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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 246 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Welfare Reforms 
That Work Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purpose.
Sec. 3. Definitions.
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

Sec. 501. Offsetting expenditure reductions.

SEC. 2. PURPOSE.

    The purposes of this Act are--
            (1) to promote bold State initiated welfare reforms that 
        will--
                    (A) move welfare recipients into the work force,
                    (B) strengthen families,
                    (C) break the cycle of welfare dependence,
                    (D) increase child support collection and paternal 
                responsibility, and
                    (E) improve the delivery of welfare services; and
            (2) to make immediate State-by-State changes to the 
        existing system while establishing a process for identifying 
        successful reform approaches that can be applied nationally.

SEC. 3. DEFINITIONS.

    For purposes of this Act:
            (1) Aid to families with dependent children.--The term 
        ``aid to families with dependent children'' has the meaning 
        given to such term by section 406(b) of the Social Security Act 
        (42 U.S.C. 606(b)).
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

SEC. 4. GENERAL PROVISIONS RELATING TO DEMONSTRATION PROJECTS.

    (a) Applications.--
            (1) In general.--Each State desiring to conduct a 
        demonstration project under this Act shall prepare and submit 
        to the Secretary an application in such manner and containing 
        such information as the Secretary may require. The Secretary 
        shall actively encourage States to submit such applications.
            (2) Approval.--The Secretary shall consider all 
        applications received from States desiring to conduct 
        demonstration projects under this Act and shall approve such 
        applications in a number of States to be determined by the 
        Secretary, taking into account the overall funding levels 
        available under section 5.
            (3) Consideration of research needs and purposes.--The 
        Secretary shall pursue a broad range of reforms consistent with 
        the purposes of this Act and with research needs in approving 
        demonstration projects under this Act.
    (b) Duration.--A demonstration project under this Act shall be 
conducted for not more than 5 years plus an additional time period of 
up to 12 months for final evaluation and reporting. The Secretary may 
terminate a project if the Secretary determines that the State 
conducting the project is not in substantial compliance with the terms 
of the application approved by the Secretary under this Act.
    (c) Evaluation Plan.--
            (1) In general.--Each State conducting a demonstration 
        project under this Act shall submit an evaluation plan (meeting 
        the standards developed by the Secretary under paragraph (2)) 
        to the Secretary not later than 90 days after the State is 
        notified of the Secretary's approval for such project. A State 
        shall not receive any Federal funds for the operation of the 
        demonstration project or be granted any waivers of the Social 
        Security Act necessary for operation of the demonstration 
        project until the Secretary approves such evaluation plan.
            (2) Standards.--Not later than 3 months after the date of 
        the enactment of this Act, the Secretary shall develop 
        standards for the evaluation plan required under paragraph (1) 
        which shall include the requirement that an independent expert 
        entity provide an evaluation of each demonstration project to 
        be included in the State's annual and final reports to the 
        Secretary under subsection (d)(1).
    (d) Reports.--
            (1) State.--A State that conducts a demonstration project 
        under this Act shall prepare and submit to the Secretary annual 
        and final reports in accordance with the State's evaluation 
        plan under subsection (c)(1) for such demonstration project.
            (2) Secretary.--The Secretary shall prepare and submit to 
        the Congress annual reports concerning each demonstration 
        project under this Act.
    (e) Legislative Proposal.--
            (1) Evaluations.--
                    (A) In general.--On each of the dates described in 
                subparagraph (B), the Secretary shall evaluate the 
                demonstration projects based on the reports received 
                from each State under subsection (d)(1) and if the 
                Secretary determines that any of the reforms in the 
                demonstration projects will be effective in achieving 
                the purposes of this Act, the Secretary shall submit 
                proposed legislation to the Congress to--
                            (i) implement such successful reforms 
                        nationally if appropriate, or
                            (ii) give States the option of adopting a 
                        successful reform in a State plan approved 
                        under section 402 of the Social Security Act 
                        (42 U.S.C. 602) where the reform may be 
                        effective in some States but not in others.
                The proposed legislation shall take into account 
                factors important to implementing local demonstration 
                projects on a national scale, including variation in 
                population density and poverty.
                    (B) Dates for evaluation and submission.--A date is 
                described in this subparagraph, if it is a date that 
                is--
                            (i) 2 years after the date of the enactment 
                        of this Act,
                            (ii) 4 years after the date of the 
                        enactment of this Act, or
                            (iii) not later than 6 months after the 
                        date the Secretary receives the last final 
                        report due under subsection (d)(1) with respect 
                        to a demonstration project.
            (2) Other legislative submissions.--At any time other than 
        a date described in paragraph (1)(B), if the Secretary 
        determines that a reform in a demonstration project is ready to 
        be implemented on a national scale or to be made a State 
        option, the Secretary may submit proposed legislation to the 
        Congress to implement the reform.
    (f) Clearinghouse.--The Secretary shall establish and maintain a 
clearinghouse to collect and disseminate to State officials and the 
public current information on approved demonstration projects, and on 
interim and final reports submitted under subsection (d)(1) with 
respect to demonstration projects. To the extent practicable, 
clearinghouse information shall be made available through electronic 
format.
    (g) Provisions Subject To Waiver.--The Secretary may waive such 
requirements of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.) as the Secretary determines to be necessary to carry out the 
purposes of the demonstration projects established under this Act.
    (h) Expenditures Otherwise Included Under the State Plan.--The 
costs of a demonstration project under this Act which would not 
otherwise be included as expenditures under the applicable State plan 
under title IV of the Social Security Act (42 U.S.C. 601 et seq.) shall 
to the extent and for the period prescribed by the Secretary, be 
regarded as expenditures under the applicable State plan under such 
title, or for administration of such State plan or plans, as may be 
appropriate.

SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There is authorized to be appropriated 
$150,000,000 for each of fiscal years 1996 and 1997, and $125,000,000 
for each of fiscal years 1998, 1999, and 2000 to carry out the 
provisions of sections 4(c), 4(d), 101, 103, 105(b), 105(c), 105(d), 
107, 201, 202, 203, 204, 205, 206, 207, 301, and 302.
    (b) Allocation of Funds.--Of the amount appropriated pursuant to 
subsection (a), the Secretary shall obligate--
            (1) 50 percent of such amount to--
                    (A) offset any increase in the amount of the 
                Federal share resulting from any demonstration project 
                established under a section described in subsection (a) 
                (other than demonstration projects established under 
                sections 107 and 207 of this Act); and
                    (B) to the extent such amount remains after any 
                such offset--
                            (i) increase the otherwise applicable 
                        Federal share rate under a State plan under 
                        title IV of the Social Security Act (42 U.S.C. 
                        601 et seq.) for such demonstration projects; 
                        and
                            (ii) increase the amount of a State's block 
                        grant under the demonstration project under 
                        section 201 of this Act; and
            (2) 50 percent of such amount to--
                    (A) offset any increase in the amount of the 
                Federal share resulting from any demonstration project 
                established under sections 107 and 207 of this Act; and
                    (B) to the extent such amount remains after any 
                such offset increase the otherwise applicable Federal 
                share rate under a State plan under title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.) for such 
                demonstration projects.
    (c) Reservation of Certain Amounts Until Final Report Submitted.--
The Secretary shall reserve 10 percent of any amounts obligated to a 
State for a demonstration project under subsection (b), and shall not 
pay such reserved amounts until such State has submitted a final report 
on such demonstration project.

  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.

    (a) Establishment.--The Secretary shall provide for demonstration 
projects described in subsection (b) in States with applications 
approved under this Act.
    (b) Project Described.--
            (1) In general.--Except as provided in paragraph (2), each 
        State conducting a demonstration project under this section 
        shall provide that--
                    (A) a family described in paragraph (3) shall not 
                receive aid to families with dependent children--
                            (i) unless the individual described in 
                        paragraph (3)(A) is, for a minimum of 35 hours 
                        a week--
                                    (I) attending school,
                                    (II) studying for a general 
                                equivalency diploma, or
                                    (III) participating in a job, job 
                                training, or job placement program; and
                            (ii) except in the case of a situation 
                        described in clause (i) through (v) of section 
                        402(a)(43)(B) of the Social Security Act (42 
                        U.S.C. 602(a)(43)(B))--
                                    (I) such individual is residing in 
                                a place of residence maintained by a 
                                parent, legal guardian, or other adult 
                                relative of such individual as such 
                                parent's, guardian's, or adult 
                                relative's own home, or residing in a 
                                foster home, maternity home, or other 
                                adult-supervised supportive living 
                                arrangement, and
                                    (II) such aid (where possible) 
                                shall be provided to the individual's 
                                parent, legal guardian, or other adult 
                                relative on behalf of such individual 
                                and the individual's dependent child; 
                                and
                    (B) such family shall be entitled to receive such 
                aid for a time period determined appropriate by the 
                State which shall, at a minimum, permit such individual 
                to complete the activities described in subparagraph 
                (A)(i).
            (2) Limitation.--A State conducting a demonstration project 
        under this section shall not apply the provisions of paragraph 
        (1) to a family unless--
                    (A) the State has made adequate child care 
                available to such family;
                    (B) the State has paid all tuition and fees 
                applicable to the activities described in paragraph 
                (1)(A); and
                    (C) such application does not endanger the welfare 
                and safety of a dependent child who is a member of such 
                family.
            (3) Family described.--A family described in this paragraph 
        is a family which--
                    (A) includes a parent under 20 years of age;
                    (B) includes at least 1 dependent child of such 
                parent; and
                    (C) does not include a child under 6 months of age.

SEC. 102. PILOT JOB CORPS PROGRAM FOR RECIPIENTS OF AID TO FAMILIES 
              WITH DEPENDENT CHILDREN.

    Section 433 of the Job Training Partnership Act (29 U.S.C. 1703) is 
amended by adding at the end the following new subsection:
    ``(f)(1) The Secretary may enter into appropriate agreements with 
agencies as described in section 427(a)(1) for the development of pilot 
projects to provide services at Job Corps centers to eligible 
individuals--
            ``(A) who are eligible youth described in section 423;
            ``(B) whose families receive aid to families with dependent 
        children under part A of title IV of the Social Security Act 
        (42 U.S.C. 601 et seq.); and
            ``(C) who are mothers of children who have not reached the 
        age of compulsory school attendance in the State in which the 
        children reside.
    ``(2) A Job Corps center serving the eligible individuals shall--
            ``(A) provide child care at or near the Job Corps center 
        for the individuals;
            ``(B) provide the activities described in section 428 for 
        the individuals; and
            ``(C) provide for the individuals, and require that each 
        such individual participate in, activities through a parents as 
        teachers program that--
                    ``(i) establishes and operates parent education 
                programs, including programs of developmental screening 
                of the children of the eligible individuals;
                    ``(ii) provides group meetings and home visits for 
                the family of each such individual by parent educators 
                who have had supervised experience in the care and 
                education of children and have had training; and
                    ``(iii) provides periodic screening, by such parent 
                educators, of the educational, hearing, and visual 
                development of the children of such individuals.
    ``(3) The Secretary shall prescribe specific standards and 
procedures under section 424 for the screening and selection of 
applicants to participate in pilot projects carried out under this 
subsection. In addition to the agencies described in the second 
sentence of such section, such standards and procedures may be 
implemented through arrangements with welfare agencies.
    ``(4) As used in this subsection:
            ``(A) The term `developmental screening' means the process 
        of measuring the progress of children to determine if there are 
        problems or potential problems or advanced abilities in the 
        areas of understanding and use of language, perception through 
        sight, perception through hearing, motor development and hand-
        eye coordination, health, and physical development.
            ``(B) The term `parent education' includes parent support 
        activities, the provision of resource materials on child 
        development and parent-child learning activities, private and 
        group educational guidance, individual and group learning 
        experiences for the eligible individual and child, and other 
        activities that enable the eligible individual to improve 
        learning in the home.''.

SEC. 103. DEMONSTRATION PROJECTS REQUIRING UP-FRONT 30-DAY ASSISTED JOB 
              SEARCH, OR SUBSTANCE ABUSE TREATMENT BEFORE RECEIVING 
              AFDC BENEFITS.

    (a) Establishment.--The Secretary shall provide for demonstration 
projects described in subsection (b) in States with applications 
approved under this Act.
    (b) Project Described.--
            (1) In general.--Except as provided in paragraph (2), each 
        State conducting a demonstration project under this section 
        shall require a parent or other relative of a dependent child 
        to undergo 30 days of assisted job search or substance abuse 
        treatment (or both) before the family may receive aid to 
        families with dependent children as part of the application 
        process for the receipt of such aid.
            (2) Limitation.--A State conducting a demonstration project 
        under this section shall not apply the provisions of paragraph 
        (1) to a family unless--
                    (A) all of the dependent children in the family are 
                over 6 months of age;
                    (B) the State has made adequate child care 
                available to such family;
                    (C) the State has paid all fees applicable to the 
                activities described in paragraph (1); and
                    (D) such application does not endanger the welfare 
                and safety of a dependent child who is a member of such 
                family.

SEC. 104. DISREGARD OF EDUCATION AND EMPLOYMENT TRAINING SAVINGS FOR 
              AFDC ELIGIBILITY.

    (a) Disregard as Resource.--Subparagraph (B) of section 402(a)(7) 
of the Social Security Act (42 U.S.C. 602(a)(7)) is amended--
            (1) by striking ``or'' before ``(iv)'', and
            (2) by inserting ``, or (v) except in the case of the 
        family's initial determination of eligibility for aid to 
        families with dependent children, any amount up to $10,000 in a 
        qualified education and employment account (as defined in 
        section 406(i)(1))'' before ``; and''.
    (b) Disregard as Income.--
            (1) In general.--Subparagraph (A) of section 402(a)(8) of 
        such Act (42 U.S.C. 602(a)(8)) is amended--
                    (A) by striking ``and'' at the end of clause (vii), 
                and
                    (B) by inserting after clause (viii) the following 
                new clause:
                            ``(ix) shall disregard any qualified 
                        distributions (as defined in section 406(i)(2)) 
                        made from any qualified education and 
                        employment account (as defined in section 
                        406(i)(1)) while the family is receiving aid to 
                        families with dependent children; and''.
            (2) Nonrecurring lump sum exempt from lump sum rule.--
        Section 402(a)(17) (42 U.S.C. 602(a)(17)) is amended by adding 
        at the end the following: ``; and that this paragraph shall not 
        apply to earned and unearned income received in a month on a 
        nonrecurring basis to the extent that such income is placed in 
        a qualified education and employment account (as defined in 
        section 406(i)(1)) the total amount which, after such 
        placement, does not exceed $10,000.''.
    (c) Qualified Education and Employment Accounts.--Section 406 of 
such Act (42 U.S.C. 606) is amended by adding at the end the following:
    ``(i)(1) The term `qualified education and employment account' 
means a mechanism established by the State (such as escrow accounts or 
education savings bonds) that allows savings from the earned income of 
a dependent child or parent of such child in a family receiving aid to 
families with dependent children to be used for qualified 
distributions.
    ``(2) The term `qualified distributions' means distributions from a 
qualified education and employment account for expenses directly 
related to the attendance at an eligible postsecondary or secondary 
institution or directly related to improving the employability (as 
determined by the State) of a member of a family receiving aid to 
families with dependent children.
    ``(3) The term `eligible postsecondary or secondary institution' 
means a postsecondary or secondary institution determined to be 
eligible by the State under guidelines established by the Secretary.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to payments under part A of title IV of the Social Security Act 
(42 U.S.C. 601 et seq.) for calendar quarters beginning on or after 
January 1, 1995.

SEC. 105. INCENTIVES AND ASSISTANCE IN STARTING A SMALL BUSINESS.

    (a) Authority for States To Permit Certain Self-Employment Program 
Participants a One-Time Election To Purchase Capital Equipment for a 
Small Business in Lieu of Depreciation; Repayments by Such Persons of 
the Principal Portion of Small Business Loans Treated as Business 
Expenses for Purposes of AFDC.--
            (1) Amendments to the social security act.--Section 
        402(a)(8) of the Social Security Act (42 U.S.C. 602(a)(8)) is 
        amended--
                    (A) in subparagraph (B)(ii)(II), by striking 
                ``and'' after the semicolon;
                    (B) by redesignating subparagraph (C) as 
                subparagraph (D); and
                    (C) by inserting after subparagraph (B) the 
                following new subparagraph:
            ``(C) provide that, in determining the earned income of a 
        family any of the members of which owns a small business and is 
        a participant in a self-employment program offered by a State 
        in accordance with section 482(d)(1)(B)(ii), the State may--
                    ``(i)(I) during the 1-year period beginning on the 
                date the family makes an election under this clause, 
                treat as an offset against the gross receipts of the 
                business the sum of the capital expenditures for the 
                business by any member of the family during such 1-year 
                period; and
                    ``(II) allow each such family eligible for aid 
                under this part not more than 1 election under this 
                clause; and
                    ``(ii) treat as an offset against the gross 
                receipts of the business--
                            ``(I) the amounts paid by any member of the 
                        family as repayment of the principal portion of 
                        a loan made for the business; and
                            ``(II) cash retained by the business for 
                        future use by the business; and''.
            (2) Amendment to the internal revenue code of 1986.--
        Section 167 of the Internal Revenue Code of 1986 (relating to 
        depreciation) is amended by redesignating subsection (g) as 
        subsection (h) and by inserting after subsection (f) the 
        following new subsection:
    ``(g) Certain Property of AFDC Recipients Not Depreciable.--No 
depreciation deduction shall be allowed under this section (and no 
depreciation or amortization deduction shall be allowed under any other 
provision of this subtitle) with respect to the portion of the adjusted 
basis of any property which is attributable to expenditures treated as 
an offset against gross receipts under section 402(a)(8)(C)(i) of the 
Social Security Act.''.
            (3) Effective date.--
                    (A) Social security act amendments.--The amendments 
                made by paragraph (1) shall apply to payments made 
                under part A of title IV of the Social Security Act (42 
                U.S.C. 601 et seq.) on or after January 1, 1996.
                    (B) Internal revenue code amendment.--The 
                amendments made by paragraph (2) shall apply to 
                property placed in service on or after January 1, 1996.
    (b) Demonstration Projects Establishing Public-Private Partnerships 
for Technical Assistance to Self-Employed AFDC Recipients.--
            (1) In general.--The Secretary shall provide for 
        demonstration projects to be conducted in States with 
        applications approved under this Act under which one or more 
        partnerships are developed between State agencies and community 
        businesses or educational institutions to provide assistance to 
        eligible participants.
            (2) Eligible participants.--For purposes of this 
        subsection, the term ``eligible participants'' means--
                    (A) individuals who are receiving aid to families 
                with dependent children; and
                    (B) individuals who cease to be eligible to receive 
                such aid who have been participating in a demonstration 
                project conducted by a State under this subsection.
            (3) Permissible expenditures.--Funds from any demonstration 
        project conducted under this subsection may be used to pay the 
        costs associated with developing and implementing a process 
        through which businesses or educational institutions would work 
        with the State agency to provide assistance to eligible 
        participants seeking to start or operate small businesses, 
        including--
                    (A) mentoring;
                    (B) training for eligible participants in 
                administering a business;
                    (C) technical assistance in preparing business 
                plans; and
                    (D) technical assistance in the process of applying 
                for business loans, marketing services, and other 
                activities related to conducting such small businesses.
    (c) Demonstration Projects for Training AFDC Recipients as Self-
Employed Providers of Child Care Services.--
            (1) In general.--The Secretary shall provide for 
        demonstration projects to be conducted in States with 
        applications approved under this Act under which one or more 
        partnerships are developed between State agencies and community 
        businesses or educational institutions to provide assistance to 
        eligible participants in the establishment and operation of 
        child care centers in the home or in the community which would 
        provide child care services.
            (2) Eligible participants.--For purposes of this 
        subsection, the term ``eligible participants'' means--
                    (A) individuals who are receiving aid to families 
                with dependent children; and
                    (B) individuals who cease to be eligible to receive 
                such aid who have been participating in a demonstration 
                project conducted by a State under this subsection.
            (3) Permissible expenditures.--Funds from any demonstration 
        project conducted under this subsection may be used to pay the 
        costs associated with developing and implementing a process 
        through which businesses or educational institutions would work 
        with the State agency to provide assistance to train eligible 
        participants to provide licensed child care services, 
        including--
                    (A) mentoring;
                    (B) training in the provision of child care 
                services;
                    (C) training for eligible participants in 
                administering a business;
                    (D) training in early childhood education;
                    (E) technical assistance in preparing business 
                plans;
                    (F) technical assistance in the process of applying 
                for loans, marketing services, qualifying for Federal 
                and State programs, and other activities related to the 
                provision of child care services; and
                    (G) technical assistance in obtaining a license and 
                complying with Federal, State, and local regulations 
                regarding the provision of child care.
    (d) Demonstration Project To Promote Ownership of Family-Owned 
Businesses by AFDC Recipients.--
            (1) Establishment.--The Secretary shall provide for 
        demonstration projects described in paragraph (2) in States 
        with applications approved under this Act.
            (2) Project described.--Each State conducting a 
        demonstration project under this subsection shall develop a 
        program under which the State shall--
                    (A) encourage incentives for families receiving aid 
                to families with dependent children to work together as 
                managers and employees in family-owned businesses;
                    (B) develop State and private partnerships for 
                making or guaranteeing small business loans, including 
                seed money, available to such families;
                    (C) provide such families with technical training 
                in small business management, accounting, and 
                bookkeeping;
                    (D) regularly evaluate the status of the recipients 
                of assistance under the project; and
                    (E) continue a transitional period of benefits 
                under title IV and title XIX of the Social Security Act 
                for recipients of assistance under the project until 
                such time as the State determines such family is self-
                sufficient.
        For purposes of this paragraph, a family-owned business may 
        include other relatives of the family receiving aid to families 
        with dependent children regardless if such relatives are also 
        receiving aid to families with dependent children.

SEC. 106. INCREASED EMPHASIS IN JOBS PROGRAM ON MOVING PEOPLE INTO THE 
              WORK FORCE.

    Section 481(a) of the Social Security Act (42 U.S.C. 681(a)) is 
amended by adding at the end the following new sentence: ``It is 
further the purpose of this part to encourage individuals receiving 
education and training to enter the permanent work force by developing 
programs through which such individuals enter the work force and then 
receive post-employment education and training.''.

SEC. 107. ADDITIONAL DEMONSTRATION PROJECTS TO MOVE AFDC RECIPIENTS 
              INTO THE WORK FORCE.

    (a) Establishment.--The Secretary shall provide for additional 
demonstration projects described in subsection (b) in States with 
applications approved under this Act.
    (b) Project Described.--Each State conducting a demonstration 
project under this section shall develop a program or programs to 
better move recipients of aid to families with dependent children 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.

    (a) Establishment.--The Secretary shall provide for demonstration 
projects described in subsection (b) in States with applications 
approved under this Act.
    (b) Project Described.--
            (1) In general.--Each State conducting a demonstration 
        project under this section shall elect to receive payments 
        under paragraph (2) in lieu of--
                    (A) all payments to which the State would otherwise 
                be entitled to under section 403 of the Social Security 
                Act (42 U.S.C. 603) for aid to families with dependent 
                children under part A of title IV of such Act or the 
                job opportunities and basic skills training program 
                under part F of such title; or
                    (B) any portion of the payment described in 
                subparagraph (A) to which the State would otherwise be 
                entitled under such section for benefits (identified by 
                the State) under part A or part F of such title for 
                populations (identified by the State) who receive such 
                benefits.
            (2) Payment.--The Secretary shall make payment under this 
        paragraph for each year of the project in an amount equal to--
                    (A) during fiscal year 1996--
                            (i) 100 percent of the total amount to 
                        which the State was entitled under section 403 
                        of the Social Security Act (42 U.S.C. 603) for 
                        aid to families with dependent children under 
                        part A of title IV of such Act or the job 
                        opportunities and basic skills training program 
                        under part F of such title; or
                            (ii) the amount to which the State was 
                        entitled to under such section for those 
                        benefits and populations identified by the 
                        State in paragraph (1)(B),
                for fiscal year 1995 plus the product of such amount 
                and the percentage increase in the consumer price index 
                for all urban consumers (U.S. city average) during such 
                fiscal year; and
                    (B) during each subsequent fiscal year, the amount 
                determined under this paragraph in the previous fiscal 
                year plus the product of such amount and the percentage 
                increase in such consumer price index during such 
                previous fiscal year.
            (3) Description of activities.--
                    (A) In general.--Each State which is paid under 
                paragraph (2) shall expend the amount received under 
                such paragraph and the amount, if any, made available 
                to such State under section 5(b)(1)(B)(ii) for one or 
                more of the following purposes:
                            (i)(I) Establish residential programs for 
                        teenage mothers with dependent children where 
                        education, job training, community service, or 
                        other employment is provided.
                            (II) Support the pilot project described in 
                        section 433(f) of the Jobs Training Partnership 
                        Act, as added by section 102 of this Act, to 
                        provide such services to teenage mothers with 
                        dependent children.
                            (ii) Establish programs to promote, 
                        expedite, and ensure adoption of children, 
                        particularly neglected or abused children.
                            (iii) Expand child care assistance for the 
                        children of needy working parents (as 
                        determined by the State).
                            (iv) Establish residential schooling with 
                        appropriate support services for children from 
                        needy families (as determined by the State) 
                        enrolled at the request of the parents of such 
                        children.
                            (v) Establish other services which will be 
                        provided directly to children from needy 
                        families (as determined by the State).
                            (vi) Implement other reforms consistent 
                        with this Act.
            (4) Community-based activities.--The Secretary shall ensure 
        that each State receiving a grant under this section--
                    (A) takes adequate steps to assure the well-being 
                of the children affected by the State's receipt of the 
                grant; and
                    (B) to the fullest extent possible, utilizes the 
                grant under this section to support community-based 
                services in communities affected by the State's receipt 
                of the grant.

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.

    (a) Establishment.--The Secretary shall provide for demonstration 
projects described in subsection (b) in States with applications 
approved under this Act.
    (b) Project Described.--If a child is born to a family after the 
date on which such family begins receiving aid to families with 
dependent children, a State conducting a demonstration project under 
this section--
            (1) shall not take such child into account in determining 
        the need of such family for such aid; and
            (2) shall increase the amounts disregarded from earned 
        income under section 402(a)(8)(A) of the Social Security Act 
        (42 U.S.C. 602(a)(8)(A)).

SEC. 203. DEMONSTRATION PROJECTS PROVIDING INCENTIVES TO MARRY.

    (a) Aid to Two-Parent Families.--
            (1) Establishment.--The Secretary shall provide for 
        demonstration projects described in paragraph (2) in States 
        with applications approved under this Act.
            (2) Project described.--
                    (A) In general.--Each State conducting a 
                demonstration project under this subsection shall not 
                apply the requirements described in subparagraph (B) to 
                a parent of a dependent child who is married to the 
                natural parent of such child.
                    (B) Requirements waived.--The requirements 
                described in this subparagraph are:
                            (i) The work history requirement described 
                        in section 407(b)(1)(A)(iii) of the Social 
                        Security Act (42 U.S.C. 607(b)(1)(A)(iii)).
                            (ii) The 100-hour rule under section 
                        233.100(a)(1)(i) of title 45, Code of Federal 
                        Regulations.
    (b) Increase in Stepparent Earned Income Disregard.--
            (1) Establishment.--The Secretary shall provide for 
        demonstration projects described in paragraph (2) in States 
        with applications approved under this Act.
            (2) Project described.--For purposes of making 
        determinations for any month under section 402(a)(7) of the 
        Social Security Act (42 U.S.C. 602(a)(7)), each State 
        conducting a demonstration project under this subsection shall 
        modify the income disregards provided in subparagraphs (A) 
        through (D) of section 402(a)(31) of such Act (42 U.S.C. 
        602(a)(31)) in order to decrease the amount of income 
        determined under such section with respect to a dependent 
        child's stepparent.

SEC. 204. DEMONSTRATION PROJECTS REDUCING AFDC BENEFITS IF SCHOOL 
              ATTENDANCE IS IRREGULAR OR PREVENTIVE HEALTH CARE FOR 
              DEPENDENT CHILDREN IS NOT OBTAINED.

    (a) Establishment.--The Secretary shall provide for demonstration 
projects described in subsection (b) in States with applications 
approved under this Act.
    (b) Project Described.--
            (1) In general.--Each State conducting a demonstration 
        project under this section shall reduce the amount of aid to 
        families with dependent children received by a family if the 
        State agency determines that one or both (at the State's 
        option) of the following conditions exist:
                    (A) A member of such family is attending school or 
                participating in a course of vocational or technical 
                training and such family member is absent from such 
                school or training with no excuse for more than a 
                number of days per month determined appropriate by the 
                State.
                    (B) A member of such family is a child under the 
                age of 6 who has not received appropriate immunizations 
                (as determined by the State).
            (2) Limitation.--Each State conducting a demonstration 
        project under this section shall establish procedures which 
        ensure that no reduction in aid to families with dependent 
        children under paragraph (1) will endanger the welfare and 
        safety of any dependent child.

SEC. 205. DEMONSTRATION PROJECTS TO DEVELOP COMMUNITY-BASED PROGRAMS 
              FOR TEENAGE PREGNANCY PREVENTION AND FAMILY PLANNING.

    (a) Establishment.--The Secretary shall provide for demonstration 
projects described in subsection (b) in States with applications 
approved under this Act.
    (b) Project Described.--Each State conducting a demonstration 
project under this section shall develop a community-based program for 
teenage pregnancy prevention and family planning.

SEC. 206. ADDITIONAL DEMONSTRATION PROJECTS TO STRENGTHEN FAMILIES AND 
              BREAK THE CYCLE OF WELFARE DEPENDENCY.

    (a) Establishment.--The Secretary shall provide for additional 
demonstration projects described in subsection (b) in States with 
applications approved under this Act.
    (b) Project Described.--Each State conducting a demonstration 
project under this section shall develop a program or programs 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.

    (a) Establishment.--The Secretary shall provide for demonstration 
projects described in subsection (b) in States with applications 
approved under this Act.
    (b) Project Described.--Each State conducting a demonstration 
project under this section shall develop a program to increase 
paternity establishment.

SEC. 302. DEMONSTRATION PROJECTS TO INCREASE CHILD SUPPORT COLLECTION.

    (a) Establishment.--The Secretary shall provide for demonstration 
projects described in subsection (b) in States with applications 
approved under this Act.
    (b) Project Described.--Each State conducting a demonstration 
project under this section shall increase the State's child support 
collection efforts through one or more of the following methods:
            (1) Enhanced child support enforcement and collection, 
        including holding a parent accountable for supporting any 
        children of the parent's minor children.
            (2) Applying section 402(a)(8)(vi) of the Social Security 
        Act (42 U.S.C. 602(a)(8)(vi)) by substituting an amount greater 
        than $50 (to be determined by the State) for ``$50'' each place 
        such dollar amount appears.
            (3) Any other method that the State deems appropriate.

   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.

    (a) Establishment.--The Secretary shall provide for demonstration 
projects described in subsection (b) in States with applications 
approved under this Act.
    (b) Project Described.--Each State conducting a demonstration 
project under this section shall--
            (1) contract with private for-profit and nonprofit groups 
        to provide any individual receiving aid to families with 
        dependent children with training, support services, and 
        placement in a private sector job which permits such individual 
        to cease receiving aid to families with dependent children; and
            (2) upon employment of such individual, pay such groups a 
        negotiated portion of the total amount that such individual's 
        family would have received over the course of the year in which 
        such individual began such employment in the form of aid to 
        families with dependent children.

SEC. 402. DEMONSTRATION PROJECTS PROVIDING PERFORMANCE-BASED INCENTIVES 
              FOR STATE PUBLIC WELFARE PROVIDERS.

    (a) Establishment.--The Secretary shall provide for demonstration 
projects to establish performance-based incentives for State public 
welfare providers in States with applications described in subsection 
(b)(1) which are approved under this Act.
    (b) Applications.--
            (1) Application described.--An application described under 
        this paragraph is an application which--
                    (A) identifies the State offices or administrative 
                units which will participate in the demonstration 
                project;
                    (B) describes indicators of employee or program 
                performance based on outcome measures for--
                            (i) training and education;
                            (ii) job search and placement assistance;
                            (iii) child support collection;
                            (iv) teen pregnancy prevention programs; 
                        and
                            (v) any other program objective that the 
                        State finds appropriate;
                    (C) describes budgetary incentives for program 
                performance, including direct financial incentives for 
                employees where appropriate;
                    (D) describes a process for developing, in 
                cooperation with employees of participating offices or 
                units, a job evaluation system based on performance 
                measures; and
                    (E) describes the way in which State public welfare 
                providers, private providers, welfare clients, and 
                members of the community have been or shall be involved 
                in the planning and implementation of a performance 
                based welfare delivery system.
            (2) Technical assistance.--The Secretary shall provide a 
        State desiring to submit an application for a demonstration 
        project under this section with technical assistance in 
        preparing an application described under paragraph (1).

SEC. 403. ELECTRONIC BENEFIT TRANSFERS.

    Section 904(d) of the Electronic Fund Transfer Act (15 U.S.C. 
1693b(d)) is amended--
            (1) by inserting ``(1)'' after ``(d)''; and
            (2) by adding at the end the following new paragraph:
    ``(2)(A) The disclosures, protections, responsibilities, and 
remedies created by this title or any rules, regulations, or orders 
issued by the Board in accordance with this title, do not apply to an 
electronic benefit transfer program established under State or local 
law, or administered by a State or local government, unless the payment 
under such program is made directly into a consumer's account held by 
the recipient.
    ``(B) Subparagraph (A) does not apply to employment related 
payments, including salaries, pension, retirement, or unemployment 
benefits established by Federal, State, or local governments.
    ``(C) Nothing in subparagraph (A) alters the protections of 
benefits established by any Federal, State, or local law, or preempts 
the application of any State or local law.
    ``(D) For purposes of subparagraph (A), an electronic benefit 
transfer program is a program under which a Federal, State, or local 
government agency distributes needs-tested benefits by establishing 
accounts to be accessed by recipients electronically, such as through 
automated teller machines, or point-of-sale terminals. A program 
established for the purpose of enforcing the support obligations owed 
by absent parents to their children and the custodial parents with whom 
the children are living is not an electronic benefit transfer 
program.''.

               TITLE V--OFFSETTING EXPENDITURE REDUCTIONS

SEC. 501. OFFSETTING EXPENDITURE REDUCTIONS.

    (a) In General.--Subparagraph (C) of section 1001(5) of the Food 
Security Act of 1985 (7 U.S.C. 1308(5)(C)) is amended to read as 
follows:
    ``(C) In the case of corporations and other entities included in 
subparagraph (B) and partnerships, the Secretary shall attribute 
payments to natural persons in proportion to their ownership interests 
in an entity and in any other entity, or partnership, that owns or 
controls the entity, or partnership, receiving the payments.''.
    (b) Removal of 3-Entity Rule.--Section 1001A(a)(1) of the Food 
Security Act of 1985 (7 U.S.C. 1308-1(a)(1)) is amended--
            (1) in the first sentence--
                    (A) by striking ``substantial beneficial interests 
                in more than two entities'' and inserting ``a 
                substantial beneficial interest in any other entity''; 
                and
                    (B) by striking ``receive such payments as separate 
                persons'' and inserting ``receives the payments as a 
                separate person''; and
            (2) by striking the second sentence.
    (c) Effective Date.--The amendments made by this section shall take 
effect on October 1, 1995.
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