‘‘(iv) sets forth the appropriate sup-
portive services the State intends to pro-
vide for the family; 
‘‘(v) establishes for the family a plan 
that addresses the issue of child well-being 
and, when appropriate, adolescent well- 
being, and that may include services such 
as domestic violence counseling, mental 
health referrals, and parenting courses; 
and 
‘‘(vi) includes a section designed to 
assist the family by informing the family of 
the work support assistance for which the 
family may be eligible, including— 
‘‘(I) the food stamp program es-
tablished under the Food Stamp Act 
of 1977 (7 U.S.C. 2011 et seq.); 
‘‘(II) the medicaid program fund-
ed under title XIX; 
‘‘(III) the State children’s health 
insurance program funded under title 
XXI; 
‘‘(IV) child care funded under 
the Child Care Development Block
Grant Act of 1990 (42 U.S.C. 9858 et 
seq.); 
‘‘(V) the earned income tax cred-
it under section 32 of the Internal 
Revenue Code of 1986; 
‘‘(VI) the low-income home en-
ergy assistance program established 
under the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 
8621 et seq.); 
‘‘(VII) the special supplemental 
nutrition program for women, infants, 
and children established under section 
17 of the Child Nutrition Act of 1966 
(42 U.S.C. 1786); 
‘‘(VIII) 
programs 
conducted 
under the Workforce Investment Act 
of 1998 (29 U.S.C. 2801 et seq.); and 
‘‘(IX) low-income housing assist-
ance programs. 
‘‘(3) REVIEW.— 
‘‘(A) REGULAR REVIEW.—The State agen-
cy shall— 
‘‘(i) monitor the participation of each 
adult recipient of the assistance in the ac-
tivities specified in the individual responsi-
bility plan, and regularly review the 
progress of each such family toward self- 
sufficiency; and 
‘‘(ii) upon such a review, revise the 
plan and activities required under the plan 
as the State deems appropriate in con-
sultation with the family. 
‘‘(B) BEFORE
IMPOSITION
OF
A
SANC-
TION.—The State agency shall— 
‘‘(i) review the individual responsi-
bility plan before imposing a sanction 
against such an adult recipient or such a 
family for failure to comply with a require-
ment of the plan or the State program 
funded under this part; and 
‘‘(ii) make a good faith effort to con-
sult with the family as part of such review. 
‘‘(4) TIMING.—The State shall comply with this 
subsection— 
‘‘(A) in the case of a family that, as of Oc-
tober 1, 2005, is not receiving assistance from 
the State program funded under this part, not 
later than 60 days after the family first receives
assistance on the basis of the most recent appli-
cation for the assistance; and 
‘‘(B) in the case of a family that, as of 
such date, is receiving the assistance, not later 
than September 30, 2006. 
‘‘(5) RULE OF INTERPRETATION.—Nothing in 
this subsection shall preclude a State from requiring 
participation in work and any other activities the 
State deems appropriate for helping families achieve 
self-sufficiency and improving child well-being.’’. 
(b) IMPLEMENTATION.— 
(1) DEVELOPMENT OF MODEL SCREENING AND 
ASSESSMENT TOOLS.— 
(A) 
IN
GENERAL.—The 
Secretary 
of 
Health and Human Services shall develop or 
identify model screening and assessment tools 
to assist States (at their option) in identifying 
an individual’s barriers to employment or com-
pliance with the State program funded under 
part A of title IV of the Social Security Act. 
(B) CONSULTATION.—The Secretary of 
Health and Human Services shall develop or 
identify the model tools required under para-
graph (1) in consultation with individuals and 
groups with expertise in circumstances such as
physical or mental impairments (including 
learning disabilities), substance abuse, limited 
English proficiency, domestic violence, or the 
need to care for a family member with a dis-
ability. 
(C) DISSEMINATION.—The Secretary of 
Health and Human Services shall disseminate 
the tools developed or identified under this 
paragraph to States (as defined in section 
1101(a)(1) of the Social Security Act (42 
U.S.C. 1301(a)(1)) for purposes of part A of 
title IV of such Act) and Indian tribes with pro-
grams funded under such part . 
SEC. 102. ELIMINATION OF CASELOAD REDUCTION RATE. 
(a) IN
GENERAL.—Section 407(b) (42 U.S.C. 
607(b)), as amended by section 503(b) of this Act, is 
amended by striking paragraph (2) and redesignating 
paragraphs (3) and (4) as paragraphs (2) and (3), respec-
tively. 
(b) STATE OPTION TO PHASE-IN REPLACEMENT OF 
CASELOAD
REDUCTION
CREDIT
WITH
EMPLOYMENT 
CREDIT AND DELAY APPLICABILITY OF OTHER PROVI-
SIONS.—A State may elect to have the amendments made 
by subsection (a) of this section not apply to the State 
program funded under part A of title IV of the Social Se-
curity Act until October 1, 2006, and if the State makes 
the election, then, in determining the participation rate 
of the State for purposes of sections 407 and 409(a)(3) 
of the Social Security Act for fiscal year 2006, the State 
shall be credited with 1⁄2 of the reduction in the rate that 
would otherwise result from applying section 407(b)(4) of 
the Social Security Act (as added by section 105(a)(1) of 
this Act) to the State for fiscal year 2006 and 1⁄2 of the 
reduction in the rate that would otherwise result from ap-
plying section 407(b)(2) of such Act (as so redesignated 
by section 503(b)(2)(D) of this Act) to the State for fiscal 
year 2006. 
SEC. 103. STATE OPTION TO SELECT JOB ENTRY RATE RE-
QUIREMENT IN LIEU OF WORK PARTICIPA-
TION RATE REQUIREMENT. 
(a) IN GENERAL.—Part A of title IV (42 U.S.C. 
601–619) is amended by inserting after section 407 the 
following: 
‘‘SEC. 407A. JOB ENTRY RATE REQUIREMENT. 
‘‘(a) STATE OPTION.—This section shall apply, in 
lieu of sections 402(a)(1)(A)(iii) and 407(a), to a State 
program funded under this part if the Governor of the 
State so notifies the Secretary in writing, or State law so 
provides, by such deadline as the Secretary shall prescribe 
in regulations.
‘‘(b) REQUIREMENT.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, a State to which this sec-
tion applies for a fiscal year shall achieve a job entry 
rate for the fiscal year that is at least 2 percentage 
points greater than— 
‘‘(A) in the case of fiscal year 2006, the 
job entry rate of the State for fiscal year 2003; 
or 
‘‘(B) in the case of any other fiscal year, 
the job entry rate of the State for the preceding 
fiscal year. 
‘‘(2) EXCEPTION FOR HIGH PERFORMANCE.—If 
the job entry rate of the State for a fiscal year is 
at least 50 percent, then the State shall achieve a 
job entry rate for the next fiscal year that is not less 
than 1 percentage point greater than the greater 
of— 
‘‘(A) in the case of fiscal year 2006, the 
job entry rate of the State for fiscal year 2003; 
or 
‘‘(B) in the case of any other fiscal year, 
the job entry rate of the State for the preceding 
fiscal year.
‘‘(3) EXCEPTION FOR HIGH UNEMPLOYMENT.— 
If the average rate of total unemployment in a State 
for the most recent 3-month period for which such 
information is available has increased by not less 
than the lesser of 50 percent or 1.5 percentage 
points as compared to such rate for the cor-
responding 3-month period in either of the 2 most 
recent preceding fiscal years, then the State shall 
achieve a job entry rate that is not less than the the 
job entry rate of the State for fiscal year 2003. 
‘‘(c) JOB ENTRY RATE.— 
‘‘(1) IN GENERAL.—The term ‘job entry rate’, 
with respect to a State, has the meaning given the 
term for purposes of the regulations prescribed to 
implement section 403(a)(4) and in effect on Janu-
ary 1, 2005, subject to paragraph (2) of this sub-
section. The Secretary shall devise a method for cal-
culating, and shall determine, the job entry rate for 
fiscal year 2003 for each State for which the cal-
culation has not been made, based on the criteria 
used in determining the job entry rate for fiscal year 
2003 for the States for which the calculation has 
been made. 
‘‘(2) GOOD JOBS BONUS.—In determining the 
job entry rate of a State for fiscal year 2006 or
thereafter, the Secretary shall count an individual 
who enters employment at a wage that is not less 
than 33 percent of the average wage in the State for 
the fiscal year as 1.5 individuals.’’. 
(b) 
PENALTY
FOR
NONCOMPLIANCE.—Section 
409(a)(3) (42 U.S.C. 609(a)(3)) is amended— 
(1) in the paragraph heading, by inserting ‘‘OR 
ACHIEVE
MINIMUM
JOB
ENTRY
RATE’’ 
after 
‘‘RATES’’; 
(2) in subparagraph (A), by inserting ‘‘or 
407A(b)’’ after ‘‘407(a)’’. 
SEC. 104. WORK RATES. 
Section 407(a)(1) (42 U.S.C. 607(a)), as amended by 
section 503(b)(1) of this Act, is amended to read as fol-
lows: 
‘‘(1) IN GENERAL.—A State to which a grant 
is made under section 403 for a fiscal year shall 
achieve a minimum participation rate equal to not 
less than— 
‘‘(A) 50 percent for fiscal year 2006; 
‘‘(B) 55 percent for fiscal year 2007; 
‘‘(C) 60 percent for fiscal year 2008; 
‘‘(D) 65 percent for fiscal year 2009; and 
‘‘(E) 70 percent for fiscal year 2010 and 
each succeeding fiscal year.’’.
SEC. 105. EMPLOYMENT CREDIT. 
(a) IN GENERAL.— 
(1) EMPLOYMENT CREDIT TO REWARD STATES 
IN WHICH FAMILIES LEAVE WELFARE FOR WORK; 
ADDITIONAL CREDIT FOR FAMILIES WITH HIGHER 
EARNINGS.—Section 407(b) (42 U.S.C. 607(b)), as 
amended by sections 503(b) and 102(a) of this Act, 
is amended by adding at the end the following: 
‘‘(4) EMPLOYMENT CREDIT.— 
‘‘(A) IN
GENERAL.—The participation 
rate, determined under paragraph (1), of a 
State for a fiscal year shall be increased by the 
lesser of— 
‘‘(i) the number of percentage points 
(if any) of the employment credit for the 
State for the fiscal year; or 
‘‘(ii) the number of percentage points 
(if any) by which the participation rate, so 
determined, is less than 99 percent. 
‘‘(B) CALCULATION OF CREDIT.— 
‘‘(i) IN
GENERAL.—The employment 
credit for a State for a fiscal year is an 
amount equal to— 
‘‘(I) twice the average quarterly 
number of families with an adult that 
ceased to receive assistance under the
State program funded under this part 
during the preceding fiscal year (but 
only if the adult did not receive such 
assistance for at least 2 months after 
the cessation) and that was employed 
during the calendar quarter imme-
diately succeeding the quarter in 
which the payments ceased; divided by 
‘‘(II) the average monthly num-
ber of families that include an adult 
who received cash payments under the 
State program funded under this part 
during the preceding fiscal year. 
‘‘(ii) SPECIAL RULE FOR FORMER RE-
CIPIENTS
WITH
HIGHER
EARNINGS.—In 
calculating the employment credit for a 
State for a fiscal year, a family that, in the 
quarter in which the wage was examined, 
earned at least 33 percent of the average 
quarterly wage in the State (determined on 
the basis of State unemployment data) 
shall be considered to be 1.5 families. 
‘‘(C) REGULATIONS.—The Secretary may 
prescribe such regulations as may be necessary 
to carry out this paragraph.
‘‘(D) REPORTS ON AMOUNT OF CREDIT.— 
Not later than 6 months after the end of each 
calendar quarter, the Secretary shall report to 
the Congress and each State the amount of the 
employment credit for the State for the quarter. 
The Secretary may carry out this subparagraph 
using funds made available under this part for 
research.’’. 
(2) AUTHORITY OF SECRETARY TO USE INFOR-
MATION IN NATIONAL DIRECTORY OF NEW HIRES.— 
Section 453(i) (42 U.S.C. 653(i)) is amended by 
adding at the end the following: 
‘‘(5) CALCULATION
OF
EMPLOYMENT
CREDIT 
FOR PURPOSES OF DETERMINING STATE WORK PAR-
TICIPATION
RATES
UNDER
TANF.—The Secretary 
may use the information in the National Directory 
of New Hires for purposes of calculating State em-
ployment credits pursuant to section 407(b)(4).’’. 
(b) STATES TO RECEIVE PARTIAL CREDIT TOWARD 
WORK PARTICIPATION RATE FOR RECIPIENTS ENGAGED 
IN PART-TIME WORK.—Section 407(c)(1)(A) (42 U.S.C. 
607(c)(1)(A)) is amended by adding at the end the fol-
lowing flush sentence: 
‘‘For purposes of subsection (b)(1)(B)(i), a family that 
does not include a recipient who is participating in work
activities for an average of 30 hours per week during a 
month but includes a recipient who is participating in such 
activities during the month for an average of at least 50 
percent of the minimum average number of hours per 
week specified for the month in the table set forth in this 
subparagraph shall be counted as a percentage of a family 
that includes an adult or minor child head of household 
who is engaged in work for the month, which percentage 
shall be the number of hours for which the recipient par-
ticipated in such activities during the month divided by 
the number of hours of such participation required of the 
recipient under this section for the month.’’. 
SEC. 106. EFFECT OF WAGE SUBSIDIES ON 5-YEAR LIMIT. 
Section 408(a)(7) (42 U.S.C. 608(a)(7)) is amended 
by adding at the end the following: 
‘‘(H) LIMITATION
ON
MEANING
OF ‘AS-
SISTANCE’ FOR FAMILIES WITH INCOME FROM 
EMPLOYMENT.—For purposes of this para-
graph, at the option of the State, a benefit or 
service provided to a family during a month 
under the State program funded under this 
part shall not be considered assistance under 
the program if— 
‘‘(i) during the month, the family in-
cludes an adult or a minor child head of
household who has received at least such 
amount of income from employment as the 
State may establish; and 
‘‘(ii) the average weekly earned in-
come of the family for the month is at 
least $100.’’. 
SEC. 107. WORKPLACE LAWS. 
Section 408 (42 U.S.C. 608) is amended by adding 
at the end the following: 
‘‘(h) WORKPLACE LAWS.—An individual engaged in 
an activity funded in whole or in part by the TANF pro-
gram shall not be subjected to discrimination based on 
race, color, religion, sex, national origin, age, or disability, 
and shall not be denied the benefits or protections of any 
Federal, State or local employment, civil rights, or health 
and safety law because of the status of the individual as 
a participant in the TANF program.’’. 
SEC. 108. NONDISPLACEMENT. 
(a) IN GENERAL.—Section 408 (42 U.S.C. 608), as 
amended by section 107 of this Act, is amended by adding 
at the end the following: 
‘‘(i) NONDISPLACEMENT.—With respect to activities 
funded in whole or in part under this part, a State shall 
establish and maintain such procedures as are necessary 
to prohibit the placement of an individual in a work activ-
ity specified in section 407(d) from resulting in the dis-
placement of any employee or position (including partial 
displacement, such as a reduction in the hours of non-
overtime work wages or in employment benefits, a filling 
of any unfilled vacancy, or the performance of work when 
any other individual is on layoff from the same or any 
substantially equivalent job).’’. 
(b) STATE PLAN REQUIREMENT.—Section 402(a) 
(42 U.S.C. 602(a)) is amended by adding at the end the 
following: 
‘‘(8) A plan that outlines the resources and pro-
cedures that will be used to ensure that the State 
will establish and maintain the procedures described 
in section 408(i).’’. 
TITLE II—RESOURCES TO 
SUPPORT WORK 
SEC. 201. FUNDING FOR CHILD CARE. 
(a) INCREASE IN MANDATORY FUNDING.—Section 
418(a)(3) (42 U.S.C. 618(a)(3)) is amended— 
(1) by striking ‘‘and’’ at the end of subpara-
graph (E); 
(2) by striking the period at the end of sub-
paragraph (F) and inserting ‘‘; and’’; and 
(3) by adding at the end the following:
‘‘(G) $2,917,000,000 for each of fiscal 
years 2006 through 2010.’’. 
(b) RESERVATION OF CHILD CARE FUNDS.— 
(1) 
IN
GENERAL.—Section 
418(a)(4) 
(42 
U.S.C. 618(a)(4)) is amended to read as follows: 
‘‘(4) AMOUNTS RESERVED.— 
‘‘(A) INDIAN TRIBES.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall reserve 2 percent of the aggregate 
amount appropriated to carry out this sec-
tion for a fiscal year for payments to In-
dian tribes and tribal organizations for 
such fiscal year for the purpose of pro-
viding child care assistance. 
‘‘(ii) APPLICATION
OF
CCDBG
RE-
QUIREMENTS.—Payments made under this 
subparagraph shall be subject to the re-
quirements that apply to payments made 
to Indian tribes and tribal organizations 
under the Child Care and Development 
Block Grant Act of 1990. 
‘‘(B) TERRITORIES.— 
‘‘(i) PUERTO
RICO.—The Secretary 
shall reserve 1.5 percent of the amount ap-
propriated under paragraph (5)(A)(i) for a
fiscal year for payments to the Common-
wealth of Puerto Rico for such fiscal year 
for the purpose of providing child care as-
sistance. 
‘‘(ii) OTHER TERRITORIES.—The Sec-
retary shall reserve 0.5 percent of the 
amount appropriated under paragraph 
(5)(A)(i) for a fiscal year for payments to 
Guam, American Samoa, the Virgin Is-
lands of the United States, and the Com-
monwealth of the Northern Mariana Is-
lands in amounts which bear the same 
ratio to such amount as the amounts allot-
ted to such territories under section 658O 
of the Child Care and Development Block 
Grant Act of 1990 for the fiscal year bear 
to the total amount reserved under such 
section for that fiscal year. 
‘‘(iii) APPLICATION
OF
CCDBG
RE-
QUIREMENTS.—Payments made under this 
subparagraph shall be subject to the re-
quirements that apply to payments made 
to territories under the Child Care and De-
velopment Block Grant Act of 1990.’’.