‘‘(5) the fiscal year is fiscal year 2006 or 2007. 
‘‘(c) DATA REQUIREMENTS.— 
‘‘(1) IN GENERAL.—A State is in compliance 
with this subsection for a fiscal year if the State has 
provided to the Secretary the data described in para-
graph (2)— 
‘‘(A) for fiscal years 2004 and 2005 (or, if 
the 1st fiscal year for which the State seeks a 
grant under this section is after fiscal year 
2006, the 2 fiscal years most immediately pre-
ceding such 1st fiscal year); and 
‘‘(B) for each fiscal year that succeeds the 
2 fiscal years specified or referred to in sub-
paragraph (A) and that precedes the fiscal year 
referred to in this paragraph in the matter pre-
ceding subparagraph (A). 
‘‘(2) DETERMINATION
OF
PERMANCY
PLACE-
MENT RATES BASED ON AFCARS DATA.—The Sec-
retary shall determine the rates of each type of 
adoption, guardianship placement, and reunification 
described in this section in each State with respect 
to each of fiscal years 2006 and 2007 on the basis 
of data meeting the requirements of the system es-
tablished pursuant to section 479, as reported by the
State and approved by the Secretary by August 1 of 
the succeeding fiscal year. 
‘‘(3) NO WAIVER OF AFCARS REQUIREMENTS.— 
This section shall not be construed to alter or affect 
any requirement of section 479 or of any regulation 
prescribed under such section with respect to report-
ing of data by States, or to waive any penalty for 
failure to comply with such a requirement. 
‘‘(d) PERMANENCY INCENTIVE PAYMENT.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the permanency incentive payment pay-
able to a State for a fiscal year under this section 
shall be equal to the sum of— 
‘‘(A) $3,000, multiplied by the amount (if 
any) by which the sum of the number of foster 
child adoptions, the number of guardianship 
placements, and the number of reunifications 
for the State for the fiscal year exceeds the sum 
of— 
‘‘(i) the number of foster child adop-
tions for the State for the fiscal year mul-
tiplied by the base foster child adoption 
rate for the State for the fiscal year; 
‘‘(ii) the number of guardianship 
placements for the State for the fiscal year
multiplied by the base guardianship place-
ment rate for the State for the fiscal year; 
and 
‘‘(iii) the number of reunifications for 
the State for the fiscal year multiplied by 
the base reunification rate for the State for 
the fiscal year; 
‘‘(B) $1,500, multiplied by the amount (if 
any) by which the sum of the number of special 
needs adoptions that are not older child adop-
tions and the number of special needs guardian-
ship placements that are not older child guard-
ianship placements for the State for the fiscal 
year exceeds the sum of— 
‘‘(i) the number of special needs adop-
tions that are not older child adoptions for 
the State for the fiscal year, multiplied by 
the base rate of special needs adoptions 
that are not older child adoptions for the 
State for the fiscal year; and 
‘‘(ii) the number of special needs 
guardianship placements that are not older 
child guardianship placements for the 
State for the fiscal year, multiplied by the 
base rate of special needs guardianship
placements that are not older child guard-
ianship placements for the State for the 
fiscal year; and 
‘‘(C) $3,000, multiplied by the amount (if 
any) by which the sum of the number of older 
child adoptions and the number of older child 
guardianship placements for the State for the 
fiscal year exceeds the sum of— 
‘‘(i) the number of older child adop-
tions for the State for the fiscal year, 
mutiplied by the base older child adoption 
rate for the State for the fiscal year; and 
‘‘(ii) the number of older child guard-
ianship placements for the State for the 
fiscal year, mutiplied by the base older 
child guardianship placement rate for the 
State for the fiscal year. 
‘‘(2) PRO RATA ADJUSTMENT IF INSUFFICIENT 
FUNDS AVAILABLE.—For any fiscal year, if the total 
amount of permanency incentive payments otherwise 
payable under this section for a fiscal year exceeds 
the amount appropriated pursuant to subsection (h) 
for the fiscal year, the amount of the permanency 
incentive payment payable to each State under this 
section for the fiscal year shall be—
‘‘(A) the amount of the permanency incen-
tive payment that would otherwise be payable to 
the State under this section for the fiscal year; 
multiplied by 
‘‘(B) the percentage represented by the 
amount so appropriated for the fiscal year, di-
vided by the total amount of permanency incen-
tive payments otherwise payable under this sec-
tion for the fiscal year. 
‘‘(e) 2-YEAR AVAILABILITY
OF INCENTIVE PAY-
MENTS.—Payments to a State under this section in a fis-
cal year shall remain available for use by the State 
through the end of the succeeding fiscal year. 
‘‘(f) LIMITATIONS
ON USE
OF INCENTIVE PAY-
MENTS.—A State shall not expend an amount paid to the 
State under this section except to provide to children or 
families any service (including post-permanency services) 
that may be provided under part B or E. Amounts ex-
pended by a State in accordance with the preceding sen-
tence shall be disregarded in determining State expendi-
tures for purposes of Federal matching payments under 
sections 423, 434, and 474. 
‘‘(g) DEFINITIONS.—In this section:
‘‘(1) FOSTER
CHILD
ADOPTION.—The term 
‘foster child adoption’ means, with respect to a State 
and a fiscal year, a final adoption of a child if— 
‘‘(A) at the time of adoptive placement, the 
child was in foster care under the supervision of 
the State; and 
‘‘(B) during the fiscal year, the period for 
which the adoption has lasted has become 12 
months. 
‘‘(2) SPECIAL
NEEDS
ADOPTION.—The term 
‘special needs adoption’ means, with respect to a 
State and a fiscal year, a final adoption of a child 
if— 
‘‘(A) there is in effect for the child an 
adoption assistance agreement entered into by 
the State under section 473; 
‘‘(B) the child is a child with special needs 
for purposes of this section; and 
‘‘(C) during the fiscal year, the period for 
which the adoption has lasted has become 12 
months. 
‘‘(3) OLDER
CHILD
ADOPTION.—The term 
‘older child adoption’ means, with respect to a State 
and a fiscal year, the final adoption in the State of 
a child who has attained 9 years of age if—