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[Senate Report 108-162]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 305
108th Congress                                                   Report
                                 SENATE
 1st Session                                                    108-162

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

 
  PERSONAL RESPONSIBILITY AND INDIVIDUAL DEVELOPMENT FOR EVERYONE ACT 
                                (PRIDE)

                                _______
                                

                October 3, 2003.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany H.R. 4]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, to which was referred the bill 
(H.R. 4) 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 recommends that the 
bill, as amended, do pass.

                             I. BACKGROUND

    The 1996 welfare reform law supplanted the main existing 
welfare program for families, Aid to Families with Dependent 
Children (AFDC) and its work/training component (JOBS), and 
greatly changed most other federally supported aid to the poor. 
It was enacted after debate stretching over 3 years and two 
presidential vetoes.
    The move to reform this system was prompted by soaring AFDC 
rolls and higher costs, extant federal waivers for more than 
half the states to undertake their own welfare reforms, 
frustration with the long AFDC tenure and youth of many 
recipient parents, concerns over the extent of unwed parenthood 
among recipients, reaction to AFDC's unrestricted entitlement 
nature, and disillusion with the most recent attempt at reform 
(the 1988 Family Support Act).
    The welfare portion of the House Republicans' Contract with 
America agenda was introduced as the Personal Responsibility 
Act in January 1995. The House and Senate both passed versions 
of the legislation.
    A preliminary House-Senate agreement on H.R. 4 was added to 
the 1995 Balanced Budget Act (H.R. 2491) in late November 1995. 
Excepting some small but controversial items, it contained the 
gist of the final accord on H.R. 4. President Clinton vetoed it 
on December 6, 1995--objecting to Medicaid provisions in the 
larger measure. Then, on December 21-22, 1995, Congress 
approved the final House-Senate H.R. 4 agreement (the Personal 
Responsibility and Work Opportunity Act). The President vetoed 
this H.R. 4 accord on January 9, 1996, citing insufficient 
child care and work support provisions.
    By the end of June 1996, House and Senate Republicans had 
essentially incorporated the vetoed H.R. 4, with added money 
for child care and contingencies, in H.R. 3734 (the FY1997 
budget reconciliation bill). On August 22, 1996, the President 
signed the welfare reform law.

                             107th Congress

    Programs authorized under PRWORA were scheduled to expire 
on September 30, 2002. In February, 2002 President Bush 
released his reauthorization proposal. The House of 
Representatives passed a welfare bill very similar to the 
President's proposal.
    In the 107th Congress, the Senate Finance Committee 
reported legislation based on a proposal crafted by a 
bipartisan group of Senators on the Senate Finance Committee 
which included a number of provisions adopted from the 
President's proposal forwelfare reform. The full Senate did not 
pass a reauthorization of Temporary Assistance for Needy Families 
(TANF).

                             108th Congress

    The Finance Committee continued the work done in the 107th 
Congress relative to welfare reform. In the 108th Congress, the 
Finance Committee held a number of bipartisan briefings on: 
fatherhood initiatives, data collection, state plans, workforce 
attachment and advancement, work readiness, and family 
formation policies. The committee made a sustained effort to 
hear from stakeholders on the issue of welfare reform, 
including policy experts, advocates, family groups, 
organizations representing the states, and officials from the 
Department of Health and Human Services.
    The full committee held one field hearing and one committee 
hearing.
    The field hearing was held on February 20, 2003 in Des 
Moines, Iowa, and was titled: ``Welfare Reform: Past Successes, 
New Challenges.'' The purpose of the hearing was to review the 
provisions of the 1996 welfare reform bill which are working in 
Iowa and to identify areas in need of strengthening and 
improvement.
    The committee heard testimony from: Ms. Donna Littrel, an 
Insurance Policy Specialist at Aegon Insurance, an Iowan who 
has successfully made the transition from welfare to work; Ms. 
Deb Bingaman, Administrator, Division of Financial, Health and 
Work Supports at the Iowa Department of Human Services; Ms. 
Linda Anderson, a Human Resources Recruiter from Mercy 
Hospital, representing the business community to discuss 
successful strategies in Iowa to assist those receiving welfare 
make the transition from welfare to work.
    The committee heard additional testimony from 
Representative Dave Heaton from the Iowa State Legislature to 
discuss ways to build upon the success of the 1996 Act; Ms. 
Sonja Marquez from Boost 4 Families to discuss Iowa's rural 
child care challenges and Ron Haskins, former White House 
policy lead on welfare reform to discuss ways to strengthen the 
family formation policies envisioned by the 1996 Act.
    The final full committee hearing on welfare reform was on 
March 12, 2003 titled, ``Welfare Reform: Building on Success.''
    The committee heard testimony from: The Honorable Tommy 
Thompson, Secretary, Department of Health and Human Services, 
on the Administration's proposal for the reauthorization of the 
Temporary Assistance for Needy Families (TANF) program.
    The committee also heard testimony from Mr. Howard 
Hendrick, Oklahoma Secretary of Human Services on family 
formation policies; Ms. Marilyn Ray Smith, Deputy Commissioner 
and IV--D Director, Massachusetts Department of Revenue on 
child support; Mr. Larry Temple, Deputy Executive Director of 
the Texas Workforce Commission on a practitioner's perspective 
on running a welfare to work program and Ms. Margy Waller, 
Fellow at the Brookings Institution on analysis of various 
welfare reform proposals.

                              CURRENT LAW

    The committee began its deliberations by agreeing to 
continue many of the reforms from the 1996 Act but working to 
improve it with priorities from members and the Administration. 
The committee bill reflects the analysis of Representative Dave 
Heaton, ``The work of welfare reform is not done. While 
caseloads have declined dramatically, many families struggle 
with barriers to self-sufficiency.'' (Testimony before the 
Senate Finance Committee)
    Additionally, the committee considered the recommendations 
of Ron Haskins: ``Given that the 1996 reforms have been so 
successful, we should leave intact the major features of the 
reforms. Thus, the block grant and state flexibility has proven 
its value and should be maintained.'' (Testimony before the 
Senate Finance Committee)
    The following provisions in the committee bill are 
maintained from current law:
           No individual entitlement;
           Five year time limit on assistance;
           Core work and work readiness activities;
           Consistent funding level for TANF block 
        grant;
           Consistent supplemental grants at current 
        level;
           States can count up to 12 months of 
        vocational education as meeting work requirement; and
           Current sanction policies.

                         CHANGES TO CURRENT LAW

    A number of changes to current law in the committee bill 
are similar to provisions both in the bill reported out of the 
Senate Finance Committee in the 107th Congress and the 
President's proposal.
    Highlights include: raising the participation rate; raising 
the standard hour for core activities; policies designed to 
address the needs of every family on assistance, otherwise 
known as ``universal engagement''; policies designed to address 
the needs of families who require additional time in barrier 
removal activities, otherwise known as the ``3+3'' provisions; 
child support improvements; and healthy family formations 
policies.
    Major themes of the changes to current law center on the 
following three principles and were informed by testimony 
presented to the committee as well as current research and 
analysis:

                            STRENGTHENS WORK

    From Donna Littrel a welfare to work success story: 
``Becoming an Aegon employee was a turning point for my family 
and me. Our family still received assistance for our medical 
bills and some food stamps, but we no longer had to rely on FIP 
(case assistance) to provide us an income. I never imagined I 
would be working for such a wonderful company. It was a very 
liberating feeling.'' (Testimony before the Senate Finance 
Committee)
    From Larry Temple: ``What have we learned? Well, that work 
works. When you strengthen the work requirements, more people 
leave the rolls due to employment.'' (Testimony before the 
Senate Finance Committee)
    From Secretary Tommy Thompson: ``The most humane social 
program is a healthy and independent family that has the 
capacity and the ability to have a good, paying job. Federal 
and State welfare programs should recognize this fact by 
helping and encouraging Americans to build and maintain healthy 
and independent families. We can do better. The first step was 
excellent. The next step can be even better.'' (Testimony 
before the Senate Finance Committee)
    The Committee bill:
     Increases the work participation rate for States 
5% each year, from 50% in 2004 to 70% in 2008.
     Eliminates the caseload reduction credit, which 
has erased most states' obligation to ensure that any TANF 
recipient is engaged in work, and replaces it with an 
employment credit which emphasizes good jobs.
     Caps the credit so that states have a real 
participation rate. The value of the credit is phased down so 
that in fiscal year 2008, all states must have a real work 
participation rate of 50%.
     Increases the minimum threshold for participation 
in core work activities from 20 to 24 hours.
     Increases the standard weekly average number of 
hours from 30 for a parent with a child six and over. Adopts a 
tiered approach assigning partial and extra credit for hours 
below and above the standard hour of 34.
     Increases the standard weekly average of hours 
from 20 for a parent with a child under six. Adopts a tiered 
approach, assigning partial credit for hours below the standard 
hour of 24 and extra credit for hours above 34.
     Ensures that every family has a plan for achieving 
self-sufficiency. States must prepare a plan for every family 
receiving assistance and in most cases that plan should involve 
some amount of work or work readiness activities.

                       IMPROVES STATE FLEXIBILITY

    From Deb Bingaman: ``* * * policies must include the 
maximum possible flexibility so that each family's uniqueness 
can be respected.'' (Testimony before the Senate Finance 
Committee)
    From Howard Hendrick: ``We are all for flexibility.'' 
(Testimony before the Senate Finance Committee)
    The Committee bill:
     Allows states to claim partial and extra credit 
for work hours below and above the standard hour. Currently, a 
recipient only counts toward the work participation requirement 
if the recipient meets the standard hour.
     Allows states to engage individuals in a broader 
range of activities, including job search, substance abuse 
treatment, post-secondary education and training and other 
barrier removal activities after the 24 hour threshold of core 
work activities is met.
     Allows states to engage adult recipients in a 
broad range of activities, including substance abuse treatment, 
post-secondary education and other barrier removal activities 
for a three-month period in each 24 month period.
     Allows states to engage adult recipients in 
education and rehabilitative activities combined with work or 
work readiness activities for an additional three months out of 
24 months for a total of 6 months.
     Includes a provision allowing adult recipients to 
attend longer duration vocational or post-secondary education.
     Allows states to determine, on a case-by-case 
basis, whether or not to count families toward their 
participation rate in the first month of assistance.
     Makes the contingency fund more accessible to 
States.
     Allows states to use unobligated balances, which 
currently can only be used for cash assistance, for any purpose 
under TANF, including funding for childcare.

                      PROMOTES MARRIAGE AND FAMILY

    From Marilyn Smith: ``There is no longer any debate that 
responsible father involvement is good for children. The only 
question is how to achieve it.'' (Testimony before the Senate 
Finance Committee)
    From Ron Haskins: ``The President has called for $300 
million per year in spending on programs that attempt to 
increase marriage rates among low-income families. There is 
little question that increased marriage rates among the poor 
would greatly reduce poverty and lead to improved school 
performance, improved social behavior and improved health among 
children.'' (Testimony before the Senate Finance Committee)
    From Wade Horn and Isabel V. Sawhill, ``The empirical 
literature clearly demonstrates that children do best when they 
grow up in a household with two parents who are married to each 
other.'' (``Father, Marriage and Welfare Reform'' Chapter 16, 
The New World of Welfare)
    The Committee bill:
     Provides $100 million a year in matching grants 
for marriage promotion and $100 million a year for research, 
demonstration and technical assistance primarily related to 
marriage.
     Adopts the Domenici/Bayh/Santorum bill to promote 
Responsible Fatherhood.
     Includes a special rule relating to a single 
parent caring for a child or dependant with a physical or 
mental impairment.
     Improves child support collection, assignment and 
distribution.
     Increases child care spending for the current 
unmet need.

                               CHILD CARE

    Increased funding for child care is a critical issue for 
members on the Senate Finance Committee.
    On the issue of child care, the committee bill increases 
mandatory child care spending $1 billion over five years. The 
committee bill recognizes that since 1996, federal funding 
specifically appropriated for child care has increased more 
than five-fold from $935 million in 1996 to $4.8 billion in 
2002. In fiscal year 2001, an estimated 2.51 million children 
were receiving Child Care and Development Fund (CCDF), 
Temporary Assistance for Needy Families (TANF) or Social 
Services Block Grant (SSBG) funded child care services in an 
average month, compared to 1.2 million in 1996.
    Further, states can transfer up to 30% of their TANF funds 
to CCDF, or spend TANF directly on child care, without limit. 
To support spending on child care, the committee bill maintains 
TANF's original funding level, even though the caseload is 54% 
of what it was prior to the 1996 act.
    In 2003, states transferred $1.9 billion from TANF to CCDF 
and spent $1.6 billion in TANF on direct child care.
    Additionally, the committee bill would allow states to use 
their unobligated TANF balances on services other than 
assistance, such as child care.

                               CONCLUSION

    Finally, the committee bill recognizes that all committee 
members share the common goal of implementing policies that 
will help move families from dependence to increasing 
independence.
    The committee bill reflects the view that enhancing work 
supports and providing additional assistance should be the 
focus of the next phase of welfare reform. The committee bill 
would enhance work supports by providing states with the option 
to serve families through barrier removal activities as well as 
substance abuse activities, post-secondary education and other 
activities.
    The committee bill reflects the view that the fact that 57% 
of adults receiving assistance who report zero hours of 
activity is an indication that states can do more to engage 
clients in meaningful activities.
    Additionally, the committee bill reflects the view that the 
fact that many states have an effective participation rate 
threshold of zero as a result of the caseload reduction credit 
represents a fundamental flaw in the 1996 act which should be 
corrected in this reauthorization.
    The committee bill adopts a blended approach, combining 
work supports and flexibility with increased work requirements 
on individuals and states in advancement of the common goal of 
moving families out of deep and persistent poverty into self-
sufficiency.

                    II. SECTION-BY-SECTION ANALYSIS

                             TITLE I--TANF

Section 101--State Plans

                              CURRENT LAW

    To receive block grant funds, a state must have submitted a 
TANF plan within the 27-month period that ends with the close 
of the 1st quarter of the fiscal year. This plan must include a 
description of the programs that the state will run to provide 
assistance to needy families and provide job preparation, work 
and support services to enable them to leave the program and 
describe how the state will ensure that parents and caretakers 
receiving assistance engage in work activities (within 24 
months of receiving assistance, or earlier at state option). 
The plan must indicate whether the state intends to treat 
families migrating from another state differently from others 
(and, if so, how) and whether it intends to provide assistance 
to non-citizens (and, if so, to provide an overview of aid). It 
also must establish goals to reduce the rate of out-of-wedlock 
pregnancies, with special emphasis on teenage pregnancies, and 
establish numerical goals for reducing the illegitimacy ratio 
of the state. The plan must describe how the state will provide 
education and training on statutory rape to the law enforcement 
and educational systems, and it must include a number of 
certifications (for example, equitable access to Indians and 
establishment and enforcement of standards against program 
fraud and abuse). States have the option of including a 
certification regarding the treatment of individuals with a 
history of domestic violence.

                           THE COMMITTEE BILL

    The Committee bill requires the state plan to establish 
specific measurable performance objectives for pursuing TANF 
purposes, and to describe the methodology the state will use to 
measure performance in relation to each objective. The 
Committee bill states that the performance objectives, as 
determined by the state, are to be consistent with criteria 
used by the Secretary in establishing performance measures for 
the employment achievement bonus (workforce attachment and 
advancement) and with such other criteria related to other 
(non-work) purposes of the program as the Secretary may 
establish, in consultation with the National Governors 
Association and the American Public Human Services Association. 
The performance measures determined by the states could include 
both process measures and outcome measures. The Committee bill 
specifies that the plan must describe any strategies and 
programs that the state plans to use concerning employment 
retention and advancement; reduction of teen pregnancy; 
services for struggling and noncompliant families, and for 
clients with special problems; program integration, including 
provision of services through the One-Stop delivery system 
under WIA; and engagement of faith-based organizations in 
provision of services funded by TANF if the state is 
undertaking any strategies or programs to engage these 
organizations. It requires state plans to describe how the 
state intends to encourage equitable treatment of healthy, 
married, two-parent families under TANF. It deletes the 
requirement to indicate whether the state intends to treat 
incoming families differently from residents (found 
unconstitutional) and drops the rule that community service be 
required from adults who fail to work after two months of aid, 
unless the governor opts out. It requires the plan to include a 
report detailing progress toward full engagement. It adds a 
requirement that tribal governments be consulted about the TANF 
plan and its service design. It requires governors of states 
that provide transportation aid under TANF to certify that 
state and local transportation agencies and planning bodies 
have been consulted in the development of the plan, The 
Committee bill directs the Secretary to develop a proposed 
Standard State Plan Form for use by states nine months from 
enactment and requires states, by October 1, 2004, to submit 
their fiscal year 2005 plans on the standard form. It requires 
states to make available to the public through an appropriate 
State-maintained Internet website and through other means the 
state deems appropriate several documents: the proposed state 
plan (with at least 45 days for comment), comments received 
concerning the plan (or, at the state's discretion, a summary 
of the comments), and proposed amendments to the plan. It also 
requires that state plans in effect for any fiscal year be 
available to the public by the means listed above. The 
Committee bill requires the Secretary, in consultation with 
states, to develop uniform performance measures designed to 
evaluate TANF state programs. The bill amends current law 
provisions requiring the Secretary to annually rank states by 
adding new ranking factors, namely: success of recipients in 
retaining employment, the ability of recipients to increase 
wages, and the degree to which recipients have workplace 
attachment and advancement. It also changes the job placement 
ranking factor by deleting the qualifier ``long-term'' from 
private sector job placement.
    Sections 107, 109 and 110 of the Committee bill contain 
other state TANF plan provisions. Section 107 requires a state 
that takes the option to establish an undergraduate 
postsecondary or vocational educational program to describe, in 
an addendum to its TANF plan, eligibility criteria that will 
restrict enrollment to persons whose past earnings indicate 
that they cannot qualify for employment that will make them 
self-sufficient and who, by enrollment in the program, will be 
prepared for higher-paying occupations in demand in the state. 
Section 109 requires plans to include criteria for deeming a 
single parent who provides care for a disabled child or 
dependent to be meeting all or part of the family's work 
requirements. Section 109 permits a State, if it includes in 
its TANF plan a description of policies for areas of Indian 
country or an Alaskan native village with high joblessness, to 
define countable work activities for persons complying with 
individual responsibility plans and living in these areas. 
Section 110 requires state plans to outline how the State 
intends to require parent or caretaker recipients to engage in 
work or alternative self-sufficiency activities, as defined by 
the State, and to require recipient families to engage in 
activities in accordance with family self-sufficiency plans.

                           REASON FOR CHANGE

    The Committee bill includes provisions to clarify what 
states are doing to move welfare clients into self sufficiency 
and to make the plans more meaningful. The Committee bill would 
require states to establish performance objectives and 
encourage an ongoing review of these objectives while 
maintaining state flexibility.

Section 102--Family Assistance Grants

                              CURRENT LAW

    The law appropriated $16.5 billion annually for family 
assistance grants to the states and the District of Columbia 
(D.C.) for FYs1997-2002. It also appropriated $77.9 million 
annually for family assistance grants to the territories (and, 
within overall ceilings, such sums as needed for matching 
grants to the territories). Family assistance grants have been 
continued at FY2002 funding levels through March 31, 2004 
through a series of temporary extensions. Basic state grants 
are based on federal expenditures for TANF's predecessor 
programs during FY1992 through FY1995.

                             COMMITTEE BILL

    The Committee bill appropriates family assistance grants, 
at current levels, for the states, the District of Columbia, 
and the territories for fiscal years 2004 through 2008. The 
Committee bill also appropriates matching grants for the 
territories for fiscal years 2004 through 2008.

                           REASON FOR CHANGE

    (No Change).

Section 103--Promotion of family formation and healthy marriage

                              CURRENT LAW

    The purposes of TANF include encouraging the formation and 
maintenance of two-parent families, ending the dependence of 
needy parents on government benefits by promoting. . .marriage, 
and reducing the incidence of out-of-wedlock pregnancies. The 
law established a bonus (up to $100 million yearly for four 
years) for 5 jurisdictions with the greatest percentage decease 
in nonmarital birth ratios and a decline from 1995 levels in 
abortion rates.

                             COMMITTEE BILL

    The Committee bill repeals the bonus for reduction of the 
illegitimacy ratio. It appropriates $100 million a year for 
five years (FYs 2004-2008) for competitive grants (50 percent 
matching rate) to states, territories, Indian tribes and tribal 
organizations to develop and implement innovative programs to 
promote and support healthy, married, two-parent families and 
to encourage responsible fatherhood. Grant funds must to used 
to support any of the following: public advertising campaigns 
on the value of marriage and the skills needed to increase 
marital stability and health; education in high schools on the 
value of marriage, relationship skills, and budgeting; marriage 
education, marriage skills, and relationship skills programs, 
which may include parenting skills, financial management, 
conflict resolution, and job and career advancement, for non-
married expectant and recent mothers and fathers; pre-marital 
education and marriage skills training for engaged couples and 
for couples or persons interested in marriage; marriage 
enhancement and marriage skills training programs for married 
couples; divorce reduction programs that teach relationship 
skills; marriage mentoring programs which use married couples 
as role models and mentors; and programs to reduce the marriage 
disincentive in means-tested aid programs, if offered in 
conjunction with any activity described above. The Committee 
bill exempts marriage promotion grants from the general rules 
governing use of TANF funds (Section 404), but not from the 
percentage cap on administrative costs. To be eligible for a 
grant, applicants must consult with experts in domestic 
violence or with relevant community domestic violence 
coalitions and must describe in their applications how their 
proposed programs or activities will deal with issues of 
domestic violence and what they will do, to the extent 
relevant, to ensure that participation in the programs is 
voluntary and to inform potential participants that 
participation is voluntary. The Committee bill provides that 
marriage promotion funds appropriated for each of fiscal years 
2004 through 2008 shall remain available to the Secretary until 
spent and that grantees may use marriage promotion funds 
without fiscal year limitation. The Committee bill provides 
that other TANF funds may be used by a state or Indian tribe 
with an approved tribal family assistance plan as all or part 
of the required state match for marriage promotion grants, but 
that these funds cannot count towards a state's ``Maintenance 
of Effort'' or MOE. The Committee bill also includes conforming 
language relative to the fourth purpose of TANF, specifying 
that it is to encourage the formation and maintenance of 
healthy, two-parent married families and to encourage 
responsible fatherhood. The bill provides that all state 
spending (including funds spent on families ineligible for 
TANF) for the purpose of preventing and reducing the incidence 
of out-of-wedlock births, encouraging the formation and 
maintenance of healthy two-parent married families, or 
encouraging responsible fatherhood shall count toward required 
maintenance-of-effort spending.

                           REASON FOR CHANGE

    Two of the four original purposes of TANF are directly 
related to ending out-of-wedlock births and encouraging the 
formation and maintenance of two-parent families. The bonus to 
reduce out of wedlock births was initially developed to enhance 
these purposes. This bonus has not proven to be an effective 
mechanism for motivating state action. A correlation between 
state action and a reduction in out of wedlock births and 
family formation has not been established.
    The Committee bill would redirect the funding to address 
the underlying purposes of TANF. The Committee bill would 
provide optional grants to states to explore innovative and 
creative approaches to promote healthy family formation 
activities. The Committee bill stipulates that participation in 
these programs is voluntary and that program development must 
be coordinated with domestic violence experts.
    The Committee bill also includes a provision (in Section 
114) which would direct a portion of the funds for research and 
demonstration programs and technical assistance related to 
healthy family formation activities. These funds would be in 
addition to grants to states for healthy family formation 
activities. Currently there is a 25 year body of research 
related to work activities and welfare. The Committee bill 
would encourage a focus on research centered on marriage and 
family assistance so that states can learn from rigorous 
evaluations of activities to promote marriage and family 
formation.

Section 104--Supplemental grant for population increases in certain 
        states

                              CURRENT LAW

    The law provides supplemental grants for (17) states with 
exceptionally high population growth during the early 1990s, 
benefits lower than 35% of the national average, or 
acombination of above-average growth and below-average AFDC benefits. 
Grants were authorized for a total of $800 million over FYs 1998 
through 2001, and annual grants grew from $79 million to $319.5 million 
over this period. Congress froze grants at the fiscal year 2001 level 
in making fiscal year 2002 and 2003 appropriations.

                             COMMITTEE BILL

    The Committee bill extends supplemental grants, at their FY 
2001 level, for FYs 2004 through 2007.

                           REASON FOR CHANGE

    The Committee bill extends the supplemental grant program 
for certain states.

Section 105--Bonus to reward employment achievement

                              CURRENT LAW

    The Secretary of HHS, in consultation with the National 
Governors Association (NGA) and the American Public Human 
Services Association (APHSA) was required to develop a formula 
for measuring state performance relative to block grant goals. 
Awards for performance years 1998-2000 were based on work-
related measures (and were paid to 38 jurisdictions). For later 
years, non-work measures--including food stamp and medicaid 
coverage of low-income families--were added. States can receive 
a bonus based on their absolute score in the current 
(performance) year and/or their improvement from the previous 
year, but the bonus cannot exceed 5% of the family assistance 
grant. $200 million per year was available for performance 
bonuses, for a total of $1 billion between FYs 1999 and 2003.

                             COMMITTEE BILL

    The Committee bill appropriates $600 million (for FYs 2004 
through 2009) for bonuses to states that qualify as 
``employment achievement'' states by meeting standards to be 
developed by the Secretary in consultation with the states. 
Bonuses are to average $100 million per year. The Committee 
bill specifies that the employment achievement formula is to 
measure absolute and relative progress toward the goals of job 
entry, job retention, and increased earnings as well as 
attachment to the workforce. It caps a state's bonus at 5% of 
its family assistance grant. For FY 2004 and FY 2005, the 
employment achievement bonus may be based on three components 
of the repealed high performance bonus--job entry rate, job 
retention rate, and earnings gain rate. The Committee bill 
makes tribal organizations eligible for the bonus and directs 
the Secretary to consult with tribal organizations in 
determining criteria for awards to them.

                           REASON FOR CHANGE

    The Committee bill provides for states to continue their 
successful efforts to move welfare recipients into good jobs. 
States have directed considerable resources into moving welfare 
recipients into meaningful employment. The Committee bill would 
continue to provide incentives for states to focus on 
employment attachment and achievement and would continue the 
policy of rewarding states for doing so. The Committee bill 
would preserve the concept of the High Performance Bonus 
focused on employment attachment and achievement.

Section 106--Contingency fund

                              CURRENT LAW

    The TANF law established a $2 billion contingency fund for 
matching grants at the Medicaid matching rate (which ranges 
from 50% to 76.6% in 2003) to ``needy'' states that expect 
during the fiscal year to spend under the TANF program (not 
counting child care) 100% of their FY1994 level of spending on 
TANF-predecessor programs (not counting child care). States can 
access the contingency fund by meeting one of two ``needy'' 
state triggers: (1) an unemployment rate for a 3-month period 
that is at least 6.5% and 110% of the rate for the 
corresponding period in either of the two preceding calendar 
years; or (2) a food stamp caseload increase of 10% over the FY 
1994-1995 level (adjusted for the impact of immigrant and food 
stamp constraints in the 1996 welfare law). Contingency fund 
payments for any fiscal year are limited to 20% of the state's 
base grant, and a state can draw down no more than \1/12\ of 
its maximum annual contingency fund amount in a given month. 
Under a final reconciliation process, a state's federal match 
rate (for drawing down contingency funds) is reduced if it 
received funds for fewer than 12 months in any year.

                             COMMITTEE BILL

    The Committee bill appropriates such sums as are needed for 
contingency fund grants, up to $2 billion over 5 years, FYs 
2004-2008. It eliminates the requirement that states spent 100% 
of their historic level to qualify for contingency funds 
(instead applying the TANF MOE, 75%-80%). It entitles states to 
a contingency fund grant reflecting costs of TANF caseloads 
when they are ``needy'' under a revised definition. To trigger 
on as needy: (a) a state must have an increase of 5 percent in 
the monthly average unduplicated number of families receiving 
assistance under its TANF program in the most recently 
concluded 3-month period with data, compared with the 
corresponding period in either of the two most recent preceding 
fiscal years; (b) the TANF caseload increase must be due, in 
large measure, to economic conditions rather than state policy 
changes, and (c) for the most recent three-month period with 
data, the average rate of seasonally adjusted total 
unemployment must be at least 1.5 percentage points or 50 
percent higher than in the corresponding period in either of 
the two most recent preceding fiscal years; or, for the most 
recent 13 weeks with data, the average rate of insured 
unemployment must be at least 1 percentage point higher than in 
the corresponding period in either of the two most recent 
fiscal years; or, for the most recently concluded 3-months with 
national data, the monthly average number of food stamp 
recipient households, as of the last day of each month, exceeds 
by at least 15 percent the corresponding caseload number in the 
comparable period in either of the two most recent preceding 
fiscal years, provided the HHS Secretary and the Secretary of 
Agriculture agree that the increased caseload was due, in large 
measure, to economic conditions rather than to policy change. 
The Committee bill provides that a state that initially 
qualifies as needy because of its TANF caseload plus its food 
stamp caseload shall continue to be considered needy as long as 
the state meets the original qualifying conditions. A state 
that initially qualifies as needy because of its TANF caseload 
plus its total or insured unemployment rate shall not trigger 
off until its rate falls below the original qualifying level
    The contingency fund grant is based on the maximum cash 
benefit level for a family of 3 persons ( if the state has more 
than one maximum cash benefit level, the grant is based on the 
maximum benefit for the largest number of 3-person families) 
and is payable for TANF caseload increases above 5 percent. The 
grant equals the state's federal Medicaid matching rate times 
the benefit cost of an increase in the TANF family caseload 
above 5 percent in the most recently concluded 3-month period 
with data, compared with the corresponding period in either of 
the two most recent preceding fiscal years. A state's total 
contingency grant cannot exceed 10 percent of its family 
assistance grant. To receive a contingency fund grant, a state 
must have spent 70 percent of its TANF grants (excluding 
welfare-to-work funds from the Department of Labor). Unexpended 
balances are the total amount of TANF grants not yet spent by 
the state as of the end of the preceding fiscal year minus 
current year expenditures through the end of the most recent 
quarter that exceed the pro rata share of the current fiscal 
year TANF grant. The Committee bill repeals the fiscal penalty 
for failure of a state that receives contingency funds to 
maintain 100% of its historic spending level (MOE), but 
provides that a state shall not be eligible for a contingency 
fund grant unless its MOE spending equals 75% (80%, if it fails 
work participation rates).

                           REASON FOR CHANGE

    Because state spending had to exceed 100% of the FY 1994 
level in order for a state to access the contingency fund, 
states were unable to receive contingency funds during the 
recent economic downturn. The Committee bill would liberalize 
the contingency fund so that states are better able to draw 
down those dollars.

Section 107--Use of funds

                              CURRENT LAW

    The law permits states or tribes to use TANF funds received 
for any fiscal year for ``assistance'' in any later year, 
without fiscal year limitation. Regulations define assistance 
as ongoing aid for basic needs, plus supportive services such 
as child care and transportation for families who are not 
employed. Federally funded assistance to a given family is 
time-limited (60 months, with some hardship extensions 
allowed).

                             COMMITTEE BILL

    The Committee bill permits carryover of TANF funds granted 
to the state or tribe for any fiscal year to provide any 
benefit or service under the state or tribal TANF program 
without fiscal year limitation. The Committee bill also allows 
a state or tribe to designate a portion of the TANF grant as a 
contingency reserve, which may be used without fiscal year 
limitation, to provide any benefit or service. If the state or 
tribe designates reserve funds, it must include the amount in 
its annual report. The Committee bill deletes authority 
(Section 404(c)) for differential treatment of families moving 
into a state (which was invalidated by the U.S. Supreme Court 
in 1999). The Committee bill exempts marriage promotion grant 
funds from general rules (but not the administrative percentage 
cap) on use of TANF funds. The Committee bill restores 
transferability of TANF funds to SSBG to 10%.
    The bill permits states to use TANF funds to establish an 
undergraduate 2- or 4-year degree postsecondary program or a 
vocational educational program for up to 10% of TANF families, 
under which the following services could be provided: child 
care, transportation, payment for books and supplies, other 
services provided under policies determined by the state to 
ensure coordination and lack of duplication. No TANF funds 
could be used for tuition under this program. Hours of 
participation in these programs would be countable toward 
meeting state work requirements. Students could also receive 
credit for hours spent in one of the nine ``direct'' work 
activities of current law or in work study, practicums, 
internships, clinical placements, laboratory or field work, or 
other activities that would enhance their employability, as 
determined by the state, or in study time (at the rate of not 
less than 1 hour for every hour of class time and not more than 
2 hours for every hour of class time. Students' total time in 
education, core work, work study, laboratory or field work, 
study time, etc. would be countable against hours requirements. 
Also, students could be credited as one working family if, in 
addition to complying with the full-time educational 
participation requirements of their educational program, they 
engaged in one of the countable work activities above for at 
least the following number of hours: 6 hours weekly in the 
first year, 8 hours in the second year, 10 hours in the third 
year, and 12 hours in the fourth and any later year. For good 
cause, states could modify these hour requirements. To be 
eligible for these programs, recipients would be required to 
maintain satisfactory academic progress (as defined by the 
institution operating the program). With good cause exceptions, 
participants would be required to complete requirements of a 
degree or vocational educational training program within the 
normal time frame for full time students.

                           REASON FOR CHANGE

    Currently, carry over funds can be spent only on cash 
assistance for basic ongoing needs (and some services for the 
unemployed). The Committee bill would allow carry over funds to 
be spent on any activity authorized under TANF, including child 
care. This provides additional flexibility for the states.
    Additionally, the Committee bill would permit states to 
designate an amount of unused dollars in a contingency reserve 
fund. This clarifies that, while unspent, these funds have been 
earmarked for purposes associated with the legislation.
    In addition, under an amendment offered by Senator Snowe, 
the bill allows states to create postsecondary education 
programs for TANF recipients, but caps the number of 
participants at 10 percent of the TANF caseload. The bill 
permits states to allow a subset of recipients to benefit from 
a postsecondary strategy while maintaining an overall work 
orientation. In doing so, the committee is using a Maine 
program (``Parents as Scholars'') as a model.

Section 108--Repeal of federal loan for state welfare programs

                              CURRENT LAW

    The law provides a $1.7 billion revolving and interest-
bearing federal loan fund for state TANF programs.

                             COMMITTEE BILL

    The Committee bill repeals the loan fund.

                           REASON FOR CHANGE

    The fund did not function effectively.

Section 109--Work participation requirements

            Participation standards

                              CURRENT LAW

    States must have a specified percentage of their adult 
recipients engaged in creditable work activities. Since FY 2002 
the participation standard has been 50% for all families (and 
since FY 1999 it has been 90% for the two-parent component of 
the caseload). Participation standards are reduced by a 
caseload reduction credit (below). In tribal family assistance 
programs, work participation standards are set by the HHS 
Secretary, with the tribe's participation.

                             COMMITTEE BILL

    The Committee bill increases the all-family standard from 
the current 50% level to the following levels: FY 2005, 55%; FY 
2006, 60%; FY 2007, 65%; and FY 2008 and thereafter, 70%. The 
Committee bill eliminates the separate rate for two parent 
families.

                           REASON FOR CHANGE

    Currently, many states have an effective participation rate 
requirement of 0%. The Committee bill increases work 
participation requirements to move towards universal engagement 
policies under which States actively engage all welfare 
recipients in moving towards self sufficiency.
            Calculation of participation rates

                              CURRENT LAW

    A state's monthly participation rate, expressed as a 
percentage, equals (a) the number of all recipient families in 
which an individual is engaged in work activities for the 
month, divided by (b) the number of recipient families with an 
adult recipient, but excluding families subject that month to a 
penalty for work refusal (provided they have not been penalized 
for more than 3 months), single-parent families with children 
under 1, if the state exempts them from work, and, at state 
option, families in tribal family assistance programs.

                             COMMITTEE BILL

    The Committee bill permits a state to exclude all families 
from work participation calculations during their first month 
of TANF assistance on a case by case basis and to exclude 
families with a child under age 1 (subject to a 12 month in a 
lifetime limit) from work requirements and calculations of work 
participation rates on a case-by-case basis.

                           REASON FOR CHANGE

    This language recognizes that the initial assessment and 
development of a family self sufficiency plan takes some time, 
during which the family may not be participating in countable 
activities. In addition, it ensures that states receive credit 
for families with young children who are engaged in countable 
activities.
            Caseload reduction credit

                              CURRENT LAW

    For each percent decline in the caseload from the FY 1995 
level (not attributable to policy changes), the work 
participation standard is lowered by l percentage point). (In 
FY 2001, caseload reduction credits cut required work rates of 
28 states to zero.)

                             COMMITTEE BILL

    The Committee bill replaces the current caseload reduction 
credit with an employment credit but permits states to phase in 
the replacement. In a separate provision, it places the same 
limits on the extent to which any employment, caseload 
reduction, or other credit could reduce a state's required 
participation rate. Under these limitations, credits could not 
exceed 40 percentage points for fiscal year 2004; 35 percentage 
points for fiscal year 2005; 30 percentage points for fiscal 
year 2006; 25 percentage points for fiscal year 2007; and 20 
percentage points for fiscal year 2008 or thereafter.

                           REASON FOR CHANGE

    PRWORA included a credit states could take for purposes of 
establishing their work participation rate based on a state's 
caseload reduction. Because caseloads have fallen so 
dramatically, many states now have an effective participation 
threshold of 0. The cap on the employment credit ensures that 
while policy priorities relative to encouraging states to work 
to move clients into good paying jobs are achieved, 
participation rates are not undermined by the credit.
            Employment credit

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee bill establishes a percentage point credit 
against the work participation standard (subject to the limits 
described immediately below). Essentially, the credit equals 
the percentage of TANF families in a fiscal year who leave 
ongoing cash assistance with a job. It is calculated by 
dividing (a) twice the quarterly average unduplicated number of 
families (excluding child-only families) that received TANF 
assistance during the preceding fiscal year but who ceased to 
receive TANF--and did not receive cash assistance from a 
separate state-funded program--for at least two consecutive 
months following case closure during the applicable period 
(most recent 4 quarters with data) and were employed during the 
calendar quarter immediately after leaving TANF by (b) the 
average monthly number of families (again excluding child-only 
families) who received cash payments under TANF during the 
preceding fiscal year. At state option, calculations could 
include in the numerator: (1) twice the quarterly average 
number of families that received non-recurring short term 
benefits rather than ongoing cash and who earned at least 
$1,000 in the quarter after receiving the benefit, and (2) 
twice the quarterly average number of families that included an 
adult who received substantial child care or transportation 
assistance. If both these options were taken, the denominator 
would be increased by twice the quarterly number of families 
that received non-recurring short-term benefits during the year 
and by twice the quarterly average number of families with an 
adult who received substantial child care or transportation 
assistance. In consultation with directors of state TANF 
programs, the Secretary is to define substantial child care or 
transportation assistance, specifying a threshold for each type 
of aid--a dollar value or a time duration. The definition is to 
take account of large one-time transition payments.
    Extra credit--as 1.5 families--would be given to families 
whose earnings during the quarter after leaving the benefit 
rolls during the preceding fiscal year equaled at least 33 
percent of the State's average wage.
    Employment credits or caseload reduction credits or a 
combination of the two could not exceed 40 percentage points 
for fiscal year 2004; 35 percentage points for fiscal year 
2005; 30 percentage points for fiscal year 2006; 25 percentage 
points for fiscal year 2007; and 20 percentage points for 
fiscal year 2008 or thereafter. (As a result, credits could not 
cut effective work participation rates below these floors: 10 
percent for fiscal year 2004, 20 percent for fiscal year 2005; 
30 percent for fiscal year 2006; 40 percent for fiscal year 
2007, and 50 percent for fiscal year 2008 and thereafter.)
    The Committee bill authorizes and requires the HHS 
Secretary to use information in the National Directory of New 
Hires to calculate State employment credits. If the TANF 
leaver's employer is not required to report new hires, the 
Secretary must use quarterly wage information submitted by the 
state. To calculate employment credits for families who 
received non-recurring short term benefits and for those who 
received substantial child care and transportation assistance, 
the Secretary is to use other required data. The Committee bill 
requires the Secretary by August 30 each year to determine--and 
to notify each state of--the amount of the employment credit 
that will be used in calculating participation rates for the 
immediately succeeding fiscal year.
    The Committee bill sets October 1, 2005 as the effective 
date for replacement of the caseload reduction credit by the 
employment credit, but permits states to elect to have a one-
year delay. If a state makes this choice, its adjusted work 
participation standard for fiscal year 2006 shall be determined 
by using both the caseload reduction credit and the employment 
credit (one-half credit for each).

                           REASON 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 for families that leave 
assistance for gainful employment.
            Work activities

                              CURRENT LAW

    The law lists 12 activities that can be credited toward 
meeting participation standards. Nine activities have priority 
status: unsubsidized jobs, subsidized private jobs, subsidized 
public jobs, work experience, on-the-job training; job search 
(6 weeks usual maximum, with no more than 4 consecutive weeks), 
community service, vocational educational training (12 month 
limit), and providing child care for TANF recipients in 
community service). Three non-priority activities are 
countable: job skills training directly related to employment; 
and (for high-school dropouts only) education directly related 
to work and completion of secondary school. The 6-week time 
limit on countable job search is doubled during high 
unemployment. No more than 30% of persons credited with work 
may consist of persons engaged in vocational educational 
training and teen parents without high school diplomas who are 
deemed to be engaged in work through education. In tribal 
family assistance programs, work activities are set by the HHS 
Secretary, with the tribe's participation.

                             COMMITTEE BILL

    The Committee bill lists 17 activities that can be credited 
toward meeting participation standards. It continues the 
current law list of 12 work activities (treating the 9 priority 
activities above as direct work activities) and lists five 
``qualified activities'' that may be counted under certain 
conditions (see below). The qualified activities are 
postsecondary education, adult literacy programs or activities, 
substance abuse counseling or treatment, programs or activities 
designed to remove work barriers, as defined by the state, and 
work activities authorized under any waiver for any State that 
was continued under Section 415 before the date of enactment of 
PRIDE. The Committee bill deletes the requirement that only 
four consecutive weeks of job search can be counted within the 
normal 6 week limit. It doubles the permissible length of job 
search if the state meets the unemployment rate or increased 
food stamp caseload criteria for a ``needy state'' under the 
contingency fund definition. The Committee bill permits a state 
to define countable work activities for persons complying with 
a family self sufficiency plan and living in areas of Indian 
country or an Alaskan native village with high ``joblessness.'' 
To qualify for this option, the state must include in its TANF 
plan a description of its policies for these areas.

                           REASON FOR CHANGE

    The Committee bill includes activities proposed to maintain 
all the flexibility of current law and adds new flexibility in 
countable activities. Expanding the list of allowable 
activities would permit states to provide up-front job 
preparedness for families who need specialized services. It 
would allow states to engage recipients in short-term ``barrier 
removal'' activities. Many states have such programs and some 
have done these under ``waivers.'' Hours in such activities 
would now count toward the federal participation standards.
            Required work hours

                              CURRENT LAW

    Generally, to count toward the all-family rate, 
participation of 30 hours (20 hours in priority work 
activities) is required. For two-parent families the standard 
is 35 hours (30 in priority work activities), but increases to 
55 hours (50 in priority activities) if the family receives 
federally-subsidized child care. For a single parent caring for 
a child under age 6, 20 hours of participation satisfies the 
standard. States may exempt single parents of children under 
age 1 from work and exclude them from the calculation of work 
participation rates. Teen parents are deemed to meet the weekly 
hour participation standard by maintaining satisfactory 
attendance in secondary school (or the equivalent in the month) 
or by participating in education directly related to employment 
for an average of 20 hours weekly. On one occasion per person, 
participation in job search for 3 or 4 days during a week must 
be treated as a week of participation.) In tribal family 
assistance programs, required work hours are set by the HHS 
Secretary, with the tribe's participation. [Note: 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.]

                             COMMITTEE BILL

    The Committee bill adopts a standard work week of 24 hours 
for a single parent with a child under age 6; 34 hours for a 
single parent with a child over 6; 39 hours for a two-parent 
family (but 55 hours for a two-parent family that receives 
federally funded child care). The calculation of weekly hour 
hours is made by dividing monthly hours of work by 4. Families 
meeting the standard are counted as 1.0 family in calculating 
the state's work participation rate. Extra credit is given for 
work by a single parent family (with or without a preschooler) 
above 34 hours and by two-parent families above their 39- and 
55-hour standards. All schedules provide partial credit--
provided sufficient hours are spent on direct work--for hours 
below the standard, as follows:

----------------------------------------------------------------------------------------------------------------
                                           Single-parent family                      Two-parent family
 Partial/full/extra work credit --------------------------------------------------------------------------------
                                    Child under 6      No child under 6                         With child care
----------------------------------------------------------------------------------------------------------------
.675 of a family...............  20-23 hours........  20-13 hours.......  26-29 hours.......  40-44 hours.
.75 of a family................  ...................  24-29 hours.......  30-34 hours.......  45-50 hours.
.875 of a family...............  ...................  30-33 hours.......  35-38 hours.......  51-54 hours.
1.0 family.....................  24-34 hours........  34 hours..........  39 hours..........  55 hours.
1.05 family....................  35-37 hours........  35-37 hours.......  40-42 hours.......  56-58 hours.
1.08 family....................  38+ hours..........  38+ hours.........  43+ hours.........  59+ hours.
----------------------------------------------------------------------------------------------------------------

    Generally, to receive any credit for hours at or below 24, 
a single-parent family must engage for all of these hours in 
one of the nine direct work activities--unsubsidized job, 
subsidized private job, subsidized public job, work experience, 
on-the-job training; job search and job readiness assistance, 
community service, vocational educational training, and 
providing child care for TANF recipients in community service. 
For work credit, a two-parent family generally must spend all 
hours at or below 34 weekly in a direct work activity (50 hours 
if the family receives federally funded child care and has no 
disabled member). However, for three months in any 24-month 
period, a state may give work credit for any hours spent in one 
of the five ``qualified activities''--postsecondary education, 
adult literacy programs or activities, substance abuse 
counseling or treatment, programs or activities designed to 
remove work barriers, as defined by the state, and work 
activities authorized under any waiver for any state that was 
continued under section 415 before the date of enactment of 
PRIDE. In some cases a state may give work credit for a second 
three-month period (within the 24 month limit). Eligible for 
this period of extended time are persons whose family self-
sufficiency plan requires engagement in one of three qualified 
rehabilitative services, namely, adult literacy programs or 
activities, participation in a program designed to increase 
proficiency in the English language, and substance abuse or 
mental health treatment. Total hours of their activity, 
including any core activities, must average 24 hours weekly. 
Once a family has reached the direct work hours threshold, it 
may receive credit for unlimited job search or vocational 
educational training or any of the five ``qualified 
activities.''
    Teen parents who maintain satisfactory secondary school 
attendance or participate in education directly related to work 
for an average of 20 hours weekly are deemed to count as 1 
family. A single recipient caregiver who provides substantial 
ongoing care for a child or adult dependent with a physical or 
mental impairment may receive credit as engaged in work under 
certain conditions. Qualifying conditions include that the 
state must have determined that the child or adult dependent 
requires substantial ongoing care because of a verified 
impairment, that the parent or other caregiver is the most 
appropriate provider of the care, and that, in the month for 
which caregiving hours count as work, the recipient is in 
compliance with her self-sufficiencyplan. Further, the state 
TANF plan must set forth criteria for deeming the single parent 
providing care for a disabled child or dependent to be meeting all or 
part of that family's work requirements. The Committee bill retains the 
(30 percent) limitation on persons who may be credited with work by 
virtue of vocational educational training (for no more than 12 months) 
or (if teen parents) by high school attendance or work directly related 
to education. Excluded from the 30% cap are participants in the 
optional, limited 2- or 4-year post-secondary education program 
(Parents as Scholars), participants supplementing hours spent in core 
activities (e.g. for single parents, meeting the 24 hour per week in 
core activity requirement) with vocational education training and 
participation during the 3-month (or 6-month) period when states have 
the option to count expanded work activities under the bill.

                           REASON FOR CHANGE

    The Committee bill recognizes that the success achieved by 
TANF and Work First programs are a result of a sustained 
emphasis on adult attachment to the workforce. The Committee 
bill attempts to build on the success of the past by increasing 
work and reducing the welfare rolls. Successes thus far come 
primarily from experiments and initiatives undertaken at the 
state level under waivers or TANF to move recipients from 
welfare-to-work. The Committee bill establishes clearly defined 
goals and benchmarks for hours of participation.
    Under the Committee bill, states would have flexibility to 
engage single moms with pre-schoolers at fewer hours than the 
overall ``standard'' and to offset this by engaging others full 
time.
    The Committee bill would expand the list of activities that 
count after a recipient has engaged in core work activities for 
24 hours--allowing states to count ``supplemental'' hours spent 
in post-secondary education, vocational education beyond 1 
year; and other education and barrier removal activities.
    It would encourage states to provide post-employment 
activities, particularly education or additional job search, 
for working recipients to help recipients enhance their job 
skills and training to advance and leave welfare.
    The Committee bill would provide a ``Tiered Approach'' to 
calculating hours of work activity counted towards meeting the 
participation rate.
    ``Partial credit'' recognizes that some recipients might 
not meet the full-time standard; for example, persons in 
unsubsidized employment might be employed part-time or part of 
the month.
    The Committee bill recognizes that parents who must engage 
in substantial, continuous care of a disabled child or family 
member are engaged in meaningful activity. States should work 
with these families to monitor their progress and development.

Section 110--Universal engagement and family self sufficiency plan 
        requirements; other prohibitions and requirements

            Universal engagement

                              CURRENT LAW

    State plan 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.)

                             COMMITTEE BILL

    The Committee bill deletes the 24-month work trigger 
provision. It requires that state plans outline how they intend 
to require parents or minor child head of household to engage 
in work or alternative sufficiency activities, as defined by 
the state--while observing the prohibition against penalizing 
work refusal by a single parent of a preschool child if the 
parent has a demonstrated inability to obtain needed child care 
for specified reasons. States may not exempt partially 
sanctioned families from the requirements of this section.

                           REASON FOR CHANGE

    By requiring states to outline how they intend to engage in 
self-sufficiency efforts all TANF families--not just those 
included in the work participation rate--the Committee bill 
would promote movement of all families from dependence to self-
sufficiency.
            Family self-sufficiency plan requirements

                              CURRENT LAW

    Within 30 days, states must make an initial assessment of 
the skills, work experience, and employability of each 
recipient 18 or older or those who have not completed high 
school. States may, but need not, establish an individual 
responsibility plan for each family.

                             COMMITTEE BILL

    The Committee bill requires states to initiate screening 
and assessment, in a manner they deem appropriate, of the 
skills, work experience, education, work readiness, work 
barriers and employability of each adult or minor child head of 
household recipient who has attained age 18 or who has not 
completed high school and to assess, in a manner they deem 
appropriate, the work support and other assistance and family 
support services for which families are eligible and the well-
being of the family's children and, where appropriate, 
activities or resources to improve their well being. The use of 
job search can be used as a form of assessment. Assessments and 
plans should be constantly updated and revised. States should 
use the experiences of participation to inform what future 
assessments and plan should include. The Committee bill 
requires states, in a manner they deem appropriate, to 
establish a self-sufficiency plan for each family. The 
Committee bill requires states to continually review and update 
a family's self sufficiency plan. Required plan contents: 
activities designed to assist the family achieve their maximum 
degree of self-sufficiency, requirement that the recipient 
participate in activities in accordance with theplan, 
supportive services that the state intends to provide, steps to promote 
child well-being and, when appropriate, adolescent well-being, 
information about work support assistance for which the family may be 
eligible (such as food stamps, medicaid, SCHIP, federal or state funded 
child care, EITC, low-income home energy assistance, WIC, WIA program, 
and housing assistance). The state must monitor the participation of 
adults and minor child household heads in the self-sufficiency plans 
and regularly review the family's progress, using methods it deems 
appropriate, and revise the plan when appropriate. Before imposing a 
sanction against a recipient for failure to comply with a TANF rule or 
a requirement of the self-sufficiency plan, the state must, to the 
extent deemed appropriate by the state, review the plan and make a good 
faith effort (defined by the state) to consult with the family. States 
must comply with self-sufficiency plan requirements within 1 year after 
enactment (for families then receiving TANF). For families not enrolled 
on the date of enactment, the deadline for self-sufficiency plans is 
the later of: 60 days after the family first receives assistance on the 
basis of its most recent application, or 1 year after enactment. The 
Committee bill provides that nothing in the self-sufficiency plan 
subsection or amendments made by it shall be construed to establish a 
private right or cause of action against a state for failure to comply 
with the provisions or to limit claims that might be available under 
other federal or state laws. The General Accounting Office is required 
to submit a report to the Ways and Means and Finance Committees 
evaluating the implementation of the universal engagement provisions of 
the bill. See Section 111 (Penalties) below for penalty on failure to 
comply with self-sufficiency plan requirements.

                           REASON FOR CHANGE

    States should provide a plan for every family on assistance 
and work with those families, even if the families are not able 
to participate fully in the work requirements. Additionally, 
the self sufficiency plan for each family should be a 
continually updated document as States monitor the progress of 
families receiving assistance. The Committee bill would require 
States to make families on assistance aware of additional work 
supports and assistance for which they are eligible.
            Prohibitions and requirements
            Transitional compliance for teen parents

                              CURRENT LAW

    The law makes an unmarried teenage parent (under age 18) 
ineligible for federally funded TANF assistance if she has a 
minor child at least 12 weeks old and no high school diploma 
unless she participates in a high school diploma program (or 
equivalent) or in an alternative educational or training 
program approved by the state. To receive TANF, she also must 
live with her child in an adult-supervised setting (a residence 
maintained by her parent, legal guardian, or other adult 
relative). If the teen parent has no available relative or 
guardian with whom to live, or if the state determines that the 
relative's home might be harmful, the state must provide, or 
assist the teen mother in locating, a second chance home, 
maternity home, or other appropriate adult-supervised living 
arrangement. TANF funds may be used to help operate second-
chance homes.

                             COMMITTEE BILL

    The Committee bill would allow 60 days for a teen parent to 
comply with these requirements--permitting states to give 
federally funded TANF for up to 60 days to a teen parent not 
yet participating in education or training or not yet living in 
an adult-supervised arrangement. It also would add to allowable 
living arrangements transitional living youth projects funded 
under section 321 of the Runaway and Homeless Youth Act.

                           REASON FOR CHANGE

    The Committee bill includes a ``transitional compliance'' 
period for minor parents, so that income-eligible minor parents 
who at the time of application are having trouble meeting the 
rules and eligibility conditions related to education and 
living arrangements (such as school dropouts and homeless 
youth) are brought into the program where they can get the case 
management they need to meet the requirements.

Section 111--Penalties against states

            Failure to meet the fiscal maintenance of effort 
                    requirement

                              CURRENT 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% of the state's historic 
level (sum spent in FY1994 on AFDC and related programs). If a 
state fails work participation requirements, the required 
spending level rises to 80%. 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% limit), child support 
collection passed through to the family without benefit 
reduction, and any other use of funds reasonably calculated to 
accomplish a TANF purpose.

                             COMMITTEE BILL

    The Committee bill extends the requirement that states 
maintain their own funding at 75 percent of its historic level 
(80% in case of failure to satisfy work standards) to cover FYs 
2003 through 2009. It also specifies that a state's required 
MOE percentage for a given year is to be based on its meeting 
or failing the work requirement for the preceding fiscal year.

                           REASON FOR CHANGE

    By basing the MOE requirement on the state's work 
performance in the preceding year, the Committee bill ensures 
that states know the MOE requirement they will need to meet at 
the start of the year.
            Penalties for failure to comply with self-sufficiency plan 
                    requirements

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee bill (in section 110) adds failure to comply 
with family self-sufficiency plan requirements to the penalty 
paragraph regarding failure to comply with minimum 
participation standards (see above for penalty schedule). For 
fiscal year 2005 and later, it provides that the penalty shall 
be based on the degree of substantial noncompliance. The 
Secretary must take into account factors such as the number or 
percentage of families for whom a plan is not established in a 
timely fashion, the duration of delays, whether the failure are 
isolated and nonrecurring, and the existence of systems to 
ensure establishment and monitoring of plans. The Secretary may 
reduce the penalty if the noncompliance is due to circumstances 
that made the state needy under the contingency fund definition 
or due to extraordinary circumstances such as a natural 
disaster or regional recession.

                           REASON FOR CHANGE

    The Committee bill adds a penalty provision to enforce the 
new requirement that states develop family self-sufficiency 
plans for recipients, while stipulating that states will not be 
subject to penalty unless they are in substantial noncompliance 
with the law.

Section 112--Data collection and reporting

                              CURRENT LAW

    The law requires states to collect monthly, and report 
quarterly, disaggregated case record information (sample case 
record information may be used) about families who receive 
assistance under the state TANF program (except for information 
relating to activities carried out with welfare-to-work grants 
from the Department of Labor [DOL]). Required information 
includes ages of family members, size of family, employment 
status and earnings of the employed adult, marital status of 
adults, race and educational level of each adult and child, 
whether the family received subsidized housing, Medicaid, food 
stamps, or subsidized child care (and if the latter two, the 
amount). Also required are the number of hours per week that an 
adult participated in specified activities, information needed 
to calculate participation rates, type and amount of assistance 
received under TANF, unearned income received, and citizenship 
of family members.
    Quarterly reports also must include the percentage of funds 
used for administrative costs or overhead, the total amount 
spent on programs for needy families, the number of 
noncustodial parents who participated in work activities, and 
the total amount spent on transitional services (with separate 
accounting for welfare-to-work grants). Quarterly reports also 
must provide the number of families and persons who received 
assistance each month and the total value of this assistance 
(with a breakdown for welfare-to-work grants). From a sample of 
closed cases, the report must provide the number of case 
closures attributed to employment, marriage, time limit 
sanction or state policy. The law requires the Secretary to 
submit annual reports to Congress that include state progress 
in meeting TANF objectives, demographic and financial 
characteristics of applicants, recipients, and ex-recipients, 
characteristics of each TANF-funded program, and trends in 
employment and earnings of needy families with children.

                             COMMITTEE BILL

    The Committee bill extends quarterly reporting requirements 
to cover families in MOE-funded separate state programs. It 
requires monthly reports from states on the TANF and separate 
state program caseload and annual reports from states on the 
characteristics of their state TANF program and their MOE 
separate state programs. Annual state reports must include 
names of programs, their activities and purpose, eligibility 
criteria, funding sources, number of beneficiaries, sanction 
policies, and work requirements, if any. The Committee bill 
qualifies the use of samples to provide disaggregated case 
record information, permitting the Secretary to designate core 
data elements that must be reported for all families. The 
Committee bill also changes some of the data elements required 
in the quarterly reports. For instance, it adds the race and 
educational level of each minor parent, deletes the educational 
level of each child, and adds the reason for receipt of 
assistance for a total of more than 60 months. It specifies 
that reported work experience be supervised. It also requires 
information needed to calculate progress toward universal 
engagement of each family, the date the family first received 
TANF, whether a self-sufficiency plan is established for the 
family; the marital status of the parents at the birth of each 
child in the family, and whether paternity has been established 
for those who were unwed. Quarterly reports must include 
information on families that became ineligible for assistance 
during the month, broken down by reason (earnings, changes in 
family composition that result in increased earnings, 
sanctions, time limits, or other specified reasons). The 
Committee bill requires the Secretary to prescribe regulations 
needed to collect data and to consult with the NGA, APHSA, and 
the National Conference of State Legislatures (as well as the 
Secretary of Labor) in defining data elements for required 
reports. The Committee bill changes the requirements for the 
Secretary's annual TANF reports to Congress by setting July 1 
as the deadline, deleting the requirement for information about 
applicants and requiring that the report include information 
about separate state MOE programs. It requires states to report 
to the Secretary annually, beginning with FY2005, on 
achievement and improvement during the past fiscal year under 
the state's performance goals and measures.

                           REASON FOR CHANGE

    The Committee bill extends quarterly reporting requirements 
to ensure consistent data reporting and monitoring of all 
qualified State programs. Annual reports on all TANF and MOE 
programs are needed to provide information (e.g., number of 
beneficiaries) that is not otherwise available on non-cash 
assistance programs. Designation of a few core data elements 
for universal reporting would facilitate performance 
measurement and accountability. These elements are already 
submitted by states as part of the High Performance Bonus data 
collection. Data elements that have been difficult for the TANF 
agency to collect and report, or are not used to any 
significant extent, would be dropped to reduce burden on state 
agencies. A few data elements would be added to monitor 
compliance with universal engagement requirements.

Section 113--Direct funding and administration by Indian tribes

                              CURRENT LAW

    The law earmarks some TANF funds--an amount equal to 
federal pre-TANF payments received by the state attributable to 
Indians--for administration by tribes with approved 
tribalfamily assistance plans. It deducts these sums ($115 million in 
FY2003) from state TANF grants. It also appropriates $7.6 million 
annually for work and training activities (now known as Native 
Employment Works [NEW]) to tribes that operated a pre-TANF work and 
training program.

                             COMMITTEE BILL

    For FYs 2004-2008, the Committee bill reauthorizes tribal 
family assistance grants and grants for NEW programs. It 
establishes a tribal TANF improvement fund ($100 million 
authorized for each of 5 years) for the purpose of providing 
technical assistance to tribes and awarding competitive grants 
directly to tribes carrying out a tribal family assistance 
plan.

                           REASON FOR CHANGE

    The 1996 welfare law permitted Indian tribes to receive 
direct Federal funding to operate cash welfare programs. The 
Committee bill continues that authority and creates a tribal 
TANF improvement fund. The fund is intended to encourage more 
tribes to exercise their option to operate TANF programs and to 
improve administration of programs already operating. The bill 
also continues funding for the Indian job training program 
known as NEW.

Section 114--Research, evaluations, and national studies

                              CURRENT LAW

    The 1996 welfare law required the HHS Secretary to conduct 
research on effects, costs, and benefits of state programs. It 
provides that the Secretary might help states develop 
innovative approaches to employing TANF recipients and 
increasing the well-being of their children and directed the 
Secretary to evaluate these innovative projects. For 6 years 
(FYs 1997 through 2002) it appropriated $15 million yearly, 
half for TANF research and novel approaches cited above and 
half for the federal share of state-initiated TANF studies and 
the completion and evaluation of pre-TANF waiver projects. 
(However, in subsequent appropriation acts, Congress has 
rescinded these provisions and appropriated research funds on a 
less prescriptive basis under Section 1110 of the Social 
Security Act--which deals with cooperative research and 
demonstration projects.) Section 413 of the Social Security Act 
also requires the Secretary to rank annually the states to 
which family assistance grants are paid, in the order of their 
placing recipients into long-term private sector jobs, reducing 
the overall welfare caseload, and (when a practicable 
calculation method becomes available) diverting persons from 
formally applying for TANF assistance.

                             COMMITTEE BILL

    The Committee bill appropriates $100 million yearly for FYs 
2004 through 2008, of which 80% must be spent on marriage 
promotion activities (described in the section establishing 
marriage grants). It makes these funds available to the HHS 
Secretary for the purpose of conducting and supporting research 
and demonstration projects by public or private entities, and 
providing technical assistance to states, Indian tribal 
organization, and such other TANF grantees as the Secretary may 
specify. It authorizes the Secretary to conduct these studies 
and demonstrations directly or through grants, contracts, or 
interagency agreements. In addition, for 5 years (FYs 2004 
through 2008) it extends the current law annual appropriation 
of $15 million and its designated 50-50 allocation).
    The committee bill also would establish a demonstration 
program for up to 10 states to enhance or to provide for 
improved program integration coordination and delivery across 
various workforce and public assistance programs. Programs 
covered in the bill (``qualified programs'') are TANF, Title XX 
social services block grant, and mandatory child care under 
Title IV of the Social Security Act. The head of a state entity 
or of a sub-state entity administering 2 or more qualified 
programs could apply to operate a demonstration. Provisions 
that could not be waived include any provision of law relating 
to civil rights or the prohibition of discrimination, purposes 
or goals of any program, maintenance of effort funding rules, 
health or safety, labor standards under the Fair Labor 
Standards Act, and environmental protection. A waiver could not 
be granted if it would waive any funding restriction or 
limitation in an appropriations Act, or if it would have the 
effect of transferring appropriated funds from one account to 
another. Child care funding can only be spent on child care. 
Applicants would be required to include a plan for evaluation 
to demonstrate the improved effectiveness of programs included. 
Approval would be required from the Secretary or Secretaries 
overseeing programs proposed under the demonstration.

                           REASON FOR CHANGE

    Healthy marriages are critically important to the well-
being of children, a point recognized in the purposes of the 
original TANF law. The TANF program works with families to help 
them overcome great difficulties and barriers, so they can 
become stronger and self-sufficient. One important way we can 
help many families is to help them build the skills and 
knowledge that will enable them to form and sustain healthy 
marriages.
    There is much, however, that we do not yet know about how 
states and communities can effectively promote healthy 
marriages. The Secretary's Fund for Research Demonstrations and 
Technical Assistance serves several purposes. Just as current 
welfare to work programs are built on the foundation of 
considerable research and experience, the ability of states and 
communities to provide effective assistance to families in the 
future will depend on a strong base of research and examined 
experience.
    This section would fund research on the operation and 
impact of various promising healthy marriage promotion services 
and strategies. Funds would also be used to support 
demonstration projects intended to examine how various 
comprehensive community based strategies and programs can help 
to promote the development and strength of healthy marriages.
    Funds would be available for HHS to make technical 
assistance available to program operators, in particular, by 
helping states, tribes and local administrators learn from each 
other.
    Effective service delivery is often inhibited by poor 
coordination and inefficiencies inherent to providing 
complementary services through different programs. Through 
these demonstrations, limited to the following three programs 
under the jurisdiction of the Senate Finance Committee: the 
Social Services Block Grant, The Temporary Assistance for Needy 
Families program and the mandatory child care funding, states 
could begin to explore ways to improve the quality of services 
for families.

Section 115--Study by the Census Bureau

                              CURRENT LAW

    The 1996 welfare law appropriated $10 million annually for 
7 years (FYs 1996 through 2002) to expand the Survey of Income 
and Program Participation (SIPP) so as to obtain data with 
which to evaluate TANF's impact on a random national sample of 
recipients and, as appropriate, other low-income working 
families.

                             COMMITTEE BILL

    The Committee bill appropriates $10 million annually for 
FYs 2004 through 2008 for continued and enhanced study by the 
Census Bureau of TANF and other low-income families with 
children. The bill requires the Bureau to implement or enhance 
a longitudinal survey of program participation. It also 
requires the Commerce Secretary, using data from the survey, to 
submit two reports to congressional committees (House Ways and 
Means and Senate Finance Committees) on the well-being of 
children and families. The first report is due not later than 
24 months, and the second one, not later than 60 months, after 
enactment of PRIDE. The bill specifies that where comparable 
measures of well-being exist in previous Census Bureau surveys, 
the reports must make appropriate comparisons and assess 
changes in the measures.

                           REASON FOR CHANGE

    Reauthorization of TANF provides an opportunity to 
strengthen the SIPP and build upon the Census Bureau's federal-
state partnership, linking state cross-program administrative 
data and survey data to meet the requirements in the enhanced 
SIPP to understand how low-income families are faring under 
TANF.

Section 116--Funding for child care

                              CURRENT LAW

    The 1996 welfare law created a mandatory child care block 
grant and appropriated $13.9 billion for it over 6 years ($2.7 
billion for FY2002, the final year) and authorized $1 billion 
annually through FY2002 in discretionary funding under an 
expanded Child Care and Development Block Grant (CCDBG). FY2003 
appropriations totaled $4.8 billion--$2.7 billion in mandatory 
funds and $2.1 billion in discretionary funds. (In addition, 
the welfare law permits states to transfer some TANF funds to 
the CCDBG.)

                             COMMITTEE BILL

    The Committee bill increases mandatory child care funding 
by $1 billion over five years, providing $2.9 billion annually. 
It also sets aside $10 million in mandatory child care funds 
for the Commonwealth of Puerto Rico.

                           REASON FOR CHANGE

    The need for additional childcare resources to assist 
families.

Section 117--Definitions

                              CURRENT LAW

    The law does not define the term ``assistance,'' but 
regulations define it as cash, payments, vouchers, and other 
forms of benefits designed to meet a family's ongoing basic 
needs (food, clothing, shelter, utilities, household goods, 
personal care items, and general incidental expenses) plus 
supportive services such as transportation and child care 
provided to families who are not employed. It does not include 
nonrecurrent, short-term benefits that are not intended to meet 
recurrent or ongoing needs and will not extend beyond four 
months.

                             COMMITTEE BILL

    The Committee bill defines assistance to mean payment, by 
cash, voucher, or other means, to or for a person or family for 
the purpose of meeting a subsistence need (including food, 
clothing, shelter, and related items, but not including costs 
of transportation or child care) and not including a payment 
for a subsistence need made on a short-term, nonrecurring 
basis, as defined by the state in accordance with regulations 
prescribed by the HHS Secretary.

                           REASON FOR CHANGE

    The Committee bill affirms the flexibility of states to 
provide assistance and services to low-income families, 
including temporarily unemployed families, and clarifies that 
rules tied to state spending on ``assistance'' will not apply 
to child care and other non-cash work support services provided 
to the unemployed.

Section 118--Responsible Fatherhood Program

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Responsible Fatherhood Program would be added to the 
Social Security Act as a new Part C to Title IV. The Committee 
bill amends Title 1 of P.L. 104-193 which would make the 
responsible fatherhood program subject to the charitable choice 
provisions. The Committee bill also includes a list of findings 
with respect to the impact of fathers being absent from the 
home and the purposes of a responsible fatherhood program.
    The Committee bill establishes four components for the 
responsible fatherhood program. It authorizes (1) a $20 million 
grant program for up to 10 eligible states to conduct 
demonstration programs; (2) a $30 million grant for eligible 
entities to conduct demonstration programs; (3) $5 million for 
a nationally recognized nonprofit fatherhood promotion 
organization to develop and promote a responsible fatherhood 
media campaign; and (4) a $20 million block grant to states for 
states to conduct responsible fatherhood media campaigns.

            Grants to states to conduct demonstration programs

    The Committee bill authorizes a $20 million appropriation 
that gives the HHS Secretary the authority to award grants to 
up to 10 eligible states to conduct demonstration programs that 
carry out the purposes described below. An eligible state is a 
state that submits to the Secretary an application for a grant, 
at such time, in such manner, and containing the information 
required by the Secretary. An eligible state must give the 
Secretary a state plan that describes the types of programs or 
activities that the state will fund under the grant, including 
a good faith estimate of the number and characteristics of 
clients to be served under the projects and how the state 
intends to achieve at least two of the purposes described 
below. The state plan also must include a description of how 
the state will coordinate and cooperate with state and local 
entities responsible for carrying out other programs that 
relate to the purposes intended to be achieved under the 
demonstration program, including as appropriate, entities 
responsible for carrying out jobs programs and programs serving 
children and families. In addition, the state plan must include 
an agreement to maintain such records, submit such reports, and 
cooperate with such reviews and audits as the Secretary finds 
necessary to provide oversight of the demonstration program.
    The Committee bill requires the chief executive officer of 
the state to certify to the HHS Secretary that the state will 
use the demonstration funds to promote at least two of the 
purposes described below; the state will return any unused 
funds to the Secretary; and that the funds provided under the 
grant will be used for programs and activities that target low-
income participants and that at least 50 percent of the 
participants in each program or activity funded must be parents 
of a child who is, or within the past 24 months has been, a 
recipient of assistance or services under a state program 
funded under Title IV-D or Title IV-A, foster care (Title IV-
E), Medicaid (Title XIX), or food stamps; or parents, including 
an expectant parent or a married parent, whose income (after 
adjustment for court-ordered child support paid or received) 
does not exceed 150% of the poverty line. In addition, the 
chief executive officer of the state must certify to the 
Secretary that programs or activities funded under the 
demonstration grant will be provided with information about the 
prevention of domestic violence and that the state will consult 
with representatives of state and local domestic violence 
centers. The state must also certify that funds provided to the 
state for demonstration grants must not be used to supplement 
or supplant other federal, state, or local funds that are used 
to support programs or activities that are related to the 
purposes of the demonstration grants.
    In determining which states to award responsible fatherhood 
demonstration grants, the HHS Secretary must attempt to achieve 
a balance among the eligible states with respect to the size, 
urban or rural location, and use of differing or unique methods 
of the entities that states intend to use to conduct the 
programs and activities funded by the demonstration grants. The 
Secretary must give priority to eligible states that have 
demonstrated progress in achieving at least one of the stated 
purposes through previous state initiatives or that have 
demonstrated need with respect to reducing the incidence of 
out-of-wedlock births or absent fathers in the state.
    The Committee bill stipulates the purposes of the 
demonstration grants are to promote responsible fatherhood 
through (1) marriage promotion (through counseling, mentoring, 
disseminating information about the advantages of marriage and 
two-parent involvement for children, enhancing relationship 
skills, teaching how to control aggressive behavior, 
disseminating information on the causes of domestic violence 
and child abuse, marriage preparation programs, premarital 
counseling, skills-based marriage education, financial planning 
seminars, and divorce education and reduction programs, 
including mediation and counseling); (2) parenting activities 
(through counseling, mentoring, mediation, disseminating 
information about good parenting practices, skills-based 
parenting education, encouraging child support payments, and 
other methods); and (3) fostering economic stability of fathers 
(through work first services, job search, job training, 
subsidized employment, education, including career-advancing 
education, job retention, job enhancement, dissemination of 
employment materials, coordination with existing employment 
services such as welfare-to-work programs, referrals to local 
employment training initiatives, and other methods).
    The Committee bill prohibits the use of responsible 
fatherhood demonstration grants for court proceedings on 
matters of child visitation or child custody, or legislative 
advocacy.
    The Committee bill prohibits a state from being awarded a 
grant unless the state consults with experts of domestic 
violence or with relevant community domestic violence 
coalitions in developing programs or activities funded by the 
grant. The state also must describe in the grant application 
how the proposed programs or activities will address, as 
appropriate, issues of domestic violence and what the state 
will do, to the extent relevant, to ensure that participation 
in such programs or activities is voluntary and to inform 
potential participants that their involvement is voluntary.
    The Committee bill requires that each eligible state that 
receives a grant must return any unused portion of the grant 
for a fiscal year back to the HHS Secretary not later than the 
last day of the second succeeding fiscal year, together with 
any earnings from interest on the unused portion. The Secretary 
is required to establish an appropriate procedure for 
redistributing to eligible states that have expended the entire 
amount of their grant for a fiscal year any amount that is 
returned to the Secretary by eligible states.
    The Committee bill authorizes a $20 million appropriation 
for each of the fiscal years 2004 through 2008 for responsible 
fatherhood demonstration grants. The Committee bill stipulates 
that the amount of each responsible fatherhood demonstration 
grant awarded must be an amount sufficient to implement the 
state plan submitted by the state, subject to a minimum amount 
of $1 million per fiscal year in the case of the 50 states and 
the District of Columbia, and $500,000 in the case of Puerto 
Rico, the Virgin Islands, Guam, American Samoa, and the 
Northern Mariana Islands.

            Grants to eligible entities to conduct demonstration 
                    programs

    The Committee bill authorizes a $30 million appropriation 
that gives the HHS Secretary the authority to award grants to 
eligible entities to conduct demonstration programs that carry 
out the purposes described above. An eligible entity is a local 
government, local private agency, community-based or nonprofit 
organization, or private entity, including any charitable or 
faith-based organization that submits to the Secretary an 
application for a grant, at such time, in such manner, and 
containing the information required by the Secretary. An 
eligible entity must give the Secretary a description of the 
programs and activities that the entity will fund under the 
grant, including a good faith estimate of the number and 
characteristics of clients to be served under the projects and 
how the entity intends to achieve at least two of the purposes 
described above. The project description also must include a 
description of how the entity will coordinate and cooperatewith 
state and local entities responsible for carrying out other programs 
that relate to the purposes intended to be achieved under the 
demonstration program, including as appropriate, entities responsible 
for carrying out jobs programs and programs serving children and 
families. In addition, the project description must include an 
agreement to maintain such records, submit such reports, and cooperate 
with such reviews and audits as the Secretary finds necessary to 
provide oversight of the demonstration program.
    The Committee bill requires a certification that the entity 
will use the demonstration funds to promote at least two of the 
purposes described above; the entity will return any unused 
funds to the Secretary; and that the funds provided under the 
grant will be used for programs and activities that target low-
income participants and that at least 50 percent of the 
participants in each program or activity funded must be parents 
of a child who is, or within the past 24 months has been, a 
recipient of assistance or services under a state program 
funded under Title IV-D or Title IV-A, foster care (Title IV-
E), Medicaid (Title XIX), or food stamps; or parents, including 
an expectant parent or a married parent, whose income (after 
adjustment for court-ordered child support paid or received) 
does not exceed 150% of the poverty line. In addition, the 
Committee bill requires a certification that the entity will 
consult with representatives of state and local domestic 
violence centers. The entity must also certify that funds 
provided to the state for demonstration grants must not be used 
to supplement or supplant other federal, state, or local funds 
provided to the entity that are used to support programs or 
activities that are related to the purposes of the 
demonstration grants.
    In determining which entities to which to award responsible 
fatherhood demonstration grants, the HHS Secretary must attempt 
to achieve a balance among the eligible entities with respect 
to the size, urban or rural location, and use of differing or 
unique methods of the entities.
    The Committee bill prohibits the use of responsible 
fatherhood demonstration grants awarded to entities for court 
proceedings on matters of child visitation or child custody, or 
legislative advocacy.
    The Committee bill stipulates that the HHS Secretary may 
not award a grant to an eligible entity unless the entity, as a 
condition of receiving the grant, consults with experts in 
domestic violence or with relevant community domestic violence 
coalitions in developing the programs or activities funded by 
the grant; and describes in the grant application how the 
programs or activities will address issues of domestic violence 
and what the entity will do to ensure that participation in the 
programs or activities funded is voluntary and to inform 
potential participants that their involvement is voluntary.
    The Committee bill requires that each eligible entity that 
receives a grant must return any unused portion of the grant 
for a fiscal year back to the HHS Secretary not later than the 
last day of the second succeeding fiscal year, together with 
any earnings from interest on the unused portion. The Secretary 
is required to establish an appropriate procedure for 
redistributing to eligible entities that have expended the 
entire amount of their grant for a fiscal year any amount that 
is returned to the Secretary by eligible entities.
    The Committee bill authorizes a $30 million appropriation 
for each of the fiscal years 2004 through 2008 for responsible 
fatherhood demonstration grants to eligible entities.

            National clearinghouse for responsible fatherhood programs

    The Committee bill authorizes an appropriation of $5 
million for the HHS Secretary to contract with a nationally 
recognized, nonprofit fatherhood promotion organization to (1) 
develop, promote and distribute to interested states, local 
governments, public agencies, and private entities a media 
campaign that encourages appropriate involvement of both 
parents in the life of their children (with an emphasis on 
responsible fatherhood); and (2) develop a national 
clearinghouse to assist states and communities in efforts to 
promote and support marriage and responsible fatherhood by 
collecting, evaluating, and making available (through the 
Internet and by other means) to other states information on 
state-sponsored media campaigns.
    The Committee bill requires the HHS Secretary to ensure 
that the selected nationally recognized nonprofit fatherhood 
promotion organization coordinate the media campaign and 
national clearinghouse that are developed with grant funds with 
a national, state, or local domestic violence program.
    The nationally recognized nonprofit fatherhood promotion 
organization must have at least four years of experience in 
designing and disseminating a national public education 
campaign, and in providing consultation and training to 
community-based organizations interested in implementing 
fatherhood programs.
    The Committee bill authorizes a $5 million appropriation 
for each of the fiscal years 2004 through 2008 to establish a 
national clearinghouse for responsible fatherhood programs.

            Block grants to states to encourage media campaigns

    The Committee bill authorizes the HHS Secretary to provide 
a $20 million block grant to states for media campaigns for 
each of the fiscal years 2004 through 2008.
    Not later than October 1 of each of the fiscal years for 
which a state wants to receive an allotment of block grant 
funds, the Committee bill requires the chief executive officer 
of the state to certify to the HHS Secretary that the state 
will use grant funds to promote the formation and maintenance 
of married two-parent families, strengthen fragile families, 
and promote responsible fatherhood through media campaigns. The 
executive officer also must certify that the state will return 
any unused funds to the Secretary and comply with the 
stipulated reporting requirements.
    States have the option of establishing media campaigns via 
radio or television, air-time challenge programs (under which 
the state may purchase air time only if it obtains non-federal 
contributions to purchase additional similar air time), or 
through the distribution of printed or other advertisements. A 
state may administer media campaigns directly or through 
grants, contracts, or cooperative agreements with public 
agencies, local governments, or private entities (including 
charitable and faith-based organizations). In developing 
broadcast and printed advertisements for media campaigns, the 
state or other entity administering the campaign must consult 
with representative of state and local domestic violence 
centers. The Committee bill defines broadcast advertisement, 
child at risk, poverty line, printed or other advertisement, 
state, and young child.
    Each state's allotment is based on its proportion of poor 
children in the nation, and its portion of children under age 5 
in the nation. Each state and the District of Columbia would 
receive no less than the minimum allotment of $200,000; Guam, 
Puerto Rico, the Virgin Islands, American Samoa, and the 
Northern Mariana Islands would receive no less than $100,000 
per year for FY2004-2008.
    The Committee bill requires that each eligible entity that 
receives a grant must return any unused portion of the grant 
for a fiscal year back to the HHS Secretary not later than the 
last day of the second succeeding fiscal year, together with 
any earnings from interest on the unused portion. The Secretary 
is required to establish an appropriate procedure for 
redistributing to states that have expended the entire amount 
of their grant for a fiscal year any amount that is returned to 
the Secretary by states, or not allotted to states because the 
state did not submit a certification by October 1 of a fiscal 
year.
    The Committee bill requires each state that receives an 
allotment to monitor and evaluate the media campaigns conducted 
using the allotted grant funds and submit an annual report to 
the Secretary at such time, in such manner, and containing such 
information as the Secretary may require.
    The Committee bill authorizes the HHS Secretary to provide 
a $20 million block grant to states for media campaigns for 
each of the fiscal years 2004 through 2008. The Secretary must 
conduct an evaluation of the impact of the media campaigns and 
report to Congress the results of the evaluation no later than 
December 31, 2006. The Committee bill authorizes a $1 million 
appropriation for FY2004 to conduct the evaluation (the 
evaluation funding is to remain available until expended).

                           REASON FOR CHANGE

    Children do better academically, emotionally and socially 
when raised by their married biological parents. This provision 
in the bill provides states and faith based and community 
organizations and local governments with resources to find 
innovative ways to promote responsible fatherhood through 
marriage promotion and divorce reduction, parenting skill 
building, and where appropriate, expanded opportunities for 
strengthening the employment opportunities of low-income 
fathers. The provision is targeted on families, many of whom 
are unmarried at the time of the birth of their child, who have 
received TANF, Food Stamps or Medicaid Services or who have 
incomes below 150% of poverty. The provision requires all 
grantees to ensure that program participation is voluntary and 
that domestic violence experts and coalitions are consulted.

Section 119--Additional grants

                              CURRENT LAW

    No provision in TANF law.

                             COMMITTEE BILL

    The Committee bill authorizes appropriation of $40 million 
for each of FYs 2004-2008 for grants to be made by the HHS 
Secretary to entities for the purpose of capitalizing and 
developing the role of sustainable social services that are 
critical to the success of moving TANF recipients to work. 
Applicants would be required to describe the capitalization 
strategy they intend to follow to develop a program that 
generates its own source of on-going revenue while assisting 
TANF recipients. Administrative costs could not exceed 15 
percent (except for computerization and information technology 
needed for tracking or monitoring required by TANF), but none 
of the other statutory rules regarding use of TANF funds would 
apply. The Committee bill requires the Secretary to conduct an 
evaluation of the programs developed by these grants.
    The bill also authorizes appropriation of $25 million for 
each of FYs 2004-2009 for grants for low-income car ownership. 
The purposes are to improve employment opportunities of low-
income families and provide incentives to states, Indian 
tribes, localities, and nonprofit groups to develop and 
administer programs that promote car ownership by low-income 
families. No more than 5% of the funds could be used for 
administrative costs of the Secretary in carrying out this 
program.

                           REASON FOR CHANGE

    These provisions would support efforts to develop the role 
of self-sustainable social services and would help families 
have reliable means of getting to and from employment.

Section 120--Technical corrections

                     TITLE II--ABSTINENCE EDUCATION

Section 201--Extension of Abstinence Education Program

                              CURRENT LAW

    The law appropriated $50 million annually for FYs 1998-2002 
for matching grants to states to provide abstinence education 
and, at state option, mentoring, counseling, and adult 
supervision to promote abstinence from sexual activity, with a 
focus on groups that are most likely to bear children out-of-
wedlock. Funding was extended through March 31, 2004 by 
continuing appropriations. Funds must be requested by states 
when they apply for Maternal and Child Health (MUCH) block 
grant funds and must be used exclusively for the teaching of 
abstinence. States must match every $4 in federal funds with $3 
in state funds.

                             COMMITTEE BILL

    The Committee bill appropriates $50 million annually for 
the program through fiscal year 2008. Moreover, the Committee 
bill allows unrequested abstinence education funds to be 
reallocated among the states with abstinence education programs 
instead of being returned to the U.S. Treasury.

                           REASON FOR CHANGE

    The Committee bill continues the program with no change, 
but allows unrequested funds to be reallocated among the states 
with abstinence education programs. This will allow states that 
want to provide abstinence education with more access to 
funding.

                        TITLE III--CHILD SUPPORT

Section 301--Distribution of child support collected by states on 
        behalf of children receiving certain welfare benefits

            Assignment of child support rights

                              CURRENT LAW

    In order to receive benefits TANF recipients must assign 
their child support rights to the state. The assignment covers 
any unpaid child support that accrues while the family receives 
TANF and any support that accrued before the family began 
receiving TANF.
    Any assignment of rights to unpaid child support that was 
in effect on Sept. 30, 1997 must remain in effect. This means 
that any child support collected as a result of the assignment 
must go the state and the federal government.

                             COMMITTEE BILL

    The Committee bill stipulates that the assignment covers 
only child support that accrues during the period that the 
family receives TANF. (In other words, pre-assistance 
arrearages would be eliminated). In addition, the Committee 
bill gives states the option to discontinue assignments in 
effect on Sept. 30, 1997. If a state chooses to discontinue the 
child support assignment, the state may distribute collections 
from such assignment to the family. States also would have the 
option to discontinue pre-assistance arrearage assignments in 
effect after September 30, 1997 and before the implementation 
date of this provision. If a state chooses to discontinue the 
child support assignment, the state may distribute collections 
from such assignment to the family.

                           REASON FOR CHANGE

    The Committee bill would support family self-sufficiency by 
allowing families to keep more of the child support collected 
on their behalf. It would also prevent TANF families from 
losing access to lump sum collections of past-due pre-
assistance support that may help them exit TANF.
            Distribution of child support to TANF families

                              CURRENT 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 which has been paid to the family. In other 
words, the state can decide how much, if any, of the state 
share (some, all, none) of the child support payment collected 
on behalf of TANF families to send to the family. The state is 
required to pay the federal government the federal share of the 
child support collected.
    Child support payments collected on behalf of TANF families 
that are passed through to the family and disregarded by the 
state count toward the TANF MOE (maintenance of effort) 
expenditure requirement.

                             COMMITTEE BILL

    For families who receive assistance from the State (which 
would include TANF or foster care) the Committee bill requires 
the federal government to waive its share of child support 
collections passed through to TANF families by the state and 
disregarded by the State up to an amount equal to $400 per 
month in the case of a family with one child, and up to $600 
per month in the case of a family with two or more children. 
Like current law, disregarded pass through amounts count as 
TANF MOE expenditures.
    The Committee bill includes a provision that allows states 
with section 1115 demonstration waivers (on or before October 
1, 1997) related to the child support pass-through provisions 
to continue to pass through payments to families in accordance 
with the terms of the waiver.

                           REASON FOR CHANGE

    The Committee bill promotes family self-sufficiency by 
providing an incentive for States to allow families to keep 
more of the child support collected on their behalf. No such 
incentive currently exists. This option would also allow 
noncustodial parents who pay child support to know that their 
support payments are being received by their children.
            Distribution of child support to former TANF families

                              CURRENT LAW

    With respect to former TANF families: Current child support 
payments must be paid to the family. 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. Further 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.

                             COMMITTEE BILL

    As mentioned above, the Committee bill eliminates the 
assignment of pre-assistance arrearages. The Committee bill 
also eliminates the special treatment of child support 
arrearages collected through the federal income tax refund 
offset program. Such collections also would go the family 
first.
    To the extent that the arrearage amount payable to a former 
TANF family in any given month under the Committee bill exceeds 
the amount that would have been payable to the family under 
current law, the state can elect to have the amount paid to the 
family considered an expenditure for Maintenance-of-Effort 
(MOE) purposes. In addition, the Committee 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 
whether it chooses to maintain the current law distribution 
method. Further, the Committee bill stipulates that no later 
than 6 months after the date of enactment of this legislation, 
the HHS Secretary, in consultation with the states, must 
establish the procedures to be used to make estimates of excess 
costs associated with the new funding option.

                           REASON FOR CHANGE

    The Committee bill supports self-sufficiency by providing 
former TANF families with more of the child support collected 
on their behalf, regardless of how it is collected. It allows 
states to use the federal tax refund offset remedy to get more 
collections to families. Providing MOE for additional money to 
families provides further incentive for states to exercise this 
option and is consistent with MOE policy on the pass through of 
child support collections to current TANF families.
            Distribution of child support to families that never 
                    received assistance

                              CURRENT LAW

    The entire amount of the child support collection is 
distributed to families that never received TANF assistance.

                             COMMITTEE BILL

    Same as current law.

                           REASON FOR CHANGE

    No change
            Distribution of child support to families under certain 
                    agreements

                              CURRENT LAW

    In the case of a family receiving TANF assistance from an 
Indian tribe or tribal organization, the child support 
collection is to be distributed according to the cooperative 
agreement specified in the Child Support Enforcement State 
Plan.

                             COMMITTEE BILL

    Same as current law.

                           REASON FOR CHANGE

    No change.
            Effective date

                              CURRENT LAW

    Not applicable.

                             COMMITTEE BILL

    The amendments made by this section of the bill would take 
effect on October 1, 2007, and would 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 could 
elect to have the amendments take effect earlier--at any date 
that is after enactment of the bill and before October 1, 2007.

                           REASON FOR CHANGE

    This effective date will allow states sufficient time to 
implement required and optional changes in child support 
distribution and assignment, while also allowing states to 
choose to proceed more quickly.

Section 302--Mandatory review and adjustment of child support orders 
        for families receiving TANF

                              CURRENT 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 update (if appropriate) child support orders at the request 
of the state Child Support Enforcement (CSE) agency or of 
either parent.

                             COMMITTEE BILL

    The Committee bill requires states to review and, if 
appropriate, adjust child support orders in TANF cases every 3 
years. The provision would take effect on October 1, 2005.

                           REASON FOR CHANGE

    The mandatory review and, if necessary, modification of 
child support orders will make award amounts more appropriate. 
In some cases this will increase the amount of payment 
required, which will in turn increase collections, and in other 
cases it will reduce the amount of payment required, therefore 
limiting the accumulation of uncollectible arrears.

Section 303--Report on undistributed child support payments

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

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

                           REASON FOR CHANGE

    Undistributed collections are a significant new issue that 
merits further analysis and may require further state or 
federal action in order to ensure that families are receiving 
the support paid on their behalf, as appropriate.

Section 304--Use of new hire information to assist in administration of 
        unemployment compensation programs

                              CURRENT 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 all this information in the 
State Directory of New Hires, to use this information to locate 
noncustodial parents who owe child support and to send a wage 
withholding order to their employer, and to (within 3 business 
days) 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. (Note that states currently have access to the new 
hire information only in their own state.)

                             COMMITTEE BILL

    The Committee bill authorizes State Employment Security 
Agencies (which are responsible for administering the 
Unemployment Compensation program) 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) via the HHS Secretary in order to help 
detect fraud in the unemployment compensation system.
    The Committee bill requires state agencies to have in 
effect data security and control policies that the HHS 
Secretary finds adequate to ensure the security of the 
information and to ensure that access to such information is 
restricted to authorized persons for purposes of authorized 
uses and disclosures. An officer or employee of a state agency 
who fails to comply with security requirements would be subject 
to current law penalties related to misuse of information. The 
Committee bill requires the Secretary to establish uniform 
procedures that govern information requests and data matching. 
The Committee bill requires the state agency to reimburse the 
HHS Secretary for cost incurred by the Secretary in furnishing 
requested information.
    The provision would take effect on October 1, 2004.

                           REASON FOR CHANGE

    The Committee bill will improve the Unemployment 
Compensation Program by allowing State Employment Security 
Agencies to determine whether people drawing unemployment 
compensation benefits are actually working in another state or 
for the federal government. Current data matches do not allow 
SESAs to identify this kind of employment.

Section 305--Decrease in amount of child support arrearage triggering 
        passport denial

                              CURRENT 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.

                             COMMITTEE BILL

    The Committee 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. The provision would take effect on October 1, 
2004.

                           REASON FOR CHANGE:

    This provision will increase the success of the passport 
denial program and provide more collections to families. Fewer 
arrears will have to build up before this effective enforcement 
tool can be utilized.

Section 306--Use of tax refund intercept program to collect past-due 
        child support on behalf of children who are not minors

                              CURRENT 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 (P.L. 97-35), 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.)

                             COMMITTEE BILL

    The Committee 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. The provision 
would take effect on October 1, 2005.

                           REASON FOR CHANGE

    This will increase support to families by removing a 
barrier to collecting past due child support on behalf of 
children who are no longer minors.

Section 307--Garnishment of compensation paid to veterans for service-
        connected disabilities in order to enforce child support 
        obligations

                              CURRENT LAW

    The disability compensation benefits of veterans are 
treated differently than most forms of government payment for 
purposes of paying child support. Whereas most government 
payments are subject to being automatically withheld to pay 
child support, veterans disability compensation is not subject 
to intercept. The only exception occurs when veterans have 
elected to forego some of their retirement pay in order to 
collect additional disability payments. The advantage of 
veterans replacing retirement pay with disability pay is that 
the disability pay is not subject to taxation. With this 
exception, which occurs rarely, the only way to obtain child 
support payments from veterans' disability compensation is to 
request that the Secretary of the Veterans Administration 
intercept the disability compensation and make the child 
support payments.

                             COMMITTEE BILL

    The Committee bill allows veterans' disability compensation 
benefits to be intercepted (withheld) and paid on a routine 
basis to the custodial parent if the veteran is in arrears on 
child support payments. This provision prohibits the 
garnishment of any veteran's disability compensation in order 
to collect alimony, unless that disability compensation is 
being paid because retirement benefits are being waived. The 
provision would take effect on October 1, 2005.

                           REASON FOR CHANGE

    This proposal will provide more child support collections 
to families of veterans and make the child support intercept of 
veterans's disability payments more consistent with other forms 
of government payment.

Section 308--Improving federal debt collection practices

                              CURRENT LAW

    Federal law stipulates that any federal agency that is owed 
a nontax debt (that is more than 180 days past-due) may notify 
the Secretary of the Treasury to obtain an administrative 
offset of the debt. Currently, states have the authority to 
garnish Social Security benefits (but not Supplemental Security 
Income [SSI] benefits) for child support payments, but they 
cannot use the federal administrative offset process to do so. 
However, Social Security payments can only be offset for 
federal debt recovery. Federal law exempts $9,000 annually 
($750 per month) from the administrative offset.

                             COMMITTEE BILL

    The Committee bill expands the federal administrative 
offset program by allowing certain Social Security benefits to 
be offset to collect past-due child support (on behalf of 
families receiving CSE [Title IV-D of the Social Security Act] 
services) in appropriate cases selected by the states. The 
provision would take effect on October 1, 2004.

                           REASON FOR CHANGE

    The Committee bill will increase child support collections 
to the families of benefit recipients by allowing offset of 
additional benefits, while maintaining an adequate benefit 
level for the recipient.

Section 309--Maintenance of technical assistance funding

                              CURRENT LAW

    Federal law authorizes the HHS Secretary to use 1% of the 
federal share of child support collected on behalf of TANF 
families the preceding year to provide to the states--
information dissemination and technical assistance, training of 
state and federal staff, staffing studies, and related 
activities needed to improve CSE programs (including technical 
assistance concerning state automated CSE systems), and 
research demonstration and special projects of regional or 
national significance relating to the operation of CSE 
programs. Such funds are available until they are expended.

                             COMMITTEE BILL

    The Committee bill authorizes the HHS Secretary to use 1% 
of the federal share of child support collected on behalf of 
TANF families the preceding year, or the amount appropriated 
for FY2002, whichever is greater, to provide to the states--
information dissemination and technical assistance, training of 
state and federal staff, staffing studies, and related 
activities needed to improve CSE programs (including technical 
assistance concerning state automated CSE systems), and 
research, demonstration and special projects of regional or 
national significance relating to the operation of CSE 
programs. Such funds are available until they are expended.

                           REASON FOR CHANGE

    Since the child support assignment and distribution changes 
in the Committee bill will allow TANF and former TANF families 
to keep more of the child support collected on their behalf, 
TANF collections retained by the federal government will be 
reduced. This provision freezes technical assistance funding at 
least at FY2002 levels to ensure that sufficient funding is 
available for important child support technical assistance 
functions, even as the federal share of collections falls.

Section 310--Maintenance of federal parent locator service funding

                              CURRENT LAW

    Federal law authorizes the HHS Secretary to use 2% of the 
federal share of child support collected on behalf of TANF 
families the preceding year for operation of the Federal Parent 
Locator Service to the extent that the costs of the Federal 
Parent Locator Service are not recovered by user fees. Federal 
law allows only such funds that were appropriated for FY1997-
FY2001 to remain available until expended.

                             COMMITTEE BILL

    The Committee bill authorizes the HHS Secretary to use 2% 
of the federal share of child support collected on behalf of 
TANF families the preceding year, or the amount appropriated 
for FY2002, whichever is greater, for operation of the Federal 
Parent Locator Service to the extent that the costs of the 
Federal Parent Locator Service are not recovered by user fees. 
Allows amounts appropriated for the Federal Parent Locator 
Service to remain available until they are expended.

                           REASON FOR CHANGE

    Since the child support assignment and distribution changes 
in the Committee bill will allow TANF and former TANF families 
to keep more of the child support collected on their behalf, 
TANF collections retained by the federal government will be 
reduced. This provision freezes Federal Parent Locator Service 
funding at least at FY2002 levels to ensure that sufficient 
funding is available for the operation of the Federal Parent 
Locator Service, which is a key child support enforcement tool, 
even as the federal share of collections falls.

Section 311--Identification and seizure of assets held by multi-state 
        financial institutions

                              CURRENT LAW

    The 1996 welfare reform law required states to enter into 
agreements with financial institutions conducting business 
within their state for the purpose of conducting a quarterly 
data match. The data match is intended to identify financial 
accounts (in banks, credit unions, money-market mutual funds, 
etc.) belonging to parents who are delinquent in the payment of 
their child support obligation. When a match is identified, 
state CSE agencies may issue liens or levies on the account(s) 
of the delinquent parent to collect the past-due child support. 
In some cases, state law prohibits the placement of liens or 
levies on accounts outside of the state and some financial 
institutions only accept liens and levies from the state where 
the account is located. In 1998, Congress made it easier for 
multi-state financial institutions to match records by 
permitting the Federal Parent Locator Service (FPLS) to help 
them coordinate their information.

                             COMMITTEE BILL

    The Committee bill authorizes the HHS Secretary, via the 
Federal Parent Locator Service, to assist states to perform 
data matches comparing information from states and 
participating multi-state financial institutions with respect 
to persons owing past-due child support. The Committee bill 
authorizes the Secretary via the Federal Parent Locator Service 
to seize assets, held by such financial institutions, of 
noncustodial parents who owe child support arrearage payments, 
by issuing a notice of a lien or levy and requiring the 
financial institution to freeze and seize assets in accounts in 
multi-state financial institutions to satisfy child support 
obligations. The Secretary would be required to transmit any 
assets seized under the procedure to the state for accounting 
and distribution. The Committee bill stipulates that the 
Secretary must inform affected account holders/ asset holders 
of their due process rights.

                           REASON FOR CHANGE

    After HHS identifies assets held in multi-state financial 
institutions by persons who owe past due support, many states 
cannot take action to seize financial assets when they are 
located in another state. Therefore, the Committee bill 
authorizes the Secretary to take administrative action on 
behalf of a state to freeze and seize assets in accounts in 
multi-state financial institutions, identified through the 
multi-state financial institution data match. This will make 
full use of this existing enforcement mechanism and increase 
the collection of past-due child support.

Section 312--Information comparisons with insurance data

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee bill authorizes the HHS Secretary, via the 
Federal Parent Locator Service, to compare information of 
noncustodial parents who owe past-due child support with 
information maintained by insurers (or their agents) concerning 
insurance claims, settlements, awards, and payments; and to 
furnish any information resulting from a match to the 
appropriate state CSE agency in order to secure settlements, 
awards, etc. for payment of past-due child support. The 
Committee bill stipulates that no insurer would be liable under 
federal or state law for disclosures made in good faith of this 
provision.

                           REASON FOR CHANGE

    States must have in effect laws requiring the use of 
procedures authorizing intercepting or seizing periodic or 
lump-sum payments from settlements to satisfy current support 
obligations. Often states are unable to access the databases 
that contain insurance and settlement information, especially 
when the information is related to an interstate case or when 
an insurance company is located in another state. In order to 
assist states, the Committee bill permits the Secretary to 
administer an insurance claims matching program. Under the 
proposal, the Federal Offset File (individuals who owe past-due 
support) would be matched against insurance databases to 
identify individuals who have pending insurance claims and 
settlements. The Secretary would notify states if delinquent 
obligors have pending insurance claims and settlements so that 
states could take enforcement actions to freeze and seize these 
payments. Participation by insurance companies would be 
voluntary.

Section 313--Tribal access to the federal parent locator service

                              CURRENT LAW

    The Federal Parent Locator Service (FPLS) is a national 
location system operated by the federal Office of Child Support 
Enforcement to assist states in locating noncustodial parents, 
putative fathers, and custodial parties for the establishment 
of paternity and child support obligations, as well as the 
enforcement and modification of orders for child support, 
custody and visitation. It also identifies support orders or 
support cases involving the same parties in different states. 
The FPLS consists of the Federal Case Registry, Federal Offset 
Program, Multi-state Financial Institution Data Match, National 
Directory of New Hires, and the Passport Denial Program. 
Additionally, the FPLS has access to external locate sources 
such as the Internal Review Service (IRS), the Social Security 
Administration (SSA), Veterans Affairs (VA), theDepartment of 
Defense (DOD), and the Federal Bureau of Investigation (FBI). The FPLS 
is only allowed to transmit information in its databases to 
``authorized persons,'' which include (1) child support enforcement 
agencies (and their attorneys and agents); (2) courts, (3) the resident 
parent, legal guardian, attorney, or agent of a child owed child 
support; and (4) foster care and adoption agencies.

                             COMMITTEE BILL

    The Committee bill includes Indian tribes and tribal 
organizations that operate a child support enforcement program 
as ``authorized persons.''

                           REASON FOR CHANGE

    The Committee bill will give tribal child support 
enforcement programs access to the Federal Parent Locator 
Service, to which state child support enforcement agencies 
currently have access, so that they can use it to locate 
noncustodial parents to establish paternity and collect child 
support. This will increase child support collections to 
families, especially tribal families.

Section 314--Reimbursement of Secretary's costs of information 
        comparisons and disclosure for enforcement of obligations on 
        higher education act loans and grants

                              CURRENT LAW

    Federal law (P.L. 106-113) authorized the Department of 
Education to have access to the National Directory of New 
Hires. The provisions were designed to improve the ability of 
the Department of Education to collect on defaulted loans and 
grant overpayments made to individuals under Title IV of the 
Higher Education Act of 1965. The Federal Office of Child 
Support Enforcement (OCSE) and the Department of Education 
negotiated and implemented a Computer Matching Agreement in 
December 2000. Under the agreement, the Secretary of Education 
is required to reimburse the HHS Secretary for the additional 
costs incurred by the HHS Secretary in furnishing requested 
information.

                             COMMITTEE BILL

    The Committee bill amends the reimbursement of costs 
provision by eliminating the word additional. Thus, the 
Secretary of Education is to reimburse the HHS Secretary for 
any costs incurred by the HHS Secretary in providing requested 
new hires information.

                           REASON FOR CHANGE

    The Committee bill makes legislative language governing the 
Department of Education's access to the National Directory of 
New Hires consistent with general reimbursement language that 
applies to other entities.

Section 315--Technical amendment relating to cooperative agreements 
        between states and Indian tribes

                              CURRENT LAW

    Federal law requires that any state that has a child 
welfare program and that has Indian country may enter into a 
cooperative agreement with an Indian tribe or tribal 
organization if the tribe demonstrates that it has an 
established tribal court system with several specific 
characteristics related to paternity establishment and the 
establishment and enforcement of child support obligations. The 
HHS Secretary may make direct payments to Indian tribes and 
tribal organizations that have approved child support 
enforcement plans.

                             COMMITTEE BILL

    The Committee bill deletes the reference to child welfare 
programs.

                           REASON FOR CHANGE

    This reference incorrectly refers to the child welfare 
program rather than the child support enforcement program.

Section 316--Claims upon longshore and harbor workers' compensation for 
        child support

                              CURRENT LAW

    The Longshore and Harbor Worker's Compensation Act is the 
federal worker's compensation law for maritime workers and 
persons working in shipyards and on docks, ships, and offshore 
drilling platforms. The Act exempts benefits paid by longshore 
or harbor employers or their insurers from all claims of 
creditors. Thus, Longshore and Harbor Worker's Compensation Act 
benefits that are paid by longshore or harbor employers or 
their insurers are not subject to attachment for payment of 
child support obligations.

                             COMMITTEE BILL

    The Committee bill amends the Longshore and Harbor Workers' 
Compensation Act to ensure that longshore or harbor workers 
benefits that are provided by the federal government or by 
private insurers are subject to garnishment for purposes of 
paying child support obligations.

                           REASON FOR CHANGE

    The Federal Longshore and Harbor Worker's Compensation Act 
(LHWCA) stipulates that benefits that are paid by a self-
insured entity or private insurer are not subject to attachment 
for payment of child support obligations. The Committee bill 
would allow garnishment of all LHWCA benefits for purpose of 
child support enforcement, thereby increasing child support 
collections.

Section 317--State option to use statewide automated data processing 
        and information retrieval system for interstate cases

                              CURRENT LAW

    The 1996 welfare reform law mandated states to establish 
procedures under which the state would use high-volume 
automated administrative enforcement, to the same extent as 
used for intrastate cases, in response to a request from 
another state to enforce a child support order.This provision 
was designed to enable child support agencies to quickly locate and 
secure assets held by delinquent noncustodial parents in another state 
without opening a full-blown interstate child support enforcement case 
in the other state. The assisting state must use automatic data 
processing to search various state data bases including financial 
institutions, license records, employment service data, and state new 
hire registries, to determine whether information is available 
regarding a parent who owes a child support obligation, the assisting 
state is then required to seize any identified assets. This provision 
does not allow states to open/establish a child support interstate 
case.

                             COMMITTEE BILL

    The Committee bill allows an assisting state to establish a 
child support interstate case based on another state's request 
for assistance; and thereby an assisting state may use the CSE 
statewide automated data processing and information retrieval 
system for interstate cases.

                           REASON FOR CHANGE

    The Committee bill allows states that cannot now use their 
automated systems to provide high-volume automated 
administrative enforcement services in interstate cases to 
choose to open a case in order to assist other states in 
collecting child support. This will increase interstate child 
support collections.

Section 318--Interception of gambling winnings for child support

                              CURRENT LAW

    Federal law requires states to establish expedited 
processes within the state judicial system or under 
administrative processes for obtaining and enforcing child 
support orders and determining paternity. These expedited 
procedures include giving states authority to secure assets to 
satisfy payment of past-due support by seizing or attaching 
lumpsum payments from unemployment compensation, workers' 
compensation, judgments, settlements, lotteries, assets held in 
financial institutions, and public and private retirement 
funds.

                             COMMITTEE BILL

    The Committee bill authorizes the HHS Secretary via the 
Federal Parent Locator Service to intercept gambling winnings 
of noncustodial parents who owe past-due child support and 
transmit those winnings to the appropriate state CSE agency for 
distribution. The Committee bill defines gambling winnings as 
the proceeds of a wager that are subject to federal tax (e.g., 
winnings from casinos, horse racing, dog racing, jai alai, 
sweepstakes, parimutuel pools, lotteries, etc.). The Secretary 
must compare information obtained from gambling establishments 
with information on persons who owe past-due support and direct 
the gambling establishment to withhold from the person's net 
winnings (i.e., the amount left after withholding amounts for 
federal taxes) all amounts not exceeding the total amount owed 
in past-due child support. In addition to the child support 
arrearage, a processing fee (not to exceed 2% of the child 
support arrearage amount withheld) would be deducted from the 
non-custodial parent's winnings. These procedures would only 
affect persons who won enough so that an IRS Form W2-G must be 
issued to report their winnings to the IRS and who owe child 
support arrearage payments.
    The Committee bill stipulates that gambling establishments 
must not pay certain individuals any gambling winnings until 
the gambling establishment has furnished the HHS Secretary 
certain information so that a data match can be performed to 
determine if the individual owes past-due child support. If a 
data match occurs, the gambling establishment is to withhold 
specified winnings and transfer them to the Secretary at the 
same time and in the same manner as amounts withheld for 
federal income tax purposes would be transferred to the IRS. 
The Committee bill requires the Secretary to promptly transfer 
gambling winnings to the appropriate state CSE agency.
    The Committee bill requires gambling establishments to 
provide written notice to the gambler regarding the amount of 
the withholding, the reason and authority for the withholding, 
and an explanation of the individual's due process rights, 
including how the individual can appeal the withholding or the 
amount of the withholding to the state CSE agency. The 
Committee bill includes non-liability protections for gambling 
establishments who comply with the provisions related to the 
withholding of gambling winnings for child support purposes. 
Gambling establishments that do not comply with the 
aforementioned requirements would be liable for the amount that 
should have been withheld by the establishment.
    Indian tribes and tribal organizations would have to agree 
to comply with the aforementioned requirements in order to 
receive direct child support enforcement funding.

                           REASON FOR CHANGE

    The Committee bill requires the Secretary to provide the 
necessary information and assistance to state and tribal child 
support enforcement agencies in order to increase child support 
collections by withholding child support from gaming winnings 
while maintaining the security and privacy of child support 
data and ensuring that due process requirements are met.

Section 319--State law requirement concerning the uniform interstate 
        family support act (UIFSA)

                              CURRENT LAW

    The 1996 welfare reform law (P.L. 104-193) required that on 
and after January 1, 1998, each state must have in effect the 
Uniform Interstate Family Support Act (UIFSA), 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. 
The 1996 welfare reform law (P.L. 104-193) 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 UIFSA, and clarifies the rules regarding 
which child support orders states must honor when there is more 
than one order.

                             COMMITTEE BILL

    The Committee bill requires that each state's Uniform 
Interstate Family Support Act (UIFSA) must include any 
amendments officially adopted as of August 2001 by the National 
Conference of Commissioners on Uniform State Laws.
    In addition, the Committee 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.

                           REASON FOR CHANGE

    The Committee bill updates an outdated reference to an 
older version of UIFSA.

Section 320--Grants to states for access and visitation programs

                              CURRENT LAW

    The 1996 welfare reform law (P.L. 104-193) authorized 
grants to states (via CSE funding) to establish and operate 
access and visitation programs. The purpose of the grants is to 
facilitate noncustodial parents' access to and visitation of 
their children. An annual entitlement of $10 million from the 
federal CSE budget account 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. The 
allotment formula is based on the ratio of the number of 
children in the state living with only one biological parent in 
relation to the total number of such children in all states. 
The amount of the allotment available to a state will be this 
same ratio to $10 million. The allotments are to be adjusted to 
ensure that there is a minimum allotment amount of $50,000 per 
state for FY1997 and FY1998, and a minimum of $100,000 for any 
year after FY1998. States may use the grants to create their 
own programs or to fund programs operated by courts, local 
public agencies, or nonprofit organizations. The programs do 
not need to be statewide. States must monitor, evaluate, and 
report on their programs in accord with regulations issued by 
the HHS Secretary.

                             COMMITTEE BILL

    The Committee bill increases funding for Access and 
Visitation grants from $10 million annually to $12 million in 
FY2004, $14 million in FY2005, $16 million in FY2006, and $20 
million annually in FY2007 and each succeeding fiscal year. The 
Committee bill extends the Access and Visitation program to 
Indian tribes and tribal organizations that have received 
direct child support enforcement payments from the federal 
government for at least one year. The Committee bill includes a 
specified amount to be set aside for Indian tribes and tribal 
organizations: $250,000 for FY2004; $600,000 for FY2005; 
$800,000 for FY2006; and $1.670 million for FY2007 or any 
succeeding fiscal year.
    The Committee bill increases the minimum allotment to 
states from $100,000 in fiscal years 1999-2003 to $120,000 in 
FY2004, $140,000 in FY2005, $160,000 in FY2006, and $180,000 in 
FY2007 or any succeeding fiscal year. The minimum allotment for 
Indian tribes and tribal organizations is $10,000 for a fiscal 
year. The tribal allotment cannot exceed the minimum state 
allotment for any given fiscal year.
    The allotment formula for Indian tribes and tribal 
organizations that operate child support enforcement programs 
is based on the ratio of the number of children in the tribe or 
tribal organization living with only one parent in relation to 
the total number of children living with only one parent in all 
Indian tribes or tribal organizations. The amount of the 
allotment available to an Indian tribe or tribal organization 
would be this same ratio to the maximum allotment for Indian 
tribes and tribal organizations (i.e., $250,000 for FY2004; 
$600,000 for FY2005; $800,000 for FY2006; and $1.670 million 
for FY2007 or any succeeding fiscal year). (Pro rata reductions 
are to be made if they are necessary.)

                           REASON FOR CHANGE

    The Committee bill provides additional funding for the 
Access and Visitation Grant Program so that more families can 
benefit from these services. Increasing a child's access to 
both parents may improve child well-being and is associated 
with increased compliance in the payment of child support.

Section 321--Timing of corrective action year for state noncompliance 
        with child support enforcement program requirements

                              CURRENT LAW

    Federal law requires that audits be conducted at least 
every 3 years to determine whether the standards and 
requirements prescribed by law and regulations have been met by 
the child support program of every state. If a state fails the 
audit, federal TANF funds must be reduced by an amount equal to 
at least 1 but not more than 2 percent for the first failure to 
comply, at least 2 but not more than 3 percent for the second 
failure, and at least 3 but not more than 5 percent for the 
third and subsequent failures.
    The HHS Secretary also must review state reports on 
compliance with federal requirements and provide states with 
recommendations for corrective action. The purpose of the 
audits is to assess the completeness, reliability, and security 
of data reported for use in calculating the performance 
indicators and to assess the adequacy of financial management 
of the state program. Federal law calls for penalties to be 
imposed against states that fail to comply with a corrective 
action plan in the succeeding fiscal year.

                             COMMITTEE BILL

    The Committee bill changes the timing of the corrective 
action year for states that are found to be in noncompliance of 
child support enforcement program requirements. The Committee 
bill changes the corrective action year to the fiscal year 
following the fiscal year in which the Secretary makes a 
finding of noncompliance and recommends a corrective action 
plan.The change is made retroactively in order to allow the 
Secretary to treat all findings of noncompliance consistently.

                           REASON FOR CHANGE

    Current language does not recognize the time necessary to 
conduct federal audits and that those audits now occur during 
what is, under current law, a state's corrective action year. 
This technical correction will give states a full year to 
correct identified deficiencies.

                        TITLE IV--CHILD WELFARE

Section 401--Extension of authority to approve demonstration projects

                              CURRENT LAW

    The law permits the HHS Secretary 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. 
This authority is granted for FY1998 through FY2003.

                             COMMITTEE BILL

    The Committee bill extends this authority through FY2008.

                           REASON FOR CHANGE

    The existing waiver programs have allowed states to seek 
improvements and efficiencies in child protection programs. 
Much have been learned from these demonstrations, which require 
rigorous evaluations. Extending waiver authority would yield 
additional important information.

Section 402--Removal of Commonwealth of Puerto Rico foster care funds 
        from limitation on payments

                              CURRENT LAW

    Combined federal funding for public assistance programs for 
Puerto Rico is capped at $107,255,000 yearly. This ceiling 
covers grants for TANF, Aid to the Aged, Blind, or Disabled, 
and programs under Title IV-E of the Social Security Act 
(foster care, adoption assistance, and independent living 
programs.

                             COMMITTEE BILL

    The bill would remove from Puerto Rico's overall funding 
ceiling foster care payments made to Puerto Rico for FY2005 or 
any later year that exceed the total amount of foster payments 
made to the Commonwealth for FY2002. However, the amount 
disregarded under this provision could not exceed $6,250,000 
for each of FYs 2005 through 2008.

                           REASON FOR CHANGE

    The Committee is concerned about the ability of Puerto Rico 
to operate its IV-E program effectively within the current 
limits that exist on its combined social services expenditures 
for IV-E, TANF, and Aid to the Aged, Blind, and Disabled 
programs. Therefore the Committee would allow Puerto Rico to 
claim up to $6.25 million in IV-E costs per year above its 
total social services cap (beginning in FY 2005), but only to 
the extent such costs exceed IV-E expenditures in FY2002. The 
Committee recognizes that budgetary constraints do not allow 
for the removal of the entire program from the cap, but 
acknowledges that this change will provide additional funding 
to allow Puerto Rico to better serve this population.

                 TITLE V--SUPPLEMENTAL SECURITY INCOME

Section 501--Review of state agency blindness and disability 
        determinations

                              CURRENT LAW

    The law has no provision requiring review by the Social 
Security Commissioner of state agency determinations of SSI 
eligibility on grounds of blindness or disability. It does 
require review of blindness or disability determinations for 
Disability Insurance (DI).

                             COMMITTEE BILL

    The Committee bill requires the Social Security 
Commissioner to review state agency blindness and disability 
determinations for SSI. It calls for review of at least 20 
percent of determinations made in FY2004; 40% in FY2005; and 
50% in FY2006 or thereafter.

               TITLE VI--TRANSITIONAL MEDICAL ASSISTANCE

Section 601--Transitional medical assistance

                              CURRENT LAW

    The law requires transitional medical assistance (TMA)--
from 6 to 12 months--for those whose lose Medicaid eligibility 
because of increased income arising from work (higher wages or 
more hours of work). Authorization for 6-12 months of TMA 
expired on September 30, 2002, but was extended by a series of 
measures through March 31, 2004. (Permanent provisions of law 
require 4 months of transitional medical benefits to families 
who lose Medicaid eligibility because of income from child or 
spousal support or from earnings.)

                             COMMITTEE BILL

    The Committee bill continues TMA until September 30, 2008. 
It also permits states to extend TMA for up to 24 months, 
allows continuous eligibility for 12 months by making reporting 
requirement optional, and eases access by permitting states to 
waive the requirement for previous receipt of Medicaid (for 3 
of previous 6 months).

                           REASON FOR CHANGE

    The Committee bill recognizes that Medicaid is an important 
part of the safety net for needy families, and that health care 
is a critical support for low-income families as they 
transition from welfare to work and self-sufficiency, 
particularly for families with entry-level employment.

Section 602--Covering childless adults with SCHIP funds

                              CURRENT LAW

    In 1997, when the State Children Health Insurance Program 
(SCHIP) was created, Congress specified that SCHIP allocations 
only could be used, ``to enable [States] to initiate and expand 
the provision of child health assistance to uninsured, low-
income children in an effective and efficient manner.''

                             COMMITTEE BILL

    In the past, the Secretary of Health and Human Services has 
approved waivers that spend SCHIP dollars to cover childless 
adults. The proposal clarifies the intent of Congress: 
specifically stating that SCHIP funds cannot be spent on 
childless adults. It will no longer be legal for the Secretary 
to approve a waiver providing health insurance coverage through 
SCHIP to childless adults.

                           REASON FOR CHANGE

    The use of funds dedicated by Congress to low-income 
uninsured children or childless adults is an inappropriate 
implementation of the SCHIP statute.

                       TITLE VII--EFFECTIVE DATE

                             COMMITTEE BILL

    Provisions take effect on the date of enactment. However, 
if the Secretary determines that state legislation is required 
for a State TANF or Child Support plan to conform with the Act, 
the effective date is delayed to three months after the first 
day of the first calendar quarter beginning after the close of 
the first regular session of the legislature that begins after 
enactment of this Act If the state has a 2-year legislative 
session, each year is to be considered a separate regular 
session.

                       III. VOTE OF THE COMMITTEE

    A substitute to H.R. 4, entitled, Personal Responsibility 
and Individual Development for Everyone (PRIDE) Act.
    Bingaman No. 1, Amendment No. 48. Defeated by rollcall 
vote, 9 ayes, 11 nays.
          Ayes: Baucus, Rockefeller (proxy), Breaux (proxy), 
        Graham (proxy), Jeffords (proxy), Bingaman, Kerry 
        (proxy), Lincoln.
          Nays: Grassley, Hatch (proxy), Nickles, Lott, Snowe, 
        Kyl (proxy), Thomas, Santorum, Frist (proxy), Bunning, 
        Conrad.
    Bingaman No. 10, Amendment No. 57. Defeated by voice vote.
    Lincoln No. 1, Amendment No. 62. Defeated by voice vote.
    Snowe No. 1, Amendment No. 5. Accepted by voice vote.
    Lincoln No. 3, Amendment No. 64. Defeated by voice vote.
    Jeffords No. 2, Amendment No. 43. Amendment accepted.
    Breaux No. 1, Amendment No. 35. Amendment accepted.
    Baucus No. 3, Amendment No. 13. Defeated by voice vote.
    Baucus No. 1, Amendment No. 11. Defeated by rollcall vote, 
10 ayes, 10 nays.
          Ayes: Baucus, Rockefeller (proxy), Daschle (proxy), 
        Breaux (proxy), Conrad (proxy), Graham (proxy), 
        Jeffords (proxy), Bingaman, Lincoln (proxy).
          Nays: Grassley, Hatch, Nickles (proxy), Lott (proxy), 
        Snowe, Kyl (proxy), Thomas (proxy), Santorum, Frist 
        (proxy), Bunning (proxy).
    H.R. 4, final passage, approved by recorded vote of Members 
present: 9 ayes, 8 nays. Including proxies: 10 ayes, 10 nays.
          Ayes: Grassley, Hatch, Nickles, Lott, Snowe, Kyl, 
        Thomas (proxy), Santorum, Frist, Bunning.
          Nays: Baucus, Rockefeller, Daschle, Breaux, Conrad, 
        Graham (proxy), Jeffords, Bingaman, Kerry (proxy), 
        Lincoln.

          IV. REGULATORY IMPACT STATEMENT AND RELATED MATTERS

                          A. Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact of the Personal 
Responsibility and Individual Development for Everyone Act 
(PRIDE).

                  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. 
Preemptions and some other requirements in the act would be 
intergovernmental mandates as defined in UMRA, and the limit on 
amounts that states could retain for state child support 
enforcement programs also could be an intergovernmental mandate 
because of the narrow focus of and limited flexibility in that 
program.

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 child support enforcement 
program is narrower in scope, and its primary goal is to 
collect and redistribute child support payments. This narrower 
focus does not afford states as much flexibility as other large 
entitlement programs, so reductions in funding for the child 
support program could be intergovernmental mandates as defined 
in UMRA. CBO estimates, however, that the cost of the 
intergovernmental mandates would not exceed the threshold 
established in UMRA ($66 million in 2008, adjusted annually for 
inflation).
    Child Support Enforcement. H.R. 4 would reduce the amounts 
that states may retain from child support collections to 
reimburse themselves for public assistance spending, in 
particular for TANF. As a result, states would lose a total of 
about $56 million in 2008 and about $370 million over the 2008-
2013 period. Retained child support collections are intended to 
reimburse states for their portion of spending for public 
assistance programs. Some states rely on these reimbursements 
for operating their child support enforcement program, and in 
those states a reduction in outside sources of revenue likely 
would result in the need for additional state funding. The 
extent of that need would determine the costs of the mandate, 
and if states are able to carry out their responsibilities more 
efficiently or to pare back their activities while maintaining 
a basic level of compliance, the aggregate costs of the mandate 
may be lower. 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 $62 million in child support program and $57 million 
in Medicaid over the 2006-2013 period.
    Preemptions. The act contains three preemptions of state 
law that would be considered intergovernmental mandates as 
defined in UMRA. The act would preempt state laws that could 
prevent an individual from contesting liens or levies on 
property seized in an effort to collect past-due child support. 
The act also would protect insurers from state liability laws 
in cases where they have shared information with the Secretary 
of HHS for the purpose of identifying individuals that owe 
past-due child support. Similarly, both public and private 
gambling facilities that share information with the Secretary 
(as required by the act) would be protected from state 
liability laws. None of these preemptions would result in 
significant costs to state, local, or tribal governments.
    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. 
4 could alter the way in which states administer the program 
and provide benefits, and such changes could increase costs to 
states. However, states could make other changes of their own, 
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 general are not 
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 to offset 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 2008 and continue supplemental grants for states that 
historically have had rising populations or that provided 
relatively low levels of benefits. It also would alter the 
Contingency Fund program and increase the likelihood that 
states would qualify for funding. In addition to $16.6 billion 
for family assistance that states will receive under current 
baseline assumptions, CBO estimates that states would receive 
$1.1 billion for supplemental grants and $285 million from the 
Contingency Fund over the 2004-2013 period.
    Increased Flexibility. The act would allow states to use 
unspent funds from prior years to pay for services in addition 
to benefits, and it would allow them to continue to use up to 
10 percent of their TANF funds for SSBG purposes. States also 
could use a portion of TANF funds for projects that foster 
access to jobs or reverse commuting.
    Child Care. The act would extend child care grants through 
2008 and increase funding for those grants by $200 million 
annually over the 2004-2013 period.
    Healthy Marriage Promotion. The act would repeal bonus 
grants for the reduction of illegitimacy, which were available 
to up to five states through 2003, and replace them with grants 
for developing and implementing innovative programs to promote 
and support healthy, two-parent married families. Grants could 
be used for a variety of education and media activities 
associated with the core goals, but they also must incorporate 
issues of domestic violence and ensure that participation in 
any related programs is voluntary. Grants of $100 million 
annually would be available from 2004 through 2008. State 
spending on related programs for otherwise non-eligible 
families could be counted toward a state's maintenance-of-
effort requirements in TANF.
    Fatherhood Grants. The act would authorize the 
appropriation of $75 million annually over the 2004-2008 period 
for a variety of grant programs to promote fatherhood, 
responsible parenting, and marriage--either directly or through 
educational and media campaigns.
    Abstinence Education. The act would extend abstinence 
education grants and provide $50 million annually over the 
2004-2008 period. Any unspent funds allocated to individual 
states would be periodically reallocated by the Secretary.
    Tribal Family Assistance. The act would reauthorize direct 
funding for the tribal TANF programs through 2008. It also 
would authorize the appropriation of $100 million annually for 
a fund to support technical assistance, economic development 
activities, and research associated with family assistance 
programs administered by tribal organizations.
    Access and Visitation. The act would allow tribes to 
receive grants for access and visitation programs, and the act 
would increase grants to state and tribes for such programs by 
$82 million over the 2004-2013 period. The act also would 
increase the minimum state allotment, increasing from $120,000 
in 2004 (up from $100,000 in current law) to $180,000 in 2007 
and thereafter.
    Grants to Support Work Activities. The act would authorize 
and appropriate $40 million annually over the 2004-2008 period 
for grants to capitalize and develop sustainable social 
services that help move recipients of assistance into work 
activities. The act also would authorize $25 million annually 
over the same period for grants to state, local, tribal, and 
non-profit entities for programs that help low-income families 
with children acquire and maintain dependable cars and 
insurance.
    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 require states to continue 
providing transitional medical assistance through fiscal year 
2008. TMA provides benefits to certain individuals and their 
dependents who otherwise would lose coverage because of 
increased earnings. The act also would allow states to 
implement simplifications of the TMA system, enabling them to 
provide TMA for an additional year in some cases and easing the 
qualification requirements. Finally, the act would prohibit 
SCHIP coverage for childless adults. CBO estimates that the 
total net effect of these provisions would be additional state 
spending of $1.9 billion in Medicaid and savings of about $200 
million in SCHIP over the 2004-2013 period.
    Bonus Grants Change to Employment Basis. Under current law, 
states are eligible to receive bonus grants totaling up to 5 
percent of their family assistance grant if they are identified 
by the Secretary as a high performing state in terms of meeting 
the goals of the TANF program. The act would reduce those 
grants by half, from averages of $200 million to $100 million 
annually, and would change the basis of the grant from general 
performance to a focus on employment entry, retention, and 
increased earnings for beneficiaries. Grants also would be 
available to tribal organizations.
    Work Participation Requirements. The act would increase 
work-participation requirements in the TANF program, but CBO 
estimates that states would move nonworking families into 
separate state programs to effectively reduce the new 
requirements. The act 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 no state 
would be subject to financial penalty for failing to meet the 
new requirements.
    The bill would increase the minimum work participation rate 
from 50 percent to 70 percent over a five-year period. To meet 
those requirements, 70 percent of families would have to be 
engaged in work activities by 2008. The act would eliminate a 
separate requirement in current law that sets even higher 
participation rates for two-parent families. In addition to 
overall participation rates, the act would increase the minimum 
number of hours a family would need to participate to fully 
count toward the standard from 30 to 34 hours a week. However, 
it would allow partial credit for recipients who participate 
for between 20 and 33 hours. Two-parent families would be 
required to work more hours, but parents with children under 
the age of six would only have to work 24 hours in order to 
meet the requirements. The increase in the number of hours of 
work per week could result in a modest spending increase by 
states and tribes for administration, worker support 
activities, and child care. As the overall participation rates 
increase, states and tribes would have to direct more resources 
toward programs such as administrative support, child care, and 
worker supervision to comply with the 70 percent requirement.
    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.
    To the extent that states find the new work requirements 
difficult to meet, CBO expects states would employ strategies 
such as moving nonworking families into separate state programs 
to effectively reduce the new requirements. For example, under 
current law, states that fail to meet work requirements, 
particularly the higher requirements applying to two-parent 
families, set up separate state programs to serve those 
families. States can count funds they spend in separate state 
programs toward their MOE requirement in TANF, but families 
served under those programs do not count in the work 
participation rate.
    Replacement of Caseload Reduction Credit. Under current 
law, a state's minimum work participation rate may be reduced 
by the amount that the average number of families receiving 
assistance declines, assuming the reduction is not the result 
of changes in eligibility requirements. The act would replace 
the caseload reduction credit with an employment creditthat 
would be based on the percentage of individuals who no longer receive 
assistance and who are actively working. Former recipients who are 
earning at comparably higher salaries would be weighted heavier in 
calculating the state's employment credit. In total, however, the size 
of any credit would be limited to 40 percentage points in 2004, 
decreasing to 20 percentage points by 2008. States could opt to have 
the shift in the basis for the credit delayed until October 1, 2006.
    Individual Responsibility v. Family Self-Sufficiency. The 
act would change the requirement that states develop individual 
responsibility plans for beneficiaries to a requirement for 
family self-sufficiency plans. States that fail to implement 
family self-sufficiency plans would be subject to the same 
penalties as failing to meet work participation requirements.
    New Requirements. States would have to implement new 
performance measurement standards and comply with a 
standardized format for submitting amendments to their state 
plans for TANF programs. The act also would require states to 
collect and report additional data on families enrolled in TANF 
programs and on those who leave the rolls because of 
ineligibility. The act would require monthly reports on 
caseload levels and it would require an annual report on how 
states are achieving their performance goals.

                 ESTIMATED IMPACT ON THE PRIVATE SECTOR

    Section 318 would impose a mandate on gambling 
establishments by requiring them to withhold certain gambling 
winnings from individuals who owe past-due child support, to 
furnish written notice to those individuals, and to transfer 
the amount withheld to a federal agency. The gambling 
establishments may retain 2 percent of the amount withheld as a 
processing fee. CBO expects that the net direct cost of the 
mandate would fall well below the annual threshold established 
by UMRA ($117 million in 2003, adjusted annually for 
inflation).

                           V. BUDGET EFFECTS

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 3, 2003.
Hon. Charles E. Grassley,
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. 4, the Personal 
Responsibility and Individual Development for Everyone Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Sheila 
Dacey (for federal costs), Leo Lex (for the state and local 
impact), and Ralph Smith (for the private-sector impact).
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 4--Personal Responsibility and Individual Development for Everyone 
        Act

    Summary: H.R. 4 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);
           Continue funding abstinence education 
        programs at $50 million annually, and increase funding 
        for child care programs by $200 million annually;
           Make several changes to the child support 
        enforcement program, including allowing the 
        distribution to families of more collections from child 
        support payments;
           Require the Social Security Administration 
        (SSA) to change its system of reviewing awards to 
        certain disabled adults in the Supplemental Security 
        Income (SSI) program;
           Extend by five years the requirement that 
        state Medicaid programs provide transitional medical 
        assistance (TMA) to certain Medicaid beneficiaries; and
           Allow states to simplify aspects of TMA 
        administration and prohibit states from using State 
        Children's Health Insurance Program (SCHIP) funds to 
        provide health coverage to childless adults.
    CBO estimates that enacting H.R. 4 as approved by the 
Senate Finance Committee would increase direct spending by $348 
million in 2004, by $4.7 billion over the 2004-2008 period, and 
by $6.4 billion over the 2004-2013 period. It also would reduce 
revenues by $22 million over the 2004-2008 period, and by $128 
million over the 2004-2013 period.
    The act would authorize the appropriation of $200 million 
annually for new grant programs to promote fatherhood, improve 
tribal services, and encourage car ownership for families with 
low incomes. CBO estimates that appropriation of the authorized 
levels would result in $14 million in outlays in 2004, $715 
million over the 2004-2008 period, and $1 billion over the 
2004-2013 period.
    H.R. 4 would impose intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) by preempting state 
law, and would reduce the amount of child support collections 
that states could retain. The preemptions would impose no 
significant costs on state governments. However, the reduction 
in the amount of child support collections that states retain 
could impose significant costs. Those costs would depend on the 
degree to which states would be able to alter their 
responsibilities within their own child support enforcement 
programs to compensate for the loss of receipts. In total, 
states would face losses ranging from $56 million in 2008 
growing to $67 million in 2013. These losses would not exceed 
the threshold established in UMRA ($66 million in 2008, 
adjusted annually 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.
    The legislation would impose a private-sector mandate, as 
defined in UMRA, on gambling establishments by requiring them 
to withhold certain gambling winnings from individuals who owe 
past-due child support, to furnish written notice to those 
individuals, and to transfer the amount withheld to a federal 
agency. CBO estimates that the net direct cost of the mandate 
would fall well below the annual threshold established in UMRA 
($117 million in 2003, adjusted annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 4 is shown in Table 1. For this 
estimate, CBO assumes that H.R. 4 will be enacted early in 
fiscal year 2004. The costs of this legislation fall within 
budget functions 500 (education, training, employment, and 
social services), 550 (health), and 600 (income security).

                 TABLE 1.--ESTIMATED COSTS OF H.R. 4, THE PERSONAL RESPONSIBILITY AND INDIVIDUAL DEVELOPMENT FOR EVERYONE ACT, BY TITLE
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal year, in millions of dollars--
                                             -----------------------------------------------------------------------------------------------------------
                                                                                                                                      2004-      2004-
                                               2004    2005    2006    2007     2008     2009     2010     2011     2012     2013      2008       2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Title I: TANF:
    Estimated Budget Authority..............     913     496     500     502      186      185      285      284      283      281      2,597      3,915
    Estimated Outlays.......................     267     536     337     643      434      349      317      286      283      281      2,217      3,733
Title II: Abstinence Education:
    Estimated Budget Authority..............      25      50      50      50       50        0        0        0        0        0        225        225
    Estimated Outlays.......................       7      25      38      44       49       37       16       10        5        0        162        228
Title III: Child Support:
    Estimated Budget Authority..............      84      70      89     102      172      208      220      232      240      250        517      1,667
    Estimated Outlays.......................      64      65      94     115      184      204      218      233      240      250        522      1,667
Title IV: Child Welfare:
    Estimated Budget Authority..............       0       6       6       6        6       20       21       21       22       22         25        131
    Estimated Outlays.......................       0       6       6       6        6       16       17       17       18       19         25        112
Title V: Supplemental Security Income:
    Estimated Budget Authority..............      -6     -24     -51     -81     -116     -152     -188     -229     -259     -307       -278     -1,413
    Estimated Outlays.......................      -6     -24     -51     -81     -116     -152     -188     -229     -259     -307       -278     -1,413
Title VI: Transitional Medical Assistance:
    Estimated Budget Authority..............      17     400     564     630      664      455       34      -36      -69      -92      2,275      2,567
    Estimated Outlays.......................      17     386     526     583      586      367      -43     -105     -114     -110      2,098      2,093
    Total Direct Spending:
        Estimated Budget Authority..........   1,033     998   1,158   1,209      962      716      372      272      217      154      5,361      7,092
        Estimated Outlays...................     348     994     950   1,309    1,143      821      337      212      172      133      4,746      6,420

                                                                   CHANGES IN REVENUES

Title III: Child Support:
    Estimated Revenues......................       0       0      -2      -7      -13      -17      -20      -22      -23      -24        -22       -128

                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Title I: TANF:
    Authorized Level........................     200     200     200     200      200        0        0        0        0        0      1,000      1,000
    Estimated Outlays.......................      14      95     191     218      197      186       90        9        0        0        715     1,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes.--Components may not sum to totals because of rounding. TANF = Temporary Assistance for Needy Families.

    Basis of estimate: Most of H.R. 4's budgetary effects would 
stem from new direct spending. A portion of the new spending 
would be offset by some savings, resulting in a net increase in 
direct spending of about $6.4 billion over the next 10 years. 
The act also would reduce federal revenues by an estimated $128 
million over the 10-year period and increase discretionary 
spending by $1 billion over that period.

Direct spending and revenues

    H.R. 4 would increase direct spending primarily for TANF, 
Child Care, and Medicaid TMA, but also for abstinence education 
and child welfare. Those increases would total nearly $9 
billion over the 2004-2013 period, but would be partially 
offset by $4.4 billion in savings from changes to the TANF, 
Medicaid, SSI, and other programs. In addition, H.R. 4 would 
make changes to the child support program that would result in 
a loss of federal collections of $1.9 billion over the 10-year 
period. Finally, a provision in title III would lead to a 
reduction in federal revenues of $128 million by allowing 
states to use a national directory of new hires to help detect 
fraud in the unemployment compensation system. (That provision 
would reduce spending for unemployment compensation, and as a 
result, lead to some reduced taxation for funding such 
compensation.)
    Title I: TANF. H.R. 4 would reauthorize basic TANF grants 
through 2008 at the current level of funding of $16.6 billion. 
That amount is assumed to continue in the current budget 
resolution baseline; thus, enacting H.R. 4 would not change 
basic TANF grants relative to that baseline. TANF and related 
grants were originally authorized through fiscal year 2002. 
They have been extended several times in subsequent 
legislation, most recently through March 31, 2004, by Public 
Law 108-89, which was enacted on October 1, 2003.
    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. However, it would alter the 
funding of some grants related to TANF and make several other 
changes to program rules and reporting requirements. CBO 
estimates that enacting title I would increase direct spending 
by $267 million in 2004 and $3.7 billion over the 2004-2013 
period (see Table 2).

                                                   TABLE 2.--DIRECT SPENDING EFFECTS OF TITLE I: TANF
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             By fiscal year, in millions of dollars--
                                         ---------------------------------------------------------------------------------------------------------------
                                                                                                                                      2004-      2004-
                                            2004     2005     2006     2007     2008     2009     2010     2011     2012     2013      2008       2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eliminate Out-of-Wedlock Bonus:
    TANF:
        Estimated Budget Authority......     -100     -100     -100     -100     -100     -100     -100     -100     -100     -100       -500     -1,000
        Estimated Outlays...............        0      -35      -79      -96     -163     -122     -100     -100     -100     -100       -373       -895
    Food Stamps:
        Estimated Budget Authority......        0        0        1        1        2        1        1        1        1        1          4          9
        Estimated Outlays...............        0        0        1        1        2        1        1        1        1        1          4          9
        Subtotal:
        Estimated Budget Authority......     -100     -100      -99      -99      -98      -99      -99      -99      -99      -99       -496       -991
        Estimated Outlays...............        0      -35      -78      -95     -161     -121      -99      -99      -99      -99       -369       -886
Establish Healthy Marriage Promotion
 Grant:
    Budget Authority....................      100      100      100      100      100      100      100      100      100      100        500      1,000
    Estimated Outlays...................        1       28       74      124      122      111      100      100      100      100        349        860
Continue Supplemental Grant at $319
 Million Through 2007:
    TANF:
        Budget Authority................      128      319      319      319        0        0        0        0        0        0      1,085      1,085
        Estimated Outlays...............       64      217      284      340      109       48       24        0        0        0      1,013      1,085
    Food Stamps:
        Estimated Budget Authority......       -2       -3       -4       -4       -2       -1        0        0        0        0        -15        -16
        Estimated Outlays...............       -2       -3       -4       -4       -2       -1        0        0        0        0        -15        -16
        Subtotal:
            Estimated Budget Authority..      126      316      315      315       -2       -1        0        0        0        0      1,070      1,069
            Estimated Outlays...........       62      214      280      336      107       47       24        0        0        0        998      1,069
Reduce High-Performance Bonus:
    TANF:
        Budget Authority................      400     -200     -200     -200     -200     -200     -100     -100     -100     -100       -400      1,000
        Estimated Outlays...............        0      -35      -79      -96     -163     -122     -100     -100     -100     -100       -373       -895
    Food Stamps:
        Estimated Budget Authority......        0        0        1        1        2        1        1        1        1        1          4          9
        Estimated Outlays...............        0        0        1        1        2        1        1        1        1        1          4          9
        Subtotal:
            Estimated Budget Authority..      400     -200     -199     -199     -198     -199      -99      -99      -99      -99       -396       -991
            Estimated Outlays...........        0      -35      -78      -95     -161     -121      -99      -99      -99      -99       -369       -886
Modify Contingency Fund:
    TANF:
        Estimated Budget Authority......       40       25       28       30       29       29       28       27       26       24        152        286
        Estimated Outlays...............       28       25       32       32       33       30       28       27       26       24        150        285
Increase Transfer Authority to SSBG:
    TANF:
        Budget Authority................        0        0        0        0        0        0        0        0        0        0          0          0
        Estimated Outlays...............       37       98      -54      -34      -35      -12        0        0        0        0         12          0
Establish Secretary's Fund for Research,
 Demonstration, and National Studies:
    Budget Authority....................      100      100      100      100      100      100      100      100      100      100        500      1,000
    Estimated Outlays...................       10       60      108      115      109      101      100      100      100      100        402        903
Extend Funding of Studies and
 Demonstrations:
    Budget Authority....................        7       15       15       15       15       15       15       15       15       15         67        142
    Estimated Outlays...................        *        4       11       15       15       15       15       15       15       15         45        120
Increase Funding for Child Care:
    Child Care:
        Budget Authority................      200      200      200      200      200      200      200      200      200      200      1,000      2,000
        Estimated Outlays...............      150      182      194      198      200      200      200      200      200      200        924      1,924
    TANF:
        Budget Authority................        0       05        0        0        0        0        0        0        0        0          0          0
        Estimated Outlays...............      -21      -16       -7        6       20        8        8        2        0        0        -18          0
        Subtotal:
            Budget Authority............      200      200      200      200      200      200      200      200      200      200      1,000      2,000
            Estimated Outlays...........      129      166      187      204      220      208      208      202      200      200        906      1,924
Establish Grants to Capitalize and
 Develop Sustainable Social Services:
    Budget Authority....................       40       40       40       40       40       40       40       40       40       40        200        400
    Estimated Outlays...................        *       11       30       50       49       44       40       40       40       40        400        344
Effect of Title I Interactions on TANF:
    Budget Authority....................        0        0        0        0        0        0        0        0        0        0          0          0
    Estimated Outlays...................        0        0     -175       -9      137       47        0        0        0        0        -47          0
Total Changes: Title I:
    Estimated Budget Authority..........      913      496      500      502      186      185      285      284      283      281      2,597      3,915
    Estimated Outlays...................      267      536      337      643      434      349      317      286      283      281      2,217      3,733
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes.--Components may not sum to total because of rounding. TANF=Temporary Assistance for Needy Families. SSBG=Social Services Block Grant.
*=Less than $500,000.

    State Family Assistance Grant. Section 102 would extend the 
state family assistance grant through 2008 at the current level 
of $16.6 billion. As noted above, 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 
2004-2013 period, relative to the baseline.
    Healthy Marriage Promotion Grants. Section 103 would 
eliminate an out-or-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 
$895 million over the 2005-2013 period. The impact of the 
reduction in funding on outlays is delayed (no effect in 2004) 
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 $9 million 
over the 2006-2013 period.
    Section 103 would establish a new competitive grant to 
states, territories, and Indian tribes for developing and 
implementing programs to promote and support marriage. The act 
would appropriate $100 million annually for grants that could 
be used for a variety of activities including public 
advertising campaigns, education and training programs on 
topics related to marriage, marriage mentoring programs, and 
programs to reduce disincentives to marriage in means-tested 
programs. The grants could be used to cover up to 50 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 as a 
provision of TANF in the baseline after 2008, in accordance 
with the Deficit Control Act. Estimated spending of these 
grants would total $1 million in 2004 and $860 million over the 
2004-2013 period.
    Supplemental Grants. Section 104 would extend the 
supplemental grants for population increases through 2007 at 
the 2003 funding level of $319 million. Supplemental grants are 
currently funded for the first two quarters of fiscal year 2004 
at $191 million, consistent with an annual level of funding of 
$319 million. Current law specifies that supplemental grants 
should not be assumed to continue in baseline projections after 
March 31, 2004, 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.
    Because many states have unspent balances from prior-year 
TANF grants, CBO assumes that states would not spend the new 
funds quickly. CBO estimates that states would spend $64 
million in 2004 and $1.1 billion over the 2004-2010 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 $16 million over 
the 2004-2009 period.
    Bonuses for High-Performing States. Section 105 would 
reduce funding for a bonus to high-performing states and 
refocus the bonus toward rewarding performance in improving job 
outcomes. 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 provided $1 
billion for bonuses, averaging $200 million annually, over the 
1999-2003 period. CBO assumes that funding will continue at 
$200 million annually in accordance with the Deficit Control 
Act.
    The revised bonus--the Bonus to Reward Employment 
Achievement--would be focused on rewarding success in 
employment entry, job retention, and increased earnings for 
families receiving assistance. The act would make $600 million 
available for bonuses averaging $100 million annually over the 
2004-2009 period. Section 105 would make all the bonus funds 
immediately available to the Secretary of HHS, so CBO allocates 
the entire $600 million in budget authority to 2004 (a $400 
million increase over what CBO assumes under current law).
    The net effect of section 105 would be a reduction in 
budget authority of $400 million over the 2004-2008 period and 
$1 billion over the 10-year period. Because the bonuses are 
usually granted in the following fiscal year, TANF spending 
would fall by only $895 million over the 2005-2013 period.
    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 $9 million 
over the 2006-2013 period.
    Contingency Fund. Section 106 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. To be eligible, 
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 the 1994 level of state spending, 
because most states currently spend well below that level.
    Section 106 would change the eligibility conditions, grant 
determination, and state spending requirements of the 
contingency fund. It would establish new thresholds of growth 
in the unemployment rate and Food Stamp participation for 
states to qualify for funds. The amount of funding a state 
would receive would be derived by multiplying the state's 
caseload increase over the level in the two years prior to its 
qualification, its TANF benefit level for a family of three, 
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 rates, Food 
Stamp participation, TANF caseloads and state TANF spending, 
CBO estimates that states would qualify for an additional $20 
million to $40 million annually from the fund. The revised 
program would increase outlays by $28 million in 2004 and $285 
million over the 2004-2013 period.
    Social Services Block Grant. Section 107 would allow states 
to maintain the authority to transfer up to 10 percent of TANF 
funds to SSBG. The 1996 welfare law that established the TANF 
program set the level of the transfer authority at 10 percent. 
Subsequent legislation permanently lowered the authority to 
4.25 percent. However, the Congress has restored the authority 
to 10 percent every year since, most recently through March 31, 
2004. In the absence of further legislation, the authority will 
fall to 4.25 percent after that date.
    In recent years, state shave transferred about $1 billion 
annually. 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 $130 million in the second 
half of 2004 ($400 million in later years) under the provision, 
but because some of this money would have been spent within the 
TANF program anyway, only $37 million of additional spending 
would occur in 2004. The provision also would increase net TANF 
spending by $98 million in 2005. Because states would have 
found alternate ways to spend the funds in later years, the 
increase in spending in 2004 and 2005 would be offset by 
decreased spending in subsequent years. Thus, there would be no 
net impact on TANF spending over the 2004-2013 period as a 
whole.
    Work Participation Requirements. Section 109 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 assumes no state would be subject to financial penalty for 
failing to meet the new requirements.
    Section 109 would require states to engage an increasing 
share of families receiving TANF in work activities. The 
required participation rate would rise by 5 percentage points a 
year from 50 percent in 2004 to 70 percent in 2008. The act 
would eliminate a separate requirement in current law that sets 
even higher participation rates for two-parent families. In 
addition, it 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.
    The act also would increase the minimum number of hours a 
family would need to participate to fully count toward the 
standard from 30 to 34 hours a week. However, it would allow 
partial credit for recipients who participate for between 20 
and 33 hours and extra credit for recipients who participate 
more than 34 hours. Two-parent families would be required to 
work more hours and parents with children under the age of six 
could be fully counted at 24 hours.
    Finally, section 109 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 credits are calculated as a 
percent of caseload. The caseload reduction credit has 
significantly lowered the required participation rate in all 
states and reduced it to zero in more than half the states. The 
new employment credit also would result in significant 
reductions in the required participation rates for some states. 
However, the act would limit the size of any credit to 40 
percentage points in 2004, shrinking to 20 percentage points by 
2008. So, in 2008, a state that earned a maximum credit would 
face a required participation rate of 50 percent (70 percent 
minus 20 percent).
    To the extent that states find the new work requirements 
difficult to meet, CBO expects states would employ strategies 
such as moving nonworking families into separate state programs 
to reduce the number of families subject to the requirements 
and increase the percentage of families remaining in the 
program that meet the requirements. For example, under current 
law, states that fail to meet work requirements, particularly 
the higher requirements applying to two-parent families, set up 
separate state programs to serve those families. States can 
count funds they spend in separate state programs toward their 
maintenance of effort (MOE) requirement in TANF, but families 
served under those programs do not count in the work 
participation rate.
    Research, Demonstrations, and Technical Assistance. Section 
114 would make funds available to the Secretary of Health and 
Human Services to conduct and support research and 
demonstration projects and provide technical assistance, 
primarily on the promotion of marriage. The program would be 
funded at $100 million annually over the 2004-2008period. Based 
on rates of spending in other social service research and grant 
programs, CBO estimates that spending would increase by $10 million in 
2004 and $903 million over the 2004-2013 period.
    Section 114 also would make annual grants of $15 million 
for research. Specifically, it would fund research on the 
effects, costs, and benefits of state TANF programs and 
innovative approaches for reducing welfare dependency and 
increasing the well-being of children. It also could fund 
evaluations of TANF programs initiated by the states and on-
going demonstration projects approved before 1996. (The 1996 
welfare law provided funding for those purposes and at the same 
$15 million annual level, but each year in appropriation acts 
the Congress rescinded the funds and instead made 
appropriations for research under another authority.) Public 
Law 108-89 (recently enacted) provided $8 million in funding 
for the first half of 2004. Section 114 would raise that to $15 
million for the year. Based on recent spending patterns, CBO 
estimates that this provision would increase outlays by an 
insignificant amount in 2004 and by $120 billion over the 2004-
2013 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 116 would 
raise the annual funding level by $200 million to $2.917 
billion over the 2004-2008 period. CBO assumes funding would 
continue at the 2008 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 
$150 million in 2004 and by $1.9 billion over the 10-year 
period.
    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 $21 million 
in 2004 and a total of $44 million over the 2004-2006 period, 
but since states would fund alternative ways to spend any funds 
no longer transferred, spending would increase in later years. 
There would be no net impact on TANF spending over the 2004-
2013 period.
    Grants to Capitalize and Develop Sustainable Social 
Services. Section 119 would appropriate $40 million each year 
over the 2004-2008 period to make grants for the purpose of 
capitalizing and developing sustainable social services. CBO 
treats the grants as a provision of the TANF program and 
assumes they would continue in baseline after 2008 in 
accordance with the Deficit Control Act. Grantees would develop 
programs that would generate their own sources of revenue while 
assisting TANF recipients. CBO estimates that the grants would 
increase outlays by an insignificant amount in 2004, $11 
million in 2005, and by $344 million over the 2005-2013 period.
    Interactions. CBO estimates that several provisions on 
title I would accelerate the rate of spending of prior-year 
balances in the TANF program. Provisions that would increase 
the transfer authority to SSBG, eliminate the out-of-wedlock 
grant, and eliminate the high-performance bonus 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 2006-2007 period by $184 
million below the sum of the provisions estimated individually, 
but raise it by $184 million over the 2008-2009 period. Thus, 
there would be no net impact on TANF spending over the 10-year 
period as a whole.
    Title II: Abstinence Education. Public Law 108-89 
authorized $25 million for the Abstinence Education program in 
2004. H.R. 4 would provide an additional $25 million in 2004 
and extend the program through 2008 at a $50 million annual 
funding level. In addition, it would allow any unrequested 
funds under the program to be reallocated to states that 
require additional funds to carry out their Abstinence 
Education programs. Based on the program's past spending 
patterns, CBO estimates that the act would increase outlays by 
$7 million in 2004 and by $228 million over the 2004-2013 
period (see Table 1). That increase includes $3 million in 
spending from 2004 funds that would have remained unrequested 
without the reallocation provision.
    Title III: Child Support. H.R. 4 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 with 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.) It would require states to 
periodically update child support orders and expand the use of 
certain enforcement tools. It would provide increases in 
funding for HHS and for grants that facilitate noncustodial 
parent access to their children. Overall, CBO estimates that 
enacting title III would increase direct spending by $64 
million in 2004 and $1.7 billion over the 2004-2013 period. We 
also estimate that this title would reduce revenues by $128 
million over the 2004-2013 period. We also estimate that this 
title would reduce revenues by $128 million over the 2004-2013 
period (see Table 3).
    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. Those 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.

                                        TABLE 3.--DIRECT SPENDING AND REVENUE EFFECTS OF TITLE III: CHILD SUPPORT
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By fiscal year, in millions of dollars--
                                                    ----------------------------------------------------------------------------------------------------
                                                                                                                                       2004-     2004-
                                                      2004    2005    2006    2007    2008    2009    2010    2011    2012    2013     2008       2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Distribute More Support to Current TANF Families:
    Child Support Collections:
        Estimated Budget Authority.................      52      57      66      75      85      96      99     103     106     110       335        848
        Estimated Outlays..........................      52      57      66      75      85      96      99     103     106     110       335        848
    Food Stamps:
        Estimated Budget Authority.................      -1      -3      -6      -9     -13     -16     -17     -18     -18     -19       -32       -120
        Estimated Outlays..........................      -1      -3      -6      -9     -13     -16     -17     -18     -18     -19       -32       -120
    TANF:
        Budget Authority...........................       0       0       0       0       0       0       0       0       0       0         0          0
        Estimated Outlays..........................     -23      -9      -1       7      14       6       5       1       0       0       -12          0
        Subtotal:
            Estimated Budget Authority.............      51      54      60      66      72      80      82      85      88      91       303        728
            Estimated Outlays......................      28      45      59      73      86      86      87      86      88      91       291        728
Distribute More Past-Due Support to Current and
 Former TANF Families:
    Child Support Families:
        Estimated Budget Authority.................      13      27      56      87     168     201     209     218     227     236       351      1,441
        Estimated Outlays..........................      13      27      56      87     168     201     209     218     227     236       351      1,441
    Food Stamps:
        Estimated Budget Authority.................      -1      -1      -2      -4      -5      -6      -7      -7      -7      -7       -13        -47
        Estimated Outlays..........................      -1      -1      -2      -4      -5      -6      -7      -7      -7      -7       -13        -47
    TANF:
        Estimated Budget Authority.................       0       0       0       0       0       0       0       0       0       0         0          0
        Estimated Outlays..........................       3       4       6       6      -2     -10      -7       0       0       0        17          0
    Student Loans:
        Estimated Budget Authority.................      15       *       *       *       *       *       *       *       *       *        15         15
        Estimated Outlays..........................      15       *       *       *       *       *       *       *       *       *        15         15
        Subtotal:
            Estimated Budget Authority.............      27      26      54      84     163     194     202     211     220     229       353      1,409
        Estimated Outlays..........................      30      30      60      90     161     184     195     211     220     229       370      1,409
Require Triennial Update of Child Support Orders:
    Administrative Costs:
        Estimated Budget Authority.................       0       0      14      15      12      12      12      13      13      13        41        104
        Estimated Outlays..........................       0       0      14      15      12      12      12      13      13      13        41        104
    Child Support Collections:
        Estimated Budget Authority.................       0       0      -6     -14     -20     -21     -20     -20     -20     -20       -40       -141
        Estimated Outlays..........................       0       0      -6     -14     -20     -21     -20     -20     -20     -20       -40       -141
    Food Stamps:
        Estimated Budget Authority.................       0       0      -1      -2      -3      -3      -3      -3      -3      -4        -6        -22
        Estimated Outlays..........................       0       0      -1      -2      -3      -3      -3      -3      -3      -4        -6        -22
    Medicaid:
        Estimated Budget Authority.................       0       0      -3      -8     -13     -13     -10      -8     -10     -10       -24        -75
        Estimated Outlays..........................       0       0      -3      -8     -13     -13     -10      -8     -10     -10       -24        -75
        Subtotal:
            Estimated Budget Authority.............       0       0       4      -9     -24     -25     -21     -18     -20     -21       -29       -134
            Estimated Outlays......................       0       0       4      -9     -24     -25     -21     -18     -20     -21       -29       -134
Use New Directory for Unemployment Compensation
 Program:
    Estimated Budget Authority.....................       0     -14     -17     -22     -22     -23     -24     -25     -25     -26       -75       -198
    Estimated Outlays..............................       0     -14     -17     -22     -22     -23     -24     -25     -25     -26       -75       -198
Reduce Threshold for Passport Denial to $2,500:
    Estimated Budget Authority.....................       0      -1      -1      -1      -1      -1      -1      -1      -1      -1        -4         -9
    Estimated Outlays..............................       0      -1      -1      -1      -1      -1      -1      -1      -1      -1        -4         -9
Withhold Child Support from Social Security
 Disability Payments:
    Estimated Budget Authority.....................       0      -3      -4      -4      -4      -5      -5      -5      -6      -6       -15        -42
    Estimated Outlays..............................       0      -3      -4      -4      -4      -5      -5      -5      -6      -6       -15        -42
Maintain Funding for Technical Assistance and
 Federal Parent Locator Service:
    Estimated Budget Authority.....................       1       0       0       0       0       0       0       0       0       0         1          1
    Estimated Outlays..............................       1       0       0       0       0       0       0       0       0       0         1          1
Allow Federal Seizure of Accounts in Multi-State
 Financial Institutions:
    Administrative Costs:
        Estimated Budget Authority.................       1       2       *       *       *       *       *       *       *       *         3          3
        Estimated Outlays..........................       1       2       *       *       *       *       *       *       *       *         3          3
    Child Support Collections:
        Estimated Budget Authority.................       0      -2      -6      -9      -9      -9      -9      -9     -10     -10       -26        -73
        Estimated Outlays..........................       0      -2      -6      -9      -9      -9      -9      -9     -10     -10       -26        -73
        Subtotal:
            Estimated Budget Authority.............       1       0      -6      -9      -9      -9      -9      -9     -10     -10       -23        -70
            Estimated Outlays......................       1       0      -6      -9      -9      -9      -9      -9     -10     -10       -23        -70
Match Databases of Insurance Claims:
    Administrative Costs:
        Estimated Budget Authority.................       1       2       *       *       *       *       *       *       *       *         3          3
        Estimated Outlays..........................       1       2       *       *       *       *       *       *       *       *         3          3
    Child Support Collections:
        Estimated Budget Authority.................       0       0      -2      -4      -3      -3      -3      -3      -3      -3        -9        -24
        Estimated Outlays..........................       0       0      -2      -4      -3      -3      -3      -3      -3      -3        -9        -24
        Subtotal:
            Estimated Budget Authority.............       1       2      -2      -4      -3      -3      -3      -3      -3      -3        -6        -21
            Estimated Outlays......................       1       2      -2      -4      -3      -3      -3      -3      -3      -3        -6        -21
Intercept Gambling Proceeds:
    Administrative Costs:
        Estimated Budget Authority.................       1       2       *       *       *       *       *       *       *       *         3          3
        Estimated Outlays..........................       1       2       *       *       *       *       *       *       *       *         3          3
    Child Support Collections:
        Estimated Budget Authority.................       0       0      -4      -9     -10     -10     -11     -12     -13     -13       -23        -82
        Estimated Outlays..........................       0       0      -4      -9     -10     -10     -11     -12     -13     -13       -23        -82
        Subtotal:
            Estimated Budget Authority.............       1       2      -4      -9     -10     -10     -11     -12     -13     -13       -20        -79
            Estimated Outlays......................       1       2      -4      -9     -10     -10     -11     -12     -13     -13       -20        -79
Increase Grants to States for Access and
 Visitation:
    Budget Authority...............................       2       4       6      10      10      10      10      10      10      10        32         82
    Estimated Outlays..............................       2       4       6      10      10      10      10      10      10      10        32         82
Total Title III Changes in Direct Spending:
    Estimated Budget Authority.....................      84      70      89     101     172     208     220     232     240     250       517      1,667
    Estimated Outlays..............................      64      65      94     115     184     204     218     233     240     250       522      1,667

                                                                   CHANGES IN REVENUES

Use of New Hire Directory for Unemployment
 Compensation Program:
    Estimated Revenues.............................       0       0      -2      -7     -13     -17     -20     -22     -23     -24       -22       -128
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes.--Components may not sum to totals because of rounding. TANF=Temporary Assistance for Needy Families.
*=Less than $500,000.

    Section 301 would allow states to pay up to $400 each month 
of child support to a family (up to $600 to a family with two 
or more children) receiving assistance and would not require 
the state to pay the federal government's share of those 
payments. The state could not count the child support as income 
in determining the families' benefits under the TANF program.
    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 one-third 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 states would put in place those increases 
slowly and that the increases would not be fully effective 
until 2009. Based on administrative data for child support and 
information supplied by state officials, CBO expects that 
states would raise payments to families in 2009 from the $105 
millionanticipated under current practices to $175 million 
under the proposal. CBO estimates that federal offsetting receipts 
(from reimbursements) would fall by $52 million in 2004, $96 million in 
2009, and $848 million over the 2004-2013 period.
    Because additional child support income would reduce Food 
Stamp benefits, CBO estimates savings in the Food Stamp program 
totaling $1 million in 2004, $16 million in 2009, and $120 
million over the 2004-2013 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 collections toward the TANF maintenance of effort 
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. 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 $33 million over the 2004-2006 
period, but, because states would find alternative ways to 
spend the funds in later years, it would have no net effect 
over the 2004-2013 period.
    Distribute More Past-Due Support to Current and Former TANF 
Recipients. Section 301 also would require states to share more 
child support with families through a change in assignment 
rules and allow states to share more support with families who 
used to receive welfare.
    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. 4 would require 
states to implement the new policy by October 1, 2007, but 
would give states the option of implementing the policy sooner.
    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 collections 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 301 would give states the option to change the 
order of the distribution rules so that all collections would 
be paid to families first before the government is reimbursed. 
In addition, it would allow states to pay any additional amount 
to families from support owed for the period the family was on 
assistance.
    CBO estimates that states with 40 percent of collections 
would implement optional policies by 2009. Based on 
conversations with state child-support officials and policy 
experts, and on administrative data, CBO estimates that 
families would receive an additional $24 million in 2004, 
rising to $365 million by 2009, and $2.6 billion over the 2004-
2013 period, as a result of these changes. CBO estimates that 
those increased distributions to families would reduce the 
federal share of collections by $13 million in 2004, $201 
million in 2009, and $1.4 billion over the 2004-2013 period.
    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 $6 million in 2004 and $474 million over the 2004-2013 
period. Food Stamps savings would be about $1 million in 2004 
and $47 million over the 2004-2013 period.
    Section 301 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 $3 million in 2004 and $19 
million over the 2004-2007 period, but reduced spending in 
later years would result in no net effect on TANF spending over 
the 2004-2013 period.
    Finally, section 301 would affect federal collections in 
the student loan program. Under a program called the federal 
tax offset refund program, tax refund payments are withheld 
from individuals who owe over-due child support and certain 
federal debts, mainly related to student loans, and used to pay 
the debts. Beginning in 2008, H.R. 4 would give child support 
debt priority over all federal debts. In current law, child 
support that is owed to the government is given such priority, 
but child support owed to families is paid off after allother 
federal debts. In cases where an individual owes both child support 
debt and other federal debt, the new priority order would decrease 
payments to the federal government in the student loan program.
    Currently one-half of one percent of tax filers are subject 
to a tax refund offset for child support owed to a family and 
one percent for student loan debt. Assuming people who owe 
student loan debt are neither more nor less likely to owe child 
support debt, 6,800 filers could be subject to an offset for 
either child support and student loan debt. CBO estimates that 
the provision would delay or reduce recoveries in the student 
loan program by $8 million annually beginning in 2008.
    The provisions affecting the student loan programs are 
assessed under the requirements of the federal credit reform 
act. As such, the budget records all the costs and collections 
associated with a new loan on a present-value basis in the year 
the loan is obligated and the costs of all changes (i.e., 
``modifications'') affecting outstanding loans are displayed in 
the fiscal year the bill is enacted--assumed to be 2004 for 
this estimate. This results in a federal cost of $15 million in 
2004 and insignificant amounts each year for 2005 through 2013.
    Mandatory Three-Year Update of Child Support Orders. 
Section 302 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, 2005, and CBO 
estimates that the net impact of this provision would be direct 
spending savings of $134 million over the 2004-2013 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 form 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 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. Children who receive TANF are 
generally eligible for Medicaid, so the new coverage would 
reduce spending in that program.
    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 administrative 
costs for child support to rise by $14 million in 2006 and $104 
million over the 2006-2013 period. Federal collections would 
increase by $6 million in 2006 and $141 million over the 2006-
2013 period. Finally, Food Stamp and Medicaid savings would 
total $22 million and $75 million respectively over the 2006-
2013 period.
    Use of New Hire Information. Section 304 would allow 
states, beginning in fiscal year 2005, 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 
berealized 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 $14 million in 2005 and $198 
million over the 2005-2013 period. CBO assumes this reduction 
in spending would lead states to reduce their unemployment 
taxes. As a result, CBO estimates that revenues would fall by 
an insignificant amount in 2005 and $128 million over the 2005-
2013 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 $70 million over the 10-year 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. Beginning in fiscal year 2005, section 305 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. CBO 
assumes the same share of those payments would be on behalf of 
current and former welfare families as in the overallprogram--
13 percent--and would be retained by the government as reimbursement 
for welfare benefits. The federal share of such collections would be 
about $1 million a year and $9 million over the 2005-2013 period.
    Improved Debt Collection: SSA Benefit Match. Section 308 
would allow states to collect past-due child support by 
withholding Social Security, Black Lung, and Railroad 
Retirement Board payments. Because parents affected by the 
legislation are generally younger than 62, we assume that most 
of them receive benefits under the Disability Insurance (DI) 
program rather than the retirement or survivors programs. The 
Debt Collection Improvement Act of 1996 limits the amount that 
can be withheld annually from an individual's Social Security 
check to the lesser of any amount over $9,000 or 15 percent of 
benefits.
    Based on an analysis done by the Treasury Department, CBO 
estimates that 50,000 beneficiaries a month could be subject to 
an offset. Based on states' current use of administrative 
offsets of other federal programs, we estimate two out of three 
of those beneficiaries would potentially have their check 
offset. On average, the offsets could amount to about $1,800 by 
2008 and could yield more than $60 million in collections for 
child support from Social Security payments.
    CBO estimates that the additional collections under section 
308 would be less than one-half of the potential $60 million 
because of several factors. First, some of this money may have 
been collected anyway through other enforcement tools, such as 
offsets currently applied to federal tax refunds. Second, 
noncustodial parents are younger than average DI recipients, 
and younger men receive lower DI benefits than older men. 
Third, children of DI recipients are entitled to a benefit from 
Social Security that averages more than $2,000 annually. Some 
states consider these benefits in determining the amount of 
child support owed by the non-custodial parent. Fourth, in some 
cases the estimated offset would exceed the amount of arrears 
owed. Finally, CBO expects a small percentage of all non-
custodial parents owing past-due support would slip through the 
administrative process.
    The estimated $24 million in child support would result in 
a net increase in federal offsetting receipts of about $4 
million in 2008. The estimate assumes 33 percent of collections 
would be on behalf of current and former welfare families.
    The provision would be effective October 1, 2004, and CBO 
assumes that the program would take several months to 
establish, so that full savings would not be realized until 
2006. As DI benefits rise over time, federal receipts under 
these provisions would climb from $3 million in 2005 to $6 
million in 2013, and total $42 million over the 2005-2013 
period.
    Maintenance of Technical Assistance and Federal Parent 
Locator Service Funding. Current law allows the Secretary to 
use 3 percent of the federal share of child support collections 
tofund technical assistance efforts and to operate the federal 
parent locator service. Sections 309 and 310 would set a minimum 
funding level for those purposes equal to the 2002 level of $37 
million. Because CBO projects that such payments will fall to $36 
million in 2004 under the current formula, this provision would 
increase payments by $1 million in that year. CBO expects that the 
federal share of child support payments will continue to grow after 
2004 such that the payment would not fall below $37 million after that 
year.
    Seizure of Assets held by Multi-State Financial 
Institutions. Under current law, HHS, matches lists of 
noncustodial parents who owe child support arrears against data 
from financial institutions to identify assets that might be 
seized to pay overdue child support. HHS forwards any matches 
to states so that states can pursue collection. On average, 
states make a collection in 8 percent of cases with a match. 
The reported performance of states varies widely from 55 
percent of cases to less than 1 percent. States' collection 
rates are low on average for a variety of reasons. In some 
cases, multi-state financial institutions will not honor a 
seizure by a state unless the institution has branch offices in 
the state. Also, some states have policies of pursuing matches 
only when a large financial asset is identified or only when 
the arrearage is long-standing or no current payments are being 
made.
    Section 311 would give the federal government the authority 
to act on behalf of states to seize financial assets for the 
purpose of paying child support. The new authority would 
resolve problems of jurisdiction in cases where a state is 
pursuing an asset in a different state. Also, the federal 
government plans to pursue collections in a higher percent of 
cases.
    Currently, HHS compares a list of about 3 million cases 
with arrears with data from financial institutions and 
identifies potential financial assets in more than 1 million 
cases. Some of those cases are later found to be false matches 
or are uncollectible for other reasons. Based on conversations 
with child-support administrators and policy experts, CBO 
expects that, when fully effective, the federal government 
would seize assets 20 percent of the time a potential asset is 
identified, up from 8 percent. Based on administrative data 
from HHS, CBO expects the average collection would be $700 per 
seizure down from $930 per seizure under current law. (The 
average seizure would go down because the federal government 
would be pursuing a broader set of cases, many of which would 
have lower levels of assets available.) CBO assumes the policy 
would take some time to implement and would not be fully 
effective until 2007. The policy would result in new 
collections of $24 million in 2005 and $974 million over the 
2005-2013 period. CBO assumes the same share of those payments 
would be on behalf of current and former welfare families as in 
the overall program--13 percent--and would be retained by the 
government as reimbursement for welfare benefits. The federal 
share of such collections would be $73 million over the 2004-
2013 period.
    Information Comparison With Insurance Data. Section 312 
would authorize the Secretary to compare information of 
noncustodial parents who owe past-due child support with 
information maintained by insurers concerning insurance 
payments and to furnish any information resulting from the 
match to state agencies to pursue payments to pay overdue child 
support. States representing about one-third of child support 
collections currently participate in an existing system 
operated by the Child Support Lien Network that performs a 
similar function. The number of participating states has been 
growing rapidly in the last several years and CBO expects that 
eventually, even without federal intervention, that about 
three-quarters of states would participate. Under the proposal, 
CBO expects all states would participate by 2007. Based on data 
for the existing program, CBO expects that collection would 
increase by more than $10 million annually when fully phased in 
and that half of those collections would be on behalf of 
current or former TANF families. The federal share of 
collections would be $24 million over the 2006-2013 period.
    Interception of Gambling Proceeds. Section 318 would 
authorize the Secretary of HHS to compare information obtained 
from gambling establishment with information on individuals who 
owe past-due child support and direct the establishment to 
withhold from the individuals' net winnings all amounts up to 
the child support owed. The procedures would apply whenever an 
individual won enough to be required to fill out an IRS form 
W2-G, generally $600.
    HHS would compare a list of more than 3 million 
noncustodial parents with overdue support to the information on 
winners reported by gambling establishments. CBO assumes that 3 
percent of such parents will receive gambling winnings above 
the threshold level, in line with the rate of winning in the 
adult population and that percentage would increase to 5 
percent by 2013. Based on data on average winnings, CBO assumes 
$2,800 would be collected, on average, per match. CBO expects 
it would take several years to establish a system of matching 
with the gambling establishments such that the program would 
not be fully operational until 2007. In that year, potential 
collections would total about $375 million.
    CBO assumes that several factors would result in only one-
third of that amount actually collected. First, child support 
is already regularly withheld from lottery winnings which form 
a substantial percent of gambling winning. Second, Indian 
casinos are not required to withhold winnings. Third, CBO 
assumes administrative errors and imperfect enforcement would 
result in a further reduction in potential collections.
    CBO estimates that implementing the policy would result in 
increased collections of $57 million in 2006, $121 million in 
2007, and $1.1 billion over the 2006-2013 period. CBO assumes 
the same share of those payments would be on behalf of current 
and former welfarefamilies as in the overall program--13 
percent--and would be retained by the government as reimbursement for 
welfare benefits. The federal share of such collections would be $82 
million over the 2004-2013 period.
    Grants to States for Access Visitation. The 1996 welfare 
law authorized grants to states funded at $10 million annually 
to establish and operate access and visitation programs. The 
purpose of the grants is to facilitate noncustodial parents' 
access to and visitation of their children. Section 320 would 
increase funding to $12 million in 2004, $14 million in 2005, 
$16 million in 2006, and $20 million in 2007 and in subsequent 
years. The new funding would result in increased of $82 million 
over the 2004-2013 period.
    Title IV: Child Welfare. Title IV would extend 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, we expect the federal budget impact would not 
be significant.
    Beginning in fiscal year 2005, section 402 would allow 
Puerto Rico to claim more federal matching funds for foster 
care expenses by excluding amounts in excess of grants received 
in fiscal year 2002 from the limitation specified in section 
1108 of the Social Security Act. The amount of spending above 
the limitation would be capped at $6.25 million for fiscal 
years 2005 through 2008, but would be unconstrained beginning 
in 2009.
    The Social Security Act currently limits total federal 
spending in Puerto Rico on certain social service programs, 
including foster care, to $107 million in any year. In fiscal 
year 2002, foster care payments comprised $11 million of that 
total. Although Puerto Rico is eligible for federal matching 
funds for foster care administrative costs, it has not received 
any such payments because it does not yet have an approved cost 
allocation methodology. (Even if it had submitted claims for 
administrative costs, because Puerto Rico already is using all 
of the funds available under the section 1108 limit, these 
claims would have either reduced funding for other social 
services, or would have been unpaid.) CBO estimates that 
reimbursements of administrative costs could equal or exceed 
the amount of matching funds Puerto Rico receives for foster 
care expenses. Moreover, if the constraints imposed by the 
section 1108 limit were loosened, reimbursements for 
maintenance payments also could increase.Section 402 would 
effectively raise the limit on foster care reimbursements for the 2005-
2008 period, and eliminate it after that. The act would constrain these 
additional costs at $6.25 million annually during the 2005-2008 period, 
after which time there would be no limit on claims above the 2002 
amount. CBO estimates this provision would increase outlays by $25 
million between fiscal years 2005 and 2008, and by $112 million from 
2005 through 2013 (see Table 1).
    Title V: Supplemental Security Income. Section 501 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 20 percent of all favorable adult-disability 
determinations made by state-level Disability Determination 
Service (DDS) offices in 2004. Under the legislation, the 
agency would have to review at least 40 percent of the adult-
disability awards made by DDS offices in 2005 and 50 percent in 
2006 and beyond.
    CBO anticipates state DDS offices will approve between 
350,000 and 400,000 adult disability applications for SSI 
benefits annually between 2004 and 2013. Based on recent data 
for comparable reviews in the Social Security Disability 
Insurance program, CBO projects that by 2013, more than 20,000 
DDS awards will have been ultimately overturned, resulting in 
lower outlays for SSI and Medicaid (in most states SSI 
eligibility automatically confers entitlement to Medicaid 
benefits). CBO estimates that section 501 would reduce SSI 
benefits by $2 million and Medicaid outlays by $4 million in 
2004. Over the 2004-2013 period, CBO estimates this provision 
would lower SSI outlays by $405 million and Medicaid spending 
by $1 billion (see Table 4).

                                       TABLE 4.--DIRECT SPENDING EFFECTS OF TITLE V: SUPPLEMENTAL SECURITY INCOME
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             By fiscal year, in millions of dollars--
                                         ---------------------------------------------------------------------------------------------------------------
                                            2004     2005     2006     2007     2008     2009     2010     2011     2012     2013    2004-08    2004-13
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pre-effectuation Reviews:
    SSI:
        Estimated Budget Authority......       -2       -9      -17      -25      -37      -46      -55      -68      -66      -80        -90       -405
        Estimated outlays...............       -2       -9      -17      -25      -37      -46      -55      -68      -66      -80        -90       -405
    Medicaid:
        Estimated Budget Authority......       -4      -15      -34      -56      -79     -106     -133     -161     -193     -227       -188     -1,008
        Estimated Outlays...............       -4      -15      -34      -56      -79     -106     -133     -161     -193     -227       -188     -1,008
    Total Changes in Title V:
        Estimated Budget Authority......       -6      -24      -51      -81     -116     -152     -188     -229     -259     -307       -278     -1,413
        Estimated Outlays...............       -6      -24      -51      -81     -116     -152     -188     -229     -259     -307       -278     -1,413
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Title VI: Transitional Medical Assistance. Title VI would 
make several changes to Medicaid and the State Children's 
Health Insurance Program. The act would extend through 2008 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 VI also would allow states to simplify aspects of TMA 
administration. Finally, it would prohibit states from using 
SCHIP funds to provide health coverage to childless adults.
    Overall, CBO estimates that enacting title VI would 
increase direct spending by $17 million in 2004 and by $2.1 
billion over the 2004-2013 period (see Table 5).
    Extension of Transitional Medical Assistance. State 
Medicaid programs are required to temporarily provide Medicaid 
coverage, known as transitional medical assistance, for certain 
individuals (usually former TANF recipients) and their 
dependents who otherwise would lose coverage because of 
increase earnings. States currently are required to provide TMA 
to welfare-related beneficiaries who lose their eligibility 
prior to March 31, 2004. Section 601 of the act would extend 
the requirement through September 30, 2008.
    CBO estimates that this provision would increase Federal 
Medicaid outlays by $21 million in 2004 and by $2.6 billion 
over the 2004-2013 period. The budgetary effects of the 
extension would continue beyond 2008 because families who 
qualify for TMA would be entitled to up to 12 months of 
additional eligibility, even if that eligibility runs beyond 
September 30, 2008. Moreover, some states provide more than 12 
months of TMA through Medicaid waivers; families living in 
those states could remain eligible through 2011.
    Without H.R. 4, CBO anticipates that some of the families 
leaving welfare between 2004 and 2008 would have incomes high 
enough to make their children ineligible for Medicaid, and that 
some of the children in those families would enroll in SCHIP 
instead. By extending TMA, the act would make those children 
eligible for Medicaid. 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 $47 million over the 2004-2008 period. 
Because states generally have 3 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 $20 million over the 2009-2013 
period.
    Optional TMA Simplification. Section 601 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 for at least three of the previous 6 
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.

                                     TABLE 5.--DIRECT SPENDING EFFECTS OF TITLE VI: TRANSITIONAL MEDICAL ASSISTANCE
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal year, in millions of dollars--
                                             -----------------------------------------------------------------------------------------------------------
                                               2004    2005    2006    2007     2008     2009     2010     2011     2012     2013    2004-08    2004-13
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Extension of TMA through 2008:
    Medicaid:
        Estimated Budget Authority..........      21     385     515     575      625      417       65       13       -1       -6      2,121      2,609
        Estimated Outlays...................      21     385     515     575      625      417       65       13       -1       -6      2,121      2,609
    SCHIP:
        Budget Authority....................       0       0       0       0        0        0        0        0        0        0          0          0
        Estimated Outlays...................       0     -15     -11      -8      -13        5        0        2        2       11        -47        -27
Optional TMA Simplifications:
    Medicaid:
        Estimated Budget Authority..........       0      21      55      63       68       63        9        1        0       -1        207        279
        Estimated Outlays...................       0      21      55      63       68       63        9        1        0       -1        207        279
    SCHIP:
        Budget Authority....................       0       0       0       0        0        0        0        0        0        0          0          0
        Estimated Outlays...................       0       0      -2      -1       -1        0        0        0        0        1         -4         -3
Prohibition on SCHIP Coverage for Childless
 Adults:
    Medicaid:
        Estimated Budget Authority..........      -4      -6      -6      -8      -29      -25      -40      -50      -68      -85        -53       -321
        Estimated Outlays...................      -4      -6      -6      -8      -29      -25      -40      -50      -68      -85        -53       -321
    SCHIP:
        Budget Authority....................       0       0       0       0        0        0        0        0        0        0          0          0
        Estimated Outlays...................       0       1     -25     -38      -64      -93      -77      -71      -47      -30       -126       -444
Total Changes in Title VI:
    Estimated Budget Authority..............      17     400     564     630      664      455       34      -36      -69      -92      2,275      2,567
    Estimated Outlays.......................      17     386     526     583      586      367      -43     -105     -114     -110      2,098     2,093
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes.--SCHIP = State Children's Health Insurance Program. TMA = Transitional Medical Assistance.

    CBO anticipates that those provisions would boost federal 
Medicaid spending by $21 million in 2005 and by $279 million 
over the 2005-2013 period. Most of those costs would stem from 
the elimination of the income-reporting requirements. States 
already have the flexibility under current law to effectively 
waive the three-out-of-six months requirement or provide more 
than 12 months of TMA by disregarding some or all of an 
individual's income when determining eligibility.CBO also 
estimates that the effect of those provisions would have a slight 
impact on SCHIP, decreasing outlays by $3 million over the 2004-2013 
period. By relaxing TMA rules, the act would make some children newly 
eligible for Medicaid, and therefore ineligible for SCHIP.
    Prohibit SCHIP Coverage for Childless Adults. Section 602 
of the act would prohibit the Secretary of Health and Human 
Services from allowing states to use SCHIP funds to provide 
health coverage to childless adults (including pregnant women 
who have no children). Several states currently provide such 
coverage through temporary waivers approved by the Secretary 
under section 1115 of the Social Security Act, and other states 
have applications for similar waivers pending or in the 
development stage. The provision would prohibit the Secretary 
from approving any new waivers to cover childless adults or 
renewing the existing waivers once they expire.
    CBO estimates that this provision would have no effect on 
SCHIP spending in 2004 and would decrease the program's 
spending by $444 million over the 2004-2013 period. Because 
state SCHIP programs would no longer be able to cover childless 
adults, they would have more funding available to cover 
children and their parents. CBO anticipates that states would 
use a portion of the freed-up funds to do so, with the 
remainder being spent after 2013.
    Under current law, CBO anticipates that the limited nature 
of SCHIP funding will restrict program spending in some states, 
and that states will partly offset these funding shortfalls by 
expanding Medicaid eligibility. The provision would lessen the 
funding shortfalls and reduce states' use of Medicaid funding 
to offset them. As a result, CBO estimates that the provision 
would reduce Medicaid spending by $321 million over the 2004-
2013 period.

Spending subject to appropriation

    H.R. 4 would establish several new grant programs that 
would require annual appropriations. Assuming appropriation of 
the authorized amounts, CBO estimates that implementing the 
legislation would cost $14 million in 2004 and $1 billion over 
the 2004-2011 period (see Table 6). Estimated outlays are based 
on historical spending patterns for social service grant 
programs.
    Tribal TANF Improvement Fund. Section 113 would authorize 
$100 million for each year through 2008 for the Secretary of 
HHS to carry out a program of technical assistance and 
competitive grants to Indian tribes operating TANF programs. 
CBO estimates implementing the program would cost $10 million 
in 2004 and $500 million over the 2004-2011 period, assuming 
appropriation of the authorized amounts.
    Fatherhood Grants. Section 118 would establish several new 
grant programs to promote fatherhood and would authorize 
appropriations totaling $75 million annually over the 2004-
2008period. Assuming appropriation of the authorized amounts, CBO 
estimates implementing section 118 would cost $1 million in 2004 and 
$375 million over the 2004-2013 period.

                                                TABLE 6.--ESTIMATED COSTS FOR NEW DISCRETIONARY SPENDING
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By fiscal year, in millions of dollars--
                                                     ---------------------------------------------------------------------------------------------------
                                                       2004    2005    2006    2007    2008    2009    2010    2011    2012    2013    2004-08   2004-13
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Tribal TANF Improvement Fund:
    Authorization Level.............................     100     100     100     100     100       0       0       0       0       0       500       500
    Estimated Outlays...............................      10      60     108     100      84      88      45       5       0       0       362       500
Fatherhood Grants:
    Authorization Level.............................      75      75      75      75      75       0       0       0       0       0       375       375
    Estimated Outlays...............................       1      20      56      93      92      76      34       3       0       0       262       375
Grants for Car Ownership:
    Authorization Level.............................      25      25      25      25      25       0       0       0       0       0       125       125
    Estimated Outlays...............................       3      15      27      25      21      22      11       1       0       0        91       125
Total Changes:
    Authorization Level.............................     200     200     200     200     200       0       0       0       0       0     1,000     1,000
    Estimated Outlays...............................      14      95     191     218     197     186      90       9       0       0       715     1,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 118 would authorize the appropriation of $20 
million per year during the 2004-2008 period for grants to up 
to 20 states to conduct demonstrations to promote responsible 
fatherhood through promoting marriage, responsible parenting, 
or economic stability. It also would authorize $30 million each 
year over the 2004-2008 period for grants to eligible entities 
for the same purposes. Eligible entities would include local 
governments, local private agencies, community-based or 
nonprofit organizations, Indian tribes, or private entities.
    Section 118 also would authorize $5 million annually 
through 2008 for the Secretary of HHS to contract with a 
nationally recognized nonprofit organization to develop, 
promote, and distribute a media campaign promoting responsible 
fatherhood and to develop a national clearinghouse to assist 
states and communities in their effort to promote marriage and 
responsible fatherhood. Finally, it would authorize a program 
of formula grants to states to conduct media campaigns to 
promote marriage and responsible fatherhood funded at $20 
million each year over the 2005-2008 period
    Grants for Car Ownership. Section 119 would authorize the 
appropriation of $25 million each year through 2008 for a 
program of grants to states, Indian tribes, localities, and 
nonprofit organizations to assist low-income families with 
children in buying automobiles. The program is designed to 
facilitate employment opportunities and access to training by 
providing low-income families with more reliable 
transportation. CBO estimates that implementing this provision 
would cost $3 million in 2004 and $125 million over the 2004-
2011 period, assuming the appropriation of the authorized 
amounts.
    Previous CBO estimate: On February 13, 2003, CBO 
transmitted a cost estimate for H.R. 4, the Personal 
Responsibility, Work, and Family Promotion Act of 2003, as 
introduced in the House of Representatives on February 4, 2003.
    H.R. 4, as approved by the Senate Committee on Finance, 
would increase direct spending by nearly $5 billion over the 
2004-2008 period compared to about $2 billion in the House 
version of the legislation. Both versions of H.R. 4 would 
reduce revenues by $22 million over those five years. The 
Senate version of H.R. 4 would increase authorizations of 
appropriations by $1 billion above the current baseline over 
the 2004-2008 period, whereas the House version would raise 
such authorizations by more than $2 billion.
    Both versions of H.R. 4 would extend TANF and related 
programs through 2008, increase direct spending on child care 
by $200 million annually, and make changes to the child support 
enforcement, SSI, and Medicaid programs. The estimates for some 
identical provisions in the versions differ because CBO 
estimated the House version of the act under its January 2003 
baseline assumptions and the Senate version under the baseline 
completed in March, and which underlies the 2004 budget 
resolution. The major difference relates to spending under the 
abstinence education program. Also, CBO assumed a later 
enactment date in its estimate of the Senate version. 
Differences in other estimated costs reflect differences in the 
legislation.
    Among the significant differences in the legislation, the 
Senate version of H.R. 4 would expand the contingency fund more 
than the House version. It would allow states to share more 
child support with current and former recipients of welfare and 
would forgive the federal share of collections on child support 
that states are currently sharing with families. The Senate 
version would establish several new enforcement tools in the 
child support program that were not included in the House 
version. It does not contain a provision in the House version 
that would institute a program of charging fees for certain 
child support clients.
    The Senate version of H.R. 4 would extend TMA for five 
years compared with one year in the House version, and it would 
allow states to adopt administrative simplifications. It also 
contains a provision not in the House version that would 
prohibit states from using SCHIP funds to provide health 
coverage for childless adults and does not include a provision 
to reduce the amount of reimbursement to states for Medicaid 
administrative costs.
    Estimate prepared by: Federal Costs: Sheila Dacey--TANF and 
Child Support; Christina Hawley Sadoti--Unemployment 
Compensation and Child Welfare; Donna Wong--Child Care; 
Geoffrey Gerhardt--Supplemental Security Income; Jeanne De Sa 
and Eric Rollins--Medicaid and SCHIP; Margaret Nowak--
Abstinence Education. Impact on State, Local, and Tribal 
Governments: Leo Lex. Impact on the Private Sector: Ralph 
Smith.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                           VI. MINORITY VIEWS

    Democratic members of the Committee support improving 
welfare reform to help more needy Americans escape poverty and 
to help their children have brighter futures. However, the 
Democratic members of the Committee are disappointed by the 
bill presented to the Committee. Despite the efforts of the 
Chairman to be collaborative, the bill inadequately funds child 
care, limits the ability of States to design effective welfare-
to-work programs, and includes a potentially dangerous ``super-
waiver'' provision likely to cede important Congressional 
authority to the Executive Branch.
    When this bill is considered by the full Senate, Democratic 
members of the Committee will seek to improve it and are 
hopeful of being able to support it if improvements are made. A 
significant concern is support for child care. While the bill 
increases child care funding by $1 billion the Congressional 
Budget Office estimates it will cost States more than $1 
billion to implement the new work standards required by the 
bill. As a result, the bill is likely to result in fewer low-
income working families receiving child care assistance in the 
United States. This is because States would be forced to shift 
funds currently used to assist low-income working families at 
risk of needing welfare and those who have left the rolls, to 
aiding only welfare recipients in meeting the work 
requirements. Already, according to the General Accounting 
Office, half of States are reporting that families eligible for 
child care assistance are not receiving it. This result is 
contrary to the spirit and substance of the 1996 welfare reform 
law which provided substantial child care assistance to low-
income working families who do not currently receive welfare. 
This could cause significant hardship, particularly for those 
families who followed the rules and left welfare for work are 
still struggling to achieve self-sufficiency--without child 
care aid they are at risk of returning to welfare. The 108th 
Congress should not turn its back on those families.
    The bill before the Committee also does not provide enough 
flexibility for States in operating TANF programs. It mandates 
higher hour standards for State programs without any assurance 
that such mandates will promote private sector employment. In 
fact, the Committee heard testimony suggesting these new 
mandates could promote ``workfare'' at the expense of private 
sector jobs. The hourly mandates are particularly troubling in 
light of its child care deficiencies. In addition, the bill 
does not provide as much flexibility as the substitute we 
offered in permitting States to incorporate longer-term 
training, education, and rehabilitative services in their 
welfare reform strategies. And it also fails to provide States 
the option of restoring eligibility for benefits for legal 
immigrants, including health care services for legal immigrant 
children.
    Finally, the bill before the Committee includes a 10 state 
``super-waiver'' demonstration. The scope of this provision was 
not made clear in the initial Chairman's Mark. While the final 
provision is scaled back, it remains an ill-considered attempt 
to cede Congressional authority to the Executive branch.
    The Democratic Members of the Committee will work to 
address these objections when the full Senate considers the 
bill. A society can be judged on how it assists those in need, 
and welfare reform is an important test of that principle. The 
Democratic Members of the Committee believe we can do better.

                                   Max Baucus.
                                   John Breaux.
                                   Blanche L. Lincoln.
                                   John F. Kerry.
                                   Jay Rockefeller.
                                   Jeff Bingaman.
                                   Tom Daschle.
                                   Kent Conrad.
                                   James Jeffords.
                                   Bob Graham.

                      VII. Changes in Existing Law

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

SOCIAL SECURITY ACT

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

   PART A--BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY 
                                FAMILIES

                                PURPOSE

    Sec. 401. (a) In General.--The purpose of this part is to 
increase the flexibility of States in operating a program 
designed to--
          (1) provide assistance to needy families so that 
        children may be cared for in their own homes or in the 
        homes of relatives;
          (2) end the dependence of needy parents on government 
        benefits by promoting job preparation, work, and 
        marriage;
          (3) prevent and reduce the incidence of out-of-
        wedlock pregnancies and establish annual numerical 
        goals for preventing and reducing the incidence of 
        these pregnancies; and
          (4) encourage the formation and maintenance of [two-
        parent families] healthy 2-parent married families, and 
        encourage responsible fatherhood.
    (b) No Individual Entitlement.--This part shall not be 
interpreted to entitle any individual or family to assistance 
under any State program funded under this part.

                      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 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 do the 
                following:
                          (i) Conduct a program, designed to 
                        serve all political subdivisions in the 
                        State (not necessarily in a uniform 
                        manner), that provides 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).
                          [(iii) Ensure, that parents and 
                        caretakers receiving assistance under 
                        the program engage in work activities 
                        in accordance with section 407.]
                          (ii) Require a parent or caretaker 
                        receiving assistance under the program 
                        to engage in work or alternative self-
                        sufficiency activities (as defined by 
                        the State), consistent with section 
                        407(e)(2).
                          (iii) Require families receiving 
                        assistance under the program to engage 
                        in activities in accordance with family 
                        self-sufficiency plans developed 
                        pursuant to section 408(b).
                          (iv) 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)).]
                          (v) Establish specific measurable 
                        performance objectives for pursuing the 
                        purposes of the program under this part 
                        as described in section 401(a), 
                        including by--
                                  (I) establishing objectives 
                                consistent (as determined by 
                                the State) with the criteria 
                                used by the Secretary in 
                                establishing performance 
                                targets under section 
                                403(a)(4)(C) (including with 
                                respect to workplace attachment 
                                and advancement), and with such 
                                additional criteria related to 
                                other purposes of the program 
                                under this part as described in 
                                section 401(a) as the 
                                Secretary, in consultation with 
                                the National Governors' 
                                Association and the American 
                                Public Human Services 
                                Association, shall establish; 
                                and
                                  (II) describing the 
                                methodology that the State will 
                                use to measure State 
                                performance in relation to each 
                                such objective.
                          (vi) Describe any strategies and 
                        programs the State plans to use to 
                        address--
                                  (I) employment retention and 
                                advancement for recipients of 
                                assistance under the program, 
                                including placement into high-
                                demand jobs, and whether the 
                                jobs are identified using labor 
                                market information;
                                  (II) efforts to reduce teen 
                                pregnancy;
                                  (III) services for struggling 
                                and noncompliant families, and 
                                for clients with special 
                                problems; and
                                  (IV) program integration, 
                                including the extent to which 
                                employment and training 
                                services under the program are 
                                provided through the One-Stop 
                                delivery system created under 
                                the Workforce Investment Act of 
                                1998, and the extent to which 
                                former recipients of such 
                                assistance have access to 
                                additional core, intensive, or 
                                training services funded 
                                through such Act.
                          [(vi)] (vii) 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.
                          (viii) encourage equitable treatment 
                        of healthy 2-parent married families 
                        under the program referred to in clause 
                        (i).
                  (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.]
                          [(ii)] (i) The document shall 
                        indicate whether the State intends to 
                        provide assistance under the program to 
                        individuals who are not citizens of the 
                        United States, and if so, shall include 
                        an overview of such assistance.
                          [(iii)] (ii) 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.
                          (iii) If the State is undertaking any 
                        strategies or programs to engage faith-
                        based organizations in the provision of 
                        services funded under this part, or 
                        that otherwise relate to section 104 of 
                        the Personal Responsibility and Work 
                        Opportunity Reconciliation Act of 1996, 
                        the document shall describe such 
                        strategies and programs.
                          (iv) The document shall describe 
                        strategies to improve program 
                        management and performance.
                          (v) The document shall include a 
                        performance report which details State 
                        progress toward full engagement for all 
                        adult or minor child head of household 
                        recipients of assistance.
                          [(vi) 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(e)(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.]
                          (vi) The document shall set forth the 
                        criteria for applying section 
                        407(c)(6)(E) to an adult recipient or 
                        minor child head of household who is 
                        the only parent or caretaker relative 
                        for a child or adult dependent for 
                        care.

           *       *       *       *       *       *       *

          (4) Certification of the administration of the 
        program.--A certification by the chief executive 
        officer of the State specifying which State agency or 
        agencies will administer and supervise the program 
        referred to in paragraph (1) for the fiscal year, which 
        shall include assurances that local and tribal 
        governments and private sector organizations--

           *       *       *       *       *       *       *

          (8) 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 and State and local transportation agencies and 
        planning bodies have been consulted in the development 
        of the plan.
    [(b) Plan amendments.--Within 30 days after a State amends 
a plan submitted pursuant to subsection (a), the State shall 
notify the Secretary of the amendment.]
  (b) Procedures for Submitting and Amending State Plans.--
          (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 under 
        subsection (a). Such form shall be finalized by the 
        Secretary for use by States not later than 9 months 
        after the date of enactment of the Personal 
        Responsibility and Individual Development for Everyone 
        Act.
          (2) Requirement for completed plan using standard 
        state plan format by fiscal year 2005.--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, 2004.
          (3) Public notice and comment.--Prior to submitting a 
        State plan to the Secretary under this section, the 
        State shall--
                  (A) make the proposed State plan 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, 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.
          (4) 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.
          (5) Amending the state plan.--A State shall file an 
        amendment to the State plan with the Secretary if the 
        State determines that there has been a material change 
        in any information required to be included in the State 
        plan or any other information that the State has 
        included in the plan, including substantial changes in 
        the use of funding. Prior to submitting an amendment to 
        the State plan to the Secretary, the State shall--
                  (A) make the proposed amendment available to 
                the public as provided for in paragraph (3)(A);
                  (B) allow for a reasonable public comment 
                period of not less than 45 days; and
                  (C) make the comments available as provided 
                for in paragraph (3)(C).
    [(c) Public Availability of State Plan Summary.--The State 
shall make available to the public a summary of any plan or 
plan amendment section.]

                            GRANTS TO STATES

    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 years [1996, 1997, 1998, 1999, 
                2000, 2001, 2002, and 2003,] 2004 through 2008 
                a grant in an amount equal to the State family 
                assistance grant payable to the State for the 
                fiscal year.
                  (B) State family assistance grant.--The State 
                family assistance grant payable to a State for 
                a fiscal year shall be the amount that bears 
                the same ratio to the amount specified in 
                subparagraph (C) of this paragraph as the 
                amount required to be paid to the State under 
                this paragraph for fiscal year 2002 (determined 
                without regard to any reduction pursuant to 
                section 409 or 412(a)(1)) bears to the total 
                amount required to be paid under this paragraph 
                for fiscal year 2002 (as so determined).
                  (C) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated [for 
                fiscal year 2003 $16,566,542,000 for grants 
                under this paragraph] for each of fiscal years 
                2004 through 2008, $16,566,542,000 for grants 
                under this paragraph.[2001, and 2002 such sums 
as are necessary for grants under this paragraph.
          [(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.
                  [(C) Definitions.--As used in this paragraph:
                          [(i) Eligible state.--
                                  [(I) In general.--The term 
                                ``eligible State'' means a 
                                State that the Secretary 
                                determines meets the following 
                                requirements:
                                          [(aa) The State 
                                        demonstrates that the 
                                        illegitimacy ratio of 
                                        the State for the most 
                                        recent 2-year period 
                                        for which such 
                                        information is 
                                        available decreased as 
                                        compared to the 
                                        illegitimacy ratio of 
                                        the State for the 
                                        previous 2-year period, 
                                        and the magnitude of 
                                        the decrease for the 
                                        State for the period is 
                                        not exceeded by the 
                                        magnitude of the 
                                        corresponding decrease 
                                        for 5 or more other 
                                        States for the period. 
                                        In the case of a State 
                                        that is not a territory 
                                        specified in 
                                        subparagraph (B), the 
                                        comparative magnitude 
                                        of the decrease for the 
                                        State shall be 
                                        determined without 
                                        regard to the magnitude 
                                        of the corresponding 
                                        decrease for any such 
                                        territory.
                                          [(bb) The rate of 
                                        induced pregnancy 
                                        terminations in the 
                                        State for the calendar 
                                        year for which the most 
                                        recent data are 
                                        available is less than 
                                        the rate of induced 
                                        pregnancy terminations 
                                        in the State for the 
                                        calendar year 1995. 
                                        104-193, Sec. 103(a).
                                  [(II) Disregard of changes in 
                                data due to changed reporting 
                                methods.--In making the 
                                determination required by 
                                subclause (I), the Secretary 
                                shall disregard--
                                          [(aa) any difference 
                                        between the 
                                        illegitimacy ratio of a 
                                        State for a calendar 
                                        year and the number of 
                                        out-of-wedlock births 
                                        that occurred in a 
                                        State for fiscal year 
                                        1995 which is 
                                        attributable to a 
                                        change in State methods 
                                        of reporting data used 
                                        to calculate the 
                                        illegitimacy ratio; and
                                          [(bb) any difference 
                                        between the rate of 
                                        induced pregnancy 
                                        terminations in a State 
                                        for a calendar year and 
                                        such rate for calendar 
                                        year 1995 which is 
                                        attributable to a 
                                        change in State methods 
                                        of reporting data used 
                                        to calculate such rate.
                          [(ii) Bonus year.--The term ``bonus 
                        year'' means calendar years 1999, 2000, 
                        2001, and 2002.
                          [(iii) Illegitimacy ratio.--The term 
                        ``illegitimacy ratio'' means, with 
                        respect to a State and a period--
                                  [(I) the number of out-of-
                                wedlock births to mothers 
                                residing in the State that 
                                occurred during the period; 
                                divided by
                                  [(II) the number of births to 
                                mothers residing in the State 
                                that occurred during the 
                                period.
                  [(D) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                years 1999 through 2002, such sums as are 
                necessary for grants under this paragraph.]
          (2) Healthy marriage promotion grants.--
                  (A) Authority.--
                          (i) In general.--The Secretary shall 
                        award competitive grants to States, 
                        territories, and Indian tribes and 
                        tribal organizations for not more than 
                        50 percent of the cost of developing 
                        and implementing innovative programs to 
                        promote and support healthy 2-parent 
                        married families.
                          (ii) Use of other tanf funds.--A 
                        State or Indian tribe with an approved 
                        tribal family assistance plan may use 
                        funds provided under other grants made 
                        under this part for all or part of the 
                        expenditures incurred for the remainder 
                        of the costs described in clause (i). 
                        In the case of a State, any such funds 
                        expended shall not be considered 
                        qualified State expenditures for 
                        purposes of section 409(a)(7).
                  (B) Healthy marriage promotion activities.--
                Funds provided under subparagraph (A) 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) Education in high schools on the 
                        value of marriage, relationship skills, 
                        and budgeting.
                          (iii) Marriage education, marriage 
                        skills, and relationship skills 
                        programs, that may include parenting 
                        skills, financial management, conflict 
                        resolution, and job and career 
                        advancement, for non-married pregnant 
                        women, non-married expectant fathers, 
                        and non-married recent parents.
                          (iv) Pre-marital education and 
                        marriage skills training for engaged 
                        couples and for couples or individuals 
                        interested in marriage.
                          (v) Marriage enhancement and marriage 
                        skills training programs for married 
                        couples.
                          (vi) Divorce reduction programs that 
                        teach relationship skills.
                          (vii) Marriage mentoring programs 
                        which use married couples as role 
                        models and mentors.
                          (viii) Programs to reduce the 
                        disincentives to marriage in means-
                        tested aid programs, if offered in 
                        conjunction with any activity described 
                        in this subparagraph.
                  (C) Voluntary participation.--Participation 
                in programs or activities described in any of 
                clauses (iii) through (vii) shall be voluntary.
                  (D) General rules governing use of funds.--
                The rules of section 404, other than subsection 
                (b) of that section, shall not apply to a grant 
                made under this paragraph.
                  (E) Requirements for receipt of funds.--A 
                State, territory, or Indian tribe or tribal 
                organization may not be awarded a grant under 
                this paragraph unless the State, territory, 
                indian tribe or tribal organization, as a 
                condition of receiving funds under such a 
                grant--
                          (i) consults with experts in domestic 
                        violence or with relevant community 
                        domestic violence coalitions in 
                        developing such programs or activities; 
                        and
                          (ii) describes in the application for 
                        a grant under this paragraph--
                                  (I) how the programs or 
                                activities proposed to be 
                                conducted will address, as 
                                appropriate, issues of domestic 
                                violence; and
                                  (II) what the State, 
                                territory, or Indian tribe or 
                                tribal organization will do, to 
                                the extent relevant, to ensure 
                                that participation in such 
                                programs or activities is 
                                voluntary, and to inform 
                                potential participants that 
                                their involvement is voluntary.
                  (F) Appropriation.--
                          (i) In general.--Out of any money in 
                        the Treasury of the United States not 
                        otherwise appropriated, there are 
                        appropriated for each of fiscal years 
                        2004 through 2008, $100,000,000 for 
                        grants under this paragraph.
                          (ii) Extended availability of 
                        funds.--
                                  (I) In general.--Funds 
                                appropriated under clause (i) 
                                for each of fiscal years 2004 
                                through 2008 shall remain 
                                available to the Secretary 
                                until expended.
                                  (II) Authority for grant 
                                recipients.--A State, 
                                territory, or Indian tribe or 
                                tribal organization may use 
                                funds made available under a 
                                grant awarded under this 
                                paragraph without fiscal year 
                                limitation pursuant to the 
                                terms of the grant.

           *       *       *       *       *       *       *

                  (H) Reauthorization.--Notwithstanding any 
                other provision of this paragraph--
                          (i) any State that was a qualifying 
                        State under this paragraph for fiscal 
                        year 2001 or any prior fiscal year 
                        shall be entitled to receive from the 
                        Secretary for each of fiscal years 
                        [2002 and 2003] 2004 through 2007 a 
                        grant in an amount equal to the amount 
                        required to be paid to the State under 
                        this paragraph for the most recent 
                        fiscal year in which the State was a 
                        qualifying State;
                          (ii) Subparagraph (G) shall be 
                        applied as if ``[2003] 2007'' were 
                        substituted for ``2001''; and
                          (iii) out of any money in the 
                        Treasury of the United States not 
                        otherwise appropriated, there are 
                        appropriated for each of fiscal years 
                        [2002 and 2003] 2004 through 2007 such 
                        sums as are necessary for grants under 
                        this subparagraph.
          [(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 after the date of the 
                enactment of the Personal Responsibility and 
                Work Opportunity Reconciliation Act of 1996 
                \4\, 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) Bonus to reward employment achievement.--
                  (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 an 
                employment achievement State.
                  (B) Amount of grant.--
                          (i) In general.--Subject to clause 
                        (ii), the Secretary shall determine the 
                        amount of the grant payable under this 
                        paragraph to an employment achievement 
                        State for a bonus year, which shall be 
                        based on the performance of the State 
                        as determined 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.--
                          (i) In general.--Subject to clause 
                        (ii), not later than October 1, 2004, 
                        the Secretary, in consultation with the 
                        States, shall develop a formula for 
                        measuring State performance in 
                        operating the State program funded 
                        under this part so as to achieve the 
                        goals of employment entry, job 
                        retention, increased earnings from 
                        employment, and workplace attachment 
                        and advancement for families receiving 
                        assistance under the program, as 
                        measured on an absolute basis and on 
                        the basis of improvement in State 
                        performance.
                          (ii) Special rule for bonus years 
                        2004 and 2005.--For the purposes of 
                        awarding a bonus under this paragraph 
                        for bonus year 2004 or 2005, the 
                        Secretary may measure the performance 
                        of a State in fiscal year 2003 or 2004 
                        (as the case may be) using the job 
                        entry rate, job retention rate, and 
                        earnings gain rate components of the 
                        formula developed under section 
                        403(a)(4)(C) as in effect immediately 
                        before the effective date of this 
                        paragraph.
                  (D) Determination of state performance.--For 
                each bonus year, the Secretary shall--
                          (i) use the formula developed under 
                        subparagraph (C) to determine the 
                        performance of each eligible State for 
                        the fiscal year that precedes the bonus 
                        year; and
                          (ii) prescribe performance standards 
                        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 $100,000,000; 
                                and
                                  (II) the total amount of 
                                grants to be made under this 
                                paragraph for all bonus years 
                                equals $600,000,000.
                  (E) Definitions.--In this paragraph:
                          (i) Bonus year.--The term ``bonus 
                        year'' means each of fiscal years 2004 
                        through 2009.
                          (ii) Employment achievement state.--
                        The term ``employment achievement 
                        State'' means, with respect to a bonus 
                        year, an eligible State whose 
                        performance determined pursuant to 
                        subparagraph (D)(i) for the fiscal year 
                        preceding the bonus year equals or 
                        exceeds the performance standards 
                        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 the 
                period of fiscal years 2004 through 2009, 
                $600,000,000 for grants under this paragraph.
                  (G) Grants for tribal organizations.--This 
                paragraph shall apply with respect to tribal 
                organizations in the same manner in which this 
                paragraph applies with respect to States. In 
                determining the criteria under which to make 
                grants to tribal organizations under this 
                paragraph, the Secretary shall consult with 
                tribal organizations.
          (5) Welfare-to-work grants.--
                  (A) Formula grants.--
                          (i) Entitlement.--A State shall be 
                        entitled to receive from the Secretary 
                        of Labor a grant for each fiscal year 
                        specified in subparagraph (H) of this 
                        paragraph for which the State is a 
                        welfare-to-work State, in an amount 
                        that does not exceed the lesser of--

           *       *       *       *       *       *       *

                          (ii) Welfare-to-work state.--A state 
                        shall be considered a welfare-to-work 
                        State for a fiscal year for purposes of 
                        this paragraph if the Secretary of 
                        Labor determines that the State meets 
                        the following requirements:
                                  (I) The State has submitted 
                                to the Secretary of Labor and 
                                the Secretary of Health and 
                                Human Services (in the form of 
                                an addendum to the State plan 
                                submitted under section 402) a 
                                plan which--

           *       *       *       *       *       *       *

                                  (III) The State has agreed to 
                                negotiate in good faith with 
                                the Secretary of Health and 
                                Human Services with respect to 
                                the substance and funding of 
                                any evaluation under section 
                                [413(j)] 413(i), and to 
                                cooperate with the conduct of 
                                any such evaluation.

           *       *       *       *       *       *       *

                  (F) Funding for evaluations of welfare-to-
                work programs.--0.6 percent $9,000,000 of the 
                amount specified in subparagraph (H) for fiscal 
                year 1998 and of the amount so specified for 
                fiscal year 1999 shall be reserved for use by 
                the Secretary to carry out section [413(j)] 
                413(i).
                  (G) Funding for evaluation of abstinence 
                education programs.--
                          (i) In general.--0.2 percent 
                        $3,000,000 of the amount specified in 
                        subparagraph (H) for fiscal year 1998 
                        and of the amount so specified for 
                        fiscal year 1999 shall be reserved for 
                        use by the Secretary to evaluate 
                        programs under section 510, directly or 
                        through grants, contracts, or 
                        interagency agreements.
                          (ii) Authority to use funds for 
                        evaluations of welfare-to-work 
                        programs.--Any such amount not required 
                        for such evaluations shall be available 
                        for use by the Secretary to carry out 
                        section [413(j)] 413(i).

           *       *       *       *       *       *       *

          (6) Grants to capitalize and develop sustainable 
        social services.--
                  (A) Authority to award grants.--The Secretary 
                may award grants to entities for the purpose of 
                capitalizing and developing the role of 
                sustainable social services that are critical 
                to the success of moving recipients of 
                assistance under a State program funded under 
                this part to work.
                  (B) Application.--
                          (i) In general.--An entity desiring a 
                        grant under this paragraph shall submit 
                        an application to the Secretary, at 
                        such time, in such manner, and, subject 
                        to clause (ii), containing such 
                        information as the Secretary may 
                        require.
                          (ii) Strategy for generation of 
                        revenue.--An application for a grant 
                        under this paragraph shall include a 
                        description of the capitalization 
                        strategy that the entity intends to 
                        follow to develop a program that 
                        generates its own source of on-going 
                        revenue while assisting recipients of 
                        assistance under a State program funded 
                        under this part.
                  (C) Use of funds.--
                                  (i) In general.--Funds made 
                                available under a grant made 
                                under this paragraph may be 
                                used for the acquisition, 
                                construction, or renovation of 
                                facilities or buildings.
                                  (ii) General rules governing 
                                use of funds.--The rules of 
                                section 404, other than 
                                subsection (b) of that section, 
                                shall not apply to a grant made 
                                under this paragraph.
                  (D) Evaluation and report.--The Secretary 
                shall, by grant, contract, or interagency 
                agreement, conduct an evaluation of the 
                programs developed with grants awarded under 
                this paragraph and shall submit a report to 
                Congress on the results of such evaluation.
                  (E) Authorization of appropriations.--Out of 
                any money in the Treasury of the United States 
                not otherwise appropriated, there is 
                appropriated to the Secretary for the purpose 
                of carrying out this paragraph, $40,000,000 for 
                each of fiscal years 2004 through 2008.
          (7) Grants for low-income car ownership programs.--
                  (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, localities, 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, counties, 
                localities, Indian tribes, 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.
                          (iii) General rules governing use of 
                        funds.--The rules of section 404, other 
                        than subsection (b) of that section, 
                        shall not apply to a grant made under 
                        this paragraph.
                  (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, 
                $25,000,000 for each of fiscal years 2004 
                through 2008.
    (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, 2001, and 2002 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 2002\14\ shall not exceed 
                        the total amount appropriated pursuant 
                        to paragraph (2).]
          (1) Contingency fund grants.--
                  (A) Payments.--Subject to subparagraph (C), 
                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 product 
                of--
                          (i) the applicable percentage (as 
                        defined under subparagraph (D)(i)) of 
                        the applicable benefit level (as 
                        defined in subparagraph (D)(ii)); and
                          (ii) the amount by which the total 
                        number of families that received 
                        assistance under the State program 
                        funded under this part in the most 
                        recently concluded 3-month period for 
                        which data are available from the State 
                        exceeds a 5 percent increase in the 
                        number of such families in the 
                        corresponding 3-month period in either 
                        of the 2 most recent preceding fiscal 
                        years and that was due, in large 
                        measure, to economic conditions rather 
                        than State policy changes.
                  (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)).
                  (D) Definitions.--In this paragraph:
                          (i) Applicable percentage.--The term 
                        ``applicable percentage'' means 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.
                  (E) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there is appropriated for the 
                period of fiscal years 2004 through 2008, 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.
          [(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.--Notwithstanding 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 Stateis 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 1994.
                          [(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.]
          (3) Initial determination of whether a state 
        qualifies as a needy state.--
                  (A) In general.--For purposes of paragraph 
                (1), subject to paragraph (4), a State will be 
                initially determined to be a needy State for a 
                month if, as determined by the Secretary--
                          (i) the monthly average of the 
                        unduplicated number of families that 
                        received assistance under the State 
                        program funded under this part in the 
                        most recently concluded 3-month period 
                        for which data are available from the 
                        State increased by at least 5 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;
                          (ii) the increase in the number of 
                        such families for the State was due, in 
                        large measure, to economic conditions 
                        rather than State policy changes; and
                          (iii) the State satisfies any of the 
                        following criteria:
                                  (I) The average rate of total 
                                unemployment in the State 
                                (seasonally adjusted) 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.
                                  (II) The average insured 
                                unemployment rate for the most 
                                recent 13 weeks for which data 
                                are available has increased by 
                                1 percentage point over the 
                                corresponding 13-week period in 
                                either of the 2 most recent 
                                preceding fiscal years.
                                  (III) 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 
                                15 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 and the 
                                Secretary of Agriculture concur 
                                in the 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.
                  (B) Duration.--A State that qualifies as a 
                needy State--
                          (i) under subclause (I) or (II) of 
                        subparagraph (A)(iii), shall be 
                        considered a needy State until the 
                        State's average rate of total 
                        unemployment or the State's insured 
                        unemployment rate, respectively, falls 
                        below the level attained in the 
                        applicable period that was first used 
                        to determine that the State qualified 
                        as a needy State under that 
                        subparagraph (and in the case of the 
                        insured unemployment rate, without 
                        regard to any declines in the rate that 
                        are the result of seasonal variation); 
                        and
                          (ii) under subclause (III) of 
                        subparagraph (A)(iii), shall be 
                        considered a needy State so long as the 
                        State meets the criteriafor being 
considered a needy State under that subparagraph.
          (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.
          [(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.

           *       *       *       *       *       *       *

    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.
    (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 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.\15\
          [(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.

           *       *       *       *       *       *       *

  [(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 Carryover or Reserve Certain Amounts for 
Benefits or Services or for Future Contingencies.--
          (1) Carryover.--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.
          (2) Contingency reserve.--A State or tribe may 
        designate any portion of a grant made to the State or 
        tribe under this part as a contingency reserve for 
        future needs, and may use any amount so designated to 
        provide, without fiscal year limitation, any benefit or 
        service that may be provided under the State or tribal 
        program funded under this part. If a State or tribe so 
        designates a portion of such a grant, the State or 
        tribe shall include in its report under section 411(a) 
        the amount so designated.
  (f) Authority To Operate Employment Placement Program.--A 
State to whcih 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 job placement agencies that 
provide employment placement services to individuals who 
receive [assistance] benefits or services under the State 
program funded under this part.

           *       *       *       *       *       *       *

  (l) Authority To Establish Undergraduate Post-Secondary or 
Vocational Educational Program.--
          (1) In general.--Subject to the succeeding paragraphs 
        of this subsection, 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 (5)) may be provided support services 
        described in paragraph (7) and, subject to paragraph 
        (8), may have hours of participation in such program 
        counted as being engaged in work for purposes of 
        determining monthly participation rates under section 
        407(b)(1)(B)(i).
          (2) State plan requirement.--In order to establish a 
        program under this subsection, a State shall describe 
        (in an addendum to the State plan submitted under 
        section 402) the applicable eligibility criteria that 
        is designed to limit participation in the program to 
        only those individuals--
                  (A) whose past earnings indicate that the 
                individuals cannot qualify for employment that 
                pays enough to allow them to obtain self-
                sufficiency (as determined by the State); and
                  (B) for whom enrollment in the program will 
                prepare the individuals for higher-paying 
                occupations in demand in the State.
          (3) Limitation on enrollment.--The number of eligible 
        participants in a program established under this 
        subsection may not exceed 10 percent of the total 
        number of families receiving assistance under the State 
        program funded under this part.
          (4) 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.
          (5) Definition of eligible participant.--In this 
        subsection, the term ``eligible participant'' means an 
        individual who receives assistance under the State 
        program funded under this part and satisfies the 
        following requirements:
                  (A) The individual is enrolled in a 
                postsecondary 2- or 4-year degree program or in 
                a vocational educational training program.
                  (B) During the period the individual 
                participates in the program, the individual 
                maintains satisfactory academic progress, as 
                defined by the institution operating the 
                undergraduate post-secondary or vocational 
                educational program in which the individual is 
                enrolled.
          (6) Required time periods for completion of degree or 
        vocational educational training program.--
                  (A) In general.--Subject to subparagraph (B), 
                an eligible participant participating in a 
                program established under this subsection shall 
                be required to complete the requirements of a 
                degree or vocational educational training 
                program within the normal time frame for full 
                time students seeking the particular degree or 
                completing the vocational educational training 
                program.
                  (B) Exception.--For good cause, the State may 
                allow an eligible participant to complete their 
                degree requirements or vocational educational 
                training program 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 eligible participant 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.
          (7) 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.
          (8) Rules for inclusion in monthly work participation 
        rates.--
                  (A) Families counted as participating if they 
                meet the requirements of subparagraphs (b) or 
                (c).--For each eligible participant, a State 
                may elect, for purposes of determining monthly 
                participation rates under section 
                407(b)(1)(B)(i), to include such participant in 
                the determination of such rates in accordance 
                with subparagraph (B) or (C).
                  (B) Full or partial credit for hours of 
                participation in educational or related 
                activities.--
                          (i) In general.--Subject to clause 
                        (iv), an eligible participant who 
                        participates in educational or related 
                        activities (as determined by the State) 
                        under a program established under this 
                        subsection shall be given credit for 
                        the number of hours of such 
                        participation to the extent that an 
                        adult recipient or minor child head of 
                        household would be given credit under 
                        section 407(c) for being engaged in the 
                        same number of hours of work activities 
                        described in paragraph (1), (2), (3), 
                        (4), (5), (6), (7), (8), or (12) of 
                        section 407(d).
                          (ii) Related activities.--For 
                        purposes of clause (i), related 
                        activities shall include--
                                  (I) work activities described 
                                in paragraph (1), (2), (3), 
                                (4), (5), (6), (7), (8), or 
                                (12) of section 407(d);
                                  (II) work study, practicums, 
                                internships, clinical 
                                placements, laboratory or field 
                                work, or such other activities 
                                as will enhance the eligible 
                                participant's employability in 
                                the participant's field of 
                                study, as determined by the 
                                State; or
                                  (III) subject to clause 
                                (iii), study time.
                          (iii) Limitation on inclusion of 
                        study time.--For purposes of 
                        determining hours per week of 
                        participation by an eligible 
                        participant under a program established 
                        under this subsection, 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.
                          (iv) Total number of hours limited to 
                        being counted as 1 family.--In no event 
                        may hours per week of participation by 
                        an eligible participant under a program 
                        established under this subsection be 
                        counted as more than 1 family for 
                        purposes of determining monthly 
                        participation rates under section 
                        407(b)(1)(B)(i).
                  (C) Full credit for being engaged in direct 
                work activities for certain hours per week.--
                          (i) In general.--A family that 
                        includes an eligible participant who, 
                        in addition to complying with the full-
                        time educational participation 
                        requirements of the degree or 
                        vocational educational training program 
                        they are enrolled in, participates in 
                        an activity described in subclause (I), 
                        (II), or (III) of subparagraph (B)(ii) 
                        for not less than the number of hours 
                        required per week under clause (ii) 
                        shall be counted as 1 family.
                          (ii) Required hours per week.--For 
                        purposes of clause (i), subject to 
                        clause (iii), the number of hours per 
                        week are--
                                  (I) 6 hours per week during 
                                the first 12-month period that 
                                an eligible participant 
                                participates in a program 
                                established under this 
                                subsection;
                                  (II) 8 hours per week during 
                                the second 12-month period of 
                                such participation;
                                  (II) 10 hours per week during 
                                the third 12-month period of 
                                such participation; and
                                  (II) 12 hours per week during 
                                the fourth or any other 
                                succeeding 12-month period of 
                                such participation.
                          (iii) Modification of requirements 
                        for good cause.--A State may modify the 
                        number of hours per week required under 
                        clause (ii) for good cause. For 
                        purposes of the preceding sentence, 
                        good cause includes the case of an 
                        eligible participant 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.

           *       *       *       *       *       *       *

               [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.--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:

[If the fiscal year is:               The minimum participation rate is:
    [1997.....................................................        25
    [1998.....................................................        30
    [1999.....................................................        35
    [2000.....................................................        40
    [2001.....................................................        45
    [2002 or thereafter.......................................       50.

          [(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.]

    (a) Participation Rate Requirements.--
          (1) In general.--A State to which a grant is made 
        under section 403 for a fiscal year shall achieve a 
        minimum participation rate with respect to all families 
        receiving assistance under the State program funded 
        under this part that is equal to not less than--
                  (A) 50 percent for fiscal year 2004;
                  (B) 55 percent for fiscal year 2005;
                  (C) 60 percent for fiscal year 2006;
                  (D) 65 percent for fiscal year 2007; and
                  (E) 70 percent for fiscal year 2008 and each 
                succeeding fiscal year.
          (2) Limitation on reduction of participation rate 
        through application of credits.--Notwithstanding any 
        other provision of this part, the net effect of any 
        percentage reduction in the minimum participation rate 
        otherwise required under this section with respect to 
        families receiving assistance under the State program 
        funded under this part as a result of the application 
        of any employment credit, caseload reduction credit, or 
        other credit against such rate for a fiscal year, shall 
        not exceed--
                  (A) 40 percentage points, in the case of 
                fiscal year 2004;
                  (B) 35 percentage points, in the case of 
                fiscal year 2005;
                  (C) 30 percentage points, in the case of 
                fiscal year 2006;
                  (D) 25 percentage points, in the case of 
                fiscal year 2007; or
                  (E) 20 percentage points, in the case of 
                fiscal year 2008 or any fiscal year thereafter.
    (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 child 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; 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).
          [(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-percent 
                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.]
          (2) Employment credit.--
                  (A) In general.--Subject to subsection 
                (a)(2), the Secretary shall, by regulation, 
                reduce 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;
                          (ii) with respect to a recipient of 
                        assistance or former 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; or
                          (iii) with respect to families 
                        described in subclause (II) or (III) of 
                        subparagraph (B)(ii), using such other 
                        data as the Secretary may require in 
                        order to determine the employment 
                        credit for a State under this 
                        paragraph.
                  (B) Calculation of credit.--
                          (i) In general.--The employment 
                        credit for a State for a fiscal year is 
                        an amount equal to the sum of the 
                        amounts determined under clause (ii), 
                        divided by the amount determined under 
                        clause (iii).
                          (ii) Numerator.--For purposes of 
                        clause (i), the amounts determined 
                        under this clause are the following:
                                  (I) Twice the quarterly 
                                average unduplicated number of 
                                families that include an adult 
                                or minor child head of 
                                household recipient of 
                                assistance under the State 
                                program funded under this part, 
                                that ceased to receive such 
                                assistance for at least 2 
                                consecutive months following 
                                the date of the case closure 
                                for the family during the 
                                applicable period (as defined 
                                in clause (v)), that did not 
                                receive assistance under a 
                                separate State-funded program 
                                during such 2-month period, and 
                                that were employed during the 
                                calendar quarter immediately 
                                succeeding the quarter in which 
                                the assistance under the State 
                                program funded under this part 
                                ceased.
                                  (II) At the option of the 
                                State, twice the quarterly 
                                average 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 $1,000 during 
                                the applicable period (as so 
                                defined).
                                  (III) At the option of the 
                                State, twice the quarterly 
                                average number of families 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 which takes 
                                account of large one-time 
                                transition payments)) during 
                                the applicable period (as so 
                                defined).
                          (iii) Denominator.--For purposes of 
                        clause (i), the amount determined under 
                        this clause is the amount equal to the 
                        sum of the following:
                                  (I) The average monthly 
                                number of families that include 
                                an adult or minor child head of 
                                household who received 
                                assistance under the State 
                                program funded under this part 
                                during the applicable period 
                                (as defined under clause (v)).
                                  (II) If the State elected the 
                                option under clause (ii)(II), 
                                twice the quarterly average 
                                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).
                                  (III) If the State elected 
                                the option under clause 
                                (ii)(III), twice the quarterly 
                                average number of families that 
                                includes an adult who is 
                                receiving substantial child 
                                care or transportation 
                                assistance during the 
                                applicable period (as so 
                                defined).
                          (iv) Special rule for former 
                        recipients with higher earnings.--In 
                        calculating the employment credit for a 
                        State for a fiscal year, in the case of 
                        a family that includes an adult or a 
                        minor child head of household that is 
                        to be included in the amount determined 
                        under clause (ii)(I) and that, with 
                        respect to the quarter in which the 
                        family's earnings was examined during 
                        the applicable period, earned at least 
                        33 percent of the average quarterly 
                        earnings in the State (determined on 
                        the basis of State unemployment data), 
                        the family shall be considered to be 
                        1.5 families.
                          (v) Definition of applicable 
                        period.--For purposes of this 
                        paragraph, the term `applicable period' 
                        means, with respect to a fiscal year, 
                        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;
                                  (II) at State option, 
                                individuals in the quarter 
                                after the individuals received 
                                a short-term, nonrecurring 
                                benefit; and
                                  (III) at State option, 
                                individuals in the quarter 
                                after the individuals ceased 
                                receiving substantial child 
                                care or transportation 
                                assistance.
                  (C) Notification to state.--Not later than 
                August 30 of each fiscal year, the Secretary 
                shall--
                          (i) determine, on the basis of the 
                        applicable period, the amount of the 
                        employment credit that will be used in 
                        determining the minimum participation 
                        rate for a State under subsection (a) 
                        for the immediately succeeding fiscal 
                        year; and
                          (ii) notify each State conducting a 
                        State program funded under this part of 
                        the amount of the employment credit for 
                        such program for the succeeding fiscal 
                        year.
          [(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)] (3) State option to include individuals 
        receiving assistance under a tribal family assistance 
        plan or tribal work program.--For purposes of 
        [paragraph (a)(B) and (2)(B)] determining monthly 
        participation rates under paragraph (a)(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) 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 under subsection (a) for not more 
        than 12 months.]
          (4) State options for participation requirement 
        exemptions.--At the option of a State, a State may, on 
        a case-by-case basis--
                  (A) not include a family in the determination 
                of the monthly participation rate for the State 
                in the first month for which the family 
                receives assistance from the State program 
                funded under this part on the basis of the most 
                recent application for such assistance; or
                  (B) not require a family in which the 
                youngest child has not attained 12 months of 
                age to engage in work, and may disregard that 
                family in determining the minimum participation 
                rate under subsection (a) for the State for not 
                more than 12 months.
    [(c) Engaged in Work.--
          [(1) General rules.--
                  [(A) All families.--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 of hours per 
                week specified in the following table during 
                the month, not fewer than 20 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:

[If the month is in                                          The minimum
[fiscal year:                                             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
          [(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 (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), 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 requirement.--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 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 educational activities.--For 
                purposes of determining monthly participation 
                rates under paragraphs (1)(B)(i) and (2)(B) of 
                subsection (b), 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.]
  (c) Determination of Countable Hours Engaged in Work.--
          (1) Single parent or relative with a child over age 
        6.--
                  (A) Minimum average number of hours per 
                week.--Subject to the succeeding paragraphs of 
                this subsection, a family in which an adult 
                recipient or minor child head of household in 
                the family is participating in work activities 
                described in subsection (d) shall be treated as 
                engaged in work for purposes of determining 
                monthly participation rates under subsection 
                (b)(1)(B)(i) as follows:
                          (i) In the case of a family in which 
                        the total number of hours in which any 
                        adult recipient or minor child head of 
                        household in the family is 
                        participating in such work activities 
                        for an average of at least 20, but less 
                        than 24, hours per week in a month, as 
                        0.675 of a family.
                          (ii) In the case of a family in which 
                        the total number of hours in which any 
                        adult recipient or minor child head of 
                        household in the family is 
                        participating in such work activities 
                        for an average of at least 24, but less 
                        than 30, hours per week in a month, as 
                        0.75 of a family.
                          (iii) In the case of a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        30, but less than 34, hours per week in 
                        a month, as 0.875 of a family.
                          (iv) In the case of a family in which 
                        the total number of hours in which any 
                        adult recipient or minor child head of 
                        household in the family is 
                        participating in such work activities 
                        for an average of at least 34, but less 
                        than 35, hours per week in a month, as 
                        1 family.
                          (v) In the case of a family in which 
                        the total number of hours in which any 
                        adult recipient or minor child head of 
                        household in the family is 
                        participating in such work activities 
                        for an average of at least 35, but less 
                        than 38, hours per week in a month, as 
                        1.05 families.
                          (vi) In the case of a family in which 
                        the total number of hours in which any 
                        adult recipient or minor child head of 
                        household in the family is 
                        participating in such work activities 
                        for an average of at least 38 hours per 
                        week in a month, as 1.08 families.
                  (B) Direct work activities required for an 
                average of 24 hours per week.--Except as 
                provided in subparagraph (C)(i), a State may 
                not count any hours of participation in work 
                activities specified in paragraph (9), (10), or 
                (11) of subsection (d) of any adult recipient 
                or minor child head of household in a family 
                before the total number of hours of 
                participation by any adult recipient or minor 
                child head of household in the family in work 
                activities described in paragraph (1), (2), 
                (3), (4), (5), (6), (7), (8), or (12) of 
                subsection (d) for the family for the month 
                averages at least 24 hours per week.
                  (C) State flexibility to count participation 
                in certain activities.--
                          (i) Qualified activities for 3-months 
                        in any 24-month period.--
                                  (I) 24-hours per week 
                                required.--Subject to 
                                subclauses (III) and (IV), for 
                                purposes of determining hours 
                                under subparagraph (A), a State 
                                may count the total number of 
                                hours any adult recipient or 
                                minor child head of household 
                                in a family engages in 
                                qualified activities described 
                                in subclause (II) as a work 
                                activity described in 
                                subsection (d), without regard 
                                to whether the recipient has 
                                satisfied the requirement of 
                                subparagraph (B), but only if--
                                          (aa) the total number 
                                        of hours of 
                                        participation in such 
                                        qualified activities 
                                        for the family for the 
                                        month average at least 
                                        24 hours per week; and
                                          (bb) engaging in such 
                                        qualified activities is 
                                        a requirement of the 
                                        family self-sufficiency 
                                        plan.
                                  (II) Qualified activities 
                                described.--For purposes of 
                                subclause (I), qualified 
                                activities described in this 
                                subclause are any of the 
                                following:
                                          (aa) Postsecondary 
                                        education.
                                          (bb) Adult literacy 
                                        programs or activities.
                                          (cc) Substance abuse 
                                        counseling or 
                                        treatment.
                                          (dd) Programs or 
                                        activities designed to 
                                        remove barriers to 
                                        work, as defined by the 
                                        State.
                                          (ee) Work activities 
                                        authorized under any 
                                        waiver for any State 
                                        that was continued 
                                        under section 415 
                                        before the date of 
                                        enactment of the 
                                        Personal Responsibility 
                                        and Individual 
                                        Development for 
                                        Everyone Act.
                                  (III) Limitation.--Except as 
                                provided in clause (ii), 
                                subclause (I) shall not apply 
                                to a family for more than 3 
                                months in any period of 24 
                                consecutive months.
                                  (IV) Certain activities.--The 
                                Secretary may allow a State to 
                                count the total hours of 
                                participation in qualified 
                                activities described in 
                                subclause (II) for an adult 
                                recipient or minor child head 
                                of household without regard to 
                                the minimum 24 hour average per 
                                week of participation 
                                requirement under subclause (I) 
                                if the State has demonstrated 
                                conclusively that such activity 
                                is part of a substantial and 
                                supervised program whose 
                                effectiveness in moving 
                                families to self-sufficiency is 
                                superior to any alternative 
                                activity and the effectiveness 
                                of the program in moving 
                                families to self-sufficiency 
                                would be substantially impaired 
                                if participating individuals 
                                participated in additional, 
                                concurrent qualified activities 
                                that enabled the individuals to 
                                achieve an average of at least 
                                24 hours per week of 
                                participation.
                          (ii) Additional 3-month period 
                        permitted for certain activities.--
                                  (I) Self-sufficiency plan 
                                requirement combined with 
                                minimum number of hours.--A 
                                State may extend the 3-month 
                                period under clause (i) for an 
                                additional 3 months in the same 
                                period of 24 consecutive months 
                                in the case of an adult 
                                recipient or minor child head 
                                of household who is receiving 
                                qualified rehabilitative 
                                services described in subclause 
                                (II) if--
                                          (aa) the total number 
                                        of hours that the adult 
                                        recipient or minor 
                                        child head of household 
                                        engages in such 
                                        qualified 
                                        rehabilitative services 
                                        and, subject to 
                                        subclause (III), a work 
                                        activity described in 
                                        paragraph (1), (2), 
                                        (3), (4), (5), (6), 
                                        (7), (8), or (12) of 
                                        subsection (d) for the 
                                        month average at least 
                                        24 hours per week; and
                                          (bb) engaging in such 
                                        qualified 
                                        rehabilitative services 
                                        is a requirement of the 
                                        family self-sufficiency 
                                        plan.
                                  (II) Qualified rehabilitative 
                                services described.--For 
                                purposes of subclause (I), 
                                qualified rehabilitative 
                                services described in this 
                                subclause are any of the 
                                following:
                                          (aa) Adult literacy 
                                        programs or activities.
                                          (bb) Participation in 
                                        a program designed to 
                                        increase proficiency in 
                                        the English language.
                                          (cc) In the case of 
                                        an adult recipient or 
                                        minor child head of 
                                        household who has been 
                                        certified by a 
                                        qualified medical, 
                                        mental health, or 
                                        social services 
                                        professional (as 
                                        defined by the State) 
                                        as having a physical or 
                                        mental disability, 
                                        substance abuse 
                                        problem, or other 
                                        problem that requires a 
                                        rehabilitative service, 
                                        substance abuse 
                                        treatment, or mental 
                                        health treatment, the 
                                        service or treatment 
                                        determined necessary by 
                                        the professional.
                                  (III) Nonapplication of 
                                limitations on job search and 
                                vocational educational 
                                training.--An adult recipient 
                                or minor child head of 
                                household who is receiving 
                                qualified rehabilitative 
                                services described in subclause 
                                (II) may engage in a work 
                                activity described in paragraph 
                                (6) or (8) of subsection (d) 
                                for purposes of satisfying the 
                                minimum 24 hour average per 
                                week of participation 
                                requirement under subclause 
                                (I)(aa) without regard to any 
                                limit that otherwise applies to 
                                the activity (including the 30 
                                percent limitation on 
                                participation in vocational 
                                educational training under 
                                paragraph (6)(C)).
                          (iii) Hours in excess of an average 
                        of 24 work activity hours per week.--If 
                        the total number of hours that any 
                        adult recipient or minor child head of 
                        household in a family has participated 
                        in a work activity described in 
                        paragraph (1), (2), (3), (4), (5), (6), 
                        (7), (8), or (12) of subsection (d) 
                        averages at least 24 hours per week in 
                        a month, a State, for purposes of 
                        determining hours under subparagraph 
                        (A), may count any hours an adult 
                        recipient or minor child head of 
                        household in the family engages in--
                                  (I) any work activity 
                                described in subsection (d), 
                                without regard to any limit 
                                that otherwise applies to the 
                                activity (including the 30 
                                percent limitation on 
                                participation in vocational 
                                educational training under 
                                paragraph (6)(C)); and
                                  (II) any qualified activity 
                                described in clause (i)(II), as 
                                a work activity described in 
                                subsection (d).
          (2) Single parent or relative with a child under age 
        6.--
                  (A) In general.--A family in which an adult 
                recipient or minor child head of household in 
                the family is the only parent or caretaker 
                relative in the family of a child who has not 
                attained 6 years of age and who is 
                participating in work activities described in 
                subsection (d) shall be treated as engaged in 
                work for purposes of determining monthly 
                participation rates under subsection 
                (b)(1)(B)(i) as follows:
                          (i) In the case of such a family in 
                        which the total number of hours in 
                        which the adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        20, but less than 24, hours per week in 
                        a month, as 0.675 of a family.
                          (ii) In the case of such a family in 
                        which the total number of hours in 
                        which the adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        24, but less than 35, hours per week in 
                        a month, as 1 family.
                          (iii) In the case of such a family in 
                        which the total number of hours in 
                        which the adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        35, but less than 38, hours per week in 
                        a month, as 1.05 families.
                          (iv) In the case of such a family in 
                        which the total number of hours in 
                        which the adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        38 hours per week in a month, as 1.08 
                        families.
                  (B) Application of rules regarding direct 
                work activities and state flexibility to count 
                participation in certain activities.--
                Subparagraphs (B) and (C) of paragraph (1) 
                apply to a family described in subparagraph (A) 
                in the same manner as such subparagraphs apply 
                to a family described in paragraph (1)(A).
          (3) 2-parent families.--
                  (A) In general.--Subject to paragraph (6)(A), 
                a 2-parent family in which an adult recipient 
                or minor child head of household in the family 
                is participating in work activities described 
                in subsection (d) shall be treated as engaged 
                in work for purposes of determining monthly 
                participation rates under subsection 
                (b)(1)(B)(i) as follows:
                          (i) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        26, but less than 30, hours per week in 
                        a month, as 0.675 of a family.
                          (ii) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        30, but less than 35, hours per week in 
                        a month, as 0.75 of a family.
                          (iii) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        35, but less than 39, hours per week in 
                        a month, as 0.875 of a family.
                          (iv) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        39, but less than 40, hours per week in 
                        a month, as 1 family.
                          (v) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        40, but less than 43, hours per week in 
                        a month, as 1.05 families.
                          (vi) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        43 hours per week in a month, as 1.08 
                        families.
                  (B) Application of rules regarding direct 
                work activities and state flexibility to count 
                participation in certain activities.--
                Subparagraphs (B) and (C) of paragraph (1) 
                apply to a 2-parent family described in 
                subparagraph (A) in the same manner as such 
                subparagraphs apply to a family described in 
                paragraph (1)(A), except that subparagraph (B) 
                of paragraph (1) shall be applied to a such a 
                2-parent family by substituting ``34'' for 
                ``24'' each place it appears.
          (4) 2-parent families that receive federally-funded 
        child care.--
                  (A) In general.--Subject to paragraph (6)(A), 
                if a 2-parent family receives federally-funded 
                child care assistance, an adult recipient or 
                minor child head of household in the family 
                participating in work activities described in 
                subsection (d) shall be treated as engaged in 
                work for purposes of determining monthly 
                participation rates under subsection 
                (b)(1)(B)(i) as follows:
                          (i) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        40, but less than 45, hours per week in 
                        a month, as 0.675 of a family.
                          (ii) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        45, but less than 51, hours per week in 
                        a month, as 0.75 of a family.
                          (iii) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        51, but less than 55, hours per week in 
                        a month, as 0.875 of a family.
                          (iv) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        55, but less than 56, hours per week in 
                        a month, as 1 family.
                          (v) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        56, but less than 59, hours per week in 
                        a month, as 1.05 families.
                          (vi) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        59 hours per week in a month, as 1.08 
                        families.
                  (B) Application of rules regarding direct 
                work activities and state flexibility to count 
                participation in certain activities.--
                Subparagraphs (B) and (C) of paragraph (1) 
                apply to a 2-parent family described in 
                subparagraph (A) in the same manner as such 
                subparagraphs apply to a family described in 
                paragraph (1)(A), except that subparagraph (B) 
                of paragraph (1) shall be applied to such a 2-
                parent family by substituting ``50'' for ``24'' 
                each place it appears.
          (5) Calculation of hours per week.--The number of 
        hours per week that a family is engaged in work is the 
        quotient of--
                  (A) the total number of hours per month that 
                the family is engaged in work; divided by
                  (B) 4.
          (6) Special rules.--
                  (A) 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 paragraph (3) or 
                (4).
                  (B) Number of weeks for which job search 
                counts as work.--An individual shall not be 
                considered to be engaged in work for a month 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 (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 meets the criteria of subclause (I), 
                (II), or (III) of section 403(b)(3)(A)(iii) or 
                satisfies the applicable duration requirement 
                of section 403(b)(3)(B), 12 weeks).
                  (C) Single teen head of household or married 
                teen who maintains satisfactory school 
                attendance deemed to count as 1 family.--For 
                purposes of determining hours under the 
                preceding paragraphs of this subsection, with 
                respect to a month, a State shall count a 
                recipient who is married or a head of household 
                and who has not attained 20 years of age as 1 
                family 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 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 educational activities.--
                Except as provided in paragraph (1)(C)(ii)(I), 
                for purposes of subsection (b)(1)(B)(i), not 
                more than 30 percent of the number of 
                individuals in all families in a State who are 
                treated as engaged in work for a month may 
                consist of individuals who are--
                          (i) determined (without regard to 
                        individuals participating in a program 
                        established under section 404(l)) to be 
                        engaged in work for the month by reason 
                        of participation in vocational 
                        educational training (but only with 
                        respect to such training thatdoes not 
exceed 12 months with respect to any individual); or
                          (ii) deemed to be engaged in work for 
                        the month by reason of subparagraph (C) 
                        of this paragraph.
                  (E) State option to deem single parent caring 
                for a child or adult dependent for care with a 
                physical or mental impairment to be meeting all 
                or part of a family's work participation 
                requirements for a month.--
                          (i) In general.--A State may count 
                        the number of hours per week that an 
                        adult recipient or minor child head of 
                        household who is the only parent or 
                        caretaker relative for a child or adult 
                        dependent for care with a physical or 
                        mental impairment engages in providing 
                        substantial ongoing care for such child 
                        or adult dependent for care if the 
                        State determines that--
                                  (I) the child or adult 
                                dependent for care has been 
                                verified through a medically 
                                acceptable clinical or 
                                diagnostic technique as having 
                                a significant physical or 
                                mental impairment or 
                                combination of impairments that 
                                require substantial ongoing 
                                care;
                                  (II) the adult recipient or 
                                minor child head of household 
                                providing such care is the most 
                                appropriate means, as 
                                determined by the State, by 
                                which such care can be provided 
                                to the child or adult dependent 
                                for care;
                                  (III) for each month in which 
                                this subparagraph applies to 
                                the adult recipient or minor 
                                child head of household, the 
                                adult recipient or minor child 
                                head of household is in 
                                compliance with the 
                                requirements of the family's 
                                self-sufficiency plan; and
                                  (IV) the recipient is unable 
                                to participate fully in work 
                                activities, after consideration 
                                of whether there are supports 
                                accessible and available to the 
                                family for the care of the 
                                child or adult dependent for 
                                care.
                          (ii) Total number of hours limited to 
                        being counted as 1 family.--In no event 
                        may a family that includes a recipient 
                        to which clause (i) applies be counted 
                        as more than 1 family for purposes of 
                        determining monthly participation rates 
                        under subsection (b)(1)(B)(i).
                          (iii) State requirements.--In the 
                        case of a recipient to which clause (i) 
                        applies, the State shall--
                                  (I) conduct regular, periodic 
                                evaluations of the family of 
                                the adult recipient or minor 
                                child head of household; and
                                  (II) include as part of the 
                                family's self-sufficiency plan, 
                                regular updates on what special 
                                needs of the child or the adult 
                                dependent for care, including 
                                substantial ongoing care, could 
                                be accommodated either by 
                                individuals other than the 
                                adult recipient or minor child 
                                head of household outside of 
                                the home.
                          (iv) Rule of construction.--Nothing 
                        in this subparagraph shall be construed 
                        as prohibiting a State from including 
                        in a recipient's self-sufficiency plan 
                        a requirement to engage in work 
                        activities described in subsection (d).
                  (F) Optional modification of work 
                requirements for recipients residing in areas 
                of indian country or an alaskan native village 
                with high joblessness.--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 that the State will treat as being 
                work activities described in subsection (d) 
                that a recipient who resides in such an area 
                and who is participating in such activities in 
                accordance with a self-sufficiency plan under 
                section 408(b) may engage in for purposes of 
                satisfying work requirements under the State 
                program and for purposes of determining monthly 
                participation rates under subsection 
                (b)(1)(B)(i).

           *       *       *       *       *       *       *

    (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 other than an 
        individual participating in a program established under 
        section 404(l));

           *       *       *       *       *       *       *

                       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.

           *       *       *       *       *       *       *

          [(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.
          (4) No assistance for teenage parents who do not 
        attend high school or other equivalent training 
        program.--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 who has not 
        attained 18 years of age, is not married, has a minor 
        child at least 12 weeks of age in his or her care, and 
        has not successfully completed a high-school education 
        (or its equivalent), if the individual does not 
        participate in--
                  (A) educational activities directed toward 
                the attainment of a high school diploma or its 
                equivalent; or
                  (B) an alternative educational or training 
                program that has been approved by the State.
          (5) No assistance for teenage parents not living in 
        adult-supervised settings.--
                  (A) In general.--
                          (i) Requirement.--Except as provided 
                        in [subparagraph (B)] 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 place of] do not reside in a--
                                  (I) 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) transitional living 
                                youth project funded under a 
                                grant made under section 321 of 
                                the Runaway 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.--In the case of an 
                        individual who is described in clause 
                        (ii), the State agency referred to in 
                        section 402(a)(4) shall provide, or 
                        assist the individual in locating, a 
                        second chance home, maternity home, or 
                        other appropriate adult-supervised 
                        supportive living arrangement, taking 
                        into consideration the needs and 
                        concerns of the individual, unless the 
                        State agency determines that the 
                        individual's current living arrangement 
                        is appropriate, and thereafter shall 
                        require that the individual and the 
                        minor child referred to in subparagraph 
                        (A)(ii)(II) reside in such living 
                        arrangement as a condition of the 
                        continued receipt of assistance under 
                        the State program funded under this 
                        part attributable to funds provided by 
                        the Federal Government (or in an 
                        alternative appropriate arrangement, 
                        should circumstances change and the 
                        current arrangement cease to be 
                        appropriate).

           *       *       *       *       *       *       *

                  (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 section 408(a)(4) for not more than a 
                single 60-day period in order to assist the 
                individual in meeting the requirement of clause 
                (i) of subparagraph (A), subparagraph (B), or 
                section 408(a)(4) for receipt of 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) Family Self-Sufficiency Plans.--
          (1) In general.--A State to which a grant is made 
        under section 403 shall--
                  (A) make an initial screening and assessment, 
                in the manner deemed appropriate by the State, 
                of the skills, prior work experience, education 
                obtained, work readiness, barriers to work, and 
                employability of each adult or minor child head 
                of household recipient of assistance in the 
                family who--
                          (i) has attained age 18; or
                          (ii) has not completed high school or 
                        obtained a certificate of high school 
                        equivalency and is not attending 
                        secondary school;
                  (B) assess, in the manner deemed appropriate 
                by the State, the work support and other 
                assistance and family support services for 
                which each family receiving assistance is 
                eligible; and
                  (C) assess, in the manner deemed appropriate 
                by the State, 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.--The State shall, in the 
        manner deemed appropriate by the State--
                  (A) establish for each family that includes 
                an individual described in paragraph (1)(A), in 
                consultation as the State deems appropriate 
                with the individual, a self-sufficiency plan 
                that--
                          (i) specifies activities described in 
                        the State plan submitted pursuant to 
                        section 402, including work activities 
                        described in paragraph (1), (2), (3), 
                        (4), (5), (6), (7), (8), or (12) of 
                        section 407(d), as appropriate;
                          (ii) is designed to assist the family 
                        in achieving their maximum degree of 
                        self-sufficiency, and
                          (iii) provides for the ongoing 
                        participation of the individual in the 
                        activities specified in the plan;
                  (B) requires, at a minimum, each such 
                individual to participate in activities in 
                accordance with the self-sufficiency plan;
                  (C) sets forth the appropriate supportive 
                services the State intends to provide for the 
                family;
                  (D) 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
                  (E) includes a section designed to assist the 
                family by informing the family, in such manner, 
                of the work support and other 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) Federal or State funded child 
                        care, including child care funded under 
                        the Child Care Development Block Grant 
                        Act of 1990 (42 U.S.C. 9858 et seq.) 
                        and funds made available under this 
                        title or title XX;
                          (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.--A State to which a grant 
                is made under section 403 shall--
                          (i) monitor the participation of each 
                        adult recipient or minor child head of 
                        household in the activities specified 
                        in the self-sufficiency 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.--
                Prior to imposing a sanction against an adult 
                recipient, minor child head of household, or a 
                family for failure to comply with a requirement 
                of the self-sufficiency plan or the State 
                program funded under this part, the State 
                shall, to the extent determined appropriate by 
                the State--
                          (i) review the self-sufficiency plan; 
                        and
                          (ii) make a good faith effort (as 
                        defined by the State) to consult with 
                        the family.
          (4) State discretion.--A State shall have sole 
        discretion, consistent with section 407, to define and 
        design activities for families for purposes of this 
        subsection, to develop methods for monitoring and 
        reviewing progress pursuant to this subsection, and to 
        make modifications to the plan as the State deems 
        appropriate to assist the individual in increasing 
        their degree of self-sufficiency.
          (5) Application to partially-sanctioned families.--
        The requirements of this subsection shall apply in the 
        case of a family that includes an adult or minor child 
        head of household recipient of assistance who is 
        subject to a partial sanction.
          (6) Timing.--The State shall initiate screening and 
        assessment and the establishment of a family self-
        sufficiency plan in accordance with the requirements of 
        this subsection--
                  (A) in the case of a family that, as of the 
                date of enactment of the Personal 
                Responsibility and Individual Development for 
                Everyone Act, is not receiving assistance from 
                the State program funded under this part, not 
                later than the later of--
                          (i) 1 year after such date of 
                        enactment; or
                          (ii) 60 days after the family first 
                        receives assistance on the basis of the 
                        most recent application for assistance; 
                        and
                  (B) in the case of a family that, as of such 
                date, is receiving assistance under the State 
                program funded under this part, not later than 
                1 year after such date of enactment.
          (7) Rule of interpretation.--Nothing in this 
        subsection shall preclude a State from--
                  (A) requiring participation in work and any 
                other activities the State deems appropriate 
                for helping families achieve self-sufficiency 
                and improving child well-being; or
                  (B) using job search or other appropriate job 
                readiness or work activities to assess the 
                employability of individuals and to determine 
                appropriate future engagement activities.

           *       *       *       *       *       *       *

                               PENALTIES

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

           *       *       *       *       *       *       *

          (3) Failure to satisfy minimum participation rates or 
        comply with family self-sufficiency plan 
        requirements.--
                  (A) In general.--If the Secretary determines 
                that a State to which a grant is made under 
                section 403 for a fiscal year has failed to 
                comply with section 407(a) or 408(b) for 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 the applicable 
                percentage of the State family assistance 
                grant.
                  (B) Applicable percentage defined.--As used 
                in subparagraph (A), the term ``applicable 
                percentage'' means, with respect to a State--
                          (i) if a penalty was not imposed on 
                        the State under subparagraph (A) for 
                        the immediately preceding fiscal year, 
                        5 percent; or
                          (ii) if a penalty was imposed on the 
                        State under subparagraph (A) for the 
                        immediately preceding fiscal year, the 
                        lesser of--
                                  (I) the percentage by which 
                                the grant payable to the State 
                                under section 403(a)(1) was 
                                reduced for such preceding 
                                fiscal year, increased by 2 
                                percentage points; or
                                  (II) 21 percent.
                  [(C) 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, and may 
                reduce the penalty if the noncompliance is due 
                to circumstances that caused the State to 
                become a needy State (as defined in section 
                403(b)(6)) during the fiscal year or if the 
                noncompliance is due to extraordinary 
                circumstances such as a natural disaster or 
                regional recession. The Secretary shall provide 
                a written report to Congress to justify any 
                waiver or penalty reduction due to such 
                extraordinary circumstances.]
                  (C) Penalty based on severity of failure.--
                          (i) Failure to satisfy minimum 
                        participation rate.--If, with respect 
                        to fiscal year 2005 or any fiscal year 
                        thereafter, the Secretary finds that a 
                        State has failed or is failing to 
                        substantially comply with the 
                        requirements of section 407(a) for that 
                        fiscal year, the Secretary shall impose 
                        reductions under subparagraph (A) with 
                        respect to the immediately succeeding 
                        fiscal year based on the degree of 
                        substantial noncompliance. In assessing 
                        the degree of substantial noncompliance 
                        under section 407(a) for a fiscal year, 
                        the Secretary shall take into account 
                        factors such as--
                                  (I) the degree to which the 
                                State missed the minimum 
                                participation rate for that 
                                fiscal year;
                                  (II) the change in the number 
                                of individuals who are engaged 
                                in work in the State since the 
                                prior fiscal year; and
                                  (III) the number of 
                                consecutive fiscal years in 
                                which the State failed to reach 
                                the minimum participation rate.
                          (ii) Failure to comply with self-
                        sufficiency plan requirements.--If, 
                        with respect to fiscal year 2005 or any 
                        fiscal year thereafter, the Secretary 
                        finds that a State has failed or is 
                        failing to substantially comply with 
                        the requirements of section 408(b) for 
                        that fiscal year, the Secretary shall 
                        impose reductions under subparagraph 
                        (A) with respect to the immediately 
                        succeeding fiscal year based on the 
                        degree of substantial noncompliance. In 
                        assessing the degree of substantial 
                        noncompliance under section 408(b), the 
                        Secretary shall take into account 
                        factors such as--
                                  (I) the number or percentage 
                                of families for which a self-
                                sufficiency plan is not 
                                established in a timely fashion 
                                for that fiscal year;
                                  (II) the duration of the 
                                delays in establishing a self-
                                sufficiency plan during that 
                                fiscal year;
                                  (III) whether the failures 
                                are isolated and nonrecurring; 
                                and
                                  (IV) the existence of systems 
                                designed to ensure that self-
                                sufficiency plans are 
                                established for all families in 
                                a timely fashion and that 
                                families' progress under such 
                                plans is monitored.
                          (iii) Authority to reduce the 
                        penalty.--The Secretary may reduce the 
                        penalty that would otherwise apply 
                        under this paragraph if the substantial 
                        noncompliance is due to circumstances 
                        that caused the State to meet the 
                        criteria of subclause (I), (II), or 
                        (III) of section 403(b)(3)(A)(iii) or 
                        to satisfy the applicable duration 
                        requirement of section 403(b)(3)(B) 
                        during the fiscal year, or if the 
                        noncompliance is due to extraordinary 
                        circumstances such as a natural 
                        disaster or regional recession. The 
                        Secretary shall provide a written 
                        report to Congress to justify any 
                        waiver or penalty reduction due to such 
                        extraordinary circumstances.

           *       *       *       *       *       *       *

          [(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 owned on the outstanding amount.]
          (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, 2003, or 2004] fiscal year 2004, 
                2005, 2006, 2007, 2008, or 2009 by the amount 
                (if any) by which qualified State expenditures 
                for the then immediately preceding fiscal year 
                are less that the applicable percentage 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 
                                        eligibility of the 
                                        family for, and the 
                                        amount of such 
                                        assistance.

           *       *       *       *       *       *       *

                                  (V) Counting of spending on 
                                non-eligible families to 
                                prevent and reduce incidence of 
                                out-of-wedlock births, 
                                encourage formation and 
                                maintenance of healthy 2-parent 
                                married families, or encourage 
                                responsible fatherhood.--
                                Subject to subclauses (II) and 
                                (III), the term ``qualified 
                                State expenditures'' includes 
                                the total expenditures by the 
                                State during the fiscal year 
                                under all State programs for a 
                                purpose described in paragraph 
                                (3) or (4) of section 401(a).
                                  (VI) 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 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 have the 
                                payment considered a qualified 
                                State expenditure.
                          (ii) Applicable percentage.--The term 
                        ``applicable percentage'' means [for 
                        fiscal years 1997 through 2003,] 80 
                        percent (or, if the State meets the 
                        requirements of section 407(a) for the 
                        preceding fiscal year, 75 percent).

           *       *       *       *       *       *       *

          (8) Noncompliance of state child support enforcement 
        program with requirements of part d.--
                  (A) In general.--If the Secretary finds, with 
                respect to a State's program under part D, [in 
                a fiscal year] for a fiscal year beginning on 
                or after October 1, 1997--
                          (i)(I) on the basis of data submitted 
                        by a State pursuant to section 
                        454(15)(B), or on the basis of the 
                        results of a review conducted under 
                        section 452(a)(4), that the State 
                        program failed to achieve the paternity 
                        establishment percentages (as defined 
                        in section 452(g)(2)), or to meet other 
                        performance measures that may be 
                        established by the Secretary;
                          (II) on the basis of the results of 
                        an audit or audits conducted under 
                        section 452(a)(4)(C)(i) that the State 
                        data submitted pursuant to section 
                        454(15)(B) is incomplete or unreliable; 
                        or
                          (III) on the basis of the results of 
                        an audit or audits conducted under 
                        section 452(a)(4)(C) that a State 
                        failed to substantially comply with 1 
                        or more of the requirements of part D 
                        (other than paragraph (24) or 
                        subparagraph (A) or (B)(i) of paragraph 
                        (27), of section 454 and
                          (ii) [that, with respect to the 
                        succeeding fiscal year--] that with 
                        respect to the period described in 
                        subparagraph (D)--
                                  (I) the State failed to take 
                                sufficient corrective action to 
                                achieve the appropriate 
                                performance levels or 
                                compliance as described in 
                                subparagraph (A)(i); or
                                  (II) the data submitted by 
                                the State pursuant to section 
                                454(15)(B) is incomplete or 
                                unreliable; the amounts 
                                otherwise payable to the State 
                                under this part for quarters 
                                following [the end of such 
                                succeeding fiscal year] the end 
                                of the period described in 
                                subparagraph (D), prior to 
                                quarters following the end of 
                                the first quarter throughout 
                                which the State program has 
                                achieved the paternity 
                                establishment percentages or 
                                other performance measures as 
                                described in subparagraph 
                                (A)(i)(I), or is in substantial 
                                compliance with 1 or more of 
                                the requirements of part D as 
                                described in subparagraph 
                                (A)(i)(III), as appropriate, 
                                shall be reduced by the 
                                percentage specified in 
                                subparagraph (B).

           *       *       *       *       *       *       *

                  (D) Period described.--Subject to 
                subparagraph (E), for purposes of this 
                paragraph, the period described in this 
                subparagraph is the period that begins with the 
                date on which the Secretary makes a finding 
                described in subparagraph (A)(i) with respect 
                to State performance in a fiscal year and ends 
                on September 30 of the fiscal year following 
                the fiscal year in which the Secretary makes 
                such a finding.
                  (E) No penalty if state corrects 
                noncompliance in finding year.--The Secretary 
                shall not take a reduction described in 
                subparagraph (A) with respect to a 
                noncompliance described in clause (i) of that 
                subparagraph if the Secretary determines that 
                the State has corrected the noncompliance in 
                the fiscal year in which the Secretary makes 
                the finding of the noncompliance.
          (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 suceeding fiscal year by the totat 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 corrects or discontinues, 
        as appropriate, the violation pursuant to the plan.

           *       *       *       *       *       *       *

                     DATA COLLECTION AND REPORTING

    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 under the 
                State program funded under this part (except 
                for information relating to activities carried 
                out under section 403(a)(5)) and on families 
                receiving assistance under State programs 
                funded with other qualified State expenditures 
                (as defined in section 409(a)(7)(B)(i)):
                          (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
                                  (V) supplemental security 
                                income benefits under title XVI 
                                (as in effect pursuant to such 
                                amendment) by reason of 
                                disability.
                          (iii) The ages of the members of such 
                        families.
                          (iv) The number of individuals in the 
                        family, and the relation of each family 
                        member to the head of the family.
                          (v) the employment status and 
                        earnings of the employed adult in the 
                        family.
                          (vi) The marital status of the adults 
                        in the family, including whether such 
                        adults have never married, are widowed, 
                        or are divorced.
                          (vii) The race and educational level 
                        of each adult and minor parent in the 
                        family.
                          (viii) The race [and educational 
                        level] of each child in the family.
                          (ix) Whether the family received 
                        subsidized housing, medical assistance 
                        under the State plan approved under 
                        title XIX, food stamps, or subsidized 
                        child care[, and if the latter 2, the 
                        amount received].
                          (x) The number of months that the 
                        family has received [each type of] 
                        assistance under the program and, if 
                        applicable, the reason for receipt of 
                        the assistance for a total of more than 
                        60 months.
                          (xi) If the adults participated in, 
                        and the number of hours per week of 
                        participation in, the following 
                        activities:
                                  [(I) Education.
                                  [(II) Subsidized private 
                                sector employment.
                                  [(III) Unsubsidized 
                                employment.
                                  [(IV) Public sector 
                                employment, work experience, or 
                                community service.
                                  [(V) Job search.
                                  [(VI) Job skills training or 
                                on-the-job training.
                                  [(VII) Vocational education.]
                          (xii) Information necessary to 
                        calculate participation rates and 
                        progress toward universal engagement 
                        under section 407.
                                  (I) Subsidized private sector 
                                employment.
                                  (II) Unsubsidized employment.
                                  (III) Public sector 
                                employment, supervised work 
                                experience, or supervised 
                                community service.
                                  (IV) On-the-job training.
                                  (V) Job search and placement.
                                  (VI) Training.
                                  (VII) Education.
                                  (VIII) Other activities 
                                directed at the purposes of 
                                this part, as specified in the 
                                State plan submitted pursuant 
                                to section 402.
                          (xiii) The [type and] amount of 
                        assistance received under the program, 
                        including the amount of and reason for 
                        any reduction of assistance including 
                        sanctions).
                          (xiv) Any amount of unearned income 
                        received by any member of the family.
                          (xv) The citizenship of the members 
                        of the family.
                          (xvi) From a sample of closed cases, 
                        whether the family left the program, 
                        and if so, whether the family left due 
                        to--
                                  (I) employment;
                                  [(II) marriage;]
                                  [(III)] (II) the prohibition 
                                set forth in section 408(a)(7);
                                  [(IV)] (III) sanction; or
                                  [(V)] (IV) State policy.
                          (xvii) With respect to each 
                        individual in the family who has not 
                        attained 20 years of age, whether the 
                        individual is a parent of a child in 
                        the family.
                          (xviii) The date the family first 
                        received assistance from the State 
                        program on the basis of the most recent 
                        application for such assistance.
                          (xix) Whether a self-sufficiency plan 
                        is established for the family in 
                        accordance with section 408(b).
                          (xx) With respect to any child in the 
                        family, the marital status of the 
                        parents at the birth of the child, and 
                        if the parents were not then married, 
                        whether the paternity of the child has 
                        been established.
                  (B) Use of samples.--
                          (i) Authority.--A State may comply 
                        with subparagraph (A) by submitting 
                        disaggregated case record information 
                        on [a sample] samples of families 
                        selected through the use of 
                        scientifically acceptable sampling 
                        methods approved by the Secretary 
                        except that the Secretary may designate 
                        core data elements that must be 
                        reported on all families.
                          (ii) Sampling and other methods.--The 
                        Secretary shall provide the States with 
                        such case sampling plans and data 
                        collection procedures as the Secretary 
                        deems necessary to produce 
                        statistically valid estimates of the 
                        performance of State programs [funded 
                        under this part] described in 
                        subparagraph (A). The Secretary may 
                        develop and implement procedures for 
                        verifying the quality of data submitted 
                        by the States.
          (2) Report on use of federal funds to cover 
        administrative costs and overhead.--The report required 
        by paragraph (1) for a fiscal quarter shall include a 
        statement of the percentage of the funds paid to the 
        State under this part for the quarter that are used to 
        cover administrative costs or overhead, with a separate 
        statement of the percentage of such funds that are used 
        to cover administrative costs or overhead incurred for 
        programs operated with funds provided under section 
        403(a)(5).

           *       *       *       *       *       *       *

          [(5) Report on transitional services.--The report 
        required by paragraph (1) for a fiscal quarter shall 
        include the total amount expended by the State during 
        the quarter to provide transitional services to a 
        family that has ceased to receive assistance under this 
        part because of employment, along with a description of 
        such services.]
          [(6)] (5) Report on families receiving assistance.--
        The report required by paragraph (1) for a fiscal 
        quarter shall include for each month in the quarter--

           *       *       *       *       *       *       *

          (6) Report on families that become ineligible to 
        receive assistance.--The report required by paragraph 
        (1) for a fiscal quarter shall include for each month 
        in the quarter the number of families and total number 
        of individuals that, during the month, became 
        ineligible to receive assistance under the State 
        program funded under this part (broken down by the 
        number of families that become so ineligible due to 
        earnings, changes in family composition that result in 
        increased earnings, sanctions, time limits, or other 
        specified reasons).
          (7) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to define the data 
        elements and to collect the necessary data with respect 
        to which reports are required by this [subsection] 
        section, and shall consult with the Secretary of Labor 
        [in defining the data elements with respect to programs 
        operated with funds provided under section 403(a)(5).], 
        the National Governors' Association, the American 
        Public Human Services Association, the National 
        Conference of State Legislatures, and others in 
        defining the data elements.
  (b) Annual Reports on Program Characteristics.--Not later 
than 90 days after the end of fiscal year 2004 and each 
succeeding fiscal year, each eligible State shall submit to the 
Secretary a report on the characteristics of the State program 
funded under this part and other State programs funded with 
qualified State expenditures (as defined in section 
409(a)(7)(B)(i)). The report shall include, with respect to 
each such program, the program name, a description of program 
activities, the program purpose, the program eligibility 
criteria, the sources of program funding, the number of program 
beneficiaries, sanction policies, and any program work 
requirements.
    (c) Monthly Reports on Caseload.--Not later than 3 months 
after the end of each calendar month that begins 1 year or more 
after the date of enactment of this subsection, each eligible 
State shall submit to the Secretary a report on the number of 
families and total number of individuals receiving assistance 
in the calendar month under the State program funded under this 
part and under other State programs funded with qualified State 
expenditures (as defined in section 409(a)(7)(B)(i)).
  (d) Annual Report on Performance Improvement.--Beginning with 
fiscal year 2005, not later than January 1 of each fiscal year, 
each eligible State shall submit to the Secretary a report on 
achievement and improvement during the preceding fiscal year 
under the performance goals and measures under the State 
program funded under this part with respect to each of the 
matters described in section 402(a)(1)(A)(v).
    [(b)] (e) Annual Reports to the Congress by the 
Secretary.--Not later than 6 months after the end of fiscal 
year 1997, [and each fiscal year thereafter] and not later than 
July 1 of each fiscal year thereafter, the Secretary shall 
transmit to the Congress a report describing--
          (1) whether the States are meeting--
                  (A) the participation rates described in 
                section 407(a); and
                  (B) the objectives of--
                          (i) increasing employment and 
                        earnings of needy families and child 
                        support collections ; and
                          (ii) decreasing out-of-wedlock 
                        pregnancies and child poverty;
          (2) the demographic and financial characteristics of 
        [families applying for assistance,] families receiving 
        assistance[,] and families that become ineligible to 
        receive assistance;
          (3) the characteristics of each State program funded 
        under this part and other programs funded with 
        qualified State expenditures (as defined in section 
        409(a)(7)(B)(i)); and
          (4) the trends in employment and earnings of needy 
        families with minor children living at home.

             STATE REQUIRED TO PROVIDE CERTAIN INFORMATION

    Sec. 411A. Each State to which a grant is made under 
section 403 shall, at lease 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 unlawfully in the United 
States.

           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, 2002, and 2003], 
                2004 through 2008 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.
                  (B) Amount determined.--

           *       *       *       *       *       *       *

          (3) Welfare-to work grants.--
                  (A) In general.--The Secretary of Labor shall 
                award a grant in accordance with this paragraph 
                to an Indian tribe for each fiscal year 
                specified in section 403(a)(5)(H) for which the 
                Indian tribe is a welfare-to-work tribe, in 
                such amount as the Secretary of Labor deems 
                appropriate subject to subparagraph (B) of this 
                paragraph.
                  (B) Welfare-to-work tribe.--An Indian tribe 
                shall be considered a welfare-to-work tribe for 
                a fiscal year for purposes for this paragraph 
                if the Indian tribe meets the following 
                requirement:
                          (i) The Indian tribe has submitted to 
                        the Secretary of Labor a plan which 
                        describes how, consistent with section 
                        403(a)(5), the Indian tribe will use 
                        any funds provided under this paragraph 
                        during the fiscal year. If the Indian 
                        tribe has a tribal family assistance 
                        plan, the plan referred to in the 
                        preceding sentence shall be in the form 
                        of an addendum to the tribal family 
                        assistance plan.

           *       *       *       *       *       *       *

                          (iv) The Indian tribe has agreed to 
                        negotiate in good faith with the 
                        Secretary of Health and Human Services 
                        with respect to the substance and 
                        funding of any evaluation under section 
                        [413(j)]413(i), and to cooperate with 
                        the conduct of any such evaluation.

           *       *       *       *       *       *       *

          (4) Tribal tanf improvement fund.--
                  (A) Establishment.--The Secretary shall 
                establish a fund for purposes of carrying out 
                any of the following activities:
                          (i) Providing technical assistance to 
                        Indian tribes considering applying to 
                        carry out, or that are carrying out, a 
                        tribal family assistance plan under 
                        this section in order to help such 
                        tribes establish and operate strong and 
                        effective tribal family assistance 
                        plans under this section that will 
                        allow families receiving assistance 
                        under such plans achieve the highest 
                        measure of self-sufficiency.
                          (ii) Awarding competitive grants 
                        directly to Indian tribes carrying out 
                        a tribal family assistance plan under 
                        this section for purposes of conducting 
                        programs and activities that would 
                        substantially improve the operation and 
                        effectiveness of such plans and the 
                        ability of such tribes to achieve the 
                        purposes of the program under this part 
                        as described in section 401(a).
                          (iii) Awarding competitive grants 
                        directly to Indian tribes carrying out 
                        a tribal family assistance plan under 
                        this section to support tribal economic 
                        development activities that would 
                        significantly assist families receiving 
                        assistance under the State program 
                        funded under this part or a tribal 
                        family assistance plan obtain 
                        employment and achieve self-
                        sufficiency.
                          (iv) Conducting, directly or through 
                        grants, contracts, or interagency 
                        agreements, research and development to 
                        improve knowledge about tribal family 
                        assistance programs conducted under 
                        this section and challenges faced by 
                        such programs in order to improve the 
                        effectiveness of such programs.
                  (B) Authorization of appropriations.--There 
                are authorized to be appropriated to the 
                Secretary to carry out this paragraph, 
                $100,000,000 for each of fiscal years 2004 
                through 2008.
    (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 
                \26\ (25 U.S.C. 450c(f)(1)), relating to the 
                sub-mission of a single-agency audit report 
                required by chapter 75 of title 31, United 
                States Code[.]; and
                  (G) provides an assurance that the State in 
                which the tribe is located has been consulted 
                regarding the plan and its design.
    (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) Eligibility 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) Penalities.--
          (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.--The Secretary, directly or through 
grants, contracts, or interagency agreements, shall conduct 
research on the benefits, effects, and costs of operating 
different State programs funded under this part, including time 
limits relating to eligibility for assistance. The research 
shall include studies on the effects of different programs and 
the operation of such programs on welfare dependency, 
illegitimacy, teen pregnancy, employment rates, child well-
being, and any other area the Secretary deems appropriate. The 
Secretary shall also conduct research on the costs and benefits 
of State activities under section 407.

           *       *       *       *       *       *       *

    (d) Annual Ranking of States and Review of Most and Least 
Successful Work Programs.--
          [(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 of 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.]
          (1) Annual ranking of states.--
                  (A) In general.--The Secretary shall rank 
                annually the States to which grants are paid 
                under section 403 in the order of their success 
                in--
                          (i) placing recipients of assistance 
                        under the State program funded under 
                        this part into private sector jobs;
                          (ii) the success of the recipients in 
                        retaining employment;
                          (iii) the ability of the recipients 
                        to increase their wages;
                          (iv) the degree to which recipients 
                        have workplace attachment and 
                        advancement;
                          (v) reducing the overall welfare 
                        caseload; and
                          (vi) when a practicable method for 
                        calculating this information becomes 
                        available, diverting individuals from 
                        formally applying to the State program 
                        and receiving assistance.
                  (B) Consideration of other factors.--In 
                ranking States under this paragraph, 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 under this part 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] aid 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.
    (e) Annual Ranking of States and Review of Issues Relating 
to Out-of-Wedlock Births.--

           *       *       *       *       *       *       *

    [(g) Report on Circumstances of Certain Children and 
Families.--
          [(1) In general.--Beginning 3 years after the date of 
        the enactment of this section, the Secretary of Health 
        and Human Services shall prepare and submit to the 
        Committees on Ways and Means and on Education and the 
        Workforce of the House of Representatives and to the 
        Committees on Finance and on Labor and Resources of the 
        Senate annual reports that examine in detail the 
        matters described in paragraph (2) with respect to each 
        of the following groups for the period after such 
        enactment:
                  [(A) Individuals who were children in 
                families that have become ineligible for 
                assistance under a State program funded under 
                this part by reason of having reached a time 
                limit on the provision of such assistance.
                  [(B) Children born after such date of 
                enactment to parents who, at the time of such 
                birth, had not attained 20 years of age.
                  [(C) Individuals who, after such date of 
                enactment, became parents before attaining 20 
                years of age.
          [(2) Matters described.--The matters described in 
        this paragraph are the following:
                  [(A) The percentage of each group that has 
                dropped out of secondary school (or the 
                equivalent), and the percentage of each group 
                at each level of educational attainment.
                  [(B) The percentage of each group that is 
                employed.
                  [(C) The percentage of each group that has 
                been convicted of a crime or has been 
                adjudicated as a delinquent.
                  [(D) The rate at which the members of each 
                group are born, or have children, out-of-
                wedlock, and the percentage of each group that 
                is married.
                  [(E) The percentage of each group that 
                continues to participate in State programs 
                funded under this part.
                  [(F) The percentage of each group that has 
                health insurance provided by a private entity 
                (broken down by whether the insurance is 
                provided through an employer or otherwise), the 
                percentage that has health insurance provided 
                by an agency of government, and the percentage 
                that does not have health insurance.
                  [(G) The average income of the families of 
                the members of each group.
                  [(H) Such other matters as the Secretary 
                deems appropriate.]
    [(h)] (g) 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] 2004 through 2008 for the purpose for 
        paying--

           *       *       *       *       *       *       *

    [(i)] (h) Child Poverty Rates.--
           (1) In general.--Not later than May 31, 1998, and 
        annually thereafter, the chief executive officer of 
        each State shall submit to the Secretary a statement of 
        the child poverty rate in the State as of such date of 
        enactment or the date of the most recent prior 
        statement under this paragraph.

           *       *       *       *       *       *       *

    [(j)] (i) 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 projects 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 Committee 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).
  (j) Performance Improvement.--The Secretary, in consultation 
with the States, shall develop uniform performance measures 
designed to assess the degree of effectiveness, and the degree 
of improvement, of State programs funded under this part in 
accomplishing the purposes of this part.
  (k) Funding for Research, Demonstrations, and Technical 
Assistance.--
          (1) Appropriation.--
                  (A) In general.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated 
                $100,000,000 for each of fiscal years 2004 
                through 2008, which shall remain available to 
                the Secretary until expended.
                  (B) Use of funds.--
                          (i) In general.--Funds appropriated 
                        under subparagraph (A) shall be used 
                        for the purpose of--
                                  (I) conducting or supporting 
                                research and demonstration 
                                projects by public or private 
                                entities; or
                                  (II) providing technical 
                                assistance in connection with a 
                                purpose of the program funded 
                                under this part, as described 
                                in section 401(a), to States, 
                                Indian tribal organizations, 
                                sub-State entities, and such 
                                other entities as the Secretary 
                                may specify.
                          (ii) Requirement.--Not less than 80 
                        percent of the funds appropriated under 
                        subparagraph (A) for a fiscal year 
                        shall be expended for the purpose of 
                        conducting or supporting research and 
                        demonstration projects, or for 
                        providing technical assistance, in 
                        connection with activities described in 
                        section 403(a)(2)(B). Funds 
                        appropriated under subparagraph (A) and 
                        expended in accordance with this clause 
                        shall be in addition to any other funds 
                        made available under this part for 
                        activities described in section 
                        403(a)(2)(B).
          (2) Secretary's authority.--The Secretary may conduct 
        activities authorized by this subsection directly or 
        through grants, contracts, or interagency agreements 
        with public or private entities.
          (3) Requirement for use of funds.--The Secretary 
        shall not pay any funds appropriated under paragraph 
        (1)(A) to an entity for the purpose of conducting or 
        supporting research and demonstration projects 
        involving activities described in section 403(a)(2)(B) 
        unless the entity complies with the requirements of 
        section 403(a)(2)(E).

                       STUDY BY THE CENSUS BUREAU

    Sec. 414. [(a) In General.--The Bureau of the Census shall 
continue to collect data on the 1992 and 1993 panels of the 
Survey of Income and Program Participation as necessary to 
obtain such information as will enable interested persons to 
evaluate the impact of the amendments made by title I of the 
Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996 on a random national sample of recipients of assistance 
under State programs funded under this part and (as 
appropriate) other low-income families, and in doing so, shall 
pay particular attention to the issues of out-of-wedlock birth, 
welfare dependency, the beginning and end of welfare spells, 
and the causes of repeat welfare spells, and shall obtain 
information about the status of children participating is such 
panels.] (a) In General._The Bureau of the Census shall 
implement or enhance a longitudinal survey of program 
participation, developed in consultation with the Secretary and 
made available to interested parties, to allow for the 
assessment of the outcomes of continued welfare reform on the 
economic and child well-being of low-income families with 
children, including those who received assistance or services 
from a State program funded under this part, and, to the extent 
possible, shall provide State representative samples. The 
content of the survey should include such information as may be 
necessary to examine the issues of out-of-wedlock childbearing, 
marriage, welfare dependency and compliance with work 
requirements, the beginning and ending of spells of assistance, 
work, earnings and employment stability, and the well-being of 
children.
  (b) Reports on the Well-Being of Children and Families.--
          (1) In general.--Not later than 24 months after the 
        date of enactment of the Personal Responsibility and 
        Individual Development for Everyone Act, the Secretary 
        of Commerce shall prepare and submit to the Committee 
        on Ways and Means of the House of Representatives and 
        the Committee on Finance of the Senate a report on the 
        well-being of children and families using data 
        collected under subsection (a).
          (2) Second report.--Not later than 60 months after 
        such date of enactment, the Secretary of Commerce shall 
        submit a second report to the Committee on Ways and 
        Means of the House of Representatives and the Committee 
        on Finance of the Senate on the well-being of children 
        and families using data collected under subsection (a).
          (3) Inclusion of comparable measures.--Where 
        comparable measures for data collected under subsection 
        (a) exist in surveys previously administered by the 
        Bureau of the Census, appropriate comparisons shall be 
        made and included in each report required under this 
        subsection on the well-being of children and families 
        to assess changes in such measures.
    [(b)] (c) Appropriation.--Out of any money in the Treasury 
of the United States not otherwise appropriated, there are 
appropriated $10,000,000 for each of fiscal years [1996, 1997, 
1998, 1999, 2000, 2001, 2002, and 2003] 2004 through 2008 for 
payment to the Bureau of the Census to carry out this section. 
Funds appropriated under this subsection for a fiscal year 
shall remain available through fiscal year 2008 to carry out 
this section for payment to the Bureau of the Census to carry 
out subsection (a).

           *       *       *       *       *       *       *

                         FUNDING FOR CHILD CARE

    Sec. 418. (a) General Child Care Entitlement.--
          (1) General entitlement.--Subject to the amount 
        appropriated under paragraph (3), 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--

           *       *       *       *       *       *       *

                (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[.]; and
                (G) $2,917,000,000 for each of fiscal years 
                2004 through 2008.
          (4) [Indian Tribes] Amounts reserved.--[The 
        Secretary] (A) 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.
          (B) Puerto rico.--The Secretary shall reserve 
        $10,000,000 of the amount appropriated under paragraph 
        (3) 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.

           *       *       *       *       *       *       *

                              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 or child 
                care).
                  (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).

           *       *       *       *       *       *       *

                        DUTIES OF THE SECRETARY

    Sec. 452. (a) The Secretary shall establish, within the 
Department of Health and Human Services a separate 
organizational unit, under the direction of a designee of the 
Secretary, who shall report directly to the Secretary and who 
shall--

           *       *       *       *       *       *       *

    (j) Out of any money in the Treasury of the United States 
not otherwise appropriated, there is hereby appropriated to the 
Secretary for each fiscal year an amount equal to 1 percent of 
the total amount paid to the Federal Government pursuant to a 
plan approved under this part during the immediately preceding 
fiscal year (as determined on the basis of the most recent 
reliable data available to the Secretary as of the end of the 
third calendar quarter following the end of such preceding 
fiscal year) or the amount appropriated under this paragraph 
for fiscal year 2002, whichever is greater, which shall be 
available for use by the Secretary, either directly or through 
grants, contracts, or interagency agreements, for--

           *       *       *       *       *       *       *

  (m) Comparisons With Insurance Information.--
          (1) In general.--The Secretary, through the Federal 
        Parent Locator Service, is authorized--
                  (A) to compare information concerning 
                individuals owing past-due support with 
                information maintained by insurers (or their 
                agents) concerning insurance claims, 
                settlements, awards, and payments, and
                  (B) to furnish information resulting from 
                such data matches to the State agencies 
                responsible for collecting child support from 
                such individuals.
          (2) Liability.--No insurer (including any agent of an 
        insurer) shall be liable under any Federal or State law 
        to any person for any disclosure provided for under 
        this subsection, or for any other action taken in good 
        faith in accordance with the provisions of this 
        subsection.
  (n) Interception of Gambling Winnings for Past-Due Support.--
          (1) In general.--The Secretary, through the Federal 
        Parent Locator Service, is authorized, in accordance 
        with this subsection, to intercept gambling winnings of 
        an individual owing past-due support being enforced by 
        a State agency with a plan approved under this part, 
        and to transmit such winnings to the State agency for 
        distribution pursuant to section 457.
          (2) Requirements for gambling establishments.--A 
        gambling establishment subject to this subsection shall 
        not pay to any individual gambling winnings (as defined 
        in paragraph (6)) meeting the criteria for reporting to 
        the Internal Revenue Service pursuant to section 6041 
        of the Internal Revenue Code of 1986 until the 
        establishment--
                  (A) has furnished to the Secretary--
                          (i) the information required to be so 
                        reported with respect to such 
                        individual and such winnings; and
                          (ii) the net amount of such gambling 
                        winnings (hereafter in this subsection 
                        referred to as the `net gambling 
                        winnings') after withholding of amounts 
                        for Federal taxes as required pursuant 
                        to section 3402(q) of the Internal 
                        Revenue Code of 1986; and
                  (B) has complied with the Secretary's 
                instructions pursuant to paragraph (3).
          (3) Data match and withholding.--The Secretary 
        shall--
                  (A) compare information furnished pursuant to 
                paragraph (2)(A) with information on 
                individuals who owe past-due support;
                  (B) direct the gambling establishment to 
                withhold from an individual's net gambling 
                winnings all amounts not exceeding the total 
                past-due support owed by the individual;
                  (C) authorize the gambling establishment, in 
                reimbursement of its costs of complying with 
                this subsection, to withhold and retain from 
                such net gambling winnings an amount equal to 2 
                percent of the amount to be withheld pursuant 
                to subparagraph (B), which amount shall be 
                taken first from any excess of such net 
                winnings above the amount withheld pursuant to 
                subparagraph (B), with any balance to be taken 
                from the amount so withheld; and
                  (D) require the gambling establishment to 
                furnish written notice to the individual whose 
                gambling winnings are withheld pursuant to this 
                subsection, that includes--
                          (i) the amounts withheld pursuant to 
                        subparagraphs (B) and (C);
                          (ii) the reason and authority for the 
                        withholding; and
                          (iii) an explanation of the 
                        individual's procedural due process 
                        rights, including the right to contest 
                        such withholding to the responsible 
                        State agency and information necessary 
                        to contact such State agency.
          (4) Transfer of withheld amounts.--Net amounts 
        withheld for past-due support pursuant to subparagraphs 
        (B) and (C) of paragraph (3) shall--
                  (A) be transferred by the gambling 
                establishment to the Secretary at the same time 
                and in the same manner as amounts withheld 
                under section 3402(q) of the Internal Revenue 
                Code of 1986 would be transferred to the 
                Internal Revenue Service, together with the 
                information described in paragraph (2)(A)(i) 
                with respect to the individuals whose winnings 
                were withheld under this subsection; and
                  (B) be promptly transferred by the Secretary 
                to the appropriate State agency.
          (5) Nonliability of gambling establishments.--A 
        gambling establishment shall not be liable under any 
        Federal or State law to any person--
                  (A) for any disclosure of information to the 
                Secretary under this subsection;
                  (B) for withholding or surrendering gambling 
                winnings in accordance with this subsection; or
                  (C) for any other action taken in good faith 
                to comply with this subsection.
          (6) Definition of gambling winnings.--In this 
        subsection, the term ``gambling winnings'' means the 
        proceeds of a wager that are subject to reporting under 
        section 6041 of the Internal Revenue Code of 1986.

                     FEDERAL PARENT LOCATOR SERVICE

    Sec. 453. (a) Establishment; Purpose.--
          (1) The Secretary shall establish and conduct a 
        Federal Parent Locator Service, under the direction of 
        the designee of the Secretary referred to in section 
        652(a) of this title, which shall be used for the 
        purposes specified in paragraphs (2) and (3).

           *       *       *       *       *       *       *

    (c) As used in subsection (a), the term ``authorized 
person'' means--
          (1) any agent or attorney of any State or Indian 
        tribe or tribal organization having in effect a plan 
        approved under this part, who has the duty or authority 
        under such plans to seek to recover any amounts owed as 
        child and spousal support or to seek to enforce orders 
        providing child custody or visitation rights 
        (including, when authorized under the State plan, any 
        official of a political subdivision);

           *       *       *       *       *       *       *

    (i) National Director of New Hires.--
          (1) In general.--In order to assist States in 
        administering programs under State plans approved under 
        this part and programs funded under part A, and for the 
        other purposes specified in this section, the Secretary 
        shall, not later than October 1, 1997, establish and 
        maintain in the Federal Parent Locator Service an 
        automated directory to be known as the National 
        Directory of New Hires, which shall contain the 
        information supplied pursuant to section 453A(g)(2).

           *       *       *       *       *       *       *

          (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 Director of New Hires for purposes of 
        calculating State employment credits pursuant to 
        section 407(b)(2).
    (j) Information Comparisons and Other Disclosures.--
          (1) Verification by social security administration.--
                  (A) In general.--The Secretary shall transmit 
                information on individuals and employers 
                maintained under this section to the Social 
                Security Administration to the extent necessary 
                for verification accordance with subparagraph 
                (B).

           *       *       *       *       *       *       *

          (6) Information comparisons and disclosure for 
        enforcement of obligations on higher education act 
        loans and grants.--
                  (A) Furnishing of information by the 
                secretary of education.--The Secretary of 
                Education shall furnish to the Secretary, on a 
                quarterly basis or at such less frequent 
                intervals as may be determined by the Secretary 
                of Education, information in the custody of the 
                Secretary of Education for comparison with 
                information in the National Directory of New 
                Hires, in order to obtain the information in 
                such directory with respect to individuals 
                who--

           *       *       *       *       *       *       *

                  (F) Reimbursement of hhs costs.--The 
                Secretary of Education shall reimburse the 
                Secretary, in accordance with subsection 
                (k)(3), for the [additional] costs incurred by 
                the Secretary in furnishing the information 
                requested under this subparagraph.
          (7) Information comparisons and disclosure to assist 
        in administration of unemployment compensation 
        programs.--
                  (A) In general.--If, for purposes of 
                administering an unemployment compensation 
                program under Federal or State law, a State 
                agency responsible for the administration of 
                such program transmits to the Secretary the 
                name and social security account number of an 
                individual, the Secretary shall disclose to the 
                State agency information on the individual and 
                the individual's employer that is maintained in 
                the National Directory of New Hires, subject to 
                the succeeding provisions of this paragraph.
                  (B) Condition on disclosure by the 
                secretary.--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 and disclosure of information by 
                state agencies.--
                          (i) In general.--A State agency may 
                        not use or disclose information 
                        provided under this paragraph except 
                        for purposes of administering a program 
                        referred to in subparagraph (A).
                          (ii) Information security.--A State 
                        agency to which information is provided 
                        under this paragraph shall have in 
                        effect data security and control 
                        policies that the Secretary finds 
                        adequate to ensure the security of 
                        information obtained under this 
                        paragraph and to ensure that access to 
                        such information is restricted to 
                        authorized persons for purposes of 
                        authorized uses and disclosures.
                          (iii) Penalty for misuse of 
                        information.--An officer or employee of 
                        a State agency who fails to comply with 
                        this subparagraph shall be subject to 
                        the sanctions under subsection (l)(2) 
                        to the same extent as if such officer 
                        or employee was an officer or employee 
                        of the United States.
                  (D) Procedural requirements.--A State agency 
                requesting information under this paragraph 
                shall adhere to uniform procedures established 
                by the Secretary governing information requests 
                and data matching under this paragraph.
                  (E) Reimbursement of costs.--A State agency 
                shall reimburse the Secretary, in accordance 
                with subsection (k)(3), for the costs incurred 
                by the Secretary in furnishing the information 
                requested under this paragraph.
    (k) Fees.--
          (1) For ssa verification.--The Secretary shall 
        reimburse the Commissioner of Social Security, at a 
        rate negotiated between the Secretary and the 
        Commissioner, for the costs incurred by the 
        Commissioner in performing the verification services 
        described in subsection (j).
          (2) For information from state directories of new 
        hires.--The Secretary shall reimburse costs incurred by 
        State directories of new hires in furnishing 
        information as required by section 453A(g)(2), at rates 
        which the Secretary determines to be reasonable (which 
        rates shall not include payment for the costs of 
        obtaining, compiling, or maintaining such information).
          (3) For information and enforcement services 
        furnished to state and federal agencies.--A State or 
        Federal agency that receives information or enforcement 
        services from the Secretary pursuant to this section or 
        subsection (l), (m), or (n) shall reimburse the 
        Secretary for costs incurred by the Secretary [in 
        furnishing the information] in furnishing such 
        information or enforcement services, at rates which the 
        Secretary determines to be reasonable (which rates 
        shall include payment for the costs of obtaining, 
        verifying, maintaining, and comparing the information).
    [(l) Restriction on Disclosure and Use.--
          [(1) In general.--Information in the Federal Parent 
        Locator Service, and information resulting from 
        comparisons using such information, shall not be used 
        or disclosed except as expressly provided in this 
        section, subject to section 6103 of the Internal 
        Revenue Code of 1986.
          [(2) Penalty for misuse of information in the 
        national directory of new hires.--The Secretary shall 
        require the imposition of an administrative penalty (up 
        to and including dismissal from employment), and a fine 
        of $1,000, for each act of unauthorized access to, 
        disclosure of, or use of, information in the National 
        Directory of New Hires established under subsection (i) 
        by any officer or employee of the United States who 
        knowingly and willfully violates this paragraph.]
    (l) Identification and Seizure of Assets Held by Multistate 
Financial Institutions.--
          (1) In general.--The Secretary, through the Federal 
        Parent Locator Service, is authorized--
                  (A) to assist State agencies operating 
                programs under this part and financial 
                institutions doing business in 2 or more States 
                in reaching agreements regarding the receipt 
                from such institutions, and the transfer to the 
                State agencies, of information that may be 
                provided pursuant to section 466(a)(17)(A)(i) 
                or 469A(a);
                  (B) to perform data matches comparing 
                information from such State agencies and 
                financial institutions entering into such 
                Agreements with respect to individuals owing 
                past-due support; and
                  (C) to seize assets, held by such financial 
                institutions, of individuals identified through 
                such data matches who owe past-due support, 
                by--
                          (i) issuing a notice of lien or levy 
                        to such financial institutions 
                        requiring them to encumber such assets 
                        for 30 calendar days and to 
                        subsequently transfer such assets to 
                        the Secretary (except that the 
                        Secretary shall promptly release such 
                        lien or levy within such 30-day period 
                        upon request of the State agencies 
                        responsible for collecting past-due 
                        support from such individuals); and
                          (ii) providing notice to such 
                        individuals of the lien or levy upon 
                        their assets and informing them--
                                  (I) of their procedural due 
                                process rights, including the 
                                opportunity to contest such 
                                lien or levy to the appropriate 
                                State agency; and
                                  (II) in the case of jointly-
                                owned assets, of the process by 
                                which other owners may secure 
                                their respective share of such 
                                assets, according to such 
                                policies and procedures as the 
                                Secretary may specify with 
                                respect to seizure of such 
                                assets.
          (2) Transfer of funds to states.--Assets seized from 
        individuals under paragraph (1)(C) shall be promptly 
        transferred by the Secretary to the State agencies 
        responsible for collecting past-due support from such 
        individuals for distribution pursuant to section 457.
          (3) Relationship to state laws.--Notwithstanding any 
        provision of State law, an individual receiving a 
        notice under paragraph (1)(C) shall have 21 calendar 
        days from the date of such notice to contest the lien 
        or levy imposed under such paragraph by requesting an 
        administrative review by the State agency responsible 
        for collecting past-due support from such individual.
          (4) Treatment of disclosures.--For purposes of 
        section 1113(d) of the Right to Financial Privacy Act 
        of 1978, a disclosure pursuant to this subsection shall 
        be considered a disclosure pursuant to a Federal 
        statute.

           *       *       *       *       *       *       *

    (o) Use of Set-Aside Funds.--Out of any money in the 
Treasury of the United States not otherwise appropriated, there 
is hereby appropriated to the Secretary for each fiscal year an 
amount equal to 2 percent of the total amount paid to the 
Federal government pursuant to a plan approved under this part 
during the immediately preceding fiscal year (as determined on 
the basis of the most recent reliable data available to the 
Secretary as of the end of the third calendar quarter following 
the end of such preceding fiscal year) or the amount 
appropriated under this paragraph for fiscal year 2002, 
whichever is greater, which shall be available for use by the 
Secretary, either directly or through grants, contracts, or 
interagency agreements, for operation of the Federal Parent 
Locator Service under this section, to the extent such costs 
are not recovered through user fees. Amounts appropriated under 
this subsection [for each of fiscal years 1997 through 2001] 
shall remain available until expended.

           *       *       *       *       *       *       *

                STATE PLAN FOR CHILD AND SPOUSAL SUPPORT

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

           *       *       *       *       *       *       *

                  (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 of 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[.]; and
          (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 (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 section 301(b) of the 
        Personal Responsibility and Individual Development for 
        Everyone Act shall not apply with respect to the State, 
        notwithstanding section 301(e) of that Act.
The State may allow the jurisdiction which makes the collection 
involved to retain any application fee under paragraph (6)(B) 
or any late payment fee under paragraph (21). Nothing in 
paragraph (33) shall void any provision of any cooperative 
agreement entered into before the date of the enactment of such 
paragraph, nor shall such paragraph deprive any State of 
jurisdiction over Indian country (as so defined) that is 
lawfully exercised under section 402 of the Act entitled ``An 
act to prescribe penalties for certain acts of violence or 
intimidation, and for other purposes'', approved April 11, 1968 
(25 U.S.C. 1322).

           *       *       *       *       *       *       *

                           PAYMENTS TO STATES

    Sec. 455 (a)(1) From the sums appropriated therfor, 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 
objective of this part, including establishment of paternity, 
establishment, modification, and enforcement of support orders, 
[and location of absent parents] location of absent parents, 
and interception of gambling winnings consistent with the 
requirements of sections 452(n) and 466(a)(20). 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.

           *       *       *       *       *       *       *

                   DISTRIBUTION OF COLLECTED SUPPORT

    Sec. 457. [(a) In General.--Subject to subsections (d) and 
(e), 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))\97\ 
                                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) area 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 point 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 government 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 col-lected, 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 arrearages 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 (d) and (e), 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 have the payment considered a qualified State 
        expenditure for purposes of section 409(a)(7).
          (7) State option to pass through additional support 
        with federal financial participation.--
                  (A) Families that are not tanf recipients.--
                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 is a 
                former recipient of assistance under the State 
                program funded under part A, to the extent that 
                the State pays the amount to the family.
                  (B) Families that include an adult and have 
                received tanf for less than 5 years.--
                          (i) In general.--Notwithstanding 
                        paragraph (1), if a family that is a 
                        recipient of assistance under the State 
                        program funded under part A includes an 
                        adult and the family has received such 
                        assistance for not more than 5 years 
                        after the date of enactment of this 
                        paragraph, a State shall not be 
                        required to pay to the Federal 
                        Government the Federal share of the 
                        excepted portion (as defined in clause 
                        (ii)) of any amount collected on behalf 
                        of such family during a month to the 
                        extent that--
                                  (I) the State pays the 
                                excepted portion to the family; 
                                and
                                  (II) the excepted portion is 
                                disregarded in determining the 
                                amount and type of assistance 
                                provided to the family under 
                                such program.
                          (ii) Excepted portion defined.--For 
                        purposes of this subparagraph, the term 
                        ``excepted portion'' means that portion 
                        of the amount collected on behalf of a 
                        family during a month that does not 
                        exceed $400 per month, or in the case 
                        of a family that includes 2 or more 
                        children, that does not exceed an 
                        amount established by the State that is 
                        at least $400, but not more than $600 
                        per month.
          (8) States with demonstration waivers.--
        Notwithstanding the preceding paragraphs, a State with 
        a waiver under section 1115 that was effective on or 
        before October 1, 1997, and 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) foster care maintenance payments under 
                the State plan approved under part E of this 
                title.
          (2) Federal share.--The term ``Federal share'' means 
        that portion of the amount collected resulting from the 
        application of the Federal medical assistance 
        percentage in effect for the fiscal year in which the 
        amount is distributed.
          (3) Federal medical assistance percentage.--The term 
        ``Federal medical assistance percentage'' means--
                  (A) 75 percent, in the case of Puerto Rico, 
                the Virgin Islands, Guam, and American Samoa; 
                or
                  (B) the Federal medical assistance percentage 
                (as defined in section 1905(b), as such section 
                was in effect on September 30, 1995) in the 
                case of any other State.
          (4) State share.--The term ``State share'' means 100 
        percent minus the Federal share.
          (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.
    [(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 remain assigned after 
such date.]
    (b) Continuation of Assignments.--
          (1) State option to discontinue pre-1997 support 
        assignments.--
                  (A) In general.--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), may remain assigned 
                after such date.
                  (B) Distribution of amounts after assignment 
                discontinuation.--If a State chooses to 
                discontinue the assignment of a support 
                obligation described in subparagraph (A), the 
                State may treat amounts collected pursuant to 
                such assignment as if such amounts had never 
                been assigned and may distribute such amounts 
                to the family in accordance with subsection 
                (a)(4).
          (2) State option to discontinue post-1997 
        assignments.--
                  (A) In general.--Any rights to support 
                obligations accruing before the date on which a 
                family first receives assistance under part A 
                that are assigned to a State under that part 
                and in effect before the implementation date of 
                this section may remain assigned after such 
                date.
                  (B) Distribution of amounts after assignment 
                discontinuation.--If a State chooses to 
                discontinue the assignment of a support 
                obligation described in subparagraph (A), the 
                State may treat amounts collected pursuant to 
                such assignment as if such amounts had never 
                been assigned and may distribute such amounts 
                to the family in accordance with subsection 
                (a)(4).

           *       *       *       *       *       *       *

 CONSENT BY THE UNITED STATES TO INCOME WITHHOLDING, GARNISHMENT, AND 
   SIMILAR PROCEEDINGS FOR ENFORCEMENT OF CHILD SUPPORT AND ALIMONY 
                              OBLIGATIONS

    Sec. 459. (a) Consent to Support Enforcement.--* * *

           *       *       *       *       *       *       *

    (h) Moneys Subject to Process.--
          (1) In general.--Subject to paragraph (2), moneys 
        payable to an individual which are considered to be 
        based upon remuneration for employment, for purposes of 
        this section--
                  (A) consist of--
                          (i) compensation payable for personal 
                        services of the individual, whether the 
                        compensation is denominated as wages, 
                        salary, commission, bonus, pay, 
                        allowances, or otherwise (including 
                        severance pay, sick pay, and incentive 
                        pay);
                          (ii) periodic benefits (including a 
                        periodic benefit as defined in section 
                        228(h)(3)) or other payments--
                                  (I) under the insurance 
                                system established by title II;

           *       *       *       *       *       *       *

                                  (V) by the Secretary of 
                                Veterans Affairs as 
                                compensation for a service-
                                connected disability paid by 
                                the Secretary to a former 
                                member of the Armed Forces [who 
                                is in receipt of retired or 
                                retainer pay if the former 
                                member has waived a portion of 
                                the retired or retainer pay in 
                                order to receive such 
                                compensation;] except that such 
                                compensation shall not subject 
                                to withholding pursuant

           *       *       *       *       *       *       *

        COLLECTION OF PAST-DUE SUPPORT FROM FEDERAL TAX REFUNDS

    Sec. 464. (a)(1) Upon receiving notice from a State agency 
administering a plan approved under this part that a named 
individual owes past-due support which has been assigned to 
such State pursuant to section 408(a)(3) or section 471(a)(17), 
the Secretary of the Treasury shall determine whether any 
amounts, as refunds of Federal taxes paid, are payable to such 
individual (regardless of whether such individual filed a tax 
return as a married or unmarried individual). If the Secretary 
of the Treasury finds that any such amount is payable, he shall 
withhold from such refunds an amount equal to the past-due 
support, 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), and shall pay such amount to the State agency 
(together with notice of the individual's home address) for 
distribution in accordance with section 457. This subsection 
may be executed by the disbursing official of the Department of 
the Treasury.
    (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 subsection (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 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 to the 
Secretary of the Treasury any fee imposed by the Secretary of 
the Treasury to cover the cost 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 owed 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) In order to satisfy section 454(20)(A), each 
State must have in effect laws requiring the use of the 
following procedures, consistent with this section and with 
regulations of the Secretary, to increase the effectiveness of 
the program which the State administers under this part:
          (1)(A) Procedures described in subsection (b) for the 
        withholding from income of amounts payable as support 
        in cases subject to enforcement under the State plan.

           *       *       *       *       *       *       *

          (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--

           *       *       *       *       *       *       *

          (14) High-volume, automated administrative 
        enforcement in interstate cases.--
                  (A) In general.--Procedures under which--
                          (i) the State shall use high-volume 
                        automated administrative enforcement, 
                        to the same extent as used for 
                        intrastate cases, in response to a 
                        request made by another State to 
                        enforce support orders, and shall 
                        promptly report the results of such 
                        enforcement procedure to the requesting 
                        State;

           *       *       *       *       *       *       *

                          (iii) if the State provides 
                        assistance to another State pursuant to 
                        this paragraph with respect to a case, 
                        neither State shall consider the case 
                        to be transferred to the caseload of 
                        such other State (but the assisting 
                        State may establish a corresponding 
                        case based on such other State's 
                        request for assistance); and
                          (iv) the State shall maintain records 
                        of--
                                  (I) the number of such 
                                requests for assistance 
                                received by the State;

           *       *       *       *       *       *       *

          (17) Financial institution data matches.--
                  (A) In general.--Procedures under which the 
                State agency shall enter into agreements with 
                financial institutions doing business in the 
                State--
                          (i) to develop and operate, in 
                        coordination with such financial 
                        institutions, and the Federal Parent 
                        Locator Service pursuant to section 
                        452(l) in the case of financial 
                        institutions doing business in two or 
                        more States, a data match system, using 
                        automated data exchanges to the maximum 
                        extent feasible, in which each such 
                        financial institution is required to 
                        provide for each calendar quarter the 
                        name, record address, social security 
                        number or other taxpayer identification 
                        number, and other identifying 
                        information for each noncustodial 
                        parent who maintains an account at such 
                        institution and who owes past-due 
                        support, as identified by the State by 
                        name and social security number or 
                        other taxpayer identification number; 
                        and
                          (ii) in response to a notice of lien 
                        or levy issued by the State agency or 
                        by the Secretary under section 452(l), 
                        encumber or surrender, as the case may 
                        be, assets held by such institution on 
                        behalf of any noncustodial parent who 
                        is subject to a child support lien 
                        pursuant to paragraph (4).
                  (B) Reasonable fees.--The State agency may 
                pay a reasonable fee to a financial institution 
                for conducting the data match provided for in 
                subparagraph (A)(i), not to exceed the actual 
                costs incurred by such financial institution.
                  (C) Liability.--A financial institution shall 
                not be liable under any Federal or State law to 
                any person--
                          (i) for any disclosure of information 
                        to the State agency or to the Federal 
                        Parent Locator Service under 
                        subparagraph (A)(i);
                          (ii) for encumbering or surrendering 
                        any assets held by such financial 
                        institution in response to a notice of 
                        lien or levy [issued by the State 
                        agency] as provided for in subparagraph 
                        (A)(ii); or
                          (iii) for any other action taken in 
                        good faith to comply with the 
                        requirements of subparagraph (A).
                  (D) Definitions.--For purposes of this 
                paragraph--
                          (i) Financial institution.--The term 
                        ``financial institution'' has the 
                        meaning given to such term by section 
                        469A(d)(1).
                          (ii) Account.--The term ``account'' 
                        means a demand deposit account, 
                        checking or negotiable withdrawal order 
                        account, savings account, time deposit 
                        account, or money-market mutual fund 
                        account.
          (18) Enforcement of orders against paternal or 
        maternal grandparents.--Procedures under which, at the 
        State's option, any child support order enforced under 
        this part with respect to a child of minor parents, if 
        the custodial parent of such child is receiving 
        assistance under the State program under part A, shall 
        be enforceable, jointly and severally, against the 
        parents of the noncustodial parent of such child.
          (19) Health care coverage.--Procedures under which 
        all child support orders enforced pursuant to this part 
        shall include a provision for the health care coverage 
        of the child, and in the case in which a noncustodial 
        parent provides such coverage and changes employment, 
        and the new employer provides health care coverage, the 
        State agency shall transfer notice of the provision to 
        the employer, which notice shall operate to enroll the 
        child in the noncustodial parent's health plan, unless 
        the noncustodial parent contests the notice.
          (20) Interception of gambling winnings.--Procedures 
        under which--
                  (A) gambling establishments subject to the 
                laws of the State are required to comply with 
                the provisions of section 452(n), and are 
                subject to sanctions for failure to comply, 
                which shall include liability in an amount 
                equal to the amount the establishment would 
                have withheld if it so complied;
                  (B) noncustodial parents owing past-due 
                support are provided with written notice that 
                gambling winnings may be subject to withholding 
                for past-due support under section 452(n); and
                  (C) cases where such noncustodial parents 
                contest the State's determination with respect 
                to past-due support are promptly resolved, and 
                expedited refund is made of any amounts 
                erroneously seized under such section 452(n).

           *       *       *       *       *       *       *

    (f) Uniform Interstate Family Support Act.--In order to 
satisfy section 454(20)(A), on any after January 1, 1998, 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] including any 
amendments officially [adopted as of such date] adopted as of 
August, 2001 by the National Conference of Commissioners on 
Uniform State Laws.

           *       *       *       *       *       *       *

NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL RECORDS TO 
    STATE CHILD SUPPORT ENFORCEMENT AGENCIES IN CHILD SUPPORT CASES

    Sec. 469A (a) In General.--Notwithstanding any other 
provision of Federal or State law, a financial institution 
shall not be liable under any Federal or State law to any 
person for disclosing any financial record of an individual to 
a State child support enforcement agency attempting to 
establish, modify, or enforce a child support obligation of 
such individual, or for disclosing any such record to the 
Federal Parent Locator Service pursuant to section 452(l) or 
section 466(a)(17)(A).

           *       *       *       *       *       *       *

 GRANTS TO STATES AND INDIAN TRIBES FOR ACCESS AND VISITATION PROGRAMS

    Sec. 469B. (a) In General.--The Administration for Children 
and Families shall make grants under this section to enable 
States and Indian tribes or tribal organizations to establish 
and administer programs to support and facilitate noncustodial 
parents' access to and visitation of their children, by means 
of activities including mediation (both voluntary and 
mandatory), counseling, education, development of parenting 
plans, visitation enforcement (including monitoring, 
supervision and neutral dropoff and pickup), and development of 
guidelines for visitation and alternative custody arrangements.
    [(b) Amount of Grant.--The amount of the grant to be made 
to a State under this section for a fiscal year shall be an 
amount equal to the lesser of--
          [(1) 90 percent of State expenditures during the 
        fiscal year for activities described in subsection (a); 
        or
          [(2) the allotment of the State under subsection (c) 
        for the fiscal year.]
  (b) Amount of Grants.--
          (1) Grants to states.--The amount of the grant to be 
        made to a State under this section for a fiscal year 
        shall be an amount equal to the lesser of--
                  (A) 90 percent of State expenditures during 
                the fiscal year for activities described in 
                subsection (a); or
                  (B) the allotment of the State under 
                subsection (c) for the fiscal year.
          (2) Grants to indian tribes.--An Indian tribe or 
        tribal organization operating a program under section 
        455 that has operated such program throughout the 
        preceding fiscal year and has an application under this 
        section approved by the Secretary shall receive a grant 
        under this section for a fiscal year in an amount equal 
        to the allotment of such Indian tribe or tribal 
        organization under subsection (c)(2) for the fiscal 
        year.
    [(c) Allotments to States.--
          [(1) In general.--The allotment of a State for a 
        fiscal year is the amount that bears the same ratio to 
        $10,000,000 for grants under this section for the 
        fiscal year as the number of children in the State 
        living with only 1 biological parent bears to the total 
        number of such children in all States.
          [(2) Minimum allotment.--The Administration for 
        Children and Families shall adjust allotments to States 
        under paragraph (1) as necessary to ensure that no 
        State is allotted less than--
                  [(A) $50,000 for fiscal year 1997 or 1998; or
                  [(B) $100,000 for any succeeding fiscal 
                year.]
    (c) Allotments.--
          (1) Allotments to states.--
                  (A) In general.--Subject to the subparagraph 
                (C), the allotment of a State for a fiscal year 
                is the amount that bears the same ratio to the 
                amount specified in subparagraph (B) for such 
                fiscal year as the number of children in the 
                State living with only 1 parent bears to the 
                total number of such children in all States.
                  (B) Amount available for allotment.--For 
                purposes of subparagraph (A), the amount 
                specified in this subparagraph is the following 
                amount, reduced by the total allotments to 
                Indian tribes or tribal organizations in 
                accordance with paragraph (2):
                          (i) $12,000,000 for fiscal year 2004.
                          (ii) $14,000,000 for fiscal year 
                        2005.
                          (iii) $16,000,000 for fiscal year 
                        2006.
                          (iv) $20,000,000 for fiscal year 2007 
                        and each succeeding fiscal year.
                  (C) Minimum state allotment.--The Secretary 
                shall adjust allotments to States under 
                subparagraph (A) as necessary to ensure that no 
                State is allotted less than--
                          (i) $120,000 for fiscal year 2004;
                          (ii) $140,000 for fiscal year 2005;
                          (iii) $160,000 for fiscal year 2006; 
                        and
                          (iv) $180,000 for fiscal year 2007 
                        and each succeeding fiscal year.
          (2) Allotments to indian tribes.--
                  (A) In general.--Subject to subparagraph (C), 
                the allotment of an Indian tribe or tribal 
                organization described in subsection (b)(2) for 
                a fiscal year is an amount that bears the same 
                ratio to the amount specified in subparagraph 
                (B) for such fiscal year as the number of 
                children in the Indian tribe or tribal 
                organization living with only 1 parent bears to 
                the total number of such children in all Indian 
                tribes and tribal organizations eligible to 
                receive grants under this section for such 
                year.
                  (B) Amount available for allotment.--For 
                purposes of subparagraph (A), the amount 
                available under this subparagraph is an amount, 
                deducted from the amount specified in paragraph 
                (1)(B), not to exceed--
                          (i) $250,000 for fiscal year 2004;
                          (ii) $600,000 for fiscal year 2005;
                          (iii) $800,000 for fiscal year 2006; 
                        and
                          (iv) $1,670,000 for fiscal year 2007 
                        and each succeeding year.
                  (C) Minimum and maximum tribal allotment.--
                The Secretary shall adjust allotments to Indian 
                tribes and tribal organizations under 
                subparagraph (A) as necessary to ensure that no 
                Indian tribe or tribal organization is 
                allotted, for a fiscal year, an amount which is 
                less than $10,000 or more than the minimum 
                State allotment for such fiscal year.
    (d) No Supplantation of State Expenditures for Similar 
Activities.--A State to which a grant is made under this 
section may not use the grant to supplant expenditures by the 
State for activities specified in subsection (a), but shall use 
the grant to supplement such expenditures at a level at least 
equal to the level of such expenditures for fiscal year 1995.
    [(e) State Administration.--Each State to which a grant is 
made under this section--
          [(1) may administer State programs funded with the 
        grant directly or through grants to or contracts with 
        courts, local public agencies, or nonprofit private 
        entities;
          [(2) shall not be required to operate such programs 
        on a statewide basis; and
          [(3) shall monitor, evaluate, and report on such 
        programs in accordance with regulations prescribed by 
        the Secretary.]
  (e) Administration.--
          (1) Grants to states.--Each State to which a grant is 
        made under this section--
                  (A) may administer State programs funded with 
                the grant, directly or through grants to or 
                contracts with courts, local public agencies, 
                or nonprofit private entities; and
                  (B) shall not be required to operate such 
                programs on a statewide basis.
          (2) Grants to states or indian tribes.--Each State or 
        Indian tribe or tribal organization to which a grant is 
        made under this section shall monitor, evaluate, and 
        report on such programs in accordance with regulations 
        prescribed by the Secretary.

           *       *       *       *       *       *       *

TITLE V--MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT

           *       *       *       *       *       *       *

               SEPARATE PROGRAM FOR ABSTINENCE EDUCATION

    Sec. 510. (a) For the purpose described in subsection (b), 
the Secretary shall, for fiscal year 1998 and each subsequent 
fiscal year, allot to each State which has transmitted [an 
application for the fiscal year under section 505(a)], for the 
fiscal year, an application under section 505(a), and an 
application under this section (in such form and meeting such 
terms and conditions as determined appropriate by the 
Secretary), an amount equal to the product of--
          (1) the amount appropriated in subsection (d) for the 
        fiscal year; and
          [(2) the percentage determined for the State under 
        section 502(c)(1)(B)(ii).]
          (2) the percentage described in section 
        502(c)(1)(B)(ii) that would be determined for the State 
        under section 502(c) if such determination took into 
        consideration only those States that transmitted both 
        such applications for such fiscal year.
    (b)(1) The purpose of an allotment under subsection(a) to a 
State is to enable the State to provide abstinence education, 
and at the option of the State, where appropriate, mentoring, 
counseling, and adult supervision to promote abstinence from 
sexual activity, with a focus on those groups which are most 
likely to bear children out-of-wedlock.
    (2) For purposes of this section, the term ``abstinence 
education'' means an educational or motivational program 
which--
          (A) has as its exclusive purpose, teaching the 
        social, psychological, and health gains to be realized 
        by abstaining from sexual activity;
          (B) teaches abstinence from sexual activity outside 
        marriage as the expected standard for all school age 
        children;
          (C) teaches that abstinence from sexual activity is 
        the only certain way to avoid out-of-wedlock pregnancy, 
        sexually transmitted diseases, and other associated 
        health problems;
          (D) teaches that a mutually faithful monogamous 
        relationship in context of marriage is the expected 
        standard of human sexual activity;
          (E) teaches that sexual activity outside of the 
        context of marriage is likely to have harmful 
        psychological and physical effects;
          (F) teaches that bearing children out-of-wedlock is 
        likely to have harmful consequences for the child, the 
        child's parents, and society;
          (G) teaches young people how to reject sexual 
        advances and how alcohol and drug use increases 
        vulnerability to sexual advances; and
          (H) teaches the importance of attaining self-
        sufficiency before engaging in sexual activity.
    (c)(1) Sections 503, 507, and 508 apply to allotments under 
subsection (a) to the same extent and in the same manner as 
such sections apply to allotments under section 502(c).
    (2) Sections 505 and 506 apply to allotments under 
subsection (a) to the extent determined by the Secretary to be 
appropriate.
    (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 [2003] 2008. The appropriation 
under the preceding sentence for a fiscal year is made on 
October 1 of the fiscal year.
    (e)(1) With respect to allotments under subsection (a) for 
fiscal year 2004 and subsequent fiscal years, the amount of any 
allotment to a State for a fiscal year that the Secretary 
determines will not be required to carry out a program under 
this section during such fiscal year or the succeeding fiscal 
year shall be available for reallotment from time to time 
during such fiscal years on such dates as the Secretary may 
fix, to other States that the Secretary determines--
          (A) require amounts in excess of amounts previously 
        allotted under subsection (a) to carry out a program 
        under this section; and
          (B) will use such excess amounts during such fiscal 
        years.
    (2) Reallotments under paragraph (1) shall be made on the 
basis of such States' applications under this section, after 
taking into consideration the population of low-income children 
in each such State as compared with the population of low-
income children in all such States with respect to which a 
determination under paragraph (1) has been made by the 
Secretary.
    (3) Any amount reallotted under paragraph (1) to a State is 
deemed to be part of its allotment under subsection (a).

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

           *       *       *       *       *       *       *

    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)] 
        (A) In general.--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), 418(a)(4)(B), or subject to clause (ii) of 
        subparagraph (B), payments to Puerto Rico described in 
        clause (i) of that subparagraph.
          (B) Certain payments to puerto rico.--
                  (i) Payments described.--For purposes of 
                subparagraph (A), payments described in this 
                subparagraph are payments made to Puerto Rico 
                under part E of title IV with respect to the 
                portion of foster care payments made to Puerto 
                Rico for fiscal year 2005 or any fiscal year 
                thereafter that exceed the total amount of such 
                payments for fiscal year 2002.
                  (ii) Limitation.--The total amount of 
                payments to Puerto Rico described in clause (i) 
                that are disregarded under subparagraph (A) may 
                not exceed $6,250,000 for each of fiscal years 
                2005 through 2008.

           *       *       *       *       *       *       *

                         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 [2003] 2008.

           *       *       *       *       *       *       *

    (b) Waiver Authority.--The Secretary may waive compliance 
with any requirement of part B or E of title IV which (if 
applied) would prevent a State from carrying out a 
demonstration project under this section or prevent the State 
from effectively achieving the purpose of such a project, 
except that the Secretary may not waive--
          (1) any provision of section 427 (as in effect before 
        April 1, 1996), section [422(b)(9)] 422(b)(10) (as in 
        effect after such date), or section 479; or
          (2) any provision of such part E, to the extent that 
        the waiver would impair the entitlement of any 
        qualified child or family to benefits under a State 
        plan approved under such part E.

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.

           *       *       *       *       *       *       *

  (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 20 percent of all determinations 
        referred to in paragraph (1) that are made in fiscal 
        year 2004;
          (ii) at least 40 percent of all such determinations 
        that are made in fiscal year 2005; and
          (iii) at least 50 percent of all such determinations 
        that are made in fiscal year 2006 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--

           *       *       *       *       *       *       *

                  (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, 2003] the last date (if any) 
                on which section 1925 applies under subsection 
                (f) of that section. 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.

           *       *       *       *       *       *       *

            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 (n), 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 re-application 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):
                          (i) Notice during initial extension 
                        period of option and requirements.--
                        Each State, during the 3rd and 6th 
                        month of any extended assistance 
                        furnished to a family under subsection 
                        (a), shall notify the family of the 
                        family's option for additional extended 
                        assistance under this subsection. Each 
                        such notice shall include (I) in the 
                        3rd month notice, a statement of the 
                        reporting requirement under 
                        subparagraph (B)(i), and, in the 6th 
                        month notice, a statement of the 
                        reporting requirement under 
                        subparagraph (B)(ii), (II) a statement 
                        as to whether any premiums are required 
                        for such additional extended 
                        assistance, and (III) a description of 
                        other out-of-pocket expenses, benefits, 
                        reporting and payment procedures, and 
                        any pre-existing condition limitations, 
                        waiting periods, or other coverage 
                        limitations imposed under any 
                        alternative coverage options offered 
                        under paragraph (4)(D). The 6th month 
                        notice under this subparagraph shall 
                        describe the amount of any premium 
                        required of a particular family for 
                        each of the first 3 months of 
                        additional extended assistance under 
                        this subsection.
                          (ii) Notice during additional 
                        extension period of reporting 
                        requirements and premiums.--Each State, 
                        during the 3rd month of any additional 
                        extended assistance furnished to a 
                        family under this subsection, shall 
                        notify the family of the reporting 
                        requirement under subparagraph (B)(ii) 
                        and a statement of the amount of any 
                        premium required for such extended 
                        assistance for the succeeding 3 months.
                  (B) Reporting requirements.--Subject to 
                subparagraph (C):
                          (i) During initial extension 
                        period.--Each State shall require (as a 
                        condition for additional extended 
                        assistance under this subsection) that 
                        a family receiving assistance under 
                        subsection (a) report to the State, not 
                        later than the 21st day of the 4th 
                        month in the period of extended 
                        assistance under subsection (a), on the 
                        family's gross monthly earnings and on 
                        the family's costs for such child care 
                        as is necessary for the employment of 
                        the caretaker relative in each of the 
                        first 3 months of that period. A State 
                        may permit such additional extended 
                        assistance under this subsection 
                        notwithstanding a failure to report 
                        under this clause if the family has 
                        established, to the satisfaction of the 
                        State, good cause for the failure to 
                        report on a timely basis.
                          (ii) During additional extension 
                        period.--Each State shall require that 
                        a family receiving extended assistance 
                        under this subsection report to the 
                        State, not later than the 21st day of 
                        the 1st month and of the 4th month in 
                        the period of additional extended 
                        assistance under this subsection, on 
                        the family's gross monthly earnings and 
                        on the family's costs for such child 
                        care as is necessary for the employment 
                        of the caretaker relative in each of 
                        the 3 preceding months.
                          (iii) Clarification on frequency of 
                        reporting.--A State may not require 
                        that a family receiving extended 
                        assistance under this subsection or 
                        subsection (a) report more frequently 
                        than as required under clause (i) or 
                        (ii).
                  (C) State option to waive notice and 
                reporting requirements.--A State may waive some 
                or all of the reporting requirements under 
                clauses (i) and (ii) of subparagraph (B). 
                Insofar as it waives such a reporting 
                requirement, the State need not provide for a 
                notice under subparagraph (A) relating to such 
                requirement.
          (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:
                          (i) No dependent child.--The 
                        extension shall terminate at the close 
                        of the first month in which the family 
                        ceases to include a child, whether or 
                        not the child is (or would if needy be) 
                        a dependent child under part A of title 
                        IV.
                          (ii) Failure to pay any premium.--If 
                        the family fails to pay any premium for 
                        a month under paragraph (5) by the 21st 
                        day of the following month, the 
                        extension shall terminate at the close 
                        of that following month, unless the 
                        family has established, to the 
                        satisfaction of the State, good cause 
                        for the failure to pay such premium on 
                        a timely basis.
                          (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--

           *       *       *       *       *       *       *

    (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 the 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, [2003] 2008.

           *       *       *       *       *       *       *

TITLE XXI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

           *       *       *       *       *       *       *

                           PAYMENTS TO STATES

    Sec. 2105. (a) Payments.--* * *

           *       *       *       *       *       *       *

    (c) Limitation on Certain Payments for Certain 
Expenditures.--
          (1) General limitations.--Funds provided to a State 
        under this title shall only be used to carry out the 
        purposes of this title (as described in section 2101), 
        and any health insurance coverage provided with such 
        funds may include coverage of abortion only if 
        necessary to save the life of the mother or if the 
        pregnancy is the result of an act of rape or incest and 
        may not include coverage of childless adults. For 
        purposes of the preceding sentence, a caretaker 
        relative (as such term is defined for purposes of 
        carrying out section 1931) shall not be considered a 
        childless adult.

           *       *       *       *       *       *       *

    STRATEGIC OBJECTIVES AND PERFORMANCE GOALS; PLAN ADMINISTRATION

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

           *       *       *       *       *       *       *

      (f) Limitation on Waiver Authority.--Notwithstanding 
subsection (e)(2)(A) and section 1115(a), the Secretary may not 
approve a waiver, experimental, pilot, or demonstration 
project, or an amendment to such a project that has been 
approved as of the date of enactment of this subsection, that 
would allow funds made available under this title to be used to 
provide child health assistance or other health benefits 
coverage to childless adults. For purposes of the preceding 
sentence, a caretaker relative (as such term is defined for 
purposes of carrying out section 1931) shall not be considered 
a childless adult.

PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1966

           *       *       *       *       *       *       *

    TITLE I--BLOCK GRANTS FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES

Sec. 101. Findings.
     * * * * * * *
Sec. 117. Responsible fatherhood program.
     * * * * * * *

TITLE I--BLOCK GRANTS FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES

           *       *       *       *       *       *       *

SEC. 116. EFFECTIVE DATE; TRANSITION RULE.

    (a) Effective Dates.--* * *

           *       *       *       *       *       *       *

SEC. 117. FATHERHOOD PROGRAM.

  (a) In General.--Title IV (42 U.S.C. 601-679b) is amended by 
inserting after part B the following:

                ``PART C--RESPONSIBLE FATHERHOOD PROGRAM

``SEC. 441. RESPONSIBLE FATHERHOOD GRANTS.

      ``(a) Grants to States To Conduct Demonstration 
Programs.--
          ``(1) Authority to award grants.--
                  ``(A) In general.--The Secretary shall award 
                grants to up to 10 eligible States to conduct 
                demonstration programs to carry out the 
                purposes described in paragraph (2).
                  ``(B) Eligible state.--For purposes of this 
                subsection, an eligible State is a State that 
                submits to the Secretary the following:
                          ``(i) Application.--An application 
                        for a grant under this subsection, at 
                        such time, in such manner, and 
                        containing such information as the 
                        Secretary may require.
                          ``(ii) State plan.--A State plan that 
                        includes the following:
                                  ``(I) Project description.--A 
                                description of the programs or 
                                activities the State will fund 
                                under the grant, including a 
                                good faith estimate of the 
                                number and characteristics of 
                                clients to be served under such 
                                projects and how the State 
                                intends to achieve at least 2 
                                of the purposes described in 
                                paragraph (2).
                                  ``(II) Coordination 
                                efforts.--A description of how 
                                the State will coordinate and 
                                cooperate with State and local 
                                entities responsible for 
                                carrying out other programs 
                                that relate to the purposes 
                                intended to be achieved under 
                                the demonstration program, 
                                including as appropriate, 
                                entities responsible for 
                                carrying out jobs programs and 
                                programs serving children and 
                                families.
                                  ``(III) Records, reports, and 
                                audits.--An agreement to 
                                maintain such records, submit 
                                such reports, and cooperate 
                                with such reviews and audits as 
                                the Secretary finds necessary 
                                for purposes of oversight of 
                                the demonstration program.
                          ``(iii) Certifications.--The 
                        following certifications from the chief 
                        executive officer of the State:
                                  ``(I) A certification that 
                                the State will use funds 
                                provided under the grant to 
                                promote at least 2 of the 
                                purposes described in paragraph 
                                (2).
                                  ``(II) A certification that 
                                the State will return any 
                                unused funds to the Secretary 
                                in accordance with the 
                                reconciliation process under 
                                paragraph (5).
                                  ``(III) A certification that 
                                the funds provided under the 
                                grant will be used for programs 
                                and activities that target low-
                                income participants and that 
                                not less than 50 percent of the 
                                participants in each program or 
                                activity funded under the grant 
                                shall be--
                                          ``(aa) parents of a 
                                        child who is, or within 
                                        the past 24 months has 
                                        been, a recipient of 
                                        assistance or services 
                                        under a State program 
                                        funded under part A, D, 
                                        or E of this title, 
                                        title XIX, or the Food 
                                        Stamp Act of 1977; or
                                          ``(bb) parents, 
                                        including an expectant 
                                        parent or a married 
                                        parent, whose income 
                                        (after adjustment for 
                                        court-ordered child 
                                        support paid or 
                                        received) does not 
                                        exceed 150 percent of 
                                        the poverty line.
                                  ``(IV) A certification that 
                                the State has or will comply 
                                with the requirements of 
                                paragraph (4).
                                  ``(V) A certification that 
                                funds provided to a State under 
                                this subsection shall not be 
                                used to supplement or supplant 
                                other Federal, State, or local 
                                funds that are used to support 
                                programs or activities that are 
                                related to the purposes 
                                described in paragraph (2).
                  ``(C) Preferences and factors of 
                consideration.--In awarding grants under this 
                subsection, the Secretary shall take into 
                consideration the following:
                          ``(i) Diversity of entities used to 
                        conduct programs and activities.--The 
                        Secretary shall, to the extent 
                        practicable, achieve a balance among 
                        the eligible States awarded grants 
                        under this subsection with respect to 
                        the size, urban or rural location, and 
                        employment of differing or unique 
                        methods of the entities that the 
                        eligible States intend to use to 
                        conduct the programs and activities 
                        funded under the grants.
                          ``(ii) Priority for certain states.--
                        The Secretary shall give priority to 
                        awarding grants to eligible States that 
                        have--
                                  ``(I) demonstrated progress 
                                in achieving at least 1 of the 
                                purposes described in paragraph 
                                (2) through previous State 
                                initiatives; or
                                  ``(II) demonstrated need with 
                                respect to reducing the 
                                incidence of out-of-wedlock 
                                births or absent fathers in the 
                                State.
          ``(2) Purposes.--The purposes described in this 
        paragraph are the following:
                  ``(A) Promoting responsible fatherhood 
                through marriage promotion.--To promote 
                marriage or sustain marriage through activities 
                such as counseling, mentoring, disseminating 
                information about the benefits of marriage and 
                2-parent involvement for children, enhancing 
                relationship skills, education regarding how to 
                control aggressive behavior, disseminating 
                information on the causes of domestic violence 
                and child abuse, marriage preparation programs, 
                premarital counseling, marital inventories, 
                skills-based marriage education, financial 
                planning seminars, including improving a 
                family's ability to effectively manage family 
                business affairs by means such as education, 
                counseling, or mentoring on matters related to 
                family finances, including household 
                management, budgeting, banking, and handling of 
                financial transactions and home maintenance, 
                and divorce education and reduction programs, 
                including mediation and counseling.
                  ``(B) Promoting responsible fatherhood 
                through parenting promotion.--To promote 
                responsible parenting through activities such 
                as counseling, mentoring, and mediation, 
                disseminating information about good parenting 
                practices, skills-based parenting education, 
                encouraging child support payments, and other 
                methods.
                  ``(C) Promoting responsible fatherhood 
                through fostering economic stability of 
                fathers.--To foster economic stability by 
                helping fathers improve their economic status 
                by providing activities such as work first 
                services, job search, job training, subsidized 
                employment, job retention, job enhancement, and 
                encouraging education, including career-
                advancing education, dissemination of 
                employment materials, coordination with 
                existing employment services such as welfare-
                to-work programs, referrals to local employment 
                training initiatives, and other methods.
          ``(3) Restriction on use of funds.--No funds provided 
        under this subsection may be used for costs 
        attributable to court proceedings regarding matters of 
        child visitation or custody, or for legislative 
        advocacy.
          ``(4) Requirements for receipt of funds.--A State may 
        not be awarded a grant under this section unless the 
        State, as a condition of receiving funds under such a 
        grant--
                  ``(A) consults with experts in domestic 
                violence or with relevant community domestic 
                violence coalitions in developing such programs 
                or activities; and
                  ``(B) describes in the application for a 
                grant under this section--
                          ``(i) how the programs or activities 
                        proposed to be conducted will address, 
                        as appropriate, issues of domestic 
                        violence; and
                          ``(ii) what the State will do, to the 
                        extent relevant, to ensure that 
                        participation in such programs or 
                        activities is voluntary, and to inform 
                        potential participants that their 
                        involvement is voluntary.
          ``(5) Reconciliation process.--
                  ``(A) 3-year availability of amounts 
                allotted.--Each eligible State that receives a 
                grant under this subsection for a fiscal year 
                shall return to the Secretary any unused 
                portion of the grant for such fiscal year not 
                later than the last day of the second 
                succeeding fiscal year, together with any 
                earnings on such unused portion.
                  ``(B) Procedure for redistribution.--The 
                Secretary shall establish an appropriate 
                procedure for redistributing to eligible States 
                that have expended the entire amount of a grant 
                made under this subsection for a fiscal year 
                any amount that is returned to the Secretary by 
                eligible States under subparagraph (A).
          ``(6) Amount of grants.--
                  ``(A) In general.--Subject to subparagraph 
                (B), the amount of each grant awarded under 
                this subsection shall be an amount sufficient 
                to implement the State plan submitted under 
                paragraph (1)(B)(ii).
                  ``(B) Minimum amounts.--No eligible State 
                shall--
                          ``(i) in the case of the District of 
                        Columbia or a State other than the 
                        Commonwealth of Puerto Rico, the United 
                        States Virgin Islands, Guam, American 
                        Samoa, and the Commonwealth of the 
                        Northern Mariana Islands, receive a 
                        grant for a fiscal year in an amount 
                        that is less than $1,000,000; and
                          ``(ii) in the case of the 
                        Commonwealth of Puerto Rico, the United 
                        States Virgin Islands, Guam, American 
                        Samoa, and the Commonwealth of the 
                        Northern Mariana Islands, receive a 
                        grant for a fiscal year in an amount 
                        that is less than $500,000.
          ``(7) Definition of state.--In this subsection the 
        term `State' means each of the 50 States, the District 
        of Columbia, the Commonwealth of Puerto Rico, the 
        United States Virgin Islands, Guam, American Samoa, and 
        the Commonwealth of the Northern Mariana Islands.
          ``(8) Authorization of appropriations.--There is 
        authorized to be appropriated $20,000,000 for each of 
        fiscal years 2004 through 2008 for purposes of making 
        grants to eligible States under this subsection.
  ``(b) Grants to Eligible Entities To Conduct Demonstration 
Programs.--
          ``(1) Authority to award grants.--
                  ``(A) In general.--The Secretary shall award 
                grants to eligible entities to conduct 
                demonstration programs to carry out the 
                purposes described in subsection (a)(2).
                  ``(B) Eligible entity.--For purposes of this 
                subsection, an eligible entity is a local 
                government, local public agency, community-
                based or nonprofit organization, or private 
                entity, including any charitable or faith-based 
                organization, or an Indian tribe (as defined in 
                section 419(4)), that submits to the Secretary 
                the following:
                          ``(i) Application.--An application 
                        for a grant under this subsection, at 
                        such time, in such manner, and 
                        containing such information as the 
                        Secretary may require.
                          ``(ii) Project description.--A 
                        description of the programs or 
                        activities the entity intends to carry 
                        out with funds provided under the 
                        grant, including a good faith estimate 
                        of the number and characteristics of 
                        clients to be served under such 
                        programs or activities and how the 
                        entity intends to achieve at least 2 of 
                        the purposes described in subsection 
                        (a)(2).
                          ``(iii) Coordination efforts.--A 
                        description of how the entity will 
                        coordinate and cooperate with State and 
                        local entities responsible for carrying 
                        out other programs that relate to the 
                        purposes intended to be achieved under 
                        the demonstration program, including as 
                        appropriate, entities responsible for 
                        carrying out jobs programs and programs 
                        serving children and families.
                          ``(iv) Records, reports, and 
                        audits.--An agreement to maintain such 
                        records, submit such reports, and 
                        cooperate with such reviews and audits 
                        as the Secretary finds necessary for 
                        purposes of oversight of the 
                        demonstration program.
                          ``(v) Certifications.--The following 
                        certifications:
                                  ``(I) A certification that 
                                the entity will use funds 
                                provided under the grant to 
                                promote at least 2 of the 
                                purposes described in 
                                subsection (a)(2).
                                  ``(II) A certification that 
                                the entity will return any 
                                unused funds to the Secretary 
                                in accordance with the 
                                reconciliation process under 
                                paragraph (3).
                                  ``(III) A certification that 
                                the funds provided under the 
                                grant will be used for programs 
                                and activities that target low-
                                income participants and that 
                                not less than 50 percent of the 
                                participants in each program or 
                                activity funded under the grant 
                                shall be--
                                          ``(aa) parents of a 
                                        child who is, or within 
                                        the past 24 months has 
                                        been, a recipient of 
                                        assistance or services 
                                        under a State program 
                                        funded under part A, D, 
                                        or E of this title, 
                                        title XIX, or the Food 
                                        Stamp Act of 1977; or
                                          ``(bb) parents, 
                                        including an expectant 
                                        parent or a married 
                                        parent, whose income 
                                        (after adjustment for 
                                        court-ordered child 
                                        support paid or 
                                        received) does not 
                                        exceed 150 percent of 
                                        the poverty line.
                                  ``(IV) A certification that 
                                the entity has or will comply 
                                with the requirements of 
                                paragraph (3).
                                  ``(V) A certification that 
                                funds provided to an entity 
                                under this subsection shall not 
                                be used to supplement or 
                                supplant other Federal, State, 
                                or local funds provided to the 
                                entity that are used to support 
                                programs or activities that are 
                                related to the purposes 
                                described in subsection (a)(2).
                  ``(C) Preferences and factors of 
                consideration.--In awarding grants under this 
                subsection, the Secretary shall, to the extent 
                practicable, achieve a balance among the 
                eligible entities awarded grants under this 
                subsection with respect to the size, urban or 
                rural location, and employment of differing or 
                unique methods of the entities.
          ``(2) Restriction on use of funds.--No funds provided 
        under this subsection may be used for costs 
        attributable to court proceedings regarding matters of 
        child visitation or custody, or for legislative 
        advocacy.
          ``(3) Requirements for use of funds.--The Secretary 
        may not award a grant under this subsection to an 
        eligible entity unless the entity, as a condition of 
        receiving funds under such a grant--
                  ``(A) consults with experts in domestic 
                violence or with relevant community domestic 
                violence coalitions in developing the programs 
                or activities to be conducted with such funds 
                awarded under the grant; and
                  ``(B) describes in the application for a 
                grant under this section--
                          ``(i) how the programs or activities 
                        proposed to be conducted will address, 
                        as appropriate, issues of domestic 
                        violence; and
                          ``(ii) what the entity will do, to 
                        the extent relevant, to ensure that 
                        participation in such programs or 
                        activities is voluntary, and to inform 
                        potential participants that their 
                        involvement is voluntary.
          ``(4) Reconciliation process.--
                  ``(A) 3-year availability of amounts 
                allotted.--Each eligible entity that receives a 
                grant under this subsection for a fiscal year 
                shall return to the Secretary any unused 
                portion of the grant for such fiscal year not 
                later than the last day of the second 
                succeeding fiscal year, together with any 
                earnings on such unused portion.
                  ``(B) Procedure for redistribution.--The 
                Secretary shall establish an appropriate 
                procedure for redistributing to eligible 
                entities that have expended the entire amount 
                of a grant made under this subsection for a 
                fiscal year any amount that is returned to the 
                Secretary by eligible entities under 
                subparagraph (A).
          ``(5) Authorization of appropriations.--There is 
        authorized to be appropriated $30,000,000 for each of 
        fiscal years 2004 through 2008 for purposes of making 
        grants to eligible entities under this subsection.

``SEC. 442. NATIONAL CLEARINGHOUSE FOR RESPONSIBLE FATHERHOOD PROGRAMS.

    ``(a) Media Campaign National Clearinghouse for Responsible 
Fatherhood.--
          ``(1) In general.--From any funds appropriated under 
        subsection (c), the Secretary shall contract with a 
        nationally recognized, nonprofit fatherhood promotion 
        organization described in subsection (b) to--
                  ``(A) develop, promote, and distribute to 
                interested States, local governments, public 
                agencies, and private entities a media campaign 
                that encourages the appropriate involvement of 
                parents in the life of any child, with a 
                priority for programs that specifically address 
                the issue of responsible fatherhood; and
                  ``(B) develop a national clearinghouse to 
                assist States and communities in efforts to 
                promote and support marriage and responsible 
                fatherhood by collecting, evaluating, and 
                making available (through the Internet and by 
                other means) to other States information 
                regarding the media campaigns established under 
                section 443.
          ``(2) Coordination with domestic violence programs.--
        The Secretary shall ensure that the nationally 
        recognized nonprofit fatherhood promotion organization 
        with a contract under paragraph (1) coordinates the 
        media campaign developed under subparagraph (A) of such 
        paragraph and the national clearinghouse developed 
        under subparagraph (B) of such paragraph with national, 
        State, or local domestic violence programs.
    ``(b) Nationally Recognized, Nonprofit Fatherhood Promotion 
Organization Described.--The nationally recognized, nonprofit 
fatherhood promotion organization described in this subsection 
is an organization that has at least 4 years of experience in--
          ``(1) designing and disseminating a national public 
        education campaign, as evidenced by the production and 
        successful placement of television, radio, and print 
        public service announcements that promote the 
        importance of responsible fatherhood, a track record of 
        service to Spanish-speaking populations and 
        historically underserved or minority populations, the 
        capacity to fulfill requests for information and a 
        proven history of fulfilling such requests, and a 
        mechanism through which the public can request 
        additional information about the campaign; and
          ``(2) providing consultation and training to 
        community-based organizations interested in 
        implementing fatherhood outreach, support, or skill 
        development programs with an emphasis on promoting 
        married fatherhood as the ideal.
    ``(c) Authorization of Appropriations.--There is authorized 
to be appropriated $5,000,000 for each of fiscal years 2004 
through 2008 to carry out this section.

``SEC. 443. BLOCK GRANTS TO STATES TO ENCOURAGE MEDIA CAMPAIGNS.

    ``(a) Definitions.--In this section:
          ``(1) Broadcast advertisement.--The term `broadcast 
        advertisement' means a communication intended to be 
        aired by a television or radio broadcast station, 
        including a communication intended to be transmitted 
        through a cable channel.
          ``(2) Child at risk.--The term `child at risk' means 
        each young child whose family income does not exceed 
        the poverty line.
          ``(3) Poverty line.--The term `poverty line' has the 
        meaning given such term in section 673(2) of the 
        Community Services Block Grant Act (42 U.S.C. 9902(2)), 
        including any revision required by such section, that 
        is applicable to a family of the size involved.
          ``(4) Printed or other advertisement.--The term 
        `printed or other advertisement' includes any 
        communication intended to be distributed through a 
        newspaper, magazine, outdoor advertising facility, 
        mailing, or any other type of general public 
        advertising, but does not include any broadcast 
        advertisement.
          ``(5) State.--The term `State' means each of the 50 
        States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the United States Virgin Islands, Guam, 
        American Samoa, and the Commonwealth of the Northern 
        Mariana Islands.
          ``(6) Young child.--The term `young child' means an 
        individual under age 5.
    ``(b) State Certifications.--Not later than October 1 of 
each of fiscal year for which a State desires to receive an 
allotment under this section, the chief executive officer of 
the State shall submit to the Secretary a certification that 
the State shall--
          ``(1) use such funds to promote the formation and 
        maintenance of healthy 2-parent married families, 
        strengthen fragile families, and promote responsible 
        fatherhood through media campaigns conducted in 
        accordance with the requirements of subsection (d);
          ``(2) return any unused funds to the Secretary in 
        accordance with the reconciliation process under 
        subsection (e); and
          ``(3) comply with the reporting requirements under 
        subsection (f).
    ``(c) Payments to States.--For each of fiscal years 2004 
through 2008, the Secretary shall pay to each State that 
submits a certification under subsection (b), from any funds 
appropriated under subsection (i), for the fiscal year an 
amount equal to the amount of the allotment determined for the 
fiscal year under subsection (g).
    ``(d) Establishment of Media Campaigns.--Each State 
receiving an allotment under this section for a fiscal year 
shall use the allotment to conduct media campaigns as follows:
          ``(1) Conduct of media campaigns.--
                  ``(A) Radio and television media campaigns.--
                          ``(i) Production of broadcast 
                        advertisements.--At the option of the 
                        State, to produce broadcast 
                        advertisements that promote the 
                        formation and maintenance of healthy 2-
                        parent married families, strengthen 
                        fragile families, and promote 
                        responsible fatherhood.
                          ``(ii) Air-time challenge program.--
                        At the option of the State, to 
                        establish an air-time challenge program 
                        under which the State may spend amounts 
                        allotted under this section to purchase 
                        time from a broadcast station to air a 
                        broadcast advertisement produced under 
                        clause (i), but only if the State 
                        obtains an amount of time of the same 
                        class and during a comparable period to 
                        air the advertisement using non-Federal 
                        contributions.
                  ``(B) Other media campaigns.--At the option 
                of the State, to conduct a media campaign that 
                consists of the production and distribution of 
                printed or other advertisements that promote 
                the formation and maintenance of healthy 2-
                parent married families, strengthen fragile 
                families, and promote responsible fatherhood.
          ``(2) Administration of media campaigns.--A State may 
        administer media campaigns funded under this section 
        directly or through grants, contracts, or cooperative 
        agreements with public agencies, local governments, or 
        private entities, including charitable and faith-based 
        organizations.
          ``(3) Consultation with domestic violence assistance 
        centers.--In developing broadcast and printed 
        advertisements to be used in the media campaigns 
        conducted under paragraph (1), the State or other 
        entity administering the campaign shall consult with 
        representatives of State and local domestic violence 
        centers.
          ``(4) Non-federal contributions.--In this section, 
        the term `non-Federal contributions' includes 
        contributions by the State and by public and private 
        entities. Such contributions may be in cash or in kind. 
        Such term 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, 2003.
    ``(e) Reconciliation Process.--
          ``(1) 3-year availability of amounts allotted.--Each 
        State that receives an allotment under this section 
        shall return to the Secretary any unused portion of the 
        amount allotted to a State for a fiscal year not later 
        than the last day of the second succeeding fiscal year 
        together with any earnings on such unused portion.
          ``(2) Procedure for redistribution of unused 
        allotments.--The Secretary shall establish an 
        appropriate procedure for redistributing to States that 
        have expended the entire amount allotted under this 
        section any amount that is--
                  ``(A) returned to the Secretary by States 
                under paragraph (1); or
                  ``(B) not allotted to a State under this 
                section because the State did not submit a 
                certification under subsection (b) by October 1 
                of a fiscal year.
    ``(f) Reporting Requirements.--
          ``(1) Monitoring and evaluation.--Each State 
        receiving an allotment under this section for a fiscal 
        year shall monitor and evaluate the media campaigns 
        conducted using funds made available under this section 
        in such manner as the Secretary, in consultation with 
        the States, determines appropriate.
          ``(2) Annual reports.--Not less frequently than 
        annually, each State receiving an allotment under this 
        section for a fiscal year shall submit to the Secretary 
        reports on the media campaigns conducted using funds 
        made available under this section at such time, in such 
        manner, and containing such information as the 
        Secretary may require.
    ``(g) Amount of Allotments.--
          ``(1) In general.--Except as provided in paragraph 
        (2), of the amount appropriated for the purpose of 
        making allotments under this section for a fiscal year, 
        the Secretary shall allot to each State that submits a 
        certification under subsection (b) for the fiscal year 
        an amount equal to the sum of--
                  ``(A) the amount that bears the same ratio to 
                50 percent of such funds as the number of young 
                children in the State (as determined by the 
                Secretary based on the most current reliable 
                data available) bears to the number of such 
                children in all States; and
                  ``(B) the amount that bears the same ratio to 
                50 percent of such funds as the number of 
                children at risk in the State (as determined by 
                the Secretary based on the most current 
                reliable data available) bears to the number of 
                such children in all States.
          ``(2) Minimum allotments.--No allotment for a fiscal 
        year under this section shall be less than--
                  ``(A) in the case of the District of Columbia 
                or a State other than the Commonwealth of 
                Puerto Rico, the United States Virgin Islands, 
                Guam, American Samoa, and the Commonwealth of 
                the Northern Mariana Islands, 1 percent of the 
                amount appropriated for the fiscal year under 
                subsection (i); and
                  ``(B) in the case of the Commonwealth of 
                Puerto Rico, the United States Virgin Islands, 
                Guam, American Samoa, and the Commonwealth of 
                the Northern Mariana Islands, 0.5 percent of 
                such amount.
          ``(3) Pro rata reductions.--The Secretary shall make 
        such pro rata reductions to the allotments determined 
        under this subsection as are necessary to comply with 
        the requirements of paragraph (2).
  ``(h) Evaluation.--
          ``(1) In general.--The Secretary shall conduct an 
        evaluation of the impact of the media campaigns funded 
        under this section.
          ``(2) Report.--Not later than December 31, 2006, the 
        Secretary shall report to Congress the results of the 
        evaluation under paragraph (1).
          ``(3) Funding.--Of the amount appropriated under 
        subsection (i) for fiscal year 2004, $1,000,000 of such 
        amount shall be transferred and made available for 
        purposes of conducting the evaluation required under 
        this subsection, and shall remain available until 
        expended.
    ``(i) Authorization of Appropriations.--There is authorized 
to be appropriated $20,000,000 for each of fiscal years 2004 
through 2008 for purposes of making allotments to States under 
this section.''
    (b) Inapplicability of Effective Date Provisions.--Section 
116 shall not apply to the amendment made by subsection (a) of 
this section.

           *       *       *       *       *       *       *

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *

              CHAPTER 65.--ABATEMENTS, CREDITS, AND REFUNDS

     * * * * * * *
Sec.  6402. Authority to make credits or refunds.
     * * * * * * *
    (c) Offset of Past-Due Support Against Overpayments.--The 
amount of any overpayment to be refunded to the person making 
the overpayment shall be reduced by the amount of any past-due 
support (as defined in section 464(c) of the Social Security 
Act) owed by that person of which the Secretary has been 
notified by a State in accordance with section 464 of [the 
Social Security Act] such Act. The Secretary shall remit the 
amount by which the overpayment is so reduced to the State 
collecting such support and notify the person making the 
overpayment that so much of the overpayment was necessary to 
satisfy his obligation for past-due support has been paid to 
the State. [A reduction under this subsection shall be applied 
first to satisfy any past-due support which has been assigned 
to the State under section 402(a)(26) or 471(a)(17) of the 
Social Security Act, and shall be applied to satisfy any other 
past-due support after any other reductions allowed by law (but 
before a credit against future liability for an internal 
revenue tax) have been made.] The Secretary shall apply a 
reduction under this subsection first to an amount certified by 
the State as past due support under section 464 of the Social 
Security Act before any other reductions allowed by law. This 
subsection shall be applied to any overpayment prior to its 
being credited to a person's future liability for an internal 
revenue tax.

           *       *       *       *       *       *       *

                           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.

    (a) General Rule.--The appropriate authorities of each 
State--

           *       *       *       *       *       *       *

    [(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 consistent 
        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.

           *       *       *       *       *       *       *

          (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.

           *       *       *       *       *       *       *

                      TITLE 31--MONEY AND FINANCE

                   Subtitle III--Financial Management

                           Chapter 37--Claims

         Subchapter II--Claims of the United States Government

SEC. 3716. ADMINISTRATIVE OFFSET.

           *       *       *       *       *       *       *

    (h)(1) The Secretary may, in the discretion of the 
Secretary, apply subsection (a) with respect to any past-due, 
legally-enforceable debt owed to a State if--

           *       *       *       *       *       *       *

    [(3) In applying this section with respect to any debt owed 
to a State, subsection (c)(3)(A) shall not apply.]
  (3)(A) Except as provided in subparagraph (B), in applying 
this subsection with respect to any debt owed to a State, 
subsection (c)(3)(A) shall not apply.
  (B) Subparagraph (A) shall not apply with respect to payments 
owed to an individual under title II of the Social Security 
Act, for purposes of an offset under this section of such 
payments against past-due support (as defined in section 464(c) 
of the Social Security Act, without regard to paragraphs (2) 
and (3) of such section 464(c)) that is being enforced by a 
State agency administering a program under part D of title IV 
of that Act.

           *       *       *       *       *       *       *

             LONGSHORE AND HARBOR WORKERS' COMPENSATION ACT

           ASSIGNMENT AND EXEMPTION FROM CLAIMS OF CREDITORS

    Sec. 16. [No] Except as provided by this Act, no 
assignment, release, or commutation of compensation or benefits 
due or payable under this Act[, except as provided by this 
Act,] shall be valid, and such compensation and benefits shall 
be exempt from all claims of creditors and from levy, 
execution, and attachment or other remedy for recovery or 
collection of a debt, which exemption may not be waived.

                       [LIEN AGAINST COMPENSATION

    [Sec. 17. Where a trust fund which complies with section 
186(c) of title 29 established pursuant to a collective-
bargaining agreement in effect between an employer and an 
employee covered under this chapter has paid disability 
benefits to an employee which the employee is legally obligated 
to repay by reason of his entitlement to compensation under 
this chapter or under a settlement, the Secretary shall 
authorize a lien on such compensation in favor or the trust 
fund for the amount of such payments.]

            LIENS ON COMPENSATION; CHILD SUPPORT ENFORCEMENT

  Sec. 17. (a) Liens.--Where a trust fund which complies with 
section 302(c) of the Labor Management Relations Act, 1947 (29 
U.S.C. 186(c)) established pursuant to a collective-bargaining 
agreement in effect between an employer and an employee covered 
under this Act has paid disability benefits to an employee 
which the employee is legally obligated to repay by reason of 
the employee's entitlement to compensation under this Act or 
under a settlement, the Secretary shall authorize a lien on 
such compensation in favor of the trust fund for the amount of 
such payments.
  (b) Child Support.--Compensation or benefits due or payable 
to an individual under this Act (other than medical benefits) 
shall be subject, in like manner and to the same extent as 
similar compensation or benefits under a workers' compensation 
program if established under State law--
          (1) to withholding in accordance with State law 
        enacted pursuant to subsections (a)(1) and (b) of 
        section 466 of the Social Security Act and regulations 
        under such subsections; and
          (2) to any other legal process brought, by a State 
        agency administering a program under a State plan 
        approved under part D of title IV of the Social 
        Security Act or by an individual obligee, to enforce 
        the legal obligation of the individual to provide child 
        support or alimony.

           *       *       *       *       *       *       *

                                
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