II

104TH CONGRESS

1ST SESSION S. 246

To establish demonstration projects to expand innovations in State administration of the aid to families with dependent children program under

title IV of the Social Security Act, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 19 (legislative day, JANUARY 10), 1995

Mr. LIEBERMAN introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To establish demonstration projects to expand innovations

in State administration of the aid to families with dependent children program under title IV of the Social

Security Act, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Welfare Reforms That Work Act’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Purpose.

Sec. 3. Definitions.
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Sec. 4. General provisions relating to demonstration projects.

Sec. 5. Authorization of appropriations.

TITLE I—INITIATIVES TO MOVE WELFARE RECIPIENTS INTO

THE WORK FORCE

Sec. 101. Demonstration projects which condition AFDC benefits for certain individuals on school attendance or job training, limit the time

period for receipt of such benefits, and require teenage parents

to live at home.

Sec. 102. Pilot Job Corps program for recipients of Aid to Families with Dependent Children.

Sec. 103. Demonstration projects requiring up-front 30-day assisted job search,

or substance abuse treatment before receiving AFDC benefits.

Sec. 104. Disregard of education and employment training savings for AFDC

eligibility.

Sec. 105. Incentives and assistance in starting a small business.

Sec. 106. Increased emphasis in JOBS program on moving people into the

work force.

Sec. 107. Additional demonstration projects to move AFDC recipients into the

work force.

TITLE II—INITIATIVES TO STRENGTHEN FAMILIES AND BREAK

THE CYCLE OF WELFARE DEPENDENCY

Sec. 201. Demonstration projects to establish child centered programs through

conversion of certain AFDC and JOBS payments into block

grants.

Sec. 202. Demonstration projects providing no additional benefits with respect

to children born while a family is receiving AFDC and allowing

increases in the earned income disregard.

Sec. 203. Demonstration projects providing incentives to marry.

Sec. 204. Demonstration projects reducing AFDC benefits if school attendance

is irregular or preventive health care for dependent children is

not obtained.

Sec. 205. Demonstration projects to develop community-based programs for

teenage pregnancy prevention and family planning.

Sec. 206. Additional demonstration projects to strengthen families and break

the cycle of welfare dependency.

TITLE III—CHANGES TO FEDERAL LAWS AND STATE INITIATIVES TO INCREASE CHILD SUPPORT AND PATERNAL RESPONSIBILITY

Sec. 301. Demonstration projects to increase paternity establishment.

Sec. 302. Demonstration projects to increase child support collection.

TITLE IV—INITIATIVES TO DIVERSIFY AND IMPROVE THE

PERFORMANCE OF WELFARE SERVICES

Sec. 401. Demonstration projects for providing placement of AFDC recipients

in private sector jobs.

Sec. 402. Demonstration projects providing performance-based incentives for

State public welfare providers.

Sec. 403. Electronic benefit transfers.

TITLE V—OFFSETTING EXPENDITURE REDUCTIONS
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Sec. 501. Offsetting expenditure reductions.

1 SEC. 2. PURPOSE.

2 The purposes of this Act are—

3 (1) to promote bold State initiated welfare re4 forms that will—

5 (A) move welfare recipients into the work

6 force,

7 (B) strengthen families,

8 (C) break the cycle of welfare dependence,

9 (D) increase child support collection and

10 paternal responsibility, and

11 (E) improve the delivery of welfare serv12 ices; and

13 (2) to make immediate State-by-State changes

14 to the existing system while establishing a process

15 for identifying successful reform approaches that

16 can be applied nationally.

17 SEC. 3. DEFINITIONS.

18 For purposes of this Act:

19 (1) AID TO FAMILIES WITH DEPENDENT CHIL20 DREN.—The term ‘‘aid to families with dependent

21 children’’ has the meaning given to such term by

22 section 406(b) of the Social Security Act (42 U.S.C.

23 606(b)).

24 (2) SECRETARY.—The term ‘‘Secretary’’ means

25 the Secretary of Health and Human Services.
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1 SEC. 4. GENERAL PROVISIONS RELATING TO DEMONSTRA2 TION PROJECTS.

3 (a) APPLICATIONS.—

4 (1) IN GENERAL.—Each State desiring to con5 duct a demonstration project under this Act shall

6 prepare and submit to the Secretary an application

7 in such manner and containing such information as

8 the Secretary may require. The Secretary shall ac9 tively encourage States to submit such applications.

10 (2) APPROVAL.—The Secretary shall consider

11 all applications received from States desiring to con12 duct demonstration projects under this Act and shall

13 approve such applications in a number of States to

14 be determined by the Secretary, taking into account

15 the overall funding levels available under section 5.

16 (3) CONSIDERATION OF RESEARCH NEEDS AND

17 PURPOSES.—The Secretary shall pursue a broad

18 range of reforms consistent with the purposes of this

19 Act and with research needs in approving dem20 onstration projects under this Act.

21 (b) DURATION.—A demonstration project under this

22 Act shall be conducted for not more than 5 years plus

23 an additional time period of up to 12 months for final

24 evaluation and reporting. The Secretary may terminate a

25 project if the Secretary determines that the State conduct26 ing the project is not in substantial compliance with the
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1 terms of the application approved by the Secretary under

2 this Act.

3 (c) EVALUATION PLAN.—

4 (1) IN GENERAL.—Each State conducting a

5 demonstration project under this Act shall submit an

6 evaluation plan (meeting the standards developed by

7 the Secretary under paragraph (2)) to the Secretary

8 not later than 90 days after the State is notified of

9 the Secretary’s approval for such project. A State

10 shall not receive any Federal funds for the operation

11 of the demonstration project or be granted any waiv12 ers of the Social Security Act necessary for oper13 ation of the demonstration project until the Sec14 retary approves such evaluation plan.

15 (2) STANDARDS.—Not later than 3 months

16 after the date of the enactment of this Act, the Sec17 retary shall develop standards for the evaluation

18 plan required under paragraph (1) which shall in19 clude the requirement that an independent expert

20 entity provide an evaluation of each demonstration

21 project to be included in the State’s annual and final

22 reports to the Secretary under subsection (d)(1).

23 (d) REPORTS.—

24 (1) STATE.—A State that conducts a dem25 onstration project under this Act shall prepare and
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1 submit to the Secretary annual and final reports in

2 accordance with the State’s evaluation plan under

3 subsection (c)(1) for such demonstration project.

4 (2) SECRETARY.—The Secretary shall prepare

5 and submit to the Congress annual reports concern6 ing each demonstration project under this Act.

7 (e) LEGISLATIVE PROPOSAL.—

8 (1) EVALUATIONS.—

9 (A) IN GENERAL.—On each of the dates

10 described in subparagraph (B), the Secretary

11 shall evaluate the demonstration projects based

12 on the reports received from each State under

13 subsection (d)(1) and if the Secretary deter14 mines that any of the reforms in the dem15 onstration projects will be effective in achieving

16 the purposes of this Act, the Secretary shall

17 submit proposed legislation to the Congress

18 to—

19 (i) implement such successful reforms

20 nationally if appropriate, or

21 (ii) give States the option of adopting

22 a successful reform in a State plan ap23 proved under section 402 of the Social Se24 curity Act (42 U.S.C. 602) where the re-
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1 form may be effective in some States but

2 not in others.

3 The proposed legislation shall take into account

4 factors important to implementing local dem5 onstration projects on a national scale, includ6 ing variation in population density and poverty.

7 (B) DATES FOR EVALUATION AND SUBMIS8 SION.—A date is described in this subpara9 graph, if it is a date that is—

10 (i) 2 years after the date of the enact11 ment of this Act,

12 (ii) 4 years after the date of the en13 actment of this Act, or

14 (iii) not later than 6 months after the

15 date the Secretary receives the last final

16 report due under subsection (d)(1) with re17 spect to a demonstration project.

18 (2) OTHER LEGISLATIVE SUBMISSIONS.—At

19 any time other than a date described in paragraph

20 (1)(B), if the Secretary determines that a reform in

21 a demonstration project is ready to be implemented

22 on a national scale or to be made a State option, the

23 Secretary may submit proposed legislation to the

24 Congress to implement the reform.
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1 (f) CLEARINGHOUSE.—The Secretary shall establish

2 and maintain a clearinghouse to collect and disseminate

3 to State officials and the public current information on

4 approved demonstration projects, and on interim and final

5 reports submitted under subsection (d)(1) with respect to

6 demonstration projects. To the extent practicable, clear7 inghouse information shall be made available through elec8 tronic format.

9 (g) PROVISIONS SUBJECT TO WAIVER.—The Sec10 retary may waive such requirements of title IV of the So11 cial Security Act (42 U.S.C. 601 et seq.) as the Secretary

12 determines to be necessary to carry out the purposes of

13 the demonstration projects established under this Act.

14 (h) EXPENDITURES OTHERWISE INCLUDED UNDER

15 THE STATE PLAN.—The costs of a demonstration project

16 under this Act which would not otherwise be included as

17 expenditures under the applicable State plan under title

18 IV of the Social Security Act (42 U.S.C. 601 et seq.) shall

19 to the extent and for the period prescribed by the Sec20 retary, be regarded as expenditures under the applicable

21 State plan under such title, or for administration of such

22 State plan or plans, as may be appropriate.

23 SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

24 (a) IN GENERAL.—There is authorized to be appro25 priated $150,000,000 for each of fiscal years 1996 and
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1 1997, and $125,000,000 for each of fiscal years 1998,

2 1999, and 2000 to carry out the provisions of sections

3 4(c), 4(d), 101, 103, 105(b), 105(c), 105(d), 107, 201,

4 202, 203, 204, 205, 206, 207, 301, and 302.

5 (b) ALLOCATION OF FUNDS.—Of the amount appro6 priated pursuant to subsection (a), the Secretary shall

7 obligate—

8 (1) 50 percent of such amount to—

9 (A) offset any increase in the amount of

10 the Federal share resulting from any dem11 onstration project established under a section

12 described in subsection (a) (other than dem13 onstration projects established under sections

14 107 and 207 of this Act); and

15 (B) to the extent such amount remains

16 after any such offset—

17 (i) increase the otherwise applicable

18 Federal share rate under a State plan

19 under title IV of the Social Security Act

20 (42 U.S.C. 601 et seq.) for such dem21 onstration projects; and

22 (ii) increase the amount of a State’s

23 block grant under the demonstration

24 project under section 201 of this Act; and

25 (2) 50 percent of such amount to—
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1 (A) offset any increase in the amount of

2 the Federal share resulting from any dem3 onstration project established under sections

4 107 and 207 of this Act; and

5 (B) to the extent such amount remains

6 after any such offset increase the otherwise ap7 plicable Federal share rate under a State plan

8 under title IV of the Social Security Act (42

9 U.S.C. 601 et seq.) for such demonstration

10 projects.

11 (c) RESERVATION OF CERTAIN AMOUNTS UNTIL

12 FINAL REPORT SUBMITTED.—The Secretary shall reserve

13 10 percent of any amounts obligated to a State for a dem14 onstration project under subsection (b), and shall not pay

15 such reserved amounts until such State has submitted a

16 final report on such demonstration project.
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1 TITLE I—INITIATIVES TO MOVE

2 WELFARE RECIPIENTS INTO

3 THE WORK FORCE

4 SEC. 101. DEMONSTRATION PROJECTS WHICH CONDITION

5 AFDC BENEFITS FOR CERTAIN INDIVIDUALS

6 ON SCHOOL ATTENDANCE OR JOB TRAINING,

7 LIMIT THE TIME PERIOD FOR RECEIPT OF

8 SUCH BENEFITS, AND REQUIRE TEENAGE

9 PARENTS TO LIVE AT HOME.

10 (a) ESTABLISHMENT.—The Secretary shall provide

11 for demonstration projects described in subsection (b) in

12 States with applications approved under this Act.

13 (b) PROJECT DESCRIBED.—

14 (1) IN GENERAL.—Except as provided in para15 graph (2), each State conducting a demonstration

16 project under this section shall provide that—

17 (A) a family described in paragraph (3)

18 shall not receive aid to families with dependent

19 children—

20 (i) unless the individual described in

21 paragraph (3)(A) is, for a minimum of 35

22 hours a week—

23 (I) attending school,

24 (II) studying for a general

25 equivalency diploma, or
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1 (III) participating in a job, job

2 training, or job placement program;

3 and

4 (ii) except in the case of a situation

5 described in clause (i) through (v) of sec6 tion 402(a)(43)(B) of the Social Security

7 Act (42 U.S.C. 602(a)(43)(B))—

8 (I) such individual is residing in

9 a place of residence maintained by a

10 parent, legal guardian, or other adult

11 relative of such individual as such

12 parent’s, guardian’s, or adult rel13 ative’s own home, or residing in a fos14 ter home, maternity home, or other

15 adult-supervised supportive living ar16 rangement, and

17 (II) such aid (where possible)

18 shall be provided to the individual’s

19 parent, legal guardian, or other adult

20 relative on behalf of such individual

21 and the individual’s dependent child;

22 and

23 (B) such family shall be entitled to receive

24 such aid for a time period determined appro25 priate by the State which shall, at a minimum,
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1 permit such individual to complete the activities

2 described in subparagraph (A)(i).

3 (2) LIMITATION.—A State conducting a dem4 onstration project under this section shall not apply

5 the provisions of paragraph (1) to a family unless—

6 (A) the State has made adequate child

7 care available to such family;

8 (B) the State has paid all tuition and fees

9 applicable to the activities described in para10 graph (1)(A); and

11 (C) such application does not endanger the

12 welfare and safety of a dependent child who is

13 a member of such family.

14 (3) FAMILY DESCRIBED.—A family described in

15 this paragraph is a family which—

16 (A) includes a parent under 20 years of

17 age;

18 (B) includes at least 1 dependent child of

19 such parent; and

20 (C) does not include a child under 6

21 months of age.
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1 SEC. 102. PILOT JOB CORPS PROGRAM FOR RECIPIENTS OF

2 AID TO FAMILIES WITH DEPENDENT CHIL3 DREN.

4 Section 433 of the Job Training Partnership Act (29

5 U.S.C. 1703) is amended by adding at the end the follow6 ing new subsection:

7 ‘‘(f)(1) The Secretary may enter into appropriate

8 agreements with agencies as described in section

9 427(a)(1) for the development of pilot projects to provide

10 services at Job Corps centers to eligible individuals—

11 ‘‘(A) who are eligible youth described in section

12 423;

13 ‘‘(B) whose families receive aid to families with

14 dependent children under part A of title IV of the

15 Social Security Act (42 U.S.C. 601 et seq.); and

16 ‘‘(C) who are mothers of children who have not

17 reached the age of compulsory school attendance in

18 the State in which the children reside.

19 ‘‘(2) A Job Corps center serving the eligible individ20 uals shall—

21 ‘‘(A) provide child care at or near the Job

22 Corps center for the individuals;

23 ‘‘(B) provide the activities described in section

24 428 for the individuals; and
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1 ‘‘(C) provide for the individuals, and require

2 that each such individual participate in, activities

3 through a parents as teachers program that—

4 ‘‘(i) establishes and operates parent edu5 cation programs, including programs of devel6 opmental screening of the children of the eligi7 ble individuals;

8 ‘‘(ii) provides group meetings and home

9 visits for the family of each such individual by

10 parent educators who have had supervised expe11 rience in the care and education of children and

12 have had training; and

13 ‘‘(iii) provides periodic screening, by such

14 parent educators, of the educational, hearing,

15 and visual development of the children of such

16 individuals.

17 ‘‘(3) The Secretary shall prescribe specific standards

18 and procedures under section 424 for the screening and

19 selection of applicants to participate in pilot projects car20 ried out under this subsection. In addition to the agencies

21 described in the second sentence of such section, such

22 standards and procedures may be implemented through

23 arrangements with welfare agencies.

24 ‘‘(4) As used in this subsection:
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1 ‘‘(A) The term ‘developmental screening’ means

2 the process of measuring the progress of children to

3 determine if there are problems or potential prob4 lems or advanced abilities in the areas of under5 standing and use of language, perception through

6 sight, perception through hearing, motor develop7 ment and hand-eye coordination, health, and phys8 ical development.

9 ‘‘(B) The term ‘parent education’ includes par10 ent support activities, the provision of resource ma11 terials on child development and parent-child learn12 ing activities, private and group educational guid13 ance, individual and group learning experiences for

14 the eligible individual and child, and other activities

15 that enable the eligible individual to improve learn16 ing in the home.’’.

17 SEC. 103. DEMONSTRATION PROJECTS REQUIRING UP18 FRONT 30-DAY ASSISTED JOB SEARCH, OR

19 SUBSTANCE ABUSE TREATMENT BEFORE RE20 CEIVING AFDC BENEFITS.

21 (a) ESTABLISHMENT.—The Secretary shall provide

22 for demonstration projects described in subsection (b) in

23 States with applications approved under this Act.

24 (b) PROJECT DESCRIBED.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), each State conducting a demonstration

3 project under this section shall require a parent or

4 other relative of a dependent child to undergo 30

5 days of assisted job search or substance abuse treat6 ment (or both) before the family may receive aid to

7 families with dependent children as part of the ap8 plication process for the receipt of such aid.

9 (2) LIMITATION.—A State conducting a dem10 onstration project under this section shall not apply

11 the provisions of paragraph (1) to a family unless—

12 (A) all of the dependent children in the

13 family are over 6 months of age;

14 (B) the State has made adequate child

15 care available to such family;

16 (C) the State has paid all fees applicable

17 to the activities described in paragraph (1); and

18 (D) such application does not endanger the

19 welfare and safety of a dependent child who is

20 a member of such family.

21 SEC. 104. DISREGARD OF EDUCATION AND EMPLOYMENT

22 TRAINING SAVINGS FOR AFDC ELIGIBILITY.

23 (a) DISREGARD AS RESOURCE.—Subparagraph (B)

24 of section 402(a)(7) of the Social Security Act (42 U.S.C.

25 602(a)(7)) is amended—
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1 (1) by striking ‘‘or’’ before ‘‘(iv)’’, and

2 (2) by inserting ‘‘, or (v) except in the case of

3 the family’s initial determination of eligibility for aid

4 to families with dependent children, any amount up

5 to $10,000 in a qualified education and employment

6 account (as defined in section 406(i)(1))’’ before ‘‘;

7 and’’.

8 (b) DISREGARD AS INCOME.—

9 (1) IN GENERAL.—Subparagraph (A) of section

10 402(a)(8) of such Act (42 U.S.C. 602(a)(8)) is

11 amended—

12 (A) by striking ‘‘and’’ at the end of clause

13 (vii), and

14 (B) by inserting after clause (viii) the fol15 lowing new clause:

16 ‘‘(ix) shall disregard any qualified dis17 tributions (as defined in section 406(i)(2))

18 made from any qualified education and

19 employment account (as defined in section

20 406(i)(1)) while the family is receiving aid

21 to families with dependent children; and’’.

22 (2) NONRECURRING LUMP SUM EXEMPT FROM

23 LUMP SUM RULE.—Section 402(a)(17) (42 U.S.C.

24 602(a)(17)) is amended by adding at the end the

25 following: ‘‘; and that this paragraph shall not apply
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1 to earned and unearned income received in a month

2 on a nonrecurring basis to the extent that such in3 come is placed in a qualified education and employ4 ment account (as defined in section 406(i)(1)) the

5 total amount which, after such placement, does not

6 exceed $10,000.’’.

7 (c) QUALIFIED EDUCATION AND EMPLOYMENT AC8 COUNTS.—Section 406 of such Act (42 U.S.C. 606) is

9 amended by adding at the end the following:

10 ‘‘(i)(1) The term ‘qualified education and employ11 ment account’ means a mechanism established by the

12 State (such as escrow accounts or education savings

13 bonds) that allows savings from the earned income of a

14 dependent child or parent of such child in a family receiv15 ing aid to families with dependent children to be used for

16 qualified distributions.

17 ‘‘(2) The term ‘qualified distributions’ means dis18 tributions from a qualified education and employment ac19 count for expenses directly related to the attendance at

20 an eligible postsecondary or secondary institution or di21 rectly related to improving the employability (as deter22 mined by the State) of a member of a family receiving

23 aid to families with dependent children.

24 ‘‘(3) The term ‘eligible postsecondary or secondary

25 institution’ means a postsecondary or secondary institu-
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1 tion determined to be eligible by the State under guide2 lines established by the Secretary.’’.

3 (d) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to payments under part A of title

5 IV of the Social Security Act (42 U.S.C. 601 et seq.) for

6 calendar quarters beginning on or after January 1, 1995.

7 SEC. 105. INCENTIVES AND ASSISTANCE IN STARTING A

8 SMALL BUSINESS.

9 (a) AUTHORITY FOR STATES TO PERMIT CERTAIN

10 SELF-EMPLOYMENT PROGRAM PARTICIPANTS A ONE11 TIME ELECTION TO PURCHASE CAPITAL EQUIPMENT

12 FOR A SMALL BUSINESS IN LIEU OF DEPRECIATION; RE13 PAYMENTS BY SUCH PERSONS OF THE PRINCIPAL POR14 TION OF SMALL BUSINESS LOANS TREATED AS BUSINESS

15 EXPENSES FOR PURPOSES OF AFDC.—

16 (1) AMENDMENTS TO THE SOCIAL SECURITY

17 ACT.—Section 402(a)(8) of the Social Security Act

18 (42 U.S.C. 602(a)(8)) is amended—

19 (A) in subparagraph (B)(ii)(II), by striking

20 ‘‘and’’ after the semicolon;

21 (B) by redesignating subparagraph (C) as

22 subparagraph (D); and

23 (C) by inserting after subparagraph (B)

24 the following new subparagraph:
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1 ‘‘(C) provide that, in determining the earned in2 come of a family any of the members of which owns

3 a small business and is a participant in a self-em4 ployment program offered by a State in accordance

5 with section 482(d)(1)(B)(ii), the State may—

6 ‘‘(i)(I) during the 1-year period beginning

7 on the date the family makes an election under

8 this clause, treat as an offset against the gross

9 receipts of the business the sum of the capital

10 expenditures for the business by any member of

11 the family during such 1-year period; and

12 ‘‘(II) allow each such family eligible for aid

13 under this part not more than 1 election under

14 this clause; and

15 ‘‘(ii) treat as an offset against the gross

16 receipts of the business—

17 ‘‘(I) the amounts paid by any member

18 of the family as repayment of the principal

19 portion of a loan made for the business;

20 and

21 ‘‘(II) cash retained by the business for

22 future use by the business; and’’.

23 (2) AMENDMENT TO THE INTERNAL REVENUE

24 CODE OF 1986.—Section 167 of the Internal Revenue

25 Code of 1986 (relating to depreciation) is amended
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1 by redesignating subsection (g) as subsection (h)

2 and by inserting after subsection (f) the following

3 new subsection:

4 ‘‘(g) CERTAIN PROPERTY OF AFDC RECIPIENTS

5 NOT DEPRECIABLE.—No depreciation deduction shall be

6 allowed under this section (and no depreciation or amorti7 zation deduction shall be allowed under any other provi8 sion of this subtitle) with respect to the portion of the

9 adjusted basis of any property which is attributable to ex10 penditures treated as an offset against gross receipts

11 under section 402(a)(8)(C)(i) of the Social Security Act.’’.

12 (3) EFFECTIVE DATE.—

13 (A) SOCIAL SECURITY ACT AMEND14 MENTS.—The amendments made by paragraph

15 (1) shall apply to payments made under part A

16 of title IV of the Social Security Act (42 U.S.C.

17 601 et seq.) on or after January 1, 1996.

18 (B) INTERNAL REVENUE CODE AMEND19 MENT.—The amendments made by paragraph

20 (2) shall apply to property placed in service on

21 or after January 1, 1996.

22 (b) DEMONSTRATION PROJECTS ESTABLISHING

23 PUBLIC-PRIVATE PARTNERSHIPS FOR TECHNICAL AS24 SISTANCE TO SELF-EMPLOYED AFDC RECIPIENTS.—
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1 (1) IN GENERAL.—The Secretary shall provide

2 for demonstration projects to be conducted in States

3 with applications approved under this Act under

4 which one or more partnerships are developed be5 tween State agencies and community businesses or

6 educational institutions to provide assistance to eligi7 ble participants.

8 (2) ELIGIBLE PARTICIPANTS.—For purposes of

9 this subsection, the term ‘‘eligible participants’’

10 means—

11 (A) individuals who are receiving aid to

12 families with dependent children; and

13 (B) individuals who cease to be eligible to

14 receive such aid who have been participating in

15 a demonstration project conducted by a State

16 under this subsection.

17 (3) PERMISSIBLE EXPENDITURES.—Funds

18 from any demonstration project conducted under

19 this subsection may be used to pay the costs associ20 ated with developing and implementing a process

21 through which businesses or educational institutions

22 would work with the State agency to provide assist23 ance to eligible participants seeking to start or oper24 ate small businesses, including—

25 (A) mentoring;
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1 (B) training for eligible participants in ad2 ministering a business;

3 (C) technical assistance in preparing busi4 ness plans; and

5 (D) technical assistance in the process of

6 applying for business loans, marketing services,

7 and other activities related to conducting such

8 small businesses.

9 (c) DEMONSTRATION PROJECTS FOR TRAINING

10 AFDC RECIPIENTS AS SELF-EMPLOYED PROVIDERS OF

11 CHILD CARE SERVICES.—

12 (1) IN GENERAL.—The Secretary shall provide

13 for demonstration projects to be conducted in States

14 with applications approved under this Act under

15 which one or more partnerships are developed be16 tween State agencies and community businesses or

17 educational institutions to provide assistance to eligi18 ble participants in the establishment and operation

19 of child care centers in the home or in the commu20 nity which would provide child care services.

21 (2) ELIGIBLE PARTICIPANTS.—For purposes of

22 this subsection, the term ‘‘eligible participants’’

23 means—

24 (A) individuals who are receiving aid to

25 families with dependent children; and
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1 (B) individuals who cease to be eligible to

2 receive such aid who have been participating in

3 a demonstration project conducted by a State

4 under this subsection.

5 (3) PERMISSIBLE EXPENDITURES.—Funds

6 from any demonstration project conducted under

7 this subsection may be used to pay the costs associ8 ated with developing and implementing a process

9 through which businesses or educational institutions

10 would work with the State agency to provide assist11 ance to train eligible participants to provide licensed

12 child care services, including—

13 (A) mentoring;

14 (B) training in the provision of child care

15 services;

16 (C) training for eligible participants in ad17 ministering a business;

18 (D) training in early childhood education;

19 (E) technical assistance in preparing busi20 ness plans;

21 (F) technical assistance in the process of

22 applying for loans, marketing services, qualify23 ing for Federal and State programs, and other

24 activities related to the provision of child care

25 services; and
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1 (G) technical assistance in obtaining a li2 cense and complying with Federal, State, and

3 local regulations regarding the provision of

4 child care.

5 (d) DEMONSTRATION PROJECT TO PROMOTE OWN6 ERSHIP OF FAMILY-OWNED BUSINESSES BY AFDC RE7 CIPIENTS.—

8 (1) ESTABLISHMENT.—The Secretary shall pro9 vide for demonstration projects described in para10 graph (2) in States with applications approved under

11 this Act.

12 (2) PROJECT DESCRIBED.—Each State con13 ducting a demonstration project under this sub14 section shall develop a program under which the

15 State shall—

16 (A) encourage incentives for families re17 ceiving aid to families with dependent children

18 to work together as managers and employees in

19 family-owned businesses;

20 (B) develop State and private partnerships

21 for making or guaranteeing small business

22 loans, including seed money, available to such

23 families;
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1 (C) provide such families with technical

2 training in small business management, ac3 counting, and bookkeeping;

4 (D) regularly evaluate the status of the re5 cipients of assistance under the project; and

6 (E) continue a transitional period of bene7 fits under title IV and title XIX of the Social

8 Security Act for recipients of assistance under

9 the project until such time as the State deter10 mines such family is self-sufficient.

11 For purposes of this paragraph, a family-owned

12 business may include other relatives of the family re13 ceiving aid to families with dependent children re14 gardless if such relatives are also receiving aid to

15 families with dependent children.

16 SEC. 106. INCREASED EMPHASIS IN JOBS PROGRAM ON

17 MOVING PEOPLE INTO THE WORK FORCE.

18 Section 481(a) of the Social Security Act (42 U.S.C.

19 681(a)) is amended by adding at the end the following

20 new sentence: ‘‘It is further the purpose of this part to

21 encourage individuals receiving education and training to

22 enter the permanent work force by developing programs

23 through which such individuals enter the work force and

24 then receive post-employment education and training.’’.
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1 SEC. 107. ADDITIONAL DEMONSTRATION PROJECTS TO

2 MOVE AFDC RECIPIENTS INTO THE WORK

3 FORCE.

4 (a) ESTABLISHMENT.—The Secretary shall provide

5 for additional demonstration projects described in sub6 section (b) in States with applications approved under this

7 Act.

8 (b) PROJECT DESCRIBED.—Each State conducting a

9 demonstration project under this section shall develop a

10 program or programs to better move recipients of aid to

11 families with dependent children into the work force.

12 TITLE II—INITIATIVES TO

13 STRENGTHEN FAMILIES AND

14 BREAK THE CYCLE OF WEL15 FARE DEPENDENCY

16 SEC. 201. DEMONSTRATION PROJECTS TO ESTABLISH

17 CHILD CENTERED PROGRAMS THROUGH

18 CONVERSION OF CERTAIN AFDC AND JOBS

19 PAYMENTS INTO BLOCK GRANTS.

20 (a) ESTABLISHMENT.—The Secretary shall provide

21 for demonstration projects described in subsection (b) in

22 States with applications approved under this Act.

23 (b) PROJECT DESCRIBED.—

24 (1) IN GENERAL.—Each State conducting a

25 demonstration project under this section shall elect

26 to receive payments under paragraph (2) in lieu of—
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1 (A) all payments to which the State would

2 otherwise be entitled to under section 403 of

3 the Social Security Act (42 U.S.C. 603) for aid

4 to families with dependent children under part

5 A of title IV of such Act or the job opportuni6 ties and basic skills training program under

7 part F of such title; or

8 (B) any portion of the payment described

9 in subparagraph (A) to which the State would

10 otherwise be entitled under such section for

11 benefits (identified by the State) under part A

12 or part F of such title for populations (identi13 fied by the State) who receive such benefits.

14 (2) PAYMENT.—The Secretary shall make pay15 ment under this paragraph for each year of the

16 project in an amount equal to—

17 (A) during fiscal year 1996—

18 (i) 100 percent of the total amount to

19 which the State was entitled under section

20 403 of the Social Security Act (42 U.S.C.

21 603) for aid to families with dependent

22 children under part A of title IV of such

23 Act or the job opportunities and basic

24 skills training program under part F of

25 such title; or
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1 (ii) the amount to which the State

2 was entitled to under such section for

3 those benefits and populations identified by

4 the State in paragraph (1)(B),

5 for fiscal year 1995 plus the product of such

6 amount and the percentage increase in the

7 consumer price index for all urban consumers

8 (U.S. city average) during such fiscal year; and

9 (B) during each subsequent fiscal year, the

10 amount determined under this paragraph in the

11 previous fiscal year plus the product of such

12 amount and the percentage increase in such

13 consumer price index during such previous fis14 cal year.

15 (3) DESCRIPTION OF ACTIVITIES.—

16 (A) IN GENERAL.—Each State which is

17 paid under paragraph (2) shall expend the

18 amount received under such paragraph and the

19 amount, if any, made available to such State

20 under section 5(b)(1)(B)(ii) for one or more of

21 the following purposes:

22 (i)(I) Establish residential programs

23 for teenage mothers with dependent chil24 dren where education, job training, com-
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1 munity service, or other employment is

2 provided.

3 (II) Support the pilot project de4 scribed in section 433(f) of the Jobs Train5 ing Partnership Act, as added by section

6 102 of this Act, to provide such services to

7 teenage mothers with dependent children.

8 (ii) Establish programs to promote,

9 expedite, and ensure adoption of children,

10 particularly neglected or abused children.

11 (iii) Expand child care assistance for

12 the children of needy working parents (as

13 determined by the State).

14 (iv) Establish residential schooling

15 with appropriate support services for chil16 dren from needy families (as determined

17 by the State) enrolled at the request of the

18 parents of such children.

19 (v) Establish other services which will

20 be provided directly to children from needy

21 families (as determined by the State).

22 (vi) Implement other reforms consist23 ent with this Act.
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1 (4) COMMUNITY-BASED ACTIVITIES.—The Sec2 retary shall ensure that each State receiving a grant

3 under this section—

4 (A) takes adequate steps to assure the

5 well-being of the children affected by the

6 State’s receipt of the grant; and

7 (B) to the fullest extent possible, utilizes

8 the grant under this section to support commu9 nity-based services in communities affected by

10 the State’s receipt of the grant.

11 SEC. 202. DEMONSTRATION PROJECTS PROVIDING NO AD12 DITIONAL BENEFITS WITH RESPECT TO CHIL13 DREN BORN WHILE A FAMILY IS RECEIVING

14 AFDC AND ALLOWING INCREASES IN THE

15 EARNED INCOME DISREGARD.

16 (a) ESTABLISHMENT.—The Secretary shall provide

17 for demonstration projects described in subsection (b) in

18 States with applications approved under this Act.

19 (b) PROJECT DESCRIBED.—If a child is born to a

20 family after the date on which such family begins receiving

21 aid to families with dependent children, a State conducting

22 a demonstration project under this section—

23 (1) shall not take such child into account in de24 termining the need of such family for such aid; and
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1 (2) shall increase the amounts disregarded from

2 earned income under section 402(a)(8)(A) of the So3 cial Security Act (42 U.S.C. 602(a)(8)(A)).

4 SEC. 203. DEMONSTRATION PROJECTS PROVIDING INCEN5 TIVES TO MARRY.

6 (a) AID TO TWO-PARENT FAMILIES.—

7 (1) ESTABLISHMENT.—The Secretary shall pro8 vide for demonstration projects described in para9 graph (2) in States with applications approved under

10 this Act.

11 (2) PROJECT DESCRIBED.—

12 (A) IN GENERAL.—Each State conducting

13 a demonstration project under this subsection

14 shall not apply the requirements described in

15 subparagraph (B) to a parent of a dependent

16 child who is married to the natural parent of

17 such child.

18 (B) REQUIREMENTS WAIVED.—The re19 quirements described in this subparagraph are:

20 (i) The work history requirement de21 scribed in section 407(b)(1)(A)(iii) of the

22 Social Security Act (42 U.S.C.

23 607(b)(1)(A)(iii)).
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1 (ii) The 100-hour rule under section

2 233.100(a)(1)(i) of title 45, Code of Fed3 eral Regulations.

4 (b) INCREASE IN STEPPARENT EARNED INCOME

5 DISREGARD.—

6 (1) ESTABLISHMENT.—The Secretary shall pro7 vide for demonstration projects described in para8 graph (2) in States with applications approved under

9 this Act.

10 (2) PROJECT DESCRIBED.—For purposes of

11 making determinations for any month under section

12 402(a)(7) of the Social Security Act (42 U.S.C.

13 602(a)(7)), each State conducting a demonstration

14 project under this subsection shall modify the in15 come disregards provided in subparagraphs (A)

16 through (D) of section 402(a)(31) of such Act (42

17 U.S.C. 602(a)(31)) in order to decrease the amount

18 of income determined under such section with re19 spect to a dependent child’s stepparent.
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1 SEC. 204. DEMONSTRATION PROJECTS REDUCING AFDC

2 BENEFITS IF SCHOOL ATTENDANCE IS IR3 REGULAR OR PREVENTIVE HEALTH CARE

4 FOR DEPENDENT CHILDREN IS NOT OB5 TAINED.

6 (a) ESTABLISHMENT.—The Secretary shall provide

7 for demonstration projects described in subsection (b) in

8 States with applications approved under this Act.

9 (b) PROJECT DESCRIBED.—

10 (1) IN GENERAL.—Each State conducting a

11 demonstration project under this section shall reduce

12 the amount of aid to families with dependent chil13 dren received by a family if the State agency deter14 mines that one or both (at the State’s option) of the

15 following conditions exist:

16 (A) A member of such family is attending

17 school or participating in a course of vocational

18 or technical training and such family member is

19 absent from such school or training with no ex20 cuse for more than a number of days per month

21 determined appropriate by the State.

22 (B) A member of such family is a child

23 under the age of 6 who has not received appro24 priate immunizations (as determined by the

25 State).
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1 (2) LIMITATION.—Each State conducting a

2 demonstration project under this section shall estab3 lish procedures which ensure that no reduction in

4 aid to families with dependent children under para5 graph (1) will endanger the welfare and safety of

6 any dependent child.

7 SEC. 205. DEMONSTRATION PROJECTS TO DEVELOP COM8 MUNITY-BASED PROGRAMS FOR TEENAGE

9 PREGNANCY PREVENTION AND FAMILY

10 PLANNING.

11 (a) ESTABLISHMENT.—The Secretary shall provide

12 for demonstration projects described in subsection (b) in

13 States with applications approved under this Act.

14 (b) PROJECT DESCRIBED.—Each State conducting a

15 demonstration project under this section shall develop a

16 community-based program for teenage pregnancy preven17 tion and family planning.

18 SEC. 206. ADDITIONAL DEMONSTRATION PROJECTS TO

19 STRENGTHEN FAMILIES AND BREAK THE

20 CYCLE OF WELFARE DEPENDENCY.

21 (a) ESTABLISHMENT.—The Secretary shall provide

22 for additional demonstration projects described in sub23 section (b) in States with applications approved under this

24 Act.
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1 (b) PROJECT DESCRIBED.—Each State conducting a

2 demonstration project under this section shall develop a

3 program or programs to strengthen families and break the

4 cycle of welfare dependency.

5 TITLE III—CHANGES TO FED6 ERAL LAWS AND STATE INI7 TIATIVES TO INCREASE

8 CHILD SUPPORT AND PATER9 NAL RESPONSIBILITY

10 SEC. 301. DEMONSTRATION PROJECTS TO INCREASE PA11 TERNITY ESTABLISHMENT.

12 (a) ESTABLISHMENT.—The Secretary shall provide

13 for demonstration projects described in subsection (b) in

14 States with applications approved under this Act.

15 (b) PROJECT DESCRIBED.—Each State conducting a

16 demonstration project under this section shall develop a

17 program to increase paternity establishment.

18 SEC. 302. DEMONSTRATION PROJECTS TO INCREASE CHILD

19 SUPPORT COLLECTION.

20 (a) ESTABLISHMENT.—The Secretary shall provide

21 for demonstration projects described in subsection (b) in

22 States with applications approved under this Act.

23 (b) PROJECT DESCRIBED.—Each State conducting a

24 demonstration project under this section shall increase the
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1 State’s child support collection efforts through one or

2 more of the following methods:

3 (1) Enhanced child support enforcement and

4 collection, including holding a parent accountable for

5 supporting any children of the parent’s minor chil6 dren.

7 (2) Applying section 402(a)(8)(vi) of the Social

8 Security Act (42 U.S.C. 602(a)(8)(vi)) by substitut9 ing an amount greater than $50 (to be determined

10 by the State) for ‘‘$50’’ each place such dollar

11 amount appears.

12 (3) Any other method that the State deems

13 appropriate.

14 TITLE IV—INITIATIVES TO DI15 VERSIFY AND IMPROVE THE

16 PERFORMANCE OF WELFARE

17 SERVICES

18 SEC. 401. DEMONSTRATION PROJECTS FOR PROVIDING

19 PLACEMENT OF AFDC RECIPIENTS IN PRI20 VATE SECTOR JOBS.

21 (a) ESTABLISHMENT.—The Secretary shall provide

22 for demonstration projects described in subsection (b) in

23 States with applications approved under this Act.

24 (b) PROJECT DESCRIBED.—Each State conducting a

25 demonstration project under this section shall—
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1 (1) contract with private for-profit and non2 profit groups to provide any individual receiving aid

3 to families with dependent children with training,

4 support services, and placement in a private sector

5 job which permits such individual to cease receiving

6 aid to families with dependent children; and

7 (2) upon employment of such individual, pay

8 such groups a negotiated portion of the total amount

9 that such individual’s family would have received

10 over the course of the year in which such individual

11 began such employment in the form of aid to fami12 lies with dependent children.

13 SEC. 402. DEMONSTRATION PROJECTS PROVIDING PER14 FORMANCE-BASED INCENTIVES FOR STATE

15 PUBLIC WELFARE PROVIDERS.

16 (a) ESTABLISHMENT.—The Secretary shall provide

17 for demonstration projects to establish performance-based

18 incentives for State public welfare providers in States with

19 applications described in subsection (b)(1) which are ap20 proved under this Act.

21 (b) APPLICATIONS.—

22 (1) APPLICATION DESCRIBED.—An application

23 described under this paragraph is an application

24 which—
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1 (A) identifies the State offices or adminis2 trative units which will participate in the dem3 onstration project;

4 (B) describes indicators of employee or

5 program performance based on outcome meas6 ures for—

7 (i) training and education;

8 (ii) job search and placement assist9 ance;

10 (iii) child support collection;

11 (iv) teen pregnancy prevention pro12 grams; and

13 (v) any other program objective that

14 the State finds appropriate;

15 (C) describes budgetary incentives for pro16 gram performance, including direct financial in17 centives for employees where appropriate;

18 (D) describes a process for developing, in

19 cooperation with employees of participating of20 fices or units, a job evaluation system based on

21 performance measures; and

22 (E) describes the way in which State pub23 lic welfare providers, private providers, welfare

24 clients, and members of the community have

25 been or shall be involved in the planning and
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1 implementation of a performance based welfare

2 delivery system.

3 (2) TECHNICAL ASSISTANCE.—The Secretary

4 shall provide a State desiring to submit an applica5 tion for a demonstration project under this section

6 with technical assistance in preparing an application

7 described under paragraph (1).

8 SEC. 403. ELECTRONIC BENEFIT TRANSFERS.

9 Section 904(d) of the Electronic Fund Transfer Act

10 (15 U.S.C. 1693b(d)) is amended—

11 (1) by inserting ‘‘(1)’’ after ‘‘(d)’’; and

12 (2) by adding at the end the following new

13 paragraph:

14 ‘‘(2)(A) The disclosures, protections, responsibilities,

15 and remedies created by this title or any rules, regulations,

16 or orders issued by the Board in accordance with this title,

17 do not apply to an electronic benefit transfer program es18 tablished under State or local law, or administered by a

19 State or local government, unless the payment under such

20 program is made directly into a consumer’s account held

21 by the recipient.

22 ‘‘(B) Subparagraph (A) does not apply to employ23 ment related payments, including salaries, pension, retire24 ment, or unemployment benefits established by Federal,

25 State, or local governments.
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1 ‘‘(C) Nothing in subparagraph (A) alters the protec2 tions of benefits established by any Federal, State, or local

3 law, or preempts the application of any State or local law.

4 ‘‘(D) For purposes of subparagraph (A), an electronic

5 benefit transfer program is a program under which a Fed6 eral, State, or local government agency distributes needs7 tested benefits by establishing accounts to be accessed by

8 recipients electronically, such as through automated teller

9 machines, or point-of-sale terminals. A program estab10 lished for the purpose of enforcing the support obligations

11 owed by absent parents to their children and the custodial

12 parents with whom the children are living is not an elec13 tronic benefit transfer program.’’.

14 TITLE V—OFFSETTING

15 EXPENDITURE REDUCTIONS

16 SEC. 501. OFFSETTING EXPENDITURE REDUCTIONS.

17 (a) IN GENERAL.—Subparagraph (C) of section

18 1001(5) of the Food Security Act of 1985 (7 U.S.C.

19 1308(5)(C)) is amended to read as follows:

20 ‘‘(C) In the case of corporations and other entities

21 included in subparagraph (B) and partnerships, the Sec22 retary shall attribute payments to natural persons in pro23 portion to their ownership interests in an entity and in

24 any other entity, or partnership, that owns or controls the

25 entity, or partnership, receiving the payments.’’.
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1 (b) REMOVAL OF 3-ENTITY RULE.—Section

2 1001A(a)(1) of the Food Security Act of 1985 (7 U.S.C.

3 1308–1(a)(1)) is amended—

4 (1) in the first sentence—

5 (A) by striking ‘‘substantial beneficial in6 terests in more than two entities’’ and inserting

7 ‘‘a substantial beneficial interest in any other

8 entity’’; and

9 (B) by striking ‘‘receive such payments as

10 separate persons’’ and inserting ‘‘receives the

11 payments as a separate person’’; and

12 (2) by striking the second sentence.

13 (c) EFFECTIVE DATE.—The amendments made by

14 this section shall take effect on October 1, 1995.

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