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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 746 Introduced in Senate (IS)]

104th CONGRESS
  1st Session
                                 S. 746

To amend the Social Security Act to provide certain reforms to welfare 
                   programs, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                  May 3 (legislative day, May 1), 1995

 Ms. Moseley-Braun introduced the following bill; which was read twice 
                and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend the Social Security Act to provide certain reforms to welfare 
                   programs, 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 ``Economic 
Opportunity and Family Responsibility Act of 1995''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. References to Social Security Act.
                     TITLE I--WORK-RELATED REFORMS

Sec. 101. Increase in JOBS program funding.
Sec. 102. Increase in JOBS matching rate; continuation of minimum rate.
Sec. 103. Increase in required JOBS participation rates.
Sec. 104. Additional requirements for JOBS participation.
Sec. 105. Activities that are considered participation in the JOBS 
                            program.
Sec. 106. Training and employment for noncustodial parents.
Sec. 107. Demonstration project for private sector employment.
Sec. 108. Coordination of services.
       TITLE II--REFORMS OF AFDC AND TREATMENT OF TEENAGE PARENTS

                        Subtitle A--AFDC Reforms

Sec. 201. Increased income disregard.
Sec. 202. Disregard of income and resources designated for education, 
                            training, and employability.
Sec. 203. Elimination of marriage disincentives.
                      Subtitle B--Teenage Parents

Sec. 211. Minor teenage parent residency requirement.
Sec. 212. Schooling and employment requirements.
Sec. 213. Planning, startup, and reporting.
Sec. 214. Case management.
 TITLE III--STRENGTHENING PARENTAL RESPONSIBILITY AND FAMILY STABILITY

                  Subtitle A--Federal Responsibilities

Sec. 301. Expansion of functions of Federal parent locator service.
Sec. 302. Expansion of Federal parent locator systems.
Sec. 303. Federal child support order registry.
Sec. 304. National reporting of employees and child support 
                            information.
Sec. 305. Federal matching payments.
Sec. 306. Performance-based incentives and penalties.
Sec. 307. Increased Federal financial participation for States with 
                            unified child support enforcement programs.
Sec. 308. New child support audit process.
Sec. 309. National child support guidelines commission.
Sec. 310. Child support audit advisory committee.
                  Subtitle B--Paternity Establishment

Sec. 311. Paternity establishment procedures.
Sec. 312. Enhancing outreach to encourage paternity establishment.
Sec. 313. Strengthening civil procedures for paternity establishment.
Sec. 314. Penalty for failure to establish paternity promptly.
                        Subtitle C--Enforcement

Sec. 321. Access to financial records.
Sec. 322. Presumed address of obligor and obligee.
Sec. 323. Fair credit reporting act amendment.
Sec. 324. Additional benefits subject to garnishment.
Sec. 325. Hold on occupational, professional, and business licenses.
Sec. 326. Driver's licenses and vehicle registrations denied to persons 
                            failing to appear in child support cases.
Sec. 327. Liens.
Sec. 328. Fraudulent transfer pursuit.
Sec. 329. Reporting of child support arrearages to credit bureaus.
Sec. 330. Denial of passports to noncustodial parents subject to State 
                            arrest warrants in cases of nonpayment of 
                            child support.
Sec. 331. Statutes of limitation.
Sec. 332. Collection of past-due support using tax collection 
                            authority.
                   Subtitle D--State Responsibilities

Sec. 341. State role.
Sec. 342. Uniform terms in orders.
Sec. 343. States required to enact the Uniform Interstate Family 
                            Support Act.
Sec. 344. Expedited processes and administrative procedures.
Sec. 345. Due process.
Sec. 346. Outreach and accessibility.
Sec. 347. Cost-of-living adjustment of child support awards.
Sec. 348. Simplified process for review and adjustment of certain child 
                            support orders.
Sec. 349. Prevention of conflicts of interest.
Sec. 350. Staffing.
Sec. 351. Training.
Sec. 352. Priorities in distribution of collected child support.
Sec. 353. Teenage noncustodial parents and child support.
         Subtitle E--Demonstrations, Grants, and Miscellaneous

Sec. 361. Establishment of child support assurance demonstration 
                            projects.
Sec. 362. Establishment of simple child support modification 
                            demonstration projects.
Sec. 363. Establishment of demonstration projects for providing 
                            services to certain noncustodial parents.
Sec. 364. Grants to States for access and visitation programs.
Sec. 365. Technical correction to ERISA definition of medical child 
                            support order.
                        Subtitle F--Tax Reforms

Sec. 371. Quarterly advanced EITC.
Sec. 372. Expansion of the tax counseling for the elderly program.
                      TITLE IV--CHILD CARE REFORMS

Sec. 401. Child care for needy families block grant.
Sec. 402. Repeals and technical and conforming amendments.
Sec. 403. State option to extend transitional medicaid benefits.
                       TITLE V--EQUITY INVESTMENT

Sec. 501. Short title.
Sec. 502. Definitions.
            Subtitle A--Equity Investment Development Zones

Sec. 511. Designation procedure.
Sec. 512. Eligibility criteria.
Sec. 513. Period for which designation is in effect.
Sec. 514. Subsequent designations.
Sec. 515. Special rules.
         Subtitle B--Equity Investments in Qualified Companies

                      PART I--Certificate Program

Sec. 521. Calculation of imputed earnings; issuance of certificates.
Sec. 522. Investment in qualified companies.
Sec. 523. Reimbursement.
Sec. 524. Transferability of certificates.
Sec. 525. Expiration of certificates.
Sec. 526. Effective date.
            Part II--Community Equity Investment Corporation

Sec. 531. Establishment.
Sec. 532. Incorporators; board of directors.
Sec. 533. Restrictions on transferability of corporation stock.
Sec. 534. Dissolution of the corporation.
    Subtitle C--Assistance to Qualified Companies Receiving Equity 
                              Investments

Sec. 541. Wage supplementation program.
                        TITLE VI--EFFECTIVE DATE

Sec. 601. Effective date.

SEC. 2. REFERENCES 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 (42 
U.S.C. 301 et seq.).

                     TITLE I--WORK-RELATED REFORMS

SEC. 101. INCREASE IN JOBS PROGRAM FUNDING.

    Section 403(k)(3) (42 U.S.C. 603(k)(3)) is amended--
            (1) in subparagraph (E), by striking ``and''; and
            (2) by striking subparagraph (F) and inserting the 
        following:
            ``(F) $1,540,000,000 in the case of the fiscal year 1996,
            ``(G) $1,980,000,000 in the case of the fiscal year 1997,
            ``(H) $2,420,000,000 in the case of the fiscal year 1998,
            ``(I) $2,860,000,000 in the case of the fiscal year 1999, 
        and
            ``(J) $3,300,000,000 in the case of the fiscal year 2000 
        and each succeeding fiscal year,''.

SEC. 102. INCREASE IN JOBS MATCHING RATE; CONTINUATION OF MINIMUM RATE.

    Section 403(l)(1) (42 U.S.C. 603(l)(1)) is amended--
            (1) in subparagraph (A)(ii)(II), by striking ``60 percent'' 
        and inserting ``the percentage described for that fiscal year 
        in subparagraph (C),''; and
            (2) by adding at the end the following new subparagraph:
    ``(C) The percentage described in this subparagraph for a fiscal 
year is as follows:
            ``(i) 65 percent, if the fiscal year is 1996 or 1997;
            ``(ii) 67 percent, if the fiscal year is 1998;
            ``(iii) 69 percent, if the fiscal year is 1999; and
            ``(iv) 70 percent, if the fiscal year is 2000 or 
        thereafter.''.

SEC. 103. INCREASE IN REQUIRED JOBS PARTICIPATION RATES.

    (a) In General.--Section 403(l)(3) (42 U.S.C. 603(l)(3)) is 
amended--
            (1) in subparagraph (A)--
                    (A) in clause (v), by striking ``and'';
                    (B) in clause (vi), by striking the period and 
                inserting a semicolon; and
                    (C) by adding at the end the following new clauses:
                    ``(vii) 25 percent if such year is 1996;
                    ``(viii) 30 percent if such year is 1997;
                    ``(ix) 35 percent if such year is 1998; and
                    ``(x) 40 percent if such year is 1999.''; and
            (2) in subparagraph (B)(ii)(IV), by striking ``and 1995'' 
        and inserting ``through 1999''.
    (b) Conforming Amendments.--Section 204(b)(2) of the Family Support 
Act of 1988 (42 U.S.C. 681 note) is amended--
            (1) by inserting ``, and amended by section 103(a) of the 
        Economic Opportunity and Family Responsibility Act of 1995'' 
        after ``this Act''; and
            (2) by striking ``1995'' and inserting ``1999''.

SEC. 104. ADDITIONAL REQUIREMENTS FOR JOBS PARTICIPATION.

    (a) Minimum Hours for JOBS Participation.--
            (1) In general.--Section 403(l)(3)(D) (42 U.S.C. 
        603(l)(3)(D)) is amended by striking ``has participated'' and 
        all that follows through ``establish'' and inserting ``has 
        participated--
            ``(i) in an activity described in section 482(d) for not 
        less than 15 and not more than 35 hours per week; and
            ``(ii) in accordance with such program requirements, 
        consistent with regulations of the Secretary, as the State 
        shall establish.''.
            (2) Conforming amendment.--Section 402(a)(19)(C)(iv) (42 
        U.S.C. 602(a)(19)(C)(iv)) is amended by striking ``30'' and 
        inserting ``35''.
    (b) No Participation Required for Parent of Young Children.--
Section 402(a)(19)(C)(iii) (42 U.S.C. 602(a)(19)(C)(iii)) is amended--
            (1) in subclause (I), by striking ``under 3 years of age'' 
        and all that follows through ``one year)'' and inserting ``not 
        older than the 12 work weeks of leave provided for in section 
        102(a)(1)(A) of the Family and Medical Leave Act of 1993 (29 
        U.S.C. 2612(a)(1)(A))''; and
            (2) in subclause (II), by striking ``and that 
        participation'' and all that follows through ``a week''.

SEC. 105. ACTIVITIES THAT ARE CONSIDERED PARTICIPATION IN THE JOBS 
              PROGRAM.

    (a) Services and Activities Under the Program.--Section 482(d) (42 
U.S.C. 682(d)) is amended--
            (1) in clause (i)--
                    (A) by striking ``shall include--'' and inserting 
                ``may include--'';
                    (B) in subclause (III), by striking ``and'' at the 
                end;
                    (C) in subclause (IV), by striking ``and'' at the 
                end; and
                    (D) by adding at the end the following new 
                subclauses:
                    ``(V) the costs of school or training described in 
                section 402(a)(19)(F)(i) for an individual 
                participating in the program;
                    ``(VI) voluntary activities that are related to a 
                school or day care center, or parenting by a custodial 
                parent; and
                    ``(VII) any other activity that the State deems 
                appropriate in preparing an individual for work; and'';
            (2) in clause (ii), by striking ``must also'' and inserting 
        ``may also''.
    (b) Conforming Amendments.--Section 402(a)(19)(F) (42 U.S.C. 
602(a)(19)(F)) is amended--
            (1) by adding ``and'' at the end of clause (ii);
            (2) by striking clause (iii); and
            (3) by redesignating clause (iv) as clause (iii).

SEC. 106. TRAINING AND EMPLOYMENT FOR NON- CUSTODIAL PARENTS.

    Section 482 (42 U.S.C. 682) is amended by adding at the end the 
following new subsection:
    ``(j) Training and Employment for Noncustodial Parents.--A State 
operating a program under this part may use not more than 5 percent of 
the sum of the amounts available to it for a fiscal year under section 
403(l) for conducting a program of training and employment 
opportunities for noncustodial parents.''.

SEC. 107. DEMONSTRATION PROJECT FOR PRIVATE SECTOR EMPLOYMENT.

    (a) Establishment.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall enter into an 
agreement with an eligible entity (as described in subsection (c)(2)) 
that has submitted an application in accordance with subsection (c) to 
conduct a demonstration project described in subsection (b).
    (b) Project Described.--
            (1) In general.--A demonstration project conducted under 
        this section shall provide individuals who--
                    (A) are receiving aid or assistance under part A of 
                title IV of the Social Security Act (42 U.S.C. 601 et 
                seq.);
                    (B) are eligible to participate in the JOBS program 
                under part F of such title of such Act (42 U.S.C. 681 
                et seq.); and
                    (C) reside in an eligible community, as defined in 
                subsection (c)(3),
        with employment at a private sector business that is not 
        located in the eligible community, and employment-related 
        support services.
            (2) Employment-related support services.--For purposes of 
        this section, the term ``employment-related support services'' 
        includes--
                    (A) transportation to and from an employment 
                location;
                    (B) child care (in addition to any child care that 
                an individual participating in the demonstration 
                project may be receiving under part G of title IV of 
                the Social Security Act or another State low-income or 
                limited assets assistance program); and
                    (C) any other support services that the Secretary 
                deems appropriate.
    (c) Applications.--
            (1) In general.--Each eligible entity desiring to conduct a 
        demonstration project under this section in an eligible 
        community shall prepare and submit to the Secretary an 
        application--
                    (A) containing--
                            (i) the information described in paragraph 
                        (2); and
                            (ii) any other information that the 
                        Secretary may require; and
                    (B) in such form as the Secretary may require.
            (2) Eligible entities.--In order to be eligible to submit 
        an application to conduct a demonstration project under this 
        section, an entity shall--
                    (A) be a public or private not-for-profit entity; 
                and
                    (B) include in the application--
                            (i) certification (in such manner as the 
                        Secretary may require) that the entity has an 
                        agreement with a private sector business that 
                        is not located in the eligible community, to 
                        provide employment to eligible individuals who 
                        reside in such community; and
                            (ii) documentation demonstrating that the 
                        community to be served by the project is an 
                        eligible community.
            (3) Eligible community defined.--
                    (A) In general.--For purposes of this section, the 
                term ``eligible community'' means a community that--
                            (i) in 1989, had a per capita income 
                        measured in accordance with subparagraph (B) of 
                        less than $3,000; and
                            (ii) meets such other criteria as the 
                        Secretary may require.
                    (B) Per capita income.--The Secretary of Health and 
                Human Services in consultation with the States shall 
                develop an appropriate measure for determining per 
                capita income in poor communities.
    (d) Limit On Number of Projects Per Year.--The Secretary shall 
authorize not more than 5 demonstration projects under this section 
during any fiscal year.
    (e) Reports.--An eligible entity that conducts a demonstration 
project under this section shall prepare and submit to the Secretary 
annual and final reports in such form and containing such information 
as the Secretary may require.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated $1,000,000 for each of fiscal years 1996 through 1998 for 
the purpose of conducting demonstration projects in accordance with 
this section.

SEC. 108. COORDINATION OF SERVICES.

    (a) In General.--Section 402(a) (42 U.S.C. 602(a)) is amended--
            (1) in paragraph (44), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (45), by striking the period and inserting 
        ``; and''; and
            (3) by inserting after paragraph (45) the following new 
        paragraph:
            ``(46) provide that the State agency may--
                    ``(A) establish at least 1 convenient location in 
                each community (if practicable, as defined by the 
                Secretary in regulations) at which a person having an 
                income which is not greater than 185 percent of the 
                income official poverty line (as defined by the Office 
                of Management and Budget, and revised annually in 
                accordance with section 673(2) of the Omnibus Budget 
                Reconciliation Act of 1981) that is applicable to a 
                family of the size involved, may apply for and (if 
                appropriate) receive, directly or through referral to 
                the appropriate provider, in appropriate languages and 
                in a culturally sensitive manner--
                            ``(i) aid under the State plan;
                            ``(ii) employment and education counseling;
                            ``(iii) job placement;
                            ``(iv) child care;
                            ``(v) health care;
                            ``(vi) transportation assistance;
                            ``(vii) housing assistance;
                            ``(viii) child support services;
                            ``(ix) assistance under the National and 
                        Community Service Act of 1990 and the Domestic 
                        Volunteer Service Act of 1973;
                            ``(x) unemployment insurance;
                            ``(xi) assistance under the Carl D. Perkins 
                        Vocational and Applied Technology Education 
                        Act;
                            ``(xii) assistance under the School-to-Work 
                        Opportunities Act of 1994;
                            ``(xiii) assistance under Federal student 
                        loan programs;
                            ``(xiv) assistance under the Job Training 
                        Partnership Act; and
                            ``(xv) other types of counseling and 
                        support services; and
                    ``(B) assign to each recipient of aid under the 
                State plan, and to each applicant for such aid (within 
                30 days after the date of application), a case manager 
                who--
                            ``(i) is knowledgeable about community 
                        resources;
                            ``(ii) is qualified to refer the applicant 
                        or recipient to appropriate education and 
                        training opportunities, employment programs, 
                        and needed health and social services; and
                            ``(iii) is required to coordinate the 
                        provision of benefits and services by the State 
                        to the applicant or recipient, until the 
                        applicant or recipient is no longer eligible 
                        for--
                                    ``(I) aid under the State plan;
                                    ``(II) child care guaranteed by the 
                                State in accordance with part G of 
                                title IV; and
                                    ``(III) medical assistance under 
                                the State plan approved under title 
                                XIX.''.
    (b) Staffing Guidelines.--Section 402 (42 U.S.C. 602) is amended by 
adding at the end the following new subsection:
    ``(j)(1) The Secretary shall establish guidelines for the staffing 
of the State agencies operating or overseeing the services and programs 
referred to in subsection (a)(46)(A) that include recommendations for 
qualifications of personnel employed by such agencies and for 
appropriate caseload size.
    ``(2) Every 2 years, each State shall report to the Secretary on--
            ``(A) the extent to which the State is staffing the State 
        agencies operating or overseeing the services and programs 
        referred to in subsection (a)(46)(A) in accordance with the 
        guidelines established pursuant to paragraph (1) of this 
        subsection; and
            ``(B) to the extent the State is not doing so, how the 
        State is carrying out the provisions of the State plan required 
        by subsection (a)(46).''.

       TITLE II--REFORMS OF AFDC AND TREATMENT OF TEENAGE PARENTS

                        Subtitle A--AFDC Reforms

SEC. 201. INCREASED INCOME DISREGARD.

    Section 402(a)(8) is amended--
            (1) in subparagraph (A)--
                    (A) in clause (ii), by striking ``the first $90 of 
                the total of such earned income for such month'' and 
                inserting ``an amount equal to (I) the first $120 of 
                the total of such earned income, plus (II) \1/3\ of the 
                remainder of such earned income for such month''.
                    (B) by repealing clause (iv); and
            (2) in subparagraph (B)--
                    (A) by striking clause (ii);
                    (B) by striking ``agency--'' and all that follows 
                through ``(i) shall not'' and inserting ``agency shall 
                not''; and
                    (C) by redesignating subclauses (I) and (II) as 
                clauses (i) and (ii), respectively and moving such 
                clauses (as redesignated) 2 ems to the left.

SEC. 202. 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)) is amended--
            (1) by striking ``or'' before ``(iv)''; and
            (2) by inserting ``, or (v) at the option 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 defined in section 406(i)) of such family, 
        reduced by the amount (if any) excluded from the resources of 
        the family pursuant to paragraph (46)(A)(i) of this 
        subsection'' before ``; and''.
    (b) Disregard as Income.--
            (1) In general.--Section 402(a)(8)(A) (42 U.S.C. 
        602(a)(8)(A)) is amended--
                    (A) by striking ``and'' at the end of clause (vii); 
                and
                    (B) by inserting after clause (viii) the following 
                new clause:
                            ``(ix) at the option of the State, shall 
                        disregard any interest or income earned on a 
                        qualified asset account (as defined in section 
                        406(i)); and''.
            (2) Nonrecurring lump-sum exempt from lump sum rule.--
        Section 402(a)(17) (42 U.S.C. 602(a)(17)) is amended by adding 
        at the end the following: ``; and that, at the option of the 
        State, 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(i)) the total amount in which, after 
        such placement, does not exceed $10,000;''.
            (3) 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) at the option of the State, shall treat as 
                income any distribution from a qualified asset account 
                (as defined in section 406(i)(I)) which does not meet 
                the definition of a qualified distribution under 
                section 406(i)(2);''.
    (c) Qualified Asset Accounts.--Section 406 (42 U.S.C. 606) is 
amended by adding at the end the following:
    ``(i)(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 a qualified 
distribution.
    ``(2) The term `qualified distribution' means a distribution 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.''.
    (d) Study of Use of Qualified Asset Accounts; Report.--The 
Secretary of Health and Human Services shall conduct a study of the use 
of qualified asset accounts established pursuant to the amendments made 
by this section, and shall report on such study and any recommendations 
for modifications of such amendments to the Committee on Finance of the 
Senate and the Committee on Ways and Means of the House of 
Representatives not later than January 1, 1998.

SEC. 203. ELIMINATION OF MARRIAGE DISINCENTIVES.

    (a) Elimination of Recent Work History Requirement.--Section 
407(b)(1)(A)(iii) (42 U.S.C. 607(b)(1)(A)(iii)) is amended--
            (1) in subclause (I), by striking ``in any 13-calendar-
        quarter period ending within one year prior to the application 
        for such aid''; and
            (2) in subclause (II), by striking ``, within one year 
        prior to the application for such aid''.
    (b) Elimination of 100-Hour Rule.--Section 407 (42 U.S.C. 607) 
shall be applied without regard to the 100-hour rule under section 
233.100(a)(1)(i) of title 45, Code of Federal Regulations, or any other 
regulation or ruling providing for the same result.
    (c) Elimination of 6-Month Limit.--Section 407(b)(2)(B)(ii) (42 
U.S.C. 607(b)(2)(B)(ii)) is amended--
            (1) by striking subclause (II); and
            (2) by redesignating subclause (III) as subclause (II).
    (d) Treatment of Stepparent Income.--
            (1) Option of family to have needs of stepparent 
        considered.--Section 402(a)(7)(A) (42 U.S.C. 602(a)(7)(A)) is 
        amended by inserting ``, at the option of such relative, of any 
        stepparent of the child (living in the same home as such child 
        and relative)'' before ``, or of any other individual''.
            (2) Modification of stepparent income disregard.--Section 
        402(a)(31) (42 U.S.C. 602(a)(31)) is amended--
                    (A) by inserting ``if the needs of a stepparent of 
                the dependent child living in the same home as the 
                child are not considered'' before ``in making'';
                    (B) by striking ``dependent child's stepparent 
                living in the same home as such child'' and inserting 
                ``stepparent''; and
                    (C) by adding at the end of subparagraph (B) the 
                following: ``or, if greater, 130 percent of the income 
                official poverty line (as defined by the Office of 
                Management and Budget, and revised annually in 
                accordance with section 673(2) of the Omnibus Budget 
                Reconciliation Act of 1981) applicable to such a 
                family,''.

                      Subtitle B--Teenage Parents

SEC. 211. MINOR TEENAGE PARENT RESIDENCY REQUIREMENT.

    Section 402(a)(43) (42 U.S.C. 602(a)(43)) is amended to read as 
follows:
            ``(43) provide that--
                    ``(A) subject to subparagraphs (B) and (C), aid 
                under the State plan shall not be provided to an 
                individual who has not attained 18 years of age, has 
                never married, and has a dependent child in the 
                individual's care or is pregnant and eligible for such 
                aid, for the individual and the dependent child (or for 
                herself in the case of a pregnant woman), if the case 
                manager for the individual determines that--
                            ``(i) the individual is not residing in a 
                        place of residence maintained by a parent, 
                        legal guardian, or other adult relative of the 
                        individual as the home of the parent, legal 
                        guardian, or other adult relative, 
                        respectively, or in a foster home, maternity 
                        home, or other adult-supervised supportive 
                        living arrangement;
                            ``(ii) an appropriate adult-supervised 
                        living arrangement is available for the 
                        individual and the dependent child (or for 
                        herself in the case of a pregnant woman); and
                            ``(iii) the individual should be required 
                        to relocate to such a place of residence;
                    ``(B) subparagraph (A) shall not apply to an 
                individual if--
                            ``(i) the circumstances described in 
                        subparagraph (A) have persisted for less than 2 
                        months since the case manager made the 
                        determination described in subparagraph (A);
                            ``(ii) the individual does not have a 
                        parent or legal guardian who is living in the 
                        State and whose whereabouts are known;
                            ``(iii) the individual has been living 
                        independently from any parent or legal guardian 
                        of the individual for at least 1 year before 
                        the date the child was born or the date the 
                        individual applied for aid under the State 
                        plan;
                            ``(iv) the individual is a ward of the 
                        court or of the State, and the court or the 
                        State (as the case may be) has approved the 
                        individual for independent living; or
                            ``(v) the individual has been emancipated 
                        by court order;
                    ``(C) subparagraph (A) shall not apply to an 
                individual if the case manager for the individual 
                determines--
                            ``(i) that the individual does not have a 
                        parent or legal guardian who will allow the 
                        individual to live in the home of the parent or 
                        legal guardian;
                            ``(ii) that the physical or emotional 
                        health or safety of the individual or the 
                        dependent child would be jeopardized if the 
                        individual and the child lived in the same 
                        residence with the parent or legal guardian of 
                        the individual;
                            ``(iii) that the application of 
                        subparagraph (A) would prevent the continued 
                        participation of the individual in--
                                    ``(I) a substance abuse treatment 
                                program approved by the State; or
                                    ``(II) an education or training 
                                program, or in employment, without 
                                providing an equivalent alternative; or
                            ``(iv) in accordance with regulations 
                        issued by the Secretary, that there is other 
                        good cause for not applying subparagraph (A) to 
                        the individual;
                    ``(D) in making the determinations described in 
                subparagraphs (A), (B), and (C), the case manager for 
                an individual shall--
                            ``(i) consider all relevant factors, 
                        including--
                                    ``(I) whether there is evidence 
                                that the individual or the child has 
                                suffered or is at risk of suffering 
                                physical or emotional abuse by someone 
                                in the place;
                                    ``(II) whether illegal activity 
                                occurs at the place; and
                                    ``(III) whether a mandatory 
                                relocation of the individual would 
                                result in overcrowding, violation of 
                                the terms of a lease, or a violation of 
                                local health or safety standards; and
                            ``(ii) if the case manager is not a family 
                        counselor, consult with a family counselor who 
                        has specialized training or demonstrated 
                        experience serving individuals and families, 
                        and the written recommendations of the 
                        counselor shall be included in the case record;
                    ``(E) if the case manager determines that the 
                individual should be required to relocate, the State 
                agency shall offer the individual counseling and other 
                services designed to help the individual make the 
                transition from independent to supervised living; and
                    ``(F) the case manager shall determine in all cases 
                in which aid under the State plan is payable to an 
                individual who is pregnant or a parent, and has not 
                attained 20 years of age, for the needs of the 
                individual and for the needs of a dependent child of 
                the individual, whether such aid should be paid to 
                another individual in the manner described in section 
                406(b)(2);''.

SEC. 212. SCHOOLING AND EMPLOYMENT REQUIREMENTS.

    (a) In General.--Section 482 (42 U.S.C. 682), as amended by section 
106 of this Act, is amended by adding at the end the following new 
subsection:
    ``(k) Schooling Requirements.--Notwithstanding any other provision 
of this part, each State program established under this part shall 
impose only the following requirements with respect to each participant 
who has not attained 20 years of age, has not completed secondary 
school or received a certificate of high school equivalency, and is a 
custodial parent or pregnant:
            ``(1) Participation requirement.--The participant shall 
        participate in an educational program, a program that leads to 
        a high school diploma, or job search and job placement 
        activities unless--
                    ``(A) the participant has a need for child care or 
                other supportive services that cannot be addressed by 
                the program; or
                    ``(B) the case manager determines, after 
                consultation with the school or training program, that 
                the recipient would not benefit from direct placement 
                in any such program, in which case the recipient shall 
                participate in appropriate alternative activities 
                specified in an individualized plan developed for the 
                individual by the case manager which may include a plan 
                for subsequent placement in such a program.
            ``(2) Penalties.--
                    ``(A) In general.--If an individual required to 
                participate in a program referred to in paragraph (1) 
                fails to meet a standard (established by the State in 
                accordance with subparagraph (B)) for minimum 
                performance in the program, the amount of aid otherwise 
                payable to the individual on a monthly basis under the 
                State plan approved under part A shall be reduced by 
                the lesser of--
                            ``(i) $60;
                            ``(ii) 20 percent of such otherwise payable 
                        amount; or
                            ``(iii) the difference between such 
                        otherwise payable amount and the amount of such 
                        aid that would be so payable if the family of 
                        the individual included 1 less person.
                    ``(B) Minimum performance standard.--The minimum 
                performance standard referred to in subparagraph (A)--
                            ``(i) shall be based on the achievement of 
                        satisfactory progress in the program or on 
                        fulfillment of an attendance standard 
                        established by the State; and
                            ``(ii) if based on the achievement of 
                        satisfactory progress--
                                    ``(I) shall not require maintenance 
                                of a grade that is higher than a 
                                passing grade in the school district in 
                                which the program is located, or if the 
                                program does not award grades, of a 
                                performance level higher than a level 
                                prescribed by the Secretary in 
                                regulations; and
                                    ``(II) shall provide for 
                                consideration, under a plan approved by 
                                the Secretary, of whether the failure 
                                of an individual to achieve a specified 
                                grade or other applicable performance 
                                level is due to limitations on the 
                                ability of the individual to learn or 
                                other circumstances that limit the 
                                ability of the individual to perform up 
                                to the individual's capacities, or 
                                shall provide for deeming progress to 
                                be satisfactory if the individual meets 
                                a specified attendance standard.
                    ``(C) Good cause.--Subparagraph (A) shall not apply 
                to an individual who has good cause (as determined by 
                the State in accordance with regulations prescribed by 
                the Secretary) for failing to meet the standard of 
                minimum performance.
                    ``(D) Escrow account.--The State may place in an 
                escrow account with respect to an individual whose aid 
                is reduced pursuant to subparagraph (A) an amount equal 
                to the amount of the reduction in such aid, and may pay 
                to the individual all amounts placed in an escrow 
                account with respect to the individual, upon a 
                demonstration by the individual of a satisfactory 
                effort (as defined by the State in accordance with 
                regulations prescribed by the Secretary) in the 
                program.
                    ``(E) School-based monitoring.--The State shall 
                monitor the percentage of the persons attending each 
                school upon whom sanctions are imposed pursuant to 
                subparagraph (A), and, if the State determines that the 
                percentage for any school significantly exceeds such 
                percentage at similar schools, the State shall 
                determine the reasons for the excessive sanction 
                percentage, and shall suspend the imposition of 
                sanctions upon the persons attending the school until 
                the State determines that the sanction percentage is 
                not excessive.
            ``(3) Incentives.--
                    ``(A) In general.--If an individual required to 
                participate in a program referred to in paragraph (1) 
                meets a standard (established by the State in 
                accordance with subparagraph (B)) for sufficient 
                performance in the program, the amount of aid otherwise 
                payable to the individual on a monthly basis under the 
                State plan approved under part A shall be increased by 
                not less than the lesser of--
                            ``(i) $60;
                            ``(ii) 20 percent of such otherwise payable 
                        amount; or
                            ``(iii) the difference between such 
                        otherwise payable amount and the amount of such 
                        aid that would be so payable if the family of 
                        the individual included 1 less person.
                    ``(B) Sufficient performance standard.--The 
                sufficient performance standard referred to in 
                subparagraph (A) shall be based on measurement of the 
                same factors used to determine whether the minimum 
                performance standard referred to in paragraph (2)(B)(i) 
                has been met, and may require a higher degree of 
                performance (subject to such limits as the Secretary 
                shall prescribe in regulations) than the minimum 
                performance standard.''.
    (b) Conforming Amendments.--Section 402(a)(19) (42 U.S.C. 
602(a)(19)), as amended by section 201(b) of this Act, is amended--
            (1) in subparagraph (C)--
                    (A) in clause (iii), by inserting ``, is not 
                described by clause (viii), and'' before ``--'';
                    (B) in clause (v)--
                            (i) by inserting a comma after ``16''; and
                            (ii) by inserting ``and is not a custodial 
                        parent or pregnant'' before the semicolon;
                    (C) by striking ``or'' at the end of clause (vii);
                    (D) by adding ``or'' at the end of clause (viii); 
                and
                    (E) by adding at the end the following new clause:
                            ``(ix)(I) has not attained 20 years of age,
                            ``(II) has not completed secondary school 
                        or received a certificate of high school 
                        equivalency, and
                            ``(III) is pregnant, or is a custodial 
                        parent of a child who has not attained 4 months 
                        of age and is personally providing care for the 
                        child;''; and
            (2) by striking subparagraph (E).

SEC. 213. PLANNING, STARTUP, AND REPORTING.

    (a) Required Participation Rates.--Section 403(l) (42 U.S.C. 
603(l)) is amended by adding at the end the following new paragraph:
    ``(5)(A) Notwithstanding paragraph (1), the Secretary shall pay to 
a State an amount equal to 50 percent of the expenditures made by such 
State in a fiscal year in operating its program established under part 
F (in lieu of any different percentage specified in paragraph (1)(A)) 
if the State's teen participation rate (determined under subparagraph 
(B)) for the preceding fiscal year does not exceed or equal--
            ``(i) 15 percent if the preceding fiscal year is 1996;
            ``(ii) 40 percent if such year is 1997;
            ``(iii) 70 percent if such year is 1998; or
            ``(iv) 90 percent if such year is 1999.
    ``(B) The State's teen participation rate for a fiscal year shall 
be the average of its teen participation rates for each month in such 
fiscal year.
    ``(C) The State's teen participation rate for a month shall be the 
number, expressed as a percentage, equal to--
            ``(i) the average monthly number of individuals required to 
        comply with section 482(k) for the month who have received aid 
        under the State plan approved under part A for at least 60 
        days, and--
                    ``(I) are in an assigned or individualized activity 
                or in the midst of a regularly scheduled school break;
                    ``(II) have good cause for not participating in a 
                program under such section;
                    ``(III) are in conciliation or whose aid under the 
                State plan approved under this part has been reduced 
                pursuant to such section; or
                    ``(IV) are former recipients of such aid who are 
                receiving case management services under the State 
                plan; divided by
            ``(ii) the number of individuals required to comply with 
        section 482(k) for the month, plus the number of former 
        recipients of such aid who are receiving case management 
        services under the State plan.
    ``(D) Subparagraphs (D) and (E) of paragraph (3) shall apply in 
like manner to this paragraph.
    ``(E) The State shall submit to the Secretary a report on the 
number of individuals in each category or subcategory of participants 
in programs under section 482(k) as the Secretary may define.
    ``(F) The Secretary shall develop such procedures as may be 
necessary to ensure that participation rates reported by States are 
accurate, and shall annually submit to the Congress a compilation of 
the State reports made pursuant to subparagraph (E).''.
    (b) State Plan Requirement.--Section 482(a)(1)(B) (42 U.S.C. 
682(a)(1)(B)) is amended by striking ``and (iii)'' and inserting 
``(iii) a description of the plans of the State for ensuring that, 
within 5 years after the effective date of this clause, all individuals 
required to comply with subsection (k) do so, including the strategy 
for phasing in the requirements of subsection (k), which shall reflect 
the finding of a needs assessment that identifies the current and 
projected numbers of recipients of aid under the State plan in 
different regions of the State who have not attained 20 years of age, 
the availability of appropriate educational institutions and 
alternatives (including parenting education capacity) and the 
availability of support services, and of the plans of the State for 
ensuring that service providers have agreed to cooperate in supplying 
necessary data (such as reports on attendance, satisfactory 
participation, and performance), and a commitment by the State to make 
annual reports to the Secretary on progress in carrying out this clause 
and subsection (k), and (iv).''.

SEC. 214. CASE MANAGEMENT.

    Section 402(a) (42 U.S.C. 602(a)), as amended by section 108(a) of 
this Act, 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:
            ``(47) provide that the State agency--
                    ``(A) shall assign a case manager--
                            ``(i) to each recipient of aid under the 
                        State plan who--
                                    ``(I) is a custodial parent of a 
                                child or pregnant; and
                                    ``(II) has not attained 20 years of 
                                age; and
                            ``(ii) for 1 year, to each former recipient 
                        of such aid who--
                                    ``(I) is a custodial parent;
                                    ``(II) has not attained 20 years of 
                                age; and
                                    ``(III) has not declined such 
                                assignment;
                    ``(B) may assign a case manager to any individual--
                            ``(i) who--
                                    ``(I) is a noncustodial parent 
                                receiving aid under the State plan; and
                                    ``(II) has not attained 20 years of 
                                age; or
                            ``(ii)(I) who is a parent not receiving aid 
                        under the State plan;
                            ``(II) who has not attained 20 years of 
                        age;
                            ``(III) whose income does not exceed 150 
                        percent of the income official poverty line (as 
                        defined by the Office of Management and Budget, 
                        and revised annually in accordance with section 
                        673(2) of the Omnibus Budget Reconciliation Act 
                        of 1981) applicable to a family of the size 
                        involved; and
                            ``(IV) who has not declined the assignment;
                    ``(C) shall require each case manager to improve 
                the capacity of any individual to whom assigned to 
                assume greater responsibility for the individual and 
                the family of the individual, by--
                            ``(i) in the case of an individual 
                        receiving aid under the State plan who is a 
                        custodial parent and has not attained 18 years 
                        of age, assessing the appropriateness of the 
                        living arrangement of the individual;
                            ``(ii) providing referrals to appropriate 
                        services (such as prenatal care, pre- and post-
                        partum school reentry, child care, well-baby 
                        care (including immunizations), and home visits 
                        if appropriate) needed for the individual to 
                        complete educational programs or employment 
                        preparation programs;
                            ``(iii) facilitating paternity 
                        establishment through contacts with the 
                        putative father during the mother's pregnancy, 
                        if appropriate, and if paternity is not 
established at birth, exploring ways to establish paternity;
                            ``(iv) explaining the rights and 
                        responsibilities of such individuals as 
                        established under the State plans approved 
                        under this part and part D, and helping such 
                        individuals meet their responsibilities;
                            ``(v) developing and monitoring the case 
                        plan and service provision in order to assess 
                        progress and make necessary changes;
                            ``(vi) ensuring that the case plan 
                        incorporates education, health, and employment 
                        goals during and after the completion of 
                        secondary school or the training program, and 
                        if the individual is required or allowed to 
                        participate in the program established by the 
                        State under part F, ensuring that the case plan 
                        is the employability plan for purposes of the 
                        State program established under part F;
                            ``(vii) attempting to identify the cause 
                        of, and address, any problems that are causing 
                        those of such individuals who are receiving aid 
                        under the State plan to be in danger of a 
                        reduction in aid;
                            ``(viii) recommending to the State agency 
                        that those of such individuals who are involved 
                        in an educational activity pursuant to a 
                        program established under section 482(k) 
                        receive bonuses, or that the State apply 
                        sanctions, as appropriate, under the State 
                        plan, or that there be exemptions from a 
                        requirement imposed by or under the State plan; 
                        and
                            ``(ix) in the case of an individual who has 
                        not attained 20 years of age and is a parent or 
                        pregnant, providing the individual with health 
                        agency information and family planning 
                        materials, and facilitating appointments with 
                        respect to such matters on request;
                    ``(D) shall, to the extent feasible, require each 
                case manager to work with such individuals to identify 
                appropriate opportunities for volunteer activities;
                    ``(E) shall locate case managers in State offices 
                that administer the State plan, or allow such offices 
                to subcontract the duties of case managers to 
                community-based organizations or other agencies of 
                State government such as health or education agencies; 
                and
                    ``(F) shall ensure that the case load of a case 
                manager assigned full-time to teenage parent case 
                management does not exceed 65 cases, and that the 
                average number of cases managed by such full-time case 
                managers does not exceed 50, and the Secretary shall 
                prescribe regulations to address situations in which a 
                case manager works less than full-time with teenage 
                parents.''.

 TITLE III--STRENGTHENING PARENTAL RESPONSIBILITY AND FAMILY STABILITY

                  Subtitle A--Federal Responsibilities

SEC. 301. EXPANSION OF FUNCTIONS OF FEDERAL PARENT LOCATOR SERVICE.

    Section 453(a) (42 U.S.C. 653(a)) is amended by striking 
``enforcing support obligations against such parent'' and inserting 
``establishing parentage, or establishing, modifying, and enforcing 
child support obligations, and which shall use safeguards to prevent 
the disclosure of information in cases that would jeopardize the safety 
of the custodial parent, the noncustodial parent, or any child of 
either such parent''.

SEC. 302. EXPANSION OF FEDERAL PARENT LOCATOR SYSTEMS.

    (a) Access to Additional Data Bases.--Section 453 (42 U.S.C. 653) 
is amended--
            (1) in subsection (b), by striking ``the most recent 
        address and place of employment'' and inserting ``the most 
        recent residential address, employer name and address, and 
        amounts and nature of income and assets''; and
            (2) in subsection (e), by adding at the end the following 
        new paragraph:
    ``(4) The Secretary of the Treasury shall enter into an agreement 
with the Secretary to provide prompt access by the Secretary (in 
accordance with this subsection and section 6103(l)(6) of the Internal 
Revenue Code of 1986) to all Federal income tax returns filed by 
individuals with the Internal Revenue Service.''.
    (b) Expansion of Access to the National Parent Locator Network.--
Section 453 (42 U.S.C. 653) is amended by adding at the end the 
following new subsection:
    ``(g) The Secretary shall expand the Parent Locator Service to 
establish a national network based on the comprehensive statewide child 
support enforcement systems developed by the States, to--
            ``(1) allow each State to--
                    ``(A) locate any absent parent who owes child 
                support or for whom a child support obligation is being 
                established, by--
                            ``(i) accessing the records of other State 
                        agencies and sources of locate information 
                        directly from one computer system to another; 
                        and
                            ``(ii) accessing Federal sources of locate 
                        information in the same fashion;
                    ``(B) access the files of other States to determine 
                whether there are other child support orders and obtain 
                the details of those orders;
                    ``(C) provide for both on-line and batch processing 
                of locate requests, with on-line access restricted to 
                cases in which the information is needed immediately 
                (for such reasons as court appearances) and batch 
                processing used to access data bases to locate 
                individuals or update information periodically; and
                    ``(D) direct locate requests to individual States 
                or Federal agencies, broadcast requests to selected 
                States, or broadcast cases to all States when there is 
                no indication of the source of needed information;
            ``(2) provide for a maximum of 48-hour turnaround time for 
        information to be broadcast and returned to a requesting State;
            ``(3) provide ready access to courts and administrative 
        agencies of the information on the network by location of a 
        computer terminal in each court; and
            ``(4) access the registries of child support orders 
        maintained by States pursuant to section 466(a)(20)(A).''.

SEC. 303. FEDERAL CHILD SUPPORT ORDER REGISTRY.

    (a) Establishment.--Not later than October 1, 1995, the Secretary 
shall establish a Federal registry of all child support orders recorded 
in State registries established pursuant to section 466(a)(20)(A) of 
the Social Security Act.
    (b) Comparison of Information on W-4 Forms With Information in 
Child Support Orders.--Not later than 10 days after the date on which a 
registry established under subsection (a) receives a W-4 form of an 
employee, the registry shall--
            (1) compare the information on the form with the 
        information in the registry on the child support obligations of 
        the employee; and
            (2) transmit to the registry established pursuant to 
        section 466(a)(20)(A) of the Social Security Act of the State 
        that is collecting and disbursing the child support payment--
                    (A) a notice as to whether the amount specified on 
                the W-4 form as the monthly child support obligation of 
                the employee is accurate or not; and
                    (B) the name and address of the employee.
    (c) Regulations.--The Secretary shall prescribe such regulations as 
may be necessary to carry out this section, especially in cases 
involving an employee who has 2 or more employers or child support 
obligations.
    (d) State Access to the Registry.--The Secretary shall, upon 
request of any State, provide the State with access to the information 
contained in the registry established under subsection (a).
    (e) Safeguards.--The Secretary shall implement such safeguards as 
may be necessary to prevent the disclosure of information of the 
registry established under subsection (a) in cases that would 
jeopardize the safety of a custodial parent, a noncustodial parent, or 
a child of such a parent.
    (f) Definitions.--As used in this section:
            (1) Child support order.--The term ``child support order'' 
        means an order requiring payments for support (including 
        medical support) and maintenance of a child or of a child and 
        the parent with whom the child is living.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (3) State.--The term ``State'' includes the several States, 
        the District of Columbia, the Commonwealth of Puerto Rico, the 
        Commonwealth of the Northern Mariana Islands, the United States 
        Virgin Islands, Guam, American Samoa, and the Trust Territory 
        of the Pacific Islands.

SEC. 304. NATIONAL REPORTING OF EMPLOYEES AND CHILD SUPPORT 
              INFORMATION.

    (a) In General.--The Secretary of the Treasury, in consultation 
with the Secretary of Labor, shall establish a system of reporting of 
employees by requiring employers to provide a copy of every employee's 
W-4 form to the Federal child support order registry established 
pursuant to section 303(a) of this Act--
            (1) in the case of employees hired on or after the 
        effective date of this section, on the date the employee is 
        hired; or
            (2) in the case of employees hired before such effective 
        date, not later than 10 days after such effective date.
    (b) Inclusion of Child Support Information on W-4 Forms.--The 
Secretary of the Treasury shall modify the W-4 form to enable the 
employee to indicate on the form--
            (1) whether the employee owes child support, and if so--
                    (A) the amount of the support payable;
                    (B) whether the support is to be paid through wage 
                withholding; and
                    (C) to whom the support is to be paid; and
            (2) whether health care insurance is available to the new 
        employee, and, if so, whether the employee has obtained such 
        insurance for the dependent children of the employee.

SEC. 305. FEDERAL MATCHING PAYMENTS.

    (a) Increased Base Matching Rate.--Section 455(a)(2) (42 U.S.C. 
655(a)(2)) is amended to read as follows:
            ``(2) For purposes of paragraph (1)(A), the percent 
        described in this paragraph for a quarter in a fiscal year is--
                    ``(A) 69 percent, for fiscal year 1997;
                    ``(B) 72 percent, for fiscal year 1998; and
                    ``(C) 75 percent, for fiscal year 1999 and each 
                succeeding fiscal year.''.
    (b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is 
amended--
            (1) in subsection (a)(1), in the matter preceding 
        subparagraph (A), by striking ``From'' and inserting ``Subject 
        to subsection (c), from''; and
            (2) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Notwithstanding subsection (a), the total expenditures for 
the State program under this part for each fiscal year, reduced by the 
percent specified in subsection (a)(2) for the fiscal year, shall not 
be less than such total expenditures for fiscal year 1995, reduced by 
66 percent.''.
    (c) Conforming Amendment.--Section 455(a)(1)(A) (42 U.S.C. 
655(a)(1)(A)) is amended by striking ``specified'' and inserting 
``described''.

SEC. 306. PERFORMANCE-BASED INCENTIVES AND PENALTIES.

    (a) Incentive Adjustments to Federal Matching Rate.--Section 458 
(42 U.S.C. 658) is amended to read as follows:

                ``incentive adjustments to matching rate

    ``Sec. 458. (a) Incentive Adjustment.--
            ``(1) In general.--In order to encourage and reward State 
        child support enforcement programs which perform in an 
        effective manner, the Federal matching rate for payments to a 
        State under section 455(a)(1)(A), for each fiscal year 
        beginning on or after October 1, 1997, shall be increased by a 
        factor reflecting the sum of the applicable incentive 
        adjustments (if any) determined in accordance with regulations 
        under this section with respect to statewide paternity 
        establishment and to overall performance in child support 
        enforcement.
            ``(2) Standards.--
                    ``(A) In general.--The Secretary shall specify in 
                regulations--
                            ``(i) the levels of accomplishment, and 
                        rates of improvement as alternatives to such 
                        levels, which States must attain to qualify for 
                        incentive adjustments under this section; and
                            ``(ii) the amounts of incentive adjustment 
                        that shall be awarded to States achieving 
                        specified accomplishment or improvement levels, 
                        which amounts shall be graduated, ranging up 
                        to--
                                    ``(I) 5 percentage points, in 
                                connection with statewide paternity 
                                establishment; and
                                    ``(II) 10 percentage points, in 
                                connection with overall performance in 
                                child support enforcement.
                    ``(B) Limitation.--In setting performance standards 
                pursuant to subparagraph (A)(i) and adjustment amounts 
                pursuant to subparagraph (A)(ii), the Secretary shall 
                ensure that the aggregate number of percentage point 
                increases as incentive adjustments to all States do not 
                exceed such aggregate increases as assumed by the 
                Secretary in estimates of the cost of this section as 
                of June 1994, unless the aggregate performance of all 
                States exceeds the projected aggregate performance of 
                all States in such cost estimates.
            ``(3) Determination of incentive adjustment.--The Secretary 
        shall determine the amount (if any) of the incentive adjustment 
        due each State on the basis of the data submitted by the State 
        through the system prescribed by the Secretary in regulations 
        issued pursuant to section 308 of the Economic Opportunity and 
        Family Responsibility Act of 1995, concerning the levels of 
        accomplishment (and rates of improvement) with respect to 
        performance indicators specified by the Secretary pursuant to 
        this section.
            ``(4) Fiscal year subject to incentive adjustment.--The 
        total percentage point increase determined pursuant to this 
        section with respect to a State program in a fiscal year shall 
        apply as an adjustment to the percent described in section 
        455(a)(2) for payments to such State for the succeeding fiscal 
        year.
    ``(b) Meaning of Terms.--For purposes of this section--
            ``(1) the term `statewide paternity establishment 
        percentage' means, with respect to a fiscal year, the ratio 
        (expressed as a percentage) of--
                    ``(A) the total number of out-of-wedlock children 
                in the State under one year of age for whom paternity 
                is established or acknowledged during the fiscal year, 
                to
                    ``(B) the total number of children born out of 
                wedlock in the State during such fiscal year; and
            ``(2) the term `overall performance in child support 
        enforcement' means a measure or measures of the effectiveness 
        of the State agency in a fiscal year which takes into account 
        factors including--
                    ``(A) the percentage of cases requiring a child 
                support order in which such an order was established;
                    ``(B) the percentage of cases in which child 
                support is being paid;
                    ``(C) the ratio of child support collected to child 
                support due; and
                    ``(D) the cost-effectiveness of the State program, 
                as determined in accordance with standards established 
                by the Secretary in regulations.''.
    (b) Title IV-D Payment Adjustment.--Section 455(a)(2) (42 U.S.C. 
655(a)(2)), as amended by section 305 of this Act, is amended--
            (1) by striking the period at the end of subparagraph (C) 
        and inserting a comma; and
            (2) by adding after and below subparagraph (C), flush with 
        the left margin of the paragraph, the following:
``increased by the incentive adjustment factor (if any) determined by 
the Secretary pursuant to section 458.''.
    (c) Conforming Amendments.--Section 454(22) (42 U.S.C. 654(22)) is 
amended--
            (1) by striking ``incentive payments'' the first place it 
        appears and inserting ``incentive adjustments''; and
            (2) by striking ``any such incentive payments made to the 
        State for such period'' and inserting ``any increases in 
        Federal payments to the State resulting from such incentive 
        adjustments''.
    (d) Calculation of IV-D Paternity Establishment Percentage.--
            (1) Overall performance.--Section 452(g)(1) (42 U.S.C. 
        652(g)(1)) is amended in the matter preceding subparagraph (A), 
        by inserting ``its overall performance in child support 
        enforcement is satisfactory (as defined in section 458(b) and 
        regulations of the Secretary), and'' after ``1994,''
            (2) Definition.--Section 452(g)(2)(A) (42 U.S.C. 
        652(g)(2)(A)) is amended in the matter preceding clause (i)--
                    (A) by striking ``paternity establishment 
                percentage'' and inserting ``IV-D paternity 
                establishment percentage''; and
                    (B) by striking ``(or all States, as the case may 
                be)''.
            (3) Modification of requirements.--Section 452(g)(3) (42 
        U.S.C. 652(g)(3)) is amended--
                    (A) by striking subparagraph (A) and redesignating 
                subparagraphs (B) and (C) as subparagraphs (A) and (B), 
                respectively;
                    (B) in subparagraph (A), as redesignated, by 
                striking ``the percentage of children born out-of-
                wedlock in the State'' and inserting ``the percentage 
                of children in the State who are born out of wedlock or 
                for whom support has not been established''; and
                    (C) in subparagraph (B), as redesignated--
                            (i) by inserting ``and overall performance 
                        in child support enforcement'' after 
                        ``paternity establishment percentages''; and
                            (ii) by inserting ``and securing support'' 
                        before the period.
    (e) Title IV-A Payment Reduction.--Section 403 (42 U.S.C. 603) is 
amended--
            (1) in subsection (a), in the matter preceding paragraph 
        (1), by striking ``From'' and inserting ``Subject to subsection 
        (h), from'';
            (2) in subsection (h), by striking ``(h)(1)'' and all that 
        follows through paragraph (2) and inserting the following:
    ``(h)(1) If the Secretary finds, with respect to a State program 
under this part in a fiscal year beginning on or after October 1, 
1996--
            ``(A)(i) on the basis of data submitted by a State through 
        the system referred to in section 458(a)(3), that the State 
        program in such fiscal year failed to achieve the required IV-D 
        paternity establishment percentage (as defined in section 
        452(g)(2)(A)) or the appropriate level of overall performance 
        in child support enforcement (as defined in section 458(b)(2)), 
        or to meet other performance measures that may be established 
        by the Secretary; or
            ``(ii) on the basis of an audit or audits of such State 
        data conducted pursuant to section 452(a)(4), that the State 
        data submitted through the system prescribed by the Secretary 
        in regulations issued pursuant to 308 of the Economic 
        Opportunity and Family Responsibility Act of 1995 is incomplete 
        or unreliable; and
            ``(B) that, with respect to the succeeding fiscal year--
                    ``(i) the State failed to take sufficient 
                corrective action to achieve the appropriate 
                performance levels as described in subparagraph (A)(i); 
                or
                    ``(ii) the data submitted by the State through the 
                system prescribed by the Secretary in regulations 
                issued pursuant to 308 of the Economic Opportunity and 
                Family Responsibility Act of 1995 is incomplete or 
                unreliable,
the amounts otherwise payable to the State under this part for quarters 
beginning after the end of the immediately succeeding fiscal year, and 
before quarters beginning after the end of the first quarter throughout 
which the State program is in compliance with the performance 
requirement, shall be reduced by the percentage specified in paragraph 
(2) of this subsection.
    ``(2) The reductions required under paragraph (1) shall be--
            ``(A) not less than 1 nor more than 2 percent;
            ``(B) not less than 2 nor more than 3 percent, if the 
        finding is the second consecutive finding made pursuant to 
        paragraph (1); or
            ``(C) not less than 3 nor more than 5 percent, if the 
        finding is the third or a subsequent consecutive such 
        finding.''; and
            (3) in subsection (h)(3), by striking ``not in full 
        compliance'' and all that follows and inserting ``determined as 
        a result of an audit to have submitted incomplete or unreliable 
        data through the system prescribed by the Secretary in 
        regulations issued pursuant to 308 of the Economic Opportunity 
        and Family Responsibility Act of 1995, shall be determined to 
        have submitted adequate data if the Secretary determines that 
        the extent of the incompleteness or unreliability of the data 
        is of a technical nature which does not adversely affect the 
        determination of the level of the State's performance.''.
    (f) Conforming Amendment.--Section 452(a)(4) is amended by striking 
``, or which is operating under a corrective action plan in accordance 
with section 403(h)(2),''.
    (g) Effective Dates.--
            (1) Incentive adjustments.--
                    (A) In general.--The amendments made by subsections 
                (a), (b), and (c) shall become effective on October 1, 
                1997, except to the extent provided in subparagraph 
                (B).
                    (B) Exception.--Section 458 of the Social Security 
                Act, as in effect prior to the enactment of this 
                section, shall be effective for purposes of incentive 
                payments to States for fiscal years prior to fiscal 
                year 1999.
            (2) Other amendments.--The amendments made by subsections 
        (d), (e), and (f) shall become effective with respect to 
        calendar quarters beginning on and after the date of the 
        enactment of this Act.

SEC. 307. INCREASED FEDERAL FINANCIAL PARTICIPATION FOR STATES WITH 
              UNIFIED CHILD SUPPORT ENFORCEMENT PROGRAMS.

    (a) In General.--Section 455(a)(2) (42 U.S.C. 655(a)(2)), as 
amended by sections 305(a) and 306(b) of this Act, is amended--
            (1) by inserting ``(A)'' after ``(2)'';
            (2) by redesignating subparagraphs (A), (B), and (C) as 
        clauses (i), (ii), and (iii), respectively; and
            (3) by adding at the end the following:
    ``(B) The percent described in this paragraph for a State for a 
quarter in a fiscal year shall be the percent specified in subparagraph 
(A) for the fiscal year increased by 5 percentage points if the 
following apply to the State child support enforcement program:
            ``(i) All authority, accountability, and responsibility for 
        the program is centered at the State level in a unified State 
        agency.
            ``(ii) The program is administered by a single agency, and 
        policymaking for the program is centralized.
            ``(iii) There is statewide uniformity of case-processing 
        procedures and forms.
            ``(iv) There is a uniform hearing and appeal process.
            ``(v) All financing decisions are made at the State level.
            ``(vi) All non-Federal funding is appropriated at the State 
        level.
            ``(vii) All personnel and contracting decision making is 
        made by the State agency, and all personnel are employees of 
        the State agency, except that the Secretary may by regulation 
        establish exceptions with respect to not more than 10 percent 
        of personnel.''.
    (b) Conforming Amendment.--Section 455(c) (42 U.S.C. 655(c)), as 
added by section 305 of this Act, is amended by striking ``(a)(2)'' and 
inserting ``(a)(2)(A)''.

SEC. 308. NEW CHILD SUPPORT AUDIT PROCESS.

    (a) In General.--After consultation with the Child Support Audit 
Advisory Committee, the Secretary of Health and Human Services shall--
            (1) in accordance with subsection (b), promulgate new 
        criteria and standards for conducting reviews under section 
        452(a)(4) of the Social Security Act and establishing a system 
        for the reporting of data relevant to such reviews, which 
        emphasize program outcomes; and
            (2) not later than the first day of the twelfth calendar 
        month beginning after the date of the enactment of this Act, 
        recommend to the Congress such legislation as may be necessary, 
        with respect to the financing of State child support programs 
        under part D of title IV of the Social Security Act, to enhance 
        the effectiveness of such audits and the associated penalty 
        process under section 403(h) of the Social Security Act.
    (b) Timing.--
            (1) Notice of proposed rulemaking.--Not later than 270 days 
        after the date of the enactment of this Act, the Secretary of 
        Health and Human Services shall issue a notice of proposed 
        rulemaking with respect to the audit criteria and standards 
        required by subsection (a)(1).
            (2) Final regulations.--Not later than the first day of the 
        twelfth calendar month beginning after the date of the 
        enactment of this Act, and after allowing not less than 45 days 
        for public comment on the proposed rulemaking required by 
        paragraph (1) of this subsection, the Secretary of Health and 
        Human Services shall issue final regulations with respect to 
        the audit criteria and standards required by subsection (a)(1).

SEC. 309. NATIONAL CHILD SUPPORT GUIDELINES COMMISSION.

    (a) Establishment.--There is hereby established a commission to be 
known as the ``National Child Support Guidelines Commission'' (in this 
section referred to as the ``Commission'').
    (b) General Duties.--The Commission shall develop a national child 
support guideline for consideration by the Congress that is based on a 
study of various guideline models, the benefits and deficiencies of 
such models, and any needed improvements.
    (c) Membership.--
            (1) Number; appointment.--
                    (A) In general.--The Commission shall be composed 
                of 12 individuals appointed jointly by the Secretary of 
                Health and Human Services and the Congress, not later 
                than January 15, 1996, of which--
                            (i) 2 shall be appointed by the Chairman of 
                        the Committee on Finance of the Senate, and 1 
                        shall be appointed by the ranking minority 
                        member of the Committee;
                            (ii) 2 shall be appointed by the Chairman 
                        of the Committee on Ways and Means of the House 
                        of Representatives, and 1 shall be appointed by 
                        the ranking minority member of the Committee; 
                        and
                            (iii) 6 shall be appointed by the Secretary 
                        of Health and Human Services.
                    (B) Qualifications of members.--Members of the 
                Commission shall have expertise and experience in the 
                evaluation and development of child support guidelines. 
                At least 1 member shall represent advocacy groups for 
                custodial parents, at least 1 member shall represent 
                advocacy groups for noncustodial parents, and at least 
                1 member shall be the director of a State program under 
                part D of title IV of the Social Security Act.
            (2) Terms of office.--Each member shall be appointed for a 
        term of 2 years. A vacancy in the Commission shall be filled in 
        the manner in which the original appointment was made.
    (d) Commission Powers, Compensation, Access to Information, and 
Supervision.--The first sentence of subparagraph (C), the first and 
third sentences of subparagraph (D), subparagraph (F) (except with 
respect to the conduct of medical studies), clauses (ii) and (iii) of 
subparagraph (G), and subparagraph (H) of section 1886(e)(6) of the 
Social Security Act shall apply to the Commission in the same manner in 
which such provisions apply to the Prospective Payment Assessment 
Commission.
    (e) Report.--Not later than 2 years after the appointment of 
members, the Commission shall submit to the President, the Committee on 
Ways and Means of the House of Representatives, and the Committee on 
Finance of the Senate, a recommended national child support guideline 
and a final assessment of issues relating to such a proposed national 
child support guideline.
    (f) Termination.--The Commission shall terminate 6 months after the 
submission of the report described in subsection (e).

SEC. 310. CHILD SUPPORT AUDIT ADVISORY COMMITTEE.

    (a) Establishment.--Not later than 60 days after the date of the 
enactment of this Act, the Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall establish a 
committee which shall be known as the Child Support Audit Advisory 
Committee (in this section referred to as the ``Committee'').
    (b) Duties.--The Committee shall assist the Secretary in--
            (1) developing revised audit criteria and standards to be 
        used pursuant to section 452(a)(4) of the Social Security Act 
        based on--
                    (A) common data elements which are defined, 
                collected, and reported in a uniform manner from each 
                State;
                    (B) numeric measures of the outcomes of the child 
                support enforcement program under part D of title IV of 
                such Act; and
                    (C) numeric measures for assessing compliance with 
                the regulations issued by the Secretary pursuant to 
                subsections (h) and (i) of section 452 of such Act;
            (2) formulating a definition of substantial compliance that 
        is based on such revised audit criteria and standards;
            (3) determining the period of time after interim or final 
        Federal regulations are issued implementing such revised audit 
        criteria and standards after which a State may be audited to 
        determine compliance with such regulations; and
            (4) recommending to the Congress such legislation as may be 
        necessary, with respect to the financing of child support 
        programs under part D of title IV of such Act, to enhance the 
        effectiveness of audits required to be conducted under section 
        452(a)(4) of such Act and the associated penalty process under 
        section 403(h) of such Act.
    (c) Membership.--The Committee shall be composed of not less than 6 
members appointed by the Secretary, including--
            (1) at least 1 director of a State child support 
        enforcement program operating under part D of title IV of the 
        Social Security Act;
            (2) at least 1 commissioner of a State human services 
        agency;
            (3) individuals who have demonstrated expertise in the 
        development of quantitative and qualitative measures for 
        performance-based audits; and
            (4) at least 2 representatives of recipients of child 
        support enforcement services.
    (d) Procedure.--
            (1) Participation of the secretary.--The Secretary (or a 
        designee of the Secretary) shall be an ex officio member of the 
        Committee, and shall not vote on matters before the Committee.
            (2) Meetings.--The Committee shall meet at the call of the 
        Secretary or a designee of the Secretary.
    (e) Compensation.--
            (1) In general.--No member of the Committee may receive 
        compensation for service on the Committee.
            (2) Travel expenses.--Each member of the Committee shall 
        receive travel expenses, including per diem in lieu of 
        subsistence, in accordance with sections 5702 and 5703 of title 
        5, United States Code.
    (f) Administrative Support.--Upon request of the Committee, the 
Secretary shall provide to the Committee the administrative support 
services necessary for the Committee to carry out its duties under this 
Act.
    (g) Inapplicability of the Federal Advisory Committee Act.--The 
Federal Advisory Committee Act shall not apply to the Committee.
    (h) Report.--Within 180 days after the date of the enactment of 
this Act, the Committee shall submit to the Secretary a report that 
contains proposed criteria and standards for conducting audits under 
section 452(a)(4) of the Social Security Act, which emphasize program 
outcomes.

                  Subtitle B--Paternity Establishment

SEC. 311. PATERNITY ESTABLISHMENT PROCEDURES.

    (a) In General.--Section 466(a)(5) (42 U.S.C. 666(a)(5)) is amended 
by striking subparagraphs (C) and (D) and inserting the following:
            ``(C)(i) Procedures for a simple civil process for 
        voluntarily acknowledging paternity under which the State must 
        provide that, before a mother and a putative father can sign an 
        acknowledgment of paternity, the putative father and the mother 
        must be given notice, orally, in writing, and in a language 
        that each can understand, of the alternatives to, the legal 
        consequences of, and the rights (including, if 1 parent is a 
        minor, any rights afforded due to minority status) and 
        responsibilities that arise from, signing the acknowledgment.
            ``(ii) Such procedures must include a hospital-based 
        program for the voluntary acknowledgment of paternity focusing 
        on the period immediately before or after the birth of a child.
            ``(iii) Such procedures must require the State agency 
        responsible for maintaining birth records to offer voluntary 
        paternity establishment services.
            ``(iv) The Secretary shall prescribe regulations governing 
        voluntary paternity establishment services offered by hospitals 
        and birth record agencies. The Secretary shall prescribe 
        regulations specifying the types of other entities that may 
        offer voluntary paternity establishment services, and governing 
        the provision of such services, which shall include a 
        requirement that such an entity must use the same notice 
        provisions used by, the same materials used by, provide the 
        personnel providing such services with the same training 
        provided by, and evaluate the provision of such services in the 
        same manner as, voluntary paternity establishment programs of 
        hospitals and birth record agencies.
            ``(v) Such procedures must require the State and those 
        required to establish paternity to use only the affidavit 
        developed under section 452(a)(7) for the voluntary 
        acknowledgment of paternity, and to give full faith and credit 
        to such an affidavit signed in any other State.
            ``(D)(i) Procedures under which a signed acknowledgment of 
        paternity is considered a legal finding of paternity, subject 
        to the right of any signatory to rescind the acknowledgment 
        within 30 days.
            ``(ii)(I) Procedures under which, after the 30-day period 
        referred to in clause (i), a signed acknowledgment of paternity 
        may be challenged in court only on the basis of fraud, duress, 
        or material mistake of fact, with the burden of proof upon the 
        challenger, and under which the legal responsibilities 
        (including child support obligations) of any signatory arising 
        from the acknowledgment may not be suspended during the 
        challenge, except for good cause shown.
            ``(II) Procedures under which, after the 30-day period 
        referred to in clause (i), a minor who signs an acknowledgment 
        of paternity other than in the presence of a parent or court-
        appointed guardian ad litem may rescind the acknowledgment in a 
        judicial or administrative proceeding, until the earlier of--
                    ``(aa) attaining the age of majority; or
                    ``(bb) the date of the first judicial or 
                administrative proceeding brought (after the signing) 
                to establish a child support obligation, visitation 
                rights, or custody rights with respect to the child 
                whose paternity is the subject of the acknowledgment, 
                and at which the minor is represented by a parent, 
                guardian ad litem, or attorney.''.
    (b) National Paternity Acknowledgment Affidavit.--Section 452(a)(7) 
(42 U.S.C. 652(a)(7)) is amended by inserting ``, and develop an 
affidavit to be used for the voluntary acknowledgment of paternity 
which shall include the social security account number of each parent'' 
before the semicolon.

SEC. 312. ENHANCING OUTREACH TO ENCOURAGE PATERNITY ESTABLISHMENT.

    (a) In General.--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) in order to encourage voluntary paternity 
        acknowledgement, provide for--
                    ``(A) the development and distribution of material 
                at schools, hospitals, agencies administering programs 
                under part A of this title and title XIX, prenatal 
                health-care providers, WIC programs, health 
                departments, clinics, driver's license offices, public 
                parks, military bases, and other appropriate locations, 
                that describe the benefits and responsibilities of 
                paternity establishment and the process by which 
                paternity services may be obtained; and
                    ``(B) outreach programs at hospitals and birthing 
                facilities and programs for prenatal care, child birth, 
                and parenting, in accordance with regulations which 
                shall be prescribed by the Secretary not later than 1 
                year after such effective date.''.
    (b) Enhanced Federal Match.--Section 455(a)(1) (42 U.S.C. 
655(a)(1)) is amended--
            (1) by striking ``and'' at the end of subparagraph (B);
            (2) by inserting ``and'' at the end of subparagraph (C); 
        and
            (3) by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) equal to 90 percent (rather than the 
                percentage specified in subparagraph (A)) of so much of 
                the sums expended during such quarter as are 
                attributable to costs incurred in carrying out section 
                454(25);''.

SEC. 313. STRENGTHENING CIVIL PROCEDURES FOR PATERNITY ESTABLISHMENT.

    Section 466(a) (42 U.S.C. 666(a)) is amended by inserting after 
paragraph (11) the following new paragraph:
            ``(12) As part of the State's civil procedures for 
        establishment of paternity, the State shall--
                    ``(A) allow for expedited procedures for ordering 
                genetic tests upon the birth of a child if the putative 
                father of the child has not acknowledged paternity of 
                the child;
                    ``(B)(i) contract for genetic testing with 
                accredited laboratories (as determined by the 
                Secretary; and
                    ``(ii) authorize the State agency to order all 
                parties to a paternity action to submit to genetic 
                testing upon request of any party or if the putative 
                father denies paternity or fails to appear at any 
                scheduled conference to respond to the allegation of 
                paternity;
                    ``(C)(i) advance the costs of genetic tests, 
                subject to recoupment from the putative father of a 
                child if he is determined to be the biological father 
                of the child; and
                    ``(ii) if the result of genetic testing done by a 
                laboratory is disputed, then, upon reasonable request 
                of any party, order that additional testing be done by 
                the same laboratory or by an independent laboratory at 
                the expense of the requesting party;
                    ``(D) authorize the State to forgive costs incurred 
                by the State for delivery medical expenses or payments 
                of aid under the State plan approved under part A (but 
                not forgive debts owed to the mother) if the father of 
                the child cooperates or acknowledges paternity before 
                or after the completion of a genetic test;
                    ``(E) authorize the State agency to enter default 
                orders to establish paternity if a party refuses to 
                comply with an order to submit to genetic testing;
                    ``(F) prohibit the use of hearings by a court or 
                administrative agency to ratify an acknowledgement of 
                paternity;
                    ``(G) allow a putative father of a child (if not 
                presumed to be the father under State law) standing to 
                bring paternity actions;
                    ``(H) after paternity of a child is established by 
                affidavit, and until an action for custody of the child 
                is brought and heard by a tribunal, presume that the 
                primary caretaker of a child born out of wedlock has 
                physical custody of the child (with the mother presumed 
                to be the primary caretaker of a newborn child whose 
                paternity is established by affidavit in a hospital), 
                unless the mother and father of the child agree that 
                physical custody should be with another individual;
                    ``(I) upon motion by a party, require a tribunal in 
                contested cases to order the absent parent of a child 
                to provide child support with respect to the child on a 
                temporary basis in accordance with State law if--
                            ``(i) the results of parentage testing 
                        create a rebuttable presumption that the 
                        putative parent is a parent of the child;
                            ``(ii) the person from whom support is 
                        sought has signed a verified statement of 
                        parentage of the child; or
                            ``(iii) there is other clear and convincing 
                        evidence that the person from whom support is 
                        sought is a parent of the child;
                    ``(J) repeal any law that provides for paternity 
                cases to be tried by a jury, except to the extent that 
                such a trial is required by the State constitution; and
                    ``(K) have and use laws that provide for the 
                introduction and admission into evidence, without need 
                for third-party foundation testimony, of pre-natal and 
                post-natal birth-related and parentage-testing bills, 
                under which such a bill shall be regarded as prima 
                facie evidence of the amount incurred on behalf of the 
                child for the procedures included in the bill.''.

SEC. 314. PENALTY FOR FAILURE TO ESTABLISH PATERNITY PROMPTLY.

    (a) In General.--Section 403 (42 U.S.C. 603) is amended by 
inserting after subsection (h) the following new subsection:
    ``(i) Penalty for Failure To Establish Paternity Promptly.--
            ``(1) In general.--The amounts otherwise payable under 
        subsection (a) to a State for any calendar quarter beginning 10 
        months or more after the date of the 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) Reduction formula.--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 that is 10 months after the date 
                of the enactment of this subsection--
                            ``(i) who are receiving aid under the State 
                        plan approved under part A;
                            ``(ii) whose custodial relatives have, 
                        throughout the preceding 12-month period, 
                        complied with the cooperation requirements 
                        specified in section 402(a)(26)(B)(i); and
                            ``(iii) for whom paternity has not been 
                        established;
                    ``(B) the average monthly assistance payment under 
                the State plan approved under this part; and
                    ``(C) the Federal matching rate applicable to the 
                assistance payment.
            ``(3) Tolerance level.--
                    ``(A) In general.--For purposes of paragraph 
                (2)(A), the tolerance level shall not be higher than 
                the applicable percentage 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) Applicable percentage.--As used in 
                subparagraph (A), the term `applicable percentage' 
                means--
                            ``(i) 25 percent for fiscal years 1998 and 
                        1999;
                            ``(ii) 20 percent for fiscal years 2000 and 
                        2001;
                            ``(iii) 15 percent for fiscal years 2002 
                        and 2003; and
                            ``(iv) 10 percent for fiscal year 20043 and 
                        each succeeding fiscal year.''.
    (b) Conforming Amendment.--Section 403(a) (42 U.S.C. 603(a)) is 
amended in the matter preceding paragraph (1), by striking ``From the'' 
and inserting ``Subject to subsection (i), from the''.

                        Subtitle C--Enforcement

SEC. 321. ACCESS TO FINANCIAL RECORDS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by section 313 of 
this Act, is amended by inserting after paragraph (12) the following 
new paragraph:
            ``(13) Procedures under which the State may obtain access 
        to financial records maintained by any financial institution 
        doing business in the State, for the purpose of establishing, 
        modifying, or enforcing a child support obligation of the 
        person.''.

SEC. 322. PRESUMED ADDRESS OF OBLIGOR AND OBLIGEE.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 313 and 
321 of this Act, is amended by inserting after paragraph (13) the 
following new paragraph:
            ``(14) Procedures under which the State shall--
                    ``(A) require the court or administrative agency 
                with authority to issue the final order in a child 
                support or parentage case to require each party subject 
                to the order to file with the court or administrative 
                agency, on or before the date the order is issued--
                            ``(i) the party's residential address or 
                        addresses;
                            ``(ii) the party's mailing address or 
                        addresses;
                            ``(iii) the party's home telephone number 
                        or numbers;
                            ``(iv) the party's driver's license number 
                        and the State that issued the license;
                            ``(v) the party's social security account 
                        number;
                            ``(vi) the name of each employer of the 
                        party;
                            ``(vii) the addresses of each place of 
                        employment of the party; and
                            ``(viii) the party's work telephone number 
                        or numbers; and
                    ``(B) require the court or administrative agency in 
                any action related to child support to presume, for the 
                purpose of providing sufficient notice (other than the 
                initial notice in an action to establish parentage or a 
                child support order), that the parent resides at the 
                last residential address given by the parent to the 
                court or agency.''.

SEC. 323. FAIR CREDIT REPORTING ACT AMENDMENT.

    Section 604 of the Fair Credit Reporting Act (15 U.S.C. 1681b) is 
amended by adding at the end the following new paragraph:
    ``(4) To a State agency administering a State plan under section 
454 of the Social Security Act, for use to establish, modify, or 
enforce a child support award.''.

SEC. 324. ADDITIONAL BENEFITS SUBJECT TO GARNISHMENT.

    (a) Federal Death Benefits, Black Lung Benefits, and Veterans 
Benefits.--Section 462(f)(2) (42 U.S.C. 662(f)(2)) is amended by 
striking ``(not including'' and all that follows through 
``compensation)''.
    (b) Workers' Compensation.--Section 462(f) (42 U.S.C. 662(f)) is 
amended--
            (1) by striking ``or'' at the end of paragraph (1);
            (2) by striking the period at the end of paragraph (2) and 
        inserting ``, or''; and
            (3) by adding at the end the following new paragraph:
            ``(3) workers' compensation benefits.''.

SEC. 325. HOLD ON OCCUPATIONAL, PROFESSIONAL, AND BUSINESS LICENSES.

    (a) State Hold Based on Warrant or Support Delinquency.--Section 
466(a) (42 U.S.C. 666(a)), as amended by sections 313, 321, and 322 of 
this Act, is amended by inserting after paragraph (14) the following 
new paragraph:
            ``(15) Procedures under which the State occupational 
        licensing and regulating departments and agencies (other than 
        the department or agency responsible for licensing the 
        operation of motor vehicles) may not issue or renew any 
        occupational, professional, or business license of--
                    ``(A) a noncustodial parent who is the subject of 
                an outstanding failure to appear warrant, capias, or 
                bench warrant related to a child support proceeding 
                that appears on the State's crime information system, 
                until removed from the system; or
                    ``(B) an individual who is delinquent in the 
                payment of child support, until the obligee or a State 
                entity responsible for child support enforcement 
                consents to, or a court or administrative agency that 
                is responsible for the order's enforcement orders, the 
                release of the hold on the license, or an expedited 
                inquiry and review is completed while the individual is 
                granted a 60-day temporary license.''.
    (b) Federal Hold Based on Support Delinquency.--A Federal agency 
may not issue or renew any occupational, professional, or business 
license of an individual who is delinquent in the payment of child 
support, until the obligee, the obligee's attorney or a State entity 
responsible for child support enforcement consents to, or a court or 
administrative agency that is responsible for the order's enforcement 
orders, the release of the hold on the license, or an expedited inquiry 
and review is completed while the individual is granted a 60-day 
temporary license.

SEC. 326. DRIVER'S LICENSES AND VEHICLE REGISTRATIONS DENIED TO PERSONS 
              FAILING TO APPEAR IN CHILD SUPPORT CASES.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 313, 321, 
322, and 325 of this Act, is amended by inserting after paragraph (15) 
the following new paragraph:
            ``(16) Procedures under which--
                    ``(A) the State motor vehicle department--
                            ``(i) may not issue or renew the driver's 
                        license or any vehicle registration (other than 
                        temporary) of any noncustodial parent who is 
                        the subject of an outstanding failure to appear 
                        warrant, capias, or bench warrant related to a 
                        child support proceeding that appears on the 
                        State's crime information system, until removed 
                        from the system; and
                            ``(ii) in any case in which a show cause 
                        order has been issued as described in 
                        subparagraph (B), may grant a temporary license 
                        or vehicle registration to the individual 
                        pending the show cause hearing or the removal 
                        of the warrant, whichever occurs first; and
                    ``(B) a State court, upon receiving notice that an 
                individual to whom a State driver's license or vehicle 
                registration has been issued is the subject of a 
                warrant related to a child support proceeding, shall 
                issue a show cause order to the individual requesting 
                the individual to demonstrate why the individual's 
                driver's license or vehicle registration should not be 
                suspended until the warrant is removed by the State 
                responsible for issuing the warrant.''.

SEC. 327. LIENS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 313, 321, 
322, 325, and 326 of this Act, is amended by inserting after paragraph 
(16) the following new paragraph:
            ``(17) Procedures under which the State shall 
        systematically place liens on all nonexempt real and titled 
        personal property for child support arrearages determined under 
        a court order or an order of an administrative process 
        established under State law, using a method for updating the 
        value of the lien on a regular basis or allowing for an 
        expedited inquiry to and response from a State child support 
        order registry established pursuant to paragraph (20)(A) for 
        proof of the amount of arrears, with an expedited method for 
        the titleholder or the individual owing the arrearage to 
        contest the arrearage or to request a release upon fulfilling 
        the support obligation, and under which such a lien has 
        precedence over all other encumbrances on a title to personal 
        property other than a purchase money security interest, and 
        that the individual owed the arrearage may execute on, seize, 
        and sell the property in accordance with State law.''.

SEC. 328. FRAUDULENT TRANSFER PURSUIT.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 313, 321, 
322, 325, 326, and 327 of this Act, is amended by inserting after 
paragraph (17) the following new paragraph:
            ``(18) Procedures requiring that, in any case related to 
        child support, any transfer of property for significantly less 
        than the fair market value of the property by an individual who 
        owes a child support arrearage shall be presumed to be made 
        with the intent to avoid payment of the arrearage, and may be 
        rebutted by evidence to the contrary.''.

SEC. 329. REPORTING OF CHILD SUPPORT ARREARAGES TO CREDIT BUREAUS.

    Section 466(a)(7)(A) (42 U.S.C. 666(a)(7)(A)) is amended by 
striking ``$1,000'' and inserting ``the amount of the monthly support 
obligation''.

SEC. 330. DENIAL OF PASSPORTS TO NONCUSTODIAL PARENTS SUBJECT TO STATE 
              ARREST WARRANTS IN CASES OF NONPAYMENT OF CHILD SUPPORT.

    The Secretary of State is authorized to refuse a passport or 
revoke, restrict, or limit a passport in any case in which the 
Secretary of State determines or is informed by competent authority 
that the applicant or passport holder is a noncustodial parent who is 
the subject of an outstanding State warrant of arrest for nonpayment of 
child support, where the amount in controversy is not less than 
$10,000.

SEC. 331. STATUTES OF LIMITATION.

    (a) In General.--Section 466(a) (42 U.S.C. 666(a)), as amended by 
sections 313, 321, 322, 325, 326, 327, and 328 of this Act, is amended 
by inserting after paragraph (18) the following new paragraph:
            ``(19) Procedures which permit the enforcement of any child 
        support order until the child attains at least 30 years of 
        age.''.
    (b) Applicability.--The amendment made by this section shall apply 
to orders entered before, on, and after the date of the enactment of 
this Act.

SEC. 332. COLLECTION OF PAST-DUE SUPPORT USING TAX COLLECTION 
              AUTHORITY.

    (a) Expanded Role of the Internal Revenue Service.--
            (1) In general.--Section 6305 of the Internal Revenue Code 
        of 1986 (relating to collection of certain liability) is 
        amended by redesignating subsections (a) and (b) as subsections 
        (b) and (c), respectively, and by inserting before subsection 
        (b) (as so redesignated) the following new subsection:
    ``(a) In General.--The head of any State child support order 
registry established pursuant to section 466(a)(20)(A) of the Social 
Security Act may certify to the Secretary for collection under this 
subsection the amount of any child support obligation. No amount may be 
certified under the preceding sentence except the amount of the 
delinquency under a court or administrative order for support and upon 
a showing by such agency head that such State has made reasonable 
efforts to collect such amount using its own collection mechanisms.''.
            (2) Conforming amendments.--
                    (A) Subsection (b) of section 6305 of such Code (as 
                redesignated by subsection (a)) is amended by striking 
                ``Upon receiving'' and all that follows through 
                ``Welfare'' the second place it appears and inserting 
                ``Upon receiving a certification referred to in 
                subsection (a)''.
                    (B) Subsection (c) of section 6305 of such Code (as 
                redesignated by subsection (a)) is amended by striking 
                ``subsection (a)'' and inserting ``subsection (b)''.
    (b) Collection of Past-Due Support Using Refund Offset.--
            (1) In general.--Subsection (c) of section 6402 of the 
        Internal Revenue Code of 1986 (relating to authority to make 
        credits or refunds) is amended to read as follows:
    ``(c) Offset of Past-Due Support Against Overpayments.--
            ``(1) In general.--Upon receiving notice from any State 
        registry that an individual owes past-due support, the 
        Secretary shall determine whether any amounts, as refunds of 
        Federal taxes paid, are payable to such individual (regardless 
        of whether such individual filed a tax return as a married or 
        unmarried individual). If the Secretary finds that any such 
        amount is payable, the Secretary--
                    ``(A) shall withhold from such refunds an amount 
                equal to the past-due support,
                    ``(B) shall concurrently send a notice to such 
                individual that the withholding has been made 
                (including in or with such notice a notification to any 
                other individual who may have filed a joint return with 
                such individual of the steps which such other 
                individual may take in order to secure his or her 
                proper share of the refund), and
                    ``(C) shall pay such amount to such registry 
                (together with notice of the individual's home 
                address).
            ``(2) Procedure.--
                    ``(A) In general.--
                            ``(i) Provision of notice.--Prior to 
                        notifying the Secretary under paragraph (1) 
                        that an individual owes past-due support, the 
                        head of the State registry shall send notice to 
                        such individual that a withholding will be made 
                        from any refund otherwise payable to such 
                        individual.
                            ``(ii) Contents of notice.--The notice 
                        shall also--
                                    ``(I) instruct the individual owing 
                                the past-due support of the steps which 
                                may be taken to contest the State 
                                registry's determination that past-due 
                                support is owed or the amount of the 
                                past-due support, and
                                    ``(II) provide information, as may 
                                be prescribed by the Secretary of 
                                Health and Human Services by regulation 
                                in consultation with the Secretary, 
                                with respect to procedures to be 
                                followed, in the case of a joint 
                                return, to protect the share of the 
                                refund which may be payable to another 
                                individual.
                    ``(B) Special rules for offsets against 
                overpayments on joint returns.--
                            ``(i) In general.--If the Secretary 
                        determines that an amount should be withheld 
                        under paragraph (1), and that the refund from 
                        which it should be withheld is based upon a 
                        joint return, the Secretary shall notify the 
                        State registry that the withholding is being 
                        made from a refund based upon a joint return, 
                        and shall furnish to the State registry the 
                        names and addresses of each spouse filing such 
                        joint return.
                            ``(ii) Share of refund payable to spouse 
                        not owing past-due support.--If the other 
                        individual filing the joint return with the 
                        named individual owing the past-due support 
                        takes appropriate action to secure his or her 
                        proper share of a refund from which a 
                        withholding was made under paragraph (1), the 
                        Secretary shall pay such share to such other 
                        individual. The Secretary shall deduct the 
                        amount of such payment from amounts 
                        subsequently payable to the State registry to 
                        which the amount originally withheld from such 
                        refund was paid.
                    ``(C) Erroneous offsets.--In any case in which an 
                amount was withheld under paragraph (1) and paid to a 
                State registry, and the State registry subsequently 
                determines that the amount certified as past-due 
                support was in excess of the amount actually owed at 
                the time the amount withheld is to be distributed to or 
                on behalf of the child, the State registry shall pay 
                the excess amount withheld to the named individual 
                thought to have owed the past-due support (or, in the 
                case of amounts withheld on the basis of a joint 
                return, jointly to the parties filing such return).
            ``(3) Regulations; contents, etc.--The Secretary shall 
        issue regulations, approved by the Secretary of Health and 
        Human Services, prescribing the time or times at which State 
        registries must submit notices of past-due support, the manner 
        in which such notices must be submitted, and the necessary 
        information that must be contained in or accompany the notices. 
        The regulations--
                    ``(A) shall be consistent with the provisions of 
                paragraph (2),
                    ``(B) shall specify the minimum amount of past-due 
                support to which the offset procedure established by 
                paragraph (1) may be applied, and
                    ``(C) shall provide that the Secretary will advise 
                the Secretary of Health and Human Services, not less 
                frequently than annually, of--
                            ``(i) the State registries which have 
                        furnished notices of past-due support under 
                        paragraph (1) of this subsection,
                            ``(ii) the number of cases in each State 
                        with respect to which such notices have been 
                        furnished,
                            ``(iii) the amount of support sought to be 
                        collected under this subsection by each State 
                        registry, and
                            ``(iv) the amount of such collections 
                        actually made in the case of each State 
                        registry.
            ``(4) State registry.--For purposes of this subsection, the 
        term `State registry' means any State child support order 
        registry established pursuant to section 466(a)(20)(A) of the 
        Social Security Act.
            ``(5) Past-due support.--For purposes of this subsection, 
        the term `past-due support' means the amount of a delinquency, 
        determined under a court order, or an order of an 
        administrative process established under State law, for support 
        (including medical support) and maintenance of a child, or of a 
        child and the parent with whom the child is living.
            ``(6) Subsection applied before crediting to future 
        liability.--This subsection shall be applied to an overpayment 
        prior to its being credit to a taxpayer's future liability for 
        any internal revenue tax.''
            (2) Conforming amendment.--Paragraph (2) of section 6402(d) 
        of such Code is amended by striking ``with respect to past-due 
        support collected pursuant to an assignment under section 
        402(a)(26) of the Social Security Act''.
    (c) Elimination of the Role of the Secretary of Health and Human 
Services.--
            (1) Section 464 (42 U.S.C. 664) is repealed.
            (2) Section 452 (42 U.S.C. 652) is amended by repealing 
        subsections (b) and (c).

                   Subtitle D--State Responsibilities

SEC. 341. STATE ROLE.

    (a) State Child Support Order Registries, Etc.--
            (1) In general.--Section 466(a) (42 U.S.C. 666(a)), as 
        amended by subtitle C of this title, is amended by inserting 
        after paragraph (19) the following new paragraph:
            ``(20) Procedures under which--
                    ``(A) the State child support enforcement agency 
                shall--
                            ``(i) establish an automated central child 
                        support order registry (including, at State 
                        option, by integrating local registries through 
                        computers, if the cost of such integration does 
                        not exceed the cost of a single centralized 
                        registry) which shall maintain a current record 
                        of--
                                    ``(I) each child support order 
                                issued, modified, or registered in the 
                                State under the State plan;
                                    ``(II) each child support order 
                                issued, modified, or being enforced in 
                                the State after the effective date of 
                                this paragraph; and
                                    ``(III) any other child support 
                                order, at the request of a party to the 
                                order;
                            ``(ii) for each such child support order, 
                        record the amount of support ordered and 
                        maintain a record of payments under the order;
                            ``(iii) prepare a support abstract that 
                        conforms to the child support order abstract 
                        developed pursuant to section 452(a)(11), 
                        forward the abstract to the Federal child 
                        support order registry established under 
                        section 303 of the Economic Opportunity and 
                        Family Responsibility Act of 1995, and enter 
                        the abstract into the State registry for 
                        purposes of matching against other data bases 
                        on a regular basis;
                            ``(iv) program the statewide automated 
                        system to extract weekly updates automatically 
                        of all case records included in the State 
                        registry;
                            ``(v) provide a central point of access to 
                        the Federal new-hire reporting directory and 
                        other Federal data bases, statewide data bases, 
                        and interstate case activity;
                            ``(vi) routinely match information in the 
                        State registry against other State data bases 
                        to which the agency has access;
                            ``(vii) use a national identification 
                        number, preferably the social security account 
                        number, for all individuals or cases as 
                        determined by the Secretary;
                            ``(viii) maintain procedures (such as 
                        notification to parents) to ensure that 
                        arrearages do not accrue after the child for 
                        whom support is ordered is no longer eligible 
                        for support or the order becomes invalid;
                            ``(ix) use technology and automated 
                        procedures in operating the State registry 
                        wherever feasible and cost-effective;
                            ``(x) ensure that the amount of any 
                        interest due with respect to delinquent child 
                        support obligations can be automatically 
                        calculated;
                            ``(xi) ensure that the State registry has 
                        access to vital statistics or other information 
                        necessary to provide the Secretary with such 
                        information as the Secretary may require in 
                        order to apply the formula provided for in 
                        section 403(i);
                            ``(xii) use the State registry (whether 
                        centralized or established through the 
                        integration of local registries)--
                                    ``(I) as a clearinghouse for the 
                                centralized collection and disbursement 
                                of child support payments, enabling the 
                                functions to be carried out (by the 
                                State or a private entity) at 1 
                                location within the State, and through 
                                a fully automated process (including, 
                                at State option, through multi-State 
                                regional cooperative agreements through 
                                1 `drop box' location with computer 
                                linkage to the individual State 
                                registries); and
                                    ``(II) as the central payment 
                                center--
                                            ``(aa) for all employers 
                                        remitting child support 
                                        withheld from wages; and
                                            ``(bb) for all payments not 
                                        made through wage withholding, 
                                        through the use of payment 
                                        coupons or stubs or electronic 
                                        means, unless otherwise agreed 
                                        by the parties to the order and 
                                        the court or administrative 
                                        agency that issued or modified 
                                        the order (which agreement may 
                                        be unilaterally rescinded by 
                                        the individual to whom child 
                                        support is payable under the 
                                        order or by the individual 
                                        obligated to pay child support 
                                        under the order, without 
                                        permission of any court or 
                                        administrative agency), and, at 
                                        State option, payments may be 
                                        made at local offices or 
                                        financial institutions only if 
                                        the payments are remitted to 
                                        the State registry by the local 
                                        office or financial institution 
                                        for payment processing by 
                                        electronic funds transfer 
                                        within 24 hours after receipt; 
                                        and
                            ``(xiii) require the State registry to--
                                    ``(I) accept all payments for child 
                                support by any means of transfer;
                                    ``(II) generate bills which provide 
                                for accurate payment identification, 
                                such as return stubs or coupons, for 
                                cases with respect to which wage 
                                withholding is not required;
                                    ``(III) identify all payments made 
                                to the State registry and match the 
                                payment to the correct child support 
                                case record;
                                    ``(IV) distribute all collections 
                                as required by law;
                                    ``(V) disburse to custodial parents 
                                child support payments that are payable 
                                to such parents, including through the 
                                use of direct deposit upon the request 
                                of the custodial parent;
                                    ``(VI) process and send to 
                                custodial parents child support 
                                payments that are payable to such 
                                parents within 24 hours after receipt;
                                    ``(VII) maintain records of 
                                transactions and the status of all 
                                accounts, including arrears, and 
                                monitor all payments of support;
                                    ``(VIII) develop automatic 
                                monitoring procedures for all cases 
                                where a disruption in payments triggers 
                                automatic enforcement mechanisms;
                                    ``(IX) accept and transmit 
                                interstate collections to other States, 
                                whenever possible, using electronic 
                                funds transfer technology; and
                                    ``(X) when necessary, change payees 
                                in child support cases 
                                administratively, with notice to both 
                                parties;
                    ``(B) each child support order issued or modified 
                in the State is required to be transmitted to the 
                registry within such period of time after the issuance 
                or modification as the Secretary shall prescribe in 
                regulations; and
                    ``(C) the State shall--
                            ``(i) prohibit any State agency from 
                        imposing a fee on any custodial or noncustodial 
                        parent for inclusion in the State registry, or 
                        imposing any new fee on a custodial parent for 
                        routine establishment, enforcement, or 
                        modification of cases handled through the State 
                        registry;
                            ``(ii) have automated procedures to monitor 
                        cases and impose those enforcement measures 
                        that can be handled on a mass or group basis 
                        using computer automation technology, by--
                                    ``(I) monitoring all cases within 
                                the State registry on a regular basis, 
                                determining on at least a monthly basis 
                                whether the child support payment has 
                                been made;
                                    ``(II) maintaining automation 
                                capability whereby a disruption in 
                                payments triggers automatic enforcement 
                                mechanisms; and
                                    ``(III) administratively imposing 
                                measures such as--
                                            ``(aa) ordering wages to be 
                                        withheld automatically for the 
                                        purposes of satisfying child 
                                        support obligations, and 
                                        directing wage withholding 
                                        orders to employers immediately 
                                        upon notification by the 
                                        Federal child support order 
                                        registry established under 
                                        section 303(a) of the Economic 
                                        Opportunity and Family 
                                        Responsibility Act of 1995;
                                            ``(bb) attaching accounts 
                                        at financial institutions, 
                                        including, at State option, 
                                        freezing withdrawals from such 
                                        accounts and, if the freeze is 
                                        not challenged, turning over 
                                        the part of the account subject 
                                        to the freeze up to the amount 
                                        of the child support debt to 
                                        the person or State seeking the 
                                        support;
                                            ``(cc) intercepting certain 
                                        lump-sum monies such as lottery 
                                        winnings and settlements to be 
                                        turned over to the State to 
                                        satisfy pending arrearages;
                                            ``(dd) attaching public and 
                                        private retirement funds in 
                                        appropriate cases, as 
                                        determined by the Secretary;
                                            ``(ee) attaching 
                                        unemployment compensation, 
                                        worker's compensation, and 
                                        other State benefits;
                                            ``(ff) increasing required 
                                        payments to cover arrearages;
                                            ``(gg) intercepting State 
                                        tax refunds; and
                                            ``(hh) submitting cases for 
                                        Federal tax refund offset; and
                            ``(iii) be able to provide parents with up-
                        do-date information on payments that are not 
                        past due, payments that are past due, and 
                        general information on available child support 
                        services;
                    ``(D) child support arrears with respect to cases 
                in the State registry are considered judgments by 
                operation of law, and reducing the amount of such 
                arrears to money judgments is not a prerequisite to 
                enforcement;
                    ``(E) all cases in the State registry shall receive 
                services offered by the registry without regard to 
                whether an application for such services has been made; 
                and
                    ``(F) the State agency referred to in section 
                402(a)(3) shall notify the State child support 
                enforcement agency of the commencement or termination 
                of aid under the State plan approved under part A to 
                any individual or family, within 10 days after the 
                commencement or termination.''.
            (2) Conforming amendment.--Section 466(b) (42 U.S.C. 
        666(b)) is amended by striking paragraph (5).
    (b) Wage Withholding.--
            (1) In general.--Section 466(b) (42 U.S.C. 666(b)) is 
        amended by adding at the end the following new paragraph:
            ``(11)(A)(i) Upon the issuance or modification by a State 
        court or administrative agency of an order imposing a child 
        support obligation on an individual, the State shall transmit 
        to any employer of the individual a wage withholding order 
        developed under section 452(a)(11) directing the employer to 
        withhold amounts from the wages of the individual pursuant to 
        the order, or such greater amount as the State child support 
        order registry established pursuant to subsection (a)(20)(A) 
        may determine is the total amount of the child support 
        obligations of the individual.
            ``(ii) Clause (i) shall not apply to an order upon 
        agreement of the parties to the order and the court or 
        administrative agency that issued or modified the order.
            ``(iii) An agreement referred to in clause (ii) may be 
        unilaterally rescinded by the individual to whom child support 
        is payable under the order or by the individual obligated to 
        pay child support under the order, without permission of any 
        court or administrative agency.
            ``(B) Any individual or entity engaged in commerce, as a 
        condition of doing business in the State, shall, on receipt of 
        a wage withholding order developed under section 452(a)(11) 
        that is regular on its face and has been issued by a court or 
        administrative agency of any State--
                    ``(i) immediately provide a copy of the order to 
                the employee subject to the order;
                    ``(ii) comply with the order by forwarding to the 
                State registry established pursuant to subsection 
                (a)(20)(A) of this section, within 5 days after the end 
                of each payroll period ending after receipt of the 
                order, the greater of--
                            ``(I) the amount required to be withheld 
                        pursuant to the order; or
                            ``(II) the amount that the State registry 
                        has notified the individual or family is the 
                        amount required to be withheld from the wages 
                        of the employee for payment of child support 
                        obligations of the employee; and
                    ``(iii) keep records of the amounts so withheld and 
                the dates of such withholding.
            ``(C) Such an order may be served on the individual or 
        entity directly or by first-class mail.
            ``(D) An individual or entity who complies with 
        subparagraph (B)(ii) with respect to such an order may not be 
        held liable for wrongful withholding of income from the 
        employee subject to the order.
            ``(E) The State shall impose a civil fine of $1,000 on any 
        individual or entity who receives such an order for each 
        failure to comply with subparagraph (B)(ii) with respect to the 
        order.
            ``(F) The State shall have in effect such procedures as the 
        Secretary may require by regulation for carrying out this 
        paragraph in cases involving an employee who has 2 or more 
        employers or child support obligations.
            ``(12) If the State transmits to an individual or entity 
        engaged in commerce only outside the State a wage withholding 
        order issued by the State with respect to an employee of the 
        individual or entity, and the individual or entity refuses to 
        comply with the order, the State shall send an informational 
        copy of the order to the registry established pursuant to 
        subsection (a)(20)(A) of any other State in which the 
        individual or entity is engaged in commerce.
            ``(13) If an employee requests a hearing to contest wage 
        withholding based on claim of a mistake of fact, the hearing 
        may be held in the State from which the child support is 
        collected, and, within 45 days after the income source receives 
        the withholding order, the entity conducting the hearing must 
        adjudicate the claim. The State in which the hearing is held 
        shall provide appropriate services in cases enforced under the 
        State plan to ensure that the interests of the individual to 
        whom the withheld income is to be paid are adequately 
        represented.''.
            (2) Conforming amendment.--Section 466(b)(6)(A)(i) (42 
        U.S.C. 666(b)(6)(A)(i)) is amended by striking ``(which may 
        include'' and all that follows through ``paragraph (5))'' and 
        inserting ``and pay such amount to the State registry 
        established under subsection (a)(12)''.
    (c) Priorities in Application of Withheld Wages.--Section 466(b) 
(42 U.S.C. 666(b)), as amended by subsection (b)(1) of this section, is 
amended by inserting after paragraph (13) the following new paragraph:
            ``(14) Procedures under which the amounts withheld pursuant 
        to a child support or wage withholding order are to be applied 
        in the following order:
                    ``(A) To payments of support due during the month 
                of withholding.
                    ``(B) To payments of premiums for health care 
                insurance coverage for dependent children.
                    ``(C) To payments of support due before the month 
                of withholding or collection, and of unreimbursed 
                health-care expenses.''.
    (d) Access to Various Data Bases.--Section 466(a) (42 U.S.C. 
666(a)), as amended by subtitle C of this title and by subsection (a) 
of this section, is amended by inserting after paragraph (20) the 
following new paragraph:
            ``(21) Procedures under which the State child support 
        enforcement agency shall have automated on-line or batch access 
        (or, if necessary, nonautomated access) to information 
        regarding residential addresses, employers and employer 
        addresses, income and assets, and medical insurance benefits 
        with respect to absent parents that is available through any 
        data base maintained by--
                    ``(A) any agency of the State or any political 
                subdivision thereof, that contains information on 
                residential addresses, or on employers and employer 
                addresses;
                    ``(B) any publicly regulated utility company 
                located in the State; and
                    ``(C) any credit reporting agency.''.
    (e) Expanded Interaction With the National Parent Locator 
Network.--Section 454(16) (42 U.S.C. 654(16)) is amended--
            (1) by striking ``and (E)'' and inserting ``(E)''; and
            (2) by striking ``enforcement;'' and inserting 
        ``enforcement, and (F) to provide access to the national 
        network developed pursuant to section 453(g);''.
    (f) State Plan Requirement.--Section 454 (42 U.S.C. 654), as 
amended by section 212(a) of this Act, 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) will have in effect safeguards applicable to all 
        sensitive and confidential information handled by the State 
        agency designed to protect the privacy rights of the parties, 
        including--
                    ``(A) safeguards against unauthorized use or 
                disclosure of information relating to proceedings or 
                actions to establish paternity, or to establish or 
                enforce support; and
                    ``(B) prohibitions against the release of 
                information on the whereabouts of a party to another 
                party against whom a protective order with respect to 
                the party has been entered.''.

SEC. 342. UNIFORM TERMS IN ORDERS.

    Section 452(a) (42 U.S.C. 652(a)) is amended--
            (1) in paragraph (9), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (10), by striking the period at the end of 
        the second sentence and inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(11) not later than 12 months after the date of the 
        enactment of this paragraph, develop a uniform abstract of a 
        child support order, for use by the child support order 
        registry established pursuant to section 466(a)(20)(A), in 
        which may be recorded--
                    ``(A) the date support payments are to begin under 
                the order;
                    ``(B) the circumstances upon which support payments 
                are to end under the order;
                    ``(C) the amount of child support payable pursuant 
                to the order expressed as a sum certain to be paid on a 
                monthly basis, arrearages expressed as a sum certain as 
                of a certain date, and any payback schedule for the 
                arrearages;
                    ``(D) whether the order awards support in a lump 
                sum (nonallocated) or per child;
                    ``(E) if the award is in a lump sum, the event 
                causing a change in the support award and the amount of 
                any change;
                    ``(F) other expenses covered by the order;
                    ``(G) the names of the parents subject to the 
                order;
                    ``(H) the social security account numbers of the 
                parents;
                    ``(I) the name, date of birth, and social security 
                account number (if any) of each child covered by the 
                order;
                    ``(J) the identification (FIPS code, name, and 
                address) of the court or administrative agency that 
                issued the order;
                    ``(K) any information on health care support 
                required by the order;
                    ``(L) the party to contact if additional 
                information is obtained; and
                    ``(M) such other information as the Secretary deems 
                appropriate.''.

SEC. 343. STATES REQUIRED TO ENACT THE UNIFORM INTERSTATE FAMILY 
              SUPPORT ACT.

    (a) In General.--Section 466 (42 U.S.C. 666) is amended by adding 
at the end the following new subsection:
    ``(f) In order to satisfy section 454(20)(A), each State must have 
in effect laws which adopt the officially approved version of the 
Uniform Interstate Family Support Act adopted by the National 
Conference of Commissioners on Uniform State Laws in August 1992.''.
    (b) Applicability.--
            (1) In general.--Except as provided in paragraph (2) of 
        this subsection, the amendment made by subsection (a) shall 
        apply with respect to calendar quarters beginning on or after 
        12 months after the date of the enactment of this Act, without 
        regard to whether regulations to implement such amendments are 
        promulgated by such date.
            (2) Delay permitted if state legislation required.--In the 
        case of a State plan approved under part D of title IV of the 
        Social Security Act which the Secretary of Health and Human 
        Services determines requires State legislation (other than 
        legislation appropriating funds) in order for the plan to meet 
        the additional requirement imposed by the amendment made by 
        subsection (a) of this section, the State plan shall not be 
        regarded as failing to comply with such additional requirement 
        solely on the basis of the failure of the plan to meet such 
        additional requirement 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 the date of 
        the enactment of this Act. For purposes of the previous 
        sentence, in the case of a State that has a 2-year legislative 
        session, each year of such session shall be deemed to be a 
        separate regular session of the State legislature.

SEC. 344. EXPEDITED PROCESSES AND ADMINISTRATIVE PROCEDURES.

    (a) Monitoring of Compliance.--Section 452(a)(4) (42 U.S.C. 
652(a)(4)) is amended by inserting ``and to determine whether the 
expedited processes required under section 466(a)(2)(A) are in effect'' 
before ``, and, not less''.
    (b) Noncompliant States With Judicial System for Processing Child 
Support Cases Required To Convert to Administrative System.--Section 
466(a)(2) (42 U.S.C. 666(a)(2)) is amended by inserting after the first 
sentence the following: ``If the Secretary finds that the processes for 
obtaining and modifying child support orders under the State judicial 
system has not met the standards established in such regulations, such 
procedures shall provide for the use of State administrative processes 
for obtaining and modifying such orders.''.

SEC. 345. DUE PROCESS.

    Section 454 (42 U.S.C. 654), as amended by sections 312(a) and 
341(f) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (25);
            (2) by striking the period at the end of paragraph (26) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (26) the following new 
        paragraph:
            ``(27) provide for procedures to ensure that--
                    ``(A) individuals who are parties to cases in which 
                services are being provided under this part--
                            ``(i) receive notice of all proceedings in 
                        which support obligations might be established 
                        or modified; and
                            ``(ii) receive a copy of any order 
                        establishing or modifying a child support 
                        obligation within 14 days after issuance of 
                        such order; and
                    ``(B) individuals receiving services under this 
                part have timely access to a fair hearing or other 
                formal complaint procedure, meeting standards 
                established by the Secretary, that ensures prompt 
                consideration and resolution of complaints (but the 
                resort to the procedure shall not stay the enforcement 
                of any support order);''.

SEC. 346. OUTREACH AND ACCESSIBILITY.

    (a) Uniform Application for Child Support Services.--
            (1) Requirement that states use federal application form.--
        Section 454(6)(A) (42 U.S.C. 654(6)(A)) is amended by inserting 
        ``(which shall be made on the service application form 
        developed under section 452(a)(7))'' after ``State''.
            (2) Duty to develop application form.--Section 452(a)(7) 
        (42 U.S.C. 652(a)(7)), as amended by section 311(b) of this 
        Act, is amended by inserting ``, and develop a form to be used 
        to apply for services established under State plans under this 
        part'' before the semicolon.
    (b) Outreach.--
            (1) State plan requirement.--Section 454 (42 U.S.C. 654), 
        as amended by sections 312(a), 341(f), and 345 of this Act, is 
        amended--
                    (A) by striking ``and'' at the end of paragraph 
                (26);
                    (B) by striking the period at the end of paragraph 
                (27) and inserting ``; and''; and
                    (C) by inserting after paragraph (27) the following 
                new paragraph:
            ``(28) provide for the establishment and conduct of an 
        ongoing program of outreach to persons eligible for services 
        under the plan, in accordance with regulations issued under 
        section 452(a)(12).''.
            (2) Regulations.--Section 452(a) (42 U.S.C. 652(a)), as 
        amended by section 342 of this Act, is amended--
                    (A) in paragraph (10), by striking ``and'' after 
                the semicolon;
                    (B) in paragraph (11), by striking the period and 
                inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(12) issue such regulations as are necessary to ensure 
        that State agencies--
                    ``(A) develop and implement a plan for serving 
                underserved populations;
                    ``(B) use appropriate personnel and printed 
                material for use by persons who do not speak English or 
                whose hearing is impaired; and
                    ``(C) work in cooperation with other Federal, 
                State, and local government agencies and private 
                nonprofit organizations which serve low-income families 
                to publicize the availability of such services and 
                coordinate the delivery of such services.''.

SEC. 347. COST-OF-LIVING ADJUSTMENT OF CHILD SUPPORT AWARDS.

    Part D of title IV (42 U.S.C. 651-669) is amended by inserting 
after section 467 the following new section:

``SEC. 467A. COST-OF-LIVING ADJUSTMENT OF CHILD SUPPORT AWARDS.

    ``(a) In General.--Each State, as a condition for having its State 
plan approved under this part, shall have in effect such laws and 
procedures as are necessary to ensure that each child support order 
issued or modified in the State after the effective date of this 
section provides that amount of child support payable under the order 
during the 12-month period that begins on each anniversary of the date 
the order was issued or most recently so modified shall be an amount 
equal to--
            ``(1) the amount of the award specified in the order; 
        multiplied by
            ``(2) the percentage (if any) by which--
                    ``(A) the average of the Consumer Price Index (as 
                defined in section 1(f)(5) of the Internal Revenue Code 
                of 1986) for the most recent 12-month period for which 
                such information is available; exceeds
                    ``(B) the average of the Consumer Price Index (as 
                so defined) for the 12-month period that ends on the 
                date the order was issued or most recently so modified.
    ``(b) Notice Requirements.--The laws and procedures described in 
subsection (a) shall include a requirement that notice of the cost-of-
living adjustment of a child support award be provided to--
            ``(1) the individual obligated to pay the child support, 
        and if wages are to be withheld to pay such support, to each 
        employer of the individual; and
            ``(2) the individual to whom the child support is owed.
    ``(c) Rule of Interpretation.--Subsection (a) shall not be 
construed to affect other grounds for modifying a child support 
award.''.

SEC. 348. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF CERTAIN CHILD 
              SUPPORT ORDERS.

    Section 466(a)(10) (42 U.S.C. 666(a)(10)) is amended by adding at 
the end the following new subparagraphs:
            ``(D)(i) Procedures under which--
                    ``(I) every 3 years, at the request of either 
                parent subject to a child support order, the State 
                shall review and, as appropriate, adjust the order in 
                accordance with the guidelines established under 
                section 467(a) if the amount of the child support award 
                under the order differs from the amount that would be 
                awarded in accordance with such guidelines by more than 
                the total of the adjustments required to be made in the 
                amount of the award pursuant to section 467A during the 
                3 year period ending on the date of the request; and
                    ``(II) upon request of either parent subject to a 
                child support order, the State shall review and, as 
                appropriate, adjust the order in accordance with the 
                guidelines established under section 467(a) based on a 
                significant change in the circumstances of either such 
                parent.
            ``(ii) Such procedures shall require both parents subject 
        to a child support order to be notified of their rights 
        provided for under clause (i) at the time the order is issued 
        and in the annual information exchange form provided under 
        subparagraph (E).
            ``(E) Procedures under which each child support order 
        issued or modified in the State after the effective date of 
        this subparagraph shall require the parents subject to the 
        order to provide each other with a complete statement of their 
        respective financial condition annually on a form which shall 
        be established by the Secretary and provided by the State.''.

SEC. 349. PREVENTION OF CONFLICTS OF INTEREST.

    Section 466(a)(10) (42 U.S.C. 666(a)(10)), as amended by section 
348 of this Act, is amended by adding at the end the following new 
subparagraph:
            ``(F) Procedures to ensure that the State does not provide 
        to any noncustodial parent of a child representation relating 
        to the review or adjustment of an order for the payment of 
        child support with respect to the child, unless the State makes 
        provision for such representation outside the State agency.''.

SEC. 350. STAFFING.

    (a) Studies.--The Secretary of Health and Human Services (in this 
section referred to as the ``Secretary'') shall conduct and, not later 
than 1 year after the date of the enactment of this Act, complete 
staffing studies for each State child support enforcement program, 
including each agency and court involved in the child support process.
    (b) Report to the Congress.--Within 90 days after the end of the 1-
year period described in subsection (a), the Secretary shall report to 
the Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate, and to each State, the results of 
the studies required by subsection (a).
    (c) Implementation.--Section 455(a) (42 U.S.C. 655(a)) is amended 
by adding at the end the following new paragraph:
    ``(3) The Secretary shall reduce by 2 percent the amount otherwise 
payable to a State pursuant to paragraph (1)(A) for any calendar 
quarter ending 2 or more years after the State receives a report 
transmitted pursuant to section 350(b) of the Economic Opportunity and 
Family Responsibility Act of 1995, if the Secretary determines that, 
during the quarter, the State has not met performance standards and has 
not implemented the staffing levels recommended in the report.''.

SEC. 351. TRAINING.

    (a) Federal Training Assistance.--Section 452(a)(7) (42 U.S.C. 
652(a)(7)) is amended by inserting ``and training'' after ``technical 
assistance''.
    (b) State Training Program.--Section 454 (42 U.S.C. 654), as 
amended by sections 312(a), 341(f), 345, and 346(b)(1) of this Act, is 
amended--
            (1) by striking ``and'' at the end of paragraph (27);
            (2) by striking the period at the end of paragraph (28) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (28) the following new 
        paragraph:
            ``(29) provide that the State will develop and implement a 
        training program under which training is to be provided not 
        less frequently than annually to all personnel performing 
        functions under the State plan.''.
    (c) Report.--Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended 
by redesignating subparagraphs (H) and (I) as subparagraphs (I) and 
(J), respectively, and by inserting after subparagraph (G) the 
following new subparagraph:
                    ``(H) the training activities at the Federal and 
                State levels, the training audit, and the amounts 
                expended on training;''.
    (d) Resources.--For technical assistance, training, operational 
research, demonstrations, and staffing studies under part D of title IV 
of the Social Security Act, there are authorized to be appropriated to 
the Secretary of Health and Human Services for each fiscal year an 
amount equal to not more than 2 percent of the total amount paid to the 
Federal Government pursuant to section 457(b) of such Act during the 
immediately preceding fiscal year.

SEC. 352. PRIORITIES IN DISTRIBUTION OF COLLECTED CHILD SUPPORT.

    (a) In General.--Section 457(a) (42 U.S.C. 657(a)) is amended to 
read as follows:
    ``(a) Amounts collected as support by a State pursuant to a child 
support or wage withholding order are to be allocated as follows:
            ``(1) First, for support payments for the month that are 
        not past due, as follows:
                    ``(A) First, for cash support payments.
                    ``(B) Then, for payments related to premiums for 
                health care insurance coverage of children covered by 
                the order.
            ``(2) Then, for payments of support that are past due, and 
        for payment of unreimbursed health care expenses.''.
    (b) Increase in Pass-Through of Collected Child Support.--
            (1) In general.--Section 457(b)(1) (42 U.S.C. 657(b)(1)) is 
        amended by inserting ``or such greater amount of such child 
        support payments as the State may establish and provide for in 
        the State plan, or if greater, \1/2\'' after ``the first $50'' 
        each place such term appears.
            (2) Increase in disregard of passed through child 
        support.--Section 402(a)(8)(A)(vi) (42 U.S.C. 602(a)(8)(A)(vi)) 
        is amended to read as follows:
                    ``(vi) shall disregard--
                            ``(I) the first $50 (for the calendar 
                        quarter in which the month occurs) or such 
                        greater amount of such child support payments 
                        as the State may establish and provide for in 
                        the State plan, or, if greater, \1/2\ of any 
                        child support payments for the month received 
                        in the month;
                            ``(II) the first $50 or such greater amount 
                        of such child support payments as the State may 
                        establish and provide for in the State plan, or 
                        if greater, \1/2\ of child support payments for 
                        each prior month received in the month if the 
                        payments were made by the absent parent in the 
                        month in which due; and
                            ``(III) any amount paid to the family under 
                        section 457(b)(1), with respect to the 
                        dependent child or children in the family;''.
    (c) Persons No Longer Receiving AFDC.--Section 457(c) (42 U.S.C. 
657(c)) is amended--
            (1) by striking ``any amount of support collected'' and all 
        that follows through ``the individuals'' and inserting ``to the 
        family any amount of support collected in payment of current or 
        future support obligations or arrears accrued for a month for 
        which the family did not receive such assistance, subject to 
        the same conditions and on the same basis as in the case of 
        payments made to families''; and
            (2) by adding at the end the following: ``If collections 
        are received in a month with respect to a family which has 
        ceased to receive such assistance, the collections shall be 
        credited first as payments for the month that are not past due, 
        then to payments of arrears accrued in months for which the 
        family did not receive such assistance, then to any other 
        unpaid arrears, and then against future support obligations.''.
    (d) Married Couples.--Section 457 (42 U.S.C. 657) is amended by 
adding at the end the following new subsection:
    ``(e) If an individual obligor and obligee join households by 
marrying or remarrying each other, or (if married to each other) by 
reuniting after a period of legal separation, the State shall suspend 
or forgive collection of child support arrearages owed to the State if 
the income of the resulting family is less than 200 percent of the 
poverty line (as determined by the Secretary).''.

SEC. 353. TEENAGE NONCUSTODIAL PARENTS AND CHILD SUPPORT.

    (a) Authority of States Temporarily To Waive Right To Collect Child 
Support Obligations of Teenage Noncustodial Parents Who Are 
Participating in a State Educational or Employment Preparation 
Program.--Section 454 (42 U.S.C. 454), as amended by sections 312(a), 
341(f), 345, 346(b)(1), and 351(b) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (28);
            (2) by striking the period at the end of paragraph (29) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (29) the following new 
        paragraph:
            ``(30) at the option of the State, provide that, if the 
        State agency determines that a noncustodial parent who has not 
        attained 20 years of age owes but is unable to pay child 
        support, then the State may, in lieu of enforcing the right to 
        such support for such period as the State considers 
        appropriate, allow the parent to choose to comply with an 
        educational or job training program.''.
    (b) Conformity of State Guidelines For Child Support Awards.--
Section 467 (42 U.S.C. 667) is amended by adding at the end the 
following new subsection:
    ``(d) The guidelines established pursuant to subsection (a) shall 
provide that if the State agency determines that a noncustodial parent 
who has not attained 20 years of age owes but is unable to pay child 
support, then the State may, in lieu of enforcing the right to such 
support for such period as the State considers appropriate, allow the 
parent to choose to comply with an educational or job training 
program.''.

         Subtitle E--Demonstrations, Grants, and Miscellaneous

SEC. 361. ESTABLISHMENT OF CHILD SUPPORT ASSURANCE DEMONSTRATION 
              PROJECTS.

    (a) In General.--In order to encourage States to provide a 
guaranteed minimum level of child support for every eligible child not 
receiving such support, the Secretary of Health and Human Services 
(hereafter in this section referred to as the ``Secretary'') shall make 
grants to not more than 6 States to conduct demonstration projects for 
the purpose of establishing or improving a system of assured minimum 
child support payments in accordance with this section.
    (b) Contents of Application.--An application for grants under this 
section shall be submitted by the Governor of a State and shall--
            (1) contain a description of the proposed child support 
        assurance project to be established, implemented, or improved 
        using amounts provided under this section, including the level 
of the assured benefit to be provided, the specific activities to be 
undertaken, and the agencies that will be involved;
            (2) specify whether the project will be carried out 
        throughout the State or in limited areas of the State;
            (3) estimate the number of children who will be eligible 
        for assured minimum child support payments under the project, 
        and the amounts to which they will be entitled on average as 
        individuals and in the aggregate;
            (4) describe the child support guidelines and review 
        procedures which are in use in the State and any expected 
        modifications;
            (5) contain a commitment by the State to carry out the 
        project during a period of not less than 7 and not more than 10 
        consecutive fiscal years beginning with fiscal year 1996;
            (6) contain assurances that the State--
                    (A) is currently at or above the national median 
                paternity establishment rate (as defined in section 
                452(g)(2) of the Social Security Act);
                    (B) will improve the performance of the agency 
                designated by the State to carry out the requirements 
                under part D of title IV of the Social Security Act by 
                at least 4 percent each year in which the State 
                operates a child support assurance project under this 
                section in--
                            (i) the number of cases in which paternity 
                        is established when required;
                            (ii) the number of cases in which child 
                        support orders are obtained; and
                            (iii) the number of cases with child 
                        support orders in which collections are made; 
                        and
                    (C) to the maximum extent possible under current 
                law, will use Federal, State, and local job training 
                assistance to assist obligors who have been determined 
                to be unable to meet their child support obligations;
            (7) describe the extent to which multiple agencies, 
        including those responsible for administering the program of 
        aid to families with dependent children under part A of title 
        IV of the Social Security Act and child support collection, 
        enforcement, and payment under part D of such title, will be 
        involved in the design and operation of the child support 
        assurance project; and
            (8) contain such other information as the Secretary may 
        require by regulation.
    (c) Use of Funds.--A State shall use amounts provided under a grant 
awarded under this section to carry out a child support assurance 
project designed to provide a minimum monthly child support benefit for 
each eligible child in the State to the extent that such minimum child 
support is not paid in a month by the noncustodial parent.
    (d) Requirements.--
            (1) In general.--A child support assurance project funded 
        under this section shall provide that--
                    (A) a child shall be eligible for the assured child 
                support benefit if--
                            (i) the child has a living noncustodial 
                        parent for whom--
                                    (I) a child support order has been 
                                sought (as defined in paragraph (3)); 
                                or
                                    (II) a child support order has been 
                                obtained and is being enforced by the 
                                State child support order registry 
                                established pursuant to section 
                                466(a)(12) of the Social Security Act; 
                                or
                            (ii) a parent of the child has good cause 
                        for not seeking or enforcing a support order;
                    (B) the assured child support benefit shall be paid 
                promptly to the custodial parent at least once a month 
                and shall be--
                            (i) an amount determined by the State which 
                        is--
                                    (I) not less than $1,500 per year 
                                for the first child, $1,000 per year 
                                for the second child, and $500 per year 
                                for the third and each subsequent 
                                child, and
                                    (II) not more than $3,000 per year 
                                for the first child and $1,000 per year 
                                for the second and each subsequent 
                                child;
                            (ii) indexed and adjusted for inflation; 
                        and
                            (iii) in the case of a family of children 
                        with multiple noncustodial parents, calculated 
                        in the same manner as if all such children were 
                        full siblings;
                    (C) when child support is collected for a child in 
                a month in which the child has received a child support 
                assurance benefit, the amount due to the child from the 
                child support collection shall be reduced by the child 
                support assurance already paid to the child for the 
                month, and if the child is receiving child support 
                assurance benefits in common with siblings or half-
                siblings, the amount of the child support assurance 
                benefits attributable to the child shall be not more 
                than the child's pro rata share of the total benefits;
                    (D) for purposes of determining the need of a child 
                or relative and the level of assistance under part A of 
                title IV of the Social Security Act, \1/2\ of the 
                amount received as a child support assurance benefit 
                shall be disregarded from income until the total amount 
                of child support and aid to families with dependent 
                children benefit received under part A of title IV of 
                the Social Security Act equals the Federal poverty 
                level for a family of comparable size;
                    (E) in determining need and the amount of 
                assistance under part A of title IV of the Social 
                Security Act, the needs of any family member not 
                receiving an assured child support benefit shall be 
determined without consideration of the assured child support benefits;
                    (F) the consideration under a State plan under part 
                A of title IV of the Social Security Act of any child 
                support payment received by a family other than a child 
                support assurance benefit shall be governed by section 
                402(a)(8)(A)(vi) of such Act; and
                    (G) in order to participate in the child support 
                assurance project, the child's caretaker shall apply 
                for or be receiving services of the State's child 
                support enforcement program under part D of title IV of 
                the Social Security Act.
            (2) Definition of child.--For purposes of this section, the 
        term ``child'' means an individual who is of such an age, 
        disability, or educational status as to be eligible for child 
        support as provided for by the law of the State in which such 
        individual resides.
            (3) Definition of sought.--For purposes of this section, a 
        child support order shall be deemed to have been ``sought'' 
        where an individual has applied for or is receiving services 
        from the State child support agency, or has sought a child 
        support order through representation by private or public 
        counsel or pro se.
    (e) Consideration and Priority of Applications.--
            (1) In general.--The Secretary shall consider all 
        applications received from States desiring to conduct 
        demonstration projects under this section and shall approve not 
        more than 6 applications which appear likely to contribute 
        significantly to the achievement of the purpose of this 
        section. In selecting States to conduct demonstration projects 
        under this section, the Secretary shall--
                    (A) ensure that the applications selected represent 
                a diversity of minimum benefits distributed throughout 
                the range specified in subsection (d)(1)(B)(i);
                    (B) consider the geographic dispersion and 
                variation in population of the applicants;
                    (C) give priority to States the applications of 
                which demonstrate--
                            (i) significant recent improvements in--
                                    (I) establishing paternity and 
                                child support awards,
                                    (II) enforcement of child support 
                                awards, and
                                    (III) collection of child support 
                                payments;
                            (ii) a record of effective automation; and
                            (iii) that efforts will be made to link 
                        child support systems with other service 
                        delivery systems;
                    (D) ensure that the proposed projects will be of a 
                size sufficient to obtain a meaningful measure of the 
                effects of child support assurance;
                    (E) give priority, first, to States intending to 
                operate a child support assurance project on a 
                statewide basis, and, second, to States that are 
                committed to phasing in an expansion of such project to 
                the entire State, if interim evaluations suggest such 
                expansion is warranted; and
                    (F) ensure that, if feasible, the States selected 
                use a variety of approaches for child support 
                guidelines.
            (2) Intensive integrated social services.--The Secretary 
        shall, if feasible, require at least 2 of the States selected 
        to participate in the demonstration projects conducted under 
        this section to provide intensive integrated social services 
        for low-income participants in the child support assurance 
        project, for the purpose of assisting such participants in 
        improving their employment, housing, health, and educational 
        status.
    (f) Duration.--During the 12-month period beginning on the date of 
the enactment of this Act, the Secretary shall develop criteria, select 
the States to participate in the demonstration, and plan for the 
evaluation required under subsection (h). The demonstration projects 
conducted under this section shall commence on the day after the end of 
such 12-month period, and shall be conducted for not less than 7 and 
not more than 10 consecutive fiscal years, except that the Secretary 
may terminate a project before the end of such period 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. The Secretary shall determine from interim reports 
required under subsection (i) whether a project may be extended beyond 
such period, and Federal financial participation shall be available for 
such an extension.
    (g) Cost Savings Recovery.--The Secretary shall develop a 
methodology to identify any State cost savings realized in connection 
with the implementation of a child support assurance project conducted 
under this section. Any such savings realized as a result of the 
implementation of a child support assurance project shall be utilized 
for child support enforcement improvements or expansions and 
improvements in the program of aid to families with dependent children 
conducted under part A of title IV of the Social Security Act within 
the participating State.
    (h) Evaluation and Report to Congress.--
            (1) Evaluation.--The Secretary shall conduct an evaluation 
        of the effectiveness of the demonstration projects funded under 
        this section and determine whether to recommend that such 
        projects be phased in on a national basis. The evaluation shall 
        include an assessment of the effect of an assured benefit on--
                    (A) parental income from nongovernment sources and 
                the number of hours worked;
                    (B) the use and amount of government supports by 
                the parents;
                    (C) the ability of the parents to accumulate 
                resources;
                    (D) the well-being of the children receiving child 
                support assurance benefits, including educational 
                attainment and school behavior; and
                    (E) the State's rates of establishing paternity and 
                support orders and of collecting support.
            (2) Report.--Four years after commencement of the 
        demonstration projects, and at the completion of the designated 
        duration of a demonstration project, the Secretary shall submit 
        an interim and final report based on the evaluation to the 
        Committee on Finance and the Committee on Labor and Human 
        Resources of the Senate, and the Committee on Ways and Means 
        and the Committee on Economic and Educational Opportunities of 
        the House of Representatives concerning the effectiveness of 
        the child support assurance projects funded under this section.
    (i) State Reports.--The Secretary shall require each State that 
conducts a demonstration project under this section to annually report 
such information on the project's operation as the Secretary may 
require, except that all such information shall be reported according 
to a uniform format prescribed by the Secretary. Each such State shall 
provide an opportunity for the public to comment on the demonstration 
project during such period as the State may establish, and shall 
include any such comments in the annual report.
    (j) Restrictions on Matching and Use of Funds.--
            (1) In general.--A State conducting a demonstration project 
        under this section shall be required--
                    (A) except as provided in paragraph (2), to provide 
                not less than 20 percent of the total amounts expended 
                in each calendar year of the project to pay the costs 
                associated with the project funded under this section;
                    (B) to maintain its level of expenditures for child 
                support collection, enforcement, and payment at the 
                same level, or at a higher level, than such 
                expenditures were prior to such State's participation 
                in a demonstration project provided by this section; 
                and
                    (C) to maintain the aid to families with dependent 
                children benefits provided under part A of title IV of 
                the Social Security Act at the same level, or at a 
                higher level, as the level of such benefits on the date 
                of the enactment of this Act.
            (2) Future years.--A State participating in a demonstration 
        project under this section may provide no less than 10 percent 
        of the total amounts expended to pay the costs associated with 
        the project funded under this section in years after the first 
        year such project is conducted in a State if the State improves 
        its performance as specified in subsection (b)(6)(B).
    (k) Coordination With Certain Means-Tested Programs.--For purposes 
of--
            (1) the United States Housing Act of 1937;
            (2) title V of the Housing Act of 1949;
            (3) section 101 of the Housing and Urban Development Act of 
        1965;
            (4) sections 221(d)(3), 235, and 236 of the National 
        Housing Act;
            (5) the Food Stamp Act of 1977;
            (6) title XIX of the Social Security Act; and
            (7) child care assistance provided through part G of title 
        IV of the Social Security Act, or title XX of the such Act,
any payment made to an individual within the demonstration project area 
for child support up to the amount which an assured child support 
benefit would provide shall not be treated as income and shall not be 
taken into account in determining resources for the month of its 
receipt and the following month.
    (l) Treatment of Child Support Benefit.--Any assured child support 
benefit received by an individual under this section shall be 
considered child support for purposes of the Internal Revenue Code of 
1986.
    (m) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary in each of the fiscal years 
1995, 1996, 1997, 1998, 1999, and 2000 to carry out this section.

SEC. 362. ESTABLISHMENT OF SIMPLE CHILD SUPPORT MODIFICATION 
              DEMONSTRATION PROJECTS.

    (a) In General.--The Secretary of Health and Human Services 
(hereafter in this section referred to as the ``Secretary'') shall make 
grants to not more than 5 States to conduct demonstration projects in 
accordance with subsection (b) for the purpose of establishing a simple 
process for the modification of child support orders based on changed 
family circumstances.
    (b) Requirements of Project.--A project conducted in accordance 
with this subsection shall provide that child support obligations shall 
not accrue during any period during which--
            (1) the parents of the child (who is the subject of the 
        order) marry or otherwise reconcile after previously 
        maintaining separate residences;
            (2) custody of the child changes from one parent to the 
        other without order of the court; or
            (3) the parent obligated to pay child support is 
        unemployed.
    (c) Applications.--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.
    (d) Reports.--A State that conducts a demonstration project under 
this section shall prepare and submit to the Secretary annual and final 
reports in such form and containing such information as the Secretary 
may require.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated $1,000,000 for each of fiscal years 1997 through 1999 for 
the purpose of conducting demonstration projects in accordance with 
this section.

SEC. 363. ESTABLISHMENT OF DEMONSTRATION PROJECTS FOR PROVIDING 
              SERVICES TO CERTAIN NONCUSTODIAL PARENTS.

    (a) In General.--The Secretary of Health and Human Services 
(hereafter in this section referred to as the ``Secretary'') shall make 
grants to not more than 5 States to conduct demonstration projects in 
accordance with subsection (b) for the purpose of providing services to 
noncustodial parents who are unable to meet child support obligations 
due to unemployment or underemployment.
    (b) Requirements of Project.--A project conducted in accordance 
with this subsection shall provide noncustodial parents who are unable 
to meet child support obligations due to unemployment or 
underemployment with the following services:
            (1) Assessment of job readiness.
            (2) Referrals to job training and education programs.
            (3) Court monitored job search.
            (4) Court ordered participation in State work programs or 
        other specialized employment programs.
            (5) Technical assistance and information and interpretation 
        of legal proceedings.
            (6) Information dissemination and referrals to other 
        available services.
            (7) Other services determined by the State.
    (c) Applications.--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.
    (d) Reports.--A State that conducts a demonstration project under 
this section shall prepare and submit to the Secretary annual and final 
reports in such form and containing such information as the Secretary 
may require.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated $1,000,000 for each of fiscal years 1996 through 1998 for 
the purpose of conducting demonstration projects in accordance with 
this section.

SEC. 364. GRANTS TO STATES FOR ACCESS AND VISITATION PROGRAMS.

    (a) In General.--Part D of title IV is amended by adding at the end 
the following new section:

         ``grants to states for access and visitation programs

    ``Sec. 469A. (a) Purposes; Authorization of Appropriations.--For 
the purposes of enabling States to establish and administer programs to 
support and facilitate absent parents' access to and visitation of 
their children, by means of activities including mediation (both 
voluntary and mandatory), counseling, education, development of 
parenting plans, visitation enforcement (including monitoring, 
supervision and neutral drop-off and pickup), and development of 
guidelines for visitation and alternative custody arrangements, there 
are authorized to be appropriated $5,000,000 for each of fiscal years 
1996 and 1997, and $10,000,000 for each succeeding fiscal year.
    ``(b) Payments to States.--(1) Each State shall, subject to 
appropriations, be entitled to payment under this section for each 
fiscal year in an amount equal to its allotment under subsection (c) 
for such fiscal year, to be used for payment of 90 percent of State 
expenditures for the purposes specified in subsection (a).
    ``(2) Payments under this section shall be used by a State to 
supplement (and not to substitute for) expenditures by the State, for 
activities specified in subsection (a), at a level at least equal to 
the level of such expenditures for fiscal year 1994.
    ``(c) Allotments to States.--
            ``(1) In general.--For purposes of subsection (b), each 
        State shall be entitled (subject to subparagraph (b)(1)) to an 
        amount for each fiscal year bearing the same ratio to the 
        amount authorized to be appropriated pursuant to subsection (a) 
        for such fiscal year as the number of children in the State 
        living with only one biological parent bears to the total 
        number of such children in all States.
            ``(2) Minimum allotment.--Allotments to States under 
        paragraph (1) shall be adjusted as necessary to ensure that no 
        State is allotted less than $50,000 for fiscal year 1996 or 
        1997, or $100,000 for any succeeding fiscal year.
    ``(d) Federal Administration.--The program under this section shall 
be administered by the Administration for Children and Families.
    ``(e) State Program Administration.--(1) Each State may administer 
the program under this section directly or through grants to or 
contracts with courts, local public agencies, or non-profit private 
entities.
    ``(2) State programs under this section may, but need not, be 
statewide.
    ``(3) States administering programs under this section shall 
monitor, evaluate, and report on such programs in accordance with 
requirements established by the Secretary.''.

SEC. 365. TECHNICAL CORRECTION TO ERISA DEFINITION OF MEDICAL CHILD 
              SUPPORT ORDER.

    (a) In General.--Section 609(a)(2)(B) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1169(a)(2)(B)) is amended--
            (1) by striking ``issued by a court of competent 
        jurisdiction'';
            (2) by striking the period at the end of clause (ii) and 
        inserting a comma; and
            (3) by adding, after and below clause (ii), the following:
                ``if such judgment, decree, or order (I) is issued by a 
                court of competent jurisdiction, or (II) is issued by 
                an administrative adjudicator and has the force and 
                effect of law under applicable State law.''.
    (b) Plan Amendments Not Required Until October 1, 1996.--
            (1) In general.--Any amendment to a plan required to be 
        made by an amendment made by this section shall not be required 
        to be made before the first plan year beginning on or after 
        October 1, 1996, if--
                    (A) during the period after the date before the 
                effective date of this Act and before such first plan 
                year, the plan is operated in accordance with the 
                requirements of the amendments made by this section; 
                and
                    (B) the plan amendment applies retroactively to the 
                period after the date before the effective date of this 
                Act and before such first plan year.
            (2) Hold harmless provision.--A plan shall not be treated 
        as failing to be operated in accordance with the provisions of 
        the plan merely because it operates in accordance with 
        paragraph (1).

                        Subtitle F--Tax Reforms

SEC. 371. QUARTERLY ADVANCED EITC.

    Not later than 6 months after the date of the enactment of this 
Act, the Secretary of the Treasury shall provide for the quarterly lump 
sum advance payment of the earned income tax credit under section 32 of 
the Internal Revenue Code of 1986.

SEC. 372. EXPANSION OF THE TAX COUNSELING FOR THE ELDERLY PROGRAM.

    (a) In General.--Not later than 6 months after the date of the 
enactment of this Act, the Commissioner of the Internal Revenue Service 
shall provide for the expansion of the Tax Counseling for the Elderly 
(TCE) program to include assistance to low-income families with incomes 
not greater than 185 percent of the income official poverty line (as 
defined by the Office of Management and Budget, and revised annually in 
accordance with section 673(2) of the Omnibus Budget Reconciliation Act 
of 1981) applicable to a family of the size involved, with specific 
outreach to families--
            (1) receiving aid to families with dependent children under 
        part A of title IV of the Social Security Act;
            (2) participating in the food stamp program established by 
        the Food Stamp Act of 1977;
            (3) who are homeless; or
            (4) receiving child care assistance through part G of title 
        IV of the Social Security Act (42 U.S.C. 602(i)) by reason of a 
        child in the family being eligible for such assistance under 
        section 491A(4)(B)(ii) of such Act.
    (b) Elements of Expansion.--The expansion described in subsection 
(a) may include--
            (1) the recruitment, training, coordination, and oversight 
        of volunteers to provide tax assistance, and
            (2) the provision of assistance with tax audits, 
        administrative hearings, and judicial proceedings.
    (c) Authorization of Appropriations.--In addition to any other 
amounts authorized to be appropriated for the Tax Counseling for the 
Elderly (TCE) program, there are authorized to be appropriated for the 
expansion of the program under this section, $1,000,000 for each fiscal 
year beginning with fiscal year 1996.

                      TITLE IV--CHILD CARE REFORMS

SEC. 401. CHILD CARE FOR NEEDY FAMILIES BLOCK GRANT.

    Title IV (42 U.S.C. 601 et seq.) is amended by adding at the end 
the following new part:

          ``PART G--CHILD CARE FOR NEEDY FAMILIES BLOCK GRANT

``SEC. 491A. DEFINITIONS.

    ``For purposes of this part:
            ``(1) Caregiver.--The term `caregiver' means an individual 
        who provides a service directly to an eligible child on a 
        person-to-person basis.
            ``(2) Child care certificate.--The term `child care 
        certificate' means a certificate (that may be a check or other 
        disbursement) that is issued by a State or local government 
        under this part directly to a parent who may use such 
        certificate only as payment for child care services. Nothing in 
        this part shall preclude the use of such certificates for 
        sectarian child care services if freely chosen by the parent. 
        For purposes of this part, child care certificates shall not be 
        considered to be grants or contracts.
            ``(3) Elementary school.--The term `elementary school' 
        means a day or residential school that provides elementary 
        education, as determined under State law.
            ``(4) Eligible child.--The term `eligible child' means the 
        following:
                    ``(A) Children for whom child care is guaranteed.--
                            ``(i) A child who would have been eligible 
                        to receive child care under section 
                        402(g)(1)(A)(i), as such section was in effect 
                        on September 30, 1995.
                            ``(ii) A child who would have been eligible 
                        to receive child care under section 
                        402(g)(1)(A)(ii) (relating to transitional 
                        child care), as such section was in effect on 
                        September 30, 1995. At the option of the State 
                        the State may, uniformly for all children, 
                        elect to extend the period for which a child is 
                        eligible for care under this clause for--
                            ``(I) 12 months; or
                            ``(II) until the income of the family 
                        exceeds 185 percent of the income official 
                        poverty line (as defined by the Office of 
                        Management and Budget, and revised annually in 
                        accordance with section 673(2) of the Omnibus 
                        Budget Reconciliation Act of 1981) that is 
                        applicable for a family of the size involved.
                    ``(B) Children for whom child care is not 
                guaranteed.--
                            ``(i) An individual--
                                    ``(I) who is less than 13 years of 
                                age;
                                    ``(II) who has a family income not 
                                in excess of an amount determined by 
                                the State which may not exceed a 
                                maximum of 75 percent of the State 
                                median income for a family of the same 
                                size; and
                                    ``(III) who meets any additional 
                                eligibility criteria established by the 
                                State.
                            ``(ii) A child who would have been eligible 
                        to receive child care under section 402(i) 
                        (relating to at-risk child care), as such 
                        section was in effect on September 30, 1995.
                            ``(iii) At the option of the State, a child 
                        who requires child care services as a result of 
                        a family member's voluntarily engaging in 
                        community service activities approved by the 
                        State if such family member is required to 
                        comply with section 482(k).
            ``(5) Eligible child care provider.--The term `eligible 
        child care provider' means--
                    ``(A) a center-based child care provider, a group 
                home child care provider, a family child care provider, 
                or other provider of child care services for 
                compensation that--
                            ``(i) is licensed, regulated, or registered 
                        under State law as described in section 
                        491E(c)(2)(E); and
                            ``(ii) satisfies the State and local 
                        requirements, including those referred to in 
                        section 491E(c)(2)(F);
                applicable to the child care services it provides; or
                    ``(B) a child care provider that is 18 years of age 
                or older who provides child care services only to 
                eligible children who are, by affinity or 
                consanguinity, or by court decree, the grandchild, 
                niece, or nephew of such provider, if such provider is 
                registered and complies with any State requirements 
that govern child care provided by the relative involved.
            ``(6) Family child care provider.--The term `family child 
        care provider' means one individual who provides child care 
        services for fewer than 24 hours per day, as the sole 
        caregiver, and in a private residence.
            ``(7) Indian tribe.--The term `Indian tribe' has the 
        meaning given it in section 4(e) of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450b(e)).
            ``(8) Lead agency.--The term `lead agency' means the agency 
        designated under section 491D(a).
            ``(9) Parent.--The term `parent' includes a legal guardian 
        or other person standing in loco parentis.
            ``(10) Secondary school.--The term `secondary school' means 
        a day or residential school which provides secondary education, 
        as determined under State law.
            ``(11) Sliding fee scale.--The term `sliding fee scale' 
        means a system of cost sharing by a family based on income and 
        size of the family.
            ``(12) State.--The term `State' means any of the several 
        States, the District of Columbia, the Virgin Islands of the 
        United States, the Commonwealth of Puerto Rico, Guam, American 
        Samoa, the Commonwealth of the Northern Mariana Islands, the 
        Trust Territory of the Pacific Islands, or an Indian tribe.
            ``(13) Tribal organization.--The term `tribal organization' 
        has the meaning given it in section 4(l) of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450b(l)).

``SEC. 491B. PURPOSES; LIMITATIONS ON AUTHORIZATIONS OF APPROPRIATIONS.

    ``(a) Purpose; Limitation on Authorization of Appropriations.--For 
the purpose of encouraging and enabling each State to develop, 
establish, or expand, and to operate a program to provide child care 
services, there are authorized to be appropriated to the Secretary the 
amounts described in subsection (b) for the fiscal years specified in 
such subsection.
    ``(b) Description of Amounts.--The amounts described in this 
subsection are--
            ``(1) for fiscal year 1996, $2,302,000,000;
            ``(2) for fiscal year 1997, $2,790,000,000;
            ``(3) for fiscal year 1998, $3,040,000,000
            ``(4) for fiscal year 1999, $3,460,000,000; and
            ``(5) for fiscal year 2000, $4,030,000,000.

``SEC. 491C. ESTABLISHMENT OF BLOCK GRANT PROGRAM.

    ``The Secretary shall make grants to States in accordance with the 
provisions of this part.

``SEC. 491D. LEAD AGENCY.

    ``(a) Designation.--The chief executive officer of a State desiring 
to receive a grant under this part shall designate, in an application 
submitted to the Secretary under section 491E, an appropriate State 
agency that complies with the requirements of subsection (b) to act as 
the lead agency.
    ``(b) Duties.--
            ``(1) In general.--The lead agency shall--
                    ``(A) administer, directly or through other State 
                agencies, the funds received under this part by the 
                State;
                    ``(B) develop the State plan to be submitted to the 
                Secretary under section 491E;
                    ``(C) in conjunction with the development of the 
                State plan as required under subparagraph (B), hold at 
                least one hearing in the State to provide to the public 
                an opportunity to comment on the provision of child 
                care services under the State plan; and
                    ``(D) coordinate the provision of services under 
                this part with other Federal, State, and local child 
                care and early childhood development programs.
            ``(2) Development of plan.--In the development of the State 
        plan described in paragraph (1)(B), the lead agency shall 
        consult with appropriate representatives of units of general 
        purpose local government. Such consultations may include 
        consideration of local child care needs and resources, the 
        effectiveness of existing child care and early childhood 
        development services, and the methods by which funds made 
        available under this part can be used to effectively address 
        local shortages.

``SEC. 491E. APPLICATION AND PLAN.

    ``(a) Application.--To be eligible to receive funds under this 
part, a State shall prepare and submit to the Secretary an application 
at such time, in such manner, and containing such information as the 
Secretary shall by rule require, including--
            ``(1) an assurance that the State will comply with the 
        requirements of this part; and
            ``(2) a State plan that meets the requirements of 
        subsection (c).
    ``(b) Period Covered by Plan.--The State plan contained in the 
application under subsection (a) shall be designed to be implemented--
            ``(1) during a 3-year period for the initial State plan; 
        and
            ``(2) during a 2-year period for subsequent State plans.
    ``(c) Requirements of a Plan.--
            ``(1) Lead agency.--The State plan shall identify the lead 
        agency designated under section 491D.
            ``(2) Policies and procedures.--The State plan shall 
        provide the following assurances:
                    ``(A) Guarantee of child care for certain eligible 
                children.--Assurances that the State will guarantee 
                child care services for which assistance is provided 
                under this part, to eligible children described in 
                section 491A(4)(A).
                    ``(B) Parental choice of providers.--Assurances 
                that--
                            ``(i) the parent or parents of each 
                        eligible child within the State who receives or 
                        is offered child care services for which 
                        assistance is provided under this part, other 
                        than through assistance provided under 
                        paragraph (3)(C), are given the option either--
                                    ``(I) to enroll such child with a 
                                child care provider that has a grant or 
                                contract for the provision of such 
                                services; or
                                    ``(II) to receive a child care 
                                certificate;
                            ``(ii) in cases in which the parent selects 
                        the option described in clause (i)(I), the 
                        child will be enrolled with the eligible 
                        provider selected by the parent to the maximum 
                        extent practicable; and
                            ``(iii) child care certificates offered to 
                        parents selecting the option described in 
                        clause (i)(II) shall be of a value commensurate 
                        with the subsidy value of child care services 
                        provided under the option described in clause 
                        (i)(I);
                except that nothing in this subparagraph shall require 
                a State to have a child care certificate program in 
                operation prior to October 1, 1998.
                    ``(C) Unlimited parental access.--Assurances that 
                procedures are in effect within the State to ensure 
                that child care providers who provide services for 
                which assistance is made available under this part 
                afford parents unlimited access to their children and 
                to the providers caring for their children, during the 
                normal hours of operation of such providers and 
                whenever such children are in the care of such 
                providers.
                    ``(D) Parental complaints.--Assurances that the 
                State maintains a record of substantiated parental 
                complaints and makes information regarding such 
                parental complaints available to the public on request.
                    ``(E) Consumer education.--Assurances that consumer 
                education information will be made available to parents 
                and the general public within the State concerning 
                licensing and regulatory requirements, complaint 
                procedures, and policies and practices relative to 
                child care services within the State.
                    ``(F) Compliance with state and local regulatory 
                requirements.--Assurances that--
                            ``(i) all providers of child care services 
                        within the State for which assistance is 
                        provided under this part comply with all 
                        licensing or regulatory requirements (including 
                        registration requirements) applicable under 
                        State and local law; and
                            ``(ii) providers within the State that are 
                        not required to be licensed or regulated under 
                        State or local law are required to be 
                        registered with the State prior to payment 
                        being made under this part, in accordance with 
                        procedures designed to facilitate appropriate 
                        payment to such providers, and to permit the 
                        State to furnish information to such providers, 
                        including information on the availability of 
                        health and safety training, technical 
                        assistance, and any relevant information 
                        pertaining to regulatory requirements in the 
                        State, and that such providers shall be 
                        permitted to register with the State after 
                        selection by the parents of eligible children 
                        and before such payment is made.
                This subparagraph shall not be construed to prohibit a 
                State from imposing more stringent standards and 
                licensing or regulatory requirements on child care 
                providers within the State that provide services for 
                which assistance is provided under this part than the 
                standards or requirements imposed on other child care 
                providers in the State.
                    ``(G) Establishment of health and safety 
                requirements.--Assurances that there are in effect 
                within the State, under State or local law, 
                requirements designed to protect the health and safety 
                of children that are applicable to child care providers 
                that provide services for which assistance is made 
                available under this part. Such requirements shall 
                include--
                            ``(i) the prevention and control of 
                        infectious diseases (including immunization);
                            ``(ii) building and physical premises 
                        safety; and
                            ``(iii) minimum health and safety training 
                        appropriate to the provider setting.
                Nothing in this subparagraph shall be construed to 
                require the establishment of additional health and 
                safety requirements for child care providers that are 
                subject to health and safety requirements in the 
                categories described in this subparagraph on the date 
                of enactment of this part under State or local law.
                    ``(H) Compliance with state and local health and 
                safety requirements.--Assurances that procedures are in 
                effect to ensure that child care providers within the 
                State that provide services for which assistance is 
                provided under this part comply with all applicable 
                State or local health and safety requirements as 
                described in subparagraph (G).
                    ``(I) Reduction in standards.--Assurances that if 
                the State reduces the level of standards applicable to 
                child care services provided in the State on the date 
                of enactment of this part, the State shall inform the 
                Secretary of the rationale for such reduction in the 
                annual report of the State described in section 491L.
                    ``(J) Review of state licensing and regulatory 
                requirements.--Assurances that not later than 18 months 
                after the date of the submission of the application 
                under this section, the State will complete a full 
                review of the law applicable to, and the licensing and 
                regulatory requirements and policies of, each licensing 
                agency that regulates child care services and programs 
                in the State unless the State has reviewed such law, 
                requirements, and policies in the 3-year period ending 
                on the date of the enactment of this part.
                    ``(K) Supplementation.--Assurances that funds 
                received under this part by the State will be used only 
                to supplement, not to supplant, the amount of Federal, 
                State, and local funds otherwise expended for the 
                support of child care services and related programs in 
                the State.
            ``(3) Use of block grant funds.--
                    ``(A) General requirement.--The State plan shall 
                provide that the State will use the amounts provided to 
                the State for each fiscal year under this part as 
                required under subparagraphs (B) and (C).
                    ``(B) Child care services.--Subject to the 
                reservation contained in subparagraph (C), and subject 
                to the child care guarantee for certain children 
                contained in 491A 4(A)(i) and (ii) the State shall use 
                amounts provided to the State for each fiscal year 
                under this part for--
                            ``(i) child care services, that meet the 
                        requirements of this part, that are provided to 
                        eligible children in the State using funding 
                        methods provided for in subsection (c)(2)(B)--
                                    ``(I) without the imposition of a 
                                fee with respect to services provided 
                                to children described in section 
                                491(a)(5)(A)(i); and
                                    ``(II) on a sliding fee scale basis 
                                with respect to eligible children not 
                                described section 491(a)(5)(A)(i), with 
                                priority being given for services 
                                provided to children of families with 
                                very low family incomes (taking into 
                                consideration family size) and to 
                                children with special needs; and
                            ``(ii) activities designed to improve the 
                        availability and quality of child care.
                    ``(C) Activities to improve the quality of child 
                care and to increase the availability of early 
                childhood development and before- and after-school care 
                services.--The State shall reserve 25 percent of the 
                amounts provided to the State for each fiscal year 
                under this part to carry out activities designed to 
                improve the quality of child care (as described in 
                section 491G), to provide before- and after-school and 
                early childhood development services (as described in 
                section 491H), and to provide for infrastructure 
                development (as described in section 491I).
            ``(4) Payment rates.--
                    ``(A) In general.--The State plan shall provide 
                assurances that payment rates for the provision of 
                child care services for which assistance is provided 
                under this part are sufficient to ensure equal access 
                for eligible children to comparable child care services 
                in the State or substate area that are provided to 
                children whose parents are not eligible to receive 
                assistance under this part or for child care assistance 
                under any other Federal or State programs. Such payment 
                rates shall take into account the variations in the 
                costs of providing child care in different settings and 
                to children of different age groups, and the additional 
                costs of providing child care for children with special 
                needs.
                    ``(B) Construction.--Nothing in this paragraph 
                shall be construed to create a private right of action.
            ``(5) Sliding fee scale.--The State plan shall provide that 
        the State will establish and periodically revise, by rule, a 
        sliding fee scale that provides for cost sharing by the 
        families that receive child care services for which assistance 
        is provided under this part.
    ``(d) Approval of Application.--The Secretary shall approve an 
application that satisfies the requirements of this section.

``SEC. 491F. LIMITATIONS ON USE OF FUNDS.

    ``(a) No Entitlement to Contract or Grant.--Nothing in this part 
shall be construed--
            ``(1) to entitle any child care provider or recipient of a 
        child care certificate to any contract, grant or benefit; or
            ``(2) to limit the right of any State to impose additional 
        limitations or conditions on contracts or grants funded under 
        this part.
    ``(b) Use of Funds for Administrative Purposes.--A State shall not 
use more than 10 percent of the amount it receives under this part for 
the administration of the plan approved under this part.

``SEC. 491G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

    ``(a) In General.--A State that receives financial assistance under 
this part shall use 20 percent of the amounts reserved by such State 
under section 491E(c)(3)(C) for each fiscal year for one or more of the 
following:
            ``(1) Resource and referral programs.--Operating directly 
        or providing financial assistance to private nonprofit 
        organizations or public organizations (including units of 
        general purpose local government) for the development, 
        establishment, expansion, operation, and coordination of 
        resource and referral programs specifically related to child 
        care.
            ``(2) Grants or loans to assist in meeting state and local 
        standards.--Making grants or providing loans to child care 
        providers to assist such providers in meeting applicable State 
        and local child care standards.
            ``(3) Monitoring of compliance with licensing and 
        regulatory requirements.--Improving the monitoring of 
        compliance with, and enforcement of, State and local licensing 
        and regulatory requirements (including registration 
        requirements).
            ``(4) Training.--Providing training and technical 
        assistance in areas appropriate to the provision of child care 
        services, such as training in health and safety, nutrition, 
        first aid, the recognition of communicable diseases, child 
        abuse detection and prevention, and the care of children with 
        special needs.
            ``(5) Compensation.--Improving salaries and other 
        compensation paid to full- and part-time staff who provide 
        child care services for which assistance is provided under this 
        part.
    ``(b) Creative Child Care Options.--Developing creative child care 
options, such as part-time, evening, and weekend child care for parents 
who do not work during day shifts on weekdays, and child care services 
located close to schools for teenage parents.

``SEC. 491H. EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-SCHOOL 
              SERVICES.

    ``(a) In General.--A State that receives financial assistance under 
this part shall use 75 percent of the amounts reserved by such State 
under section 491E(c)(3)(C) for each fiscal year to establish or expand 
and conduct, through the provision of grants or contracts, early 
childhood development or before- and after-school child care programs, 
or both.
    ``(b) Program Description.--Programs that receive assistance under 
this section shall--
            ``(1) in the case of early childhood development programs, 
        consist of services that are not intended to serve as a 
        substitute for compulsory academic programs but that are 
        intended to provide an environment that enhances the 
        educational, social, cultural, emotional, and recreational 
        development of children; and
            ``(2) in the case of before- and after-school child care 
        programs--
                    ``(A) be provided Monday through Friday, including 
                school holidays and vacation periods other than legal 
                public holidays, to children attending early childhood 
                development programs, kindergarten, or elementary or 
                secondary school classes during such times of the day 
                and on such days that regular instructional services 
                are not in session; and
                    ``(B) not be intended to extend or replace the 
                regular academic program.
    ``(c) Priority for Assistance.--In awarding grants and contracts 
under this section, the State shall give the highest priority to 
geographic areas within the State that are eligible to receive grants 
under section 1006 of the Elementary and Secondary Education Act of 
1965, and shall then give priority to--
            ``(1) any other areas with concentrations of poverty; and
            ``(2) any areas with very high or very low population 
        densities.

``SEC. 491I. INFRASTRUCTURE DEVELOPMENT.

    ``A State that receives financial assistance under this part shall 
use 5 percent of the amounts received by the State under section 
491E(c)(3)(C) for the development of infrastructure to be used to 
provide child care services in accordance with this part, including the 
construction of or renovation of child care facilities.

``SEC. 491J. ADMINISTRATION AND ENFORCEMENT.

    ``(a) Administration.--The Secretary shall--
            ``(1) coordinate all activities of the Department of Health 
        and Human Services relating to child care, and, to the maximum 
        extent practicable, coordinate such activities with similar 
        activities of other Federal entities;
            ``(2) collect, publish and make available to the public a 
        listing of State child care standards at least once every 3 
        years; and
            ``(3) provide technical assistance to assist States to 
        carry out this part, including assistance on a reimbursable 
        basis.
    ``(b) Enforcement.--
            ``(1) Review of compliance with state plan.--The Secretary 
        shall review and monitor State compliance with this part and 
        the plan approved under section 491E(d) for the State, 
and shall have the power to terminate payments to the State in 
accordance with paragraph (2).
            ``(2) Noncompliance.--
                    ``(A) In general.--If the Secretary, after 
                reasonable notice to a State and opportunity for a 
                hearing, finds that--
                            ``(i) there has been a failure by the State 
                        to comply substantially with any provision or 
                        requirement set forth in the plan approved 
                        under section 491E(d) for the State; or
                            ``(ii) in the operation of any program for 
                        which assistance is provided under this part 
                        there is a failure by the State to comply 
                        substantially with any provision of this part;
                the Secretary shall notify the State of the finding and 
                that no further payments may be made to such State 
                under this part (or, in the case of noncompliance in 
                the operation of a program or activity, that no further 
                payments to the State will be made with respect to such 
                program or activity) until the Secretary is satisfied 
                that there is no longer any such failure to comply or 
                that the noncompliance will be promptly corrected.
                    ``(B) Additional sanctions.--In the case of a 
                finding of noncompliance made pursuant to subparagraph 
                (A), the Secretary may, in addition to imposing the 
                sanctions described in such subparagraph, impose other 
                appropriate sanctions, including recoupment of money 
                improperly expended for purposes prohibited or not 
                authorized by this part, and disqualification from the 
                receipt of financial assistance under this part.
                    ``(C) Notice.--The notice required under 
                subparagraph (A) shall include a specific 
                identification of any additional sanction being imposed 
                under subparagraph (B).
            ``(3) Issuance of rules.--The Secretary shall establish by 
        rule procedures for--
                    ``(A) receiving, processing, and determining the 
                validity of complaints concerning any failure of a 
                State to comply with the State plan or any requirement 
                of this part; and
                    ``(B) imposing sanctions under this section.

``SEC. 491K. PAYMENTS.

    ``(a) In General.--
            ``(1) Payments.--Each State that has an application 
        approved by the Secretary under section 491E(d) shall be 
        entitled to a payment under this section for each fiscal year 
        in an amount equal to the sum of--
                    ``(A) the hold harmless amount determined under 
                subsection (c); and
                    ``(B) the additional amount determined under 
                subsection (d).
            ``(2) State entitlement.--The provisions of this part 
        constitute budget authority in advance of appropriations Acts, 
        and represent the obligation of the Federal Government to 
        provide for the payment to States of the amount described in 
        paragraph (1).
    ``(b) Method of Payment.--
            ``(1) In general.--Subject to paragraph (2), the Secretary 
        may make payments to a State in installments, and in advance or 
        by way of reimbursement, with necessary adjustments on account 
        of overpayments or underpayments, as the Secretary may 
        determine.
            ``(2) Limitation.--The Secretary may not make such payments 
        in a manner that prevents the State from complying with the 
        requirement specified in section 491E(c)(3).
    ``(c) Hold Harmless Amount.--
            ``(1) In general.--For purposes of subsection (a), the hold 
        harmless amount determined under this subsection is the amount 
        equal to the aggregate amount of Federal funds received by a 
        State under the child care programs specified in paragraph (2) 
        (as such programs were in effect in fiscal year 1995) for 
        fiscal year 1995.
            ``(2) Child care programs specified.--The child care 
        programs specified in this paragraph are the following:
                    ``(A) The child care and development block grant 
                program operated in accordance with the Child Care and 
                Development Block Grant Act of 1990 (42 U.S.C. 9858A-
                9858Q).
                    ``(B) The AFDC-JOBS guaranteed child care program 
                operated in accordance with section 402(g)(1)(A)(i) of 
                this Act (42 U.S.C. 602(g)(1)(A)(i)).
                    ``(C) The at-risk child care program operated in 
                accordance with section 402(i) of this Act (42 U.S.C. 
                602(i)).
                    ``(D) The transitional child care program operated 
                in accordance with section 402(g)(1)(A)(ii) of this Act 
                (42 U.S.C. 602(g)(1)(A)(ii)).
                    ``(E) The child development associate program 
                operated in accordance with title VI of the Human 
                Services Reauthorization Act of 1986 (commonly known as 
                the Child Development Associate Scholarship Assistance 
                Act of 1985) (42 U.S.C. 10901 et seq.).
                    ``(F) The State dependent care planning and 
                development grant program operated in accordance with 
                subchapter E of chapter 8 of subtitle A of title VI of 
                the Omnibus Budget Reconciliation Act of 1981 (commonly 
                known as the State Dependent Care Development Grants 
                Act) (42 U.S.C. 9871 et seq.).
    ``(d) Additional Amount.--
            ``(1) Territories, possessions, and indian tribes.--
                    ``(A) In general.--With respect to a State that is 
                a territory, possession, or Indian tribe, the 
                additional amount determined under this subsection for 
                a fiscal year is an amount equal to the lesser of--
                            ``(i) 80 percent of the amount that such 
                        territory, possession, or Indian tribe expended 
                        under the plan for child care services, 
                        activities designed to improve the quality of 
                        child care, and before- and after-school and 
                        early childhood development services (including 
                        the cost of administration of the plan) in 
                        excess of the hold-harmless amount determined 
                        under subsection (c); or
                            ``(ii) an amount that bears the same ratio 
                        to the remainder amount determined under 
                        subparagraph (B) as--
                                    ``(I) the hold harmless amount 
                                received by the territory, possession, 
                                or Indian tribe under subsection (c) in 
                                such fiscal year; bears
                                    ``(II) to the total hold harmless 
                                amount determined for all territories, 
                                possessions, Indian tribes, and other 
                                States under subsection (c) in such 
                                fiscal year.
                    ``(B) Remainder amount.--For purposes of this 
                subparagraph, the remainder amount determined under 
                this subparagraph for a fiscal year is equal to--
                            ``(i) the amount described in section 
                        491B(b) for such fiscal year; minus
                            ``(ii) the aggregate hold harmless amount 
                        determined under subsection (c) for all 
                        territories, possessions, Indian tribes, and 
                        other States for such fiscal year.
            ``(2) Other states.--
                    ``(A) In general.--With respect to a State that is 
                not a State described in paragraph (1), the additional 
                amount determined under this subsection for a fiscal 
                year is an amount equal to the lesser of--
                            ``(i) 80 percent of the amount that the 
                        State expended under the plan for child care 
                        services, activities designed to improve the 
                        quality of child care, and before- and after-
                        school and early childhood development services 
                        (including the cost of administration of the 
                        plan) during the fiscal year in excess of the 
                        hold-harmless amount determined under 
                        subsection (b) for the fiscal year; or
                            ``(ii) the State's child poverty amount 
                        determined under subparagraph (B) for the 
                        fiscal year.
                    ``(B) Child poverty amount.--For purposes of 
                subparagraph (A), the child poverty amount determined 
                under this subparagraph for a fiscal year for a State 
                (other than a State described in paragraph (1)) is an 
                amount equal to the product of--
                            ``(i)(I) the amount described in section 
                        491B(b) for the fiscal year; minus
                            ``(II) the sum of the aggregate amounts 
                        determined under--
                                    ``(aa) subsection (c) for all 
                                States; and
                                    ``(bb) paragraph (1) for 
                                territories, possessions, and Indian 
                                tribes in such fiscal year; and
                            ``(ii) an amount equal to--
                                    ``(I) the number of children 17 
                                years of age and younger living in 
                                families in the State in the fiscal 
                                year with annual income lower than the 
                                income official poverty line (as 
                                defined by the Office of Management and 
                                Budget, and revised annually in 
                                accordance with section 673(2) of the 
                                Omnibus Budget Reconciliation Act of 
                                1981) that is applicable to a family of 
                                the size involved; divided by
                                    ``(II) the number of such children 
                                living in all States (other than States 
                                described in paragraph (1)) in the 
                                fiscal year.
    ``(e) Data and Information.--The Secretary shall use decennial 
census data to determine the child poverty amount under subsection 
(d)(2)(B)(ii) in a State until such time as the Bureau of the Census 
develops a methodology to compile more frequent estimates to make such 
determinations.
    ``(f) Spending of Funds by State.--Payments to a State under this 
section for any fiscal year may be expended by the State in that fiscal 
year or in the succeeding 3 fiscal years.

``SEC. 491L. ANNUAL REPORT AND AUDITS.

    ``(a) Annual Report.--Not later than December 31, 1998, and 
annually thereafter, a State that receives assistance under this part 
shall prepare and submit to the Secretary a report--
            ``(1) specifying the uses for which the State expended 
        funds specified under paragraph (3) of section 491E(c) and the 
        amount of funds expended for such uses;
            ``(2) containing available data on the manner in which the 
        child care needs of families in the State are being fulfilled, 
        including information concerning--
                    ``(A) the number of children being assisted with 
                funds provided under this part, and under other Federal 
                child care and pre-school programs;
                    ``(B) the type and number of child care programs, 
                child care providers, caregivers, and support personnel 
                located in the State;
                    ``(C) salaries and other compensation paid to full- 
                and part-time staff who provide child care services; 
                and
                    ``(D) activities in the State to encourage public-
                private partnerships that promote business involvement 
                in meeting child care needs;
            ``(3) describing the extent to which the affordability and 
        availability of child care services has increased;
            ``(4) if applicable, describing, in either the first or 
        second such report, the findings of the review of State 
        licensing and regulatory requirements and policies described in 
        section 491E(c), including a description of actions taken by 
        the State in response to such reviews;
            ``(5) containing an explanation of any State action, in 
        accordance with section 491E, to reduce the level of child care 
        standards in the State, if applicable;
            ``(6) describing the standards and health and safety 
        requirements applicable to child care providers in the State, 
        including a description of State efforts to improve the quality 
        of child care; and
            ``(7) containing measurements of the State's success in 
        meeting child care needs of low-income families in the State in 
        accordance with the performance-based and outcome-based 
        measures developed in accordance with subsection (c);
during the period for which such report is required to be submitted.
    ``(b) Audits.--
            ``(1) Requirement.--A State shall, after the close of each 
        program period covered by an application approved under section 
        491E(d) audit its expenditures during such program period from 
        amounts received under this part.
            ``(2) Independent auditor.--Audits under this subsection 
        shall be conducted by an entity that is independent of any 
        agency administering activities that receive assistance under 
        this part and be in accordance with generally accepted auditing 
        principles.
            ``(3) Submission.--Not later than 30 days after the 
        completion of an audit under this subsection, the State shall 
        submit a copy of the audit to the legislature of the State and 
        to the Secretary.
            ``(4) Repayment of amounts.--Each State shall repay to the 
        United States any amounts determined through an audit under 
        this subsection not to have been expended in accordance with 
        this part, or the Secretary may offset such amounts against any 
        other amount to which the State is or may be entitled under 
        this part.
    ``(c) Development of Outcome and Performance-Based Measures.--
            ``(1) In general.--Not later than 12 months after the date 
        of the enactment of the Economic Opportunity and Family 
        Responsibility Act of 1995, the Secretary, in consultation with 
        the States, shall develop and publish in the Federal Register 
        performance-based and outcome-based measures for determining a 
        State's success in meeting the child care needs of low-income 
        families in a State.
            ``(2) Replacement of old standards.--The measures developed 
        under paragraph (1) shall, upon publication of such measures in 
        the Federal Register, replace any matter required in the report 
        under subsection (a) as the Secretary may determine 
        appropriate.

``SEC. 491M. REPORT BY SECRETARY.

    ``Not later than July 31, 1999, and annually thereafter, the 
Secretary shall prepare and submit to the Committee on Ways and Means 
of the House of Representatives and the Committee on Finance of the 
Senate a report that contains a summary and analysis of the data and 
information provided to the Secretary in the State reports submitted 
under section 491L. Such report shall include an assessment, and where 
appropriate, recommendations for the Congress concerning efforts that 
should be undertaken to improve the access of the public to quality and 
affordable child care in the United States.

``SEC. 491N. LIMITATIONS ON USE OF FINANCIAL ASSISTANCE FOR CERTAIN 
              PURPOSES.

    ``(a) Sectarian Purposes and Activities.--No financial assistance 
provided under this part, pursuant to the choice of a parent under 
section 491E(c)(2)(A)(i)(I) or through any other grant or contract 
under the State plan, shall be expended for any sectarian purpose or 
activity, including sectarian worship or instruction.
    ``(b) Tuition.--With regard to services provided to students 
enrolled in grades 1 through 12, no financial assistance provided under 
this part shall be expended for--
            ``(1) any services provided to such students during the 
        regular school day;
            ``(2) any services for which such students receive academic 
        credit toward graduation; or
            ``(3) any instructional services which supplant or 
        duplicate the academic program of any public or private school.

``SEC. 491O. NONDISCRIMINATION.

    ``(a) Religious Nondiscrimination.--
            ``(1) Construction.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), nothing in this section shall be 
                construed to modify or affect the provisions of any 
                other Federal law or regulation that relates to 
                discrimination in employment on the basis of religion.
                    ``(B) Exception.--A sectarian organization may 
                require that employees adhere to the religious tenets 
                and teachings of such organization, and such 
                organization may require that employees adhere to rules 
                forbidding the use of drugs or alcohol.
            ``(2) Discrimination against child.--
                    ``(A) In general.--A child care provider (other 
                than a family child care provider) that receives 
                assistance under this part shall not discriminate 
                against any child on the basis of religion in providing 
                child care services.
                    ``(B) Non-funded child care slots.--Nothing in this 
                section shall prohibit a child care provider from 
                selecting children for child care slots that are not 
                funded directly with assistance provided under this 
                part because such children or their family members 
                participate on a regular basis in other activities of 
                the organization that owns or operates such provider.
            ``(3) Employment in general.--
                    ``(A) Prohibition.--A child care provider that 
                receives assistance under this part shall not 
                discriminate in employment on the basis of the religion 
                of the prospective employee if such employee's primary 
                responsibility is or will be working directly with 
                children in the provision of child care services.
                    ``(B) Qualified applicants.--If 2 or more 
                prospective employees are qualified for any position 
                with a child care provider receiving assistance under 
                this part, nothing in this section shall prohibit such 
                child care provider from employing a prospective 
                employee who is already participating on a regular 
                basis in other activities of the organization that owns 
                or operates such provider.
                    ``(C) Present employees.--This paragraph shall not 
                apply to employees of child care providers receiving 
                assistance under this part if such employees are 
                employed with the provider on the date of enactment of 
                this part.
            ``(4) Employment and admission practices.--Notwithstanding 
        paragraphs (1)(B), (2), and (3), if assistance provided under 
        this part, and any other Federal or State program, amounts to 
        80 percent or more of the operating budget of a child care 
        provider that receives such assistance, the Secretary shall not 
        permit such provider to receive any further assistance under 
        this part unless the grant or contract relating to the 
        financial assistance, or the employment and admissions policies 
        of the provider, specifically provides that no person with 
        responsibilities in the operation of the child care program, 
        project, or activity of the provider will discriminate against 
        any individual in employment, if such employee's primary 
        responsibility is or will be working directly with children in 
        the provision of child care, or admissions because of the 
        religion of such individual.
    ``(b) Effect on State Law.--Nothing in this part shall be construed 
to supersede or modify any provision of a State constitution or State 
law that prohibits the expenditure of public funds in or by sectarian 
institutions, except that no provision of a State constitution or State 
law shall be construed to prohibit the expenditure in or by sectarian 
institutions of any Federal funds provided under this part.

``SEC. 491P. PARENTAL RIGHTS AND RESPONSIBILITIES.

    ``Nothing in this part shall be construed or applied in any manner 
to infringe on or usurp the moral and legal rights and responsibilities 
of parents or legal guardians.

``SEC. 491Q. SEVERABILITY.

    ``If any provision of this part or the application thereof to any 
person or circumstance is held invalid, the invalidity shall not affect 
other provisions of applications of this part which can be given effect 
without regard to the invalid provision or application, and to this end 
the provisions of this part shall be severable.

``SEC. 491R. MISCELLANEOUS PROVISIONS.

    ``Notwithstanding any other law, the value of any child care 
provided or arranged (or any amount received as payment for such care 
or reimbursement for costs incurred for such care) under this part 
shall not be treated as income for purposes of any other Federal or 
federally-assisted program that bases eligibility, or the amount of 
benefits, on need.''.

SEC. 402. REPEALS AND TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Child Care and Development Block Grant of 1990.--The Child Care 
and Development Block Grant of 1990 (42 U.S.C. 9858 et seq.) is 
repealed.
    (b) Child Development Associate Scholarship Assistance Act of 
1985.--Title VI of the Human Services Reauthorization Act of 1986 
(commonly known as the Child Development Associate Scholarship 
Assistance Act of 1985) (42 U.S.C. 10901 et seq.) is repealed.
    (c) State Dependent Care Development Grants Act.--Subchapter E of 
chapter 8 of subtitle A of title VI of the Omnibus Budget 
Reconciliation Act of 1981 (commonly known as the State Dependent Care 
Development Grants Act) (42 U.S.C. 9871 et seq.) is repealed.
    (d) AFDC, AFDC At-Risk, and Transitional Child Care Programs.--
            (1) In general.--Section 402 (42 U.S.C. 602) is amended--
                    (A) in subsection (g)--
                            (i) by striking paragraph (1), and 
                        paragraphs (3) through (7); and
                            (ii) by striking ``(g)'' and all that 
                        follows through ``(2) In'' and inserting ``(g) 
                        In''; and
                    (B) by striking subsection (i).
            (2) Technical and conforming amendments.--
                    (A) Food stamp act of 1977.--Section 17(b)(3)(C) of 
                the Food Stamp Act of 1977 (7 U.S.C. 2026(b)(3)(C)) is 
                amended by striking ``(but not including the provision 
                of transitional benefits under clauses (ii) through 
                (vii) of section 402(g)(1)(A))''.
                    (B) AFDC state plan.--Section 402 (42 U.S.C. 602) 
                is amended--
                            (i) in subsection (a)(19)--
                                    (I) in subparagraph (B)(i)(I), by 
                                striking ``section 402(g)'' and 
                                inserting ``part G'';
                                    (II) in subparagraph (C)(iii)(II), 
                                by striking ``section 402(g)'' and 
                                inserting ``part G'';
                                    (III) in subparagraph (D), by 
                                striking ``section 402(g)'' and 
                                inserting ``part G''; and
                                    (IV) in subparagraph (F)(iv), by 
                                striking ``day care, transportation,'' 
                                and inserting ``transportation''; and
                            (ii) in subsection (g), as amended by 
                        paragraph (1) by striking ``(in addition to 
                        guaranteeing child care under paragraph (1))'' 
                        and inserting ``(in addition to the provision 
                        by the State of child care under part G)''.
                    (C) AFDC payments to states.--Section 403 (42 
                U.S.C. 603) is amended--
                            (i) in subsection (e)--
                                    (I) in the first sentence, by 
                                striking ``, 402(a)(43), and 
                                402(g)(1)(A),'' and inserting ``and 
                                402(a)(43)''; and
                                    (II) by striking the second 
                                sentence;
                            (ii) in subsection (l)(1)(A)--
                                    (I) in the matter preceding clause 
                                (i), by striking ``(including 
                                expenditures for child care under 
                                section 402(g)(1)(A)(i), but only in 
                                the case of a State with respect to 
                                which section 1108 applies)''; and
                                    (II) in clause (ii)(I), by striking 
                                ``section 402(g)(2)'' and inserting 
                                ``section 402(g)''; and
                            (iii) by striking subsection (n).
                    (D) Family support act of 1988.--Section 502 of the 
                Family Support Act of 1988 (42 U.S.C. 1315 note) is 
                repealed.
                    (E) Head start act.--Section 642(c) of the Head 
                Start Act (42 U.S.C. 9837(c)) is amended by striking 
                ``section 402(g) of the Social Security Act, and 
                other''.

SEC. 403. STATE OPTION TO EXTEND TRANSITIONAL MEDICAID BENEFITS.

    (a) Optional Extension of Medicaid Enrollment for Former AFDC 
Recipients for 1 Additional Year.--
            (1) In general.--Section 1925(b)(1) (42 U.S.C. 1396r-
        6(b)(1)) is amended by striking the period at the end and 
        inserting the following: ``, and may provide that the State 
        shall offer to each such family the option of extending 
        coverage under this subsection for any of the first 2 
        succeeding 6-month periods, in the same manner and under the 
        same conditions as the option of extending coverage under this 
        subsection for the first succeeding 6-month period.''.
            (2) Conforming amendments.--
                    (A) In general.--Section 1925 (42 U.S.C. 1396r-6) 
                is amended--
                            (i) in subsection (b)--
                                    (I) in the heading, by striking 
                                ``Extension'' and inserting 
                                ``Extensions'';
                                    (II) in the heading of paragraph 
                                (1), by striking ``Requirement'' and 
                                inserting ``In general'';
                                    (III) in paragraph (2)(B)(ii)--
                                            (aa) in the heading, by 
                                        striking ``period'' and 
                                        inserting ``periods''; and
                                            (bb) by striking ``in the 
                                        period'' and inserting ``in 
                                        each of the 6-month periods'';
                                    (IV) in paragraph (3)(A), by 
                                striking ``the 6-month period'' and 
                                inserting ``any 6-month period'';
                                    (V) in paragraph (4)(A), by 
                                striking ``the extension period'' and 
                                inserting ``any extension period''; and
                                    (VI) in paragraph (5)(D)(i), by 
                                striking ``is a 3-month period'' and 
                                all that follows and inserting the 
                                following: ``is, with respect to a 
                                particular 6-month additional extension 
                                period provided under this subsection, 
                                a 3-month period beginning with the 
                                first or fourth month of such extension 
                                period.''; and
                            (ii) by striking subsection (f).
                    (B) Family support act.--Section 303(f)(2) of the 
                Family Support Act of 1988 (42 U.S.C. 602 note) is 
                amended--
                            (i) by striking ``(A)''; and
                            (ii) by striking subparagraphs (B) and (C).
    (b) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by subsection (a) shall apply to calendar 
        quarters beginning on or after October 1, 1996, without regard 
        to whether final regulations to carry out such amendments have 
        been promulgated by such date.
            (2) When state legislation is required.--In the case of a 
        State plan for medical assistance under title XIX of the Social 
        Security Act which the Secretary of Health and Human Services 
        determines requires State legislation (other than legislation 
        appropriating funds) in order for the plan to meet the 
        additional requirements imposed by the amendments made by 
        subsection (a), the State plan shall not be regarded as failing 
        to comply with the requirements of such title solely on the 
        basis of its failure to meet these additional requirements 
        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 the date of the enactment of this 
        Act. For purposes of the previous sentence, in the case of a 
        State that has a 2-year legislative session, each year of such 
        session shall be deemed to be a separate regular session of the 
        State legislature.

                       TITLE V--EQUITY INVESTMENT

SEC. 501. SHORT TITLE.

    This title may be cited as the ``Equity Investment Development Act 
of 1995''.

SEC. 502. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Affiliate.--The term ``affiliate'' has the same meaning 
        as in section 2 of the Bank Holding Company Act of 1956.
            (2) Adjusted face value.--The term ``adjusted face value'' 
        means, with respect to any certificate issued under subtitle B, 
        the difference between--
                    (A) the face value of the certificate; and
                    (B) any necessary and reasonable expenses incurred 
                by an insured depository institution, the Corporation, 
                or any third party in making an equity investment in a 
                qualified company under subtitle B.
            (3) Appropriate federal financial supervisory agency.--The 
        term ``appropriate Federal financial supervisory agency'' has 
        the same meaning as in section 803 of the Community 
        Reinvestment Act of 1977.
            (4) Appropriate secretary.--The term ``appropriate 
        Secretary'' means--
                    (A) the Secretary of Housing and Urban Development, 
                in the case of any area nominated for designation that 
                is located in an urban area; and
                    (B) the Secretary of Agriculture, in the case of 
                any area nominated for designation that is located in a 
                rural area.
            (5) Board.--The term ``Board'' means the Board of Governors 
        of the Federal Reserve System.
            (6) Corporation.--The term ``Corporation'' means the 
        corporation established pursuant to section 531.
            (7) Deposit insurance fund.--The term ``deposit insurance 
        fund'' has the same meaning as in section 3 of the Federal 
        Deposit Insurance Act.
            (8) Equity investment development zone.--The term ``equity 
        investment development zone'' means an area designated as an 
        equity investment development zone in accordance with subtitle 
        A.
            (9) Federal low-income assistance program.--The term 
        ``Federal low-income assistance program'' means--
                    (A) any program conducted under the Social Security 
                Act based on low income or limited assets which, 
                directly or indirectly, provides aid or assistance to 
                individuals;
                    (B) the food stamp program, as defined in section 
                3(h) of the Food Stamp Act of 1977;
                    (C) any program conducted under the Public Health 
                Service Act based on low income or limited assets 
                which, directly or indirectly, provides aid or 
                assistance to individuals; and
                    (D) any other Federal program based on low-income 
                or limited assets which, directly or indirectly, 
                provides aid or assistance to individuals, or under 
                which aid or assistance is available for--
                            (i) education;
                            (ii) employment training;
                            (iii) health;
                            (iv) housing;
                            (v) nutrition; or
                            (vi) other social services.
            (10) Insured depository institution.--The term ``insured 
        depository institution'' has the same meaning as in section 3 
        of the Federal Deposit Insurance Act.
            (11) Local government.--The term ``local government'' 
        means--
                    (A) any county, city, town, township, parish, 
                village, or other general purpose political subdivision 
                of a State; and
                    (B) any combination of political subdivisions 
                described in subparagraph (A) recognized by the 
                appropriate Secretary.
            (12) Member bank.--The term ``member bank'' has the same 
        meaning as in section 1 of the Federal Reserve Act.
            (13) Qualified company.--The term ``qualified company'' 
        means any entity that certifies in writing to any entity 
        seeking to make an equity investment under subtitle B, that--
                    (A) such entity is or will be located in or near an 
                equity investment development zone; and
                    (B) not less than 50 percent of its employees are, 
                or will be, underemployed residents of the equity 
                investment development zone, particularly residents 
                experiencing long-term unemployment and residents 
                receiving or eligible for assistance under any Federal 
                low-income assistance program.
            (14) Reserve bank.--The term ``reserve bank'' has the same 
        meaning as in section 1 of the Federal Reserve Act.
            (15) Reserves.--The term ``reserves'' means funds required 
        to be maintained by insured depository institutions under 
        section 19(b) of the Federal Reserve Act.
            (16) Rural area.--The term ``rural area'' means any area 
        that is--
                    (A) outside of a metropolitan statistical area 
                (within the meaning of section 143(k)(2)(B) of the 
                Internal Revenue Code of 1986); or
                    (B) determined by the Secretary of Agriculture, 
                after consultation with the Secretary of Commerce, to 
                be a rural area.
            (17) Urban area.--The term ``urban area'' means an area 
        that is not a rural area.

            Subtitle A--Equity Investment Development Zones

SEC. 511. DESIGNATION PROCEDURE.

    (a) Authorization.--Not later than 1 year after the date of 
enactment of this title, the appropriate Secretaries shall designate 10 
areas as equity investment development zones in accordance with this 
title.
    (b) Designation Process.--The appropriate Secretary may designate 
an area as an equity investment development zone if--
            (1) the area meets the eligibility requirements for 
        designation under section 512;
            (2) the area is nominated by one or more local governments 
        and the State or States in which it is located for designation 
        under this section;
            (3) such State or States and the local governments have the 
        authority--
                    (A) to nominate the area for designation under this 
                section; and
                    (B) to provide the assurances described in 
                paragraph (4);
            (4) such State or States and the local governments provide 
        written assurances satisfactory to the appropriate Secretary 
        that the strategic plan referred to in paragraph (5)(B) for 
        such area will be implemented;
            (5) the appropriate Secretary determines that--
                    (A) the area satisfies the eligibility criteria 
                described in section 512; and
                    (B) the area has a strategic plan for accomplishing 
                the purposes of this title that--
                            (i) describes the coordinated economic, 
                        human, community, and physical development plan 
                        and related activities proposed for the area;
                            (ii) describes the proposed implementation 
                        of the plan and the extent to which local 
                        institutions and organizations have contributed 
                        to the planning process;
                            (iii) identifies the amount of State, 
                        local, and private resources that will be 
                        available in the area and the private-public 
                        partnerships to be used, which may include 
                        participation by, and cooperation with, 
                        universities, medical centers, and other 
                        private and public entities;
                            (iv) identifies baselines, methods, and 
                        benchmarks for measuring the success of 
                        carrying out the strategic plan, including the 
                        extent to which poor persons and families will 
                        be empowered to become economically self-
                        sufficient; and
                            (v) includes such other information as may 
                        be required by the appropriate Secretary; and
            (6) any information furnished to the Secretary under this 
        subsection is determined by the Secretary to be accurate.
    (c) Location of Zones.--Seven areas shall be designated as equity 
investment development zones in urban areas, and 3 areas shall be 
designated in rural areas.

SEC. 512. ELIGIBILITY CRITERIA.

    (a) In General.--An area shall be eligible for designation under 
section 511 only if it meets the following criteria:
            (1) Population.--The area has a maximum population of--
                    (A) in the case of an urban area, not more than 
                300,000; or
                    (B) in the case of a rural area, not more than 
                30,000.
            (2) Distress.--The area is one of pervasive poverty, 
        unemployment, and general distress.
            (3) Size.--The area--
                    (A) does not exceed--
                            (i) 30 square miles, in the case of an 
                        urban area; or
                            (ii) 1,000 square miles, in the case of a 
                        rural area;
                    (B) has a boundary that is continuous, or, except 
                in the case of a rural area located in more than 1 
                State, consists of not more than 3 noncontiguous 
                parcels;
                    (C) in the case of--
                            (i) an urban area, is located entirely 
                        within not more than 2 contiguous States; and
                            (ii) a rural area, is located entirely 
                        within not more than 3 contiguous States; and
                    (D) does not include any portion of a central 
                business district (as such term is used for purposes of 
                the most recent Census of Retail Trade prepared by the 
                Bureau of the Census of the Department of Commerce) 
                unless the poverty rate for each population census 
                tract in such district is not less than 35 percent.
            (4) Poverty rate or unemployment rate.--The--
                    (A) poverty rate--
                            (i) for each population census tract within 
                        the area is not less than 20 percent;
                            (ii) for not less than 90 percent of the 
                        population census tracts within the area is not 
                        less than 25 percent; and
                            (iii) for not less than 50 percent of the 
                        population census tracts within the area is not 
                        less than 35 percent; or
                    (B) average rate of total unemployment within the 
                area during the most recent 12-month period for which 
                data is published by the Secretary of Labor is not less 
                than 30 percent higher than the average rate of total 
                unemployment in the State or States in which the area 
                is located during such 12-month period.
    (b) Special Rules Relating to Determination of Poverty Rate.--For 
purposes of subsection (a)(4)(A) the following restrictions shall 
apply:
            (1) Treatment of census tracts with small populations.--
                    (A) Tracts with no population.--In the case of a 
                population census tract with no population--
                            (i) such tract shall be treated as having a 
                        poverty rate that meets the requirements of 
                        clauses (i) and (ii) of subsection (a)(4)(A); 
                        but
                            (ii) such tract shall be treated as having 
                        a zero poverty rate for purposes of applying 
                        subsection (a)(4)(iii).
                    (B) Tracts with populations of less than 2,000.--A 
                population census tract with a population of less than 
                2,000 shall be treated as having a poverty rate that 
                meets the requirements of clauses (i) and (ii) of 
                subsection (a)(4)(A) if more than 75 percent of such 
                tract is zoned for commercial or industrial use.
            (2) Discretion to adjust requirements for equity investment 
        development zone.--
                    (A) In general.--The appropriate Secretary may, if 
                necessary to carry out the purposes of this title, 
                reduce any of the poverty rate thresholds established 
                under subsection (a)(4)(A) by 5 percentage points for 
                the greater of 10 percent of the population census 
                tracts or 5 population census tracts in the area.
                    (B) Alternative.--In lieu of applying subparagraph 
                (A), the Secretary may reduce the poverty rate 
                threshold under subsection (a)(4)(a)(iii) by 10 
                percentage points for not more than 3 population census 
                tracts.
            (3) Each noncontiguous area must satisfy poverty rate 
        rule.--An area nominated for designation as an equity 
        investment development zone may not include a noncontiguous 
        parcel unless such parcel separately meets (subject to 
        paragraphs (1) and (2)) the criteria set forth in subsection 
        (a)(4)(A).
            (4) Areas not within census tracts.--In the case of an area 
        that is not tracted for population census tracts, the 
        equivalent county divisions (as defined by the Bureau of the 
        Census of the Department of Commerce, for purposes of defining 
        poverty areas) shall be used for purposes of determining 
        poverty rates.

SEC. 513. PERIOD FOR WHICH DESIGNATION IS IN EFFECT.

    (a) In General.--Any designation under this section shall remain in 
effect unless revoked by the appropriate Secretary under paragraph (2).
    (b) Revocation of Designation.--The appropriate Secretary shall 
revoke a designation of an area under this subtitle if such Secretary 
determines that the area--
            (1) has an average annual poverty rate that is less than or 
        equal to the average annual poverty rate in the State or States 
        in which the zone is located; or
            (2) has an average rate of total unemployment that, during 
        any 2-year period beginning after the date of the designation, 
        is less than or equal to the average rate of total unemployment 
        in the State or States in which the zone is located.

SEC. 514. SUBSEQUENT DESIGNATIONS.

    (a) In General.--In addition to the areas designated under section 
101, during the period beginning on the effective date of part I of 
subtitle B and ending not later than 6 years after the date of 
enactment of this title, the appropriate Secretaries may designate not 
more than 100 areas as equity investment development zones in 
accordance with this subtitle.
    (b) Urban and Rural Areas.--Not more than 70 areas may be 
designated as equity investment development zones in urban areas under 
this section, and not more than 30 areas may be designated in rural 
areas.

SEC. 515. SPECIAL RULES.

    For purposes of this subtitle, the following restrictions shall 
apply:
            (1) Governments.--If more than one State or local 
        government seeks to nominate an area for designation as an 
        equity investment development zone under this subtitle, any 
        reference to, or requirement of, this subtitle shall apply to 
        each such government.
            (2) Economic development corporation nominations.--An area 
        shall be treated as an area nominated by a State and a local 
        government if it is nominated by an economic development 
        corporation chartered by the State.
            (3) Use of census data.--Population and poverty rate shall 
        be determined by the most recent decennial census of the Bureau 
        of the Census of the Department of Commerce.

         Subtitle B--Equity Investments in Qualified Companies

                      PART I--CERTIFICATE PROGRAM

SEC. 521. CALCULATION OF IMPUTED EARNINGS; ISSUANCE OF CERTIFICATES.

    (a) Establishment of Rate of Interest.--
            (1) In general.--Not later than the effective date of this 
        part, the Board shall, by rule, regulation, or order, establish 
        a single rate of interest applicable to all reserves.
            (2) Adjustments.--The Board may, by rule, regulation, or 
        order, on a quarterly basis, make such adjustments to the rate 
        of interest established under paragraph (1) as the Board 
        determines to be necessary or appropriate.
    (b) Calculation of Imputed Earnings.--
            (1) In general.--On March 1 of each year, the Board shall 
        calculate the imputed earnings on all reserves during the 
        preceding calendar year, based on the rate of interest 
        established under subsection (a), and any adjustments to such 
        rate effected prior to March 1.
            (2) Effective date.--This subsection shall take effect on 
        March 1 of the first calendar year commencing after the date of 
        enactment of this title.
    (c) Issuance of Certificates.--
            (1) In general.--Except as provided in paragraph (2), after 
        making a calculation under subsection (b), the Board shall 
        issue a certificate to each insured depository institution, 
        which shall have a face value equal to the imputed earnings on 
        the reserves maintained by that insured depository institution 
        during the calendar year described in subsection (b).
            (2) Initial issuance.--
                    (A) Issuance to the corporation.--Subject to 
                section 534, after making a calculation under 
                subsection (b) for the first calendar year for which 
such a calculation is made, the Board shall issue a certificate to the 
Corporation, which shall have a face value equal to the difference 
between--
                            (i) the imputed earnings on all reserves 
                        during such calendar year; and
                            (ii) the total face value of all 
                        certificates issued to insured depository 
                        institutions under subparagraph (B).
                    (B) Issuance to insured depository institutions.--
                Notwithstanding subparagraph (A), upon the written 
                request of an insured depository institution, after 
                making a calculation under subsection (b) for the first 
                calendar year for which such a calculation is made, the 
                Board shall issue a certificate to the insured 
                depository institution which shall have a face value 
                equal to the imputed earnings on the reserves 
                maintained by that insured depository institution 
                during such calendar year.

SEC. 522. INVESTMENT IN QUALIFIED COMPANIES.

    (a) By Insured Depository Institutions.--A certificate issued to an 
insured depository institution under section 521(c) may--
            (1) be used by the insured depository institution to make 
        an equity investment in one or more qualified companies, acting 
        through an affiliate or consortium of affiliates, in an amount 
        equal to the adjusted face value of the certificate;
            (2) be transferred by the insured depository institution to 
        the Corporation; or
            (3) be sold by the insured depository institution to a 
        third party.
    (b) By the Corporation.--
            (1) In general.--
                    (A) Certificate issued to corporation.--The 
                certificate issued to the Corporation under section 
                521(c)(2)(A) shall be used by the Corporation to make 
                an equity investment in one or more qualified companies 
                in an amount equal to the adjusted face value of the 
                certificate (taking into account any reduction in the 
                face value of the certificate under paragraph (2)(B)).
                    (B) Certificates transferred to corporation.--Any 
                certificate transferred to the Corporation under 
                subsection (a)(2) shall be used by the Corporation to 
                make an equity investment in one or more qualified 
                companies in an amount equal to the adjusted face value 
                of the certificate.
            (2) Startup expenses.--Upon the request of the Corporation, 
        the Board shall--
                    (A) provide funds to cover the startup expenses of 
                the Corporation in an amount not to exceed 5 percent of 
                the total face value of the certificate issued to the 
                Corporation under section 521(c)(2)(A); and
                    (B) reduce the face value of the certificate issued 
                to the Corporation under section 521(c)(2)(A) by an 
                amount equal to the amount provided under subparagraph 
                (A).
    (c) By Third Party.--Any entity that purchases a certificate, 
either from an insured depository institution or from any other party, 
may--
            (1) make an equity investment in one or more qualified 
        companies in an amount equal to the adjusted face value of the 
        certificate; or
            (2) resell the certificate to another party.

SEC. 523. REIMBURSEMENT.

    (a) Reimbursement Relating to Direct Investment.--
            (1) Certification to fdic.--
                    (A) In general.--After making an equity investment 
                under section 522(a)(1), an insured depository 
                institution may submit to the Federal Deposit Insurance 
                Corporation--
                            (i) the certificate; and
                            (ii) a written certification that an 
                        investment has been made in accordance with 
                        section 522(a)(1).
                    (B) Reduction in deposit insurance liability.--Upon 
                receipt of a certificate and written certification 
                submitted under subparagraph (A), the Federal Deposit 
                Insurance Corporation shall--
                            (i) reduce the most recent semiannual 
                        assessment against the insured depository 
                        institution under section 7(b) of the Federal 
                        Deposit Insurance Act by an amount equal to the 
                        face value of the certificate; and
                            (ii) submit the certificate to the Board.
                    (C) Reimbursement to insurance funds.--Upon receipt 
                of a certificate submitted under subparagraph (B)(ii), 
                the Board shall reimburse the appropriate deposit 
                insurance fund in an amount equal to the face value of 
                the certificate.
            (2) Certification to appropriate federal financial 
        supervisory agency.--
                    (A) In general.--After making an equity investment 
                under section 522(a)(1), an insured depository 
                institution may submit to the appropriate Federal 
                financial supervisory agency a written certification 
                that an investment has been made in accordance with 
                section 522(a)(1).
                    (B) CRA credit.--Section 804 of the Community 
                Reinvestment Act of 1977 (12 U.S.C. 2903) is amended by 
                adding at the end the following:
    ``(c) Equity Investments in Qualified Companies.--In assessing and 
taking into account, under subsection (a), the record of a financial 
institution in meeting the credit needs of the community, the 
appropriate Federal supervisory agency shall take into consideration--
            ``(1) any equity investment in a qualified company (as such 
        term is defined in section 502 of the Equity Investment 
        Development Act of 1995) made by such financial institution 
        under subtitle C of the Equity Investment Development Act of 
        1995; and
            ``(2) any transfer of certificates to the Corporation (as 
        such term is defined in section 3 of the Equity Investment 
        Development Act of 1995) made by such financial institution 
        under subtitle C of the Equity Investment Development Act of 
        1995.''.
    (b) Reimbursement Relating to the Corporation.--
            (1) Stock certificates to insured depository 
        institutions.--
                    (A) Initial issuance.--Subject to section 214, 
                after carrying out section 521(c)(2), the Corporation 
                shall issue to each insured depository institution 
                shares of common stock in the Corporation having a 
                total value that is proportionate to the institution's 
                pro rata share of the face value of the certificate 
                issued to the Corporation under section 521(c)(2).
                    (B) Annual issuance.--The Corporation shall, on an 
                annual basis, provide to each insured depository 
                institution shares of common stock in the Corporation 
                having a total value that is proportionate to the face 
                value of all certificates transferred by the insured 
                depository institution to the Corporation under section 
                522(a)(2).
            (2) Reimbursement by board.--
                    (A) In general.--After making an equity investment 
                under section 522(b)(1), the Corporation may submit to 
                the Board--
                            (i) the certificate; and
                            (ii) a written certification that an 
                        investment has been made in accordance with 
                        section 522(b)(1).
                    (B) Reduction in deposit insurance liability.--Upon 
                receipt of a certificate and written certification 
                submitted under subparagraph (A), the Board shall 
                reimburse the Corporation in an amount equal to the 
                face value of the certificate.
    (c) Reimbursement Relating to Certificates Sold by Insured 
Depository Institutions.--
            (1) Certification to secretary of housing and urban 
        development.--After making an equity investment under section 
        522(c)(1), the purchasing entity may submit to the Secretary of 
        Housing and Urban Development--
                    (A) the certificate; and
                    (B) a written certification that an investment has 
                been made in accordance with section 522(c)(1).
            (2) Reimbursement by hud.--Upon receipt of the certificate 
        and written certification submitted under paragraph (2), the 
        Secretary of Housing and Urban Development shall--
                    (A) reimburse the purchasing entity in an amount 
                equal to the face value of the certificate; and
                    (B) submit the certificate to the Board.
            (3) Reimbursement by board.--Upon receipt of a certificate 
        submitted under paragraph (2)(B), the Board shall reimburse the 
        Secretary of Housing and Urban Development in an amount equal 
        to the face value of the certificate.

SEC. 524. TRANSFERABILITY OF CERTIFICATES.

    Except as provided in section 522(b), each certificate issued under 
this part shall be fully transferable.

SEC. 525. EXPIRATION OF CERTIFICATES.

    (a) In General.--Each certificate issued under this subtitle shall 
expire upon the expiration of the 2-year period beginning on the date 
on which the certificate is issued. An expired certificate may not be 
submitted for reimbursement under section 203 or consideration under 
section 804(c) of the Community Reinvestment Act of 1977, as added by 
this title.
    (b) Replacement of Expired Certificates.--The Board may issue, in 
accordance with this title, a new certificate with a face value equal 
to that of any expired certificate. New certificates shall be issued 
proportionately to each insured depository institution that has used 
each of the certificates that was issued to the institution during the 
year in which the expired certificates were originally issued.

SEC. 526. EFFECTIVE DATE.

    Except as provided in section 521(b), this part shall become 
effective on the date on which all of the initial designations of 
equity investment development zones are made in accordance with section 
511.

            PART II--COMMUNITY EQUITY INVESTMENT CORPORATION

SEC. 531. ESTABLISHMENT.

    (a) In General.--Not later than 6 months after the date of 
enactment of this title, there shall be established a corporation to be 
known as the Community Equity Investment Corporation, or such other 
corporate name as may be duly adopted by the Corporation.
    (b) Status.--The Corporation--
            (1) shall be a for-profit corporation;
            (2) shall not be an agency or instrumentality of the 
        Federal Government; and
            (3) shall initially be incorporated in the State of 
        Delaware.

SEC. 532. INCORPORATORS; BOARD OF DIRECTORS.

    (a) Designation.--The board of directors of each reserve bank shall 
designate 1 person, who shall be--
            (1) an incorporator of the Corporation; and
            (2) a member of the interim board of directors of the 
        Corporation.
    (b) Duties of Incorporators.--The incorporators of the Corporation 
designated under subsection (a) shall take such steps as may be 
necessary to establish the Corporation, including the filing of 
articles of incorporation in accordance with the laws of the State of 
Delaware.
    (c) Interim Board of Directors.--
            (1) Duties of interim board of directors.--The interim 
        board of directors of the Corporation designated under 
        subsection (a) shall--
                    (A) establish and adopt the bylaws of the 
                Corporation; and
                    (B) designate a chief executive officer of the 
                Corporation, who shall be selected from among the 
                members of the interim board of directors of the 
                Corporation.
            (2) Terms of interim board of directors.--Each member of 
        the interim board of directors of the Corporation shall serve 
        for a term of 3 years.
    (d) Appointment of Board of Directors.--Upon the expiration of the 
term of each member of the interim board of directors of the 
Corporation, members of the board of directors of the Corporation shall 
be appointed in accordance with the bylaws of the Corporation.
    (e) Vacancies.--
            (1) Board of directors.--Except as provided in paragraph 
        (2), any vacancy in the board of directors of the Corporation 
        shall be filled in accordance with the bylaws of the 
        Corporation.
            (2) Interim board of directors.--Any vacancy in the interim 
        board of directors of the Corporation shall be filled in the 
        same manner in which the original appointment was made.

SEC. 533. RESTRICTIONS ON TRANSFERABILITY OF CORPORATION STOCK.

    (a) In General.--The common stock of the Corporation shall not be 
transferable prior to the expiration of the 5-year period beginning on 
the date of incorporation of the Corporation.
    (b) Ownership.--During the 5-year period beginning on the 
expiration of the 5-year period described in subsection (a), the common 
stock of the Corporation shall be transferable only among insured 
depository institutions that own common stock in the Corporation on or 
before the expiration of the 5-year period described in subsection (a).

SEC. 534. DISSOLUTION OF THE CORPORATION.

    If the total face value of all certificates issued to insured 
depository institutions under section 521(c)(2)(B) exceeds 75 percent 
of the imputed earnings on all reserves during the first calendar year 
for which a calculation is made under section 521(b), the Corporation 
shall be dissolved and the imputed earnings during such calendar year 
shall be transferred to the Board for distribution to insured 
depository institutions in accordance with section 521(c)(1).

    Subtitle C--Assistance to Qualified Companies Receiving Equity 
                              Investments

SEC. 541. WAGE SUPPLEMENTATION PROGRAM.

    (a) In General.--The Secretary of Health and Human Services and the 
Secretary of Agriculture shall establish a wage supplementation program 
(hereafter in this section referred to as the ``program'') described in 
subsection (b).
    (b) Program Described.--A State may, at its option, operate a 
program under which--
            (1) certain individuals who are eligible for aid to 
        families with dependent children under title IV of the Social 
        Security Act (42 U.S.C. 601 et seq.), or who are members of 
        households who are eligible for food stamp benefits under the 
        Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), or both, would 
        be given an incentive to work; and
            (2) the State would use funds available to pay the cash or 
        food stamp benefits described in paragraph (1) to such families 
        or households to make monthly incentive payments (in lieu of 
        such benefits) to participating employers.
Each such program shall meet the requirements of subsection (c).
    (c) Wage Supplementation Program.--
            (1) In general.--A program conducted under this section 
        shall provide the following:
                    (A) Incentives to work.--
                            (i) In general.--The program shall--
                                    (I) require as a condition of 
                                participation in the program that an 
                                eligible individual be employed by a 
                                participating employer for at least 40 
                                hours per week;
                                    (II) provide that the State shall 
                                make monthly incentive payments to any 
                                participating employer for each month 
                                of employment in an amount equal to the 
                                applicable percentage (described in 
                                clause (ii)) of benefits described in 
                                subsection (a)(2) which would otherwise 
                                be payable to the family or household 
                                of the eligible 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 cash or food benefits.
                            (ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage is 
                        equal to--
                                    (I) 90 percent, in the first year 
                                of employment of the eligible 
                                individual by a participating employer;
                                    (II) 70 percent, in the second year 
                                of employment of the eligible 
                                individual by a participating employer; 
                                and
                                    (III) 40 percent, in the third year 
                                of employment of the eligible 
                                individual by a participating employer.
                            (iii) Cap.--The monthly incentive payment 
                        under clause (i)(II) with respect to an 
                        eligible individual may not exceed two-thirds 
                        of the total monthly wage paid by the 
                        participating employer to such individual.
                    (B) Period of participation.--The program shall not 
                permit an eligible individual to participate in the 
                program for more than 36 months (whether or not 
                consecutive).
            (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 program:
                    (A) Wages as earned income.--Except as provided in 
                subparagraph (B), monthly wages paid to an eligible 
                individual by a participating employer under this 
                section shall be considered to be earned income.
                    (B) Exception for benefit programs.--Monthly wages 
                paid to an eligible individual by a participating 
                employer shall not be considered to be earned income 
                for purposes of determining continued eligibility 
                (other than for the benefits for which the monthly 
                incentive payments are in lieu of) for--
                            (i) aid to families with dependent children 
                        under a State plan approved under part A of 
                        title IV of the Social Security Act (42 U.S.C. 
                        601 et seq.);
                            (ii) medical assistance under a State plan 
                        approved under title XIX of such Act (42 U.S.C. 
                        1396 et seq.); or
                            (iii) food stamp benefits under the Food 
                        Stamp Act of 1977 (7 U.S.C. 2011 et seq.).
                    (C) Additional child support amounts.--An eligible 
                individual who participates in the program shall remain 
                eligible for the program 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)) (relating to certain child support 
                amounts).
                    (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 program 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, at the time of placement in the job 
                involved--
                            (i) 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.); or
                            (ii) a member of a household that is 
                        eligible for food stamp benefits under the Food 
                        Stamp Act of 1977 (7 U.S.C. 20141 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 employer is a 
                                qualified company that has received an 
                                equity investment under title III;
                                    (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 amount 
                                determined under clause (ii);
                                    (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) Minimum wage.--The amount determined 
                        under this clause is equal to the product of--
                                    (I) the greater of the Federal 
                                minimum wage or the applicable State 
                                minimum wage, and
                                    (II) the number of hours worked by 
                                an individual.
                            (iii) 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 each of the requirements 
                        under clause (i) with respect to an eligible 
                        individual during the period such individual 
                        participates under the program.
    (d) Funding for Program.--For each State that conducts a program 
under this section--
            (1) the portion of the monthly incentive payments that the 
        State makes to an eligible employer under subsection 
        (c)(1)(A)(i)(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 program 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 an eligible employer under subsection (c)(1)(A)(i)(II) 
        that is attributable to the cash value of an allotment received 
        under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) shall 
        be considered to be expenditures for allotments under such Act.
    (e) Application for Employment.--An employer seeking to be a 
participating employer with respect to an individual may, prior to 
employing an individual, verify with the State the status of the 
individual as an eligible individual and the amount of monthly 
incentive payment the employer may receive under the program with 
respect to the individual.

                        TITLE VI--EFFECTIVE DATE

SEC. 601. EFFECTIVE DATE.

    (a) In General.--Except as otherwise provided in this Act, this Act 
and the amendments made by this Act shall take effect 12 months after 
the date of the enactment of this Act.
    (b) Delay if State Legislation Required.--In the case of a State 
which the Secretary of Health and Human Services determines requires 
State legislation (other than legislation authorizing or appropriating 
funds) in order to comply with this Act or the amendments made by this 
Act, the State shall not be regarded as failing to comply with the Act 
or such amendments solely on the basis of its failure to meet the 
requirements of the Act or 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 the date of the 
enactment of this Act. For purposes of the preceding sentence, in the 
case of a State that has a 2-year legislative session, each year of 
such session shall be deemed to be a separate regular session of the 
State legislature.
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