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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 867 Enrolled Bill (ENR)]

        H.R.867

                       One Hundred Fifth Congress

                                 of the

                        United States of America

                          AT THE FIRST SESSION

          Begun and held at the City of Washington on Tuesday,
 the seventh day of January, one thousand nine hundred and ninety-seven

                                 An Act

 
           To promote the adoption of children in foster care.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Adoption and Safe 
Families Act of 1997''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:
Sec. 1. Short title; table of contents.

TITLE I--REASONABLE EFFORTS AND SAFETY REQUIREMENTS FOR FOSTER CARE AND 
                           ADOPTION PLACEMENTS

Sec. 101. Clarification of the reasonable efforts requirement.
Sec. 102. Including safety in case plan and case review system 
          requirements.
Sec. 103. States required to initiate or join proceedings to terminate 
          parental rights for certain children in foster care.
Sec. 104. Notice of reviews and hearings; opportunity to be heard.
Sec. 105. Use of the Federal Parent Locator Service for child welfare 
          services.
Sec. 106. Criminal records checks for prospective foster and adoptive 
          parents.
Sec. 107. Documentation of efforts for adoption or location of a 
          permanent home.

   TITLE II--INCENTIVES FOR PROVIDING PERMANENT FAMILIES FOR CHILDREN

Sec. 201. Adoption incentive payments.
Sec. 202. Adoptions across State and county jurisdictions.
Sec. 203. Performance of States in protecting children.

             TITLE III--ADDITIONAL IMPROVEMENTS AND REFORMS

Sec. 301. Authority to approve more child protection demonstration 
          projects.
Sec. 302. Permanency hearings.
Sec. 303. Kinship care.
Sec. 304. Clarification of eligible population for independent living 
          services.
Sec. 305. Reauthorization and expansion of family preservation and 
          support services.
Sec. 306. Health insurance coverage for children with special needs.
Sec. 307. Continuation of eligibility for adoption assistance payments 
          on behalf of children with special needs whose initial 
          adoption has been dissolved.
Sec. 308. State standards to ensure quality services for children in 
          foster care.

                         TITLE IV--MISCELLANEOUS

Sec. 401. Preservation of reasonable parenting.
Sec. 402. Reporting requirements.
Sec. 403. Sense of Congress regarding standby guardianship.
Sec. 404. Temporary adjustment of Contingency Fund for State Welfare 
          Programs.
Sec. 405. Coordination of substance abuse and child protection services.
Sec. 406. Purchase of American-made equipment and products.

                         TITLE V--EFFECTIVE DATE

Sec. 501. Effective date.

TITLE I--REASONABLE EFFORTS AND SAFETY REQUIREMENTS FOR FOSTER CARE AND 
                          ADOPTION PLACEMENTS

SEC. 101. CLARIFICATION OF THE REASONABLE EFFORTS REQUIREMENT.

    (a) In General.--Section 471(a)(15) of the Social Security Act (42 
U.S.C. 671(a)(15)) is amended to read as follows:
        ``(15) provides that--
            ``(A) in determining reasonable efforts to be made with 
        respect to a child, as described in this paragraph, and in 
        making such reasonable efforts, the child's health and safety 
        shall be the paramount concern;
            ``(B) except as provided in subparagraph (D), reasonable 
        efforts shall be made to preserve and reunify families--
                ``(i) prior to the placement of a child in foster care, 
            to prevent or eliminate the need for removing the child 
            from the child's home; and
                ``(ii) to make it possible for a child to safely return 
            to the child's home;
            ``(C) if continuation of reasonable efforts of the type 
        described in subparagraph (B) is determined to be inconsistent 
        with the permanency plan for the child, reasonable efforts 
        shall be made to place the child in a timely manner in 
        accordance with the permanency plan, and to complete whatever 
        steps are necessary to finalize the permanent placement of the 
        child;
            ``(D) reasonable efforts of the type described in 
        subparagraph (B) shall not be required to be made with respect 
        to a parent of a child if a court of competent jurisdiction has 
        determined that--
                ``(i) the parent has subjected the child to aggravated 
            circumstances (as defined in State law, which definition 
            may include but need not be limited to abandonment, 
            torture, chronic abuse, and sexual abuse);
                ``(ii) the parent has--

                    ``(I) committed murder (which would have been an 
                offense under section 1111(a) of title 18, United 
                States Code, if the offense had occurred in the special 
                maritime or territorial jurisdiction of the United 
                States) of another child of the parent;
                    ``(II) committed voluntary manslaughter (which 
                would have been an offense under section 1112(a) of 
                title 18, United States Code, if the offense had 
                occurred in the special maritime or territorial 
                jurisdiction of the United States) of another child of 
                the parent;
                    ``(III) aided or abetted, attempted, conspired, or 
                solicited to commit such a murder or such a voluntary 
                manslaughter; or
                    ``(IV) committed a felony assault that results in 
                serious bodily injury to the child or another child of 
                the parent; or

                ``(iii) the parental rights of the parent to a sibling 
            have been terminated involuntarily;
            ``(E) if reasonable efforts of the type described in 
        subparagraph (B) are not made with respect to a child as a 
        result of a determination made by a court of competent 
        jurisdiction in accordance with subparagraph (D)--
                ``(i) a permanency hearing (as described in section 
            475(5)(C)) shall be held for the child within 30 days after 
            the determination; and
                ``(ii) reasonable efforts shall be made to place the 
            child in a timely manner in accordance with the permanency 
            plan, and to complete whatever steps are necessary to 
            finalize the permanent placement of the child; and
            ``(F) reasonable efforts to place a child for adoption or 
        with a legal guardian may be made concurrently with reasonable 
        efforts of the type described in subparagraph (B);''.
    (b) Definition of Legal Guardianship.--Section 475 of such Act (42 
U.S.C. 675) is amended by adding at the end the following:
        ``(7) The term `legal guardianship' means a judicially created 
    relationship between child and caretaker which is intended to be 
    permanent and self-sustaining as evidenced by the transfer to the 
    caretaker of the following parental rights with respect to the 
    child: protection, education, care and control of the person, 
    custody of the person, and decisionmaking. The term `legal 
    guardian' means the caretaker in such a relationship.''.
    (c) Conforming Amendment.--Section 472(a)(1) of such Act (42 U.S.C. 
672(a)(1)) is amended by inserting ``for a child'' before ``have been 
made''.
    (d) Rule of Construction.--Part E of title IV of such Act (42 
U.S.C. 670-679) is amended by inserting after section 477 the 
following:

``SEC. 478. RULE OF CONSTRUCTION.

    ``Nothing in this part shall be construed as precluding State 
courts from exercising their discretion to protect the health and 
safety of children in individual cases, including cases other than 
those described in section 471(a)(15)(D).''.

SEC. 102. INCLUDING SAFETY IN CASE PLAN AND CASE REVIEW SYSTEM 
              REQUIREMENTS.

    Title IV of the Social Security Act (42 U.S.C. 601 et seq.) is 
amended--
        (1) in section 422(b)(10)(B)--
            (A) in clause (iii)(I), by inserting ``safe and'' after 
        ``where''; and
            (B) in clause (iv), by inserting ``safely'' after 
        ``remain''; and
        (2) in section 475--
            (A) in paragraph (1)--
                (i) in subparagraph (A), by inserting ``safety and'' 
            after ``discussion of the''; and
                (ii) in subparagraph (B)--

                    (I) by inserting ``safe and'' after ``child 
                receives''; and
                    (II) by inserting ``safe'' after ``return of the 
                child to his own''; and

            (B) in paragraph (5)--
                (i) in subparagraph (A), in the matter preceding clause 
            (i), by inserting ``a safe setting that is'' after 
            ``placement in''; and
                (ii) in subparagraph (B)--

                    (I) by inserting ``the safety of the child,'' after 
                ``determine''; and
                    (II) by inserting ``and safely maintained in'' 
                after ``returned to''.

SEC. 103. STATES REQUIRED TO INITIATE OR JOIN PROCEEDINGS TO TERMINATE 
              PARENTAL RIGHTS FOR CERTAIN CHILDREN IN FOSTER CARE.

    (a) Requirement for Proceedings.--Section 475(5) of the Social 
Security Act (42 U.S.C. 675(5)) is amended--
        (1) by striking ``and'' at the end of subparagraph (C);
        (2) by striking the period at the end of subparagraph (D) and 
    inserting ``; and''; and
        (3) by adding at the end the following:
            ``(E) in the case of a child who has been in foster care 
        under the responsibility of the State for 15 of the most recent 
        22 months, or, if a court of competent jurisdiction has 
        determined a child to be an abandoned infant (as defined under 
        State law) or has made a determination that the parent has 
        committed murder of another child of the parent, committed 
        voluntary manslaughter of another child of the parent, aided or 
        abetted, attempted, conspired, or solicited to commit such a 
        murder or such a voluntary manslaughter, or committed a felony 
        assault that has resulted in serious bodily injury to the child 
        or to another child of the parent, the State shall file a 
        petition to terminate the parental rights of the child's 
        parents (or, if such a petition has been filed by another 
        party, seek to be joined as a party to the petition), and, 
        concurrently, to identify, recruit, process, and approve a 
        qualified family for an adoption, unless--
                ``(i) at the option of the State, the child is being 
            cared for by a relative;
                ``(ii) a State agency has documented in the case plan 
            (which shall be available for court review) a compelling 
            reason for determining that filing such a petition would 
            not be in the best interests of the child; or
                ``(iii) the State has not provided to the family of the 
            child, consistent with the time period in the State case 
            plan, such services as the State deems necessary for the 
            safe return of the child to the child's home, if reasonable 
            efforts of the type described in section 471(a)(15)(B)(ii) 
            are required to be made with respect to the child.''.
    (b) Determination of Beginning of Foster Care.--Section 475(5) of 
the Social Security Act (42 U.S.C. 675(5)), as amended by subsection 
(a), is amended--
        (1) by striking ``and'' at the end of subparagraph (D);
        (2) by striking the period at the end of subparagraph (E) and 
    inserting ``; and''; and
        (3) by adding at the end the following:
            ``(F) a child shall be considered to have entered foster 
        care on the earlier of--
                ``(i) the date of the first judicial finding that the 
            child has been subjected to child abuse or neglect; or
                ``(ii) the date that is 60 days after the date on which 
            the child is removed from the home.''.
    (c) Transition Rules.--
        (1) New foster children.--In the case of a child who enters 
    foster care (within the meaning of section 475(5)(F) of the Social 
    Security Act) under the responsibility of a State after the date of 
    the enactment of this Act--
            (A) if the State comes into compliance with the amendments 
        made by subsection (a) of this section before the child has 
        been in such foster care for 15 of the most recent 22 months, 
        the State shall comply with section 475(5)(E) of the Social 
        Security Act with respect to the child when the child has been 
        in such foster care for 15 of the most recent 22 months; and
            (B) if the State comes into such compliance after the child 
        has been in such foster care for 15 of the most recent 22 
        months, the State shall comply with such section 475(5)(E) with 
        respect to the child not later than 3 months after the end of 
        the first regular session of the State legislature that begins 
        after such date of enactment.
        (2) Current foster children.--In the case of children in foster 
    care under the responsibility of the State on the date of the 
    enactment of this Act, the State shall--
            (A) not later than 6 months after the end of the first 
        regular session of the State legislature that begins after such 
        date of enactment, comply with section 475(5)(E) of the Social 
        Security Act with respect to not less than \1/3\ of such 
        children as the State shall select, giving priority to children 
        for whom the permanency plan (within the meaning of part E of 
        title IV of the Social Security Act) is adoption and children 
        who have been in foster care for the greatest length of time;
            (B) not later than 12 months after the end of such first 
        regular session, comply with such section 475(5)(E) with 
        respect to not less than \2/3\ of such children as the State 
        shall select; and
            (C) not later than 18 months after the end of such first 
        regular session, comply with such section 475(5)(E) with 
        respect to all of such children.
        (3) Treatment of 2-year legislative sessions.--For purposes of 
    this subsection, in the case of a State that has a 2-year 
    legislative session, each year of the session is deemed to be a 
    separate regular session of the State legislature.
        (4) Requirements treated as state plan requirements.--For 
    purposes of part E of title IV of the Social Security Act, the 
    requirements of this subsection shall be treated as State plan 
    requirements imposed by section 471(a) of such Act.
    (d) Rule of Construction.--Nothing in this section or in part E of 
title IV of the Social Security Act (42 U.S.C. 670 et seq.), as amended 
by this Act, shall be construed as precluding State courts or State 
agencies from initiating the termination of parental rights for reasons 
other than, or for timelines earlier than, those specified in part E of 
title IV of such Act, when such actions are determined to be in the 
best interests of the child, including cases where the child has 
experienced multiple foster care placements of varying durations.

SEC. 104. NOTICE OF REVIEWS AND HEARINGS; OPPORTUNITY TO BE HEARD.

    Section 475(5) of the Social Security Act (42 U.S.C. 675(5)), as 
amended by section 103, is amended--
        (1) by striking ``and'' at the end of subparagraph (E);
        (2) by striking the period at the end of subparagraph (F) and 
    inserting ``; and''; and
        (3) by adding at the end the following:
            ``(G) the foster parents (if any) of a child and any 
        preadoptive parent or relative providing care for the child are 
        provided with notice of, and an opportunity to be heard in, any 
        review or hearing to be held with respect to the child, except 
        that this subparagraph shall not be construed to require that 
        any foster parent, preadoptive parent, or relative providing 
        care for the child be made a party to such a review or hearing 
        solely on the basis of such notice and opportunity to be 
        heard.''.

SEC. 105. USE OF THE FEDERAL PARENT LOCATOR SERVICE FOR CHILD WELFARE 
              SERVICES.

    Section 453 of the Social Security Act (42 U.S.C. 653) is amended--
        (1) in subsection (a)(2)--
            (A) in the matter preceding subparagraph (A), by inserting 
        ``or making or enforcing child custody or visitation orders,'' 
        after ``obligations,''; and
            (B) in subparagraph (A)--
                (i) by striking ``or'' at the end of clause (ii);
                (ii) by striking the comma at the end of clause (iii) 
            and inserting ``; or''; and
                (iii) by inserting after clause (iii) the following:
                ``(iv) who has or may have parental rights with respect 
            to a child,''; and
        (2) in subsection (c)--
            (A) by striking the period at the end of paragraph (3) and 
        inserting ``; and''; and
            (B) by adding at the end the following:
        ``(4) a State agency that is administering a program operated 
    under a State plan under subpart 1 of part B, or a State plan 
    approved under subpart 2 of part B or under part E.''.

SEC. 106. CRIMINAL RECORDS CHECKS FOR PROSPECTIVE FOSTER AND ADOPTIVE 
              PARENTS.

    Section 471(a) of the Social Security Act (42 U.S.C. 671(a)) is 
amended--
        (1) by striking ``and'' at the end of paragraph (18);
        (2) by striking the period at the end of paragraph (19) and 
    inserting ``; and''; and
        (3) by adding at the end the following:
        ``(20)(A) unless an election provided for in subparagraph (B) 
    is made with respect to the State, provides procedures for criminal 
    records checks for any prospective foster or adoptive parent before 
    the foster or adoptive parent may be finally approved for placement 
    of a child on whose behalf foster care maintenance payments or 
    adoption assistance payments are to be made under the State plan 
    under this part, including procedures requiring that--
            ``(i) in any case in which a record check reveals a felony 
        conviction for child abuse or neglect, for spousal abuse, for a 
        crime against children (including child pornography), or for a 
        crime involving violence, including rape, sexual assault, or 
        homicide, but not including other physical assault or battery, 
        if a State finds that a court of competent jurisdiction has 
        determined that the felony was committed at any time, such 
        final approval shall not be granted; and
            ``(ii) in any case in which a record check reveals a felony 
        conviction for physical assault, battery, or a drug-related 
        offense, if a State finds that a court of competent 
        jurisdiction has determined that the felony was committed 
        within the past 5 years, such final approval shall not be 
        granted; and
        ``(B) subparagraph (A) shall not apply to a State plan if the 
    Governor of the State has notified the Secretary in writing that 
    the State has elected to make subparagraph (A) inapplicable to the 
    State, or if the State legislature, by law, has elected to make 
    subparagraph (A) inapplicable to the State.''.

SEC. 107. DOCUMENTATION OF EFFORTS FOR ADOPTION OR LOCATION OF A 
              PERMANENT HOME.

    Section 475(1) of the Social Security Act (42 U.S.C. 675(1)) is 
amended--
        (1) in the last sentence--
            (A) by striking ``the case plan must also include''; and
            (B) by redesignating such sentence as subparagraph (D) and 
        indenting appropriately; and
        (2) by adding at the end the following:
            ``(E) In the case of a child with respect to whom the 
        permanency plan is adoption or placement in another permanent 
        home, documentation of the steps the agency is taking to find 
        an adoptive family or other permanent living arrangement for 
        the child, to place the child with an adoptive family, a fit 
        and willing relative, a legal guardian, or in another planned 
        permanent living arrangement, and to finalize the adoption or 
        legal guardianship. At a minimum, such documentation shall 
        include child specific recruitment efforts such as the use of 
        State, regional, and national adoption exchanges including 
        electronic exchange systems.''.

   TITLE II--INCENTIVES FOR PROVIDING PERMANENT FAMILIES FOR CHILDREN

SEC. 201. ADOPTION INCENTIVE PAYMENTS.

    (a) In General.--Part E of title IV of the Social Security Act (42 
U.S.C. 670-679) is amended by inserting after section 473 the 
following:

``SEC. 473A. ADOPTION INCENTIVE PAYMENTS.

    ``(a) Grant Authority.--Subject to the availability of such amounts 
as may be provided in advance in appropriations Acts for this purpose, 
the Secretary shall make a grant to each State that is an incentive-
eligible State for a fiscal year in an amount equal to the adoption 
incentive payment payable to the State under this section for the 
fiscal year, which shall be payable in the immediately succeeding 
fiscal year.
    ``(b) Incentive-Eligible State.--A State is an incentive-eligible 
State for a fiscal year if--
        ``(1) the State has a plan approved under this part for the 
    fiscal year;
        ``(2) the number of foster child adoptions in the State during 
    the fiscal year exceeds the base number of foster child adoptions 
    for the State for the fiscal year;
        ``(3) the State is in compliance with subsection (c) for the 
    fiscal year;
        ``(4) in the case of fiscal years 2001 and 2002, the State 
    provides health insurance coverage to any child with special needs 
    (as determined under section 473(c)) for whom there is in effect an 
    adoption assistance agreement between a State and an adoptive 
    parent or parents; and
        ``(5) the fiscal year is any of fiscal years 1998 through 2002.
    ``(c) Data Requirements.--
        ``(1) In general.--A State is in compliance with this 
    subsection for a fiscal year if the State has provided to the 
    Secretary the data described in paragraph (2)--
            ``(A) for fiscal years 1995 through 1997 (or, if the first 
        fiscal year for which the State seeks a grant under this 
        section is after fiscal year 1998, the fiscal year that 
        precedes such first fiscal year); and
            ``(B) for each succeeding fiscal year that precedes the 
        fiscal year.
        ``(2) Determination of numbers of adoptions.--
            ``(A) Determinations based on afcars data.--Except as 
        provided in subparagraph (B), the Secretary shall determine the 
        numbers of foster child adoptions and of special needs 
        adoptions in a State during each of fiscal years 1995 through 
        2002, for purposes of this section, on the basis of data 
        meeting the requirements of the system established pursuant to 
        section 479, as reported by the State and approved by the 
        Secretary by August 1 of the succeeding fiscal year.
            ``(B) Alternative data sources permitted for fiscal years 
        1995 through 1997.--For purposes of the determination described 
        in subparagraph (A) for fiscal years 1995 through 1997, the 
        Secretary may use data from a source or sources other than that 
        specified in subparagraph (A) that the Secretary finds to be of 
        equivalent completeness and reliability, as reported by a State 
        by November 30, 1997, and approved by the Secretary by March 1, 
        1998.
        ``(3) No waiver of afcars requirements.--This section shall not 
    be construed to alter or affect any requirement of section 479 or 
    of any regulation prescribed under such section with respect to 
    reporting of data by States, or to waive any penalty for failure to 
    comply with such a requirement.
    ``(d) Adoption Incentive Payment.--
        ``(1) In general.--Except as provided in paragraph (2), the 
    adoption incentive payment payable to a State for a fiscal year 
    under this section shall be equal to the sum of--
            ``(A) $4,000, multiplied by the amount (if any) by which 
        the number of foster child adoptions in the State during the 
        fiscal year exceeds the base number of foster child adoptions 
        for the State for the fiscal year; and
            ``(B) $2,000, multiplied by the amount (if any) by which 
        the number of special needs adoptions in the State during the 
        fiscal year exceeds the base number of special needs adoptions 
        for the State for the fiscal year.
        ``(2) Pro rata adjustment if insufficient funds available.--For 
    any fiscal year, if the total amount of adoption incentive payments 
    otherwise payable under this section for a fiscal year exceeds the 
    amount appropriated pursuant to subsection (h) for the fiscal year, 
    the amount of the adoption incentive payment payable to each State 
    under this section for the fiscal year shall be--
            ``(A) the amount of the adoption incentive payment that 
        would otherwise be payable to the State under this section for 
        the fiscal year; multiplied by
            ``(B) the percentage represented by the amount so 
        appropriated for the fiscal year, divided by the total amount 
        of adoption incentive payments otherwise payable under this 
        section for the fiscal year.
    ``(e) 2-Year Availability of Incentive Payments.--Payments to a 
State under this section in a fiscal year shall remain available for 
use by the State through the end of the succeeding fiscal year.
    ``(f) Limitations on Use of Incentive Payments.--A State shall not 
expend an amount paid to the State under this section except to provide 
to children or families any service (including post-adoption services) 
that may be provided under part B or E. Amounts expended by a State in 
accordance with the preceding sentence shall be disregarded in 
determining State expenditures for purposes of Federal matching 
payments under sections 423, 434, and 474.
    ``(g) Definitions.--As used in this section:
        ``(1) Foster child adoption.--The term `foster child adoption' 
    means the final adoption of a child who, at the time of adoptive 
    placement, was in foster care under the supervision of the State.
        ``(2) Special needs adoption.--The term `special needs 
    adoption' means the final adoption of a child for whom an adoption 
    assistance agreement is in effect under section 473.
        ``(3) Base number of foster child adoptions.--The term `base 
    number of foster child adoptions for a State' means--
            ``(A) with respect to fiscal year 1998, the average number 
        of foster child adoptions in the State in fiscal years 1995, 
        1996, and 1997; and
            ``(B) with respect to any subsequent fiscal year, the 
        number of foster child adoptions in the State in the fiscal 
        year for which the number is the greatest in the period that 
        begins with fiscal year 1997 and ends with the fiscal year 
        preceding such subsequent fiscal year.
        ``(4) Base number of special needs adoptions.--The term `base 
    number of special needs adoptions for a State' means--
            ``(A) with respect to fiscal year 1998, the average number 
        of special needs adoptions in the State in fiscal years 1995, 
        1996, and 1997; and
            ``(B) with respect to any subsequent fiscal year, the 
        number of special needs adoptions in the State in the fiscal 
        year for which the number is the greatest in the period that 
        begins with fiscal year 1997 and ends with the fiscal year 
        preceding such subsequent fiscal year.
    ``(h) Limitations on Authorization of Appropriations.--
        ``(1) In general.--For grants under subsection (a), there are 
    authorized to be appropriated to the Secretary $20,000,000 for each 
    of fiscal years 1999 through 2003.
        ``(2) Availability.--Amounts appropriated under paragraph (1) 
    are authorized to remain available until expended, but not after 
    fiscal year 2003.
    ``(i) Technical Assistance.--
        ``(1) In general.--The Secretary may, directly or through 
    grants or contracts, provide technical assistance to assist States 
    and local communities to reach their targets for increased numbers 
    of adoptions and, to the extent that adoption is not possible, 
    alternative permanent placements, for children in foster care.
        ``(2) Description of the character of the technical 
    assistance.--The technical assistance provided under paragraph (1) 
    may support the goal of encouraging more adoptions out of the 
    foster care system, when adoptions promote the best interests of 
    children, and may include the following:
            ``(A) The development of best practice guidelines for 
        expediting termination of parental rights.
            ``(B) Models to encourage the use of concurrent planning.
            ``(C) The development of specialized units and expertise in 
        moving children toward adoption as a permanency goal.
            ``(D) The development of risk assessment tools to 
        facilitate early identification of the children who will be at 
        risk of harm if returned home.
            ``(E) Models to encourage the fast tracking of children who 
        have not attained 1 year of age into pre-adoptive placements.
            ``(F) Development of programs that place children into pre-
        adoptive families without waiting for termination of parental 
        rights.
        ``(3) Targeting of technical assistance to the courts.--Not 
    less than 50 percent of any amount appropriated pursuant to 
    paragraph (4) shall be used to provide technical assistance to the 
    courts.
        ``(4) Limitations on authorization of appropriations.--To carry 
    out this subsection, there are authorized to be appropriated to the 
    Secretary of Health and Human Services not to exceed $10,000,000 
    for each of fiscal years 1998 through 2000.''.
    (b) Discretionary Cap Adjustment for Adoption Incentive Payments.--
        (1) Section 251 amendment.--Section 251(b)(2) of the Balanced 
    Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 
    901(b)(2)), as amended by section 10203(a)(4) of the Balanced 
    Budget Act of 1997, is amended by adding at the end the following 
    new subparagraph:
            ``(G) Adoption incentive payments.--Whenever a bill or 
        joint resolution making appropriations for fiscal year 1999, 
        2000, 2001, 2002, or 2003 is enacted that specifies an amount 
        for adoption incentive payments pursuant to this part for the 
        Department of Health and Human Services--
                ``(i) the adjustments for new budget authority shall be 
            the amounts of new budget authority provided in that 
            measure for adoption incentive payments, but not to exceed 
            $20,000,000; and
                ``(ii) the adjustment for outlays shall be the 
            additional outlays flowing from such amount.''.
        (2) Section 314 amendment.--Section 314(b) of the Congressional 
    Budget Act of 1974, as amended by section 10114(a) of the Balanced 
    Budget Act of 1997, is amended--
            (A) by striking ``or'' at the end of paragraph (4);
            (B) by striking the period at the end of paragraph (5) and 
        inserting ``; or''; and
            (C) by adding at the end the following:
        ``(6) in the case of an amount for adoption incentive payments 
    (as defined in section 251(b)(2)(G) of the Balanced Budget and 
    Emergency Deficit Control Act of 1985) for fiscal year 1999, 2000, 
    2001, 2002, or 2003 for the Department of Health and Human 
    Services, an amount not to exceed $20,000,000.''.

SEC. 202. ADOPTIONS ACROSS STATE AND COUNTY JURISDICTIONS.

    (a) State Plan for Child Welfare Services Requirement.--Section 
422(b) of the Social Security Act (42 U.S.C. 622(b)) is amended--
        (1) in paragraph (10), by striking ``and'' at the end;
        (2) in paragraph (11), by striking the period and inserting ``; 
    and''; and
        (3) by adding at the end the following:
        ``(12) contain assurances that the State shall develop plans 
    for the effective use of cross-jurisdictional resources to 
    facilitate timely adoptive or permanent placements for waiting 
    children.''.
    (b) Condition of Assistance.--Section 474 of such Act (42 U.S.C. 
674) is amended by adding at the end the following:
    ``(e) Notwithstanding subsection (a), a State shall not be eligible 
for any payment under this section if the Secretary finds that, after 
the date of the enactment of this subsection, the State has--
        ``(1) denied or delayed the placement of a child for adoption 
    when an approved family is available outside of the jurisdiction 
    with responsibility for handling the case of the child; or
        ``(2) failed to grant an opportunity for a fair hearing, as 
    described in section 471(a)(12), to an individual whose allegation 
    of a violation of paragraph (1) of this subsection is denied by the 
    State or not acted upon by the State with reasonable promptness.''.
    (c) Study of Interjurisdictional Adoption Issues.--
        (1) In general.--The Comptroller General of the United States 
    shall--
            (A) study and consider how to improve procedures and 
        policies to facilitate the timely and permanent adoptions of 
        children across State and county jurisdictions; and
            (B) examine, at a minimum, interjurisdictional adoption 
        issues--
                (i) concerning the recruitment of prospective adoptive 
            families from other States and counties;
                (ii) concerning the procedures to grant reciprocity to 
            prospective adoptive family home studies from other States 
            and counties;
                (iii) arising from a review of the comity and full 
            faith and credit provided to adoption decrees and 
            termination of parental rights orders from other States; 
            and
                (iv) concerning the procedures related to the 
            administration and implementation of the Interstate Compact 
            on the Placement of Children.
        (2) Report to the congress.--Not later than 1 year after the 
    date of the enactment of this Act, the Comptroller General shall 
    submit to the appropriate committees of the Congress a report that 
    includes--
            (A) the results of the study conducted under paragraph (1); 
        and
            (B) recommendations on how to improve procedures to 
        facilitate the interjurisdictional adoption of children, 
        including interstate and intercounty adoptions, so that 
        children will be assured timely and permanent placements.

SEC. 203. PERFORMANCE OF STATES IN PROTECTING CHILDREN.

    (a) Annual Report on State Performance.--Part E of title IV of the 
Social Security Act (42 U.S.C. 670 et seq.) is amended by adding at the 
end the following:

``SEC. 479A. ANNUAL REPORT.

    ``The Secretary, in consultation with Governors, State 
legislatures, State and local public officials responsible for 
administering child welfare programs, and child welfare advocates, 
shall--
        ``(1) develop a set of outcome measures (including length of 
    stay in foster care, number of foster care placements, and number 
    of adoptions) that can be used to assess the performance of States 
    in operating child protection and child welfare programs pursuant 
    to parts B and E to ensure the safety of children;
        ``(2) to the maximum extent possible, the outcome measures 
    should be developed from data available from the Adoption and 
    Foster Care Analysis and Reporting System;
        ``(3) develop a system for rating the performance of States 
    with respect to the outcome measures, and provide to the States an 
    explanation of the rating system and how scores are determined 
    under the rating system;
        ``(4) prescribe such regulations as may be necessary to ensure 
    that States provide to the Secretary the data necessary to 
    determine State performance with respect to each outcome measure, 
    as a condition of the State receiving funds under this part; and
        ``(5) on May 1, 1999, and annually thereafter, prepare and 
    submit to the Congress a report on the performance of each State on 
    each outcome measure, which shall examine the reasons for high 
    performance and low performance and, where possible, make 
    recommendations as to how State performance could be improved.''.
    (b) Development of Performance-Based Incentive System.--The 
Secretary of Health and Human Services, in consultation with State and 
local public officials responsible for administering child welfare 
programs and child welfare advocates, shall study, develop, and 
recommend to Congress an incentive system to provide payments under 
parts B and E of title IV of the Social Security Act (42 U.S.C. 620 et 
seq., 670 et seq.) to any State based on the State's performance under 
such a system. Such a system shall, to the extent the Secretary 
determines feasible and appropriate, be based on the annual report 
required by section 479A of the Social Security Act (as added by 
subsection (a) of this section) or on any proposed modifications of the 
annual report. Not later than 6 months after the date of the enactment 
of this Act, the Secretary shall submit to the Committee on Ways and 
Means of the House of Representatives and the Committee on Finance of 
the Senate a progress report on the feasibility, timetable, and 
consultation process for conducting such a study. Not later than 15 
months after such date of enactment, the Secretary shall submit to the 
Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate the final report on a performance-
based incentive system. The report may include other recommendations 
for restructuring the program and payments under parts B and E of title 
IV of the Social Security Act.

             TITLE III--ADDITIONAL IMPROVEMENTS AND REFORMS

SEC. 301. EXPANSION OF CHILD WELFARE DEMONSTRATION PROJECTS.

    (a) In General.--Section 1130(a) of the Social Security Act (42 
U.S.C. 1320a-9) is amended to read as follows:
    ``(a) Authority To Approve Demonstration Projects.--
        ``(1) In general.--The Secretary may authorize States to 
    conduct demonstration projects pursuant to this section which the 
    Secretary finds are likely to promote the objectives of part B or E 
    of title IV.
        ``(2) Limitation.--The Secretary may authorize not more than 10 
    demonstration projects under paragraph (1) in each of fiscal years 
    1998 through 2002.
        ``(3) Certain types of proposals required to be considered.--
            ``(A) If an appropriate application therefor is submitted, 
        the Secretary shall consider authorizing a demonstration 
        project which is designed to identify and address barriers that 
        result in delays to adoptive placements for children in foster 
        care.
            ``(B) If an appropriate application therefor is submitted, 
        the Secretary shall consider authorizing a demonstration 
        project which is designed to identify and address parental 
        substance abuse problems that endanger children and result in 
        the placement of children in foster care, including through the 
        placement of children with their parents in residential 
        treatment facilities (including residential treatment 
        facilities for post-partum depression) that are specifically 
        designed to serve parents and children together in order to 
        promote family reunification and that can ensure the health and 
        safety of the children in such placements.
            ``(C) If an appropriate application therefor is submitted, 
        the Secretary shall consider authorizing a demonstration 
        project which is designed to address kinship care.
        ``(4) Limitation on eligibility.--The Secretary may not 
    authorize a State to conduct a demonstration project under this 
    section if the State fails to provide health insurance coverage to 
    any child with special needs (as determined under section 473(c)) 
    for whom there is in effect an adoption assistance agreement 
    between a State and an adoptive parent or parents.
        ``(5) Requirement to consider effect of project on terms and 
    conditions of certain court orders.--In considering an application 
    to conduct a demonstration project under this section that has been 
    submitted by a State in which there is in effect a court order 
    determining that the State's child welfare program has failed to 
    comply with the provisions of part B or E of title IV, or with the 
    Constitution of the United States, the Secretary shall take into 
    consideration the effect of approving the proposed project on the 
    terms and conditions of the court order related to the failure to 
    comply.''.
    (b) Rule of Construction.--Nothing in the amendment made by 
subsection (a) shall be construed as affecting the terms and conditions 
of any demonstration project approved under section 1130 of the Social 
Security Act (42 U.S.C. 1320a-9) before the date of the enactment of 
this Act.
    (c) Authority To Extend Duration of Demonstrations.--Section 
1130(d) of such Act (42 U.S.C. 1320a-9(d)) is amended by inserting ``, 
unless in the judgment of the Secretary, the demonstration project 
should be allowed to continue'' before the period.

SEC. 302. PERMANENCY HEARINGS.

    Section 475(5)(C) of the Social Security Act (42 U.S.C. 675(5)(C)) 
is amended--
        (1) by striking ``dispositional'' and inserting ``permanency'';
        (2) by striking ``eighteen'' and inserting ``12'';
        (3) by striking ``original placement'' and inserting ``date the 
    child is considered to have entered foster care (as determined 
    under subparagraph (F))''; and
        (4) by striking ``future status of'' and all that follows 
    through ``long term basis)'' and inserting ``permanency plan for 
    the child that includes whether, and if applicable when, the child 
    will be returned to the parent, placed for adoption and the State 
    will file a petition for termination of parental rights, or 
    referred for legal guardianship, or (in cases where the State 
    agency has documented to the State court a compelling reason for 
    determining that it would not be in the best interests of the child 
    to return home, be referred for termination of parental rights, or 
    be placed for adoption, with a fit and willing relative, or with a 
    legal guardian) placed in another planned permanent living 
    arrangement''.

SEC. 303. KINSHIP CARE.

    (a) Report.--
        (1) In general.--The Secretary of Health and Human Services 
    shall--
            (A) not later than June 1, 1998, convene the advisory panel 
        provided for in subsection (b)(1) and prepare and submit to the 
        advisory panel an initial report on the extent to which 
        children in foster care are placed in the care of a relative 
        (in this section referred to as ``kinship care''); and
            (B) not later than June 1, 1999, submit to the Committee on 
        Ways and Means of the House of Representatives and the 
        Committee on Finance of the Senate a final report on the matter 
        described in subparagraph (A), which shall--
                (i) be based on the comments submitted by the advisory 
            panel pursuant to subsection (b)(2) and other information 
            and considerations; and
                (ii) include the policy recommendations of the 
            Secretary with respect to the matter.
        (2) Required contents.--Each report required by paragraph (1) 
    shall--
            (A) include, to the extent available for each State, 
        information on--
                (i) the policy of the State regarding kinship care;
                (ii) the characteristics of the kinship care providers 
            (including age, income, ethnicity, and race, and the 
            relationship of the kinship care providers to the 
            children);
                (iii) the characteristics of the household of such 
            providers (such as number of other persons in the household 
            and family composition);
                (iv) how much access to the child is afforded to the 
            parent from whom the child has been removed;
                (v) the cost of, and source of funds for, kinship care 
            (including any subsidies such as medicaid and cash 
            assistance);
                (vi) the permanency plan for the child and the actions 
            being taken by the State to achieve the plan;
                (vii) the services being provided to the parent from 
            whom the child has been removed; and
                (viii) the services being provided to the kinship care 
            provider; and
            (B) specifically note the circumstances or conditions under 
        which children enter kinship care.
    (b) Advisory Panel.--
        (1) Establishment.--The Secretary of Health and Human Services, 
    in consultation with the Chairman of the Committee on Ways and 
    Means of the House of Representatives and the Chairman of the 
    Committee on Finance of the Senate, shall convene an advisory panel 
    which shall include parents, foster parents, relative caregivers, 
    former foster children, State and local public officials 
    responsible for administering child welfare programs, private 
    persons involved in the delivery of child welfare services, 
    representatives of tribal governments and tribal courts, judges, 
    and academic experts.
        (2) Duties.--The advisory panel convened pursuant to paragraph 
    (1) shall review the report prepared pursuant to subsection (a), 
    and, not later than October 1, 1998, submit to the Secretary 
    comments on the report.

SEC. 304. CLARIFICATION OF ELIGIBLE POPULATION FOR INDEPENDENT LIVING 
              SERVICES.

    Section 477(a)(2)(A) of the Social Security Act (42 U.S.C. 
677(a)(2)(A)) is amended by inserting ``(including children with 
respect to whom such payments are no longer being made because the 
child has accumulated assets, not to exceed $5,000, which are otherwise 
regarded as resources for purposes of determining eligibility for 
benefits under this part)'' before the comma.

SEC. 305. REAUTHORIZATION AND EXPANSION OF FAMILY PRESERVATION AND 
              SUPPORT SERVICES.

    (a) Reauthorization of Family Preservation and Support Services.--
        (1) In general.--Section 430(b) of the Social Security Act (42 
    U.S.C. 629(b)) is amended--
            (A) in paragraph (4), by striking ``or'' at the end;
            (B) in paragraph (5), by striking the period and inserting 
        a semicolon; and
            (C) by adding at the end the following:
        ``(6) for fiscal year 1999, $275,000,000;
        ``(7) for fiscal year 2000, $295,000,000; and
        ``(8) for fiscal year 2001, $305,000,000.''.
        (2) Continuation of reservation of certain amounts.--Paragraphs 
    (1) and (2) of section 430(d) of the Social Security Act (42 U.S.C. 
    629(d)(1) and (2)) are each amended by striking ``and 1998'' and 
    inserting ``1998, 1999, 2000, and 2001''.
        (3) Conforming amendments.--Section 13712 of the Omnibus Budget 
    Reconciliation Act of 1993 (42 U.S.C. 670 note) is amended--
            (A) in subsection (c), by striking ``1998'' each place it 
        appears and inserting ``2001''; and
            (B) in subsection (d)(2), by striking ``and 1998'' and 
        inserting ``1998, 1999, 2000, and 2001''.
    (b) Expansion for Time-Limited Family Reunification Services and 
Adoption Promotion and Support Services.--
        (1) Additions to state plan.--Section 432 of the Social 
    Security Act (42 U.S.C. 629b) is amended--
            (A) in subsection (a)--
                (i) in paragraph (4), by striking ``and community-based 
            family support services'' and inserting ``, community-based 
            family support services, time-limited family reunification 
            services, and adoption promotion and support services,''; 
            and
                (ii) in paragraph (5)(A), by striking ``and community-
            based family support services'' and inserting ``, 
            community-based family support services, time-limited 
            family reunification services, and adoption promotion and 
            support services''; and
            (B) in subsection (b)(1), by striking ``and family 
        support'' and inserting ``, family support, time-limited family 
        reunification, and adoption promotion and support''.
        (2) Definitions of time-limited family reunification services 
    and adoption promotion and support services.--Section 431(a) of the 
    Social Security Act (42 U.S.C. 629a(a)) is amended by adding at the 
    end the following:
        ``(7) Time-limited family reunification services.--
            ``(A) In general.--The term `time-limited family 
        reunification services' means the services and activities 
        described in subparagraph (B) that are provided to a child that 
        is removed from the child's home and placed in a foster family 
        home or a child care institution and to the parents or primary 
        caregiver of such a child, in order to facilitate the 
        reunification of the child safely and appropriately within a 
        timely fashion, but only during the 15-month period that begins 
        on the date that the child, pursuant to section 475(5)(F), is 
        considered to have entered foster care.
            ``(B) Services and activities described.--The services and 
        activities described in this subparagraph are the following:
                ``(i) Individual, group, and family counseling.
                ``(ii) Inpatient, residential, or outpatient substance 
            abuse treatment services.
                ``(iii) Mental health services.
                ``(iv) Assistance to address domestic violence.
                ``(v) Services designed to provide temporary child care 
            and therapeutic services for families, including crisis 
            nurseries.
                ``(vi) Transportation to or from any of the services 
            and activities described in this subparagraph.
        ``(8) Adoption promotion and support services.--The term 
    `adoption promotion and support services' means services and 
    activities designed to encourage more adoptions out of the foster 
    care system, when adoptions promote the best interests of children, 
    including such activities as pre- and post-adoptive services and 
    activities designed to expedite the adoption process and support 
    adoptive families.''.
        (3) Additional conforming amendments.--
            (A) Purposes.--Section 430(a) of the Social Security Act 
        (42 U.S.C. 629(a)) is amended by striking ``and community-based 
        family support services'' and inserting ``, community-based 
        family support services, time-limited family reunification 
        services, and adoption promotion and support services''.
            (B) Program title.--The heading of subpart 2 of part B of 
        title IV of the Social Security Act (42 U.S.C. 629 et seq.) is 
        amended to read as follows:

           ``Subpart 2--Promoting Safe and Stable Families''.

    (c) Emphasizing the Safety of the Child.--
        (1) Requiring assurances that the safety of children shall be 
    of paramount concern.--Section 432(a) of the Social Security Act 
    (42 U.S.C. 629b(a)) is amended--
            (A) by striking ``and'' at the end of paragraph (7);
            (B) by striking the period at the end of paragraph (8); and
            (C) by adding at the end the following:
        ``(9) contains assurances that in administering and conducting 
    service programs under the plan, the safety of the children to be 
    served shall be of paramount concern.''.
        (2) Definitions of family preservation and family support 
    services.--Section 431(a) of the Social Security Act (42 U.S.C. 
    629a(a)) is amended--
            (A) in paragraph (1)--
                (i) in subparagraph (A), by inserting ``safe and'' 
            before ``appropriate'' each place it appears; and
                (ii) in subparagraph (B), by inserting ``safely'' after 
            ``remain''; and
            (B) in paragraph (2)--
                (i) by inserting ``safety and'' before ``well-being''; 
            and
                (ii) by striking ``stable'' and inserting ``safe, 
            stable,''.
    (d) Clarification of Maintenance of Effort Requirement.--
        (1) Definition of non-federal funds.--Section 431(a) of the 
    Social Security Act (42 U.S.C. 629a(a)), as amended by subsection 
    (b)(2), is amended by adding at the end the following:
        ``(9) Non-federal funds.--The term `non-Federal funds' means 
    State funds, or at the option of a State, State and local funds.''.
        (2) Effective date.--The amendment made by paragraph (1) takes 
    effect as if included in the enactment of section 13711 of the 
    Omnibus Budget Reconciliation Act of 1993 (Public Law 103-33; 107 
    Stat. 649).

SEC. 306. HEALTH INSURANCE COVERAGE FOR CHILDREN WITH SPECIAL NEEDS.

    Section 471(a) of the Social Security Act (42 U.S.C. 671(a)), as 
amended by section 106, is amended--
        (1) in paragraph (19), by striking ``and'' at the end;
        (2) in paragraph (20), by striking the period and inserting ``; 
    and''; and
        (3) by adding at the end the following:
        ``(21) provides for health insurance coverage (including, at 
    State option, through the program under the State plan approved 
    under title XIX) for any child who has been determined to be a 
    child with special needs, for whom there is in effect an adoption 
    assistance agreement (other than an agreement under this part) 
    between the State and an adoptive parent or parents, and who the 
    State has determined cannot be placed with an adoptive parent or 
    parents without medical assistance because such child has special 
    needs for medical, mental health, or rehabilitative care, and that 
    with respect to the provision of such health insurance coverage--
            ``(A) such coverage may be provided through 1 or more State 
        medical assistance programs;
            ``(B) the State, in providing such coverage, shall ensure 
        that the medical benefits, including mental health benefits, 
        provided are of the same type and kind as those that would be 
        provided for children by the State under title XIX;
            ``(C) in the event that the State provides such coverage 
        through a State medical assistance program other than the 
        program under title XIX, and the State exceeds its funding for 
        services under such other program, any such child shall be 
        deemed to be receiving aid or assistance under the State plan 
        under this part for purposes of section 1902(a)(10)(A)(i)(I); 
        and
            ``(D) in determining cost-sharing requirements, the State 
        shall take into consideration the circumstances of the adopting 
        parent or parents and the needs of the child being adopted 
        consistent, to the extent coverage is provided through a State 
        medical assistance program, with the rules under such 
        program.''.

SEC. 307. CONTINUATION OF ELIGIBILITY FOR ADOPTION ASSISTANCE PAYMENTS 
              ON BEHALF OF CHILDREN WITH SPECIAL NEEDS WHOSE INITIAL 
              ADOPTION HAS BEEN DISSOLVED.

    (a) Continuation of Eligibility.--Section 473(a)(2) of the Social 
Security Act (42 U.S.C. 673(a)(2)) is amended by adding at the end the 
following: ``Any child who meets the requirements of subparagraph (C), 
who was determined eligible for adoption assistance payments under this 
part with respect to a prior adoption, who is available for adoption 
because the prior adoption has been dissolved and the parental rights 
of the adoptive parents have been terminated or because the child's 
adoptive parents have died, and who fails to meet the requirements of 
subparagraphs (A) and (B) but would meet such requirements if the child 
were treated as if the child were in the same financial and other 
circumstances the child was in the last time the child was determined 
eligible for adoption assistance payments under this part and the prior 
adoption were treated as never having occurred, shall be treated as 
meeting the requirements of this paragraph for purposes of paragraph 
(1)(B)(ii).''.
    (b) Applicability.--The amendment made by subsection (a) shall only 
apply to children who are adopted on or after October 1, 1997.

SEC. 308. STATE STANDARDS TO ENSURE QUALITY SERVICES FOR CHILDREN IN 
              FOSTER CARE.

    Section 471(a) of the Social Security Act (42 U.S.C. 671(a)), as 
amended by sections 106 and 306, is amended--
        (1) in paragraph (20), by striking ``and'' at the end;
        (2) in paragraph (21), by striking the period and inserting ``; 
    and''; and
        (3) by adding at the end the following:
        ``(22) provides that, not later than January 1, 1999, the State 
    shall develop and implement standards to ensure that children in 
    foster care placements in public or private agencies are provided 
    quality services that protect the safety and health of the 
    children.''.

                        TITLE IV--MISCELLANEOUS

SEC. 401. PRESERVATION OF REASONABLE PARENTING.

    Nothing in this Act is intended to disrupt the family unnecessarily 
or to intrude inappropriately into family life, to prohibit the use of 
reasonable methods of parental discipline, or to prescribe a particular 
method of parenting.

SEC. 402. REPORTING REQUIREMENTS.

    Any information required to be reported under this Act shall be 
supplied to the Secretary of Health and Human Services through data 
meeting the requirements of the Adoption and Foster Care Analysis and 
Reporting System established pursuant to section 479 of the Social 
Security Act (42 U.S.C. 679), to the extent such data is available 
under that system. The Secretary shall make such modifications to 
regulations issued under section 479 of such Act with respect to the 
Adoption and Foster Care Analysis and Reporting System as may be 
necessary to allow States to obtain data that meets the requirements of 
such system in order to satisfy the reporting requirements of this Act.

SEC. 403. SENSE OF CONGRESS REGARDING STANDBY GUARDIANSHIP.

    It is the sense of Congress that the States should have in effect 
laws and procedures that permit any parent who is chronically ill or 
near death, without surrendering parental rights, to designate a 
standby guardian for the parent's minor children, whose authority would 
take effect upon--
        (1) the death of the parent;
        (2) the mental incapacity of the parent; or
        (3) the physical debilitation and consent of the parent.

SEC. 404. TEMPORARY ADJUSTMENT OF CONTINGENCY FUND FOR STATE WELFARE 
              PROGRAMS.

    (a) Reduction of Appropriation.--Section 403(b)(2) of the Social 
Security Act (42 U.S.C. 603(b)(2)) is amended by inserting ``, reduced 
by the sum of the dollar amounts specified in paragraph (6)(C)(ii)'' 
before the period.
    (b) Increase in State Remittances.--Section 403(b)(6) of such Act 
(42 U.S.C. 603(b)(6)) is amended by adding at the end the following:
            ``(C) Adjustment of state remittances.--
                ``(i) In general.--The amount otherwise required by 
            subparagraph (A) to be remitted by a State for a fiscal 
            year shall be increased by the lesser of--

                    ``(I) the total adjustment for the fiscal year, 
                multiplied by the adjustment percentage for the State 
                for the fiscal year; or
                    ``(II) the unadjusted net payment to the State for 
                the fiscal year.

                ``(ii) Total adjustment.--As used in clause (i), the 
            term `total adjustment' means--

                    ``(I) in the case of fiscal year 1998, $2,000,000;
                    ``(II) in the case of fiscal year 1999, $9,000,000;
                    ``(III) in the case of fiscal year 2000, 
                $16,000,000; and
                    ``(IV) in the case of fiscal year 2001, 
                $13,000,000.

                ``(iii) Adjustment percentage.--As used in clause (i), 
            the term `adjustment percentage' means, with respect to a 
            State and a fiscal year--

                    ``(I) the unadjusted net payment to the State for 
                the fiscal year; divided by
                    ``(II) the sum of the unadjusted net payments to 
                all States for the fiscal year.

                ``(iv) Unadjusted net payment.--As used in this 
            subparagraph, the term, `unadjusted net payment' means with 
            respect to a State and a fiscal year--

                    ``(I) the total amount paid to the State under 
                paragraph (3) in the fiscal year; minus
                    ``(II) the amount that, in the absence of this 
                subparagraph, would be required by subparagraph (A) or 
                by section 409(a)(10) to be remitted by the State in 
                respect of the payment.''.

    (c) Recommendations for Improving the Operation of the Contingency 
Fund.--Not later than March 1, 1998, the Secretary of Health and Human 
Services shall make recommendations to the Congress for improving the 
operation of the Contingency Fund for State Welfare Programs.

SEC. 405. COORDINATION OF SUBSTANCE ABUSE AND CHILD PROTECTION 
              SERVICES.

    Within 1 year after the date of the enactment of this Act, the 
Secretary of Health and Human Services, based on information from the 
Substance Abuse and Mental Health Services Administration and the 
Administration for Children and Families in the Department of Health of 
Human Services, shall prepare and submit to the Committee on Ways and 
Means of the House of Representatives and the Committee on Finance of 
the Senate a report which describes the extent and scope of the problem 
of substance abuse in the child welfare population, the types of 
services provided to such population, and the outcomes resulting from 
the provision of such services to such population. The report shall 
include recommendations for any legislation that may be needed to 
improve coordination in providing such services to such population.

SEC. 406. PURCHASE OF AMERICAN-MADE EQUIPMENT AND PRODUCTS.

    (a) In General.--It is the sense of the Congress that, to the 
greatest extent practicable, all equipment and products purchased with 
funds made available under this Act should be American-made.
    (b) Notice Requirement.--In providing financial assistance to, or 
entering into any contract with, any entity using funds made available 
under this Act, the head of each Federal agency, to the greatest extent 
practicable, shall provide to such entity a notice describing the 
statement made in subsection (a) by the Congress.

                        TITLE V--EFFECTIVE DATE

SEC. 501. EFFECTIVE DATE.

    (a) In General.--Except as otherwise provided in this Act, the 
amendments made by this Act take effect on the date of enactment of 
this Act.
    (b) Delay Permitted if State Legislation Required.--In the case of 
a State plan under part B or E of title IV of the Social Security Act 
which the Secretary of Health and Human Services determines requires 
State legislation (other than legislation appropriating funds) in order 
for the plan to meet the additional requirements imposed by the 
amendments made by this Act, the State plan shall not be regarded as 
failing to comply with the requirements of such part solely on the 
basis of the failure of the plan to meet such additional requirements 
before the first day of the first calendar quarter beginning after the 
close of the first regular session of the State legislature that begins 
after the date of enactment of this Act. For purposes of the previous 
sentence, in the case of a State that has a 2-year legislative session, 
each year of such session shall be deemed to be a separate regular 
session of the State legislature.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.
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