cept as provided in subparagraph (C)(ii) of this
paragraph;
‘‘(II) 8 percent of the penalty base, in the
case of the 2nd such fiscal year;
‘‘(III) 16 percent of the penalty base, in
the case of the 3rd such fiscal year;
‘‘(IV) 25 percent of the penalty base, in
the case of the 4th such fiscal year; or
‘‘(V) 30 percent of the penalty base, in the
case of the 5th or any subsequent such fiscal
year.
‘‘(ii) The term ‘penalty base’ means, with re-
spect to a failure of a State to comply with subpara-
graphs (A) and (B)(i) of section 454(27) during a
fiscal year, the amount otherwise payable to the
State under paragraph (1)(A) of this subsection for
the preceding fiscal year.
‘‘(C)(i) The Secretary shall waive all penalties im-
posed against a State under this paragraph for any failure
of the State to comply with subparagraphs (A) and (B)(i)
of section 454(27) if the Secretary determines that, before
April 1, 2000, the State has achieved such compliance.
‘‘(ii) If a State with respect to which a reduction is
required to be made under this paragraph with respect
to a failure to comply with subparagraphs (A) and (B)(i)
of section 454(27) achieves such compliance on or after
April 1, 2000, and on or before September 30, 2000, then
the penalty amount applicable to the State shall be 1 per-
cent of the penalty base with respect to the failure in-
volved.
‘‘(D) The Secretary may not impose a penalty under
this paragraph against a State for a fiscal year for which
the amount otherwise payable to the State under para-
graph (1)(A) of this subsection is reduced under para-
graph (4) of this subsection for failure to comply with sec-
tion 454(24)(A).’’.
(b) INAPPLICABILITY OF PENALTY UNDER TANF
PROGRAM.—Section 409(a)(8)(A)(i)(III) of such Act (42
U.S.C. 609(a)(8)(A)(i)(III)) is amended by striking ‘‘sec-
tion 454(24)’’ and inserting ‘‘paragraph (24), or subpara-
graph (A) or (B)(i) of paragraph (27), of section 454’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on October 1, 1999.
TITLE V—FINANCING
PROVISIONS
SEC. 501. USE OF NEW HIRE INFORMATION TO ASSIST IN
COLLECTION 
OF 
DEFAULTED 
STUDENT
LOANS AND GRANTS.
(a) IN GENERAL.—Section 453(j) of the Social Secu-
rity Act (42 U.S.C. 653(j)) is amended by adding at the
end the following:
‘‘(6) INFORMATION COMPARISONS AND DISCLO-
SURE
FOR
ENFORCEMENT
OF
OBLIGATIONS
ON
HIGHER EDUCATION ACT LOANS AND GRANTS.—
‘‘(A) FURNISHING
OF
INFORMATION
BY
THE
SECRETARY
OF
EDUCATION.—The Sec-
retary of Education shall furnish to the Sec-
retary, on a quarterly basis or at such less fre-
quent intervals as may be determined by the
Secretary of Education, information in the cus-
tody of the Secretary of Education for compari-
son with information in the National Directory
of New Hires, in order to obtain the informa-
tion in such directory with respect to individ-
uals who—
‘‘(i) are borrowers of loans made
under title IV of the Higher Education Act
of 1965 that are in default; or
‘‘(ii) owe an obligation to refund an
overpayment of a grant awarded under
such title.
‘‘(B) REQUIREMENT
TO
SEEK
MINIMUM
INFORMATION
NECESSARY.—The Secretary of
Education shall seek information pursuant to
this section only to the extent essential to im-
proving collection of the debt described in sub-
paragraph (A).
‘‘(C) DUTIES OF THE SECRETARY.—
‘‘(i) INFORMATION COMPARISON; DIS-
CLOSURE
TO
THE
SECRETARY
OF
EDU-
CATION.—The Secretary, in cooperation
with the Secretary of Education, shall
compare information in the National Di-
rectory of New Hires with information in
the custody of the Secretary of Education,
and disclose information in that Directory
to the Secretary of Education, in accord-
ance with this paragraph, for the purposes
specified in this paragraph.
‘‘(ii) CONDITION
ON
DISCLOSURE.—
The Secretary shall make disclosures in ac-
cordance with clause (i) only to the extent
that the Secretary determines that such
disclosures do not interfere with the effec-
tive operation of the program under this
part. Support collection under section
466(b) shall be given priority over collec-
tion of any defaulted student loan or grant
overpayment against the same income.
‘‘(D) USE OF INFORMATION BY THE SEC-
RETARY
OF
EDUCATION.—The Secretary of
Education may use information resulting from
a data match pursuant to this paragraph
only—
‘‘(i) for the purpose of collection of
the debt described in subparagraph (A)
owed by an individual whose annualized
wage level (determined by taking into con-
sideration information from the National
Directory of New Hires) exceeds $16,000;
and
‘‘(ii) after removal of personal identi-
fiers, to conduct analyses of student loan
defaults.
‘‘(E) DISCLOSURE
OF
INFORMATION
BY
THE SECRETARY OF EDUCATION.—
‘‘(i) DISCLOSURES PERMITTED.—The
Secretary of Education may disclose infor-
mation resulting from a data match pursu-
ant to this paragraph only to—
‘‘(I) a guaranty agency holding a
loan made under part B of title IV of
the Higher Education Act of 1965 on
which the individual is obligated;
‘‘(II) a contractor or agent of the
guaranty agency described in sub-
clause (I);
‘‘(III) a contractor or agent of
the Secretary; and
‘‘(IV) the Attorney General.
‘‘(ii) PURPOSE OF DISCLOSURE.—The
Secretary of Education may make a disclo-
sure under clause (i) only for the purpose
of collection of the debts owed on defaulted
student loans, or overpayments of grants,
made under title IV of the Higher Edu-
cation Act of 1965.
‘‘(iii) RESTRICTION
ON
REDISCLO-
SURE.—An entity to which information is
disclosed under clause (i) may use or dis-
close such information only as needed for
the purpose of collecting on defaulted stu-
dent loans, or overpayments of grants,
made under title IV of the Higher Edu-
cation Act of 1965.
‘‘(F) REIMBURSEMENT OF HHS COSTS.—
The Secretary of Education shall reimburse the
Secretary, in accordance with subsection (k)(3),
for the additional costs incurred by the Sec-
retary in furnishing the information requested
under this subparagraph.’’.
(b) PENALTIES FOR MISUSE OF INFORMATION.—
Section 402(a) of the Child Support Performance and In-
centive Act of 1998 (112 Stat. 669) is amended in the
matter added by paragraph (2) by inserting ‘‘or any other
person’’ after ‘‘officer or employee of the United States’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall become effective October 1, 1999.
SEC. 502. ELIMINATION OF SET-ASIDE OF PORTION OF WEL-
FARE-TO-WORK 
FUNDS 
FOR 
SUCCESSFUL
PERFORMANCE BONUS.
(a) IN GENERAL.—Section 403(a)(5) of the Social
Security Act (42 U.S.C. 603(a)(5)) is amended by striking
subparagraph (E) and redesignating subparagraphs (F)
through (J) as subparagraphs (E) through (I), respec-
tively.
(b) CONFORMING AMENDMENTS.—
(1) Section 403(a)(5)(A)(i) of such Act (42
U.S.C. 603(a)(5)(A)(i)) is amended by striking
‘‘subparagraph (I)’’ and inserting ‘‘subparagraph
(H)’’.
(2) Subclause (I) of each of subparagraphs
(A)(iv) and (B)(v) of section 403(a)(5) of such Act
(42 U.S.C. 603(a)(5)(A)(iv)(I) and (B)(v)(I)) is
amended—
(A) in item (aa)—
(i) by striking ‘‘(I)’’ and inserting
‘‘(H)’’; and
(ii) by striking ‘‘(G), and (H)’’ and
inserting ‘‘and (G)’’; and
(B) in item (bb), by striking ‘‘(F)’’ and in-
serting ‘‘(E)’’.
(3) Section 403(a)(5)(B)(v) of such Act (42
U.S.C. 603(a)(5)(B)) is amended in the matter pre-
ceding subclause (I) by striking ‘‘(I)’’ and inserting
‘‘(H)’’.
(4) Subparagraphs (F) and (G) of section
403(a)(5) of such Act (42 U.S.C. 603(a)(5)(F) and
(G)) are each amended by striking ‘‘(I)’’ and insert-
ing ‘‘(H)’’.
(5) Section 412(a)(3)(A) of such Act (42
U.S.C. 612(a)(3)(A)) is amended by striking
‘‘403(a)(5)(I)’’ and inserting ‘‘403(a)(5)(H)’’.
(c) FUNDING AMENDMENT.—Section 403(a)(5)(H)
of such Act (42 U.S.C. 603(a)(5)(H)), as so redesignated
by subsection (a) of this section, is amended by striking
‘‘$1,500,000,000’’ and all that follows and inserting ‘‘for
grants under this paragraph—
‘‘(I) $1,500,000,000 for fiscal
year 1998; and
‘‘(II) $1,400,000,000 for fiscal
year 1999.’’.
TITLE VI—MISCELLANEOUS
SEC. 601. CHANGE DATES FOR EVALUATION.
(a) IN GENERAL.—Section 403(a)(5)(H)(iii) of the
Social Security Act (42 U.S.C. 603(a)(5)(H)(iii)), as so
redesignated by section 502(a) of this Act, is amended by
striking ‘‘2001’’ and inserting ‘‘2005’’.
(b) 
INTERIM
REPORT
REQUIRED.—Section
403(a)(5)(H) of such Act (42 U.S.C. 603(a)(5)(H)), as
so redesignated, is amended by adding at the end the fol-
lowing:
‘‘(iv) INTERIM
REPORT.—Not later
than January 1, 2002, the Secretary shall
submit to the Congress a interim report on
the evaluations referred to in clause (i).’’.
SEC. 602. REPORT ON UNDISTRIBUTED CHILD SUPPORT
PAYMENTS.
Not later than 6 months after the date of the enact-
ment of this Act, the Secretary of Health and Human
Services shall submit to the Committee on Ways and
Means of the House of Representatives and the Committee
on Finance of the Senate a report on the procedures that
the States use generally to locate custodial parents for
whom child support has been collected but not yet distrib-
uted due to a change in address. The report shall include
an estimate of the total amount of such undistributed
child support and the average length of time it takes for
such child support to be distributed. The Secretary shall
include in the report recommendations as to whether addi-
tional procedures should be established at the State or
Federal level to expedite the payment of undistributed
child support.
SEC. 603. SENSE OF THE CONGRESS.
It is the sense of the Congress that the States may
use funds provided under the program of block grants for
temporary assistance for needy families under part A of
title IV of the Social Security Act to promote fatherhood
activities of the type described in section 403A of such
Act, as added by this Act.
Æ