‘‘(B) the whole number of months remain-
ing in the time period.
‘‘SEC. 405. REQUIREMENTS CONCERNING OTHER PRO-
GRAMS.
‘‘(a) WORK FIRST PROGRAM; WORKFARE OR JOB
PLACEMENT VOUCHER PROGRAM.—The State plan shall
provide that the State has in effect—
‘‘(1) a Work First program that meets the re-
quirements of part F; and
‘‘(2) a workfare program that meets the re-
quirements of part G, or a job placement voucher
program that meets the requirements of part H, but
not both.
‘‘(b) PROVISION
OF
CASE
MANAGEMENT
SERV-
ICES.—The State plan shall provide that the State shall
furnish to participants in those programs case manage-
ment services that are necessary to ensure the integrated
provision of benefits and services under those programs
and under this part.
‘‘(c) STATE CHILD SUPPORT AGENCY.—The State
plan shall—
‘‘(1) provide that the State has in effect a plan
approved under part D and operates a child support
program in substantial compliance with such plan;
‘‘(2) provide that the State agency administer-
ing the plan approved under this part is responsible
for ensuring that—
‘‘(A) the benefits and services provided
under plans under this part and part D are fur-
nished in an integrated manner, including co-
ordination of intake procedures with the agency
administering the plan under part D;
‘‘(B) all applicants for, and recipients of,
temporary employment assistance are encour-
aged, assisted, and required (as provided under
section 403(b)(1)(E)(ii)) to cooperate in the es-
tablishment and enforcement of paternity and
child support obligations and are notified about
the services available under the State plan ap-
proved under part D; and
‘‘(C) procedures require referral of pater-
nity and child support enforcement cases to the
agency administering the plan approved under
part D not later than 10 days after the applica-
tion for temporary employment assistance; and
‘‘(3) provide for prompt notice (including the
transmittal of all relevant information) to the State
child support collection agency established pursuant
to part D of the furnishing of temporary employ-
ment assistance with respect to a child who has been
deserted or abandoned by a parent (including a child
born out of wedlock, without regard to whether the
paternity of the child has been established).
‘‘(d) CHILD WELFARE SERVICES AND FOSTER CARE
AND ADOPTION ASSISTANCE.—The State plan shall pro-
vide that the State has in effect—
‘‘(1) a State plan for child welfare services ap-
proved under part B; and
‘‘(2) a State plan for foster care and adoption
assistance approved under part E,
and operates such plans in substantial compliance with the
requirements of such parts.
‘‘(e) REPORT OF CHILD ABUSE, ETC.—The State
plan shall provide that the State agency will—
‘‘(1) report to an appropriate agency or official
known or suspected instances of physical or mental
injury, sexual abuse or exploitation, or negligent
treatment or maltreatment of a child receiving as-
sistance under the State plan under circumstances
which indicate that the child’s health or welfare is
threatened thereby; and
‘‘(2) provide such information with respect to a
situation described in paragraph (1) as the State
agency may have.
‘‘(f) AVAILABILITY OF ASSISTANCE IN RURAL AREAS
OF STATE.—The State plan shall provide that the State
agency shall consider and address any special needs of
rural areas in the State to ensure that families in such
areas receive assistance to become self-sufficient.
‘‘(g) FAMILY PRESERVATION.—
‘‘(1) IN GENERAL.—The State plan shall de-
scribe the efforts by the State to promote family
preservation and stability, including efforts—
‘‘(A) to encourage fathers to stay home
and be a part of the family;
‘‘(B) to keep families together to the ex-
tent possible; and
‘‘(C) except to the extent provided in para-
graph (2), to treat 2-parent families and 1-par-
ent families equally with respect to eligibility
for assistance.
‘‘(2) MAINTENANCE
OF
TREATMENT.—The
State may impose eligibility limitations relating spe-
cifically to 2-parent families to the extent such limi-
tations are no more restrictive than such limitations
in effect in the State plan in fiscal year 1995.
‘‘(h) CHILD CARE.—The State plan shall provide that
the State has in effect a plan under its program under
the Child Care Development Block Grant Act of 1990.
‘‘SEC. 406. ADMINISTRATIVE REQUIREMENTS FOR STATE
PLAN.
‘‘(a) STATEWIDE PLAN.—The State plan shall be in
effect in all political subdivisions of the State, and, if ad-
ministered by the subdivisions, be mandatory upon such
subdivisions. If such plan is not administered uniformly
throughout the State, the plan shall describe the adminis-
trative variations.
‘‘(b) SINGLE ADMINISTERING AGENCY.—The State
plan shall provide for the establishment or designation of
a single State agency to administer the plan or supervise
the administration of the plan.
‘‘(c) FINANCIAL PARTICIPATION.—The State plan
shall provide for financial participation by the State con-
sistent with section 413.
‘‘(d) REASONABLE PROMPTNESS.—The State plan
shall provide that all individuals wishing to apply for tem-
porary employment assistance shall have opportunity to
do so, and that such assistance shall be furnished with
reasonable promptness to all eligible individuals.
‘‘(e) AUTOMATED DATA PROCESSING SYSTEM.—The
State plan may provide for the establishment and oper-
ation of an automated statewide management information
system designed effectively and efficiently to assist man-
agement in the administration of the State plan approved
under this part, so as—
‘‘(1) to control and account for—
‘‘(A) all the factors in the total eligibility
determination process under such plan for as-
sistance, and
‘‘(B) the costs, quality, and delivery of
payments and services furnished to applicants
for and recipients of assistance; and
‘‘(2) to notify the appropriate officials for child
support, food stamp, and social service programs,
and the medical assistance program approved under
title XIX, whenever a recipient becomes ineligible for
such assistance or the amount of assistance provided
to a recipient under the State plan is changed.
‘‘(f) DISCLOSURE OF INFORMATION.—The State plan
shall provide for safeguards which restrict the use or dis-
closure of information concerning applicants or recipients.
‘‘(g) DETECTION OF FRAUD.—The State plan shall
provide, in accordance with regulations issued by the Sec-
retary, for appropriate measures to detect fraudulent ap-
plications for temporary employment assistance before the
establishment of eligibility for such assistance.
‘‘(h) AUDITS.—
‘‘(1) IN GENERAL.—Each State shall audit, not
less than annually, the State expenditures for the
program under this part and parts F, G, and H to
411, if the Secretary, after reasonable notice and oppor-
tunity for hearing to the State agency administering or
supervising the administration of such plan, finds that in
the administration of the plan there is a failure to comply
substantially with any provision required by subpart 1 to
be included in the plan, the Secretary shall notify such
State agency that further payments will not be made to
the State (or in the Secretary’s discretion, that payments
will be limited to categories under or parts of the State
plan not affected by such failure) until the Secretary is
satisfied that there is no longer any such failure to comply.
Until the Secretary is so satisfied the Secretary shall make
no further payments to such State (or shall limit payments
to categories under or parts of the State plan not affected
by such failure).
‘‘SEC. 413. PAYMENTS TO STATES.
‘‘(a) COMPUTATION OF AMOUNT.—
‘‘(1) IN GENERAL.—Subject to section 412, the
Secretary of the Treasury shall pay to each State
which has an approved plan for temporary employ-
ment assistance, for each quarter, beginning with
the quarter commencing October 1, 1996, an
amount equal to the Federal medical assistance per-
centage (as defined in section 1905(b) or, as appli-
cable, in section 1118) of the program expenditures
by the State under that plan (other than expendi-
tures for administrative costs of that plan and for
purposes specified in paragraph (2)(B)).
‘‘(2) WORK FIRST AND OTHER PROGRAMS.—
‘‘(A) ENTITLEMENT; FEDERAL MATCHING
SHARE.—Each State that is operating a pro-
gram in accordance with a plan approved under
part F and a program in accordance with part
G or H shall be entitled to payment, for each
fiscal year, equal to the lesser of—
‘‘(i) the sum of the amounts allotted
to the State pursuant to subparagraphs
(D) and (E), or
‘‘(ii) the greater of 60 percent or the
Federal medical assistance percentage (as
defined in section 1905(b) or, as applica-
ble, in section 1118) of State expenditures
for the purposes specified in subparagraph
(B) (excluding any expenditures from per-
formance bonuses provided under para-
graph (4)).
‘‘(B) USE OF FUNDS.—
‘‘(i) Amounts available to a State pur-
suant to this paragraph may be used by
the State—
‘‘(I) for all costs of carrying out
programs under part F and part G or
part H;
‘‘(II) for administrative costs of
carrying out the program under part
A;
‘‘(III) for all costs of providing
emergency assistance to needy fami-
lies with children in accordance with
paragraph (3); and
‘‘(IV) to supplement amounts
otherwise available for child care
under section 6580b of the Child Care
and Development Block Grant Act of
1990, subject to the terms and condi-
tions, including matching require-
ments, under section 6580b of that
Act.
‘‘(ii) States shall not allocate to pro-
grams in which Federal financial participa-
tion is available, other than programs spec-
ified in clause (i), administrative costs for
activities in fiscal year 1997 and succeed-
ing fiscal years that in fiscal year 1995
were allocated to programs under parts A
and F.
‘‘(C) AMOUNTS
FOR
ALLOTMENT.—For
purposes of allotment to States under subpara-
graphs (D) and (E), the amount specified in
this subparagraph is as follows:
‘‘(i) For fiscal years 1997 through
2002, the amount specified is:
‘‘(I) $2,900,000,000 for fiscal
year 1997;
‘‘(II) $2,950,000,000 for fiscal
year 1998;
‘‘(III) $3,100,000,000 for fiscal
year 1999;
‘‘(IV) $3,350,000,000 for fiscal
year 2000;
‘‘(V) $3,800,000,000 for fiscal
year 2001;
‘‘(VI) $3,900,000,000 for fiscal
year 2002;
‘‘(ii) For fiscal year 2003 and each
succeeding fiscal year, the amount speci-
fied is the product of the following:
‘‘(I) The amount specified in this
subparagraph for the immediately pre-
ceding fiscal year.
‘‘(II) 1.00 plus the percentage (if
any) by which the average of the
Consumer Price Index (as defined in
section 1(f)(5) of the Internal Reve-
nue Code of 1986) for the most recent
12-month period for which such infor-
mation is available exceeds that for
the previous 12-month period.
‘‘(III) 1.00 plus the percentage
change (if any) in the participation
rate required in section 488.
‘‘(IV) 1.00 plus the percentage
change in the non-exempt adult recipi-
ent caseload for the most recent quar-
ter for which information is available,
compared to that caseload for the
same calendar quarter in the previous
year.
‘‘(D) BASE
ALLOTMENT
TO
STATES.—
From the amount specified in subparagraph (C)
for a fiscal year, the Secretary shall first allot
to each eligible State an amount equal to the
amount paid to the State pursuant to section
403(a)(3) for administration of the State pro-
gram under part A in fiscal year 1995.
‘‘(E) ALLOTMENT
OF
REMAINDER
TO
STATES.—
‘‘(i) From the amount specified in
subparagraph (C) for a fiscal year remain-
ing after application of subparagraph (D),
the Secretary shall allot to each State an
amount bearing the same ratio to such re-
mainder as the average monthly number of
non-exempt adult recipients (as defined in
clause (ii)) in the State in the preceding
fiscal year bears to the average monthly
number of such recipients in all eligible
States for such preceding year.
‘‘(ii) For purposes of this subpara-
graph, the term ‘non-exempt adult recipi-
ent’ in the case of any State means an in-
dividual other than a dependent child (un-
less such child is the custodial parent of
another dependent child)—
‘‘(I) whose needs are met (in
whole or in part) with assistance pro-
vided under the State plan approved
under this part, and
‘‘(II) who is required to partici-
pate in a program under part F, G, or
H.
‘‘(iii) For purposes of clause (ii), the
term ‘dependent child’ means a needy
child—
‘‘(I) who has been deprived of pa-
rental support or care by reason of
the death, continued absence from the
home (other than absence occasioned
solely by reason of the performance of
active duty in the uniformed services
of the United States), or physical or
mental incapacity of a parent, and
who is living with his father, mother,
grandfather, grandmother, brother,
sister, stepfather, stepmother, step-
brother, stepsister, uncle, aunt, first
cousin, nephew, or niece, in a place of
residence maintained by one or more
of such relatives as the relative’s own
home, and
‘‘(II) who is—
‘‘(aa) under the age of
eighteen, or
‘‘(bb) at the option of the
State, under the age of nineteen
and a full-time student in a sec-
ondary school (or in the equiva-
lent level of vocational or tech-
nical training), if, before age
nineteen, the child reasonably
may be expected to complete the
secondary school program (or
training).
‘‘(iv) For purposes of clause (iii), the
term ‘relative with whom any dependent
child is living’ means the individual who is
one of the relatives specified in clause (iii)
and with whom the child is living (within
the meaning of such subsection) in a place
of residence maintained by the individual
(alone or together with any one or more of
the other relatives so specified) as the rel-
ative’s own home.
‘‘(F) AMOUNTS FOR INELIGIBLE PARTICI-
PANTS.—Not more than 10 percent of the
amount payable to a State under this para-
graph for a calendar quarter may be for ex-
penditures made during the quarter with re-
spect to program participants who are not eligi-
ble for assistance under the State plan ap-
proved under this part.
‘‘(3) EMERGENCY ASSISTANCE.—
‘‘(A) 
For 
purposes 
of 
paragraph
(2)(B)(i)(III), the term ‘emergency assistance
to needy families with children’ means any of
the items specified in subparagraph (B), fur-
nished for a period not in excess of 30 days in
any 12-month period, in the case of a needy
child under the age of 21 who is (or, within
such period as may be specified by the Sec-
retary, has been) living with any of the relatives
specified in paragraph (2)(E)(iii) in a place of
residence maintained by one or more of such
relatives as the relative’s own home, but only
where—
‘‘(i) such child is without available re-
sources,
‘‘(ii) the payments, care, or services
involved are necessary to avoid destitution
of such child or to provide living arrange-
ments in a home for such child, and
‘‘(iii) the destitution or need for living
arrangements did not arise because the
child or relative refused without good cause
to accept employment or training for em-
ployment.
‘‘(B) For the purposes of subparagraph
(A), the items specified include—
‘‘(i) money payments, payments in
kind, or such other payments as the State
agency may specify with respect to, or
medical care or any other type of remedial
care recognized under State law (for which
the individual is not entitled to medical as-
sistance under the State plan under title
XIX) on behalf of, such child or any other
member of the household in which he is liv-
ing, and
‘‘(ii) services the Secretary may speci-
fy,
but the term does not include benefits or serv-
ices provided to children in the juvenile justice
system.
‘‘(4) PERFORMANCE BONUS.—
‘‘(A) IN GENERAL.—The Secretary, in con-
sultation with State and local government offi-
cials and other interested persons, shall develop
a system of performance measures and per-
formance bonuses that rewards States that op-
erate programs established under parts F, G,
and H that are effective in moving recipients of
assistance under the State plan approved under
this part into employment.
‘‘(B) ALLOCATION FORMULA.—
‘‘(i) IN
GENERAL.—Not later than
January 1, 1997, the Secretary, in con-
sultation with State and local government
officials and other interested persons, shall
develop and publish in the Federal Reg-
ister a formula for allocating the limitation
amount specified in subparagraph (E) for
the performance bonus fund for a fiscal
year, based on the effectiveness of State
programs established under parts F, G,
and H in moving recipients of assistance
under the State plan under this part into
employment in the preceding fiscal year,
including those who remain employed for
greater periods of time. In each fiscal year
specified in subparagraph (E), a State
shall be entitled to receive payments equal
to the limitation allocated to such State
under the formula developed by the Sec-
retary under this clause.
‘‘(ii) FACTORS TO BE CONSIDERED.—
In developing the allocation formula under
clause (i), the Secretary shall take into
consideration factors that affect a State’s
ability to achieve a given level of employ-
ment of recipients, such as—
‘‘(I) the proportion of families
who are at greatest risk of long-term
welfare dependency, or who have re-
mained unemployed for long periods
of time; and
‘‘(II) the unemployment condi-
tions of each State.
‘‘(C) ANNUAL
COMPLIANCE
REPORTS.—
Each State shall submit to the Secretary an-
nual reports on the effectiveness of its program
under part F based on the performance meas-
ures established under subparagraph (A).
‘‘(D) USE
OF
PAYMENTS.—Bonus pay-
ments under this paragraph shall be used for
the 
purposes 
allowable 
under 
subsection
(a)(2)(B)(i).
‘‘(E) LIMITATION
AMOUNT
SPECIFIED.—
For purposes of the allocation formula under
subparagraph (B), the limitation amount speci-
fied in this subparagraph is—
‘‘(i) $100,000,000 for fiscal year 1997
rates, payable in FY 1998;
‘‘(ii) $100,000,000 for fiscal year
1998 rates, payable in FY 1999;
‘‘(iii) $200,000,000 for fiscal year
1999 rates, payable in FY 2000;
‘‘(iv) $200,000,000 for fiscal year
2000 rates, payable in FY 2001; and
‘‘(v) $200,000,000 for fiscal year
2001 rates, payable in FY 2002.
‘‘(b) METHOD OF COMPUTATION AND PAYMENT.—
The method of computing and paying amounts pursuant
to this section is as follows:
‘‘(1) The Secretary, prior to the beginning of
each quarter, shall estimate the amount to be paid
to the State for the quarter under subsection (a),
the estimate to be based on—
‘‘(A) a report filed by the State containing
its estimate of the amount to be expended in
the quarter in accordance with each provision of
subsection (a) and stating the amounts appro-
quarter by the State or any political subdivision
thereof with respect to temporary employment
assistance furnished under the State plan; and
‘‘(C) reduced by such amount as is nec-
essary to provide the appropriate reimburse-
ment to the Federal Government that the State
is required to make under section 457 out of
that portion of child support collections retained
by the State pursuant to such section, except
that such increases or reductions shall not be
made to the extent that such sums have been
applied to make the amount certified for any
prior quarter greater or less than the amount
estimated by the Secretary of Health and
Human Services for such prior quarter.
‘‘(c) METHOD OF PAYMENT.—The Secretary of the
Treasury, through the Fiscal Service of the Department
of the Treasury and prior to audit or settlement by the
General Accounting Office, shall pay to the State, at the
time or times fixed by the Secretary of Health and Human
Services, the amount so certified.
‘‘SEC. 414. QUALITY ASSURANCE, DATA COLLECTION, AND
REPORTING SYSTEM.
‘‘(a) QUALITY ASSURANCE.—
‘‘(1) IN GENERAL.—In order—
‘‘(A) to improve the accuracy of payments
of temporary employment assistance and wages
under work programs under parts F, G, and H,
to assess the accuracy of data reported by each
State relating to its work programs and to its
implementation of the time limits established by
section 402(c)(2),
‘‘(B) to determine whether participation
standards under section 488(a) have been met,
‘‘(C) to assess the effectiveness of the
State’s program by applying the performance
standards developed under section 413(a)(4),
and
‘‘(D) to serve such other purposes as the
Secretary finds appropriate for a performance
measurement system, the Secretary shall estab-
lish and operate a quality assurance system to
secure the accurate data needed to measure
performance, identify areas in which corrective
action is necessary, and determine the amount
(if any) of the disallowance required to be re-
paid to the Secretary because of erroneous aid
payments made by the State. A quality assur-
ance system shall be developed based upon a
collaborative effort involving the Secretary, the
States and other interested parties, and shall
include quantifiable program outcomes related
to self sufficiency in the categories of welfare-
to-work, payment accuracy, and child support.
‘‘(2) MODIFICATIONS TO SYSTEM.—As consid-
ered necessary, but not more often than every 2
years, the Secretary, in consultation with the States
and other interested parties, shall make appropriate
changes in the design and administration of the
quality assurance system, including changes in
benchmarks, measures, and data collection or sam-
pling procedures.
‘‘(b) DATA COLLECTION AND REPORTING.—
‘‘(1) IN GENERAL.—The State plan shall pro-
vide for a quarterly report to the Secretary regard-
ing the data described in paragraphs (2) and (3)
and such additional data as the Secretary deter-
mines is needed for the quality assurance system.
The data collection and reporting system under this
subsection shall promote accountability, continuous
improvement, and integrity in the State programs
for temporary employment assistance and Work
First.
‘‘(2) DISAGGREGATED DATA.—The State shall
collect the following data items on a monthly basis
from disaggregated case records of applicants for
and recipients of temporary employment assistance
from the previous month:
‘‘(A) The age of adults and children (in-
cluding pregnant women).
‘‘(B) Marital or familial status of cases:
married (2-parent family), widowed, divorced,
separated, or never married; or child living with
other adult relative.
‘‘(C) The gender, race, educational attain-
ment, work experience, disability status (wheth-
er the individual is seriously ill, incapacitated,
or caring for a disabled or incapacitated child)
of adults.
‘‘(D) The amount of cash assistance and
the amount and reason for any reduction in
such assistance. Any other data necessary to
determine the timeliness and accuracy of bene-
fits and welfare diversions.
‘‘(E) Whether any member of the family
receives benefits under any of the following:
‘‘(i) Any housing program.
‘‘(ii) The program under the Food
Stamp Act of 1977.
‘‘(iii) The program under the Head
Start Act.
‘‘(iv) Any job training program.
‘‘(F) The number of months since the most
recent application for assistance under the plan.
‘‘(G) The total number of months for
which assistance has been provided to the fami-
lies under the plan.
‘‘(H) 
The 
employment 
status, 
hours
worked, and earnings of individuals while re-
ceiving assistance, whether the case was closed
due to employment, and other data needed to
determine the work performance rate.
‘‘(I) Status in Work First and workfare,
including the number of hours an individual
participated and the component in which the in-
dividual participated.
‘‘(J) The number of individuals in the as-
sistance unit and their relationship to the
youngest child. Nonrecipients in the household
and the relationship of each to the youngest
child.
‘‘(K) Citizenship status.
‘‘(L) Shelter arrangement.
‘‘(M) Unearned income (not including tem-
porary employment assistance), such as child
support, and assets.
‘‘(N) The number of children who have a
parent who is deceased, incapacitated, or unem-
ployed.
‘‘(O) Geographic location.
‘‘(3) AGGREGATED DATA.—The State shall col-
lect the following data items on a monthly basis
from aggregated case records of applicants for and
recipients of temporary employment assistance from
the previous month:
‘‘(A) The number of adults receiving as-
sistance.
‘‘(B) The number of children receiving as-
sistance.
‘‘(C) The number of families receiving as-
sistance.
‘‘(D) The number of assistance units who
had grants reduced or terminated and the rea-
son for the reduction or termination, including
sanction, employment, and exceeding the time
limit for assistance.
‘‘(E) The number of applications for as-
sistance; the number approved and the number
denied and the reason for denial.
‘‘(4) LONGITUDINAL STUDIES.—The State shall
submit selected data items for a cohort of individ-
uals who are tracked over time. This longitudinal
sample shall be used for selected data items de-
scribed in paragraphs (2) and (3), as determined ap-
propriate by the Secretary.
‘‘(c) ADDITIONAL DATA.—The report required by
subsection (b) for a fiscal year quarter also shall include
the following:
‘‘(1) REPORT ON USE OF FEDERAL FUNDS TO
COVER ADMINISTRATIVE COSTS AND OVERHEAD.—A
statement of—
‘‘(A) the percentage of the Federal funds
paid to the State under Section 413 for the fis-
cal year quarter and used to carry out parts F
and G or H that are used to cover administra-
tive costs or overhead; and
‘‘(B) the total amount of State funds that
are used to cover such costs or overhead.
‘‘(2) REPORT
ON
STATE
EXPENDITURES
ON
PROGRAMS FOR NEEDY FAMILIES.—A statement of
the total amount expended by the State during the
fiscal year quarter on programs for needy families,
with the amount spent on the program under this
part, and the purposes for which such amount was
spent, separately stated.
‘‘(3) REPORT ON NONCUSTODIAL PARENTS PAR-
TICIPATING IN WORK ACTIVITIES.—The number of
noncustodial parents in the State who participated
in work activities during the fiscal year quarter.
‘‘(4) 
REPORT
ON
CHILD
SUPPORT
COL-
LECTED.—The total amount of child support col-
lected by the State agency administering the State
plan under part D on behalf of a family receiving as-
sistance under this part.
‘‘(5) REPORT
ON
TRANSITIONAL
SERVICES.—
The total amount expended by the State for provid-
ing transitional services to families that have ceased
to receive assistance under this part because of in-
creased hours of, or increased income from, employ-
ment, together with a description of such services.
‘‘(d) COLLECTION
PROCEDURES.—The Secretary
shall provide case sampling plans and data collection pro-
cedures as considered necessary to make statistically valid
estimates of plan performance.
‘‘(e) VERIFICATION.—The Secretary shall develop
and implement procedures for verifying the quality of the
data submitted by the State, and shall provide technical
assistance, funded by the compliance penalties imposed
under section 412, if such data quality falls below accept-
able standards.
‘‘SEC. 415. COMPILATION AND REPORTING OF DATA.
‘‘(a) CURRENT PROGRAMS.—The Secretary, on the
basis of the Secretary’s review of the reports received from
the States under section 414, shall compile such data as
the Secretary believes necessary, and from time to time,
publish the findings as to the effectiveness of the programs
developed and administered by the States under this part.
The Secretary annually shall report to the Congress on
the programs developed and administered by each State
under this part.
‘‘(b) RESEARCH, DEMONSTRATION
AND EVALUA-
TION.—For each fiscal year beginning with fiscal year
1996, from the appropriation account providing funds for
grants to States for activities funded under section
413(a)(1), the Secretary may reserve for obligation, or
transfer to other accounts funding research activities, an
amount not to exceed 0.19 percent of the total amount
paid to States in the previous fiscal year for activities
under section 413(a)(1), and may use the reserved
amounts to pay costs of the following types of research,
demonstrations, and evaluations:
‘‘(1) STATE-INITIATED RESEARCH.—States may
apply for grants to cover up to 90 percent of the
costs of self-evaluations of programs under State
plans approved under this part.
‘‘(2) DEMONSTRATIONS.—
‘‘(A) IN
GENERAL.—-The Secretary may
implement and evaluate demonstrations of inno-
vative and promising strategies to—
‘‘(i) improve child well-being through
reductions in illegitimacy, teen pregnancy,
welfare dependency, homelessness, and
poverty;
‘‘(ii) test promising strategies by non-
profit and for-profit institutions to increase
employment, earnings, child support pay-
ments, and self-sufficiency with respect to
temporary employment assistance clients
under State plans; and
‘‘(iii) foster the development of child
care.
‘‘(B) ADDITIONAL
PARAMETERS.—Dem-
onstrations implemented under this para-
graph—
‘‘(i) may provide one-time capital
funds to establish, expand, or replicate
programs;
‘‘(ii) 
may 
test 
performance-based
grant-to-loan financing in which programs
meeting performance targets receive grants
while programs not meeting such targets
repay funding on a pro-rated basis; and
‘‘(iii) should test strategies in multiple
States and types of communities.
‘‘(3) FEDERAL EVALUATIONS.—
‘‘(A) IN
GENERAL.—The Secretary shall
conduct research on the effects, benefits, and
costs of different approaches to operating wel-
fare programs, including an implementation
study based on a representative sample of
States and localities, documenting the policies
adopted, how such policies were implemented,
the types and mix of services provided, and
such other factors as the Secretary considers
appropriate.
‘‘(B) RESEARCH ON RELATED ISSUES.—
The Secretary also shall conduct research on is-
sues related to the purposes of this part, such
as strategies for moving welfare recipients into
the workforce quickly, reducing teen preg-
nancies and out-of-wedlock births, and provid-
ing adequate child care.
‘‘(C) STATE REIMBURSEMENT.—The Sec-
retary may reimburse a State for any research-
related costs incurred pursuant to research con-
ducted under this paragraph.
‘‘(D) USE
OF
RANDOM
ASSIGNMENT.—
Evaluations authorized under this paragraph
should use random assignment to the maximum
extent feasible and appropriate.
‘‘(c) STUDY BY THE CENSUS BUREAU.
‘‘(1) IN GENERAL.—The Bureau of the Census
shall expand the Survey of Income and Program
Participation as necessary to obtain such informa-
tion as will enable interested persons to evaluate the
impact of the amendments made by the Work First
and Personal Responsibility Act of 1996 on a ran-
dom national sample of recipients of assistance
under State programs funded under this part and
(as appropriate) other low-income families, and in
doing so, shall pay particular attention to the issues
of out-of-wedlock birth, welfare dependency, the be-
ginning and end of welfare spells, and the causes of
repeat welfare spells.
‘‘(2) APPROPRIATION.—For each of fiscal years
1996, 1997, 1998, 1999, 2000, 2001, and 2002,
from the appropriation account providing funds for
grants to States for activities funded under section
413(a)(1), the Secretary shall transfer to the Bu-
reau of the Census $10,000,000 to carry out para-
graph (1). Such funds transferred to the Bureau of
the Census shall remain available for obligation by
the Bureau of the Census until expended.
‘‘SEC. 416. COLLECTION OF OVERPAYMENTS FROM FED-
ERAL TAX REFUNDS.
‘‘(a) IN GENERAL.—Upon receiving notice from a
State agency administering a plan approved under this
part that a named individual has been overpaid under the
State plan approved under this part, the Secretary of the
Treasury shall determine whether any amounts as refunds
of Federal taxes paid are payable to such individual, re-
gardless of whether such individual filed a tax return as
a married or unmarried individual. If the Secretary of the
Treasury finds that any such amount is payable, the Sec-
retary shall withhold from such refunds an amount equal
to the overpayment sought to be collected by the State
and pay such amount to the State agency.
‘‘(b) REGULATIONS.—The Secretary of the Treasury
shall issue regulations, approved by the Secretary of
Health and Human Services, that provide—
‘‘(1) that a State may only submit under sub-
section (a) requests for collection of overpayments
with respect to individuals—
‘‘(A) who are no longer receiving tem-
porary employment assistance under the State
plan approved under this part,
‘‘(B) with respect to whom the State has
already taken appropriate action under State
law against the income or resources of the indi-
viduals or families involved; and
‘‘(C) to whom the State agency has given
notice of its intent to request withholding by
the Secretary of the Treasury from the income
tax refunds of such individuals;
‘‘(2) that the Secretary of the Treasury will
give a timely and appropriate notice to any other
person filing a joint return with the individual whose
refund is subject to withholding under subsection
(a); and
‘‘(3) the procedures that the State and the Sec-
retary of the Treasury will follow in carrying out
this section which, to the maximum extent feasible
and consistent with the specific provisions of this
section, will be the same as those issued pursuant to
section 464(b) applicable to collection of past-due
child support.
‘‘SEC. 417. ASSISTANT SECRETARY FOR FAMILY SUPPORT.
‘‘The programs under this title shall be administered
by an Assistant Secretary for Family Support within the
Department of Health and Human Services, who shall be
appointed by the President, by and with the advice and
consent of the Senate, and who shall be in addition to any
other Assistant Secretary of Health and Human Services
provided for by law. If an individual is the Assistant Sec-
retary for Children and Families on the day before the
enactment of this Act, that individual shall become the
Assistant Secretary for Family Support.’’.
SEC. 103. CONFORMING AMENDMENTS RELATING TO COL-
LECTION OF OVERPAYMENTS.
(a) Section 6402 of the Internal Revenue Code of
1986 (relating to authority to make credits or refunds)
is amended—
(1) in subsection (a), by striking ‘‘(c) and (d)’’
and inserting ‘‘(c), (d), and (e)’’;
(2) by redesignating subsections (e) through (i)
as subsections (f) through (j), respectively; and
(3) by inserting after subsection (d) the follow-
ing:
‘‘(e) COLLECTION OF OVERPAYMENTS UNDER TITLE
IV–A OF THE SOCIAL SECURITY ACT.—The amount of
any overpayment to be refunded to the person making the
overpayment shall be reduced (after reductions pursuant
to subsections (c) and (d), but before a credit against fu-
ture liability for an internal revenue tax) in accordance
with section 416 of the Social Security Act (concerning
recovery of overpayments to individuals under State plans
approved under part A of title IV of such Act).’’.
(b) Paragraph (10) of section 6103(l) of the Internal
Revenue Code of 1986 is amended—
(1) by striking ‘‘(c) or (d)’’ each place it ap-
pears and inserting ‘‘(c), (d), or (e)’’; and
(2) by adding at the end of subparagraph (B)
the following new sentence; ‘‘Any return information
disclosed with respect to section 6402(e) shall only
be disclosed to officers and employees of the State
agency requesting such information.’’.
(c) The matter preceding subparagraph (A) of section
6103(p)(4) of such Code is amended—
(1) by striking ‘‘(10),’’ before ‘‘(11)’’ and
(2) by inserting ‘‘(10),’’ after ‘‘(9),’’.
(d) Section 552a(a)(8)(B)(iv)(III) of title 5, United
States Code, is amended by striking ‘‘section 464 or 1137
of the Social Security Act’’ and inserting ‘‘section 416,
464, or 1137 of the Social Security Act’’.
SEC. 104. TERRITORIES.
(a) LIMITATIONS ON FEDERAL PAYMENTS.—Section
1108(a)(2) and (3) of the Act is amended to read as fol-
lows:
‘‘(2) for payment to the Virgin Islands shall not
exceed—
‘‘(A) $2,800,000 with respect to fiscal
years 1994, 1995, and 1996, and
‘‘(B) $3,500,000 or, if greater, such
amount adjusted by the CPI (as prescribed in
subsection (f)) for fiscal year 1997 and each
fiscal year thereafter; and
‘‘(3) for payment to Guam shall not exceed—
‘‘(A) $3,800,000 with respect to fiscal year
1994, 1995, and 1996, and
‘‘(B) $4,750,000 or, if greater, such
amount adjusted by the CPI (as prescribed in
subsection (f)), for fiscal year 1997 and each
fiscal year thereafter.’’.
(b) CPI ADJUSTMENT.—Section 1108 of the Act is
amended by adding at the end the following new sub-
section:
‘‘(f) For purposes of subsection (a), an amount is ‘ad-
justed by the CPI’ for months in a calendar year by mul-
tiplying that amount by the ratio of the Consumer Price
Index as prepared by the Department of Labor for—
‘‘(1) the third quarter of the preceding calendar
year, to
‘‘(2) the third quarter of calendar year 1996,
and rounding the product, if not a multiple of
$10,000, to the nearer multiple of $10,000.’’.
SEC. 105. EFFECTIVE DATES.
(a)(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by sections 102 and 104
of this Act are effective with respect to calendar quarters
beginning on or after October 1, 1996.
(2)(A) Funds that would be available for obligation
in fiscal year 1996 under section 415 of the Social Secu-
rity Act (as amended by this Act) are available upon en-
actment.
(B) Amendments made by section 103 of this Act are
effective upon enactment.
(b) SPECIAL RULE.—In the case of a State that the
Secretary of Health and Human Services determines re-
quires State legislation (other than legislation appropriat-
ing funds) in order to meet the requirements imposed by
the amendments made by this subtitle, the State shall not
be regarded as failing to comply with those requirements
before the first day of the first calendar quarter beginning
after the close of the first regular session of the State leg-
islature that begins after the date of enactment of this
Act. For purposes of this paragraph, in the case of a State
that has a 2-year legislative session, each year of the ses-
sion shall be treated as a separate regular session of the
State legislature. Such a State, however, shall be subject
to the funding provisions in section 413 of the Social Secu-
rity Act (as amended by this Act) on and after October
1, 1996.
Subtitle B—Make Work Pay
SEC. 111. TRANSITIONAL MEDICAID BENEFITS.
(a) PERMANENT EXTENSION OF AUTHORITY.—Sub-
section (f) of section 1925 of the Social Security Act (42
U.S.C. 1396r-6(f)) is repealed.
(b) EFFECTIVE DATE.—The repeal made by sub-
section (a) applies to calendar quarters beginning on or
after October 1, 1997, without regard to whether final
regulations to carry out the repeal have been promulgated
by that date.
SEC. 112. NOTICE OF AVAILABILITY REQUIRED TO BE PRO-
VIDED TO APPLICANTS AND FORMER RECIPI-
ENTS OF TEMPORARY EMPLOYMENT ASSIST-
ANCE, FOOD STAMPS, AND MEDICAID.
(a) TEMPORARY EMPLOYMENT ASSISTANCE.—Sec-
tion 406, as added by section 102 of this Act, is amended
by adding at the end the following:
‘‘(i) NOTICE OF AVAILABILITY OF EITC.—The State
plan shall provide that the State agency shall provide writ-
ten notice of the existence and availability of the earned
income credit under section 32 of the Internal Revenue
Code of 1986 to—
‘‘(1) any individual who applies for assistance
under the State plan, upon receipt of the applica-
tion; and
‘‘(2) any recipient of assistance under the State
plan under this part (including any recipient of as-
sistance under the plan in effect before the effective
date of the Work First and Personal Responsibility
Act of 1996) whose assistance is terminated, in the
notice of termination of benefits.’’.
(b) FOOD STAMPS.—Section 11(e) of the Food
Stamp Act of 1977 (7 U.S.C. 2020(e)), as amended by
sections 323(b), 330(c), and 364(1)(C) and (D) of this
Act, 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 at other times the Sec-
retary considers appropriate, the State agency shall
provide to each member of such household 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) The second sentence of section 5(a) of the Food
Stamp Act of 1977 (7 U.S.C. 2014(a) is amended by—
(1) striking ‘‘plan approved’’ and inserting
‘‘program funded’’; and
(2) inserting before ‘‘, supplemental security in-
come’’ the following ‘‘that limits receipt of benefits
to households whose gross income, as defined by the
State, does not exceed the poverty line, as described
in subsection (c), by more than 30 per cent’’.
(d) 
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 inserting after paragraph (62) the fol-
lowing 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. 113. ADVANCE PAYMENT OF EARNED INCOME TAX
CREDIT THROUGH STATE DEMONSTRATION
PROGRAMS.
(a) IN GENERAL.—Section 3507 of the Internal Rev-
enue Code of 1986 (relating to the advance payment of
the earned income tax credit) is amended by adding at
the end the following:
‘‘(g) STATE DEMONSTRATIONS.—
‘‘(1) IN GENERAL.—In lieu of receiving earned
income advance amounts from an employer under
subsection (a), a participating resident shall receive
advance earned income payments from a responsible
State agency pursuant to a State Advance Payment
Program that is designated pursuant to paragraph
(2).
‘‘(2) DESIGNATIONS.—
‘‘(A) IN
GENERAL.—From among the
States submitting proposals satisfying the re-
quirements of paragraph (3), the Secretary (in
consultation with the Secretary of Health and
Human Services and the Secretary of Agri-
culture) may designate not more than 4 State
Advance 
Payment 
Demonstrations. 
These
States may operate demonstrations in areas
that include, in the aggregate, no more than 10
percent of the total number of households par-
ticipating in the program under the Food
Stamp program in the immediately preceding
fiscal year. Administrative costs of a State in
conducting a demonstration under this section
may be included for matching under section
413(a)(2) of the Social Security Act.
‘‘(B) 
WHEN
DESIGNATION
MAY
BE
MADE.—Any designation under this paragraph
shall be made no later than December 31,
1998.
‘‘(C) PERIOD FOR WHICH DESIGNATION IS
IN EFFECT.—
‘‘(i) 
IN
GENERAL.—Designations
made under this paragraph shall be effec-
tive for advance earned income payments
made after December 31, 1998, and before
January 1, 2002.
‘‘(ii) SPECIAL RULES.—
‘‘(I) REVOCATION
OF
DESIGNA-
TIONS.—The Secretary may revoke
any designation made under this
paragraph if the Secretary determines
that the State is not complying sub-
stantially with the proposal described
in paragraph (3) submitted by the
State.
‘‘(II) AUTOMATIC
TERMINATION
OF DESIGNATIONS.—Any failure by a
State to comply with the reporting re-
quirements described in paragraphs
(3)(F) and (3)(G) shall have the ef-
fect of immediately terminating the
designation under this paragraph and
rendering paragraph (5)(A)(ii) inap-
plicable to subsequent payments.
‘‘(3) PROPOSALS.—No State may be designated
under paragraph (2) unless the State’s proposal for
such designation—
‘‘(A) identifies the responsible State agen-
cy,
‘‘(B) describes how and when the advance
earned income payments will be made by that
agency, including a description of any other
State or Federal benefits with which such pay-
ments will be coordinated,
‘‘(C) describes how the State will obtain
the information on which the amount of ad-
vance earned income payments made to each
participating resident will be determined in ac-
cordance with paragraph (4),
‘‘(D) describes how State residents who
will be eligible to receive advance earned income
payments will be selected, notified of the oppor-
tunity to receive advance earned income pay-
ments from the responsible State agency, and
given the opportunity to elect to participate in
the program,
‘‘(E) describes how the State will verify, in
addition to receiving the certifications and
statement described in paragraph (7)(D)(iv),
the eligibility of participating residents for the
earned income tax credit,
‘‘(F) commits the State to furnishing to
each participating resident, by January 31 of
each year a written statement showing—
‘‘(i) the name and taxpayer identifica-
tion number of the participating resident
and by January 31 the amounts paid to
each participating resident, and
‘‘(ii) the total amount of advance
earned income payments made to the par-
ticipating resident during the prior cal-
endar year,
‘‘(G) commits the State to furnishing to
the Secretary by December 1 of each year a
written statement showing the name and tax-
payer identification number of each participat-
ing resident, and by January 31 the amounts
paid to each participating resident,
‘‘(H) commits the State to treat any ad-
vance earned income payments as described in
paragraph (5) and any repayments of excessive
advance earned income payments as described
in paragraph (6),
‘‘(I) commits the State to assess the devel-
opment and implementation of its State Ad-
vance Payment Program, including an agree-
ment to share its findings and lessons with
other interested States in a manner to be de-
scribed by the Secretary, and
‘‘(J) is submitted to the Secretary on or
before June 30, 1998.
‘‘(4) AMOUNT
AND
TIMING
OF
ADVANCE
EARNED INCOME PAYMENTS.—
‘‘(A) AMOUNT.—
‘‘(i) IN
GENERAL.—The method for
determining the amount of advance earned
income payments made to each participat-
ing resident shall conform to the fullest ex-
tent possible with the provisions of sub-
section (c).
‘‘(ii) SPECIAL RULE.—A State may,
at its election, apply the rules of subsection
(c)(2)(B) by substituting ‘between 60 per-
cent and 75 percent of the credit percent-
age in effect under section 32(b)(1) for an
individual with the corresponding number
of qualifying children’ for ‘60 percent of
the credit percentage in effect under sec-
tion 32(b)(1) for such an eligible individual
with 1 qualifying child’ in clause (i) and
‘the same percentage (as applied in clause
(i))’ for ‘60 percent’ in clause (ii).
‘‘(B) TIMING.—The frequency of advance
earned income payments may be determined on
the basis of the payroll periods of participating
residents, on a single statewide schedule, or on
any other reasonable basis prescribed by the
State in its proposal; however, in no event may
advance earned income payments be made to
any participating resident less frequently than
on a calendar-quarter basis.
‘‘(5) PAYMENTS TO BE TREATED AS PAYMENTS
OF WITHHOLDING AND FICA TAXES.—
‘‘(A) IN GENERAL.—For purposes of this
title, advance earned income payments during
any calendar quarter—
‘‘(i) shall neither be treated as a pay-
ment of compensation nor be included in
gross income, and
‘‘(ii) shall be treated as made out of—
‘‘(I) amounts required to be de-
ducted by the State and withheld for
the calendar quarter by the State
under section 3401 (relating to wage
withholding),
‘‘(II) amounts required to be de-
ducted for the calendar quarter under
section 3102 (relating to FICA em-
ployee taxes), and
‘‘(III) amounts of the taxes im-
posed on the State for the calendar
quarter under section 3111 (relating
to FICA employer taxes), as if the
State had paid to the Secretary, on
the day on which payments are made
to participating residents, an amount
equal to such payments.
‘‘(B) IF
ADVANCE
PAYMENTS
EXCEED
TAXES DUE.—If for any calendar quarter the
aggregate amount of advance earned income
payments made by the responsible State agency
under a State Advance Payment Program ex-
ceeds the sum of the amounts referred to in
subparagraph (A)(ii) (without regard to para-
graph (6)(A)), each such advance earned in-
come payment shall be reduced by an amount
which bears the same ratio to such excess as
such advance earned income payment bears to
the aggregate amount of all such advance
earned income payments.
‘‘(6) STATE
REPAYMENT
OF
EXCESSIVE
AD-
VANCE EARNED INCOME PAYMENTS.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of law, in the case of an exces-
sive advance earned income payment a State
shall be treated as having deducted and with-
held under section 3401 (relating to wage with-
holding), and as being required to pay to the
United States, the repayment amount during
the repayment calendar quarter.
‘‘(B) EXCESSIVE
ADVANCE
EARNED
IN-
COME PAYMENT.—For purposes of this section,
the term ‘excessive advance income payment’
means that portion of any advance earned in-
come payment that, when combined with other
advance earned income payments previously
made to the same participating resident during
the same calendar year, exceeds the amount of
earned income tax credit to which that partici-
pating resident is entitled under section 32 for
that year.
‘‘(C) REPAYMENT AMOUNT.—For purposes
of this subsection, the term ‘repayment amount’
means an amount equal to 50 percent of the ex-
cess of—
‘‘(i) excessive advance earned income
payments made by a State during a par-
ticular calendar year, over
‘‘(ii) the sum of—
‘‘(I) 4 percent of all advance
earned income payments made by the
State during that calendar year, and
‘‘(II) 
the 
excessive 
advance
earned income payments made by the
State during that calendar year that
have been collected from participating
residents by the Secretary.
‘‘(D) REPAYMENT CALENDAR QUARTER.—
For purposes of this subsection, the term ‘re-
payment calendar quarter’ means the second
calendar quarter of the third calendar year be-
ginning after the calendar year in which an ex-
cessive earned income payment is made.
‘‘(7) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) STATE
ADVANCE
PAYMENT
PRO-
GRAM.—The term ‘State Advance Payment
Program’ means the program described in a
proposal submitted for designation under para-
graph (1) and designated by the Secretary
under paragraph (2).
‘‘(B) RESPONSIBLE STATE AGENCY.—The
term ‘responsible State agency’ means the sin-
gle State agency that will be making the ad-
vance earned income payments to residents of
the State who elect to participate in a State Ad-
vance Payment Program.
‘‘(C) ADVANCE
EARNED
INCOME
PAY-
MENTS.—The term ‘advance earned income
payments’ means an amount paid by a respon-
sible State agency to residents of the State pur-
suant to a State Advance Payment Program.
‘‘(D) 
PARTICIPATING
RESIDENT.—The
term ‘participating resident’ means an individ-
ual who—
‘‘(i) is a resident of a State that has
in effect a designated State Advance Pay-
ment Program,
‘‘(ii) makes the election described in
paragraph (3)(D) pursuant to guidelines
prescribed by the State,
‘‘(iii) certifies to the State the number
of qualifying children the individual has,
and
‘‘(iv) provides to the State the certifi-
cations and statement described in sub-
sections (b)(1), (b)(2), (b)(3), and (b)(4)
(except that for purposes of this clause,
the term ‘any employer’ shall be sub-
stituted for ‘another employer’ in sub-
section (b)(3)), along with any other infor-
mation required by the State.’’.
(b) TECHNICAL ASSISTANCE.—The Secretaries of the
Treasury and Health and Human Services shall jointly en-
sure that technical assistance is provided to State Advance
Payment Programs and that these programs are rigor-
ously evaluated.
(c) ANNUAL REPORTS.—The Secretary shall issue
annual reports detailing the extent to which—
(1) residents participate in the State Advance
Payment Programs,
(2) participating residents file Federal and
State tax returns,