120
‘‘(e) SUSPENSION OR CANCELLATION OF DEBTS TO
STATE UPON MARRIAGE OF PARENTS.—
‘‘(1) CIRCUMSTANCES REQUIRING SUSPENSION
OR CANCELLATION.—In any case in which a State
has been assigned rights to support owed with re-
spect to a child who is receiving or has received as-
sistance under part A and—
‘‘(A) the parent owing such support mar-
ries (or remarries) the parent with whom such
child is living and to whom such support is
owed and applies to the State for relief under
this subsection;
‘‘(B) the State determines (in accordance
with procedures and criteria established by the
Secretary) that the marriage is not a sham
marriage entered into solely to satisfy this sub-
section; and
‘‘(C) the combined income of such parents
is less than twice the Federal poverty line,
the State shall afford relief to the parent owing such
support in accordance with paragraph (2).
‘‘(2) SUSPENSION OR CANCELLATION.—In the
case of a marriage or remarriage described in para-
graph (1), the State shall either—
121
‘‘(A) cancel all debts owed to the State
pursuant to such assignment; or
‘‘(B) suspend collection of such debts for
the duration of such marriage, and cancel such
debts if such duration extends beyond the end
of the period with respect to which support is
owed.
‘‘(3) NOTICE REQUIRED.—The State shall no-
tify custodial parents of children who are receiving
aid under part A of the relief available under this
subsection to individuals who marry (or remarry).’’.
(f) STATE OPTIONS TO PASS THROUGH AND TO DIS-
REGARD CHILD SUPPORT AMOUNTS.—
(1) STATE OPTION TO PASS THROUGH CHILD
SUPPORT.—Section 457(b)(1) (42 U.S.C. 657(b)(1))
is amended to read as follows:
‘‘(1) at State option, an amount determined by
the State, equal to all or a portion of the monthly
support obligation, may be paid to the family from
each of—
‘‘(A) amounts received in a month which
represent payments for that month; and
‘‘(B) amounts received in a month which
represent payments for a prior month which
122
were made by the absent parent in the month
when due;’’.
(2) STATE OPTION TO DISREGARD CHILD SUP-
PORT.—Section 
402(a)(8)(A)(vi) 
(42 
U.S.C
602(a)(8)(A)(vi)) is amended—
(A) by striking ‘‘shall disregard the first
$50’’ and inserting ‘‘may disregard all or any
portion’’;
(B) by striking ‘‘the first $50’’ and insert-
ing ‘‘and all or any portion’’; and
(C) by striking ‘‘section 457(b)’’ and in-
serting ‘‘section 457(a)’’.
(g) PASS THROUGH AND DISREGARD OF SUPPORT
COLLECTED ON BEHALF OF A FAMILY SUBJECT TO THE
FAMILY CAP.—
(1) PASS THROUGH.—Section 457 (42 U.S.C.
657), as amended by subsection (e) of this section,
is amended by adding at the end the following:
‘‘(f) PASS THROUGH OF SUPPORT COLLECTED ON
BEHALF OF A FAMILY SUBJECT TO THE FAMILY CAP.—
Amounts collected by a State agency under this part dur-
ing any month as support of a child who is a member
of a 1-parent family subject to section 402(a)(51) shall
be distributed to the family.’’.
123
(2) DISREGARD.—Section 402(a)(8)(A)(vi) (42
U.S.C. 602(a)(8)(A)(vi)) is amended by inserting
‘‘, except that, in the case of a 1-parent family sub-
ject to paragraph (51), all support payments col-
lected and paid to the family under section 457(f)
shall be disregarded’’ before the semicolon.
(h) REGULATIONS.—The Secretary of Health and
Human Services shall promulgate regulations—
(1) under part D of title IV of the Social Secu-
rity Act, establishing a uniform nationwide standard
for allocation of child support collections from an ob-
ligor owing support to more than one family; and
(2) under part A of such title, establishing
standards applicable to States electing the alter-
native formula under section 457(b) of such Act for
distribution of collections on behalf of families re-
ceiving Aid to Families with Dependent Children,
designed to minimize irregular monthly payments to
such families.
(i) CLERICAL AMENDMENT.—Section 454 (42 U.S.C.
654) is amended—
(1) in paragraph (11), by striking ‘‘(11)’’ and
inserting ‘‘(11)(A)’’; and
(2) by redesignating paragraph (12) as sub-
paragraph (B) of paragraph (11).
124
SEC. 403. DUE PROCESS RIGHTS.
(a) IN GENERAL.—Section 454 (42 U.S.C. 654), as
amended by section 402(f) of this Act, is amended by in-
serting after paragraph (11) the following new paragraph:
‘‘(12) provide for procedures to ensure that—
‘‘(A) individuals who are applying for or
receiving services under this part, or are parties
to cases in which services are being provided
under this part—
‘‘(i) receive notice of all proceedings in
which support obligations might be estab-
lished or modified; and
‘‘(ii) receive a copy of any order estab-
lishing or modifying a child support obliga-
tion, or (in the case of a petition for modi-
fication) a notice of determination that
there should be no change in the amount
of the child support award, within 14 days
after issuance of such order or determina-
tion;
‘‘(B) individuals applying for or receiving
services under this part have access to a fair
hearing that meets standards established by the
Secretary and ensures prompt consideration
and resolution of complaints (but the resort to
125
such procedure shall not stay the enforcement
of any support order); and
‘‘(C) individuals adversely affected by the
establishment or modification of (or, in the case
of a petition for modification, the determination
that there should be no change in) a child sup-
port order shall be afforded not less than 30
days after the receipt of the order or determina-
tion to initiate proceedings to challenge such
order or determination;’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall become effective on October 1, 1997.
SEC. 404. PRIVACY SAFEGUARDS.
(a) STATE PLAN REQUIREMENT.—Section 454 (42
U.S.C. 454) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(23);
(2) by striking the period at the end of para-
graph (24) and inserting ‘‘; and’’; and
(3) by adding after paragraph (24) the follow-
ing:
‘‘(25) will have in effect safeguards applicable
to all sensitive and confidential information handled
by the State agency designed to protect the privacy
rights of the parties, including—
126
‘‘(A) safeguards against unauthorized use
or disclosure of information relating to proceed-
ings or actions to establish paternity, or to es-
tablish or enforce support;
‘‘(B) prohibitions on the release of infor-
mation on the whereabouts of one party to an-
other party against whom a protective order
with respect to the former party has been en-
tered; and
‘‘(C) prohibitions on the release of infor-
mation on the whereabouts of one party to an-
other party if the State has reason to believe
that the release of the information may result
in physical or emotional harm to the former
party.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall become effective on October 1, 1997.
Subtitle B—Program
Administration and Funding
SEC. 411. FEDERAL MATCHING PAYMENTS.
(a) INCREASED BASE MATCHING RATE.—Section
455(a)(2) (42 U.S.C. 655(a)(2)) is amended to read as
follows:
‘‘(2) The applicable percent for a quarter for
purposes of paragraph (1)(A) is—
127
‘‘(A) for fiscal year 1997, 69 percent,
‘‘(B) for fiscal year 1998, 72 percent, and
‘‘(C) for fiscal year 1999 and succeeding
fiscal years, 75 percent.’’.
(b) MAINTENANCE OF EFFORT.—Section 455 (42
U.S.C. 655) is amended—
(1) in subsection (a)(1), in the matter preced-
ing subparagraph (A), by striking ‘‘From’’ and in-
serting ‘‘Subject to subsection (c), from’’; and
(2) by inserting after subsection (b) the follow-
ing new subsection:
‘‘(c) MAINTENANCE OF EFFORT.—Notwithstanding
the provisions of subsection (a), total expenditures for the
State program under this part for fiscal year 1997 and
each succeeding fiscal year, reduced by the percentage
specified for such fiscal year under subsection (a)(2)(A),
(B), or (C)(i), shall not be less than such total expendi-
tures for fiscal year 1996, reduced by 66 percent.’’.
SEC. 412. PERFORMANCE-BASED INCENTIVES AND PEN-
ALTIES.
(a) INCENTIVE ADJUSTMENTS TO FEDERAL MATCH-
ING RATE.—Section 458 (42 U.S.C. 658) is amended to
read as follows:
‘‘INCENTIVE ADJUSTMENTS TO MATCHING RATE
‘‘SEC. 458. (a) INCENTIVE ADJUSTMENT.—(1) IN
GENERAL.—In order to encourage and reward State child
128
support enforcement programs which perform in an effec-
tive manner, the Federal matching rate for payments to
a State under section 455(a)(1)(A), for each fiscal year
beginning on or after October 1, 1998, shall be increased
by a factor reflecting the sum of the applicable incentive
adjustments (if any) determined in accordance with regu-
lations under this section with respect to Statewide pater-
nity establishment and to overall performance in child sup-
port enforcement.
‘‘(2) STANDARDS.—(A) IN GENERAL.—The Sec-
retary shall specify in regulations—
‘‘(i) the levels of accomplishment, and rates of
improvement as alternatives to such levels, which
States must attain to qualify for incentive adjust-
ments under this section; and
‘‘(ii) the amounts of incentive adjustment that
shall be awarded to States achieving specified ac-
complishment or improvement levels, which amounts
shall be graduated, ranging up to—
‘‘(I) 5 percentage points, in connection
with Statewide paternity establishment; and
‘‘(II) 10 percentage points, in connection
with overall performance in child support en-
forcement.
129
‘‘(B) LIMITATION.—In setting performance stand-
ards pursuant to subparagraph (A)(i) and adjustment
amounts pursuant to subparagraph (A)(ii), the Secretary
shall ensure that the aggregate number of percentage
point increases as incentive adjustments to all States do
not exceed such aggregate increases as assumed by the
Secretary in estimates of the cost of this section as of
June 1995, unless the aggregate performance of all States
exceeds the projected aggregate performance of all States
in such cost estimates.
‘‘(3) DETERMINATION
OF
INCENTIVE
ADJUST-
MENT.—The Secretary shall determine the amount (if
any) of incentive adjustment due each State on the basis
of the data submitted by the State pursuant to section
454(15)(B) concerning the levels of accomplishment (and
rates of improvement) with respect to performance indica-
tors specified by the Secretary pursuant to this section.
‘‘(4) FISCAL YEAR SUBJECT TO INCENTIVE ADJUST-
MENT.—The total percentage point increase determined
pursuant to this section with respect to a State program
in a fiscal year shall apply as an adjustment to the appli-
cable percent under section 455(a)(2) for payments to
such State for the succeeding fiscal year.
‘‘(5) RECYCLING OF INCENTIVE ADJUSTMENT.—A
State shall expend in the State program under this part
130
all funds paid to the State by the Federal Government
as a result of an incentive adjustment under this section.
‘‘(b) MEANING OF TERMS.—For purposes of this sec-
tion—
‘‘(1) the term ‘Statewide paternity establish-
ment percentage’ means, with respect to a fiscal
year, the ratio (expressed as a percentage) of—
‘‘(A) the total number of out-of-wedlock
children in the State under one year of age for
whom paternity is established or acknowledged
during the fiscal year, to
‘‘(B) the total number of children born out
of wedlock in the State during such fiscal year;
and
‘‘(2) the term ‘overall performance in child sup-
port enforcement’ means a measure or measures of
the effectiveness of the State agency in a fiscal year
which takes into account factors including—
‘‘(A) the percentage of cases requiring a
child support order in which such an order was
established;
‘‘(B) the percentage of cases in which child
support is being paid;
‘‘(C) the ratio of child support collected to
child support due; and
131
‘‘(D) the cost-effectiveness of the State
program, as determined in accordance with
standards established by the Secretary in regu-
lations.’’.
(b) ADJUSTMENT OF PAYMENTS UNDER PART D OF
TITLE IV.—Section 455(a)(2) (42 U.S.C. 655(a)(2)), as
amended by section 411(a) of this Act, is amended—
(1) by striking the period at the end of sub-
paragraph (C)(ii) and inserting a comma; and
(2) by adding after and below subparagraph
(C), flush with the left margin of the subsection, the
following:
‘‘increased by the incentive adjustment factor (if any) de-
termined by the Secretary pursuant to section 458.’’.
(c) CONFORMING AMENDMENTS.—Section 454(22)
(42 U.S.C. 654(22)) is amended—
(1) by striking ‘‘incentive payments’’ the first
place it appears and inserting ‘‘incentive adjust-
ments’’; and
(2) by striking ‘‘any such incentive payments
made to the State for such period’’ and inserting
‘‘any increases in Federal payments to the State re-
sulting from such incentive adjustments’’.
(d) CALCULATION OF IV–D PATERNITY ESTABLISH-
MENT PERCENTAGE.—(1) Section 452(g)(1) (42 U.S.C.
132
652(g)(1)) is amended in the matter preceding subpara-
graph (A) by inserting ‘‘its overall performance in child
support enforcement is satisfactory (as defined in section
458(b) and regulations of the Secretary), and’’ after
‘‘1994,’’.
(2) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is
amended—
(A) in subparagraph (A), in the matter preced-
ing clause (i)—
(i) by striking ‘‘paternity establishment
percentage’’ and inserting ‘‘IV–D paternity es-
tablishment percentage’’; and
(ii) by striking ‘‘(or all States, as the case
may be)’’;
(B) in subparagraph (A)(i), by striking ‘‘during
the fiscal year’’;
(C) in subparagraph (A)(ii)(I), by striking ‘‘as
of the end of the fiscal year’’ and inserting ‘‘in the
fiscal year or, at the option of the State, as of the
end of such year’’;
(D) in subparagraph (A)(ii)(II), by striking ‘‘or
(E) as of the end of the fiscal year’’ and inserting
‘‘in the fiscal year or, at the option of the State, as
of the end of such year’’;
(E) in subparagraph (A)(iii)—
133
(i) by striking ‘‘during the fiscal year’’;
and
(ii) by striking ‘‘and’’ at the end; and
(F) in the matter following subparagraph (A)—
(i) by striking ‘‘who were born out of wed-
lock during the immediately preceding fiscal
year’’ and inserting ‘‘born out of wedlock’’;
(ii) by striking ‘‘such preceding fiscal
year’’ both places it appears and inserting ‘‘the
preceding fiscal year’’; and
(iii) by striking ‘‘or (E)’’ the second place
it appears.
(3) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is
amended—
(A) by striking subparagraph (A) and redesig-
nating subparagraphs (B) and (C) as subparagraphs
(A) and (B), respectively;
(B) in subparagraph (A), as redesignated, by
striking ‘‘the percentage of children born out-of-wed-
lock in the State’’ and inserting ‘‘the percentage of
children in the State who are born out of wedlock
or for whom support has not been established’’; and
(C) in subparagraph (B), as redesignated—
134
(i) by inserting ‘‘and overall performance
in child support enforcement’’ after ‘‘paternity
establishment percentages’’; and
(ii) by inserting ‘‘and securing support’’
before the period.
(e) REDUCTION OF PAYMENTS UNDER PART D OF
TITLE IV.—
(1) NEW
REQUIREMENTS.—Section 455 (42
U.S.C. 655) is amended by inserting after sub-
section (b) the following:
‘‘(c)(1) If the Secretary finds, with respect to a State
program under this part in a fiscal year beginning on or
after October 1, 1997—
‘‘(A)(i) on the basis of data submitted by a
State pursuant to section 454(15)(B), that the State
program in such fiscal year failed to achieve the IV–
D paternity establishment percentage (as defined in
section 452(g)(2)(A)) or the appropriate level of
overall performance in child support enforcement (as
defined in section 458(b)(2)), or to meet other per-
formance measures that may be established by the
Secretary, or
‘‘(ii) on the basis of an audit or audits of such
State 
data 
conducted 
pursuant 
to 
section
452(a)(4)(C), that the State data submitted pursu-
135
ant to section 454(15)(B) is incomplete or unreli-
able; and
‘‘(B) that, with respect to the succeeding fiscal
year—
‘‘(i) the State failed to take sufficient cor-
rective action to achieve the appropriate per-
formance levels as described in subparagraph
(A)(i) of this paragraph, or
‘‘(ii) the data submitted by the State pur-
suant to section 454(15)(B) is incomplete or
unreliable,
the amounts otherwise payable to the State under this
part for quarters following the end of such succeeding fis-
cal year, prior to quarters following the end of the first
quarter throughout which the State program is in compli-
ance with such performance requirement, shall be reduced
by the percentage specified in paragraph (2).
‘‘(2) The reductions required under paragraph (1)
shall be—
‘‘(A) not less than 6 nor more than 8 percent,
or
‘‘(B) not less than 8 nor more than 12 percent,
if the finding is the second consecutive finding made
pursuant to paragraph (1), or
136
‘‘(C) not less than 12 nor more than 15 per-
cent, if the finding is the third or a subsequent con-
secutive such finding.
‘‘(3) For purposes of this subsection, section
402(a)(27), and section 452(a)(4), a State which is deter-
mined as a result of an audit to have submitted incomplete
or unreliable data pursuant to section 454(15)(B), shall
be determined to have submitted adequate data if the Sec-
retary determines that the extent of the incompleteness
or unreliability of the data is of a technical nature which
does not adversely affect the determination of the level of
the State’s performance.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 403 (42 U.S.C. 603) is amend-
ed by striking subsection (h).
(B) 
Section 
452(a)(4) 
(42 
U.S.C.
652(a)(4)) is amended by striking ‘‘403(h)’’
each place such term appears and inserting
‘‘455(c)’’.
(C) Subsections (d)(3)(A), (g)(1), and
(g)(3)(A) of section 452 (42 U.S.C. 652) are
each amended by striking ‘‘403(h)’’ and insert-
ing ‘‘455(c)’’.
(f) EFFECTIVE DATES.—
137
(1) 
INCENTIVE
ADJUSTMENTS.—(A) 
The
amendments made by subsections (a), (b), and (c)
shall become effective October 1, 1997, except to the
extent provided in subparagraph (B).
(B) Section 458 of the Social Security Act, as
in effect prior to the enactment of this section, shall
be effective for purposes of incentive payments to
States for fiscal years prior to fiscal year 1999.
(2) PENALTY REDUCTIONS.—(A) The amend-
ments made by subsection (d) shall become effective
with respect to calendar quarters beginning on and
after the date of enactment of this Act.
(B) The amendments made by subsection (e)
shall become effective with respect to calendar quar-
ters beginning on and after the date one year after
the date of enactment of this Act.
SEC. 413. FEDERAL AND STATE REVIEWS AND AUDITS.
(a) STATE AGENCY ACTIVITIES.—Section 454 (42
U.S.C. 654) is amended—
(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:
237
(A) by striking ‘‘responding to interrog-
atories pursuant to requirements imposed by
section 461(b)(3)’’ and inserting ‘‘taking ac-
tions necessary to comply with the requirements
of subsection (A) with regard to any individ-
ual’’; and
(B) by striking ‘‘any of his duties’’ and all
that follows and inserting ‘‘such duties.’’.
(5) Section 461 (42 U.S.C. 661) is amended by
striking subsection (b), and section 459 (42 U.S.C.
659) is amended by inserting after subsection (b)
(as added by paragraph (3) of this subsection) the
following:
‘‘(c) DESIGNATION OF AGENT; RESPONSE TO NOTICE
OR PROCESS.—(1) The head of each agency subject to the
requirements of this section shall—
‘‘(A) designate an agent or agents to receive or-
ders and accept service of process; and
‘‘(B) publish (i) in the appendix of such regula-
tions, (ii) in each subsequent republication of such
regulations, and (iii) annually in the Federal Reg-
ister, the designation of such agent or agents, identi-
fied by title of position, mailing address, and tele-
phone number.’’.