SEC. 106. CONTINGENCY FUND. 
(a) DEPOSITS INTO FUND.—Section 403(b)(2) (42 
U.S.C. 603(b)(2)) is amended—
(1) by striking ‘‘1997, 1998, 1999, 2000, 2001, 
and 2002’’ and inserting ‘‘2004 through 2008’’; and 
(2)
by
striking
all
that
follows 
‘‘$2,000,000,000’’ and inserting a period. 
(b) GRANTS.—Section 403(b)(3)(C)(ii) (42 U.S.C. 
603(b)(3)(C)(ii)) is amended by striking ‘‘fiscal years 
1997 through 2002’’ and inserting ‘‘fiscal years 2004 
through 2008’’. 
(c) DEFINITION OF NEEDY STATE.—Clauses (i) and 
(ii) of section 403(b)(5)(B) (42 U.S.C. 603(b)(5)(B)) are 
amended by inserting after ‘‘1996’’ the following: ‘‘, and 
the Food Stamp Act of 1977 as in effect during the cor-
responding 3-month period in the fiscal year preceding 
such most recently concluded 3-month period,’’. 
(d) ANNUAL RECONCILIATION: FEDERAL MATCHING 
OF STATE EXPENDITURES ABOVE ‘‘MAINTENANCE OF 
EFFORT’’
LEVEL.—Section
403(b)(6)
(42
U.S.C. 
603(b)(6)) is amended—
(1) in subparagraph (A)(ii)—
(A) by adding ‘‘and’’ at the end of sub-
clause (I); 
(B) by striking ‘‘; and’’ at the end of sub-
clause (II) and inserting a period; and
(C) by striking subclause (III); 
(2) in subparagraph (B)(i)(II), by striking all 
that follows ‘‘section 409(a)(7)(B)(iii))’’ and insert-
ing a period; 
(3) by amending subparagraph (B)(ii)(I) to 
read as follows: 
‘‘(I) the qualified State expendi-
tures
(as
defined
in
section 
409(a)(7)(B)(i)) for the fiscal year; 
plus’’; and 
(4) by striking subparagraph (C). 
(e) CONSIDERATION OF CERTAIN CHILD CARE EX-
PENDITURES
IN
DETERMINING
STATE
COMPLIANCE 
WITH CONTINGENCY FUND MAINTENANCE OF EFFORT 
REQUIREMENT.—Section
409(a)(10)
(42
U.S.C. 
609(a)(10)) is amended—
(1) by striking ‘‘(other than the expenditures 
described in subclause (I)(bb) of that paragraph)) 
under the State program funded under this part’’ 
and inserting a close parenthesis; and 
(2) by striking ‘‘excluding any amount ex-
pended by the State for child care under subsection 
(g) or (i) of section 402 (as in effect during fiscal 
year 1994) for fiscal year 1994,’’.
(f) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on October 1, 2003. 
SEC. 107. USE OF FUNDS. 
(a) GENERAL RULES.—Section 404(a)(2) (42 U.S.C. 
604(a)(2)) is amended by striking ‘‘in any manner that’’ 
and inserting ‘‘for any purposes or activities for which’’. 
(b) TREATMENT OF INTERSTATE IMMIGRANTS.—
(1)
STATE
PLAN
PROVISION.—Section 
402(a)(1)(B) (42 U.S.C. 602(a)(1)(B)) is amended 
by striking clause (i) and redesignating clauses (ii) 
through (iv) as clauses (i) through (iii), respectively. 
(2) USE OF FUNDS.—Section 404 (42 U.S.C. 
604) is amended by striking subsection (c). 
(c) INCREASE IN AMOUNT TRANSFERABLE TO CHILD 
CARE.—Section
404(d)(1)
(42
U.S.C.
604(d)(1))
is 
amended by striking ‘‘30’’ and inserting ‘‘50’’. 
(d) INCREASE IN AMOUNT TRANSFERABLE TO TITLE 
XX
PROGRAMS.—Section
404(d)(2)(B)
(42
U.S.C. 
604(d)(2)(B)) is amended to read as follows: 
‘‘(B)
APPLICABLE
PERCENT.—For
pur-
poses of subparagraph (A), the applicable per-
cent is 10 percent for fiscal year 2004 and each 
succeeding fiscal year.’’. 
(e) CLARIFICATION OF AUTHORITY OF STATES TO 
USE TANF FUNDS CARRIED OVER FROM PRIOR YEARS
TO PROVIDE TANF BENEFITS AND SERVICES.—Section 
404(e) (42 U.S.C. 604(e)) is amended to read as follows: 
‘‘(e) AUTHORITY TO CARRYOVER OR RESERVE CER-
TAIN AMOUNTS FOR BENEFITS OR SERVICES OR FOR FU-
TURE CONTINGENCIES.—
‘‘(1) CARRYOVER.—A State or tribe may use a 
grant made to the State or tribe under this part for 
any fiscal year to provide, without fiscal year limita-
tion, any benefit or service that may be provided 
under the State or tribal program funded under this 
part. 
‘‘(2) CONTINGENCY RESERVE.—A State or tribe 
may designate any portion of a grant made to the 
State or tribe under this part as a contingency re-
serve for future needs, and may use any amount so 
designated to provide, without fiscal year limitation, 
any benefit or service that may be provided under 
the State or tribal program funded under this part. 
If a State or tribe so designates a portion of such 
a grant, the State shall, on an annual basis, include 
in its report under section 411(a) the amount so 
designated.’’.
SEC. 108. REPEAL OF FEDERAL LOAN FOR STATE WELFARE 
PROGRAMS. 
(a) REPEAL.—Section 406 (42 U.S.C. 606) is re-
pealed. 
(b) CONFORMING AMENDMENTS.—
(1)
Section
409(a)
(42
U.S.C.
609(a))
is 
amended by striking paragraph (6). 
(2) Section 412 (42 U.S.C. 612) is amended by 
striking subsection (f) and redesignating subsections 
(g) through (i) as subsections (f) through (h), re-
spectively. 
(3) Section 1108(a)(2) (42 U.S.C. 1308(a)(2)) 
is amended by striking ‘‘406,’’. 
SEC. 109. UNIVERSAL ENGAGEMENT AND FAMILY SELF-
SUFFICIENCY PLAN REQUIREMENTS. 
(a)
MODIFICATION
OF
STATE
PLAN
REQUIRE-
MENTS.—Section 402(a)(1)(A) (42 U.S.C. 602(a)(1)(A)) 
is amended by striking clauses (ii) and (iii) and inserting 
the following: 
‘‘(ii) Require a parent or caretaker re-
ceiving assistance under the program to 
engage in work or alternative self-suffi-
ciency activities (as defined by the State), 
consistent with section 407(e)(2). 
‘‘(iii) Require families receiving assist-
ance under the program to engage in ac-
tivities in accordance with family self-suffi-
ciency plans developed pursuant to section 
408(b).’’. 
(b) ESTABLISHMENT OF FAMILY SELF-SUFFICIENCY 
PLANS.—
(1) IN GENERAL.—Section 408(b) (42 U.S.C. 
608(b)) is amended to read as follows: 
‘‘(b) FAMILY SELF-SUFFICIENCY PLANS.—
‘‘(1) IN GENERAL.—A State to which a grant 
is made under section 403 shall—
‘‘(A) assess, in the manner deemed appro-
priate by the State, the skills, prior work expe-
rience, and employability of each work-eligible 
individual (as defined in section 407(b)(2)(C)) 
receiving assistance under the State program 
funded under this part; 
‘‘(B) establish for each family that in-
cludes such an individual, in consultation as the 
State deems appropriate with the individual, a 
self-sufficiency plan that specifies appropriate 
activities described in the State plan submitted 
pursuant to section 402, including direct work 
activities as appropriate designed to assist the 
family in achieving their maximum degree of 
self-sufficiency, and that provides for the ongo-