II

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.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Economic Opportunity and Family Responsibility Act of

6 1995’’.

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

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. References to Social Security Act.

TITLE I—WORK-RELATED REFORMS
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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.
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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.
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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.

1 SEC. 2. REFERENCES TO SOCIAL SECURITY ACT.

2 Except as otherwise specifically provided, whenever in

3 this Act an amendment is expressed in terms of an amend4 ment to or repeal of a section or other provision, the ref5 erence shall be considered to be made to that section or

6 other provision of the Social Security Act (42 U.S.C. 301

7 et seq.).

8 TITLE I—WORK-RELATED

9 REFORMS

10 SEC. 101. INCREASE IN JOBS PROGRAM FUNDING.

11 Section 403(k)(3) (42 U.S.C. 603(k)(3)) is

12 amended—
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1 (1) in subparagraph (E), by striking ‘‘and’’;

2 and

3 (2) by striking subparagraph (F) and inserting

4 the following:

5 ‘‘(F) $1,540,000,000 in the case of the fiscal

6 year 1996,

7 ‘‘(G) $1,980,000,000 in the case of the fiscal

8 year 1997,

9 ‘‘(H) $2,420,000,000 in the case of the fiscal

10 year 1998,

11 ‘‘(I) $2,860,000,000 in the case of the fiscal

12 year 1999, and

13 ‘‘(J) $3,300,000,000 in the case of the fiscal

14 year 2000 and each succeeding fiscal year,’’.

15 SEC. 102. INCREASE IN JOBS MATCHING RATE; CONTINU16 ATION OF MINIMUM RATE.

17 Section 403(l)(1) (42 U.S.C. 603(l)(1)) is amended—

18 (1) in subparagraph (A)(ii)(II), by striking ‘‘60

19 percent’’ and inserting ‘‘the percentage described for

20 that fiscal year in subparagraph (C),’’; and

21 (2) by adding at the end the following new sub22 paragraph:

23 ‘‘(C) The percentage described in this subparagraph

24 for a fiscal year is as follows:
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1 ‘‘(i) 65 percent, if the fiscal year is 1996 or

2 1997;

3 ‘‘(ii) 67 percent, if the fiscal year is 1998;

4 ‘‘(iii) 69 percent, if the fiscal year is 1999; and

5 ‘‘(iv) 70 percent, if the fiscal year is 2000 or

6 thereafter.’’.

7 SEC. 103. INCREASE IN REQUIRED JOBS PARTICIPATION

8 RATES.

9 (a) IN GENERAL.—Section 403(l)(3) (42 U.S.C.

10 603(l)(3)) is amended—

11 (1) in subparagraph (A)—

12 (A) in clause (v), by striking ‘‘and’’;

13 (B) in clause (vi), by striking the period

14 and inserting a semicolon; and

15 (C) by adding at the end the following new

16 clauses:

17 ‘‘(vii) 25 percent if such year is 1996;

18 ‘‘(viii) 30 percent if such year is 1997;

19 ‘‘(ix) 35 percent if such year is 1998; and

20 ‘‘(x) 40 percent if such year is 1999.’’; and

21 (2) in subparagraph (B)(ii)(IV), by striking

22 ‘‘and 1995’’ and inserting ‘‘through 1999’’.

23 (b) CONFORMING AMENDMENTS.—Section 204(b)(2)

24 of the Family Support Act of 1988 (42 U.S.C. 681 note)

25 is amended—
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1 (1) by inserting ‘‘, and amended by section

2 103(a) of the Economic Opportunity and Family Re3 sponsibility Act of 1995’’ after ‘‘this Act’’; and

4 (2) by striking ‘‘1995’’ and inserting ‘‘1999’’.

5 SEC. 104. ADDITIONAL REQUIREMENTS FOR JOBS PARTICI6 PATION.

7 (a) MINIMUM HOURS FOR JOBS PARTICIPATION.—

8 (1) IN GENERAL.—Section 403(l)(3)(D) (42

9 U.S.C. 603(l)(3)(D)) is amended by striking ‘‘has

10 participated’’ and all that follows through ‘‘estab11 lish’’ and inserting ‘‘has participated—

12 ‘‘(i) in an activity described in section 482(d)

13 for not less than 15 and not more than 35 hours per

14 week; and

15 ‘‘(ii) in accordance with such program require16 ments, consistent with regulations of the Secretary,

17 as the State shall establish.’’.

18 (2) CONFORMING AMENDMENT.—Section

19 402(a)(19)(C)(iv) (42 U.S.C. 602(a)(19)(C)(iv)) is

20 amended by striking ‘‘30’’ and inserting ‘‘35’’.

21 (b) NO PARTICIPATION REQUIRED FOR PARENT OF

22 YOUNG CHILDREN.—Section 402(a)(19)(C)(iii) (42

23 U.S.C. 602(a)(19)(C)(iii)) is amended—

24 (1) in subclause (I), by striking ‘‘under 3 years

25 of age’’ and all that follows through ‘‘one year)’’ and
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1 inserting ‘‘not older than the 12 work weeks of leave

2 provided for in section 102(a)(1)(A) of the Family

3 and Medical Leave Act of 1993 (29 U.S.C.

4 2612(a)(1)(A))’’; and

5 (2) in subclause (II), by striking ‘‘and that par6 ticipation’’ and all that follows through ‘‘a week’’.

7 SEC. 105. ACTIVITIES THAT ARE CONSIDERED PARTICIPA8 TION IN THE JOBS PROGRAM.

9 (a) SERVICES AND ACTIVITIES UNDER THE PRO10 GRAM.—Section 482(d) (42 U.S.C. 682(d)) is amended—

11 (1) in clause (i)—

12 (A) by striking ‘‘shall include—’’ and in13 serting ‘‘may include—’’;

14 (B) in subclause (III), by striking ‘‘and’’

15 at the end;

16 (C) in subclause (IV), by striking ‘‘and’’ at

17 the end; and

18 (D) by adding at the end the following new

19 subclauses:

20 ‘‘(V) the costs of school or training de21 scribed in section 402(a)(19)(F)(i) for an indi22 vidual participating in the program;

23 ‘‘(VI) voluntary activities that are related

24 to a school or day care center, or parenting by

25 a custodial parent; and
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1 ‘‘(VII) any other activity that the State

2 deems appropriate in preparing an individual

3 for work; and’’;

4 (2) in clause (ii), by striking ‘‘must also’’ and

5 inserting ‘‘may also’’.

6 (b) CONFORMING AMENDMENTS.—Section

7 402(a)(19)(F) (42 U.S.C. 602(a)(19)(F)) is amended—

8 (1) by adding ‘‘and’’ at the end of clause (ii);

9 (2) by striking clause (iii); and

10 (3) by redesignating clause (iv) as clause (iii).

11 SEC. 106. TRAINING AND EMPLOYMENT FOR NON- CUSTO12 DIAL PARENTS.

13 Section 482 (42 U.S.C. 682) is amended by adding

14 at the end the following new subsection:

15 ‘‘(j) TRAINING AND EMPLOYMENT FOR

16 NONCUSTODIAL PARENTS.—A State operating a program

17 under this part may use not more than 5 percent of the

18 sum of the amounts available to it for a fiscal year under

19 section 403(l) for conducting a program of training and

20 employment opportunities for noncustodial parents.’’.

21 SEC. 107. DEMONSTRATION PROJECT FOR PRIVATE SEC22 TOR EMPLOYMENT.

23 (a) ESTABLISHMENT.—The Secretary of Health and

24 Human Services (in this section referred to as the ‘‘Sec25 retary’’) shall enter into an agreement with an eligible en-
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1 tity (as described in subsection (c)(2)) that has submitted

2 an application in accordance with subsection (c) to con3 duct a demonstration project described in subsection (b).

4 (b) PROJECT DESCRIBED.—

5 (1) IN GENERAL.—A demonstration project

6 conducted under this section shall provide individ7 uals who—

8 (A) are receiving aid or assistance under

9 part A of title IV of the Social Security Act (42

10 U.S.C. 601 et seq.);

11 (B) are eligible to participate in the JOBS

12 program under part F of such title of such Act

13 (42 U.S.C. 681 et seq.); and

14 (C) reside in an eligible community, as de15 fined in subsection (c)(3),

16 with employment at a private sector business that is

17 not located in the eligible community, and employ18 ment-related support services.

19 (2) EMPLOYMENT-RELATED SUPPORT SERV20 ICES.—For purposes of this section, the term ‘‘em21 ployment-related support services’’ includes—

22 (A) transportation to and from an employ23 ment location;

24 (B) child care (in addition to any child

25 care that an individual participating in the
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1 demonstration project may be receiving under

2 part G of title IV of the Social Security Act or

3 another State low-income or limited assets as4 sistance program); and

5 (C) any other support services that the

6 Secretary deems appropriate.

7 (c) APPLICATIONS.—

8 (1) IN GENERAL.—Each eligible entity desiring

9 to conduct a demonstration project under this sec10 tion in an eligible community shall prepare and sub11 mit to the Secretary an application—

12 (A) containing—

13 (i) the information described in para14 graph (2); and

15 (ii) any other information that the

16 Secretary may require; and

17 (B) in such form as the Secretary may re18 quire.

19 (2) ELIGIBLE ENTITIES.—In order to be eligi20 ble to submit an application to conduct a demonstra21 tion project under this section, an entity shall—

22 (A) be a public or private not-for-profit en23 tity; and

24 (B) include in the application—
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1 (i) certification (in such manner as

2 the Secretary may require) that the entity

3 has an agreement with a private sector

4 business that is not located in the eligible

5 community, to provide employment to eligi6 ble individuals who reside in such commu7 nity; and

8 (ii) documentation demonstrating that

9 the community to be served by the project

10 is an eligible community.

11 (3) ELIGIBLE COMMUNITY DEFINED.—

12 (A) IN GENERAL.—For purposes of this

13 section, the term ‘‘eligible community’’ means a

14 community that—

15 (i) in 1989, had a per capita income

16 measured in accordance with subparagraph

17 (B) of less than $3,000; and

18 (ii) meets such other criteria as the

19 Secretary may require.

20 (B) PER CAPITA INCOME.—The Secretary

21 of Health and Human Services in consultation

22 with the States shall develop an appropriate

23 measure for determining per capita income in

24 poor communities.
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1 (d) LIMIT ON NUMBER OF PROJECTS PER YEAR.—

2 The Secretary shall authorize not more than 5 demonstra3 tion projects under this section during any fiscal year.

4 (e) REPORTS.—An eligible entity that conducts a

5 demonstration project under this section shall prepare and

6 submit to the Secretary annual and final reports in such

7 form and containing such information as the Secretary

8 may require.

9 (f) AUTHORIZATION OF APPROPRIATIONS.—There

10 are authorized to be appropriated $1,000,000 for each of

11 fiscal years 1996 through 1998 for the purpose of con12 ducting demonstration projects in accordance with this

13 section.

14 SEC. 108. COORDINATION OF SERVICES.

15 (a) IN GENERAL.—Section 402(a) (42 U.S.C.

16 602(a)) is amended—

17 (1) in paragraph (44), by striking ‘‘and’’ after

18 the semicolon;

19 (2) in paragraph (45), by striking the period

20 and inserting ‘‘; and’’; and

21 (3) by inserting after paragraph (45) the fol22 lowing new paragraph:

23 ‘‘(46) provide that the State agency may—

24 ‘‘(A) establish at least 1 convenient loca25 tion in each community (if practicable, as de-
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1 fined by the Secretary in regulations) at which

2 a person having an income which is not greater

3 than 185 percent of the income official poverty

4 line (as defined by the Office of Management

5 and Budget, and revised annually in accordance

6 with section 673(2) of the Omnibus Budget

7 Reconciliation Act of 1981) that is applicable to

8 a family of the size involved, may apply for and

9 (if appropriate) receive, directly or through re10 ferral to the appropriate provider, in appro11 priate languages and in a culturally sensitive

12 manner—

13 ‘‘(i) aid under the State plan;

14 ‘‘(ii) employment and education coun15 seling;

16 ‘‘(iii) job placement;

17 ‘‘(iv) child care;

18 ‘‘(v) health care;

19 ‘‘(vi) transportation assistance;

20 ‘‘(vii) housing assistance;

21 ‘‘(viii) child support services;

22 ‘‘(ix) assistance under the National

23 and Community Service Act of 1990 and

24 the Domestic Volunteer Service Act of

25 1973;
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1 ‘‘(x) unemployment insurance;

2 ‘‘(xi) assistance under the Carl D.

3 Perkins Vocational and Applied Tech4 nology Education Act;

5 ‘‘(xii) assistance under the School-to6 Work Opportunities Act of 1994;

7 ‘‘(xiii) assistance under Federal stu8 dent loan programs;

9 ‘‘(xiv) assistance under the Job Train10 ing Partnership Act; and

11 ‘‘(xv) other types of counseling and

12 support services; and

13 ‘‘(B) assign to each recipient of aid under

14 the State plan, and to each applicant for such

15 aid (within 30 days after the date of applica16 tion), a case manager who—

17 ‘‘(i) is knowledgeable about commu18 nity resources;

19 ‘‘(ii) is qualified to refer the applicant

20 or recipient to appropriate education and

21 training opportunities, employment pro22 grams, and needed health and social serv23 ices; and

24 ‘‘(iii) is required to coordinate the

25 provision of benefits and services by the
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1 State to the applicant or recipient, until

2 the applicant or recipient is no longer eligi3 ble for—

4 ‘‘(I) aid under the State plan;

5 ‘‘(II) child care guaranteed by

6 the State in accordance with part G of

7 title IV; and

8 ‘‘(III) medical assistance under

9 the State plan approved under title

10 XIX.’’.

11 (b) STAFFING GUIDELINES.—Section 402 (42 U.S.C.

12 602) is amended by adding at the end the following new

13 subsection:

14 ‘‘(j)(1) The Secretary shall establish guidelines for

15 the staffing of the State agencies operating or overseeing

16 the services and programs referred to in subsection

17 (a)(46)(A) that include recommendations for qualifica18 tions of personnel employed by such agencies and for ap19 propriate caseload size.

20 ‘‘(2) Every 2 years, each State shall report to the

21 Secretary on—

22 ‘‘(A) the extent to which the State is staffing

23 the State agencies operating or overseeing the serv24 ices and programs referred to in subsection

25 (a)(46)(A) in accordance with the guidelines estab-
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1 lished pursuant to paragraph (1) of this subsection;

2 and

3 ‘‘(B) to the extent the State is not doing so,

4 how the State is carrying out the provisions of the

5 State plan required by subsection (a)(46).’’.

6 TITLE II—REFORMS OF AFDC

7 AND TREATMENT OF TEEN8 AGE PARENTS

9 Subtitle A—AFDC Reforms

10 SEC. 201. INCREASED INCOME DISREGARD.

11 Section 402(a)(8) is amended—

12 (1) in subparagraph (A)—

13 (A) in clause (ii), by striking ‘‘the first $90

14 of the total of such earned income for such

15 month’’ and inserting ‘‘an amount equal to (I)

16 the first $120 of the total of such earned income, plus (II) 1 17 ⁄3 of the remainder of such

18 earned income for such month’’.

19 (B) by repealing clause (iv); and

20 (2) in subparagraph (B)—

21 (A) by striking clause (ii);

22 (B) by striking ‘‘agency—’’ and all that

23 follows through ‘‘(i) shall not’’ and inserting

24 ‘‘agency shall not’’; and
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1 (C) by redesignating subclauses (I) and

2 (II) as clauses (i) and (ii), respectively and

3 moving such clauses (as redesignated) 2 ems to

4 the left.

5 SEC. 202. DISREGARD OF INCOME AND RESOURCES DES6 IGNATED FOR EDUCATION, TRAINING, AND

7 EMPLOYABILITY.

8 (a) DISREGARD AS RESOURCE.—Section

9 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)) is amended—

10 (1) by striking ‘‘or’’ before ‘‘(iv)’’; and

11 (2) by inserting ‘‘, or (v) at the option of the

12 State, in the case of a family receiving aid under the

13 State plan (and a family not receiving such aid but

14 which received such aid in at least 1 of the preced15 ing 4 months or became ineligible for such aid dur16 ing the preceding 12 months because of excessive

17 earnings), any amount not to exceed $10,000 in a

18 qualified asset account (as defined in section 406(i))

19 of such family, reduced by the amount (if any) ex20 cluded from the resources of the family pursuant to

21 paragraph (46)(A)(i) of this subsection’’ before ‘‘;

22 and’’.

23 (b) DISREGARD AS INCOME.—

24 (1) IN GENERAL.—Section 402(a)(8)(A) (42

25 U.S.C. 602(a)(8)(A)) is amended—
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1 (A) by striking ‘‘and’’ at the end of clause

2 (vii); and

3 (B) by inserting after clause (viii) the fol4 lowing new clause:

5 ‘‘(ix) at the option of the State, shall

6 disregard any interest or income earned on

7 a qualified asset account (as defined in

8 section 406(i)); and’’.

9 (2) NONRECURRING LUMP-SUM EXEMPT FROM

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

11 602(a)(17)) is amended by adding at the end the

12 following: ‘‘; and that, at the option of the State,

13 this paragraph shall not apply to earned or unearned

14 income received in a month on a nonrecurring basis

15 to the extent that such income is placed in a quali16 fied asset account (as defined in section 406(i)) the

17 total amount in which, after such placement, does

18 not exceed $10,000;’’.

19 (3) TREATMENT AS INCOME.—Section

20 402(a)(7) (42 U.S.C. 602(a)(7)) is amended—

21 (A) by striking ‘‘and’’ at the end of sub22 paragraph (B);

23 (B) by striking the semicolon at the end of

24 subparagraph (C) and inserting ‘‘; and’’; and
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1 (C) by adding at the end the following new

2 subparagraph:

3 ‘‘(D) at the option of the State, shall treat

4 as income any distribution from a qualified

5 asset account (as defined in section 406(i)(I))

6 which does not meet the definition of a qualified

7 distribution under section 406(i)(2);’’.

8 (c) QUALIFIED ASSET ACCOUNTS.—Section 406 (42

9 U.S.C. 606) is amended by adding at the end the follow10 ing:

11 ‘‘(i)(1) The term ‘qualified asset account’ means a

12 mechanism approved by the State (such as individual re13 tirement accounts, escrow accounts, or savings bonds) that

14 allows savings of a family receiving aid to families with

15 dependent children to be used for a qualified distribution.

16 ‘‘(2) The term ‘qualified distribution’ means a dis17 tribution for expenses directly related to 1 or more of the

18 following purposes:

19 ‘‘(A) The attendance of a member of the family

20 at any education or training program.

21 ‘‘(B) The improvement of the employability (in22 cluding self-employment) of a member of the family

23 (such as through the purchase of an automobile).

24 ‘‘(C) The purchase of a home for the family.

25 ‘‘(D) A change of the family residence.’’.
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1 (d) STUDY OF USE OF QUALIFIED ASSET ACCOUNTS;

2 REPORT.—The Secretary of Health and Human Services

3 shall conduct a study of the use of qualified asset accounts

4 established pursuant to the amendments made by this sec5 tion, and shall report on such study and any recommenda6 tions for modifications of such amendments to the Com7 mittee on Finance of the Senate and the Committee on

8 Ways and Means of the House of Representatives not later

9 than January 1, 1998.

10 SEC. 203. ELIMINATION OF MARRIAGE DISINCENTIVES.

11 (a) ELIMINATION OF RECENT WORK HISTORY RE12 QUIREMENT.—Section 407(b)(1)(A)(iii) (42 U.S.C.

13 607(b)(1)(A)(iii)) is amended—

14 (1) in subclause (I), by striking ‘‘in any 13-cal15 endar-quarter period ending within one year prior to

16 the application for such aid’’; and

17 (2) in subclause (II), by striking ‘‘, within one

18 year prior to the application for such aid’’.

19 (b) ELIMINATION OF 100-HOUR RULE.—Section 407

20 (42 U.S.C. 607) shall be applied without regard to the

21 100-hour rule under section 233.100(a)(1)(i) of title 45,

22 Code of Federal Regulations, or any other regulation or

23 ruling providing for the same result.
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1 (c) ELIMINATION OF 6-MONTH LIMIT.—Section

2 407(b)(2)(B)(ii) (42 U.S.C. 607(b)(2)(B)(ii)) is amend3 ed—

4 (1) by striking subclause (II); and

5 (2) by redesignating subclause (III) as

6 subclause (II).

7 (d) TREATMENT OF STEPPARENT INCOME.—

8 (1) OPTION OF FAMILY TO HAVE NEEDS OF

9 STEPPARENT CONSIDERED.—Section 402(a)(7)(A)

10 (42 U.S.C. 602(a)(7)(A)) is amended by inserting ‘‘,

11 at the option of such relative, of any stepparent of

12 the child (living in the same home as such child and

13 relative)’’ before ‘‘, or of any other individual’’.

14 (2) MODIFICATION OF STEPPARENT INCOME

15 DISREGARD.—Section 402(a)(31) (42 U.S.C.

16 602(a)(31)) is amended—

17 (A) by inserting ‘‘if the needs of a step18 parent of the dependent child living in the same

19 home as the child are not considered’’ before

20 ‘‘in making’’;

21 (B) by striking ‘‘dependent child’s step22 parent living in the same home as such child’’

23 and inserting ‘‘stepparent’’; and

24 (C) by adding at the end of subparagraph

25 (B) the following: ‘‘or, if greater, 130 percent
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1 of the income official poverty line (as defined by

2 the Office of Management and Budget, and re3 vised annually in accordance with section

4 673(2) of the Omnibus Budget Reconciliation

5 Act of 1981) applicable to such a family,’’.

6 Subtitle B—Teenage Parents

7 SEC. 211. MINOR TEENAGE PARENT RESIDENCY REQUIRE8 MENT.

9 Section 402(a)(43) (42 U.S.C. 602(a)(43)) is amend10 ed to read as follows:

11 ‘‘(43) provide that—

12 ‘‘(A) subject to subparagraphs (B) and

13 (C), aid under the State plan shall not be pro14 vided to an individual who has not attained 18

15 years of age, has never married, and has a de16 pendent child in the individual’s care or is preg17 nant and eligible for such aid, for the individual

18 and the dependent child (or for herself in the

19 case of a pregnant woman), if the case manager

20 for the individual determines that—

21 ‘‘(i) the individual is not residing in a

22 place of residence maintained by a parent,

23 legal guardian, or other adult relative of

24 the individual as the home of the parent,

25 legal guardian, or other adult relative, re-
24

•S 746 IS

1 spectively, or in a foster home, maternity

2 home, or other adult-supervised supportive

3 living arrangement;

4 ‘‘(ii) an appropriate adult-supervised

5 living arrangement is available for the indi6 vidual and the dependent child (or for her7 self in the case of a pregnant woman); and

8 ‘‘(iii) the individual should be required

9 to relocate to such a place of residence;

10 ‘‘(B) subparagraph (A) shall not apply to

11 an individual if—

12 ‘‘(i) the circumstances described in

13 subparagraph (A) have persisted for less

14 than 2 months since the case manager

15 made the determination described in sub16 paragraph (A);

17 ‘‘(ii) the individual does not have a

18 parent or legal guardian who is living in

19 the State and whose whereabouts are

20 known;

21 ‘‘(iii) the individual has been living

22 independently from any parent or legal

23 guardian of the individual for at least 1

24 year before the date the child was born or
25

•S 746 IS

1 the date the individual applied for aid

2 under the State plan;

3 ‘‘(iv) the individual is a ward of the

4 court or of the State, and the court or the

5 State (as the case may be) has approved

6 the individual for independent living; or

7 ‘‘(v) the individual has been emanci8 pated by court order;

9 ‘‘(C) subparagraph (A) shall not apply to

10 an individual if the case manager for the indi11 vidual determines—

12 ‘‘(i) that the individual does not have

13 a parent or legal guardian who will allow

14 the individual to live in the home of the

15 parent or legal guardian;

16 ‘‘(ii) that the physical or emotional

17 health or safety of the individual or the de18 pendent child would be jeopardized if the

19 individual and the child lived in the same

20 residence with the parent or legal guardian

21 of the individual;

22 ‘‘(iii) that the application of subpara23 graph (A) would prevent the continued

24 participation of the individual in—
26

•S 746 IS

1 ‘‘(I) a substance abuse treatment

2 program approved by the State; or

3 ‘‘(II) an education or training

4 program, or in employment, without

5 providing an equivalent alternative; or

6 ‘‘(iv) in accordance with regulations

7 issued by the Secretary, that there is other

8 good cause for not applying subparagraph

9 (A) to the individual;

10 ‘‘(D) in making the determinations de11 scribed in subparagraphs (A), (B), and (C), the

12 case manager for an individual shall—

13 ‘‘(i) consider all relevant factors, in14 cluding—

15 ‘‘(I) whether there is evidence

16 that the individual or the child has

17 suffered or is at risk of suffering

18 physical or emotional abuse by some19 one in the place;

20 ‘‘(II) whether illegal activity oc21 curs at the place; and

22 ‘‘(III) whether a mandatory relo23 cation of the individual would result

24 in overcrowding, violation of the terms
27

•S 746 IS

1 of a lease, or a violation of local

2 health or safety standards; and

3 ‘‘(ii) if the case manager is not a fam4 ily counselor, consult with a family coun5 selor who has specialized training or dem6 onstrated experience serving individuals

7 and families, and the written recommenda8 tions of the counselor shall be included in

9 the case record;

10 ‘‘(E) if the case manager determines that

11 the individual should be required to relocate,

12 the State agency shall offer the individual coun13 seling and other services designed to help the

14 individual make the transition from independ15 ent to supervised living; and

16 ‘‘(F) the case manager shall determine in

17 all cases in which aid under the State plan is

18 payable to an individual who is pregnant or a

19 parent, and has not attained 20 years of age,

20 for the needs of the individual and for the needs

21 of a dependent child of the individual, whether

22 such aid should be paid to another individual in

23 the manner described in section 406(b)(2);’’.
28

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1 SEC. 212. SCHOOLING AND EMPLOYMENT REQUIREMENTS.

2 (a) IN GENERAL.—Section 482 (42 U.S.C. 682), as

3 amended by section 106 of this Act, is amended by adding

4 at the end the following new subsection:

5 ‘‘(k) SCHOOLING REQUIREMENTS.—Notwithstanding

6 any other provision of this part, each State program estab7 lished under this part shall impose only the following re8 quirements with respect to each participant who has not

9 attained 20 years of age, has not completed secondary

10 school or received a certificate of high school equivalency,

11 and is a custodial parent or pregnant:

12 ‘‘(1) PARTICIPATION REQUIREMENT.—The par13 ticipant shall participate in an educational program,

14 a program that leads to a high school diploma, or

15 job search and job placement activities unless—

16 ‘‘(A) the participant has a need for child

17 care or other supportive services that cannot be

18 addressed by the program; or

19 ‘‘(B) the case manager determines, after

20 consultation with the school or training pro21 gram, that the recipient would not benefit from

22 direct placement in any such program, in which

23 case the recipient shall participate in appro24 priate alternative activities specified in an indi25 vidualized plan developed for the individual by
29

•S 746 IS

1 the case manager which may include a plan for

2 subsequent placement in such a program.

3 ‘‘(2) PENALTIES.—

4 ‘‘(A) IN GENERAL.—If an individual re5 quired to participate in a program referred to

6 in paragraph (1) fails to meet a standard (es7 tablished by the State in accordance with sub8 paragraph (B)) for minimum performance in

9 the program, the amount of aid otherwise pay10 able to the individual on a monthly basis under

11 the State plan approved under part A shall be

12 reduced by the lesser of—

13 ‘‘(i) $60;

14 ‘‘(ii) 20 percent of such otherwise

15 payable amount; or

16 ‘‘(iii) the difference between such oth17 erwise payable amount and the amount of

18 such aid that would be so payable if the

19 family of the individual included 1 less per20 son.

21 ‘‘(B) MINIMUM PERFORMANCE STAND22 ARD.—The minimum performance standard re23 ferred to in subparagraph (A)—

24 ‘‘(i) shall be based on the achievement

25 of satisfactory progress in the program or
30

•S 746 IS

1 on fulfillment of an attendance standard

2 established by the State; and

3 ‘‘(ii) if based on the achievement of

4 satisfactory progress—

5 ‘‘(I) shall not require mainte6 nance of a grade that is higher than

7 a passing grade in the school district

8 in which the program is located, or if

9 the program does not award grades,

10 of a performance level higher than a

11 level prescribed by the Secretary in

12 regulations; and

13 ‘‘(II) shall provide for consider14 ation, under a plan approved by the

15 Secretary, of whether the failure of an

16 individual to achieve a specified grade

17 or other applicable performance level

18 is due to limitations on the ability of

19 the individual to learn or other cir20 cumstances that limit the ability of

21 the individual to perform up to the in22 dividual’s capacities, or shall provide

23 for deeming progress to be satisfac24 tory if the individual meets a specified

25 attendance standard.
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•S 746 IS

1 ‘‘(C) GOOD CAUSE.—Subparagraph (A)

2 shall not apply to an individual who has good

3 cause (as determined by the State in accord4 ance with regulations prescribed by the Sec5 retary) for failing to meet the standard of mini6 mum performance.

7 ‘‘(D) ESCROW ACCOUNT.—The State may

8 place in an escrow account with respect to an

9 individual whose aid is reduced pursuant to

10 subparagraph (A) an amount equal to the

11 amount of the reduction in such aid, and may

12 pay to the individual all amounts placed in an

13 escrow account with respect to the individual,

14 upon a demonstration by the individual of a

15 satisfactory effort (as defined by the State in

16 accordance with regulations prescribed by the

17 Secretary) in the program.

18 ‘‘(E) SCHOOL-BASED MONITORING.—The

19 State shall monitor the percentage of the per20 sons attending each school upon whom sanc21 tions are imposed pursuant to subparagraph

22 (A), and, if the State determines that the per23 centage for any school significantly exceeds

24 such percentage at similar schools, the State

25 shall determine the reasons for the excessive
32

•S 746 IS

1 sanction percentage, and shall suspend the im2 position of sanctions upon the persons attend3 ing the school until the State determines that

4 the sanction percentage is not excessive.

5 ‘‘(3) INCENTIVES.—

6 ‘‘(A) IN GENERAL.—If an individual re7 quired to participate in a program referred to

8 in paragraph (1) meets a standard (established

9 by the State in accordance with subparagraph

10 (B)) for sufficient performance in the program,

11 the amount of aid otherwise payable to the indi12 vidual on a monthly basis under the State plan

13 approved under part A shall be increased by not

14 less than the lesser of—

15 ‘‘(i) $60;

16 ‘‘(ii) 20 percent of such otherwise

17 payable amount; or

18 ‘‘(iii) the difference between such oth19 erwise payable amount and the amount of

20 such aid that would be so payable if the

21 family of the individual included 1 less per22 son.

23 ‘‘(B) SUFFICIENT PERFORMANCE STAND24 ARD.—The sufficient performance standard re25 ferred to in subparagraph (A) shall be based on
33

•S 746 IS

1 measurement of the same factors used to deter2 mine whether the minimum performance stand3 ard referred to in paragraph (2)(B)(i) has been

4 met, and may require a higher degree of per5 formance (subject to such limits as the Sec6 retary shall prescribe in regulations) than the

7 minimum performance standard.’’.

8 (b) CONFORMING AMENDMENTS.—Section

9 402(a)(19) (42 U.S.C. 602(a)(19)), as amended by section

10 201(b) of this Act, is amended—

11 (1) in subparagraph (C)—

12 (A) in clause (iii), by inserting ‘‘, is not de13 scribed by clause (viii), and’’ before ‘‘—’’;

14 (B) in clause (v)—

15 (i) by inserting a comma after ‘‘16’’;

16 and

17 (ii) by inserting ‘‘and is not a custo18 dial parent or pregnant’’ before the semi19 colon;

20 (C) by striking ‘‘or’’ at the end of clause

21 (vii);

22 (D) by adding ‘‘or’’ at the end of clause

23 (viii); and

24 (E) by adding at the end the following new

25 clause:
34

•S 746 IS

1 ‘‘(ix)(I) has not attained 20 years of

2 age,

3 ‘‘(II) has not completed secondary

4 school or received a certificate of high

5 school equivalency, and

6 ‘‘(III) is pregnant, or is a custodial

7 parent of a child who has not attained 4

8 months of age and is personally providing

9 care for the child;’’; and

10 (2) by striking subparagraph (E).

11 SEC. 213. PLANNING, STARTUP, AND REPORTING.

12 (a) REQUIRED PARTICIPATION RATES.—Section

13 403(l) (42 U.S.C. 603(l)) is amended by adding at the

14 end the following new paragraph:

15 ‘‘(5)(A) Notwithstanding paragraph (1), the Sec16 retary shall pay to a State an amount equal to 50 percent

17 of the expenditures made by such State in a fiscal year

18 in operating its program established under part F (in lieu

19 of any different percentage specified in paragraph (1)(A))

20 if the State’s teen participation rate (determined under

21 subparagraph (B)) for the preceding fiscal year does not

22 exceed or equal—

23 ‘‘(i) 15 percent if the preceding fiscal year is

24 1996;

25 ‘‘(ii) 40 percent if such year is 1997;
35

•S 746 IS

1 ‘‘(iii) 70 percent if such year is 1998; or

2 ‘‘(iv) 90 percent if such year is 1999.

3 ‘‘(B) The State’s teen participation rate for a fiscal

4 year shall be the average of its teen participation rates

5 for each month in such fiscal year.

6 ‘‘(C) The State’s teen participation rate for a month

7 shall be the number, expressed as a percentage, equal to—

8 ‘‘(i) the average monthly number of individuals

9 required to comply with section 482(k) for the

10 month who have received aid under the State plan

11 approved under part A for at least 60 days, and—

12 ‘‘(I) are in an assigned or individualized

13 activity or in the midst of a regularly scheduled

14 school break;

15 ‘‘(II) have good cause for not participating

16 in a program under such section;

17 ‘‘(III) are in conciliation or whose aid

18 under the State plan approved under this part

19 has been reduced pursuant to such section; or

20 ‘‘(IV) are former recipients of such aid

21 who are receiving case management services

22 under the State plan; divided by

23 ‘‘(ii) the number of individuals required to com24 ply with section 482(k) for the month, plus the num-
36

•S 746 IS

1 ber of former recipients of such aid who are receiv2 ing case management services under the State plan.

3 ‘‘(D) Subparagraphs (D) and (E) of paragraph (3)

4 shall apply in like manner to this paragraph.

5 ‘‘(E) The State shall submit to the Secretary a report

6 on the number of individuals in each category or sub7 category of participants in programs under section 482(k)

8 as the Secretary may define.

9 ‘‘(F) The Secretary shall develop such procedures as

10 may be necessary to ensure that participation rates re11 ported by States are accurate, and shall annually submit

12 to the Congress a compilation of the State reports made

13 pursuant to subparagraph (E).’’.

14 (b) STATE PLAN REQUIREMENT.—Section

15 482(a)(1)(B) (42 U.S.C. 682(a)(1)(B)) is amended by

16 striking ‘‘and (iii)’’ and inserting ‘‘(iii) a description of

17 the plans of the State for ensuring that, within 5 years

18 after the effective date of this clause, all individuals re19 quired to comply with subsection (k) do so, including the

20 strategy for phasing in the requirements of subsection (k),

21 which shall reflect the finding of a needs assessment that

22 identifies the current and projected numbers of recipients

23 of aid under the State plan in different regions of the

24 State who have not attained 20 years of age, the availabil25 ity of appropriate educational institutions and alternatives
37

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1 (including parenting education capacity) and the availabil2 ity of support services, and of the plans of the State for

3 ensuring that service providers have agreed to cooperate

4 in supplying necessary data (such as reports on attend5 ance, satisfactory participation, and performance), and a

6 commitment by the State to make annual reports to the

7 Secretary on progress in carrying out this clause and sub8 section (k), and (iv).’’.

9 SEC. 214. CASE MANAGEMENT.

10 Section 402(a) (42 U.S.C. 602(a)), as amended by

11 section 108(a) of this Act, is amended—

12 (1) by striking ‘‘and’’ at the end of paragraph

13 (45);

14 (2) by striking the period at the end of para15 graph (46) and inserting ‘‘; and’’; and

16 (3) by inserting after paragraph (46) the fol17 lowing:

18 ‘‘(47) provide that the State agency—

19 ‘‘(A) shall assign a case manager—

20 ‘‘(i) to each recipient of aid under the

21 State plan who—

22 ‘‘(I) is a custodial parent of a

23 child or pregnant; and

24 ‘‘(II) has not attained 20 years

25 of age; and
38

•S 746 IS

1 ‘‘(ii) for 1 year, to each former recipi2 ent of such aid who—

3 ‘‘(I) is a custodial parent;

4 ‘‘(II) has not attained 20 years

5 of age; and

6 ‘‘(III) has not declined such as7 signment;

8 ‘‘(B) may assign a case manager to any in9 dividual—

10 ‘‘(i) who—

11 ‘‘(I) is a noncustodial parent re12 ceiving aid under the State plan; and

13 ‘‘(II) has not attained 20 years

14 of age; or

15 ‘‘(ii)(I) who is a parent not receiving

16 aid under the State plan;

17 ‘‘(II) who has not attained 20 years of

18 age;

19 ‘‘(III) whose income does not exceed

20 150 percent of the income official poverty

21 line (as defined by the Office of Manage22 ment and Budget, and revised annually in

23 accordance with section 673(2) of the Om24 nibus Budget Reconciliation Act of 1981)
39

•S 746 IS

1 applicable to a family of the size involved;

2 and

3 ‘‘(IV) who has not declined the as4 signment;

5 ‘‘(C) shall require each case manager to

6 improve the capacity of any individual to whom

7 assigned to assume greater responsibility for

8 the individual and the family of the individual,

9 by—

10 ‘‘(i) in the case of an individual re11 ceiving aid under the State plan who is a

12 custodial parent and has not attained 18

13 years of age, assessing the appropriateness

14 of the living arrangement of the individual;

15 ‘‘(ii) providing referrals to appropriate

16 services (such as prenatal care, pre- and

17 post-partum school reentry, child care,

18 well-baby care (including immunizations),

19 and home visits if appropriate) needed for

20 the individual to complete educational pro21 grams or employment preparation pro22 grams;

23 ‘‘(iii) facilitating paternity establish24 ment through contacts with the putative

25 father during the mother’s pregnancy, if
40

•S 746 IS

1 appropriate, and if paternity is not estab2 lished at birth, exploring ways to establish

3 paternity;

4 ‘‘(iv) explaining the rights and respon5 sibilities of such individuals as established

6 under the State plans approved under this

7 part and part D, and helping such individ8 uals meet their responsibilities;

9 ‘‘(v) developing and monitoring the

10 case plan and service provision in order to

11 assess progress and make necessary

12 changes;

13 ‘‘(vi) ensuring that the case plan in14 corporates education, health, and employ15 ment goals during and after the completion

16 of secondary school or the training pro17 gram, and if the individual is required or

18 allowed to participate in the program es19 tablished by the State under part F, ensur20 ing that the case plan is the employability

21 plan for purposes of the State program es22 tablished under part F;

23 ‘‘(vii) attempting to identify the cause

24 of, and address, any problems that are

25 causing those of such individuals who are
41

•S 746 IS

1 receiving aid under the State plan to be in

2 danger of a reduction in aid;

3 ‘‘(viii) recommending to the State

4 agency that those of such individuals who

5 are involved in an educational activity pur6 suant to a program established under sec7 tion 482(k) receive bonuses, or that the

8 State apply sanctions, as appropriate,

9 under the State plan, or that there be ex10 emptions from a requirement imposed by

11 or under the State plan; and

12 ‘‘(ix) in the case of an individual who

13 has not attained 20 years of age and is a

14 parent or pregnant, providing the individ15 ual with health agency information and

16 family planning materials, and facilitating

17 appointments with respect to such matters

18 on request;

19 ‘‘(D) shall, to the extent feasible, require

20 each case manager to work with such individ21 uals to identify appropriate opportunities for

22 volunteer activities;

23 ‘‘(E) shall locate case managers in State

24 offices that administer the State plan, or allow

25 such offices to subcontract the duties of case
42

•S 746 IS

1 managers to community-based organizations or

2 other agencies of State government such as

3 health or education agencies; and

4 ‘‘(F) shall ensure that the case load of a

5 case manager assigned full-time to teenage par6 ent case management does not exceed 65 cases,

7 and that the average number of cases managed

8 by such full-time case managers does not exceed

9 50, and the Secretary shall prescribe regula10 tions to address situations in which a case man11 ager works less than full-time with teenage par12 ents.’’.

13 TITLE III—STRENGTHENING PA14 RENTAL RESPONSIBILITY

15 AND FAMILY STABILITY

16 Subtitle A—Federal

17 Responsibilities

18 SEC. 301. EXPANSION OF FUNCTIONS OF FEDERAL PARENT

19 LOCATOR SERVICE.

20 Section 453(a) (42 U.S.C. 653(a)) is amended by

21 striking ‘‘enforcing support obligations against such par22 ent’’ and inserting ‘‘establishing parentage, or establish23 ing, modifying, and enforcing child support obligations,

24 and which shall use safeguards to prevent the disclosure

25 of information in cases that would jeopardize the safety
43

•S 746 IS

1 of the custodial parent, the noncustodial parent, or any

2 child of either such parent’’.

3 SEC. 302. EXPANSION OF FEDERAL PARENT LOCATOR SYS4 TEMS.

5 (a) ACCESS TO ADDITIONAL DATA BASES.—Section

6 453 (42 U.S.C. 653) is amended—

7 (1) in subsection (b), by striking ‘‘the most re8 cent address and place of employment’’ and insert9 ing ‘‘the most recent residential address, employer

10 name and address, and amounts and nature of in11 come and assets’’; and

12 (2) in subsection (e), by adding at the end the

13 following new paragraph:

14 ‘‘(4) The Secretary of the Treasury shall enter into

15 an agreement with the Secretary to provide prompt access

16 by the Secretary (in accordance with this subsection and

17 section 6103(l)(6) of the Internal Revenue Code of 1986)

18 to all Federal income tax returns filed by individuals with

19 the Internal Revenue Service.’’.

20 (b) EXPANSION OF ACCESS TO THE NATIONAL PAR21 ENT LOCATOR NETWORK.—Section 453 (42 U.S.C. 653)

22 is amended by adding at the end the following new sub23 section:

24 ‘‘(g) The Secretary shall expand the Parent Locator

25 Service to establish a national network based on the com-
44

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1 prehensive statewide child support enforcement systems

2 developed by the States, to—

3 ‘‘(1) allow each State to—

4 ‘‘(A) locate any absent parent who owes

5 child support or for whom a child support obli6 gation is being established, by—

7 ‘‘(i) accessing the records of other

8 State agencies and sources of locate infor9 mation directly from one computer system

10 to another; and

11 ‘‘(ii) accessing Federal sources of lo12 cate information in the same fashion;

13 ‘‘(B) access the files of other States to de14 termine whether there are other child support

15 orders and obtain the details of those orders;

16 ‘‘(C) provide for both on-line and batch

17 processing of locate requests, with on-line ac18 cess restricted to cases in which the information

19 is needed immediately (for such reasons as

20 court appearances) and batch processing used

21 to access data bases to locate individuals or up22 date information periodically; and

23 ‘‘(D) direct locate requests to individual

24 States or Federal agencies, broadcast requests

25 to selected States, or broadcast cases to all
45

•S 746 IS

1 States when there is no indication of the source

2 of needed information;

3 ‘‘(2) provide for a maximum of 48-hour turn4 around time for information to be broadcast and re5 turned to a requesting State;

6 ‘‘(3) provide ready access to courts and admin7 istrative agencies of the information on the network

8 by location of a computer terminal in each court;

9 and

10 ‘‘(4) access the registries of child support or11 ders maintained by States pursuant to section

12 466(a)(20)(A).’’.

13 SEC. 303. FEDERAL CHILD SUPPORT ORDER REGISTRY.

14 (a) ESTABLISHMENT.—Not later than October 1,

15 1995, the Secretary shall establish a Federal registry of

16 all child support orders recorded in State registries estab17 lished pursuant to section 466(a)(20)(A) of the Social Se18 curity Act.

19 (b) COMPARISON OF INFORMATION ON W–4 FORMS

20 WITH INFORMATION IN CHILD SUPPORT ORDERS.—Not

21 later than 10 days after the date on which a registry es22 tablished under subsection (a) receives a W–4 form of an

23 employee, the registry shall—
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•S 746 IS

1 (1) compare the information on the form with

2 the information in the registry on the child support

3 obligations of the employee; and

4 (2) transmit to the registry established pursu5 ant to section 466(a)(20)(A) of the Social Security

6 Act of the State that is collecting and disbursing the

7 child support payment—

8 (A) a notice as to whether the amount

9 specified on the W–4 form as the monthly child

10 support obligation of the employee is accurate

11 or not; and

12 (B) the name and address of the employee.

13 (c) REGULATIONS.—The Secretary shall prescribe

14 such regulations as may be necessary to carry out this

15 section, especially in cases involving an employee who has

16 2 or more employers or child support obligations.

17 (d) STATE ACCESS TO THE REGISTRY.—The Sec18 retary shall, upon request of any State, provide the State

19 with access to the information contained in the registry

20 established under subsection (a).

21 (e) SAFEGUARDS.—The Secretary shall implement

22 such safeguards as may be necessary to prevent the disclo23 sure of information of the registry established under sub24 section (a) in cases that would jeopardize the safety of
47

•S 746 IS

1 a custodial parent, a noncustodial parent, or a child of

2 such a parent.

3 (f) DEFINITIONS.—As used in this section:

4 (1) CHILD SUPPORT ORDER.—The term ‘‘child

5 support order’’ means an order requiring payments

6 for support (including medical support) and mainte7 nance of a child or of a child and the parent with

8 whom the child is living.

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

10 the Secretary of Health and Human Services.

11 (3) STATE.—The term ‘‘State’’ includes the

12 several States, the District of Columbia, the Com13 monwealth of Puerto Rico, the Commonwealth of the

14 Northern Mariana Islands, the United States Virgin

15 Islands, Guam, American Samoa, and the Trust

16 Territory of the Pacific Islands.

17 SEC. 304. NATIONAL REPORTING OF EMPLOYEES AND

18 CHILD SUPPORT INFORMATION.

19 (a) IN GENERAL.—The Secretary of the Treasury, in

20 consultation with the Secretary of Labor, shall establish

21 a system of reporting of employees by requiring employers

22 to provide a copy of every employee’s W–4 form to the

23 Federal child support order registry established pursuant

24 to section 303(a) of this Act—
48

•S 746 IS

1 (1) in the case of employees hired on or after

2 the effective date of this section, on the date the em3 ployee is hired; or

4 (2) in the case of employees hired before such

5 effective date, not later than 10 days after such ef6 fective date.

7 (b) INCLUSION OF CHILD SUPPORT INFORMATION

8 ON W–4 FORMS.—The Secretary of the Treasury shall

9 modify the W–4 form to enable the employee to indicate

10 on the form—

11 (1) whether the employee owes child support,

12 and if so—

13 (A) the amount of the support payable;

14 (B) whether the support is to be paid

15 through wage withholding; and

16 (C) to whom the support is to be paid; and

17 (2) whether health care insurance is available to

18 the new employee, and, if so, whether the employee

19 has obtained such insurance for the dependent chil20 dren of the employee.

21 SEC. 305. FEDERAL MATCHING PAYMENTS.

22 (a) INCREASED BASE MATCHING RATE.—Section

23 455(a)(2) (42 U.S.C. 655(a)(2)) is amended to read as

24 follows:
49

•S 746 IS

1 ‘‘(2) For purposes of paragraph (1)(A), the per2 cent described in this paragraph for a quarter in a

3 fiscal year is—

4 ‘‘(A) 69 percent, for fiscal year 1997;

5 ‘‘(B) 72 percent, for fiscal year 1998; and

6 ‘‘(C) 75 percent, for fiscal year 1999 and

7 each succeeding fiscal year.’’.

8 (b) MAINTENANCE OF EFFORT.—Section 455 (42

9 U.S.C. 655) is amended—

10 (1) in subsection (a)(1), in the matter preced11 ing subparagraph (A), by striking ‘‘From’’ and in12 serting ‘‘Subject to subsection (c), from’’; and

13 (2) by inserting after subsection (b) the follow14 ing new subsection:

15 ‘‘(c) Notwithstanding subsection (a), the total ex16 penditures for the State program under this part for each

17 fiscal year, reduced by the percent specified in subsection

18 (a)(2) for the fiscal year, shall not be less than such total

19 expenditures for fiscal year 1995, reduced by 66 percent.’’.

20 (c) CONFORMING AMENDMENT.—Section

21 455(a)(1)(A) (42 U.S.C. 655(a)(1)(A)) is amended by

22 striking ‘‘specified’’ and inserting ‘‘described’’.
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1 SEC. 306. PERFORMANCE-BASED INCENTIVES AND PEN2 ALTIES.

3 (a) INCENTIVE ADJUSTMENTS TO FEDERAL MATCH4 ING RATE.—Section 458 (42 U.S.C. 658) is amended to

5 read as follows:

6 ‘‘INCENTIVE ADJUSTMENTS TO MATCHING RATE

7 ‘‘SEC. 458. (a) INCENTIVE ADJUSTMENT.—

8 ‘‘(1) IN GENERAL.—In order to encourage and

9 reward State child support enforcement programs

10 which perform in an effective manner, the Federal

11 matching rate for payments to a State under section

12 455(a)(1)(A), for each fiscal year beginning on or

13 after October 1, 1997, shall be increased by a factor

14 reflecting the sum of the applicable incentive adjust15 ments (if any) determined in accordance with regu16 lations under this section with respect to statewide

17 paternity establishment and to overall performance

18 in child support enforcement.

19 ‘‘(2) STANDARDS.—

20 ‘‘(A) IN GENERAL.—The Secretary shall

21 specify in regulations—

22 ‘‘(i) the levels of accomplishment, and

23 rates of improvement as alternatives to

24 such levels, which States must attain to

25 qualify for incentive adjustments under

26 this section; and
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1 ‘‘(ii) the amounts of incentive adjust2 ment that shall be awarded to States

3 achieving specified accomplishment or im4 provement levels, which amounts shall be

5 graduated, ranging up to—

6 ‘‘(I) 5 percentage points, in con7 nection with statewide paternity es8 tablishment; and

9 ‘‘(II) 10 percentage points, in

10 connection with overall performance in

11 child support enforcement.

12 ‘‘(B) LIMITATION.—In setting performance

13 standards pursuant to subparagraph (A)(i) and

14 adjustment amounts pursuant to subparagraph

15 (A)(ii), the Secretary shall ensure that the ag16 gregate number of percentage point increases as

17 incentive adjustments to all States do not ex18 ceed such aggregate increases as assumed by

19 the Secretary in estimates of the cost of this

20 section as of June 1994, unless the aggregate

21 performance of all States exceeds the projected

22 aggregate performance of all States in such cost

23 estimates.

24 ‘‘(3) DETERMINATION OF INCENTIVE ADJUST25 MENT.—The Secretary shall determine the amount
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1 (if any) of the incentive adjustment due each State

2 on the basis of the data submitted by the State

3 through the system prescribed by the Secretary in

4 regulations issued pursuant to section 308 of the

5 Economic Opportunity and Family Responsibility

6 Act of 1995, concerning the levels of accomplish7 ment (and rates of improvement) with respect to

8 performance indicators specified by the Secretary

9 pursuant to this section.

10 ‘‘(4) FISCAL YEAR SUBJECT TO INCENTIVE AD11 JUSTMENT.—The total percentage point increase de12 termined pursuant to this section with respect to a

13 State program in a fiscal year shall apply as an ad14 justment to the percent described in section

15 455(a)(2) for payments to such State for the suc16 ceeding fiscal year.

17 ‘‘(b) MEANING OF TERMS.—For purposes of this sec18 tion—

19 ‘‘(1) the term ‘statewide paternity establish20 ment percentage’ means, with respect to a fiscal

21 year, the ratio (expressed as a percentage) of—

22 ‘‘(A) the total number of out-of-wedlock

23 children in the State under one year of age for

24 whom paternity is established or acknowledged

25 during the fiscal year, to
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1 ‘‘(B) the total number of children born out

2 of wedlock in the State during such fiscal year;

3 and

4 ‘‘(2) the term ‘overall performance in child sup5 port enforcement’ means a measure or measures of

6 the effectiveness of the State agency in a fiscal year

7 which takes into account factors including—

8 ‘‘(A) the percentage of cases requiring a

9 child support order in which such an order was

10 established;

11 ‘‘(B) the percentage of cases in which child

12 support is being paid;

13 ‘‘(C) the ratio of child support collected to

14 child support due; and

15 ‘‘(D) the cost-effectiveness of the State

16 program, as determined in accordance with

17 standards established by the Secretary in regu18 lations.’’.

19 (b) TITLE IV–D PAYMENT ADJUSTMENT.—Section

20 455(a)(2) (42 U.S.C. 655(a)(2)), as amended by section

21 305 of this Act, is amended—

22 (1) by striking the period at the end of sub23 paragraph (C) and inserting a comma; and
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1 (2) by adding after and below subparagraph

2 (C), flush with the left margin of the paragraph, the

3 following:

4 ‘‘increased by the incentive adjustment factor (if any) de5 termined by the Secretary pursuant to section 458.’’.

6 (c) CONFORMING AMENDMENTS.—Section 454(22)

7 (42 U.S.C. 654(22)) is amended—

8 (1) by striking ‘‘incentive payments’’ the first

9 place it appears and inserting ‘‘incentive adjust10 ments’’; and

11 (2) by striking ‘‘any such incentive payments

12 made to the State for such period’’ and inserting

13 ‘‘any increases in Federal payments to the State re14 sulting from such incentive adjustments’’.

15 (d) CALCULATION OF IV–D PATERNITY ESTABLISH16 MENT PERCENTAGE.—

17 (1) OVERALL PERFORMANCE.—Section

18 452(g)(1) (42 U.S.C. 652(g)(1)) is amended in the

19 matter preceding subparagraph (A), by inserting

20 ‘‘its overall performance in child support enforce21 ment is satisfactory (as defined in section 458(b)

22 and regulations of the Secretary), and’’ after

23 ‘‘1994,’’
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1 (2) DEFINITION.—Section 452(g)(2)(A) (42

2 U.S.C. 652(g)(2)(A)) is amended in the matter pre3 ceding clause (i)—

4 (A) by striking ‘‘paternity establishment

5 percentage’’ and inserting ‘‘IV–D paternity es6 tablishment percentage’’; and

7 (B) by striking ‘‘(or all States, as the case

8 may be)’’.

9 (3) MODIFICATION OF REQUIREMENTS.—Sec10 tion 452(g)(3) (42 U.S.C. 652(g)(3)) is amended—

11 (A) by striking subparagraph (A) and re12 designating subparagraphs (B) and (C) as sub13 paragraphs (A) and (B), respectively;

14 (B) in subparagraph (A), as redesignated,

15 by striking ‘‘the percentage of children born

16 out-of-wedlock in the State’’ and inserting ‘‘the

17 percentage of children in the State who are

18 born out of wedlock or for whom support has

19 not been established’’; and

20 (C) in subparagraph (B), as redesig21 nated—

22 (i) by inserting ‘‘and overall perform23 ance in child support enforcement’’ after

24 ‘‘paternity establishment percentages’’; and
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1 (ii) by inserting ‘‘and securing sup2 port’’ before the period.

3 (e) TITLE IV–A PAYMENT REDUCTION.—Section

4 403 (42 U.S.C. 603) is amended—

5 (1) in subsection (a), in the matter preceding

6 paragraph (1), by striking ‘‘From’’ and inserting

7 ‘‘Subject to subsection (h), from’’;

8 (2) in subsection (h), by striking ‘‘(h)(1)’’ and

9 all that follows through paragraph (2) and inserting

10 the following:

11 ‘‘(h)(1) If the Secretary finds, with respect to a State

12 program under this part in a fiscal year beginning on or

13 after October 1, 1996—

14 ‘‘(A)(i) on the basis of data submitted by a

15 State through the system referred to in section

16 458(a)(3), that the State program in such fiscal

17 year failed to achieve the required IV–D paternity

18 establishment percentage (as defined in section

19 452(g)(2)(A)) or the appropriate level of overall per20 formance in child support enforcement (as defined in

21 section 458(b)(2)), or to meet other performance

22 measures that may be established by the Secretary;

23 or

24 ‘‘(ii) on the basis of an audit or audits of such

25 State data conducted pursuant to section 452(a)(4),
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1 that the State data submitted through the system

2 prescribed by the Secretary in regulations issued

3 pursuant to 308 of the Economic Opportunity and

4 Family Responsibility Act of 1995 is incomplete or

5 unreliable; and

6 ‘‘(B) that, with respect to the succeeding fiscal

7 year—

8 ‘‘(i) the State failed to take sufficient cor9 rective action to achieve the appropriate per10 formance levels as described in subparagraph

11 (A)(i); or

12 ‘‘(ii) the data submitted by the State

13 through the system prescribed by the Secretary

14 in regulations issued pursuant to 308 of the

15 Economic Opportunity and Family Responsibil16 ity Act of 1995 is incomplete or unreliable,

17 the amounts otherwise payable to the State under this

18 part for quarters beginning after the end of the imme19 diately succeeding fiscal year, and before quarters begin20 ning after the end of the first quarter throughout which

21 the State program is in compliance with the performance

22 requirement, shall be reduced by the percentage specified

23 in paragraph (2) of this subsection.

24 ‘‘(2) The reductions required under paragraph (1)

25 shall be—
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1 ‘‘(A) not less than 1 nor more than 2 percent;

2 ‘‘(B) not less than 2 nor more than 3 percent,

3 if the finding is the second consecutive finding made

4 pursuant to paragraph (1); or

5 ‘‘(C) not less than 3 nor more than 5 percent,

6 if the finding is the third or a subsequent consecu7 tive such finding.’’; and

8 (3) in subsection (h)(3), by striking ‘‘not in full

9 compliance’’ and all that follows and inserting ‘‘de10 termined as a result of an audit to have submitted

11 incomplete or unreliable data through the system

12 prescribed by the Secretary in regulations issued

13 pursuant to 308 of the Economic Opportunity and

14 Family Responsibility Act of 1995, shall be deter15 mined to have submitted adequate data if the Sec16 retary determines that the extent of the incomplete17 ness or unreliability of the data is of a technical na18 ture which does not adversely affect the determina19 tion of the level of the State’s performance.’’.

20 (f) CONFORMING AMENDMENT.—Section 452(a)(4)

21 is amended by striking ‘‘, or which is operating under a

22 corrective action plan in accordance with section

23 403(h)(2),’’.

24 (g) EFFECTIVE DATES.—

25 (1) INCENTIVE ADJUSTMENTS.—
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1 (A) IN GENERAL.—The amendments made

2 by subsections (a), (b), and (c) shall become ef3 fective on October 1, 1997, except to the extent

4 provided in subparagraph (B).

5 (B) EXCEPTION.—Section 458 of the So6 cial Security Act, as in effect prior to the enact7 ment of this section, shall be effective for pur8 poses of incentive payments to States for fiscal

9 years prior to fiscal year 1999.

10 (2) OTHER AMENDMENTS.—The amendments

11 made by subsections (d), (e), and (f) shall become

12 effective with respect to calendar quarters beginning

13 on and after the date of the enactment of this Act.

14 SEC. 307. INCREASED FEDERAL FINANCIAL PARTICIPATION

15 FOR STATES WITH UNIFIED CHILD SUPPORT

16 ENFORCEMENT PROGRAMS.

17 (a) IN GENERAL.—Section 455(a)(2) (42 U.S.C.

18 655(a)(2)), as amended by sections 305(a) and 306(b) of

19 this Act, is amended—

20 (1) by inserting ‘‘(A)’’ after ‘‘(2)’’;

21 (2) by redesignating subparagraphs (A), (B),

22 and (C) as clauses (i), (ii), and (iii), respectively;

23 and

24 (3) by adding at the end the following:
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1 ‘‘(B) The percent described in this paragraph for a

2 State for a quarter in a fiscal year shall be the percent

3 specified in subparagraph (A) for the fiscal year increased

4 by 5 percentage points if the following apply to the State

5 child support enforcement program:

6 ‘‘(i) All authority, accountability, and respon7 sibility for the program is centered at the State level

8 in a unified State agency.

9 ‘‘(ii) The program is administered by a single

10 agency, and policymaking for the program is central11 ized.

12 ‘‘(iii) There is statewide uniformity of case13 processing procedures and forms.

14 ‘‘(iv) There is a uniform hearing and appeal

15 process.

16 ‘‘(v) All financing decisions are made at the

17 State level.

18 ‘‘(vi) All non-Federal funding is appropriated at

19 the State level.

20 ‘‘(vii) All personnel and contracting decision

21 making is made by the State agency, and all person22 nel are employees of the State agency, except that

23 the Secretary may by regulation establish exceptions

24 with respect to not more than 10 percent of person25 nel.’’.
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1 (b) CONFORMING AMENDMENT.—Section 455(c) (42

2 U.S.C. 655(c)), as added by section 305 of this Act, is

3 amended by striking ‘‘(a)(2)’’ and inserting ‘‘(a)(2)(A)’’.

4 SEC. 308. NEW CHILD SUPPORT AUDIT PROCESS.

5 (a) IN GENERAL.—After consultation with the Child

6 Support Audit Advisory Committee, the Secretary of

7 Health and Human Services shall—

8 (1) in accordance with subsection (b), promul9 gate new criteria and standards for conducting re10 views under section 452(a)(4) of the Social Security

11 Act and establishing a system for the reporting of

12 data relevant to such reviews, which emphasize pro13 gram outcomes; and

14 (2) not later than the first day of the twelfth

15 calendar month beginning after the date of the en16 actment of this Act, recommend to the Congress

17 such legislation as may be necessary, with respect to

18 the financing of State child support programs under

19 part D of title IV of the Social Security Act, to en20 hance the effectiveness of such audits and the asso21 ciated penalty process under section 403(h) of the

22 Social Security Act.

23 (b) TIMING.—

24 (1) NOTICE OF PROPOSED RULEMAKING.—Not

25 later than 270 days after the date of the enactment
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1 of this Act, the Secretary of Health and Human

2 Services shall issue a notice of proposed rulemaking

3 with respect to the audit criteria and standards re4 quired by subsection (a)(1).

5 (2) FINAL REGULATIONS.—Not later than the

6 first day of the twelfth calendar month beginning

7 after the date of the enactment of this Act, and

8 after allowing not less than 45 days for public com9 ment on the proposed rulemaking required by para10 graph (1) of this subsection, the Secretary of Health

11 and Human Services shall issue final regulations

12 with respect to the audit criteria and standards re13 quired by subsection (a)(1).

14 SEC. 309. NATIONAL CHILD SUPPORT GUIDELINES COMMIS15 SION.

16 (a) ESTABLISHMENT.—There is hereby established a

17 commission to be known as the ‘‘National Child Support

18 Guidelines Commission’’ (in this section referred to as the

19 ‘‘Commission’’).

20 (b) GENERAL DUTIES.—The Commission shall de21 velop a national child support guideline for consideration

22 by the Congress that is based on a study of various guide23 line models, the benefits and deficiencies of such models,

24 and any needed improvements.

25 (c) MEMBERSHIP.—
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1 (1) NUMBER; APPOINTMENT.—

2 (A) IN GENERAL.—The Commission shall

3 be composed of 12 individuals appointed jointly

4 by the Secretary of Health and Human Services

5 and the Congress, not later than January 15,

6 1996, of which—

7 (i) 2 shall be appointed by the Chair8 man of the Committee on Finance of the

9 Senate, and 1 shall be appointed by the

10 ranking minority member of the Commit11 tee;

12 (ii) 2 shall be appointed by the Chair13 man of the Committee on Ways and Means

14 of the House of Representatives, and 1

15 shall be appointed by the ranking minority

16 member of the Committee; and

17 (iii) 6 shall be appointed by the Sec18 retary of Health and Human Services.

19 (B) QUALIFICATIONS OF MEMBERS.—

20 Members of the Commission shall have exper21 tise and experience in the evaluation and devel22 opment of child support guidelines. At least 1

23 member shall represent advocacy groups for

24 custodial parents, at least 1 member shall rep25 resent advocacy groups for noncustodial par-
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1 ents, and at least 1 member shall be the direc2 tor of a State program under part D of title IV

3 of the Social Security Act.

4 (2) TERMS OF OFFICE.—Each member shall be

5 appointed for a term of 2 years. A vacancy in the

6 Commission shall be filled in the manner in which

7 the original appointment was made.

8 (d) COMMISSION POWERS, COMPENSATION, ACCESS

9 TO INFORMATION, AND SUPERVISION.—The first sentence

10 of subparagraph (C), the first and third sentences of sub11 paragraph (D), subparagraph (F) (except with respect to

12 the conduct of medical studies), clauses (ii) and (iii) of

13 subparagraph (G), and subparagraph (H) of section

14 1886(e)(6) of the Social Security Act shall apply to the

15 Commission in the same manner in which such provisions

16 apply to the Prospective Payment Assessment Commis17 sion.

18 (e) REPORT.—Not later than 2 years after the ap19 pointment of members, the Commission shall submit to

20 the President, the Committee on Ways and Means of the

21 House of Representatives, and the Committee on Finance

22 of the Senate, a recommended national child support

23 guideline and a final assessment of issues relating to such

24 a proposed national child support guideline.
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1 (f) TERMINATION.—The Commission shall terminate

2 6 months after the submission of the report described in

3 subsection (e).

4 SEC. 310. CHILD SUPPORT AUDIT ADVISORY COMMITTEE.

5 (a) ESTABLISHMENT.—Not later than 60 days after

6 the date of the enactment of this Act, the Secretary of

7 Health and Human Services (in this section referred to

8 as the ‘‘Secretary’’) shall establish a committee which

9 shall be known as the Child Support Audit Advisory Com10 mittee (in this section referred to as the ‘‘Committee’’).

11 (b) DUTIES.—The Committee shall assist the Sec12 retary in—

13 (1) developing revised audit criteria and stand14 ards to be used pursuant to section 452(a)(4) of the

15 Social Security Act based on—

16 (A) common data elements which are de17 fined, collected, and reported in a uniform man18 ner from each State;

19 (B) numeric measures of the outcomes of

20 the child support enforcement program under

21 part D of title IV of such Act; and

22 (C) numeric measures for assessing com23 pliance with the regulations issued by the Sec24 retary pursuant to subsections (h) and (i) of

25 section 452 of such Act;
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1 (2) formulating a definition of substantial com2 pliance that is based on such revised audit criteria

3 and standards;

4 (3) determining the period of time after interim

5 or final Federal regulations are issued implementing

6 such revised audit criteria and standards after which

7 a State may be audited to determine compliance

8 with such regulations; and

9 (4) recommending to the Congress such legisla10 tion as may be necessary, with respect to the financ11 ing of child support programs under part D of title

12 IV of such Act, to enhance the effectiveness of au13 dits required to be conducted under section

14 452(a)(4) of such Act and the associated penalty

15 process under section 403(h) of such Act.

16 (c) MEMBERSHIP.—The Committee shall be com17 posed of not less than 6 members appointed by the Sec18 retary, including—

19 (1) at least 1 director of a State child support

20 enforcement program operating under part D of title

21 IV of the Social Security Act;

22 (2) at least 1 commissioner of a State human

23 services agency;
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1 (3) individuals who have demonstrated expertise

2 in the development of quantitative and qualitative

3 measures for performance-based audits; and

4 (4) at least 2 representatives of recipients of

5 child support enforcement services.

6 (d) PROCEDURE.—

7 (1) PARTICIPATION OF THE SECRETARY.—The

8 Secretary (or a designee of the Secretary) shall be

9 an ex officio member of the Committee, and shall

10 not vote on matters before the Committee.

11 (2) MEETINGS.—The Committee shall meet at

12 the call of the Secretary or a designee of the Sec13 retary.

14 (e) COMPENSATION.—

15 (1) IN GENERAL.—No member of the Commit16 tee may receive compensation for service on the

17 Committee.

18 (2) TRAVEL EXPENSES.—Each member of the

19 Committee shall receive travel expenses, including

20 per diem in lieu of subsistence, in accordance with

21 sections 5702 and 5703 of title 5, United States

22 Code.

23 (f) ADMINISTRATIVE SUPPORT.—Upon request of the

24 Committee, the Secretary shall provide to the Committee
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1 the administrative support services necessary for the Com2 mittee to carry out its duties under this Act.

3 (g) INAPPLICABILITY OF THE FEDERAL ADVISORY

4 COMMITTEE ACT.—The Federal Advisory Committee Act

5 shall not apply to the Committee.

6 (h) REPORT.—Within 180 days after the date of the

7 enactment of this Act, the Committee shall submit to the

8 Secretary a report that contains proposed criteria and

9 standards for conducting audits under section 452(a)(4)

10 of the Social Security Act, which emphasize program out11 comes.

12 Subtitle B—Paternity

13 Establishment

14 SEC. 311. PATERNITY ESTABLISHMENT PROCEDURES.

15 (a) IN GENERAL.—Section 466(a)(5) (42 U.S.C.

16 666(a)(5)) is amended by striking subparagraphs (C) and

17 (D) and inserting the following:

18 ‘‘(C)(i) Procedures for a simple civil process for

19 voluntarily acknowledging paternity under which the

20 State must provide that, before a mother and a pu21 tative father can sign an acknowledgment of pater22 nity, the putative father and the mother must be

23 given notice, orally, in writing, and in a language

24 that each can understand, of the alternatives to, the

25 legal consequences of, and the rights (including, if 1
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1 parent is a minor, any rights afforded due to minor2 ity status) and responsibilities that arise from, sign3 ing the acknowledgment.

4 ‘‘(ii) Such procedures must include a hospital5 based program for the voluntary acknowledgment of

6 paternity focusing on the period immediately before

7 or after the birth of a child.

8 ‘‘(iii) Such procedures must require the State

9 agency responsible for maintaining birth records to

10 offer voluntary paternity establishment services.

11 ‘‘(iv) The Secretary shall prescribe regulations

12 governing voluntary paternity establishment services

13 offered by hospitals and birth record agencies. The

14 Secretary shall prescribe regulations specifying the

15 types of other entities that may offer voluntary pa16 ternity establishment services, and governing the

17 provision of such services, which shall include a re18 quirement that such an entity must use the same

19 notice provisions used by, the same materials used

20 by, provide the personnel providing such services

21 with the same training provided by, and evaluate the

22 provision of such services in the same manner as,

23 voluntary paternity establishment programs of hos24 pitals and birth record agencies.
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1 ‘‘(v) Such procedures must require the State

2 and those required to establish paternity to use only

3 the affidavit developed under section 452(a)(7) for

4 the voluntary acknowledgment of paternity, and to

5 give full faith and credit to such an affidavit signed

6 in any other State.

7 ‘‘(D)(i) Procedures under which a signed ac8 knowledgment of paternity is considered a legal find9 ing of paternity, subject to the right of any signa10 tory to rescind the acknowledgment within 30 days.

11 ‘‘(ii)(I) Procedures under which, after the 30-

12 day period referred to in clause (i), a signed ac13 knowledgment of paternity may be challenged in

14 court only on the basis of fraud, duress, or material

15 mistake of fact, with the burden of proof upon the

16 challenger, and under which the legal responsibilities

17 (including child support obligations) of any signatory

18 arising from the acknowledgment may not be sus19 pended during the challenge, except for good cause

20 shown.

21 ‘‘(II) Procedures under which, after the 30-day

22 period referred to in clause (i), a minor who signs

23 an acknowledgment of paternity other than in the

24 presence of a parent or court-appointed guardian ad
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1 litem may rescind the acknowledgment in a judicial

2 or administrative proceeding, until the earlier of—

3 ‘‘(aa) attaining the age of majority; or

4 ‘‘(bb) the date of the first judicial or ad5 ministrative proceeding brought (after the sign6 ing) to establish a child support obligation, visi7 tation rights, or custody rights with respect to

8 the child whose paternity is the subject of the

9 acknowledgment, and at which the minor is rep10 resented by a parent, guardian ad litem, or at11 torney.’’.

12 (b) NATIONAL PATERNITY ACKNOWLEDGMENT AFFI13 DAVIT.—Section 452(a)(7) (42 U.S.C. 652(a)(7)) is

14 amended by inserting ‘‘, and develop an affidavit to be

15 used for the voluntary acknowledgment of paternity which

16 shall include the social security account number of each

17 parent’’ before the semicolon.

18 SEC. 312. ENHANCING OUTREACH TO ENCOURAGE PATER19 NITY ESTABLISHMENT.

20 (a) IN GENERAL.—Section 454 (42 U.S.C. 654) is

21 amended—

22 (1) by striking ‘‘and’’ at the end of paragraph

23 (23);

24 (2) by striking the period at the end of para25 graph (24) and inserting ‘‘; and’’; and
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1 (3) by inserting after paragraph (24) the fol2 lowing new paragraph:

3 ‘‘(25) in order to encourage voluntary paternity

4 acknowledgement, provide for—

5 ‘‘(A) the development and distribution of

6 material at schools, hospitals, agencies admin7 istering programs under part A of this title and

8 title XIX, prenatal health-care providers, WIC

9 programs, health departments, clinics, driver’s

10 license offices, public parks, military bases, and

11 other appropriate locations, that describe the

12 benefits and responsibilities of paternity estab13 lishment and the process by which paternity

14 services may be obtained; and

15 ‘‘(B) outreach programs at hospitals and

16 birthing facilities and programs for prenatal

17 care, child birth, and parenting, in accordance

18 with regulations which shall be prescribed by

19 the Secretary not later than 1 year after such

20 effective date.’’.

21 (b) ENHANCED FEDERAL MATCH.—Section

22 455(a)(1) (42 U.S.C. 655(a)(1)) is amended—

23 (1) by striking ‘‘and’’ at the end of subpara24 graph (B);
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1 (2) by inserting ‘‘and’’ at the end of subpara2 graph (C); and

3 (3) by inserting after subparagraph (C) the fol4 lowing new subparagraph:

5 ‘‘(D) equal to 90 percent (rather than the

6 percentage specified in subparagraph (A)) of so

7 much of the sums expended during such quar8 ter as are attributable to costs incurred in car9 rying out section 454(25);’’.

10 SEC. 313. STRENGTHENING CIVIL PROCEDURES FOR PA11 TERNITY ESTABLISHMENT.

12 Section 466(a) (42 U.S.C. 666(a)) is amended by in13 serting after paragraph (11) the following new paragraph:

14 ‘‘(12) As part of the State’s civil procedures for

15 establishment of paternity, the State shall—

16 ‘‘(A) allow for expedited procedures for or17 dering genetic tests upon the birth of a child if

18 the putative father of the child has not ac19 knowledged paternity of the child;

20 ‘‘(B)(i) contract for genetic testing with

21 accredited laboratories (as determined by the

22 Secretary; and

23 ‘‘(ii) authorize the State agency to order

24 all parties to a paternity action to submit to ge25 netic testing upon request of any party or if the
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1 putative father denies paternity or fails to ap2 pear at any scheduled conference to respond to

3 the allegation of paternity;

4 ‘‘(C)(i) advance the costs of genetic tests,

5 subject to recoupment from the putative father

6 of a child if he is determined to be the biologi7 cal father of the child; and

8 ‘‘(ii) if the result of genetic testing done by

9 a laboratory is disputed, then, upon reasonable

10 request of any party, order that additional test11 ing be done by the same laboratory or by an

12 independent laboratory at the expense of the re13 questing party;

14 ‘‘(D) authorize the State to forgive costs

15 incurred by the State for delivery medical ex16 penses or payments of aid under the State plan

17 approved under part A (but not forgive debts

18 owed to the mother) if the father of the child

19 cooperates or acknowledges paternity before or

20 after the completion of a genetic test;

21 ‘‘(E) authorize the State agency to enter

22 default orders to establish paternity if a party

23 refuses to comply with an order to submit to

24 genetic testing;
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1 ‘‘(F) prohibit the use of hearings by a

2 court or administrative agency to ratify an ac3 knowledgement of paternity;

4 ‘‘(G) allow a putative father of a child (if

5 not presumed to be the father under State law)

6 standing to bring paternity actions;

7 ‘‘(H) after paternity of a child is estab8 lished by affidavit, and until an action for cus9 tody of the child is brought and heard by a tri10 bunal, presume that the primary caretaker of a

11 child born out of wedlock has physical custody

12 of the child (with the mother presumed to be

13 the primary caretaker of a newborn child whose

14 paternity is established by affidavit in a hos15 pital), unless the mother and father of the child

16 agree that physical custody should be with an17 other individual;

18 ‘‘(I) upon motion by a party, require a tri19 bunal in contested cases to order the absent

20 parent of a child to provide child support with

21 respect to the child on a temporary basis in ac22 cordance with State law if—

23 ‘‘(i) the results of parentage testing

24 create a rebuttable presumption that the

25 putative parent is a parent of the child;
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1 ‘‘(ii) the person from whom support is

2 sought has signed a verified statement of

3 parentage of the child; or

4 ‘‘(iii) there is other clear and convinc5 ing evidence that the person from whom

6 support is sought is a parent of the child;

7 ‘‘(J) repeal any law that provides for pa8 ternity cases to be tried by a jury, except to the

9 extent that such a trial is required by the State

10 constitution; and

11 ‘‘(K) have and use laws that provide for

12 the introduction and admission into evidence,

13 without need for third-party foundation testi14 mony, of pre-natal and post-natal birth-related

15 and parentage-testing bills, under which such a

16 bill shall be regarded as prima facie evidence of

17 the amount incurred on behalf of the child for

18 the procedures included in the bill.’’.

19 SEC. 314. PENALTY FOR FAILURE TO ESTABLISH PATER20 NITY PROMPTLY.

21 (a) IN GENERAL.—Section 403 (42 U.S.C. 603) is

22 amended by inserting after subsection (h) the following

23 new subsection:

24 ‘‘(i) PENALTY FOR FAILURE TO ESTABLISH PATER25 NITY PROMPTLY.—
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1 ‘‘(1) IN GENERAL.—The amounts otherwise

2 payable under subsection (a) to a State for any cal3 endar quarter beginning 10 months or more after

4 the date of the enactment of this subsection shall be

5 reduced by an amount, determined pursuant to regu6 lations in accordance with paragraph (2), for certain

7 children for whom paternity has not been estab8 lished.

9 ‘‘(2) REDUCTION FORMULA.—The Secretary

10 shall promulgate regulations specifying the formula

11 for the reduction required under this subsection,

12 which formula shall provide for a reduction in Fed13 eral matching payments to a State under this sec14 tion by an amount equal to the product of—

15 ‘‘(A) the number (after allowing for the

16 tolerance level established under paragraph (3))

17 of children born on or after the date that is 10

18 months after the date of the enactment of this

19 subsection—

20 ‘‘(i) who are receiving aid under the

21 State plan approved under part A;

22 ‘‘(ii) whose custodial relatives have,

23 throughout the preceding 12-month period,

24 complied with the cooperation require-
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1 ments specified in section

2 402(a)(26)(B)(i); and

3 ‘‘(iii) for whom paternity has not been

4 established;

5 ‘‘(B) the average monthly assistance pay6 ment under the State plan approved under this

7 part; and

8 ‘‘(C) the Federal matching rate applicable

9 to the assistance payment.

10 ‘‘(3) TOLERANCE LEVEL.—

11 ‘‘(A) IN GENERAL.—For purposes of para12 graph (2)(A), the tolerance level shall not be

13 higher than the applicable percentage of chil14 dren in the State described in paragraph (1),

15 and may decrease over time to make allowance

16 for a State’s inability to establish paternity in

17 all cases.

18 ‘‘(B) APPLICABLE PERCENTAGE.—As used

19 in subparagraph (A), the term ‘applicable per20 centage’ means—

21 ‘‘(i) 25 percent for fiscal years 1998

22 and 1999;

23 ‘‘(ii) 20 percent for fiscal years 2000

24 and 2001;
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1 ‘‘(iii) 15 percent for fiscal years 2002

2 and 2003; and

3 ‘‘(iv) 10 percent for fiscal year 20043

4 and each succeeding fiscal year.’’.

5 (b) CONFORMING AMENDMENT.—Section 403(a) (42

6 U.S.C. 603(a)) is amended in the matter preceding para7 graph (1), by striking ‘‘From the’’ and inserting ‘‘Subject

8 to subsection (i), from the’’.

9 Subtitle C—Enforcement

10 SEC. 321. ACCESS TO FINANCIAL RECORDS.

11 Section 466(a) (42 U.S.C. 666(a)), as amended by

12 section 313 of this Act, is amended by inserting after

13 paragraph (12) the following new paragraph:

14 ‘‘(13) Procedures under which the State may

15 obtain access to financial records maintained by any

16 financial institution doing business in the State, for

17 the purpose of establishing, modifying, or enforcing

18 a child support obligation of the person.’’.

19 SEC. 322. PRESUMED ADDRESS OF OBLIGOR AND OBLIGEE.

20 Section 466(a) (42 U.S.C. 666(a)), as amended by

21 sections 313 and 321 of this Act, is amended by inserting

22 after paragraph (13) the following new paragraph:

23 ‘‘(14) Procedures under which the State shall—

24 ‘‘(A) require the court or administrative

25 agency with authority to issue the final order in
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1 a child support or parentage case to require

2 each party subject to the order to file with the

3 court or administrative agency, on or before the

4 date the order is issued—

5 ‘‘(i) the party’s residential address or

6 addresses;

7 ‘‘(ii) the party’s mailing address or

8 addresses;

9 ‘‘(iii) the party’s home telephone num10 ber or numbers;

11 ‘‘(iv) the party’s driver’s license num12 ber and the State that issued the license;

13 ‘‘(v) the party’s social security ac14 count number;

15 ‘‘(vi) the name of each employer of

16 the party;

17 ‘‘(vii) the addresses of each place of

18 employment of the party; and

19 ‘‘(viii) the party’s work telephone

20 number or numbers; and

21 ‘‘(B) require the court or administrative

22 agency in any action related to child support to

23 presume, for the purpose of providing sufficient

24 notice (other than the initial notice in an action

25 to establish parentage or a child support order),
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1 that the parent resides at the last residential

2 address given by the parent to the court or

3 agency.’’.

4 SEC. 323. FAIR CREDIT REPORTING ACT AMENDMENT.

5 Section 604 of the Fair Credit Reporting Act (15

6 U.S.C. 1681b) is amended by adding at the end the follow7 ing new paragraph:

8 ‘‘(4) To a State agency administering a State plan

9 under section 454 of the Social Security Act, for use to

10 establish, modify, or enforce a child support award.’’.

11 SEC. 324. ADDITIONAL BENEFITS SUBJECT TO GARNISH12 MENT.

13 (a) FEDERAL DEATH BENEFITS, BLACK LUNG BEN14 EFITS, AND VETERANS BENEFITS.—Section 462(f)(2) (42

15 U.S.C. 662(f)(2)) is amended by striking ‘‘(not including’’

16 and all that follows through ‘‘compensation)’’.

17 (b) WORKERS’ COMPENSATION.—Section 462(f) (42

18 U.S.C. 662(f)) is amended—

19 (1) by striking ‘‘or’’ at the end of paragraph

20 (1);

21 (2) by striking the period at the end of para22 graph (2) and inserting ‘‘, or’’; and

23 (3) by adding at the end the following new

24 paragraph:

25 ‘‘(3) workers’ compensation benefits.’’.
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1 SEC. 325. HOLD ON OCCUPATIONAL, PROFESSIONAL, AND

2 BUSINESS LICENSES.

3 (a) STATE HOLD BASED ON WARRANT OR SUPPORT

4 DELINQUENCY.—Section 466(a) (42 U.S.C. 666(a)), as

5 amended by sections 313, 321, and 322 of this Act, is

6 amended by inserting after paragraph (14) the following

7 new paragraph:

8 ‘‘(15) Procedures under which the State occu9 pational licensing and regulating departments and

10 agencies (other than the department or agency re11 sponsible for licensing the operation of motor vehi12 cles) may not issue or renew any occupational, pro13 fessional, or business license of—

14 ‘‘(A) a noncustodial parent who is the sub15 ject of an outstanding failure to appear war16 rant, capias, or bench warrant related to a child

17 support proceeding that appears on the State’s

18 crime information system, until removed from

19 the system; or

20 ‘‘(B) an individual who is delinquent in the

21 payment of child support, until the obligee or a

22 State entity responsible for child support en23 forcement consents to, or a court or administra24 tive agency that is responsible for the order’s

25 enforcement orders, the release of the hold on

26 the license, or an expedited inquiry and review
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1 is completed while the individual is granted a

2 60-day temporary license.’’.

3 (b) FEDERAL HOLD BASED ON SUPPORT DELIN4 QUENCY.—A Federal agency may not issue or renew any

5 occupational, professional, or business license of an indi6 vidual who is delinquent in the payment of child support,

7 until the obligee, the obligee’s attorney or a State entity

8 responsible for child support enforcement consents to, or

9 a court or administrative agency that is responsible for

10 the order’s enforcement orders, the release of the hold on

11 the license, or an expedited inquiry and review is com12 pleted while the individual is granted a 60-day temporary

13 license.

14 SEC. 326. DRIVER’S LICENSES AND VEHICLE REGISTRA15 TIONS DENIED TO PERSONS FAILING TO AP16 PEAR IN CHILD SUPPORT CASES.

17 Section 466(a) (42 U.S.C. 666(a)), as amended by

18 sections 313, 321, 322, and 325 of this Act, is amended

19 by inserting after paragraph (15) the following new para20 graph:

21 ‘‘(16) Procedures under which—

22 ‘‘(A) the State motor vehicle department—

23 ‘‘(i) may not issue or renew the driv24 er’s license or any vehicle registration

25 (other than temporary) of any noncustodial
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1 parent who is the subject of an outstand2 ing failure to appear warrant, capias, or

3 bench warrant related to a child support

4 proceeding that appears on the State’s

5 crime information system, until removed

6 from the system; and

7 ‘‘(ii) in any case in which a show

8 cause order has been issued as described in

9 subparagraph (B), may grant a temporary

10 license or vehicle registration to the indi11 vidual pending the show cause hearing or

12 the removal of the warrant, whichever oc13 curs first; and

14 ‘‘(B) a State court, upon receiving notice

15 that an individual to whom a State driver’s li16 cense or vehicle registration has been issued is

17 the subject of a warrant related to a child sup18 port proceeding, shall issue a show cause order

19 to the individual requesting the individual to

20 demonstrate why the individual’s driver’s li21 cense or vehicle registration should not be sus22 pended until the warrant is removed by the

23 State responsible for issuing the warrant.’’.
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1 SEC. 327. LIENS.

2 Section 466(a) (42 U.S.C. 666(a)), as amended by

3 sections 313, 321, 322, 325, and 326 of this Act, is

4 amended by inserting after paragraph (16) the following

5 new paragraph:

6 ‘‘(17) Procedures under which the State shall

7 systematically place liens on all nonexempt real and

8 titled personal property for child support arrearages

9 determined under a court order or an order of an

10 administrative process established under State law,

11 using a method for updating the value of the lien on

12 a regular basis or allowing for an expedited inquiry

13 to and response from a State child support order

14 registry established pursuant to paragraph (20)(A)

15 for proof of the amount of arrears, with an expe16 dited method for the titleholder or the individual

17 owing the arrearage to contest the arrearage or to

18 request a release upon fulfilling the support obliga19 tion, and under which such a lien has precedence

20 over all other encumbrances on a title to personal

21 property other than a purchase money security inter22 est, and that the individual owed the arrearage may

23 execute on, seize, and sell the property in accordance

24 with State law.’’.
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1 SEC. 328. FRAUDULENT TRANSFER PURSUIT.

2 Section 466(a) (42 U.S.C. 666(a)), as amended by

3 sections 313, 321, 322, 325, 326, and 327 of this Act,

4 is amended by inserting after paragraph (17) the following

5 new paragraph:

6 ‘‘(18) Procedures requiring that, in any case re7 lated to child support, any transfer of property for

8 significantly less than the fair market value of the

9 property by an individual who owes a child support

10 arrearage shall be presumed to be made with the in11 tent to avoid payment of the arrearage, and may be

12 rebutted by evidence to the contrary.’’.

13 SEC. 329. REPORTING OF CHILD SUPPORT ARREARAGES TO

14 CREDIT BUREAUS.

15 Section 466(a)(7)(A) (42 U.S.C. 666(a)(7)(A)) is

16 amended by striking ‘‘$1,000’’ and inserting ‘‘the amount

17 of the monthly support obligation’’.

18 SEC. 330. DENIAL OF PASSPORTS TO NONCUSTODIAL PAR19 ENTS SUBJECT TO STATE ARREST WARRANTS

20 IN CASES OF NONPAYMENT OF CHILD SUP21 PORT.

22 The Secretary of State is authorized to refuse a pass23 port or revoke, restrict, or limit a passport in any case

24 in which the Secretary of State determines or is informed

25 by competent authority that the applicant or passport

26 holder is a noncustodial parent who is the subject of an
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1 outstanding State warrant of arrest for nonpayment of

2 child support, where the amount in controversy is not less

3 than $10,000.

4 SEC. 331. STATUTES OF LIMITATION.

5 (a) IN GENERAL.—Section 466(a) (42 U.S.C.

6 666(a)), as amended by sections 313, 321, 322, 325, 326,

7 327, and 328 of this Act, is amended by inserting after

8 paragraph (18) the following new paragraph:

9 ‘‘(19) Procedures which permit the enforcement

10 of any child support order until the child attains at

11 least 30 years of age.’’.

12 (b) APPLICABILITY.—The amendment made by this

13 section shall apply to orders entered before, on, and after

14 the date of the enactment of this Act.

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

16 COLLECTION AUTHORITY.

17 (a) EXPANDED ROLE OF THE INTERNAL REVENUE

18 SERVICE.—

19 (1) IN GENERAL.—Section 6305 of the Internal

20 Revenue Code of 1986 (relating to collection of cer21 tain liability) is amended by redesignating sub22 sections (a) and (b) as subsections (b) and (c), re23 spectively, and by inserting before subsection (b) (as

24 so redesignated) the following new subsection:
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1 ‘‘(a) IN GENERAL.—The head of any State child sup2 port order registry established pursuant to section

3 466(a)(20)(A) of the Social Security Act may certify to

4 the Secretary for collection under this subsection the

5 amount of any child support obligation. No amount may

6 be certified under the preceding sentence except the

7 amount of the delinquency under a court or administrative

8 order for support and upon a showing by such agency head

9 that such State has made reasonable efforts to collect such

10 amount using its own collection mechanisms.’’.

11 (2) CONFORMING AMENDMENTS.—

12 (A) Subsection (b) of section 6305 of such

13 Code (as redesignated by subsection (a)) is

14 amended by striking ‘‘Upon receiving’’ and all

15 that follows through ‘‘Welfare’’ the second place

16 it appears and inserting ‘‘Upon receiving a cer17 tification referred to in subsection (a)’’.

18 (B) Subsection (c) of section 6305 of such

19 Code (as redesignated by subsection (a)) is

20 amended by striking ‘‘subsection (a)’’ and in21 serting ‘‘subsection (b)’’.

22 (b) COLLECTION OF PAST-DUE SUPPORT USING RE23 FUND OFFSET.—

24 (1) IN GENERAL.—Subsection (c) of section

25 6402 of the Internal Revenue Code of 1986 (relating
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1 to authority to make credits or refunds) is amended

2 to read as follows:

3 ‘‘(c) OFFSET OF PAST-DUE SUPPORT AGAINST

4 OVERPAYMENTS.—

5 ‘‘(1) IN GENERAL.—Upon receiving notice from

6 any State registry that an individual owes past-due

7 support, the Secretary shall determine whether any

8 amounts, as refunds of Federal taxes paid, are pay9 able to such individual (regardless of whether such

10 individual filed a tax return as a married or unmar11 ried individual). If the Secretary finds that any such

12 amount is payable, the Secretary—

13 ‘‘(A) shall withhold from such refunds an

14 amount equal to the past-due support,

15 ‘‘(B) shall concurrently send a notice to

16 such individual that the withholding has been

17 made (including in or with such notice a notifi18 cation to any other individual who may have

19 filed a joint return with such individual of the

20 steps which such other individual may take in

21 order to secure his or her proper share of the

22 refund), and

23 ‘‘(C) shall pay such amount to such reg24 istry (together with notice of the individual’s

25 home address).
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1 ‘‘(2) PROCEDURE.—

2 ‘‘(A) IN GENERAL.—

3 ‘‘(i) PROVISION OF NOTICE.—Prior to

4 notifying the Secretary under paragraph

5 (1) that an individual owes past-due sup6 port, the head of the State registry shall

7 send notice to such individual that a with8 holding will be made from any refund oth9 erwise payable to such individual.

10 ‘‘(ii) CONTENTS OF NOTICE.—The no11 tice shall also—

12 ‘‘(I) instruct the individual owing

13 the past-due support of the steps

14 which may be taken to contest the

15 State registry’s determination that

16 past-due support is owed or the

17 amount of the past-due support, and

18 ‘‘(II) provide information, as may

19 be prescribed by the Secretary of

20 Health and Human Services by regu21 lation in consultation with the Sec22 retary, with respect to procedures to

23 be followed, in the case of a joint re24 turn, to protect the share of the re-
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1 fund which may be payable to another

2 individual.

3 ‘‘(B) SPECIAL RULES FOR OFFSETS

4 AGAINST OVERPAYMENTS ON JOINT RE5 TURNS.—

6 ‘‘(i) IN GENERAL.—If the Secretary

7 determines that an amount should be with8 held under paragraph (1), and that the re9 fund from which it should be withheld is

10 based upon a joint return, the Secretary

11 shall notify the State registry that the

12 withholding is being made from a refund

13 based upon a joint return, and shall fur14 nish to the State registry the names and

15 addresses of each spouse filing such joint

16 return.

17 ‘‘(ii) SHARE OF REFUND PAYABLE TO

18 SPOUSE NOT OWING PAST-DUE SUPPORT.—

19 If the other individual filing the joint re20 turn with the named individual owing the

21 past-due support takes appropriate action

22 to secure his or her proper share of a re23 fund from which a withholding was made

24 under paragraph (1), the Secretary shall

25 pay such share to such other individual.
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1 The Secretary shall deduct the amount of

2 such payment from amounts subsequently

3 payable to the State registry to which the

4 amount originally withheld from such re5 fund was paid.

6 ‘‘(C) ERRONEOUS OFFSETS.—In any case

7 in which an amount was withheld under para8 graph (1) and paid to a State registry, and the

9 State registry subsequently determines that the

10 amount certified as past-due support was in ex11 cess of the amount actually owed at the time

12 the amount withheld is to be distributed to or

13 on behalf of the child, the State registry shall

14 pay the excess amount withheld to the named

15 individual thought to have owed the past-due

16 support (or, in the case of amounts withheld on

17 the basis of a joint return, jointly to the parties

18 filing such return).

19 ‘‘(3) REGULATIONS; CONTENTS, ETC.—The

20 Secretary shall issue regulations, approved by the

21 Secretary of Health and Human Services, prescrib22 ing the time or times at which State registries must

23 submit notices of past-due support, the manner in

24 which such notices must be submitted, and the nec-
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1 essary information that must be contained in or ac2 company the notices. The regulations—

3 ‘‘(A) shall be consistent with the provisions

4 of paragraph (2),

5 ‘‘(B) shall specify the minimum amount of

6 past-due support to which the offset procedure

7 established by paragraph (1) may be applied,

8 and

9 ‘‘(C) shall provide that the Secretary will

10 advise the Secretary of Health and Human

11 Services, not less frequently than annually, of—

12 ‘‘(i) the State registries which have

13 furnished notices of past-due support

14 under paragraph (1) of this subsection,

15 ‘‘(ii) the number of cases in each

16 State with respect to which such notices

17 have been furnished,

18 ‘‘(iii) the amount of support sought to

19 be collected under this subsection by each

20 State registry, and

21 ‘‘(iv) the amount of such collections

22 actually made in the case of each State

23 registry.

24 ‘‘(4) STATE REGISTRY.—For purposes of this

25 subsection, the term ‘State registry’ means any
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1 State child support order registry established pursu2 ant to section 466(a)(20)(A) of the Social Security

3 Act.

4 ‘‘(5) PAST-DUE SUPPORT.—For purposes of

5 this subsection, the term ‘past-due support’ means

6 the amount of a delinquency, determined under a

7 court order, or an order of an administrative process

8 established under State law, for support (including

9 medical support) and maintenance of a child, or of

10 a child and the parent with whom the child is living.

11 ‘‘(6) SUBSECTION APPLIED BEFORE CREDITING

12 TO FUTURE LIABILITY.—This subsection shall be ap13 plied to an overpayment prior to its being credit to

14 a taxpayer’s future liability for any internal revenue

15 tax.’’

16 (2) CONFORMING AMENDMENT.—Paragraph (2)

17 of section 6402(d) of such Code is amended by strik18 ing ‘‘with respect to past-due support collected pur19 suant to an assignment under section 402(a)(26) of

20 the Social Security Act’’.

21 (c) ELIMINATION OF THE ROLE OF THE SECRETARY

22 OF HEALTH AND HUMAN SERVICES.—

23 (1) Section 464 (42 U.S.C. 664) is repealed.

24 (2) Section 452 (42 U.S.C. 652) is amended by

25 repealing subsections (b) and (c).
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1 Subtitle D—State Responsibilities

2 SEC. 341. STATE ROLE.

3 (a) STATE CHILD SUPPORT ORDER REGISTRIES,

4 ETC.—

5 (1) IN GENERAL.—Section 466(a) (42 U.S.C.

6 666(a)), as amended by subtitle C of this title, is

7 amended by inserting after paragraph (19) the fol8 lowing new paragraph:

9 ‘‘(20) Procedures under which—

10 ‘‘(A) the State child support enforcement

11 agency shall—

12 ‘‘(i) establish an automated central

13 child support order registry (including, at

14 State option, by integrating local registries

15 through computers, if the cost of such inte16 gration does not exceed the cost of a single

17 centralized registry) which shall maintain a

18 current record of—

19 ‘‘(I) each child support order is20 sued, modified, or registered in the

21 State under the State plan;

22 ‘‘(II) each child support order is23 sued, modified, or being enforced in

24 the State after the effective date of

25 this paragraph; and
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1 ‘‘(III) any other child support

2 order, at the request of a party to the

3 order;

4 ‘‘(ii) for each such child support

5 order, record the amount of support or6 dered and maintain a record of payments

7 under the order;

8 ‘‘(iii) prepare a support abstract that

9 conforms to the child support order ab10 stract developed pursuant to section

11 452(a)(11), forward the abstract to the

12 Federal child support order registry estab13 lished under section 303 of the Economic

14 Opportunity and Family Responsibility Act

15 of 1995, and enter the abstract into the

16 State registry for purposes of matching

17 against other data bases on a regular

18 basis;

19 ‘‘(iv) program the statewide auto20 mated system to extract weekly updates

21 automatically of all case records included

22 in the State registry;

23 ‘‘(v) provide a central point of access

24 to the Federal new-hire reporting directory
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1 and other Federal data bases, statewide

2 data bases, and interstate case activity;

3 ‘‘(vi) routinely match information in

4 the State registry against other State data

5 bases to which the agency has access;

6 ‘‘(vii) use a national identification

7 number, preferably the social security ac8 count number, for all individuals or cases

9 as determined by the Secretary;

10 ‘‘(viii) maintain procedures (such as

11 notification to parents) to ensure that ar12 rearages do not accrue after the child for

13 whom support is ordered is no longer eligi14 ble for support or the order becomes in15 valid;

16 ‘‘(ix) use technology and automated

17 procedures in operating the State registry

18 wherever feasible and cost-effective;

19 ‘‘(x) ensure that the amount of any

20 interest due with respect to delinquent

21 child support obligations can be automati22 cally calculated;

23 ‘‘(xi) ensure that the State registry

24 has access to vital statistics or other infor25 mation necessary to provide the Secretary
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1 with such information as the Secretary

2 may require in order to apply the formula

3 provided for in section 403(i);

4 ‘‘(xii) use the State registry (whether

5 centralized or established through the inte6 gration of local registries)—

7 ‘‘(I) as a clearinghouse for the

8 centralized collection and disburse9 ment of child support payments, ena10 bling the functions to be carried out

11 (by the State or a private entity) at 1

12 location within the State, and through

13 a fully automated process (including,

14 at State option, through multi-State

15 regional cooperative agreements

16 through 1 ‘drop box’ location with

17 computer linkage to the individual

18 State registries); and

19 ‘‘(II) as the central payment cen20 ter—

21 ‘‘(aa) for all employers re22 mitting child support withheld

23 from wages; and

24 ‘‘(bb) for all payments not

25 made through wage withholding,
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1 through the use of payment cou2 pons or stubs or electronic

3 means, unless otherwise agreed

4 by the parties to the order and

5 the court or administrative agen6 cy that issued or modified the

7 order (which agreement may be

8 unilaterally rescinded by the indi9 vidual to whom child support is

10 payable under the order or by the

11 individual obligated to pay child

12 support under the order, without

13 permission of any court or ad14 ministrative agency), and, at

15 State option, payments may be

16 made at local offices or financial

17 institutions only if the payments

18 are remitted to the State registry

19 by the local office or financial in20 stitution for payment processing

21 by electronic funds transfer with22 in 24 hours after receipt; and

23 ‘‘(xiii) require the State registry to—

24 ‘‘(I) accept all payments for child

25 support by any means of transfer;
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1 ‘‘(II) generate bills which provide

2 for accurate payment identification,

3 such as return stubs or coupons, for

4 cases with respect to which wage with5 holding is not required;

6 ‘‘(III) identify all payments made

7 to the State registry and match the

8 payment to the correct child support

9 case record;

10 ‘‘(IV) distribute all collections as

11 required by law;

12 ‘‘(V) disburse to custodial par13 ents child support payments that are

14 payable to such parents, including

15 through the use of direct deposit upon

16 the request of the custodial parent;

17 ‘‘(VI) process and send to custo18 dial parents child support payments

19 that are payable to such parents with20 in 24 hours after receipt;

21 ‘‘(VII) maintain records of trans22 actions and the status of all accounts,

23 including arrears, and monitor all

24 payments of support;
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1 ‘‘(VIII) develop automatic mon2 itoring procedures for all cases where

3 a disruption in payments triggers

4 automatic enforcement mechanisms;

5 ‘‘(IX) accept and transmit inter6 state collections to other States, when7 ever possible, using electronic funds

8 transfer technology; and

9 ‘‘(X) when necessary, change

10 payees in child support cases adminis11 tratively, with notice to both parties;

12 ‘‘(B) each child support order issued or

13 modified in the State is required to be transmit14 ted to the registry within such period of time

15 after the issuance or modification as the Sec16 retary shall prescribe in regulations; and

17 ‘‘(C) the State shall—

18 ‘‘(i) prohibit any State agency from

19 imposing a fee on any custodial or

20 noncustodial parent for inclusion in the

21 State registry, or imposing any new fee on

22 a custodial parent for routine establish23 ment, enforcement, or modification of

24 cases handled through the State registry;
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1 ‘‘(ii) have automated procedures to

2 monitor cases and impose those enforce3 ment measures that can be handled on a

4 mass or group basis using computer auto5 mation technology, by—

6 ‘‘(I) monitoring all cases within

7 the State registry on a regular basis,

8 determining on at least a monthly

9 basis whether the child support pay10 ment has been made;

11 ‘‘(II) maintaining automation ca12 pability whereby a disruption in pay13 ments triggers automatic enforcement

14 mechanisms; and

15 ‘‘(III) administratively imposing

16 measures such as—

17 ‘‘(aa) ordering wages to be

18 withheld automatically for the

19 purposes of satisfying child sup20 port obligations, and directing

21 wage withholding orders to em22 ployers immediately upon notifi23 cation by the Federal child sup24 port order registry established

25 under section 303(a) of the Eco-
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1 nomic Opportunity and Family

2 Responsibility Act of 1995;

3 ‘‘(bb) attaching accounts at

4 financial institutions, including,

5 at State option, freezing with6 drawals from such accounts and,

7 if the freeze is not challenged,

8 turning over the part of the ac9 count subject to the freeze up to

10 the amount of the child support

11 debt to the person or State seek12 ing the support;

13 ‘‘(cc) intercepting certain

14 lump-sum monies such as lottery

15 winnings and settlements to be

16 turned over to the State to sat17 isfy pending arrearages;

18 ‘‘(dd) attaching public and

19 private retirement funds in ap20 propriate cases, as determined by

21 the Secretary;

22 ‘‘(ee) attaching unemploy23 ment compensation, worker’s

24 compensation, and other State

25 benefits;
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1 ‘‘(ff) increasing required

2 payments to cover arrearages;

3 ‘‘(gg) intercepting State tax

4 refunds; and

5 ‘‘(hh) submitting cases for

6 Federal tax refund offset; and

7 ‘‘(iii) be able to provide parents with

8 up-do-date information on payments that

9 are not past due, payments that are past

10 due, and general information on available

11 child support services;

12 ‘‘(D) child support arrears with respect to

13 cases in the State registry are considered judg14 ments by operation of law, and reducing the

15 amount of such arrears to money judgments is

16 not a prerequisite to enforcement;

17 ‘‘(E) all cases in the State registry shall

18 receive services offered by the registry without

19 regard to whether an application for such serv20 ices has been made; and

21 ‘‘(F) the State agency referred to in sec22 tion 402(a)(3) shall notify the State child sup23 port enforcement agency of the commencement

24 or termination of aid under the State plan ap25 proved under part A to any individual or fam-
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1 ily, within 10 days after the commencement or

2 termination.’’.

3 (2) CONFORMING AMENDMENT.—Section

4 466(b) (42 U.S.C. 666(b)) is amended by striking

5 paragraph (5).

6 (b) WAGE WITHHOLDING.—

7 (1) IN GENERAL.—Section 466(b) (42 U.S.C.

8 666(b)) is amended by adding at the end the follow9 ing new paragraph:

10 ‘‘(11)(A)(i) Upon the issuance or modification

11 by a State court or administrative agency of an

12 order imposing a child support obligation on an indi13 vidual, the State shall transmit to any employer of

14 the individual a wage withholding order developed

15 under section 452(a)(11) directing the employer to

16 withhold amounts from the wages of the individual

17 pursuant to the order, or such greater amount as

18 the State child support order registry established

19 pursuant to subsection (a)(20)(A) may determine is

20 the total amount of the child support obligations of

21 the individual.

22 ‘‘(ii) Clause (i) shall not apply to an order upon

23 agreement of the parties to the order and the court

24 or administrative agency that issued or modified the

25 order.
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1 ‘‘(iii) An agreement referred to in clause (ii)

2 may be unilaterally rescinded by the individual to

3 whom child support is payable under the order or by

4 the individual obligated to pay child support under

5 the order, without permission of any court or admin6 istrative agency.

7 ‘‘(B) Any individual or entity engaged in com8 merce, as a condition of doing business in the State,

9 shall, on receipt of a wage withholding order devel10 oped under section 452(a)(11) that is regular on its

11 face and has been issued by a court or administra12 tive agency of any State—

13 ‘‘(i) immediately provide a copy of the

14 order to the employee subject to the order;

15 ‘‘(ii) comply with the order by forwarding

16 to the State registry established pursuant to

17 subsection (a)(20)(A) of this section, within 5

18 days after the end of each payroll period ending

19 after receipt of the order, the greater of—

20 ‘‘(I) the amount required to be with21 held pursuant to the order; or

22 ‘‘(II) the amount that the State reg23 istry has notified the individual or family

24 is the amount required to be withheld from

25 the wages of the employee for payment of
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•S 746 IS

1 child support obligations of the employee;

2 and

3 ‘‘(iii) keep records of the amounts so with4 held and the dates of such withholding.

5 ‘‘(C) Such an order may be served on the indi6 vidual or entity directly or by first-class mail.

7 ‘‘(D) An individual or entity who complies with

8 subparagraph (B)(ii) with respect to such an order

9 may not be held liable for wrongful withholding of

10 income from the employee subject to the order.

11 ‘‘(E) The State shall impose a civil fine of

12 $1,000 on any individual or entity who receives such

13 an order for each failure to comply with subpara14 graph (B)(ii) with respect to the order.

15 ‘‘(F) The State shall have in effect such proce16 dures as the Secretary may require by regulation for

17 carrying out this paragraph in cases involving an

18 employee who has 2 or more employers or child sup19 port obligations.

20 ‘‘(12) If the State transmits to an individual or

21 entity engaged in commerce only outside the State

22 a wage withholding order issued by the State with

23 respect to an employee of the individual or entity,

24 and the individual or entity refuses to comply with

25 the order, the State shall send an informational copy
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1 of the order to the registry established pursuant to

2 subsection (a)(20)(A) of any other State in which

3 the individual or entity is engaged in commerce.

4 ‘‘(13) If an employee requests a hearing to con5 test wage withholding based on claim of a mistake

6 of fact, the hearing may be held in the State from

7 which the child support is collected, and, within 45

8 days after the income source receives the withhold9 ing order, the entity conducting the hearing must

10 adjudicate the claim. The State in which the hearing

11 is held shall provide appropriate services in cases en12 forced under the State plan to ensure that the inter13 ests of the individual to whom the withheld income

14 is to be paid are adequately represented.’’.

15 (2) CONFORMING AMENDMENT.—Section

16 466(b)(6)(A)(i) (42 U.S.C. 666(b)(6)(A)(i)) is

17 amended by striking ‘‘(which may include’’ and all

18 that follows through ‘‘paragraph (5))’’ and inserting

19 ‘‘and pay such amount to the State registry estab20 lished under subsection (a)(12)’’.

21 (c) PRIORITIES IN APPLICATION OF WITHHELD

22 WAGES.—Section 466(b) (42 U.S.C. 666(b)), as amended

23 by subsection (b)(1) of this section, is amended by insert24 ing after paragraph (13) the following new paragraph:
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1 ‘‘(14) Procedures under which the amounts

2 withheld pursuant to a child support or wage with3 holding order are to be applied in the following

4 order:

5 ‘‘(A) To payments of support due during

6 the month of withholding.

7 ‘‘(B) To payments of premiums for health

8 care insurance coverage for dependent children.

9 ‘‘(C) To payments of support due before

10 the month of withholding or collection, and of

11 unreimbursed health-care expenses.’’.

12 (d) ACCESS TO VARIOUS DATA BASES.—Section

13 466(a) (42 U.S.C. 666(a)), as amended by subtitle C of

14 this title and by subsection (a) of this section, is amended

15 by inserting after paragraph (20) the following new para16 graph:

17 ‘‘(21) Procedures under which the State child

18 support enforcement agency shall have automated

19 on-line or batch access (or, if necessary,

20 nonautomated access) to information regarding resi21 dential addresses, employers and employer address22 es, income and assets, and medical insurance bene23 fits with respect to absent parents that is available

24 through any data base maintained by—
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1 ‘‘(A) any agency of the State or any politi2 cal subdivision thereof, that contains informa3 tion on residential addresses, or on employers

4 and employer addresses;

5 ‘‘(B) any publicly regulated utility com6 pany located in the State; and

7 ‘‘(C) any credit reporting agency.’’.

8 (e) EXPANDED INTERACTION WITH THE NATIONAL

9 PARENT LOCATOR NETWORK.—Section 454(16) (42

10 U.S.C. 654(16)) is amended—

11 (1) by striking ‘‘and (E)’’ and inserting ‘‘(E)’’;

12 and

13 (2) by striking ‘‘enforcement;’’ and inserting

14 ‘‘enforcement, and (F) to provide access to the na15 tional network developed pursuant to section

16 453(g);’’.

17 (f) STATE PLAN REQUIREMENT.—Section 454 (42

18 U.S.C. 654), as amended by section 212(a) of this Act,

19 is amended—

20 (1) by striking ‘‘and’’ at the end of paragraph

21 (24);

22 (2) by striking the period at the end of para23 graph (25) and inserting ‘‘; and’’; and

24 (3) by inserting after paragraph (25) the fol25 lowing new paragraph:
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•S 746 IS

1 ‘‘(26) will have in effect safeguards applicable

2 to all sensitive and confidential information handled

3 by the State agency designed to protect the privacy

4 rights of the parties, including—

5 ‘‘(A) safeguards against unauthorized use

6 or disclosure of information relating to proceed7 ings or actions to establish paternity, or to es8 tablish or enforce support; and

9 ‘‘(B) prohibitions against the release of in10 formation on the whereabouts of a party to an11 other party against whom a protective order

12 with respect to the party has been entered.’’.

13 SEC. 342. UNIFORM TERMS IN ORDERS.

14 Section 452(a) (42 U.S.C. 652(a)) is amended—

15 (1) in paragraph (9), by striking ‘‘and’’ after

16 the semicolon;

17 (2) in paragraph (10), by striking the period at

18 the end of the second sentence and inserting ‘‘;

19 and’’; and

20 (3) by adding at the end the following new

21 paragraph:

22 ‘‘(11) not later than 12 months after the date

23 of the enactment of this paragraph, develop a uni24 form abstract of a child support order, for use by

25 the child support order registry established pursuant
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•S 746 IS

1 to section 466(a)(20)(A), in which may be re2 corded—

3 ‘‘(A) the date support payments are to

4 begin under the order;

5 ‘‘(B) the circumstances upon which sup6 port payments are to end under the order;

7 ‘‘(C) the amount of child support payable

8 pursuant to the order expressed as a sum cer9 tain to be paid on a monthly basis, arrearages

10 expressed as a sum certain as of a certain date,

11 and any payback schedule for the arrearages;

12 ‘‘(D) whether the order awards support in

13 a lump sum (nonallocated) or per child;

14 ‘‘(E) if the award is in a lump sum, the

15 event causing a change in the support award

16 and the amount of any change;

17 ‘‘(F) other expenses covered by the order;

18 ‘‘(G) the names of the parents subject to

19 the order;

20 ‘‘(H) the social security account numbers

21 of the parents;

22 ‘‘(I) the name, date of birth, and social se23 curity account number (if any) of each child

24 covered by the order;
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1 ‘‘(J) the identification (FIPS code, name,

2 and address) of the court or administrative

3 agency that issued the order;

4 ‘‘(K) any information on health care sup5 port required by the order;

6 ‘‘(L) the party to contact if additional in7 formation is obtained; and

8 ‘‘(M) such other information as the Sec9 retary deems appropriate.’’.

10 SEC. 343. STATES REQUIRED TO ENACT THE UNIFORM

11 INTERSTATE FAMILY SUPPORT ACT.

12 (a) IN GENERAL.—Section 466 (42 U.S.C. 666) is

13 amended by adding at the end the following new sub14 section:

15 ‘‘(f) In order to satisfy section 454(20)(A), each

16 State must have in effect laws which adopt the officially

17 approved version of the Uniform Interstate Family Sup18 port Act adopted by the National Conference of Commis19 sioners on Uniform State Laws in August 1992.’’.

20 (b) APPLICABILITY.—

21 (1) IN GENERAL.—Except as provided in para22 graph (2) of this subsection, the amendment made

23 by subsection (a) shall apply with respect to cal24 endar quarters beginning on or after 12 months

25 after the date of the enactment of this Act, without
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1 regard to whether regulations to implement such

2 amendments are promulgated by such date.

3 (2) DELAY PERMITTED IF STATE LEGISLATION

4 REQUIRED.—In the case of a State plan approved

5 under part D of title IV of the Social Security Act

6 which the Secretary of Health and Human Services

7 determines requires State legislation (other than leg8 islation appropriating funds) in order for the plan to

9 meet the additional requirement imposed by the

10 amendment made by subsection (a) of this section,

11 the State plan shall not be regarded as failing to

12 comply with such additional requirement solely on

13 the basis of the failure of the plan to meet such ad14 ditional requirement before the first day of the first

15 calendar quarter beginning after the close of the

16 first regular session of the State legislature that be17 gins after the date of the enactment of this Act. For

18 purposes of the previous sentence, in the case of a

19 State that has a 2-year legislative session, each year

20 of such session shall be deemed to be a separate reg21 ular session of the State legislature.

22 SEC. 344. EXPEDITED PROCESSES AND ADMINISTRATIVE

23 PROCEDURES.

24 (a) MONITORING OF COMPLIANCE.—Section

25 452(a)(4) (42 U.S.C. 652(a)(4)) is amended by inserting
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1 ‘‘and to determine whether the expedited processes re2 quired under section 466(a)(2)(A) are in effect’’ before ‘‘,

3 and, not less’’.

4 (b) NONCOMPLIANT STATES WITH JUDICIAL SYS5 TEM FOR PROCESSING CHILD SUPPORT CASES REQUIRED

6 TO CONVERT TO ADMINISTRATIVE SYSTEM.—Section

7 466(a)(2) (42 U.S.C. 666(a)(2)) is amended by inserting

8 after the first sentence the following: ‘‘If the Secretary

9 finds that the processes for obtaining and modifying child

10 support orders under the State judicial system has not

11 met the standards established in such regulations, such

12 procedures shall provide for the use of State administra13 tive processes for obtaining and modifying such orders.’’.

14 SEC. 345. DUE PROCESS.

15 Section 454 (42 U.S.C. 654), as amended by sections

16 312(a) and 341(f) of this Act, is amended—

17 (1) by striking ‘‘and’’ at the end of paragraph

18 (25);

19 (2) by striking the period at the end of para20 graph (26) and inserting ‘‘; and’’; and

21 (3) by inserting after paragraph (26) the fol22 lowing new paragraph:

23 ‘‘(27) provide for procedures to ensure that—
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•S 746 IS

1 ‘‘(A) individuals who are parties to cases

2 in which services are being provided under this

3 part—

4 ‘‘(i) receive notice of all proceedings in

5 which support obligations might be estab6 lished or modified; and

7 ‘‘(ii) receive a copy of any order estab8 lishing or modifying a child support obliga9 tion within 14 days after issuance of such

10 order; and

11 ‘‘(B) individuals receiving services under

12 this part have timely access to a fair hearing or

13 other formal complaint procedure, meeting

14 standards established by the Secretary, that en15 sures prompt consideration and resolution of

16 complaints (but the resort to the procedure

17 shall not stay the enforcement of any support

18 order);’’.

19 SEC. 346. OUTREACH AND ACCESSIBILITY.

20 (a) UNIFORM APPLICATION FOR CHILD SUPPORT

21 SERVICES.—

22 (1) REQUIREMENT THAT STATES USE FEDERAL

23 APPLICATION FORM.—Section 454(6)(A) (42 U.S.C.

24 654(6)(A)) is amended by inserting ‘‘(which shall be
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1 made on the service application form developed

2 under section 452(a)(7))’’ after ‘‘State’’.

3 (2) DUTY TO DEVELOP APPLICATION FORM.—

4 Section 452(a)(7) (42 U.S.C. 652(a)(7)), as amend5 ed by section 311(b) of this Act, is amended by in6 serting ‘‘, and develop a form to be used to apply

7 for services established under State plans under this

8 part’’ before the semicolon.

9 (b) OUTREACH.—

10 (1) STATE PLAN REQUIREMENT.—Section 454

11 (42 U.S.C. 654), as amended by sections 312(a),

12 341(f), and 345 of this Act, is amended—

13 (A) by striking ‘‘and’’ at the end of para14 graph (26);

15 (B) by striking the period at the end of

16 paragraph (27) and inserting ‘‘; and’’; and

17 (C) by inserting after paragraph (27) the

18 following new paragraph:

19 ‘‘(28) provide for the establishment and conduct

20 of an ongoing program of outreach to persons eligi21 ble for services under the plan, in accordance with

22 regulations issued under section 452(a)(12).’’.

23 (2) REGULATIONS.—Section 452(a) (42 U.S.C.

24 652(a)), as amended by section 342 of this Act, is

25 amended—
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1 (A) in paragraph (10), by striking ‘‘and’’

2 after the semicolon;

3 (B) in paragraph (11), by striking the pe4 riod and inserting ‘‘; and’’; and

5 (C) by adding at the end the following new

6 paragraph:

7 ‘‘(12) issue such regulations as are necessary to

8 ensure that State agencies—

9 ‘‘(A) develop and implement a plan for

10 serving underserved populations;

11 ‘‘(B) use appropriate personnel and print12 ed material for use by persons who do not

13 speak English or whose hearing is impaired;

14 and

15 ‘‘(C) work in cooperation with other Fed16 eral, State, and local government agencies and

17 private nonprofit organizations which serve low18 income families to publicize the availability of

19 such services and coordinate the delivery of

20 such services.’’.

21 SEC. 347. COST-OF-LIVING ADJUSTMENT OF CHILD SUP22 PORT AWARDS.

23 Part D of title IV (42 U.S.C. 651–669) is amended

24 by inserting after section 467 the following new section:
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1 ‘‘SEC. 467A. COST-OF-LIVING ADJUSTMENT OF CHILD SUP2 PORT AWARDS.

3 ‘‘(a) IN GENERAL.—Each State, as a condition for

4 having its State plan approved under this part, shall have

5 in effect such laws and procedures as are necessary to en6 sure that each child support order issued or modified in

7 the State after the effective date of this section provides

8 that amount of child support payable under the order dur9 ing the 12-month period that begins on each anniversary

10 of the date the order was issued or most recently so modi11 fied shall be an amount equal to—

12 ‘‘(1) the amount of the award specified in the

13 order; multiplied by

14 ‘‘(2) the percentage (if any) by which—

15 ‘‘(A) the average of the Consumer Price

16 Index (as defined in section 1(f)(5) of the Inter17 nal Revenue Code of 1986) for the most recent

18 12-month period for which such information is

19 available; exceeds

20 ‘‘(B) the average of the Consumer Price

21 Index (as so defined) for the 12-month period

22 that ends on the date the order was issued or

23 most recently so modified.

24 ‘‘(b) NOTICE REQUIREMENTS.—The laws and proce25 dures described in subsection (a) shall include a require-
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1 ment that notice of the cost-of-living adjustment of a child

2 support award be provided to—

3 ‘‘(1) the individual obligated to pay the child

4 support, and if wages are to be withheld to pay such

5 support, to each employer of the individual; and

6 ‘‘(2) the individual to whom the child support

7 is owed.

8 ‘‘(c) RULE OF INTERPRETATION.—Subsection (a)

9 shall not be construed to affect other grounds for modify10 ing a child support award.’’.

11 SEC. 348. SIMPLIFIED PROCESS FOR REVIEW AND ADJUST12 MENT OF CERTAIN CHILD SUPPORT ORDERS.

13 Section 466(a)(10) (42 U.S.C. 666(a)(10)) is amend14 ed by adding at the end the following new subparagraphs:

15 ‘‘(D)(i) Procedures under which—

16 ‘‘(I) every 3 years, at the request of either

17 parent subject to a child support order, the

18 State shall review and, as appropriate, adjust

19 the order in accordance with the guidelines es20 tablished under section 467(a) if the amount of

21 the child support award under the order differs

22 from the amount that would be awarded in ac23 cordance with such guidelines by more than the

24 total of the adjustments required to be made in

25 the amount of the award pursuant to section
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1 467A during the 3 year period ending on the

2 date of the request; and

3 ‘‘(II) upon request of either parent subject

4 to a child support order, the State shall review

5 and, as appropriate, adjust the order in accord6 ance with the guidelines established under sec7 tion 467(a) based on a significant change in the

8 circumstances of either such parent.

9 ‘‘(ii) Such procedures shall require both parents

10 subject to a child support order to be notified of

11 their rights provided for under clause (i) at the time

12 the order is issued and in the annual information ex13 change form provided under subparagraph (E).

14 ‘‘(E) Procedures under which each child sup15 port order issued or modified in the State after the

16 effective date of this subparagraph shall require the

17 parents subject to the order to provide each other

18 with a complete statement of their respective finan19 cial condition annually on a form which shall be es20 tablished by the Secretary and provided by the

21 State.’’.

22 SEC. 349. PREVENTION OF CONFLICTS OF INTEREST.

23 Section 466(a)(10) (42 U.S.C. 666(a)(10)), as

24 amended by section 348 of this Act, is amended by adding

25 at the end the following new subparagraph:
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1 ‘‘(F) Procedures to ensure that the State does

2 not provide to any noncustodial parent of a child

3 representation relating to the review or adjustment

4 of an order for the payment of child support with re5 spect to the child, unless the State makes provision

6 for such representation outside the State agency.’’.

7 SEC. 350. STAFFING.

8 (a) STUDIES.—The Secretary of Health and Human

9 Services (in this section referred to as the ‘‘Secretary’’)

10 shall conduct and, not later than 1 year after the date

11 of the enactment of this Act, complete staffing studies for

12 each State child support enforcement program, including

13 each agency and court involved in the child support proc14 ess.

15 (b) REPORT TO THE CONGRESS.—Within 90 days

16 after the end of the 1-year period described in subsection

17 (a), the Secretary shall report to the Committee on Ways

18 and Means of the House of Representatives and the Com19 mittee on Finance of the Senate, and to each State, the

20 results of the studies required by subsection (a).

21 (c) IMPLEMENTATION.—Section 455(a) (42 U.S.C.

22 655(a)) is amended by adding at the end the following

23 new paragraph:

24 ‘‘(3) The Secretary shall reduce by 2 percent the

25 amount otherwise payable to a State pursuant to para-
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1 graph (1)(A) for any calendar quarter ending 2 or more

2 years after the State receives a report transmitted pursu3 ant to section 350(b) of the Economic Opportunity and

4 Family Responsibility Act of 1995, if the Secretary deter5 mines that, during the quarter, the State has not met per6 formance standards and has not implemented the staffing

7 levels recommended in the report.’’.

8 SEC. 351. TRAINING.

9 (a) FEDERAL TRAINING ASSISTANCE.—Section

10 452(a)(7) (42 U.S.C. 652(a)(7)) is amended by inserting

11 ‘‘and training’’ after ‘‘technical assistance’’.

12 (b) STATE TRAINING PROGRAM.—Section 454 (42

13 U.S.C. 654), as amended by sections 312(a), 341(f), 345,

14 and 346(b)(1) of this Act, is amended—

15 (1) by striking ‘‘and’’ at the end of paragraph

16 (27);

17 (2) by striking the period at the end of para18 graph (28) and inserting ‘‘; and’’; and

19 (3) by inserting after paragraph (28) the fol20 lowing new paragraph:

21 ‘‘(29) provide that the State will develop and

22 implement a training program under which training

23 is to be provided not less frequently than annually

24 to all personnel performing functions under the

25 State plan.’’.
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1 (c) REPORT.—Section 452(a)(10) (42 U.S.C.

2 652(a)(10)) is amended by redesignating subparagraphs

3 (H) and (I) as subparagraphs (I) and (J), respectively,

4 and by inserting after subparagraph (G) the following new

5 subparagraph:

6 ‘‘(H) the training activities at the Federal

7 and State levels, the training audit, and the

8 amounts expended on training;’’.

9 (d) RESOURCES.—For technical assistance, training,

10 operational research, demonstrations, and staffing studies

11 under part D of title IV of the Social Security Act, there

12 are authorized to be appropriated to the Secretary of

13 Health and Human Services for each fiscal year an

14 amount equal to not more than 2 percent of the total

15 amount paid to the Federal Government pursuant to sec16 tion 457(b) of such Act during the immediately preceding

17 fiscal year.

18 SEC. 352. PRIORITIES IN DISTRIBUTION OF COLLECTED

19 CHILD SUPPORT.

20 (a) IN GENERAL.—Section 457(a) (42 U.S.C.

21 657(a)) is amended to read as follows:

22 ‘‘(a) Amounts collected as support by a State pursu23 ant to a child support or wage withholding order are to

24 be allocated as follows:
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1 ‘‘(1) First, for support payments for the month

2 that are not past due, as follows:

3 ‘‘(A) First, for cash support payments.

4 ‘‘(B) Then, for payments related to pre5 miums for health care insurance coverage of

6 children covered by the order.

7 ‘‘(2) Then, for payments of support that are

8 past due, and for payment of unreimbursed health

9 care expenses.’’.

10 (b) INCREASE IN PASS-THROUGH OF COLLECTED

11 CHILD SUPPORT.—

12 (1) IN GENERAL.—Section 457(b)(1) (42

13 U.S.C. 657(b)(1)) is amended by inserting ‘‘or such

14 greater amount of such child support payments as

15 the State may establish and provide for in the State

plan, or if greater, 1 16 ⁄2’’ after ‘‘the first $50’’ each

17 place such term appears.

18 (2) INCREASE IN DISREGARD OF PASSED

19 THROUGH CHILD SUPPORT.—Section

20 402(a)(8)(A)(vi) (42 U.S.C. 602(a)(8)(A)(vi)) is

21 amended to read as follows:

22 ‘‘(vi) shall disregard—

23 ‘‘(I) the first $50 (for the calendar

24 quarter in which the month occurs) or

25 such greater amount of such child support
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1 payments as the State may establish and

2 provide for in the State plan, or, if greater,

1 3 ⁄2 of any child support payments for the

4 month received in the month;

5 ‘‘(II) the first $50 or such greater

6 amount of such child support payments as

7 the State may establish and provide for in

the State plan, or if greater, 1 8 ⁄2 of child

9 support payments for each prior month re10 ceived in the month if the payments were

11 made by the absent parent in the month in

12 which due; and

13 ‘‘(III) any amount paid to the family

14 under section 457(b)(1), with respect to

15 the dependent child or children in the fam16 ily;’’.

17 (c) PERSONS NO LONGER RECEIVING AFDC.—Sec18 tion 457(c) (42 U.S.C. 657(c)) is amended—

19 (1) by striking ‘‘any amount of support col20 lected’’ and all that follows through ‘‘the individ21 uals’’ and inserting ‘‘to the family any amount of

22 support collected in payment of current or future

23 support obligations or arrears accrued for a month

24 for which the family did not receive such assistance,

25 subject to the same conditions and on the same
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1 basis as in the case of payments made to families’’;

2 and

3 (2) by adding at the end the following: ‘‘If col4 lections are received in a month with respect to a

5 family which has ceased to receive such assistance,

6 the collections shall be credited first as payments for

7 the month that are not past due, then to payments

8 of arrears accrued in months for which the family

9 did not receive such assistance, then to any other

10 unpaid arrears, and then against future support ob11 ligations.’’.

12 (d) MARRIED COUPLES.—Section 457 (42 U.S.C.

13 657) is amended by adding at the end the following new

14 subsection:

15 ‘‘(e) If an individual obligor and obligee join house16 holds by marrying or remarrying each other, or (if married

17 to each other) by reuniting after a period of legal separa18 tion, the State shall suspend or forgive collection of child

19 support arrearages owed to the State if the income of the

20 resulting family is less than 200 percent of the poverty

21 line (as determined by the Secretary).’’.

22 SEC. 353. TEENAGE NONCUSTODIAL PARENTS AND CHILD

23 SUPPORT.

24 (a) AUTHORITY OF STATES TEMPORARILY TO WAIVE

25 RIGHT TO COLLECT CHILD SUPPORT OBLIGATIONS OF
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1 TEENAGE NONCUSTODIAL PARENTS WHO ARE PARTICI2 PATING IN A STATE EDUCATIONAL OR EMPLOYMENT

3 PREPARATION PROGRAM.—Section 454 (42 U.S.C. 454),

4 as amended by sections 312(a), 341(f), 345, 346(b)(1),

5 and 351(b) of this Act, is amended—

6 (1) by striking ‘‘and’’ at the end of paragraph

7 (28);

8 (2) by striking the period at the end of para9 graph (29) and inserting ‘‘; and’’; and

10 (3) by inserting after paragraph (29) the fol11 lowing new paragraph:

12 ‘‘(30) at the option of the State, provide that,

13 if the State agency determines that a noncustodial

14 parent who has not attained 20 years of age owes

15 but is unable to pay child support, then the State

16 may, in lieu of enforcing the right to such support

17 for such period as the State considers appropriate,

18 allow the parent to choose to comply with an edu19 cational or job training program.’’.

20 (b) CONFORMITY OF STATE GUIDELINES FOR CHILD

21 SUPPORT AWARDS.—Section 467 (42 U.S.C. 667) is

22 amended by adding at the end the following new sub23 section:

24 ‘‘(d) The guidelines established pursuant to sub25 section (a) shall provide that if the State agency deter-
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1 mines that a noncustodial parent who has not attained 20

2 years of age owes but is unable to pay child support, then

3 the State may, in lieu of enforcing the right to such sup4 port for such period as the State considers appropriate,

5 allow the parent to choose to comply with an educational

6 or job training program.’’.

7 Subtitle E—Demonstrations,

8 Grants, and Miscellaneous

9 SEC. 361. ESTABLISHMENT OF CHILD SUPPORT ASSUR10 ANCE DEMONSTRATION PROJECTS.

11 (a) IN GENERAL.—In order to encourage States to

12 provide a guaranteed minimum level of child support for

13 every eligible child not receiving such support, the Sec14 retary of Health and Human Services (hereafter in this

15 section referred to as the ‘‘Secretary’’) shall make grants

16 to not more than 6 States to conduct demonstration

17 projects for the purpose of establishing or improving a sys18 tem of assured minimum child support payments in ac19 cordance with this section.

20 (b) CONTENTS OF APPLICATION.—An application for

21 grants under this section shall be submitted by the Gov22 ernor of a State and shall—

23 (1) contain a description of the proposed child

24 support assurance project to be established, imple25 mented, or improved using amounts provided under
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1 this section, including the level of the assured bene2 fit to be provided, the specific activities to be under3 taken, and the agencies that will be involved;

4 (2) specify whether the project will be carried

5 out throughout the State or in limited areas of the

6 State;

7 (3) estimate the number of children who will be

8 eligible for assured minimum child support payments

9 under the project, and the amounts to which they

10 will be entitled on average as individuals and in the

11 aggregate;

12 (4) describe the child support guidelines and re13 view procedures which are in use in the State and

14 any expected modifications;

15 (5) contain a commitment by the State to carry

16 out the project during a period of not less than 7

17 and not more than 10 consecutive fiscal years begin18 ning with fiscal year 1996;

19 (6) contain assurances that the State—

20 (A) is currently at or above the national

21 median paternity establishment rate (as defined

22 in section 452(g)(2) of the Social Security Act);

23 (B) will improve the performance of the

24 agency designated by the State to carry out the

25 requirements under part D of title IV of the
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1 Social Security Act by at least 4 percent each

2 year in which the State operates a child support

3 assurance project under this section in—

4 (i) the number of cases in which pa5 ternity is established when required;

6 (ii) the number of cases in which child

7 support orders are obtained; and

8 (iii) the number of cases with child

9 support orders in which collections are

10 made; and

11 (C) to the maximum extent possible under

12 current law, will use Federal, State, and local

13 job training assistance to assist obligors who

14 have been determined to be unable to meet

15 their child support obligations;

16 (7) describe the extent to which multiple agen17 cies, including those responsible for administering

18 the program of aid to families with dependent chil19 dren under part A of title IV of the Social Security

20 Act and child support collection, enforcement, and

21 payment under part D of such title, will be involved

22 in the design and operation of the child support as23 surance project; and

24 (8) contain such other information as the Sec25 retary may require by regulation.
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1 (c) USE OF FUNDS.—A State shall use amounts pro2 vided under a grant awarded under this section to carry

3 out a child support assurance project designed to provide

4 a minimum monthly child support benefit for each eligible

5 child in the State to the extent that such minimum child

6 support is not paid in a month by the noncustodial parent.

7 (d) REQUIREMENTS.—

8 (1) IN GENERAL.—A child support assurance

9 project funded under this section shall provide

10 that—

11 (A) a child shall be eligible for the assured

12 child support benefit if—

13 (i) the child has a living noncustodial

14 parent for whom—

15 (I) a child support order has

16 been sought (as defined in paragraph

17 (3)); or

18 (II) a child support order has

19 been obtained and is being enforced

20 by the State child support order reg21 istry established pursuant to section

22 466(a)(12) of the Social Security Act;

23 or
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1 (ii) a parent of the child has good

2 cause for not seeking or enforcing a sup3 port order;

4 (B) the assured child support benefit shall

5 be paid promptly to the custodial parent at

6 least once a month and shall be—

7 (i) an amount determined by the

8 State which is—

9 (I) not less than $1,500 per year

10 for the first child, $1,000 per year for

11 the second child, and $500 per year

12 for the third and each subsequent

13 child, and

14 (II) not more than $3,000 per

15 year for the first child and $1,000 per

16 year for the second and each subse17 quent child;

18 (ii) indexed and adjusted for inflation;

19 and

20 (iii) in the case of a family of children

21 with multiple noncustodial parents, cal22 culated in the same manner as if all such

23 children were full siblings;

24 (C) when child support is collected for a

25 child in a month in which the child has received
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1 a child support assurance benefit, the amount

2 due to the child from the child support collec3 tion shall be reduced by the child support as4 surance already paid to the child for the month,

5 and if the child is receiving child support assur6 ance benefits in common with siblings or half7 siblings, the amount of the child support assur8 ance benefits attributable to the child shall be

9 not more than the child’s pro rata share of the

10 total benefits;

11 (D) for purposes of determining the need

12 of a child or relative and the level of assistance

13 under part A of title IV of the Social Security

Act, 1 14 ⁄2 of the amount received as a child sup15 port assurance benefit shall be disregarded

16 from income until the total amount of child

17 support and aid to families with dependent chil18 dren benefit received under part A of title IV

19 of the Social Security Act equals the Federal

20 poverty level for a family of comparable size;

21 (E) in determining need and the amount of

22 assistance under part A of title IV of the Social

23 Security Act, the needs of any family member

24 not receiving an assured child support benefit
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1 shall be determined without consideration of the

2 assured child support benefits;

3 (F) the consideration under a State plan

4 under part A of title IV of the Social Security

5 Act of any child support payment received by a

6 family other than a child support assurance

7 benefit shall be governed by section

8 402(a)(8)(A)(vi) of such Act; and

9 (G) in order to participate in the child sup10 port assurance project, the child’s caretaker

11 shall apply for or be receiving services of the

12 State’s child support enforcement program

13 under part D of title IV of the Social Security

14 Act.

15 (2) DEFINITION OF CHILD.—For purposes of

16 this section, the term ‘‘child’’ means an individual

17 who is of such an age, disability, or educational sta18 tus as to be eligible for child support as provided for

19 by the law of the State in which such individual re20 sides.

21 (3) DEFINITION OF SOUGHT.—For purposes of

22 this section, a child support order shall be deemed

23 to have been ‘‘sought’’ where an individual has ap24 plied for or is receiving services from the State child

25 support agency, or has sought a child support order
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1 through representation by private or public counsel

2 or pro se.

3 (e) CONSIDERATION AND PRIORITY OF APPLICA4 TIONS.—

5 (1) IN GENERAL.—The Secretary shall consider

6 all applications received from States desiring to con7 duct demonstration projects under this section and

8 shall approve not more than 6 applications which ap9 pear likely to contribute significantly to the achieve10 ment of the purpose of this section. In selecting

11 States to conduct demonstration projects under this

12 section, the Secretary shall—

13 (A) ensure that the applications selected

14 represent a diversity of minimum benefits dis15 tributed throughout the range specified in sub16 section (d)(1)(B)(i);

17 (B) consider the geographic dispersion and

18 variation in population of the applicants;

19 (C) give priority to States the applications

20 of which demonstrate—

21 (i) significant recent improvements

22 in—

23 (I) establishing paternity and

24 child support awards,
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1 (II) enforcement of child support

2 awards, and

3 (III) collection of child support

4 payments;

5 (ii) a record of effective automation;

6 and

7 (iii) that efforts will be made to link

8 child support systems with other service

9 delivery systems;

10 (D) ensure that the proposed projects will

11 be of a size sufficient to obtain a meaningful

12 measure of the effects of child support assur13 ance;

14 (E) give priority, first, to States intending

15 to operate a child support assurance project on

16 a statewide basis, and, second, to States that

17 are committed to phasing in an expansion of

18 such project to the entire State, if interim eval19 uations suggest such expansion is warranted;

20 and

21 (F) ensure that, if feasible, the States se22 lected use a variety of approaches for child sup23 port guidelines.

24 (2) INTENSIVE INTEGRATED SOCIAL SERV25 ICES.—The Secretary shall, if feasible, require at
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1 least 2 of the States selected to participate in the

2 demonstration projects conducted under this section

3 to provide intensive integrated social services for

4 low-income participants in the child support assur5 ance project, for the purpose of assisting such par6 ticipants in improving their employment, housing,

7 health, and educational status.

8 (f) DURATION.—During the 12-month period begin9 ning on the date of the enactment of this Act, the Sec10 retary shall develop criteria, select the States to partici11 pate in the demonstration, and plan for the evaluation re12 quired under subsection (h). The demonstration projects

13 conducted under this section shall commence on the day

14 after the end of such 12-month period, and shall be con15 ducted for not less than 7 and not more than 10 consecu16 tive fiscal years, except that the Secretary may terminate

17 a project before the end of such period if the Secretary

18 determines that the State conducting the project is not

19 in substantial compliance with the terms of the application

20 approved by the Secretary under this section. The Sec21 retary shall determine from interim reports required under

22 subsection (i) whether a project may be extended beyond

23 such period, and Federal financial participation shall be

24 available for such an extension.
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1 (g) COST SAVINGS RECOVERY.—The Secretary shall

2 develop a methodology to identify any State cost savings

3 realized in connection with the implementation of a child

4 support assurance project conducted under this section.

5 Any such savings realized as a result of the implementa6 tion of a child support assurance project shall be utilized

7 for child support enforcement improvements or expansions

8 and improvements in the program of aid to families with

9 dependent children conducted under part A of title IV of

10 the Social Security Act within the participating State.

11 (h) EVALUATION AND REPORT TO CONGRESS.—

12 (1) EVALUATION.—The Secretary shall conduct

13 an evaluation of the effectiveness of the demonstra14 tion projects funded under this section and deter15 mine whether to recommend that such projects be

16 phased in on a national basis. The evaluation shall

17 include an assessment of the effect of an assured

18 benefit on—

19 (A) parental income from nongovernment

20 sources and the number of hours worked;

21 (B) the use and amount of government

22 supports by the parents;

23 (C) the ability of the parents to accumu24 late resources;
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1 (D) the well-being of the children receiving

2 child support assurance benefits, including edu3 cational attainment and school behavior; and

4 (E) the State’s rates of establishing pater5 nity and support orders and of collecting sup6 port.

7 (2) REPORT.—Four years after commencement

8 of the demonstration projects, and at the completion

9 of the designated duration of a demonstration

10 project, the Secretary shall submit an interim and

11 final report based on the evaluation to the Commit12 tee on Finance and the Committee on Labor and

13 Human Resources of the Senate, and the Committee

14 on Ways and Means and the Committee on Eco15 nomic and Educational Opportunities of the House

16 of Representatives concerning the effectiveness of

17 the child support assurance projects funded under

18 this section.

19 (i) STATE REPORTS.—The Secretary shall require

20 each State that conducts a demonstration project under

21 this section to annually report such information on the

22 project’s operation as the Secretary may require, except

23 that all such information shall be reported according to

24 a uniform format prescribed by the Secretary. Each such

25 State shall provide an opportunity for the public to com-
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1 ment on the demonstration project during such period as

2 the State may establish, and shall include any such com3 ments in the annual report.

4 (j) RESTRICTIONS ON MATCHING AND USE OF

5 FUNDS.—

6 (1) IN GENERAL.—A State conducting a dem7 onstration project under this section shall be re8 quired—

9 (A) except as provided in paragraph (2), to

10 provide not less than 20 percent of the total

11 amounts expended in each calendar year of the

12 project to pay the costs associated with the

13 project funded under this section;

14 (B) to maintain its level of expenditures

15 for child support collection, enforcement, and

16 payment at the same level, or at a higher level,

17 than such expenditures were prior to such

18 State’s participation in a demonstration project

19 provided by this section; and

20 (C) to maintain the aid to families with de21 pendent children benefits provided under part A

22 of title IV of the Social Security Act at the

23 same level, or at a higher level, as the level of

24 such benefits on the date of the enactment of

25 this Act.
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1 (2) FUTURE YEARS.—A State participating in a

2 demonstration project under this section may pro3 vide no less than 10 percent of the total amounts ex4 pended to pay the costs associated with the project

5 funded under this section in years after the first

6 year such project is conducted in a State if the State

7 improves its performance as specified in subsection

8 (b)(6)(B).

9 (k) COORDINATION WITH CERTAIN MEANS-TESTED

10 PROGRAMS.—For purposes of—

11 (1) the United States Housing Act of 1937;

12 (2) title V of the Housing Act of 1949;

13 (3) section 101 of the Housing and Urban De14 velopment Act of 1965;

15 (4) sections 221(d)(3), 235, and 236 of the Na16 tional Housing Act;

17 (5) the Food Stamp Act of 1977;

18 (6) title XIX of the Social Security Act; and

19 (7) child care assistance provided through part

20 G of title IV of the Social Security Act, or title XX

21 of the such Act,

22 any payment made to an individual within the demonstra23 tion project area for child support up to the amount which

24 an assured child support benefit would provide shall not

25 be treated as income and shall not be taken into account
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1 in determining resources for the month of its receipt and

2 the following month.

3 (l) TREATMENT OF CHILD SUPPORT BENEFIT.—Any

4 assured child support benefit received by an individual

5 under this section shall be considered child support for

6 purposes of the Internal Revenue Code of 1986.

7 (m) AUTHORIZATION OF APPROPRIATIONS.—There

8 are authorized to be appropriated such sums as may be

9 necessary in each of the fiscal years 1995, 1996, 1997,

10 1998, 1999, and 2000 to carry out this section.

11 SEC. 362. ESTABLISHMENT OF SIMPLE CHILD SUPPORT

12 MODIFICATION DEMONSTRATION PROJECTS.

13 (a) IN GENERAL.—The Secretary of Health and

14 Human Services (hereafter in this section referred to as

15 the ‘‘Secretary’’) shall make grants to not more than 5

16 States to conduct demonstration projects in accordance

17 with subsection (b) for the purpose of establishing a sim18 ple process for the modification of child support orders

19 based on changed family circumstances.

20 (b) REQUIREMENTS OF PROJECT.—A project con21 ducted in accordance with this subsection shall provide

22 that child support obligations shall not accrue during any

23 period during which—
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1 (1) the parents of the child (who is the subject

2 of the order) marry or otherwise reconcile after pre3 viously maintaining separate residences;

4 (2) custody of the child changes from one par5 ent to the other without order of the court; or

6 (3) the parent obligated to pay child support is

7 unemployed.

8 (c) APPLICATIONS.—Each State desiring to conduct

9 a demonstration project under this section shall prepare

10 and submit to the Secretary an application at such time,

11 in such manner, and containing such information as the

12 Secretary may require.

13 (d) REPORTS.—A State that conducts a demonstra14 tion project under this section shall prepare and submit

15 to the Secretary annual and final reports in such form

16 and containing such information as the Secretary may re17 quire.

18 (e) AUTHORIZATION OF APPROPRIATIONS.—There

19 are authorized to be appropriated $1,000,000 for each of

20 fiscal years 1997 through 1999 for the purpose of con21 ducting demonstration projects in accordance with this

22 section.
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1 SEC. 363. ESTABLISHMENT OF DEMONSTRATION PROJECTS

2 FOR PROVIDING SERVICES TO CERTAIN

3 NONCUSTODIAL PARENTS.

4 (a) IN GENERAL.—The Secretary of Health and

5 Human Services (hereafter in this section referred to as

6 the ‘‘Secretary’’) shall make grants to not more than 5

7 States to conduct demonstration projects in accordance

8 with subsection (b) for the purpose of providing services

9 to noncustodial parents who are unable to meet child sup10 port obligations due to unemployment or

11 underemployment.

12 (b) REQUIREMENTS OF PROJECT.—A project con13 ducted in accordance with this subsection shall provide

14 noncustodial parents who are unable to meet child support

15 obligations due to unemployment or underemployment

16 with the following services:

17 (1) Assessment of job readiness.

18 (2) Referrals to job training and education pro19 grams.

20 (3) Court monitored job search.

21 (4) Court ordered participation in State work

22 programs or other specialized employment programs.

23 (5) Technical assistance and information and

24 interpretation of legal proceedings.

25 (6) Information dissemination and referrals to

26 other available services.
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1 (7) Other services determined by the State.

2 (c) APPLICATIONS.—Each State desiring to conduct

3 a demonstration project under this section shall prepare

4 and submit to the Secretary an application at such time,

5 in such manner, and containing such information as the

6 Secretary may require.

7 (d) REPORTS.—A State that conducts a demonstra8 tion project under this section shall prepare and submit

9 to the Secretary annual and final reports in such form

10 and containing such information as the Secretary may re11 quire.

12 (e) AUTHORIZATION OF APPROPRIATIONS.—There

13 are authorized to be appropriated $1,000,000 for each of

14 fiscal years 1996 through 1998 for the purpose of con15 ducting demonstration projects in accordance with this

16 section.

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

18 PROGRAMS.

19 (a) IN GENERAL.—Part D of title IV is amended by

20 adding at the end the following new section:

21 ‘‘GRANTS TO STATES FOR ACCESS AND VISITATION

22 PROGRAMS

23 ‘‘SEC. 469A. (a) PURPOSES; AUTHORIZATION OF AP24 PROPRIATIONS.—For the purposes of enabling States to

25 establish and administer programs to support and facili26 tate absent parents’ access to and visitation of their chil-
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1 dren, by means of activities including mediation (both vol2 untary and mandatory), counseling, education, develop3 ment of parenting plans, visitation enforcement (including

4 monitoring, supervision and neutral drop-off and pickup),

5 and development of guidelines for visitation and alter6 native custody arrangements, there are authorized to be

7 appropriated $5,000,000 for each of fiscal years 1996 and

8 1997, and $10,000,000 for each succeeding fiscal year.

9 ‘‘(b) PAYMENTS TO STATES.—(1) Each State shall,

10 subject to appropriations, be entitled to payment under

11 this section for each fiscal year in an amount equal to

12 its allotment under subsection (c) for such fiscal year, to

13 be used for payment of 90 percent of State expenditures

14 for the purposes specified in subsection (a).

15 ‘‘(2) Payments under this section shall be used by

16 a State to supplement (and not to substitute for) expendi17 tures by the State, for activities specified in subsection

18 (a), at a level at least equal to the level of such expendi19 tures for fiscal year 1994.

20 ‘‘(c) ALLOTMENTS TO STATES.—

21 ‘‘(1) IN GENERAL.—For purposes of subsection

22 (b), each State shall be entitled (subject to subpara23 graph (b)(1)) to an amount for each fiscal year

24 bearing the same ratio to the amount authorized to

25 be appropriated pursuant to subsection (a) for such
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1 fiscal year as the number of children in the State

2 living with only one biological parent bears to the

3 total number of such children in all States.

4 ‘‘(2) MINIMUM ALLOTMENT.—Allotments to

5 States under paragraph (1) shall be adjusted as nec6 essary to ensure that no State is allotted less than

7 $50,000 for fiscal year 1996 or 1997, or $100,000

8 for any succeeding fiscal year.

9 ‘‘(d) FEDERAL ADMINISTRATION.—The program

10 under this section shall be administered by the Adminis11 tration for Children and Families.

12 ‘‘(e) STATE PROGRAM ADMINISTRATION.—(1) Each

13 State may administer the program under this section di14 rectly or through grants to or contracts with courts, local

15 public agencies, or non-profit private entities.

16 ‘‘(2) State programs under this section may, but need

17 not, be statewide.

18 ‘‘(3) States administering programs under this sec19 tion shall monitor, evaluate, and report on such programs

20 in accordance with requirements established by the Sec21 retary.’’.
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1 SEC. 365. TECHNICAL CORRECTION TO ERISA DEFINITION

2 OF MEDICAL CHILD SUPPORT ORDER.

3 (a) IN GENERAL.—Section 609(a)(2)(B) of the Em4 ployee Retirement Income Security Act of 1974 (29

5 U.S.C. 1169(a)(2)(B)) is amended—

6 (1) by striking ‘‘issued by a court of competent

7 jurisdiction’’;

8 (2) by striking the period at the end of clause

9 (ii) and inserting a comma; and

10 (3) by adding, after and below clause (ii), the

11 following:

12 ‘‘if such judgment, decree, or order (I) is issued

13 by a court of competent jurisdiction, or (II) is

14 issued by an administrative adjudicator and has

15 the force and effect of law under applicable

16 State law.’’.

17 (b) PLAN AMENDMENTS NOT REQUIRED UNTIL OC18 TOBER 1, 1996.—

19 (1) IN GENERAL.—Any amendment to a plan

20 required to be made by an amendment made by this

21 section shall not be required to be made before the

22 first plan year beginning on or after October 1,

23 1996, if—

24 (A) during the period after the date before

25 the effective date of this Act and before such

26 first plan year, the plan is operated in accord-
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1 ance with the requirements of the amendments

2 made by this section; and

3 (B) the plan amendment applies retro4 actively to the period after the date before the

5 effective date of this Act and before such first

6 plan year.

7 (2) HOLD HARMLESS PROVISION.—A plan shall

8 not be treated as failing to be operated in accord9 ance with the provisions of the plan merely because

10 it operates in accordance with paragraph (1).

11 Subtitle F—Tax Reforms

12 SEC. 371. QUARTERLY ADVANCED EITC.

13 Not later than 6 months after the date of the enact14 ment of this Act, the Secretary of the Treasury shall pro15 vide for the quarterly lump sum advance payment of the

16 earned income tax credit under section 32 of the Internal

17 Revenue Code of 1986.

18 SEC. 372. EXPANSION OF THE TAX COUNSELING FOR THE

19 ELDERLY PROGRAM.

20 (a) IN GENERAL.—Not later than 6 months after the

21 date of the enactment of this Act, the Commissioner of

22 the Internal Revenue Service shall provide for the expan23 sion of the Tax Counseling for the Elderly (TCE) program

24 to include assistance to low-income families with incomes

25 not greater than 185 percent of the income official poverty
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1 line (as defined by the Office of Management and Budget,

2 and revised annually in accordance with section 673(2) of

3 the Omnibus Budget Reconciliation Act of 1981) applica4 ble to a family of the size involved, with specific outreach

5 to families—

6 (1) receiving aid to families with dependent

7 children under part A of title IV of the Social Secu8 rity Act;

9 (2) participating in the food stamp program es10 tablished by the Food Stamp Act of 1977;

11 (3) who are homeless; or

12 (4) receiving child care assistance through part

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

14 602(i)) by reason of a child in the family being eligi15 ble for such assistance under section 491A(4)(B)(ii)

16 of such Act.

17 (b) ELEMENTS OF EXPANSION.—The expansion de18 scribed in subsection (a) may include—

19 (1) the recruitment, training, coordination, and

20 oversight of volunteers to provide tax assistance, and

21 (2) the provision of assistance with tax audits,

22 administrative hearings, and judicial proceedings.

23 (c) AUTHORIZATION OF APPROPRIATIONS.—In addi24 tion to any other amounts authorized to be appropriated

25 for the Tax Counseling for the Elderly (TCE) program,
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1 there are authorized to be appropriated for the expansion

2 of the program under this section, $1,000,000 for each

3 fiscal year beginning with fiscal year 1996.

4 TITLE IV—CHILD CARE

5 REFORMS

6 SEC. 401. CHILD CARE FOR NEEDY FAMILIES BLOCK

7 GRANT.

8 Title IV (42 U.S.C. 601 et seq.) is amended by add9 ing at the end the following new part:

10 ‘‘PART G—CHILD CARE FOR NEEDY

11 FAMILIES BLOCK GRANT

12 ‘‘SEC. 491A. DEFINITIONS.

13 ‘‘For purposes of this part:

14 ‘‘(1) CAREGIVER.—The term ‘caregiver’ means

15 an individual who provides a service directly to an

16 eligible child on a person-to-person basis.

17 ‘‘(2) CHILD CARE CERTIFICATE.—The term

18 ‘child care certificate’ means a certificate (that may

19 be a check or other disbursement) that is issued by

20 a State or local government under this part directly

21 to a parent who may use such certificate only as

22 payment for child care services. Nothing in this part

23 shall preclude the use of such certificates for sectar24 ian child care services if freely chosen by the parent.
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1 For purposes of this part, child care certificates

2 shall not be considered to be grants or contracts.

3 ‘‘(3) ELEMENTARY SCHOOL.—The term ‘ele4 mentary school’ means a day or residential school

5 that provides elementary education, as determined

6 under State law.

7 ‘‘(4) ELIGIBLE CHILD.—The term ‘eligible

8 child’ means the following:

9 ‘‘(A) CHILDREN FOR WHOM CHILD CARE IS

10 GUARANTEED.—

11 ‘‘(i) A child who would have been eli12 gible to receive child care under section

13 402(g)(1)(A)(i), as such section was in ef14 fect on September 30, 1995.

15 ‘‘(ii) A child who would have been eli16 gible to receive child care under section

17 402(g)(1)(A)(ii) (relating to transitional

18 child care), as such section was in effect on

19 September 30, 1995. At the option of the

20 State the State may, uniformly for all chil21 dren, elect to extend the period for which

22 a child is eligible for care under this clause

23 for—

24 ‘‘(I) 12 months; or
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1 ‘‘(II) until the income of the family

2 exceeds 185 percent of the income official

3 poverty line (as defined by the Office of

4 Management and Budget, and revised an5 nually in accordance with section 673(2) of

6 the Omnibus Budget Reconciliation Act of

7 1981) that is applicable for a family of the

8 size involved.

9 ‘‘(B) CHILDREN FOR WHOM CHILD CARE

10 IS NOT GUARANTEED.—

11 ‘‘(i) An individual—

12 ‘‘(I) who is less than 13 years of

13 age;

14 ‘‘(II) who has a family income

15 not in excess of an amount deter16 mined by the State which may not ex17 ceed a maximum of 75 percent of the

18 State median income for a family of

19 the same size; and

20 ‘‘(III) who meets any additional

21 eligibility criteria established by the

22 State.

23 ‘‘(ii) A child who would have been eli24 gible to receive child care under section

25 402(i) (relating to at-risk child care), as
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1 such section was in effect on September

2 30, 1995.

3 ‘‘(iii) At the option of the State, a

4 child who requires child care services as a

5 result of a family member’s voluntarily en6 gaging in community service activities ap7 proved by the State if such family member

8 is required to comply with section 482(k).

9 ‘‘(5) ELIGIBLE CHILD CARE PROVIDER.—The

10 term ‘eligible child care provider’ means—

11 ‘‘(A) a center-based child care provider, a

12 group home child care provider, a family child

13 care provider, or other provider of child care

14 services for compensation that—

15 ‘‘(i) is licensed, regulated, or reg16 istered under State law as described in sec17 tion 491E(c)(2)(E); and

18 ‘‘(ii) satisfies the State and local re19 quirements, including those referred to in

20 section 491E(c)(2)(F);

21 applicable to the child care services it provides;

22 or

23 ‘‘(B) a child care provider that is 18 years

24 of age or older who provides child care services

25 only to eligible children who are, by affinity or
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•S 746 IS

1 consanguinity, or by court decree, the grand2 child, niece, or nephew of such provider, if such

3 provider is registered and complies with any

4 State requirements that govern child care pro5 vided by the relative involved.

6 ‘‘(6) FAMILY CHILD CARE PROVIDER.—The

7 term ‘family child care provider’ means one individ8 ual who provides child care services for fewer than

9 24 hours per day, as the sole caregiver, and in a pri10 vate residence.

11 ‘‘(7) INDIAN TRIBE.—The term ‘Indian tribe’

12 has the meaning given it in section 4(e) of the In13 dian Self-Determination and Education Assistance

14 Act (25 U.S.C. 450b(e)).

15 ‘‘(8) LEAD AGENCY.—The term ‘lead agency’

16 means the agency designated under section 491D(a).

17 ‘‘(9) PARENT.—The term ‘parent’ includes a

18 legal guardian or other person standing in loco

19 parentis.

20 ‘‘(10) SECONDARY SCHOOL.—The term ‘second21 ary school’ means a day or residential school which

22 provides secondary education, as determined under

23 State law.
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1 ‘‘(11) SLIDING FEE SCALE.—The term ‘sliding

2 fee scale’ means a system of cost sharing by a family

3 based on income and size of the family.

4 ‘‘(12) STATE.—The term ‘State’ means any of

5 the several States, the District of Columbia, the Vir6 gin Islands of the United States, the Commonwealth

7 of Puerto Rico, Guam, American Samoa, the Com8 monwealth of the Northern Mariana Islands, the

9 Trust Territory of the Pacific Islands, or an Indian

10 tribe.

11 ‘‘(13) TRIBAL ORGANIZATION.—The term ‘trib12 al organization’ has the meaning given it in section

13 4(l) of the Indian Self-Determination and Education

14 Assistance Act (25 U.S.C. 450b(l)).

15 ‘‘SEC. 491B. PURPOSES; LIMITATIONS ON AUTHORIZATIONS

16 OF APPROPRIATIONS.

17 ‘‘(a) PURPOSE; LIMITATION ON AUTHORIZATION OF

18 APPROPRIATIONS.—For the purpose of encouraging and

19 enabling each State to develop, establish, or expand, and

20 to operate a program to provide child care services, there

21 are authorized to be appropriated to the Secretary the

22 amounts described in subsection (b) for the fiscal years

23 specified in such subsection.

24 ‘‘(b) DESCRIPTION OF AMOUNTS.—The amounts de25 scribed in this subsection are—
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1 ‘‘(1) for fiscal year 1996, $2,302,000,000;

2 ‘‘(2) for fiscal year 1997, $2,790,000,000;

3 ‘‘(3) for fiscal year 1998, $3,040,000,000

4 ‘‘(4) for fiscal year 1999, $3,460,000,000; and

5 ‘‘(5) for fiscal year 2000, $4,030,000,000.

6 ‘‘SEC. 491C. ESTABLISHMENT OF BLOCK GRANT PROGRAM.

7 ‘‘The Secretary shall make grants to States in ac8 cordance with the provisions of this part.

9 ‘‘SEC. 491D. LEAD AGENCY.

10 ‘‘(a) DESIGNATION.—The chief executive officer of a

11 State desiring to receive a grant under this part shall des12 ignate, in an application submitted to the Secretary under

13 section 491E, an appropriate State agency that complies

14 with the requirements of subsection (b) to act as the lead

15 agency.

16 ‘‘(b) DUTIES.—

17 ‘‘(1) IN GENERAL.—The lead agency shall—

18 ‘‘(A) administer, directly or through other

19 State agencies, the funds received under this

20 part by the State;

21 ‘‘(B) develop the State plan to be submit22 ted to the Secretary under section 491E;

23 ‘‘(C) in conjunction with the development

24 of the State plan as required under subpara25 graph (B), hold at least one hearing in the
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1 State to provide to the public an opportunity to

2 comment on the provision of child care services

3 under the State plan; and

4 ‘‘(D) coordinate the provision of services

5 under this part with other Federal, State, and

6 local child care and early childhood development

7 programs.

8 ‘‘(2) DEVELOPMENT OF PLAN.—In the develop9 ment of the State plan described in paragraph

10 (1)(B), the lead agency shall consult with appro11 priate representatives of units of general purpose

12 local government. Such consultations may include

13 consideration of local child care needs and resources,

14 the effectiveness of existing child care and early

15 childhood development services, and the methods by

16 which funds made available under this part can be

17 used to effectively address local shortages.

18 ‘‘SEC. 491E. APPLICATION AND PLAN.

19 ‘‘(a) APPLICATION.—To be eligible to receive funds

20 under this part, a State shall prepare and submit to the

21 Secretary an application at such time, in such manner,

22 and containing such information as the Secretary shall by

23 rule require, including—

24 ‘‘(1) an assurance that the State will comply

25 with the requirements of this part; and
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1 ‘‘(2) a State plan that meets the requirements

2 of subsection (c).

3 ‘‘(b) PERIOD COVERED BY PLAN.—The State plan

4 contained in the application under subsection (a) shall be

5 designed to be implemented—

6 ‘‘(1) during a 3-year period for the initial State

7 plan; and

8 ‘‘(2) during a 2-year period for subsequent

9 State plans.

10 ‘‘(c) REQUIREMENTS OF A PLAN.—

11 ‘‘(1) LEAD AGENCY.—The State plan shall

12 identify the lead agency designated under section

13 491D.

14 ‘‘(2) POLICIES AND PROCEDURES.—The State

15 plan shall provide the following assurances:

16 ‘‘(A) GUARANTEE OF CHILD CARE FOR

17 CERTAIN ELIGIBLE CHILDREN.—Assurances

18 that the State will guarantee child care services

19 for which assistance is provided under this part,

20 to eligible children described in section

21 491A(4)(A).

22 ‘‘(B) PARENTAL CHOICE OF PROVIDERS.—

23 Assurances that—

24 ‘‘(i) the parent or parents of each eli25 gible child within the State who receives or
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•S 746 IS

1 is offered child care services for which as2 sistance is provided under this part, other

3 than through assistance provided under

4 paragraph (3)(C), are given the option ei5 ther—

6 ‘‘(I) to enroll such child with a

7 child care provider that has a grant or

8 contract for the provision of such

9 services; or

10 ‘‘(II) to receive a child care cer11 tificate;

12 ‘‘(ii) in cases in which the parent se13 lects the option described in clause (i)(I),

14 the child will be enrolled with the eligible

15 provider selected by the parent to the max16 imum extent practicable; and

17 ‘‘(iii) child care certificates offered to

18 parents selecting the option described in

19 clause (i)(II) shall be of a value commen20 surate with the subsidy value of child care

21 services provided under the option de22 scribed in clause (i)(I);

23 except that nothing in this subparagraph shall

24 require a State to have a child care certificate

25 program in operation prior to October 1, 1998.
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1 ‘‘(C) UNLIMITED PARENTAL ACCESS.—As2 surances that procedures are in effect within

3 the State to ensure that child care providers

4 who provide services for which assistance is

5 made available under this part afford parents

6 unlimited access to their children and to the

7 providers caring for their children, during the

8 normal hours of operation of such providers and

9 whenever such children are in the care of such

10 providers.

11 ‘‘(D) PARENTAL COMPLAINTS.—Assur12 ances that the State maintains a record of sub13 stantiated parental complaints and makes infor14 mation regarding such parental complaints

15 available to the public on request.

16 ‘‘(E) CONSUMER EDUCATION.—Assurances

17 that consumer education information will be

18 made available to parents and the general pub19 lic within the State concerning licensing and

20 regulatory requirements, complaint procedures,

21 and policies and practices relative to child care

22 services within the State.

23 ‘‘(F) COMPLIANCE WITH STATE AND

24 LOCAL REGULATORY REQUIREMENTS.—Assur25 ances that—
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1 ‘‘(i) all providers of child care services

2 within the State for which assistance is

3 provided under this part comply with all li4 censing or regulatory requirements (includ5 ing registration requirements) applicable

6 under State and local law; and

7 ‘‘(ii) providers within the State that

8 are not required to be licensed or regulated

9 under State or local law are required to be

10 registered with the State prior to payment

11 being made under this part, in accordance

12 with procedures designed to facilitate ap13 propriate payment to such providers, and

14 to permit the State to furnish information

15 to such providers, including information on

16 the availability of health and safety train17 ing, technical assistance, and any relevant

18 information pertaining to regulatory re19 quirements in the State, and that such

20 providers shall be permitted to register

21 with the State after selection by the par22 ents of eligible children and before such

23 payment is made.

24 This subparagraph shall not be construed to

25 prohibit a State from imposing more stringent
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1 standards and licensing or regulatory require2 ments on child care providers within the State

3 that provide services for which assistance is

4 provided under this part than the standards or

5 requirements imposed on other child care pro6 viders in the State.

7 ‘‘(G) ESTABLISHMENT OF HEALTH AND

8 SAFETY REQUIREMENTS.—Assurances that

9 there are in effect within the State, under State

10 or local law, requirements designed to protect

11 the health and safety of children that are appli12 cable to child care providers that provide serv13 ices for which assistance is made available

14 under this part. Such requirements shall in15 clude—

16 ‘‘(i) the prevention and control of in17 fectious diseases (including immunization);

18 ‘‘(ii) building and physical premises

19 safety; and

20 ‘‘(iii) minimum health and safety

21 training appropriate to the provider set22 ting.

23 Nothing in this subparagraph shall be con24 strued to require the establishment of addi25 tional health and safety requirements for child
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•S 746 IS

1 care providers that are subject to health and

2 safety requirements in the categories described

3 in this subparagraph on the date of enactment

4 of this part under State or local law.

5 ‘‘(H) COMPLIANCE WITH STATE AND

6 LOCAL HEALTH AND SAFETY REQUIREMENTS.—

7 Assurances that procedures are in effect to en8 sure that child care providers within the State

9 that provide services for which assistance is

10 provided under this part comply with all appli11 cable State or local health and safety require12 ments as described in subparagraph (G).

13 ‘‘(I) REDUCTION IN STANDARDS.—Assur14 ances that if the State reduces the level of

15 standards applicable to child care services pro16 vided in the State on the date of enactment of

17 this part, the State shall inform the Secretary

18 of the rationale for such reduction in the an19 nual report of the State described in section

20 491L.

21 ‘‘(J) REVIEW OF STATE LICENSING AND

22 REGULATORY REQUIREMENTS.—Assurances

23 that not later than 18 months after the date of

24 the submission of the application under this

25 section, the State will complete a full review of
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1 the law applicable to, and the licensing and reg2 ulatory requirements and policies of, each li3 censing agency that regulates child care services

4 and programs in the State unless the State has

5 reviewed such law, requirements, and policies in

6 the 3-year period ending on the date of the en7 actment of this part.

8 ‘‘(K) SUPPLEMENTATION.—Assurances

9 that funds received under this part by the State

10 will be used only to supplement, not to sup11 plant, the amount of Federal, State, and local

12 funds otherwise expended for the support of

13 child care services and related programs in the

14 State.

15 ‘‘(3) USE OF BLOCK GRANT FUNDS.—

16 ‘‘(A) GENERAL REQUIREMENT.—The State

17 plan shall provide that the State will use the

18 amounts provided to the State for each fiscal

19 year under this part as required under subpara20 graphs (B) and (C).

21 ‘‘(B) CHILD CARE SERVICES.—Subject to

22 the reservation contained in subparagraph (C),

23 and subject to the child care guarantee for cer24 tain children contained in 491A 4(A)(i) and (ii)
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1 the State shall use amounts provided to the

2 State for each fiscal year under this part for—

3 ‘‘(i) child care services, that meet the

4 requirements of this part, that are pro5 vided to eligible children in the State using

6 funding methods provided for in subsection

7 (c)(2)(B)—

8 ‘‘(I) without the imposition of a

9 fee with respect to services provided

10 to children described in section

11 491(a)(5)(A)(i); and

12 ‘‘(II) on a sliding fee scale basis

13 with respect to eligible children not

14 described section 491(a)(5)(A)(i), with

15 priority being given for services pro16 vided to children of families with very

17 low family incomes (taking into con18 sideration family size) and to children

19 with special needs; and

20 ‘‘(ii) activities designed to improve the

21 availability and quality of child care.

22 ‘‘(C) ACTIVITIES TO IMPROVE THE QUAL23 ITY OF CHILD CARE AND TO INCREASE THE

24 AVAILABILITY OF EARLY CHILDHOOD DEVELOP25 MENT AND BEFORE- AND AFTER-SCHOOL CARE
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1 SERVICES.—The State shall reserve 25 percent

2 of the amounts provided to the State for each

3 fiscal year under this part to carry out activities

4 designed to improve the quality of child care (as

5 described in section 491G), to provide before6 and after-school and early childhood develop7 ment services (as described in section 491H),

8 and to provide for infrastructure development

9 (as described in section 491I).

10 ‘‘(4) PAYMENT RATES.—

11 ‘‘(A) IN GENERAL.—The State plan shall

12 provide assurances that payment rates for the

13 provision of child care services for which assist14 ance is provided under this part are sufficient

15 to ensure equal access for eligible children to

16 comparable child care services in the State or

17 substate area that are provided to children

18 whose parents are not eligible to receive assist19 ance under this part or for child care assistance

20 under any other Federal or State programs.

21 Such payment rates shall take into account the

22 variations in the costs of providing child care in

23 different settings and to children of different

24 age groups, and the additional costs of provid25 ing child care for children with special needs.
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•S 746 IS

1 ‘‘(B) CONSTRUCTION.—Nothing in this

2 paragraph shall be construed to create a private

3 right of action.

4 ‘‘(5) SLIDING FEE SCALE.—The State plan

5 shall provide that the State will establish and peri6 odically revise, by rule, a sliding fee scale that pro7 vides for cost sharing by the families that receive

8 child care services for which assistance is provided

9 under this part.

10 ‘‘(d) APPROVAL OF APPLICATION.—The Secretary

11 shall approve an application that satisfies the require12 ments of this section.

13 ‘‘SEC. 491F. LIMITATIONS ON USE OF FUNDS.

14 ‘‘(a) NO ENTITLEMENT TO CONTRACT OR GRANT.—

15 Nothing in this part shall be construed—

16 ‘‘(1) to entitle any child care provider or recipi17 ent of a child care certificate to any contract, grant

18 or benefit; or

19 ‘‘(2) to limit the right of any State to impose

20 additional limitations or conditions on contracts or

21 grants funded under this part.

22 ‘‘(b) USE OF FUNDS FOR ADMINISTRATIVE PUR23 POSES.—A State shall not use more than 10 percent of

24 the amount it receives under this part for the administra25 tion of the plan approved under this part.
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1 ‘‘SEC. 491G. ACTIVITIES TO IMPROVE THE QUALITY OF

2 CHILD CARE.

3 ‘‘(a) IN GENERAL.—A State that receives financial

4 assistance under this part shall use 20 percent of the

5 amounts reserved by such State under section

6 491E(c)(3)(C) for each fiscal year for one or more of the

7 following:

8 ‘‘(1) RESOURCE AND REFERRAL PROGRAMS.—

9 Operating directly or providing financial assistance

10 to private nonprofit organizations or public organiza11 tions (including units of general purpose local gov12 ernment) for the development, establishment, expan13 sion, operation, and coordination of resource and re14 ferral programs specifically related to child care.

15 ‘‘(2) GRANTS OR LOANS TO ASSIST IN MEETING

16 STATE AND LOCAL STANDARDS.—Making grants or

17 providing loans to child care providers to assist such

18 providers in meeting applicable State and local child

19 care standards.

20 ‘‘(3) MONITORING OF COMPLIANCE WITH LI21 CENSING AND REGULATORY REQUIREMENTS.—Im22 proving the monitoring of compliance with, and en23 forcement of, State and local licensing and regu24 latory requirements (including registration require25 ments).
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1 ‘‘(4) TRAINING.—Providing training and tech2 nical assistance in areas appropriate to the provision

3 of child care services, such as training in health and

4 safety, nutrition, first aid, the recognition of commu5 nicable diseases, child abuse detection and preven6 tion, and the care of children with special needs.

7 ‘‘(5) COMPENSATION.—Improving salaries and

8 other compensation paid to full- and part-time staff

9 who provide child care services for which assistance

10 is provided under this part.

11 ‘‘(b) CREATIVE CHILD CARE OPTIONS.—Developing

12 creative child care options, such as part-time, evening, and

13 weekend child care for parents who do not work during

14 day shifts on weekdays, and child care services located

15 close to schools for teenage parents.

16 ‘‘SEC. 491H. EARLY CHILDHOOD DEVELOPMENT AND

17 BEFORE- AND AFTER-SCHOOL SERVICES.

18 ‘‘(a) IN GENERAL.—A State that receives financial

19 assistance under this part shall use 75 percent of the

20 amounts reserved by such State under section

21 491E(c)(3)(C) for each fiscal year to establish or expand

22 and conduct, through the provision of grants or contracts,

23 early childhood development or before- and after-school

24 child care programs, or both.
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•S 746 IS

1 ‘‘(b) PROGRAM DESCRIPTION.—Programs that re2 ceive assistance under this section shall—

3 ‘‘(1) in the case of early childhood development

4 programs, consist of services that are not intended

5 to serve as a substitute for compulsory academic

6 programs but that are intended to provide an envi7 ronment that enhances the educational, social, cul8 tural, emotional, and recreational development of

9 children; and

10 ‘‘(2) in the case of before- and after-school child

11 care programs—

12 ‘‘(A) be provided Monday through Friday,

13 including school holidays and vacation periods

14 other than legal public holidays, to children at15 tending early childhood development programs,

16 kindergarten, or elementary or secondary school

17 classes during such times of the day and on

18 such days that regular instructional services are

19 not in session; and

20 ‘‘(B) not be intended to extend or replace

21 the regular academic program.

22 ‘‘(c) PRIORITY FOR ASSISTANCE.—In awarding

23 grants and contracts under this section, the State shall

24 give the highest priority to geographic areas within the

25 State that are eligible to receive grants under section 1006
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•S 746 IS

1 of the Elementary and Secondary Education Act of 1965,

2 and shall then give priority to—

3 ‘‘(1) any other areas with concentrations of

4 poverty; and

5 ‘‘(2) any areas with very high or very low popu6 lation densities.

7 ‘‘SEC. 491I. INFRASTRUCTURE DEVELOPMENT.

8 ‘‘A State that receives financial assistance under this

9 part shall use 5 percent of the amounts received by the

10 State under section 491E(c)(3)(C) for the development of

11 infrastructure to be used to provide child care services in

12 accordance with this part, including the construction of

13 or renovation of child care facilities.

14 ‘‘SEC. 491J. ADMINISTRATION AND ENFORCEMENT.

15 ‘‘(a) ADMINISTRATION.—The Secretary shall—

16 ‘‘(1) coordinate all activities of the Department

17 of Health and Human Services relating to child

18 care, and, to the maximum extent practicable, co19 ordinate such activities with similar activities of

20 other Federal entities;

21 ‘‘(2) collect, publish and make available to the

22 public a listing of State child care standards at least

23 once every 3 years; and
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•S 746 IS

1 ‘‘(3) provide technical assistance to assist

2 States to carry out this part, including assistance on

3 a reimbursable basis.

4 ‘‘(b) ENFORCEMENT.—

5 ‘‘(1) REVIEW OF COMPLIANCE WITH STATE

6 PLAN.—The Secretary shall review and monitor

7 State compliance with this part and the plan ap8 proved under section 491E(d) for the State, and

9 shall have the power to terminate payments to the

10 State in accordance with paragraph (2).

11 ‘‘(2) NONCOMPLIANCE.—

12 ‘‘(A) IN GENERAL.—If the Secretary, after

13 reasonable notice to a State and opportunity for

14 a hearing, finds that—

15 ‘‘(i) there has been a failure by the

16 State to comply substantially with any pro17 vision or requirement set forth in the plan

18 approved under section 491E(d) for the

19 State; or

20 ‘‘(ii) in the operation of any program

21 for which assistance is provided under this

22 part there is a failure by the State to com23 ply substantially with any provision of this

24 part;
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•S 746 IS

1 the Secretary shall notify the State of the find2 ing and that no further payments may be made

3 to such State under this part (or, in the case

4 of noncompliance in the operation of a program

5 or activity, that no further payments to the

6 State will be made with respect to such pro7 gram or activity) until the Secretary is satisfied

8 that there is no longer any such failure to com9 ply or that the noncompliance will be promptly

10 corrected.

11 ‘‘(B) ADDITIONAL SANCTIONS.—In the

12 case of a finding of noncompliance made pursu13 ant to subparagraph (A), the Secretary may, in

14 addition to imposing the sanctions described in

15 such subparagraph, impose other appropriate

16 sanctions, including recoupment of money im17 properly expended for purposes prohibited or

18 not authorized by this part, and disqualification

19 from the receipt of financial assistance under

20 this part.

21 ‘‘(C) NOTICE.—The notice required under

22 subparagraph (A) shall include a specific identi23 fication of any additional sanction being im24 posed under subparagraph (B).
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1 ‘‘(3) ISSUANCE OF RULES.—The Secretary shall

2 establish by rule procedures for—

3 ‘‘(A) receiving, processing, and determin4 ing the validity of complaints concerning any

5 failure of a State to comply with the State plan

6 or any requirement of this part; and

7 ‘‘(B) imposing sanctions under this sec8 tion.

9 ‘‘SEC. 491K. PAYMENTS.

10 ‘‘(a) IN GENERAL.—

11 ‘‘(1) PAYMENTS.—Each State that has an ap12 plication approved by the Secretary under section

13 491E(d) shall be entitled to a payment under this

14 section for each fiscal year in an amount equal to

15 the sum of—

16 ‘‘(A) the hold harmless amount determined

17 under subsection (c); and

18 ‘‘(B) the additional amount determined

19 under subsection (d).

20 ‘‘(2) STATE ENTITLEMENT.—The provisions of

21 this part constitute budget authority in advance of

22 appropriations Acts, and represent the obligation of

23 the Federal Government to provide for the payment

24 to States of the amount described in paragraph (1).

25 ‘‘(b) METHOD OF PAYMENT.—
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•S 746 IS

1 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

2 the Secretary may make payments to a State in in3 stallments, and in advance or by way of reimburse4 ment, with necessary adjustments on account of

5 overpayments or underpayments, as the Secretary

6 may determine.

7 ‘‘(2) LIMITATION.—The Secretary may not

8 make such payments in a manner that prevents the

9 State from complying with the requirement specified

10 in section 491E(c)(3).

11 ‘‘(c) HOLD HARMLESS AMOUNT.—

12 ‘‘(1) IN GENERAL.—For purposes of subsection

13 (a), the hold harmless amount determined under this

14 subsection is the amount equal to the aggregate

15 amount of Federal funds received by a State under

16 the child care programs specified in paragraph (2)

17 (as such programs were in effect in fiscal year 1995)

18 for fiscal year 1995.

19 ‘‘(2) CHILD CARE PROGRAMS SPECIFIED.—The

20 child care programs specified in this paragraph are

21 the following:

22 ‘‘(A) The child care and development block

23 grant program operated in accordance with the

24 Child Care and Development Block Grant Act

25 of 1990 (42 U.S.C. 9858A–9858Q).
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•S 746 IS

1 ‘‘(B) The AFDC–JOBS guaranteed child

2 care program operated in accordance with sec3 tion 402(g)(1)(A)(i) of this Act (42 U.S.C.

4 602(g)(1)(A)(i)).

5 ‘‘(C) The at-risk child care program oper6 ated in accordance with section 402(i) of this

7 Act (42 U.S.C. 602(i)).

8 ‘‘(D) The transitional child care program

9 operated in accordance with section

10 402(g)(1)(A)(ii) of this Act (42 U.S.C.

11 602(g)(1)(A)(ii)).

12 ‘‘(E) The child development associate pro13 gram operated in accordance with title VI of

14 the Human Services Reauthorization Act of

15 1986 (commonly known as the Child Develop16 ment Associate Scholarship Assistance Act of

17 1985) (42 U.S.C. 10901 et seq.).

18 ‘‘(F) The State dependent care planning

19 and development grant program operated in ac20 cordance with subchapter E of chapter 8 of

21 subtitle A of title VI of the Omnibus Budget

22 Reconciliation Act of 1981 (commonly known as

23 the State Dependent Care Development Grants

24 Act) (42 U.S.C. 9871 et seq.).

25 ‘‘(d) ADDITIONAL AMOUNT.—
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1 ‘‘(1) TERRITORIES, POSSESSIONS, AND INDIAN

2 TRIBES.—

3 ‘‘(A) IN GENERAL.—With respect to a

4 State that is a territory, possession, or Indian

5 tribe, the additional amount determined under

6 this subsection for a fiscal year is an amount

7 equal to the lesser of—

8 ‘‘(i) 80 percent of the amount that

9 such territory, possession, or Indian tribe

10 expended under the plan for child care

11 services, activities designed to improve the

12 quality of child care, and before- and after13 school and early childhood development

14 services (including the cost of administra15 tion of the plan) in excess of the hold16 harmless amount determined under sub17 section (c); or

18 ‘‘(ii) an amount that bears the same

19 ratio to the remainder amount determined

20 under subparagraph (B) as—

21 ‘‘(I) the hold harmless amount

22 received by the territory, possession,

23 or Indian tribe under subsection (c) in

24 such fiscal year; bears
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1 ‘‘(II) to the total hold harmless

2 amount determined for all territories,

3 possessions, Indian tribes, and other

4 States under subsection (c) in such

5 fiscal year.

6 ‘‘(B) REMAINDER AMOUNT.—For purposes

7 of this subparagraph, the remainder amount de8 termined under this subparagraph for a fiscal

9 year is equal to—

10 ‘‘(i) the amount described in section

11 491B(b) for such fiscal year; minus

12 ‘‘(ii) the aggregate hold harmless

13 amount determined under subsection (c)

14 for all territories, possessions, Indian

15 tribes, and other States for such fiscal

16 year.

17 ‘‘(2) OTHER STATES.—

18 ‘‘(A) IN GENERAL.—With respect to a

19 State that is not a State described in paragraph

20 (1), the additional amount determined under

21 this subsection for a fiscal year is an amount

22 equal to the lesser of—

23 ‘‘(i) 80 percent of the amount that the

24 State expended under the plan for child

25 care services, activities designed to improve
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1 the quality of child care, and before- and

2 after-school and early childhood develop3 ment services (including the cost of admin4 istration of the plan) during the fiscal year

5 in excess of the hold-harmless amount de6 termined under subsection (b) for the fis7 cal year; or

8 ‘‘(ii) the State’s child poverty amount

9 determined under subparagraph (B) for

10 the fiscal year.

11 ‘‘(B) CHILD POVERTY AMOUNT.—For pur12 poses of subparagraph (A), the child poverty

13 amount determined under this subparagraph

14 for a fiscal year for a State (other than a State

15 described in paragraph (1)) is an amount equal

16 to the product of—

17 ‘‘(i)(I) the amount described in sec18 tion 491B(b) for the fiscal year; minus

19 ‘‘(II) the sum of the aggregate

20 amounts determined under—

21 ‘‘(aa) subsection (c) for all

22 States; and

23 ‘‘(bb) paragraph (1) for terri24 tories, possessions, and Indian tribes

25 in such fiscal year; and
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1 ‘‘(ii) an amount equal to—

2 ‘‘(I) the number of children 17

3 years of age and younger living in

4 families in the State in the fiscal year

5 with annual income lower than the in6 come official poverty line (as defined

7 by the Office of Management and

8 Budget, and revised annually in ac9 cordance with section 673(2) of the

10 Omnibus Budget Reconciliation Act of

11 1981) that is applicable to a family of

12 the size involved; divided by

13 ‘‘(II) the number of such children

14 living in all States (other than States

15 described in paragraph (1)) in the fis16 cal year.

17 ‘‘(e) DATA AND INFORMATION.—The Secretary shall

18 use decennial census data to determine the child poverty

19 amount under subsection (d)(2)(B)(ii) in a State until

20 such time as the Bureau of the Census develops a meth21 odology to compile more frequent estimates to make such

22 determinations.

23 ‘‘(f) SPENDING OF FUNDS BY STATE.—Payments to

24 a State under this section for any fiscal year may be ex-
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1 pended by the State in that fiscal year or in the succeeding

2 3 fiscal years.

3 ‘‘SEC. 491L. ANNUAL REPORT AND AUDITS.

4 ‘‘(a) ANNUAL REPORT.—Not later than December

5 31, 1998, and annually thereafter, a State that receives

6 assistance under this part shall prepare and submit to the

7 Secretary a report—

8 ‘‘(1) specifying the uses for which the State ex9 pended funds specified under paragraph (3) of sec10 tion 491E(c) and the amount of funds expended for

11 such uses;

12 ‘‘(2) containing available data on the manner in

13 which the child care needs of families in the State

14 are being fulfilled, including information concern15 ing—

16 ‘‘(A) the number of children being assisted

17 with funds provided under this part, and under

18 other Federal child care and pre-school pro19 grams;

20 ‘‘(B) the type and number of child care

21 programs, child care providers, caregivers, and

22 support personnel located in the State;

23 ‘‘(C) salaries and other compensation paid

24 to full- and part-time staff who provide child

25 care services; and
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1 ‘‘(D) activities in the State to encourage

2 public-private partnerships that promote busi3 ness involvement in meeting child care needs;

4 ‘‘(3) describing the extent to which the afford5 ability and availability of child care services has in6 creased;

7 ‘‘(4) if applicable, describing, in either the first

8 or second such report, the findings of the review of

9 State licensing and regulatory requirements and

10 policies described in section 491E(c), including a de11 scription of actions taken by the State in response

12 to such reviews;

13 ‘‘(5) containing an explanation of any State ac14 tion, in accordance with section 491E, to reduce the

15 level of child care standards in the State, if applica16 ble;

17 ‘‘(6) describing the standards and health and

18 safety requirements applicable to child care provid19 ers in the State, including a description of State ef20 forts to improve the quality of child care; and

21 ‘‘(7) containing measurements of the State’s

22 success in meeting child care needs of low-income

23 families in the State in accordance with the perform24 ance-based and outcome-based measures developed

25 in accordance with subsection (c);
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1 during the period for which such report is required to be

2 submitted.

3 ‘‘(b) AUDITS.—

4 ‘‘(1) REQUIREMENT.—A State shall, after the

5 close of each program period covered by an applica6 tion approved under section 491E(d) audit its ex7 penditures during such program period from

8 amounts received under this part.

9 ‘‘(2) INDEPENDENT AUDITOR.—Audits under

10 this subsection shall be conducted by an entity that

11 is independent of any agency administering activities

12 that receive assistance under this part and be in ac13 cordance with generally accepted auditing principles.

14 ‘‘(3) SUBMISSION.—Not later than 30 days

15 after the completion of an audit under this sub16 section, the State shall submit a copy of the audit

17 to the legislature of the State and to the Secretary.

18 ‘‘(4) REPAYMENT OF AMOUNTS.—Each State

19 shall repay to the United States any amounts deter20 mined through an audit under this subsection not to

21 have been expended in accordance with this part, or

22 the Secretary may offset such amounts against any

23 other amount to which the State is or may be enti24 tled under this part.
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1 ‘‘(c) DEVELOPMENT OF OUTCOME AND PERFORM2 ANCE-BASED MEASURES.—

3 ‘‘(1) IN GENERAL.—Not later than 12 months

4 after the date of the enactment of the Economic Op5 portunity and Family Responsibility Act of 1995,

6 the Secretary, in consultation with the States, shall

7 develop and publish in the Federal Register perform8 ance-based and outcome-based measures for deter9 mining a State’s success in meeting the child care

10 needs of low-income families in a State.

11 ‘‘(2) REPLACEMENT OF OLD STANDARDS.—The

12 measures developed under paragraph (1) shall, upon

13 publication of such measures in the Federal Reg14 ister, replace any matter required in the report

15 under subsection (a) as the Secretary may determine

16 appropriate.

17 ‘‘SEC. 491M. REPORT BY SECRETARY.

18 ‘‘Not later than July 31, 1999, and annually there19 after, the Secretary shall prepare and submit to the Com20 mittee on Ways and Means of the House of Representa21 tives and the Committee on Finance of the Senate a report

22 that contains a summary and analysis of the data and in23 formation provided to the Secretary in the State reports

24 submitted under section 491L. Such report shall include

25 an assessment, and where appropriate, recommendations
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•S 746 IS

1 for the Congress concerning efforts that should be under2 taken to improve the access of the public to quality and

3 affordable child care in the United States.

4 ‘‘SEC. 491N. LIMITATIONS ON USE OF FINANCIAL ASSIST5 ANCE FOR CERTAIN PURPOSES.

6 ‘‘(a) SECTARIAN PURPOSES AND ACTIVITIES.—No fi7 nancial assistance provided under this part, pursuant to

8 the choice of a parent under section 491E(c)(2)(A)(i)(I)

9 or through any other grant or contract under the State

10 plan, shall be expended for any sectarian purpose or activ11 ity, including sectarian worship or instruction.

12 ‘‘(b) TUITION.—With regard to services provided to

13 students enrolled in grades 1 through 12, no financial as14 sistance provided under this part shall be expended for—

15 ‘‘(1) any services provided to such students dur16 ing the regular school day;

17 ‘‘(2) any services for which such students re18 ceive academic credit toward graduation; or

19 ‘‘(3) any instructional services which supplant

20 or duplicate the academic program of any public or

21 private school.

22 ‘‘SEC. 491O. NONDISCRIMINATION.

23 ‘‘(a) RELIGIOUS NONDISCRIMINATION.—

24 ‘‘(1) CONSTRUCTION.—
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1 ‘‘(A) IN GENERAL.—Except as provided in

2 subparagraph (B), nothing in this section shall

3 be construed to modify or affect the provisions

4 of any other Federal law or regulation that re5 lates to discrimination in employment on the

6 basis of religion.

7 ‘‘(B) EXCEPTION.—A sectarian organiza8 tion may require that employees adhere to the

9 religious tenets and teachings of such organiza10 tion, and such organization may require that

11 employees adhere to rules forbidding the use of

12 drugs or alcohol.

13 ‘‘(2) DISCRIMINATION AGAINST CHILD.—

14 ‘‘(A) IN GENERAL.—A child care provider

15 (other than a family child care provider) that

16 receives assistance under this part shall not dis17 criminate against any child on the basis of reli18 gion in providing child care services.

19 ‘‘(B) NON-FUNDED CHILD CARE SLOTS.—

20 Nothing in this section shall prohibit a child

21 care provider from selecting children for child

22 care slots that are not funded directly with as23 sistance provided under this part because such

24 children or their family members participate on
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•S 746 IS

1 a regular basis in other activities of the organi2 zation that owns or operates such provider.

3 ‘‘(3) EMPLOYMENT IN GENERAL.—

4 ‘‘(A) PROHIBITION.—A child care provider

5 that receives assistance under this part shall

6 not discriminate in employment on the basis of

7 the religion of the prospective employee if such

8 employee’s primary responsibility is or will be

9 working directly with children in the provision

10 of child care services.

11 ‘‘(B) QUALIFIED APPLICANTS.—If 2 or

12 more prospective employees are qualified for

13 any position with a child care provider receiving

14 assistance under this part, nothing in this sec15 tion shall prohibit such child care provider from

16 employing a prospective employee who is al17 ready participating on a regular basis in other

18 activities of the organization that owns or oper19 ates such provider.

20 ‘‘(C) PRESENT EMPLOYEES.—This para21 graph shall not apply to employees of child care

22 providers receiving assistance under this part if

23 such employees are employed with the provider

24 on the date of enactment of this part.
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1 ‘‘(4) EMPLOYMENT AND ADMISSION PRAC2 TICES.—Notwithstanding paragraphs (1)(B), (2),

3 and (3), if assistance provided under this part, and

4 any other Federal or State program, amounts to 80

5 percent or more of the operating budget of a child

6 care provider that receives such assistance, the Sec7 retary shall not permit such provider to receive any

8 further assistance under this part unless the grant

9 or contract relating to the financial assistance, or

10 the employment and admissions policies of the pro11 vider, specifically provides that no person with re12 sponsibilities in the operation of the child care pro13 gram, project, or activity of the provider will dis14 criminate against any individual in employment, if

15 such employee’s primary responsibility is or will be

16 working directly with children in the provision of

17 child care, or admissions because of the religion of

18 such individual.

19 ‘‘(b) EFFECT ON STATE LAW.—Nothing in this part

20 shall be construed to supersede or modify any provision

21 of a State constitution or State law that prohibits the ex22 penditure of public funds in or by sectarian institutions,

23 except that no provision of a State constitution or State

24 law shall be construed to prohibit the expenditure in or
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•S 746 IS

1 by sectarian institutions of any Federal funds provided

2 under this part.

3 ‘‘SEC. 491P. PARENTAL RIGHTS AND RESPONSIBILITIES.

4 ‘‘Nothing in this part shall be construed or applied

5 in any manner to infringe on or usurp the moral and legal

6 rights and responsibilities of parents or legal guardians.

7 ‘‘SEC. 491Q. SEVERABILITY.

8 ‘‘If any provision of this part or the application there9 of to any person or circumstance is held invalid, the inva10 lidity shall not affect other provisions of applications of

11 this part which can be given effect without regard to the

12 invalid provision or application, and to this end the provi13 sions of this part shall be severable.

14 ‘‘SEC. 491R. MISCELLANEOUS PROVISIONS.

15 ‘‘Notwithstanding any other law, the value of any

16 child care provided or arranged (or any amount received

17 as payment for such care or reimbursement for costs in18 curred for such care) under this part shall not be treated

19 as income for purposes of any other Federal or federally20 assisted program that bases eligibility, or the amount of

21 benefits, on need.’’.
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1 SEC. 402. REPEALS AND TECHNICAL AND CONFORMING

2 AMENDMENTS.

3 (a) CHILD CARE AND DEVELOPMENT BLOCK GRANT

4 OF 1990.—The Child Care and Development Block Grant

5 of 1990 (42 U.S.C. 9858 et seq.) is repealed.

6 (b) CHILD DEVELOPMENT ASSOCIATE SCHOLARSHIP

7 ASSISTANCE ACT OF 1985.—Title VI of the Human Serv8 ices Reauthorization Act of 1986 (commonly known as the

9 Child Development Associate Scholarship Assistance Act

10 of 1985) (42 U.S.C. 10901 et seq.) is repealed.

11 (c) STATE DEPENDENT CARE DEVELOPMENT

12 GRANTS ACT.—Subchapter E of chapter 8 of subtitle A

13 of title VI of the Omnibus Budget Reconciliation Act of

14 1981 (commonly known as the State Dependent Care De15 velopment Grants Act) (42 U.S.C. 9871 et seq.) is re16 pealed.

17 (d) AFDC, AFDC AT-RISK, AND TRANSITIONAL

18 CHILD CARE PROGRAMS.—

19 (1) IN GENERAL.—Section 402 (42 U.S.C. 602)

20 is amended—

21 (A) in subsection (g)—

22 (i) by striking paragraph (1), and

23 paragraphs (3) through (7); and

24 (ii) by striking ‘‘(g)’’ and all that fol25 lows through ‘‘(2) In’’ and inserting ‘‘(g)

26 In’’; and
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1 (B) by striking subsection (i).

2 (2) TECHNICAL AND CONFORMING AMEND3 MENTS.—

4 (A) FOOD STAMP ACT OF 1977.—Section

5 17(b)(3)(C) of the Food Stamp Act of 1977 (7

6 U.S.C. 2026(b)(3)(C)) is amended by striking

7 ‘‘(but not including the provision of transitional

8 benefits under clauses (ii) through (vii) of sec9 tion 402(g)(1)(A))’’.

10 (B) AFDC STATE PLAN.—Section 402 (42

11 U.S.C. 602) is amended—

12 (i) in subsection (a)(19)—

13 (I) in subparagraph (B)(i)(I), by

14 striking ‘‘section 402(g)’’ and insert15 ing ‘‘part G’’;

16 (II) in subparagraph (C)(iii)(II),

17 by striking ‘‘section 402(g)’’ and in18 serting ‘‘part G’’;

19 (III) in subparagraph (D), by

20 striking ‘‘section 402(g)’’ and insert21 ing ‘‘part G’’; and

22 (IV) in subparagraph (F)(iv), by

23 striking ‘‘day care, transportation,’’

24 and inserting ‘‘transportation’’; and
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1 (ii) in subsection (g), as amended by

2 paragraph (1) by striking ‘‘(in addition to

3 guaranteeing child care under paragraph

4 (1))’’ and inserting ‘‘(in addition to the

5 provision by the State of child care under

6 part G)’’.

7 (C) AFDC PAYMENTS TO STATES.—Sec8 tion 403 (42 U.S.C. 603) is amended—

9 (i) in subsection (e)—

10 (I) in the first sentence, by strik11 ing ‘‘, 402(a)(43), and 402(g)(1)(A),’’

12 and inserting ‘‘and 402(a)(43)’’; and

13 (II) by striking the second sen14 tence;

15 (ii) in subsection (l)(1)(A)—

16 (I) in the matter preceding clause

17 (i), by striking ‘‘(including expendi18 tures for child care under section

19 402(g)(1)(A)(i), but only in the case

20 of a State with respect to which sec21 tion 1108 applies)’’; and

22 (II) in clause (ii)(I), by striking

23 ‘‘section 402(g)(2)’’ and inserting

24 ‘‘section 402(g)’’; and

25 (iii) by striking subsection (n).
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1 (D) FAMILY SUPPORT ACT OF 1988.—Sec2 tion 502 of the Family Support Act of 1988

3 (42 U.S.C. 1315 note) is repealed.

4 (E) HEAD START ACT.—Section 642(c) of

5 the Head Start Act (42 U.S.C. 9837(c)) is

6 amended by striking ‘‘section 402(g) of the So7 cial Security Act, and other’’.

8 SEC. 403. STATE OPTION TO EXTEND TRANSITIONAL MED9 ICAID BENEFITS.

10 (a) OPTIONAL EXTENSION OF MEDICAID ENROLL11 MENT FOR FORMER AFDC RECIPIENTS FOR 1 ADDI12 TIONAL YEAR.—

13 (1) IN GENERAL.—Section 1925(b)(1) (42

14 U.S.C. 1396r–6(b)(1)) is amended by striking the

15 period at the end and inserting the following: ‘‘, and

16 may provide that the State shall offer to each such

17 family the option of extending coverage under this

18 subsection for any of the first 2 succeeding 6-month

19 periods, in the same manner and under the same

20 conditions as the option of extending coverage under

21 this subsection for the first succeeding 6-month pe22 riod.’’.

23 (2) CONFORMING AMENDMENTS.—

24 (A) IN GENERAL.—Section 1925 (42

25 U.S.C. 1396r–6) is amended—
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1 (i) in subsection (b)—

2 (I) in the heading, by striking

3 ‘‘EXTENSION’’ and inserting ‘‘EXTEN4 SIONS’’;

5 (II) in the heading of paragraph

6 (1), by striking ‘‘REQUIREMENT’’ and

7 inserting ‘‘IN GENERAL’’;

8 (III) in paragraph (2)(B)(ii)—

9 (aa) in the heading, by

10 striking ‘‘PERIOD’’ and inserting

11 ‘‘PERIODS’’; and

12 (bb) by striking ‘‘in the pe13 riod’’ and inserting ‘‘in each of

14 the 6-month periods’’;

15 (IV) in paragraph (3)(A), by

16 striking ‘‘the 6-month period’’ and in17 serting ‘‘any 6-month period’’;

18 (V) in paragraph (4)(A), by

19 striking ‘‘the extension period’’ and

20 inserting ‘‘any extension period’’; and

21 (VI) in paragraph (5)(D)(i), by

22 striking ‘‘is a 3-month period’’ and all

23 that follows and inserting the follow24 ing: ‘‘is, with respect to a particular

25 6-month additional extension period
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•S 746 IS

1 provided under this subsection, a 3-

2 month period beginning with the first

3 or fourth month of such extension pe4 riod.’’; and

5 (ii) by striking subsection (f).

6 (B) FAMILY SUPPORT ACT.—Section

7 303(f)(2) of the Family Support Act of 1988

8 (42 U.S.C. 602 note) is amended—

9 (i) by striking ‘‘(A)’’; and

10 (ii) by striking subparagraphs (B) and

11 (C).

12 (b) EFFECTIVE DATE.—

13 (1) IN GENERAL.—Except as provided in para14 graph (2), the amendments made by subsection (a)

15 shall apply to calendar quarters beginning on or

16 after October 1, 1996, without regard to whether

17 final regulations to carry out such amendments have

18 been promulgated by such date.

19 (2) WHEN STATE LEGISLATION IS REQUIRED.—

20 In the case of a State plan for medical assistance

21 under title XIX of the Social Security Act which the

22 Secretary of Health and Human Services determines

23 requires State legislation (other than legislation ap24 propriating funds) in order for the plan to meet the

25 additional requirements imposed by the amendments
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•S 746 IS

1 made by subsection (a), the State plan shall not be

2 regarded as failing to comply with the requirements

3 of such title solely on the basis of its failure to meet

4 these additional requirements before the first day of

5 the first calendar quarter beginning after the close

6 of the first regular session of the State legislature

7 that begins after the date of the enactment of this

8 Act. For purposes of the previous sentence, in the

9 case of a State that has a 2-year legislative session,

10 each year of such session shall be deemed to be a

11 separate regular session of the State legislature.

12 TITLE V—EQUITY INVESTMENT

13 SEC. 501. SHORT TITLE.

14 This title may be cited as the ‘‘Equity Investment De15 velopment Act of 1995’’.

16 SEC. 502. DEFINITIONS.

17 For purposes of this title, the following definitions

18 shall apply:

19 (1) AFFILIATE.—The term ‘‘affiliate’’ has the

20 same meaning as in section 2 of the Bank Holding

21 Company Act of 1956.

22 (2) ADJUSTED FACE VALUE.—The term ‘‘ad23 justed face value’’ means, with respect to any certifi24 cate issued under subtitle B, the difference be25 tween—
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1 (A) the face value of the certificate; and

2 (B) any necessary and reasonable expenses

3 incurred by an insured depository institution,

4 the Corporation, or any third party in making

5 an equity investment in a qualified company

6 under subtitle B.

7 (3) APPROPRIATE FEDERAL FINANCIAL SUPER8 VISORY AGENCY.—The term ‘‘appropriate Federal fi9 nancial supervisory agency’’ has the same meaning

10 as in section 803 of the Community Reinvestment

11 Act of 1977.

12 (4) APPROPRIATE SECRETARY.—The term ‘‘ap13 propriate Secretary’’ means—

14 (A) the Secretary of Housing and Urban

15 Development, in the case of any area nominated

16 for designation that is located in an urban area;

17 and

18 (B) the Secretary of Agriculture, in the

19 case of any area nominated for designation that

20 is located in a rural area.

21 (5) BOARD.—The term ‘‘Board’’ means the

22 Board of Governors of the Federal Reserve System.

23 (6) CORPORATION.—The term ‘‘Corporation’’

24 means the corporation established pursuant to sec25 tion 531.
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1 (7) DEPOSIT INSURANCE FUND.—The term

2 ‘‘deposit insurance fund’’ has the same meaning as

3 in section 3 of the Federal Deposit Insurance Act.

4 (8) EQUITY INVESTMENT DEVELOPMENT

5 ZONE.—The term ‘‘equity investment development

6 zone’’ means an area designated as an equity invest7 ment development zone in accordance with subtitle

8 A.

9 (9) FEDERAL LOW-INCOME ASSISTANCE PRO10 GRAM.—The term ‘‘Federal low-income assistance

11 program’’ means—

12 (A) any program conducted under the So13 cial Security Act based on low income or limited

14 assets which, directly or indirectly, provides aid

15 or assistance to individuals;

16 (B) the food stamp program, as defined in

17 section 3(h) of the Food Stamp Act of 1977;

18 (C) any program conducted under the

19 Public Health Service Act based on low income

20 or limited assets which, directly or indirectly,

21 provides aid or assistance to individuals; and

22 (D) any other Federal program based on

23 low-income or limited assets which, directly or

24 indirectly, provides aid or assistance to individ-
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1 uals, or under which aid or assistance is avail2 able for—

3 (i) education;

4 (ii) employment training;

5 (iii) health;

6 (iv) housing;

7 (v) nutrition; or

8 (vi) other social services.

9 (10) INSURED DEPOSITORY INSTITUTION.—The

10 term ‘‘insured depository institution’’ has the same

11 meaning as in section 3 of the Federal Deposit In12 surance Act.

13 (11) LOCAL GOVERNMENT.—The term ‘‘local

14 government’’ means—

15 (A) any county, city, town, township, par16 ish, village, or other general purpose political

17 subdivision of a State; and

18 (B) any combination of political subdivi19 sions described in subparagraph (A) recognized

20 by the appropriate Secretary.

21 (12) MEMBER BANK.—The term ‘‘member

22 bank’’ has the same meaning as in section 1 of the

23 Federal Reserve Act.

24 (13) QUALIFIED COMPANY.—The term ‘‘quali25 fied company’’ means any entity that certifies in
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•S 746 IS

1 writing to any entity seeking to make an equity in2 vestment under subtitle B, that—

3 (A) such entity is or will be located in or

4 near an equity investment development zone;

5 and

6 (B) not less than 50 percent of its employ7 ees are, or will be, underemployed residents of

8 the equity investment development zone, par9 ticularly residents experiencing long-term unem10 ployment and residents receiving or eligible for

11 assistance under any Federal low-income assist12 ance program.

13 (14) RESERVE BANK.—The term ‘‘reserve

14 bank’’ has the same meaning as in section 1 of the

15 Federal Reserve Act.

16 (15) RESERVES.—The term ‘‘reserves’’ means

17 funds required to be maintained by insured deposi18 tory institutions under section 19(b) of the Federal

19 Reserve Act.

20 (16) RURAL AREA.—The term ‘‘rural area’’

21 means any area that is—

22 (A) outside of a metropolitan statistical

23 area (within the meaning of section

24 143(k)(2)(B) of the Internal Revenue Code of

25 1986); or
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1 (B) determined by the Secretary of Agri2 culture, after consultation with the Secretary of

3 Commerce, to be a rural area.

4 (17) URBAN AREA.—The term ‘‘urban area’’

5 means an area that is not a rural area.

6 Subtitle A—Equity Investment

7 Development Zones

8 SEC. 511. DESIGNATION PROCEDURE.

9 (a) AUTHORIZATION.—Not later than 1 year after

10 the date of enactment of this title, the appropriate Sec11 retaries shall designate 10 areas as equity investment de12 velopment zones in accordance with this title.

13 (b) DESIGNATION PROCESS.—The appropriate Sec14 retary may designate an area as an equity investment de15 velopment zone if—

16 (1) the area meets the eligibility requirements

17 for designation under section 512;

18 (2) the area is nominated by one or more local

19 governments and the State or States in which it is

20 located for designation under this section;

21 (3) such State or States and the local govern22 ments have the authority—

23 (A) to nominate the area for designation

24 under this section; and
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1 (B) to provide the assurances described in

2 paragraph (4);

3 (4) such State or States and the local govern4 ments provide written assurances satisfactory to the

5 appropriate Secretary that the strategic plan re6 ferred to in paragraph (5)(B) for such area will be

7 implemented;

8 (5) the appropriate Secretary determines that—

9 (A) the area satisfies the eligibility criteria

10 described in section 512; and

11 (B) the area has a strategic plan for ac12 complishing the purposes of this title that—

13 (i) describes the coordinated eco14 nomic, human, community, and physical

15 development plan and related activities

16 proposed for the area;

17 (ii) describes the proposed implemen18 tation of the plan and the extent to which

19 local institutions and organizations have

20 contributed to the planning process;

21 (iii) identifies the amount of State,

22 local, and private resources that will be

23 available in the area and the private-public

24 partnerships to be used, which may include

25 participation by, and cooperation with, uni-
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1 versities, medical centers, and other private

2 and public entities;

3 (iv) identifies baselines, methods, and

4 benchmarks for measuring the success of

5 carrying out the strategic plan, including

6 the extent to which poor persons and fami7 lies will be empowered to become economi8 cally self-sufficient; and

9 (v) includes such other information as

10 may be required by the appropriate Sec11 retary; and

12 (6) any information furnished to the Secretary

13 under this subsection is determined by the Secretary

14 to be accurate.

15 (c) LOCATION OF ZONES.—Seven areas shall be des16 ignated as equity investment development zones in urban

17 areas, and 3 areas shall be designated in rural areas.

18 SEC. 512. ELIGIBILITY CRITERIA.

19 (a) IN GENERAL.—An area shall be eligible for des20 ignation under section 511 only if it meets the following

21 criteria:

22 (1) POPULATION.—The area has a maximum

23 population of—

24 (A) in the case of an urban area, not more

25 than 300,000; or
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1 (B) in the case of a rural area, not more

2 than 30,000.

3 (2) DISTRESS.—The area is one of pervasive

4 poverty, unemployment, and general distress.

5 (3) SIZE.—The area—

6 (A) does not exceed—

7 (i) 30 square miles, in the case of an

8 urban area; or

9 (ii) 1,000 square miles, in the case of

10 a rural area;

11 (B) has a boundary that is continuous, or,

12 except in the case of a rural area located in

13 more than 1 State, consists of not more than

14 3 noncontiguous parcels;

15 (C) in the case of—

16 (i) an urban area, is located entirely

17 within not more than 2 contiguous States;

18 and

19 (ii) a rural area, is located entirely

20 within not more than 3 contiguous States;

21 and

22 (D) does not include any portion of a

23 central business district (as such term is used

24 for purposes of the most recent Census of Re25 tail Trade prepared by the Bureau of the Cen-
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•S 746 IS

1 sus of the Department of Commerce) unless the

2 poverty rate for each population census tract in

3 such district is not less than 35 percent.

4 (4) POVERTY RATE OR UNEMPLOYMENT

5 RATE.—The—

6 (A) poverty rate—

7 (i) for each population census tract

8 within the area is not less than 20 percent;

9 (ii) for not less than 90 percent of the

10 population census tracts within the area is

11 not less than 25 percent; and

12 (iii) for not less than 50 percent of

13 the population census tracts within the

14 area is not less than 35 percent; or

15 (B) average rate of total unemployment

16 within the area during the most recent 12-

17 month period for which data is published by the

18 Secretary of Labor is not less than 30 percent

19 higher than the average rate of total unemploy20 ment in the State or States in which the area

21 is located during such 12-month period.

22 (b) SPECIAL RULES RELATING TO DETERMINATION

23 OF POVERTY RATE.—For purposes of subsection

24 (a)(4)(A) the following restrictions shall apply:
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•S 746 IS

1 (1) TREATMENT OF CENSUS TRACTS WITH

2 SMALL POPULATIONS.—

3 (A) TRACTS WITH NO POPULATION.—In

4 the case of a population census tract with no

5 population—

6 (i) such tract shall be treated as hav7 ing a poverty rate that meets the require8 ments of clauses (i) and (ii) of subsection

9 (a)(4)(A); but

10 (ii) such tract shall be treated as hav11 ing a zero poverty rate for purposes of ap12 plying subsection (a)(4)(iii).

13 (B) TRACTS WITH POPULATIONS OF LESS

14 THAN 2,000.—A population census tract with a

15 population of less than 2,000 shall be treated as

16 having a poverty rate that meets the require17 ments of clauses (i) and (ii) of subsection

18 (a)(4)(A) if more than 75 percent of such tract

19 is zoned for commercial or industrial use.

20 (2) DISCRETION TO ADJUST REQUIREMENTS

21 FOR EQUITY INVESTMENT DEVELOPMENT ZONE.—

22 (A) IN GENERAL.—The appropriate Sec23 retary may, if necessary to carry out the pur24 poses of this title, reduce any of the poverty

25 rate thresholds established under subsection
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•S 746 IS

1 (a)(4)(A) by 5 percentage points for the greater

2 of 10 percent of the population census tracts or

3 5 population census tracts in the area.

4 (B) ALTERNATIVE.—In lieu of applying

5 subparagraph (A), the Secretary may reduce

6 the poverty rate threshold under subsection

7 (a)(4)(a)(iii) by 10 percentage points for not

8 more than 3 population census tracts.

9 (3) EACH NONCONTIGUOUS AREA MUST SAT10 ISFY POVERTY RATE RULE.—An area nominated for

11 designation as an equity investment development

12 zone may not include a noncontiguous parcel unless

13 such parcel separately meets (subject to paragraphs

14 (1) and (2)) the criteria set forth in subsection

15 (a)(4)(A).

16 (4) AREAS NOT WITHIN CENSUS TRACTS.—In

17 the case of an area that is not tracted for population

18 census tracts, the equivalent county divisions (as de19 fined by the Bureau of the Census of the Depart20 ment of Commerce, for purposes of defining poverty

21 areas) shall be used for purposes of determining pov22 erty rates.
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1 SEC. 513. PERIOD FOR WHICH DESIGNATION IS IN EFFECT.

2 (a) IN GENERAL.—Any designation under this sec3 tion shall remain in effect unless revoked by the appro4 priate Secretary under paragraph (2).

5 (b) REVOCATION OF DESIGNATION.—The appro6 priate Secretary shall revoke a designation of an area

7 under this subtitle if such Secretary determines that the

8 area—

9 (1) has an average annual poverty rate that is

10 less than or equal to the average annual poverty rate

11 in the State or States in which the zone is located;

12 or

13 (2) has an average rate of total unemployment

14 that, during any 2-year period beginning after the

15 date of the designation, is less than or equal to the

16 average rate of total unemployment in the State or

17 States in which the zone is located.

18 SEC. 514. SUBSEQUENT DESIGNATIONS.

19 (a) IN GENERAL.—In addition to the areas des20 ignated under section 101, during the period beginning on

21 the effective date of part I of subtitle B and ending not

22 later than 6 years after the date of enactment of this title,

23 the appropriate Secretaries may designate not more than

24 100 areas as equity investment development zones in ac25 cordance with this subtitle.
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•S 746 IS

1 (b) URBAN AND RURAL AREAS.—Not more than 70

2 areas may be designated as equity investment development

3 zones in urban areas under this section, and not more

4 than 30 areas may be designated in rural areas.

5 SEC. 515. SPECIAL RULES.

6 For purposes of this subtitle, the following restric7 tions shall apply:

8 (1) GOVERNMENTS.—If more than one State or

9 local government seeks to nominate an area for des10 ignation as an equity investment development zone

11 under this subtitle, any reference to, or requirement

12 of, this subtitle shall apply to each such government.

13 (2) ECONOMIC DEVELOPMENT CORPORATION

14 NOMINATIONS.—An area shall be treated as an area

15 nominated by a State and a local government if it

16 is nominated by an economic development corpora17 tion chartered by the State.

18 (3) USE OF CENSUS DATA.—Population and

19 poverty rate shall be determined by the most recent

20 decennial census of the Bureau of the Census of the

21 Department of Commerce.
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1 Subtitle B—Equity Investments in

2 Qualified Companies

3 PART I—CERTIFICATE PROGRAM

4 SEC. 521. CALCULATION OF IMPUTED EARNINGS; ISSUANCE

5 OF CERTIFICATES.

6 (a) ESTABLISHMENT OF RATE OF INTEREST.—

7 (1) IN GENERAL.—Not later than the effective

8 date of this part, the Board shall, by rule, regula9 tion, or order, establish a single rate of interest ap10 plicable to all reserves.

11 (2) ADJUSTMENTS.—The Board may, by rule,

12 regulation, or order, on a quarterly basis, make such

13 adjustments to the rate of interest established under

14 paragraph (1) as the Board determines to be nec15 essary or appropriate.

16 (b) CALCULATION OF IMPUTED EARNINGS.—

17 (1) IN GENERAL.—On March 1 of each year,

18 the Board shall calculate the imputed earnings on all

19 reserves during the preceding calendar year, based

20 on the rate of interest established under subsection

21 (a), and any adjustments to such rate effected prior

22 to March 1.

23 (2) EFFECTIVE DATE.—This subsection shall

24 take effect on March 1 of the first calendar year

25 commencing after the date of enactment of this title.
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•S 746 IS

1 (c) ISSUANCE OF CERTIFICATES.—

2 (1) IN GENERAL.—Except as provided in para3 graph (2), after making a calculation under sub4 section (b), the Board shall issue a certificate to

5 each insured depository institution, which shall have

6 a face value equal to the imputed earnings on the

7 reserves maintained by that insured depository insti8 tution during the calendar year described in sub9 section (b).

10 (2) INITIAL ISSUANCE.—

11 (A) ISSUANCE TO THE CORPORATION.—

12 Subject to section 534, after making a calcula13 tion under subsection (b) for the first calendar

14 year for which such a calculation is made, the

15 Board shall issue a certificate to the Corpora16 tion, which shall have a face value equal to the

17 difference between—

18 (i) the imputed earnings on all re19 serves during such calendar year; and

20 (ii) the total face value of all certifi21 cates issued to insured depository institu22 tions under subparagraph (B).

23 (B) ISSUANCE TO INSURED DEPOSITORY

24 INSTITUTIONS.—Notwithstanding subparagraph

25 (A), upon the written request of an insured de-
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1 pository institution, after making a calculation

2 under subsection (b) for the first calendar year

3 for which such a calculation is made, the Board

4 shall issue a certificate to the insured deposi5 tory institution which shall have a face value

6 equal to the imputed earnings on the reserves

7 maintained by that insured depository institu8 tion during such calendar year.

9 SEC. 522. INVESTMENT IN QUALIFIED COMPANIES.

10 (a) BY INSURED DEPOSITORY INSTITUTIONS.—A

11 certificate issued to an insured depository institution

12 under section 521(c) may—

13 (1) be used by the insured depository institu14 tion to make an equity investment in one or more

15 qualified companies, acting through an affiliate or

16 consortium of affiliates, in an amount equal to the

17 adjusted face value of the certificate;

18 (2) be transferred by the insured depository in19 stitution to the Corporation; or

20 (3) be sold by the insured depository institution

21 to a third party.

22 (b) BY THE CORPORATION.—

23 (1) IN GENERAL.—

24 (A) CERTIFICATE ISSUED TO CORPORA25 TION.—The certificate issued to the Corpora-
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•S 746 IS

1 tion under section 521(c)(2)(A) shall be used by

2 the Corporation to make an equity investment

3 in one or more qualified companies in an

4 amount equal to the adjusted face value of the

5 certificate (taking into account any reduction in

6 the face value of the certificate under para7 graph (2)(B)).

8 (B) CERTIFICATES TRANSFERRED TO COR9 PORATION.—Any certificate transferred to the

10 Corporation under subsection (a)(2) shall be

11 used by the Corporation to make an equity in12 vestment in one or more qualified companies in

13 an amount equal to the adjusted face value of

14 the certificate.

15 (2) STARTUP EXPENSES.—Upon the request of

16 the Corporation, the Board shall—

17 (A) provide funds to cover the startup ex18 penses of the Corporation in an amount not to

19 exceed 5 percent of the total face value of the

20 certificate issued to the Corporation under sec21 tion 521(c)(2)(A); and

22 (B) reduce the face value of the certificate

23 issued to the Corporation under section

24 521(c)(2)(A) by an amount equal to the

25 amount provided under subparagraph (A).
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•S 746 IS

1 (c) BY THIRD PARTY.—Any entity that purchases a

2 certificate, either from an insured depository institution

3 or from any other party, may—

4 (1) make an equity investment in one or more

5 qualified companies in an amount equal to the ad6 justed face value of the certificate; or

7 (2) resell the certificate to another party.

8 SEC. 523. REIMBURSEMENT.

9 (a) REIMBURSEMENT RELATING TO DIRECT INVEST10 MENT.—

11 (1) CERTIFICATION TO FDIC.—

12 (A) IN GENERAL.—After making an equity

13 investment under section 522(a)(1), an insured

14 depository institution may submit to the Fed15 eral Deposit Insurance Corporation—

16 (i) the certificate; and

17 (ii) a written certification that an in18 vestment has been made in accordance

19 with section 522(a)(1).

20 (B) REDUCTION IN DEPOSIT INSURANCE

21 LIABILITY.—Upon receipt of a certificate and

22 written certification submitted under subpara23 graph (A), the Federal Deposit Insurance Cor24 poration shall—
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•S 746 IS

1 (i) reduce the most recent semiannual

2 assessment against the insured depository

3 institution under section 7(b) of the Fed4 eral Deposit Insurance Act by an amount

5 equal to the face value of the certificate;

6 and

7 (ii) submit the certificate to the

8 Board.

9 (C) REIMBURSEMENT TO INSURANCE

10 FUNDS.—Upon receipt of a certificate submit11 ted under subparagraph (B)(ii), the Board shall

12 reimburse the appropriate deposit insurance

13 fund in an amount equal to the face value of

14 the certificate.

15 (2) CERTIFICATION TO APPROPRIATE FEDERAL

16 FINANCIAL SUPERVISORY AGENCY.—

17 (A) IN GENERAL.—After making an equity

18 investment under section 522(a)(1), an insured

19 depository institution may submit to the appro20 priate Federal financial supervisory agency a

21 written certification that an investment has

22 been made in accordance with section

23 522(a)(1).

24 (B) CRA CREDIT.—Section 804 of the

25 Community Reinvestment Act of 1977 (12
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•S 746 IS

1 U.S.C. 2903) is amended by adding at the end

2 the following:

3 ‘‘(c) EQUITY INVESTMENTS IN QUALIFIED COMPA4 NIES.—In assessing and taking into account, under sub5 section (a), the record of a financial institution in meeting

6 the credit needs of the community, the appropriate Fed7 eral supervisory agency shall take into consideration—

8 ‘‘(1) any equity investment in a qualified com9 pany (as such term is defined in section 502 of the

10 Equity Investment Development Act of 1995) made

11 by such financial institution under subtitle C of the

12 Equity Investment Development Act of 1995; and

13 ‘‘(2) any transfer of certificates to the Corpora14 tion (as such term is defined in section 3 of the Eq15 uity Investment Development Act of 1995) made by

16 such financial institution under subtitle C of the Eq17 uity Investment Development Act of 1995.’’.

18 (b) REIMBURSEMENT RELATING TO THE CORPORA19 TION.—

20 (1) STOCK CERTIFICATES TO INSURED DEPOSI21 TORY INSTITUTIONS.—

22 (A) INITIAL ISSUANCE.—Subject to section

23 214, after carrying out section 521(c)(2), the

24 Corporation shall issue to each insured deposi25 tory institution shares of common stock in the
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•S 746 IS

1 Corporation having a total value that is propor2 tionate to the institution’s pro rata share of the

3 face value of the certificate issued to the Cor4 poration under section 521(c)(2).

5 (B) ANNUAL ISSUANCE.—The Corporation

6 shall, on an annual basis, provide to each in7 sured depository institution shares of common

8 stock in the Corporation having a total value

9 that is proportionate to the face value of all cer10 tificates transferred by the insured depository

11 institution to the Corporation under section

12 522(a)(2).

13 (2) REIMBURSEMENT BY BOARD.—

14 (A) IN GENERAL.—After making an equity

15 investment under section 522(b)(1), the Cor16 poration may submit to the Board—

17 (i) the certificate; and

18 (ii) a written certification that an in19 vestment has been made in accordance

20 with section 522(b)(1).

21 (B) REDUCTION IN DEPOSIT INSURANCE

22 LIABILITY.—Upon receipt of a certificate and

23 written certification submitted under subpara24 graph (A), the Board shall reimburse the Cor-
220

•S 746 IS

1 poration in an amount equal to the face value

2 of the certificate.

3 (c) REIMBURSEMENT RELATING TO CERTIFICATES

4 SOLD BY INSURED DEPOSITORY INSTITUTIONS.—

5 (1) CERTIFICATION TO SECRETARY OF HOUS6 ING AND URBAN DEVELOPMENT.—After making an

7 equity investment under section 522(c)(1), the pur8 chasing entity may submit to the Secretary of Hous9 ing and Urban Development—

10 (A) the certificate; and

11 (B) a written certification that an invest12 ment has been made in accordance with section

13 522(c)(1).

14 (2) REIMBURSEMENT BY HUD.—Upon receipt

15 of the certificate and written certification submitted

16 under paragraph (2), the Secretary of Housing and

17 Urban Development shall—

18 (A) reimburse the purchasing entity in an

19 amount equal to the face value of the certifi20 cate; and

21 (B) submit the certificate to the Board.

22 (3) REIMBURSEMENT BY BOARD.—Upon receipt

23 of a certificate submitted under paragraph (2)(B),

24 the Board shall reimburse the Secretary of Housing
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•S 746 IS

1 and Urban Development in an amount equal to the

2 face value of the certificate.

3 SEC. 524. TRANSFERABILITY OF CERTIFICATES.

4 Except as provided in section 522(b), each certificate

5 issued under this part shall be fully transferable.

6 SEC. 525. EXPIRATION OF CERTIFICATES.

7 (a) IN GENERAL.—Each certificate issued under this

8 subtitle shall expire upon the expiration of the 2-year pe9 riod beginning on the date on which the certificate is is10 sued. An expired certificate may not be submitted for re11 imbursement under section 203 or consideration under

12 section 804(c) of the Community Reinvestment Act of

13 1977, as added by this title.

14 (b) REPLACEMENT OF EXPIRED CERTIFICATES.—

15 The Board may issue, in accordance with this title, a new

16 certificate with a face value equal to that of any expired

17 certificate. New certificates shall be issued proportionately

18 to each insured depository institution that has used each

19 of the certificates that was issued to the institution during

20 the year in which the expired certificates were originally

21 issued.

22 SEC. 526. EFFECTIVE DATE.

23 Except as provided in section 521(b), this part shall

24 become effective on the date on which all of the initial
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1 designations of equity investment development zones are

2 made in accordance with section 511.

3 PART II—COMMUNITY EQUITY INVESTMENT

4 CORPORATION

5 SEC. 531. ESTABLISHMENT.

6 (a) IN GENERAL.—Not later than 6 months after the

7 date of enactment of this title, there shall be established

8 a corporation to be known as the Community Equity In9 vestment Corporation, or such other corporate name as

10 may be duly adopted by the Corporation.

11 (b) STATUS.—The Corporation—

12 (1) shall be a for-profit corporation;

13 (2) shall not be an agency or instrumentality of

14 the Federal Government; and

15 (3) shall initially be incorporated in the State of

16 Delaware.

17 SEC. 532. INCORPORATORS; BOARD OF DIRECTORS.

18 (a) DESIGNATION.—The board of directors of each

19 reserve bank shall designate 1 person, who shall be—

20 (1) an incorporator of the Corporation; and

21 (2) a member of the interim board of directors

22 of the Corporation.

23 (b) DUTIES OF INCORPORATORS.—The incorporators

24 of the Corporation designated under subsection (a) shall

25 take such steps as may be necessary to establish the Cor-
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•S 746 IS

1 poration, including the filing of articles of incorporation

2 in accordance with the laws of the State of Delaware.

3 (c) INTERIM BOARD OF DIRECTORS.—

4 (1) DUTIES OF INTERIM BOARD OF DIREC5 TORS.—The interim board of directors of the Cor6 poration designated under subsection (a) shall—

7 (A) establish and adopt the bylaws of the

8 Corporation; and

9 (B) designate a chief executive officer of

10 the Corporation, who shall be selected from

11 among the members of the interim board of di12 rectors of the Corporation.

13 (2) TERMS OF INTERIM BOARD OF DIREC14 TORS.—Each member of the interim board of direc15 tors of the Corporation shall serve for a term of 3

16 years.

17 (d) APPOINTMENT OF BOARD OF DIRECTORS.—

18 Upon the expiration of the term of each member of the

19 interim board of directors of the Corporation, members

20 of the board of directors of the Corporation shall be ap21 pointed in accordance with the bylaws of the Corporation.

22 (e) VACANCIES.—

23 (1) BOARD OF DIRECTORS.—Except as provided

24 in paragraph (2), any vacancy in the board of direc-
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•S 746 IS

1 tors of the Corporation shall be filled in accordance

2 with the bylaws of the Corporation.

3 (2) INTERIM BOARD OF DIRECTORS.—Any va4 cancy in the interim board of directors of the Cor5 poration shall be filled in the same manner in which

6 the original appointment was made.

7 SEC. 533. RESTRICTIONS ON TRANSFERABILITY OF COR8 PORATION STOCK.

9 (a) IN GENERAL.—The common stock of the Cor10 poration shall not be transferable prior to the expiration

11 of the 5-year period beginning on the date of incorporation

12 of the Corporation.

13 (b) OWNERSHIP.—During the 5-year period begin14 ning on the expiration of the 5-year period described in

15 subsection (a), the common stock of the Corporation shall

16 be transferable only among insured depository institutions

17 that own common stock in the Corporation on or before

18 the expiration of the 5-year period described in subsection

19 (a).

20 SEC. 534. DISSOLUTION OF THE CORPORATION.

21 If the total face value of all certificates issued to in22 sured depository institutions under section 521(c)(2)(B)

23 exceeds 75 percent of the imputed earnings on all reserves

24 during the first calendar year for which a calculation is

25 made under section 521(b), the Corporation shall be dis-
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•S 746 IS

1 solved and the imputed earnings during such calendar

2 year shall be transferred to the Board for distribution to

3 insured depository institutions in accordance with section

4 521(c)(1).

5 Subtitle C—Assistance to Qualified

6 Companies Receiving Equity In7 vestments

8 SEC. 541. WAGE SUPPLEMENTATION PROGRAM.

9 (a) IN GENERAL.—The Secretary of Health and

10 Human Services and the Secretary of Agriculture shall es11 tablish a wage supplementation program (hereafter in this

12 section referred to as the ‘‘program’’) described in sub13 section (b).

14 (b) PROGRAM DESCRIBED.—A State may, at its op15 tion, operate a program under which—

16 (1) certain individuals who are eligible for aid

17 to families with dependent children under title IV of

18 the Social Security Act (42 U.S.C. 601 et seq.), or

19 who are members of households who are eligible for

20 food stamp benefits under the Food Stamp Act of

21 1977 (7 U.S.C. 2011 et seq.), or both, would be

22 given an incentive to work; and

23 (2) the State would use funds available to pay

24 the cash or food stamp benefits described in para25 graph (1) to such families or households to make
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•S 746 IS

1 monthly incentive payments (in lieu of such benefits)

2 to participating employers.

3 Each such program shall meet the requirements of sub4 section (c).

5 (c) WAGE SUPPLEMENTATION PROGRAM.—

6 (1) IN GENERAL.—A program conducted under

7 this section shall provide the following:

8 (A) INCENTIVES TO WORK.—

9 (i) IN GENERAL.—The program

10 shall—

11 (I) require as a condition of par12 ticipation in the program that an eli13 gible individual be employed by a par14 ticipating employer for at least 40

15 hours per week;

16 (II) provide that the State shall

17 make monthly incentive payments to

18 any participating employer for each

19 month of employment in an amount

20 equal to the applicable percentage (de21 scribed in clause (ii)) of benefits de22 scribed in subsection (a)(2) which

23 would otherwise be payable to the

24 family or household of the eligible in25 dividual, determined as of the first
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•S 746 IS

1 day of the first full month of employ2 ment of such individual by a partici3 pating employer; and

4 (III) provide that such payments

5 be in lieu of such cash or food bene6 fits.

7 (ii) APPLICABLE PERCENTAGE.—For

8 purposes of clause (i), the applicable per9 centage is equal to—

10 (I) 90 percent, in the first year

11 of employment of the eligible individ12 ual by a participating employer;

13 (II) 70 percent, in the second

14 year of employment of the eligible in15 dividual by a participating employer;

16 and

17 (III) 40 percent, in the third

18 year of employment of the eligible in19 dividual by a participating employer.

20 (iii) CAP.—The monthly incentive

21 payment under clause (i)(II) with respect

22 to an eligible individual may not exceed

23 two-thirds of the total monthly wage paid

24 by the participating employer to such indi25 vidual.
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•S 746 IS

1 (B) PERIOD OF PARTICIPATION.—The pro2 gram shall not permit an eligible individual to

3 participate in the program for more than 36

4 months (whether or not consecutive).

5 (2) SPECIAL RULES FOR TREATMENT UNDER

6 FEDERAL PROGRAMS.—Notwithstanding any other

7 provision of law, the following special rules shall

8 apply to an eligible individual participating in the

9 program:

10 (A) WAGES AS EARNED INCOME.—Except

11 as provided in subparagraph (B), monthly

12 wages paid to an eligible individual by a partici13 pating employer under this section shall be con14 sidered to be earned income.

15 (B) EXCEPTION FOR BENEFIT PRO16 GRAMS.—Monthly wages paid to an eligible in17 dividual by a participating employer shall not

18 be considered to be earned income for purposes

19 of determining continued eligibility (other than

20 for the benefits for which the monthly incentive

21 payments are in lieu of) for—

22 (i) aid to families with dependent chil23 dren under a State plan approved under

24 part A of title IV of the Social Security

25 Act (42 U.S.C. 601 et seq.);
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•S 746 IS

1 (ii) medical assistance under a State

2 plan approved under title XIX of such Act

3 (42 U.S.C. 1396 et seq.); or

4 (iii) food stamp benefits under the

5 Food Stamp Act of 1977 (7 U.S.C. 2011

6 et seq.).

7 (C) ADDITIONAL CHILD SUPPORT

8 AMOUNTS.—An eligible individual who partici9 pates in the program shall remain eligible for

10 the program notwithstanding the receipt of any

11 amounts paid to the family of the individual

12 under section 457(b)(4)(B) of the Social Secu13 rity Act (42 U.S.C. 657(b)(4)(B)) (relating to

14 certain child support amounts).

15 (D) HOUSING.—Any wages paid to an eli16 gible individual by a participating employer dur17 ing the period of time that an eligible individual

18 participates in the program shall not be taken

19 into account in determining—

20 (i) the monthly rent under section

21 3(a) of the United States Housing Act of

22 1937 for any family residing in a dwelling

23 unit assisted under such Act; and
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•S 746 IS

1 (ii) the monthly assistance payment

2 for any family under section 8(o)(2) of

3 such Act.

4 (3) ELIGIBLE INDIVIDUAL AND PARTICIPATING

5 EMPLOYER.—

6 (A) ELIGIBLE INDIVIDUAL.—For purposes

7 of this section, an individual is an eligible indi8 vidual if the individual is, at the time of place9 ment in the job involved—

10 (i) eligible for aid to families with de11 pendent children under an approved State

12 plan under title IV of the Social Security

13 Act (42 U.S.C. 601 et seq.); or

14 (ii) a member of a household that is

15 eligible for food stamp benefits under the

16 Food Stamp Act of 1977 (7 U.S.C. 20141

17 et seq.).

18 (B) PARTICIPATING EMPLOYER.—

19 (i) IN GENERAL.—For purposes of

20 this section, an employer is a participating

21 employer with respect to an eligible indi22 vidual if the employer provides the State

23 with a written agreement certifying—
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•S 746 IS

1 (I) that the employer is a quali2 fied company that has received an eq3 uity investment under title III;

4 (II) that the gross wages (as de5 fined in section 209 of the Social Se6 curity Act (42 U.S.C. 609) deter7 mined without regard to any dollar

8 limitation) paid to such eligible indi9 vidual by the employer during any

10 month will not be less than the

11 amount determined under clause (ii);

12 (III) that the employer will not

13 receive any wage subsidy under any

14 other provision of Federal law, includ15 ing part F of title IV of the Social Se16 curity Act with respect to the employ17 ment of such eligible individual; and

18 (IV) that the eligible individual

19 receives the same employer-provided

20 benefits (other than health care bene21 fits) that other employees of the em22 ployer receive.

23 (ii) MINIMUM WAGE.—The amount

24 determined under this clause is equal to

25 the product of—
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•S 746 IS

1 (I) the greater of the Federal

2 minimum wage or the applicable State

3 minimum wage, and

4 (II) the number of hours worked

5 by an individual.

6 (iii) CONTINUING CERTIFICATION RE7 QUIREMENT.—A participating employer

8 shall be required to submit a monthly re9 port to the State (in a form and in such

10 manner as the State requires) certifying

11 that the employer has complied with each

12 of the requirements under clause (i) with

13 respect to an eligible individual during the

14 period such individual participates under

15 the program.

16 (d) FUNDING FOR PROGRAM.—For each State that

17 conducts a program under this section—

18 (1) the portion of the monthly incentive pay19 ments that the State makes to an eligible employer

20 under subsection (c)(1)(A)(i)(II) that is attributable

21 to aid to families with dependent children under part

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

23 601 et seq.) shall be considered expenditures under

24 the State plan for such aid;
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1 (2) the expenses incurred by the State in the

2 administration of the program shall be considered

3 expenditures by the State for administrative costs in

4 operating a program under part F of title IV of the

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

6 (3) the portion of the monthly payments that

7 the State makes to an eligible employer under sub8 section (c)(1)(A)(i)(II) that is attributable to the

9 cash value of an allotment received under the Food

10 Stamp Act of 1977 (7 U.S.C. 2011 et seq.) shall be

11 considered to be expenditures for allotments under

12 such Act.

13 (e) APPLICATION FOR EMPLOYMENT.—An employer

14 seeking to be a participating employer with respect to an

15 individual may, prior to employing an individual, verify

16 with the State the status of the individual as an eligible

17 individual and the amount of monthly incentive payment

18 the employer may receive under the program with respect

19 to the individual.

20 TITLE VI—EFFECTIVE DATE

21 SEC. 601. EFFECTIVE DATE.

22 (a) IN GENERAL.—Except as otherwise provided in

23 this Act, this Act and the amendments made by this Act

24 shall take effect 12 months after the date of the enactment

25 of this Act.
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1 (b) DELAY IF STATE LEGISLATION REQUIRED.—In

2 the case of a State which the Secretary of Health and

3 Human Services determines requires State legislation

4 (other than legislation authorizing or appropriating funds)

5 in order to comply with this Act or the amendments made

6 by this Act, the State shall not be regarded as failing to

7 comply with the Act or such amendments solely on the

8 basis of its failure to meet the requirements of the Act

9 or such amendments before the first day of the first cal10 endar quarter beginning after the close of the first regular

11 session of the State legislature that begins after the date

12 of the enactment of this Act. For purposes of the preced13 ing sentence, in the case of a State that has a 2-year legis14 lative session, each year of such session shall be deemed

15 to be a separate regular session of the State legislature.

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