF base period level.--In this 
                        subparagraph, the term ``TANF base 
                        period level'' means the monthly 
                        average of the unduplicated number of 
                        families receiving assistance under the 
                        State program funded under this part 
                        and all programs funded with qualified 
                        State expenditures (as defined in 
                        section 409(a)(7)(B)(i)) that 
                        corresponds to the most recent 3 months 
                        for which data are available at the 
                        time when the State first was 
                        determined to be a needy State under 
                        this paragraph.
          (4) Exceptions.--
                  (A) Unexpended balances.--
                          (i) In general.--Notwithstanding 
                        paragraph (3), a State that has 
                        unexpended TANF balances in an amount 
                        that exceeds 30 percent of the total 
                        amount of grants received by the State 
                        under subsection (a) for the most 
                        recently completed fiscal year (other 
                        than welfare-to-work grants made under 
                        paragraph (5) of that subsection prior 
                        to fiscal year 2000), shall not be a 
                        needy State under this subsection.
                          (ii) Definition of unexpended tanf 
                        balances.--In clause (i), the term 
                        ``unexpended TANF balances'' means the 
                        lessor of--
                                  (I) the total amount of 
                                grants made to the State 
                                (regardless of the fiscal year 
                                in which such funds were 
                                awarded) under subsection (a) 
                                (other than welfare-to-work 
                                grants made under paragraph (5) 
                                of that subsection prior to 
                                fiscal year 2000) but not yet 
                                expended as of the end of the 
                                fiscal year preceding the 
                                fiscal year for which the State 
                                would, in the absence of this 
                                subparagraph, be considered a 
                                needy State under this 
                                subsection; and
                                  (II) the total amount of 
                                grants made to the State under 
                                subsection (a) (other than 
                                welfare-to-work grants made 
                                under paragraph (5) of that 
                                subsection prior to fiscal year 
                                2000) but not yet expended as 
                                of the end of such preceding 
                                fiscal year, plus the 
                                difference between--
                                          (aa) the pro rata 
                                        share of the current 
                                        fiscal year grant to be 
                                        made under subsection 
                                        (a) to the State; and
                                          (bb) current year 
                                        expenditures of the 
                                        total amount of grants 
                                        made to the State under 
                                        subsection (a) 
                                        (regardless of the 
                                        fiscal year in which 
                                        such funds were 
                                        awarded) (other than 
                                        such welfare-to-work 
                                        grants) through the end 
                                        of the most recent 
                                        calendar quarter.
                  (B) Failure to satisfy maintenance of effort 
                requirement.--Notwithstanding paragraph (3), a 
                State that fails to satisfy the requirement of 
                section 409(a)(7) with respect to a fiscal year 
                shall not be a needy State under this 
                subsection for that fiscal year.
          [(5) Needy state.--For purposes of paragraph (4), a 
        State is a needy State for a month if--
                  [(A) the average rate of--
                          [(i) total unemployment in such State 
                        (seasonally adjusted) for the period 
                        consisting of the most recent 3 months 
                        for which data for all States are 
                        published equals or exceeds 6.5 
                        percent; and
                          [(ii) total unemployment in such 
                        State (seasonally adjusted) for the 3-
                        month period equals or exceeds 110 
                        percent of such average rate for either 
                        (or both) of the corresponding 3-month 
                        periods ending in the 2 preceding 
                        calendar years; or
                  [(B) as determined by the Secretary of 
                Agriculture (in the discretion of the Secretary 
                of Agriculture), the monthly average number of 
                individuals (as of the last day of each month) 
                participating in the food stamp program in the 
                State in the then most recently concluded 3-
                month period for which data are available 
                exceeds by not less than 10 percent the less or 
                of--
                          [(i) the monthly average number of 
                        individuals (as of the last day of each 
                        month) in the State that would have 
                        participated in the food stamp program 
                        in the corresponding 3-month period in 
                        fiscal year 1994 if the amendments made 
                        by titles IV and VIII of the Personal 
                        Responsibility and Work Opportunity 
                        Reconciliation Act of 1996 had been in 
                        effect throughout fiscal year 1994; or
                          [(ii) the monthly average number of 
                        individuals (as of the last day of each 
                        month) in the State that would have 
                        participated in the food stamp program 
                        in the corresponding 3-month period in 
                        fiscal year 1995 if the amendments made 
                        by titles IV and VIII of the Personal 
                        Responsibility and Work Opportunity 
                        Reconciliation Act of 1996 had been in 
                        effect throughout fiscal year 1995.
          [(6) Annual reconciliation.--
                  [(A) In general.--Nothwithstanding paragraph 
                (3), if the Secretary makes a payment to a 
                State under this subsection in a fiscal year, 
                then the State shall remit to the Secretary, 
                within 1 year after the end of the first 
                subsequent period of 3 consecutive months for 
                which the State is not a needy State, an amount 
                equal to the amount (if any) by which--
                          [(i) the total amount paid to the 
                        State under paragraph (3) of this 
                        subsection in the fiscal year; exceeds
                          [(ii) the product of--
                                  [(I) the Federal medical 
                                assistance percentage for the 
                                State (as defined in section 
                                1905(b), as such section was in 
                                effect on September 30, 1995);
                                  [(II) the State's 
                                reimbursable expenditures for 
                                the fiscal year; and
                                  [(III) \1/12\ times the 
                                number of months during the 
                                fiscal year for which the 
                                Secretary made a payment to the 
                                State under such paragraph (3).
                  [(B) Definitions.--As used in subparagraph 
                (A);
                          [(i) Reimbursable expenditures.--The 
                        term ``reimbursable expenditures'' 
                        means, with respect to a State and a 
                        fiscal year, the amount (if any) by 
                        which--
                                  [(I) countable State 
                                expenditures for the fiscal 
                                year; exceeds
                                  [(II) historic State 
                                expenditures (as defined in 
                                section 409(a)(7)(B)(iii)), 
                                excluding any amount expended 
                                by the State for child care 
                                under subsection (g) or (i) of 
                                section 402 (as in effect 
                                during fiscal year 1994) for 
                                fiscal year 1995.
                          [(ii) Countable state expenditures.--
                        The term ``countable expenditures'' 
                        means, with respect to a State and a 
                        fiscal year--
                                  [(I) the qualified State 
                                expenditures (as defined in 
                                section 409(a)(7)(B)(i) (other 
                                than the expenditures described 
                                in subclause (I)(bb) of such 
                                section)) under the State 
                                program funded under this part 
                                for the fiscal year; plus
                                  [(II) any amount paid to the 
                                State under paragraph (3) 
                                during the fiscal year that is 
                                expended by the State under the 
                                State program funded under this 
                                part.
                  [(C) Adjustment of state remittances.--
                          [(i) In general.--The amount 
                        otherwise required by subparagraph (A) 
                        to be remitted by a State for a fiscal 
                        year shall be increased by the lesser 
                        of--
                                  [(I) the total adjustment for 
                                the fiscal year, multiplied by 
                                the adjustment percentage for 
                                the State for the fiscal year; 
                                or
                                  [(II) the unadjusted net 
                                payment to the State for the 
                                fiscal year.
                          [(ii) Total adjustment.--As used in 
                        clause (i), the term ``total 
                        adjustment'' means--
                                  [(I) in the case of fiscal 
                                year 1998, $2,000,000;
                                  [(II) in the case of fiscal 
                                year 1999, $9,000,000;
                                  [(III) in the case of fiscal 
                                year 2001, $13,000,000.
                          [(iii) Adjustment percentage.--As 
                        used in clause (i), the term 
                        ``adjustment percentage'' means, with 
                        respect to a State and a fiscal year--
                                  [(I) the unadjusted net 
                                payment to the State for the 
                                fiscal year; divided by
                                  [(II) the sum of the 
                                unadjusted net payments to all 
                                States for the fiscal year.
                          [(iv) Unadjusted net payment.--As 
                        used in this subparagraph, the term, 
                        ``unadjusted net payment'' means with 
                        respect to a State and a fiscal year--
                                  [(I) the total amount paid to 
                                the State under paragraph (3) 
                                in the fiscal year; minus
                                  [(II) the amount that, in the 
                                absence of this subparagraph, 
                                would be required by 
                                subparagraph (A) or by section 
                                409(a)(10) to be remitted by 
                                the State in respect of the 
                                payment.]
          [(7)] (5) Other terms defined.--As used in this 
        subsection:
                  (A) State.--The term ``State'' means each of 
                the 50 States of the United States and the 
                District of Columbia.
                  (B) Secretary.--The term ``Secretary'' means 
                the Secretary of the Treasury.
          [(8)] (6) Annual reports.--The Secretary shall 
        annually report to the Congress [on the status of the 
        Fund] on the States that qualified for contingency 
        funds and the amount of funding awarded under this 
        subsection.

           *       *       *       *       *       *       *

                             USE OF GRANTS

    Sec. 404. (a) General Rules.--Subject to this part, a State 
to which a grant is made under section 403 may use the grant--
          (1) in any manner that is reasonably calculated to 
        accomplish the purpose of this part, including to 
        provide low income households with [assistance] aid in 
        meeting home heating and cooling costs; [or]
          (2) in any manner that the state was authorized to 
        use amounts received under part A or F, as such parts 
        were in effect on September 30, 1995, or (as the option 
        of the State) August 21, 1996 [.]; or
          (3) to fund payment of an amount pursuant to clause 
        (i) or (ii) of section 457(a)(2)(B), but only to the 
        extent that the State properly elects under section 
        457(a)(6) to use the grant to fund the payment.
    (b) Limitation on Use of Grant for Administrative 
Purposes.--
          (1) Limitation.--A State to which a grant is made 
        under section 403 shall not expend more than 15 percent 
        of the grant (determined without regard to any amounts 
        transferred under subsection (d)) for administrative 
        purposes.
          (2) Exception.--Paragraph (1) shall not apply to the 
        use of a grant for information technology and 
        computerization needed for tracking or monitoring 
        required by or under this part.
    [(c) Authority To Treat Interstate Immigrants Under Rules 
of Former State.--A State operating a program funded under this 
part may apply to a family the rules (including benefit 
amounts) of the program funded under this part of another State 
if the family has moved to the State from the other State and 
has resided in the State for less than 12 months.]
    (d) Authority To Use Portion of Grant for Other Purposes.--
          (1) In General.-- Subject to paragraph (2), a State 
        may use not more than 30 percent of the amount of any 
        grant made to the State under section 403(a) for a 
        fiscal year to carry out a State program pursuant to 
        any or all of the following provisions of law:
                  (A) Title XX of this Act.
                  (B) The Child Care and Development Block 
                Grant Act of 1990.
                  (C) An access to jobs project or a reverse 
                commute project under a grant made under 
                section 3037 of the Transportation Equity Act 
                for the 21st Century (49 U.S.C. 5309 note).
          [(2) Limitation on Amount Transferable to Title XX 
        Programs.--
                  [(A) In general.--A State may use not more 
                than the applicable percent of the amount of 
                any grant made to the State under section 
                403(a) for a fiscal year to carry out State 
                programs pursuant to title XX.
                  [(B) Applicable percent.--For purposes of 
                subparagraph (A), the applicable percent is 
                4.25 percent in the case of fiscal year 2001 
                and each succeeding fiscal year.]
          (2) Limitation on amount transferable to title xx 
        programs.--A State may use not more than 10 percent of 
        the amount of any grant made to the State under section 
        403(a) for a fiscal year to carry out State programs 
        pursuant to title XX.
          (3) Applicable rules.--
                  (A) In general.--Except as provided in 
                subparagraph (B) of this paragraph, any amount 
                paid to a State under this part that is used to 
                carry out a State program pursuant to a 
                provision of law specified in paragraph (1) 
                shall not be subject to the requirements of 
                this part, but shall be subject to the 
                requirements that apply to Federal funds 
                provided directly under the provision of law to 
                carry out the program, and the expenditure of 
                any amount so used shall not be considered to 
                be an expenditure under this part.
                  (B) Exception relating to title xx 
                programs.--All amounts paid to a State under 
                this part that are used to carry out State 
                programs pursuant to title XX shall be used 
                only for programs and services to children or 
                their families whose income is less than 200 
                percent of the income official poverty line (as 
                defined by the Office of Management and Budget, 
                and revised annually in accordance with section 
                673(2) of the Omnibus Budget Reconciliation Act 
                of 1981) applicable to a family of the size 
                involved.
    [(e) Authority To Reserve Certain Amounts for Assistance.--
A State or tribe may reserve amounts paid to the State or tribe 
under this part for any fiscal year for the purpose of 
providing, without fiscal year limitation, assistance under the 
State or tribal program funded under this part.]
    (e) Authority To Carry Over Certain Amounts for Benefits or 
Services or for Future Contingencies.--A State or tribe may use 
a grant made to the State or tribe under this part for any 
fiscal year to provide, without fiscal year limitation, any 
benefit or service that may be provided under the State or 
tribal program funded under this part.
    (f) Authority To Operate Employment Placement Program.--A 
State to which a grant is made under section 403 may use the 
grant to make payments (or provide job placement vouchers) to 
State-approved public and private placement agencies that 
provide employment placement services to individuals who 
receive [assistance] benefits or services under the State 
program funded under this part.
    (g) Implementation of Electronic Benefit Transfer System.--
A State to which a grant is made under section 403 is 
encouraged to implement an electronic benefit transfer system 
for providing assistance under the State program funded under 
this part, and may use the grant for such purpose.
    (h) Use of Funds for Individual Development Accounts.--
          (1) In general.--A State to which a grant is made 
        under section 403 may use the grant to carry out a 
        program to fund individual development accounts (as 
        defined in paragraph (2)) established by individuals 
        eligible for assistance under the State program funded 
        under this part.
          (2) Individual developmental accounts.--
                  (A) Establishment.--Under a State program 
                carried out under paragraph (1), an individual 
                development account may be established by or on 
                behalf of an individual eligible for assistance 
                under the State program operated under this 
                part for the purpose of enabling the individual 
                to accumulate funds for a qualified purpose 
                described in sub-paragraph (B).
                  (B) Qualified purpose.--A qualified purpose 
                described in this subparagraph is 1 or more of 
                the following, as provided by the qualified 
                entity providing assistance to the individual 
                under this subsection:
                          (i) Postsecondary educational 
                        expenses.--Post-secondary educational 
                        expenses paid from an individual 
                        development account directly to an 
                        eligible educational institution.
                          (ii) First home purchase.--Qualified 
                        acquisition costs with respect to a 
                        qualified principal residence for a 
                        qualified first-time homebuyer, if paid 
                        from an individual development account 
                        directly to the persons to whom the 
                        amounts are due.
                          (iii) Business capitalization.--
                        Amounts paid from an individual 
                        development account directly to a 
                        business capitalization account which 
                        is established in a federally insured 
                        financial institution and is restricted 
                        to use solely for qualified business 
                        capitalization expenses.
                          (vi) Automobile purchase or 
                        maintenance.--At the option of the 
                        State, costs with respect to the 
                        purchase or maintenance of an 
                        automobile.
                  (C) Contributions to be from earned income.--
                An individual may only contribute to an 
                individual development account such amounts as 
                are derived from earned income, as defined in 
                section 911(d)(2) of the Internal Revenue Code 
                of 1986.
                  (D) Withdrawal of funds.--The Secretary shall 
                establish such regulations as may be necessary 
                to ensure that funds held in an individual 
                development account are not withdrawn except 
                for 1 or more of the qualified purposes 
                described in subparagraph (B).
          (3) Requirements.--
                  (A) In general.--An individual development 
                account established under this subsection shall 
                be [a trust created or organized in the United 
                States and] funded through periodic 
                contributions by the establishing individual 
                and matched by or through a qualified entity 
                for a qualified purpose (as described in 
                paragraphs (2)(B)).

           *       *       *       *       *       *       *

    (l) Authority To Establish Postsecondary Education 
Program.--
          (1) In general.--Subject to paragraph (2), a State to 
        which a grant is made under section 403 may use the 
        grant to establish a program under which an eligible 
        participant (as defined in paragraph (3)) may be 
        provided assistance and other benefits as determined by 
        the State, including support services described in 
        paragraph (5).
          (2) No federal funds for tuition.--A State may not 
        use Federal funds provided under a grant made under 
        section 403 to pay tuition for an eligible participant 
        in a program established under this subsection.
          (3) Definition of eligible participant.--
                  (A) In general.--In this subsection, the term 
                ``eligible participant'' means an individual 
                eligible for assistance, benefits, or services 
                under the State program funded under this part 
                and satisfies the following requirements:
                          (i) The individual is enrolled in a 
                        postsecondary 2- or 4-year degree 
                        program.
                          (ii) Enrollment in the postsecondary 
                        program is a requirement of the 
                        individual's individual responsibility 
                        plan under section 408(b).
                          (iii) During the first 24 months that 
                        the individual participates in the 
                        postsecondary program, the individual 
                        engages in a combination of educational 
                        activities in connection with a course 
                        of study, training, study time, 
                        employment, or work experience for an 
                        average of not less than 24 hours (20 
                        hours, in the case of an individual 
                        described in section 407(c)(2)(B)) per 
                        week.
                          (iv) After the first 24 months of the 
                        individual's participation in the 
                        postsecondary program, the individual--
                                  (I) works not less than an 
                                average of 15 hours per week 
                                (in addition to school and 
                                study time, and with priority 
                                for hours engaged in work 
                                related to the individual's 
                                course of study); or
                                  (II) engages in a combination 
                                of educational activities in 
                                connection with a course of 
                                study, training, study time, 
                                employment, or work experience 
                                for an average of not less than 
                                30 hours (20 hours, in the case 
                                of an individual described in 
                                section 407(c)(2)(B)) per week.
                          (v) During the period the individual 
                        participates in the postsecondary 
                        program, the individual maintains 
                        satisfactory academic progress, as 
                        defined by the institution operating 
                        the undergraduate postsecondary program 
                        in which the individual is enrolled.
                  (B) Determination of hours.--For purposes of 
                determining hours per week under clause (ii) or 
                (iii) of subparagraph (A), a State may not 
                count study time of less than 1 hour for every 
                hour of class time or more than 2 hours for 
                every hour of class time.
          (4) Required time periods for completion of degree.--
                  (A) In general.--Subject to subparagraph (B), 
                an individual participating in a program 
                established under this subsection shall be 
                required to complete the requirements of a 
                degree program within the normal timeframe for 
                full time students seeking the particular 
                degree.
                  (B) Exception.--For good cause, the State may 
                allow an individual to complete their degree 
                requirements within a period not to exceed 1\1/
                2\ times the normal timeframe established under 
                subparagraph (A) (unless further modification 
                is required by the Americans with Disabilities 
                Act of 1990 (42 U.S.C. 12101 et seq.), or 
                section 504 of the Rehabilitation Act of 1973 
                (29 U.S.C. 794)) and may modify the 
                requirements applicable to an individual 
                participating in the program. For purposes of 
                the preceding sentence, good cause includes the 
                case of an individual with 1 or more 
                significant barriers to normal participation, 
                as determined by the State, such as the need to 
                care for a family member with special needs.
          (5) Support services described.--For purposes of 
        paragraph (1), the support services described in this 
        paragraph include any or all of the following during 
        the period the eligible participant is in the program 
        established under this subsection:
                  (A) Child care.
                  (B) Transportation services.
                  (C) Payment for books and supplies.
                  (D) Other services provided under policies 
                determined by the State to ensure coordination 
                and lack of duplication with other programs 
                available to provide support services.
  (m) Use of Funds for Supplemental Housing Benefits.--
          (1) In general.--A State to which a grant is made 
        under section 403 may use the grant to provide 
        supplemental housing benefits (as defined in paragraph 
        (4)) in order to carry out the purposes specified in 
        section 401(a).
          (2) Not considered assistance.--Supplemental housing 
        benefits (as so defined) shall not for any purpose, be 
        considered assistance under the State program funded 
        under this part.
          (3) Limitation on use of funds.--A State may not use 
        any part of the funds made available under a grant made 
        under section 403 to supplant existing State 
        expenditures on housing-related programs. 
        Notwithstanding the preceding sentence, a State may use 
        such funds to supplement such State expenditures.
          (4) Definition of supplemental housing benefits.--In 
        this subsection, the term ``supplemental housing 
        benefits'' means payments made to, or on behalf of, an 
        individual with significant annual earnings (as defined 
        by the State) to reduce or reimburse the costs incurred 
        by the individual for housing accommodations.
  (n) State Authority To Define Minor Housing Rehabilitation 
Costs.--A State to which a grant is made under section 403 may 
use the grant to provide grants, loans, or to otherwise pay the 
costs of minor rehabilitation of housing owned or rented by 
individuals eligible for assistance under the State program 
funded under this part, consistent with a definition of minor 
housing rehabilitation adopted by the State and incorporated 
into the State plan required under section 402(a).

                       ADMINISTRATIVE PROVISIONS

    Sec. 405. (a) Quarterly.--The Secretary shall pay each 
grant payable to a State under [section 403] sections 403 and 
412(a)(2)(C) in quarterly installments, subject to this 
section.

           *       *       *       *       *       *       *

               [FEDERAL LOANS FOR STATE WELFARE PROGRAMS

    [Sec. 406. (a) Loan Authority.--
          [(1) In general.--The Secretary shall make loans to 
        any loan-eligible State, for a period to maturity of 
        not more than 3 years.
          [(2) Loan-eligible state.--As used in paragraph (1), 
        the term ``loan-eligible State'' means a State against 
        which a penalty has not been imposed under section 
        409(a)(1).
    [(b) Rate of Interest.--The Secretary shall charge and 
collect interest on any loan made under this Section at a rate 
equal to the current average market yield on outstanding 
marketable obligations of the United States with remaining 
periods to maturity comparable to the period to maturity of the 
loan.
    [(c) Use of Loan.--A State shall use a loan made to the 
State under this section only for any purpose for which grant 
amounts received by the State under section 403(a) may be used, 
including--
          [(1) welfare anti-fraud activities, and
          [(2) the provision of assistance under the State 
        program to Indian families that have moved from the 
        service area of an Indian tribe with a tribal family 
        assistance plan approved under section 412.
    [(d) Limitation on Total Amount of Loans to a State.--The 
cumulative dollar amount of all loans made to a State under 
this section during fiscal years 1997 through 2002 shall not 
exceed 10 percent of the State family assistance grant.
    [(e) Limitation on Total Amount of Outstanding Loans.--The 
total dollar amount of loans outstanding under this section may 
not exceed $1,700,000,000.
    [(f) Appropriation.--Out of any money in the Treasury of 
the United States not otherwise appropriated, there are 
appropriated such sums as may be necessary for the cost of 
loans under this section.]

                      MANDATORY WORK REQUIREMENTS

    Sec. 407. (a) Participation Rate Requirements.--
          (1) [All families] In general.--A State to which a 
        grant is made under section 403 for a fiscal year shall 
        achieve the minimum participation rate specified in the 
        following table for the fiscal year with respect to all 
        families receiving assistance under the State program 
        funded under this part (including, at the option of the 
        State, a family that includes an adult who is receiving 
        substantial child care or transportation assistance (as 
        defined by the Secretary, in consultation with 
        directors of State programs funded under this part, 
        which definition shall specify for each type of 
        assistance a threshold which is a dollar value or a 
        length of time over which the assistance is received, 
        and take into account large one-time transition 
        payments) except any family taken into account under 
        paragraph (2)(B)(i)(I)):

If the fiscal year is:                The minimum participation rate is:
    1997......................................................       25 
    1998......................................................       30 
    1999......................................................       35 
    2000......................................................       40 
    2001......................................................       45 
    2002 [or thereafter] or 2003..............................     50[.]
    2004......................................................       55 
    2005......................................................       60 
    2006......................................................       65 
    2007 or thereafter........................................      70. 

          [(2) 2-parent families.--A State to which a grant is 
        made under section 403 for a fiscal year shall achieve 
        the minimum participation rate specified in the 
        following table for the fiscal year with respect to 2-
        parent families receiving assistance under the State 
        program funded under this part:

[If the fiscal year is:               The minimum participation rate is:
    [1997.....................................................       75 
    [1998.....................................................       75 
    [1999 or thereafter.......................................      90.]

          (2) Employment credit.--
                  (A) In general.--In consultation with the 
                States, and subject to subparagraph (C), the 
                Secretary shall prescribe regulations for 
                reducing the minimum participation rate 
                otherwise applicable to a State under this 
                subsection for a fiscal year by the number of 
                percentage points in the employment credit for 
                the State for the fiscal year, as determined by 
                the Secretary--
                          (i) using information in the National 
                        Directory of New Hires; and
                          (ii) with respect to a recipient of 
                        assistance under the State program 
                        funded under this part who is placed 
                        with an employer whose hiring 
                        information is not reported to the 
                        National Directory of New Hires, using 
                        quarterly wage information submitted by 
                        the State to the Secretary not later 
                        than such date as the Secretary shall 
                        prescribe in regulations.
                  (B) Calculation of credit.--
                          (i) In general.--The employment 
                        credit for a State for a fiscal year is 
                        an amount equal to--
                                  (I)(aa) twice the 
                                unduplicated number of families 
                                that include an adult recipient 
                                of assistance under the State 
                                program funded under this part, 
                                that ceased to receive such 
                                assistance for at least a 2-
                                month period during the 
                                applicable period (as defined 
                                in clause (iii)), that did not 
                                receive assistance under a 
                                separate State-funded program 
                                during such 2-month period, 
                                that were employed during the 
                                calendar quarter immediately 
                                succeeding the quarter in which 
                                the assistance under the State 
                                program funded under this part 
                                ceased, and that are not 
                                otherwise included in the 
                                determination of a credit 
                                against the minimum 
                                participation rate otherwise 
                                applicable to a State under 
                                this subsection for a fiscal 
                                year, plus;
                                  (bb) at State option, the 
                                number of families that 
                                received a nonrecurring short-
                                term benefit under the State 
                                program funded under this part 
                                during the applicable period 
                                (as so defined), that were 
                                employed during the calendar 
                                quarter immediately succeeding 
                                the quarter in which the 
                                nonrecurring short-term benefit 
                                was so received, and that 
                                earned at least $1000 during 
                                the applicable period (as so 
                                defined); divided by
                                  (II) the average monthly 
                                number of families that include 
                                an adult who received 
                                assistance under the State 
                                program funded under this part 
                                during the applicable period 
                                (as so defined), plus, if the 
                                State elected the option under 
                                subclause (I)(bb), the number 
                                of families that received a 
                                nonrecurring short-term benefit 
                                under the State program funded 
                                under this part during the 
                                applicable period (as so 
                                defined).
                          (ii) Special rule for former 
                        recipients with higher earnings.--In 
                        calculating the employment credit for a 
                        State for a fiscal year, a family that, 
                        with respect to the quarter in which 
                        the family's earnings was examined 
                        during the preceding fiscal year, 
                        earned at least 33 percent of the 
                        average quarterly earnings in the State 
                        (determined on the basis of State 
                        unemployment data) shall be considered 
                        to be 1.5 families.
                          (iii) Definition of applicable 
                        period.--For purposes of this 
                        subparagraph, the term ``applicable 
                        period's means the most recent 4 
                        quarters for which data are available 
                        to the Secretary providing information 
                        on the work status of--
                                  (I) individuals in the 
                                quarter after the individuals 
                                ceased receiving assistance 
                                under the State program funded 
                                under this part; and
                                  (II) at State option, 
                                individuals in the quarter 
                                after the individuals received 
                                a short-term, non recurring 
                                benefit.
                  (C) Limitation.--
                          (i) In general.--Except with respect 
                        to a State described in clause (ii), 
                        the minimum participation rate 
                        applicable to families receiving 
                        assistance under the State program 
                        funded under this part shall not have 
                        the effect of being reduced through the 
                        application of the employment credit 
                        determined under subparagraph 
                        (B)(i)(I)(aa) or the inclusion, at 
                        State option, of individuals who 
                        receive substantial child care or 
                        transportation assistance in the 
                        determination of the minimum 
                        participation rate under paragraph (1), 
                        below--
                                  (I) 20 percent, in the case 
                                of fiscal year 2004;
                                  (II) 30 percent, in the case 
                                of fiscal year 2005;
                                  (III) 40 percent, in the case 
                                of fiscal year 2006; or
                                  (IV) 50 percent, in the case 
                                of fiscal year 2007.
                          (ii) State described.--Clause (i) 
                        shall not apply to a State that meets 
                        at least 2 of the criteria for being 
                        considered a needy State under section 
                        403(b)(3)(A).
                  (D) Quarterly reports.--Not later than 6 
                months after the end of a fiscal year quarter, 
                the Secretary shall issue a report to Congress 
                and each State for the preceding quarter that 
                includes information regarding the performance 
                of each State on the factors used to determine 
                the employment credit for a State under this 
                paragraph during that quarter, including any 
                option selected by the State.
    (b) Calculation of Participation Rates.--
          (1) All families.--
                  (A) Average monthly rate.--For purposes of 
                subsection (a)(1), the participation rate for 
                all families of a State for a fiscal year is 
                the average of the participation rates for all 
                families of the State for each month in the 
                fiscal year.
                  (B) Monthly participation rates.--The 
                participation rate of a State for all families 
                of the State for a month, expressed as a 
                percentage, is--
                          (i) the number of families receiving 
                        assistance under the State program 
                        funded under this part that include an 
                        adult or a minor head of household who 
                        is engaged in work for the month; 
                        divided by
                          (ii) the amount by which--
                                  (I) the number of families 
                                receiving such assistance 
                                during the month that include 
                                an adult or a minor child head 
                                of household receiving such 
                                assistance who has not become 
                                eligible for supplemental 
                                security income benefits under 
                                title XVI during the fiscal 
                                year; exceeds
                                  (II) the number of families 
                                receiving such assistance that 
                                are subject in such month to a 
                                penalty described in subsection 
                                (e)(1) but have not been 
                                subject to such penalty for 
                                more than 3 months within the 
                                preceding 12-month period 
                                (whether or not consecutive), 
                                and that do not include an 
                                adult or minor child head of 
                                household who has become 
                                eligible for supplemental 
                                security income benefits under 
                                title XVI during the fiscal 
                                year.
          [(2) 2-parent families.--
                  [(A) Average monthly rate.--For purposes of 
                subsection (a)(2), the participation rate for 
                2-parent families of a State for a fiscal year 
                is the average of the participation rates for 
                2-parent families of the State for each month 
                in the fiscal year.
                  [(B) Monthly participation rates.--The 
                participation rate of a State for 2-parent 
                families of the State for a month shall be 
                calculated by use of the formula set forth in 
                paragraph (1)(B), except that in the formula 
                the term ``number of 2-parent families'' shall 
                be substituted for the term ``number of 
                families'' each place such latter term appears.
                  [(C) Family with a disabled parent not 
                treated as a 2-parent family.--A family that 
                includes a disabled parent shall not be 
                considered a 2-parent family for purposes of 
                subsections (a) and (b) of this section.
          [(3) Pro rata reduction of participation rate due to 
        caseload reductions not required by federal law and not 
        resulting from changes in state eligibility criteria.--
                  [(A) In general.--The Secretary shall 
                prescribe regulations for reducing the minimum 
                participation rate otherwise required by this 
                section for a fiscal year by the number of 
                percentage points equal to the number of 
                percentage points (if any) by which--
                          [(i) the average monthly number of 
                        families receiving assistance during 
                        the immediately preceding fiscal year 
                        under the State program funded under 
                        this part is less than
                          [(ii) the average monthly number of 
                        families that received aid under the 
                        State plan approved under part A (as in 
                        effect on September 30, 1995) during 
                        fiscal year 1995.
                [The minimum participation rate shall not be 
                reduced to the extent that the Secretary 
                determines that the reduction in the number of 
                families receiving such assistance is required 
                by Federal law.
                  [(B) Eligibility changes not counted.--The 
                regulations required by subparagraph (A) shall 
                not take into account families that are 
                diverted from a State program funded under this 
                part as a result of differences in eligibility 
                criteria under a State program funded under 
                this part and eligibility criteria under the 
                State program operated under the State plan 
                approved under part (A) (as such plan and such 
                part were in effect on September 30, 1995). 
                Such regulations shall place the burden on the 
                Secretary to prove that such families were 
                diverted as a direct result of differences in 
                such eligibility criteria.]
          [(4)] (2) State option to include individuals 
        receiving assistance under a tribal family assistance 
        plan or tribal work program.--For purposes of 
        [paragraph (1)(B) and (2)(B)] paragraph (1)(B), a State 
        may, at its option, include families in the State that 
        are receiving assistance under a tribal family 
        assistance plan approved under section 412 or under a 
        tribal work program to which funds are provided under 
        this part.
          [(5)] (3) State option for participation requirement 
        exemptions.--For any fiscal year, a State may, at its 
        option, not require an individual who is single 
        custodial parent caring for a child who has not 
        attained 12 months of age to engage in work, and may 
        disregard such an individual in determining the 
        participation [rates] rate under subsection (a) for not 
        more than 12 months.
    (c) Engaged in Work.--
          (1) [General rules.--
                  [(A) All families.--For purposes] General 
                rule.--For purposes of subsection (b)(1)(B)(i), 
                a recipient is engaged in work for a month in a 
                fiscal year if the recipient is participating 
                in work activities for at least the minimum 
                average number of hours per week specified in 
                the following table during the month, not fewer 
                than [20 hours] 24 hours per week of which are 
                attributable to an activity described in 
                paragraph (1), (2), (3), (4), (5), (6), (7), 
                (8), [or (12)] (12), or (13)(A) of subsection 
                (d), subject to this subsection:

If the month is in fiscal year:               The minimum average number
                                                   of hours per week is:
    1997......................................................       20 
    1998......................................................       20 
    1999......................................................       25 
    2000 or thereafter........................................       30.

                  [(B) 2-parent families.--For purposes of 
                subsection (b)(2)(B), an individual is engaged 
                in work for a month in a fiscal year if--
                          [(i) the individual and the other 
                        parent in the family are participating 
                        in work activities for a total of at 
                        least 35 hours per week during the 
                        month, not fewer than 30 hours per week 
                        of which are attributable to an 
                        activity described in paragraph (1), 
                        (2), (3), (4), (5), (6), (7), (8), or 
                        (12) of subsection (d), subject to this 
                        subsection; and]
For purposes of subsection (b)(1)(B)(i), a family that does not 
include a recipient who is participating in work activities for 
an average of 30 hours per week during a month but includes a 
recipient who is participating in activities described in 
paragraph (1), (2), (3), (4), (5), (6), (7), (8), (12), or 
13(A) of subsection (d) during the month for an average of at 
least 50 percent of the minimum average number of hours per 
week specified for the month in the table set forth in this 
paragraph shall be counted as a percentage of a family that 
includes an adult or minor child head of household who is 
engaged in work for the month, which percentage shall be the 
number of hours for which the recipient participated in such 
activities during the month divided by the number of hours of 
such participation required of the recipient under this section 
for the month.
          (2) Limitations and special rules.--
                  (A) Number of weeks for which job search 
                counts as work.--
                          (i) Limitation.--Notwithstanding 
                        paragraph (1) of this subsection, an 
                        individual shall not be considered to 
                        be engaged in work by virtue of 
                        participation in an activity described 
                        in subsection (d)(6) of a State program 
                        funded under this part, after the 
                        individual has participated in such an 
                        activity for [6 weeks] 8 weeks (or, if 
                        the unemployment rate of the State is 
                        at least 50 percent greater than the 
                        unemployment rate of the United States 
                        or the State is a needy State within 
                        the meaning of section [403(b)(6)] 
                        403(b), 12 weeks)[, or if the 
                        participation is for a week that 
                        immediately follows 4 consecutive weeks 
                        of such participation].
                          (ii) Limited authority to count less 
                        than full week of participation.--For 
                        purposes of clause (i) of this 
                        subparagraph, on not more than 1 
                        occasion per individual, the State 
                        shall consider participation of the 
                        individual in an activity described in 
                        subsection (d)(6) for 3 or 4 days 
                        during a week as a week of 
                        participation in the activity by the 
                        individual.
                  (B) Single parent or relative with child 
                under age 6 deemed to be meeting work 
                participation requirements if parent or 
                relative is engaged in work for 20 hours per 
                week.--For purposes of determining monthly 
                participation rates under subsection 
                (b)(1)(B)(i), a recipient who is the only 
                parent or caretaker relative in the family of a 
                child who has not attained 6 years of age is 
                deemed to be engaged in work for a month if the 
                recipient is engaged in work for an average of 
                at least 20 hours per week during the month.
                  (C) Single teen head of household or married 
                teen who maintains satisfactory school 
                attendance deemed to be meeting work 
                participation requirements.--For purposes of 
                determining monthly participation rates under 
                subsection (b)(1)(B)(i), a recipient who is 
                married or a head of household and has not 
                attained 20 years of age is deemed to be 
                engaged in work for a month in a fiscal year if 
                the recipient--
                          (i) maintains satisfactory attendance 
                        at secondary school or the equivalent 
                        during the month; or
                          (ii) participates in education 
                        directly related to employment 
                        including vocational education and 
                        training for an average of at least 20 
                        hours per week during the month.
                  (D) Limitation on number of persons who may 
                be treated as engaged in work by reason of 
                participation in certain [educational 
                activities] vocational education activities.--
                For purposes of determining monthly 
                participation rates under [paragraphs (1)(B)(i) 
                and (2)(B) of subsection (b)] subsection 
                (b)(1)(B)(i), not more than 30 percent of the 
                number of individuals in all families [and in 
                2-parent families, respectively,] in a State 
                who are treated as engaged in work for a month 
                may consist of individuals who are determined 
                to be engaged in work for the month by reason 
                of participation in vocational [educational 
                training, or (if the month is in fiscal year 
                2000 or thereafter) deemed to be engaged in 
                work for the month by reason of subparagraph 
                (C) of this paragraph] education and training 
                (determined without regard to any individual 
                described in subparagraphs (C) and (E).
                  (E) State option to treat participants in 
                postsecondary education program as engaged in 
                work.--
                          (i) In general.--Subject to clause 
                        (ii), in the case of a State that 
                        elects to establish a postsecondary 
                        education program under section 404(l), 
                        the State may include, for purposes of 
                        determining monthly participation rates 
                        under subsection (b)(1)(B)(i), all 
                        families that include an individual 
                        participating in the program during the 
                        month as being engaged in work for the 
                        month, so long as each such individual 
                        is in compliance with the requirements 
                        of that program.
                          (ii) Limitation.--With respect to a 
                        month, the number of families treated 
                        as being engaged in work under clause 
                        (i) may not exceed the amount equal to 
                        10 percent of the average monthly 
                        number of families to which assistance 
                        is provided under the State program 
                        funded under this part during the 
                        fiscal year or the immediately 
                        preceding fiscal year (but not both), 
                        as the State may elect.
                  (F) State option to exempt full time 
                caregiver of a family member with a disability 
                from work requirements.--
                          (i) In general.--Subject to clause 
                        (ii), a State may exempt an adult 
                        recipient from the requirement to 
                        engage in work in accordance with this 
                        section and may exclude the family of 
                        the recipient from the determination 
                        required under subsection (b)(1)(B)(ii) 
                        if--
                                  (I) there are no other adults 
                                in the family who are able-
                                bodied;
                                  (II) the recipient is the 
                                primary caregiver for a child 
                                with a physical or mental 
                                disability or chronic illness 
                                (as defined by the State), or 
                                for another family member with 
                                a physical or mental disability 
                                or chronic illness (as so 
                                defined);
                                  (III) the State or locality 
                                administering the State program 
                                funded under this part 
                                determines that the demands of 
                                caregiving do not allow the 
                                recipient to obtain or retain 
                                employment of at least 30 hours 
                                per week; and
                                  (IV) the need to provide 
                                caregiving is specified in the 
                                recipient's individual 
                                responsibility plan established 
                                under section 408(b) and 
                                reviewed not less than 
                                annually.
                          (ii) Limitation.--The average monthly 
                        number of families excluded under 
                        clause (i) from the determination 
                        required under subsection (b)(1)(B)(ii) 
                        shall not exceed 10 percent of the 
                        average monthly number of families to 
                        which assistance is provided under the 
                        State program funded under this part 
                        during the fiscal year or the 
                        immediately preceding fiscal year (but 
                        not both), as the State may elect.
                          (iii) Rules of construction.--
                                  (I) Some work activity.--
                                Nothing in this subparagraph 
                                shall be construed as 
                                prohibiting a State from 
                                determining that, taking into 
                                consideration the needs of the 
                                child or other family member 
                                with a physical or mental 
                                disability or chronic illness, 
                                the adult recipient caregiver 
                                can engage in some work 
                                activity, or another activity 
                                that may lead to work, on a 
                                basis that is less than 30 
                                hours a week. A State may 
                                exclude the family of such a 
                                recipient from the 
                                determination required under 
                                subsection (b)(1)(B)(ii) if the 
                                individual meets the 
                                requirements specified in 
                                subclauses (I) through (IV) of 
                                clause (i), but subject to the 
                                limitation under clause (ii).
                                  (II) Authority to exempt 
                                other recipient caregivers.--
                                Nothing in this subparagraph 
                                shall be construed as 
                                prohibiting a State from 
                                exempting from the work 
                                requirements under this section 
                                an adult recipient who is a 
                                caregiver of a child or other 
                                family member with a physical 
                                or mental disability or chronic 
                                illness but who does not meet 
                                the requirements specified in 
                                subclauses (I) through (IV) of 
                                clause (i), except that the 
                                State may not exclude the 
                                family of such a recipient from 
                                the determination required 
                                under subsection (b)(1)(B)(ii).
                  (G) Optional modification of work 
                requirements for recipients residing in areas 
                of indian country or an alaskan native village 
                with high joblessness.--Notwithstanding 
                paragraph (1), if a State has included in the 
                State plan a description of the State's 
                policies in areas of Indian country or an 
                Alaskan Native village described in section 
                408(a)(7)(D), the State may define the 
                activities described in subseciton (d) that a 
                recipient who resides in such an area and who 
                is participating in activities in accordance 
                with an individual responsibility plan under 
                section 408(b) may engage in for purposes of 
                satisfying work requirements under the State 
                program and for purposes of determining monthly 
                participating rates under subsection (b).
    (d) Work Activities Defined.--As used in this section, the 
term ``work activities'' means--
          (1) unsubsidized employment;
          (2) subsidized private sector employment;
          (3) subsidized public sector employment;
          (4) work experience (including work associated with 
        the refurbishing of publicly assisted housing) if 
        sufficient private sector employment is not available;
          (5) on-the-job training;
          (6) job search and job readiness assistance;
          (7) community service programs;
          [(8) vocational educational training (not to exceed 
        12 months with respect to any individual);] (8) 
        vocational education and training and post-secondary 
        education that is a requirement of the individual's 
        responsibility plan under section 408(b) (not to exceed 
        24 months with respect to any individual, or such long 
        period as the State may allow for an individual who is 
        treated as being engaged in work through participation 
        in a program that meets the requirements of section 
        404(l)).
          (9) job skills training directly related to 
        employment;
          (10) education directly related to employment, in the 
        case of certificate of high school equivalency;
          (11) satisfactory attendance at secondary school or 
        in a course of study leading to a certificate of 
        general equivalence, in the case of a recipient who has 
        not completed secondary school or received such a 
        certificate; [and]
          (12) the provision of child care services to an 
        individual who is participating in a community service 
        program[.]; and
          (13)(A) rehabilitative services, such as adult basic 
        education, participation in a program designed to 
        increase proficiency in the English language, or, in 
        the case of an individual determined by a qualified 
        medical, mental health, or social services professional 
        as having a physical or mental disability, substance 
        abuse problem, or other problem that requires 
        rehabilitative services, substance abuse treatment, 
        mental health treatment, or other rehabilitative 
        services, provided that the provision of such services 
        is a requirement of the individual's individual 
        responsibility plan under section 408(b) (not to exceed 
        3 months out of any 24-month period, or, if such 
        services for a longer period of time is a requirement 
        of the individual's plan under section 408(b), up to 6 
        months, but only if, during the last 3 months of such 6 
        months, such services are combined with work or job-
        readiness activities); and
          (B) for purposes of counting toward the minimum 
        average number of hours per week specified in the table 
        set forth in subsection (c)(1), services described in 
        subparagraph (A), the provision of which is a 
        requirement of the individual's individual 
        responsibility plan under section 408(b), until an 
        individual successfully completes such services (and 
        without regard to the time limits for the receipt of 
        such services for purposes of subparagraph (A).

           *       *       *       *       *       *       *

          (2) Exception.--Notwithstanding paragraph (1), a 
        State may not reduce or terminate assistance under the 
        State program funded under this part based on a refusal 
        of an individual to engage in work required in 
        accordance with this section if the individual is a 
        single custodial parent caring for a child who has not 
        attained 6 years of age, and the individual proves that 
        the individual has a demonstrated inability (as 
        determined by the State) to obtain needed child care, 
        for 1 or more of the following reasons:
                  (A) Unavailability of appropriate child care 
                within a reasonable distance from the 
                individual's home or work site.
                  (B) Unavailability or unsuitability of 
                informal child care by a relative or under 
                other arrangements.
                  (C) Unavailability of appropriate and 
                affordable formal child care arrangements.
    [(f) Nondisplacement in Work Activities.--
          [(1) In general.--Subject to paragraph (2), an adult 
        in a family receiving assistance under a State program 
        funded under this part attributable to funds provided 
        by the Federal Government may fill a vacant employment 
        position in order to engage in a work activity 
        described in subsection (d).
          [(2) No filling of certain vacancies.--No adult in a 
        work activity described in subsection (d) which is 
        funded, in whole or in part, by funds provided by the 
        Federal Government shall be employed or assigned--
                  [(A) when any other individual is on layoff 
                from the same or any substantially equivalent 
                job; or
                  [(B) if the employer has terminated the 
                employment of any regular employee or otherwise 
                caused an involuntary reduction of its 
                workforce in order to fill the vacancy so 
                created with an adult described in paragraph 
                (1).
          [(3) Grievance procedure.--A State with a program 
        funded under this part shall establish and maintain a 
        grievance procedure for resolving complaints of alleged 
        violations of paragraph (2).
          [(4) No preemption.--Nothing in this subsection shall 
        preempt or supersede any provision of State or local 
        law that provides greater protection for employees from 
        displacement.]
  (f) Nondisplacement.--
          (1) In general.--An adult in a family receiving 
        assistance under a State program funded under this 
        part, in order to engage in a work activity, shall not 
        displace any employee or position (including partial 
        displacement, such as a reduction in the hours of 
        nonovertime work, wages, or employment benefits), fill 
        any unfilled vacancy, or perform work when any 
        individual is on layoff from the same or substantially 
        equivalent job.
          (2) Prohibitions.--A work activity engaged in under a 
        program operated with funds provided under this part 
        shall not impair any existing contract for services, be 
        inconsistent with any existing law, regulation, or 
        collective bargaining agreement, or infringe upon the 
        recall rights or promotional opportunities of any 
        worker.
          (3) No supplanting of other hires.--A work activity 
        engaged in under a program operated with funds provided 
        under this part shall be in addition to any activity 
        that otherwise would be available and shall not 
        supplant the hiring of an employed worker not funded 
        under such program.
          (4) Enforcing antidisplacement protections.--
                  (A) In general.--The State shall establish 
                and maintain an impartial grievance procedure, 
                which shall include the opportunity for a 
                hearing, to resolve any complaints alleging 
                violations of the requirements of paragraphs 
                (1), (2), or (3) within 60 days of receipt of 
                the complaint and, if a decision is adverse to 
                the party who filed such grievance or no 
                decision has been reached, provide for the 
                completion of an arbitration procedure within 
                75 days of receipt of the complaint or the 
                adverse decision or conclusion of the 60-day 
                period, whichever is earlier.
                  (B) Remedies.--Remedies for a violation of 
                the requirements of paragraph (1), (2), or (3) 
                shall include termination or suspension of 
                payments, prohibition of the placement of the 
                participant, reinstatement of an employee, and 
                other relief to make an aggrieved employee 
                whole.
                  (C) Limitation on placement.--If a grievance 
                is filed regarding a proposed placement of a 
                participant, such placement shall not be made 
                unless such placement is consistent with the 
                resolution of the grievance pursuant to this 
                paragraph.
                  (D) Nonpreemption of state law.--The 
                provisions of this paragraph shall not be 
                construed to preempt any provision of State law 
                that affords greater protections to employees 
                or to other participants engaged in work 
                activities under a program funded under this 
                part than is afforded by the provisions of this 
                paragraph.
                  (E) Non-exclusive procedures.--The grievance 
                procedures specified in this paragraph are not 
                exclusive, and an aggrieved employee or 
                participant in a program funded under a grant 
                made under this part may pursue other remedies 
                or procedures available under applicable 
                contracts, collective bargaining agreements, or 
                Federal, State, or local laws.

           *       *       *       *       *       *       *

                       PROHIBITIONS; REQUIREMENTS

    Sec. 408. (a) In General.--
          (1) No assistance for families without a minor 
        child.--A State to which a grant is made under section 
        403 shall not use any part of the grant to provide 
        assistance to a family unless the family includes a 
        minor child who resides with the family (consistent 
        with paragraph (10)) or a pregnant individual.
          (2) Reduction or elimination of assistance for non-
        cooperation in establishing paternity or obtaining 
        child support.--If the agency responsible for 
        administering the State plan approved under part D 
        determines that an individual is not cooperating with 
        the State in establishing paternity or in establishing, 
        modifying, or enforcing a support order with respect to 
        a child of the individual, and the individual does not 
        qualify for any good cause or other exception 
        established by the State pursuant to section 454(29), 
        then the State--
                  (A) shall deduct from the assistance that 
                would otherwise be provided to the family of 
                the individual under the State program funded 
                under this part an amount equal to not less 
                than 25 percent of the amount of such 
                assistance; and
                  (B) may deny the family any assistance under 
                the State program.
          [(3) No assistance for families not assigning certain 
        support rights to the state.--
                  [(A) General.--A State to which a grant is 
                made under section 403 shall require, as a 
                condition of providing assistance to a family 
                under the state program funded under this part, 
                that a member of the family assign to the State 
                any rights, the family member may have (on 
                behalf of the family member or of any other 
                person for whom the family member has applied 
                for or is receiving such assistance) to support 
                from any other person, not exceeding the total 
                amount of assistance so provided to the family, 
                which accrue (or have accrued) before the date 
                the family ceases to receive assistance under 
                the program, which assignment, on and after 
                such date, shall not apply with respect to any 
                support (other than support collected pursuant 
                to section 464) which accrued before the family 
                received such assistance and which the State 
                has not collected by--
                          [(i)(I) September 30, 2000, if the 
                        assignment is executed on or after 
                        October 1, 1997, and before October 1, 
                        2000; or
                          [(II) the date the family ceases to 
                        receive assistance under the program, 
                        if the assignment is executed on or 
                        after October 1, 2000; or
                          [(ii) If the State elects to 
                        distribute collections under section 
                        457(a)(6), the date the family ceases 
                        to receive assistance under the 
                        program, if the assignment is executed 
                        on or after October 1, 1998.
                  [(B) Limitation.--A State to which a grant is 
                made under section 403 shall not require, as a 
                condition of providing assistance to any family 
                under the State program funded under this part, 
                that a member of the family assign to the State 
                any rights to support described in subparagraph 
                (A) which accrue after the date the family 
                ceases to receive assistance under the 
                program.]
          (3) No assistance for families not assigning certain 
        support rights to the state.--A State to which a grant 
        is made under section 403 shall require, as a condition 
        of paying assistance to a family under the State 
        program funded under this part, that a member of the 
        family assign to the State any right the family member 
        may have (on behalf of the family member or of any 
        other person for whom the family member has applied for 
        or is receiving such assistance) to support from any 
        other person, not exceeding the total amount of 
        assistance so paid to the family, which accrues during 
        the period that the family receives assistance under 
        the program.

           *       *       *       *       *       *       *

          (5) No assistance for teenage parents not living in 
        adult supervised settings.--
                (A) In general.--
                          (i) Requirement.--Except as provided 
                        in [subparagraphs (B) and (C)], a State 
                        to which a grant is made under section 
                        403 shall not use any part of the grant 
                        to provide assistance to an individual 
                        described in the minor child referred 
                        to in clause (ii) of this subparagraph 
                        if the individual and the minor child 
                        referred to in clause (ii)(II) [do not 
                        reside in a] do not reside--
                                  (I) in a place of residence 
                                maintained by a parent, legal 
                                guardian, or other adult 
                                relative of the individual as 
                                such parent's, guardian's, or 
                                adult relative's own home[.]; 
                                or
                                  (II) in a transitional living 
                                youth project funded under a 
                                grant made under section 321 of 
                                the Run-away and Homeless Youth 
                                Act (42 U.S.C. 5714-1).
                          (ii) Individual described.--For 
                        purposes of clause (i), an individual 
                        described in this clause is an 
                        individual who--
                                  (I) has not attained 18 years 
                                of age; and
                                  (II) is not married, and has 
                                a minor child in his or her 
                                care.
                  (B) Exception.--
                          (i) Provision of, or [assistance] aid 
                        in locating, adult-supervised living 
                        arrangement.--* * *

           *       *       *       *       *       *       *

                  ``(C) Authority to provide temporary 
                assistance.--A State may use any part of a 
                grant made under section 403 to provide 
                assistance to an individual described in clause 
                (ii) of subparagraph (A) who would otherwise be 
                prohibited from receiving such assistance under 
                clause (i) of that subparagraph, subparagraph 
                (B), or under section 408(a)(4) for not more 
                than 60 days in order to assist the individual 
                in meeting the requirement of clause (i) of 
                subparagraph (A), subparagraph (B), or under 
                section 408(a)(4) for receipt of such 
                assistance.''
          (6) No medical services.--
                  (A) In general.--A State to which a grant is 
                made under section 403 shall not use any part 
                of the grant to provide medical services.
                  (B) Exception for prepregnancy family 
                planning services.--As used in subparagraph 
                (A), the term ``medical services'' does not 
                include prepregnancy family planning services.
          (7) No assistance for more than 5 years.--

           *       *       *       *       *       *       *

                  (D) Disregard of months of assistance 
                received [by adult while living in Indian 
                Country or an Alaskan Native Village with 50 
                percent unemployment] in areas of indian 
                country or an alaskan native village with high 
                joblessness._

           *       *       *       *       *       *       *

                          (i) In general.--[In] Subject to 
                        clauses (ii) and (iii), in determining 
                        the number of months for which an adult 
                        has received assistance under a State 
                        or tribal program funded under this 
                        part, the State or tribe shall 
                        disregard any month during which the 
                        adult lived in Indian country or an 
                        Alaskan Native village if the most 
                        reliable data available with respect to 
                        the month (or a period including the 
                        month) indicate that at least [50 
                        percent of the adults living in Indian 
                        country or in the village were not 
                        employed.] 20 percent of the adults who 
                        were living in Indian country were 
                        jobless.
                          (ii) Alaskan native village.--With 
                        respect to an Alaskan Notice village, 
                        this subparagraph shall be applied--
                                  (I) in clause (i), by 
                                substituting ``50 percent of 
                                the adults living in the 
                                village were not employed'' for 
                                ``20 percent of the adults who 
                                were living in Indian country 
                                were jobless;'' and
                                  (II) without regard to clause 
                                (iii).
                          (iii) Requirement.--A month may only 
                        be disregarded under clause (i) with 
                        respect to an adult recipient described 
                        in that clause if the adult is in 
                        compliance with program requirements.
                          [(ii)] (iv) Indian country defined.--
                        As used in clause (i), the term 
                        ``Indian country'' has the meaning 
                        given such term in section 1151 of 
                        title 18, United States Code.

           *       *       *       *       *       *       *

          (12) Ban on imposition of stricter eligibility 
        criteria for 2-parent families.--In determining the 
        eligibility of a 2-percent family for any benefit or 
        service funded under this part or funded with non-
        Federal funds counting toward the State's qualified 
        State expenditures under section 409(a)(7), the State 
        shall not impose a requirement that does not apply in 
        determining the eligibility of a 1-percent family for 
        such assistance.
    [(b) Individual Responsibility Plans.--
          [(1) Assessment.--The State agency responsible for 
        administering the State program funded under this part 
        shall make an initial assessment of the skills, prior 
        work experience, and employability of each recipient of 
        assistance under the program who--
                  [(A) has attained 18 years of age; or
                  [(B) has not completed high school or 
                obtained a certificate of high school 
                equivalency, and is not attending secondary 
                school.
          [(2) Contents of plans.--
                  (A) In general.--On the basis of the 
                assessment made under subsection (a) with 
                respect to an individual, the State agency, in 
                consultation with the individual, may develop 
                an individual responsibility plan for the 
                individual, which--
                          [(i) sets forth an employment goal 
                        for the individual and a plan for 
                        moving the individual immediately into 
                        private sector employment;
                          [(ii) 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;
                          [(iii) to the greatest extent 
                        possible is designed to move the 
                        individual into whatever private sector 
                        employment the individual is capable of 
                        handling as quickly as possible, and to 
                        increase the responsibility and amount 
                        of work the individual is to handle 
                        over time;
                          [(iv) describes the services the 
                        State will provide the individual so 
                        that the individual will be able to 
                        obtain and keep employment in the 
                        private sector, and describe the job 
                        counseling and other services that will 
                        be provided by the State; and
                          [(v) may require the individual to 
                        undergo appropriate substance abuse 
                        treatment.
                  [(B) Timing.--The State agency may comply 
                with paragraph (1) with respect to an 
                individual--
                          [(i) 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 (as in effect immediately before 
                        such effective date); or
                          [(ii) within 30 days (or, at the 
                        option of the State, 90 days) after the 
                        individual is determined to be eligible 
                        for such assistance, in the case of any 
                        other individual.
          [(3) Penalty for noncompliance by individual.--In 
        addition to any other penalties required under the 
        State program funded under this part, the State may 
        reduce, by such amount as the State considers 
        appropriate, the amount of assistance otherwise payable 
        under the State program to a family that includes an 
        individual who fails without good cause to comply with 
        a responsibility plan signed by the individual.
          [(4) State discretion.--The exercise of the authority 
        of this subsection shall be within the sole discretion 
        of the State.]
  (b) Individual Responsibility Plans.--
          (1) Assessment.--The State agency responsible for 
        administering the State program funded under this part 
        shall make an initial screening and assessment of the 
        following for each family with an adult or minor child 
        head of household receiving assistance:
                  (A) The education obtained, skills, prior 
                work experience, work readiness, and barriers 
                to work of each adult or minor child head of 
                household recipient of assistance in the family 
                who has attained age 18 or who has not 
                completed high school or obtained a certificate 
                of high school equivalency, and is not 
                attending secondary school.
                  (B) The work support, work readiness, and 
                family support services for which families 
                receiving assistance are eligible.
                  (C) The well-being of the children in the 
                family and, where appropriate, activities or 
                resources to improve the well-being of the 
                children.
          (2) Contents of plans.--
                  (A) In general.--On the basis of the 
                screening and assessment required under 
                paragraph (1) for a family with an adult or 
                minor child head of household receiving 
                assistance under the State program funded under 
                this part, the State agency, in consultation 
                with the family, shall develop an individual 
                responsibility plan that--
                          (i) establishes for each adult and 
                        minor child head of household recipient 
                        a self-sufficiency plan that specifies 
                        activities described in the State plan 
                        submitted pursuant to section 402, 
                        including work activities specified in 
                        section 407(d), as appropriate, that 
                        are designed to assist the family in 
                        achieving their maximum degree of self-
                        sufficiency, and that provides for the 
                        ongoing participation of the adult or 
                        minor child head of household recipient 
                        in the activities;
                          (ii) sets forth the obligations of 
                        the adult or minor child head of 
                        household recipient which may include 
                        registering for work and commencing a 
                        search for employment for a specified 
                        number of hours each week;
                          (iii) requires, at a minimum, each 
                        such recipient to participate in 
                        activities in accordance with the 
                        individual responsibility plan;
                          (iv) sets forth the appropriate 
                        supportive services the State intends 
                        to provide for the family;
                          (v) establishes for the family a plan 
                        that addresses the issue of child well-
                        being and, when appropriate, adolescent 
                        well-being, and that may include 
                        services such as domestic violence 
                        counseling, mental health referrals, 
                        and parenting courses; and
                          (vi) includes a section designed to 
                        assist the family by informing the 
                        family of the work support assistance 
                        for which the family may be eligible, 
                        including (but not limited to)--
                                  (I) the food stamp program 
                                established under the Food 
                                Stamp Act of 1977 (7 U.S.C. 
                                2011 et seq.);
                                  (II) the medicaid program 
                                funded under title XIX;
                                  (III) the State children's 
                                health insurance program funded 
                                under title XXI;
                                  (IV) child care funded under 
                                the Child Care Development 
                                Block Grant Act of 1990 (42 
                                U.S.C. 9858 et seq.);
                                  (V) the earned income tax 
                                credit under section 32 of the 
                                Internal Revenue Code of 1986;
                                  (VI) the low-income home 
                                energy assistance program 
                                established under the Low-
                                Income Home Energy Assistance 
                                Act of 1981 (42 U.S.C. 8621 et 
                                seq.);
                                  (VII) the special 
                                supplemental nutrition program 
                                for women, infants, and 
                                children established under 
                                section 17 of the Child 
                                Nutrition Act of 1966 (42 
                                U.S.C. 1786);
                                  (VIII) programs conducted 
                                under the Workforce Investment 
                                Act of 1998 (29 U.S.C. 2801 et 
                                seq.); and
                                  (IX) low-income housing 
                                assistance programs.
          (3) Review.--
                  (A) Regular review.--The State agency shall--
                          (i) monitor the participation of each 
                        adult recipient in the activities 
                        specified in the individual 
                        responsibility plan, and regularly 
                        review the progress of the family 
                        toward self-sufficiency; and
                          (ii) upon such a review, revise the 
                        plan and activities required under the 
                        plan as the State deems appropriate in 
                        consultation with the family.
                  (B) Prior to the imposition of a sanction.--
                The State agency shall--
                          (i) review the individual 
                        responsibility plan prior to imposing a 
                        sanction against the adult recipient or 
                        the family for failure to comply with a 
                        requirement of the plan or the State 
                        program funded under this part; and
                          (ii) make a good faith effort (as 
                        defined by the State) to consult with 
                        the family as part of such review.
          (4) Timing.--With respect to a family, the State 
        shall comply with this subsection--
                  (A) in the case of a family that, as of 
                October 1, 2003, is not receiving assistance 
                from the State program funded under this part, 
                not later than 60 days after the family first 
                receives assistance on the basis of the most 
                recent application for the assistance; and
                  (B) in the case of a family that, as of such 
                date, is receiving the assistance, not later 
                than September 30, 2004.
          (5) Rule of interpretation.--Nothing in this 
        subsection shall preclude a State from requiring 
        participation in work and any other activities the 
        State deems appropriate for helping families achieve 
        self-sufficiency and improving child well-being.

           *       *       *       *       *       *       *

    [e] * * *
    (e) Eligibility of Certain Aliens.--Except as provided in 
subsection (f), at State option, a State may provide 
assistance, benefits, or services to a qualified alien (as 
defined in subsections (b) and (c) of section 431 of the 
Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996 (8 U.S.C. 1641)) under the State program funded under 
this part in the same manner and to the same extent as a 
citizen of the United States would be provided such assistance, 
benefits, or services.
    (f) Special Rules Relating to the Treatment of [Non-213A] 
Sponsored Aliens.--[The following rules shall apply if a State 
elects to take the income or resources of any sponsor of a non-
213A alien into account in determining whether the alien is 
eligible for assistance under the State program funded under 
this part, or in determining the amount or types of such 
assistance to be provided to the alien:] The following rules 
shall apply in determining whether an alien sponsored under 
section 213A of the Immigration and Nationality Act (and, at 
the option of the State, a non-213A alien) is eligible for cash 
assistance under the State program funded under this part, or 
in determining the amount of such assistance to be provided to 
a sponsored alien:
          (1) Deeming of sponsor's income and resources.--For a 
        period of 3 years after a [non-213A] sponsored alien 
        enters the United States:
                  (A) Income deeming rule.--The income of any 
                sponsor of the alien and of any spouse of the 
                sponsor is deemed to be income of the alien, to 
                the extent that the total amount of the income 
                exceeds the sum of--
                  (B) Resource deeming rule.--The resources of 
                a sponsor of the alien and of any spouse of the 
                sponsor are deemed to be resources of the alien 
                to the extent that the aggregate value of the 
                resources exceeds $1,500 (or, a greater amount 
                as determined by the State).
                  (C) Sponsors of multiple [non-213A] sponsored 
                aliens.--If a person is a sponsor of 2 or more 
                non-213A aliens who are living in the same 
                home, the income and resources of the sponsor 
                and any spouse of the sponsor that would be 
                deemed income and resources of any such alien 
                under subparagraph (A) shall be divided into a 
                number of equal shares equal to the number of 
                such aliens, and the State shall deem the 
                income and resources of each such alien to 
                include 1 such share.

           *       *       *       *       *       *       *

          (4) Non-213a alien defined.--An alien is a non-213A 
        alien for purposes of this subsection if the affidavit 
        of support or similar agreement with respect to the 
        alien that was executed by the sponsor of the alien's 
        entry into the United States was executed other than 
        pursuant to section 213A of the Immigration and 
        Nationality Act.
          [(5) Inapplicability to alien minor sponsored by a 
        parent.--This subsection shall not apply to an alien 
        who is a minor child if the sponsor of the alien or any 
        spouse of the sponsor is a parent of the alien.]
          (5) Exceptions.--This subsection shall not apply to 
        an alien who is--
                  (A) a minor child if the sponsor of the alien 
                or any spouse of the sponsor is a parent of the 
                alien child; or
                  (B) described in subsection (e) or (f) of 
                section 421 of the Personal Responsibility and 
                Work Opportunity Reconciliation Act of 1996 (8 
                U.S.C. 1631).
          (6) Inapplicability to certain categories of 
        aliens.--This subsection shall not apply to an alien 
        who is--
                  (A) admitted to the United States as a 
                refugee under section 207 of the Immigration 
                and Nationality Act;
                  (B) paroled into the United States under 
                section 212(d)(5) of such Act for a period of 
                at least 1 year; or
                  (C) granted political asylum by the Attorney 
                General under section 208 of such Act.
          (7) Inapplicability to family members who are not 
        sponsored aliens.--Income and resources of a sponsor 
        which are deemed under this subsection to be the income 
        and resources of any alien individual in a family shall 
        not be considered in determining the need of other 
        family members except to the extent such income or 
        resources are actually available to such other family 
        members.
          (8) Rule of construction.--For purposes of section 
        421 of the Personal Responsibility and Work Opportunity 
        Reconciliation Act of 1996 (8 U.S.C. 1631), the State 
        program funded under this part is not a Federal means-
        tested public benefits program.
    (g) State Required To Provide Certain Information.--Each 
State to which a grant is made under section 403 shall, at 
least 4 times annually and upon request of the Immigration and 
Naturalization Service, furnish the Immigration and 
Naturalization Service with the name and address of, and other 
identifying information on, any individual who the State knows 
is not lawfully present in the United States.
    (h) Mandatory Partners With One-Stop Employment Training 
Centers Unless State Opt-Out.--For purposes of section 121(b) 
of the Workforce Investment Act of 1998, a State program funded 
under this part shall be considered a program referred to in 
paragraph (1)(B) of such section, unless, after the date of 
enactment of this subsection, the Governor of the State 
notifies the Secretary of Health and Human Services and the 
Secretary of Labor in writing of the decision of the Governor 
not to make the State program a mandatory partner.
    (i) Application of Workplace Laws.--
          (1) In general.--Notwithstanding any other provision 
        of law, workplace laws, including (but not limited to) 
        the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et 
        seq.), the Occupational Safety and Health Act of 1970 
        (29 U.S.C. 651 et seq.), title VII of the Civil Rights 
        Act of 1964 (42 U.S.C. 2000e et seq.), the Americans 
        with Disabilities Act of 1990 (42 U.S.C. 12101 et 
        seq.), and title IX of the Education Amendments of 1972 
        (20 U.S.C. 1681 et seq.) shall apply to an individual 
        who is a recipient of assistance under the State 
        program funded under this part in the same manner as 
        such laws apply to other workers. The fact that such an 
        individual is participating in, or seeking to 
        participate in work activities under the State program 
        funded under this part in satisfaction of the work 
        activity requirements of the program, shall not deprive 
        the individual of the protection of any Federal, State, 
        or local workplace law.
          (2) Neutrality.--No funds provided under this part 
        shall be used to assist, promote, or deter organizing 
        for the purpose of collective bargaining.

                               PENALTIES

    Sec. 409. (a) In General.--Subject to this section:
          (1) Use of grant in violation of this part.
                  (A) General Penalty.--If an audit conducted 
                under chapter 75 of title 31, United States 
                Code, finds that an amount paid to a State 
                under section 403 for a fiscal year has been 
                used in violation of this part, the Secretary 
                shall reduce the grant payable to the State 
                under section 403(a)(1) for the immediately 
                succeeding fiscal year quarter by the amount so 
                used.

           *       *       *       *       *       *       *

          [(6) Failure to timely repay a federal loan fund for 
        state welfare programs.--If the Secretary determines 
        that a State has failed to repay any amount borrowed 
        from the Federal Loan Fund for State Welfare Programs 
        established under section 406 within the period of 
        maturity applicable to the loan, plus any interest owed 
        on the loan, the Secretary shall reduce the grant 
        payable to the State under section 403(a)(1) for the 
        immediately succeeding fiscal year quarter (without 
        regard to this section) by the outstanding loan amount, 
        plus the interest owed on the outstanding amount. The 
        Secretary shall not forgive any outstanding loan amount 
        or interest owed on the outstanding amount.]
          (6) Penalty for imposition of stricter eligibility 
        criteria for 2-parent families.--
                  (A) In general.--If the Secretary determines 
                that a State to which a grant is made under 
                section 403 for a fiscal year has violated 
                section 408(a)(12) during the fiscal year, the 
                Secretary shall reduce the grant payable to the 
                State under section 403(a)(1) for the 
                immediately succeeding fiscal year by an amount 
                up to 5 percent of the State family assistance 
                grant.
                  (B) Penalty based on severity of failure.--
                The Secretary shall impose reductions under 
                subparagraph (A) with respect to a fiscal year 
                based on the degree of noncompliance.
          (7) Failure of any state to maintain certain level of 
        historic effort.--
                  (A) In general.--The Secretary shall reduce 
                the grant payable to the State under section 
                403(a)(1) for [fiscal year 1998, 1999, 2000, 
                2001, 2002, or 2003] fiscal year 2003, 2004, 
                2005, 2006, 2007 or 2008 by the amount (if any) 
                by which qualified State expenditures for the 
                then immediately preceding fiscal year are less 
                that the applicable percentagae of historic 
                State expenditures with respect to such 
                preceding fiscal year.
                  (B) Definitions.--As used in this paragraph:
                          (i) Qualified state expenditures.--
                                  (I) In general.--The term 
                                ``qualified State expenditures 
                                means, with respect to a State 
                                and a fiscal year, the total 
                                expenditures by the State 
                                during the fiscal year, under 
                                all State programs, for any of 
                                the following with respect to 
                                eligible families:
                                          (aa) Cash assistance, 
                                        including any amount 
                                        collected by the State 
                                        as support pursuant to 
                                        a plan approved under 
                                        part D, on behalf of a 
                                        family receiving 
                                        assistance under the 
                                        State program funded 
                                        under this part, that 
                                        is distributed to the 
                                        family under section 
                                        [457(a)(1)(B)] 
                                        457(a)(1) and 
                                        disregarded in 
                                        determining the 
                                        elibility of the family 
                                        for, and the amount of, 
                                        such assistance.

           *       *       *       *       *       *       *

                                  (V) Portions of certain child 
                                support payments collected on 
                                behalf of and distributed to 
                                families no longer receiving 
                                assistance.--Any amount paid by 
                                a State pursuant to section 
                                457(a)(2)(B), but only to the 
                                extent that the State properly 
                                elects under section 457(a)(6) 
                                to have the payment considered 
                                a qualified State expenditure.
                          (ii) Applicable percentage.--The term 
                        ``applicable percentage'' means [for 
                        fiscal years 1997 through 2002,] 80 
                        percent (or, if the State meets the 
                        requirements of section 407(a) for the 
                        preceding fiscal year (or fails to meet 
                        such requirements but meets at least 1 
                        of the criteria for being considered a 
                        needy State under section 
                        403(b)(3)(A)), 75 percent).

           *       *       *       *       *       *       *

          (9) Failure to comply with 5-year limit on 
        assistance.--If the Secretary determines that a State 
        has not complied with section 408(a)(7) during a fiscal 
        year, the Secretary shall reduce the grant payable to 
        the State under section 403(a)(1) for the immediately 
        succeeding fiscal year by an amount equal to 5 percent 
        of the State family assistance grant.
          [(10) Failure of state receiving amounts from 
        contingency fund to maintain 100 percent of historic 
        effort.--If, at the end of any fiscal year during which 
        amounts from the Contingency Fund for State Welfare 
        Programs have been paid to a State, the Secretary finds 
        that the qualified State expenditures (as defined in 
        paragraph (7)(B)(i) (other than the expenditures 
        described in subclause (I)(bb) of that paragraph)) 
        under the State program funded under this part for the 
        fiscal year are less than 100 percent of historic State 
        expenditures (as defined in paragraph (7)(B)(iii) of 
        this subsection), excluding any amount expended by the 
        State for child care under subsection (g) or (i) of 
        section 402 (as in effect during fiscal year 1994) for 
        fiscal year 1994, the Secretary shall reduce the grant 
        payable to the State under section 403(a)(1) for the 
        immediately succeeding fiscal year by the total of the 
        amounts so paid to the State that the State has not 
        remitted under section 403(b)(6).]
          [(11)] (10) Failure to maintain assistance to adult 
        single custodial parent who cannot obtain child care 
        for child under age 6.--
                  (A) In general.--If the Secretary determines 
                that a State to which a grant is made under 
                section 403 for a fiscal year has violated 
                section 407(e)(2) during the fiscal year, the 
                Secretary shall reduce the grant payable to the 
                State under section 403(a)(1) for the 
                immediately succeeding fiscal year by an amount 
                equal to not more than 5 percent of the State 
                family assistance grant.
                  (B) Penalty based on severity of failure.--
                The Secretary shall impose reductions under 
                subparagraph (A) with respect to a fiscal year 
                based on the degree of non-compliance.
          [(12)] (11) Requirement to expend additional state 
        funds to replace grant reductions; penalty for failure 
        to do so.--If the grant payable to a State under 
        section 403(a)(1) for a fiscal year is reduced by 
        reason of this subsection, the State shall, during the 
        immediately succeeding fiscal year, expend under the 
        State program funded under this part an amount equal to 
        the total amount of such reductions. If the State fails 
        during such succeeding fiscal year to make the 
        expenditure required by the preceding sentence from its 
        own funds, the Secretary may reduce the grant payable 
        to the State under section 403(a)(1) for the fiscal 
        year that follows such succeeding fiscal year by an 
        amount equal to the sum of--
                  (A) not more than 2 percent of the State 
                family assistance grant; and
                  (B) the amount of the expenditure required by 
                the preceding sentence.
          [(13)] (12) Penalty for failure of state to maintain 
        historic effort during year in which welfare-to-work 
        grant is received.--If a grant is made to a State under 
        section 403(a)(5)(A) for a fiscal year and paragraph 
        (7) of this subsection requires the grant payable to 
        the State under section 403(a)(1) to be reduced for the 
        immediately succeeding fiscal year, then the Secretary 
        shall reduce the grant payable to the State under 
        section 403(a)(1) for such succeeding fiscal year by 
        the amount of the grant made to the State under section 
        403(a)(5)(A) for the fiscal year.
          [(14)] (13) Penalty for failure to reduce assistance 
        for recipients refusing without good cause to work.--

           *       *       *       *       *       *       *

    (c) Corrective Compliance Plan.--
          (1) In general.--

           *       *       *       *       *       *       *

          (2) Effect of correcting or discontinuing 
        violation.--The Secretary may not impose any penalty 
        under subsection (a) with respect to any violation 
        covered by a State corrective compliance plan accepted 
        by the Secretary if the State correct or discontinues, 
        as appropriate the violation pursuant to the plan.

           *       *       *       *       *       *       *

    Sec. 411. (a) Quarterly Reports by States.--
          (1) General reporting requirement.--
                  (A) Contents of report.--Each eligible State 
                shall collect on a monthly basis, and report to 
                the Secretary on a quarterly basis, the 
                following disaggregated case record information 
                on the families receiving assistance (including 
                any family with respect to whom the State has 
                exercised its option under section 407(a)(1) or 
                407(a)(2)(B)(i)(I)(bb)) under the State program 
                funded under this part (except for information 
                relating to activities carried out under 
                section 403(a)(5):
                          (i) The county of residence of the 
                        family.
                          (ii) Whether a child receiving such 
                        assistance or an adult in the family is 
                        receiving--
                                  (I) Federal disability 
                                insurance benefits;
                                  (II) benefits based on 
                                Federal disability status;
                                  (III) aid under a State plan 
                                approved under title XIV (as in 
                                effect without regard to the 
                                amendment made by section 301 
                                of the Social Security 
                                Amendments of 1972)[)];
                                  (IV) aid or assistance under 
                                a State plan approved under 
                                title XVI (as in effect without 
                                regard to such amendment) by 
                                reason of being permanently and 
                                totally disabled; or

           *       *       *       *       *       *       *

                          (vii) The race and educational level 
                        of each adult in the family.
                          (viii) The race [and educational 
                        level] of each child in the family.

           *       *       *       *       *       *       *

                          (xviii) Whether an individual 
                        responsibility plan is established for 
                        each family in accordance with section 
                        408(b).

           *       *       *       *       *       *       *

          (7) Report on indians served by the state program.--
        The report required by paragraph (1) for a fiscal 
        quarter shall include information on the demographics 
        and caseload charcteristics of Indians served by the 
        State program during the quarter.
          (8) Public availability of report.--The State shall 
        make publicly available at the time of submission of 
        each report required under paragraph (1) for a fiscal 
        quarter a copy of the report for that fiscal quarter, 
        including by posting of the copy on the Internet 
        website for the State agency administering the State 
        program funded under this part.
          [(7)] (9) Regulations.--The Secretary shall prescribe 
        such regulations as may be necessary to define the data 
        elements with respect to which reports are required by 
        this subsection, and shall consult with the Secretary 
        of Labor in defining the data elements with respect to 
        programs operated with funds provided under sections 
        403(a)(5).
    (b) Annual Reports to the Congress by the Secretary.-- * * 
*

           *       *       *       *       *       *       *

          (3) the characteristics of each State program funded 
        under this part; [and]
          (4) the trends in employment and earnings of needy 
        families with minor children living at home[.];
          (5) information regarding any complaints received by 
        the Federal Government or States concerning fair and 
        equitable treatment related to civil rights or labor 
        laws, including the number and status of such 
        complaints, and in the case of States, that is State 
        specific; and
          (6) State specific information on the demographics 
        and caseload characteristics of Indians served by each 
        State program funded under this part.

           *       *       *       *       *       *       *

           DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES

    Sec. 412. (a) Grants for Indian Tribes.--
          (1) Tribal family assistance grant.--
                  (A) In general.--For each of fiscal years 
                [1997, 1998, 1999, 2000, 2001, and 2002] 2003 
                through 2007, the Secretary shall pay to each 
                Indian tribe that has an approved tribal family 
                assistance plan a tribal family assistance 
                grant for the fiscal year in an amount equal to 
                the amount determined under subparagraph (B), 
                which shall be reduced for a fiscal year, on a 
                pro rata basis for each quarter, in the case of 
                a tribal family assistance plan approved during 
                a fiscal year for which the plan is to be in 
                effect, and shall reduce the grant payable 
                under section 403(a)(1) to any State in which 
                lies the service area or areas of the Indian 
                tribe by that portion of the amount so 
                determined that is attributable to expenditures 
                by the State.

           *       *       *       *       *       *       *

          [(2) Grants for indian tribes that received jobs 
        funds.--
                [(A) In general.--For each of fiscal years 
                1997, 1998, 1999, 2000, 2001, and 2002, the 
                Secretary shall pay to each eligible Indian 
                tribe that proposes to operate a program 
                described in subparagraph (C) a grant in an 
                amount equal to the amount received by the 
                Indian tribe in fiscal year 1994 under section 
                482(i) (as in effect during fiscal year 1994).
                  [(B) Eligible indian tribe.--For purposes of 
                subparagraph (A), the term ``eligible Indian 
                tribe'' means an Indian tribe or Alaska Native 
                organization that conducted a job opportunities 
                and basic skills training program in fiscal 
                year 1995 under section 482(i) (as in effect 
                during fiscal year 1995).
                  [(C) Use of grant.--Each Indian tribe to 
                which a grant is made under this paragraph 
                shall use the grant for the purpose of 
                operating a program to make work activities 
                available to such population and such service 
                areas or areas as the tribe specifies.
                  [(D) Appropriation.--Out of the any money in 
                the Treasury in the United States not otherwise 
                appropriated, there are appropriated $7,633,287 
                for each fiscal year specified in subparagraph 
                (A) for grants under subparagraph (A).]
          (2) Tribal tanf improvement grants.--
                  (A) Tribal capacity grants.--
                          (i) In general.--Of the amount 
                        appropriated under subparagraph (D) for 
                        the period of fiscal years 2003 through 
                        2006, $35,000,000 shall be used by the 
                        Secretary to award grants for tribal 
                        human services program infrastructure 
                        improvement (as defined in clause (v)) 
                        to--
                                  (I) Indian tribes that have 
                                applied for approval of a 
                                tribal family assistance plan 
                                and that meet the requirements 
                                of clause (ii)(I);
                                  (II) Indian tribes with an 
                                approved tribal family 
                                assistance plan and that meet 
                                the requirements of clause 
                                (ii)(II); and
                                  (III) Indian tribes that have 
                                applied for approval of a 
                                foster care and adoption 
                                assistance program under 
                                section 479B or that plan to 
                                enter into, or have in place, a 
                                tribal-State cooperative 
                                agreement under section 479B(c) 
                                and that meet the requirements 
                                of clause (ii)(III).
                          (ii) Priorities for awarding of 
                        grants.--The Secretary shall give 
                        priority in awarding grants under this 
                        subparagraph as follows:
                                  (I) First, for grants to 
                                Indian tribes that have applied 
                                for approval of a tribal family 
                                assistance plan, that have not 
                                operated such a plan as of the 
                                date of enactment of the Work, 
                                Opportunity, and Responsibility 
                                for Kids Act of 2002 that will 
                                have such plan approved, and 
                                that include in the plan 
                                submission provisions for 
                                tribal human services program 
                                infrastructure improvement (as 
                                so defined) and related 
                                management information systems 
                                training.
                                  (II) Second, for Indian 
                                tribes with an approved tribal 
                                family assistance plan that are 
                                not described in subclause (I) 
                                and that submit an addendum to 
                                such plan that includes 
                                provisions for tribal human 
                                services program infrastructure 
                                improvement that includes 
                                implementing or improving 
                                management information systems 
                                of the tribe (including 
                                management information systems 
                                training), as such systems 
                                relate to the operation of the 
                                tribal family assistance plan.
                                  (III) Third, for Indian 
                                tribes that have applied for 
                                approval of a foster care and 
                                adoption assistance program 
                                under section 479B or that plan 
                                to enter into, or have in 
                                place, a tribal-State 
                                cooperative agreement under 
                                section 479B(c) and that 
                                include in the plan submission 
                                under section 471 (or in an 
                                addendum to such plan) 
                                provisions for tribal human 
                                services program infrastructure 
                                improvement (as so defined) and 
                                related management information 
                                systems training.
                          (iii) Other requirements for awarding 
                        grants.--In awarding grants under this 
                        subparagraph, the Secretary--
                                  (I) may not award an Indian 
                                tribe more than 1 grant under 
                                this subparagraph per fiscal 
                                year;
                                  (II) shall award grants in 
                                such a manner as to maximize 
                                the number of Indian tribes 
                                that receive grants under this 
                                subparagraph; and
                                  (III) shall consult with 
                                Indian tribes located 
                                throughout the United States.
                          (iv) Application.--An Indian tribe 
                        desiring a grant under this 
                        subparagraph shall submit an 
                        application to the Secretary, at such 
                        time, in such manner, and containing 
                        such information as the Secretary may 
                        require.
                          (v) Definition of human services 
                        program infrastructure improvement.--In 
                        this subparagraph, the term ``human 
                        services program infrastructure 
                        improvement'' includes (but is not 
                        limited to) improvement of management 
                        information systems, management 
                        information systems-related training, 
                        equipping offices, and renovating, but 
                        not constructing, buildings, as 
                        described in an application for a grant 
                        under this subparagraph, and subject to 
                        approval by the Secretary.
                  (B) Tribal development grants.--
                          (i) In general.--Of the amount 
                        appropriated under subparagraph (D) for 
                        the period of fiscal years 2003 through 
                        2006, $35,000,000 shall be used by the 
                        Secretary to award, through the 
                        Commissioner of the Administration for 
                        Native Americans, grants to nonprofit 
                        organizations, Indian tribes, and 
                        tribal organizations to enable such 
                        organizations and tribes to provide 
                        technical assistance to Indian tribes 
                        and tribal organizations in any or all 
                        of the following areas:
                                  (I) The development and 
                                improvement of uniform 
                                commercial codes.
                                  (II) The creation or 
                                expansion of small business or 
                                microenterprise programs.
                                  (III) The development and 
                                improvement of tort liability 
                                codes.
                                  (IV) The creation or 
                                expansion of tribal marketing 
                                efforts.
                                  (V) The creation or expansion 
                                of for-profit collaborative 
                                business networks.
                                  (VI) The development of 
                                innovative uses of 
                                telecommunications to assist 
                                with distance learning or 
                                telecommuting.
                                  (VII) The development of 
                                economic opportunities and job 
                                creation in areas of high 
                                joblessness in Alaska (as 
                                defined in section 
                                408(a)(7)(D)(ii)).
                          (ii) Requirements.--
                                  (I) In general.--At least an 
                                amount equal to 10 percent of 
                                the total amount of grants 
                                awarded under this subparagraph 
                                shall be awarded to carry out 
                                clause (i)(VII).
                                  (II) Consultation.--In 
                                awarding grants under this 
                                subparagraph the Secretary 
                                shall consult with other 
                                Federal agencies with expertise 
                                in the areas described in 
                                clause (i).
                          (iii) Application.--A nonprofit 
                        organization, Indian tribe, or tribal 
                        organization desiring a grant under 
                        this subparagraph shall submit an 
                        application to the Secretary at such 
                        time, in such manner, and containing 
                        such information as the Secretary may 
                        require.
                  (C) Technical assistance.--
                          (i) In general.--Of the amount 
                        appropriated under subparagraph (D) for 
                        the period of fiscal years 2003 through 
                        2006, $5,000,000 shall be used by the 
                        Secretary for making grants, or 
                        entering into contracts, to provide 
                        technical assistance to Indian tribes--
                                  (I) in applying for or 
                                carrying out a grant made under 
                                this paragraph;
                                  (II) in applying for or 
                                carrying out a tribal family 
                                assistance plan under this 
                                section; or
                                  (III) related to best 
                                practices and approaches for 
                                State and tribal coordination 
                                on the transfer of the 
                                administration of social 
                                services programs to Indian 
                                tribes.
                          (ii) Reservation of funds.--Not less 
                        than--
                                  (I) $2,500,000 of the amount 
                                described in clause (i) shall 
                                be used by the Secretary to 
                                support, through grants or 
                                contracts, peer-learning 
                                programs among tribal 
                                administrators; and
                                  (II) $1,000,000 of such 
                                amount shall be used by the 
                                Secretary for making grants to 
                                Indian tribes to conduct 
                                feasibility studies of the 
                                capacity of Indian tribes to 
                                operate tribal family 
                                assistance plans under this 
                                part.
                  (D) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there is appropriated $75,000,000 
                for the period of fiscal years 2003 through 
                2006 to carry out this paragraph. Amounts 
                appropriated under this subparagraph shall 
                remain available until expended.

           *       *       *       *       *       *       *

          (4) Grants for tribal employment services programs.--
                  (A) Purpose.--The purpose of this paragraph 
                is to support comprehensive services to enable 
                eligible beneficiaries to support themselves 
                through employment without requiring cash 
                benefits from public assistance programs for 
                themselves or their families.
                  (B) Statement of policy.--The programs funded 
                under grants made under this paragraph shall be 
                administered in a manner consistent with the 
                principles of the Indian Self-Determination and 
                Education Assistance Act (25 U.S.C. 450 et 
                seq.) and the government-to-government 
                relationship between the Federal Government and 
                Indian tribal governments.
                  (C) Definitions.--In this paragraph:
                          (i) Alaska native organization.--The 
                        term ``Alaska Native organization'' has 
                        the meaning given the term ``Indian 
                        tribe'' with respect to the State of 
                        Alaska in section 419(4)(B).
                          (ii) Department.--Unless otherwise 
                        specified, the term ``Department'' 
                        means the Department of Labor.
                          (iii) Eligible beneficiary.-- The 
                        term ``eligible beneficiary'' means--
                                  (I) an individual who is an 
                                Indian or Alaska Native 
                                receiving or eligible to 
                                receive cash benefits for the 
                                individual or the individual's 
                                family under the State program 
                                funded under this part, a 
                                tribal family assistance 
                                program under this section, or 
                                the General Assistance program;
                                  (II) an individual who is an 
                                Indian or Alaska Native 
                                transitioning from receipt of 
                                cash benefits under any such 
                                programs to employment;
                                  (III) an individual who is an 
                                Indian or Alaska Native with a 
                                history of long-term dependence 
                                (as defined in clause (v)) on 
                                cash benefits under any such 
                                programs or under the aid for 
                                families with dependent 
                                children program under this 
                                part (as in effect before 
                                August 22, 1996);
                                  (IV) an individual who is an 
                                Indian or Alaska Native who is 
                                a non-custodial parent of a 
                                minor child receiving, eligible 
                                to receive, or with a history 
                                of receiving cash benefits 
                                under any such programs, or an 
                                individual who has an 
                                obligation to provide support 
                                for such children; or
                                  (V) an individual who is an 
                                Indian or Alaska Native and is 
                                a member of a family who is at 
                                risk of becoming dependent on 
                                cash benefits under any such 
                                programs or who has exhausted 
                                eligibility for such benefits 
                                because of the application of 
                                time limits on benefits.
                          (iv) General assistance.--The term 
                        ``General Assistance'' means the 
                        General Assistance program supported 
                        through the Bureau of Indian Affairs in 
                        the Department of the Interior.
                          (v) Long-term dependence.--The term 
                        ``long-term dependence'' means receipt 
                        of cash benefits under a program 
                        referred to in clause (iii)(III) for at 
                        least 24 months, which need not be 
                        consecutive.
                          (vi) Secretary.--Unless otherwise 
                        specified, the term ``Secretary'' means 
                        the Secretary of Labor.
                  (D) Authority to make grants.--
                          (i) Direct services.--The Secretary 
                        shall make grants to Indian tribes, 
                        tribal organizations, and Alaska Native 
                        organizations on the basis of a formula 
                        determined in accordance with 
                        subparagraph (H)(ii) to carry out the 
                        activities described in subparagraph 
                        (E).
                          (ii) Program support.--The Secretary 
                        shall, through grants or contracts with 
                        entities, or interagency agreements, 
                        carry out the activities described in 
                        subparagraph (F).
                          (iii) Appropriation.--
                                  (I) In general.--Out of any 
                                money in the Treasury of the 
                                United States not otherwise 
                                appropriated, there is 
                                appropriated $37,000,000 for 
                                each of fiscal years 2003 
                                through 2007 to carry out this 
                                paragraph.
                                  (II) Reservation of funds for 
                                program support.--The Secretary 
                                may reserve an amount equal to 
                                not more than 1.5 percent of 
                                the amount appropriated under 
                                subclause (I) for a fiscal year 
                                to make grants or enter into 
                                contracts under clause (ii).
                  (E) Direct service activities.--
                          (i) In general.--A recipient of a 
                        grant made under subparagraph (D)(i) 
                        shall use the funds provided under the 
                        grant to support any services which may 
                        be useful in preparing eligible 
                        beneficiaries to enter or reenter the 
                        workforce, to retain employment or to 
                        advance to positions which may enable 
                        the eligible beneficiary and the 
                        beneficiary's family to become 
                        economically self-sufficient.
                          (ii) Services permitted.--Services 
                        provided with funds made available 
                        under a grant made under subparagraph 
                        (D)(i) may include--
                                  (I) assessment;
                                  (II) education;
                                  (III) job readiness and 
                                placement;
                                  (IV) occupational training 
                                (including on-the-job 
                                training);
                                  (V) work experience;
                                  (VI) wage subsidies;
                                  (VII) job retention;
                                  (VIII) job creation 
                                specifically for eligible 
                                beneficiaries;
                                  (IX) case management;
                                  (X) counseling;
                                  (XI) supportive services, 
                                including (but not limited to) 
                                child care, transportation, 
                                mental health and substance 
                                abuse treatment, and prevention 
                                services important to 
                                employability; and
                                  (XII) counseling and other 
                                services to promote marriage, 
                                discourage teen pregnancies, 
                                assist in the formation and 
                                stabilization of 2-parent 
                                families, and address 
                                situations involving domestic 
                                violence.
                          (iii) Retention of eligibility for 
                        other services.--An eligible 
                        beneficiary who receives services 
                        through funds provided under a grant 
                        made under subparagraph (D)(i) shall 
                        not be precluded from receiving other 
                        services from any State, local, or 
                        tribal government agency, or any other 
                        entity.
                          (iv) Disregard.--Income or services 
                        received by an eligible beneficiary 
                        under this paragraph shall be 
                        disregarded for purposes of determining 
                        eligibility for benefits under any 
                        means-tested program for which the 
                        eligibility requirements are 
                        established under Federal law.
                  (F) Program support activities.--
                          (i) In general.--In order to improve 
                        the effectiveness of services provided 
                        by Indian tribes, tribal organizations, 
                        and Alaska Native organizations under 
                        grants made under this paragraph, the 
                        Secretary shall support, through 
                        grants, contracts, or interagency 
                        agreements, activities that--
                                  (I) enhance the capacity of 
                                Indian tribes, tribal 
                                organizations, and Alaska 
                                Native organizations under this 
                                section to deliver the services 
                                authorized under subparagraph 
                                (E); and
                                  (II) test or demonstrate new 
                                or improved methods of 
                                providing such services.
                          (ii) Preference.--In awarding grants 
                        or contracts under subparagraph (D)(ii) 
                        to carry out this subparagraph, the 
                        Secretary shall implement a preference 
                        policy consistent with the terms of 
                        section 7(b) of the Indian Self-
                        Determination and Education Assistance 
                        Act (25 U.S.C. 450e(b)).
                  (G) Additional requirements.--
                          (i) Direct service activities.--
                                  (I) Authority to consolidate 
                                funds.--An Indian tribe, tribal 
                                organization, or Alaska Native 
                                organization receiving a grant 
                                under subparagraph (D)(i) may 
                                consolidate funds received 
                                under the grant with assistance 
                                received from other programs in 
                                accordance with the provisions 
                                of the Indian Employment, 
                                Training and Related Services 
                                Demonstration Act of 1992 (25 
                                U.S.C. 3401 et seq.) or the 
                                provisions of the Tribal Self-
                                Governance Act of 1994 (25 
                                U.S.C. 458aa et seq.).
                                  (II) Option to exclude 
                                participants from determination 
                                of work participation rates.--A 
                                State, Indian tribe, or tribal 
                                organization may exclude 
                                individuals participating in a 
                                direct services program funded 
                                under a grant made under 
                                subparagraph (D)(i) for a month 
                                from the calculation of the 
                                work participation rate for the 
                                State or tribe for such month.
                          (ii) Applicable rules.--Any amount 
                        paid to an Indian tribe, tribal 
                        organization, or Alaska Native 
                        organization under this part that is 
                        used to carry out the activities 
                        described in subparagraph (E) or (F) 
                        shall not be subject to the 
                        requirements of this part, but shall be 
                        subject to the requirements specified 
                        in the regulations required under 
                        subparagraph (H)(iii), and the 
                        expenditure of any amount so used shall 
                        not be considered to be an expenditure 
                        under this part.
                          (iii) Availability of funds.--Funds 
                        provided to a recipient of a grant or 
                        contract under subparagraph (D)(ii) 
                        shall remain available for obligation 
                        for 2 succeeding fiscal years after the 
                        fiscal year in which the grant is made 
                        or the contract is entered into.
                  (H) Program administration.--
                          (i) Designation of office with 
                        primary responsibility.--The Secretary 
                        shall designate a single organizational 
                        unit within the Department that shall 
                        have as its primary responsibility the 
                        administration of the activities 
                        authorized under this paragraph and of 
                        any related Indian programs 
                        administered by the Department.
                          (ii) Consultation.--
                                  (I) In general.--The 
                                Secretary shall consult with 
                                Indian tribes and tribal 
                                organizations eligible to 
                                administer activities 
                                authorized under this paragraph 
                                that are located throughout the 
                                United States on all aspects of 
                                the operation and 
                                administration of such 
                                activities, including the 
                                promulgation of regulations, 
                                the design of a formula for the 
                                allocation of funds among 
                                Indian tribes and tribal 
                                organizations, and the 
                                implementation of program 
                                support activities described in 
                                subparagraph (F).
                                  (II) Advisory committee.--The 
                                Secretary may utilize a broadly 
                                based advisory committee whose 
                                members are nominated by Indian 
                                tribes and tribal organizations 
                                eligible to administer 
                                activities authorized under 
                                this paragraph as part of the 
                                consultation required under 
                                subclause (I), except that the 
                                consultation process shall not 
                                be limited to discussions with 
                                such committee.
                          (iii) Regulations.--The Secretary may 
                        issue regulations for the conduct of 
                        activities under this paragraph. All 
                        requirements imposed by such 
                        regulations, including reporting 
                        requirements, shall take into full 
                        consideration tribal circumstances and 
                        conditions.
          (5) Application of indian employment, training, and 
        related services demonstration act of 1992.--
        Notwithstanding any other provision of law, if an 
        Indian tribe elects to incorporate the services it 
        provides under this part into a plan under section 6 of 
        the Indian Employment, Training, and Related Services 
        Demonstration Act of 1992 (25 U.S.C. 3405), the 
        programs authorized to be conducted with grants made 
        under this part shall be--
                  (A) considered to be programs subject to 
                section 5 of the Indian Employment, Training, 
                and Related Services Demonstration Act of 1992 
                (25 U.S.C. 3404); and
                  (B) subject to the single plan and single 
                budget requirements of section 6 of that Act 
                (25 U.S.C. 3405) and the single report format 
                required under section 11 of that Act (25 
                U.S.C. 3410).
    (b) 3-Year Tribal Family Assistance Plan.--
          (1) In General.--Any Indian tribe that desires to 
        receive a tribal family assistance grant shall submit 
        to the Secretary a 3-year tribal family assistance plan 
        that--
                  (A) outlines the Indian tribe's approach to 
                providing welfare-related services for the 3-
                year period, consistent with this section;
                  (E) identifies the employment opportunities 
                in or near the service area or areas of the 
                Indian tribe and the manner in which the Indian 
                tribe will cooperate and participate in 
                enhancing such opportunities for recipients of 
                assistance under the plan consistent with any 
                applicable State standards; [and]
                  (F) applies the fiscal accountability 
                provisions of section 5(f)(1) of the Indian 
                Self-Determination and Education Assistance Act 
                (25 U.S.C. 450c(f)(1)), relating to the 
                submission of a single-agency audit report 
                required by chapter 75 of title 31, United 
                States Code[.];
                  (G) describes how the Indian tribe will 
                ensure equitable access to benefits and 
                services provided under the plan for each 
                member of the population to be served by the 
                plan; and
                  (H) provides that the Indian tribe will 
                consult with each State in which a service area 
                of the plan is located at the operation of the 
                plan and the provision of assistance or 
                services to families under the plan.

           *       *       *       *       *       *       *

    (e) Accountability.--Nothing in this section shall be 
construed to limit the ability of the Secretary to maintain 
program funding accountability consistent with--
          (1) generally accepted accounting principles; and
          (2) the requirements of the Indian Self-Determination 
        and Education Assistance Act (25 U.S.C. 450 et seq.).
    [(f) Eligibilty for Federal Loans.--Section 406 shall apply 
to an Indian tribe with an approved tribal assistance plan in 
the same manner as such section applies to a State, except that 
section 406(c) shall be applied by substituting ``section 
412(a)'' for ``section 403(a)''.]
    [(g)] (f) Penalties.--
          (1) Subsections (a)(1), (a)(6), (b), and (c) of 
        section 409, shall apply to an Indian tribe with an 
        approved tribal assistance plan in the same manner as 
        such subsections apply to a State.
          (2) Section 409(a)(3) shall apply to an Indian tribe 
        with an approved tribal assistance plan by substituting 
        ``meet minimum work participation requirements 
        established under section 412(c)'' for ``comply with 
        section 407(a)''.
    [(h)] (g) Data Collection and Reporting.--Section 411 shall 
apply to an Indian tribe with an approved tribal family 
assistance plan.
    [(i)] (h) Special Rule for Indian Tribes in Alaska.--
          (1) In general.--Notwithstanding any other provision 
        of this section, and except as provided in paragraph 
        (2), an Indian tribe in the State of Alaska that 
        receives a tribal family assistance grant under this 
        section shall use the grant to operate a program in 
        accordance with requirements comparable to the 
        requirements applicable to the program of the State of 
        Alaska funded under this part. Comparability of 
        programs shall be established on the basis of program 
        criteria developed by the Secretary in consultation 
        with the State of Alaska and such Indian tribes.
          (2) Waiver.--An Indian tribe described in paragraph 
        (1) may apply to the appropriate State authority to 
        receive a waiver of the requirement of paragraph (1).

              RESEARCH, EVALUATIONS, AND NATIONAL STUDIES

    Sec. 413. (a) Research.--* * *

           *       *       *       *       *       *       *

    [(d) Annual Ranking of States and Review of Most and Least 
Successful Work Program.--
          [(1) Annual ranking of states.--The Secretary shall 
        rank annually the States to which grants are paid under 
        section 403 in the order of their success in placing 
        recipients of assistance under the State program funded 
        under this part into long-term private sector jobs, 
        reducing the overall welfare caseload, and, when a 
        practicable method for calculating this information 
        becomes available, diverting individuals from formally 
        applying to the State program and receiving assistance. 
        In ranking States under this subsection, the Secretary 
        shall take into account the average number of minor 
        children living at home in families in the State that 
        have incomes below the poverty line and the amount of 
        funding provided each State for such families.
          [(2) Annual review of most and least successful work 
        programs.--The Secretary shall review the programs of 
        the 3 States most recently ranked highest under 
        paragraph (1) and the 3 States most recently ranked 
        lowest under paragraph (1) that provide parents with 
        work experience, assistance in finding employment, and 
        other work preparation activities and support services 
        to enable the families of such parents to leave the 
        program and become self-sufficient.]
    (d) Annual Performance Measures of Success in Moving 
Recipients From Welfare to Work.--Beginning on January 1, 2003, 
and annually thereafter, the Secretary shall issue the 
following data regarding the performance of each State program 
funded under this part for the 2 preceding fiscal years with 
respect to helping recipients of assistance under such State 
programs in becoming self-sufficient through earnings from 
employment:
          (1) Job entry and retention rates for such recipients 
        and former recipients.
          (2) Quarterly earnings and earnings gain for such 
        recipients and former recipients.
    [(e) Annual Ranking of States and Review of Issues Relating 
to Out-of-Wedlock Births.--
          [(1) In general.--The Secretary shall annually rank 
        States to which grants are made under section 403 based 
        on the following ranking factors:
                  [(A) Absolute out-of-wedlock ratios.--The 
                ratio represented by--
                          [(i) the total number of out-of-
                        wedlock births in families receiving 
                        assistance under the State program 
                        under this part in the State for the 
                        most recent year for which information 
                        is available; over
                          [(ii) the total number of births in 
                        families receiving assistance under the 
                        State program under this part in the 
                        State for the year.
                  [(B) Net changes in the out-of-wedlock 
                ratio.--The difference between the ratio 
                described in subparagraph (A) with respect to a 
                State for the most recent year for which such 
                information is available and the ratio with 
                respect to the State for the immediately 
                preceding year.
          [(2) Annual review.--The Secretary shall review the 
        programs of the 5 States most recently ranked highest 
        under paragraph (1) and the 5 States most recently 
        ranked the lowest under paragraph (1).]
    (e) National Goal To Reduce Teen Pregnancy--
          (1) Establishment of national goal.--There is hereby 
        established a national goal of reduction teen pregnancy 
        by \1/3\ by December 31, 2007.
          (2) Annual assessment of progress.--Beginning on 
        January 1, 2003, and annually thereafter, the Secretary 
        shall issue an annual assessment of the progress toward 
        achieving the national goal established under paragraph 
        (1), that includes State-level data on teen pregnancies 
        and an assessment of the progress of each State in 
        achieving such goal.

           *       *       *       *       *       *       *

    (h) Funding of Studies and Demonstrations.--
          (1) In general.--[Out of any money in the Treasury of 
        the United States not otherwise appropriated, there are 
        appropriated $15,000,000 for each of fiscal years 1997 
        through 2002] Of the amount appropriated under section 
        403(a)(1)(F) for each of fiscal year 2003 through 2007, 
        $20,000,000 shall be reserved for the purpose for 
        paying--
                  (A) the cost of conducting the research 
                described in subsection (a);
                  (B) the cost of developing and evaluating 
                innovative approaches for reducing welfare 
                dependency and increasing the well-being of 
                minor children under subsection (b);
                  (C) the Federal share of any State-initiated 
                study approved under subsection (f); and
                  [(D) an amount determined by the Secretary to 
                be necessary to operate and evaluate 
                demonstration projects, relating to this part, 
                that are in effect or approved under section 
                1115 as of August 22, 1996, and are continued 
                after such date.]
                  (D) the cost of conducting the studies 
                described in paragraphs (4) through (6).
          (2) Allocation.--Of the amount appropriated under 
        paragraph (1) for a fiscal year--
                  [(A) 50 percent shall be allocated for the 
                purposes described in subparagraphs (A) and (B) 
                of paragraph (1), and
                  [(B) 50 percent shall be allocated for the 
                purposes described in subparagraphs (C) and (D) 
                of paragraph (1).]
                  (A) not less than 25 percent shall be 
                allocated to carry out the purpose described in 
                paragraph (1)(A);
                  (B) not less than 25 percent shall be 
                allocated to carry out the purpose described in 
                paragraph (1)(B);
                  (C) not less than 25 percent shall be 
                allocated to carry out the purpose described in 
                paragraph (1)(C); and
                  (D) not less than 25 percent shall be 
                allocated to carry out the purpose described in 
                paragraph (1)(D);

           *       *       *       *       *       *       *

          (4) Longitudinal studies of applicants and recipients 
        to determine the factors that contribute to positive 
        employment and family outcomes.--
                  (A) In general.--The Secretary, directly or 
                through grants, contracts, or interagency 
                agreements, shall conduct longitudinal studies 
                in at least 5 and not more than 10 States (or 
                sub-State areas, provided that none of such 
                areas are located in the same State) of a 
                representative sample of families that receive, 
                and applicants for, assistance in a State 
                program funded under this part or under a 
                program funded with qualified State 
                expenditures (as defined in section 
                409(a)(7)(B)(i)).
                  (B) General requirements.--The studies 
                conducted under this paragraph shall follow 
                families that leave assistance, those that 
                receive assistance throughout the study period, 
                and those diverted from assistance programs. 
                The studies shall gather information on--
                          (i) family and adult demographics 
                        (including race, ethnicity, household 
                        composition, marital status, primary 
                        language, barriers to employment, 
                        educational status of adults, prior 
                        work history, and prior history of 
                        welfare receipt);
                          (ii) family income (including 
                        earnings, unemployment compensation, 
                        and child support);
                          (iii) benefit receipt (including 
                        benefits under the food stamp program, 
                        the medicaid program under title XIX, 
                        the State children's health insurance 
                        program under title XXI, child care 
                        assistance, supplemental security 
                        income benefits under title XVI, earned 
                        income tax credits, and housing 
                        assistance);
                          (iv) reasons for leaving or returning 
                        to assistance programs;
                          (v) work participation status and 
                        activities, including the scope and 
                        duration of work activities;
                          (vi) sanction status (including 
                        reasons for sanction);
                          (vii) time limit status (including 
                        months remaining on Federal and State 
                        time limits);
                          (viii) recipient views on program 
                        participation; and
                          (ix) other measures of family well-
                        being over the period studied.
                  (C) Comparability.--The Secretary shall 
                ensure to the extent possible that the studies 
                conducted under this paragraph produce 
                comparable results and information.
                  (D) Geographic diversity.--The studies 
                conducted under this paragraph shall be 
                conducted in States or sub-State areas that 
                have significant areas of low population 
                density and in States or sub-State areas with 
                areas of high population density.
                  (E) Reports.--The Secretary shall publish--
                          (i) not later than December 31, 2005, 
                        interim findings from at least 12 
                        months of longitudinal data collected 
                        under studies conducted under this 
                        paragraph; and
                          (ii) not later than December 31, 
                        2006, findings from at least 24 months 
                        of longitudinal data collected under 
                        studies conducted under this paragraph.
          (5) Study of effects of sanctions.--
                  (A) In general.--The Secretary, directly or 
                through grants, contracts, or interagency 
                agreements, shall conduct a random assignment 
                study comparing the effects of full-family 
                sanctions, partial sanctions, and other 
                policies for increasing engagement in work 
                activities required under the State programs 
                funded under this part.
                  (B) Required information.--The study 
                conducted under this paragraph shall include 
                information with respect to participants in the 
                study on demographic characteristics, work 
                participation rates, employment and earnings, 
                duration and amount of payments of assistance 
                under the State program funded under this part, 
                factors affecting program compliance, 
                incidences of hardship, family income, and the 
                well-being of children.
                  (C) Report.--Not later than December 31, 
                2006, the Secretary shall submit to Congress 
                the results of the study conducted under this 
                paragraph.
          (6) Study of teen parent recipients.--
                  (A) In general.--The Secretary, directly or 
                through grants, contracts, or interagency 
                agreements, shall conduct a study of a 
                representative sample of teen parents who are 
                recipients of assistance under State programs 
                funded under this part to determine--
                          (i) whether Federal and State data on 
                        the number of such recipients is 
                        accurate, including an examination of 
                        the extent to which such recipients are 
                        members of a family that is not 
                        reflected in the data;
                          (ii) what assessment procedures are 
                        utilized with such recipients and 
                        whether such procedures would detect a 
                        housing or an educational barrier, such 
                        as a learning disability; and
                          (iii) the services and eligibility 
                        requirements for such recipients.
                  (B) Report.--Not later than December 31, 
                2006, the Secretary shall submit to Congress 
                the results of the study conducted under this 
                paragraph.

           *       *       *       *       *       *       *

    (j) Evaluation of Welfare-to-Work Programs.--
          (1) Evaluation.--The Secretary, in consultation with 
        the Secretary of Labor and the Secretary of Housing and 
        Urban Development--

           *       *       *       *       *       *       *

          (2) Reports to the congress.--
                  (A) In general.--Subject to subparagraphs (B) 
                and (C), the Secretary, in consultation with 
                the Secretary of Labor and the Secretary of 
                Housing and Urban Development, shall submit to 
                the Congress reports on the project funded 
                under [section] sections 403(a)(5) and 
                412(a)(3) and on the evaluations of the 
                projects.
                  (B) Interim report.--Not later than January 
                1, 1999, the Secretary shall submit an interim 
                report on the matter described in subparagraph 
                (A).
                  (C) Final report.--Not later than January 1, 
                2001, (or at a later date, if the Secretary 
                informs the Committees of the Congress with 
                jurisdiction over the subject matter of the 
                report) the Secretary shall submit a final 
                report on the matter described in subparagraph 
                (A).
  (k) Teen Pregnancy Prevention Resource Center.--
          (1) Authority.--
                  (A) In general.--The Secretary shall make a 
                grant to a nationally recognized, nonpartisan, 
                nonprofit organization that meets the 
                requirements described in subparagraph (B) to 
                establish and operate a national teen pregnancy 
                prevention resource center (in this subsection 
                referred to as the ``Resource Center'') to 
                carry out the purposes and activities described 
                in paragraph (2).
                  (B) Requirements.--The requirements described 
                in this subparagraph are the following:
                          (i) The organization has at least 5 
                        years of experience in working with 
                        diverse sectors of society to reduce 
                        teen pregnancy.
                          (ii) The organization has a 
                        demonstrated ability to work with and 
                        provide assistance to a broad range of 
                        individuals and entities, including 
                        teens, parents, the entertainment and 
                        news media, State, tribal, and local 
                        organizations, networks of teen 
                        pregnancy prevention practitioners, 
                        businesses, faith and community 
                        leaders, and researchers.
                          (iii) The organization is research-
                        based and has capabilities in 
                        scientific analysis and evaluation.
                          (iv) The organization has 
                        comprehensive knowledge and data about 
                        teen pregnancy prevention strategies.
                          (v) The organization has experiences 
                        operating a resource center that 
                        carries out activities similar to the 
                        activities described in paragraph 
                        (2)(B).
          (2) Purposes and activities.--
                  (A) Purposes.--The purposes of the Resource 
                Center are to--
                          (i) provide information and technical 
                        assistance to States, Indian tribes, 
                        local communities, and other public or 
                        private organizations seeking to reduce 
                        rates of teen pregnancy; and
                          (ii) assist such entities in their 
                        efforts to work through all forms of 
                        media to communicate effective messages 
                        about preventing teen pregnancy, 
                        including messages that focus on 
                        abstinence, responsible behavior, 
                        family communication, relationships, 
                        and values.
                  (B) Activities.--The Resource Center shall 
                carry out the purposes described in 
                subparagraph (A) through the following 
                activities:
                          (i) Synthesizing and disseminating 
                        research and information regarding 
                        effective and promising practices to 
                        prevent teen pregnancy.
                          (ii) Developing and providing 
                        information on how to design and 
                        implement effective programs to prevent 
                        teen pregnancy.
                          (iii) Helping States, local 
                        communities, and other organizations 
                        increase their knowledge of existing 
                        resources that can be used to advance 
                        teen pregnancy prevention efforts.
                          (iv) Linking organizations working to 
                        reduce teen pregnancy with experts and 
                        peer groups, including the creation of 
                        technical assistance networks.
                          (v) Providing consultation and 
                        resources on how to reduce teen 
                        pregnancy through a broad array of 
                        strategies, including enlisting the 
                        help of various sectors of society such 
                        as parents, other adults (such as 
                        coaches and mentors), community or 
                        faith-based groups, the entertainment 
                        and news media, business, and other 
                        teens.
                          (vi) Working directly with 
                        individuals and organizations in the 
                        entertainment industry to provide 
                        consultation and serve as a source of 
                        factual information on issues related 
                        to teen pregnancy prevention.
          (3) Collaboration with other organizations.--The 
        organization operating the Resource Center shall 
        collaborate with other nonprofit organizations that 
        have expertise and interest in teen pregnancy 
        prevention.
          (4) Appropriations.--Out of any money in the Treasury 
        of the United States not otherwise appropriated, there 
        is appropriated to carry out this subsection, 
        $5,000,000 for each of fiscal years 2003 through 2007.
    (l) Indicators of Child Well-Being.--
          (1) In general.--The Secretary, through grants, 
        contracts, or interagency agreements shall develop 
        comprehensive indicators to assess child well-being in 
        each State.
          (2) Requirements.--
                  (A) In general.--The indicators developed 
                under paragraph (1) shall include measures 
                related to the following:
                          (i) Education.
                          (ii) Social and emotional 
                        development.
                          (iii) Health and safety.
                          (iv) Family well-being, such as 
                        family structure, income, employment, 
                        child care arrangements, and family 
                        relationships.
                  (B) Other requirements.--The data collected 
                with respect to the indicators developed under 
                paragraph (1) shall be--
                          (i) statistically representative at 
                        the State level;
                          (ii) consistent across States;
                          (iii) collected on an annual basis 
                        for at least the 5 years preceding the 
                        year of collection;
                          (iv) expressed in terms of rates or 
                        percentages;
                          (v) statistically representative at 
                        the national level;
                          (vi) measured with reliability;
                          (vii) current; and
                          (viii) over-sampled, with respect to 
                        low-income children and families.
                  (C) Consultation.--In developing the 
                indicators required under paragraph (1) and the 
                means to collect the data required with respect 
                to the indicators, the Secretary shall consult 
                and collaborate with the Federal Interagency 
                Forum on Child and Family Statistics.
          (3) Advisory panel.--
                  (A) Establishment.--The Secretary shall 
                establish an advisory panel to make 
                recommendations regarding the appropriate 
                measures and statistical tools necessary for 
                making the assessment required under paragraph 
                (1) based on the indicators developed under 
                that paragraph and the data collected with 
                respect to the indicators.
                  (B) Membership.--
                          (i) In general.--The advisory panel 
                        established under subparagraph (A) 
                        shall consist of the following:
                                  (I) One member appointed by 
                                the Secretary of Health and 
                                Human Services.
                                  (II) One member appointed by 
                                the Chairman of the Committee 
                                on Ways and Means of the House 
                                of Representatives.
                                  (III) One member appointed by 
                                the Ranking Member of the 
                                Committee on Ways and Means of 
                                the House of Representatives.
                                  (IV) One member appointed by 
                                the Chairman of the Committee 
                                on Finance of the Senate.
                                  (V) One member appointed by 
                                the Ranking Member of the 
                                Committee on Finance of the 
                                Senate.
                                  (VI) One member appointed by 
                                the Chairman of the National 
                                Governors Association, or the 
                                Chairman's designee.
                                  (VII) One member appointed by 
                                the President of the National 
                                Conference of State 
                                Legislatures or the President's 
                                designee.
                                  (VIII) One member appointed 
                                by the Director of the National 
                                Academy of Sciences, or the 
                                Director's designee.
                          (ii) Deadline.--The members of the 
                        advisory panel shall be appointed not 
                        later than 2 months after the date of 
                        enactment of the Work, Opportunity, and 
                        Responsibility for Kids Act of 2002.
                  (C) Meetings.--The advisory panel established 
                under subparagraph (A) shall meet--
                          (i) at least 3 times during the first 
                        year after the date of enactment of the 
                        Work, Opportunity, and Responsibility 
                        for Kids Act of 2002; and
                          (ii) annually thereafter for the 3 
                        succeeding years.
          (4) Funding.--Of the amount appropriated under 
        section 403(a)(1)(F) for each of fiscal years 2003 
        through 2007, $15,000,000 shall be reserved for the 
        purpose of carrying out this subsection.
    (m) Tribal Welfare Programs and Efforts To Reduce Poverty 
Among Indians.--
          (1) In general.--The Secretary, directly or through 
        grants, contracts, or interagency agreements, shall 
        conduct research to improve the effectiveness of tribal 
        family assistance programs conducted under section 412 
        and other tribal welfare programs and on efforts to 
        reduce poverty among Indians.
          (2) Priority for certain applications.--With respect 
        to applications for grants under paragraph (1), the 
        Secretary shall give priority to applications to 
        conduct research in cooperation with tribal governments 
        or tribally controlled colleges or universities.
          (3) Funding.--Of the amount appropriated under 
        section 403(a)(1)(F) for fiscal year 2003, $2,000,000 
        shall be reserved for the purpose of carrying out this 
        subsection.
    (n) Demonstration Projects for At Home Infant Care.--
          (1) Authority to award grants.--
                  (A) In general.--The Secretary shall award 
                grants to not less than 5 and not more than 10 
                States to enable such States to carry out 
                demonstration projects to provide at-home 
                infant care benefits to eligible low-income 
                families.
                  (B) Indian tribes.--An Indian tribe may 
                submit an application for a grant under this 
                subsection. If awarded a grant, the Indian 
                tribe shall conduct a demonstration project to 
                provide at-home infant care benefits to 
                eligible low-income families in the same 
                manner, and to the same extent as a State, 
                except that the Secretary may modify the 
                requirements of this subsection as appropriate 
                with respect to the Indian tribe. For purposes 
                of subparagraph (A), any grant awarded to an 
                Indian tribe shall not count toward the number 
                of grants awarded to States.
          (2) Family eligibility.--
                  (A) In general.--To be eligible to 
                participate in a program of at-home infant care 
                under a demonstration project established under 
                paragraph (1), a family shall--
                          (i) have an income that does not 
                        exceed the limits specified in section 
                        658P(3)(B) of the Child Care and 
                        Development Block Grant Act of 1990 (42 
                        U.S.C. 9858n(3)(B));
                          (ii) include a child under the age of 
                        2;
                          (iii) include a parent (as defined in 
                        section 658P(8) of the Child Care and 
                        Development Block Grant Act of 1990 (42 
                        U.S.C. 9858n(8))), who meets the 
                        State's requirements for having had a 
                        recent work history prior to 
                        application for at-home infant care 
                        benefits; and
                          (iv) meet such other eligibility 
                        requirements as the State may 
                        establish.
                  (B) 2-parent families.--A State selected to 
                participate in a demonstration project of at-
                home infant care under this section shall 
                permit 2-parent families to participate in the 
                project but may not limit participation in the 
                project to such families.
          (3) Amount of assistance.--The amount of at-home 
        infant care benefits provided to an eligible family 
        under this subsection for a month of benefit receipt 
        shall not exceed the payment rate applicable to 
        eligible child care providers for infant care under the 
        State's payment rate schedule, according to the 
        provisions of section 658E(c)(4)(A) of the Child Care 
        and Development Block Grant Act of 1990 (42 U.S.C. 
        9858c(c)(4)(A)).
          (4) Submission of applications.--An eligible low-
        income parent may submit an application for at-home 
        infant care benefits under a demonstration project 
        established under this subsection at any time prior to 
        the date on which the child attains age 2.
          (5) Required certifications.--A State selected to 
        participate in a demonstration project of at-home 
        infant care under this section shall provide 
        certifications to the Secretary that--
                  (A) during the period of the demonstration 
                project, the State shall not reduce 
                expenditures for child care services below the 
                levels in effect in the fiscal year preceding 
                the fiscal year in which the State begins to 
                participate in the project;
                  (B) the State, in operating the demonstration 
                project, shall not give priority or preference 
                to parents seeking to participate in the 
                program of At-Home Infant Care over other 
                eligible parents on a waiting list for child 
                care assistance in the State;
                  (C) the State shall--
                          (i) provide parents applying to 
                        receive at-home infant care benefits 
                        with information on the range of 
                        options for child care available to the 
                        parents;
                          (ii) ensure that approved applicants 
                        for at-home infant care are permitted 
                        to choose between receipt of at-home 
                        infant care benefits and receipt of a 
                        certificate that may be used with an 
                        eligible child care provider for child 
                        care needed for employment; and
                          (iii) provide that a family receiving 
                        an at-home infant care benefit may 
                        exchange the benefit for a child care 
                        voucher for employment at any time 
                        during the family's participation in 
                        the program;
                  (D) the State shall develop or update and 
                implement a plan to improve the quality of 
                infant care, and shall use up to 10 percent of 
                the funds received under the demonstration 
                project for efforts to improve the quality of 
                infant care in the State;
                  (E) the State shall ensure that voluntary 
                employment services are offered to program 
                participants after the completion of 
                participation in the program to assist the 
                participants in returning to unsubsidized 
                employment; and
                  (F) the State shall cooperate with 
                information collection and evaluation activity 
                conducted by the Secretary.
          (6) TANF assistance.--The receipt of an at-home 
        infant care benefit funded under this subsection shall 
        not be considered assistance under the State program 
        funded under this part for any purpose.
          (7) Benefit not treated as income.--Notwithstanding 
        any other provision of law, the value of an at-home 
        infant care benefit funded under this subsection shall 
        not be treated as income for purposes of any Federal or 
        federally-assisted program that bases eligibility, or 
        the amount of benefits or services provided, on need.
          (8) Application for participation and selection of 
        states.--
                  (A) Applications.--Not later than 90 days 
                after the date of enactment of the Work, 
                Opportunity, and Responsibility for Kids Act of 
                2002, the Secretary shall publish a notice of 
                opportunity to participate, specifying the 
                contents of an application for participation in 
                the At-Home Infant Care demonstration project 
                funded under this subsection. The notice shall 
                include a timeframe for States to submit an 
                application to participate, and shall provide 
                that all such applications are to be submitted 
                not later than 270 days after such date of 
                enactment.
                  (B) Selection.--
                          (i) In general.--The Secretary shall 
                        review the applications and select the 
                        participating States not later than 1 
                        year after such date of enactment.
                          (ii) Criteria.--In selecting States 
                        to participate in the demonstration 
                        project funded under this subsection, 
                        the Secretary shall--
                                  (I) seek to ensure geographic 
                                diversity; and
                                  (II) give priority to 
                                States--
                                          (aa) whose 
                                        applications 
                                        demonstrate a strong 
                                        commitment to improving 
                                        the quality of infant 
                                        care and the choice 
                                        available to parents of 
                                        infants;
                                          (bb) with experience 
                                        relevant to the 
                                        operation of at-home 
                                        infant care programs; 
                                        and
                                          (cc) in which there 
                                        are demonstrable 
                                        shortages of infant 
                                        care.
          (9) Evaluation and report to congress.--
                  (A) In general.--The Secretary shall conduct 
                an evaluation of the demonstration projects 
                conducted under this subsection and submit a 
                report to Congress on such evaluation not later 
                than 4 years after the date of enactment of the 
                Work, Opportunity, and Responsibility for Kids 
                Act of 2002.
                  (B) Requirements.--The evaluation required 
                under this paragraph shall expressly address 
                the following:
                          (i) Implementation experiences of the 
                        States participating in the project in 
                        developing and operating programs of 
                        at-home infant care, including design 
                        issues and issues in coordinating at-
                        home infant care benefits with benefits 
                        provided or funded under the Child Care 
                        and Development Block Grant in the 
                        State.
                          (ii) The characteristics of families 
                        seeking to participate and 
                        participating in the programs of at-
                        home infant care funded under this 
                        subsection.
                          (iii) The length of participation by 
                        families in such programs and the 
                        reasons for the families ceasing to 
                        participate in the programs.
                          (iv) The prior and subsequent 
                        employment of participating families 
                        and the effect of program participation 
                        on subsequent employment participation 
                        of the families.
                          (v) The costs and benefits of the 
                        programs of at-home infant care.
                          (vi) The effectiveness of State or 
                        tribal efforts to improve the quality 
                        of infant care during the period in 
                        which the demonstration project is 
                        conducted in the State.
                  (C) Reservation of funds.--Of the amount 
                appropriated under paragraph (10) for a fiscal 
                year, $750,000 shall be reserved with respect 
                to each such fiscal year for purposes of 
                conducting the evaluation required under this 
                paragraph.
          (10) Appropriations.--Out of any money in the 
        Treasury of the United States not otherwise 
        appropriated, there is appropriated to carry out this 
        subsection, $30,000,000 for each of fiscal years 2003 
        through 2007.
  (o) Interagency Demonstration on Housing With Services.--
          (1) In general.--The Secretary and the Secretary of 
        Housing and Urban Development (in this subsection 
        referred to as the ``Secretaries'') jointly shall award 
        grants for the conduct and evaluation of demonstrations 
        of different models to provide housing with services to 
        promote the employment of individuals who have multiple 
        barriers to work, including lack of adequate housing, 
        and who are--
                  (A) parents or caretaker relatives who are 
                eligible for a benefit or service under the 
                State program funded under this part; or
                  (B) non-custodial parents of children who are 
                eligible for a benefit or service under such 
                State program.
          (2) Requirements.--
                  (A) Eligible recipients.--Grants shall be 
                awarded under this subsection on a competitive 
                basis to States and organizations which have 
                exempt status under section 501(c)(3) of the 
                Internal Revenue Code of 1986, including 
                community and faith-based organizations.
                  (B) Location.--In awarding such grants, the 
                Secretaries shall ensure that demonstrations 
                are conducted in metropolitan and 
                nonmetropolitan areas.
                  (C) Use of funds.--
                          (i) In general.--Funds provided under 
                        a grant awarded under this subsection 
                        shall be used for the cost of 
                        implementation and evaluation of the 
                        demonstrations conducted with such 
                        funds.
                          (ii) Limitation on benefits or 
                        services to noncustodial parents.--Not 
                        more than 10 percent of the total 
                        amount of grant funds awarded to a 
                        State or organization under this 
                        subsection may be used to provide 
                        benefits or services to noncustodial 
                        parents.
                  (D) Not considered assistance.--A benefit or 
                service provided with funds made available 
                under a grant awarded under this subsection 
                shall not for any purpose, be considered 
                assistance under the State program funded under 
                this part.
                  (E) Duration; availability of funds.--Funds 
                provided under a grant awarded under this 
                subsection shall remain available for a period 
                of 3 years after the date on which the grant is 
                made.
          (3) Evaluation.--Not later than December 31, 2006, 
        the Secretaries shall publish an evaluation of the 
        demonstrations conducted under grants made under this 
        subsection.
          (4) Authorization of appropriations.--There is 
        authorized to be appropriated to make grants under this 
        subsection, $50,000,000 for fiscal year 2004.

           *       *       *       *       *       *       *

                                WAIVERS

    Sec. 415. (a) Continuation of Waivers.--
          (1) Waivers in effect on date of enactment of welfare 
        reform.--

           *       *       *       *       *       *       *

    (b) State Option To Terminate Waiver.--
          (1) In general.--A State may terminate a waiver 
        described in subsection (a), extended under subsection 
        (e), or approved under subsection (f) before the 
        expiration of the waiver.

           *       *       *       *       *       *       *

    (d) Continuation of Individual Waivers.--A State may elect 
to continue 1 or more individual waivers described in 
subsection (a).
  (e) Continuation of Waivers Approved or Submitted Before Date 
of Enactment of Welfare Reform.--
          (1) In general.--Notwithstanding subsection (a) but 
        subject to paragraph (2), with respect to any State 
        that is operating under a waiver described in that 
        subsection which would otherwise expire on a date that 
        occurs during the period that begins on October 1, 
        2002, and ends on September 30, 2007, the State may 
        elect to continue to operate under that waiver, on the 
        same terms and conditions as applied to the waiver on 
        the day before such date, through September 30, 2007.
          (2) No effect on application of universal engagement 
        and individual responsibility plan requirements.--
        Notwithstanding paragraph (1), the continuation of a 
        waiver under paragraph (1) shall not affect the 
        applicability of section 408(b) (as amended by the 
        Work, Opportunity, and Responsibility for Kids Act of 
        2002) to the State.
  (f) Requirement To Approve Waivers To Duplicate Innovative 
Programs.--
          (1) In general.--Notwithstanding any other provision 
        of law, if a State submits an application for a waiver 
        of 1 or more requirements of this part that contains 
        terms that are similar or identical to the terms of a 
        waiver eligible to be continued under subsection (e), 
        and the application satisfies the requirements of 
        paragraph (2), the Secretary--
                  (A) shall approve the application for a 
                period of at least 2 years, but not more than 4 
                years, unless the Secretary determines that 
                approval would be inconsistent with the 
                purposes of this part set forth in section 401;
                  (B) at the end of the waiver period, shall 
                review documentation of the effectiveness of 
                the waiver provided by the State; and
                  (C) if such documentation adequately 
                demonstrates that the program as implemented 
                under the waiver has been effective, may renew 
                the waiver for such period as the Secretary 
                determines appropriate, but not later than 
                September 30, 2007.
          (2) Application requirements.--An application for a 
        waiver described in paragraph (1) shall--
                  (A) describe relevant State caseload 
                characteristics and labor market conditions;
                  (B) specify how the waiver is likely to 
                result in improved employment outcomes, 
                improved child well-being, or both;
                  (C) describe the State's proposed approach 
                for evaluation of the program under the waiver; 
                and
                  (D) include an agreement to conduct an 
                independent evaluation of the waiver and to 
                submit the results of the evaluation to the 
                Secretary.

           *       *       *       *       *       *       *

                         FUNDING FOR CHILD CARE

    Sec. 418. (a) General Child Care Entitlement.--
          (1) General entitlement.--Subject to the amount 
        appropriated under paragraph (3) and paragraph (6), 
        each State shall, for the purpose of providing child 
        care assistance, be entitled to payments under a grant 
        under this subsection for a fiscal year in an amount 
        equal to the greater of--

           *       *       *       *       *       *       *

          (3) Appropriation.--For grants under this section, 
        there are appropriated--
                  (A) $1,967,000,000 for fiscal year 1997;
                  (B) $2,067,000,000 for fiscal year 1998;
                  (C) $2,167,000,000 for fiscal year 1999
                  (D) $2,367,000,000 for fiscal year 2000
                  (E) $2,567,000,000 for fiscal year 2001 [and]
                  (F) $2,717,000,000 for [fiscal year 2002.] 
                each of fiscal years 2002 through 2005; and
                  (G) $2,967,000,000 for each of fiscal years 
                2006 and 2007.
          [(4) Indian tribes.--The Secretary shall reserve not 
        less than 1 percent, and not more than 2 percent, of 
        the aggregate amount appropriated to carry out this 
        section in each fiscal year for payments to Indian 
        tribes and tribal organizations.]
          (4) Amounts reserved.--
                  (A) Indian tribes.--The Secretary shall 
                reserve 2 percent of the aggregate amount 
                appropriated to carry out this section under 
                paragraphs (3) and (5) for each fiscal year for 
                payments to Indian tribes and tribal 
                organizations for each such fiscal year for the 
                purpose of providing child care assistance.
                  (B) Puerto rico.--The Secretary shall reserve 
                $10,000,000 of the amount appropriated under 
                paragraph (5) for each fiscal year for payments 
                to the Commonwealth of Puerto Rico for each 
                such fiscal year for the purpose of providing 
                child care assistance.
                  (C) Use of funds; application of child care 
                and development block grant act.--Subsections 
                (b) and (c) apply to amounts received under 
                this paragraph in the same manner as such 
                subsections apply to amounts received by a 
                State under this section.
                  (D) No matching requirement.--No matching 
                requirement shall apply to amounts paid under 
                this paragraph for a fiscal year.
          (5) Additional general entitlement grants.--
                  (A) Appropriation.--For additional grants 
                under paragraph (1), there is appropriated 
                $1,000,000,000 for each of fiscal years 2003 
                through 2007. Amounts appropriated under this 
                subparagraph for a fiscal year shall be in 
                addition to amounts appropriated under 
                paragraph (3) for such fiscal year.
                  (B) Additional grant.--In addition to the 
                grant paid to a State under paragraph (1) for 
                each of fiscal years 2003 through 2007, of the 
                amount available for additional grants under 
                subparagraph (A) for a fiscal year, the 
                Secretary shall pay the State an amount equal 
                to the same proportion of such amount as the 
                proportion of the State's grant under paragraph 
                (1) to the amount appropriated under paragraph 
                (3) for such fiscal year.
          (6) Requirement for grant increase.--Notwithstanding 
        paragraph (1), (2), or (5), the aggregate amount paid 
        to a State under this section for each of fiscal years 
        2003 through 2007 may not exceed the aggregate amount 
        paid to the State under this section for fiscal year 
        2002 unless the State ensures that the level of State 
        expenditures for child care for such fiscal year is not 
        less than the level of State expenditures for child 
        care that were matched under a grant made to the State 
        under paragraph (2) or that the State expended to meet 
        its maintenance of effort obligation under paragraph 
        (2) for fiscal year 2002.
          [(5)] (7) Data used to determine state and federal 
        shares of expenditures.--In making the determinations 
        concerning expenditures required under paragraphs (1) 
        and (2)(C), the Secretary shall use information that 
        was reported by the State on ACF Form 231 and available 
        as of the applicable dates specified in clauses (i)(I), 
        (ii), and (iii)(III) of section 403(a)(1)(D).

           *       *       *       *       *       *       *

                              DEFINITIONS

    Sec. 419. As used in this part:
          (1) Adult.--The term ``adult'' means an individual 
        who is not a minor child.

           *       *       *       *       *       *       *

          (6) Assistance.--
                  (A) In general.--The term ``assistance'' 
                means payment, by cash, voucher, or other 
                means, to or for an individual or family for 
                the purpose of meeting a subsistence need of 
                the individual or family (including food, 
                clothing, shelter, and related items, but not 
                including costs of transportation, child care, 
                or supplemental housing benefits (as defined in 
                section 404(m)(4)).
                  (B) Exception.--The term ``assistance'' does 
                not include a payment described in subparagraph 
                (A) to or for an individual or family on a 
                short-term, nonrecurring basis (as defined by 
                the State in accordance with regulations 
                prescribed by the Secretary) or any other 
                benefit or service excluded from the definition 
                of assistance under section 260.31 of title 45 
                of the Code of Federal Regulations (as in 
                effect on June 1, 2002).

Part D--Child Support and Establishment of Paternity

           *       *       *       *       *       *       *

                     FEDERAL PARENT LOCATOR SERVICE

    Sec. 453. (a)(1) * * *
          (2) For the purpose of establishing percentage or 
        establishing, setting the amount of, modifying, or 
        enforcing child support obligations, the Federal Parent 
        Locator Service shall obtain and transmit to any 
        authorized person specified in subsection (c)--

           *       *       *       *       *       *       *

    (i) National Directory of New Hires.--

           *       *       *       *       *       *       *

          (4) List of multistate employers.--The Secretary 
        shall maintain within the National Directory of New 
        Hires a list of multistate employers that report 
        information regarding newly hired employees pursuant to 
        section 453A(b)(1)(B), and the State which each such 
        employer has designated to receive such information.
          (5) Calculation of employment credit for purposes of 
        determining state work participation rates under 
        tanf.--The Secretary may use the information in the 
        National Directory of New Hires for purposes of 
        calculating State employment credits pursuant to 
        section 407(a)(2).
    (j) Information Comparisons and Other Disclosures.--

           *       *       *       *       *       *       *

          (7) Information comparisons and disclosure to assist 
        in administration of unemployment compensation 
        programs.--
                  (A) In general.--If a State agency 
                responsible for the administration of an 
                unemployment compensation program under Federal 
                or State law transmits to the Secretary the 
                name and social security account number of an 
                individual, the Secretary shall, if the 
                information in the National Directory of New 
                Hires indicates that the individual may be 
                employed, disclose to the State agency the 
                name, address, and employer identification 
                number of any putative employer of the 
                individual, subject to this paragraph.
                  (B) Condition on disclosure.--The Secretary 
                shall make a disclosure under subparagraph (A) 
                only to the extent that the Secretary 
                determines that the disclosure would not 
                interfere with the effective operation of the 
                program under this part.
                  (C) Use of information.--A State agency may 
                use information provided under this paragraph 
                only for purposes of administering a program 
                referred to in subparagraph (A).

           *       *       *       *       *       *       *

                STATE PLAN FOR CHILD AND SPOUSAL SUPPORT

    Sec. 454. A State plan for child and spousal support must--

           *       *       *       *       *       *       *

          (32)(A) provide that any request for services under 
        this part by a foreign reciprocating country or a 
        foreign country with which the State has an arrangement 
        described in section 459A(d) shall be treated as a 
        request by a State;
          (B) provide, at State option, notwithstanding 
        paragraph (4) or any other provision of this part, for 
        services under the plan for enforcement of a spousal 
        support order not described in paragraph (4)(B) entered 
        by such a country (or subdivision); and
          (C) provide that no applications will be required 
        from, and no costs will be assessed for such services 
        against, the foreign reciprocating country or foreign 
        obligee (but costs may at State option be assessed 
        against the obligor); [and]
          (33) provide that a State that receives funding 
        pursuant to section 428 and that has within its borders 
        Indian country (as defined in section 1151 of title 18, 
        United States Code) may enter into cooperative 
        agreements with an Indian tribe or tribal organization 
        (as defined in subsections (e) and (l) of section 4 of 
        the Indian Self-Determination and Education Assistance 
        Act (25 U.S.C. 450b)), if the Indian tribe or tribal 
        organization demonstrates that such tribe or 
        organization has an established tribal court system or 
        a Court of Indian Offenses with the authority to 
        establish paternity, establish, modify, or enforce 
        support orders or, and to enter support orders in 
        accordance with child support guidelines established or 
        adopted by such tribe or organization, under which the 
        State and tribe or organization, under which the State 
        and tribe or organization shall provide for the 
        cooperative delivery of child support enforcement 
        services in Indian country and for the forwarding of 
        all collections pursuant to the functions performed by 
        the tribe or organization to the State agency, or 
        conversely, by the State agency to the tribe or 
        organization, which shall distribute such collections 
        in accordance with such agreement[.];
          (34) include an election by the State to apply 
        section 457(a)(2)(B) of this Act or former section 
        457(a)(2)(B) of this Act or former section 457(a)(2)(B) 
        of this Act (as in effect for the State immediately 
        before the date this paragraph first applies to the 
        State) to the distribution of the amounts which are the 
        subject of such sections, and for so long as the State 
        elects to so apply such former section, the amendments 
        made by subsection (e) of section 501 of the Work, 
        Opportunity, and Responsibility for Kids Act of 2002 
        shall not apply with respect to the State, 
        notwithstanding subsection (f)(1) of such section 501; 
        and
          (35) provide that the State shall not use the State 
        program operated under this part to collect any amount 
        owed to the State by reason of costs incurred under the 
        State plan approved under title XIX for the birth of a 
        child for whom support rights have been assigned 
        pursuant to section 408(a)(3), 471(a)(17), or 1912.

           *       *       *       *       *       *       *

                   DISTRIBUTION OF COLLECTED SUPPORT

    Sec. 457. [(a) In General.--Subject to subsections (e) and 
(f), an amount collected on behalf of a family as support by a 
State pursuant to a plan approved under this part shall be 
distributed as follows:
          [(1) Families receiving assistance.--In the case of a 
        family receiving assistance from the State, the State 
        shall--
                  [(A) pay to the Federal Government the 
                Federal share of the amount so collected; and
                  [(B) retain, or distribute to the family, the 
                State share of the amount so collected.
        [In no event shall the total of the amounts paid to the 
        Federal Government and retained by the State exceed the 
        total of the amounts that have been paid to the family 
        as assistance by the State.
          [(2) Families that formerly received assistance.--In 
        the case of a family that formerly received assistance 
        from the State:
                  [(A) Current support payments.--To the extent 
                that the amount so collected does not exceed 
                the amount required to be paid to the family 
                for the month in which collected, the State 
                shall distribute the amount so collected to the 
                family.
                  [(B) Payments of arrearages.--To the extent 
                that the amount so collected exceeds the amount 
                required to be paid to the family for the month 
                in which collected, the State shall distribute 
                the amount so collected as follows:
                          [(i) Distribution of arrearages that 
                        accrued after the family ceased to 
                        receive assistance.--
                                  [(I) Pre-october 1997.--
                                Except as provided in subclause 
                                (II), the provisions of this 
                                section as in effect and 
                                applied on the day before the 
                                date of the enactment of 
                                section 302 of the Personal 
                                Responsibility and Work 
                                Opportunity Reconciliation Act 
                                of 1996 (other than subsection 
                                (b)(1) (as so in effect)) shall 
                                apply with respect to the 
                                distribution of support 
                                arrearages that--
                                          [(aa) accrued after 
                                        the family ceased to 
                                        receive assistance, and
                                          [(bb) are collected 
                                        before October 1, 1997.
                                  [(II) Post-september 1997.--
                                With respect to the amount so 
                                collected on or after October 
                                1, 1997 (or before such date, 
                                at the option of the State)--
                                          [(aa) In general.--
                                        The State shall first 
                                        distribute the amount 
                                        so collected (other 
                                        than any amount 
                                        described in clause 
                                        (iv)) to the family to 
                                        the extent necessary to 
                                        satisfy any support 
                                        arrearages with respect 
                                        to the family that 
                                        accrued after the 
                                        family ceased to 
                                        receive assistance from 
                                        the State.
                                          [(bb) Reimbursement 
                                        of governments for 
                                        assistance provided to 
                                        the family.--After the 
                                        application of division 
                                        (aa) and clause 
                                        (ii)(II)(aa) with 
                                        respect to the amount 
                                        so collected, the State 
                                        shall retain the State 
                                        share of the amount so 
                                        collected, and pay to 
                                        the Federal Government 
                                        the Federal share as 
                                        defined in subsection 
                                        (c)(2)) of the amount 
                                        so collected, but only 
                                        to the extent necessary 
                                        to reimburse amounts 
                                        paid to the family as 
                                        assistance by the 
                                        State.
                                          [(cc) Distribution of 
                                        the remainder to the 
                                        family.--To the extent 
                                        that neither division 
                                        (aa) nor division (bb) 
                                        applies to the amount 
                                        so collected, the State 
                                        shall distribute the 
                                        amount to the family.
                          [(ii) Distribution of arrearages that 
                        accrued before the family received 
                        assistance.--
                                  [(I) Pre-october 2000.--
                                Except as provided in subclause 
                                (II), the provisions of this 
                                section as in effect and 
                                applied on the day before the 
                                date of enactment of section 
                                302 of the Personal 
                                Responsibility and Work 
                                Opportunity Reconciliation Act 
                                of 1996 (other than subsection 
                                (b)(1) (as so in effect)) shall 
                                apply with respect to the 
                                distribution of support 
                                arrearages that--
                                          [(aa) accrued before 
                                        the family received 
                                        assistance, and
                                          [(bb) are collected 
                                        before October 1, 2000.
                                  [(II) Post-september 2000.--
                                Unless, based on the report 
                                required by paragraph (5), the 
                                Congress determines otherwise, 
                                with respect to the amount so 
                                collected on or after October 
                                1, 2000 (or before such date, 
                                at the option of the State)--
                                          [(aa) In general.--
                                        The State shall first 
                                        distribute the amount 
                                        so collected (other 
                                        than any amount 
                                        described in clause 
                                        (iv)) to the family to 
                                        the extent necessary to 
                                        satisfy any support 
                                        arrearages with respect 
                                        to the family that 
                                        accrued before the 
                                        family received 
                                        assistance from the 
                                        State.
                                          [(bb) Reimbursement 
                                        of governments for 
                                        assistance provided to 
                                        the family.--After the 
                                        application of clause 
                                        (i)(II)(aa) and 
                                        division (aa) with 
                                        respect to the amount 
                                        so collected, the State 
                                        shall retain the State 
                                        share of the amount so 
                                        collected, and pay to 
                                        the Federal Government 
                                        the Federal share (as 
                                        defined in subsection 
                                        (c)(2)) of the amount 
                                        so collected, but only 
                                        to the extent necessary 
                                        to reimburse amounts 
                                        paid to the family as 
                                        assistance by the 
                                        State.
                                          [(cc) Distribution of 
                                        the remainder to the 
                                        family.--To the extent 
                                        that neither division 
                                        (aa) nor division (bb) 
                                        applies to the amount 
                                        so collected, the State 
                                        shall distribute the 
                                        amount to the family.
                          [(iii) Distribution of arrearages 
                        that accrued while the family received 
                        assistance.--In the case of a family 
                        described in this subparagraph, the 
                        provisions of paragraph (1) shall apply 
                        with respect to the distribution of 
                        support arrearages that accrued while 
                        the family received assistance.
                          [(iv) Amounts collected pursuant to 
                        section 464.--Notwithstanding any other 
                        provision of this section, any amount 
                        of support collected pursuant to 
                        section 464 shall be retained by the 
                        State to the extent past-due support 
                        has been assigned to the State as a 
                        condition of receiving assistance from 
                        the State, up to the amount necessary 
                        to reimburse the State for amounts paid 
                        to the family as assistance by the 
                        State. The State shall pay to the 
                        Federal Government the Federal share of 
                        the amounts so retained. To the extent 
                        the amount collected pursuant to 
                        section 464 exceeds the amount so 
                        retained, the State shall distribute 
                        the excess to the family.
                          [(v) Ordering rules for 
                        distributions.--For purposes of this 
                        subparagraph, unless an earlier 
                        effective date is required by this 
                        section, effective October 1, 2000, the 
                        State shall treat any support 
                        arrearages collected, except for 
                        amounts collected pursuant to section 
                        464, as accruing in the following 
                        order:
                                  [(I) To the period after the 
                                family ceased to receive 
                                assistance.
                                  [(II) To the period before 
                                the family received assistance.
                                  [(III) To the period while 
                                the family was receiving 
                                assistance.
          [(3) Families that never received assistance.--In the 
        case of any other family, the State shall distribute 
        the amount so collected to the family.
          [(4) Families under certain agreements.--In the case 
        of an amount collected for a family in accordance with 
        a cooperative agreement under section 454(33), 
        distribute the amount so collected pursuant to the 
        terms of the agreement.
          [(5) Study and report.--Not later than October 1, 
        1999, the Secretary shall report to the Congress the 
        Secretary's findings with respect to--
                  [(A) whether the distribution of post-
                assistance arrearages to families has been 
                effective in moving people off of welfare and 
                keeping them off of welfare;
                  [(B) whether early implementation of a pre-
                assistance arrearage program by some States has 
                been effective in moving people off of welfare 
                and keeping them off of welfare;
                  [(C) what the overall impact has been of the 
                amendments made by the Personal Responsibility 
                and Work Opportunity Reconciliation Act of 1996 
                with respect to child support enforcement in 
                moving people off of welfare and keeping them 
                off of welfare; and
                  [(D) based on the information and data the 
                Secretary has obtained, what changes, if any, 
                should be made in the policies related to the 
                distribution of child support arrearages.
          [(6) State option for applicability.--Notwithstanding 
        any other provision of this subsection, a State may 
        elect to apply the rules described in clauses (i)(II), 
        (ii)(II), and (v) of paragraph (2)(B) to support 
        arrearages collected on and after October 1, 1998, and, 
        if the State makes such an election, shall apply the 
        provisions of this section, as in effect and applied on 
        the day before the date of enactment of section 302 of 
        the Personal Responsibility and Work Opportunity 
        Reconciliation Act of 1996 (Public Law 104-193, 110 
        Stat. 2200), other than subsection (b)(1) (as so in 
        effect), to amounts collected before October 1, 1998.]
  (a) In General.--Subject to subsections (e) and (f), the 
amounts collected on behalf of a family as support by a State 
pursuant to a plan approved under this part shall be 
distributed as follows:
          (1) Families receiving assistance.--In the case of a 
        family receiving assistance from the State, the State 
        shall--
                  (A) pay to the Federal Government the Federal 
                share of the amount collected, subject to 
                paragraph (3)(A);
                  (B) retain, or pay to the family, the State 
                share of the amount collected, subject to 
                paragraph (3)(B); and
                  (C) pay to the family any remaining amount.
          (2) Families that formerly received assistance.--In 
        the case of a family that formerly received assistance 
        from the State:
                  (A) Current support.--To the extent that the 
                amount collected does not exceed the current 
                support amount, the State shall pay the amount 
                to the family.
                  (B) Arrearages.--Except as otherwise provided 
                in an election made under section 454(34), to 
                the extent that the amount collected exceeds 
                the current support amount, the State--
                          (i) shall first pay to the family the 
                        excess amount, to the extent necessary 
                        to satisfy support arrearages not 
                        assigned pursuant to section 408(a)(3);
                          (ii) if the amount collected exceeds 
                        the amount required to be paid to the 
                        family under clause (i), shall--
                                  (I) pay to the Federal 
                                Government, the Federal share 
                                of the excess amount described 
                                in this clause, subject to 
                                paragraph (3)(A); and
                                  (II) retain, or pay to the 
                                family, the State share of the 
                                excess amount described in this 
                                clause, subject to paragraph 
                                (3)(B); and
                          (iii) shall pay to the family any 
                        remaining amount.
          (3) Limitations.--
                  (A) Federal reimbursements.--The total of the 
                amounts paid by the State to the Federal 
                Government under paragraphs (1) and (2) of this 
                subsection with respect to a family shall not 
                exceed the Federal share of the amount assigned 
                with respect to the family pursuant to section 
                408(a)(3).
                  (B) State reimbursements.--The total of the 
                amounts retained by the State under paragraphs 
                (1) and (2) of this subsection with respect to 
                a family shall not exceed the State share of 
                the amount assigned with respect to the family 
                pursuant to section 408(a)(3).
          (4) Families that never received assistance.--In the 
        case of any other family, the State shall pay the 
        amount collected to the family.
          (5) Families under certain agreements.--
        Notwithstanding paragraphs (1) through (3), in the case 
        of an amount collected for a family in accordance with 
        a cooperative agreement under section 454(33), the 
        State shall distribute the amount collected pursuant to 
        the terms of the agreement.
          (6) State financing options.--To the extent that the 
        State's share of the amount payable to a family 
        pursuant to paragraph (2)(B) of this subsection exceeds 
        the amount that the State estimates (under procedures 
        approved by the Secretary) would have been payable to 
        the family pursuant to former section 457(a)(2)(B) (as 
        in effect for the State immediately before the date 
        this subsection first applies to the State) if such 
        former section had remained in effect, the State may 
        elect to use the grant made to the State under section 
        403(a) to pay the amount, or to have the payment 
        considered a qualified State expenditure for purposes 
        of section 409(a)(7)(B)(i), but not both.
          (7) State option to pass through additional support 
        with federal cost-sharing.--
                  (A) In general.--Notwithstanding paragraph 
                (2), a State shall not be required to pay to 
                the Federal Government the Federal share of an 
                amount collected on behalf of a family that 
                formerly received assistance under the State 
                program funded under part A, to the extent that 
                the State pays the amount to the family.
                  (B) Recipients of tanf for less than 5 
                years.--
                          (i) In general.--Notwithstanding 
                        paragraph (1), a State shall not be 
                        required to pay to the Federal 
                        Government the Federal share of an 
                        amount collected on behalf of a family 
                        that is a recipient of assistance under 
                        the State program funded under part A 
                        and, if the family includes an adult, 
                        that has received the assistance for 
                        not more than 5 years after the date of 
                        enactment of this paragraph, to the 
                        extent that--
                                  (I) the State pays the amount 
                                to the family; and
                                  (II) subject to clause (ii), 
                                the amount is disregarded in 
                                determining the amount and type 
                                of the assistance provided to 
                                the family.
                          (ii) Limitation.--Of the amount 
                        disregarded as described in clause 
                        (i)(II), the maximum amount that may be 
                        taken into account for purposes of 
                        clause (i) shall not exceed $400 per 
                        month, except that, in the case of a 
                        family that includes 2 or more 
                        children, the State may elect to 
                        increase the maximum amount to not more 
                        than $600 per month.
          (8) States with demonstration waivers.--
        Notwithstanding the preceding paragraphs, a State with 
        a waiver under section 1115, effective on or before 
        October 1, 1997, the terms of which allow pass-through 
        of child support payments, may pass through payments in 
        accordance with such terms with respect to families 
        subject to the waiver.
    (b) Continuation of Assignments.--Any rights to support 
obligations, assigned to a State as a condition of receiving 
assistance from the State under part A and in effect on 
September 30, 1997 (or such earlier date, on or after August 
22, 1996, as the state may choose), [shall] may remain assigned 
after such date.
    (c) Definitions.--As used in subsection (a):
          (1) Assistance.--The term ``assistance from the 
        State'' means--

           *       *       *       *       *       *       *

          (5) Current support amount.--The term ``current 
        support amount'' means, with respect to amounts 
        collected as support on behalf of a family, the amount 
        designated as the monthly support obligation of the 
        noncustodial parent in the order requiring the support.

                           PAYMENTS TO STATES

    Sec. 455. (a)(1) From the sums appropriated therefor, the 
Secretary shall pay to each State for each quarter an amount--

           *       *       *       *       *       *       *

    (f) The Secretary may make direct payments under this part 
to an Indian tribe or tribal organization that demonstrates to 
the satisfaction of the Secretary that it has the capacity to 
operate a child support enforcement program meeting the 
objectives of this part, including establishment of paternity, 
establishment, modification, and enforcement of support orders, 
and location of absent parents. The Secretary shall promulgate 
regulations establishing the requirements which must be met by 
an Indian tribe or tribal organization to be eligible for a 
grant under this subsection.
  (g)(1) In addition to any other payments made to a State 
under this part, the Secretary shall pay each State an amount 
determined in accordance with paragraph (2) for fiscal year 
2003 to carry out any of the following activities:
          (A) To review State policies on collecting fees under 
        the State program operated under the State plan 
        approved under this part.
          (B) To review the distribution options provided under 
        section 457(a) (as amended by section 501(b)(1)(A) of 
        the Work, Opportunity, and Responsibility for Kids Act 
        of 2002), and, if a State elects such options, to 
        prepare for the implementation of the options.
          (C) To update automated systems to conform with 
        requirements of the State program operated under the 
        State plan approved under this part, including as 
        amended by the Work, Opportunity, and Responsibility 
        for Kids Act of 2002.
          (D) To improve customer service under such State 
        program.
          (E) To examine the causes of, and propose solutions 
        for, undistributed collections under such State 
        program.
          (F) To examine the buildup of arrears and approaches 
        to arrears management under such State program.
          (G) To develop approaches to improving interstate 
        collections of child support obligations.
          (H) To develop approaches to improving the percentage 
        of cases under such State program with an established 
        order for child support.
          (I) To review the review and adjustment policies 
        under such program and the State program funded under 
        part A for families receiving assistance or services 
        under the State program funded under part A.
  (2)(A) Subject to subparagraph (B), the Secretary shall 
determine the amount of each payment to a State under this 
subsection for fiscal year 2003 based on the proportion of 
cases under the State program operated under the State plan 
approved under this part for the most recent fiscal year for 
which data is available, as compared to all such cases in all 
States for that fiscal year.
  (B) No State shall receive a payment under this subsection 
for fiscal year 2003 that is less than $750,000.
  (3) Out of any money in the Treasury of the United States not 
otherwise appropriated, there is appropriated for fiscal year 
2003, $50,000,000 for making payments to States under this 
subsection.

           *       *       *       *       *       *       *

        COLLECTION OF PAST-DUE SUPPORT FROM FEDERAL TAX REFUNDS

    Sec. 464. (a)(1) * * *

           *       *       *       *       *       *       *

    (2)(A) Upon receiving notice from a State agency 
administering a plan approved under this part that a named 
individual owes past-due support [(as that term is defined for 
purposes of this paragraph under section (c))] which such State 
has agreed to collect under section 454(4)(A)(ii), and that the 
State agency has sent notice to such individual in accordance 
with paragraph (3)(A), 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 such past-due support, and shall concurrently 
send notice to such individual that the withholding has been 
made, including in or with such notice a notification to any 
other person who may have filed a joint return with such 
individual of the steps which such other person may take in 
order to secure his or her proper share of the refund. The 
Secretary of the Treasury shall pay the amount withheld to the 
State agency, and the State shall pay the Secretary of Treasury 
any fee imposed by the Secretary of the Treasury to cover the 
costs of the withholding and any required notification. The 
State agency shall, subject to paragraph (3)(B), distribute 
such amount to or on behalf of the child to whom the support 
was owned in accordance with section 457. This subsection may 
be executed by the Secretary of the Department of the Treasury 
or his designee.

           *       *       *       *       *       *       *

    (c)[(1) Except as provided in paragraph (2), as used in] In 
this part the term ``past-due support'' means the amount of a 
delinquency, determined under a court order, or an order of an 
administrative process established under State law, for support 
and maintenance of a child (whether or not a minor), or of a 
child (whether or not a minor) and the parent with whom the 
child is living.
    [(2) For purposes of subsection (a)(2), the term ``past-due 
support'' means only past-due support owed to or on behalf of a 
qualified child (or a qualified child and the parent with whom 
the child is living if the same support order includes support 
for the child and the parent).
    [(3) For purposes of paragraph (2), the term ``qualified 
child'' means a child--
          [(A) who is a minor; or
          [(B)(i) who, while a minor, was determined to be 
        disabled under title II or XVI; and
          [(ii) for whom an order of support is in force.]

           *       *       *       *       *       *       *

      REQUIREMENT OF STATUTORILY PRESCRIBED PROCEDURES TO IMPROVE 
               EFFECTIVENESS OF CHILD SUPPORT ENFORCEMENT

    Sec. 466. (a) * * *

           *       *       *       *       *       *       *

          (10) Review and adjustment of support orders upon 
        request.--
                  (A) 3-year cycle.--
                          (i) In general.--Procedures under 
                        which every 3 years (or such shorter 
                        cycle as the State may determine), upon 
                        the request of either [parent, or,] 
                        parent or if there is an assignment 
                        under part A, [upon the request of the 
                        State agency under the State plan or of 
                        either parent,] the State shall with 
                        respect to a support order being 
                        enforced under this part, taking into 
                        account the best interests of the child 
                        involved--

           *       *       *       *       *       *       *

    (f) Uniform Interstate Family Support Act.--In order to 
satisfy section 454(2)(A), on and after [January 1, 1998] 
October 1, 2004, each State must have in effect the Uniform 
Interstate Family Support Act, as approved by the American Bar 
Association on February 9, 1993, and as in effect on [August 
22, 1996,] January 1, 2002, including any amendments officially 
adopted as of such date by the National Conference of 
Commissioners on Uniform State Laws.

           *       *       *       *       *       *       *

              NONCUSTODIAL PARENT EMPLOYMENT GRANT PROGRAM

  Sec. 469C. (a) Definitions.--In this section:
          (1) Eligible state.--The term ``eligible State'' 
        means a State that has obtained a commitment from at 
        least 1 county within the State to establish a 
        supervised employment program to provide noncustodial 
        parents described in subsection (b) with an option to 
        participate in that program prior to a court entering a 
        finding that the noncustodial parent is in contempt of 
        court for failure to pay a child support obligation.
          (2) Supervised employment program.--The term 
        ``supervised employment program'' means an employment 
        program supervised by a court or administered by the 
        State agency responsible for administering the State 
        plan under section 454.
  (b) Authority To Award Grants.--Subject to the availability 
of appropriations, the Secretary and the Secretary of Labor (in 
this subsection referred to as the ``Secretaries'') jointly 
shall award grants to eligible States for the purpose of 
establishing, in coordination with counties and other local 
governments, supervised employment programs for noncustodial 
parents who are determined by a court or the State agency 
responsible for administering the State plan under section 454 
to have a history of nonpayment or irregular payment of child 
support obligations and are determined to be in need of 
employment services in order to pay such child support 
obligations. A noncustodial parent described in the preceding 
sentence who is an ex-offender shall be eligible to participate 
in a program established with a grant made under this 
subsection.
  (c) Administration.--An eligible State that receives a grant 
under this section may contract with a public, private, faith-
based or community-based organization to administer (in 
conjunction with the court of jurisdiction or State agency 
responsible for administering the State plan under section 454) 
the supervised employment program.
  (d) Program Goals and Requirement.--
          (1) Goals.--The goals of a supervised employment 
        program established with funds made available under a 
        grant made under this section shall include the 
        following:
                  (A) To assist noncustodial parents described 
                in subsection (b) establish a pattern of 
                regular child support payments by obtaining and 
                maintaining employment.
                  (B) To increase the dollar amount and total 
                number of child support orders with 
                collections.
                  (C) To help noncustodial parents described in 
                subsection (b) improve relationships with their 
                children.
          (2) Requirement.--A supervised employment program 
        established with funds made available under a grant 
        made under this section shall not permit a noncustodial 
        parent placed in the program to graduate from the 
        program and avoid penalties for failure to pay a child 
        support obligation until the noncustodial parent 
        completes at least 6 months of continuous, timely 
        payment of the parent's child support obligations.
  (e) Use of Funds.--Services provided under a supervised 
employment program established with funds made available under 
a grant made under this section may include the following:
          (1) Job development.
          (2) Supervised job search.
          (3) Job placement.
          (4) Case management.
          (5) Court and child support liaison services.
          (6) Educational assessment.
          (7) Educational referrals.
          (8) Vocational assessment.
          (9) Counseling on responsible fatherhood and 
        effective parenting.
          (10) Support funds for services such as 
        transportation or short-term training.
          (11) Referral for support services.
          (12) Employment retention services.
          (13) Outreach to community agencies that provide 
        bonding programs.
          (14) Domestic violence services and health services.
    (f) Amount of Grants.--
          (1) In general.--The Secretaries shall determine the 
        amount of each grant to be awarded under this section, 
        taking into account the number of counties 
        participating in an eligible State and the population 
        of the noncustodial parents to be served by the 
        employment programs in that State.
          (2) Priority for certain programs.--In awarding 
        grants under this section, the Secretaries shall give 
        priority to eligible States with programs that are 
        designed to target noncustodial parents whose income 
        does not exceed 150 percent of the poverty line (as 
        defined in section 673(2) of the Community Services 
        Block Grant Act (42 U.S.C. 9902(2)), including any 
        revision required by such section applicable to a 
        family of the size involved).
          (3) Matching requirement.--
                  (A) In general.--The Secretaries may not 
                award a grant to an eligible State under this 
                section unless the eligible State agrees that, 
                with respect to the costs to be incurred by the 
                eligible State in supporting the supervised 
                employment program established with funds 
                provided under the grant, the State will make 
                available non-Federal contributions in an 
                amount equal to 25 percent of the amount of 
                Federal funds paid to the State under such 
                grant.
                  (B) Non-federal contributions.--In this 
                paragraph, the term ``non-Federal 
                contributions'' includes contributions by the 
                State and by public and private entities that 
                may be in cash or in kind, but does not include 
                any amounts provided by the Federal Government, 
                or services assisted or subsidized to any 
                significant extent by the Federal Government or 
                any amount expended by a State before October 
                1, 2002.
  (g) Application.--In order to receive a grant under this 
section, an eligible State shall submit an application to the 
Secretaries, at such time and in such manner as the Secretaries 
may require, and that includes the following:
          (1) Evidence of an agreement between the State and 1 
        or more counties to establish a supervised employment 
        program that meets the requirements of this section.
          (2) The number of potential noncustodial parents to 
        be served by the program.
          (3) The purposes specific to that State's program.
          (4) The income of the target population.
          (5) The amount of proposed grant funds to be awarded.
          (6) A certification that the State matching 
        requirements of subsection (f)(3) will be satisfied if 
        the grant is awarded to that State.
          (7) Such other information as the Secretaries deem 
        appropriate.
  (h) Authorization of Appropriations.--There is authorized to 
be appropriated for making grants under this section, 
$25,000,000 for each of fiscal years 2004 through 2007.

    GRANTS TO CONDUCT POLICY REVIEWS AND DEMONSTRATION PROJECTS TO 
        COORDINATE SERVICES FOR LOW-INCOME, NONCUSTODIAL PARENTS

    Sec. 469D. (a) Policy Reviews.--Subject to the availability 
of appropriations, the Secretary shall make grants to States 
desiring to conduct policy reviews and develop recommendations 
with the goals of--
          (1) obtaining and retaining employment, increasing 
        child support payments, and increasing the healthy 
        involvement of low-income, noncustodial parents with 
        their children; and
          (2) coordinating services for low-income, 
        noncustodial parents among the different systems or 
        programs in which such parents are involved, including 
        the criminal justice system, the State program funded 
        under part A, the State program funded under this part, 
        and job training or employment programs.
    (b) Demonstration Projects.--
          (1) In general.--The Secretary shall make grants to 
        States desiring to conduct a demonstration project for 
        the purpose of--
                  (A) testing innovative policies and to better 
                coordinate policies and services for low-
                income, noncustodial parents to accomplish the 
                goals described in subsection (a); or
                  (B) if the State conducted a policy review 
                with a grant made under subsection (a) and 
                desires to implement the recommendations of 
                that review, implementing such recommendations.
          (2) Use of funds.--Funds made available under a grant 
        made under this subsection may be used to provide a 
        wide variety of services to, and to implement policies 
        regarding, low-income, noncustodial parents, including 
        providing economic incentives (with or without penalty) 
        to increase the employment of such parents or to 
        increase the amount of child support paid by such 
        parents.
  (c) Application.--A State desiring to receive a grant to 
conduct a policy review under subsection (a) or a grant to 
conduct a demonstration project under subsection (b) shall 
submit an application to the Secretary at such time, in such 
manner, and containing such information as the Secretary may 
require.
  (d) Authorization of Appropriations.--There is authorized to 
be appropriated for making grants under this section, 
$25,000,000 for each of fiscal years 2004 through 2007.

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

                         PURPOSE: APPROPRIATION

    Sec. 470. * * *

           *       *       *       *       *       *       *

                FOSTER CARE MAINTENANCE PAYMENTS PROGRAM

    Sec. 472. * * *

           *       *       *       *       *       *       *

          (2) such child's placement and care are the 
        responsibility of (A) the State agency administering 
        the State plan approved under section 471, [or (B)] any 
        other public agency with whom the State agency 
        administering or supervising the administration of the 
        State plan approved under section 471 has made an 
        agreement which is still in effect[;], or (C) an Indian 
        tribe or tribal organization (as defined in section 
        479B(e)) or an intertribal consortium if the Indian 
        tribe, tribal organization, or consortium is not 
        operating a program pursuant to section 479B and (i) 
        has a cooperative agreement with a State pursuant to 
        section 479B(c) or (ii) submits to the Secretary a 
        description of the arrangements (jointly developed or 
        developed in consultation with the State) made by the 
        Indian tribe, tribal organization, or consortium for 
        the payment of funds and the provision of the child 
        welfare services and protections required by this 
        title.

           *       *       *       *       *       *       *

            PROGRAMS OPERATED BY INDIAN TRIBAL ORGANIZATIONS

    Sec. 479B. (a) Application.--Except as provided in 
subsection (b), this part shall apply to an Indian tribe or 
tribal organization that elects to operate a program under this 
part in the same manner as this part applies to a State.
    (b) Modification of Plan Requirements.--
          (1) Service area; standards.--
                  (A) In general.--Subject to subparagraph (B), 
                in the case of an Indian tribe or tribal 
                organization submitting a plan for approval 
                under section 471, the plan shall--
                          (i) in lieu of the requirement of 
                        section 471(a)(3), identify the service 
                        area or areas and population to be 
                        served by the Indian tribe or tribal 
                        organization; and
                          (ii) in lieu of the requirement of 
                        section 471(a)(10), provide for the 
                        approval of foster homes pursuant to 
                        tribal standards and in a manner that 
                        ensures the safety of, and 
                        accountability for, children placed in 
                        foster care.
                  (B) Special rule.--With respect to an Indian 
                tribe located in the State of Alaska--
                          (i) clause (ii) of subparagraph (A) 
                        shall not apply; and
                          (ii) the requirement of section 
                        471(a)(10) shall apply to a plan 
                        submitted by such tribe.
          (2) Determination of federal share.--
                  (A) Per capita income.--
                          (i) In general.--For purposes of 
                        determining the Federal medical 
                        assistance percentage applicable to an 
                        Indian tribe or tribal organization 
                        under paragraphs (1) and (2) of section 
                        474(a), the calculation of an Indian 
                        tribe's or tribal organization's per 
                        capita income shall be based upon the 
                        service population of the Indian tribe 
                        or tribal organization as defined in 
                        its plan in accordance with paragraph 
                        (1)(A).
                          (ii) Consideration of other 
                        information.--An Indian tribe or tribal 
                        organization may submit to the 
                        Secretary such information as the 
                        Indian tribe or tribal organization 
                        considers relevant to the calculation 
                        of the per capita income of the Indian 
                        tribe or tribal organization, and the 
                        Secretary shall consider such 
                        information before making the 
                        calculation.
                  (B) Administrative expenditures.--The 
                Secretary shall, by regulation, determine the 
                proportions to be paid to Indian tribes and 
                tribal organizations pursuant to section 
                474(a)(3), except that in no case shall an 
                Indian tribe or tribal organization receive a 
                lesser proportion than the corresponding amount 
                specified for a State in that section.
                  (C) Sources of non-federal share.--An Indian 
                tribe or tribal organization may use Federal or 
                State funds to match payments for which the 
                Indian tribe or tribal organization is eligible 
                under section 474.
          (3) Modification of other requirements.--Upon the 
        request of an Indian tribe, tribal organization, or a 
        consortia of tribes or tribal organizations, the 
        Secretary may modify any requirement under this part 
        if, after consulting with the Indian tribe, tribal 
        organization, or consortia of tribes or tribal 
        organizations, the Secretary determines that 
        modification of the requirement would advance the best 
        interests and the safety of children served by the 
        Indian tribe, tribal organization, or consortia of 
        tribes or tribal organizations.
          (4) Consortium.--The participating Indian tribes or 
        tribal organizations of an intertribal consortium may 
        develop and submit a single plan under section 471 that 
        meets the requirements of this section.
  (c) Cooperative Agreements.--An Indian tribe, tribal 
organization, or intertribal consortium and a State may enter 
into a cooperative agreement for the administration or payment 
of funds pursuant to this part. In any case where an Indian 
tribe, tribal organization, or intertribal consortium and a 
State enter into a cooperative agreement that incorporates any 
of the provisions of this section, those provisions shall be 
valid and enforceable. Any such cooperative agreement that is 
in effect as of the date of enactment of this section, shall 
remain in full force and effect subject to the right of either 
party to the agreement to revoke or modify the agreement 
pursuant to the terms of the agreement.
  (d) Regulations.--Not later than 1 year after the date of 
enactment of this section, the Secretary shall, in full 
consultation with Indian tribes and tribal organizations, 
promulgate regulations to carry out this section.
  (e) Definitions of Indian Tribe; Tribal Organizations.--In 
this section, the terms ``Indian tribe'' and ``tribal 
organization'' have the meanings given those terms in 
subsections (e) and (l) of section 4 of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450b), 
respectively, except that, with respect to the State of Alaska, 
the term ``Indian tribe'' has the meaning given that term in 
section 419(4)(B).

TITLE V--MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT

           *       *       *       *       *       *       *

              [SEPARATE PROGRAM FOR] ABSTINENCE EDUCATION

    Sec. 510. * * *

           *       *       *       *       *       *       *

    (d) For the purpose of allotments under subsection (a), 
there is appropriated, out of any money in the Treasury not 
otherwise appropriated, an additional $50,000,000 for each of 
the fiscal years 1998 through [2002] 2007. The appropriation 
under the preceding sentence for a fiscal year is made on 
October 1 of the fiscal year.

    GRANTS TO IMPLEMENT ABSTINENCE FIRST TEEN PREGNANCY PREVENTION 
                               STRATEGIES

      Sec. 511. (a) Authority.--
          (1) In general.--The Secretary shall award grants to 
        States and Indian tribes to implement teen pregnancy 
        prevention strategies that--
                  (A) are abstinence-first (as defined in 
                paragraph (3)(A);
                  (B) replicate or substantially incorporate 
                the elements of 1 or more teen pregnancy 
                prevention programs, including certain youth 
                development programs and service learning 
                programs, that have been proven effective (on 
                the basis of rigorous scientific research (as 
                defined in paragraph (3)(D));
                  (C) delay or decrease sexual intercourse or 
                sexual activity and increase contraceptive use 
                among sexually active teens or reduce teenage 
                pregnancies without increasing risky behavior; 
                and
                  (D) incorporate outreach or media programs.
          (2) Design and implementation flexibility.--States 
        and Indian tribes shall have flexibility to determine 
        how to design and implement teen pregnancy prevention 
        strategies under paragraph (1).
          (3) Definitions.--In this section:
                  (A) Abstinence-first.--The term ``abstinence-
                first'' means a strategy that strongly 
                emphasizes abstinence as the best and only 
                certain way to avoid pregnancy and sexually 
                transmitted infections and that discusses the 
                scientifically proven effectiveness, benefits, 
                and limitations of contraception technologies 
                and other prevention approaches in a manner 
                that is medically accurate (as defined in 
                subparagraph (C)).
                  (B) Indian tribe.--The term ``Indian tribe'' 
                has the meaning given that term in section 
                419(4).
                  (C) Medically accurate.--The term ``medically 
                accurate'' means information that is--
                          (i) supported by research recognized 
                        as accurate and objective by leading 
                        medical, psychological, psychiatric, or 
                        public health organizations and 
                        agencies; and
                          (ii) where relevant, is published in 
                        a peer-reviewed journal (as defined by 
                        the American Medical Association).
                  (D) Rigorous scientific research.--The term 
                ``rigorous scientific research'' means research 
                that typically uses randomized control trials 
                and other similar strong experimental designs.
  (b) Application of Other Requirements.--With respect to a 
grant made under this section--
          (1) sections 503, 507, and 508 apply to the grant to 
        the same extent and in the same manner as such sections 
        apply to allotments under section 502(c); and
          (2) sections 505 and 506 apply to the grant to the 
        extent determined by the Secretary to be appropriate.
  (c) Comparative Evaluation of Education Approaches.--
          (1) In general.--The Secretary shall, in consultation 
        with an advisory panel of researchers identified by the 
        Board on Children, Youth, and Families of the National 
        Academy of Sciences, conduct an experimental, 
        independent evaluation, directly or through contract or 
        interagency agreement, that assesses the relative 
        efficacy of the 2 approaches to abstinence education 
        established under section 510 and this section.
          (2) Design.--The evaluation conducted under paragraph 
        (1) shall be designed to--
                  (A) enable a comparison of the efficacy of a 
                program that precludes education about 
                contraception with a similar program that 
                includes education about contraception and 
                means of preventing the transmission of HIV and 
                sexually-transmitted diseases; and
                  (B) measure key outcomes, including behaviors 
                that put teens at risk for unintended pregnancy 
                and childbearing and for HIV and other sexually 
                transmitted diseases, such as sexual activity, 
                contraceptive use, condom use and patterns of 
                sexual relationships.
          (3) Report.--Not later than 5 years after the date of 
        enactment of this section, the Secretary shall submit a 
        report to Congress that contains the results of the 
        evaluation conducted under paragraph (1).
  (d) Appropriations.--
          (1) In general.--Out of any money in the Treasury not 
        otherwise appropriated, there is appropriated to the 
        Secretary for the purpose of making grants under this 
        section, $50,000,000 for each of fiscal years 2003 
        through 2007.
          (2) Reservation of funds.--Of the amount appropriated 
        under paragraph (1) for a fiscal year, the Secretary 
        shall reserve--
                  (A) an amount equal to 1.5 percent of such 
                amount for each such fiscal year for the 
                purpose of awarding grants to Indian tribes 
                under this section in such manner, and subject 
                to such requirements as the Secretary, in 
                consultation with such tribes, determines 
                appropriate; and
                  (B) up to $5,000,000 of such amount for each 
                such fiscal year for the purpose of conducting 
                the evaluation required under subsection (c).

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

           *       *       *       *       *       *       *

Part A--General Provisions

           *       *       *       *       *       *       *

    ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN ISLANDS, GUAM, AND 
              AMERICAN SAMOA; LIMITATION ON TOTAL PAYMENTS

    Sec. 1108. (a) Limitation on Total Payments to Each 
Territory.--
          (1) In general.--Notwithstanding any other provision 
        of this Act, (except for paragraph (2) of this 
        subsection), the total amount certified by the 
        Secretary of Health and Human Services under titles I, 
        X, XIV, and XVI, under parts A and E of title IV, and 
        under subsection (b) of this section, for payment to 
        any territory for a fiscal year shall not exceed the 
        ceiling amount for the territory for the fiscal year.
          (2) Certain payments disregarded.--Paragraph (1) of 
        this subsection shall be applied without regard to any 
        payment made under section 403(a)(2), 403(a)(4), 
        403(a)(5), [406, or 413(f)] 413f, or 418(a)(4)(B).
    (b) Entitlement to Matching Grant.--
          (1) In general.--Each territory shall be entitled to 
        receive from the Secretary for each fiscal year a grant 
        in an amount equal to 75 percent of the amount (if any) 
        by which--
                  (A) the total expenditures of the territory 
                during the fiscal year under the territory 
                programs funded under parts A and E of title 
                IV, including any amount paid to the State 
                under part A of title IV that is transferred in 
                accordance with section 404(d) and expended 
                under the program to which transferred; exceeds
                  (B) the sum of--
                          (i) the amount of the family 
                        assistance grant payable to the 
                        territory without regard to section 
                        409; and
                          (ii) the total amount expended by the 
                        territory during fiscal year 1995 
                        pursuant to parts A and F of title IV 
                        (as so in effect), other than for child 
                        care.
          (2) Appropriation.--Out of any money in the Treasury 
        of the United States not otherwise appropriated, there 
        are appropriated for [fiscal years 1997 through 2002] 
        each of fiscal years 2003 through 2007, such sums as 
        are necessary for grants under this paragraph.
    (c) Definitions.--As used in this section:
          (1) Territory.--The term ``territory'' means Puerto 
        Rico, the Virgin Islands, Guam, and American Samoa.
          (2) Ceiling amount.--The term ``ceiling amount'' 
        means, with respect to a territory and a fiscal year, 
        the mandatory ceiling amount with respect to the 
        territory, reduced for the fiscal year in accordance 
        with subsection (e), and reduced by the amount of any 
        penalty imposed on the territory under any provision of 
        law specified in subsection (a) during the fiscal year.
          (3) Family assistance grant.--The term ``family 
        assistance grant'' has the meaning given such term by 
        section 403(a)(1)(B).
          (4) Mandatory ceiling amount.--The term ``mandatory 
        ceiling amount'' means--
                  (A) [$107,255,000] $109,936,375 with respect 
                to Puerto Rico;
                  (B) [$4,686,000] $4,803,150 with respect to 
                Guam;
                  (C) [$3,554,000] $3,642,850 with respect to 
                the Virgin Islands; and
                  (D) [$1,000,000] $1,250,000 with respect to 
                American Samoa.

           *       *       *       *       *       *       *

                         DEMONSTRATION PROJECTS

    Sec. 1130. (a) Authority To Approve Demonstration 
Projects.--
          (1) In general.--The Secretary may authorize States 
        to conduct demonstration projects pursuant to this 
        section which the Secretary finds are likely to promote 
        the objectives of part B or E of title IV.
          (2) Limitation.--The Secretary may authorize not more 
        than 10 demonstration projects under paragraph (1) in 
        each of fiscal years 1998 through [2002] 2007.

           *       *       *       *       *       *       *

    (g) Cost Neutrality.--The Secretary may not authorize a 
State to conduct a demonstration project under this section 
unless the Secretary determines that the total amount of 
Federal funds that will be expended under (or by reason of) the 
project over its approved term (or such portion thereof or 
other period as the Secretary may find appropriate) will not 
exceed the amount of such funds that would be expended by the 
State under the State plans approved under parts B and E of 
title IV if the project were not conducted.
    (h) No Limit on Number of Waivers Granted to, or 
Demonstration Projects That May Be Conducted by, a Single 
State.--The Secretary shall not impose any limit on the number 
of waivers that may be granted to a State, or the number of 
demonstration projects that a State may be authorized to 
conduct, under this section.

TITLE XVI--GRANTS TO STATES FOR AID TO THE AGED, BLIND, OR DISABLED

           *       *       *       *       *       *       *

                             ADMINISTRATION

    Sec. 1633. (a) Subject to subsection (b), the Commissioner 
of Social Security may make such administrative and other 
arrangements (including arrangements for the determination of 
blindness and disability under section 1614(a)(2) and (3) in 
the same manner and subject to the same conditions as provided 
with respect to disability determinations under section 221) as 
may be necessary or appropriate to carry out the Commissioner's 
functions under this title.

           *       *       *       *       *       *       *

     (d) The Commissioner of Social Security shall establish by 
regulation criteria for time limits and other criteria related 
to individuals' plans for achieving self-support, that take 
into account--
          (1) the length of time that the individual will need 
        to achieve the individual's employment goal (within 
        such reasonable period as the Commissioner of Social 
        Security may establish); and
          (2) other factors determined by the Commissioner of 
        Social Security to be appropriate.
      (e)(1) The Commissioner of Social Security shall review 
determinations, made by State agencies pursuant to subsection 
(a) in connection with applications for benefits under this 
title on the basis of blindness or disability, that individuals 
who have attained 18 years of age are blind or disabled as of a 
specified onset date. The Commissioner of Social Security shall 
review such a determination before any action is taken to 
implement the determination.
    (2)(A) In carrying out paragraph (1), the Commissioner of 
Social Security shall review--
          (i) at least 25 percent of all determinations 
        referred to in paragraph (1) that are made in fiscal 
        year 2003; and
          (ii) at least 50 percent of all such determinations 
        that are made in fiscal year 2004 or thereafter.
  (B) In carrying out subparagraph (A), the Commissioner of 
Social Security shall, to the extent feasible, select for 
review the determinations which the Commissioner of Social 
Security identifies as being the most likely to be incorrect.

TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

           *       *       *       *       *       *       *

                   STATE PLANS FOR MEDICAL ASSISTANCE

    Sec. 1902. (a) A State plan for medical assistance must--
          (1) provide that it shall be in effect in all 
        political subdivisions of the State, and, if 
        administered by them, be mandatory upon them;

           *       *       *       *       *       *       *

          (55) provide for receipt and initial processing of 
        applications of individuals for medical assistance 
        under subsection (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), 
        (a)(10)(A)(i)(VII), or (a)(10)(A)(ii)(IX) and under 
        section 1931--

           *       *       *       *       *       *       *

    (e)(1)(A) Notwithstanding any other provision of this 
title, effective January 1, 1974, subject to subparagraph (B) 
each State plan approved under this title must provide that 
each family which was receiving aid pursuant to a plan of the 
State approved under part A of title IV in at least 3 of the 6 
months immediately preceding the month in which such family 
became ineligible for such aid because of increased hours of, 
or increased income from, employment, shall, while a member of 
such family is employed, remain eligible for assistance under 
the plan approved under this title (as though the family was 
receiving aid under the plan approved under part A of title IV) 
for 4 calendar months beginning with the month in which such 
family became ineligible for aid under the plan approved under 
part A of title IV because of income and resources or hours of 
work limitations contained in such plan.
    (B) Subparagraph (A) shall not apply with respect to 
families that cease to be eligible for aid under Part A of 
title IV during the period beginning on April 1, 1990, and 
ending on September 30, [2002] 2007. During such period, for 
provisions relating to extension of eligibility for medical 
assistance for certain families who have received aid pursuant 
to a State plan approved under part A of title IV and have 
earned income, see section 1925.

           *       *       *       *       *       *       *

                           PAYMENT TO STATES

    Sec. 1903. * * *

           *       *       *       *       *       *       *

    (v)(1) Notwithstanding the preceding provisions of this 
section, except as provided in [paragraph (2)] paragraphs (2) 
and (4), no payment may be made to a State under this section 
for medical assistance furnished to an alien who is not 
lawfully admitted for permanent residence or otherwise 
permanently residing in the United States under color of law.

           *       *       *       *       *       *       *

    (3) For purposes of this subsection, the term ``emergency 
medical condition'' means a medical condition (including 
emergency labor and delivery) manifesting itself by acute 
symptoms of sufficient severity (including severe pain) such 
that the absence of immediate medical attention could 
reasonably be expected to result in--
          (A) placing the patient's health in serious jeopardy,
          (B) serious impairment to bodily functions, or
          (C) serious dysfunction of any bodily organ or part.
  (4)(A) A State may elect (in a plan amendment under this 
title) to provide medical assistance under this title 
(including under a waiver authorized by the Secretary), 
notwithstanding sections 401(a), 402(b), 403, and 421 of the 
Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996, for aliens who are lawfully residing in the United 
States (including battered aliens described in section 431(c) 
of such Act) and who are otherwise eligible for such 
assistance, within any of the following eligibility categories:
          (i) Pregnant women.--Women during pregnancy (and 
        during the 60-day period beginning on the last day of 
        the pregnancy).
          (ii) Children.--Children (as defined under such 
        plan), including optional targeted low-income children 
        described in section 1905(u)(2)(B).
  (B) In the case of a State that has elected to provide 
medical assistance to a category of aliens under subparagraph 
(A), no debt shall accrue under an affidavit of support against 
any sponsor of such an alien on the basis of provision of 
assistance to such category and the cost of such assistance 
shall not be considered as an unreimbursed cost.

           *       *       *       *       *       *       *

            EXTENSION OF ELIGIBILITY FOR MEDICAL ASSISTANCE

    Sec. 1925. (a) Initial 6-Month Extension.--
          (1) Requirement.--Notwithstanding any other provision 
        of this title, but subject to subsection (h), each 
        State plan approved under this title must provide that 
        each family which was receiving aid pursuant to a plan 
        of the State approved under part A of title IV in at 
        least 3 of the 6 months immediately preceding the month 
        in which such family becomes ineligible for such aid, 
        because of hours of, or income from, employment of the 
        caretaker relative (as defined in subsection (e)) or 
        because of section 402(a)(8)(B)(ii)(II) (providing for 
        a time-limited earned income disregard), shall, subject 
        to paragraph (3) and without any reapplication for 
        benefits under the plan, remain eligible for assistance 
        under the plan approved under this title during the 
        immediately succeeding 6-month period in accordance 
        with this subsection. A State may, at its option, also 
        apply the previous sentence in the case of a family 
        that was receiving such aid for fewer than 3 months, or 
        that had applied for and was eligible for such aid for 
        fewer than 3 months, during the 6 immediately preceding 
        months described in such sentence.
          (2) Notice of benefits.--Each State, in the notice of 
        termination of aid under part A of title IV sent to a 
        family meeting the requirements of paragraph (1)--
                  (A) shall notify the family of its right to 
                extended medical assistance under this 
                subsection and include in the notice a 
                description of the reporting requirement of 
                subsection (b)(2)(B)(i) and of the 
                circumstances (described in paragraph (3)) 
                under which such extension may be terminated; 
                and
                  (B) shall include a card or other evidence of 
                the family's entitlement to assistance under 
                this title for the period provided in this 
                subsection.
        Each State shall provide, to families whose aid under 
        part A or E of title IV has terminated but whose 
        eligibility for medical assistance under this title 
        continues, written notice of their ongoing eligibility 
        for such medical assistance. If a State makes a 
        determination that any member of a family whose aid 
        under part A or E of title IV is being terminated is 
        also no longer eligible for medical assistance under 
        this title, the notice of such determination shall be 
        supplemented by a 1-page notification form describing 
        the different ways in which individuals and families 
        may qualify for such medical assistance and explaining 
        that individuals and families do not have to be 
        receiving aid under part A or E of title IV in order to 
        qualify for such medical assistance. Such notice shall 
        further be supplemented by information on how to apply 
        for child health assistance under the State children's 
        health insurance program under title XXI and how to 
        apply for medical assistance under this title.

           *       *       *       *       *       *       *

    (b) Additional 6-Month Extension.--
          (1) Requirement.--Notwithstanding any other provision 
        of this title, but subject to subsection (h), each 
        State plan approved under this title shall provide that 
        the State shall offer to each family, which has 
        received assistance during the entire 6-month period 
        under subsection (a) and which, at the option of a 
        State, meets the requirement of paragraph (2)(B)(i), in 
        the last month of the period the option of extending 
        coverage under this subsection for the succeeding 6-
        month period, subject to paragraph (3).
          (2) Notice and reporting requirements.--
                  (A) Notices.--Subject to subparagraph (C):

           *       *       *       *       *       *       *

                  (B) Reporting requirements.--Subject to 
                subparagraph (C):

           *       *       *       *       *       *       *

          (3) Termination of extension.--
                  (A) In general.--Subject to subparagraphs (B) 
                and (C), extension of assistance during the 6-
                month period described in paragraph (1) to a 
                family shall terminate (during the period) as 
                follows:

           *       *       *       *       *       *       *

                          (iii) Quarterly income reporting and 
                        test.--The extension under this 
                        subsection shall terminate at the close 
                        of the 1st or 4th month of the 6-month 
                        period if the State has not waived 
                        under paragraph (2)(C) the reporting 
                        requirement with respect to such month 
                        under paragraph (2)(B) and if--

           *       *       *       *       *       *       *

          (5) Premium.--
                  (A) Permitted.--Notwithstanding any other 
                provision of this title, but subject to 
                subsection (h) (including section 1916), a 
                State may impose a premium for a family for 
                additional extended coverage under this 
                subsection for a premium payment period (as 
                defined in subparagraph (D)(i)), but only if 
                the family's average gross monthly earnings 
                (less the average monthly cost for such child 
                care as is necessary for the employment of the 
                caretaker relative) for the premium base period 
                exceed 100 percent of the official poverty line 
                (as defined by the Office of Management and 
                Budget, and revised annually in accordance with 
                section 673(2) of the Omnibus Budget 
                Reconciliation Act of 1981 \216\) applicable to 
                a family of the size involved.

           *       *       *       *       *       *       *

  (c) State Option of up to 12 Months of Additional 
Eligibility.--
          (1) In general.--Notwithstanding any other provision 
        of this title, each State plan approved under this 
        title may provide, at the option of the State, that the 
        State shall offer to each family which received 
        assistance during the entire 6-month period under 
        subsection (b) and which meets the applicable 
        requirement of paragraph (2), in the last month of the 
        period the option of extending coverage under this 
        subsection for the succeeding period not to exceed 12 
        months.
          (2) Income restriction.--The option under paragraph 
        (1) shall not be made available to a family for a 
        succeeding period unless the State determines that the 
        family's average gross monthly earnings (less such 
        costs for such child care as is necessary for the 
        employment of the caretaker relative) as of the end of 
        the 6-month period under subsection (b) does not exceed 
        185 percent of the official poverty line (as defined by 
        the Office of Management and Budget, and revised 
        annually in accordance with section 673(2) of the 
        Omnibus Budget Reconciliation Act of 1981) applicable 
        to a family of the size involved.
          (3) Application of extension rules.--The provisions 
        of paragraphs (2), (3), (4), and (5) of subsection (b) 
        shall apply to the extension provided under this 
        subsection in the same manner as they apply to the 
        extension provided under subsection (b)(1), except that 
        for purposes of this subsection--
                  (A) any reference to a 6-month period under 
                subsection (b)(1) is deemed a reference to the 
                extension period provided under paragraph (1) 
                and any deadlines for any notices or reporting 
                and the premium payment periods shall be 
                modified to correspond to the appropriate 
                calendar quarters of coverage provided under 
                this subsection; and
                  (B) any reference to a provision of 
                subsection (a) or (b) is deemed a reference to 
                the corresponding provision of subsection (b) 
                or of this subsection, respectively.''.
    [(c)] (d) Applicability in States and Territories.--
          (1) States operating under demonstration projects.--
        In the case of any State which is providing medical 
        assistance to its residents under a waiver granted 
        under section 1115(a), the Secretary shall require the 
        State to meet the requirements of this section in the 
        same manner as the State would be required to meet such 
        requirement if the State had in effect a plan approved 
        under this title.
          (2) Inapplicability in commonwealths and 
        territories.--The provisions of this section shall only 
        apply to the 50 States and the District of Columbia.
    [(d)] (e) General Disqualification for Fraud.--
          (1) Ineligibility for aid.--This section shall not 
        apply to an individual who is a member of a family 
        which has received aid under part A of title IV if the 
        State makes a finding that, at any time during this 
        last 6 months in which the family was receiving such 
        aid before otherwise being provided extended 
        eligibility under this section, the individual was 
        ineligible for such aid because of fraud.
          (2) General disqualifications.--For additional 
        provisions relating to fraud and program abuse, see 
        sections 1128, 1128A, and 1128B.
          [(e)] (f) Caretaker Relative Defined.--In this 
        section, the term ``caretaker relative'' has the 
        meaning of such term as used in part A of title IV.
  (g) Additional Provisions.--
          (1) Collection and reporting of participation 
        information.--Each State shall--
                  (A) collect and submit to the Secretary, in a 
                format specified by the Secretary, information 
                on average monthly enrollment and average 
                monthly participation rates for adults and 
                children under this section; and
                  (B) make such information publicly available.
        Such information shall be submitted under subparagraph 
        (A) at the same time and frequency in which other 
        enrollment information under this title is submitted to 
        the Secretary. Using such information, the Secretary 
        shall submit to Congress annual reports concerning such 
        rates.
          (2) Coordination with administration for children and 
        families.--The Administrator of the Centers for 
        Medicare & Medicaid Services, in carrying out this 
        section, shall work with the Assistant Secretary for 
        the Administration for Children and Families to develop 
        guidance or other technical assistance for States 
        regarding best practices in guaranteeing access to 
        transitional medical assistance under this section.
  (h) Provisions Optional for States That Extend Coverage to 
Children and Parents Through 185 Percent of Poverty.--A State 
may meet (but is not required to meet) the requirements of 
subsections (a) and (b) if it provides for medical assistance 
under section 1931 to families (including both children and 
caretaker relatives) the average gross monthly earning of which 
(less such costs for such child care as is necessary for the 
employment of a caretaker relative) is at or below a level that 
is at least 185 percent of the official poverty line (as 
defined by the Office of Management and Budget, and revised 
annually in accordance with section 673(2) of the Omnibus 
Budget Reconciliation Act of 1981) applicable to a family of 
the size involved.
    [(f)] (i) Sunset.--This section shall not apply with 
respect to families that cease to be eligible for aid under 
part A of title IV after September 30, [2002] 2007.

           *       *       *       *       *       *       *

         TITLE XX--BLOCK GRANTS TO STATES FOR SOCIAL SERVICES

           *       *       *       *       *       *       *

                               ALLOTMENTS

    Sec. 2003. (a) * * *

           *       *       *       *       *       *       *

    (c) The amount specified for purposes of subsections (a) 
and (b) shall be--
          (1) $2,400,000,000 for the fiscal year 1982;
          (2) $2,450,000,000 for the fiscal year 1983;
          (3) $2,700,000,000 for the fiscal years 1984, 1985, 
        1986, 1987, and 1989;
          (4) $2,750,000,000 for the fiscal year 1988;
          (5) $2,800,000,000 for each of the fiscal years 1990 
        through 1995;
          (6) $2,381,000,000 for the fiscal year 1996;
          (7) $2,380,000,000 for the fiscal year 1997;
          (8) $2,299,000,000 for the fiscal year 1998;
          (9) $2,380,000,000 for the fiscal year 1999;
          (10) $2,380,000,000 for the fiscal year 2000; and
          (11) $1,700,000,000 for the fiscal year 2001 and each 
        fiscal year thereafter, except that, with respect to 
        fiscal year 2005, the amount shall be $1,952,000,000.

         TITLE XXI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

           *       *       *       *       *       *       *

    STRATEGIC OBJECTIVES AND PERFORMANCE GOALS; PLAN ADMINISTRATION

    Sec. 2107. (a) Strategic Objectives and Performance 
Goals.--

           *       *       *       *       *       *       *

    (e) Application of Certain General Provisions.--The 
following sections of this Act shall apply to States under this 
title in the same manner as they apply to a State under title 
IXI:
          (1) Title xix provisions.--
                  (A) Section 1902(a)(4)(C) (relating to 
                conflict of interest standards).

           *       *       *       *       *       *       *

                  (E) Section 1903(v)(4) (relating to optional 
                coverage of categories of lawful resident alien 
                pregnant women and children), but only with 
                respect to an eligibility category under this 
                title, it the same eligibility category has 
                been elected under such section for purposes of 
                title XIX.

  PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILATION ACT OF 1996

           *       *       *       *       *       *       *

      TITLE IV--RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS

           *       *       *       *       *       *       *

             Subtitle A--Eligibility for Federal Benefits

           *       *       *       *       *       *       *

SEC. 403. FIVE-YEAR LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR FEDERAL 
                    MEANS-TESTED PUBLIC BENEFIT.

           *       *       *       *       *       *       *

    (c) Application of Term Federal Means-Tested Public 
Benefit.--
          (1) The limitation under subsection (a) shall not 
        apply to assistance or benefits under paragraph (2).
          (2) Assistance and benefits under this paragraph are 
        as follows:

           *       *       *       *       *       *       *

                  (M) At State option, assistance, benefits, or 
                services under a State program funded under 
                part A of title IV of the Social Security Act 
                (42 U.S.C. 601 et seq.).

           *       *       *       *       *       *       *

  Subtitle B--Eligibility for State and Local Public Benefits Programs

SEC. 411. ALIENS WHO ARE NOT QUALIFIED ALIENS OR NON-IMMIGRANTS 
                    INELIGIBLE FOR STATE AND LOCAL PUBLIC BENEFITS.

    (a) In General.--Notwithstanding any other provision of law 
and accept as provided in subsections (b) and (d), an alien who 
is not--
          (1) a qualified alien (as defined in section 431),
          (2) a nonimmigrant under the Immigration and 
        Nationality Act, or
          (3) an alien who is paroled into the United States 
        under section 212(d)(5) of such Act for less than one 
        year,
is not eligible for any State or local public benefit (as 
defined in subsection (c)).
    (b) Exceptions.--Subsection (a) shall not apply with 
respect to the following State or local public benefits:
          [(1) Assistance for health care items and services 
        that are necessary for the treatment of an emergency 
        medical condition (as defined in section 1903(v)(3) of 
        the Social Security Act) of the alien involved and are 
        not related to an organ transplant procedure.]
          [(2)] (1) Short-term, non-cash, in-kind emergency 
        disaster relief.
          [(3) Public health assistance for immunizations with 
        respect to immunizable diseases and for testing and 
        treatment of symptoms of communicable diseases whether 
        or not such symptoms are caused by a communicable 
        disease.]
          [(4)] (2) Programs, services, or assistance (such as 
        soup kitchens, crisis counseling and intervention, and 
        short-term shelter) specified by the Attorney General, 
        in the Attorney General's sole and unreviewable 
        discretion after consultation with appropriate Federal 
        agencies and departments, which (A) deliver in-kind 
        services at the community level, including through 
        public or private nonprofit agencies; (B) do not 
        condition the provision of assistance, the amount of 
        assistance provided, or the cost of assistance provided 
        on the individual recipient's income or resources; and 
        (C) are necessary for the protection of life or safety.
    (c) State or Local Public Benefit Defined.--
          (1) Except as provided in paragraphs [(2) and (3)] 
        (2), (3), and (4), for purposes of this subtitle the 
        term ``State or local public benefit'' means--
                  (A) any grant, contract, loan, professional 
                license, or commercial license provided by an 
                agency of a State or local government or by 
                appropriated funds of a State or local 
                government; and
                  (B) any retirement, welfare, [health,] 
                disability, public or assisted housing, 
                postsecondary education, food assistance, 
                unemployment benefit, or any other similar 
                benefit for which payments or assistance are 
                provided to an individual, household, or family 
                eligibility unit by an agency of a State or 
                local government or by appropriated funds of a 
                State or local government.
          (2) Such term shall not apply--
                  (A) to any contract, professional license, or 
                commercial license for a nonimmigrant whose 
                visa for entry is related to such employment in 
                the United States; or
                  (B) with respect to benefits for an alien who 
                as a work authorized nonimmigrant or as an 
                alien lawfully admitted for permanent residence 
                under the Immigration and Nationality Act 
                qualified for such benefits and for whom the 
                United States under reciprocal treaty 
                agreements is required to pay benefits, as 
                determined by the Secretary of State, after 
                consultation with the Attorney General.
          (3) Such term does not include any Federal public 
        benefit under section 4001(c).
          (4) Such term does not include any health benefit for 
        which payments or assistance are provided to an 
        individual, household, or family eligibility unit by an 
        agency of a State or local government or by 
        appropriated funds of a State or local government.
    (d) State Authority To Provide for Eligibility of Illegal 
and Other Aliens for State and Local Public Benefits.--A State 
may provide that an alien who is not lawfully present in the 
United States or who otherwise is not a qualified alien (as 
defined in subsections (b) and (c) of section 431) is eligible 
for any State or local public benefit for which such alien 
would otherwise be ineligible under subsection (a) only through 
the enactment of a State law after the date of the enactment of 
this Act which affirmatively provides for such eligibility.

           *       *       *       *       *       *       *

Subtitle C--Attribution of Income and Affidavits of Support

           *       *       *       *       *       *       *

SEC. 423. REQUIREMENTS FOR SPONSORS AFFIDAVIT OF SUPPORT.

           *       *       *       *       *       *       *

    (d) Benefits Not Subject to Reimbursement.-- Requirements 
for reimbursement by a sponsor for benefits provided to a 
sponsored alien pursuant to an affidavit of support under 
section 213A of the Immigration and Nationality Act shall not 
apply with respect to the following:
          (1) Medical assistance described in section 
        401(b)(1)(A) or assistance described in section 
        411(b)(1).

           *       *       *       *       *       *       *

          (12) Assistance, benefits, or services under part A 
        of title IV of the Social Security Act except for cash 
        assistance provided to a sponsored alien who is subject 
        to deeming pursuant to section 408(f) of that Act.

Subtitle D--General Provisions

           *       *       *       *       *       *       *

SEC. 432. VERIFICATION OF ELIGIBILITY FOR FEDERAL PUBLIC BENEFITS.

           *       *       *       *       *       *       *

    (d) No Verification Requirement for Nonprofit Charitable 
Organizations.--[Subject to subsection (a) of this section, a] 
A nonprofit charitable organization, in providing any Federal 
public benefit (as defined in section 1611(c) of this title) or 
any State or local public benefit (as defined in section 
1621(c) of this title or under section 1137 of the Social 
Security Act (42 U.S.C. 1320b-7)), [is not] shall not be 
required under this chapter to determine, verify, or otherwise 
require proof of eligibility of any applicant for such 
benefits.

FOOD STAMP OF ACT OF 1977

           *       *       *       *       *       *       *

SEC. 5. ELIGIBLE HOUSEHOLDS.

           *       *       *       *       *       *       *

    (g) Allowable Financial Resources Which Eligible Household 
May Own.--

           *       *       *       *       *       *       *

          (2) Included assets.--

           *       *       *       *       *       *       *

                  (D) Alternative vehicle allowance.--[If the 
                vehicle allowance]
                          (i) In general.--If the vehicle 
                        allowance standards that a State agency 
                        uses to determine eligibility for 
                        assistance under the State program 
                        funded under part A of title IV of the 
                        Social Security Act (42 U.S.C. 601 et 
                        seq.) would result in a lower 
                        attribution of resources to certain 
                        households than under subparagraph 
                        (B)(iv), in lieu of applying 
                        subparagraph (B)(iv), the State agency 
                        may elect to apply the State vehicle 
                        allowance standards to all households 
                        that would incur a lower attribution of 
                        resources under the State vehicle 
                        allowance standards.
                          (ii) Definition of assistance.--In 
                        clause (i), the term ``assistance'' 
                        shall have the meaning given such term 
                        in section 260.31 of title 45 of the 
                        Code of Federal Regulations, as in 
                        effect on June 1, 2002.

CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985

           *       *       *       *       *       *       *

    Sec. 13031. * * *

           *       *       *       *       *       *       *

    (j) Effective Dates.--
          (1) Except as otherwise provided in this subsection, 
        the provisions of this section, and the amendments and 
        repeals made by this section, shall apply with respect 
        to customs services rendered after the date that is 90 
        days after April 7, 1986.
          (2) Fees may be charged under subsection (a)(5) of 
        this section only with respect to customs services 
        rendered in regard to arriving passengers using 
        transportation for which documents or tickets were 
        issued after the date that is 90 days after April 7, 
        1986.
          (3) Fees may not be charged under subsection (a) of 
        this section after [September 30, 2003] February 28, 
        2005.

           *       *       *       *       *       *       *

UNITED STATES CODE

           *       *       *       *       *       *       *

               TITLE 28--JUDICIARY AND JUDICIAL PROCEDURE

                           PART V--PROCEDURE

                   CHAPTER 115--EVIDENCE; DOCUMENTARY

SEC. 1738B. FULL FAITH AND CREDIT FOR CHILD SUPPORT ORDERS.

           *       *       *       *       *       *       *

    [(d) Continuing Jurisdiction.--A court of a State that has 
made a child support order consistently with this section has 
continuing, exclusive jurisdiction over the order if the State 
is the child's State or the residence of any individual 
contestant unless the court of another State, acting in 
accordance with subsections (e) and (f), has made a 
modification of the order.]
  (d) Continuing Exclusive Jurisdiction.--
          (1) In general.--Subject to paragraph (2), a court of 
        a State that has made a child support order 
        consistently with this section has continuing, 
        exclusive jurisdiction to modify its order if the order 
        is the controlling order and--
                  (A) the State is the child's State or the 
                residence of any individual contestant; or
                  (B) if the State is not the residence of the 
                child or an individual contestant, the 
                contestants consent in a record or in open 
                court that the court may continue to exercise 
                jurisdiction to modify its order.
          (2) Requirement.--A court may not exercise its 
        continuing, exclusive jurisdiction to modify the order 
        if the court of another State, acting in accordance 
        with subsections (e) and (f), has made a modification 
        of the order.
    (e) Authority To Modify Orders.--A court of a State may 
modify a child support order issued by a court of another State 
if--
          (1) the court has jurisdiction to make such a child 
        support order pursuant to subsection (i); and
          (2) (A) the court of the other State no longer has 
        continuing, exclusive jurisdiction of the child support 
        order [because that state no longer is the child's 
        State or the residence of any individual contestant] 
        pursuant to paragraph (1) or (2) of subsection (d); or
          (B) each individual contestant has filed written 
        consent with the State of continuing, exclusive 
        jurisdiction for a court of another State with 
        jurisdiction over at least 1 of the individual 
        contestants or that is located in the child's State to 
        modify the order and assume continuing, exclusive 
        jurisdiction over the order.
    (f) [Recognition of] Determination of Controlling Child 
Support Orders.--If 1 or more child support orders have been 
issued 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:] having personal jurisdiction over both 
individual contestants shall apply the following rules and by 
order shall determine which order controls:
          (1) If only 1 court has issued a child support order, 
        the order of that court [must be] controls and must be 
        so recognized.
          (2) If 2 or more courts have issued child support 
        orders for the same obligor and child, and only 1 of 
        the courts would have continuing, exclusive 
        jurisdiction under this section, the order of that 
        court [must be recognized] controls.
          (3) If 2 or more courts have issued child support 
        orders for the same obligor and child, and more than 1 
        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] controls, but if an order has not been 
        issued in the current home state of the child, the 
        order most recently issued [must be recognized] 
        controls.
          (4) If 2 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 having jurisdiction over 
        the parties shall issue a child support order, which 
        [must be recognized] controls.
          [(5) The court that has issued an order recognized 
        under this subsection is the court having continuing, 
        exclusive jurisdiction under subsection (d).]
    [(g) Enforcement of Modified Orders.--A court of a State 
that no longer has continuing, exclusive jurisdiction of a 
child support order may enforce the order with respect to 
nonmodifiable obligations and unsatisfied obligations that 
accrued before the date on which a modification of the order is 
made under subsections (e) and (f).]
    (g) Enforcement of Modified Orders.--If a child support 
order issued by a court of a State is modified by a court of 
another State which properly assumed jurisdiction, the issuing 
court--
          (1) may enforce its order that was modified only as 
        to arrears and interest accruing before the 
        modification;
          (2) may provide appropriate relief for violations of 
        its order which occurred before the effective date of 
        the modification; and
          (3) shall recognize the modifying order of the other 
        State for the purpose of enforcement.'';
    (h) Choice of Law.--
          (1) In general.--in a proceeding to establish, 
        modify, or enforce a child support order, the forum 
        State's law shall apply except as provided in 
        paragraphs (2) [and (3)], (3), and (4).
          (2) Law of state of issuance of order.--In 
        interpreting a child support order including the 
        duration of current payments and other obligations of 
        support the computation and payment of arrearages, and 
        the accrual of interest on the arrearages, a court 
        shall apply the law of the State of the court that 
        issued the order.
          (3) Period of limitation.--In an action to enforce 
        arrears under a child support order, a court shall 
        apply the statute of limitation of the forum State or 
        the State of the court that issued the order, whichever 
        statute provides the longer period of limitation.
          ``(4) Prospective application.--After a court 
        determines which is the controlling order and issues an 
        order consolidating arrears, if any, a court shall 
        prospectively apply the law of the State issuing the 
        controlling order, including that State's law with 
        respect to interest on arrears, current and future 
        support, and consolidated arrears.
    (i) Registration for Modification.--If there is no 
individual contestant or child residing in the issuing State 
and subsection (d)(2) does not apply, 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.

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