be considered the 2nd such failure, and
any 2nd such failure that continues for
more than 3 calendar months shall be con-
sidered the 3rd such failure;
‘‘(vi) at the option of the State, the State
may impose a rule under which the family of an
individual shall not be eligible for aid under the
State plan under this part, notwithstanding any
other provision of this part, after the individual
has received such aid for 60 months (whether
or not consecutive); and
‘‘(vii) if a family becomes ineligible for aid
under the State plan under this part by reason
of clause (v)(II) or (vi), the family shall, for
purposes of medical assistance under the State
plan under title XIX, be deemed to be a recipi-
ent of aid under the State plan under this part
for so long as the family is otherwise eligible for
aid under the State plan under this part.’’.
(3) PERSONS
EXEMPTED
FROM
PARTICIPA-
TION.—Section 402(a)(19)(C) of such Act (42
U.S.C. 602(a)(19)(C)) is amended by striking all
that follows ‘‘—’’ and inserting the following:
‘‘(C) that an individual may not be re-
quired to participate in the program—
‘‘(i) if the individual is incapacitated;
‘‘(ii) if the individual works 30 or
more hours per week;
‘‘(iii) if the individual attends, full-
time, an elementary, secondary, or voca-
tional (or technical) school;
‘‘(iv) if the individual is the parent of
a child who was returned to the home of
the individual during the preceding 2
months after having been removed from
the home;
‘‘(v) if the individual is providing full-
time care for a disabled dependent of the
individual;
‘‘(vi) at the option of the State, if the
individual is making progress in a sub-
stance abuse treatment program, unless
this clause has been applied to the individ-
ual for 12 months;
‘‘(vii) during such 6-month period as
the individual may select, in which the in-
dividual gives birth to the first child born
to the individual after becoming eligible for
aid under this part; or
‘‘(viii) during such 4-month period as
the individual may select, in which the in-
dividual gives birth to the second or subse-
quent child born to the individual after be-
coming eligible for aid under this part;’’.
(4) EXTENSION TO ALL STATES OF OPTION TO
LIMIT AFDC–UP.—Section 407(b)(2)(B) of such Act
(42 U.S.C. 607(b)(2)(B)) is amended by striking
clause (iii).
(5) INCREASE IN REQUIRED JOBS PARTICIPA-
TION
RATES.—Section 403(l)(3) of such Act (42
U.S.C. 603(l)(3)) is amended—
(A) in subparagraph (A)—
(i) by striking all that follows ‘‘—’’
and inserting the following:
‘‘(i) with respect to all individuals eligible for
aid under the State plan who applied for such aid
before October 1, 1996, and are not described in
section 402(a)(19)(C)—
‘‘(I) 15 percent if such year is 1996;
‘‘(II) 20 percent if such year is 1997;
‘‘(III) 20 percent if such year is 1998;
‘‘(IV) 20 percent if such year is 1999; and
‘‘(V) 20 percent if such year is 2000;
‘‘(ii) with respect to all individuals eligible for
aid under the State plan who applied for such aid
on or after October 1, 1996, and are not described
in section 402(a)(19)(C)—
‘‘(I) 30 percent if such year is 1998;
‘‘(II) 40 percent if such year is 1999; and
‘‘(III) 50 percent if such year is 2000; and
‘‘(iii) with respect to all individuals eligible for
aid under the State plan who are not described in
section 402(a)(19)(C)—
‘‘(I) 60 percent if such year is 2001;
‘‘(II) 70 percent if such year is 2002;
‘‘(III) 80 percent if such year is 2003; and
‘‘(IV) 90 percent if such year is 2004.’’;
and
(B) in subparagraph (B)(ii)(IV), by strik-
ing ‘‘and 1995’’ and inserting ‘‘through 2004’’.
(6) INCREASE
IN
REQUIRED
WORK
PROGRAM
PARTICIPATION
RATES
OF
UNEMPLOYED
PAR-
ENTS.—Section 403(l)(4)(B) of such Act (42 U.S.C.
603(l)(4)(B)) is amended—
(A) in clause (iii), by striking ‘‘and’’;
(B) in clause (iv), by striking ‘‘and 1998’’
and inserting ‘‘, 1998, 1999, and 2000’’.
(c) PAYMENTS TO STATES.—Section 403 of such Act
(42 U.S.C. 603) is amended by adding at the end the fol-
lowing:
‘‘(o)(1) Each State which has been paid under sub-
section (l) of this section for any fiscal year an amount
equal to the limitation determined under subsection (k)(2)
of this section for the fiscal year shall be entitled to pay-
ments under paragraph (4) of this subsection for the fiscal
year in an amount equal to the lesser of—
‘‘(A) the sum of the applicable percentages
(specified in such paragraph (4)) of its expenditures
to carry out the program of the State under part F
(subject to limitations prescribed by or pursuant to
such part or such paragraph (4) on expenditures
that may be included for purposes of determining
payment under such paragraph (4)); or
‘‘(B) the limitation determined under paragraph
(2) of this subsection with respect to the State for
the fiscal year.
‘‘(2) The limitation determined under this paragraph
with respect to a State for any fiscal year is the amount
that bears the same ratio to the amount specified in para-
graph (3) of this subsection for the fiscal year as the aver-
age monthly number of adult recipients (as defined in sub-
section (k)(4)) in the State in the preceding fiscal year