legislation appropriating funds) in order for the plan 
to meet the additional requirements imposed by the 
amendments made by this section, 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 legislature that begins after the date of enact-
ment of this Act. For purposes of the previous sen-
tence, in the case of a State that has a 2-year legis-
lative session, each year of such session shall be 
deemed to be a separate regular session of the State 
legislature. 
SEC. 205. EXTENSION OF SUPPLEMENTAL GRANTS. 
Section 403(a)(3) (42 U.S.C. 603(a)(3)) is amend-
ed— 
(1) in subparagraph (A)— 
(A) by striking ‘‘and’’ at the end of clause 
(i); 
(B) by striking the period at the end of 
clause (ii) and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(iii) for each of fiscal years 2006 
through 2010, a grant in an amount equal
to the amount required to be paid to the 
State under this paragraph in fiscal year 
2001.’’; 
(2) in subparagraph (E), by striking ‘‘1998’’ 
and all that follows and inserting ‘‘2006 through 
2010 $1,597,250,000 for grants under this para-
graph.’’; 
(3) by striking subparagraph (G); and 
(4) by striking subparagraph (H), as amended 
by section 801(b)(1) of this Act. 
SEC. 206. ADDITIONAL GRANTS FOR STATES WITH LOW 
FEDERAL FUNDING PER POOR CHILD. 
Section 403(a) (42 U.S.C. 603(a)) is amended by 
adding at the end the following: 
‘‘(6) ADDITIONAL GRANTS FOR STATES WITH LOW 
FEDERAL FUNDING PER POOR CHILD.— 
‘‘(A) IN GENERAL.—The Secretary shall make 
a grant pursuant to this paragraph to a State— 
‘‘(i) for fiscal year 2006, if the State is an 
inadequately poverty-funded State for fiscal 
year 2005; and 
‘‘(ii) for any of fiscal years 2006 through 
2010, if the State is an inadequately poverty- 
funded State for any prior fiscal year after fis-
cal year 2005.
‘‘(B) 
INADEQUATELY
POVERTY-FUNDED 
STATE.—For purposes of this paragraph, a State is 
an inadequately poverty-funded State for a par-
ticular fiscal year if— 
‘‘(i) the total amount of the grants made 
to the State under paragraph (1), paragraph 
(3), and this paragraph for the particular fiscal 
year, divided by the number of children in pov-
erty in the State with respect to the particular 
fiscal year is less than 75 percent of the total 
amount of grants made to all eligible States 
under paragraph (1), paragraph (3), and this 
paragraph for the particular fiscal year, divided 
by the total number of children living in poverty 
in all eligible States with respect to the par-
ticular fiscal year; and 
‘‘(ii) the total of the amounts paid to the 
State under this subsection for all prior fiscal 
years that have not been expended by the State 
by the end of the preceding fiscal year is less 
than 50 percent of State family assistance 
grant for the particular fiscal year. 
‘‘(C) AMOUNT OF GRANT.—The amount of the 
grant to be made under this paragraph to a State 
for a particular fiscal year shall be—
‘‘(i) if the particular fiscal year is fiscal 
year 2006, an amount equal to— 
‘‘(I) the number of children in poverty 
in the State for the then preceding fiscal 
year, divided by the total number of chil-
dren in poverty in all States that are inad-
equately poverty-funded States for the then 
preceding fiscal year; multiplied by 
‘‘(II) the amount appropriated pursu-
ant to subparagraph (G) for the particular 
fiscal year; or 
‘‘(ii) if the particular fiscal year is any of 
fiscal years 2007 through 2010, an amount 
equal to— 
‘‘(I) the amount required to be paid to 
the State under this paragraph for the 
then preceding fiscal year; plus 
‘‘(II) if the State is an inadequately 
poverty-funded State for the then pre-
ceding fiscal year— 
‘‘(aa) the number of children in 
poverty in the State for the then pre-
ceding fiscal year, divided by the total 
number of children in poverty in all 
States that are inadequately poverty-
funded States for the then preceding 
fiscal year; multiplied by 
‘‘(bb) the amount appropriated 
pursuant to subparagraph (G) for the 
particular fiscal year. 
‘‘(D) USE
OF
GRANT.—A State to which a 
grant is made under this paragraph shall use the 
grant for any purpose for which a grant made under 
this part may be used. 
‘‘(E) DEFINITIONS.—In this paragraph: 
‘‘(i) CHILDREN
IN
POVERTY.—The term 
‘children in poverty’ means, with respect to a 
State and a fiscal year, the number of children 
residing in the State who had not attained 18 
years of age and whose family income was less 
than the poverty line then applicable to the 
family, as of the end of the fiscal year. 
‘‘(ii) POVERTY LINE.—The term ‘poverty 
line’ has the meaning given the term in section 
673(2) of the Omnibus Budget Reconciliation 
Act of 1981, including any revision required by 
such section. 
‘‘(F) FAMILY INCOME DETERMINATIONS.—For 
purposes of this paragraph, family income includes
cash income, except cash benefits from means-tested 
public programs and child support payments. 
‘‘(G) APPROPRIATIONS.— 
‘‘(i) IN GENERAL.—Out of any money in 
the Treasury of the United States not otherwise 
appropriated, there are appropriated for grants 
under this paragraph— 
‘‘(I) $45,000,000 for fiscal year 2006; 
‘‘(II) $90,000,000 for fiscal year 
2007; 
‘‘(III) $135,000,000 for fiscal year 
2008; 
‘‘(IV) $180,000,000 for fiscal year 
2009; and 
‘‘(V) $225,000,000 for fiscal year 
2010. 
‘‘(ii) AVAILABILITY.—Amounts made avail-
able under clause (i) shall remain available until 
expended.’’. 
SEC. 
207. 
BONUS 
TO 
REWARD 
HIGH 
PERFORMANCE 
STATES. 
Section 403(a)(4) (42 U.S.C. 603(a)(4)) is amend-
ed— 
(1) 
in 
subparagraph 
(D), 
by 
striking 
‘‘$1,000,000,000’’ and inserting ‘‘$1,800,000,000’’;
(2) in subparagraph (E), by striking ‘‘and 
2003’’ and inserting ‘‘2005, 2006, 2007, 2008, 
2009, and 2010’’; and 
(3) 
in 
subparagraph 
(F), 
by 
striking 
‘‘$1,000,000,000’’ and inserting ‘‘$800,000,000, and 
for 
fiscal 
years 
2006 
through 
2010 
$1,000,000,000,’’. 
SEC. 208. CONTINGENCY FUND. 
(a) CONTINGENCY FUNDING AVAILABLE TO NEEDY 
STATES.—Section 403(b) (42 U.S.C. 603(b)) is amend-
ed— 
(1) by striking paragraphs (1) through (3) and 
inserting the following: 
‘‘(1) CONTINGENCY FUND GRANTS.— 
‘‘(A) PAYMENTS.—Subject to subpara-
graph (C), and out of funds appropriated under 
subparagraph (E), each State shall receive a 
contingency fund grant for each eligible month 
in which the State is a needy State under para-
graph (3). 
‘‘(B) 
MONTHLY
CONTINGENCY
FUND 
GRANT AMOUNT.—For each eligible month in 
which a State is a needy State, the State shall 
receive a contingency fund grant equal to the 
higher of $0 and the applicable percentage (as
defined in subparagraph (D)(i)) of the product 
of— 
‘‘(i) the applicable benefit level (as de-
fined in subparagraph (D)(ii)); and 
‘‘(ii) the adjusted increase in the num-
ber of families receiving assistance under 
the State program funded under this part 
and all programs funded with qualified 
State expenditures (as defined in subpara-
graph (D)(iii)). 
‘‘(C) LIMITATION.—The total amount paid 
to a single State under subparagraph (A) dur-
ing a fiscal year shall not exceed the amount 
equal to 10 percent of the State family assist-
ance grant (as defined under subparagraph (B) 
of subsection (a)(1) and increased under sub-
paragraph (E) of that subsection). 
‘‘(D) DEFINITIONS.—In this paragraph: 
‘‘(i) APPLICABLE PERCENTAGE.—The 
term ‘applicable percentage’ means the 
higher of— 
‘‘(I) 60 percent; and 
‘‘(II) the Federal medical assist-
ance percentage for the State (as de-
fined in section 1905(b)).
‘‘(ii) APPLICABLE BENEFIT LEVEL.— 
‘‘(I) IN
GENERAL.—Subject to 
subclause (II), the term ‘applicable 
benefit level’ means the amount equal 
to the maximum cash assistance grant 
for a family consisting of 3 individuals 
under the State program funded 
under this part. 
‘‘(II) RULE
FOR
STATES
WITH 
MORE THAN 1 MAXIMUM LEVEL.—In 
the case of a State that has more 
than 1 maximum cash assistance 
grant level for families consisting of 3 
individuals, the basic assistance cost 
shall be the amount equal to the max-
imum cash assistance grant level ap-
plicable to the largest number of fami-
lies consisting of 3 individuals receiv-
ing assistance under the State pro-
gram funded under this part and all 
programs funded with qualified State 
expenditures (as defined in section 
409(a)(7)(B)(i)). 
‘‘(iii) ADJUSTED
INCREASE
IN
THE 
NUMBER OF FAMILIES RECEIVING ASSIST-
ANCE UNDER THE STATE PROGRAM FUND-
ED UNDER THIS PART AND ALL PROGRAMS 
FUNDED WITH QUALIFIED STATE EXPEND-
ITURES.—The term ‘adjusted increase in 
the number of families receiving assistance 
under the State program funded under this 
part and all programs funded with quali-
fied State expenditures’ means the increase 
in— 
‘‘(I) the unduplicated number of 
families receiving assistance under the 
State program funded under this part 
and all programs funded with quali-
fied State expenditures (as defined in 
section 409(a)(7)(B)(i)) in the most 
recent month for which data from the 
State are available; as compared to 
‘‘(II) the product of— 
‘‘(aa) the lower of the aver-
age monthly number of families 
receiving such assistance in ei-
ther of the 2 completed fiscal 
years immediately preceding the 
fiscal year in which the State ini-
tially qualifies as a needy State; 
and 
‘‘(bb) 1.04. 
‘‘(E) APPROPRIATION.—Out of any money 
in the Treasury of the United States not other-
wise appropriated, there is appropriated for the 
period of fiscal years 2006 through 2010, such 
sums as are necessary for making contingency 
fund grants under this subsection in a total 
amount not to exceed $2,000,000,000.’’; 
(2) by redesignating paragraph (4) as para-
graph (2); and 
(3) in paragraph (2) (as so redesignated)— 
(A) by striking ‘‘(3)(A)’’ and inserting 
‘‘(1)’’; and 
(B) by striking ‘‘2-month period that be-
gins with any’’ and inserting ‘‘fiscal year quar-
ter that includes a’’. 
(b) MODIFICATION
OF
DEFINITION
OF
NEEDY 
STATE.—Section 403(b) (42 U.S.C. 603(b)), as amended 
by subsection (a) of this section, is amended— 
(1) by striking paragraphs (5) and (6); 
(2) by redesignating paragraphs (7) and (8) as 
paragraphs (5) and (6), respectively; and
(3) by inserting after paragraph (2) (as so re-
designated by subsection (a)(2) of this section) the 
following: 
‘‘(3) INITIAL DETERMINATION OF WHETHER A 
STATE QUALIFIES AS A NEEDY STATE.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), a State shall be initially determined 
to be a needy State for a month if the State 
satisfies any of the following: 
‘‘(i) The— 
‘‘(I) average rate of total unem-
ployment in the State for the period 
consisting of the most recent 3 
months for which data are available 
has increased by the lesser of 1.5 per-
centage points or by 50 percent over 
the corresponding 3-month period in 
either of the 2 most recent preceding 
fiscal years; or 
‘‘(II) average insured unemploy-
ment rate for the most recent 3 
months for which data are available 
has increased by 1 percentage point 
over the corresponding 3-month pe-
riod in either of the 2 most recent 
preceding fiscal years. 
‘‘(ii) As determined by the Secretary 
of Agriculture, the monthly average num-
ber of households (as of the last day of 
each month) that participated in the food 
stamp program in the State in the then 
most recently concluded 3-month period 
for which data are available exceeds by at 
least 10 percent the monthly average num-
ber of households (as of the last day of 
each month) in the State that participated 
in the food stamp program in the cor-
responding 3-month period in either of the 
2 most recent preceding fiscal years, but 
only if the Secretary of Agriculture makes 
a determination that the State’s increased 
caseload was due, in large measure, to eco-
nomic conditions rather than changes in 
Federal or State policies related to the 
food stamp program. 
‘‘(iii) As determined by the Secretary, 
the monthly average of the unduplicated 
number of families that received assistance 
under the State program funded under this
part and all programs funded with quali-
fied State expenditures (as defined in sec-
tion 409(a)(7)(B)(i)) in the most recently 
concluded 3-month period for which data 
are available from the State increased by 
at least 10 percent over the number of 
such families that received such benefits in 
the corresponding 3-month period in either 
of the 2 most recent preceding fiscal years, 
but only if the Secretary makes a deter-
mination that the State’s increased case-
load was due, in large measure, to eco-
nomic conditions rather than State policy 
changes. 
‘‘(B) DURATION.— 
‘‘(i) IN
GENERAL.—A State that 
qualifies as a needy State— 
‘‘(I) under subparagraph (A)(i), 
shall be considered a needy State until 
either the State’s (seasonally ad-
justed) total unemployment rate or 
(seasonally adjusted) insured unem-
ployment rate, whichever rate was 
used to meet the definition as a needy 
State under that subparagraph for the
most recently concluded 3-month pe-
riod for which data are available, falls 
below the level attained in the 3- 
month period that was used to first 
determine that the State qualified as 
a needy State under that subpara-
graph; 
‘‘(II) under subparagraph (A)(ii), 
shall be considered a needy State until 
the average monthly number of house-
holds participating in the food stamp 
program for the most recently con-
cluded 3-month period for which data 
are available nationally falls below the 
food stamp base period level; and 
‘‘(III) 
under 
subparagraph 
(A)(iii), shall be considered a needy 
State until the unduplicated number 
of families receiving assistance under 
the State program funded under this 
part and all programs funded with 
qualified State expenditures (as de-
fined in section 409(a)(7)(B)(i)) for 
the most recently concluded 3-month 
period for which data are available