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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 736 Introduced in Senate (IS)]

104th CONGRESS
  1st Session
                                 S. 736

 To amend title IV of the Social Security Act by reforming the aid to 
   families with dependent children program, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

               April 27 (legislative day, April 24), 1995

 Mr. Harkin (for himself and Mr. Bond) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To amend title IV of the Social Security Act by reforming the aid to 
   families with dependent children program, 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 to Self-
Sufficiency Act of 1995''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purpose.
Sec. 4. Policy.
Sec. 5. Amendments to Social Security Act.
      TITLE I--FAMILY INVESTMENT PROGRAM AND OTHER WELFARE REFORM

Sec. 101. State plan required to include family investment program.
Sec. 102. Family investment program.
Sec. 103. Family investment agreement and limited benefit plan.
Sec. 104. Coordination between departments.
Sec. 105. JOBS program.
             TITLE II--INCREASING WORK AND SELF-SUFFICIENCY

                      Subtitle A--Work Incentives

Sec. 201. Increase in work expense disregard.
Sec. 202. Increase in earned income incentive.
Sec. 203. Work transition period.
Sec. 204. Optional State disregard of dependent child's income.
Sec. 205. Transitional child care program.
Sec. 206. Increase in motor vehicle limit.
Sec. 207. Retrospective budgeting procedures.
                     Subtitle B--Incentives to Save

Sec. 211. Increase in asset limits.
Sec. 212. Disregard of income and resources designated for education, 
                            training, and employability.
Sec. 213. Disregard of interest income.
 Subtitle C--Microenterprise Development and Other Projects to Create 
                                  Jobs

Sec. 221. Disregard of income and resources related to self-employment.
Sec. 222. Inclusion of microenterprise training and activities in the 
                            JOBS program.
Sec. 223. Wage supplementation demonstration projects.
Sec. 224. Projects to expand the number of job opportunities available 
                            to certain low-income individuals.
                 TITLE III--IMPROVING STATE FLEXIBILITY

Sec. 301. Equivalent treatment of stepparent income and parent income.
Sec. 302. AFDC-up program.
Sec. 303. Increased payments to States.
Sec. 304. Optional assessment, monitoring, and evaluation.
Sec. 305. Optional timely preventive health care for children.
                 TITLE IV--COMBATING TEENAGE PREGNANCY

Sec. 401. Supervised living arrangements for minors.
Sec. 402. Optional requirement of teenage parents to stay in school.
Sec. 403. Additional authorization of Public Health Service Act title X 
                            family planning grants to combat teenage 
                            pregnancy.
              TITLE V--IMPROVING CHILD SUPPORT COLLECTION

      Subtitle A--Improvements in the Collection of Child Support

Sec. 501. Transmission and assignment of certain child support orders 
                            to the IRS.
Sec. 502. Collection of child support by Internal Revenue Service.
Sec. 503. Optional publication of delinquent child support obligors.
Sec. 504. Optional State law authorizing suspension of licenses.
Sec. 505. Optional community service requirement for delinquent child 
                            support obligors.
Sec. 506. Optional State laws concerning modification of child support 
                            orders.
          Subtitle B--Improvements in Paternity Establishment

Sec. 511. Optional State laws concerning paternity establishment.
Sec. 512. Optional outreach for voluntary paternity establishment.
Sec. 513. Penalty for failure to establish paternity promptly.
Sec. 514. Incentives to parents to establish paternity.
                      TITLE VI--SAVINGS PROVISIONS

Sec. 601. Block grants to States to replace certain Federal 
                            administrative payments.
Sec. 602. Extension of deeming of income and resources under AFDC, SSI, 
                            medicaid, and food stamp programs.
Sec. 603. Requirements for sponsor's affidavits of support.
Sec. 604. Extending requirement for affidavits of support to family-
                            related and diversity immigrants.
Sec. 605. Limitation on expenditures for emergency assistance.
                       TITLE VII--EFFECTIVE DATE

Sec. 701. Effective date.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The welfare system is failing recipients and taxpayers 
        and must be reformed.
            (2) The aid to families with dependent children program 
        under title IV of the Social Security Act (hereafter in this 
        section referred to as ``AFDC'') remains largely unchanged from 
        its predecessor program which was created in 1935, while 
        society has changed dramatically during the same period.
            (3) The number of female-headed households with children 
        under the age of 18 increased by 146 percent from 1970 to 1990, 
        and there are now more children living in single-parent homes 
        than at any time in the Nation's history.
            (4) Expenditures for AFDC increased 13 percent (in 
        inflation adjusted dollars) over a 12-year period, from 
        $19,600,000,000 in 1980 to $22,200,000,000 in 1992.
            (5) The number of families on AFDC has increased 33 percent 
        over a 12-year period, from 3,600,000 families in 1980 to 
        4,800,000 families in 1992.
            (6) There were 2,000,000 more children receiving welfare in 
        1992 than there were in 1980 and 1 in 5 American children 
        currently live in poverty.
            (7) Many States are enacting sweeping changes to welfare 
        programs in an effort to curb expenditures and reduce the 
        number of dependent families.
            (8) Iowa has replaced AFDC with a new ``Family Investment 
        Program'' which requires all families on welfare to enter into 
        a social contract with the State which establishes a specific 
        time-line when welfare benefits will end and outlines the steps 
        that individual families will take to move off welfare and into 
        work and self-sufficiency.
            (9) Welfare reform legislation must recognize the 
        individuality of each family and enact programs that are 
        consistent with this principle.
            (10) Welfare reform legislation must also recognize the 
        importance of a holistic approach which treats the family as a 
        single unit and not as the sum of its parts.
            (11) Health care reform is essential to welfare reform 
        because many families remain on public assistance simply 
        because they cannot afford to lose benefits under the medicaid 
        program under title XIX of the Social Security Act for 
        themselves, and, more importantly, for their children.
            (12) In recent years, there has been a dramatic increase in 
        the number of births to unmarried teenagers. Between 1986 and 
        1991, births to teenagers increased by 11.9 percent, from 50.2 
        to 62.1 births per 1,000 females.
            (13) Parents, including noncustodial parents, have a 
        responsibility to provide financial support for their children 
        and failure to provide child support increases the need for 
        AFDC payments.
            (14) In 1991, the United States Commission on Interstate 
        Child Support reported that the collection of child support 
        fell far short of court awards, with 11,000,000 children being 
awarded $15,000,000,000 in child support payments while approximately 
$5,000,000,000 in child support payments remained unpaid.

SEC. 3. PURPOSE.

    It is the purpose of this Act to--
            (1) increase accountability in the aid to families with 
        dependent children program by requiring individuals to 
        negotiate and sign binding agreements which outline the steps a 
        family will take to move off of welfare and into self-
        sufficient employment;
            (2) focus efforts to increase work by welfare recipients 
        and to ensure that these efforts will lead to the economic 
        self-sufficiency of the family;
            (3) increase flexibility by providing States with policy 
        options to create a welfare program designed to meet the unique 
        needs of the citizens of each State;
            (4) combat the increase in teenage pregnancy by providing 
        States with expanded options to effectively deal with this 
        serious problem; and
            (5) improve the collection of child support by reforming 
        the system and provide States with policy options to improve 
        child support collection.

SEC. 4. POLICY.

    It is the policy of the United States that all programs, projects, 
and activities receiving assistance under this Act shall be carried out 
in a manner consistent with the following principles:
            (1) Welfare recipients are required to accept immediate 
        responsibility for their families from the first visit to the 
        welfare office by negotiating and signing a binding agreement 
        that outlines the steps the family will take to become self-
        sufficient.
            (2) Failure to sign such an agreement shall result in the 
        reduction and eventual elimination of cash welfare benefits.
            (3) Welfare programs are to provide temporary cash 
        assistance for needy families with children and must provide 
        the support and skills that parents need to obtain full-time 
        employment in private sector jobs that will ensure the economic 
        self sufficiency of the family.
            (4) States must have more flexibility to design welfare 
        program to effectively respond to the needs of welfare 
        recipients in each individual state.
            (5) Actions must be taken to combat the dramatic increase 
        in births among unmarried teenagers.
            (6) Children have a right to receive financial support from 
        their parents and no parent shall escape responsibility from 
        providing such support.

SEC. 5. AMENDMENTS TO SOCIAL SECURITY ACT.

    Except as otherwise specifically provided, whenever in this Act an 
amendment is expressed in terms of an amendment to or repeal of a 
section or other provision, the reference shall be considered to be 
made to that section or other provision of the Social Security Act.

      TITLE I--FAMILY INVESTMENT PROGRAM AND OTHER WELFARE REFORM

SEC. 101. STATE PLAN REQUIRED TO INCLUDE FAMILY INVESTMENT PROGRAM.

    Section 402(a) (42 U.S.C. 602(a)) is amended by inserting after 
paragraph (28) the following new paragraph:
            ``(29) except in the case of a State receiving a waiver 
        from the Secretary, provide that the State has in effect a 
        family investment program described in subsection (j);''.

SEC. 102. FAMILY INVESTMENT PROGRAM.

    Section 402 (42 U.S.C. 602) is amended by adding at the end the 
following new subsection:
    ``(j) For purposes of subsection (a)(29)--
            ``(1) The term `family investment program' means a program 
        under which the State agency--
                    ``(A) negotiates a family investment agreement (as 
                defined in section 406(i)) with at least the 
                implementation percentage (as specified in paragraph 
                (5)(B)) of individuals described in paragraph (2), and
                    ``(B) offers individuals described in paragraph (2) 
                the opportunity to enter into a limited benefit 
                agreement (as defined in section 406(j)) in lieu of 
                such family investment agreement.
            ``(2) An individual described in this paragraph is any 
        recipient of aid to families with dependent children other 
        than--
                    ``(A) a dependent child;
                    ``(B) a parent of a child who is less than 6 months 
                of age, but if both parents are living in the child's 
                home, only one parent shall be exempt from entering 
                into the agreement;
                    ``(C) an individual who is employed for 30 or more 
                hours per week;
                    ``(D) an individual who is of advanced age;
                    ``(E) for an initial deferment period to be 
                determined by the State, an individual who is ill or 
                incapacitated; and
                    ``(F) for an initial deferment period to be 
                determined by the State, an individual who is needed in 
                the home because of the illness or incapacity of 
                another member of the household.
            ``(3) The State agency shall ensure that--
                    ``(A) any correspondence with an individual 
                described in paragraph (2) relating to the family 
                investment program (including the initial notice of the 
                requirement to enter into a family investment 
                agreement) shall be in a format which is designed to be 
                easily understandable to such individual;
                    ``(B) the correspondence described in subparagraph 
                (A) shall be designed to be understandable to 
                individuals who are not English language speakers; and
                    ``(C) employees of the State agency are readily 
                available to assist individuals in completing any 
                documents required for participation in the family 
                investment program.
            ``(4) The State agency shall establish a dispute resolution 
        procedure for disputes related to participation in the family 
        investment agreement that provides the opportunity for a 
        hearing consistent with the hearing requirement under section 
        482(h).
            ``(5)(A) A State shall be treated as operating a family 
        investment program in accordance with paragraph (1) for fiscal 
        years 1996 through 2003 if the State agency enters into family 
        investment agreements with at least the implementation 
        percentage of the applicable population.
            ``(B) For purposes of subparagraph (A), the implementation 
        percentage is equal to--
                    ``(i) 20 percent in fiscal year 1996;
                    ``(ii) 25 percent in fiscal year 1997;
                    ``(iii) 30 percent in fiscal year 1998;
                    ``(iv) 35 percent in fiscal year 1999;
                    ``(v) 40 percent in fiscal year 2000;
                    ``(vi) 60 percent in fiscal year 2001;
                    ``(vii) 70 percent in fiscal year 2002; and
                    ``(viii) 90 percent in fiscal year 2003.
            ``(C) For purposes of subparagraph (A), the applicable 
        population is the average total number of individuals in the 
        State during the fiscal year who are described in paragraph 
        (2).
            ``(6)(A) If a State reports that the State has failed to 
        achieve the implementation percentage required by paragraph (1) 
        for the fiscal year, the Secretary may make recommendations for 
        changes in the State family investment program. The State may 
        elect to follow such recommendations, and shall demonstrate to 
        the Secretary how the State will achieve the required 
        implementation percentage.
            ``(B) Notwithstanding subparagraph (A), if a State fails to 
        achieve the implementation percentage required by paragraph (5) 
        for 2 consecutive fiscal years, the Secretary may--
                    ``(i) require the State to make changes in the 
                family investment program; and
                    ``(ii) reduce by 5 percent the amount otherwise 
                payable to the State under paragraph (1) or (2) 
                (whichever applies to the State) of section 403(a).''.

SEC. 103. FAMILY INVESTMENT AGREEMENT AND LIMITED BENEFIT PLAN.

    (a) Family Investment Agreement.--Section 406 (42 U.S.C. 606) is 
amended by adding at the end the following new subsection:
    ``(i) The term `family investment agreement' means a social 
contract between the State and each family receiving aid to families 
with dependent children which--
            ``(1) outlines the steps a family will take to obtain self-
        sufficiency;
            ``(2) specifies a negotiated time-limited period of 
        eligibility for receipt of aid to families with dependent 
        children that is consistent with unique family circumstances 
        and is based on a reasonable plan to facilitate the transition 
        of the family to self-sufficiency;
            ``(3)(A) contains a requirement that each individual 
        entering into the agreement (except those determined to need 
        child care assistance but for whom the State does not guarantee 
        such assistance in accordance with section 402(g)), participate 
        in at least one of the following activities providing such 
        individual with a significant level of commitment up to the 
        level required for full-time employment:
                    ``(i) Full-time or part-time employment.
                    ``(ii) Job-search activities.
                    ``(iii) Participation in a job opportunities and 
                basic skills training program which meets the 
                requirements of part F.
                    ``(iv) Participation in education or training 
                programs.
                    ``(v) Unpaid community service (subject to the 
                provisions of subparagraph (B)), only as part of a plan 
                to improve the employability of the individual and 
                leading to the eventual self-sufficiency of the family.
                    ``(vi) Placement in a community work experience 
                program in accordance with section 482(f).
                    ``(vii) High school completion activities (or the 
                equivalent) for a parent under the age of 20; and
            ``(B)(i) provides that an individual who participates in 
        unpaid community service under subparagraph (A)(v) shall not be 
        required to perform such unpaid community service for a greater 
        number of hours per month than the maximum number of hours an 
        individual may be required to work in any month under the 
        community work experience program as determined under section 
        482(f)(1)(B)(i);
            ``(ii) requires any sponsor of unpaid community service to 
        comply with the rules described in subsections (b), (c), (d), 
        and (g) of section 484; and
            ``(iii) provides that an individual's participation in 
        unpaid community service may not exceed 3 months;
            ``(4) provides each individual entering into the agreement 
        with the supplemental services required to obtain self-
sufficiency and comply with the terms of the family investment 
agreement, including health care, transportation, child care, 
education, and training;
            ``(5) if the State agency and the individual entering into 
        the agreement agree, provides that the individual participate 
        in--
                    ``(A) a substance abuse treatment program, or other 
                social service program that the State agency determines 
                necessary to increase the employability of such 
                individual;
                    ``(B) programs and support services to strengthen 
                parenting skills and assure family stability; and
                    ``(C) programs that lead to improved school 
                readiness for preschool children and on-grade 
                performance for school age children;
            ``(6) provides that the State agency shall provide the 
        family with reasonable support and case management in the 
        creation, monitoring, and adaptation of a family investment 
        agreement to respond to changes in family circumstances and 
        factors outside family control;
            ``(7) provides that the State agency shall renegotiate the 
        family investment agreement--
                    ``(A) during the period of the agreement, to 
                reflect substantial changes in family circumstances or 
                needs; and
                    ``(B) at the conclusion of the original agreement, 
                if each individual entering into the agreement has made 
                a good faith effort to comply with the agreement but 
                were unable to reach self-sufficiency because of 
                factors outside of the control of the individual;
            ``(8) provides that the family will automatically enter 
        into a limited benefit plan (as described in subsection (j)) if 
        an individual who has entered into the family investment 
        agreement fails to comply with the agreement; and
            ``(9) provides that the agreement shall be invalid if the 
        State agency fails to comply with the agreement.
    (b) Limited Benefit Plan.--Section 406 (42 U.S.C. 606), as amended 
by subsection (a), is amended by adding at the end the following new 
subsection:
    ``(j) The term `limited benefit plan' means a plan which, 
notwithstanding any other provision of this title, provides that--
            ``(1)(A) during the first 3-month period in which a family 
        receives aid under the plan, the family shall receive benefits 
        as normally determined under this title;
            ``(B) during the second 3-month period in which the family 
        receives aid under the plan, the needs of the caretaker 
        relative, any other relative with whom a dependent child is 
        living, and any other individual living in the same home as 
        such relative and the dependent child whose needs are taken 
        into account in making the determination under section 
        402(a)(7), shall not be taken into account in making the 
        determination with respect to the family for purposes of 
        subsection (a)(7) and in the case of a family which is eligible 
        by reason of section 407, both parents shall not be taken into 
        account into making such a determination; and
            ``(C) after the expiration of a 6-month period beginning on 
        the date on which the family enters into the limited benefit 
        plan, the family shall be ineligible for benefits under this 
        title and may not reapply for such benefits within a 6-month 
        period beginning on the date of such expiration;
            ``(2) during the duration of a limited benefit plan, a 
        third-party counselor shall inquire as to the well being of the 
        dependent children; and
            ``(3) within a 45-day period beginning on the date that the 
        family automatically enters a limited benefit plan by reason of 
        the family investment agreement provision described in 
        subsection (i)(8) or elects to enter a limited benefit plan 
        under section 402(j)(1)(B), the family shall have the option to 
        void the limited benefit plan by regaining compliance with the 
        negotiated family investment agreement or if no agreement has 
        been negotiated, negotiate an agreement.''.

SEC. 104. COORDINATION BETWEEN DEPARTMENTS.

    (a) In General.--The Secretary of Health and Human Services, the 
Secretary of Labor, and the Secretary of Education shall ensure 
appropriate coordination in the planning, development, and operation of 
the programs described in subsection (b) in order to--
            (1) improve the quality and effectiveness of services 
        provided by the Department of Health and Human Services, the 
        Department of Labor, and the Department of Education;
            (2) reduce the overlap of such programs; and
            (3) reduce the administrative costs of such programs.
    (b) Programs Described.--The programs described in this subsection 
are as follows:
            (1) The family investment program under section 402(j) of 
        the Social Security Act (42 U.S.C. 602(j)).
            (2) The JOBS program under part F of title IV of the Social 
        Security Act (42 U.S.C. 681 et seq.).
            (3) Job training programs.
            (4) Child care programs.
            (5) Educational programs.
            (6) Any other program administered by the Department of 
        Health and Human Services, the Department of Labor, or the 
        Department of Education which has the effect of promoting self-
        sufficiency among recipients of aid to families with dependent 
        children under title IV of the Social Security Act (42 U.S.C. 
        601 et seq.).

SEC. 105. JOBS PROGRAM.

    (a) Requirement of JOBS Participation of Pregnant Individuals.--
Section 402(a)(19)(C) (42 U.S.C. 602(a)(19)(C)) is amended--
            (1) by inserting ``or'' at the end of clause (v);
            (2) by striking clause (vi); and
            (3) by redesignating clause (vii) as clause (vi).
    (b) No Limitation on Length of Job Search Program.--Section 
482(g)(2) (42 U.S.C. 682(g)(2)) is amended by striking ``402(a)(19)(D) 
applies'' through the end of subparagraph (B) and inserting 
``402(a)(19)(D) applies.''.
    (c) Protection of Existing Workers.--
            (1) Nondisplacement.--Section 484(c) (42 U.S.C. 684(c)) is 
        amended by--
                    (A) by striking ``or'' at the end of paragraph (2);
                    (B) by striking the period at the end of paragraph 
                (3) and inserting ``; or''; and
                    (C) by inserting after paragraph (3) the following 
                new paragraph:
            ``(4) the employment or assignment of a participant or the 
        filling of a position if such participant will perform any 
        services or duties, or engage in activities, that--
                    ``(A) will supplant the hiring of employed workers;
                    ``(B) are services, duties, or activities with 
                respect to which an individual has recall rights 
                pursuant to a collective bargaining agreement or 
                applicable personnel procedures; or
                    ``(C) had been performed by or were assigned to any 
                employee who--
                            ``(i) is subject to a reduction in force; 
                        or
                            ``(ii) has recall rights pursuant to a 
                        collective bargaining agreement or applicable 
                        personnel procedures.''.
            (2) Concurrence of local labor organization.--Section 484 
        (42 U.S.C. 684) is amended by adding at the end the following 
        new subsection:
    ``(g) No work assignment under the program shall be made until the 
State agency has obtained from an employer with whom a participant is 
placed, the written concurrence of any local labor organization 
representing employees of the employer who are engaged in the same or 
substantially similar work as that proposed to be carried out.''.
    (d) Grievance Procedure.--Section 484(d)(1) (42 U.S.C. 684(d)(1)) 
is amended to read as follows:
    ``(d)(1)(A) The State shall establish and maintain a grievance 
procedure for resolving complaints by regular employees or such 
employees' representatives that the work assignment of an individual 
under the program violates any of the prohibitions described in 
subsection (c).
    ``(B) Except for a grievance that alleges fraud or criminal 
activity, a grievance shall be made not later than 1 year after the 
date of the alleged occurrence of the event that is the subject of the 
grievance.
    ``(C)(i) A hearing conducted under this paragraph on any grievance 
shall be conducted not later than 30 days after the filing of such 
grievance.
    ``(ii) A decision on any such grievance shall be made not later 
than 60 days after the filing of such grievance.
    ``(D)(i)(I) In the event of a decision on a grievance that is 
adverse to the party who filed such grievance, or 60 days after the 
filing of such grievance if no decision has been reached, such party 
shall be permitted to submit such grievance to binding arbitration 
before a qualified arbitrator who is jointly selected and independent 
of the interested parties.
    ``(II) If the parties cannot agree on an arbitrator, the Governor 
shall appoint an arbitrator from a list of qualified arbitrators within 
15 days after receiving a request for such appointment from one of the 
parties to the grievance.
    ``(ii) An arbitration proceeding shall be held not later than 45 
days after the request for such arbitration proceeding, or, if the 
arbitrator is appointed by the Governor in accordance with clause 
(i)(II), not later than 30 days after the appointment of such 
arbitrator.
    ``(iii) A decision concerning a grievance shall be made not later 
than 30 days after the date such arbitration proceeding begins.
    ``(iv)(I) Except as provided in subclause (II), the cost of an 
arbitration proceeding shall be divided evenly between the parties to 
the arbitration.
    ``(II) If a regular employee or such employee's representative 
prevails under a binding arbitration proceeding, the State agency shall 
pay the total cost of such proceeding and the attorneys' fees of such 
employee or representative.
    ``(E) Remedies for a grievance filed under this paragraph include--
            ``(i) prohibition of the work assignment in the program 
        under this part; and
            ``(ii)(I) reinstatement of the displaced employee to the 
        position held by such employee prior to displacement;
            ``(II) payment of lost wages and benefits of the displaced 
        employee;
            ``(III) reestablishment of other relevant terms, 
        conditions, and privileges of employment of the displaced 
        employee; and
            ``(IV) such equitable relief as is necessary to make the 
        displaced employee whole.
    ``(F) Suits to enforce arbitration awards under this paragraph may 
be brought in any district court of the United States having 
jurisdiction of the parties, without regard to the amount in 
controversy and without regard to the citizenship of the parties.''.

             TITLE II--INCREASING WORK AND SELF-SUFFICIENCY

                      Subtitle A--Work Incentives

SEC. 201. INCREASE IN WORK EXPENSE DISREGARD.

    Section 402(a)(8)(A)(ii) (42 U.S.C. 602(a)(8)(A)(ii)) is amended by 
inserting ``, or at the option of the State (on a statewide basis or in 
a defined area of the State), the greater of the first $90, or up to 
the first 20 percent of the total of such earned income for such 
month'' after ``such month''.

SEC. 202. INCREASE IN EARNED INCOME INCENTIVE.

    (a) In General.--Section 402(a)(8)(A)(iv) (42 U.S.C. 
602(a)(8)(A)(iv)) is amended--
            (1) by striking ``(II)''; and
            (2) by inserting ``, or (II) at the option of the State (on 
        a statewide basis or in a defined area of the State), up to 
        one-half of the total of such earned income not disregarded 
        under any other clause of this subparagraph if such amount is 
        greater than the amount disregarded under subclause (I)'' 
before the semicolon at the end.
    (b) No Time Limitation.--Section 402(a)(8)(B) (42 U.S.C. 
602(a)(8)(B)) is amended to read as follows:
            ``(B) provide that (with respect to any month) the State 
        agency shall not disregard under clause (ii), (iii), or (iv) of 
        subparagraph (A) any earned income of any one of the 
        individuals specified in subparagraph (A)(ii) if such 
        individual--
                    ``(i) terminated the individual's employment or 
                reduced the individual's earned income without good 
                cause within such period (of not less than 30 days) 
                preceding such month as may be prescribed by the 
                Secretary;
                    ``(ii) refused without good cause, within such 
                period preceding such month as may be prescribed by the 
                Secretary, to accept employment in which the individual 
                is able to engage which is offered through the public 
                employment offices of the State, or is otherwise 
                offered by an employer if the offer of such employer is 
                determined by the State or local agency administering 
                the State plan, after notification by the employer, to 
                be a bona fide offer of employment; or
                    ``(iii) failed without good cause to make a timely 
                report (as prescribed by the State plan pursuant to 
                paragraph (14)) to the State agency of earned income 
                received in such month; and''.

SEC. 203. WORK TRANSITION PERIOD.

    (a) In General.--Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)) is 
amended--
            (1) by striking ``and'' at the end of clause (vii); and
            (2) by inserting after clause (viii) the following new 
        clause:
                    ``(ix) at the option of the State (on a statewide 
                basis or in a defined area of the State), may disregard 
                up to the first 4 months of earned income due to new 
                employment of any child or relative receiving aid to 
                families with dependent children, or of any other 
                individual (living in the same home as such relative 
                and child) whose needs are taken into account in making 
                such a determination not disregarded under any other 
                clause of this subparagraph, if--
                            ``(I) such individual earned less than 
                        $1,200 in the 12-month period preceding the new 
                        employment; and
                            ``(II) such individual timely reports the 
                        earnings to the State agency; and''.
    (b) AFDC Quality Control.--Section 408(c)(3) (42 U.S.C. 608(c)(3)) 
is amended--
            (1) by striking ``or'' at the end of subparagraph (D);
            (2) by striking the period at the end of subparagraph (E) 
        and inserting ``; or''; and
            (3) by adding at the end the following new subparagraph:
                    ``(F) the State's reliance on the best information 
                available in determining eligibility for the earned 
                income disregard described in section 
                402(a)(8)(A)(ix).''.

SEC. 204. OPTIONAL STATE DISREGARD OF DEPENDENT CHILD'S INCOME.

    Section 402(a)(8) (42 U.S.C. 602(a)(8)), as amended by section 
203(a), is amended--
            (1) by striking ``and'' at the end of clause (viii);
            (2) by striking the semicolon at the end of clause (ix) and 
        inserting ``; and''; and
            (3) by inserting after clause (ix) the following new 
        clause:
                    ``(x) at the option of the State (on a statewide 
                basis or in a defined area of the State), may disregard 
                all or any part of the earned income of a dependent 
                child; and''.

SEC. 205. TRANSITIONAL CHILD CARE PROGRAM.

    (a) Permanent Extension of Program.--
            (1) In general.--Paragraph (2) of section 304(b) of the 
        Family Support Act of 1988 (42 U.S.C. 602 note) is repealed.
            (2) Conforming amendment.--Section 304(b)(1) of the Family 
        Support Act of 1988 (42 U.S.C. 602 note) is amended by striking 
        ``(1)''.
    (b) Extension of Transitional Child Care.--Section 
402(g)(1)(A)(iii) (42 U.S.C. 602(g)(1)(A)(iii)) is amended by inserting 
``(or, at the option of the State, for a period of 24 months)'' after 
``12 months''.

SEC. 206. INCREASE IN MOTOR VEHICLE LIMIT.

    Section 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)) is amended--
            (1) in clause (i), by striking ``and so much of the family 
        member's ownership interest in one automobile as does not 
        exceed such amount as the Secretary may prescribe'';
            (2) by striking ``or'' before ``(iv)''; and
            (3) by striking ``; and'' at the end of clause (iv) and 
        inserting ``, or (v) the greater of so much of the family 
        member's ownership interest in 1 automobile as does not exceed 
        (I) such amount as the Secretary may prescribe, or (II) at the 
        option of the State (on a statewide basis or in a defined area 
        of the State), an amount not to exceed $3,000, adjusted on 
        October 1 of each year (beginning in 1995) to equal the amount 
        determined under this subclause for the previous fiscal year 
        plus the product of such amount and the increase in the 
        Consumer Price Index for used vehicles during such fiscal year; 
        and''.

SEC. 207. RETROSPECTIVE BUDGETING PROCEDURES.

    Section 402(a)(13) (42 U.S.C. 602(a)(13)) is amended--
            (1) by striking ``subparagraph (B)'' in subparagraph (A) 
        and inserting ``subparagraphs (B) and (C)'';
            (2) by striking ``and'' at the end of subparagraph (A);
            (3) by adding ``and'' at the end of subparagraph (B); and
            (4) by adding at the end the following new subparagraph:
                    ``(C) in the case of the termination of a source of 
                income of an individual whose income is taken into 
                account in making a determination under paragraph (7), 
                the State agency shall consider the loss of income in 
                making a determination regarding the amount of aid, 
                beginning in the first month such loss of income 
                occurs, but only if the termination is timely reported 
                and, in the case of earned income, the individual shows 
                good cause for the termination of employment;''.

                     Subtitle B--Incentives to Save

SEC. 211. INCREASE IN ASSET LIMITS.

    Section 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)) is amended in the 
matter preceding clause (i) by inserting ``(or, at the option of the 
State (on a statewide basis or in a defined area of the State), exceeds 
an amount prescribed by the State not to exceed $2,000 for applicant 
families and $5,000 for recipient families)'' after ``may determine''.

SEC. 212. DISREGARD OF INCOME AND RESOURCES DESIGNATED FOR EDUCATION, 
              TRAINING, AND EMPLOYABILITY.

    (a) Disregard as Resource.--Section 402(a)(7)(B) (42 U.S.C. 
602(a)(7)(B)), as amended by section 206, is amended--
            (1) by striking ``or'' before ``(v)''; and
            (2) by inserting ``, or (vi) at the option of the State (on 
        a statewide basis or in a defined area of the State), in the 
        case of a family receiving aid under the State plan (and a 
        family not receiving such aid but which received such aid in at 
        least 1 of the preceding 4 months or became ineligible for such 
        aid during the preceding 12 months because of excessive 
        earnings), any amount not to exceed $10,000 in a qualified 
        asset account (as such term is defined in section 406(k)) of 
        such family, reduced by the amount (if any) excluded from the 
        resources of the family pursuant to paragraph (46)(A)(i)'' 
        before ``; and''.
    (b) Disregard as Income.--
            (1) Nonrecurring lump sum exempt from lump-sum rule.--
        Section 402(a)(17) (42 U.S.C. 602(a)(17)) is amended by adding 
        before the semicolon at the end the following: ``; at the 
        option of the State (on a statewide basis or in a defined area 
        of the State), that this paragraph shall not apply to earned or 
        unearned income received in a month on a nonrecurring basis to 
        the extent that such income is placed in a qualified asset 
        account (as defined in section 406(k)) the total amounts in 
        which, after such placement, does not exceed $10,000''.
            (2) Treatment as income.--Section 402(a)(7) (42 U.S.C. 
        602(a)(7)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (B);
                    (B) by striking the semicolon at the end of 
                subparagraph (C) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(D) shall treat as income any distributions from 
                a qualified asset account (as defined in section 
                406(k)(1)) which do not meet the definition of a 
                qualified distribution under section 406(k)(2);''.
    (c) Qualified Asset Accounts.--Section 406 (42 U.S.C. 606), as 
amended by section 103, is amended by adding at the end the following 
new subsection:
    ``(k)(1) The term `qualified asset account' means a mechanism 
approved by the State (such as individual retirement accounts, escrow 
accounts, or savings bonds) that allows savings of a family receiving 
aid to families with dependent children to be used for qualified 
distributions.
    ``(2) The term `qualified distributions' means distributions for 
expenses directly related to 1 or more of the following purposes:
            ``(A) The attendance of a member of the family at any 
        education or training program.
            ``(B) The improvement of the employability (including self-
        employment) of a member of the family (such as through the 
        purchase of an automobile).
            ``(C) The purchase of a home for the family.
            ``(D) A change of the family residence.''.

SEC. 213. DISREGARD OF INTEREST INCOME.

    Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)), as amended by 
sections 203(a) and 204, is amended--
            (1) by striking ``and'' at the end of clause (ix); and
            (2) by inserting after clause (x) the following new clause:
                    ``(xi) at the option of the State (on a statewide 
                basis or in a defined area of the State), may disregard 
                all interest income of any child or relative applying 
                for or receiving aid to families with dependent 
                children, or of any other individual (living in the 
                same home as such relative and child) whose needs are 
                taken into account in making such a determination; 
                and''.

 Subtitle C--Microenterprise Development and Other Projects to Create 
                                  Jobs

SEC. 221. DISREGARD OF INCOME AND RESOURCES RELATED TO SELF-EMPLOYMENT.

    (a) State Plan Requirements.--Section 402(a) (42 U.S.C. 602(a)) is 
amended--
            (1) by striking ``and'' at the end of paragraph (44);
            (2) by striking the period at the end of paragraph (45) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (45) the following new 
        paragraph:
            ``(46) at the option of the State (on a statewide basis or 
        in a defined area of the State), provide that the State agency 
        for a period not to exceed 2 years--
                    ``(A)(i) shall not include as a resource of the 
                family of which a child referred to in paragraph (7)(A) 
                is a member, for purposes of paragraph (7)(B), the 
                lesser of--
                            ``(I) the first $10,000 of the net worth 
                        (assets reduced by liabilities with respect 
                        thereto) of all microenterprises (as defined in 
                        section 406(l)(1)) owned, in whole or in part, 
                        by the child or by a relative or other 
                        individual referred to in paragraph (7)(A), or
                            ``(II) such net worth attributable to such 
                        ownership; and
                    ``(ii) shall take into consideration as earned 
                income of the family of which the child is a member, 
                only the net profits (as defined in section 406(l)(2)) 
                of such microenterprises; and
                    ``(B) shall ensure that caseworkers are able to 
                properly advise recipients of aid under the State plan 
                of the option of microenterprise as a legitimate route 
                toward self-sufficiency, and that caseworkers encourage 
                recipients of such aid who are interested in starting a 
                microenterprise to participate in a program designed to 
                assist them in such effort.''.
    (b) Definitions.--Section 406 (42 U.S.C. 606), as amended by 
sections 103 and 212(c), is amended by adding at the end the following 
new subsection:
    ``(l)(1) The term `microenterprise' means a commercial enterprise 
which has 5 or fewer employees, 1 or more of whom owns the enterprise.
    ``(2) The term `net profits' means, with respect to a 
microenterprise, the gross receipts of the business, minus--
            ``(A) payments of principal or interest on a loan to the 
        microenterprise;
            ``(B) transportation expenses;
            ``(C) inventory costs;
            ``(D) expenditures to purchase capital equipment;
            ``(E) cash retained by the microenterprise for future use 
        by the business;
            ``(F) taxes paid by reason of the business;
            ``(G) if the business is covered under a policy of 
        insurance against loss--
                    ``(i) the premiums paid for such insurance; and
                    ``(ii) the losses incurred by the business that are 
                not reimbursed by the insurer solely by reason of the 
                existence of a deductible with respect to the insurance 
                policy;
            ``(H) the reasonable costs of obtaining 1 motor vehicle 
        necessary for the conduct of the business; and
            ``(I) the other expenses of the business.''.

SEC. 222. INCLUSION OF MICROENTERPRISE TRAINING AND ACTIVITIES IN THE 
              JOBS PROGRAM.

    (a) In General.--Section 482(d)(1) (42 U.S.C. 682(d)(1)) is amended 
by adding at the end the following new subparagraph:
    ``(C) The services and activities referred to in subparagraph (A)--
            ``(i) in the case of a State in which at least 3 percent of 
        the adult recipients of aid under the State plan approved under 
        part A (as of the close of the immediately preceding fiscal 
        year) elect to participate in microenterprise activities, shall 
        include programs described in paragraph (4); or
            ``(ii) in the case of a State in which less than 3 percent 
        of the adult recipients of such aid (as of such time) elect to 
        participate in microenterprise activities, may include programs 
        described in paragraph (4).''.
    (b) Microenterprise Programs.--Section 482(d) (42 U.S.C. 682(d)) is 
amended by adding at the end the following new paragraph:
    ``(4) The programs described in this paragraph are programs of 
public and private organizations, agencies, and other entities 
(including nonprofit and for-profit entities) to enable such entities 
to facilitate economic development by--
            ``(A) providing technical assistance, advice, and business 
        support services (including assistance, advice, and support 
        relating to business planning, financing, marketing, and other 
        microenterprise development activities) to owners of 
        microenterprises and persons developing microenterprises; and
            ``(B) providing general support (such as peer support and 
        self-esteem programs) to owners of microenterprises and persons 
        developing microenterprises.''.

SEC. 223. WAGE SUPPLEMENTATION DEMONSTRATION PROJECTS.

    (a) In General.--The Secretary of Health and Human Services 
(hereafter in this section referred to as the ``Secretary'') shall 
establish demonstration projects for the purpose of developing a wage 
supplementation program under which--
            (1) certain individuals eligible for aid to families with 
        dependent children under title IV of the Social Security Act 
        (42 U.S.C. 601 et seq.) would be given an incentive to work; 
        and
            (2) the State would use funds available to pay benefits 
        described in paragraph (1) and food stamp benefits under the 
        Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) to make monthly 
        incentive payments (in lieu of such benefits) to such 
        individuals.
Each such program shall meet the requirements of subsection (b).
    (b) Wage Supplementation Demonstration Project.--
            (1) In general.--A demonstration project conducted under 
        this section shall provide the following:
                    (A) Incentives to work.--The project shall--
                            (i) require as a condition of participation 
                        in the project that an eligible individual be 
                        employed by a participating employer;
                            (ii) provide that the State shall make 
                        monthly incentive payments to any eligible 
                        individual for each month of employment in an 
                        amount equal to the benefits described in 
                        subsection (a)(2) which would otherwise be 
                        payable to the individual, determined as of the 
                        first day of the first full month of employment 
                        of such individual by a participating employer; 
                        and
                            (iii) provide that such payments be in lieu 
                        of such benefits.
                    (B) Period of participation.--A project shall not 
                permit an eligible individual to participate in the 
                demonstration project for a period in excess of the 
                lesser of--
                            (i) an aggregate period of 48 months, or
                            (ii) a period consisting of the number of 
                        months in which such individual was employed by 
                        a participating employer.
                    (C) Income in excess of limit.--The project shall 
                set a limit (to be determined by the State) on the 
                monthly income (including payments under subparagraph 
                (A)(ii)) of the family of an eligible individual and 
                shall permit the State to--
                            (i) reduce payments under subparagraph 
                        (A)(ii) in excess of the limit; or
                            (ii) determine an individual ineligible for 
                        participation in the project if such income is 
                        in excess of the limit.
            (2) Special rules for treatment under federal programs.--
        Notwithstanding any other provision of law, the following 
        special rules shall apply to an eligible individual 
participating in the project:
                    (A) Wages as earned income.--Wages paid to an 
                eligible individual by a participating employer (but 
                not payments under the project) shall be considered 
                earned income.
                    (B) Treated as eligibles.--Except for purposes of 
                determining eligibility for benefits for which payments 
                under the project are in lieu of, an eligible 
                individual participating in the project shall be 
                treated as eligible--
                            (i) for 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
                            (ii) for food stamp benefits under the Food 
                        Stamp Act of 1977 (7 U.S.C. 2011 et seq.) if 
                        such individual was otherwise eligible for food 
                        stamp benefits, determined as of the first day 
                        of the first full month of the employment of 
                        such individual by an employer.
                    (C) Additional child support amounts.--An eligible 
                individual who participates in the demonstration 
                project shall remain eligible for the project 
                notwithstanding the receipt of any amounts paid to the 
                family of the individual under section 457(b)(4)(B) of 
                the Social Security Act (42 U.S.C. 657(b)(4)(B)).
                    (D) Housing.--Any wages paid to an eligible 
                individual by a participating employer during the 
                period of time that an eligible individual participates 
                in the demonstration project shall not be taken into 
                account in determining--
                            (i) the monthly rent under section 3(a) of 
                        the United States Housing Act of 1937 for any 
                        family residing in a dwelling unit assisted 
                        under such Act; and
                            (ii) the monthly assistance payment for any 
                        family under section 8(o)(2) of such Act.
            (3) Eligible individual and participating employer.--
                    (A) Eligible individual.--For purposes of this 
                section, an individual is an eligible individual if the 
                individual is in a category of individuals which the 
                State determines should be eligible to participate in 
                the demonstration project, and who would, at the time 
                of placement in the job involved, be eligible for aid 
                to families with dependent children under an approved 
                State plan under title IV of the Social Security Act 
                (42 U.S.C. 601 et seq.).
                    (B) Participating employer.--
                            (i) In general.--For purposes of this 
                        section, an employer is a participating 
                        employer, with respect to an eligible 
                        individual, if the employer provides the State 
                        with a written agreement certifying--
                                    (I) that the employment of the 
                                eligible individual complies with the 
                                rules described in subsections (b), 
                                (c), (d), and (g) of section 484 of the 
                                Social Security Act (42 U.S.C. 684);
                                    (II) that the gross wages (as 
                                defined in section 209 of the Social 
                                Security Act (42 U.S.C. 609) determined 
                                without regard to any dollar 
                                limitation) paid to such eligible 
                                individual by the employer during any 
                                month will not be less than the product 
                                of--
                                            (aa) the greater of the 
                                        Federal minimum wage or the 
                                        applicable State minimum wage, 
                                        and
                                            (bb) the number of hours 
                                        worked by such individual;
                                    (III) that the employer will not 
                                receive any wage subsidy under any 
                                other provision of Federal law, 
                                including part F of title IV of the 
                                Social Security Act with respect to the 
                                employment of such eligible individual; 
                                and
                                    (IV) that the eligible individual 
                                receives the same employer-provided 
                                benefits (other than health care 
                                benefits) that other employees of the 
                                employer receive.
                            (ii) Continuing certification 
                        requirement.--A participating employer shall be 
                        required to submit a monthly report to the 
                        State (in a form and in such manner as the 
                        State requires) certifying that the employer 
                        has complied with the requirements of 
                        subclauses (I), (II), (III), and (IV) of clause 
                        (i) with respect to an eligible individual 
                        during the period such individual participates 
                        under the project.
    (c) Duration.--A demonstration project under this Act shall be 
conducted for not more than 5 years (including any time necessary 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 section.
    (d) Applications.--
            (1) In general.--Each State desiring to conduct a 
        demonstration project under this section shall prepare and 
        submit to the Secretary an application, at such time, in such 
        manner, and containing such information as the Secretary may 
        require, including an explanation of a plan for evaluating the 
        project.
            (2) Approval of applications.--A State that submits an 
        application under paragraph (1) may begin a demonstration 
        project under this section--
                    (A) upon approval of such application by the 
                Secretary; or
                    (B) at the end of the 60-day period beginning on 
                the date such application is submitted, unless the 
                Secretary denies the application during such period.
            (3) Notice and comment.--A State shall issue a public 
        notice on the date the State submits an application under 
        paragraph (1) that contains a general description of the 
        proposed demonstration project. Any interested party may 
comment on the proposed demonstration project to the State or the 
Secretary during the 30-day period beginning on the date the public 
notice is issued.
    (e) Evaluations.--Each State conducting a demonstration project 
under this section shall submit to the Secretary an annual and final 
evaluation that determines the success of the State's demonstration 
project under this section in moving people from welfare dependency to 
self-sufficiency.
    (f) Funding for Demonstration Projects.--For each State that 
conducts a demonstration project under this section--
            (1) the portion of the monthly payments that the State 
        makes to a participant in the project under subsection 
        (b)(1)(A)(ii) that is attributable to aid to families with 
        dependent children under part A of title IV of the Social 
        Security Act (42 U.S.C. 601 et seq.) shall be considered 
        expenditures under the State plan for such aid;
            (2) the expenses incurred by the State in the 
        administration of the demonstration project shall be considered 
        expenditures by the State for administrative costs in operating 
        a program under part F of title IV of the Social Security Act 
        (42 U.S.C. 601 et seq.); and
            (3) the portion of the monthly payments that the State 
        makes to a participant in the project that is attributable to 
        the cash value of food stamp benefits under the Food Stamp Act 
        of 1977 (7 U.S.C. 2011 et seq.) shall be considered to be 
        expenditures for food stamp benefits under such Act.
    (g) Maintenance of Effort.--Any funds available for the activities 
covered by a demonstration project conducted under this section shall 
supplement, and shall not supplant, funds that are expended for similar 
purposes under any State, regional, or local program.

SEC. 224. PROJECTS TO EXPAND THE NUMBER OF JOB OPPORTUNITIES AVAILABLE 
              TO CERTAIN LOW-INCOME INDIVIDUALS.

    (a) In General.--Section 505 of the Family Support Act (42 U.S.C. 
1315 note) is amended--
            (1) in the section heading, by striking ``demonstration'';
            (2) in subsection (a)--
                    (A) by striking ``in each of the fiscal years 1990, 
                1991, and 1992,''; and
                    (B) by striking ``not less than 5 nor more than 
                10'';
            (3) in subsections (a), (b), (d), and (g), by striking 
        ``demonstration'' each place such term appears;
            (4) by striking subsections (e) and (f), and redesignating 
        subsection (g) as subsection (f); and
            (5) in subsection (f), as redesignated, by striking 
        ``$6,500,000 for each of fiscal years 1990, 1991, 1992, 1993, 
        1994, 1995, and 1996'' and inserting ``$25,000,000 for fiscal 
        year 1996 and each subsequent fiscal year''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the date of the enactment of this Act.

                 TITLE III--IMPROVING STATE FLEXIBILITY

SEC. 301. EQUIVALENT TREATMENT OF STEPPARENT INCOME AND PARENT INCOME.

    Section 402(a)(31) (42 U.S.C. 602(a)(31)) is amended--
            (1) in subparagraph (A), by inserting ``, or at the option 
        of the State (on a statewide basis or in a defined area of the 
        State), the greater of $90, or the first 20 percent of such 
        total'' before the comma at the end;
            (2) by striking ``and'' at the end of subparagraph (C); and
            (3) by striking the semicolon at the end of subparagraph 
        (D) and inserting ``, (E) an amount equal to the expenditure 
        for care in such month for a child of the stepparent who is 
        living in the same home as the stepparent, not receiving aid to 
        families for dependent children, and requiring care for such 
        month to the extent that such amount (for each such child) does 
        not exceed $175 (or such lesser amount as the Secretary may 
        prescribe in the case of an individual not engaged in full-time 
        employment, or not employed throughout the month), or, in the 
        case such child is under age 2, $200, and (F) at the option of 
        the State (on a statewide basis or in a defined area of the 
        State), up to one-half of the total of such earned income not 
        disregarded under any other subparagraph of this paragraph;''.

SEC. 302. AFDC-UP PROGRAM.

    (a) Permanent Extension of Program.--Subsection (h) of section 401 
of the Family Support Act (42 U.S.C. 602 note) is repealed.
    (b) Work Requirements for Unemployed Parents.--
            (1) Elimination of required participation of one parent in 
        work component of jobs program.--Section 403(l) (42 U.S.C. 
        603(l)) is amended by striking paragraph (4).
            (2) Required participation of both parents.--Section 
        407(b)(2)(A) (42 U.S.C. 607(b)(2)(A)) is amended to read as 
        follows:
    ``(2)(A)(i) In carrying out the program under this section, a State 
may condition continued eligibility for aid to families with dependent 
children by reason of the unemployment of either parent, on the 
participation of both parents in a program established by the State 
agency which shall include job search activities, counseling, and 
training services when the State agency determines that such 
participation is required, except as provided in clause (ii).
    ``(ii) A parent shall not be subject to the requirement under 
subparagraph (A), if such parent is employed at least 30 hours per 
week, is needed in the home to care for a child under 6 months of age, 
or if the State agency determines the existence of other good cause.''.
    (c) Unemployed Parent Households.--
            (1) Elimination of principal earner requirement.--
                    (A) In general.--Section 407 (42 U.S.C. 607) is 
                amended--
                            (i) by striking ``of the parent who is the 
                        principal earner'' in subsection (a) and 
                        inserting ``of either parent in a home in which 
                        both parents of such child are living'';
                            (ii) by striking ``the parent who is the 
                        principal earner'' in subsection 
                        (b)(2)(B)(ii)(II) and inserting ``either 
                        parent'';
                            (iii) by striking ``; and'' at the end of 
                        paragraph (3) of subsection (d) and inserting a 
                        period; and
                            (iv) by striking paragraph (4) of 
                        subsection (d).
                    (B) Conforming amendment.--Section 402(a)(19)(D) 
                (42 U.S.C. 602(a)(19)(D)) is amended by striking ``the 
                parent who is the principal earner'' and inserting 
                ``either parent''.
            (2) Modification of other requirements.--Subparagraph (A) 
        of section 407(b)(1) (42 U.S.C. 607(b)(1)) is amended to read 
        as follows:
            ``(A) subject to paragraph (2), shall require the payment 
        of aid to families with dependent children with respect to a 
        dependent child as defined in subsection (a) when--
                    ``(i) for at least 30 days--
                            ``(I) prior to the receipt of aid, either 
                        parent has been employed for less than a 
                        monthly cap specified by the State plan (not to 
                        exceed 100 hours), and at the time of the 
                        application for aid, both parents are employed 
                        for less than such monthly cap; or
                            ``(II) after the application for aid, one 
                        or both parents are employed for less than the 
                        monthly cap established under subclause (I),
                    ``(ii) either such parent has not without good 
                cause, within such period (of not less than 30 days) as 
                may be prescribed by the Secretary, refused a bona fide 
                offer of employment or training for employment, and
                    ``(iii) notwithstanding the number of hours either 
                such parent is working after the initial determination 
                of eligibility, such family remains otherwise eligible 
                for payment under this section; and''.

SEC. 303. INCREASED PAYMENTS TO STATES.

    (a) Changes to JOBS Payment Formula.--
            (1) In general.--Section 403(l)(1)(A) (42 U.S.C. 
        603(l)(1)(A)) is amended--
                    (A) by striking ``and'' at the end of clause (i);
                    (B) in clause (ii), in the matter preceding 
                subclause (I), by striking ``described in clause (i)'' 
                and inserting ``described in clause (i) but do not 
                exceed the amount of such expenditures in fiscal year 
                1995'';
                    (C) by striking the period at the end of clause 
                (ii) and inserting ``; and''; and
                    (D) by adding at the end the following new clause:
            ``(iii) with respect to so much of the expenditures in a 
        fiscal year that exceed the sum of the amounts described in 
        clauses (i) and (ii)--
                    ``(I) 50 percent in the case of expenditures 
                described in clause (ii)(I), and
                    ``(II) in the case of expenditures made by a State 
                in operating such a program for a fiscal year (other 
                than for costs described in subclause (I)), the greater 
                of--
                            ``(aa) 70 percent, or
                            ``(bb) the Federal medical assistance 
                        percentage (as defined in section 1118 in the 
                        case of any State to which section 1108 
                        applies, or as defined in section 1905(b) in 
                        the case of any other State).''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply with respect to payments made on and after October 
        1, 1995.
    (b) Increase in JOBS Program Authorization.--Section 403(k)(3) (42 
U.S.C. 603(k)(3)) is amended--
            (1) by striking ``and'' at the end of subparagraph (E);
            (2) by striking subparagraph (F); and
            (3) by inserting after subparagraph (E) the following new 
        subparagraphs:
            ``(F) $1,250,000,000 in the case of fiscal year 1996,
            ``(G) $1,500,000,000 in the case of fiscal year 1997,
            ``(H) $2,000,000,000 in the case of fiscal year 1998,
            ``(I) $2,500,000,000 in the case of fiscal year 1999, and
            ``(J) $3,000,000,000 in the case of fiscal year 2000.''.
    (c) Increase in Child Care Payment Formula.--
            (1) Increased percentage.--Section 402(g)(3)(A)(i) (42 
        U.S.C. 602(g)(3)(A)(i)) is amended to read as follows:
    ``(3)(A)(i) In the case of expenditures in any fiscal year for 
child care pursuant to paragraph (1)(A) by any State to which section 
1108 does not apply, the applicable rate for purposes of section 403(a) 
shall be--
            ``(I) with respect to so much of such expenditures as does 
        not exceed the State's expenditures in the fiscal year 1995, 
        the Federal medical assistance percentage (as defined in 
        section 1905(b)), and
            ``(II) with respect to so much of such expenditures as 
        exceed the amount described in subclause (I), the sum of--
                    ``(aa) the Federal medical assistance percentage 
                (as defined in section 1905(b)), and
                    ``(bb) one-half of the difference between 100 
                percent and such Federal medical assistance 
                percentage.''
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply with respect to payments made on and after October 
        1, 1995.

SEC. 304. OPTIONAL ASSESSMENT, MONITORING, AND EVALUATION.

    Section 402(a) (42 U.S.C. 602(a)), as amended by section 221(a), is 
amended--
            (1) by striking ``and'' at the end of paragraph (45);
            (2) by striking the period at the end of paragraph (46) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (46) the following new 
        paragraph:
            ``(47) at the option of the State (on a statewide basis or 
        in a defined area of the State), provide that the State agency 
        (in order to increase the percentage of families moving from 
        welfare to self-sufficiency)--
                    ``(A) shall conduct an assessment, in consultation 
                with State and local elected officials, current 
                recipients of aid to families with dependent children, 
                recipients of community-based service systems, and 
                individuals with expertise in business, education, 
                child welfare, juvenile justice, mental health, 
                substance addiction, housing, and labor--
                            ``(i) of the barriers which families that 
                        receive aid to families with dependent children 
                        face in achieving self-sufficiency, including 
                        noneconomic barriers such as family functions, 
                        parenting capacity, child development, housing, 
                        substance abuse, and mental illness;
                            ``(ii) of the capacity within the State to 
                        provide employment opportunities to families 
                        that receive aid to families with dependent 
                        children and to address other barriers such 
                        families face to achieving self-sufficiency; 
                        and
                            ``(iii) of the number and skills of workers 
                        needed to develop the family investment program 
                        under paragraph (29), monitor progress, and 
                        adapt goals to meet new challenges;
                    ``(B) shall establish a system to monitor and 
                evaluate both the economic gains related to employment 
                of individuals in households receiving aid to families 
                with dependent children and the social, health, 
                educational, and developmental impact on children in 
                such households that result from efforts to achieve 
                self-sufficiency; and
                    ``(C) shall establish a system to determine the 
                number of individuals who achieve self-sufficiency 
                through the family investment program under paragraph 
                (29) and the rate of recidivism.''.

SEC. 305. OPTIONAL TIMELY PREVENTIVE HEALTH CARE FOR CHILDREN.

    Section 402(a) (42 U.S.C. 602(a)), as amended by sections 221(a) 
and 304, is amended--
            (1) by striking ``and'' at the end of paragraph (46);
            (2) by striking the period at the end of paragraph (47) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (47) the following new 
        paragraph:
            ``(48) at the option of the State, provide that (unless the 
        State agency provides the Secretary with adequate certification 
        that the care described in subparagraph (A)(i)(I) is not 
        accessible in the area in which a family resides)--
                    ``(A)(i) the State shall decrease the amount of aid 
                paid to a family under this part (determined without 
                regard to subparagraph (B)) by a percentage amount 
                determined appropriate by the Secretary beginning in 
                the month following any month in which the State agency 
                has failed to receive--
                            ``(I) written verification that each child 
                        in the family under 6 years of age has been 
                        immunized and has received well-baby and well-
                        child care in accordance with guidelines issued 
                        by the Surgeon General of the Public Health 
                        Service; or
                            ``(II) notice of a medical justification 
                        that would exempt the child or children from 
                        receiving such care; and
                    ``(ii) the State shall end the reduction of payment 
                under clause (i) beginning in the month following the 
                month in which the State agency receives the required 
                verification; and
                    ``(B) aid under the plan to a family shall be 
                increased by a bonus payment equal to the percentage 
                amount determined by the Secretary under subparagraph 
                (A) in the month following a month in which the State 
                agency receives verification that each such child has 
                received the immunizations and care described in 
                subparagraph (A)(i).''.

                 TITLE IV--COMBATING TEENAGE PREGNANCY

SEC. 401. SUPERVISED LIVING ARRANGEMENTS FOR MINORS.

    Section 402(a)(43) (42 U.S.C. 602(a)(43)) is amended--
            (1) in subparagraph (A)(i), by inserting ``reside in a 
        place of residence maintained by another responsible adult as 
        such adult's own home,'' after ``own home,''; and
            (2) by amending subparagraph (B)(iii) to read as follows:
                            ``(iii) the State agency determines that 
                        compliance with the requirements of 
                        subparagraph (A) would jeopardize the physical 
                        or emotional health or safety of the individual 
                        or dependent child;''.

SEC. 402. OPTIONAL REQUIREMENT OF TEENAGE PARENTS TO STAY IN SCHOOL.

    Section 402(a)(19)(E)(i) (42 U.S.C. 602(a)(19)(E)(i)) is amended to 
read as follows:
                            ``(i) at the option of the State, in the 
                        case of a custodial parent who has not attained 
                        20 years of age, does not have a high school 
                        diploma (or its equivalent), and is required to 
participate in the program under part F, the State shall require such 
parent to participate in an educational activity; and''.

SEC. 403. ADDITIONAL AUTHORIZATION OF PUBLIC HEALTH SERVICE ACT TITLE X 
              FAMILY PLANNING GRANTS TO COMBAT TEENAGE PREGNANCY.

    (a) In General.--Section 1001(d) of the Public Health Service Act 
(42 U.S.C. 300a(d)) is amended by adding at the end the following new 
sentence: ``In addition to any other amounts appropriated under title 
X, for the purpose of expanding efforts to combat teenage pregnancy, 
there are authorized to be appropriated $100,000,000 for the fiscal 
year ending September 30, 1996, and for each subsequent fiscal year.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act.

              TITLE V--IMPROVING CHILD SUPPORT COLLECTION

      Subtitle A--Improvements in the Collection of Child Support

SEC. 501. TRANSMISSION AND ASSIGNMENT OF CERTAIN CHILD SUPPORT ORDERS 
              TO THE IRS.

    Section 466(a) (42 U.S.C. 666(a)) is amended by inserting after 
paragraph (11) the following new paragraph:
            ``(12)(A) Procedures which require any State court or 
        administrative agency that issues or modifies (or has issued or 
        modified) a child support order (including an order for the 
        payment of past-due support) to transmit a copy of the order to 
        the Internal Revenue Service upon the completion of a 12-month 
        period during which less than 50 percent of the court-ordered 
        child support amount for such period has been paid.
            ``(B) Procedures which--
                    ``(i) require any individual with the right to 
                collect child support pursuant to an order issued or 
                modified in the State (whether before or after the 
                effective date of this paragraph) to be presumed to 
                have assigned to the Internal Revenue Service the right 
                to collect such support (including any past-due 
                support) pursuant to subparagraph (A), unless the 
                individual affirmatively elects to retain such right at 
                any time; and
                    ``(ii) allow any individual who has made the 
                election referred to in clause (i) to rescind or revive 
                such election at any time.''.

SEC. 502. COLLECTION OF CHILD SUPPORT BY INTERNAL REVENUE SERVICE.

    (a) In General.--Chapter 77 of the Internal Revenue Code of 1986 
(relating to miscellaneous provisions) is amended by adding at the end 
the following new section:

``SEC. 7524. COLLECTION OF CHILD SUPPORT.

    ``(a) In General.--The Secretary shall establish a program to 
collect child support (including past-due support) pursuant to child 
support orders which are assigned to the Internal Revenue Service under 
section 466(a)(12) of the Social Security Act.
    ``(b) Use of Wage Withholding, Etc.--Such program shall provide for 
the collection of child support required to be paid for any period 
through increases in wage withholding under chapter 24 and estimated 
tax payments under section 6654 during such period. Amounts required to 
be paid through such withholding and payments shall be treated as tax 
for purposes for this subtitle.
    ``(c) Annual Reckoning of Obligation.--
            ``(1) In general.--The entire amount of child support 
        required to be paid by any individual to the Internal Revenue 
        Service during any taxable year shall be paid--
                    ``(A) not later than the last date (determined 
                without regard to extensions) prescribed for filing 
                such individual's return of tax imposed by chapter 1 
                for such taxable year, and
                    ``(B)(i) if such return is filed not later than 
                such date, with such return, or
                    ``(ii) in any case not described in subparagraph 
                (A), in such manner as the Secretary may by regulations 
                prescribe.
            ``(2) Credit for periodic payments.--The amount required to 
        be paid under paragraph (1) shall be reduced by the aggregate 
        payments of child support made under subsection (b) by such 
        individual through increases in wage withholding and estimated 
        tax payments.
    ``(d) Failure To Pay Amount Owing.--If an individual fails to pay 
the full amount required to be paid on or before the last date 
described in subsection (c)(1), the Secretary shall assess and collect 
the unpaid amount in the same manner, with the same powers, and subject 
to the same limitations applicable to a tax imposed by subtitle C the 
collection of which would be jeopardized by delay, except that--
            ``(1) for such purposes, paragraphs (4), (6), and (8) of 
        section 6334(a) (relating to property exempt from levy) shall 
        not apply, and
            ``(2) there shall be exempt from levy so much of the 
        salary, wages, or other income of an individual as is being 
        withheld therefrom in garnishment pursuant to a judgment 
        entered by a court of competent jurisdiction for the support of 
        the individual's minor children.
    ``(e) Collections Dispersed to Individual Specified in Order.--
            ``(1) In general.--Except as provided in paragraph (2), 
        amounts collected under this section pursuant to any child 
        support order shall be paid to the individual entitled to such 
        amounts under such order as quickly as possible. Any penalties 
        and interest collected with respect to such amounts also shall 
        be paid to such individual.
            ``(2) Families receiving state assistance.--In the case of 
        an individual with respect to whom--
                    ``(A) an assignment of child support payments to a 
                State under section 402(a)(26) or 471(a)(17) of the 
Social Security Act is in effect, or
                    ``(B) an application for State assistance under 
                section 454(6) is in effect,
        amounts collected under this section shall be paid to such 
        State pursuant to section 457 of such Act.
    ``(f) Coordination With Underpayment Provisions.--If the Secretary 
is collecting--
            ``(1) unpaid child support pursuant to an assessment under 
        this section, and
            ``(2) unpaid tax pursuant to an assessment under section 
        6203,
all amounts collected shall be treated as collected pursuant to the 
assessment under this section to the extent of the amount of such 
unpaid child support.
    ``(g) Limitation on Judicial Review.--No court of the United States 
shall have jurisdiction to hear any action, whether legal or equitable, 
brought to restrain or review any assessment or collection authorized 
by this section, nor shall any such assessment or collection be subject 
to review by the Secretary in an administrative proceeding. This 
subsection shall not preclude any legal, equitable, or administrative 
action against the State by an individual in any State court or before 
any State agency to determine his liability for any amount assessed 
against him and collected, or to recover any such amount collected from 
him, under this section.
    ``(h) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out the purposes of this section.''.
    (b) Estimate of Increased Internal Revenue Funding.--Within 1 year 
of the date of the enactment of this Act, the Secretary of the Treasury 
shall submit to the Congress an estimate of the additional cost per 
fiscal year for administering the program described in section 7524 of 
the Internal Revenue Code of 1986 (as added by this section).
    (c) Clerical Amendment.--The table of sections for chapter 77 of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new item:

                              ``Sec. 7524. Collection of child 
                                        support.''

SEC. 503. OPTIONAL PUBLICATION OF DELINQUENT CHILD SUPPORT OBLIGORS.

    Section 454 (42 U.S.C. 654) is amended--
            (1) by striking ``and'' at the end of paragraph (23);
            (2) by striking the period at the end of paragraph (24) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (24) the following new 
        paragraph:
            ``(25) at the option of the State, provide that with 
        respect to any child support order enforced by the State under 
        this part in which no payment has been made during a preceding 
        3-month period, the State make available for publication on a 
        semiannual basis a listing of all such orders by name of the 
        support obligor, verified city and State address of such 
        obligor, and any other information deemed appropriate by the 
        State, and publicize the existence of such listing to such 
        support obligors.''.

SEC. 504. OPTIONAL STATE LAW AUTHORIZING SUSPENSION OF LICENSES.

    Section 466(a) (42 U.S.C. 666(a)), as amended by section 501, is 
amended by inserting after paragraph (12) the following new paragraph:
            ``(13) At the option of the State, procedures under which 
        the State has (and uses in appropriate cases) authority 
        (subject to appropriate due process safeguards) to withhold or 
        suspend, or to restrict the use of driver's licenses, 
        professional and occupational licenses, and recreational 
        licenses of individuals owing overdue child support or failing, 
        after receiving appropriate notice, to comply with subpoenas or 
        warrants relating to paternity or child support proceedings.''.

SEC. 505. OPTIONAL COMMUNITY SERVICE REQUIREMENT FOR DELINQUENT CHILD 
              SUPPORT OBLIGORS.

    Section 454 (42 U.S.C. 654), as amended by section 503, is 
amended--
            (1) by striking ``and'' at the end of paragraph (24);
            (2) by striking the period at the end of paragraph (25) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (25) the following new 
        paragraph:
            ``(26) at the option of the State, provide that with 
        respect to any child support order enforced by the State under 
        this part in which no payment has been made during a preceding 
        3-month period, the State require that the support obligor 
        participate in a community service program to be determined by 
        the State.''.

SEC. 506. OPTIONAL STATE LAWS CONCERNING MODIFICATION OF CHILD SUPPORT 
              ORDERS.

    Section 466(a)(10) (42 U.S.C. 666(a)(10)) is amended--
            (1) by redesignating subparagraph (C) as subparagraph (E) 
        and inserting after subparagraph (B) the following new 
        subparagraphs:
                    ``(C)(i) At the option of the State, procedures to 
                ensure that, beginning October 1, 1999 (or such earlier 
                date as the State may select), the State agency (or, at 
                the option of the State, the local agency) reviews and 
                adjusts, in accordance with guidelines established 
                pursuant to section 467(a), judicial and administrative 
                child support orders under which (subject to clauses 
                (ii) and (iii)) the order--
                            ``(I) is to be reviewed not later than 36 
                        months after the establishment of the order or 
                        the most recent adjustment of (or determination 
                        not to adjust) such order; and
                            ``(II) at State option may not be reviewed 
                        during a minimum period established by the 
                        State following the establishment or most 
                        recent review of the order.
                    ``(ii) The requirement of clause (i)(I) shall not 
                apply in any case where--
                            ``(I) the State has determined, in 
                        accordance with regulations of the Secretary, 
                        that such a review would not be in the best 
                        interests of the child; or
                            ``(II) both parents have been informed of 
                        the modified support amount that would be 
                        imposed under the guidelines and have declined 
                        such modification in writing.
                    ``(iii) The State shall provide for review of a 
                child support order upon the request of either parent, 
                notwithstanding the requirement of clause (i)(II), 
                whenever, subsequent to the establishment or most 
                recent review--
                            ``(I) either parent's income has changed by 
                        more than 20 percent, or
                            ``(II) other substantial changes have 
                        occurred in either parent's circumstances.
                    ``(D) Amount of modification based on guidelines.--
                Procedures under which support orders reviewed in 
                accordance with subparagraph (C) must be adjusted in 
                accordance with the guidelines established pursuant to 
                section 467(a), without a requirement for any other 
                change in circumstances (except that the State may 
                refuse to modify an order in any case where the change 
                in the support amount, if so modified, would not exceed 
                a threshold percentage (which may not be greater than 
                10 percent)).'';
            (2) in subparagraph (E), as redesignated--
                    (A) in the matter preceding clause (i), by striking 
                ``this part--'' and inserting ``this part, in 
                accordance with State due process requirements--'';
                    (B) in clause (i), by striking ``, at least 30 days 
                before the commencement of such review''; and
                    (C) in clause (iii), by striking ``not less than 30 
                days'' and inserting ``a reasonable time''.

          Subtitle B--Improvements in Paternity Establishment

SEC. 511. OPTIONAL STATE LAWS CONCERNING PATERNITY ESTABLISHMENT.

    (a) State Laws Required.--
            (1) Establishment process available from before birth until 
        age 18.--Section 466(a)(5)(A) (42 U.S.C. 666(a)(5)(A)) is 
        amended--
                    (A) by moving clause (ii) two ems to the right; and
                    (B) by adding after and below clause (ii) the 
                following new clause:
            ``(iii) At the option of the State, procedures which permit 
        the initiation of proceedings to establish paternity prior to 
        the birth of the child concerned.''.
            (2) Procedures concerning genetic testing.--Section 
        466(a)(5)(B) (42 U.S.C. 666(a)(5)(B)) is amended--
                    (A) by striking ``(B)'' and inserting ``(B)(i)'';
                    (B) in clause (i), as redesignated, by inserting 
                before the period ``, where, at the option of the 
                State, such request is supported by a sworn statement 
                by such party setting forth facts establishing a 
                reasonable possibility of the requisite sexual 
                contact''; and
                    (C) by inserting after and below clause (i), as 
                redesignated, the following new clause:
            ``(ii) At the option of the State, procedures which require 
        the State agency, in any case in which such agency orders 
        genetic testing--
                    ``(I) to pay costs of such tests, subject to 
                recoupment (where the State so elects) from the 
                putative father if paternity is established; and
                    ``(II) to obtain additional testing in any case 
                where an original test result is disputed, upon request 
                and advance payment by the disputing party.''.
            (3) Voluntary acknowledgment procedure.--Section 
        466(a)(5)(C) (42 U.S.C. 666(a)(5)(C)) is amended to read as 
        follows:
            ``(C) At the option of the State, procedures for a simple 
        civil process for voluntarily acknowledging paternity under 
        which--
                    ``(i) the benefits, rights, and responsibilities of 
                acknowledging paternity are explained to unwed parents;
                    ``(ii) due process safeguards are afforded; and
                    ``(iii) hospitals and other health care facilities 
                providing inpatient or outpatient maternity and 
                pediatric services are required, as a condition of 
                participation in the State program under title XIX--
                            ``(I) to explain to unwed parents the 
                        matters specified in clause (i);
                            ``(II) to make available the voluntary 
                        acknowledgment procedure required under this 
                        subparagraph; and
                            ``(III) in the case of hospitals providing 
                        maternity services--
                                    ``(aa) to have facilities for 
                                obtaining blood or other genetic 
                                samples from the mother, putative 
                                father, and child for genetic testing;
                                    ``(bb) to inform the mother and 
                                putative father of the availability of 
                                such testing (at their expense); and
                                    ``(cc) to obtain such samples upon 
                                request of both such individuals;''.
            (4) Legal status of acknowledgment.--Section 466(a)(5)(D) 
        (42 U.S.C. 666(a)(5)(D)) is amended to read as follows:
            ``(D) At the option of the State, procedures under which--
                    ``(i) a voluntary acknowledgment of paternity 
                creates, at the State's option, either--
                            ``(I) a conclusive presumption of 
                        paternity, or
                            ``(II) a rebuttable presumption which 
                        becomes a conclusive presumption within one 
                        year, unless rebutted or invalidated by an 
                        intervening determination which reaches a 
                        contrary conclusion;
                    ``(ii) notwithstanding clause (i), at the option of 
                the State and upon the request of a party, a 
                determination of paternity based on an acknowledgment 
                may be vacated on the basis of new evidence, the 
                existence of fraud, or the best interests of the child; 
                and
                    ``(iii) a voluntary acknowledgment of paternity is 
                admissible as evidence of paternity, and as a basis for 
                seeking a support order, without requiring any further 
                proceedings to establish paternity.''.
            (5) Bar on acknowledgment ratification proceedings.--
        Section 466(a)(5)(E) (42 U.S.C. 666(a)(5)(E)) is amended to 
        read as follows:
                    ``(E) At the option of the State, procedures under 
                which no judicial or administrative proceedings are 
                required or permitted to ratify an unchallenged 
                acknowledgment of paternity.''.
            (6) Admissibility of genetic testing results.--Section 
        466(a)(5)(F) (42 U.S.C. 666(a)(5)(F)) is amended to read as 
        follows:
            ``(F) At the option of the State, procedures requiring--
                    ``(i) that the State admit into evidence, for 
                purposes of establishing paternity, results of any 
                genetic test that is--
                            ``(I) of a type generally acknowledged, by 
                        accreditation bodies designated by the 
                        Secretary, as reliable evidence of paternity; 
                        and
                            ``(II) performed by a laboratory approved 
                        by such an accreditation body;
                    ``(ii) that any objection to genetic testing 
                results must be made in writing not later than a 
                specified number of days before any hearing at which 
                such results may be introduced into evidence (or, at 
                State option, not later than a specified number of days 
                after receipt of such results); and
                    ``(iii) that, if no objection is made, the test 
                results are admissible as evidence of paternity without 
                the need for foundation testimony or other proof of 
                authenticity or accuracy.''.
            (7) Additional state laws required.--Section 466(a)(5) (42 
        U.S.C. 666(a)(5)) is amended by adding at the end the following 
        new subparagraphs:
            ``(I) At the option of the State, procedures providing that 
        the parties to an action to establish paternity are not 
        entitled to jury trial.
            ``(J) At the option of the State, procedures which require 
        that a temporary order be issued, upon motion by a party, 
        requiring the provision of child support pending an 
        administrative or judicial determination of parentage, where 
        there is clear and convincing evidence of paternity (on the 
        basis of genetic tests or other evidence).
            ``(K) At the option of the State, procedures under which 
        bills for pregnancy, childbirth, and genetic testing are 
        admissible as evidence without requiring third-party foundation 
        testimony, and shall constitute prima facie evidence of amounts 
        incurred for such services and testing on behalf of the child.
            ``(L) At the option of the State, procedures under which 
        the tribunal establishing paternity and support has discretion 
        to waive rights to all or part of amounts owed to the State 
        (but not to the mother) for costs related to pregnancy, 
        childbirth, and genetic testing and for public assistance paid 
        to the family where the father cooperates or acknowledges 
        paternity before or after genetic testing.
            ``(M) Procedures ensuring that the putative father has a 
        reasonable opportunity to initiate a paternity action.''.
    (b) Technical Amendment.--Section 468 (42 U.S.C. 668) is amended--
            (1) in the heading, by striking ``simple civil process for 
        voluntarily acknowledging paternity and''; and
            (2) by striking ``a simple civil process for voluntarily 
        acknowledging paternity and''.

SEC. 512. OPTIONAL OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT.

    (a) State Plan Requirement.--Section 454(23) (42 U.S.C. 654(23)) is 
amended--
            (1) by inserting ``(A)'' after ``(23)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(B) at the option of the State, publicize the 
                availability and encourage the use of procedures for 
                voluntary establishment of paternity and child support 
                through a variety of means, which--
                            ``(i) include distribution of written 
                        materials at health care facilities (including 
                        hospitals and clinics), and other locations 
                        such as schools;
                            ``(ii) may include prenatal programs to 
                        educate expectant couples on individual and 
                        joint rights and responsibilities with respect 
                        to paternity (and may require all expectant 
                        recipients of assistance under part A to 
                        participate in such prenatal programs, as an 
                        element of cooperation with efforts to 
                        establish paternity and child support); and
                            ``(iii) include, with respect to each child 
                        discharged from a hospital after birth for whom 
                        paternity or child support has not been 
                        established, reasonable followup efforts 
                        (including at least one contact of each parent 
                        whose whereabouts are known, except where there 
                        is reason to believe such followup efforts 
                        would put mother or child at risk), providing--
                                    ``(I) in the case of a child for 
                                whom paternity has not been 
                                established, information on the 
                                benefits of and procedures for 
                                establishing paternity; and
                                    ``(II) in the case of a child for 
                                whom paternity has been established but 
                                child support has not been established, 
                                information on the benefits of and 
                                procedures for establishing a child 
                                support order, and an application for 
                                child support services; and''.
    (b) Enhanced Federal Matching.--Section 455(a)(1)(C) (42 U.S.C. 
655(a)(1)(C)) is amended--
            (1) by inserting ``(i)'' before ``laboratory costs''; and
            (2) by inserting ``, and (ii) costs of outreach programs 
        designed to encourage voluntary acknowledgment of paternity'' 
        before the semicolon at the end.
    (c) Effective Dates.--(1) The amendments made by subsection (a) 
shall become effective October 1, 1996.
    (2) The amendments made by subsection (b) shall be effective with 
respect to calendar quarters beginning on and after October 1, 1995.

SEC. 513. PENALTY FOR FAILURE TO ESTABLISH PATERNITY PROMPTLY.

    Section 403 (42 U.S.C. 603) is amended--
            (1) in subsection (a), by striking ``1958--'' and inserting 
        ``1958 (subject to subsection (i))--'' ; and
            (2) by adding after subsection (h) the following new 
        subsection:
    ``(i)(1) The amounts otherwise payable to a State under subsection 
(a) for any calendar quarter beginning 10 months or more after 
enactment of this subsection shall be reduced by an amount, determined 
pursuant to regulations in accordance with paragraph (2), for certain 
children for whom paternity has not been established.
    ``(2) The Secretary shall promulgate regulations specifying the 
formula for the reduction required under this subsection, which formula 
shall provide for a reduction in Federal matching payments to a State 
under this section by an amount equal to the product of--
            ``(A) the number (after allowing for the tolerance level 
        established under paragraph (3)) of children born on or after 
        the date 10 months after enactment of this provision who are 
        receiving aid under the State plan under part A, whose 
        custodial relatives have, throughout the preceding 12-month 
        period, complied with cooperation requirements for establishing 
        paternity required under the State program for establishing 
        paternity operated in accordance with section 454(13) but for 
        whom paternity has not been established;
            ``(B) the average monthly assistance payment under the 
        State plan under this part; and
            ``(C) the Federal matching rate applicable to such 
        assistance payment.
    ``(3)(A) The tolerance level, for purposes of paragraph (2)(A), 
shall not be higher than the percentage specified in subparagraph (B) 
of children in the State described in paragraph (1), and may decrease 
over time to make allowance for a State's inability to establish 
paternity in all cases.
    ``(B) The percentage specified in this paragraph shall be 25 
percent for fiscal years 1997 and 1998, 20 percent for fiscal years 
1999 and 2000, 15 percent for fiscal years 2001 and 2002, and 10 
percent for fiscal year 2003 and each succeeding fiscal year.''.

SEC. 514. INCENTIVES TO PARENTS TO ESTABLISH PATERNITY.

    (a) Optional State Activities.--Section 455 (42 U.S.C. 655) is 
amended by adding at the end the following new subsection:
    ``(f)(1) The Secretary, in accordance with regulations, may approve 
proposals by States to amend State plans under this part to provide for 
incentive payments to families to encourage paternity establishment.
    ``(2) Federal financial participation shall be available in 
accordance with subsection (a) for expenditures by a State pursuant to 
a plan amendment approved under paragraph (1).''.
    (b) Demonstrations.--
            (1) Projects authorized.--The Secretary of Health and Human 
        Services shall authorize up to 3 States to conduct 
        demonstration projects providing financial incentives to 
        families for establishment of paternity.
            (2) Federal funding.--
                    (A) In general.--Subject to subparagraph (B), a 
                State participating in a demonstration under this 
                subsection shall be entitled to Federal payments 
                pursuant to section 455(f) of the Social Security Act 
                (42 U.S.C. 655(f)) for 90 percent of the payments to 
                families under such demonstration.
                    (B) Funding limitation.--Total Federal expenditures 
                for demonstrations under this subsection shall not 
                exceed $1,000,000.

                      TITLE VI--SAVINGS PROVISIONS

SEC. 601. BLOCK GRANTS TO STATES TO REPLACE CERTAIN FEDERAL 
              ADMINISTRATIVE PAYMENTS.

    (a) Purpose; Authorization of Appropriations.--
            (1) In general.--For the purpose of consolidating Federal 
        assistance to States for the administration of the programs 
        described in paragraph (2), there are authorized to be 
        appropriated such sums as may be necessary to carry out the 
        purposes of this section.
            (2) Programs described.--The programs described in this 
        paragraph are the following programs:
                    (A) The medicaid program under title XIX of the 
                Social Security Act (42 U.S.C. 1396 et seq.).
                    (B) The aid to families with dependent children 
                program under part A of title IV of the Social Security 
                Act (42 U.S.C. 601 et seq.).
                    (C) The food stamp program established under 
                section 4 of the Food Stamp Act of 1977 (7 U.S.C. 
                2013).
    (b) States Entitled to Payment.--
            (1) In general.--Each State shall be entitled to payment 
        under this section for fiscal year 1996 and each fiscal year 
        thereafter in an amount equal to the Federal administrative 
        payment amount determined under subsection (c) to be used for 
        administering the programs described in subsection (a)(2).
            (2) Rules for making payments.--The Secretary of Health and 
        Human Services, in cooperation with the Secretary of 
        Agriculture, shall make payments in accordance with section 
        6503 of title 31, United States Code, to each State in 
        accordance with this subsection.
    (c) Federal Administrative Payment Amount.--
            (1) In general.--Subject to paragraph (2), the Federal 
        administrative payment amount determined under this subsection 
        is an amount equal to the sum of--
                    (A) the amount that the State received under 
                section 16(a) of the Food Stamp Act of 1977 (7 U.S.C. 
                2025(a)) for fiscal year 1995, adjusted pursuant to 
                section 16(c)(1)(A) of such Act;
                    (B) the amount that the State received under 
                section 403(a)(3) of the Social Security Act (42 U.S.C. 
                603(a)(3)) (relating to payments to States for 
                administering the aid to families with dependent 
                children program) for fiscal year 1995; and
                    (C) the amount that the State received under 
                paragraphs (2)(A), (3), (4), and (7) of section 1903(a) 
                of the Social Security Act (42 U.S.C. 1396b(a)) 
                (relating to payments to States for administering the 
                medicaid program) for fiscal year 1995.
            (2) Pro rata reduction if insufficient amount 
        appropriated.--If the amount appropriated in accordance with 
        subsection (a) for a fiscal year is insufficient to make the 
        payments described in paragraph (1) to all States, the amount 
        to be paid to each State under this subsection shall be reduced 
        ratably for such fiscal year.
    (d) Amounts To Be Used for Administering Programs.--
            (1) Expenditures.--Payments to a State under this section 
        shall be expended by the State in such fiscal year or in the 
        succeeding fiscal year.
            (2) Allocation among programs.--A State shall have the 
        discretion to allocate the amounts received under this section 
        among the programs described in subsection (a)(2) in any 
        manner.
    (e) Reports and Audits.--
            (1) Reports.--Each State shall prepare reports on its 
        activities carried out with funds made available under this 
        section. Reports shall be prepared annually, covering the most 
        recently completed fiscal year, and shall be in such form and 
        contain such information as the State finds necessary to 
        provide an accurate description of such activities, to secure a 
        complete record of the purposes for which funds were spent, and 
        to determine the extent to which funds were spent in a manner 
        consistent with the purposes of this section. The State shall 
        make copies of the reports required by this section available 
        for public inspection within the State and shall transmit a 
        copy to the Secretary of Health and Human Services. Copies 
        shall also be provided, upon request, to any interested public 
        agency, and each such agency may provide its views on these 
        reports to the congress.
            (2) Audits.--Each State shall, not less than every 2 years, 
        audit its expenditures from amounts received under this 
        section. Such State audits shall be conducted by an entity 
        independent of any agency administering activities funded under 
        this section, in accordance with generally accepted auditing 
        principles. Within 30 days following the completion of each 
        audit, the State shall submit a copy of that audit to the 
        legislature of the State and to the Secretary of Health and 
        Human Services. Each State shall repay to the United States 
        amounts ultimately found not to have been expended in 
        accordance with this section, or the Secretary may offset such 
        amounts against any other amount to which the State is or may 
        become entitled under this section.
            (3) Agreement regarding intergovernmental financing.--The 
        provisions of section 6503(h) of title 31, United States Code, 
        shall apply to payments made to a State under this section.
    (f) State Defined.--For purposes of this section, the term 
``State'' shall include any State, territory, possession, or Indian 
tribe that directly received payments under titles IV and XIX of the 
Social Security Act or the Food Stamp Act of 1977 during the fiscal 
year preceding the date of the enactment of this Act.
    (g) Conforming Amendments.--
            (1) Medicaid Program.--Section 1903(a) of the Social 
        Security Act (42 U.S.C. 1396b(a)) is amended--
                    (A) in paragraph (2), by repealing subparagraph 
                (A);
                    (B) by repealing paragraphs (3), (4), and (7);
                    (C) by inserting ``plus'' at the end of paragraph 
                (5);
                    (D) by striking ``; plus'' at the end of paragraph 
                (6) and inserting a period.
            (2) AFDC program.--Section 403(a) of the Social Security 
        Act (42 U.S.C. 603(a)) is amended--
                    (A) by striking paragraph (3); and
                    (B) by redesignating paragraph (5) as paragraph 
                (3).
            (3) Food stamp program.--Section 16 of the Food Stamp Act 
        of 1977 (7 U.S.C. 2025) is amended--
                    (A) in the first sentence of subsection (a), by 
                striking ``pay to each State'' and all that follows 
                through ``as well as to''; and
                    (B) in subsection (c)(1)(A), by striking ``the 
                Secretary shall'' and all that follows through ``all 
                such administrative costs'' and inserting ``the Federal 
                administrative payment amount determined under section 
                601(c) of the
            Welfare to Self-Sufficiency Act of 1995 shall be adjusted 
        by increasing the payment amount by 1 percentage point to a 
        maximum of 10 percent''.
            (4) Effective date.--The amendments made by paragraphs (1), 
        (2), and (3) shall take effect on October 1, 1995.

SEC. 602. EXTENSION OF DEEMING OF INCOME AND RESOURCES UNDER AFDC, SSI, 
              MEDICAID, AND FOOD STAMP PROGRAMS.

    (a) In General.--Except as provided in subsections (b) and (c), in 
applying sections 415 and 1621 of the Social Security Act and section 
5(i) of the Food Stamp Act of 1977, the period in which each respective 
section otherwise applies with respect to an alien shall be extended 
through the date (if any) on which the alien becomes a citizen of the 
United States under chapter 2 of title III of the Immigration and 
Nationality Act.
    (b) Exception.--Subsection (a) shall not apply to an alien if--
            (1) the alien--
                    (A) is a veteran (as defined in section 101 of 
                title 38, United States Code) with a discharge 
                characterized as an honorable discharge,
                    (B) is on active duty (other than active duty for 
                training) in the Armed Forces of the United States, or
                    (C) is the spouse or unmarried dependent child of 
                an individual described in subparagraph (A) or (B);
            (2) the alien is the subject of domestic violence by the 
        alien's spouse and a divorce between the alien and the alien's 
        spouse has been initiated through the filing of an appropriate 
        action in an appropriate court; or
            (3) there has been paid with respect to the self-employment 
        income or employment of the alien, or of a parent or spouse of 
        the alien, taxes under chapter 2 or chapter 21 of the Internal 
        Revenue Code of 1986 in each of 20 different calendar quarters.
    (c) Medicaid Eligibility.--
            (1) In general.--Except as provided in paragraph (2), 
        subsection (a) shall apply with respect to determinations of 
        eligibility for benefits under part A of title IV of the Social 
        Security Act or under the supplemental income security program 
        under title XVI of such Act insofar as such determinations 
        provide for eligibility for medical assistance under title XIX 
        of such Act.
            (2) Immunizations and emergency medical conditions.--
        Subsection (a) shall not apply with respect to determinations 
        of eligibility for benefits under part A of title IV of the 
        Social Security Act or under the supplemental income security 
        program under title XVI of such Act insofar as such 
        determinations provide for eligibility for immunizations and 
        care and services necessary for the treatment of an emergency 
        medical condition (as defined in section 1903(v)(3) of such Act 
        (42 U.S.C. 1396b(v)(3))) of the alien under title XIX of such 
        Act.
    (d) Effective Date.--This section shall take effect on October 1, 
1995.

SEC. 603. REQUIREMENTS FOR SPONSOR'S AFFIDAVITS OF SUPPORT.

    (a) In General.--Title II of the Immigration and Nationality Act is 
amended by inserting after section 213 the following new section:

           ``requirements for sponsor's affidavit of support

    ``Sec. 213A. (a) Enforceability.--
            ``(1) In general.--No affidavit of support may be accepted 
        by the Attorney General or by any consular officer to establish 
        that an alien is not excludable under section 212(a)(4) unless 
        such affidavit is executed as a contract--
                    ``(A) which, for not more than 5 years after the 
                date the alien last receives any such cash benefit, is 
                legally enforceable against the sponsor by the Federal 
                Government, by a State, or by any political subdivision 
                of a State, providing cash benefits under a public cash 
                assistance program (as defined in subsection (f)(2)); 
                and
                    ``(B) in which the sponsor agrees to submit to the 
                jurisdiction of any Federal or State court for the 
                purpose of actions brought under subsection (e)(2).
            ``(2) Expiration of liability.--Such contract shall only 
        apply with respect to cash benefits described in paragraph 
        (1)(A) provided to an alien before the earliest of the 
        following:
                    ``(A) Citizenship.--The date the alien becomes a 
                citizen of the United States under chapter 2 of title 
                III.
                    ``(B) Veteran.--The first date the alien is a 
                veteran (as defined in section 101 of title 38, United 
                States Code) with a discharge characterized as an 
                honorable discharge.
                    ``(C) Payment of social security taxes.--The first 
                date as of which there has been paid with respect to 
                the self-employment income or employment of the alien, 
                or of a parent or spouse of the alien, taxes under 
                chapter 2 or chapter 21 of the Internal Revenue Code of 
                1986 in each of 20 different calendar quarters.
            ``(3) Nonapplication during certain periods.--Such contract 
        also shall not apply with respect to cash benefits described in 
        paragraph (1)(A) provided during any period in which the alien 
        is--
                    ``(A) on active duty (other than active duty for 
                training) in the Armed Forces of the United States, or
                    ``(B) the spouse or unmarried dependent child of an 
                individual described in paragraph (2)(A) or 
                subparagraph (A) of this paragraph;
    ``(b) Forms.--Not later than 90 days after the date of the 
enactment of this section, the Attorney General, in consultation with 
the Secretary of State and the Secretary of Health and Human Services, 
shall formulate an affidavit of support consistent with the provisions 
of this section.
    ``(c) Notification of Change of Address.--
            ``(1) Requirement.--The sponsor shall notify the Federal 
        Government and the State in which the sponsored alien is 
currently resident within 30 days of any change of address of the 
sponsor during the period specified in subsection (a)(1)(A).
            ``(2) Enforcement.--Any person subject to the requirement 
        of paragraph (1) who fails to satisfy such requirement shall be 
        subject to a civil penalty of--
                    ``(A) not less than $250 or more than $2,000, or
                    ``(B) if such failure occurs with knowledge that 
                the sponsored alien has received any benefit under any 
                means-tested public benefits program, not less than 
                $2,000 or more than $5,000.
    ``(d) Reimbursement of Government Expenses.--
            ``(1) Request for reimbursement.--
                    ``(A) In general.--Upon notification that a 
                sponsored alien has received any cash benefits 
                described in subsection (a)(1)(A), the appropriate 
                Federal, State, or local official shall request 
                reimbursement by the sponsor in the amount of such cash 
                benefits.
                    ``(B) Regulations.--The Attorney General, in 
                consultation with the Secretary of Health and Human 
                Services, shall prescribe such regulations as may be 
                necessary to carry out subparagraph (A).
            ``(2) Initiation of action.--If, not later than 45 days 
        after requesting reimbursement, the appropriate Federal, State, 
        or local agency has not received a response from the sponsor 
        indicating a willingness to commence payments, an action may be 
        brought against the sponsor pursuant to the affidavit of 
        support.
            ``(3) Failure to abide by repayment terms.--If the sponsor 
        fails to abide by the repayment terms established by such 
        agency, the agency may, not later than 60 days after such 
        failure, bring an action against the sponsor pursuant to the 
        affidavit of support.
            ``(4) Limitation on actions.--No cause of action may be 
        brought under this subsection later than 5 years after the date 
        the alien last received any cash benefit described in 
        subsection (a)(1)(A).
    ``(f) Definitions.--For the purposes of this section:
            ``(1) Sponsor.--The term `sponsor' means an individual 
        who--
                    ``(A) is a citizen or national of the United States 
                or an alien who is lawfully admitted to the United 
                States for permanent residence;
                    ``(B) is 18 years of age or over; and
                    ``(C) is domiciled in any State.
            ``(2) Public cash assistance program.--The term `public 
        cash assistance program' means a program of the Federal 
        Government or of a State or political subdivision of a State 
        that provides direct cash assistance for the purpose of income 
        maintenance and in which the eligibility of an individual, 
        household, or family eligibility unit for cash benefits under 
        the program, or the amount of such cash benefits, or both are 
        determined on the basis of income, resources, or financial need 
        of the individual, household, or unit. Such term does not 
        include any program insofar as it provides medical, housing, 
        education, job training, food, or in-kind assistance or social 
        services.''.
    (b) Clerical Amendment.--The table of contents of such Act is 
amended by inserting after the item relating to section 213 the 
following:

``Sec. 213A. Requirements for sponsor's affidavit of support.''.
    (c) Effective Date.--Subsection (a) of section 213A of the 
Immigration and Nationality Act, as inserted by subsection (a) of this 
section, shall apply to affidavits of support executed on or after a 
date specified by the Attorney General, which date shall be not earlier 
than 60 days (and not later than 90 days) after the date the Attorney 
General formulates the form for such affidavits under subsection (b) of 
such section 213A.

SEC. 604. EXTENDING REQUIREMENT FOR AFFIDAVITS OF SUPPORT TO FAMILY-
              RELATED AND DIVERSITY IMMIGRANTS.

    (A) In General.--Section 212(a)(4) of the Immigration and 
Nationality Act (8 U.S.C. 1182(a)(4)) is amended to read as follows:
            ``(4) Public charge and affidavits of support.--
                    ``(A) Public charge.--Any alien who, in the opinion 
                of the consular officer at the time of application for 
                a visa, or in the opinion of the Attorney General at 
                the time of application for admission or adjustment of 
                status, is likely at any time to become a public charge 
                is excludable.
                    ``(B) Affidavits of support.--Any immigrant who 
                seeks admission or adjustment of status as any of the 
                following is excludable unless there has been executed 
                with respect to the immigrant an affidavit of support 
                pursuant to section 213A:
                            ``(i) As an immediate relative (under 
                        section 201(b)(2)).
                            ``(ii) As a family-sponsored immigrant 
                        under section 203(a) (or as the spouse or child 
                        under section 203(d) of such an immigrant).
                            ``(iii) As the spouse or child (under 
                        section 203(d)) of an employment-based 
                        immigrant under section 203(b).
                            ``(iv) As a diversity immigrant under 
                        section 203(c) (or as the spouse or child under 
                        section 203(d) of such an immigrant).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to aliens with respect to whom an immigrant visa is issued (or 
adjustment of status is granted) after the date specified by the 
Attorney General under section 603(c).

SEC. 605. LIMITATION ON EXPENDITURES FOR EMERGENCY ASSISTANCE.

    (a) In General.--Section 403(a)(5) (42 U.S.C. 602(a)(5)) is amended 
to read as follows:
            ``(5) in the case of any State, an amount equal to the 
        lesser of--
                    ``(A) 50 percent of the total amount expended under 
                the State plan during such quarter as emergency 
                assistance to needy families with children; or
                    ``(B) the greater of--
                            ``(i) the total amount expended under the 
                        State plan during the fiscal year that 
                        immediately precedes the fiscal year in which 
                        the quarter occurs; multiplied by
                                    ``(I) 4 percent, if the national 
                                unemployment rate for the United States 
                                (as determined by the Secretary of 
                                Labor) for the 3rd or 4th quarter of 
                                the immediately preceding fiscal year 
                                is at least 7 percent; or
                                    ``(II) 3 percent, otherwise; or
                            ``(ii) the total amount expended under the 
                        State plan during fiscal year 1995 as emergency 
                        assistance to needy families with children.''.
    (b) Authority of States To Define Emergency Assistance.--Section 
406(e)(1) (42 U.S.C. 606(e)(1)) is amended to read as follows:
    ``(e)(1)(A) The term `emergency assistance to needy families with 
children' means emergency assistance furnished by an eligible State 
with respect to an eligible needy child to avoid destitution of the 
child or to provide living arrangements in a home for the child.
    ``(B) As used in this paragraph:
            ``(i) The term `emergency assistance' means emergency 
        assistance as provided for in the State plan approved under 
        section 402 of an eligible State, but shall not include care 
        for an eligible needy child or other member of the household in 
        which the child is living to the extent that the child or other 
        member is entitled to such care as medical assistance under the 
        State plan under title XIX.
            ``(ii) The term `eligible needy child' means a needy 
        child--
                    ``(I) who has not attained 21 years of age;
                    ``(II) who is or (within such period as the 
                Secretary may specify) has been living with any 
                relative specified in subsection (a)(1) in a place of 
                residence maintained by 1 or more of such relatives as 
                the home of the relative or relatives;
                    ``(III) who is without available resources; and
                    ``(IV) whose requirement for emergency assistance 
                did not arise because the child or relative refused 
                without good cause to accept employment or training for 
                employment.
            ``(iii) The term ``eligible State'' means a State whose 
        State plan approved under section 402 includes provision for 
        emergency assistance.''.

                       TITLE VII--EFFECTIVE DATE

SEC. 701. EFFECTIVE DATE.

    (a) In General.--Except as otherwise specifically provided in this 
Act, the amendments made by this Act shall take effect on the first day 
of the first fiscal year beginning after the date of the enactment of 
this Act.
    (b) Exception.--In the case of a State that the Secretary of Health 
and Human Services determines requires State legislation (other than 
legislation appropriating funds) in order to meet the additional 
requirements imposed by the amendments made by this Act, the State 
shall not be regarded as failing to comply with the requirements of 
such amendments before the first day of the first calendar quarter 
beginning after the close of the first regular session of the State 
legislature that begins after October 1, 1995, if such State 
legislature did not meet in a regular session after the date of the 
enactment of this Act and before October 1, 1995. For purposes of this 
subsection, in the case of a State that has a 2-year legislative 
session, each year of the session shall be treated as a separate 
regular session of the State legislature.
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