552
part A, or the State program under title XIX;
and
‘‘(E) shall promptly notify the individual,
the State agency administering the State pro-
gram funded under part A, and the State agen-
cy administering the State program under title
XIX, of each such determination, and if non-
cooperation is determined, the basis therefor.’’.
CHAPTER 5—PROGRAM ADMINISTRATION
AND FUNDING
SEC. 4341. PERFORMANCE-BASED INCENTIVES AND PEN-
ALTIES.
(a) DEVELOPMENT
OF NEW SYSTEM.—The Sec-
retary of Health and Human Services, in consultation with
State directors of programs under part D of title IV of
the Social Security Act, shall develop a new incentive sys-
tem to replace, in a revenue neutral manner, the system
under section 458 of such Act. The new system shall pro-
vide additional payments to any State based on such
State’s performance under such a program. Not later than
November 1, 1996, the Secretary shall report on the new
system to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance
of the Senate.
553
(b) CONFORMING AMENDMENTS TO PRESENT SYS-
TEM.—Section 458 (42 U.S.C. 658) is amended—
(1) in subsection (a), by striking ‘‘aid to fami-
lies with dependent children under a State plan ap-
proved under part A of this title’’ and inserting ‘‘as-
sistance under a program funded under part A’’;
(2) in subsection (b)(1)(A), by striking ‘‘section
402(a)(26)’’ and inserting ‘‘section 408(a)(4)’’;
(3) in subsections (b) and (c)—
(A) by striking ‘‘AFDC collections’’ each
place it appears and inserting ‘‘title IV–A col-
lections’’, and
(B) by striking ‘‘non-AFDC collections’’
each place it appears and inserting ‘‘non-title
IV–A collections’’; and
(4) in subsection (c), by striking ‘‘combined
AFDC/non-AFDC administrative costs’’ both places
it appears and inserting ‘‘combined title IV–A/non-
title IV–A administrative costs’’.
(c) CALCULATION OF PATERNITY ESTABLISHMENT
PERCENTAGE.—
(1) 
Section 
452(g)(1)(A) 
(42 
U.S.C.
652(g)(1)(A)) is amended by striking ‘‘75’’ and in-
serting ‘‘90’’.
554
(2) Section 452(g)(1) (42 U.S.C. 652(g)(1)) is
amended—
(A) by redesignating subparagraphs (B)
through (E) as subparagraphs (C) through (F),
respectively, and by inserting after subpara-
graph (A) the following new subparagraph:
‘‘(B) for a State with a paternity establishment
percentage of not less than 75 percent but less than
90 percent for such fiscal year, the paternity estab-
lishment percentage of the State for the immediately
preceding fiscal year plus 2 percentage points;’’; and
(B) by adding at the end the following new
flush sentence:
‘‘In determining compliance under this section, a State
may use as its paternity establishment percentage either
the State’s IV–D paternity establishment percentage (as
defined in paragraph (2)(A)) or the State’s statewide pa-
ternity establishment percentage (as defined in paragraph
(2)(B)).’’.
(3) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is
amended—
(A) in subparagraph (A)—
(i) in the matter preceding clause
(i)—
555
(I) by striking ‘‘paternity estab-
lishment percentage’’ and inserting
‘‘IV–D paternity establishment per-
centage’’; and
(II) by striking ‘‘(or all States, as
the case may be)’’; and
(ii) by striking ‘‘and’’ at the end; and
(B) by redesignating subparagraph (B) as
subparagraph (C) and by inserting after sub-
paragraph (A) the following new subparagraph:
‘‘(B) the term ‘statewide paternity establish-
ment percentage’ means, with respect to a State for
a fiscal year, the ratio (expressed as a percentage)
that the total number of minor children—
‘‘(i) who have been born out of wedlock,
and
‘‘(ii) the paternity of whom has been estab-
lished or acknowledged during the fiscal year,
bears to the total number of children born out of
wedlock during the preceding fiscal year; and’’.
(4) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is
amended—
(A) by striking subparagraph (A) and re-
designating subparagraphs (B) and (C) as sub-
paragraphs (A) and (B), respectively; and
556
(B) in subparagraph (A) (as so redesig-
nated), by striking ‘‘the percentage of children
born out-of-wedlock in a State’’ and inserting
‘‘the percentage of children in a State who are
born out of wedlock or for whom support has
not been established’’.
(d) EFFECTIVE DATES.—
(1) INCENTIVE ADJUSTMENTS.—
(A) IN GENERAL.—The system developed under
subsection (a) and the amendments made by sub-
section (b) shall become effective on October 1,
1998, except to the extent provided in subparagraph
(B).
(B) APPLICATION
OF
SECTION
458.—Section
458 of the Social Security Act, as in effect on the
day before the date of the enactment of this section,
shall be effective for purposes of incentive payments
to States for fiscal years before fiscal year 1999.
(2) PENALTY REDUCTIONS.—The amendments
made by subsection (c) shall become effective with
respect to calendar quarters beginning on or after
the date of the enactment of this Act.
SEC. 4342. FEDERAL AND STATE REVIEWS AND AUDITS.
(a) STATE AGENCY ACTIVITIES.—Section 454 (42
U.S.C. 654) is amended—
557
(1) in paragraph (14), by striking ‘‘(14)’’ and
inserting ‘‘(14)(A)’’;
(2) by redesignating paragraph (15) as sub-
paragraph (B) of paragraph (14); and
(3) by inserting after paragraph (14) the fol-
lowing new paragraph:
‘‘(15) provide for—
‘‘(A) a process for annual reviews of and
reports to the Secretary on the State program
operated under the State plan approved under
this part, including such information as may be
necessary to measure State compliance with
Federal requirements for expedited procedures,
using such standards and procedures as are re-
quired by the Secretary, under which the State
agency will determine the extent to which the
program is operated in compliance with this
part; and
‘‘(B) a process of extracting from the auto-
mated data processing system required by para-
graph (16) and transmitting to the Secretary
data and calculations concerning the levels of
accomplishment (and rates of improvement)
with respect to applicable performance indica-
tors (including paternity establishment percent-
558
ages) to the extent necessary for purposes of
sections 452(g) and 458;’’.
(b) FEDERAL ACTIVITIES.—Section 452(a)(4) (42
U.S.C. 652(a)(4)) is amended to read as follows:
‘‘(4)(A) review data and calculations transmit-
ted 
by 
State 
agencies 
pursuant 
to 
section
454(15)(B) on State program accomplishments with
respect to performance indicators for purposes of
subsection (g) of this section and section 458;
‘‘(B) review annual reports submitted pursuant
to section 454(15)(A) and, as appropriate, provide
to the State comments, recommendations for addi-
tional or alternative corrective actions, and technical
assistance; and
‘‘(C) conduct audits, in accordance with the
Government auditing standards of the Comptroller
General of the United States—
‘‘(i) at least once every 3 years (or more
frequently, in the case of a State which fails to
meet the requirements of this part concerning
performance standards and reliability of pro-
gram data) to assess the completeness, reliabil-
ity, and security of the data and the accuracy
of the reporting systems used in calculating
559
performance indicators under subsection (g) of
this section and section 458;
‘‘(ii) of the adequacy of financial manage-
ment of the State program operated under the
State plan approved under this part, including
assessments of—
‘‘(I) whether Federal and other funds
made available to carry out the State pro-
gram are being appropriately expended,
and are properly and fully accounted for;
and
‘‘(II) whether collections and disburse-
ments of support payments are carried out
correctly and are fully accounted for; and
‘‘(iii) for such other purposes as the Sec-
retary may find necessary;’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall be effective with respect to calendar
quarters beginning 12 months or more after the date of
the enactment of this Act.
SEC. 4343. REQUIRED REPORTING PROCEDURES.
(a) ESTABLISHMENT.—Section 452(a)(5) (42 U.S.C.
652(a)(5)) is amended by inserting ‘‘, and establish proce-
dures to be followed by States for collecting and reporting
information required to be provided under this part, and
560
establish uniform definitions (including those necessary to
enable the measurement of State compliance with the re-
quirements of this part relating to expedited processes) to
be applied in following such procedures’’ before the semi-
colon.
(b) STATE PLAN REQUIREMENT.—Section 454 (42
U.S.C. 654), as amended by sections 4301(b), 4303(a),
4312(a), 4313(a), and 4333 of this Act, is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(28);
(2) by striking the period at the end of para-
graph (29) and inserting ‘‘; and’’; and
(3) by adding after paragraph (29) the follow-
ing new paragraph:
‘‘(30) provide that the State shall use the defi-
nitions established under section 452(a)(5) in col-
lecting and reporting information as required under
this part.’’.
SEC. 4344. AUTOMATED DATA PROCESSING REQUIRE-
MENTS.
(a) REVISED REQUIREMENTS.—
(1) IN GENERAL.—Section 454(16) (42 U.S.C.
654(16)) is amended—
(A) by striking ‘‘, at the option of the
State,’’;
561
(B) by inserting ‘‘and operation by the
State agency’’ after ‘‘for the establishment’’;
(C) by inserting ‘‘meeting the requirements
of section 454A’’ after ‘‘information retrieval
system’’;
(D) by striking ‘‘in the State and localities
thereof, so as (A)’’ and inserting ‘‘so as’’;
(E) by striking ‘‘(i)’’; and
(F) by striking ‘‘(including’’ and all that
follows and inserting a semicolon.
(2) AUTOMATED DATA PROCESSING.—Part D of
title IV (42 U.S.C. 651–669) is amended by insert-
ing after section 454 the following new section:
‘‘SEC. 454A. AUTOMATED DATA PROCESSING.
‘‘(a) IN GENERAL.—In order for a State to meet the
requirements of this section, the State agency administer-
ing the State program under this part shall have in oper-
ation a single statewide automated data processing and
information retrieval system which has the capability to
perform the tasks specified in this section with the fre-
quency and in the manner required by or under this part.
‘‘(b) PROGRAM MANAGEMENT.—The automated sys-
tem required by this section shall perform such functions
as the Secretary may specify relating to management of
the State program under this part, including—
562
‘‘(1) controlling and accounting for use of Fed-
eral, State, and local funds in carrying out the pro-
gram; and
‘‘(2) maintaining the data necessary to meet
Federal reporting requirements under this part on a
timely basis.
‘‘(c) CALCULATION
OF
PERFORMANCE
INDICA-
TORS.—In order to enable the Secretary to determine the
incentive payments and penalty adjustments required by
sections 452(g) and 458, the State agency shall—
‘‘(1) use the automated system—
‘‘(A) to maintain the requisite data on
State performance with respect to paternity es-
tablishment and child support enforcement in
the State; and
‘‘(B) to calculate the paternity establish-
ment percentage for the State for each fiscal
year; and
‘‘(2) have in place systems controls to ensure
the completeness and reliability of, and ready access
to, the data described in paragraph (1)(A), and the
accuracy of the calculations described in paragraph
(1)(B).
‘‘(d) INFORMATION INTEGRITY AND SECURITY.—The
State agency shall have in effect safeguards on the integ-
563
rity, accuracy, and completeness of, access to, and use of
data in the automated system required by this section,
which shall include the following (in addition to such other
safeguards as the Secretary may specify in regulations):
‘‘(1) POLICIES RESTRICTING ACCESS.—Written
policies concerning access to data by State agency
personnel, and sharing of data with other persons,
which—
‘‘(A) permit access to and use of data only
to the extent necessary to carry out the State
program under this part; and
‘‘(B) specify the data which may be used
for particular program purposes, and the per-
sonnel permitted access to such data.
‘‘(2) SYSTEMS
CONTROLS.—Systems controls
(such as passwords or blocking of fields) to ensure
strict adherence to the policies described in para-
graph (1).
‘‘(3) MONITORING OF ACCESS.—Routine mon-
itoring of access to and use of the automated sys-
tem, through methods such as audit trails and feed-
back mechanisms, to guard against and promptly
identify unauthorized access or use.
‘‘(4) TRAINING
AND
INFORMATION.—Proce-
dures to ensure that all personnel (including State
564
and local agency staff and contractors) who may
have access to or be required to use confidential pro-
gram data are informed of applicable requirements
and penalties (including those in section 6103 of the
Internal Revenue Code of 1986), and are adequately
trained in security procedures.
‘‘(5) PENALTIES.—Administrative penalties (up
to and including dismissal from employment) for un-
authorized access to, or disclosure or use of, con-
fidential data.’’.
(3) REGULATIONS.—The Secretary of Health
and Human Services shall prescribe final regulations
for implementation of section 454A of the Social Se-
curity Act not later than 2 years after the date of
the enactment of this Act.
(4) 
IMPLEMENTATION
TIMETABLE.—Section
454(24) (42 U.S.C. 654(24)), as amended by section
4303(a)(1) of this Act, is amended to read as fol-
lows:
‘‘(24) provide that the State will have in effect
an automated data processing and information re-
trieval system—
‘‘(A) by October 1, 1997, which meets all
requirements of this part which were enacted on
565
or before the date of enactment of the Family
Support Act of 1988, and
‘‘(B) by October 1, 1999, which meets all
requirements of this part enacted on or before
the date of the enactment of the Personal Re-
sponsibility and Work Opportunity Act of 1996,
except that such deadline shall be extended by
1 day for each day (if any) by which the Sec-
retary fails to meet the deadline imposed by
section 4344(a)(3) of the Personal Responsibil-
ity and Work Opportunity Act of 1996;’’.
(b) SPECIAL FEDERAL MATCHING RATE FOR DE-
VELOPMENT COSTS OF AUTOMATED SYSTEMS.—
(1) IN GENERAL.—Section 455(a) (42 U.S.C.
655(a)) is amended—
(A) in paragraph (1)(B)—
(i) by striking ‘‘90 percent’’ and in-
serting ‘‘the percent specified in paragraph
(3)’’;
(ii) by striking ‘‘so much of’’; and
(iii) by striking ‘‘which the Secretary’’
and all that follows and inserting ‘‘, and’’;
and
(B) by adding at the end the following new
paragraph:
566
‘‘(3)(A) The Secretary shall pay to each State, for
each quarter in fiscal years 1996 and 1997, 90 percent
of so much of the State expenditures described in para-
graph (1)(B) as the Secretary finds are for a system meet-
ing the requirements specified in section 454(16) (as in
effect on September 30, 1995) but limited to the amount
approved for States in the advance planning documents
of such States submitted on or before September 30,
1995.
‘‘(B)(i) The Secretary shall pay to each State, for
each quarter in fiscal years 1996 through 2001, the per-
centage specified in clause (ii) of so much of the State
expenditures described in paragraph (1)(B) as the Sec-
retary finds are for a system meeting the requirements
of sections 454(16) and 454A.
‘‘(ii) The percentage specified in this clause is 80 per-
cent.’’.
(2) TEMPORARY
LIMITATION
ON
PAYMENTS
UNDER SPECIAL FEDERAL MATCHING RATE.—
(A) 
IN
GENERAL.—The 
Secretary 
of
Health and Human Services may not pay more
than $400,000,000 in the aggregate under sec-
tion 455(a)(3)(B) of the Social Security Act for
fiscal years 1996 through 2001.
567
(B) ALLOCATION OF LIMITATION AMONG
STATES.—The total amount payable to a State
under section 455(a)(3)(B) of such Act for fis-
cal years 1996 through 2001 shall not exceed
the limitation determined for the State by the
Secretary of Health and Human Services in
regulations.
(C) ALLOCATION FORMULA.—The regula-
tions referred to in subparagraph (B) shall pre-
scribe a formula for allocating the amount spec-
ified in subparagraph (A) among States with
plans approved under part D of title IV of the
Social Security Act, which shall take into ac-
count—
(i) the relative size of State caseloads
under such part; and
(ii) the level of automation needed to
meet the automated data processing re-
quirements of such part.
(c) CONFORMING AMENDMENT.—Section 123(c) of
the Family Support Act of 1988 (102 Stat. 2352; Public
Law 100–485) is repealed.
SEC. 4345. TECHNICAL ASSISTANCE.
(a) FOR TRAINING OF FEDERAL AND STATE STAFF,
RESEARCH AND DEMONSTRATION PROGRAMS, AND SPE-
568
CIAL PROJECTS OF REGIONAL OR NATIONAL SIGNIFI-
CANCE.—Section 452 (42 U.S.C. 652) is amended by add-
ing at the end the following new subsection:
‘‘(j) Out of any money in the Treasury of the United
States not otherwise appropriated, there is hereby appro-
priated to the Secretary for each fiscal year an amount
equal to 1 percent of the total amount paid to the Federal
Government pursuant to section 457(a) during the imme-
diately preceding fiscal year (as determined on the basis
of the most recent reliable data available to the Secretary
as of the end of the 3rd calendar quarter following the
end of such preceding fiscal year), to cover costs incurred
by the Secretary for—
‘‘(1) information dissemination and technical
assistance to States, training of State and Federal
staff, staffing studies, and related activities needed
to improve programs under this part (including tech-
nical assistance concerning State automated systems
required by this part); and
‘‘(2) research, demonstration, and special
projects of regional or national significance relating
to the operation of State programs under this part.
The amount appropriated under this subsection shall re-
main available until expended.’’.
580
‘‘(A) the greater of—
‘‘(i) $1,000 for each act of unauthor-
ized disclosure of a financial record with
respect to which such defendant is found
liable; or
‘‘(ii) the sum of—
‘‘(I) the actual damages sus-
tained by the plaintiff as a result of
such unauthorized disclosure; plus
‘‘(II) in the case of a willful dis-
closure or a disclosure which is the re-
sult of gross negligence, punitive dam-
ages; plus
‘‘(B) the costs (including attorney’s fees)
of the action.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) FINANCIAL INSTITUTION.—The term ‘fi-
nancial institution’ means—
‘‘(A) a depository institution, as defined in
section 3(c) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(c));
‘‘(B) an institution-affiliated party, as de-
fined in section 3(u) of such Act (12 U.S.C.
1813(u));