438
‘‘(A) IN GENERAL.—If the Secretary deter-
mines that a State has not, within 6 months
after the end of a fiscal year, submitted the re-
port required by section 408 for the fiscal year,
the Secretary shall reduce by 5 percent the
amount of the grant that would (in the absence
of this section) be payable to the State under sec-
tion 403 for the immediately succeeding fiscal
year.
‘‘(B) RESCISSION OF PENALTY.—The Sec-
retary shall rescind a penalty imposed on a
State under subparagraph (A) with respect to a
report for a fiscal year if the State submits the
report before the end of the immediately succeed-
ing fiscal year.
‘‘(3) FOR FAILURE TO SATISFY MINIMUM PAR-
TICIPATION RATES.—
‘‘(A) IN GENERAL.—If the Secretary deter-
mines that a State has failed to satisfy the mini-
mum participation rates specified in section 404
for a fiscal year, the Secretary shall reduce by
not more than 5 percent the amount of the grant
that would (in the absence of this section) be
payable to the State under section 403 for the
immediately succeeding fiscal year.
439
‘‘(B) PENALTY
BASED
ON
SEVERITY
OF
FAILURE.—The Secretary shall impose reduc-
tions under subparagraph (A) on the basis of the
degree of noncompliance.
‘‘(4) FOR FAILURE TO PARTICIPATE IN THE IN-
COME
AND
ELIGIBILITY
VERIFICATION
SYSTEM.—If
the Secretary determines that a State program funded
under this part is not participating during a fiscal
year in the income and eligibility verification system
required by section 1137, the Secretary shall reduce
by not more than 5 percent the amount of the grant
that would (in the absence of this section) be payable
to the State under section 403 for the immediately
succeeding fiscal year.
‘‘(5) FOR FAILURE TO COMPLY WITH PATERNITY
ESTABLISHMENT AND CHILD SUPPORT ENFORCEMENT
REQUIREMENTS UNDER PART D.—
‘‘(A) IN
GENERAL.—Notwithstanding any
other provision of this Act, if a State’s program
operated under part D of this title is found as
a result of a review conducted under section
452(a)(4) of this title not to have complied sub-
stantially with the requirements of such part for
any quarter beginning after September 30, 1983,
and the Secretary determines that the State’s
440
program is not complying substantially with
such requirements at the time such finding is
made, the amounts otherwise payable to the
State under section 403 for such quarter and
each subsequent quarter, prior to the first quar-
ter throughout which the State program is found
to be in substantial compliance with such re-
quirements, shall be reduced (subject to para-
graph (2)) by—
‘‘(i) not less than 1 nor more than 2
percent;
‘‘(ii) not less than 2 nor more than 3
percent, if the finding is the second consecu-
tive such finding made as a result of such
a review; or
‘‘(iii) not less than 3 nor more than 5
percent, if the finding is the third or a sub-
sequent consecutive such finding made as a
result of such a review.
‘‘(B) SUSPENSION OF REDUCTIONS.—
‘‘(i) IN GENERAL.—The reductions re-
quired under subparagraph (A) shall be sus-
pended for any quarter if—
‘‘(I) the State submits a corrective
action plan, within a period prescribed
441
by the Secretary following notice of the
finding 
under 
subparagraph 
(A),
which contains steps necessary to
achieve substantial compliance within
a time period which the Secretary
finds to be appropriate;
‘‘(II) the Secretary approves such
corrective 
action 
plan 
(and 
any
amendments thereto) as being sufficient
to achieve substantial compliance; and
‘‘(III) the Secretary finds that the
corrective 
action 
plan 
(and 
any
amendments approved under subclause
(II)) is being fully implemented by the
State and that the State is progressing
in accordance with the timetable con-
tained in the plan to achieve substan-
tial compliance with such require-
ments.
‘‘(ii) 
CONTINUATION
OF
SUSPEN-
SION.—A suspension of the penalty under
clause (i) shall continue until such time as
the Secretary determines that—
‘‘(I) the State has achieved sub-
stantial compliance;
442
‘‘(II) the State is no longer imple-
menting its corrective action plan; or
‘‘(III) the State is implementing
or has implemented its corrective ac-
tion plan but has failed to achieve sub-
stantial compliance within the appro-
priate time period (as specified in
clause (i)(I)).
‘‘(iii) EXCEPTIONS.—
‘‘(I) ACHIEVES COMPLIANCE.—In
the case of a State whose penalty sus-
pension ends pursuant to clause (ii)(I),
the penalty shall not be applied.
‘‘(II) NO LONGER IMPLEMENTING
CORRECTIVE
ACTION
PLAN.—In the
case of a State whose penalty suspen-
sion ends pursuant to clause (ii)(II),
the penalty shall be applied as if the
suspension had not occurred.
‘‘(III) FAILURE TO ACHIEVE COM-
PLIANCE
WITHIN
APPROPRIATE
TIME
PERIOD.—In the case of a State whose
penalty suspension ends pursuant to
clause (ii)(III), the penalty shall be
applied to all quarters ending after the
443
expiration of the time period specified
in such clause and prior to the first
quarter throughout which the State
program is found to be in substantial
compliance.
‘‘(C) DETERMINATION
OF
SUBSTANTIAL
COMPLIANCE.—For purposes of this paragraph
and section 452(a)(4) of this title, a State which
is not in full compliance with the requirements
of part D shall be determined to be in substan-
tial compliance with such requirements only if
the Secretary determines that any noncompli-
ance with such requirements is of a technical na-
ture which does not adversely affect the perform-
ance of the child support enforcement program.
‘‘(6) FOR FAILURE TO TIMELY REPAY A SUPPLE-
MENTAL ASSISTANCE FOR NEEDY FAMILIES FEDERAL
LOAN.—If the Secretary determines that a State has
failed to repay any amount borrowed from the Sup-
plemental Assistance for Needy Families Federal
Loan Fund established under section 403(f) within
the period of maturity applicable to such loan, plus
any interest owed on such loan, then the Secretary
shall reduce the amount of the grant otherwise pay-
able to the State under section 403 for the imme-
444
diately succeeding fiscal year quarter by the outstand-
ing loan amount, plus the interest owed on such out-
standing amount.
‘‘(b) REQUIREMENTS.—
‘‘(1) LIMITATION ON AMOUNT OF PENALTY.—
‘‘(A) IN GENERAL.—In imposing the pen-
alties described in subsection (a), the Secretary
shall not reduce any quarterly payment to a
State by more than 25 percent.
‘‘(B) CARRYFORWARD
OF
UNRECOVERED
PENALTIES.—To the extent that subparagraph
(A) prevents the Secretary from recovering dur-
ing a fiscal year the full amount of all penalties
imposed on a State under subsection (a) for a
prior fiscal year, the Secretary shall apply any
remaining amount of such penalties to the grant
otherwise payable to the State under section 403
for the immediately succeeding fiscal year.
‘‘(2) STATE FUNDS TO REPLACE REDUCTIONS IN
GRANT.—A State which has a penalty imposed
against it under subsection (a) shall expend addi-
tional State funds in an amount equal to the amount
of the penalty for the purpose of providing assistance
under the State program under this part.
445
‘‘(3) REASONABLE
CAUSE
FOR
NONCOMPLI-
ANCE.—The Secretary may not impose a penalty on
a State under subsection (a) if the Secretary deter-
mines that the State has reasonable cause for failing
to comply with a requirement for which a penalty is
imposed under such subsection.
‘‘SEC. 407. RELIGIOUS CHARACTER AND FREEDOM.
‘‘Notwithstanding any other provision of law, any reli-
gious organization participating in the State program
funded under this part shall retain its independence from
Federal, State, and local government, including such an or-
ganization’s control over the definition, development, prac-
tice, and expression of its religious beliefs. However, a reli-
gious organization participating in the State program
under this part shall not deny needy families and children
any assistance provided under this part on the basis of reli-
gion, a religious belief, or refusal to participate in a reli-
gious practice.
‘‘SEC. 408. DATA COLLECTION AND REPORTING.
‘‘(a) IN GENERAL.—Each State to which a grant is
made under section 403 for a fiscal year shall, not later
than 6 months after the end of fiscal year 1997, and each
fiscal year thereafter, transmit to the Secretary the follow-
ing aggregate information on families to which assistance
446
was provided during the fiscal year under the State pro-
gram operated under this part:
‘‘(1) The number of adults receiving such assist-
ance.
‘‘(2) The number of children receiving such as-
sistance and the average age of the children.
‘‘(3) The employment status of such adults, and
the average earnings of employed adults receiving
such assistance.
‘‘(4) The age, race, and educational attainment
at the time of application for assistance of the adults
receiving such assistance.
‘‘(5) The average amount of cash and other as-
sistance provided to the families under the program.
‘‘(6) The number of months, since the most recent
application for assistance under the program, for
which such assistance has been provided to the fami-
lies.
‘‘(7) The total number of months for which as-
sistance has been provided to the families under the
program.
‘‘(8) Any other data necessary to indicate wheth-
er the State is in compliance with the plan most re-
cently submitted by the State pursuant to section 402.
459
‘‘DEEMED INCOME REQUIREMENT FOR FEDERAL AND
FEDERALLY FUNDED PROGRAMS
‘‘SEC. 1145. (a) DEEMING REQUIREMENT FOR FED-
ERAL AND FEDERALLY FUNDED PROGRAMS.—For purposes
of determining the eligibility of an individual (whether a
citizen or national of the United States or an alien) for
assistance, and the amount of assistance, under any Federal
program of assistance authorized under this Act, or any
program of assistance authorized under this Act funded in
whole or in part by the Federal Government for which eligi-
bility is based on need, the income and resources described
in subsection (b) shall, notwithstanding any other provision
of law, be deemed to be the income and resources of such
individual.
‘‘(b) DEEMED INCOME AND RESOURCES.—The income
and resources described in this subsection include the follow-
ing:
‘‘(1) The income and resources of any person
who, as a sponsor of such individual’s entry into the
United States (or in order to enable such individual
lawfully to remain in the United States), executed an
affidavit of support or similar agreement with respect
to such individual.
‘‘(2) The income and resources of such sponsor’s
spouse.