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‘‘(F) APPROPRIATION.—Out of any money
in the Treasury of the United States not other-
wise appropriated, there are appropriated for
fiscal years 1999 through 2003 $1,000,000,000
for grants under this paragraph.
‘‘(5) BONUS TO REWARD DECREASE IN ILLEGIT-
IMACY.—
‘‘(A) IN
GENERAL.—The Secretary shall
make a grant pursuant to this paragraph to
each State determined eligible under paragraph
(2)(B) for each bonus year for which the State
demonstrates a net decrease in out-of-wedlock
births.
‘‘(B) AMOUNT OF GRANT.—
‘‘(i) IN GENERAL.—Subject to this sub-
paragraph, the Secretary shall determine
the amount of the grant payable under this
paragraph to a low illegitimacy State for a
bonus year.
‘‘(ii) TOP FIVE STATES.—With respect
to States determined eligible under para-
graph (2)(B) for a fiscal year, the Secretary
shall determine which five of such States
demonstrated the greatest decrease in out-of-
wedlock births under such paragraph for the
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period involved. Each of such five States
shall receive a grant of equal amount under
this paragraph for such fiscal year but such
amount shall not exceed $20,000,000 for
any single State.
‘‘(iii) LESS THAN FIVE STATES.—With
respect to a fiscal year, if the Secretary de-
termines that there are less than five States
eligible under paragraph (2)(B) for a fiscal
year, the grants under this paragraph shall
be awarded to each such State in an equal
amount but such amount shall not exceed
$25,000,000 for any single State.
‘‘(C) BONUS YEAR.—The term ‘bonus year’
means fiscal years 1999, 2000, 2001, 2002, and
2003.
‘‘(D) APPROPRIATION.—Out of any money
in the Treasury of the United States not other-
wise appropriated, there are appropriated for
fiscal years 1999 through 2003, such sums as are
necessary for grants under this paragraph.
‘‘(b) CONTINGENCY FUND.—
‘‘(1) ESTABLISHMENT.—There is hereby estab-
lished in the Treasury of the United States a fund
which shall be known as the ‘Contingency Fund for
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State Welfare Programs’ (in this section referred to as
the ‘Fund’).
‘‘(2) DEPOSITS INTO FUND.—Out of any money
in the Treasury of the United States not otherwise
appropriated, there are appropriated for fiscal years
1998, 1999, 2000, and 2001 such sums as are nec-
essary for payment to the Fund in a total amount not
to exceed $2,000,000,000.
‘‘(3) GRANTS.—
‘‘(A) PROVISIONAL PAYMENTS.—If an eligi-
ble State submits to the Secretary a request for
funds under this paragraph during an eligible
month, the Secretary shall, subject to this para-
graph, pay to the State, from amounts appro-
priated pursuant to paragraph (2), an amount
equal to the amount of funds so requested.
‘‘(B) PAYMENT
PRIORITY.—The Secretary
shall make payments under subparagraph (A) in
the order in which the Secretary receives requests
for such payments.
‘‘(C) LIMITATIONS.—
‘‘(i) 
MONTHLY
PAYMENT
TO
A
STATE.—The total amount paid to a single
State under subparagraph (A) during a
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month shall not exceed 1⁄12 of 20 percent of
the State family assistance grant.
‘‘(ii) PAYMENTS TO ALL STATES.—The
total amount paid to all States under sub-
paragraph (A) during fiscal years 1998
through 2001 shall not exceed the total
amount appropriated pursuant to para-
graph (2).
‘‘(4) ANNUAL
RECONCILIATION.—Notwithstand-
ing paragraph (3), at the end of each fiscal year, each
State shall remit to the Secretary an amount equal
to the amount (if any) by which the total amount
paid to the State under paragraph (3) during the fis-
cal year exceeds—
‘‘(A) the Federal medical assistance percent-
age for the State for the fiscal year (as defined
in section 1905(b), as in effect on September 30,
1995) of the amount (if any) by which the ex-
penditures under the State program funded
under this part for the fiscal year exceed historic
State 
expenditures 
(as 
defined 
in 
section
409(a)(7)(B)(iii)); multiplied by
‘‘(B) 1⁄12 times the number of months dur-
ing the fiscal year for which the Secretary makes
a payment to the State under this subsection.
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‘‘(5) ELIGIBLE MONTH.—As used in paragraph
(3)(A), the term ‘eligible month’ means, with respect
to a State, a month in the 2-month period that begins
with any month for which the State is a needy State.
‘‘(6) NEEDY STATE.—For purposes of paragraph
(5), a State is a needy State for a month if—
‘‘(A) the average rate of—
‘‘(i) total unemployment in such State
(seasonally adjusted) for the period consist-
ing of the most recent 3 months for which
data for all States are published equals or
exceeds 6.5 percent; and
‘‘(ii) total unemployment in such State
(seasonally adjusted) for the 3-month period
equals or exceeds 110 percent of such aver-
age rate for either (or both) of the cor-
responding 3-month periods ending in the 2
preceding calendar years; or
‘‘(B) as determined by the Secretary of Ag-
riculture (in the discretion of the Secretary of
Agriculture), the monthly average number of in-
dividuals (as of the last day of each month) par-
ticipating in the food stamp program in the
State in the then most recently concluded 3-
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month period for which data are available ex-
ceeds by not less than 10 percent the lesser of—
‘‘(i) the monthly average number of in-
dividuals (as of the last day of each month)
in the State that would have participated
in the food stamp program in the cor-
responding 3-month period in fiscal year
1994 if the amendments made by chapter 4
of the Personal Responsibility and Work
Opportunity Act of 1996 and the amend-
ments made by chapter 1 of subtitle A of
title I of the Agricultural Reconciliation Act
of 1996 had been in effect throughout fiscal
year 1994; or
‘‘(ii) the monthly average number of
individuals (as of the last day of each
month) in the State that would have par-
ticipated in the food stamp program in the
corresponding 3-month period in fiscal year
1995 if the amendments made by chapter 4
of the Personal Responsibility and Work
Opportunity Act of 1996 and the amend-
ments made by chapter 1 of subtitle A of
title I of the Agricultural Reconciliation Act
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of 1996 had been in effect throughout fiscal
year 1995.
‘‘(7) OTHER TERMS DEFINED.—As used in this
subsection:
‘‘(A) STATE.—The term ‘State’ means each
of the 50 States of the United States and the
District of Columbia.
‘‘(B) SECRETARY.—The term ‘Secretary’
means the Secretary of the Treasury.
‘‘(8) ANNUAL REPORTS.—The Secretary shall an-
nually report to the Congress on the status of the
Fund.
‘‘SEC. 404. USE OF GRANTS.
‘‘(a) GENERAL RULES.—Subject to this part, a State
to which a grant is made under section 403 may use the
grant—
‘‘(1) in any manner that is reasonably cal-
culated to accomplish the purpose of this part, includ-
ing to provide low income households with assistance
in meeting home heating and cooling costs; or
‘‘(2) in any manner that the State was author-
ized to use amounts received under part A or F, as
such parts were in effect on September 30, 1995.
‘‘(b) LIMITATION ON USE OF GRANT FOR ADMINISTRA-
TIVE PURPOSES.—
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‘‘(1) LIMITATION.—A State to which a grant is
made under section 403 shall not expend more than
15 percent of the grant for administrative purposes.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply to the use of a grant for information technology
and computerization needed for tracking or monitor-
ing required by or under this part.
‘‘(c) AUTHORITY TO TREAT INTERSTATE IMMIGRANTS
UNDER RULES OF FORMER STATE.—A State operating a
program funded under this part may apply to a family
the rules (including benefit amounts) of the program funded
under this part of another State if the family has moved
to the State from the other State and has resided in the
State for less than 12 months.
‘‘(d) AUTHORITY TO USE PORTION OF GRANT FOR
OTHER PURPOSES.—
‘‘(1) IN GENERAL.—A State may use not more
than 30 percent of the amount of the grant made to
the State under section 403 for a fiscal year to carry
out a State program pursuant to the Child Care and
Development Block Grant Act of 1990.
‘‘(2) APPLICABLE RULES.—Any amount paid to
the State under this part that is used to carry out a
State program pursuant to a provision of law speci-
fied or described in paragraph (1) shall not be subject
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to the requirements of this part, but shall be subject
to the requirements that apply to Federal funds pro-
vided directly under the provision of law to carry out
the program.
‘‘(e) AUTHORITY TO RESERVE CERTAIN AMOUNTS FOR
ASSISTANCE.—A State may reserve amounts paid to the
State under this part for any fiscal year for the purpose
of providing, without fiscal year limitation, assistance
under the State program funded under this part.
‘‘(f) AUTHORITY TO OPERATE EMPLOYMENT PLACE-
MENT PROGRAM.—A State to which a grant is made under
section 403 may use the grant to make payments (or pro-
vide job placement vouchers) to State-approved public and
private job placement agencies that provide employment
placement services to individuals who receive assistance
under the State program funded under this part.
‘‘(g) IMPLEMENTATION
OF
ELECTRONIC
BENEFIT
TRANSFER SYSTEM.—A State to which a grant is made
under section 403 is encouraged to implement an electronic
benefit transfer system for providing assistance under the
State program funded under this part, and may use the
grant for such purpose.
‘‘(h) USE OF FUNDS FOR INDIVIDUAL DEVELOPMENT
ACCOUNTS.—
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‘‘(1) IN GENERAL.—A State operating a pro-
gram funded under this part may use amounts re-
ceived under a grant under section 403 to carry out
a program to fund individual development accounts
(as defined in paragraph (2)) established by individ-
uals eligible for assistance under the State program
under this part.
‘‘(2) INDIVIDUAL DEVELOPMENT ACCOUNTS.—
‘‘(A) ESTABLISHMENT.—Under a State pro-
gram carried out under paragraph (1), an indi-
vidual development account may be established
by or on behalf of an individual eligible for as-
sistance under the State program operated under
this part for the purpose of enabling the individ-
ual to accumulate funds to for a qualified pur-
pose described in subparagraph (B).
‘‘(B) QUALIFIED
PURPOSE.—A qualified
purpose described in this subparagraph is 1 or
more of the following, as provided by the quali-
fied entity providing assistance to the individual
under this subsection:
‘‘(i) 
POSTSECONDARY
EDUCATIONAL
EXPENSES.—Postsecondary educational ex-
penses paid from an individual develop-
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except for 1 or more of the qualified purposes de-
scribed in subparagraph (B).
‘‘(3) REQUIREMENTS.—
‘‘(A) IN GENERAL.—An individual develop-
ment account established under this subsection
shall be a trust created or organized in the Unit-
ed States and funded through periodic contribu-
tions by the establishing individual and matched
by or through a qualified entity for a qualified
purpose (as described in paragraph (2)(B).
‘‘(B) QUALIFIED ENTITY.—For purposes of
this subsection, the term ‘qualified entity’ means
either—
‘‘(i) a not-for-profit organization de-
scribed in section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from tax-
ation under section 501(a) of such Code; or
‘‘(ii) a State or local government agen-
cy acting in cooperation with an organiza-
tion described in clause (i).
‘‘(4) NO
REDUCTION
IN
BENEFITS.—Notwith-
standing any other provision of Federal law (other
than the Internal Revenue Code of 1986) that requires
consideration of 1 or more financial circumstances of
an individual, for the purpose of determining eligi-
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bility to receive, or the amount of, any assistance or
benefit authorized by such law to be provided to or for
the benefit of such individual, funds (including inter-
est accruing) in an individual development account
under this subsection shall be disregarded for such
purpose with respect to any period during which such
individual maintains or makes contributions into
such an account.
‘‘(5) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) 
ELIGIBLE
EDUCATIONAL
INSTITU-
TION.—The term ‘eligible educational institution’
means the following:
‘‘(i) An institution described in section
481(a)(1) or 1201(a) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1088(a)(1) or
1141(a)), as such sections are in effect on
the date of the enactment of this subsection.
‘‘(ii) An area vocational education
school (as defined in subparagraph (C) or
(D) of section 521(4) of the Carl D. Perkins
Vocational and Applied Technology Edu-
cation Act (20 U.S.C. 2471(4))) which is in
any State (as defined in section 521(33) of
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such Act), as such sections are in effect on
the date of the enactment of this subsection.
‘‘(B) POST-SECONDARY
EDUCATIONAL
EX-
PENSES.—The term ‘post-secondary educational
expenses’ means—
‘‘(i) tuition and fees required for the
enrollment or attendance of a student at an
eligible educational institution, and
‘‘(ii) fees, books, supplies, and equip-
ment required for courses of instruction at
an eligible educational institution.
‘‘(C) QUALIFIED ACQUISITION COSTS.—The
term ‘qualified acquisition costs’ means the costs
of acquiring, constructing, or reconstructing a
residence. The term includes any usual or rea-
sonable settlement, financing, or other closing
costs.
‘‘(D) 
QUALIFIED
BUSINESS.—The 
term
‘qualified business’ means any business that does
not contravene any law or public policy (as de-
termined by the Secretary).
‘‘(E) QUALIFIED BUSINESS CAPITALIZATION
EXPENSES.—The term ‘qualified business cap-
italization expenses’ means qualified expendi-
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tures for the capitalization of a qualified busi-
ness pursuant to a qualified plan.
‘‘(F) QUALIFIED EXPENDITURES.—The term
‘qualified expenditures’ means expenditures in-
cluded in a qualified plan, including capital,
plant, equipment, working capital, and inven-
tory expenses.
‘‘(G) 
QUALIFIED
FIRST-TIME
HOME-
BUYER.—
‘‘(i) IN GENERAL.—The term ‘qualified
first-time homebuyer’ means a taxpayer
(and, if married, the taxpayer’s spouse) who
has no present ownership interest in a prin-
cipal residence during the 3-year period
ending on the date of acquisition of the
principal residence to which this subsection
applies.
‘‘(ii) DATE
OF
ACQUISITION.—The
term ‘date of acquisition’ means the date on
which a binding contract to acquire, con-
struct, or reconstruct the principal residence
to which this subparagraph applies is en-
tered into.
‘‘(H) QUALIFIED PLAN.—The term ‘quali-
fied plan’ means a business plan which—
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‘‘(i) is approved by a financial institu-
tion, or by a nonprofit loan fund having
demonstrated fiduciary integrity,
‘‘(ii) includes a description of services
or goods to be sold, a marketing plan, and
projected financial statements, and
‘‘(iii) may require the eligible individ-
ual to obtain the assistance of an experi-
enced entrepreneurial advisor.
‘‘(I) QUALIFIED
PRINCIPAL
RESIDENCE.—
The term ‘qualified principal residence’ means a
principal residence (within the meaning of sec-
tion 1034 of the Internal Revenue Code of 1986),
the qualified acquisition costs of which do not ex-
ceed 100 percent of the average area purchase
price applicable to such residence (determined in
accordance with paragraphs (2) and (3) of sec-
tion 143(e) of such Code).
‘‘SEC. 405. ADMINISTRATIVE PROVISIONS.
‘‘(a) QUARTERLY.—The Secretary shall pay each grant
payable to a State under section 403 in quarterly install-
ments.
‘‘(b) NOTIFICATION.—Not later than 3 months before
the payment of any such quarterly installment to a State,
the Secretary shall notify the State of the amount of any
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reduction determined under section 412(a)(1)(B) with re-
spect to the State.
‘‘(c) COMPUTATION AND CERTIFICATION OF PAYMENTS
TO STATES.—
‘‘(1) COMPUTATION.—The Secretary shall esti-
mate the amount to be paid to each eligible State for
each quarter under this part, such estimate to be
based on a report filed by the State containing an es-
timate by the State of the total sum to be expended
by the State in the quarter under the State program
funded under this part and such other information as
the Secretary may find necessary.
‘‘(2) CERTIFICATION.—The Secretary of Health
and Human Services shall certify to the Secretary of
the Treasury the amount estimated under paragraph
(1) with respect to a State, reduced or increased to
the extent of any overpayment or underpayment
which the Secretary of Health and Human Services
determines was made under this part to the State for
any prior quarter and with respect to which adjust-
ment has not been made under this paragraph.
‘‘(d) PAYMENT METHOD.—Upon receipt of a certifi-
cation under subsection (c)(2) with respect to a State, the
Secretary of the Treasury shall, through the Fiscal Service
of the Department of the Treasury and before audit or set-
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tlement by the General Accounting Office, pay to the State,
at the time or times fixed by the Secretary of Health and
Human Services, the amount so certified.
‘‘SEC. 406. FEDERAL LOANS FOR STATE WELFARE PRO-
GRAMS.
‘‘(a) LOAN AUTHORITY.—
‘‘(1) IN
GENERAL.—The Secretary shall make
loans to any loan-eligible State, for a period to matu-
rity of not more than 3 years.
‘‘(2) LOAN-ELIGIBLE STATE.—As used in para-
graph (1), the term ‘loan-eligible State’ means a State
against which a penalty has not been imposed under
section 409(a)(1).
‘‘(b) RATE OF INTEREST.—The Secretary shall charge
and collect interest on any loan made under this section
at a rate equal to the current average market yield on out-
standing marketable obligations of the United States with
remaining periods to maturity comparable to the period to
maturity of the loan.
‘‘(c) USE OF LOAN.—A State shall use a loan made
to the State under this section only for any purpose for
which grant amounts received by the State under section
403(a) may be used, including—
‘‘(1) welfare anti-fraud activities; and
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‘‘(2) the provision of assistance under the State
program to Indian families that have moved from the
service area of an Indian tribe with a tribal family
assistance plan approved under section 412.
‘‘(d) LIMITATION ON TOTAL AMOUNT OF LOANS TO A
STATE.—The cumulative dollar amount of all loans made
to a State under this section during fiscal years 1997
through 2001 shall not exceed 10 percent of the State family
assistance grant.
‘‘(e) LIMITATION ON TOTAL AMOUNT OF OUTSTANDING
LOANS.—The total dollar amount of loans outstanding
under this section may not exceed $1,700,000,000.
‘‘(f) APPROPRIATION.—Out of any money in the Treas-
ury of the United States not otherwise appropriated, there
are appropriated such sums as may be necessary for the
cost of loans under this section.
‘‘SEC. 407. MANDATORY WORK REQUIREMENTS.
‘‘(a) PARTICIPATION RATE REQUIREMENTS.—
‘‘(1) ALL FAMILIES.—A State to which a grant
is made under section 403 for a fiscal year shall
achieve the minimum participation rate specified in
the following table for the fiscal year with respect to
all families receiving assistance under the State pro-
gram funded under this part:
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The minimum
participation
‘‘If the fiscal year is:
rate is:
1996 ....................................................................
1997 ....................................................................
1998 ....................................................................
1999 ....................................................................
2000 ....................................................................
2001 ....................................................................
2002 and thereafter ...........................................
50.
‘‘(2) 2-PARENT FAMILIES.—A State to which a
grant is made under section 403 for a fiscal year
shall achieve the minimum participation rate speci-
fied in the following table for the fiscal year with re-
spect to 2-parent families receiving assistance under
the State program funded under this part:
The minimum
participation
‘‘If the fiscal year is:
rate is:
1996 ....................................................................
1997 ....................................................................
1998 ....................................................................
1999 and thereafter ...........................................
90.
‘‘(b) CALCULATION OF PARTICIPATION RATES.—
‘‘(1) ALL FAMILIES.—
‘‘(A) AVERAGE MONTHLY RATE.—For pur-
poses of subsection (a)(1), the participation rate
for all families of a State for a fiscal year is the
average of the participation rates for all families
of the State for each month in the fiscal year.
‘‘(B) MONTHLY
PARTICIPATION
RATES.—
The participation rate of a State for all families
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of the State for a month, expressed as a percent-
age, is—
‘‘(i) the number of families receiving
assistance under the State program funded
under this part that include an adult who
is engaged in work for the month; divided
by
‘‘(ii) the amount by which—
‘‘(I) the number of families receiv-
ing such assistance during the month
that include an adult receiving such
assistance; exceeds
‘‘(II) the number of families re-
ceiving such assistance that are subject
in such month to a penalty described
in subsection (e)(1) but have not been
subject to such penalty for more than 3
months within the preceding 12-month
period (whether or not consecutive).
‘‘(2) 2-PARENT FAMILIES.—
‘‘(A) AVERAGE MONTHLY RATE.—For pur-
poses of subsection (a)(2), the participation rate
for 2-parent families of a State for a fiscal year
is the average of the participation rates for 2-
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parent families of the State for each month in
the fiscal year.
‘‘(B) MONTHLY
PARTICIPATION
RATES.—
The participation rate of a State for 2-parent
families of the State for a month shall be cal-
culated by use of the formula set forth in para-
graph (1)(B), except that in the formula the term
‘number of 2-parent families’ shall be substituted
for the term ‘number of families’ each place such
latter term appears.
‘‘(3) PRO RATA REDUCTION OF PARTICIPATION
RATE DUE TO CASELOAD REDUCTIONS NOT REQUIRED
BY FEDERAL LAW.—
‘‘(A) IN
GENERAL.—The Secretary shall
prescribe regulations for reducing the minimum
participation rate otherwise required by this sec-
tion for a fiscal year by the number of percent-
age points equal to the number of percentage
points (if any) by which—
‘‘(i) the average monthly number of
families receiving assistance during the fis-
cal year under the State program funded
under this part is less than
‘‘(ii) the average monthly number of
families that received aid under the State
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plan approved under part A (as in effect on
September 30, 1995) during fiscal year
1995.
The minimum participation rate shall not be re-
duced to the extent that the Secretary determines
that the reduction in the number of families re-
ceiving such assistance is required by Federal
law.
‘‘(B) ELIGIBILITY
CHANGES
NOT
COUNT-
ED.—The regulations described in subparagraph
(A) shall not take into account families that are
diverted from a State program funded under this
part as a result of differences in eligibility cri-
teria under a State program funded under this
part and eligibility criteria under the State pro-
gram operated under the State plan approved
under part A (as such plan and such part were
in effect on September 30, 1995). Such regula-
tions shall place the burden on the Secretary to
prove that such families were diverted as a direct
result of differences in such eligibility criteria.
‘‘(4) STATE OPTION TO INCLUDE INDIVIDUALS
RECEIVING ASSISTANCE UNDER A TRIBAL FAMILY AS-
SISTANCE PLAN.—For purposes of paragraphs (1)(B)
and (2)(B), a State may, at its option, include fami-
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lies receiving assistance under a tribal family assist-
ance plan approved under section 412.
‘‘(5) STATE
OPTION
FOR
PARTICIPATION
RE-
QUIREMENT EXEMPTIONS.—
‘‘(A) IN GENERAL.—For any fiscal year, a
State may, at its option, not require an individ-
ual who is a single custodial parent caring for
a child who has not attained 12 months of age
to engage in work and may disregard such an
individual in determining the participation
rates under subsection (a).
‘‘(B) 
LIMITATION.—The 
exemption 
de-
scribed in subparagraph (A) may only be ap-
plied to a single custodial parent for a total of
12 months (whether or not consecutive).
‘‘(c) ENGAGED IN WORK.—
‘‘(1) ALL FAMILIES.—For purposes of subsection
(b)(1)(B)(i), a recipient is engaged in work for a
month in a fiscal year if the recipient is participat-
ing in work activities for at least the minimum aver-
age number of hours per week specified in the follow-
ing table during the month, not fewer than 20 hours
per week of which are attributable to an activity de-
scribed in paragraph (1), (2), (3), (4), (5), (6), (7),
or (8) of subsection (d):
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The minimum
‘‘If the month is
average number of
in fiscal year:
hours per week is:
1996 ....................................................................
1997 ....................................................................
1998 ....................................................................
1999 ....................................................................
2000 ....................................................................
2001 ....................................................................
2002 and thereafter ...........................................
35.
‘‘(2) 2-PARENT FAMILIES.—For purposes of sub-
section (b)(2)(B)(i)—
‘‘(A) an adult is engaged in work for a
month in a fiscal year if the adult is making
progress in work activities for at least 35 hours
per week during the month, not fewer than 30
hours per week of which are attributable to an
activity described in paragraph (1), (2), (3), (4),
(5), (6), (7), or (8) of subsection (d); and
‘‘(B) if the family of such adult receives fed-
erally-funded child care assistance, if the adult’s
spouse is making progress in work activities for
at least 20 hours per week during the month
which are attributable to an activity described in
paragraph (1), (2), (3), (4), (5), or (7) of sub-
section (d).
‘‘(3) LIMITATION ON NUMBER OF WEEKS FOR
WHICH
JOB
SEARCH
COUNTS
AS
WORK.—Notwith-
standing paragraphs (1) and (2), an individual shall
not be considered to be engaged in work by virtue of
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participation in an activity described in subsection
(d)(6), after the individual has participated in such
an activity for 4 weeks (except if the unemployment
rate in the State is above the national average, in
which case, 12 weeks) in a fiscal year. An individual
shall be considered to be participating in such an ac-
tivity for a week if the individual participates in
such an activity at any time during the week.
‘‘(4) LIMITATION
ON
EDUCATION
ACTIVITIES
COUNTED
AS
WORK.—For purposes of determining
monthly 
participation 
rates 
under 
paragraphs
(1)(B)(i) and (2)(B)(i) of subsection (b), not more
than 30 percent of adults in all families and in 2-
parent families determined to be engaged in work in
the State for a month may meet the work activity re-
quirement through participation in vocational edu-
cational training.
‘‘(5) SINGLE PARENT WITH CHILD UNDER AGE 6
DEEMED TO BE MEETING WORK PARTICIPATION RE-
QUIREMENTS IF PARENT IS ENGAGED IN WORK FOR 20
HOURS
PER
WEEK.—For purposes of determining
monthly 
participation 
rates 
under 
subsection
(b)(1)(B)(i), a recipient in a 1-parent family who is
the parent of a child who has not attained 6 years
of age is deemed to be engaged in work for a month
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if the recipient is engaged in work for an average of
at least 20 hours per week during the month.
‘‘(6) TEEN HEAD OF HOUSEHOLD WHO MAIN-
TAINS SATISFACTORY SCHOOL ATTENDANCE DEEMED
TO
BE
MEETING
WORK
PARTICIPATION
REQUIRE-
MENTS.—For purposes of determining monthly par-
ticipation rates under subsection (b)(1)(B)(i), a recip-
ient who is a single head of household and has not
attained 20 years of age is deemed to be engaged in
work for a month in a fiscal year if the recipient—
‘‘(A) maintains satisfactory attendance at
secondary school or the equivalent during the
month; or
‘‘(B) participates in education directly re-
lated to employment for at least the minimum
average number of hours per week specified in
the table set forth in paragraph (1).
‘‘(d) WORK ACTIVITIES DEFINED.—As used in this
section, the term ‘work activities’ means—
‘‘(1) unsubsidized employment;
‘‘(2) subsidized private sector employment;
‘‘(3) subsidized public sector employment;
‘‘(4) work experience (including work associated
with the refurbishing of publicly assisted housing) if
sufficient private sector employment is not available;
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‘‘(5) on-the-job training;
‘‘(6) job search and job readiness assistance;
‘‘(7) community service programs;
‘‘(8) educational training (not to exceed 24
months with respect to any individual);
‘‘(9) job skills training directly related to em-
ployment;
‘‘(10) education directly related to employment,
in the case of a recipient who has not attained 20
years of age, and has not received a high school di-
ploma or a certificate of high school equivalency; and
‘‘(11) satisfactory attendance at secondary
school, in the case of a recipient who—
‘‘(A) has not completed secondary school;
and
‘‘(B) is a dependent child, or a head of
household who has not attained 20 years of age.
‘‘(e) PENALTIES AGAINST INDIVIDUALS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if an adult in a family receiving assistance
under the State program funded under this part re-
fuses to engage in work required in accordance with
this section, the State shall—
‘‘(A) reduce the amount of assistance other-
wise payable to the family pro rata (or more, at
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the option of the State) with respect to any pe-
riod during a month in which the adult so re-
fuses; or
‘‘(B) terminate such assistance,
subject to such good cause and other exceptions as the
State may establish.
‘‘(2) EXCEPTION.—
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), a State may not reduce or terminate
assistance under the State program funded under
this part based on a refusal of an adult to work
if the adult is a single custodial parent caring
for a child who has not attained 11 years of age,
and the adult proves that the adult has a dem-
onstrated inability (as determined by the State)
to obtain needed child care, for 1 or more of the
following reasons:
‘‘(i) Unavailability of appropriate
child care within a reasonable distance from
the individual’s home or work site.
‘‘(ii) Unavailability or unsuitability of
informal child care by a relative or under
other arrangements.
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‘‘(iii) Unavailability of appropriate
and affordable formal child care arrange-
ments.
‘‘(B) INCLUDED IN DETERMINATION OF PAR-
TICIPATION RATES.—A State may not disregard
an adult for which the exception described in
subparagraph (A) applies from determination of
the participation rates under subsection (a).
‘‘(f) NONDISPLACEMENT IN WORK ACTIVITIES.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), an
adult in a family receiving assistance under a State
program funded under this part attributable to funds
provided by the Federal Government may fill a va-
cant employment position in order to engage in a
work activity described in subsection (d).
‘‘(2) NO FILLING OF CERTAIN VACANCIES.—No
work assignment to an adult in a family receiving as-
sistance under a State program funded under this
part shall result in—
‘‘(A) the displacement of any currently em-
ployed worker (including any temporary layoffs
and any partial displacement of such worker
through such matters as a reduction in the hours
of nonovertime work, wages, or employment ben-
efits; and
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‘‘(B) the termination of the employment of
any regular employee or any other involuntary
reduction of an employer’s workforce in order to
fill the vacancy so created with an adult de-
scribed in paragraph (1).
‘‘(3) GRIEVANCE PROCEDURE.—A State with a
program funded under this part shall establish and
maintain a grievance procedure for resolving com-
plaints of alleged violations of the provisions of para-
graph (2) and for providing adequate remedies for
any such violations established. The grievance proce-
dure established under this paragraph shall include
an opportunity for a hearing.
‘‘(4) NO
PREEMPTION.—Nothing in this sub-
section shall preempt or supersede any provision of
State or local law that provides greater protection for
employees from displacement.
‘‘(g) SENSE OF THE CONGRESS.—It is the sense of the
Congress that in complying with this section, each State
that operates a program funded under this part is encour-
aged to assign the highest priority to requiring adults in
2-parent families and adults in single-parent families that
include older preschool or school-age children to be engaged
in work activities.
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‘‘(h) SENSE OF THE CONGRESS THAT STATES SHOULD
IMPOSE CERTAIN REQUIREMENTS ON NONCUSTODIAL, NON-
SUPPORTING MINOR PARENTS.—It is the sense of the Con-
gress that the States should require noncustodial, non-
supporting parents who have not attained 18 years of age
to fulfill community work obligations and attend appro-
priate parenting or money management classes after school.
‘‘(i) ENCOURAGEMENT TO PROVIDE CHILD CARE
SERVICES.—An individual participating in a State com-
munity service program may be treated as being engaged
in work under subsection (c) if such individual provides
child care services to other individuals participating in the
community service program in the manner, and for the pe-
riod of time each week, determined appropriate by the
State.
‘‘SEC. 408. PROHIBITIONS; REQUIREMENTS.
‘‘(a) IN GENERAL.—
‘‘(1) NO ASSISTANCE FOR FAMILIES WITHOUT A
MINOR CHILD.—A State to which a grant is made
under section 403 shall not use any part of the grant
to provide assistance to a family—
‘‘(A) unless the family includes—
‘‘(i) a minor child who resides with a
custodial parent or other adult caretaker
relative of the child; or
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‘‘(ii) a pregnant individual; and
‘‘(B) if such family includes an adult who
has received assistance under any State program
funded under this part attributable to funds pro-
vided by the Federal Government, for 60 months
(whether or not consecutive) after the date the
State program funded under this part com-
mences (unless an exception described in sub-
paragraph (B) or (C) of paragraph (8) applies).
‘‘(2) REDUCTION
OR
ELIMINATION
OF
ASSIST-
ANCE
FOR
NONCOOPERATION
IN
ESTABLISHING
PA-
TERNITY
OR
OBTAINING
CHILD
SUPPORT.—If the
agency responsible for administering the State plan
approved under part D determines that an individual
is not cooperating with the State in establishing pa-
ternity or in establishing, modifying, or enforcing a
support order with respect to a child of the individ-
ual, and the individual does not qualify for any good
cause or other exception established by the State pur-
suant to section 454(29), then the State—
‘‘(A) shall deduct not less than 25 percent
of the assistance that would otherwise be pro-
vided to the family of the individual under the
State program funded under this part; and
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‘‘(B) may deny the family any assistance
under the State program.
‘‘(3) NO ASSISTANCE FOR FAMILIES NOT ASSIGN-
ING CERTAIN SUPPORT RIGHTS TO THE STATE.—
‘‘(A) IN
GENERAL.—A State to which a
grant is made under section 403 shall require, as
a condition of providing assistance to a family
under the State program funded under this part,
that a member of the family assign to the State
any rights the family member may have (on be-
half of the family member or of any other person
for whom the family member has applied for or
is receiving such assistance) to support from any
other person, not exceeding the total amount of
assistance so provided to the family, which ac-
crue (or have accrued) before the date the family
leaves the program, which assignment, on and
after the date the family leaves the program,
shall not apply with respect to any support
(other than support collected pursuant to section
464) which accrued before the family received
such assistance and which the State has not col-
lected by—
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‘‘(i) September 30, 2000, if the assign-
ment is executed on or after October 1,
1997, and before October 1, 2000; or
‘‘(ii) the date the family leaves the pro-
gram, if the assignment is executed on or
after October 1, 2000.
‘‘(B) LIMITATION.—A State to which a
grant is made under section 403 shall not re-
quire, as a condition of providing assistance to
any family under the State program funded
under this part, that a member of the family as-
sign to the State any rights to support described
in subparagraph (A) which accrue after the date
the family leaves the program.
‘‘(4) NO
ASSISTANCE
FOR
TEENAGE
PARENTS
WHO
DO
NOT
ATTEND
HIGH
SCHOOL
OR
OTHER
EQUIVALENT TRAINING PROGRAM.—A State to which
a grant is made under section 403 shall not use any
part of the grant to provide assistance to an individ-
ual who has not attained 18 years of age, is not mar-
ried, has a minor child at least 12 weeks of age in
his or her care, and has not successfully completed a
high-school education (or its equivalent), if the indi-
vidual does not participate in—
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‘‘(A) educational activities directed toward
the attainment of a high school diploma or its
equivalent; or
‘‘(B) an alternative educational or training
program that has been approved by the State.
‘‘(5) NO
ASSISTANCE
FOR
TEENAGE
PARENTS
NOT LIVING IN ADULT-SUPERVISED SETTINGS.—
‘‘(A) IN GENERAL.—
‘‘(i) REQUIREMENT.—Except as pro-
vided in subparagraph (B), a State to
which a grant is made under section 403
shall not use any part of the grant to pro-
vide assistance to an individual described
in clause (ii) of this subparagraph if the in-
dividual and the minor child referred to in
clause (ii)(II) do not reside in a place of
residence maintained by a parent, legal
guardian, or other adult relative of the in-
dividual as such parent’s, guardian’s, or
adult relative’s own home.
‘‘(ii) 
INDIVIDUAL
DESCRIBED.—For
purposes of clause (i), an individual de-
scribed in this clause is an individual
who—
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‘‘(I) has not attained 18 years of
age; and
‘‘(II) is not married, and has a
minor child in his or her care.
‘‘(B) EXCEPTION.—
‘‘(i) PROVISION OF, OR ASSISTANCE IN
LOCATING, ADULT-SUPERVISED LIVING AR-
RANGEMENT.—In the case of an individual
who is described in clause (ii), the State
agency referred to in section 402(a)(4) shall
provide, or assist the individual in locating,
a second chance home, maternity home, or
other appropriate adult-supervised support-
ive living arrangement, taking into consid-
eration the needs and concerns of the indi-
vidual, and thereafter shall require that the
individual and the minor child referred to
in subparagraph (A)(ii)(II) reside in such
living arrangement as a condition of the
continued receipt of assistance under the
State program funded under this part at-
tributable to funds provided by the Federal
Government (or in an alternative appro-
priate arrangement, should circumstances
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change and the current arrangement cease
to be appropriate).
‘‘(ii) 
INDIVIDUAL
DESCRIBED.—For
purposes of clause (i), an individual is de-
scribed in this clause if the individual is de-
scribed in subparagraph (A)(ii), and—
‘‘(I) the individual has no parent,
legal guardian or other appropriate
adult relative described in subclause
(II) of his or her own who is living or
whose whereabouts are known;
‘‘(II) no living parent, legal
guardian, or other appropriate adult
relative, who would otherwise meet ap-
plicable State criteria to act as the in-
dividual’s legal guardian, of such indi-
vidual allows the individual to live in
the home of such parent, guardian, or
relative;
‘‘(III) the State agency determines
that—
‘‘(aa) the individual or the
minor child referred to in sub-
paragraph (A)(ii)(II) is being or
has been subjected to serious phys-
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ical or emotional harm, sexual
abuse, or exploitation in the resi-
dence of the individual’s own par-
ent or legal guardian; or
‘‘(bb) substantial evidence ex-
ists of an act or failure to act that
presents an imminent or serious
harm if the individual and the
minor child lived in the same res-
idence with the individual’s own
parent or legal guardian; or
‘‘(IV) the State agency otherwise
determines that it is in the best inter-
est of the minor child to waive the re-
quirement of subparagraph (A) with
respect to the individual or the minor
child.
‘‘(iii) SECOND-CHANCE
HOME.—For
purposes of this subparagraph, the term
‘second-chance home’ means an entity that
provides individuals described in clause (ii)
with a supportive and supervised living ar-
rangement in which such individuals are
required to learn parenting skills, including
child development, family budgeting, health
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and nutrition, and other skills to promote
their long-term economic independence and
the well-being of their children.
‘‘(6) NO MEDICAL SERVICES.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), a State to which a grant is
made under section 403 shall not use any part
of the grant to provide medical services.
‘‘(B) EXCEPTION
FOR
FAMILY
PLANNING
SERVICES.—As used in subparagraph (A), the
term ‘medical services’ does not include family
planning services.
‘‘(7) SANCTION WELFARE RECIPIENTS FOR FAIL-
ING TO ENSURE THAT MINOR DEPENDENT CHILDREN
ATTEND SCHOOL.—
‘‘(A) IN
GENERAL.—A State to which a
grant is made under section 403 shall not be
prohibited from sanctioning a family that in-
cludes an adult who has received assistance
under any State program funded under this part
attributable to funds provided by the Federal
Government or under the food stamp program,
as defined in section 3(h) of the Food Stamp Act
of 1977, if such adult fails to ensure that the
minor dependent children of such adult attend
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school as required by the law of the State in
which the minor children reside.
‘‘(8) DENIAL OF ASSISTANCE FOR 10 YEARS TO A
PERSON FOUND TO HAVE FRAUDULENTLY MISREPRE-
SENTED RESIDENCE IN ORDER TO OBTAIN ASSIST-
ANCE IN 2 OR MORE STATES.—A State to which a
grant is made under section 403 shall not use any
part of the grant to provide cash assistance to an in-
dividual during the 10-year period that begins on the
date the individual is convicted in Federal or State
court of having made a fraudulent statement or rep-
resentation with respect to the place of residence of
the individual in order to receive assistance simulta-
neously from 2 or more States under programs that
are funded under this title, title XV or XIX, or the
Food Stamp Act of 1977, or benefits in 2 or more
States under the supplemental security income pro-
gram under title XVI. The preceding sentence shall
not apply with respect to a conviction of an individ-
ual, for any month beginning after the President of
the United States grants a pardon with respect to the
conduct which was the subject of the conviction.
‘‘(9) DENIAL OF ASSISTANCE FOR FUGITIVE FEL-
ONS AND PROBATION AND PAROLE VIOLATORS.—
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‘‘(A) IN
GENERAL.—A State to which a
grant is made under section 403 shall not use
any part of the grant to provide assistance to
any individual who is—
‘‘(i) fleeing to avoid prosecution, or
custody or confinement after conviction,
under the laws of the place from which the
individual flees, for a crime, or an attempt
to commit a crime, which is a felony under
the laws of the place from which the indi-
vidual flees, or which, in the case of the
State of New Jersey, is a high misdemeanor
under the laws of such State; or
‘‘(ii) violating a condition of probation
or parole imposed under Federal or State
law.
The preceding sentence shall not apply with re-
spect to conduct of an individual, for any month
beginning after the President of the United
States grants a pardon with respect to the con-
duct.
‘‘(B) EXCHANGE
OF
INFORMATION
WITH
LAW
ENFORCEMENT
AGENCIES.—If a State to
which a grant is made under section 403 estab-
lishes safeguards against the use or disclosure of
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information about applicants or recipients of as-
sistance under the State program funded under
this part, the safeguards shall not prevent the
State agency administering the program from
furnishing a Federal, State, or local law enforce-
ment officer, upon the request of the officer, with
the current address of any recipient if the officer
furnishes the agency with the name of the recipi-
ent and notifies the agency that—
‘‘(i) the recipient—
‘‘(I) is described in subparagraph
(A); or
‘‘(II) has information that is nec-
essary for the officer to conduct the of-
ficial duties of the officer; and
‘‘(ii) the location or apprehension of
the recipient is within such official duties.
‘‘(10) DENIAL OF ASSISTANCE FOR MINOR CHIL-
DREN WHO ARE ABSENT FROM THE HOME FOR A SIG-
NIFICANT PERIOD.—
‘‘(A) IN
GENERAL.—A State to which a
grant is made under section 403 shall not use
any part of the grant to provide assistance for
a minor child who has been, or is expected by a
parent (or other caretaker relative) of the child
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to be, absent from the home for a period of 45
consecutive days or, at the option of the State,
such period of not less than 30 and not more
than 180 consecutive days as the State may pro-
vide for in the State plan submitted pursuant to
section 402.
‘‘(B) STATE
AUTHORITY
TO
ESTABLISH
GOOD CAUSE EXCEPTIONS.—The State may es-
tablish such good cause exceptions to subpara-
graph (A) as the State considers appropriate if
such exceptions are provided for in the State
plan submitted pursuant to section 402.
‘‘(C) DENIAL OF ASSISTANCE FOR RELATIVE
WHO FAILS TO NOTIFY STATE AGENCY OF AB-
SENCE OF CHILD.—A State to which a grant is
made under section 403 shall not use any part
of the grant to provide assistance for an individ-
ual who is a parent (or other caretaker relative)
of a minor child and who fails to notify the
agency administering the State program funded
under this part of the absence of the minor child
from the home for the period specified in or pro-
vided for pursuant to subparagraph (A), by the
end of the 5-day period that begins with the date
that it becomes clear to the parent (or relative)
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that the minor child will be absent for such pe-
riod so specified or provided for.
‘‘(11) ASSURING MEDICAID COVERAGE FOR LOW-
INCOME FAMILIES.—
‘‘(A) IN
GENERAL.—Notwithstanding any
other provision of this Act, subject to the succeed-
ing provisions of this paragraph, with respect to
a State any reference in title XIX (or other pro-
vision of law in relation to the operation of such
title) to a provision of this part, or a State plan
under this part (or a provision of such a plan),
including standards and methodologies for deter-
mining income and resources under this part or
such plan, shall be considered a reference to such
a provision or plan as in effect as of July 1,
1996, with respect to the State.
‘‘(B) CONSTRUCTIONS.—
‘‘(i) In applying section 1925(a)(1),
the reference to ‘section 402(a)(8)(B)(ii)(II)’
is deemed a reference to a corresponding
earning disregard rule (if any) established
under a State program funded under this
part (as in effect on or after October 1,
1996).
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‘‘(ii) The provisions of former section
406(h) (as in effect on July 1, 1996) shall
apply, in relation to title XIX, with respect
to individuals who receive assistance under
a State program funded under this part (as
in effect on or after October 1, 1996) and
are eligible for medical assistance under
title XIX or who are described in subpara-
graph (C)(i) in the same manner as they
apply as of July 1, 1996, with respect to in-
dividuals who become ineligible for aid to
families with dependent children as a result
(wholly or partly) of the collection or in-
creased collection of child or spousal sup-
port under part D of this title.
‘‘(iii) With respect to the reference in
section 1902(a)(5) to a State plan approved
under this part, a State may treat such ref-
erence as a reference either to a State pro-
gram funded under this part (as in effect on
or after October 1, 1996) or to the State
plan under title XIX.
‘‘(C) ELIGIBILITY CRITERIA.—
‘‘(i) IN
GENERAL.—For purposes of
title XIX, subject to clause (ii), in determin-
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ing eligibility for medical assistance under
such title, an individual shall be treated as
receiving aid or assistance under a State
plan approved under this part (and shall be
treated as meeting the income and resource
standards under this part) only if the indi-
vidual meets—
‘‘(I) the income and resource
standards for determining eligibility
under such plan; and
‘‘(II) the eligibility requirements
of such plan under subsections (a)
through (c) of former section 406 and
former section 407(a),
as in effect as of July 1, 1996. Subject to
clause (ii)(II), the income and resource
methodologies under such plan as of such
date shall be used in the determination of
whether any individual meets income and
resource standards under such plan.
‘‘(ii) STATE OPTION.—For purposes of
applying this paragraph, a State may—
‘‘(I) lower its income standards
applicable with respect to this part,
but not below the income standards ap-
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plicable under its State plan under
this part on May 1, 1988; and
‘‘(II) use income and resource
standards or methodologies that are
less restrictive than the standards or
methodologies used under the State
plan under this part as of July 1,
1996.
‘‘(iii) TRANSITIONAL COVERAGE.—For
purposes of section 1925, an individual who
is receiving assistance under the State pro-
gram funded under this part (as in effect on
or after October 1, 1996) and is eligible for
medical assistance under title XIX shall be
treated as an individual receiving aid or
assistance pursuant to a State plan ap-
proved under this part (as in effect as of
July 1, 1996) (and thereby eligible for con-
tinuation of medical assistance under such
section 1925).
‘‘(D) WAIVERS.—In the case of a waiver of
a provision of this part in effect with respect to
a State as of July 1, 1996, if the waiver affects
eligibility of individuals for medical assistance
under title XIX, such waiver may (but need not)
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continue to be applied, at the option of the State,
in relation to such title after the date the waiver
would otherwise expire. If a State elects not to
continue to apply such a waiver, then, after the
date of the expiration of the waiver, subpara-
graphs (A), (B), and (C) shall be applied as if
any provisions so waived had not been waived.
‘‘(E) STATE OPTION TO USE 1 APPLICATION
FORM.—Nothing in this paragraph, this part, or
title XIX, shall be construed as preventing a
State from providing for the same application
form for assistance under a State program fund-
ed under this part (on or after October 1, 1996)
and for medical assistance under title XIX.
‘‘(F) 
REQUIREMENT
FOR
RECEIPT
OF
FUNDS.—A State to which a grant is made
under section 403 shall take such action as may
be necessary to ensure that the provisions of this
paragraph are carried out: Provided, That the
State is otherwise participating in title XIX of
this Act.
‘‘(b) ALIENS.—For special rules relating to the treat-
ment of aliens, see section 2402 of the Personal Responsibil-
ity and Work Opportunity Act of 1996.
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‘‘(c) NONDISCRIMINATION PROVISIONS.—Any program
or activity that receives funds under this part shall be sub-
ject to enforcement authorized under the following provi-
sions of law:
‘‘(1) The Age Discrimination Act of 1975 (42
U.S.C. 6101 et seq.).
‘‘(2) Section 504 of the Rehabilitation Act of
1973 (29 U.S.C. 794).
‘‘(3) The Americans with Disabilities Act of
1990 (42 U.S.C. 12101 et seq.).
‘‘(4) Title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d et seq.).
‘‘(d) STATE REQUIRED TO ENTER INTO A PERSONAL
RESPONSIBILITY AGREEMENT WITH EACH FAMILY RE-
CEIVING ASSISTANCE.—
‘‘(1) IN GENERAL.—Each State to which a grant
is made under section 403 shall require each family
receiving assistance under the State program funded
under this part to enter into a personal responsibility
agreement (as developed by the State) with the State.
‘‘(2) PERSONAL RESPONSIBILITY AGREEMENT.—
For purposes of this subsection, the term ‘personal re-
sponsibility agreement’ means a binding contract be-
tween the State and each family receiving assistance
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under the State program funded under this part
that—
‘‘(A) contains a statement that public as-
sistance is not intended to be a way of life, but
is intended as temporary assistance to help the
family achieve self-sufficiency and personal inde-
pendence;
‘‘(B) outlines the steps each family and the
State will take to get the family off of welfare
and to become self-sufficient, including an em-
ployment goal for the individual and a plan for
promptly moving the individual into paid em-
ployment;
‘‘(C) specifies a negotiated time-limited pe-
riod of eligibility for receipt of assistance that is
consistent with unique family circumstances and
is based on a reasonable plan to facilitate the
transition of the family to self-sufficiency;
‘‘(D) provides for the imposition of sanc-
tions if the individual refuses to sign the agree-
ment or does not comply with the terms of the
agreement, which may include loss or reduction
of cash benefits;
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‘‘(E) provides that the contract shall be in-
valid if the State agency fails to comply with the
contract; and
‘‘(F) provides that the individual agrees not
to abuse illegal drugs or other substances that
would interfere with the ability of the individual
to become self-sufficient, or provide for a referral
for substance abuse treatment if necessary to in-
crease the employability of the individual.
‘‘(3) ASSESSMENT.—The State agency shall pro-
vide, through a case manager, an initial and thor-
ough assessment of the skills, prior work experience,
and employability of each parent for use in develop-
ing and negotiating a personal responsibility con-
tract.
‘‘(4) DISPUTE RESOLUTION.—The State agency
shall establish a dispute resolution procedure for dis-
putes related to participation in the personal respon-
sibility contract that provides the opportunity for a
hearing.
‘‘SEC. 409. PENALTIES.
‘‘(a) IN GENERAL.—Subject to this section:
‘‘(1) USE
OF
GRANT
IN
VIOLATION
OF
THIS
PART.—
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‘‘(A) GENERAL PENALTY.—If an audit con-
ducted under chapter 75 of title 31, United
States Code, finds that an amount paid to a
State under section 403 for a fiscal year has
been used in violation of this part, the Secretary
shall reduce the grant payable to the State under
section 403(a)(1) for the immediately succeeding
fiscal year quarter by the amount so used.
‘‘(B) ENHANCED
PENALTY
FOR
INTEN-
TIONAL VIOLATIONS.—If the State does not prove
to the satisfaction of the Secretary that the State
did not intend to use the amount in violation of
this part, the Secretary shall further reduce the
grant payable to the State under section
403(a)(1) for the immediately succeeding fiscal
year quarter by an amount equal to 5 percent of
the State family assistance grant.
‘‘(2) FAILURE TO SUBMIT REQUIRED REPORT.—
‘‘(A) IN GENERAL.—If the Secretary deter-
mines that a State has not, within 1 month after
the end of a fiscal quarter, submitted the report
required by section 411(a) for the quarter, the
Secretary shall reduce the grant payable to the
State under section 403(a)(1) for the imme-
diately succeeding fiscal year by an amount
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equal to 4 percent of the State family assistance
grant.
‘‘(B) RESCISSION OF PENALTY.—The Sec-
retary shall rescind a penalty imposed on a
State under subparagraph (A) with respect to a
report if the State submits the report before the
end of the fiscal quarter that immediately suc-
ceeds the fiscal quarter for which the report was
required.
‘‘(3) FAILURE TO SATISFY MINIMUM PARTICIPA-
TION RATES.—
‘‘(A) IN GENERAL.—If the Secretary deter-
mines that a State to which a grant is made
under section 403 for a fiscal year has failed to
comply with section 407(a) for the fiscal year,
the Secretary shall reduce the grant payable to
the State under section 403(a)(1) for the imme-
diately succeeding fiscal year by an amount
equal to not more than 5 percent of the State
family assistance grant.
‘‘(B) PENALTY
BASED
ON
SEVERITY
OF
FAILURE.—The Secretary shall impose reduc-
tions under subparagraph (A) based on the de-
gree of noncompliance.
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‘‘(C) ADDITIONAL PENALTY FOR CONSECU-
TIVE
NONCOMPLIANCE.—Notwithstanding 
the
limitation described in subparagraph (A), the
Secretary shall reduce the grant payable to the
State under section 403(a)(1) for a fiscal year,
in addition to the reduction imposed under sub-
paragraph (A), by an amount equal to 5 percent
of the State family assistance grant, if the Sec-
retary determines that the State failed to comply
with section 407(a) for 2 or more consecutive
preceding fiscal years.
‘‘(4) FAILURE TO PARTICIPATE IN THE INCOME
AND ELIGIBILITY VERIFICATION SYSTEM.—If the Sec-
retary 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 the grant
payable to the State under section 403(a)(1) for the
immediately succeeding fiscal year by an amount
equal to not more than 2 percent of the State family
assistance grant.
‘‘(5) FAILURE TO COMPLY WITH PATERNITY ES-
TABLISHMENT
AND
CHILD
SUPPORT
ENFORCEMENT
REQUIREMENTS
UNDER
PART
D.—Notwithstanding
any other provision of this Act, if the Secretary deter-
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mines that the State agency that administers a pro-
gram funded under this part does not enforce the pen-
alties requested by the agency administering part D
against recipients of assistance under the State pro-
gram who fail to cooperate in establishing paternity
or in establishing, modifying, or enforcing a child
support order in accordance with such part and who
do not qualify for any good cause or other exception
established by the State under section 454(29), the
Secretary shall reduce the grant payable to the State
under section 403(a)(1) for the immediately succeed-
ing fiscal year (without regard to this section) by not
more than 5 percent.
‘‘(6) FAILURE
TO
TIMELY
REPAY
A
FEDERAL
LOAN FUND FOR STATE WELFARE PROGRAMS.—If the
Secretary determines that a State has failed to repay
any amount borrowed from the Federal Loan Fund
for State Welfare Programs established under section
406 within the period of maturity applicable to the
loan, plus any interest owed on the loan, the Sec-
retary shall reduce the grant payable to the State
under section 403(a)(1) for the immediately succeed-
ing fiscal year quarter (without regard to this sec-
tion) by the outstanding loan amount, plus the inter-
est owed on the outstanding amount. The Secretary
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shall not forgive any outstanding loan amount or in-
terest owed on the outstanding amount.
‘‘(7) FAILURE OF ANY STATE TO MAINTAIN CER-
TAIN LEVEL OF HISTORIC EFFORT.—
‘‘(A) IN GENERAL.—The Secretary shall re-
duce the grant payable to the State under section
403(a)(1) for fiscal year 1998, 1999, 2000, 2001,
or 2002 by the amount (if any) by which quali-
fied State expenditures for the then immediately
preceding fiscal year are less than the applicable
percentage of historic State expenditures with re-
spect to such preceding fiscal year.
‘‘(B) DEFINITIONS.—As used in this para-
graph:
‘‘(i) 
QUALIFIED
STATE
EXPENDI-
TURES.—
‘‘(I) 
IN
GENERAL.—The 
term
‘qualified State expenditures’ means,
with respect to a State and a fiscal
year, the total expenditures by the
State during the fiscal year, under all
State programs, for any of the follow-
ing with respect to eligible families:
‘‘(aa) Cash assistance.
‘‘(bb) Child care assistance.
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‘‘(cc) Educational activities
designed to increase self-suffi-
ciency, job training, and work, ex-
cluding any expenditure for pub-
lic education in the State except
expenditures which involve the
provision of services or assistance
to a member of an eligible family
which is not generally available to
persons who are not members of
an eligible family.
‘‘(dd) Administrative costs in
connection with the matters de-
scribed in items (aa), (bb), (cc),
and (ee), but only to the extent
that such costs do not exceed 15
percent of the total amount of
qualified State expenditures for
the fiscal year.
‘‘(ee) Any other use of funds
allowable under section 404(a)(1).
‘‘(II) EXCLUSION OF TRANSFERS
FROM OTHER STATE AND LOCAL PRO-
GRAMS.—Such term does not include
expenditures under any State or local
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program during a fiscal year, except to
the extent that—
‘‘(aa) such expenditures ex-
ceed the amount expended under
the State or local program in the
fiscal year most recently ending
before the date of the enactment of
the Personal Responsibility and
Work Opportunity Act of 1996; or
‘‘(bb) the State is entitled to
a payment under former section
403 (as in effect immediately be-
fore such date of enactment) with
respect to such expenditures.
‘‘(III) ELIGIBLE
FAMILIES.—As
used in subclause (I), the term ‘eligible
families’ means families eligible for as-
sistance under the State program fund-
ed under this part, and families that
would be eligible for such assistance
but for the application of section
408(a)(8) of this Act or section 2402 of
the Personal Responsibility and Work
Opportunity Act of 1996.
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‘‘(ii) APPLICABLE PERCENTAGE.—The
term ‘applicable percentage’ means for fiscal
years 1997 through 2001, 80 percent re-
duced (if appropriate) in accordance with
subparagraph (C)(ii).
‘‘(iii) 
HISTORIC
STATE
EXPENDI-
TURES.—The term ‘historic State expendi-
tures’ means, with respect to a State, the
lesser of—
‘‘(I) the expenditures by the State
under parts A and F (as in effect dur-
ing fiscal year 1994) for fiscal year
1994; or
‘‘(II) the amount which bears the
same ratio to the amount described in
subclause (I) as—
‘‘(aa) the State family assist-
ance grant, plus the total amount
required to be paid to the State
under former section 403 for fiscal
year 1994 with respect to amounts
expended by the State for child
care under subsection (g) or (i) of
section 402 (as in effect during
fiscal year 1994); bears to
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‘‘(bb) the total amount re-
quired to be paid to the State
under former section 403 (as in
effect during fiscal year 1994) for
fiscal year 1994.
Such term does not include any expendi-
tures under the State plan approved under
part A (as so in effect) on behalf of individ-
uals covered by a tribal family assistance
plan approved under section 412, as deter-
mined by the Secretary.
‘‘(iv) EXPENDITURES BY THE STATE.—
The term ‘expenditures by the State’ does
not include—
‘‘(I) 
any 
expenditures 
from
amounts made available by the Federal
Government;
‘‘(II) State funds expended for the
medicaid program under title XV or
XIX; or
‘‘(III) any State funds which are
used to match Federal funds or are ex-
pended as a condition of receiving Fed-
eral funds under Federal programs
other than under this part.
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‘‘(C) APPLICABLE
PERCENTAGE
REDUCED
FOR HIGH PERFORMANCE STATES.—
‘‘(i) DETERMINATION
OF
HIGH
PER-
FORMANCE
STATES.—The Secretary shall
use the formula developed under section
403(a)(4)(C) to assign a score to each eligi-
ble State that represents the performance of
the State program funded under this part
for each fiscal year, and shall prescribe a
performance threshold which the Secretary
shall use to determine whether to reduce the
applicable percentage with respect to any el-
igible State for a fiscal year.
‘‘(ii) REDUCTION
PROPORTIONAL
TO
PERFORMANCE.—The Secretary shall reduce
the applicable percentage for a fiscal year
with respect to each eligible State by an
amount which is directly proportional to
the amount (if any) by which the score as-
signed to the State under clause (i) for the
immediately preceding fiscal year exceeds
the performance threshold prescribed under
clause (i) for such preceding fiscal year,
subject to clause (iii).
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‘‘(iii) LIMITATION
ON
REDUCTION.—
The applicable percentage for a fiscal year
with respect to a State may not be reduced
by more than 8 percentage points under this
subparagraph.
‘‘(8) SUBSTANTIAL
NONCOMPLIANCE
OF
STATE
CHILD SUPPORT ENFORCEMENT PROGRAM WITH RE-
QUIREMENTS OF PART D.—
‘‘(A) IN GENERAL.—If a State program op-
erated under part D is found as a result of a re-
view conducted under section 452(a)(4) not to
have complied substantially with the require-
ments of such part for any quarter, and the Sec-
retary determines that the program is not com-
plying substantially with such requirements at
the time the finding is made, the Secretary shall
reduce the grant payable to the State under sec-
tion 403(a)(1) for the quarter and each subse-
quent quarter that ends before the 1st quarter
throughout which the program is found to be in
substantial compliance with such requirements
by—
‘‘(i) not less than 1 nor more than 2
percent;
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‘‘(ii) not less than 2 nor more than 3
percent, if the finding is the 2nd consecutive
such finding made as a result of such a re-
view; or
‘‘(iii) not less than 3 nor more than 5
percent, if the finding is the 3rd or a subse-
quent consecutive such finding made as a
result of such a review.
‘‘(B) 
DISREGARD
OF
NONCOMPLIANCE
WHICH IS OF A TECHNICAL NATURE.—For pur-
poses of subparagraph (A) and section 452(a)(4),
a State which is not in full compliance with the
requirements of this part shall be determined to
be in substantial compliance with such require-
ments only if the Secretary determines that any
noncompliance with such requirements is of a
technical nature which does not adversely affect
the performance of the State’s program operated
under part D.
‘‘(9) FAILURE
OF
STATE
RECEIVING
AMOUNTS
FROM CONTINGENCY FUND TO MAINTAIN 100 PERCENT
OF HISTORIC EFFORT.—If, at the end of any fiscal
year during which amounts from the Contingency
Fund for State Welfare Programs have been paid to
a State, the Secretary finds that the expenditures
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under the State program funded under this part for
the fiscal year are less than 100 percent of historic
State 
expenditures 
(as 
defined 
in 
paragraph
(7)(B)(iii) of this subsection), the Secretary shall re-
duce the grant payable to the State under section
403(a)(1) for the immediately succeeding fiscal year
by the total of the amounts so paid to the State.
‘‘(10) FAILURE TO COMPLY WITH PROVISIONS OF
THIS PART OR THE STATE PLAN.—If, after reasonable
notice and opportunity for hearing, the Secretary de-
termines that during a fiscal year a State has not
substantially complied with any provision of this
part or of the State plan, the Secretary shall, if a pre-
ceding paragraph of this subsection does not apply to
such noncompliance, reduce the grant payable to the
State under section 403(a)(1) for the immediately
succeeding fiscal year by an amount equal to not
more than 5 percent of the State family assistance
grant, and shall continue to impose such reduction
during each succeeding fiscal year until the Secretary
determines that the State no longer is in noncompli-
ance with such provision.
‘‘(11) FAILURE TO COMPLY WITH 5-YEAR LIMIT
ON
ASSISTANCE.—If the Secretary determines that
during a fiscal year a State has not complied with
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the provisions of section 408(a)(1)(B), the Secretary
shall reduce the grant payable to the State under sec-
tion 403(a)(1) for the immediately succeeding fiscal
year by an amount equal to 5 percent of the State
family assistance grant.
‘‘(12) REQUIRED REPLACEMENT OF GRANT FUND
REDUCTIONS CAUSED BY PENALTIES.—If the grant
payable to a State under section 403(a)(1) for a fiscal
year is reduced by reason of this subsection, the State
shall, during the immediately succeeding fiscal year,
expend under the State program funded under this
part an amount equal to the total amount of such re-
ductions.
‘‘(b) REASONABLE CAUSE EXCEPTION.—
‘‘(1) IN GENERAL.—The Secretary may not im-
pose a penalty on a State under subsection (a) with
respect to a requirement if the Secretary determines
that the State has reasonable cause for failing to com-
ply with the requirement.
‘‘(2) EXCEPTION.—Paragraph (1) of this sub-
section shall not apply to any penalty under para-
graph (6) or (7) of subsection (a).
‘‘(c) CORRECTIVE COMPLIANCE PLAN.—
‘‘(1) IN GENERAL.—
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‘‘(A) NOTIFICATION OF VIOLATION.—Before
imposing a penalty against a State under sub-
section (a) with respect to a violation of this
part, the Secretary shall notify the State of the
violation and allow the State the opportunity to
enter into a corrective compliance plan in ac-
cordance with this subsection which outlines how
the State will correct the violation and how the
State will insure continuing compliance with
this part.
‘‘(B) 60-DAY PERIOD TO PROPOSE A COR-
RECTIVE COMPLIANCE PLAN.—During the 60-day
period that begins on the date the State receives
a notice provided under subparagraph (A) with
respect to a violation, the State may submit to
the Federal Government a corrective compliance
plan to correct the violation.
‘‘(C) 
CONSULTATION
ABOUT
MODIFICA-
TIONS.—During the 60-day period that begins
with the date the Secretary receives a corrective
compliance plan submitted by a State in accord-
ance with subparagraph (B), the Secretary may
consult with the State on modifications to the
plan.
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‘‘(D) ACCEPTANCE OF PLAN.— A corrective
compliance plan submitted by a State in accord-
ance with subparagraph (B) is deemed to be ac-
cepted by the Secretary if the Secretary does not
accept or reject the plan during 60-day period
that begins on the date the plan is submitted.
‘‘(2) EFFECT OF CORRECTING VIOLATION.—The
Secretary may not impose any penalty under sub-
section (a) with respect to any violation covered by a
State corrective compliance plan accepted by the Sec-
retary if the State corrects the violation pursuant to
the plan.
‘‘(3) EFFECT OF FAILING TO CORRECT VIOLA-
TION.—The Secretary shall assess some or all of a
penalty imposed on a State under subsection (a) with
respect to a violation if the State does not, in a time-
ly manner, correct the violation pursuant to a State
corrective compliance plan accepted by the Secretary.
‘‘(4) INAPPLICABILITY TO FAILURE TO TIMELY
REPAY A FEDERAL LOAN FUND FOR A STATE WEL-
FARE PROGRAM.—This subsection shall not apply to
the imposition of a penalty against a State under
subsection (a)(6).
‘‘(d) LIMITATION ON AMOUNT OF PENALTY.—
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‘‘(1) IN GENERAL.—In imposing the penalties
described in subsection (a), the Secretary shall not re-
duce any quarterly payment to a State by more than
25 percent.
‘‘(2) CARRYFORWARD
OF
UNRECOVERED
PEN-
ALTIES.—To the extent that paragraph (1) of this
subsection prevents the Secretary from recovering dur-
ing a fiscal year the full amount of penalties imposed
on a State under subsection (a) of this section for a
prior fiscal year, the Secretary shall apply any re-
maining amount of such penalties to the grant pay-
able to the State under section 403(a)(1) for the im-
mediately succeeding fiscal year.
‘‘SEC. 410. APPEAL OF ADVERSE DECISION.
‘‘(a) IN GENERAL.—Within 5 days after the date the
Secretary takes any adverse action under this part with re-
spect to a State, the Secretary shall notify the chief execu-
tive officer of the State of the adverse action, including any
action with respect to the State plan submitted under sec-
tion 402 or the imposition of a penalty under section 409.
‘‘(b) ADMINISTRATIVE REVIEW.—
‘‘(1) IN
GENERAL.—Within 60 days after the
date a State receives notice under subsection (a) of an
adverse action, the State may appeal the action, in
whole or in part, to the Departmental Appeals Board
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established in the Department of Health and Human
Services (in this section referred to as the ‘Board’) by
filing an appeal with the Board.
‘‘(2) PROCEDURAL
RULES.—The Board shall
consider an appeal filed by a State under paragraph
(1) on the basis of such documentation as the State
may submit and as the Board may require to support
the final decision of the Board. In deciding whether
to uphold an adverse action or any portion of such
an action, the Board shall conduct a thorough review
of the issues and take into account all relevant evi-
dence. The Board shall make a final determination
with respect to an appeal filed under paragraph (1)
not less than 60 days after the date the appeal is
filed.
‘‘(c) JUDICIAL REVIEW OF ADVERSE DECISION.—
‘‘(1) IN
GENERAL.—Within 90 days after the
date of a final decision by the Board under this sec-
tion with respect to an adverse action taken against
a State, the State may obtain judicial review of the
final decision (and the findings incorporated into the
final decision) by filing an action in—
‘‘(A) the district court of the United States
for the judicial district in which the principal or
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headquarters office of the State agency is located;
or
‘‘(B) the United States District Court for
the District of Columbia.
‘‘(2) PROCEDURAL RULES.—The district court in
which an action is filed under paragraph (1) shall re-
view the final decision of the Board on the record es-
tablished in the administrative proceeding, in accord-
ance with the standards of review prescribed by sub-
paragraphs (A) through (E) of section 706(2) of title
5, United States Code. The review shall be on the
basis of the documents and supporting data submitted
to the Board.
‘‘SEC. 411. DATA COLLECTION AND REPORTING.
‘‘(a) QUARTERLY REPORTS BY STATES.—
‘‘(1) GENERAL REPORTING REQUIREMENT.—
‘‘(A) CONTENTS OF REPORT.—Each eligible
State shall collect on a monthly basis, and report
to the Secretary on a quarterly basis, the follow-
ing disaggregated case record information on the
families receiving assistance under the State pro-
gram funded under this part:
‘‘(i) The county of residence of the fam-
ily.
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‘‘(ii) Whether a child receiving such as-
sistance or an adult in the family is dis-
abled.
‘‘(iii) The ages of the members of such
families.
‘‘(iv) The number of individuals in the
family, and the relation of each family
member to the youngest child in the family.
‘‘(v) The employment status and earn-
ings of the employed adult in the family.
‘‘(vi) The marital status of the adults
in the family, including whether such adults
have never married, are widowed, or are di-
vorced.
‘‘(vii) The race and educational status
of each adult in the family.
‘‘(viii) The race and educational status
of each child in the family.
‘‘(ix) Whether the family received sub-
sidized housing, medical assistance under
the State plan under title XV or the State
plan approved under title XIX, food stamps,
or subsidized child care, and if the latter 2,
the amount received.
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‘‘(x) The number of months that the
family has received each type of assistance
under the program.
‘‘(xi) If the adults participated in, and
the number of hours per week of participa-
tion in, the following activities:
‘‘(I) Education.
‘‘(II) Subsidized private sector
employment.
‘‘(III) Unsubsidized employment.
‘‘(IV) Public sector employment,
work experience, or community service.
‘‘(V) Job search.
‘‘(VI) Job skills training or on-
the-job training.
‘‘(VII) Vocational education.
‘‘(xii) Information necessary to cal-
culate participation rates under section
407.
‘‘(xiii) The type and amount of assist-
ance received under the program, including
the amount of and reason for any reduction
of assistance (including sanctions).
‘‘(xiv) Any amount of unearned in-
come received by any member of the family.
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HR 3734 EAS
‘‘(xv) The citizenship of the members of
the family.
‘‘(xvi) From a sample of closed cases,
whether the family left the program, and if
so, whether the family left due to—
‘‘(I) employment;
‘‘(II) marriage;
‘‘(III) the prohibition set forth in
section 408(a)(8);
‘‘(IV) sanction; or
‘‘(V) State policy.
‘‘(B) USE OF ESTIMATES.—
‘‘(i) AUTHORITY.—A State may com-
ply with subparagraph (A) by submitting
an estimate which is obtained through the
use of scientifically acceptable sampling
methods approved by the Secretary.
‘‘(ii) SAMPLING
AND
OTHER
METH-
ODS.—The Secretary shall provide the
States with such case sampling plans and
data collection procedures as the Secretary
deems necessary to produce statistically
valid estimates of the performance of State
programs funded under this part. The Sec-
retary may develop and implement proce-
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HR 3734 EAS
dures for verifying the quality of data sub-
mitted by the States.
‘‘(2) REPORT ON USE OF FEDERAL FUNDS TO
COVER ADMINISTRATIVE COSTS AND OVERHEAD.—The
report required by paragraph (1) for a fiscal quarter
shall include a statement of the percentage of the
funds paid to the State under this part for the quar-
ter that are used to cover administrative costs or over-
head.
‘‘(3) REPORT ON STATE EXPENDITURES ON PRO-
GRAMS FOR NEEDY FAMILIES.—The report required
by paragraph (1) for a fiscal quarter shall include a
statement of the total amount expended by the State
during the quarter on programs for needy families.
‘‘(4) REPORT ON NONCUSTODIAL PARENTS PAR-
TICIPATING
IN
WORK
ACTIVITIES.—The report re-
quired by paragraph (1) for a fiscal quarter shall in-
clude the number of noncustodial parents in the State
who participated in work activities (as defined in sec-
tion 407(d)) during the quarter.
‘‘(5) REPORT ON TRANSITIONAL SERVICES.—The
report required by paragraph (1) for a fiscal quarter
shall include the total amount expended by the State
during the quarter to provide transitional services to
a family that has ceased to receive assistance under
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this part because of employment, along with a de-
scription of such services.
‘‘(6) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to define
the data elements with respect to which reports are re-
quired by this subsection.
‘‘(b) ANNUAL REPORTS TO THE CONGRESS BY THE
SECRETARY.—Not later than 6 months after the end of fis-
cal year 1997, and each fiscal year thereafter, the Secretary
shall transmit to the Congress a report describing—
‘‘(1) whether the States are meeting—
‘‘(A) the participation rates described in
section 407(a); and
‘‘(B) the objectives of—
‘‘(i) increasing employment and earn-
ings of needy families, and child support
collections; and
‘‘(ii) decreasing out-of-wedlock preg-
nancies and child poverty;
‘‘(2) the demographic and financial characteris-
tics of families applying for assistance, families re-
ceiving assistance, and families that become ineligible
to receive assistance;
‘‘(3) the characteristics of each State program
funded under this part; and
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HR 3734 EAS
‘‘(4) the trends in employment and earnings of
needy families with minor children living at home.
‘‘SEC. 412. DIRECT FUNDING AND ADMINISTRATION BY IN-
DIAN TRIBES.
‘‘(a) GRANTS FOR INDIAN TRIBES.—
‘‘(1) TRIBAL FAMILY ASSISTANCE GRANT.—
‘‘(A) IN GENERAL.—For each of fiscal years
1997, 1998, 1999, 2000, and 2001, the Secretary
shall pay to each Indian tribe that has an ap-
proved tribal family assistance plan a tribal
family assistance grant for the fiscal year in an
amount equal to the amount determined under
subparagraph (B), and shall reduce the grant
payable under section 403(a)(1) to any State in
which lies the service area or areas of the Indian
tribe by that portion of the amount so deter-
mined that is attributable to expenditures by the
State.
‘‘(B) AMOUNT DETERMINED.—
‘‘(i) IN GENERAL.—The amount deter-
mined under this subparagraph is an
amount equal to the total amount of the
Federal payments to a State or States
under section 403 (as in effect during such
fiscal year) for fiscal year 1994 attributable
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HR 3734 EAS
to expenditures (other than child care ex-
penditures) by the State or States under
parts A and F (as so in effect) for fiscal
year 1994 for Indian families residing in
the service area or areas identified by the
Indian 
tribe 
pursuant 
to 
subsection
(b)(1)(C) of this section.
‘‘(ii) 
USE
OF
STATE
SUBMITTED
DATA.—
‘‘(I) IN GENERAL.—The Secretary
shall use State submitted data to make
each determination under clause (i).
‘‘(II) DISAGREEMENT
WITH
DE-
TERMINATION.—If an Indian tribe or
tribal 
organization 
disagrees 
with
State submitted data described under
subclause (I), the Indian tribe or tribal
organization may submit to the Sec-
retary such additional information as
may be relevant to making the deter-
mination under clause (i) and the Sec-
retary may consider such information
before making such determination.
‘‘(2) GRANTS
FOR
INDIAN
TRIBES
THAT
RE-
CEIVED JOBS FUNDS.—
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‘‘(A) IN GENERAL.—The Secretary shall pay
to each eligible Indian tribe for each of fiscal
years 1996, 1997, 1998, 1999, 2000, and 2001 a
grant in an amount equal to the amount re-
ceived by the Indian tribe in fiscal year 1994
under section 482(i) (as in effect during fiscal
year 1994).
‘‘(B) ELIGIBLE
INDIAN
TRIBE.—For pur-
poses of subparagraph (A), the term ‘eligible In-
dian tribe’ means an Indian tribe or Alaska Na-
tive organization that conducted a job opportuni-
ties and basic skills training program in fiscal
year 1995 under section 482(i) (as in effect dur-
ing fiscal year 1995).
‘‘(C) USE OF GRANT.—Each Indian tribe to
which a grant is made under this paragraph
shall use the grant for the purpose of operating
a program to make work activities available to
members of the Indian tribe.
‘‘(D) APPROPRIATION.—Out of any money
in the Treasury of the United States not other-
wise 
appropriated, 
there 
are 
appropriated
$7,638,474 for each fiscal year specified in sub-
paragraph (A) for grants under subparagraph
(A).
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‘‘(b) 3-YEAR TRIBAL FAMILY ASSISTANCE PLAN.—
‘‘(1) IN GENERAL.—Any Indian tribe that de-
sires to receive a tribal family assistance grant shall
submit to the Secretary a 3-year tribal family assist-
ance plan that—
‘‘(A) outlines the Indian tribe’s approach to
providing welfare-related services for the 3-year
period, consistent with this section;
‘‘(B) specifies whether the welfare-related
services provided under the plan will be provided
by the Indian tribe or through agreements, con-
tracts, or compacts with intertribal consortia,
States, or other entities;
‘‘(C) identifies the population and service
area or areas to be served by such plan;
‘‘(D) provides that a family receiving as-
sistance under the plan may not receive duplica-
tive assistance from other State or tribal pro-
grams funded under this part;
‘‘(E) identifies the employment opportuni-
ties in or near the service area or areas of the
Indian tribe and the manner in which the In-
dian tribe will cooperate and participate in en-
hancing such opportunities for recipients of as-
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sistance under the plan consistent with any ap-
plicable State standards; and
‘‘(F) applies the fiscal accountability provi-
sions of section 5(f)(1) of the Indian Self-Deter-
mination and Education Assistance Act (25
U.S.C. 450c(f)(1)), relating to the submission of
a single-agency audit report required by chapter
75 of title 31, United States Code.
‘‘(2) APPROVAL.—The Secretary shall approve
each tribal family assistance plan submitted in ac-
cordance with paragraph (1).
‘‘(3) CONSORTIUM OF TRIBES.—Nothing in this
section shall preclude the development and submission
of a single tribal family assistance plan by the par-
ticipating Indian tribes of an intertribal consortium.
‘‘(c) MINIMUM WORK PARTICIPATION REQUIREMENTS
AND TIME LIMITS.—The Secretary, with the participation
of Indian tribes, shall establish for each Indian tribe receiv-
ing a grant under this section minimum work participa-
tion requirements, appropriate time limits for receipt of
welfare-related services under the grant, and penalties
against individuals—
‘‘(1) consistent with the purposes of this section;
‘‘(2) consistent with the economic conditions and
resources available to each tribe; and
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‘‘(3) similar to comparable provisions in section
407(d).
‘‘(d) EMERGENCY ASSISTANCE.—Nothing in this sec-
tion shall preclude an Indian tribe from seeking emergency
assistance from any Federal loan program or emergency
fund.
‘‘(e) ACCOUNTABILITY.—Nothing in this section shall
be construed to limit the ability of the Secretary to main-
tain program funding accountability consistent with—
‘‘(1) generally accepted accounting principles;
and
‘‘(2) the requirements of the Indian Self-Deter-
mination and Education Assistance Act (25 U.S.C.
450 et seq.).
‘‘(f) PENALTIES.—
‘‘(1) Subsections (a)(1), (a)(6), and (b) of section
409, shall apply to an Indian tribe with an approved
tribal assistance plan in the same manner as such
subsections apply to a State.
‘‘(2) Section 409(a)(3) shall apply to an Indian
tribe with an approved tribal assistance plan by sub-
stituting ‘meet minimum work participation require-
ments established under section 412(c)’ for ‘comply
with section 407(a)’.
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‘‘(g) DATA COLLECTION
AND REPORTING.—Section
411 shall apply to an Indian tribe with an approved tribal
family assistance plan.
‘‘(h) SPECIAL RULE FOR INDIAN TRIBES IN ALAS-
KA.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this section, and except as provided in
paragraph (2), an Indian tribe in the State of Alaska
that receives a tribal family assistance grant under
this section shall use the grant to operate a program
in accordance with requirements comparable to the
requirements applicable to the program of the State
of Alaska funded under this part. Comparability of
programs shall be established on the basis of program
criteria developed by the Secretary in consultation
with the State of Alaska and such Indian tribes.
‘‘(2) WAIVER.—An Indian tribe described in
paragraph (1) may apply to the appropriate State
authority to receive a waiver of the requirement of
paragraph (1).
‘‘SEC. 413. RESEARCH, EVALUATIONS, AND NATIONAL STUD-
IES.
‘‘(a) RESEARCH.—The Secretary shall conduct re-
search on the benefits, effects, and costs of operating dif-
ferent State programs funded under this part, including
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time limits relating to eligibility for assistance. The re-
search shall include studies on the effects of different pro-
grams and the operation of such programs on welfare de-
pendency, illegitimacy, teen pregnancy, employment rates,
child well-being, and any other area the Secretary deems
appropriate. The Secretary shall also conduct research on
the costs and benefits of State activities under section 409.
‘‘(b) DEVELOPMENT AND EVALUATION OF INNOVATIVE
APPROACHES TO REDUCING WELFARE DEPENDENCY AND
INCREASING CHILD WELL-BEING.—
‘‘(1) IN
GENERAL.—The Secretary may assist
States in developing, and shall evaluate, innovative
approaches for reducing welfare dependency and in-
creasing the well-being of minor children living at
home with respect to recipients of assistance under
programs funded under this part. The Secretary may
provide funds for training and technical assistance to
carry out the approaches developed pursuant to this
paragraph.
‘‘(2) EVALUATIONS.—In performing the evalua-
tions under paragraph (1), the Secretary shall, to the
maximum extent feasible, use random assignment as
an evaluation methodology.
‘‘(c) DISSEMINATION
OF INFORMATION.—The Sec-
retary shall develop innovative methods of disseminating
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information on any research, evaluations, and studies con-
ducted under this section, including the facilitation of the
sharing of information and best practices among States and
localities through the use of computers and other tech-
nologies.
‘‘(d) ANNUAL RANKING OF STATES AND REVIEW OF
MOST AND LEAST SUCCESSFUL WORK PROGRAMS.—
‘‘(1) ANNUAL
RANKING
OF
STATES.—The Sec-
retary shall rank annually the States to which grants
are paid under section 403 in the order of their suc-
cess in placing recipients of assistance under the
State program funded under this part into long-term
private sector jobs, reducing the overall welfare case-
load, and, when a practicable method for calculating
this information becomes available, diverting individ-
uals from formally applying to the State program
and receiving assistance. In ranking States under this
subsection, the Secretary shall take into account the
average number of minor children living at home in
families in the State that have incomes below the pov-
erty line and the amount of funding provided each
State for such families.
‘‘(2) ANNUAL REVIEW OF MOST AND LEAST SUC-
CESSFUL WORK PROGRAMS.—The Secretary shall re-
view the programs of the 3 States most recently
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ranked highest under paragraph (1) and the 3 States
most recently ranked lowest under paragraph (1) that
provide parents with work experience, assistance in
finding employment, and other work preparation ac-
tivities and support services to enable the families of
such parents to leave the program and become self-suf-
ficient.
‘‘(e) ANNUAL RANKING OF STATES AND REVIEW OF IS-
SUES RELATING TO OUT-OF-WEDLOCK BIRTHS.—
‘‘(1) ANNUAL RANKING OF STATES.—
‘‘(A) IN GENERAL.—The Secretary shall an-
nually rank States to which grants are made
under section 403 based on the following ranking
factors:
‘‘(i) ABSOLUTE OUT-OF-WEDLOCK RA-
TIOS.—The ratio represented by—
‘‘(I) the total number of out-of-
wedlock births in families receiving as-
sistance under the State program
under this part in the State for the
most recent fiscal year for which infor-
mation is available; over
‘‘(II) the total number of births in
families receiving assistance under the
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from non-Federal sources, an amount equal to at least
10 percent of the cost of the evaluation.
‘‘(g) FUNDING OF STUDIES AND DEMONSTRATIONS.—
‘‘(1) IN GENERAL.—Out of any money in the
Treasury of the United States not otherwise appro-
priated, there are appropriated $15,000,000 for each
of fiscal years 1998 through 2001, for the purpose of
paying—
‘‘(A) the cost of conducting the research de-
scribed in subsection (a);
‘‘(B) the cost of developing and evaluating
innovative approaches for reducing welfare de-
pendency and increasing the well-being of minor
children under subsection (b);
‘‘(C) the Federal share of any State-initi-
ated study approved under subsection (f); and
‘‘(D) an amount determined by the Sec-
retary to be necessary to operate and evaluate
demonstration projects, relating to this part, that
are in effect or approved under section 1115 as
of September 30, 1995, and are continued after
such date.
‘‘(2) ALLOCATION.—Of the amount appropriated
under paragraph (1) for a fiscal year—
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‘‘(A) 50 percent shall be allocated for the
purposes described in subparagraphs (A) and
(B) of paragraph (1), and
‘‘(B) 50 percent shall be allocated for the
purposes described in subparagraphs (C) and
(D) of paragraph (1).
‘‘(3) DEMONSTRATIONS OF INNOVATIVE STRATE-
GIES.—The Secretary may implement and evaluate
demonstrations of innovative and promising strate-
gies which—
‘‘(A) provide one-time capital funds to es-
tablish, expand, or replicate programs;
‘‘(B) test performance-based grant-to-loan
financing in which programs meeting perform-
ance targets receive grants while programs not
meeting such targets repay funding on a pro-
rated basis; and
‘‘(C) test strategies in multiple States and
types of communities.
‘‘(h) CHILD POVERTY RATES.—
‘‘(1) IN GENERAL.—Not later than 90 days after
the date of the enactment of this part, and annually
thereafter, the chief executive officer of a State shall
submit to the Secretary a statement of the child pov-
erty rate in the State as of such date of enactment or
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the date of such subsequent statements. Such subse-
quent statements shall include the change in such rate
from the previous statement, if any.
‘‘(2) INCREASE
IN
RATE.—With respect to a
State that submits a statement under paragraph (1)
that indicates an increase of 5 percent or more in the
child poverty rate of the State from the previous state-
ment as a result of the changes made by the Act, the
State shall, not later than 90 days after the date of
such statement, prepare and submit to the Secretary
a corrective action plan in accordance with para-
graph (3).
‘‘(3) CORRECTIVE ACTION PLAN.—
‘‘(A) IN
GENERAL.—A corrective action
plan submitted under paragraph (2) shall out-
line that manner in which the State will reduce
the child poverty rate within the State. The plan
shall include a description of the actions to be
taken by the State under such plan.
‘‘(B) 
CONSULTATION
ABOUT
MODIFICA-
TIONS.—During the 60-day period that begins
with the date the Secretary receives the corrective
action plan of a State under subparagraph (A),
the Secretary may consult with the State on
modifications to the plan.
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‘‘(C) ACCEPTANCE OF PLAN.— A corrective
action plan submitted by a State in accordance
with subparagraph (A) is deemed to be accepted
by the Secretary if the Secretary does not accept
or reject the plan during 60-day period that be-
gins on the date the plan is submitted.
‘‘(4) COMPLIANCE WITH PLAN.—
‘‘(A) IN GENERAL.—A State that submits a
corrective action plan under this subsection shall
continue to implement such plan until such time
as the Secretary makes the determination de-
scribed in subparagraph (B).
‘‘(B) DETERMINATION.—A determination
described in this subparagraph is a determina-
tion that the child poverty rate for the State in-
volved has fallen to, and not exceeded for a pe-
riod of 2-consecutive years, a rate that is not
greater than the rate contained in the most re-
cent statement submitted by the State under
paragraph (1) which did not trigger the applica-
tion of paragraph (2).
‘‘(C) LABOR SURPLUS AREA.—With respect
to a State that submits a corrective action plan
under
paragraph
(2),
such
plan
shall
con-
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tinue to be implemented until the area involved
is no longer designated as a Labor Surplus Area.
‘‘(5) METHODOLOGY.—The Secretary shall pro-
mulgate regulations establishing the methodology by
which a States shall determine the child poverty rate
within such State. Such methodology shall, with re-
spect to a State, take into account factors including
the number of children who receive free or reduced-
price lunches, the number of food stamp households,
and the county by county estimates of children in
poverty as determined by the Census Bureau.
‘‘SEC. 414. STUDY BY THE CENSUS BUREAU.
‘‘(a) IN GENERAL.—The Bureau of the Census shall
expand the Survey of Income and Program Participation
as necessary to obtain such information as will enable in-
terested persons to evaluate the impact of the amendments
made by chapter 1 of the Personal Responsibility and Work
Opportunity Act of 1996 on a random national sample of
recipients of assistance under State programs funded under
this part and (as appropriate) other low income families,
and in doing so, shall pay particular attention to the issues
of out-of-wedlock birth, welfare dependency, the beginning
and end of welfare spells, and the causes of repeat welfare
spells.
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‘‘(b) APPROPRIATION.—Out of any money in the
Treasury of the United States not otherwise appropriated,
there are appropriated $10,000,000 for each of fiscal years
1998, 1999, 2000, 2001, and 2002 for payment to the Bu-
reau of the Census to carry out subsection (a).
‘‘SEC. 415. WAIVERS.
‘‘(a) CONTINUATION OF WAIVERS.—
‘‘(1) WAIVERS IN EFFECT ON DATE OF ENACT-
MENT OF WELFARE REFORM.—Except as provided in
paragraph (3), if any waiver granted to a State
under section 1115 or otherwise which relates to the
provision of assistance under a State plan under this
part (as in effect on September 30, 1996) is in effect
as of the date of the enactment of the Personal Re-
sponsibility and Work Opportunity Act of 1996, the
amendments made by such Act (other than by section
2103(d) of such Act) shall not apply with respect to
the State before the expiration (determined without
regard to any extensions) of the waiver to the extent
such amendments are inconsistent with the waiver.
‘‘(2) WAIVERS
GRANTED
SUBSEQUENTLY.—Ex-
cept as provided in paragraph (3), if any waiver
granted to a State under section 1115 or otherwise
which relates to the provision of assistance under a
State plan under this part (as in effect on September
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30, 1996) is submitted to the Secretary before the date
of the enactment of the Personal Responsibility and
Work Opportunity Act of 1996 and approved by the
Secretary on or before July 1, 1997, and the State
demonstrates to the satisfaction of the Secretary that
the waiver will not result in Federal expenditures
under title IV of this Act (as in effect without regard
to the amendments made by the Personal Responsibil-
ity and Work Opportunity Act of 1996) that are
greater than would occur in the absence of the waiver,
the amendments made by the Personal Responsibility
and Work Opportunity Act of 1996 (other than by
section 2103(d) of such Act) shall not apply with re-
spect to the State before the expiration (determined
without regard to any extensions) of the waiver to the
extent the amendments made by the Personal Respon-
sibility and Work Opportunity Act of 1996 are incon-
sistent with the waiver.
‘‘(3) FINANCING
LIMITATION.—Notwithstanding
any other provision of law, beginning with fiscal year
1996, a State operating under a waiver described in
paragraph (1) shall be entitled to payment under sec-
tion 403 for the fiscal year, in lieu of any other pay-
ment provided for in the waiver.
‘‘(b) STATE OPTION TO TERMINATE WAIVER.—
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‘‘(1) IN GENERAL.—A State may terminate a
waiver described in subsection (a) before the expira-
tion of the waiver.
‘‘(2) REPORT.—A State which terminates a
waiver under paragraph (1) shall submit a report to
the Secretary summarizing the waiver and any avail-
able information concerning the result or effect of the
waiver.
‘‘(3) HOLD HARMLESS PROVISION.—
‘‘(A) IN
GENERAL.—Notwithstanding any
other provision of law, a State that, not later
than the date described in subparagraph (B),
submits a written request to terminate a waiver
described in subsection (a) shall be held harmless
for accrued cost neutrality liabilities incurred
under the waiver.
‘‘(B) DATE DESCRIBED.—The date described
in this subparagraph is 90 days following the
adjournment of the first regular session of the
State legislature that begins after the date of the
enactment of the Personal Responsibility and
Work Opportunity Act of 1996.
‘‘(c) SECRETARIAL ENCOURAGEMENT
OF CURRENT
WAIVERS.—The Secretary shall encourage any State oper-
ating a waiver described in subsection (a) to continue the
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waiver and to evaluate, using random sampling and other
characteristics of accepted scientific evaluations, the result
or effect of the waiver.
‘‘(d) CONTINUATION
OF INDIVIDUAL WAIVERS.—A
State may elect to continue 1 or more individual waivers
described in subsection (a).
‘‘SEC. 416. ADMINISTRATION.
‘‘The programs under this part and part D shall be
administered by an Assistant Secretary for Family Support
within the Department of Health and Human Services, who
shall be appointed by the President, by and with the advice
and consent of the Senate, and who shall be in addition
to any other Assistant Secretary of Health and Human
Services provided for by law, and the Secretary shall reduce
the Federal workforce within the Department of Health and
Human Services by an amount equal to the sum of 75 per-
cent of the full-time equivalent positions at such Depart-
ment that relate to any direct spending program, or any
program funded through discretionary spending, that has
been converted into a block grant program under the Per-
sonal Responsibility and Work Opportunity Act of 1996
and the amendments made by such Act, and by an amount
equal to 75 percent of that portion of the total full-time
equivalent departmental management positions at such De-
partment that bears the same relationship to the amount
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appropriated for any direct spending program, or any pro-
gram funded through discretionary spending, that has been
converted into a block grant program under the Personal
Responsibility and Work Opportunity Act of 1996 and the
amendments made by such Act, as such amount relates to
the total amount appropriated for use by such Department,
and, notwithstanding any other provision of law, the Sec-
retary shall take such actions as may be necessary, includ-
ing reductions in force actions, consistent with sections
3502 and 3595 of title 5, United States Code, to reduce the
full-time equivalent positions within the Department of
Health and Human Services by 245 full-time equivalent po-
sitions related to the program converted into a block grant
under the amendment made by section 2103 of the Personal
Responsibility and Work Opportunity Act of 1996, and by
60 full-time equivalent managerial positions in the Depart-
ment.
‘‘SEC. 417. LIMITATION ON FEDERAL AUTHORITY.
‘‘No officer or employee of the Federal Government
may regulate the conduct of States under this part or en-
force any provision of this part, except to the extent ex-
pressly provided in this part.’’; and
(2) by inserting after such section 418 the follow-
ing:
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‘‘SEC. 419. DEFINITIONS.
‘‘As used in this part:
‘‘(1) ADULT.—The term ‘adult’ means an indi-
vidual who is not a minor child.
‘‘(2) MINOR
CHILD.—The term ‘minor child’
means an individual who—
‘‘(A) has not attained 18 years of age; or
‘‘(B) has not attained 19 years of age and
is a full-time student in a secondary school (or
in the equivalent level of vocational or technical
training).
‘‘(3) FISCAL
YEAR.—The term ‘fiscal year’
means any 12-month period ending on September 30
of a calendar year.
‘‘(4) INDIAN, INDIAN TRIBE, AND TRIBAL ORGANI-
ZATION.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the terms ‘Indian’, ‘Indian
tribe’, and ‘tribal organization’ have the mean-
ing given such terms by section 4 of the Indian
Self-Determination and Education Assistance
Act (25 U.S.C. 450b).
‘‘(B) SPECIAL RULE FOR INDIAN TRIBES IN
ALASKA.—The term ‘Indian tribe’ means, with
respect to the State of Alaska, only the
Metlakatla Indian Community of the Annette Is-
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lands Reserve and the following Alaska Native
regional nonprofit corporations:
‘‘(i) Arctic Slope Native Association.
‘‘(ii) Kawerak, Inc.
‘‘(iii) Maniilaq Association.
‘‘(iv) Association of Village Council
Presidents.
‘‘(v) Tanana Chiefs Conference.
‘‘(vi) Cook Inlet Tribal Council.
‘‘(vii) Bristol Bay Native Association.
‘‘(viii) Aleutian and Pribilof Island
Association.
‘‘(ix) Chugachmuit.
‘‘(x) Tlingit Haida Central Council.
‘‘(xi) Kodiak Area Native Association.
‘‘(xii) Copper River Native Associa-
tion.
‘‘(5) STATE.—
‘‘(A) IN
GENERAL.—Except as otherwise
specifically provided, the term ‘State’ means the
50 States of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the
United States Virgin Islands, Guam, and Amer-
ican Samoa.
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‘‘(B) STATE OPTION TO CONTRACT TO PRO-
VIDE SERVICES.—The term ‘State’ includes the—
‘‘(i) administration and provision of
services under the program funded under
this part, or under the programs funded
under parts B and E of this title, through
contracts with charitable, religious, or pri-
vate organizations; and
‘‘(ii) provision to beneficiaries of as-
sistance under such programs with certifi-
cates, vouchers, or other forms of disburse-
ment which are redeemable with such orga-
nizations.’’.
(b) GRANTS TO OUTLYING AREAS.—Section 1108 (42
U.S.C. 1308) is amended—
(1) by redesignating subsection (c) as subsection
(g);
(2) by striking all that precedes subsection (c)
and inserting the following:
‘‘SEC. 1108. ADDITIONAL GRANTS TO PUERTO RICO, THE
VIRGIN 
ISLANDS, 
GUAM, 
AND 
AMERICAN
SAMOA; LIMITATION ON TOTAL PAYMENTS.
‘‘(a) LIMITATION ON TOTAL PAYMENTS TO EACH TER-
RITORY.—Notwithstanding any other provision of this Act,
the total amount certified by the Secretary of Health and
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Human Services under titles I, X, XIV, and XVI, under
parts A and E of title IV, and under subsection (b) of this
section, for payment to any territory for a fiscal year shall
not exceed the ceiling amount for the territory for the fiscal
year.
‘‘(b) ENTITLEMENT TO MATCHING GRANT.—
‘‘(1) IN GENERAL.—Each territory shall be enti-
tled to receive from the Secretary for each fiscal year
a grant in an amount equal to 75 percent of the
amount (if any) by which—
‘‘(A) the total expenditures of the territory
during the fiscal year under the territory pro-
grams funded under parts A and E of title IV;
exceeds
‘‘(B) the sum of—
‘‘(i) the total amount required to be
paid to the territory (other than with re-
spect to child care) under former section
403 (as in effect on September 30, 1995) for
fiscal year 1995, which shall be determined
by applying subparagraphs (C) and (D) of
section 403(a)(1) to the territory;
‘‘(ii) the total amount required to be
paid to the territory under former section
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434 (as so in effect) for fiscal year 1995;
and
‘‘(iii) the total amount expended by the
territory during fiscal year 1995 pursuant
to parts A and F of title IV (as so in effect),
other than for child care.
‘‘(2) USE OF GRANT.—Any territory to which a
grant is made under paragraph (1) may expend the
amount under any program operated or funded under
any provision of law specified in subsection (a).
‘‘(c) DEFINITIONS.—As used in this section:
‘‘(1) TERRITORY.—The term ‘territory’ means
Puerto Rico, the Virgin Islands, Guam, and Amer-
ican Samoa.
‘‘(2) 
CEILING
AMOUNT.—The 
term 
‘ceiling
amount’ means, with respect to a territory and a fis-
cal year, the mandatory ceiling amount with respect
to the territory, reduced for the fiscal year in accord-
ance with subsection (e).
‘‘(3) MANDATORY CEILING AMOUNT.—The term
‘mandatory ceiling amount’ means—
‘‘(A) $102,040,000 with respect to for Puer-
to Rico;
‘‘(B) $4,683,000 with respect to Guam;
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‘‘(C) $3,554,000 with respect to the Virgin
Islands; and
‘‘(D) $1,000,000 with respect to American
Samoa.
‘‘(4) TOTAL AMOUNT EXPENDED BY THE TERRI-
TORY.—The term ‘total amount expended by the terri-
tory’—
‘‘(A) does not include expenditures during
the fiscal year from amounts made available by
the Federal Government; and
‘‘(B) when used with respect to fiscal year
1995, also does not include—
‘‘(i) expenditures during fiscal year
1995 under subsection (g) or (i) of section
402 (as in effect on September 30, 1995); or
‘‘(ii) any expenditures during fiscal
year 1995 for which the territory (but for
section 1108, as in effect on September 30,
1995) would have received reimbursement
from the Federal Government.
‘‘(d) AUTHORITY TO TRANSFER FUNDS AMONG PRO-
GRAMS.—Notwithstanding any other provision of this Act,
any territory to which an amount is paid under any provi-
sion of law specified in subsection (a) may use part or all
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of the amount to carry out any program operated by the
territory, or funded, under any other such provision of law.
‘‘(e) MAINTENANCE OF EFFORT.—The ceiling amount
with respect to a territory shall be reduced for a fiscal year
by an amount equal to the amount (if any) by which—
‘‘(1) the total amount expended by the territory
under all programs of the territory operated pursuant
to the provisions of law specified in subsection (a) (as
such provisions were in effect for fiscal year 1995) for
fiscal year 1995; exceeds
‘‘(2) the total amount expended by the territory
under all programs of the territory that are funded
under the provisions of law specified in subsection (a)
for the fiscal year that immediately precedes the fiscal
year referred to in the matter preceding paragraph
(1).’’; and
(3) by striking subsections (d) and (e).
(c) REPEAL OF PROVISIONS REQUIRING REDUCTION
OF MEDICAID PAYMENTS TO STATES THAT REDUCE WEL-
FARE PAYMENT LEVELS.—
(1) Section 1903(i) (42 U.S.C. 1396b(i)) is
amended by striking paragraph (9).
(2) Section 1902 (42 U.S.C. 1396a) is amended
by striking subsection (c).
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(d) ELIMINATION OF CHILD CARE PROGRAMS UNDER
THE SOCIAL SECURITY ACT.—
(1) AFDC AND TRANSITIONAL CHILD CARE PRO-
GRAMS.—Section 402 (42 U.S.C. 602) is amended by
striking subsection (g).
(2) AT-RISK CHILD CARE PROGRAM.—
(A) AUTHORIZATION.—Section 402 (42
U.S.C. 602) is amended by striking subsection
(i).
(B) FUNDING PROVISIONS.—Section 403 (42
U.S.C. 603) is amended by striking subsection
(n).
SEC. 2104. SERVICES PROVIDED BY CHARITABLE, RELI-
GIOUS, OR PRIVATE ORGANIZATIONS.
(a) IN GENERAL.—
(1) STATE OPTIONS.—A State may—
(A) administer and provide services under
the programs described in subparagraphs (A)
and (B)(i) of paragraph (2) through contracts
with charitable, religious, or private organiza-
tions; and
(B) provide beneficiaries of assistance under
the programs described in subparagraphs (A)
and (B)(ii) of paragraph (2) with certificates,
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(c) NONDISCRIMINATION AGAINST RELIGIOUS ORGANI-
ZATIONS.—In the event a State exercises its authority under
subsection (a), religious organizations are eligible, on the
same basis as any other private organization, as contractors
to provide assistance, or to accept certificates, vouchers, or
other forms of disbursement, under any program described
in subsection (a)(2) so long as the programs are imple-
mented consistent with the Establishment Clause of the
United States Constitution. Except as provided in sub-
section (k), neither the Federal Government nor a State re-
ceiving funds under such programs shall discriminate
against an organization which is or applies to be a contrac-
tor to provide assistance, or which accepts certificates,
vouchers, or other forms of disbursement, on the basis that
the organization has a religious character.
(d) RELIGIOUS CHARACTER AND FREEDOM.—
(1) RELIGIOUS ORGANIZATIONS.—A religious or-
ganization with a contract described in subsection
(a)(1)(A), or which accepts certificates, vouchers, or
other 
forms 
of 
disbursement 
under 
subsection
(a)(1)(B), shall retain its independence from Federal,
State, and local governments, including such organi-
zation’s control over the definition, development,
practice, and expression of its religious beliefs.
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(2) ADDITIONAL SAFEGUARDS.—Neither the Fed-
eral Government nor a State shall require a religious
organization to—
(A) alter its form of internal governance; or
(B) remove religious art, icons, scripture, or
other symbols;
in order to be eligible to contract to provide assist-
ance, or to accept certificates, vouchers, or other forms
of disbursement, funded under a program described in
subsection (a)(2).
(e) RIGHTS OF BENEFICIARIES OF ASSISTANCE.—
(1) IN GENERAL.—If an individual described in
paragraph (2) has an objection to the religious char-
acter of the organization or institution from which
the individual receives, or would receive, assistance
funded under any program described in subsection
(a)(2), the State in which the individual resides shall
provide such individual (if otherwise eligible for such
assistance) within a reasonable period of time after
the date of such objection with assistance from an al-
ternative provider that is accessible to the individual
and the value of which is not less than the value of
the assistance which the individual would have re-
ceived from such organization.
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(2) INDIVIDUAL DESCRIBED.—An individual de-
scribed in this paragraph is an individual who re-
ceives, applies for, or requests to apply for, assistance
under a program described in subsection (a)(2).
(f) EMPLOYMENT PRACTICES.—A religious organiza-
tion’s exemption provided under section 702 of the Civil
Rights Act of 1964 (42 U.S.C. 2000e–1a) regarding employ-
ment practices shall not be affected by its participation in,
or receipt of funds from, programs described in subsection
(a)(2).
(g) NONDISCRIMINATION AGAINST BENEFICIARIES.—
Except as otherwise provided in law, a religious organiza-
tion shall not discriminate against an individual in regard
to rendering assistance funded under any program de-
scribed in subsection (a)(2) on the basis of religion, a reli-
gious belief, or refusal to actively participate in a religious
practice.
(h) FISCAL ACCOUNTABILITY.—
(1) IN GENERAL.—Except as provided in para-
graph (2), any religious organization contracting to
provide assistance funded under any program de-
scribed in subsection (a)(2) shall be subject to the
same regulations as other contractors to account in
accord with generally accepted auditing principles for
the use of such funds provided under such programs.
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(2) LIMITED AUDIT.—If such organization seg-
regates Federal funds provided under such programs
into separate accounts, then only the financial assist-
ance provided with such funds shall be subject to
audit.
(i) COMPLIANCE.—Any party which seeks to enforce its
rights under this section may assert a civil action for in-
junctive relief exclusively in an appropriate State court
against the entity or agency that allegedly commits such
violation.
(j) LIMITATIONS ON USE OF FUNDS FOR CERTAIN
PURPOSES.—No funds provided directly to institutions or
organizations to provide services and administer programs
under subsection (a)(1)(A) shall be expended for sectarian
worship, instruction, or proselytization.
(k) PREEMPTION.—Nothing in this section shall be
construed to preempt any provision of a State constitution
or State statute that prohibits or restricts the expenditure
of State funds in or by religious organizations.
SEC. 2105. CENSUS DATA ON GRANDPARENTS AS PRIMARY
CAREGIVERS FOR THEIR GRANDCHILDREN.
(a) IN GENERAL.—Not later than 90 days after the
date of the enactment of this Act, the Secretary of Com-
merce, in carrying out section 141 of title 13, United States
Code, shall expand the data collection efforts of the Bureau
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of the Census (in this section referred to as the ‘‘Bureau’’)
to enable the Bureau to collect statistically significant data,
in connection with its decennial census and its mid-decade
census, concerning the growing trend of grandparents who
are the primary caregivers for their grandchildren.
(b) EXPANDED CENSUS QUESTION.—In carrying out
subsection (a), the Secretary of Commerce shall expand the
Bureau’s census question that details households which in-
clude both grandparents and their grandchildren. The ex-
panded question shall be formulated to distinguish between
the following households:
(1) A household in which a grandparent tempo-
rarily provides a home for a grandchild for a period
of weeks or months during periods of parental dis-
tress.
(2) A household in which a grandparent provides
a home for a grandchild and serves as the primary
caregiver for the grandchild.
SEC. 2106. REPORT ON DATA PROCESSING.
(a) IN GENERAL.—Within 6 months after the date of
the enactment of this Act, the Secretary of Health and
Human Services shall prepare and submit to the Congress
a report on—
(1) the status of the automated data processing
systems operated by the States to assist management
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in the administration of State programs under part
A of title IV of the Social Security Act (whether in
effect before or after October 1, 1995); and
(2) what would be required to establish a system
capable of—
(A) tracking participants in public pro-
grams over time; and
(B) checking case records of the States to de-
termine whether individuals are participating in
public programs of 2 or more States.
(b) PREFERRED CONTENTS.—The report required by
subsection (a) should include—
(1) a plan for building on the automated data
processing systems of the States to establish a system
with the capabilities described in subsection (a)(2);
and
(2) an estimate of the amount of time required
to establish such a system and of the cost of establish-
ing such a system.
SEC. 2107. STUDY ON ALTERNATIVE OUTCOMES MEASURES.
(a) STUDY.—The Secretary shall, in cooperation with
the States, study and analyze outcomes measures for evalu-
ating the success of the States in moving individuals out
of the welfare system through employment as an alternative
to the minimum participation rates described in section
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407 of the Social Security Act. The study shall include a
determination as to whether such alternative outcomes
measures should be applied on a national or a State-by-
State basis and a preliminary assessment of the effects of
section 409(a)(7)(C) of such Act.
(b) REPORT.—Not later than September 30, 1998, the
Secretary shall submit to the Committee on Finance of the
Senate and the Committee on Ways and Means of the House
of Representatives a report containing the findings of the
study required by subsection (a).
SEC. 2108. WELFARE FORMULA FAIRNESS COMMISSION.
(a) ESTABLISHMENT.—There is established a commis-
sion to be known as the Welfare Formula Fairness Commis-
sion (in this section referred to as the ‘‘Commission’’).
(b) MEMBERSHIP.—
(1) COMPOSITION.—The Commission shall be
composed of 13 members, of whom—
(A) 3 shall be appointed by the President,
of whom not more than 2 shall be of the same
political party;
(B) 3 shall be appointed by the Majority
Leader of the Senate;
(C) 2 shall be appointed by the Minority
Leader of the Senate;
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(D) 3 shall be appointed by the Speaker of
the House of Representatives; and
(E) 2 shall be appointed by the Minority
Leader of the House of Representatives.
(2) DATE.—The appointments of the members of
the Commission shall be made not later than 30 days
after the date of the enactment of this Act.
(c) PERIOD OF APPOINTMENT; VACANCIES.—Members
shall be appointed for the life of the Commission. Any va-
cancy in the Commission shall not affect its powers, but
shall be filled in the same manner as the original appoint-
ment.
(d) INITIAL MEETING.—Not later than 30 days after
the date on which all members of the Commission have been
appointed, the Commission shall hold its first meeting.
(e) MEETINGS.—The Commission shall meet at the call
of the Chair.
(f) QUORUM.—A majority of the members of the Com-
mission shall constitute a quorum, but a lesser number of
members may hold hearings.
(g) CHAIR AND VICE CHAIR.—The Commission shall
select a Chair and Vice Chair from among its members.
(h) DUTIES OF THE COMMISSION.—
(1) STUDY.—The Commission shall study—
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(A) the temporary assistance for needy fam-
ilies block grant program established under part
A of title IV of the Social Security Act, as
amended by section 2103 of this Act; and
(B) the funding formulas applied, the bonus
payments provided, and the work requirements
established under such program.
(2) REPORT.—Not later than September 1, 1998,
the Commission shall submit a report to the Congress
on the matters studied under paragraph (1).
(i) POWERS OF THE COMMISSION.—
(1) HEARINGS.—The Commission may hold such
hearings, sit and act at such times and places, take
such testimony, and receive such evidence as the Com-
mission considers advisable to carry out the purposes
of this section.
(2) INFORMATION FROM FEDERAL AGENCIES.—
The Commission may secure directly from any Fed-
eral department or agency such information as the
Commission considers necessary to carry out the pro-
visions of this section. Upon request of the Chair of
the Commission, the head of such department or agen-
cy shall furnish such information to the Commission.
(3) POSTAL
SERVICES.—The Commission may
use the United States mails in the same manner and
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under the same conditions as other departments and
agencies of the Federal Government.
(4) GIFTS.—The Commission may accept, use,
and dispose of gifts or donations of services or prop-
erty.
(j) PERSONNEL MATTERS.—
(1) COMPENSATION OF MEMBERS.—Each mem-
ber of the Commission who is not an officer or em-
ployee of the Federal Government shall be com-
pensated at a rate equal to the daily equivalent of the
annual rate of basic pay prescribed for level IV of the
Executive Schedule under section 5315 of title 5,
United States Code, for each day (including travel
time) during which such member is engaged in the
performance of the duties of the Commission. All
members of the Commission who are officers or em-
ployees of the United States shall serve without com-
pensation in addition to that received for their serv-
ices as officers or employees of the United States.
(2) TRAVEL
EXPENSES.—The members of the
Commission shall be allowed travel expenses, includ-
ing per diem in lieu of subsistence, at rates author-
ized for employees of agencies under subchapter I of
chapter 57 of title 5, United States Code, while away
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from their homes or regular places of business in the
performance of services for the Commission.
(3) STAFF.—
(A) IN GENERAL.—The Chair of the Com-
mission may, without regard to the civil service
laws and regulations, appoint and terminate an
executive director and such other additional per-
sonnel as may be necessary to enable the Com-
mission to perform its duties. The employment of
an executive director shall be subject to confirma-
tion by the Commission.
(B) COMPENSATION.—The Chair of the
Commission may fix the compensation of the ex-
ecutive director and other personnel without re-
gard to the provisions of chapter 51 and sub-
chapter III of chapter 53 of title 5, United States
Code, relating to classification of positions and
General Schedule pay rates, except that the rate
of pay for the executive director and other per-
sonnel may not exceed the rate payable for level
V of the Executive Schedule under section 5316
of such title.
(4) DETAIL OF GOVERNMENT EMPLOYEES.—Any
Federal Government employee may be detailed to the
Commission without reimbursement, and such detail
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shall be without interruption or loss of civil service
status or privilege.
(5) PROCUREMENT OF TEMPORARY AND INTER-
MITTENT SERVICES.—The Chair of the Commission
may procure temporary and intermittent services
under section 3109(b) of title 5, United States Code,
at rates for individuals which do not exceed the daily
equivalent of the annual rate of basic pay prescribed
for level V of the Executive Schedule under section
5316 of such title.
(k) TERMINATION OF THE COMMISSION.—The Com-
mission shall terminate not later than December 31, 1998.
(l) AUTHORIZATION OF APPROPRIATIONS.—There is
authorized to be appropriated to the Commission such sums
as are necessary to carry out the purposes of this section.
SEC. 2109. CONFORMING AMENDMENTS TO THE SOCIAL SE-
CURITY ACT.
(a) AMENDMENTS TO PART D OF TITLE IV.—
(1) Section 451 (42 U.S.C. 651) is amended by
striking ‘‘aid’’ and inserting ‘‘assistance under a
State program funded’’.
(2) 
Section 
452(a)(10)(C) 
(42 
U.S.C.
652(a)(10)(C)) is amended—
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(A) by striking ‘‘aid to families with de-
pendent children’’ and inserting ‘‘assistance
under a State program funded under part A’’;
(B) by striking ‘‘such aid’’ and inserting
‘‘such assistance’’; and
(C) by striking ‘‘under section 402(a)(26)
or’’ and inserting ‘‘pursuant to section 408(a)(4)
or under section’’.
(3) 
Section 
452(a)(10)(F) 
(42 
U.S.C.
652(a)(10)(F)) is amended—
(A) by striking ‘‘aid under a State plan ap-
proved’’ and inserting ‘‘assistance under a State
program funded’’; and
(B) by striking ‘‘in accordance with the
standards 
referred 
to 
in 
section
402(a)(26)(B)(ii)’’ and inserting ‘‘by the State’’.
(4) Section 452(b) (42 U.S.C. 652(b)) is amend-
ed in the first sentence by striking ‘‘aid under the
State plan approved under part A’’ and inserting
‘‘assistance under the State program funded under
part A’’.
(5) 
Section 
452(d)(3)(B)(i) 
(42 
U.S.C.
652(d)(3)(B)(i)) is amended by striking ‘‘1115(c)’’
and inserting ‘‘1115(b)’’.
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(6) 
Section 
452(g)(2)(A)(ii)(I) 
(42 
U.S.C.
652(g)(2)(A)(ii)(I)) is amended by striking ‘‘aid is
being paid under the State’s plan approved under
part A or E’’ and inserting ‘‘assistance is being pro-
vided under the State program funded under part A’’.
(7) 
Section 
452(g)(2)(A) 
(42 
U.S.C.
652(g)(2)(A)) is amended in the matter following
clause (iii) by striking ‘‘aid was being paid under the
State’s plan approved under part A or E’’ and insert-
ing ‘‘assistance was being provided under the State
program funded under part A’’.
(8) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is
amended in the matter following subparagraph (B)—
(A) by striking ‘‘who is a dependent child’’
and inserting ‘‘with respect to whom assistance
is being provided under the State program fund-
ed under part A’’;
(B) by inserting ‘‘by the State’’ after
‘‘found’’; and
(C) by striking ‘‘to have good cause for re-
fusing to cooperate under section 402(a)(26)’’
and inserting ‘‘to qualify for a good cause or
other exception to cooperation pursuant to sec-
tion 454(29)’’.
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(9) Section 452(h) (42 U.S.C. 652(h)) is amend-
ed by striking ‘‘under section 402(a)(26)’’ and insert-
ing ‘‘pursuant to section 408(a)(4)’’.
(10) Section 453(c)(3) (42 U.S.C. 653(c)(3)) is
amended by striking ‘‘aid under part A of this title’’
and inserting ‘‘assistance under a State program
funded under part A’’.
(11) Section 454(5)(A) (42 U.S.C. 654(5)(A))) is
amended—
(A) by striking ‘‘under section 402(a)(26)’’
and inserting ‘‘pursuant to section 408(a)(4)’’;
and
(B) by striking ‘‘; except that this para-
graph shall not apply to such payments for any
month following the first month in which the
amount collected is sufficient to make such fam-
ily ineligible for assistance under the State plan
approved under part A;’’ and inserting a
comma.
(12) Section 454(6)(D) (42 U.S.C. 654(6)(D)) is
amended by striking ‘‘aid under a State plan ap-
proved’’ and inserting ‘‘assistance under a State pro-
gram funded’’.
(13) Section 456(a)(1) (42 U.S.C. 656(a)(1)) is
amended by striking ‘‘under section 402(a)(26)’’.
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(14) 
Section 
466(a)(3)(B) 
(42 
U.S.C.
666(a)(3)(B)) is amended by striking ‘‘402(a)(26)’’
and inserting ‘‘408(a)(3)’’.
(15) Section 466(b)(2) (42 U.S.C. 666(b)(2)) is
amended by striking ‘‘aid’’ and inserting ‘‘assistance
under a State program funded’’.
(16) Section 469(a) (42 U.S.C. 669(a)) is
amended—
(A) by striking ‘‘aid under plans approved’’
and inserting ‘‘assistance under State programs
funded’’; and
(B) by striking ‘‘such aid’’ and inserting
‘‘such assistance’’.
(17) Section 472(c)(2) (42 U.S.C. 672(c)(2)) is
amended by striking ‘‘nonprofit’’.
(b) REPEAL OF PART F OF TITLE IV.—Part F of title
IV (42 U.S.C. 681–687) is repealed.
(c) AMENDMENT TO TITLE X.—Section 1002(a)(7) (42
U.S.C. 1202(a)(7)) is amended by striking ‘‘aid to families
with dependent children under the State plan approved
under section 402 of this Act’’ and inserting ‘‘assistance
under a State program funded under part A of title IV’’.
(d) AMENDMENTS TO TITLE XI.—
(1) Section 1109 (42 U.S.C. 1309) is amended
by striking ‘‘or part A of title IV,’’.
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(2) Section 1115 (42 U.S.C. 1315) is amended—
(A) in subsection (a)(2)—
(i) by inserting ‘‘(A)’’ after ‘‘(2)’’;
(ii) by striking ‘‘403,’’;
(iii) by striking the period at the end
and inserting ‘‘, and’’; and
(iv) by adding at the end the following
new subparagraph:
‘‘(B) costs of such project which would not other-
wise be a permissible use of funds under part A of
title IV and which are not included as part of the
costs of projects under section 1110, shall to the extent
and for the period prescribed by the Secretary, be re-
garded as a permissible use of funds under such
part.’’; and
(B) in subsection (c)(3), by striking ‘‘the
program of aid to families with dependent chil-
dren’’ and inserting ‘‘part A of such title’’.
(3) Section 1116 (42 U.S.C. 1316) is amended—
(A) in each of subsections (a)(1), (b), and
(d), by striking ‘‘or part A of title IV,’’; and
(B) in subsection (a)(3), by striking ‘‘404,’’.
(4) Section 1118 (42 U.S.C. 1318) is amended—
(A) by striking ‘‘403(a),’’;
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(B) by striking ‘‘and part A of title IV,’’;
and
(C) by striking ‘‘, and shall, in the case of
American Samoa, mean 75 per centum with re-
spect to part A of title IV’’.
(5) Section 1119 (42 U.S.C. 1319) is amended—
(A) by striking ‘‘or part A of title IV’’; and
(B) by striking ‘‘403(a),’’.
(6) Section 1133(a) (42 U.S.C. 1320b–3(a)) is
amended by striking ‘‘or part A of title IV,’’.
(7) Section 1136 (42 U.S.C. 1320b–6) is re-
pealed.
(8) Section 1137 (42 U.S.C. 1320b–7) is amend-
ed—
(A) in subsection (b), by striking paragraph
(1) and inserting the following:
‘‘(1) any State program funded under part A of
title IV of this Act;’’; and
(B) in subsection (d)(1)(B)—
(i) by striking ‘‘In this subsection—’’
and all that follows through ‘‘(ii) in’’ and
inserting ‘‘In this subsection, in’’;
(ii) by redesignating subclauses (I),
(II), and (III) as clauses (i), (ii), and (iii);
and
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(iii) by moving such redesignated ma-
terial 2 ems to the left.
(e) AMENDMENT TO TITLE XIV.—Section 1402(a)(7)
(42 U.S.C. 1352(a)(7)) is amended by striking ‘‘aid to fam-
ilies with dependent children under the State plan approved
under section 402 of this Act’’ and inserting ‘‘assistance
under a State program funded under part A of title IV’’.
(f) AMENDMENT TO TITLE XVI AS IN EFFECT WITH
RESPECT TO THE TERRITORIES.—Section 1602(a)(11), as
in effect without regard to the amendment made by section
301 of the Social Security Amendments of 1972 (42 U.S.C.
1382 note), is amended by striking ‘‘aid under the State
plan approved’’ and inserting ‘‘assistance under a State
program funded’’.
(g) AMENDMENT TO TITLE XVI AS IN EFFECT WITH
RESPECT
TO
THE STATES.—Section 1611(c)(5)(A) (42
U.S.C. 1382(c)(5)(A)) is amended to read as follows: ‘‘(A)
a State program funded under part A of title IV,’’.
(h) AMENDMENT TO TITLE XIX.—Section 1902(j) (42
U.S.C. 1396a(j)) is amended by striking ‘‘1108(c)’’ and in-
serting ‘‘1108(g)’’.
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SEC. 2110. CONFORMING AMENDMENTS TO THE FOOD
STAMP ACT OF 1977 AND RELATED PROVI-
SIONS.
(a) Section 5 of the Food Stamp Act of 1977 (7 U.S.C.
2014) is amended—
(1) in the second sentence of subsection (a), by
striking ‘‘plan approved’’ and all that follows through
‘‘title IV of the Social Security Act’’ and inserting
‘‘program funded under part A of title IV of the So-
cial Security Act (42 U.S.C. 601 et seq.)’’;
(2) in subsection (d)—
(A) in paragraph (5), by striking ‘‘assist-
ance to families with dependent children’’ and
inserting ‘‘assistance under a State program
funded’’; and
(B) by striking paragraph (13) and redesig-
nating paragraphs (14), (15), and (16) as para-
graphs (13), (14), and (15), respectively;
(3) in subsection (j), by striking ‘‘plan approved
under part A of title IV of such Act (42 U.S.C. 601
et seq.)’’ and inserting ‘‘program funded under part
A of title IV of the Act (42 U.S.C. 601 et seq.)’’; and
(4) by striking subsection (m) and redesignating
subsection (n), as added by section 1122, as subsection
(m).
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(b) Section 6 of such Act (7 U.S.C. 2015) is amend-
ed—
(1) in subsection (c)(5), by striking ‘‘the State
plan approved’’ and inserting ‘‘the State program
funded’’; and
(2) in subsection (e)(6), by striking ‘‘aid to fami-
lies with dependent children’’ and inserting ‘‘benefits
under a State program funded’’.
(c) Section 16(g)(4) of such Act (7 U.S.C. 2025(g)(4))
is amended by striking ‘‘State plans under the Aid to Fami-
lies with Dependent Children Program under’’ and insert-
ing ‘‘State programs funded under part A of’’.
(d) Section 17(b)(3) of such Act (7 U.S.C. 2026(b)(3))
is amended by adding at the end the following new subpara-
graph:
‘‘(I) The Secretary may not grant a waiver under this
paragraph on or after October 1, 1995. Any reference in
this paragraph to a provision of title IV of the Social Secu-
rity Act shall be deemed to be a reference to such provision
as in effect on September 30, 1995.’’.
(e) Section 20 of such Act (7 U.S.C. 2029) is amend-
ed—
(1) in subsection (a)(2)(B) by striking ‘‘operat-
ing—’’ and all that follows through ‘‘(ii) any other’’
and inserting ‘‘operating any’’; and
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(2) in subsection (b)—
(A) in paragraph (1)—
(i) by striking ‘‘(b)(1) A household’’
and inserting ‘‘(b) A household’’; and
(ii) in subparagraph (B), by striking
‘‘training program’’ and inserting ‘‘activ-
ity’’;
(B) by striking paragraph (2); and
(C) by redesignating subparagraphs (A)
through (F) as paragraphs (1) through (6), re-
spectively.
(f) Section 5(h)(1) of the Agriculture and Consumer
Protection Act of 1973 (Public Law 93–186; 7 U.S.C. 612c
note) is amended by striking ‘‘the program for aid to fami-
lies with dependent children’’ and inserting ‘‘the State pro-
gram funded’’.
(g) Section 9 of the National School Lunch Act (42
U.S.C. 1758) is amended—
(1) in subsection (b)—
(A) in paragraph (2)(B)(ii)(II), as amend-
ed by section 1202(b)—
(i) by striking ‘‘program for aid to
families with dependent children’’ and in-
serting ‘‘State program funded’’; and
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(ii) by inserting before the period at
the end the following: ‘‘(42 U.S.C. 601 et
seq.) that the Secretary determines complies
with standards established by the Secretary
that ensure that the standards under the
State program are comparable to or more
restrictive than those in effect on June 1,
1995’’; and
(B) in paragraph (6)—
(i) in subparagraph (A)(ii)—
(I) by striking ‘‘an AFDC assist-
ance unit (under the aid to families
with dependent children program au-
thorized’’ and inserting ‘‘a family
(under the State program funded’’; and
(II) by striking ‘‘, in a State’’
and 
all 
that 
follows 
through
‘‘9902(2)))’’ and inserting ‘‘that the
Secretary determines complies with
standards established by the Secretary
that ensure that the standards under
the State program are comparable to
or more restrictive than those in effect
on June 1, 1995’’; and
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(ii) in subparagraph (B), by striking
‘‘aid to families with dependent children’’
and inserting ‘‘assistance under the State
program funded under part A of title IV of
the Social Security Act (42 U.S.C. 601 et
seq.) that the Secretary determines complies
with standards established by the Secretary
that ensure that the standards under the
State program are comparable to or more
restrictive than those in effect on June 1,
1995’’; and
(2) in subsection (d)(2)(C)—
(A) by striking ‘‘program for aid to families
with dependent children’’ and inserting ‘‘State
program funded’’; and
(B) by inserting before the period at the end
the following: ‘‘(42 U.S.C. 601 et seq.) that the
Secretary determines complies with standards es-
tablished by the Secretary that ensure that the
standards under the State program are com-
parable to or more restrictive than those in effect
on June 1, 1995’’.
(h) Section 17(d)(2)(A)(ii)(II) of the Child Nutrition
Act of 1966 (42 U.S.C. 1786(d)(2)(A)(ii)(II)) is amended—
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(1) by striking ‘‘program for aid to families with
dependent children established’’ and inserting ‘‘State
program funded’’; and
(2) by inserting before the semicolon the follow-
ing: ‘‘(42 U.S.C. 601 et seq.) that the Secretary deter-
mines complies with standards established by the Sec-
retary that ensure that the standards under the State
program are comparable to or more restrictive than
those in effect on June 1, 1995’’.
SEC. 2111. CONFORMING AMENDMENTS TO OTHER LAWS.
(a) Subsection (b) of section 508 of the Unemployment
Compensation Amendments of 1976 (42 U.S.C. 603a; Pub-
lic Law 94–566; 90 Stat. 2689) is amended to read as fol-
lows:
‘‘(b) PROVISION
FOR
REIMBURSEMENT
OF
EX-
PENSES.—For purposes of section 455 of the Social Security
Act, expenses incurred to reimburse State employment of-
fices for furnishing information requested of such offices—
‘‘(1) pursuant to the third sentence of section
3(a) of the Act entitled ‘An Act to provide for the es-
tablishment of a national employment system and for
cooperation with the States in the promotion of such
system, and for other purposes’, approved June 6,
1933 (29 U.S.C. 49b(a)), or
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‘‘(2) by a State or local agency charged with the
duty of carrying a State plan for child support ap-
proved under part D of title IV of the Social Security
Act,
shall be considered to constitute expenses incurred in the
administration of such State plan.’’.
(b) Section 9121 of the Omnibus Budget Reconcili-
ation Act of 1987 (42 U.S.C. 602 note) is repealed.
(c) Section 9122 of the Omnibus Budget Reconciliation
Act of 1987 (42 U.S.C. 602 note) is repealed.
(d) Section 221 of the Housing and Urban-Rural Re-
covery Act of 1983 (42 U.S.C. 602 note), relating to treat-
ment under AFDC of certain rental payments for federally
assisted housing, is repealed.
(e) Section 159 of the Tax Equity and Fiscal Respon-
sibility Act of 1982 (42 U.S.C. 602 note) is repealed.
(f) Section 202(d) of the Social Security Amendments
of 1967 (81 Stat. 882; 42 U.S.C. 602 note) is repealed.
(g) Section 903 of the Stewart B. McKinney Homeless
Assistance Amendments Act of 1988 (42 U.S.C. 11381 note),
relating to demonstration projects to reduce number of
AFDC families in welfare hotels, is amended—
(1) in subsection (a), by striking ‘‘aid to families
with dependent children under a State plan ap-
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proved’’ and inserting ‘‘assistance under a State pro-
gram funded’’; and
(2) in subsection (c), by striking ‘‘aid to families
with dependent children in the State under a State
plan approved’’ and inserting ‘‘assistance in the State
under a State program funded’’.
(h) The Higher Education Act of 1965 (20 U.S.C. 1001
et seq.) is amended—
(1) in section 404C(c)(3) (20 U.S.C. 1070a–
23(c)(3)), by striking ‘‘(Aid to Families with Depend-
ent Children)’’; and
(2) 
in 
section 
480(b)(2) 
(20 
U.S.C.
1087vv(b)(2)), by striking ‘‘aid to families with de-
pendent children under a State plan approved’’ and
inserting ‘‘assistance under a State program funded’’.
(i) The Carl D. Perkins Vocational and Applied Tech-
nology Education Act (20 U.S.C. 2301 et seq.) is amend-
ed—
(1) in section 231(d)(3)(A)(ii) (20 U.S.C.
2341(d)(3)(A)(ii)), by striking ‘‘The program for aid
to dependent children’’ and inserting ‘‘The State pro-
gram funded’’;
(2) 
in 
section 
232(b)(2)(B) 
(20 
U.S.C.
2341a(b)(2)(B)), by striking ‘‘the program for aid to
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families with dependent children’’ and inserting ‘‘the
State program funded’’; and
(3) in section 521(14)(B)(iii) (20 U.S.C.
2471(14)(B)(iii)), by striking ‘‘the program for aid to
families with dependent children’’ and inserting ‘‘the
State program funded’’.
(j) The Elementary and Secondary Education Act of
1965 (20 U.S.C. 2701 et seq.) is amended—
(1) in section 1113(a)(5) (20 U.S.C. 6313(a)(5)),
by striking ‘‘Aid to Families with Dependent Chil-
dren program’’ and inserting ‘‘State program funded
under part A of title IV of the Social Security Act’’;
(2) in section 1124(c)(5) (20 U.S.C. 6333(c)(5)),
by striking ‘‘the program of aid to families with de-
pendent children under a State plan approved under’’
and inserting ‘‘a State program funded under part A
of’’; and
(3) 
in 
section 
5203(b)(2) 
(20 
U.S.C.
7233(b)(2))—
(A) in subparagraph (A)(xi), by striking
‘‘Aid to Families with Dependent Children bene-
fits’’ and inserting ‘‘assistance under a State
program funded under part A of title IV of the
Social Security Act’’; and
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(B) in subparagraph (B)(viii), by striking
‘‘Aid to Families with Dependent Children’’ and
inserting ‘‘assistance under the State program
funded under part A of title IV of the Social Se-
curity Act’’.
(k) The 4th proviso of chapter VII of title I of Public
Law 99–88 (25 U.S.C. 13d–1) is amended to read as fol-
lows: ‘‘Provided further, That general assistance payments
made by the Bureau of Indian Affairs shall be made—
‘‘(1) after April 29, 1985, and before October 1,
1995, on the basis of Aid to Families with Dependent
Children (AFDC) standards of need; and
‘‘(2) on and after October 1, 1995, on the basis
of standards of need established under the State pro-
gram funded under part A of title IV of the Social
Security Act,
except that where a State ratably reduces its AFDC or State
program payments, the Bureau shall reduce general assist-
ance payments in such State by the same percentage as the
State has reduced the AFDC or State program payment.’’.
(l) The Internal Revenue Code of 1986 (26 U.S.C. 1
et seq.) is amended—
(1) in section 51(d)(9) (26 U.S.C. 51(d)(9)), by
striking all that follows ‘‘agency as’’ and inserting
‘‘being eligible for financial assistance under part A
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of title IV of the Social Security Act and as having
continually received such financial assistance during
the 90-day period which immediately precedes the
date on which such individual is hired by the em-
ployer.’’;
(2) 
in 
section 
3304(a)(16) 
(26 
U.S.C.
3304(a)(16)), by striking ‘‘eligibility for aid or serv-
ices,’’ and all that follows through ‘‘children ap-
proved’’ and inserting ‘‘eligibility for assistance, or
the amount of such assistance, under a State program
funded’’;
(3) in section 6103(l)(7)(D)(i) (26 U.S.C.
6103(l)(7)(D)(i)), by striking ‘‘aid to families with
dependent children provided under a State plan ap-
proved’’ and inserting ‘‘a State program funded’’;
(4) 
in 
section 
6103(l)(10) 
(26 
U.S.C.
6103(l)(10))—
(A) by striking ‘‘(c) or (d)’’ each place it
appears and inserting ‘‘(c), (d), or (e)’’; and
(B) by adding at the end of subparagraph
(B) the following new sentence: ‘‘Any return in-
formation disclosed with respect to section
6402(e) shall only be disclosed to officers and em-
ployees of the State agency requesting such infor-
mation.’’;
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(5) in section 6103(p)(4) (26 U.S.C. 6103(p)(4)),
in the matter preceding subparagraph (A)—
(A) by striking ‘‘(5), (10)’’ and inserting
‘‘(5)’’; and
(B) by striking ‘‘(9), or (12)’’ and inserting
‘‘(9), (10), or (12)’’;
(6) 
in 
section 
6334(a)(11)(A) 
(26 
U.S.C.
6334(a)(11)(A)), by striking ‘‘(relating to aid to fam-
ilies with dependent children)’’;
(7) in section 6402 (26 U.S.C. 6402)—
(A) in subsection (a), by striking ‘‘(c) and
(d)’’ and inserting ‘‘(c), (d), and (e)’’;
(B) by redesignating subsections (e) through
(i) as subsections (f) through (j), respectively;
and
(C) by inserting after subsection (d) the fol-
lowing:
‘‘(e) COLLECTION OF OVERPAYMENTS UNDER TITLE
IV–A OF THE SOCIAL SECURITY ACT.—The amount of any
overpayment to be refunded to the person making the over-
payment shall be reduced (after reductions pursuant to sub-
sections (c) and (d), but before a credit against future liabil-
ity for an internal revenue tax) in accordance with section
405(e) of the Social Security Act (concerning recovery of
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overpayments to individuals under State plans approved
under part A of title IV of such Act).’’; and
(8) 
in 
section 
7523(b)(3)(C) 
(26 
U.S.C.
7523(b)(3)(C)), by striking ‘‘aid to families with de-
pendent children’’ and inserting ‘‘assistance under a
State program funded under part A of title IV of the
Social Security Act’’.
(m) Section 3(b) of the Wagner-Peyser Act (29 U.S.C.
49b(b)) is amended by striking ‘‘State plan approved under
part A of title IV’’ and inserting ‘‘State program funded
under part A of title IV’’.
(n) The Job Training Partnership Act (29 U.S.C. 1501
et seq.) is amended—
(1) 
in 
section 
4(29)(A)(i) 
(29 
U.S.C.
1503(29)(A)(i)), by striking ‘‘(42 U.S.C. 601 et seq.)’’;
(2) 
in 
section 
106(b)(6)(C) 
(29 
U.S.C.
1516(b)(6)(C)), by striking ‘‘State aid to families
with dependent children records,’’ and inserting
‘‘records collected under the State program funded
under part A of title IV of the Social Security Act,’’;
(3) in section 121(b)(2) (29 U.S.C. 1531(b)(2))—
(A) by striking ‘‘the JOBS program’’ and
inserting ‘‘the work activities required under
title IV of the Social Security Act’’; and
(B) by striking the second sentence;
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(4) in section 123(c) (29 U.S.C. 1533(c))—
(A) in paragraph (1)(E), by repealing
clause (vi); and
(B) in paragraph (2)(D), by repealing
clause (v);
(5) in section 203(b)(3) (29 U.S.C. 1603(b)(3)),
by striking ‘‘, including recipients under the JOBS
program’’;
(6) in subparagraphs (A) and (B) of section
204(a)(1) (29 U.S.C. 1604(a)(1) (A) and (B)), by
striking ‘‘(such as the JOBS program)’’ each place it
appears;
(7) in section 205(a) (29 U.S.C. 1605(a)), by
striking paragraph (4) and inserting the following:
‘‘(4) the portions of title IV of the Social Secu-
rity Act relating to work activities;’’;
(8) in section 253 (29 U.S.C. 1632)—
(A) in subsection (b)(2), by repealing sub-
paragraph (C); and
(B) in paragraphs (1)(B) and (2)(B) of
subsection (c), by striking ‘‘the JOBS program
or’’ each place it appears;
(9) in section 264 (29 U.S.C. 1644)—
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(A) in subparagraphs (A) and (B) of sub-
section (b)(1), by striking ‘‘(such as the JOBS
program)’’ each place it appears; and
(B) in subparagraphs (A) and (B) of sub-
section (d)(3), by striking ‘‘and the JOBS pro-
gram’’ each place it appears;
(10) in section 265(b) (29 U.S.C. 1645(b)), by
striking paragraph (6) and inserting the following:
‘‘(6) the portion of title IV of the Social Security
Act relating to work activities;’’;
(11) in the second sentence of section 429(e) (29
U.S.C. 1699(e)), by striking ‘‘and shall be in an
amount that does not exceed the maximum amount
that may be provided by the State pursuant to section
402(g)(1)(C) of the Social Security Act (42 U.S.C.
602(g)(1)(C))’’;
(12) in section 454(c) (29 U.S.C. 1734(c)), by
striking ‘‘JOBS and’’;
(13) in section 455(b) (29 U.S.C. 1735(b)), by
striking ‘‘the JOBS program,’’;
(14) in section 501(1) (29 U.S.C. 1791(1)), by
striking ‘‘aid to families with dependent children
under part A of title IV of the Social Security Act (42
U.S.C. 601 et seq.)’’ and inserting ‘‘assistance under
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the State program funded under part A of title IV of
the Social Security Act’’;
(15) 
in 
section 
506(1)(A) 
(29 
U.S.C.
1791e(1)(A)), by striking ‘‘aid to families with de-
pendent children’’ and inserting ‘‘assistance under the
State program funded’’;
(16) 
in 
section 
508(a)(2)(A) 
(29 
U.S.C.
1791g(a)(2)(A)), by striking ‘‘aid to families with de-
pendent children’’ and inserting ‘‘assistance under the
State program funded’’; and
(17) 
in 
section 
701(b)(2)(A) 
(29 
U.S.C.
1792(b)(2)(A))—
(A) in clause (v), by striking the semicolon
and inserting ‘‘; and’’; and
(B) by striking clause (vi).
(o) Section 3803(c)(2)(C)(iv) of title 31, United States
Code, is amended to read as follows:
‘‘(iv) assistance under a State program funded
under part A of title IV of the Social Security Act;’’.
(p) Section 2605(b)(2)(A)(i) of the Low-Income Home
Energy Assistance Act of 1981 (42 U.S.C. 8624(b)(2)(A)(i))
is amended to read as follows:
‘‘(i) assistance under the State pro-
gram funded under part A of title IV of the
Social Security Act;’’.
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(q) Section 303(f)(2) of the Family Support Act of
1988 (42 U.S.C. 602 note) is amended—
(1) by striking ‘‘(A)’’; and
(2) by striking subparagraphs (B) and (C).
(r) The Balanced Budget and Emergency Deficit Con-
trol Act of 1985 (2 U.S.C. 900 et seq.) is amended—
(1) in the first section 255(h) (2 U.S.C. 905(h)),
by striking ‘‘Aid to families with dependent children
(75–0412–0–1–609);’’ and inserting ‘‘Block grants to
States for temporary assistance for needy families;’’;
and
(2) in section 256 (2 U.S.C. 906)—
(A) by striking subsection (k); and
(B) by redesignating subsection (l) as sub-
section (k).
(s) The Immigration and Nationality Act (8 U.S.C.
1101 et seq.) is amended—
(1) in section 210(f) (8 U.S.C. 1160(f)), by strik-
ing ‘‘aid under a State plan approved under’’ each
place it appears and inserting ‘‘assistance under a
State program funded under’’;
(2) in section 245A(h) (8 U.S.C. 1255a(h))—
(A) in paragraph (1)(A)(i), by striking
‘‘program of aid to families with dependent chil-
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dren’’ and inserting ‘‘State program of assist-
ance’’; and
(B) in paragraph (2)(B), by striking ‘‘aid
to families with dependent children’’ and insert-
ing ‘‘assistance under a State program funded
under part A of title IV of the Social Security
Act’’; and
(3) in section 412(e)(4) (8 U.S.C. 1522(e)(4)), by
striking ‘‘State plan approved’’ and inserting ‘‘State
program funded’’.
(t) Section 640(a)(4)(B)(i) of the Head Start Act (42
U.S.C. 9835(a)(4)(B)(i)) is amended by striking ‘‘program
of aid to families with dependent children under a State
plan approved’’ and inserting ‘‘State program of assistance
funded’’.
(u) Section 9 of the Act of April 19, 1950 (64 Stat.
47, chapter 92; 25 U.S.C. 639) is repealed.
(v) Subparagraph (E) of section 213(d)(6) of the
School-To-Work Opportunities Act of 1994 (20 U.S.C.
6143(d)(6)) is amended to read as follows:
‘‘(E) part A of title IV of the Social Secu-
rity Act (42 U.S.C. 601 et seq.) relating to work
activities;’’.
(w) Section 552a(a)(8)(B)(iv)(III) of title 5, United
States Code, is amended by striking ‘‘section 464 or 1137
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of the Social Security Act’’ and inserting ‘‘section 404(e),
464, or 1137 of the Social Security Act’’.
SEC. 2112. DEVELOPMENT OF PROTOTYPE OF COUNTER-
FEIT-RESISTANT SOCIAL SECURITY CARD RE-
QUIRED.
(a) DEVELOPMENT.—
(1) IN GENERAL.—The Commissioner of Social
Security (in this section referred to as the ‘‘Commis-
sioner’’) shall, in accordance with this section, develop
a prototype of a counterfeit-resistant social security
card. Such prototype card shall—
(A) be made of a durable, tamper-resistant
material such as plastic or polyester,
(B) employ technologies that provide secu-
rity 
features, 
such 
as 
magnetic 
stripes,
holograms, and integrated circuits, and
(C) be developed so as to provide individ-
uals with reliable proof of citizenship or legal
resident alien status.
(2) ASSISTANCE BY ATTORNEY GENERAL.—The
Attorney General of the United States shall provide
such information and assistance as the Commissioner
deems necessary to enable the Commissioner to com-
ply with this section.
(b) STUDY AND REPORT.—
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(1) IN GENERAL.—The Commissioner shall con-
duct a study and issue a report to the Congress which
examines different methods of improving the social se-
curity card application process.
(2) ELEMENTS OF STUDY.—The study shall in-
clude an evaluation of the cost and work load impli-
cations of issuing a counterfeit-resistant social secu-
rity card for all individuals over a 3-, 5-, and 10-
year period. The study shall also evaluate the feasibil-
ity and cost implications of imposing a user fee for
replacement cards and cards issued to individuals
who apply for such a card prior to the scheduled 3-
, 5-, and 10-year phase-in options.
(3) DISTRIBUTION
OF
REPORT.—The Commis-
sioner shall submit copies of the report described in
this subsection along with a facsimile of the prototype
card as described in subsection (a) to the Committees
on Ways and Means and Judiciary of the House of
Representatives and the Committees on Finance and
Judiciary of the Senate within 1 year after the date
of the enactment of this Act.
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SEC. 2113. MODIFICATIONS TO THE JOB OPPORTUNITIES
FOR 
CERTAIN 
LOW-INCOME 
INDIVIDUALS
PROGRAM.
Section 505 of the Family Support Act of 1988 (42
U.S.C. 1315 note) is amended—
(1) in the heading, by striking ‘‘DEMONSTRA-
TION’’;
(2) by striking ‘‘demonstration’’ each place such
term appears;
(3) in subsection (a), by striking ‘‘in each of fis-
cal years’’ and all that follows through ‘‘10’’ and in-
serting ‘‘shall enter into agreements with’’;
(4) in subsection (b)(3), by striking ‘‘aid to fam-
ilies with dependent children under part A of title IV
of the Social Security Act’’ and inserting ‘‘assistance
under the program funded part A of title IV of the
Social Security Act of the State in which the individ-
ual resides’’;
(5) in subsection (c)—
(A) in paragraph (1)(C), by striking ‘‘aid
to families with dependent children under title
IV of the Social Security Act’’ and inserting ‘‘as-
sistance under a State program funded part A of
title IV of the Social Security Act’’; and
(B) in paragraph (2), by striking ‘‘aid to
families with dependent children under title IV
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of such Act’’ and inserting ‘‘assistance under a
State program funded part A of title IV of the
Social Security Act’’;
(6) in subsection (d), by striking ‘‘job opportuni-
ties and basic skills training program (as provided
for under title IV of the Social Security Act)’’ and in-
serting ‘‘the State program funded under part A of
title IV of the Social Security Act’’; and
(7) by striking subsections (e) through (g) and
inserting the following:
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—For the
purpose of conducting projects under this section, there is
authorized to be appropriated an amount not to exceed
$25,000,000 for any fiscal year.’’.
SEC. 2114. SECRETARIAL SUBMISSION OF LEGISLATIVE
PROPOSAL FOR TECHNICAL AND CONFORM-
ING AMENDMENTS.
Not later than 90 days after the date of the enactment
of this Act, the Secretary of Health and Human Services
and the Commissioner of Social Security, in consultation,
as appropriate, with the heads of other Federal agencies,
shall submit to the appropriate committees of the Congress
a legislative proposal proposing such technical and con-
forming amendments as are necessary to bring the law into
conformity with the policy embodied in this chapter.
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SEC. 2115. EFFECTIVE DATE; TRANSITION RULE.
(a) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as otherwise provided
in this chapter, this chapter and the amendments
made by this chapter shall take effect on July 1, 1997.
(2) DELAYED
EFFECTIVE
DATE
FOR
CERTAIN
PROVISIONS.—Notwithstanding any other provision of
this section, paragraphs (2), (3), (4), (5), (8), and
(10) of section 409(a) and section 411(a) of the Social
Security Act (as added by the amendments made by
section 2103(a) of this Act) shall not take effect with
respect to a State until, and shall apply only with re-
spect to conduct that occurs on or after, the later of—
(A) July 1, 1997; or
(B) the date that is 6 months after the date
the Secretary of Health and Human Services re-
ceives from the State a plan described in section
402(a) of the Social Security Act (as added by
such amendment).
(3) ELIMINATION OF CHILD CARE PROGRAMS.—
The amendments made by section 2103(d) shall take
effect on October 1, 1996.
(4) DEFINITIONS
APPLICABLE
TO
NEW
CHILD
CARE
ENTITLEMENT.—Sections 
403(a)(1)(C),
403(a)(1)(D), and 419(4) of the Social Security Act,
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as added by the amendments made by section 2103(a)
of this Act, shall take effect on October 1, 1996.
(b) TRANSITION RULES.—Effective on the date of the
enactment of this Act:
(1) STATE OPTION TO ACCELERATE EFFECTIVE
DATE.—
(A) IN
GENERAL.—If the Secretary of
Health and Human Services receives from a
State a plan described in section 402(a) of the
Social Security Act (as added by the amendment
made by section 2103(a)(1) of this Act), then—
(i) on and after the date of such re-
ceipt—
(I) except as provided in clause
(ii), this chapter and the amendments
made by this chapter (other than by
section 2103(d) of this Act) shall apply
with respect to the State; and
(II) the State shall be considered
an eligible State for purposes of part A
of title IV of the Social Security Act
(as in effect pursuant to the amend-
ments made by such section 2103(a));
and
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(ii) during the period that begins on
the date of such receipt and ends on June
30, 1997, there shall remain in effect with
respect to the State—
(I) section 403(h) of the Social
Security Act (as in effect on September
30, 1995); and
(II) all State reporting require-
ments under parts A and F of title IV
of the Social Security Act (as in effect
on September 30, 1995), modified by
the Secretary as appropriate, taking
into account the State program under
part A of title IV of the Social Secu-
rity Act (as in effect pursuant to the
amendments made by such section
2103(a)).
(B) LIMITATIONS
ON
FEDERAL
OBLIGA-
TIONS.—
(i) UNDER AFDC PROGRAM.—The total
obligations of the Federal Government to a
State under part A of title IV of the Social
Security Act (as in effect on September 30,
1995) with respect to expenditures in fiscal
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year 1997 shall not exceed an amount equal
to the State family assistance grant.
(ii) UNDER
TEMPORARY
FAMILY
AS-
SISTANCE PROGRAM.—Notwithstanding sec-
tion 403(a)(1) of the Social Security Act (as
in effect pursuant to the amendments made
by section 2103(a) of this Act), the total ob-
ligations of the Federal Government to a
State under such section 403(a)(1)—
(I) for fiscal year 1996, shall be
an amount equal to—
(aa) the State family assist-
ance grant; multiplied by
(bb) 1⁄366 of the number of
days during the period that begins
on the date the Secretary of
Health and Human Services first
receives from the State a plan de-
scribed in section 402(a) of the
Social Security Act (as added by
the amendment made by section
2103(a)(1) of this Act) and ends
on September 30, 1996; and
(II) for fiscal year 1997, shall be
an amount equal to the lesser of—
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(aa) the amount (if any) by
which the State family assistance
grant exceeds the total obligations
of the Federal Government to the
State under part A of title IV of
the Social Security Act (as in ef-
fect on September 30, 1995) with
respect to expenditures in fiscal
year 1997; or
(bb) the State family assist-
ance grant, multiplied by 1⁄365 of
the number of days during the pe-
riod that begins on October 1,
1996, or the date the Secretary of
Health and Human Services first
receives from the State a plan de-
scribed in section 402(a) of the
Social Security Act (as added by
the amendment made by section
2103(a)(1) of this Act), whichever
is later, and ends on September
30, 1997.
(iii) CHILD
CARE
OBLIGATIONS
EX-
CLUDED
IN
DETERMINING
FEDERAL
AFDC
OBLIGATIONS.—As used in this subpara-
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graph, the term ‘‘obligations of the Federal
Government to the State under part A of
title IV of the Social Security Act’’ does not
include any obligation of the Federal Gov-
ernment with respect to child care expendi-
tures by the State.
(C) SUBMISSION OF STATE PLAN FOR FIS-
CAL YEAR 1996 OR 1997 DEEMED ACCEPTANCE OF
GRANT LIMITATIONS AND FORMULA AND TERMI-
NATION
OF
AFDC
ENTITLEMENT.—The submis-
sion of a plan by a State pursuant to subpara-
graph (A) is deemed to constitute—
(i) the State’s acceptance of the grant
reductions under subparagraph (B) (includ-
ing the formula for computing the amount
of the reduction); and
(ii) the termination of any entitlement
of any individual or family to benefits or
services under the State AFDC program.
(D) DEFINITIONS.—As used in this para-
graph:
(i) STATE AFDC PROGRAM.—The term
‘‘State AFDC program’’ means the State
program under parts A and F of title IV of
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the Social Security Act (as in effect on Sep-
tember 30, 1995).
(ii) STATE.—The term ‘‘State’’ means
the 50 States and the District of Columbia.
(iii) 
STATE
FAMILY
ASSISTANCE
GRANT.—The term ‘‘State family assistance
grant’’ means the State family assistance
grant (as defined in section 403(a)(1)(B) of
the Social Security Act, as added by the
amendment made by section 2103(a)(1) of
this Act).
(2) CLAIMS, ACTIONS, AND PROCEEDINGS.—The
amendments made by this chapter shall not apply
with respect to—
(A) powers, duties, functions, rights, claims,
penalties, or obligations applicable to aid, assist-
ance, or services provided before the effective date
of this chapter under the provisions amended;
and
(B) administrative actions and proceedings
commenced before such date, or authorized before
such date to be commenced, under such provi-
sions.
(3) CLOSING
OUT
ACCOUNT
FOR
THOSE
PRO-
GRAMS TERMINATED OR SUBSTANTIALLY MODIFIED BY
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THIS CHAPTER.—In closing out accounts, Federal and
State officials may use scientifically acceptable statis-
tical sampling techniques. Claims made with respect
to State expenditures under a State plan approved
under part A of title IV of the Social Security Act (as
in effect on September 30, 1995) with respect to as-
sistance or services provided on or before September
30, 1995, shall be treated as claims with respect to ex-
penditures during fiscal year 1995 for purposes of re-
imbursement even if payment was made by a State
on or after October 1, 1995. Each State shall complete
the filing of all claims under the State plan (as so in
effect) within 2 years after the date of the enactment
of this Act. The head of each Federal department
shall—
(A) use the single audit procedure to review
and resolve any claims in connection with the
close out of programs under such State plans;
and
(B) reimburse States for any payments
made for assistance or services provided during
a prior fiscal year from funds for fiscal year
1995, rather than from funds authorized by this
chapter.
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(4) CONTINUANCE IN OFFICE OF ASSISTANT SEC-
RETARY FOR FAMILY SUPPORT.—The individual who,
on the day before the effective date of this chapter, is
serving as Assistant Secretary for Family Support
within the Department of Health and Human Serv-
ices shall, until a successor is appointed to such posi-
tion—
(A) continue to serve in such position; and
(B) except as otherwise provided by law—
(i) continue to perform the functions of
the Assistant Secretary for Family Support
under section 417 of the Social Security Act
(as in effect before such effective date); and
(ii) have the powers and duties of the
Assistant Secretary for Family Support
under section 416 of the Social Security Act
(as in effect pursuant to the amendment
made by section 2103(a)(1) of this Act).
(c) TERMINATION OF ENTITLEMENT UNDER AFDC
PROGRAM.—Effective October 1, 1996, no individual or
family shall be entitled to any benefits or services under
any State plan approved under part A or F of title IV of
the Social Security Act (as in effect on September 30, 1995).
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SEC. 2116. COMMUNITY STEERING COMMITTEES DEM-
ONSTRATION PROJECTS.
(a) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall enter into agreements with not more than 5
States that submit an application under this section, in
such form and such manner as the Secretary may specify,
for the purpose of conducting a demonstration project de-
scribed in subsection (b).
(b) DESCRIPTION OF PROJECT.—
(1) ESTABLISHMENT.—A demonstration project
conducted under this section shall establish within a
State in each participating county a Community
Steering Committee that shall be designed to help re-
cipients of temporary assistance to needy families
under a State program under part A of title IV of the
Social Security Act who are parents move into the
non-subsidized workforce and to develop a holistic ap-
proach to the development needs of such recipient’s
family.
(2) 
MEMBERSHIP.—A 
Community 
Steering
Committee shall consist of local educators, business
representatives, and social service providers.
(3) GOALS AND DUTIES.—
(A) GOALS.—The goals of a Community
Steering Committee are—
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(i) to ensure that recipients of tem-
porary assistance to needy families who are
parents obtain and retain unsubsidized em-
ployment; and
(ii) 
to 
reduce 
the 
incidence 
of
intergenerational receipt of welfare assist-
ance by addressing the needs of children of
recipients of temporary assistance to needy
families.
(B) DUTIES.—A Community Steering Com-
mittee shall—
(i) identify and create unsubsidized
employment positions for recipients of tem-
porary assistance to needy families;
(ii) propose and implement solutions
to barriers to unsubsidized employment of
recipients of temporary assistance to needy
families;
(iii) assess the needs of children of re-
cipients of temporary assistance to needy
families; and
(iv) provide services that are designed
to ensure that children of recipients of tem-
porary assistance to needy families enter
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school ready to learn and that, once en-
rolled, such children stay in school.
(C) PRIMARY RESPONSIBILITY.—A primary
responsibility of a Community Steering Commit-
tee shall be to work on an ongoing basis with
parents who are recipients of temporary assist-
ance to needy families and who have obtained
nonsubsidized employment in order to ensure
that such recipients retain their employment. Ac-
tivities to carry out this responsibility may in-
clude—
(i) counseling;
(ii) emergency day care;
(iii) sick day care;
(iv) transportation;
(v) provision of clothing;
(vi) housing assistance; or
(vii) any other assistance that may be
necessary on an emergency and temporary
basis to ensure that such parents can man-
age the responsibility of being employed and
the demands of having a family.
(D) 
FOLLOW-UP
SERVICES
FOR
CHIL-
DREN.—A Community Steering Committee may
provide special follow-up services for children of
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recipients of temporary assistance to needy fami-
lies that are designed to ensure that the children
reach their fullest potential and do not, as they
mature, receive welfare assistance as the head of
their own household.
(c) REPORT.—Not later than October 1, 2001, the Sec-
retary shall submit a report to the Congress on the results
of the demonstration projects conducted under this section.
SEC. 2117. DENIAL OF BENEFITS FOR CERTAIN DRUG RE-
LATED CONVICTIONS.
(a) IN GENERAL.—An individual convicted (under
Federal or State law) of any crime relating to the illegal
possession, use, or distribution of a drug shall not be eligible
for any Federal means-tested public benefit, as defined in
section 2403(c)(1) of this Act.
(b) FAMILY MEMBERS EXEMPT.—The prohibition con-
tained under subsection (a) shall not apply to the family
members or dependents of the convicted individual in a
manner that would make such family members or depend-
ents ineligible for welfare benefits that they would otherwise
be eligible for. Any benefits provided to family members or
dependents of a person described in subsection (a) shall be
reduced by the amount which would have otherwise been
made available to the convicted individual.
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(c) PERIOD OF PROHIBITION.—The prohibition under
subsection (a) shall apply—
(1) with respect to an individual convicted of a
misdemeanor, during the 5-year period beginning on
the date of the conviction or the 5-year period begin-
ning on January 1, 1997, whichever is later; and
(2) with respect to an individual convicted of a
felony, for the duration of the life of that individual.
(d) EXCEPTIONS.—Subsection (a) shall not apply with
respect to the following Federal benefits:
(1) Emergency medical services under title XV or
XIX of the Social Security Act.
(2) Short-term, non-cash, in-kind emergency dis-
aster relief.
(3)(A) Public health assistance for immuniza-
tions.
(B) Public health assistance for testing and
treatment of communicable diseases if the Secretary of
Health and Human Services determines that it is
necessary to prevent the spread of such disease.
(e) EFFECTIVE DATE.—The denial of Federal benefits
set forth in this section shall take effect for convictions oc-
curring after the date of enactment.
(f) REGULATIONS.—Not later than December 31, 1996,
the Attorney General shall promulgate regulations detailing
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the means by which Federal and State agencies, courts, and
law enforcement agencies will exchange and share the data
and information necessary to implement and enforce the
withholding of Federal benefits.
CHAPTER 2—SUPPLEMENTAL SECURITY
INCOME
SEC. 2200. REFERENCE TO SOCIAL SECURITY ACT.
Except as otherwise specifically provided, wherever in
this chapter an amendment is expressed in terms of an
amendment to or repeal of a section or other provision, the
reference shall be considered to be made to that section or
other provision of the Social Security Act.
Subchapter A—Eligibility Restrictions
SEC. 2201. DENIAL OF SSI BENEFITS FOR 10 YEARS TO INDI-
VIDUALS FOUND TO HAVE FRAUDULENTLY
MISREPRESENTED RESIDENCE IN ORDER TO
OBTAIN BENEFITS SIMULTANEOUSLY IN 2 OR
MORE STATES.
(a) IN
GENERAL.—Section 1611(e) (42 U.S.C.
1382(e)), as amended by section 105(b)(4) of the Contract
with America Advancement Act of 1996, is amended by re-
designating paragraph (5) as paragraph (3) and by adding
at the end the following new paragraph:
‘‘(4)(A) No person shall be considered an eligible indi-
vidual or eligible spouse for purposes of this title during
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the 10-year period that begins on the date the person is con-
victed in Federal or State court of having made a fraudu-
lent statement or representation with respect to the place
of residence of the person in order to receive assistance si-
multaneously from 2 or more States under programs that
are funded under title IV, title XV, title XIX, or the Food
Stamp Act of 1977, or benefits in 2 or more States under
the supplemental security income program under this title.
‘‘(B) As soon as practicable after the conviction of a
person in a Federal or State court as described in subpara-
graph (A), an official of such court shall notify the Commis-
sioner of such conviction.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect on the date of the enactment of this
Act.
SEC. 2202. DENIAL OF SSI BENEFITS FOR FUGITIVE FELONS
AND PROBATION AND PAROLE VIOLATORS.
(a) IN
GENERAL.—Section 1611(e) (42 U.S.C.
1382(e)), as amended by section 2201(a) of this Act, is
amended by adding at the end the following new paragraph:
‘‘(5) No person shall be considered an eligible individ-
ual or eligible spouse for purposes of this title with respect
to any month if during such month the person is—
‘‘(A) fleeing to avoid prosecution, or custody or
confinement after conviction, under the laws of the
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place from which the person flees, for a crime, or an
attempt to commit a crime, which is a felony under
the laws of the place from which the person flees, or
which, in the case of the State of New Jersey, is a
high misdemeanor under the laws of such State; or
‘‘(B) violating a condition of probation or parole
imposed under Federal or State law.’’.
(b) EXCHANGE OF INFORMATION.—Section 1611(e) (42
U.S.C. 1382(e)), as amended by section 2201(a) of this Act
and subsection (a) of this section, is amended by adding
at the end the following new paragraph:
‘‘(6) Notwithstanding any other provision of law
(other than section 6103 of the Internal Revenue Code of
1986), the Commissioner shall furnish any Federal, State,
or local law enforcement officer, upon the written request
of the officer, with the current address, Social Security
number, and photograph (if applicable) of any recipient of
benefits under this title, if the officer furnishes the Commis-
sioner with the name of the recipient, and other identifying
information as reasonably required by the Commissioner to
establish the unique identity of the recipient, and notifies
the Commissioner that—
‘‘(A) the recipient—
‘‘(i) is described in subparagraph (A) or
(B) of paragraph (5); or
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‘‘(ii) has information that is necessary for
the officer to conduct the officer’s official duties;
and
‘‘(B) the location or apprehension of the recipi-
ent is within the officer’s official duties.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of the enactment of this
Act.
SEC. 2203. TREATMENT OF PRISONERS.
(a) IMPLEMENTATION OF PROHIBITION AGAINST PAY-
MENT OF BENEFITS TO PRISONERS.—Section 1611(e)(1)
(42 U.S.C. 1382(e)(1)) is amended by adding at the end
the following new subparagraph:
‘‘(I)(i) The Commissioner shall enter into a contract,
with any interested State or local institution referred to in
subparagraph (A), under which—
‘‘(I) the institution shall provide to the Commis-
sioner, on a monthly basis, the names, social security
account numbers, dates of birth, and such other iden-
tifying information concerning the inmates of the in-
stitution as the Commissioner may require for the
purpose of carrying out paragraph (1); and
‘‘(II) the Commissioner shall pay to any such in-
stitution, with respect to each inmate of the institu-
tion who is eligible for a benefit under this title for
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the month preceding the first month throughout which
such inmate is in such institution and becomes ineli-
gible for such benefit (or becomes eligible only for a
benefit payable at a reduced rate) as a result of the
application of this paragraph, an amount not to ex-
ceed $400 if the institution furnishes the information
described in subclause (I) to the Commissioner within
30 days after such individual becomes an inmate of
such institution, or an amount not to exceed $200 if
the institution furnishes such information after 30
days after such date but within 90 days after such
date.
‘‘(ii) The provisions of section 552a of title 5, United
States Code, shall not apply to any agreement entered into
under clause (i) or to information exchanged pursuant to
such agreement.
‘‘(iii) Payments to institutions required by clause
(i)(II) shall be made from funds otherwise available for the
payment of benefits under this title and shall be treated as
direct spending for purposes of the Balanced Budget and
Emergency Deficit Control Act of 1985.’’.
(b) DENIAL OF SSI BENEFITS FOR 10 YEARS TO A
PERSON FOUND TO HAVE FRAUDULENTLY OBTAINED SSI
BENEFITS WHILE IN PRISON.—
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(1) IN GENERAL.—Section 1611(e)(1) (42 U.S.C.
1382(e)(1)), as amended by subsection (a) of this sec-
tion, is amended by adding at the end the following
new subparagraph:
‘‘(J) In any case in which the Commissioner of Social
Security finds that a person has made a fraudulent state-
ment or representation in order to obtain or to continue
to receive benefits under this title while being an inmate
in a penal institution, such person shall not be considered
an eligible individual or eligible spouse for any month end-
ing during the 10-year period beginning on the date on
which such person ceases being such an inmate.’’.
(2) EFFECTIVE DATE.—The amendment made by
this subsection shall apply with respect to statements
or representations made on or after the date of the en-
actment of this Act.
(c) STUDY OF OTHER POTENTIAL IMPROVEMENTS IN
THE COLLECTION OF INFORMATION RESPECTING PUBLIC
INMATES.—
(1) STUDY.—The Commissioner of Social Secu-
rity shall conduct a study of the desirability, feasibil-
ity, and cost of—
(A) establishing a system under which Fed-
eral, State, and local courts would furnish to the
Commissioner such information respecting court
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orders by which individuals are confined in
jails, prisons, or other public penal, correctional,
or medical facilities as the Commissioner may
require for the purpose of carrying out section
1611(e)(1) of the Social Security Act; and
(B) requiring that State and local jails,
prisons, and other institutions that enter into
contracts with the Commissioner under section
1611(e)(1)(I) of the Social Security Act furnish
the information required by such contracts to the
Commissioner by means of an electronic or other
sophisticated data exchange system.
(2) REPORT.—Not later than 1 year after the
date of the enactment of this Act, the Commissioner
of Social Security shall submit a report on the results
of the study conducted pursuant to this subsection to
the Committee on Finance of the Senate and the Com-
mittee on Ways and Means of the House of Represent-
atives.
SEC. 2204. EFFECTIVE DATE OF APPLICATION FOR BENE-
FITS.
(a) IN GENERAL.—Subparagraphs (A) and (B) of sec-
tion 1611(c)(7) (42 U.S.C. 1382(c)(7)) are amended to read
as follows:
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‘‘(A) the first day of the month following the date
such application is filed, or
‘‘(B) the first day of the month following the
date such individual becomes eligible for such benefits
with respect to such application.’’.
(b) SPECIAL RULE RELATING TO EMERGENCY AD-
VANCE
PAYMENTS.—Section 1631(a)(4)(A) (42 U.S.C.
1383(a)(4)(A)) is amended—
(1) by inserting ‘‘for the month following the
date the application is filed’’ after ‘‘is presumptively
eligible for such benefits’’; and
(2) by inserting ‘‘, which shall be repaid through
proportionate reductions in such benefits over a pe-
riod of not more than 6 months’’ before the semicolon.
(c) CONFORMING AMENDMENTS.—
(1) Section 1614(b) (42 U.S.C. 1382c(b)) is
amended by striking ‘‘at the time the application or
request is filed’’ and inserting ‘‘on the first day of the
month following the date the application or request is
filed’’.
(2) Section 1631(g)(3) (42 U.S.C. 1382j(g)(3)) is
amended by inserting ‘‘following the month’’ after
‘‘beginning with the month’’.
(d) EFFECTIVE DATE.—
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(1) IN
GENERAL.—The amendments made by
this section shall apply to applications for benefits
under title XVI of the Social Security Act filed on or
after the date of the enactment of this Act, without re-
gard to whether regulations have been issued to imple-
ment such amendments.
(2) BENEFITS UNDER TITLE XVI.—For purposes
of this subsection, the term ‘‘benefits under title XVI
of the Social Security Act’’ includes supplementary
payments pursuant to an agreement for Federal ad-
ministration under section 1616(a) of the Social Se-
curity Act, and payments pursuant to an agreement
entered into under section 212(b) of Public Law 93–
66.
Subchapter B—Benefits for Disabled Children
SEC. 2211. DEFINITION AND ELIGIBILITY RULES.
(a) DEFINITION OF CHILDHOOD DISABILITY.—Section
1614(a)(3) (42 U.S.C. 1382c(a)(3)), as amended by section
105(b)(1) of the Contract with America Advancement Act
of 1996, is amended—
(1) in subparagraph (A), by striking ‘‘An indi-
vidual’’ and inserting ‘‘Except as provided in sub-
paragraph (C), an individual’’;
(2) in subparagraph (A), by striking ‘‘(or, in the
case of an individual under the age of 18, if he suffers
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from any medically determinable physical or mental
impairment of comparable severity)’’;
(3) by redesignating subparagraphs (C) through
(I) as subparagraphs (D) through (J), respectively;
(4) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) An individual under the age of 18 shall be consid-
ered disabled for the purposes of this title if that individual
has a medically determinable physical or mental impair-
ment, which results in marked and severe functional limita-
tions, and which can be expected to result in death or which
has lasted or can be expected to last for a continuous period
of not less than 12 months. Notwithstanding the preceding
sentence, no individual under the age of 18 who engages
in substantial gainful activity (determined in accordance
with regulations prescribed pursuant to subparagraph (E))
may be considered to be disabled.’’; and
(5) in subparagraph (F), as redesignated by
paragraph (3), by striking ‘‘(D)’’ and inserting
‘‘(E)’’.
(b) REQUEST FOR COMMENTS TO IMPROVE DISABILITY
EVALUATION.—Not later than 60 days after the date of the
enactment of this Act, and annually thereafter, the Commis-
sioner of Social Security shall issue a request for comments
in the Federal Register regarding improvements to the dis-
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ability evaluation and determination procedures for indi-
viduals under age 18 to ensure the comprehensive assess-
ment of such individuals, including—
(1) additions to conditions which should be pre-
sumptively disabling at birth or ages 0 through 3
years;
(2) specific changes in individual listings in the
Listing of Impairments set forth in appendix 1 of
subpart P of part 404 of title 20, Code of Federal
Regulations;
(3) improvements in regulations regarding deter-
minations based on regulations providing for medical
and functional equivalence to such Listing of Impair-
ments, and consideration of multiple impairments;
and
(4) any other changes to the disability deter-
mination procedures.
(c) CHANGES TO CHILDHOOD SSI REGULATIONS.—
(1) MODIFICATION TO MEDICAL CRITERIA FOR
EVALUATION
OF
MENTAL
AND
EMOTIONAL
DIS-
ORDERS.—The Commissioner of Social Security shall
modify sections 112.00C.2. and 112.02B.2.c.(2) of ap-
pendix 1 to subpart P of part 404 of title 20, Code
of Federal Regulations, to eliminate references to
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maladaptive behavior in the domain of personal/
behavorial function.
(2) DISCONTINUANCE OF INDIVIDUALIZED FUNC-
TIONAL ASSESSMENT.—The Commissioner of Social
Security shall discontinue the individualized func-
tional assessment for children set forth in sections
416.924d and 416.924e of title 20, Code of Federal
Regulations.
(d) MEDICAL IMPROVEMENT REVIEW STANDARD AS IT
APPLIES TO INDIVIDUALS UNDER THE AGE OF 18.—Sec-
tion 1614(a)(4) (42 U.S.C. 1382(a)(4)) is amended—
(1) by redesignating subclauses (I) and (II) of
clauses (i) and (ii) of subparagraph (B) as items (aa)
and (bb), respectively;
(2) by redesignating clauses (i) and (ii) of sub-
paragraphs (A) and (B) as subclauses (I) and (II),
respectively;
(3) by redesignating subparagraphs (A) through
(C) as clauses (i) through (iii), respectively;
(4) by inserting before clause (i) (as redesignated
by paragraph (3)) the following new subparagraph:
‘‘(A) in the case of an individual who is age 18
or older—’’;
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(5) by inserting after and below subparagraph
(A)(iii) (as so redesignated) the following new sub-
paragraph:
‘‘(B) in the case of an individual who is under
the age of 18—
‘‘(i) 
substantial 
evidence 
which 
dem-
onstrates that there has been medical improve-
ment in the individual’s impairment or com-
bination of impairments, and that such impair-
ment or combination of impairments no longer
results in marked and severe functional limita-
tions; or
‘‘(ii) 
substantial 
evidence 
which 
dem-
onstrates that, as determined on the basis of new
or improved diagnostic techniques or evalua-
tions, the individual’s impairment or combina-
tion of impairments, is not as disabling as it
was considered to be at the time of the most re-
cent prior decision that the individual was
under a disability or continued to be under a
disability, and such impairment or combination
of impairments does not result in marked and
severe functional limitations; or’’;
(6) by redesignating subparagraph (D) as sub-
paragraph (C) and by inserting in such subpara-
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graph ‘‘in the case of any individual,’’ before ‘‘sub-
stantial evidence’’; and
(7) in the first sentence following subparagraph
(C) (as redesignated by paragraph (6)), by—
(A) inserting ‘‘(i)’’ before ‘‘to restore’’; and
(B) inserting ‘‘, or (ii) in the case of an in-
dividual under the age of 18, to eliminate or im-
prove the individual’s impairment or combina-
tion of impairments so that it no longer results
in marked and severe functional limitations’’
immediately before the period.
(e) EFFECTIVE DATES, ETC.—
(1) EFFECTIVE DATES.—
(A) SUBSECTIONS (a) AND (c).—
(i) IN
GENERAL.—The provisions of,
and amendments made by, subsections (a)
and (c) shall apply to any individual who
applies for, or whose claim is finally adju-
dicated with respect to, benefits under title
XVI of the Social Security Act on or after
the date of the enactment of this Act, with-
out regard to whether regulations have been
issued to implement such provisions and
amendments.
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(ii) DETERMINATION OF FINAL ADJU-
DICATION.—For purposes of clause (i), no
individual’s claim with respect to such ben-
efits may be considered to be finally adju-
dicated before such date of enactment if, on
or after such date, there is pending a re-
quest for either administrative or judicial
review with respect to such claim that has
been denied in whole, or there is pending,
with respect to such claim, readjudication
by the Commissioner of Social Security
pursuant to relief in a class action or im-
plementation by the Commissioner of a
court remand order.
(B) SUBSECTION
(d).—The amendments
made by subsection (d) shall apply with respect
to benefits under title XVI of the Social Security
Act for months beginning on or after the date of
the enactment of this Act, without regard to
whether regulations have been issued to imple-
ment such amendments.
(2) APPLICATION TO CURRENT RECIPIENTS.—
(A) 
ELIGIBILITY
REDETERMINATIONS.—
During the period beginning on the date of the
enactment of this Act and ending on the date
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which is 1 year after such date of enactment, the
Commissioner of Social Security shall redeter-
mine the eligibility of any individual under age
18 who is receiving supplemental security in-
come benefits by reason of disability under title
XVI of the Social Security Act as of the date of
the enactment of this Act and whose eligibility
for such benefits may terminate by reason of the
provisions of, or amendments made by, sub-
sections (a) and (c) of this section. With respect
to any redetermination under this subpara-
graph—
(i) section 1614(a)(4) of the Social Se-
curity Act (42 U.S.C. 1382c(a)(4)) shall not
apply;
(ii) the Commissioner of Social Secu-
rity shall apply the eligibility criteria for
new applicants for benefits under title XVI
of such Act;
(iii) the Commissioner shall give such
redetermination priority over all continuing
eligibility reviews and other reviews under
such title; and
(iv) such redetermination shall be
counted as a review or redetermination oth-
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erwise required to be made under section
208 of the Social Security Independence
and Program Improvements Act of 1994 or
any other provision of title XVI of the So-
cial Security Act.
(B) GRANDFATHER PROVISION.—The provi-
sions of, and amendments made by, subsections
(a) and (c) of this section, and the redetermina-
tion under subparagraph (A), shall only apply
with respect to the benefits of an individual de-
scribed in subparagraph (A) for months begin-
ning on or after the later of July 1, 1997, or the
date of the redetermination with respect to such
individual.
(C) NOTICE.—Not later than January 1,
1997, the Commissioner of Social Security shall
notify an individual described in subparagraph
(A) of the provisions of this paragraph.
(3) REPORT.—The Commissioner of Social Secu-
rity shall report to the Congress regarding the
progress made in implementing the provisions of, and
amendments made by, this section on child disability
evaluations not later than 180 days after the date of
the enactment of this Act.
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(4) REGULATIONS.—Notwithstanding any other
provision of law, the Commissioner of Social Security
shall submit for review to the committees of jurisdic-
tion in the Congress any final regulation pertaining
to the eligibility of individuals under age 18 for bene-
fits under title XVI of the Social Security Act at least
45 days before the effective date of such regulation.
The submission under this paragraph shall include
supporting documentation providing a cost analysis,
workload impact, and projections as to how the regu-
lation will effect the future number of recipients
under such title.
(5) APPROPRIATIONS.—
(A) IN GENERAL.—Out of any money in the
Treasury not otherwise appropriated, there are
authorized to be appropriated and are hereby
appropriated, to remain available without fiscal
year limitation, $200,000,000 for fiscal year
1997, $75,000,000 for fiscal year 1998, and
$25,000,000 for fiscal year 1999, for the Com-
missioner of Social Security to utilize only for
continuing disability reviews and redetermina-
tions under title XVI of the Social Security Act,
with reviews and redeterminations for individ-
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uals affected by the provisions of subsection (b)
given highest priority.
(B) ADDITIONAL FUNDS.—Amounts appro-
priated under subparagraph (A) shall be in ad-
dition to any funds otherwise appropriated for
continuing disability reviews and redetermina-
tions under title XVI of the Social Security Act.
(6) BENEFITS UNDER TITLE XVI.—For purposes
of this subsection, the term ‘‘benefits under title XVI
of the Social Security Act’’ includes supplementary
payments pursuant to an agreement for Federal ad-
ministration under section 1616(a) of the Social Se-
curity Act, and payments pursuant to an agreement
entered into under section 212(b) of Public Law 93–
66.
SEC. 2212. ELIGIBILITY REDETERMINATIONS AND CONTINU-
ING DISABILITY REVIEWS.
(a) CONTINUING DISABILITY REVIEWS RELATING TO
CERTAIN CHILDREN.—Section 1614(a)(3)(H) (42 U.S.C.
1382c(a)(3)(H)), as redesignated by section 2211(a)(3) of
this Act, is amended—
(1) by inserting ‘‘(i)’’ after ‘‘(H)’’; and
(2) by adding at the end the following new
clause:
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‘‘(ii)(I) Not less frequently than once every 3 years,
the Commissioner shall review in accordance with para-
graph (4) the continued eligibility for benefits under this
title of each individual who has not attained 18 years of
age and is eligible for such benefits by reason of an impair-
ment (or combination of impairments) which is likely to
improve (or, at the option of the Commissioner, which is
unlikely to improve).
‘‘(II) A representative payee of a recipient whose case
is reviewed under this clause shall present, at the time of
review, evidence demonstrating that the recipient is, and
has been, receiving treatment, to the extent considered medi-
cally necessary and available, of the condition which was
the basis for providing benefits under this title.
‘‘(III) If the representative payee refuses to comply
without good cause with the requirements of subclause (II),
the Commissioner of Social Security shall, if the Commis-
sioner determines it is in the best interest of the individual,
promptly suspend payment of benefits to the representative
payee, and provide for payment of benefits to an alternative
representative payee of the individual or, if the interest of
the individual under this title would be served thereby, to
the individual.
‘‘(IV) Subclause (II) shall not apply to the representa-
tive payee of any individual with respect to whom the Com-
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missioner determines such application would be inappro-
priate or unnecessary. In making such determination, the
Commissioner shall take into consideration the nature of
the individual’s impairment (or combination of impair-
ments). Section 1631(c) shall not apply to a finding by the
Commissioner that the requirements of subclause (II) should
not apply to an individual’s representative payee.’’.
(b) DISABILITY ELIGIBILITY REDETERMINATIONS RE-
QUIRED FOR SSI RECIPIENTS WHO ATTAIN 18 YEARS OF
AGE.—
(1) IN
GENERAL.—Section 1614(a)(3)(H) (42
U.S.C. 1382c(a)(3)(H)), as amended by subsection (a)
of this section, is amended by adding at the end the
following new clause:
‘‘(iii) If an individual is eligible for benefits under this
title by reason of disability for the month preceding the
month in which the individual attains the age of 18 years,
the Commissioner shall redetermine such eligibility—
‘‘(I) during the 1-year period beginning on the
individual’s 18th birthday; and
‘‘(II) by applying the criteria used in determin-
ing the initial eligibility for applicants who are age
18 or older.
With respect to a redetermination under this clause, para-
graph (4) shall not apply and such redetermination shall
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be considered a substitute for a review or redetermination
otherwise required under any other provision of this sub-
paragraph during that 1-year period.’’.
(2) CONFORMING REPEAL.—Section 207 of the
Social Security Independence and Program Improve-
ments Act of 1994 (42 U.S.C. 1382 note; 108 Stat.
1516) is hereby repealed.
(c) CONTINUING DISABILITY REVIEW REQUIRED FOR
LOW BIRTH WEIGHT BABIES.—Section 1614(a)(3)(H) (42
U.S.C. 1382c(a)(3)(H)), as amended by subsections (a) and
(b) of this section, is amended by adding at the end the
following new clause:
‘‘(iv)(I) Not later than 12 months after the birth of
an individual, the Commissioner shall review in accordance
with paragraph (4) the continuing eligibility for benefits
under this title by reason of disability of such individual
whose low birth weight is a contributing factor material
to the Commissioner’s determination that the individual is
disabled.
‘‘(II) A review under subclause (I) shall be considered
a substitute for a review otherwise required under any other
provision of this subparagraph during that 12-month pe-
riod.
‘‘(III) A representative payee of a recipient whose case
is reviewed under this clause shall present, at the time of
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review, evidence demonstrating that the recipient is, and
has been, receiving treatment, to the extent considered medi-
cally necessary and available, of the condition which was
the basis for providing benefits under this title.
‘‘(IV) If the representative payee refuses to comply
without good cause with the requirements of subclause (III),
the Commissioner of Social Security shall, if the Commis-
sioner determines it is in the best interest of the individual,
promptly suspend payment of benefits to the representative
payee, and provide for payment of benefits to an alternative
representative payee of the individual or, if the interest of
the individual under this title would be served thereby, to
the individual.
‘‘(V) Subclause (III) shall not apply to the representa-
tive payee of any individual with respect to whom the Com-
missioner determines such application would be inappro-
priate or unnecessary. In making such determination, the
Commissioner shall take into consideration the nature of
the individual’s impairment (or combination of impair-
ments). Section 1631(c) shall not apply to a finding by the
Commissioner that the requirements of subclause (III)
should not apply to an individual’s representative payee.’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to benefits for months beginning on or
after the date of the enactment of this Act, without regard
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to whether regulations have been issued to implement such
amendments.
SEC. 2213. ADDITIONAL ACCOUNTABILITY REQUIREMENTS.
(a) REQUIREMENT TO ESTABLISH ACCOUNT.—Section
1631(a)(2) (42 U.S.C. 1383(a)(2)) is amended—
(1) by redesignating subparagraphs (F) and (G)
as subparagraphs (G) and (H), respectively; and
(2) by inserting after subparagraph (E) the fol-
lowing new subparagraph:
‘‘(F)(i)(I) Each representative payee of an eligible in-
dividual under the age of 18 who is eligible for the payment
of benefits described in subclause (II) shall establish on be-
half of such individual an account in a financial institu-
tion into which such benefits shall be paid, and shall there-
after maintain such account for use in accordance with
clause (ii).
‘‘(II) Benefits described in this subclause are past-due
monthly benefits under this title (which, for purposes of this
subclause, include State supplementary payments made by
the Commissioner pursuant to an agreement under section
1616 or section 212(b) of Public Law 93–66) in an amount
(after any withholding by the Commissioner for reimburse-
ment to a State for interim assistance under subsection (g))
that exceeds the product of—
‘‘(aa) 6, and
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‘‘(bb) the maximum monthly benefit payable
under this title to an eligible individual.
‘‘(ii)(I) A representative payee may use funds in the
account established under clause (i) to pay for allowable
expenses described in subclause (II).
‘‘(II) An allowable expense described in this subclause
is an expense for—
‘‘(aa) education or job skills training;
‘‘(bb) personal needs assistance;
‘‘(cc) special equipment;
‘‘(dd) housing modification;
‘‘(ee) medical treatment;
‘‘(ff) therapy or rehabilitation; or
‘‘(gg) any other item or service that the Commis-
sioner determines to be appropriate:
Provided, That such expense benefits such individual and,
in the case of an expense described in item (cc), (dd), (ff),
or (gg), is related to the impairment (or combination of
impairments) of such individual.
‘‘(III) The use of funds from an account established
under clause (i) in any manner not authorized by this
clause—
‘‘(aa) by a representative payee shall be consid-
ered a misapplication of benefits for all purposes of
this paragraph, and any representative payee who
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knowingly misapplies benefits from such an account
shall be liable to the Commissioner in an amount
equal to the total amount of such benefits; and
‘‘(bb) by an eligible individual who is his or her
own payee shall be considered a misapplication of
benefits for all purposes of this paragraph and the
total amount of such benefits so used shall be consid-
ered to be the uncompensated value of a disposed re-
source and shall be subject to the provisions of section
1613(c).
‘‘(IV) This clause shall continue to apply to funds in
the account after the child has reached age 18, regardless
of whether benefits are paid directly to the beneficiary or
through a representative payee.
‘‘(iii) The representative payee may deposit into the
account established pursuant to clause (i)—
‘‘(I) past-due benefits payable to the eligible in-
dividual in an amount less than that specified in
clause (i)(II), and
‘‘(II) any other funds representing an underpay-
ment under this title to such individual, provided
that the amount of such underpayment is equal to or
exceeds the maximum monthly benefit payable under
this title to an eligible individual.
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‘‘(iv) The Commissioner of Social Security shall estab-
lish a system for accountability monitoring whereby such
representative payee shall report, at such time and in such
manner as the Commissioner shall require, on activity re-
specting funds in the account established pursuant to clause
(i).’’.
(b) CONFORMING AMENDMENTS.—
(1) EXCLUSION
FROM
RESOURCES.—Section
1613(a) (42 U.S.C. 1382b(a)) is amended—
(A) by striking ‘‘and’’ at the end of para-
graph (10);
(B) by striking the period at the end of
paragraph (11) and inserting ‘‘; and’’; and
(C) by inserting after paragraph (11) the
following new paragraph:
‘‘(12) any account, including accrued interest or
other earnings thereon, established and maintained in
accordance with section 1631(a)(2)(F).’’.
(2) EXCLUSION FROM INCOME.—Section 1612(b)
(42 U.S.C. 1382a(b)) is amended—
(A) by striking ‘‘and’’ at the end of para-
graph (19);
(B) by striking the period at the end of
paragraph (20) and inserting ‘‘; and’’; and
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(C) by adding at the end the following new
paragraph:
‘‘(21) the interest or other earnings on any ac-
count established and maintained in accordance with
section 1631(a)(2)(F).’’.
(c) EFFECTIVE DATE.—The amendments made
by this section shall apply to payments made after
the date of the enactment of this Act.
SEC. 2214. REDUCTION IN CASH BENEFITS PAYABLE TO IN-
STITUTIONALIZED INDIVIDUALS WHOSE MED-
ICAL COSTS ARE COVERED BY PRIVATE IN-
SURANCE.
(a) IN GENERAL.—Section 1611(e)(1)(B) (42 U.S.C.
1382(e)(1)(B)) is amended—
(1) by striking ‘‘title XIX, or’’ and inserting
‘‘title XV or XIX,’’; and
(2) by inserting ‘‘or, in the case of an eligible in-
dividual under the age of 18, receiving payments
(with respect to such individual) under any health in-
surance policy issued by a private provider of such
insurance’’ after ‘‘section 1614(f)(2)(B),’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to benefits for months beginning 90 or
more days after the date of the enactment of this Act, with-