I
104TH CONGRESS
1ST SESSION
H. R. 982
To reconnect welfare families to the world of work, make work pay, strengthen
families, require personal responsibility, and support State flexibility.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 16, 1995
Mr. DEAL of Georgia (for himself, Mr. CLEMENT, Mr. TANNER, Mr. STEN-
HOLM, Mrs. LINCOLN, Ms. THURMAN, Mr. BREWSTER, Mr. HAYES, Mr.
HOLDEN, Mr. LAUGHLIN, Mr. LIPINSKI, Mr. MCHALE, Mr. MINGE, Mr.
MONTGOMERY, and Mr. PETERSON of Minnesota) introduced the follow-
ing bill; which was referred to the Committee on Ways and Means and,
in addition, to the Committees on Economic and Educational Opportuni-
ties, Commerce, Agriculture, Banking and Financial Services, the Judici-
ary, and the Budget, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To reconnect welfare families to the world of work, make
work pay, strengthen families, require personal respon-
sibility, and support State flexibility.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Individual Responsibil-
ity Act of 1995’’.
SEC. 2. TABLE OF CONTENTS.
The table of contents of this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Amendment of the Social Security Act.
TITLE I—TIME-LIMITED TRANSITIONAL ASSISTANCE
Sec. 101. Limitation on duration of AFDC benefits.
Sec. 102. Job search requirement.
Sec. 103. Establishment of Federal data base.
TITLE II—MAKE WORK PAY
Subtitle A—Health Care
Sec. 201. Transitional medicaid benefits.
Subtitle B—Earned Income Tax Credit
Sec. 211. Notice of availability required to be provided to applicants and former
recipients of AFDC, food stamps, and medicaid.
Sec. 212. Notice of availability of earned income tax credit and dependent care
tax credit to be included on W–4 form.
Subtitle C—Child Care
Sec. 221. Dependent care credit to be refundable; high-income taxpayers ineli-
gible for credit.
Sec. 222. Funding of child care services.
Subtitle D—AFDC Work Disregards
Sec. 231. Option to increase disregard of earned income.
Sec. 232. State option to establish voluntary diversion program.
Sec. 233. Elimination of quarters of coverage requirement for married teens
under AFDC–UP program.
Subtitle E—AFDC Asset Limitations
Sec. 241. Increase in resource thresholds; separate threshold for vehicles.
Sec. 242. Limited disregard of amounts saved for post-secondary education, the
purchase of a first home, or the establishment or operation of
a microenterprise.
TITLE III—THE WORK FIRST PROGRAM
Sec. 301. Work first program.
Sec. 302. Regulations.
Sec. 303. Applicability to States.
Sec. 304. Sense of the Congress relating to availability of work first program
in rural areas.
TITLE IV—FAMILY RESPONSIBILITY AND IMPROVED CHILD
SUPPORT ENFORCEMENT
Subtitle A—Enhancement of Ability to Identify and Locate Noncustodial
Parents
Sec. 401. Expansion of functions of Federal Parent Locator Service.
Sec. 402. Expansion of data bases accessed by parent locator systems.
Sec. 403. National parent locator network.
Sec. 404. Private access to locate and enforcement services.
Subtitle B—Paternity Establishment
Sec. 411. Sense of the Congress.
Sec. 412. Availability of parenting social services for new fathers.
Sec. 413. Cooperation requirement and good cause exception.
Sec. 414. Elimination of $50 child support pass-through to AFDC recipients.
Sec. 415. Federal matching payments.
Sec. 416. Performance-based incentives and penalties.
Sec. 417. State laws concerning paternity establishment.
Subtitle C—Improvement of Child Support Order Establishment Process
Sec. 421. National Child Support Guidelines Commission.
Sec. 422. State laws providing expedited procedures.
Subtitle D—Child Support Enforcement
Sec. 431. National reporting of new hires and child support information.
Sec. 432. Certain benefits subject to garnishment.
Sec. 433. Seizure of lottery winnings, settlements, payouts, awards, and be-
quests, and sale of forfeited property, to pay child support ar-
rearages.
Sec. 434. Reporting of child support arrearages to credit bureaus.
Sec. 435. Liability of grandparents for financial support of children of their
minor children.
Sec. 436. Sense of the Congress regarding programs for noncustodial parents
unable to meet child support obligations.
Sec. 437. Distribution of payments.
Sec. 438. Due process rights.
Sec. 439. Use of social security numbers.
Sec. 440. Adoption of uniform State laws.
Sec. 441. State law authorizing suspension of licenses.
Sec. 442. Treatment of support obligations under bankruptcy code.
Sec. 443. Federal income tax refund offset.
TITLE V—TEEN PREGNANCY AND FAMILY STABILITY
Subtitle A—Federal Role
Sec. 501. State option to deny AFDC for additional children.
Sec. 502. Minors receiving AFDC required to live under responsible adult su-
pervision.
Sec. 503. Task force to reduce teenage pregnancy.
Sec. 504. Incentive for teen parents to attend school.
Sec. 505. State option to disregard 100-hour rule under AFDC–UP program.
Sec. 506. State option to disregard 6-month limitation on AFDC–UP benefits.
Sec. 507. Elimination of quarters of coverage requirement under AFDC–UP
program for families in which both parents are teens.
Sec. 508. Denial of Federal housing benefits to minors who bear children out-
of-wedlock.
Sec. 509. State option to deny AFDC to minor parents.
Subtitle B—State Role
Sec. 511. Teenage pregnancy prevention and family stability.
Sec. 512. Availability of family planning services.
TITLE VI—PROGRAM SIMPLIFICATION
Subtitle A—Increased State Flexibility
Sec. 601. State option to provide AFDC through electronic benefit transfer sys-
tems.
Sec. 602. Deadline for action on application for waiver of requirement applica-
ble to program of aid to families with dependent children.
Subtitle B—Coordination of AFDC and Food Stamp Programs
Sec. 611. Amendments to part A of title IV of the Social Security Act.
Sec. 612. Amendments to the Food Stamp Act of 1977.
Subtitle C—Fraud Reduction
Sec. 631. Sense of the Congress in support of the efforts of the administration
to address the problems of fraud and abuse in the supple-
mental security income program.
Sec. 632. Study on feasibility of single tamper-proof identification card to serve
programs under both the Social Security Act and health reform
legislation.
Subtitle D—Additional Provisions
Sec. 641. State options regarding unemployed parent program.
Sec. 642. Definition of essential person.
Sec. 643. ‘‘Fill-the-gap’’ budgeting.
Sec. 644. Repeal of requirement to make certain supplemental payments in
States paying less than their needs standards.
Sec. 645. Collection of AFDC overpayments from Federal tax refunds.
Sec. 646. Territories.
Sec. 647. Disregard of student income.
Sec. 648. Lump-sum income.
TITLE VII—FINANCING
Subtitle A—Ineligibility of Certain Aliens for Certain Social Services
Sec. 701. Certain aliens ineligible for aid to families with dependent children.
Sec. 702. Certain aliens ineligible for supplemental security income benefits.
Sec. 703. Disqualification of certain aliens to receive food stamp benefits.
Sec. 704. Certain aliens ineligible for medical assistance under medicaid.
Subtitle B—Other Provisions Relating to Aliens
Sec. 711. Sponsor responsibility for costs of income-based cash public assist-
ance provided to an alien.
Sec. 712. Enforcement of affidavits of support or financial responsibility by
State and local governments providing assistance.
Sec. 713. Authority to States and localities to limit assistance to aliens and to
distinguish among classes of aliens in providing income-based
cash public assistance.
Sec. 714. Grants to States to compensate for resident lawful aliens.
Subtitle C—Limitation on Emergency Assistance Expenditures
Sec. 721. Limitation on expenditures for emergency assistance.
Subtitle D—Family Day Care Homes Program Improvements
Sec. 731. Improvement of operation of family or group day care homes located
in low- and moderate-income areas under the child and adult
care food program under the National School Lunch Act.
Subtitle E—Deficit Reduction
Sec. 741. Dedication of savings to deficit reduction.
Subtitle F—Tax Provisions
Sec. 751. Certain Federal assistance includible in gross income.
Sec. 752. Earned income tax credit denied to individuals not authorized to be
employed in the United States.
Sec. 753. Phaseout of earned income credit for individuals having more than
$2,500 of taxable interest and dividends.
Sec. 754. Treatment of children receiving AFDC benefits under earned income
credit.
TITLE VIII—SSI REFORM
Sec. 801. Limitation on payment of supplemental security income benefits for
children by reason of disability.
TITLE IX—EFFECTIVE DATE
Sec. 901. Effective date.
SEC. 3. AMENDMENT OF THE SOCIAL SECURITY ACT.
Except as otherwise expressly provided, wherever in
this Act an amendment or repeal is expressed in terms
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a
section or other provision of the Social Security Act.
TITLE I—TIME-LIMITED
TRANSITIONAL ASSISTANCE
SEC. 101. LIMITATION ON DURATION OF AFDC BENEFITS.
Section 402(a) (42 U.S.C. 602(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(44);
(2) by striking the period at the end of para-
graph (45) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (45) the fol-
lowing:
‘‘(46) in the case of a State that has exercised
the option provided for in paragraph (52), provide
that—
‘‘(A) a family shall not be eligible for aid
under the State plan if a member of the family
is—
‘‘(i) prohibited from participating in
the State program established under sub-
part 1 of part F by reason of section
487(b); or
‘‘(ii) prohibited from participating in
the State program established under sub-
part 2 of part F by reason of section
489(a)(4); and
‘‘(B) each member of the family shall be
considered to be receiving such aid for purposes
of eligibility for medical assistance under the
State plan approved under title XIX for so long
as the family would be eligible for such aid but
for subparagraph (A).’’.
SEC. 102. JOB SEARCH REQUIREMENT.
Section 402(a) (42 U.S.C. 602(a)), as amended by
section 101 of this Act, is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(45);
(2) by striking the period at the end of para-
graph (46) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (46) the fol-
lowing:
‘‘(47) provide that participation in job search
activities shall be a condition of eligibility for aid
under the State plan, except during any period of
unsubsidized full-time employment in the private
sector.’’.
SEC. 103. ESTABLISHMENT OF FEDERAL DATA BASE.
Section 402 (42 U.S.C. 602) is amended by inserting
after subsection (c) the following:
‘‘(d) The Secretary shall establish and maintain a
data base of participants in State programs established
under parts F and G which shall be made available to the
States for use in administering subsection (a)(46).’’.
TITLE II—MAKE WORK PAY
Subtitle A—Health Care
SEC. 201. TRANSITIONAL MEDICAID BENEFITS.
(a) EXTENSION
OF MEDICAID ENROLLMENT
FOR
FORMER AFDC RECIPIENTS FOR 1 ADDITIONAL YEAR.—
(1) IN
GENERAL.—Section 1925(b)(1) (42
U.S.C. 1396r–6(b)(1)) is amended by striking the
period at the end and inserting the following: ‘‘, and
that the State shall offer to each such family the op-
tion of extending coverage under this subsection for
any of the first 2 succeeding 6-month periods, in the
same manner and under the same conditions as the
option of extending coverage under this subsection
for the first succeeding 6-month period.’’.
(2) 
CONFORMING
AMENDMENTS.—Section
1925(b) (42 U.S.C. 1396r–6(b)) is amended—
(A) in the heading, by striking ‘‘EXTEN-
SION’’ and inserting ‘‘EXTENSIONS’’;
(B) in the heading of paragraph (1), by
striking ‘‘REQUIREMENT’’ and inserting ‘‘IN
GENERAL’’;
(C) in paragraph (2)(B)(ii)—
(i) in the heading, by striking ‘‘PE-
RIOD’’ and inserting ‘‘PERIODS’’, and
(ii) by striking ‘‘in the period’’ and in-
serting ‘‘in each of the 6-month periods’’;
(D) in paragraph (3)(A), by striking ‘‘the
6-month period’’ and inserting ‘‘any 6-month
period’’;
(E) in paragraph (4)(A), by striking ‘‘the
extension period’’ and inserting ‘‘any extension
period’’; and
(F) in paragraph (5)(D)(i), by striking ‘‘is
a 3-month period’’ and all that follows and in-
serting the following: ‘‘is, with respect to a par-
ticular 6-month additional extension period pro-
vided under this subsection, a 3-month period
beginning with the 1st or 4th month of such ex-
tension period.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to calendar quarters beginning
on or after October 1, 1997, without regard to whether
or not final regulations to carry out such amendments
have been promulgated by such date.
Subtitle B—Earned Income Tax
Credit
SEC. 211. NOTICE OF AVAILABILITY REQUIRED TO BE PRO-
VIDED TO APPLICANTS AND FORMER RECIPI-
ENTS OF AFDC, FOOD STAMPS, AND MEDIC-
AID.
(a) AFDC.—Section 402(a) (42 U.S.C. 602(a)), as
amended by sections 101 and 102 of this Act, is amend-
ed—
(1) by striking ‘‘and’’ at the end of paragraph
(46);
(2) by striking the period at the end of para-
graph (47) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (47) the fol-
lowing:
‘‘(48) provide that the State agency must pro-
vide written notice of the existence and availability
of the earned income credit under section 32 of the
Internal Revenue Code of 1986 to—
‘‘(A) any individual who applies for aid
under the State plan, upon receipt of the appli-
cation; and
‘‘(B) any individual whose aid under the
State plan is terminated, in the notice of termi-
nation of benefits.’’.
(b) FOOD STAMPS.—Section 11(e) of the Food
Stamp Act of 1977 (7 U.S.C. 2020(e)) is amended—
(1) in paragraph (24) by striking ‘‘and’’ at the
end;
(2) in paragraph (25) by striking the period at
the end and inserting ‘‘; and’’; and
(3) by inserting after paragraph (25) the fol-
lowing:
‘‘(26) that whenever a household applies for
food stamp benefits, and whenever such benefits are
terminated with respect to a household, the State
agency shall provide to each member of such house-
hold notice of—
‘‘(A) the existence of the earned income
tax credit under section 32 of the Internal Rev-
enue Code of 1986; and
‘‘(B) the fact that such credit may be ap-
plicable to such member.’’.
(c) 
MEDICAID.—Section 
1902(a) 
(42 
U.S.C.
1396a(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(61);
(2) by striking the period at the end of para-
graph (62) and inserting ‘‘; and’’; and
(3) by adding at the end the following new
paragraph:
‘‘(63) provide that the State shall provide notice
of the existence and availability of the earned income
tax credit under section 32 of the Internal Revenue
Code of 1986 to each individual applying for medical
assistance under the State plan and to each individ-
ual whose eligibility for medical assistance under the
State plan is terminated.’’.
SEC. 212. NOTICE OF AVAILABILITY OF EARNED INCOME
TAX CREDIT AND DEPENDENT CARE TAX
CREDIT TO BE INCLUDED ON W–4 FORM.
Section 11114 of the Omnibus Budget Reconciliation
Act of 1990 (26 U.S.C. 21 note), relating to program to
increase public awareness, is amended by adding at the
end the following new sentence: ‘‘Such means shall include
printing a notice of the availability of such credits on the
forms used by employees to determine the proper number
of withholding exemptions under chapter 24 of the Inter-
nal Revenue Code of 1986.’’.
Subtitle C—Child Care
SEC. 221. DEPENDENT CARE CREDIT TO BE REFUNDABLE;
HIGH-INCOME TAXPAYERS INELIGIBLE FOR
CREDIT.
(a) CREDIT TO BE REFUNDABLE.—
(1) IN GENERAL.—Section 21 of the Internal
Revenue Code of 1986 (relating to expenses for
household and dependent care services necessary for
gainful employment) is hereby moved to subpart C
of part IV of subchapter A of chapter 1 of such
Code (relating to refundable credits) and inserted
after section 34.
(2) TECHNICAL AMENDMENTS.—
(A) Section 35 of such Code is redesig-
nated as section 36.
(B) Section 21 of such Code is redesig-
nated as section 35.
(C) Paragraph (1) of section 35(a) of such
Code (as redesignated by subparagraph (B)) is
amended by striking ‘‘this chapter’’ and insert-
ing ‘‘this subtitle’’.
(D) Subparagraph (C) of section 129(a)(2)
of such Code is amended by striking ‘‘section
21(e)’’ and inserting ‘‘section 35(e)’’.
(E) Paragraph (2) of section 129(b) of
such Code is amended by striking ‘‘section
21(d)(2)’’ and inserting ‘‘section 35(d)(2)’’.
(F) Paragraph (1) of section 129(e) of
such Code is amended by striking ‘‘section
21(b)(2)’’ and inserting ‘‘section 35(b)(2)’’.
(G) Subsection (e) of section 213 of such
Code is amended by striking ‘‘section 21’’ and
inserting ‘‘section 35’’.
(H) Paragraph (2) of section 1324(b) of
title 31, United States Code, is amended by in-
serting before the period ‘‘, or from section 35
of such Code’’.
(I) The table of sections for subpart C of
part IV of subchapter A of chapter 1 of such
Code is amended by striking the item relating
to section 35 and inserting the following:
‘‘Sec. 35. Expenses for household and dependent care services
necessary for gainful employment.
‘‘Sec. 36. Overpayments of tax.’’.
(J) The table of sections for subpart A of
such part IV is amended by striking the item
relating to section 21.
(b) HIGHER-INCOME TAXPAYERS INELIGIBLE FOR
CREDIT.—Subsection (a) of section 35 of such Code, as
redesignated by subsection (a), is amended by adding at
the end the following new paragraph:
‘‘(3) PHASEOUT
OF
CREDIT
FOR
HIGHER-IN-
COME TAXPAYERS.—The amount of the credit which
would (but for this paragraph) be allowed by this
section shall be reduced (but not below zero) by an
amount which bears the same ratio to such amount
of credit as the excess of the taxpayer’s adjusted
gross income for the taxable year over $70,000 bears
to $20,000. Any reduction determined under the
preceding sentence which is not a multiple of $10
shall be rounded to the nearest multiple of $10.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1996.
SEC. 222. FUNDING OF CHILD CARE SERVICES.
(a) ELIMINATION OF CHILD CARE PROGRAMS.—
(1) AFDC AND
TRANSITIONAL
CHILD
CARE
PROGRAMS.—
(A) 
REPEALER.—Section 
402(g) 
(42
U.S.C. 602(g)) is hereby repealed.
(B) CONFORMING AMENDMENTS.—
(i) Section 403(a)(3) (42 U.S.C.
603(a)(3)) is amended by striking ‘‘other
than services furnished pursuant to section
402(g)’’.
(ii) Section 403(e) (42 U.S.C. 603(e))
is amended—
(I) by striking ‘‘, 402(a)(43), and
402(g)(1),’’ 
and 
inserting 
‘‘and
402(a)(43)’’; and
(II) by striking the 2nd sentence.
(2) AT-RISK CHILD CARE PROGRAM.—Sections
402(i) and 403(n) (42 U.S.C. 602(i) and 603(n))
are hereby repealed.
(3) ELIMINATION
OF
FINANCIAL
ASSISTANCE
FOR
DIRECT
CHILD
CARE
SERVICES
UNDER
THE
CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT
OF 1990.—The Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9858 et seq.) is
amended—
(A) 
in 
section 
658B 
by 
striking
‘‘$750,000,000’’ and all that follows through
‘‘1995’’, and inserting ‘‘$235,000,000 for fiscal
year 1996, $240,000,000 for fiscal year 1997,
and $250,000,000 for fiscal year 1998’’,
(B) by striking sections 658D, 658I,
658K, 658L, 658M, and 658N,
(C) in section 658E—
(i) in subsection (a)—
(I) by striking ‘‘including—’’ and
all that follows through ‘‘(1)’’ and in-
serting ‘‘including’’, and
(II) by striking ‘‘; and’’ and all
that follows through ‘‘subsection (c)’’,
(ii) by striking subsections (b) and
(c), and
(iii) by redesignating subsection (d) as
subsection (b),
(D) in section 658F(b)(2) by striking ‘‘re-
ferred to in section 658E(c)(2)(F)’’ and insert-
ing ‘‘applicable under State and local law’’,
(E) in sections 658G and 658H(a) by
striking ‘‘of the amounts reserved by such State
under section 658E(c)(3)(C)’’ and inserting
‘‘such assistance’’,
(F) in section 658J—
(i) in subsection (a) by striking ‘‘sec-
tion 658(d)’’ and inserting ‘‘section 658’’,
(ii) in subsection (b)—
(I) by striking ‘‘PAYMENT.—’’
and all that follows through ‘‘para-
graph (2),’’ and inserting ‘‘PAY-
MENT.—The’’, and
(II) by striking paragraph (2),
(G) in section 658P—
(i) by striking paragraphs (1), (2),
(4), (5), (6), (8), (9), and (12, and
(ii) by redesignating paragraphs (3),
(7), (10), (11), (13), and (14) as para-
graphs (1), (2), (3), (4), (5), and (6), re-
spectively, and
(H) by redesignating sections 658E, 658F,
658G, 658H, 658J, 658O, 658P, 658Q, 658R,
and 658S as sections 658D, 658E, 658F,
658G, 658H, 658I, 658J, 658K, 658L, and
658M, respectively.
(b) FUNDING OF CHILD CARE SERVICES THROUGH
SOCIAL SERVICES BLOCK GRANT PROGRAM.—Title XX
(42 U.S.C. 1397–1397f) is amended by adding at the end
the following:
‘‘SEC. 2008. CHILD CARE.
‘‘(a) CONDITIONAL ENTITLEMENT.—In addition to
any payment under section 2002 or 2007, each State with
a plan approved under this section for a fiscal year shall
be entitled to payment of an amount equal to the special
allotment of the State for the fiscal year.
‘‘(b) STATE PLANS.—
‘‘(1) CONTENT.—A plan meets the require-
ments of this paragraph if the plan—
‘‘(A) identifies an appropriate State agency
to be the lead agency responsible for admin-
istering at the State level, and coordinating
with local governments, the activities of the
State pursuant to this section;
‘‘(B) describes the activities the State will
carry out with funds provided under this sec-
tion;
‘‘(C) provides assurances that the funds
provided under this section will be used to sup-
plement, not supplant, State and local funds as
well as Federal funds provided under any Act
and applied to child care activities in the State
during fiscal year 1989;
‘‘(D) provides assurances that the State
will not expend more than 7 percent of the
funds provided to the States under this section
for the fiscal year for administrative expenses;
‘‘(E) provides assurances that, in providing
child care assistance, the State will give priority
to families with low income and families living
in a low-income geographical area;
‘‘(F) ensures that child care providers re-
imbursed under this section meet applicable
standards of State and local law;
‘‘(G) provides assurances that the lead
agency will coordinate the use of funds provided
under this section with the use of other Federal
resources for child care provided under this Act,
and with other Federal, State, or local child
care and preschool programs operated in the
State;
‘‘(H) provides for the establishment of
such fiscal and accounting procedures as may
be necessary to—
‘‘(i) ensure a proper accounting of
Federal funds received by the State under
this section; and
‘‘(ii) ensure the proper verification of
the reports submitted by the State under
subsection (f)(2);
‘‘(I) provides assurances that the State will
not impose more stringent standards and
licening or regulatory requirements on child
care providers receiving funds provided under
this section than those imposed on other child
care providers in the State; and
‘‘(J) provides assurances that the State
will not implement any policy or practice which
has the effect of significantly restricting paren-
tal choice by—
‘‘(i) expressly or effectively excluding
any category of care or type of provider
within a category of care;
‘‘(ii) limiting parental access to or
choices from among various categories of
care or types of providers; or
‘‘(iii) excluding a significant number
of providers in any category of care.
‘‘(2) FORM.—A State may submit a plan that
meets the requirements of paragraph (1) in the form
of amendments to the State plan submitted pursu-
ant to section 658E of the Child Care and Develop-
ment Block Grant Act of 1990, as in effect before
the effective date of section 222 of the Individual
Responsibility Act of 1995.
‘‘(3) APPROVAL.—Not later than 90 days after
the date the State submits a plan to the Secretary
under this subsection, the Secretary shall either ap-
prove or disapprove the plan. If the Secretary dis-
approves the plan, the Secretary shall provide the
State with an explanation and recommendations for
changes in the plan to gain approval.
‘‘(c) SPECIAL ALLOTMENTS.—
‘‘(1) IN GENERAL.—The special allotment of a
State for a fiscal year equals the amount that bears
the same ratio to the amount specified in paragraph
(2) for the fiscal year, as the number of children
who have not attained 13 years of age and are resid-
ing with families in the State bears to the total
number of such children in all States with plans ap-
proved under this section for the fiscal year, deter-
mined on the basis of the most recent data available
from the Department of Commerce at the time the
special allotment is determined.
‘‘(2) AMOUNT SPECIFIED.—The amount speci-
fied in this paragraph is—
‘‘(A) $1,150,000,000 for fiscal year 1997;
and
‘‘(B) $1,200,000,000 for each of fiscal
years 1998, 1999, and 2000.
‘‘(d) PAYMENTS TO STATES.—
‘‘(1) PAYMENTS.—The Secretary shall provide
funds to each State with a plan approved under this
section for a fiscal year from the special allotment
of the State for the fiscal year, in accordance with
section 6503 of title 31, United States Code.
‘‘(2) EXPENDITURE OF FUNDS BY STATES.—
Except as provided in paragraph (3)(A), each State
to which funds are paid under this section for a fis-
cal year shall expend such funds in the fiscal year
or in the immediately succeeding fiscal year.
‘‘(3) REDISTRIBUTION OF UNEXPENDED SPE-
CIAL ALLOTMENTS.—
‘‘(A) REMITTANCE TO THE SECRETARY.—
Each State to which funds are paid under this
section for a fiscal year shall remit to the Sec-
retary that part of such funds which the State
intends not to, or does not, expend in the fiscal
year or in the immediately succeeding fiscal
year.
‘‘(B) 
REDISTRIBUTION.—The 
Secretary
shall increase the special allotment of each
State with a plan approved under this part for
a fiscal year that does not remit any amount to
the Secretary for the fiscal year by an amount
equal to—
‘‘(i) the aggregate of the amounts re-
mitted pursuant to subparagraph (A) for
the fiscal year; multiplied by
‘‘(ii) the adjusted State share for the
fiscal year.
‘‘(C) ADJUSTED STATE SHARE.—As used
in subparagraph (B)(ii), the term ‘adjusted
State share’ means, with respect to a fiscal
year—
‘‘(i) the special allotment of the State
for the fiscal year (before any increase
under subparagraph (B)); divided by
‘‘(ii)(I) the sum of the special allot-
ments of all States with plans approved
under this part for the fiscal year; minus
‘‘(II) the aggregate of the amounts re-
mitted to the Secretary pursuant to sub-
paragraph (A) for the fiscal year.
‘‘(e) USE OF FUNDS.—
‘‘(1) IN GENERAL.—Funds provided under this
section shall be used to expand parent choices in se-
lecting child care, to address deficiencies in the sup-
ply of child care, and to expand and improve child
care services, with an emphasis on providing such
services to low-income families and geographical
areas. Subject to the approval of the Secretary,
States to which funds are paid under this section
shall use such funds to carry out child care pro-
grams and activities through cash grants, certifi-
cates, or contracts with families, or public or private
entities as the State determines appropriate.
‘‘(2) SPECIFIC
USES.—Each State to which
funds are paid under this section may expend such
funds for—
‘‘(A) child care services for infants, sick
children, children with special needs, and chil-
dren of adolescent parents;
‘‘(B) after-school and before-school pro-
grams and programs during nontraditional
hours for the children of working parents;
‘‘(C) programs for the recruitment and
training of day care workers, including older
Americans;
‘‘(D) grant and loan programs to enable
child care workers and providers to meet State
and local standards and requirements;
‘‘(E) child care information and referral
services;
‘‘(F) child care programs developed by
public and private sector partnerships;
‘‘(G) liability insurance pools to serve child
care providers;
‘‘(H) programs to promote and ensure the
health and safety of children and caregivers, to
improve the quality of all types of child care,
and to train child care providers in health and
safety practices;
‘‘(I) State efforts to provide technical as-
sistance designed to help providers improve the
services offered to parents and children; and
‘‘(J) other child care-related programs con-
sistent with the purpose of this section and ap-
proved by the Secretary.
‘‘(3) METHODS OF FUNDING.—Funds for child
care services under this title shall be for the benefit
of parents and shall be provided through contracts
or grants with public or private providers or through
child care certificates given directly to parents.
‘‘(4) PARENTAL RIGHTS OF CHOICE.—Any par-
ent who receives a child care certificate under this
title may use such certificate with any child care
provider, including those providers which have reli-
gious activities, if such provider is freely chosen by
the parent from among the available alternatives.
‘‘(5) CHILD CARE CERTIFICATES.—
‘‘(A) IN GENERAL.—For purposes of this
title, a child care certificate is a certificate is-
sued by a State directly to a parent or legal
guardian for use only as payment for child care
services in any child care facility eligible to re-
ceive funds under this Act.
‘‘(B) REDEMPTION.—If the demand for
child care services of families qualified to re-
ceive such services from a State under this Act
exceeds the available supply of such services,
the State shall ration assistance to obtain such
services using procedures that do not disadvan-
tage parents using child care certificates, rel-
ative to other methods of financing, in either
the waiting period or the pecuniary value of
such services.
‘‘(C) COMMENCEMENT
OF
CERTIFICATE
PROGRAM.—Beginning not later than 1 year
after the date of the enactment of this section,
each State that receives funds under this title
shall offer a child care certificate program in
accordance with this section.
‘‘(D) AUTHORITY
TO
USE
CHILD
CARE
FUNDS
FOR
CERTIFICATE
PROGRAM.—Each
State to which funds are paid under this title
may use the funds provided to the State under
this title which are required to be used for child
care activities to plan and establish the State’s
child care certificate program.
‘‘(6) OPTION
OF
RECEIVING
A
CHILD
CARE
CERTIFICATE.—Each parent or legal guardian who
receives assistance pursuant to this title shall be
provided with the option of enrolling their child with
an eligible child care provider that receives funds
through grants, contracts, or child care certificates
provided under this title. Such parent shall have the
right to use such certificates to purchase child care
services from an eligible provider of their choice.
‘‘(7) RIGHTS OF RELIGIOUS CHILD CARE PRO-
VIDERS.—Notwithstanding any other provision of
law, a religious child care provider who receives
funds under this Act may require adherence by em-
ployees to the religious tenets or teachings of the
provider.
‘‘(8) ELIGIBLE CHILD CARE PROVIDERS.—Any
child care provider who meets applicable standards
of State and local law shall be eligible to receive
funds under this section. As used in this paragraph,
the term ‘child care provider’ includes—
‘‘(A) units of State and local governments,
and elementary, secondary, and post-secondary
educational institutions;
‘‘(B) nonprofit organizations under sub-
sections (c) and (d) of section 501 of the Inter-
nal Revenue Code of 1986;
‘‘(C) professional or employee associations;
‘‘(D) consortia of small businesses; and
‘‘(E) proprietary for-profit entities, rel-
atives, informal day care homes, religious child
care providers, day care centers, and any other
entities that the State determines appropriate
subject to approval of the Secretary.
‘‘(9) PROHIBITED USES.—Any State to which
funds are paid under this section may not use such
funds—
‘‘(A) to satisfy any State matching require-
ment imposed under any Federal grant;
‘‘(B) for the purchase or improvement of
land, or the purchase, construction, or perma-
nent improvement (other than minor remodel-
ing) of any building or other facility; or
‘‘(C) to provide any service which the State
makes generally available to the residents of the
State without cost to such residents and with-
out regard to the income of such residents.
‘‘(f) REPORTING REQUIREMENTS.—
‘‘(1) NOTICE TO SECRETARY OF UNEXPENDED
FUNDS.—Each State which has not completely ex-
pended the funds paid to the State under this sec-
tion for a fiscal year in the fiscal year or the imme-
diately succeeding fiscal year shall notify the Sec-
retary of any amount not so expended.
‘‘(2) STATE REPORTS ON USE OF FUNDS.—Not
later than 18 months after the date of the enact-
ment of this section, and each year thereafter, the
State shall prepare and submit to the Secretary, in
such form as the Secretary shall prescribe, a report
describing the State’s use of funds paid to the State
under this section, including—
‘‘(A) the number, type, and distribution of
services and programs under this section;
‘‘(B) the average cost of child care, by type
of provider;
‘‘(C) the number of children serviced under
this section;
‘‘(D) the average income and distribution
of incomes of the families being served;
‘‘(E) efforts undertaken by the State pur-
suant to this section to promote and ensure
health and safety and improve quality; and
‘‘(F) such other information as the Sec-
retary considers appropriate.
‘‘(3) GUIDELINES
FOR
STATE
REPORTS; CO-
ORDINATION
WITH
REPORTS
UNDER
SECTION
2006.—Within 6 months after the date of the enact-
ment of this section, the Secretary shall establish
guidelines for State reports under paragraph (2). To
the extent feasible, the Secretary shall coordinate
such reporting requirement with the reports required
under section 2006 and, as the Secretary deems ap-
propriate, with other reporting requirements placed
on States as a condition of receipt of other Federal
funds which support child care.
‘‘(4) REPORTS BY THE SECRETARY.—
‘‘(A) REPORTS TO THE CONGRESS OF SUM-
MARY OF STATE REPORTS.—The Secretary shall
annually summarize the information reported to
the Secretary pursuant to paragraph (2) and
provide such summary to the Congress.
‘‘(B) REPORTS TO THE STATES ON EFFEC-
TIVE PRACTICES.—The Secretary shall annually
provide the States with a report on particularly
effective practices and programs supported by
funds paid to the State under this section,
which ensure the health and safety of children
in care, promote quality child care, and provide
training to all types of providers.
‘‘(g) ADMINISTRATION AND ENFORCEMENT.—
‘‘(1) ADMINISTRATION.—The Secretary shall—
‘‘(A) coordinate all activities of the Depart-
ment of Health and Human Services relating to
child care, and, to the maximum extent prac-
ticable, coordinate such activities with similar
activities of other Federal entities;
‘‘(B) collect, publish, and make available to
the public a listing of State child care standards
at least once every 3 years; and
‘‘(C) provide technical assistance to assist
States to carry out this section, including as-
sistance on a reimbursable basis.
‘‘(2) ENFORCEMENT.—
‘‘(A) REVIEW
OF
COMPLIANCE
WITH
STATE PLAN.—The Secretary shall review and
monitor State compliance with this section and
the plans approved under this section for the
State, and shall have the power to terminate
payments to the State in accordance with sub-
paragraph (B).
‘‘(B) NONCOMPLIANCE.—
‘‘(i) IN GENERAL.—If the Secretary,
after reasonable notice to a State and op-
portunity for a hearing, finds that—
‘‘(I) there has been a failure by
the State to comply substantially with
any provision or requirement set forth
in the plan approved under this sec-
tion for the State; or
‘‘(II) in the operation of any pro-
gram for which assistance is provided
under this section there is a failure by
the State to comply substantially with
any provision of this section;
the Secretary shall notify the State of the
findings and that no further payments may
be made to such State under this section
(or, in the case of noncompliance in the op-
eration of a program or activity, that no
further payments to the State will be made
with respect to such program or activity)
until the Secretary is satisfied that there is
no longer any such failure to comply or
that the noncompliance will be promptly
corrected.
‘‘(ii) ADDITIONAL SANCTIONS.—In the
case of a finding of noncompliance made
pursuant to clause (i), the Secretary may,
in addition to imposing the sanctions de-
scribed in such subparagraph, impose the
other 
appropriate 
sanctions, 
including
recoupment of money improperly expended
for purposes prohibited or not authorized
by this section, and disqualification from
the receipt of financial assistance under
this section.
‘‘(iii) NOTICE.—The notice required
under subparagraph (A) shall include a
specific identification of any additional
sanction being imposed under clause (ii).
‘‘(C) ISSUANCE OF RULES.—The Secretary
shall establish by rule procedures for—
‘‘(i) receiving, processing, and deter-
mining the validity of complaints concern-
ing any failure of a State to comply with
the State plan or any requirement of this
section; and
‘‘(ii) imposing sanctions under this
subsection.
‘‘SEC. 2009. CHILD CARE DURING PARTICIPATION IN EM-
PLOYMENT, EDUCATION, AND TRAINING; EX-
TENDED ELIGIBILITY.
‘‘(a) CHILD CARE GUARANTEE.—
‘‘(1) IN GENERAL.—Each State agency referred
to in section 2008(b)(1)(A) shall guarantee child
care in accordance with section 2008—
‘‘(A) for any individual who is participat-
ing in an education or training activity (includ-
ing participation in a program established
under part F of title IV) if the State agency ap-
proves the activity and determines that the indi-
vidual is participating satisfactorily in the activ-
ity; and
‘‘(B) to the extent that the State agency
determines that such care is necessary for the
employment of an individual, if the family of
which the individual is a member has ceased to
receive aid under the State plan approved under
part A of title IV by reason of increased hours
of, or income from, such employment or by rea-
son of section 402(a)(8)(B)(ii)(II), subject to
paragraph (2) of this subsection.
‘‘(2) LIMITATIONS ON ELIGIBILITY FOR TRANSI-
TIONAL CHILD CARE.—A family shall not be eligible
for child care under paragraph (1)(B)—
‘‘(A) for more than 12 months after the
last month for which the family received aid de-
scribed in such paragraph;
‘‘(B) if the family did not receive such aid
in at least 3 of the most recent 6 months in
which the family received such aid;
‘‘(C) if the family does not include a child
who is (or, if needy, would be) a dependent
child (within the meaning of part A of title IV);
‘‘(D) for any month beginning after the
caretaker relative (within the meaning of such
part) in the family has terminated his or her
employment without good cause; or
‘‘(E) with respect to a child, for any month
beginning after the caretaker relative in the
family has refused to cooperate with the State
in establishing or enforcing the obligation of
any parent of the child to provide support for
the child, without good cause as determined by
the State agency in accordance with standards
prescribed by the Secretary which shall take
into consideration the best interests of the
child.
‘‘(b) STATE ENTITLEMENT
TO PAYMENTS.—Each
State with a plan approved under section 2008 shall be
entitled to receive from the Secretary for any fiscal year
an amount equal to—
‘‘(1) the total amount expended by the State to
carry out subsection (a) during the fiscal year; mul-
tiplied by
‘‘(2) the greater of—
‘‘(A) 70 percent; or
‘‘(B) the Federal medical assistance per-
centage (as defined in the last sentence of sec-
tion 1118, increased by 10 percentage points.’’.
(c) EFFECTIVE DATE.—The amendments and re-
peals made by this section shall take effect on October
1, 1996.
Subtitle D—AFDC Work Disregards
SEC. 231. OPTION TO INCREASE DISREGARD OF EARNED IN-
COME.
Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)) is
amended—
(1) by striking ‘‘and’’ at the end of clause (vii);
and
(2) by adding at the end the following:
‘‘(ix) if electing to disregard clauses (ii)
and (iv), shall disregard from the earned in-
come of any child, relative, or other individual
specified in clause (ii) an amount equal to not
less than the first $120 and not more than the
first $225 of the total of such earned income
not disregarded under any other clause of this
subparagraph, plus not more than one third of
the remainder of such earned income; and’’.
SEC. 232. STATE OPTION TO ESTABLISH VOLUNTARY DI-
VERSION PROGRAM.
Section 402(a) (42 U.S.C. 602(a)), as amended by
sections 101, 102, and 211(a) of this Act, is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(47);
(2) by striking the period at the end of para-
graph (48) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (48) the fol-
lowing:
‘‘(49) at the option of the State, and in such
part or parts of the State as the State may select,
provide that—
‘‘(A) upon the recommendation of the case-
worker who is handling the case of a family eli-
gible for aid under the State plan, the State
shall, in lieu of any other payment under the
State plan to a family during a 3-month period,
make a lump-sum payment to the family for the
3-month period in an amount not to exceed 3
times the amount of the monthly benefit to
which the family is entitled under the State
plan;
‘‘(B) a lump-sum payment pursuant to
subparagraph (A) shall not be made more than
once to any family; and
‘‘(C) if, during a 3-month period for which
the State has made a lump-sum payment to a
family pursuant to subparagraph (A), the fam-
ily applies for and (but for the lump-sum pay-
ment) would be eligible for aid under the State
plan for a greater monthly benefit than the
monthly benefit to which the family was entitled
under the State plan at the time of the calcula-
tion of the lump sum payment, then, notwith-
standing subparagraph (A), the State shall, for
that part of the 3-month period that remains
after the family becomes eligible for the greater
monthly benefit, provide monthly benefits to the
family in an amount not to exceed—
‘‘(i) 3 times the amount by which the
greater monthly benefit exceeds the former
monthly benefit; divided by
‘‘(ii) the whole number of months re-
maining in the 3-month period.’’.
SEC. 233. ELIMINATION OF QUARTERS OF COVERAGE RE-
QUIREMENT FOR MARRIED TEENS UNDER
AFDC–UP PROGRAM.
Section 
407(b)(1)(A)(iii)(I) 
(42 
U.S.C.
607(b)(1)(A)(iii)(I)) is amended by inserting ‘‘except in
the case of a family in which the parents are married and
neither parent has attained 20 years of age,’’ after ‘‘(I)’’.
Subtitle E—AFDC Asset
Limitations
SEC. 241. INCREASE IN RESOURCE THRESHOLDS; SEPA-
RATE THRESHOLD FOR VEHICLES.
Section 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)) is
amended—
(1) by striking ‘‘$1,000 or such lower amount
as the State may determine’’ and inserting
‘‘$2,000’’; and
(2) in clause (i), by striking ‘‘such amount as
the Secretary may prescribe’’ and inserting ‘‘the dol-
lar amount prescribed by the Secretary of Agri-
culture under section 5(g) of the Food Stamp Act of
1977’’.
SEC. 242. LIMITED DISREGARD OF AMOUNTS SAVED FOR
POST-SECONDARY 
EDUCATION, 
THE 
PUR-
CHASE OF A FIRST HOME, OR THE ESTAB-
LISHMENT 
OR 
OPERATION 
OF 
A
MICROENTERPRISE.
(a) 
DISREGARD
FROM
RESOURCES.—Section
402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)) is amended—
(1) by striking ‘‘or’’ before ‘‘(iv)’’; and
(2) by inserting ‘‘, or (v) any amount not ex-
ceeding $8,000 in 1 qualified asset account (as de-
fined in section 406(i)) of 1 member of such family’’
before ‘‘; and’’.
(b) DISREGARD FROM INCOME.—
(1) IN
GENERAL.—Section 402(a)(8)(A) (42
U.S.C. 602(a)(8)(A)), as amended by section 231 of
this Act, is amended—
(A) by striking ‘‘and’’ at the end of clause
(viii); and
(B) by inserting after clause (ix) the fol-
lowing new clause:
‘‘(x) shall disregard any interest or in-
come earned on a qualified asset account
(as defined in section 406(i)) and paid into
the account, to the extent that the total
amount in the account, after such pay-
ment, does not exceed $8,000; and’’.
(2) NONRECURRING LUMP SUM EXEMPT FROM
LUMP SUM RULE.—Section 402(a)(17) (42 U.S.C.
602(a)(17)) is amended by adding at the end the
following: ‘‘; and that this paragraph shall not apply
to earned or unearned income received in a month
on a nonrecurring basis to the extent that such in-
come is placed in a qualified asset account (as de-
fined in section 406(i)) the total amount in which,
after such placement, does not exceed $8,000;’’.
(3) 
TREATMENT
AS
INCOME.—Section
402(a)(7) (42 U.S.C. 602(a)(7)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (B);
(B) by striking the semicolon at the end of
subparagraph (C) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(D) shall treat as income any distribution
from a qualified asset account (as defined in
section 406(i)(1)) that is not a qualified dis-
tribution (as defined in section 406(i)(2));’’.
(c) DEFINITIONS.—Section 406 (42 U.S.C. 606) is
amended by adding at the end the following:
‘‘(i)(1) The term ‘qualified asset account’ means a
mechanism approved by the State (such as individual re-
tirement accounts, escrow accounts, or savings bonds) that
allows savings of an individual receiving aid to families
with dependent children to be used for a purpose described
in paragraph (2).
‘‘(2) The term ‘qualified distribution’ means a dis-
tribution for expenses directly related to 1 or more of the
following purposes:
‘‘(A) The attendance of a member of the family
at any postsecondary education program.
‘‘(B) The purchase of residential real property
for the family that the family intends to occupy, if
no member of the family has an ownership interest
in such a property.
‘‘(C) The establishment or operation of a
microenterprise owned by a member of the family.
‘‘(j) The term ‘microenterprise’ means a commercial
enterprise which has 5 or fewer employees, 1 or more of
whom owns the enterprise.’’.
TITLE III—THE WORK FIRST
PROGRAM
SEC. 301. WORK FIRST PROGRAM.
(a) STATE PLAN REQUIREMENT.—Section 402(a)
(42 U.S.C. 602(a)), as amended by sections 101, 102,
211(a), and 232 of this Act, is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(48);
(2) by striking the period at the end of para-
graph (49) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (49) the fol-
lowing:
‘‘(50) provide that the State—
‘‘(A) has in effect and operation—
‘‘(i) a work first program that meets
the requirements of subpart 1 of part F
(or, for any fiscal year for which the Sec-
retary has approved a State plan under
subpart 2 of part F, such subpart 2); and
‘‘(ii) at the option of the State, a com-
munity service program that meets the re-
quirements of part G; and
‘‘(B) must provide to participants in such
programs such case management services as are
necessary to ensure the integrated provision of
benefits and services under such programs.’’.
(b) ESTABLISHMENT
AND
OPERATION
OF
PRO-
GRAM.—Title IV (42 U.S.C. 601 et seq.) is amended by
striking part F and inserting the following:
‘‘Part F—Work First Program
‘‘Subpart 1—Federal Model
‘‘SEC. 481. ESTABLISHMENT AND OPERATION OF STATE
PROGRAMS.
‘‘A work first program meets the requirements of this
subpart if the program meets the following requirements:
‘‘(1) OBJECTIVE.—The objective of the pro-
gram is for each program participant to find and
hold a full-time unsubsidized paid job, and for this
goal to be achieved in a cost-effective fashion.
‘‘(2) METHOD.—The method of the program is
to connect recipients of aid to families with depend-
ent children with the private sector labor market as
soon as possible and offer them the support and
skills necessary to remain in the labor market. Each
component of the program should be permeated with
an emphasis on employment and with an under-
standing that minimum wage jobs are a stepping
stone to more highly paid employment.
‘‘(3) JOB
CREATION.—The creation of jobs,
with an emphasis on private sector jobs, shall be a
component of the program and shall be a priority for
each State office with responsibilities under the pro-
gram.
‘‘(4) USE OF INCENTIVES.—The State shall use
incentives to change the culture of each State office
with responsibilities under the State plan approved
under part A, improve the performance of employ-
ees, and ensure that the objective of each employee
of each such State office is to find an unsubsidized
paid job for each program participant.
‘‘(5) CASEWORKER TRAINING.—The State shall
provide such training to caseworkers and related
personnel (including through the use of incentives)
as may be necessary to ensure successful job place-
ments that result in full-time public or private em-
ployment (outside the State agencies with respon-
sibilities under part A) for program participants.
The State shall reward any caseworker who enters
an agreement of mutual responsibility with a pro-
gram participant that provides for education or
training activities as well as work.
‘‘(6) REPORTS.—Each office with responsibility
for operating the program shall make monthly sta-
tistical reports to the governing body of the State,
county, and city in which located, of job placements
and the number of program participants who are no
longer receiving aid under the State plan approved
under part A as a result of participation in the pro-
gram.
‘‘(7) CASE MANAGEMENT TEAMS.—
‘‘(A) DUTIES.—The program requires the
State to assign to each individual required or
allowed to participate in the program a case
management team that shall meet with the pro-
gram participant and develop an agreement of
mutual responsibility for the individual.
‘‘(B) DEADLINE.—
‘‘(i) IN GENERAL.—The case manage-
ment team shall comply with subparagraph
(A) with respect to a program participant
within 30 days (or, at the option of the
State, within a period not exceeding 90
days) after the later of—
‘‘(I) the date the application of
the program participant for aid under
the State plan approved under part A
was approved; or
‘‘(II) the date this subpart first
applies to the State.
‘‘(ii) REPEAT PARTICIPANTS.—Within
30 days after the State makes a deter-
mination under section 487(b)(2) to allow
an individual to participate in the pro-
gram, the case management team shall
meet with the individual and develop an
agreement of mutual responsibility for the
individual.
‘‘(8) AGREEMENTS OF MUTUAL RESPONSIBIL-
ITY.—The agreement of mutual responsibility for a
participant shall—
‘‘(A) contain an individualized comprehen-
sive plan, developed by the team and the partic-
ipant, to move the participant into a full-time
unsubsidized job, through activities under sec-
tion 482, 483, 484, 485, or 486;
‘‘(B) to the greatest extent possible, be de-
signed to move the participant as quickly as
possible into whatever type and amount of work
as the participant is capable of handling, and
increases the responsibility and amount of work
over time until the participant is able to work
full-time;
‘‘(C) where necessary, provide for edu-
cation or training of the participant;
‘‘(D) provide that aid under the State plan
is to be paid to the participant based on the
number of hours that the participant spends in
activities provided for in the agreement;
‘‘(E) provide that the participant shall
spend at least 30 hours per week in activities
provided for in the agreement;
‘‘(F) provide that the participant shall ac-
cept any bona fide offer of unsubsidized full-
time employment, unless the participant has
good cause for not doing so; and
‘‘(G) at the option of the State, require the
participant to undergo appropriate substance
abuse treatment.
‘‘(9) OPTIONS
FOR
PARTICIPANTS.—The case
manager for a program participant shall present the
participant with each option offered under the State
program through which the participant will, over
time, be moved into full-time unsubsidized employ-
ment.
‘‘(10) ONE-STOP EMPLOYMENT SHOPS.—
‘‘(A) IN GENERAL.—In carrying out the
program, the State shall utilize and make avail-
able to each program participant, through the
establishment and operation or utilization of
appropriate Federal or State one-stop employ-
ment shops, services under programs carried
out under the following provisions of law:
‘‘(i) Part A of title II of the Job
Training Partnership Act (29 U.S.C. 1601
et seq.) (relating to the adult training pro-
gram).
‘‘(ii) Part B of title II of such Act (29
U.S.C. 1630 et seq.) (relating to the sum-
mer youth employment and training pro-
grams).
‘‘(iii) Part C of title II of such Act
(29 U.S.C. 1641 et seq.) (relating to the
youth training program).
‘‘(iv) Title III of such Act (29 U.S.C.
1651 et seq.) (relating to employment and
training assistance for dislocated workers).
‘‘(v) Part B of title IV of such Act
(29 U.S.C. 1691 et seq.) (relating to the
Job Corps).
‘‘(vi) The Carl D. Perkins Vocational
and Applied Technology Education Act (20
U.S.C. 2301 et seq.).
‘‘(vii) The Adult Education Act (20
U.S.C. 1201 et seq.).
‘‘(viii) Part B of chapter 1 of title I
of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 2741 et
seq.) (relating to Even Start family lit-
eracy programs).
‘‘(ix) Subtitle A of title VII of the
Stewart B. Mckinney Homeless Assistance
Act (42 U.S.C. 11421) (relating to adult
education for the homeless).
‘‘(x) Subtitle B of title VII of such
Act (42 U.S.C. 11431 et seq.) (relating to
education 
for 
homeless 
children 
and
youth).
‘‘(xi) Subtitle C of title VII of such
Act (42 U.S.C. 11441) (relating to job
training for the homeless).
‘‘(xii) The School-to-Work Opportuni-
ties Act of 1994.
‘‘(xiii) The National and Community
Service Act of 1990 (42 U.S.C. 12501 et
seq.).
‘‘(xiv) The National Skill Standards
Act of 1994.
‘‘(B) COORDINATION.—In utilizing appro-
priate Federal or State one-stop employment
shops described in subparagraph (A), the State
shall ensure coordination between the case-
worker of each program participant and the ad-
ministrators of the programs carried out under
the provisions of law described in such subpara-
graph.
‘‘(11) PENALTIES FOR REFUSAL TO WORK.—
The amount of aid otherwise payable under the
State plan approved under part A to a family that
includes an individual who fails without good cause
to comply with an agreement of mutual responsibil-
ity signed by the individual shall be reduced for 1
month by 25 percent for each act of noncompliance.
‘‘SEC. 482. REVAMPED JOBS PROGRAM.
‘‘A State that establishes a program under this sub-
part may operate a program similar to the program known
as the ‘GAIN Program’ that has been operated by River-
side County, California, under Federal law in effect imme-
diately before the date this subpart first applies to the
State of California.
‘‘SEC. 483. USE OF PLACEMENT COMPANIES.
‘‘(a) IN GENERAL.—A State that establishes a pro-
gram under this subpart may enter into contracts with
private companies (whether operated for profit or not for
profit) for the placement of participants in the program
in positions of full-time employment, preferably in the pri-
vate sector, for wages sufficient to eliminate the need of
such participants for cash assistance.
‘‘(b) REQUIRED CONTRACT TERMS.—Each contract
entered into under this section with a company shall meet
the following requirements:
‘‘(1) PROVISION OF JOB READINESS AND SUP-
PORT
SERVICES.—The contract shall require the
company to provide, to any program participant who
presents to the company a voucher issued under sub-
section (d) intensive personalized support and job
readiness services designed to prepare the individual
for employment and ensure the continued success of
the individual in employment.
‘‘(2) PAYMENTS.—
‘‘(A) IN
GENERAL.—The contract shall
provide for payments to be made to the com-
pany with respect to each program participant
who presents to the company a voucher issued
under subsection (d).
‘‘(B) STRUCTURE.—The contract shall
provide for the majority of the amounts to be
paid under the contract with respect to a pro-
gram participant, to be paid after the company
has placed the participant in a position of full-
time employment and the participant has been
employed in the position for such period of not
less than 5 months as the State deems appro-
priate.
‘‘(c) COMPETITIVE BIDDING REQUIRED.—Contracts
under this section shall be awarded only after competitive
bidding.
‘‘(d) VOUCHERS.—The State shall issue a voucher to
each program participant whose agreement of mutual re-
sponsibility provides for the use of placement companies
under this section, indicating that the participant is eligi-
ble for the services of such a company.
‘‘SEC. 484. TEMPORARY SUBSIDIZED JOB CREATION.
‘‘A State that establishes a program under this sub-
part may establish a program similar to the program
known as ‘JOBS Plus’ that has been operated by the State
of Oregon under Federal law in effect immediately before
the date this subpart first applies to the State of Oregon.
‘‘SEC. 485. MICROENTERPRISE.
‘‘(a) GRANTS AND LOANS TO NONPROFIT ORGANIZA-
TIONS FOR THE PROVISION OF TECHNICAL ASSISTANCE,
TRAINING, AND
CREDIT
TO
LOW
INCOME
ENTRE-
PRENEURS.—A State that establishes a program under
this subpart may make grants and loans to nonprofit orga-
nizations to provide technical assistance, training, and
credit to low income entrepreneurs for the purpose of es-
tablishing microenterprises.
‘‘(b) MICROENTERPRISE DEFINED.—For purposes of
this subsection, the term ‘microenterprise’ means a com-
mercial enterprise which has 5 or fewer employees, 1 or
more of whom owns the enterprise.
‘‘SEC. 486. WORK SUPPLEMENTATION PROGRAM.
‘‘(a) IN GENERAL.—A State that establishes a pro-
gram under this subpart may institute a work
supplementation program under which the State, to the
extent it considers appropriate, may reserve the sums that
would otherwise be payable to participants in the program
as aid to families with dependent children and use the
sums instead for the purpose of providing and subsidizing
jobs for the participants (as described in subsection
(c)(3)(A) and (B)), as an alternative to the aid to families
with dependent children that would otherwise be so pay-
able to the participants.
‘‘(b) STATE FLEXIBILITY.—
‘‘(1) Nothing in this subpart, or in any State
plan approved under part A, shall be construed to
prevent a State from operating (on such terms and
conditions and in such cases as the State may find
to 
be 
necessary 
or 
appropriate) 
a 
work
supplementation program in accordance with this
section and section 484 (as in effect immediately be-
fore the date this subpart first applies to the State).
‘‘(2) Notwithstanding section 402(a)(23) or any
other provision of law, a State may adjust the levels
of the standards of need under the State plan as the
State determines to be necessary and appropriate for
carrying out a work supplementation program under
this section.
‘‘(3) Notwithstanding section 402(a)(1) or any
other provision of law, a State operating a work
supplementation program under this section may
provide that the need standards in effect in those
areas of the State in which the program is in oper-
ation may be different from the need standards in
effect in the areas in which the program is not in
operation, and the State may provide that the need
standards for categories of recipients may vary
among such categories to the extent the State deter-
mines to be appropriate on the basis of ability to
participate in the work supplementation program.
‘‘(4) Notwithstanding any other provision of
law, a State may make such further adjustments in
the amounts of the aid to families with dependent
children paid under the plan to different categories
of recipients (as determined under paragraph (3)) in
order to offset increases in benefits from needs-relat-
ed programs (other than the State plan approved
under part A) as the State determines to be nec-
essary and appropriate to further the purposes of
the work supplementation program.
‘‘(5) In determining the amounts to be reserved
and used for providing and subsidizing jobs under
this section as described in subsection (a), the State
may use a sampling methodology.
‘‘(6) Notwithstanding section 402(a)(8) or any
other provision of law, a State operating a work
supplementation program under this section—
‘‘(A) may reduce or eliminate the amount
of earned income to be disregarded under the
State plan as the State determines to be nec-
essary and appropriate to further the purposes
of the work supplementation program; and
‘‘(B) during 1 or more of the first 9
months of an individual’s employment pursuant
to a program under this subpart, may apply to
the wages of the individual the provisions of
subparagraph (A)(iv) of section 402(a)(8) with-
out regard to the provisions of subparagraph
(B)(ii)(II) of such section.
‘‘(c) RULES RELATING TO SUPPLEMENTED JOBS.—
‘‘(1) A work supplementation program operated
by a State under this section may provide that any
individual who is an eligible individual (as deter-
mined under paragraph (2)) shall take a supple-
mented job (as defined in paragraph (3)) to the ex-
tent that supplemented jobs are available under the
program. Payments by the State to individuals or to
employers under the work supplementation program
shall be treated as expenditures incurred by the
State for aid to families with dependent children ex-
cept as limited by subsection (d).
‘‘(2) For purposes of this section, an eligible in-
dividual is an individual who is in a category which
the State determines should be eligible to participate
in the work supplementation program, and who
would, at the time of placement in the job involved,
be eligible for aid to families with dependent chil-
dren under an approved State plan if the State did
not have a work supplementation program in effect.
‘‘(3) For purposes of this subsection, a supple-
mented job is—
‘‘(A) a job provided to an eligible individ-
ual by the State or local agency administering
the State plan under part A; or
‘‘(B) a job provided to an eligible individ-
ual by any other employer for which all or part
of the wages are paid by the State or local
agency.
A State may provide or subsidize under the program
any job which the State determines to be appro-
priate.
‘‘(4) At the option of the State, individuals who
hold supplemented jobs under a State’s work
supplementation program shall be exempt from the
retrospective budgeting requirements imposed pursu-
ant to section 402(a)(13)(A)(ii) (and the amount of
the aid which is payable to the family of any such
individual for any month, or which would be so pay-
able but for the individual’s participation in the
work supplementation program, shall be determined
on the basis of the income and other relevant cir-
cumstances in that month).
‘‘(d) COST LIMITATION.—The amount of the Federal
payment to a State under section 403 for expenditures in-
curred in making payments to individuals and employers
under a work supplementation program under this sub-
section shall not exceed an amount equal to the amount
which would otherwise be payable under such section if
the family of each individual employed in the program es-
tablished in the State under this section had received the
maximum amount of aid to families with dependent chil-
dren payable under the State plan to such a family with
no income (without regard to adjustments under sub-
section (b)) for the lesser of—
‘‘(1) 9 months; or
‘‘(2) the number of months in which the indi-
vidual was employed in the program.
‘‘(e) RULES OF INTERPRETATION.—
‘‘(1) This section shall not be construed as re-
quiring the State or local agency administering the
State plan to provide employee status to an eligible