medical assistance percentage (as defined in section
403(k)(7))’’.
(3) 
Section 
403(n)(1)(A) 
(42 
U.S.C.
603(n)(1)(A)) is amended by striking ‘‘the Federal
medical assistance percentage as defined in section
1905(b))’’ and inserting ‘‘the State’s enhanced Fed-
eral medical assistance percentage (as defined in
subsection (k)(7))’’.
SEC. 103. JOBS PARTICIPATION REQUIREMENTS.
(a) PARTICIPATION RATES COMBINED.—
(1) IN
GENERAL.—Section 403(l)(3)(A) (42
U.S.C. 603(l)(3)(A)) is amended—
(A) by striking ‘‘and’’ at the end of clause
(v);
(B) by striking the period at the end of
clause (vi) and inserting ‘‘; and’’; and
(C) by adding at the end the following:
‘‘(vii) 25 percent, if such year is 1996;
‘‘(viii) 30 percent, if such year is 1997;
‘‘(ix) 40 percent, if such year is 1998; and
‘‘(x) 50 percent, if such year is 1999.’’.
(2) ELIMINATION OF SEPARATE AFDC-UP PAR-
TICIPATION
RATES.—Section 403(l) (42 U.S.C.
603(l)) is amended by striking paragraph (4).
(b) 
DEFINITION
OF
PARTICIPATION.—Section
403(l)(3)(D) (42 U.S.C. 603(l)(3)(D)) is amended—
(1) by inserting ‘‘(i)’’ after ‘‘(D)’’; and
(2) by adding after and below the end the fol-
lowing:
‘‘(ii) Each hour of classroom instruction of an indi-
vidual who is enrolled in a degree program offered by an
institution of higher education (as defined in section
1201(a) of the Higher Education Act of 1965) or in such
other education or training programs that require sub-
stantial outside classroom preparation (which programs
shall be designated by the Secretary in regulations) shall
be considered 2 hours of participation in the State pro-
gram established under part F.
‘‘(iii) Each hour spent by an individual in
unsubsidized employment shall be considered 1 hour of
participation by the individual in the State program estab-
lished under part F.
‘‘(iv) Each hour of employment of an individual who
has become ineligible for aid under the State plan ap-
proved under this part and whose income (plus the other
income of the family of the individual) are sufficient to
make the individual ineligible for such aid shall be consid-
ered 1 hour of participation by the individual in the State
program established under part F, until the end of the
6-month period that begins with the date the ineligibility
begins.
‘‘(v) Each hour spent by an individual in a self-em-
ployment 
program 
referred 
to 
in 
section
482(d)(1)(A)(ii)(VI) shall be considered 1 hour of partici-
pation by the individual in the State program established
under part F.
‘‘(vi) Each hour spent by an individual in a parenting
education program approved by the State shall be consid-
ered 1 hour of participation by the individual in the State
program established under part F.’’.
(c) SCHEDULE
OF PENALTIES
FOR FAILURE
TO
MEET
REQUIRED
PARTICIPATION
RATE.—Section
403(l)(3) (42 U.S.C. 603(l)(3)) is amended—
(1) in subparagraph (A), by striking all that
precedes clause (i) and inserting the following:
‘‘(3)(A) Each State’s participation rate (determined
under subparagraph (B)) for a fiscal year shall be not less
than—’’; and
(2) by amending subparagraph (E) to read as
follows:
‘‘(E)(i) The Secretary shall, by regulation, prescribe
a set of penalties for noncompliance with subparagraph
(A), which shall take into consideration—
‘‘(I) the extent of the noncompliance;
‘‘(II) whether the job entry rate (as defined by
the Secretary in regulations) of the State exceeds
the average job entry rate for the States operating
programs under part F); and
‘‘(III) any special circumstances.
‘‘(ii) Notwithstanding any regulation prescribed
under clause (i) of this subparagraph, if a State substan-
tially fails to comply with subparagraph (A) of this para-
graph for a fiscal year, then the Secretary—
‘‘(I) shall pay to a State an amount equal to 50
percent (in lieu of any different percentage specified
in paragraph (1)(A)) of the expenditures made by
the State in the immediately succeeding fiscal year
in operating its program under part F; and
‘‘(II) until the Secretary determines that the
substantial failure to comply has ceased—
‘‘(aa) may suspend or terminate any waiv-
er granted under section 1115 of compliance by
the State with a requirement of section 402 ;
and
‘‘(bb) may not grant any such waiver to
the State under section 1115.’’.
(d) SEPARATE PARTICIPATION REQUIREMENT FOR
WORK ACTIVITIES.—Section 403(l) (42 U.S.C. 603(l)) is
amended by inserting after paragraph (3) the following:
‘‘(4)(A)(i) Notwithstanding paragraph (1), the Sec-
retary shall pay to a State an amount equal to 50 percent
of the expenditures made by such State in a fiscal year
in operating its program established under part F (in lieu
of any different percentage specified in paragraph (1)(A))
if less than 1⁄2 of the State’s participation rate (deter-
mined under paragraph (3)(B)) for the preceding fiscal
year is attributable to individuals engaged in—
‘‘(I) unsubsidized employment;
‘‘(II) on-the-job training;
‘‘(III) activities under a work supplementation
program operated under section 482(e);
‘‘(IV) public service employment;
‘‘(V) a community work experience program es-
tablished in accordance with section 482(f);
‘‘(VI) an alternative work experience program;
or
‘‘(VII) a self-employment program referred to
in section 482(d)(1)(A)(ii)(VI).
‘‘(ii)(I) Not more than 6 months of participation in
a program referred to in subclause (V) or (VI) of clause
(i) may be taken into account under clause (i) in the case
of a participant who has little or no recent work history.
‘‘(II) Not more than 90 days of participation in a
program referred to in subclause (V) or (VI) of clause (i)
may be taken into account under clause (i) if the work
experience provided by the program is designed to provide
experience in a specific occupation in accordance with the
employability plan developed for the participant.
‘‘(B) Subparagraph (A) shall not apply to a State for
a fiscal year if the State demonstrates that at least 1⁄3
of the expenditures made by the State in the fiscal year
in operating its program established under part F were
for work activities specified in subparagraph (A) and for
job placement, job development, and job retention activi-
ties.’’.
(e) 
GOOD
CAUSE
EXEMPTIONS.—Section
402(a)(19)(G)(iv) (42 U.S.C. 602(a)(19)(G)(iv)) is
amended—
(1) by striking ‘‘or’’ at the end of subclause (I);
(2) by striking ‘‘and’’ at the end of subclause
(II) and inserting ‘‘or’’; and
(3) by adding at the end the following:
‘‘(III) on the basis of the refusal
of an individual to participate in the
program or accept employment if
child care is necessary for the individ-
ual to accept such employment, and—
‘‘(B) determine whether it would be appro-
priate to require any member of the family who
may be required to participate in the program
of the State under part F to immediately begin
participation in the program; and
‘‘(C) advise the family of the availability of
child care assistance under section 402(g) for
participation in education, training, and em-
ployment.’’.
Subtitle 
B—Job 
Creation, 
Job
Placement 
and 
Development,
and Work Requirements
SEC. 111. PUBLIC JOBS CREATION PROGRAM.
(a) IN GENERAL.—Section 482 (42 U.S.C. 682) is
amended by adding at the end the following:
‘‘(j) PUBLIC JOBS CREATION PROGRAM.—
‘‘(1) IN GENERAL.—Any State may establish a
public jobs creation program in accordance with this
subsection.
‘‘(2) GENERAL REQUIREMENTS.—A public jobs
creation program is a program that provides employ-
ment in the public sector or in private nonprofit or-
ganizations in accordance with the following require-
ments:
‘‘(A) ELIGIBILITY.—A State may elect to
make a job available to an individual under this
paragraph if the individual—
‘‘(i) is eligible to receive aid under the
State plan approved under part A; and
‘‘(ii) has not, during the immediately
preceding 6 months, voluntarily termi-
nated, without good cause, full-time em-
ployment of the individual at a wage rate
of at least the minimum wage rate then in
effect under section 6 of the Fair Labor
Standards Act of 1938.
‘‘(B) PERIODIC JOB SEARCH REQUIRED.—
As a continuing condition of eligibility to par-
ticipate in the program, each participant in the
program shall periodically engage in job search.
‘‘(C) ENTRY-LEVEL POSITIONS.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the program shall provide entry-level
positions, to the extent practicable.
‘‘(ii) NO
INFRINGEMENT
ON
PRO-
MOTIONAL
OPPORTUNITIES.—A job shall
not be created in a promotional line that
will infringe in any way upon the pro-
motional opportunities of persons employed
in jobs not subsidized under this sub-
section.
‘‘(D) MAXIMUM
PERIOD
OF
SUBSIDIZED
EMPLOYMENT
AT
SAME
POSITION.—The pro-
gram shall not permit an individual to remain
in the same position of subsidized employment
for more than 24 months.
‘‘(3) WAGES TREATED AS EARNED INCOME.—
Wages paid under a program established under this
subsection shall be considered to be earned income
for purposes of any provision of law.
‘‘(4) PRESERVATION
OF
ELIGIBILITY
FOR
CHILD
CARE
ASSISTANCE
AND
MEDICAID
BENE-
FITS.—Any individual who becomes ineligible to re-
ceive aid under a State plan approved under part A
by reason of income from employment provided
under a program established under this subsection
to the caretaker relative of the family of which the
individual is a member shall for purposes of eligi-
bility 
for 
child 
care 
benefits 
under 
section
402(g)(1)(A)(i) and for purposes of eligibility for
medical assistance under the State plan approved
under title XIX, be considered to be receiving such
aid for so long as the subsidized employment pro-
vided to the individual under this subsection contin-
ues.
‘‘(5) TARGETED
INDIVIDUALS.—At least 50
percent of the amounts expended by a State under
this subsection shall be expended with respect to in-
dividuals who have received aid under the State plan
approved under part A for any 36 of the most recent
60 months, or with respect to such other groups of
individuals as the State may select and are approved
by the Secretary.’’.
(b) OPTIONAL COMPONENT OF JOBS PROGRAM.—
Section 482(d)(1)(A)(ii) (42 U.S.C. 682(d)(1)(A)(ii)) is
amended—
(1) by striking ‘‘and’’ at the end of subclause
(III);
(2) by striking the period and inserting ‘‘;
and’’; and
(3) by adding at the end the following:
‘‘(V) a publicly funded jobs creation pro-
gram as described in subsection (j).’’.
SEC. 112. EXPANSION OF JOB PLACEMENT, JOB DEVELOP-
MENT, AND JOB RETENTION ACTIVITIES.
(a) IN GENERAL.—Section 403(l) (42 U.S.C. 603(l))
is amended by adding at the end the following:
‘‘(5) Each State shall expend for job placement, job
development, and job retention activities in each fiscal
year not less than 10 percent of the total amount ex-
pended by the State for the operation of the State pro-
gram established under part F in the fiscal year.’’.
(b) CASE MANAGEMENT SERVICES REQUIRED TO BE
OFFERED
TO
JOBS 
PARTICIPANTS.—Section
482(a)(1)(B) (42 U.S.C. 682(a)(1)(B)) is amended by
adding at the end the following: ‘‘In addition, such plan
must provide that the State shall offer case management
services to each participant in the program for a period
of not fewer than 90 days after the participant becomes
employed, and, at the option of the State, the State may
extend such period to not more than 365 days.’’.
SEC. 113. SELF-EMPLOYMENT PROGRAMS.
Section 
482(d)(1)(A)(ii) 
(42 
U.S.C.
682(d)(1)(A)(ii)), as amended by section 111(b) of this
Act, is amended—
(1) by striking ‘‘and’’ at the end of subclause
(IV);
(2) by striking the period and inserting ‘‘;
and’’; and
(3) by adding at the end the following:
‘‘(VI) programs to prepare for self-employ-
ment or to enable individuals to establish a
microenterprise.’’.
SEC. 114. PROVISIONS GENERALLY APPLICABLE TO THE
JOBS PROGRAM.
Section 484 (42 U.S.C. 684) is amended by striking
subsections (b), (c), and (d) and inserting the following:
‘‘(b)(1)(A) Funds provided for a program established
under section 482 may be used only for programs that
do not duplicate any employment activity otherwise avail-
able in the locality of the program.
‘‘(B) Funds provided for a program established under
section 482 shall not be paid to a private nonprofit entity
to conduct activities that are the same or substantially
equivalent to activities provided by a State in which the
entity is located or by an agency of local government with
jurisdiction over the locality in which the entity is located,
unless the requirements of paragraph (2) are met.
‘‘(2)(A) An employer shall not displace an employee
or position, including partial displacement such as reduc-
tion in hours, wages, or employment benefits, as a result
of the use by the employer of a participant in a program
established under section 482.
‘‘(B) No work assignment under a program estab-
lished under section 482 shall result in any infringement
of the promotional opportunities of any employed individ-
ual.
‘‘(C)(i) A participant in a program established under
section 482(f) or an alternative work experience program
shall not perform any services or duties or engage in ac-
tivities that would otherwise be performed by an employee
as part of the assigned duties of the employee.
‘‘(ii) A participant in a program established under
section 482 shall not perform any services or duties or
engage in activities that—
‘‘(I) will supplant the hiring of employed work-
ers; or
‘‘(II) are services, duties or activities with re-
spect to which an individual has recall rights pursu-
ant to a collective bargaining agreement or applica-
ble personnel procedures.
‘‘(iii) A participant in a program established under
section 482 shall not perform services or duties that have
been performed by or were assigned to any—
‘‘(I) presently employed worker if the partici-
pant is in a program established under section
482(f);
‘‘(II) employee who recently resigned or was
discharged;
‘‘(III) employee who—
‘‘(aa) is the subject of a reduction in force;
or
‘‘(bb) has recall rights pursuant to a col-
lective bargaining agreement or applicable per-
sonnel procedures;
‘‘(IV) employee who is on leave (terminal, tem-
porary, vacation, emergency, or sick); or
‘‘(V) employee who is on strike or is being
locked out.
‘‘(c)(1) Sections 142(a), 143(a)(4), 143(a)(5), and
143(c)(2) of the Job Training Partnership Act shall apply
to employment provided through any program established
under section 482 of this Act.
‘‘(2) Sections 130(f) and 176(f) of the National and
Community Service Act of 1990 shall apply to employment
provided through any program established under section
482 of this Act.
‘‘(d)(1) A participant in a program established under
subsection (e), (f), or (j) of section 482 may not be as-
signed to fill any established unfilled position vacancy.
‘‘(2)(A) A program established under section 482
may not be used to assist, promote, or deter union orga-
nizing.
‘‘(B) A program established under section 482 may
not be used to impair existing contracts for services or
collective bargaining agreements.’’.
Subtitle C—Support for Working
Families
SEC. 121. END DOLLAR-FOR-DOLLAR WORK PENALTY.
(a) IN
GENERAL.—Section 402(a)(8)(A)(ii) (42
U.S.C. 602(a)(8)(A)(ii)) is amended to read as follows:
‘‘(ii) shall disregard from the earned in-
come of any child or relative receiving aid under
the State plan, or of any other individual (living
in the same home as the relative and child)
whose needs are taken into account in making
the determination, an amount equal to—
‘‘(I) not less than the first $120 (ad-
justed pursuant to section 406(i) for the
calendar quarter in which the month oc-
curs) and not more than the first $200
(adjusted pursuant to section 406(i) for
the calendar quarter in which the month
occurs) of the total of such earned income
for the month; plus
‘‘(II) not less than 1⁄3 and not more
than 1⁄2 of the remainder of such earned
income;’’.
(b) INFLATION
ADJUSTMENT.—Section 406 (42
U.S.C. 606) is amended by adding at the end the follow-
ing:
‘‘(i) The Secretary shall adjust each dollar amount
required to be adjusted pursuant to this subsection for any
month in a calendar quarter by—
‘‘(1) multiplying the amount by the ratio of—
‘‘(A) the Consumer Price Index (as pre-
pared by the Department of Labor) for the 3rd
quarter of the calendar year that immediately
precedes the calendar year in which the cal-
endar quarter occurs, to
‘‘(B) the Consumer Price Index for the 3rd
quarter of calendar year 1995; and
‘‘(2) rounding the product, if not a multiple of
$10, to the nearer multiple of $10.’’.
(c) CONFORMING AMENDMENTS.—
(1) 
Section 
402(a)(8)(A) 
(42 
U.S.C.
602(a)(8)(A)) is amended by striking clause (iv).
(2) 
Section 
402(a)(8)(B) 
(42 
U.S.C.
602(a)(8)(B)) is amended—
(A) by striking ‘‘—’’ the first place such
term appears and all that follows through ‘‘(i)’’;
(B) by striking ‘‘, (iii), or (iv)’’ and insert-
ing ‘‘or (iii)’’;
(C) by redesignating subclauses (I), (II),
and (III) of clause (i) as clauses (i), (ii), and
(iii), respectively; and
(D) by striking clause (ii).
(3) Section 402(a)(37) (42 U.S.C. 602(a)(37))
is amended by striking ‘‘or because of paragraph
(8)(B)(ii)(II)’’.
(4) 
Section 
402(g)(1)(A)(ii) 
(42 
U.S.C.
602(g)(1)(A)(ii)) is amended by striking ‘‘or by rea-
son of subsection (a)(8)(B)(ii)(II)’’.
(5) Section 1925(a) (42 U.S.C. 1396r–6(a)) is
amended by striking ‘‘or because of section
402(a)(8)(B)(ii)(II) (providing for a time-limited
earned income disregard)’’.
(d) RESEARCH
AND ANALYSIS CONCERNING EF-
FECTS OF IMPROVED EARNINGS TREATMENT.—The Sec-
retary shall establish State reporting requirements de-
signed to improve Federal data concerning employment
entries by recipients of aid under a State plan approved
under part A of title IV of the Social Security Act, and
designed to calculate monthly employment entry rates by
States. The Secretary shall also solicit from States appli-
cations under section 1115 of such Act for a structured
set of waivers designed to identify the extent to which
earnings disregard rules affect the employment entry and
employment retention rates of such recipients.
SEC. 122. INCREASE IN LIMITATION ON TOTAL FAMILY IN-
COME.
Section 402(a)(18) (42 U.S.C. 602(a)(18)) is amend-
ed by inserting ‘‘the greater of 130 percent of the income
official poverty line (as defined by the Office of Manage-
ment and Budget, and revised annually in accordance with
section 673(2) of the Omnibus Budget Reconciliation Act
of 1981) for a family of the same composition or’’ before
‘‘185’’.
SEC. 123. AVAILABILITY OF HEALTH CARE FOR POOR
WORKING FAMILIES.
(a) OPTIONAL EXTENSION OF MEDICAID ENROLL-
MENT FOR FORMER AFDC RECIPIENTS FOR 1 ADDI-
TIONAL YEAR.—
(1) IN
GENERAL.—Section 1925(b)(1) (42
U.S.C. 1396r–6(b)(1)) is amended by striking the
period at the end and inserting the following: ‘‘, and
may provide that the State shall offer to each such
family the option of extending coverage under this
subsection for any of the first 2 succeeding 6-month
periods, in the same manner and under the same
conditions as the option of extending coverage under
this subsection for the first succeeding 6-month pe-
riod.’’.
(2) 
CONFORMING
AMENDMENTS.—Section
1925(b) (42 U.S.C. 1396r–6(b)) is amended—
(A) in the heading, by striking ‘‘EXTEN-
SION’’ and inserting ‘‘EXTENSIONS’’;
(B) in the heading of paragraph (1), by
striking ‘‘REQUIREMENT’’ and inserting ‘‘IN
GENERAL’’;
(C) in paragraph (2)(B)(ii)—
(i) in the heading, by striking ‘‘PE-
RIOD’’ and inserting ‘‘PERIODS’’; and
(ii) by striking ‘‘in the period’’ and in-
serting ‘‘in each of the 6-month periods’’;
(D) in paragraph (3)(A), by striking ‘‘the
6-month period’’ and inserting ‘‘any 6-month
period’’;
(E) in paragraph (4)(A), by striking ‘‘the
extension period’’ and inserting ‘‘any extension
period’’; and
(F) in paragraph (5)(D)(i), by striking ‘‘is
a 3-month period’’ and all that follows and in-
serting the following: ‘‘is, with respect to a par-
ticular 6-month additional extension period pro-
vided under this subsection, a 3-month period
beginning with the 1st or 4th month of such ex-
tension period.’’.
(b) PERMITTING STATES TO PROVIDE TRANSI-
TIONAL
COVERAGE
TO
ANY
INDIVIDUAL
RECEIVING
AFDC 
DURING
PREVIOUS
MONTHS.—Section
1925(a)(1) (42 U.S.C. 1396r–6(a)(1)) is amended by
striking ‘‘such aid,’’ and inserting ‘‘such aid (or, at the
option of the State, in any of the 6 months immediately
preceding such month),’’.
(c) REPEAL OF REPORTING REQUIREMENT DURING
EXTENSION PERIODS.—
(1) IN
GENERAL.—Section 1925(b)(2) (42
U.S.C. 1396r–6(b)(2)) is amended by striking sub-
paragraph (B).
(2) CONFORMING AMENDMENTS.—(A) Section
1925(b)(1) (42 U.S.C. 1396r–6(b)(1)) is amended
by striking ‘‘and which meets the requirement of
paragraph (2)(B)(i)’’.
(B) Section 1925(b)(2) (42 U.S.C. 1396r–
6(b)(2)) is amended—
(i) in the heading for such paragraph, by
striking ‘‘AND REPORTING’’;
(ii) by striking ‘‘(A) NOTICE’’;
(iii) by redesignating clauses (i) and (ii) as
subparagraphs (A) and (B);
(iv) in the second sentence of subpara-
graph (A) (as so redesignated)—
(I) by striking ‘‘in the 3rd month’’
and all that follows through ‘‘(II)’’; and
(II) by striking ‘‘(III)’’ and inserting
‘‘(II)’’; and
(v) in subparagraph (B) (as so redesig-
nated)—
(I) in the heading, by striking ‘‘RE-
PORTING REQUIREMENTS AND’’; and
(II) by striking ‘‘the reporting re-
quirement’’ and all that follows through
‘‘statement of’’.
(C) Section 1925(b)(3) (42 U.S.C. 1396r–
6(b)(3)) is amended—
(i) in subparagraph (A)—
(I) by striking subclause (I);
(II) by redesignating subclauses (II)
and (III) as subclauses (I) and (II); and
(III) by striking the matter following
subclause (II) (as so redesignated); and
(ii) in subparagraph (B), by striking
‘‘(A)(iii)(II)’’ and inserting ‘‘(A)(iii)(I)’’.
(d) EFFECTIVE DATE.—(1) Except as provided in
paragraph (2), the amendments made by subsections (a)
and (b) shall apply to calendar quarters beginning on or
after October 1, 1995, without regard to whether final
regulations to carry out such amendments have been pro-
mulgated by such date.
(2) In the case of a State plan for medical assistance
under title XIX of the Social Security Act which the Sec-
retary of Health and Human Services determines requires
State legislation (other than legislation appropriating
funds) in order for the plan to meet the additional require-
ments imposed by the amendments made by subsections
(a) and (b), the State plan shall not be regarded as failing
to comply with the requirements of such title solely on the
basis of its failure to meet these additional requirements
before the first day of the first calendar quarter beginning
after the close of the first regular session of the State leg-
islature that begins after the date of the enactment of this
Act. For purposes of the previous sentence, in the case
of a State that has a 2-year legislative session, each year
of such session shall be deemed to be a separate regular
session of the State legislature.
SEC. 124. ELIMINATION OF DIFFERENT TREATMENT OF 2-
PARENT FAMILIES.
(a) IN
GENERAL.—Section 402(a) (42 U.S.C.
602(a)) is amended by striking paragraph (41).
(b) CONFORMING AMENDMENTS.—
(1) Section 402(a)(19)(B)(i)(II) (42 U.S.C.
602(a)(19)(B)(i)(II)) is amended by striking ‘‘(and’’
and all that follows through ‘‘407(b)(2)(B)(i))’’.
(2) 
Section 
402(a)(19)(D) 
(42 
U.S.C.
602(a)(19)(D)) is amended by striking ‘‘eligible’’
and all that follows through ‘‘earner’’ and inserting
‘‘in which both parents are living at home’’.
(3) 
Section 
402(a)(19)(G)(i) 
(42 
U.S.C.
602(a)(19)(G)(i)) is amended—
(A) in subclause (I), by striking ‘‘(whether
or not section 407 applies)’’; and
(B) in subclause (II)—
(i) by striking ‘‘which is eligible for
aid to families with dependent children by
reason of section 407’’ and inserting ‘‘in
which both parents are living at home’’;
and
(ii) by striking ‘‘the needs of such
spouse shall also not’’ and inserting ‘‘the
spouse shall be required to participate in
the program unless exempt by reason of
subparagraph (C) (other than clause (iii)
thereof), or by reason of subparagraph
(C)(iii) if the individual demonstrates to
the satisfaction of the State that it is in
the best interest of the child or children
not to impose such requirement, and if the
spouse fails without good cause to so par-
ticipate, the needs of the spouse shall’’.
(4) 
Section 
402(a)(38)(B) 
(42 
U.S.C.
602(a)(38)(B)) is amended by striking ‘‘or in section
407(a)’’.
(5) Section 402(a) (42 U.S.C. 602(a)) is
amended by striking paragraph (42).
(6) 
Section 
402(g)(1)(A)(ii) 
(42 
U.S.C.
602(g)(1)(A)(ii)) is amended by striking ‘‘hours of,
or increased income from,’’ and inserting ‘‘income
from’’.
(7) Section 406(a)(1) (42 U.S.C. 606(a)(1)) is
amended by striking ‘‘who has been deprived’’ and
all that follows through ‘‘incapacity of a parent’’.
(8) Section 406(b)(1) (42 U.S.C. 606(b)(1)) is
amended by striking ‘‘and if such relative’’ and all
that follows through ‘‘section 407’’.
(9) Section 407 (42 U.S.C. 607) is hereby re-
pealed.
(10) Section 472(a) (42 U.S.C. 672(a)) is
amended by striking ‘‘or of section 407’’.
(11) 
Section 
473(a)(2)(A)(i) 
(42 
U.S.C.
672(a)(2)(A)(i)) is amended by striking ‘‘or section
407’’.
(12) Section 1115(b) (42 U.S.C. 1315(b)) is
amended by striking paragraph (5).
(13) Section 1115 (42 U.S.C. 1315) is amended
by striking subsection (d).
(14) Section 1902(a)(10)(A)(i) (42 U.S.C.
1396a(a)(10)(A)(i)) 
is 
amended 
by 
striking
subclause (V) and by redesignating subclauses (VI)
and (VII) as subclauses (V) and (VI), respectively.
(15) Section 1905 (42 U.S.C. 1396d) is amend-
ed by striking subsection (m).
(16) 
Section 
1905(n)(1) 
(42 
U.S.C.
1396d(n)(1)) is amended—
(A) in subparagraph (A)—
(i) by striking ‘‘(or’’ and all that fol-
lows through ‘‘407)’’; and
(ii) by adding ‘‘or’’ at the end; and
(B) by striking subparagraph (B).
(17) Section 1925(a) (42 U.S.C. 1396r–6(a)) is
amended by striking ‘‘hours of, or income from,’’
and inserting ‘‘income from’’.
(18) Section 204(b)(2) of the Family Support
Act of 1988 (42 U.S.C. 681 note) is amended by
striking the semicolon and all that follows through
‘‘1998’’.
SEC. 125. INCREASE IN STEPPARENT INCOME DISREGARD.
Section 402(a)(31)(B) (42 U.S.C. 602(a)(31)(B)) is
amended by striking ‘‘the State’s standard of need under
such plan’’ and inserting ‘‘the greatest of (i) the State’s
standard of need under such plan, (ii) 130 percent of the
income official poverty line (as defined by the Office of
Management and Budget, and revised annually in accord-
ance with section 673(2) of the Omnibus Budget Rec-
onciliation Act of 1981), or (iii) such amount as the State
may establish,’’.
Subtitle D—Child Care
SEC. 131. INCREASE IN CHILD CARE FUNDS.
Section 403(n)(2)(B) (42 U.S.C. 603(n)(2)(B)) is
amended—
(1) by striking ‘‘and’’ at the end of clause (iv);
(2) in clause (v), by striking the comma and all
that follows and inserting a semicolon; and
(3) by adding at the end the following:
‘‘(vi) $800,000,000 for fiscal year 1996;
‘‘(vii) $1,300,000,000 for fiscal year 1997;
‘‘(viii) $1,800,000,000 for fiscal year 1998; and
‘‘(ix) $2,300,000,000 for fiscal year 1999.’’.
SEC. 132. PAYMENTS TO ENCOURAGE USE OF ENTIRE
STATE 
ALLOTMENT 
FOR 
AT-RISK 
CHILD
CARE.
Section 403 (42 U.S.C. 603) is amended—
(1) in subsection (n)—
(A) in paragraph (1)(B), by inserting ‘‘95
percent of’’ before ‘‘the limitation’’; and
(B) in paragraph (3)—
(i) by inserting ‘‘(A)’’ after ‘‘(3)’’; and
(ii) by adding at the end the follow-
ing:
‘‘(B) Notwithstanding subparagraph (A), the Sec-
retary shall reserve for payments under subsection (o) an
amount equal to the sum of—
‘‘(i) 5 percent of the amounts made available
for payments under this subsection for each fiscal
year; and
‘‘(ii) the amount of any excess referred to in
paragraph (2)(C)(ii) with respect to a State for a
fiscal year that is not used to increase the limitation
determined under paragraph (2) with respect to the
State for the 3rd succeeding fiscal year.’’; and
(2) by adding at the end the following:
‘‘(o)(1)(A) In addition to any other payment under
this section, each State that is a qualified State for a fiscal
year shall be entitled to payment from the Secretary of
an amount equal to the sum of—
‘‘(i) 5 percent of the aggregate of the amounts
paid to the State under subsection (n) for the imme-
diately preceding fiscal year; and
‘‘(ii)(I) the amount reserved under subsection
(n)(3)(B) for the immediately preceding fiscal year
that remains after applying clause (i) of this sub-
paragraph to each qualified State; multiplied by
‘‘(II) the ratio of—
‘‘(aa) the number of children residing in
the State in the immediately preceding fiscal
year, to
‘‘(bb) the number of children residing in a
qualified State in the immediately preceding fis-
cal year.
‘‘(B) As used in subparagraph (A) of this paragraph,
the term ‘qualified State’ means, with respect to a fiscal
year, a State with respect to which the amount described
in subsection (n)(1)(A) for the immediately preceding fis-
cal year equals the amount described in subsection
(n)(1)(B) for the immediately preceding fiscal year.
‘‘(2) The Secretary may not apply any amount to
which a State is entitled under paragraph (1) as an offset
against any amount owed by the State to any department
or agency of the Federal Government.
‘‘(3)(A) Within 1 year after a State receives an
amount paid under paragraph (1) of this subsection, the
State shall obligate the amount for—
‘‘(i) services under section 402(i) directly to
families eligible therefor; or
‘‘(ii) improvements in the quality of services,
and the building of infrastructure, under subsection
(g) or (i) of section 402.
‘‘(B) Amounts paid under this section may not be
used to supplant State or local expenditures for staff or
administration.’’.
SEC. 133. LIMITATION ON CARRYFORWARD OF UNUSED AT-
RISK CHILD CARE ALLOTMENTS.
Section 403(n)(2)(C) (42 U.S.C. 603(n)(2)(C)) is
amended—
(1) by inserting ‘‘(i)’’ after ‘‘(C)’’; and
(2) by adding after and below the end the fol-
lowing:
‘‘(ii) The amount of such excess with respect to
a State for a fiscal year shall not be used to increase
the limitation determined under this paragraph with
respect to the State for any fiscal year after the 2nd
succeeding fiscal year.’’.
SEC. 134. PAYMENT OF LOCAL MARKET RATES.
Section 402(g)(1)(C) (42 U.S.C. 602(g)(1)(C)) is
amended to read as follows:
‘‘(C) The State agency shall make payment for the
actual cost of child care provided with respect to a family,
in an amount that may not exceed the 75th percentile of
the local cost of care (as determined by the State in ac-
cordance with regulations prescribed by the Secretary), or
such other payment schedule (under which payment rates
are not less than the 75th percentile of the local cost of
care) as the State may establish.’’.
SEC. 135. SET-ASIDE FOR IMPROVEMENT OF INFRASTRUC-
TURE AND QUALITY.
Section 403(n) (42 U.S.C. 603(n)) is amended by
adding at the end the following:
‘‘(4) Not less than 10 percent and not more than 12
percent of the total amount obligated by a State from
amounts provided under this subsection for fiscal year
1995 and for each succeeding fiscal year shall be used for
improvement of the quality of services and the building
of infrastructure to serve low-income children, the develop-
ment of on-site or near-site facilities for parents who have
not attained 20 years of age and are attending educational
or vocational institutions, and for State licensing and reg-
istration requirements, monitoring, and assistance to child
care providers in meeting applicable standards under sub-
section (g) or (i) of section 402.’’.
SEC. 136. CHILD CARE FOR WORKING AFDC PARENTS.
(a) DEPENDENT CARE DISREGARD NOT TO BE RE-
GARDED AS SUFFICIENT TO GUARANTEE CHILD CARE.—
Section 402(g)(1)(B) (42 U.S.C. 602(g)(1)(B)) is amend-
ed by adding at the end the following: ‘‘Compliance with
subsection (a)(8)(A)(iii) with respect to a family shall not
be construed to be a guarantee of child care for the family
pursuant to this subsection, unless the family has been
offered, and has declined, payment through at least 1 of
the methods authorized by this subparagraph (other than
clause (iv) of the 1st sentence of this subparagraph).’’.
(b) ELIMINATION OF AUTHORITY TO DECREASE THE
DEPENDENT
CARE
DISREGARD
FOR
PARENTS
NOT
WORKING
FULL-TIME.—Section 402(a)(8)(A)(iii) (42
U.S.C. 602(a)(8)(A)(iii)) is amended by striking ‘‘(or’’
and all that follows through ‘‘month)’’.
(c) INCREASE IN THE AMOUNT OF THE DEPENDENT
CARE DISREGARDS.—Section 402(a)(8)(A)(iii) (42 U.S.C.
602(a)(8)(A)(iii)) is amended—
(1) by striking ‘‘$175’’ and inserting ‘‘$200 (or,
if greater, the dollar amount in effect under sub-
section (d))’’; and
(2) by striking ‘‘$200’’ and inserting ‘‘$250 (or,
if greater, the dollar amount in effect under sub-
section (d))’’.
(d) COST-OF-LIVING ADJUSTMENT OF THE DEPEND-
ENT CARE DISREGARDS.—Section 402 (42 U.S.C. 602)
is amended by inserting after subsection (c) the following:
‘‘(d) Whenever benefits under title II for a month are
increased by a percentage by reason of section 215(i)—
‘‘(1) each dollar amount in effect under sub-
section (a)(8)(A)(iii) of this section for the month
and for each subsequent month shall be increased by
the amount (if any) by which—
‘‘(A) the amount which would have been in
effect for the month under such subsection but
for rounding of the amount pursuant to para-
graph (3) of this subsection; exceeds
‘‘(B) the amount in effect for the month
under such subsection (a)(8)(A)(iii);
‘‘(2) the amount obtained under paragraph (1)
of this subsection shall be further increased by the
greater of—
‘‘(A) if the increase under title II was de-
termined on the basis of the CPI increase per-
centage, the percentage of the increase; or
‘‘(B) if not, the percentage by which bene-
fits under title II would have been increased if
the increase under title II was determined on
the basis of the CPI increase percentage; and
‘‘(3) if the amount obtained under paragraph
(2) of this subsection is not a multiple of $10, the
amount shall be rounded to the nearest multiple of
$10.’’.
SEC. 137. HEALTH AND SAFETY STANDARDS; CONTINUITY
OF CARE.
(a) FOR RECIPIENTS.—Section 402(g)(1)(A) (42
U.S.C. 602(g)(1)(A)) is amended by adding at the end the
following:
‘‘(viii) Child care guaranteed under this section,
whether provided by a method permitted under subpara-
graph (B) or by means of an agreement under subsection
(j) with the lead agency designated under the Child Care
and Development Block Grant Act of 1990 (in this section
referred to as the ‘CCDBG Act’), must meet all health
and safety standards established by the lead agency (for
purposes of the CCDBG Act), and, in addition to any
other requirements imposed pursuant to that Act, the
State agency must establish immunization requirements
and assure (and any such agreement must provide) that,
consistent with regulations of the Secretary—
‘‘(I) children whose child care is paid for, in
whole or in part, under this subsection will be re-
quired to have received all immunizations, at the ap-
propriate times, as currently recommended by the
Advisory Committee on Immunization Practices (an
advisory committee established by the Secretary, act-
ing through the director of the Centers for Disease
Control and Prevention) as specified on the pediatric
vaccines list referred to in section 1928(e); and
‘‘(II) child care providers used will take steps to
assure that toxic substances, weapons, and any other
items at the location where the child care is provided
that could be harmful to young children, will be se-
cured and unobtainable by the children.
‘‘(ix)(I) The State shall provide information about the
immunization requirements imposed pursuant to clause
(viii) and about where free immunizations may be ob-
tained, to parents upon application for child care assist-
ance and to child care providers.
‘‘(II) The State shall take needed action to ensure
that immunizations are available and accessible to all re-
cipients of such aid to whom clause (viii) applies, and, with
respect to each such recipient, shall offer assistance in
meeting such requirements, shall provide assistance in re-
sponse to a parent’s request for assistance, may not deny
child care to any parent who is seeking immunizations for
his or her child or children during a reasonable grace pe-
riod, and may not deny or terminate such child care to
a family by reason of the failure of the family to receive
required immunizations until the State has identified the
reason for the failure and addressed any barriers to ac-
cess. The State shall allow for exceptions in cases where
good cause can be shown.
‘‘(III) The State shall provide information about eli-
gibility for medical assistance under the State plan ap-
proved under title XIX to all child care providers receiving
Federal child care funds and shall suggest strategies for
informing parents about such eligibility.
‘‘(IV) The State shall work with public health clinics
to provide immunizations at child care clinics during ap-
propriate times.
‘‘(x) The State plan must assure that child care pro-
vided under this subsection will conform in all ways to the
provisions for parental choice, unlimited parental access,
handling of parental complaints, and consumer education,
as well as to all the other standards, criteria, and require-
ments applicable to child care provided under the CCDBG
Act.’’.
(b) FOR AT-RISK FAMILIES.—Section 402(i) (42
U.S.C. 602(i)) is amended by redesignating paragraphs
(5) and (6) as paragraphs (6) and (7), respectively, and
by inserting after paragraph (4) the following:
‘‘(5)(A) Child care provided under this subsection,
whether provided by a method permitted under paragraph
(2) of this subsection or by means of an agreement under
subsection (j) with the lead agency designated under the
CCDBG Act, must meet all health and safety standards
established by the lead agency (for purposes of the
CCDBG Act), and, in addition to any other requirements
imposed pursuant to that Act, the State agency must es-
tablish immunization requirements and assure (and any
such agreement must provide) that, consistent with the
regulations of the Secretary—
‘‘(i) children whose child care is paid for, in
whole or in part, under this subsection will be re-
quired to have received all immunizations, at the ap-
propriate times, as currently recommended by the
Advisory Committee on Immunization Practices (as
advisory committee established by the Secretary, act-
ing through the director of the Centers for Disease
Control and Prevention) as specified on the pediatric
vaccines list referred to in section 1928(e); and
‘‘(ii) child care providers used will take steps to
assure that toxic substances, weapons, and any other
items at the location where the child care is provided
that could be harmful to young children, will be se-
cured and unobtainable by the children.
‘‘(B)(i) The State shall provide information about the
immunization requirements imposed pursuant to subpara-
graph (A) and about where free immunizations may be
obtained, to parents upon application for child care assist-
ance and to child care providers.
‘‘(ii) The State shall provide information about eligi-
bility for medical assistance under the State plan approved
under title XIX to all child care providers receiving Fed-
eral child care funds and shall suggest strategies for in-
forming parents about such eligibility.
‘‘(iii) The State shall work with public health clinics
to provide immunizations at child care clinics during ap-
propriate times.
‘‘(6) The State plan must assure that child care pro-
vided under this subsection will conform in all ways to the
provisions for parental choice, unlimited parental access,
handling of parental complaints, and consumer education,
as well as to all other standards, criteria, and require-
ments applicable to child care provided under the CCDBG
Act.’’.
(c) CONFORMING AMENDMENTS.—
(1) CHILD
CARE
FOR
PARTICIPANTS
IN
THE
JOBS
OR
WORK
PROGRAM, 
AND
TRANSITIONAL
CHILD CARE.—Section 402(g) (42 U.S.C. 602(g)) is
amended—
(A) in paragraph (3)(B)—
(i) by adding ‘‘and’’ at the end of
clause (i);
(ii) in clause (ii), by striking ‘‘applica-
ble standards’’ and all that follows and in-
serting ‘‘all requirements, standards, and
criteria applicable to child care funded
under the CCDBG Act.’’; and
(iii) by striking clause (iii); and
(B) by striking paragraphs (4) and (5).
(2) AT-RISK CHILD CARE.—Section 402(i) (42
U.S.C. 602(i)), as amended by subsection (b) of this
section, is amended—
(A) in paragraph (6)—
(i) in subparagraph (B), by striking
‘‘applicable standards of State and local
law;’’ and inserting ‘‘all requirements,
standards, and other criteria applicable to
child care funded under the CCDBG Act;’’;
and
(ii) by striking subparagraphs (C) and
(D); and
(B) by amending paragraph (7) to read as
follows:
‘‘(8) In order to facilitate more accurate analy-
sis of the supply and quality of child care resources,
the demand for such resources that cannot currently
be satisfied, and the effectiveness and relationship of
Federal programs providing support for child care
and child development activities, the Secretary shall
specify by regulation a core set of consistently de-
fined data elements for child care which must be
used by each State with respect to all reports relat-
ing to child care or child development activities sup-
ported in whole or in part under this Act or under
the CCDBG Act.’’.
SEC. 138. PERIODIC IDENTIFICATION OF CHILD CARE
NEEDS; ENSURING THAT FAMILIES UNDER-
STAND CHILD CARE ALTERNATIVES.
Section 402(a) (42 U.S.C. 602(a)), as amended by
section 104 of this Act, is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(45);
(2) by striking the period at the end of para-
graph (46) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (46) the fol-
lowing:
‘‘(B) if an employability plan has been de-
veloped for the individual, the employability
plan shall include a notation with respect to
how the child care needs of the individual are
to be met, and, if child care is not to be pro-
vided by or through the State, the reasons
therefor.’’.
SEC. 139. ENSURING THAT REIMBURSEMENT MECHANISMS
MEET FAMILY NEEDS.
Section 402(g)(1)(B) (42 U.S.C. 602(g)(1)(B)) is
amended—
(1) by inserting ‘‘(i)’’ after ‘‘(B)’’;
(2) by redesignating clauses (i) through (v) as
subclauses (I) through (V), respectively; and
(3) by striking the 2nd sentence and inserting
the following:
‘‘(ii) When the State agency arranges for child care,
the agency shall take into account the individual needs of
the child.
‘‘(iii) The State agency may make advance payments
for child care assistance to a family eligible for such care
in any appropriate case, and shall make advance payment
if—
‘‘(I) an advance is needed in order for the fam-
ily to secure or retain such care from the provider
chosen by the individual;
‘‘(II) the provider of such care will not provide
such care without payment in advance; or
‘‘(III) the family has elected to have dependent
care 
expenses 
disregarded 
under 
subsection
(a)(8)(A)(iii), and the cost of child care is not re-
flected in the amount of aid payable to the family
under the State plan approved under this part due
to the use by the State of retrospective budgeting.’’.
SEC. 140. FACILITATION OF SEAMLESS SERVICES.
(a) AFDC CHILD CARE.—Section 402(g)(1)(A) (42
U.S.C. 602(g)(1)(A)), as amended by section 137(a) of
this Act, is amended by adding at the end the following:
‘‘(xi) Each State agency shall assess the eligibility for
child care under this paragraph of each family who ceases
to receive aid to families with dependent children, and if
the family is eligible for child care benefits under clause
(ii), shall provide such care without requiring a separate
application for such benefits.’’.
(b) 
TRANSITIONAL
CHILD
CARE.—Section
402(g)(1)(A)(ii) 
(42 
U.S.C. 
602(g)(1)(A)(ii)) 
is
amended—
(1) by inserting ‘‘(I)’’ after ‘‘(ii)’’; and
(2) by adding after and below the end the fol-
lowing:
‘‘(II) Before the exhaustion of child care benefits by
a family for whom the State is guaranteeing child care
under subclause (I), the State must assist the family in
obtaining information about, and referral to, other pro-
grams under which, or providers from which, the family
may receive child care on a continuing basis upon such
ineligibility.
‘‘(III) The State must consider any family whose
child care benefits under subclause (I) are about to be ex-
hausted for eligibility for other child care benefits offered
by the State.’’.
SEC. 141. AUTHORITY TO PROVIDE FOR CONTINUITY OF
CHILD CARE.
Section 402(g)(1)(A) (42 U.S.C. 602(g)(1)(A)), as
amended by sections 137(a) and 140(a) of this Act, is
amended by adding at the end the following:
‘‘(xii) A State may continue child care assistance
without interruption during breaks between otherwise al-
lowable activities, and for a reasonable period of time after
any loss of employment, to ensure continuity of child care
arrangements for the child or children of a family eligible
to receive care under this paragraph.’’.
SEC. 142. CHILD CARE FOR FAMILIES INCLUDING A CARE-
TAKER RELATIVE NOT RECEIVING AFDC.
Section 402(g)(1)(A) (42 U.S.C. 602(g)(1)(A)), as
amended by sections 137(a), 140(a), and 141 of this Act,
is amended by adding at the end the following:
‘‘(xiii) In any case in which child care is determined
to be necessary for the caretaker relative of a child receiv-
ing aid to families with dependent children to accept or
retain employment, the State shall guarantee child care
whether or not the caretaker relative is receiving such aid,
and if the caretaker relative is not receiving such aid, the
State may apply a sliding fee scale to determine the appro-
priate contribution (if any) to the cost of care to be paid
by the caretaker.’’.
SEC. 143. STATE OPTION TO EXTEND TRANSITIONAL CHILD
CARE BENEFITS.
Section 
402(g)(1)(A)(iii) 
(42 
U.S.C.
602(g)(1)(A)(iii)) is amended—
(1) by inserting ‘‘(I)’’ after ‘‘(iii)’’; and
(2) by adding after and below the end the fol-
lowing:
‘‘(II) At the option of the State, the State may, uni-
formly for all families—
‘‘(aa) elect to extend the period described in
subclause (I) by 12 months; or
‘‘(bb) elect to extend the period described in
subclause (I) until the income of the family exceeds
185 percent (or such lower figure as the State may
establish) of the income official poverty line (as de-
fined by the Office of Management and Budget, and
revised annually in accordance with section 673(2)
of the Omnibus Budget Reconciliation Act of 1981)
for a family of the same composition.’’.
SEC. 144. STATE OPTION TO PROVIDE TRANSITIONAL
CHILD CARE BENEFITS TO FAMILIES WHO
HAVE RECEIVED AFDC FOR FEWER THAN 3
MONTHS.
Section 
402(g)(1)(A)(iv) 
(42 
U.S.C.
602(g)(1)(A)(iv)) is amended by striking ‘‘A family’’ and
inserting ‘‘At the option of the State, a family’’.
SEC. 145. LIMITATION OF AT-RISK CHILD CARE TO FAMI-
LIES INELIGIBLE FOR RECIPIENT OR TRANSI-
TIONAL CHILD CARE.
Section 402(i)(1)(A) (42 U.S.C. 602(i)(1)(A)) is
amended to read as follows:
‘‘(A) is not eligible for child care under
subsection (g);’’.
SEC. 146. ELIMINATION OF REQUIREMENT THAT FAMILY
RECEIVING TRANSITIONAL CHILD CARE BEN-
EFITS INCLUDE A DEPENDENT CHILD.
Section 402(g)(1)(A) (42 U.S.C. 602(g)(1)(A)) is
amended by striking clause (v).
SEC. 147. STATE OPTION TO WAIVE CONTRIBUTION RE-
QUIREMENT FOR FAMILIES WITH INCOME
BELOW THE POVERTY LEVEL.
Section 
402(g)(1)(A)(vii) 
(42 
U.S.C.
602(g)(1)(A)(vii)) is amended by striking ‘‘a sliding’’ and
all that follows and inserting ‘‘the sliding fee scale estab-
lished by the State under the Child Care and Development
Block Grant Act of 1990.’’.
SEC. 148. CONTINUATION OF CHILD CARE DURING DISPUTE
RESOLUTION.
(a) AFDC AND TRANSITIONAL CHILD CARE.—Sec-
tion 402(g)(1) (42 U.S.C. 602(g)(1)) is amended by redes-
ignating subparagraph (E) as subparagraph (F) and by
inserting after subparagraph (D) the following:
‘‘(E) While the State and an individual are seeking
to resolve any dispute over whether the individual qualifies
for the provision of child care under this paragraph, the
State shall ensure the continued provision of such care
with respect to the family of the individual.’’.
(b) AT-RISK
CHILD
CARE.—Section 402(i) (42
U.S.C. 602(i)), as amended by subsections (b) and (c)(2)
of section 137 of this Act, is amended by redesignating
paragraphs (4), (5), (6), and (7) as paragraphs (5), (6),
(7), and (8), respectively, and by inserting after paragraph
(3) the following:
‘‘(4) While the State and an individual are seeking
to resolve any dispute over whether the individual qualifies
for the provision of child care under this subsection, the
State shall ensure the continued provision of such care
with respect to the family of the individual.’’.
SEC. 149. OPTION TO CONSOLIDATE STATE RESPONSIBIL-
ITY FOR CHILD CARE.
Section 402 (42 U.S.C. 602) is amended by adding
at the end the following:
‘‘(j)(1) In order to provide the child care which must
be guaranteed pursuant to subsection (g) of this section
or which may be furnished pursuant to subsection (i) of
this section, the State agency may enter into an agreement
with the lead agency designated under section 658D of
the CCDBG Act under which—
‘‘(A) subject to paragraph (2) of this sub-
section, the State agency will pay (either in advance
or as reimbursement) the lead agency for the cost of
providing child care for any child with respect to
whom care must be guaranteed under such sub-
section (g) or is to be furnished under such sub-
purposes of the CCDBG Act. An agreement shall not be
necessary in the case where the same agency is designated
under both the CCDBG Act and this Act, but the agency
shall, as lead agency, comply with all the provisions of this
subsection.’’.
TITLE II—STRENGTHENING PA-
RENTAL 
RESPONSIBILITY
AND FAMILY STABILITY
Subtitle A—Federal
Responsibilities
SEC. 201. EXPANSION OF FUNCTIONS OF FEDERAL PARENT
LOCATOR SERVICE.
Section 453(a) (42 U.S.C. 653(a)) is amended by
striking ‘‘enforcing support obligations against such par-
ent’’ and inserting ‘‘establishing parentage, or establish-
ing, modifying, and enforcing child support obligations,
and which shall use safeguards to prevent the disclosure
of information in cases that would jeopardize the safety
of the custodial parent, the noncustodial parent, or any
child of either such parent’’.
SEC. 202. EXPANSION OF FEDERAL PARENT LOCATOR SYS-
TEMS.
(a) ACCESS TO ADDITIONAL DATA BASES.—Section
453 (42 U.S.C. 653) is amended—
(1) in subsection (b), by striking ‘‘the most re-
cent address and place of employment’’ and insert-
ing ‘‘the most recent residential address, employer
name and address, and amounts and nature of in-
come and assets’’; and
(2) in subsection (e), by adding at the end the
following:
‘‘(4) The Secretary of the Treasury shall enter into
an agreement with the Secretary to provide prompt access
by the Secretary (in accordance with this subsection and
section 6103(l)(6) of the Internal Revenue Code of 1986)
to all Federal income tax returns filed by individuals with
the Internal Revenue Service.’’.
(b) EXPANSION OF ACCESS TO THE NATIONAL PAR-
ENT LOCATOR NETWORK.—Section 453 (42 U.S.C. 653)
is amended by adding at the end the following:
‘‘(g) The Secretary shall expand the Parent Locator
Service to establish a national network based on the com-
prehensive statewide child support enforcement systems
developed by the States, to—
‘‘(1) allow each State to—
‘‘(A) locate any absent parent who owes
child support or for whom a child support obli-
gation is being established, by—
‘‘(i) accessing the records of other
State agencies and sources of locate infor-
mation directly from one computer system
to another; and
‘‘(ii) accessing Federal sources of lo-
cate information in the same fashion;
‘‘(B) access the files of other States to de-
termine whether there are other child support
orders and obtain the details of those orders;
‘‘(C) provide for both on-line and batch
processing of locate requests, with on-line ac-
cess restricted to cases in which the information
is needed immediately (for such reasons as
court appearances) and batch processing used
to access data bases to locate individuals or up-
date information periodically; and
‘‘(D) direct locate requests to individual
States or Federal agencies, broadcast requests
to selected States, or broadcast cases to all
States when there is no indication of the source
of needed information;
‘‘(2) provide for a maximum of 48-hour turn-
around time for information to be broadcast and re-
turned to a requesting State;
‘‘(3) provide ready access to courts and admin-
istrative agencies of the information on the network
by location of a computer terminal in each court;
and
‘‘(4) access the registries of child support or-
ders maintained by States pursuant to section
466(a)(20)(A).’’.
SEC. 203. FEDERAL CHILD SUPPORT ORDER REGISTRY.
(a) ESTABLISHMENT.—Not later than October 1,
1995, the Secretary shall establish a Federal registry of
all child support orders recorded in State registries estab-
lished pursuant to section 466(a)(20)(A) of the Social Se-
curity Act.
(b) COMPARISON OF INFORMATION ON W–4 FORMS
WITH INFORMATION IN CHILD SUPPORT ORDERS.—With-
in 10 days after the registry established under subsection
(a) receives a W–4 form of an employee, the registry
shall—
(1) compare the information on the form with
the information in the registry on the child support
obligations of the employee; and
(2) transmit to the registry established pursu-
ant to section 466(a)(20)(A) of the Social Security
Act of the State that is collecting and disbursing the
child support payment—
(A) a notice as to whether the amount
specified on the W–4 form as the monthly child
support obligation of the employee is accurate
or not; and
(B) the name and address of the employee.
(c) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out this
section, especially in cases involving an employee who has
2 or more employers or child support obligations.
(d) STATE ACCESS TO THE REGISTRY.—The Sec-
retary shall, upon request of any State, provide the State
with access to the information contained in the registry
established under subsection (a).
(e) SAFEGUARDS.—The Secretary shall implement
such safeguards as may be necessary to prevent the disclo-
sure of information of the registry established under sub-
section (a) in cases that would jeopardize the safety of
a custodial parent, a noncustodial parent, or a child of
such a parent.
(f) DEFINITIONS.—As used in this section:
(1) CHILD SUPPORT ORDER.—The term ‘‘child
support order’’ means an order requiring payments
for support (including medical support) and mainte-
nance of a child or of a child and the parent with
whom the child is living.
(2) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Health and Human Services.
(3) STATE.—The term ‘‘State’’ includes the
several States, the District of Columbia, the Com-
monwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, the United States Virgin
Islands, Guam, American Samoa, and the Trust
Territory of the Pacific Islands.
SEC. 204. NATIONAL REPORTING OF EMPLOYEES AND
CHILD SUPPORT INFORMATION.
(a) IN GENERAL.—The Secretary of the Treasury, in
consultation with the Secretary of Labor, shall establish
a system of reporting of employees by requiring employers
to provide a copy of every employee’s W–4 form to the
Federal child support order registry established pursuant
to section 203(a) of this Act—
(1) in the case of employees hired on or after
the effective date of this section, on the date the em-
ployee is hired; or
(2) in the case of employees hired before such
effective date, within 10 days after such effective
date.
(b) INCLUSION OF CHILD SUPPORT INFORMATION
ON W–4 FORMS.—The Secretary of the Treasury shall
modify the W–4 form to enable the employee to indicate
on the form—
(1) whether the employee owes child support,
and if so—
(A) the amount of the support payable;
(B) whether the support is to be paid
through wage withholding; and
(C) to whom the support is to be paid; and
(2) whether health care insurance is available to
the new employee, and, if so, whether the employee
has obtained such insurance for the dependent chil-
dren of the employee.
SEC. 205. FEDERAL MATCHING PAYMENTS.
(a) INCREASED BASE MATCHING RATE.—Section
455(a)(2) (42 U.S.C. 655(a)(2)) is amended to read as
follows:
‘‘(2) The percent described in this paragraph
for a quarter in a fiscal year is—
‘‘(A) 69 percent, for fiscal year 1996;
‘‘(B) 72 percent, for fiscal year 1997; and
‘‘(C) 75 percent, for fiscal year 1998 and
each succeeding fiscal year.’’.
(b) MAINTENANCE OF EFFORT.—Section 455 (42
U.S.C. 655) is amended—
(1) in subsection (a)(1), in the matter preced-
ing subparagraph (A), by striking ‘‘From’’ and in-
serting ‘‘Subject to subsection (c), from’’; and
(2) by inserting after subsection (b) the follow-
ing:
‘‘(c) MAINTENANCE OF EFFORT.—Notwithstanding
subsection (a), the total expenditures for the State pro-
gram under this part for each fiscal year, reduced by the
percent specified in subsection (a)(2) for the fiscal year,
shall not be less than such total expenditures for fiscal
year 1995, reduced by 66 percent.’’
(c) 
CONFORMING
AMENDMENT.—Section
455(a)(1)(A) (42 U.S.C. 655(a)(1)(A)) is amended by
striking ‘‘specified’’ and inserting ‘‘described’’.
SEC. 206. PERFORMANCE-BASED INCENTIVES AND PEN-
ALTIES.
(a) INCENTIVE ADJUSTMENTS TO FEDERAL MATCH-
ING RATE.—
(1) IN GENERAL.—Section 458 (42 U.S.C. 658)
is amended to read as follows:
‘‘INCENTIVE ADJUSTMENTS TO MATCHING RATE
‘‘SEC. 458. (a) INCENTIVE ADJUSTMENT.—
‘‘(1) IN GENERAL.—In order to encourage and
reward State child support enforcement programs
which perform in an effective manner, the Federal
matching rate for payments to a State under section
455(a)(1)(A), for each fiscal year beginning on or
after October 1, 1997, shall be increased by a factor
reflecting the sum of the applicable incentive adjust-
ments (if any) determined in accordance with regu-
lations under this section with respect to Statewide
paternity establishment and to overall performance
in child support enforcement.
‘‘(2) STANDARDS.—
‘‘(A) IN
GENERAL.—The Secretary shall
specify in regulations—
‘‘(i) the levels of accomplishment, and
rates of improvement as alternatives to
such levels, which States must attain to
qualify for incentive adjustments under
this section; and
‘‘(ii) the amounts of incentive adjust-
ment that shall be awarded to States
achieving specified accomplishment or im-
provement levels, which amounts shall be
graduated, ranging up to—
‘‘(I) 5 percentage points, in con-
nection with Statewide paternity es-
tablishment; and
‘‘(II) 10 percentage points, in
connection with overall performance in
child support enforcement.
‘‘(B) LIMITATION.—In setting performance
standards pursuant to subparagraph (A)(i) and
adjustment amounts pursuant to subparagraph
(A)(ii), the Secretary shall ensure that the ag-
gregate number of percentage point increases as
incentive adjustments to all States do not ex-
ceed such aggregate increases as assumed by
the Secretary in estimates of the cost of this
section as of June 1994, unless the aggregate
performance of all States exceeds the projected
aggregate performance of all States in such cost
estimates.
‘‘(3) DETERMINATION OF INCENTIVE ADJUST-
MENT.—The Secretary shall determine the amount
(if any) of incentive adjustment due each State on
the basis of the data submitted by the State through
the system prescribed by the Secretary in regula-
tions issued pursuant to section 259 of the Family
Self-Sufficiency Act of 1994, concerning the levels of
accomplishment (and rates of improvement) with re-
spect to performance indicators specified by the Sec-
retary pursuant to this section.
‘‘(4) FISCAL YEAR SUBJECT TO INCENTIVE AD-
JUSTMENT.—The total percentage point increase de-
termined pursuant to this section with respect to a
State program in a fiscal year shall apply as an ad-
justment to the percent described in section
455(a)(2) for payments to such State for the suc-
ceeding fiscal year.
‘‘(b) MEANING OF TERMS.—For purposes of this sec-
tion—
‘‘(1) the term ‘Statewide paternity establish-
ment percentage’ means, with respect to a fiscal
year, the ratio (expressed as a percentage) of—
‘‘(A) the total number of out-of-wedlock
children in the State under one year of age for
whom paternity is established or acknowledged
during the fiscal year, to
‘‘(B) the total number of children born out
of wedlock in the State during such fiscal year;
and
‘‘(2) the term ‘overall performance in child sup-
port enforcement’ means a measure or measures of
the effectiveness of the State agency in a fiscal year
which takes into account factors including—
‘‘(A) the percentage of cases requiring a
child support order in which such an order was
established;
‘‘(B) the percentage of cases in which child
support is being paid;
‘‘(C) the ratio of child support collected to
child support due; and
‘‘(D) the cost-effectiveness of the State
program, as determined in accordance with
standards established by the Secretary in regu-
lations.’’.
(b) TITLE IV–D PAYMENT ADJUSTMENT.—Section
455(a)(2) (42 U.S.C. 655(a)(2)), as amended by section
205 of this Act, is amended—
(1) by striking the period at the end of sub-
paragraph (C) and inserting a comma; and
(2) by adding after and below subparagraph
(C), flush with the left margin of the subsection, the
following: ‘‘increased by the incentive adjustment
factor (if any) determined by the Secretary pursuant
to section 458.’’.
(c) CONFORMING AMENDMENTS.—Section 454(22)
(42 U.S.C. 654(22)) is amended—
‘‘(D)(i) Procedures under which a signed ac-
knowledgment of paternity is considered a legal find-
ing of paternity, subject to the right of any signa-
tory to rescind the acknowledgment within 30 days.
‘‘(ii)(I) Procedures under which, after the 30-
day period referred to in clause (i), a signed ac-
knowledgment of paternity may be challenged in
court only on the basis of fraud, duress, or material
mistake of fact, with the burden of proof upon the
challenger, and under which the legal responsibilities
(including child support obligations) of any signatory
arising from the acknowledgment may not be sus-
pended during the challenge, except for good cause
shown.
‘‘(II) Procedures under which, after the 30-day
period referred to in clause (i), a minor who signs
an acknowledgment of paternity other than in the
presence of a parent or court-appointed guardian ad
litem may rescind the acknowledgment in a judicial
or administrative proceeding, until the earlier of—
‘‘(aa) attaining the age of majority; or
‘‘(bb) the date of the first judicial or ad-
ministrative proceeding brought (after the sign-
ing) to establish a child support obligation, visi-
tation rights, or custody rights with respect to
the child whose paternity is the subject of the
acknowledgment, and at which the minor is rep-
resented by a parent, guardian ad litem, or at-
torney.’’.
(b) NATIONAL PATERNITY ACKNOWLEDGMENT AFFI-
DAVIT.—Section 452(a)(7) (42 U.S.C. 652(a)(7)) is
amended by inserting ‘‘, and develop an affidavit to be
used for the voluntary acknowledgment of paternity which
shall include the social security account number of each
parent’’ before the semicolon.
SEC. 212. ENHANCING OUTREACH TO ENCOURAGE PATER-
NITY ESTABLISHMENT.
(a) IN GENERAL.—Section 454 (42 U.S.C. 654) is
amended—
(1) by striking ‘‘and’’ at the end of paragraph
(23);
(2) by striking the period at the end of para-
graph (24) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (24) the fol-
lowing:
‘‘(25) in order to encourage voluntary paternity
acknowledgement, provide for—
‘‘(A) the development and distribution of
material at schools, hospitals, agencies admin-
istering programs under part A of this title and