‘‘(2) AFDC PERCENTAGE.—The term ‘AFDC
percentage’ means, with respect to a State and a fis-
cal year—
‘‘(A) if the State has exercised the option
provided for in section 1118, the Federal medi-
cal assistance percentage referred to in such
section; or
‘‘(B) if the State has not exercised the op-
tion—
‘‘(i) the Federal percentage (as de-
fined in section 1101(a)(8)), in the case of
any State other than Puerto Rico, the Vir-
gin Islands, Guam, or American Samoa; or
‘‘(ii) 50 percent, in the case of Puerto
Rico, the Virgin Islands, Guam, and Amer-
ican Samoa.
‘‘(3) NET
AFDC
CHILD
SUPPORT
COLLEC-
TIONS.—The term ‘net AFDC child support collec-
tions’ means, with respect to a State and a fiscal
year—
‘‘(A) the total amount of child support (in-
cluding past-due support) collected by the State
during the fiscal year with respect to children
receiving aid under the State plan approved
under part A; minus
‘‘(B) the total amount expended by the
State during the fiscal year with respect to the
collection of child support for such children, in-
cluding any amount distributed by the State
during the fiscal year pursuant to section
457(b)(1).
‘‘(4) PERFORMANCE STANDARD.—
‘‘(A) IN
GENERAL.—The term ‘perform-
ance standard’ means 30 percent.
‘‘(B) LIMITED
AUTHORITY
TO
CHANGE
PERFORMANCE
STANDARD.—The 
Secretary
shall annually review the performance standard
in effect under this section and determine
whether the standard is appropriate in achiev-
ing the purposes of this title, and may increase
or decrease the performance standard in effect
for the fiscal year to not more than 40 percent
and not less than 20 percent, as the Secretary
deems appropriate.
‘‘(5) STATE PERFORMANCE PERCENTAGE.—The
term ‘State performance percentage’ means, with re-
spect to a State and a fiscal year—
‘‘(A) the net AFDC child support collec-
tions of the State during the fiscal year; divided
by
‘‘(B) the sum of—
‘‘(i) the total amount of child support
(excluding past-due support) payable dur-
ing the fiscal year with respect to children
receiving aid under the State plan ap-
proved under part A; and
‘‘(ii) the total amount of past-due
child support collected during the fiscal
year with respect to such children.’’.
(c) PAYMENTS TO STATES WITH RESPECT TO CHIL-
DREN WHO ARE NOT ELIGIBLE FOR AID TO FAMILIES
WITH DEPENDENT CHILDREN.—Section 458 of such Act
(42 U.S.C. 658) is amended to read as follows:
‘‘SEC. 458. PAYMENTS TO STATES.
‘‘(a) IN GENERAL.—From the sums appropriated
therefor, the Secretary shall pay to each State for each
calendar quarter an amount equal to the adjusted AFDC
percentage of the qualified collection costs of the State for
the quarter.
‘‘(b) DEFINITIONS.—As used in this section:
‘‘(1) ADJUSTED AFDC PERCENTAGE.—The term
‘adjusted AFDC percentage’ means, with respect to
a State and a quarter in a fiscal year—
‘‘(A) the AFDC percentage of the State
for the fiscal year; plus
‘‘(B) the number of percentage points (if
any) by which the State performance percent-
age for the immediately preceding fiscal year
exceeds the performance standard for such pre-
ceding fiscal year.
‘‘(2) AFDC PERCENTAGE.—The term ‘AFDC
percentage’ means, with respect to a State and a
quarter in a fiscal year—
‘‘(A) if the State has exercised the option
provided for in section 1118, the Federal medi-
cal assistance percentage referred to in such
section; or
‘‘(B) if the State has not exercised the op-
tion—
‘‘(i) the Federal percentage (as de-
fined in section 1101(a)(8)), in the case of
any State other than Puerto Rico, the Vir-
gin Islands, Guam, or American Samoa; or
‘‘(ii) 50 percent, in the case of Puerto
Rico, the Virgin Islands, Guam, and Amer-
ican Samoa.
‘‘(3) QUALIFIED NET COLLECTIONS.—The term
‘qualified net collections’ means, with respect to a
State and a quarter in a fiscal year—