not been subject to such penalty for
more than 3 months within the pre-
ceding 12-month period (whether or
not consecutive).
‘‘(C) SPECIAL RULE.—An individual shall
be considered to be engaged in work and to be
an adult recipient of assistance under a State
program funded under this part for purposes of
subparagraph (B) for the first 6 months
(whether or not consecutive) after the first ces-
sation of assistance to an individual under the
program during which the individual is em-
ployed for an average of more than 25 hours
per week in an unsubsidized job in the private
sector.
‘‘(2) 2-PARENT FAMILIES.—
‘‘(A) AVERAGE MONTHLY RATE.—For pur-
poses of subsection (a)(2), the participation
rate for 2-parent families of a State for a fiscal
year is the average of the participation rates for
2-parent families of the State for each month in
the fiscal year.
‘‘(B) MONTHLY PARTICIPATION RATES.—
The participation rate of a State for 2-parent
families of the State for a month shall be cal-
culated by use of the formula set forth in para-
graph (1)(B), except that in the formula the
term ‘number of 2-parent families’ shall be sub-
stituted for the term ‘number of families’ each
place such latter term appears.
‘‘(3) PRO RATA REDUCTION OF PARTICIPATION
RATE
DUE
TO
CASELOAD
REDUCTIONS
NOT
RE-
QUIRED BY FEDERAL LAW.—
‘‘(A) IN
GENERAL.—The Secretary shall
prescribe regulations for reducing the minimum
participation rate otherwise required by this
section for a fiscal year by the number of per-
centage points equal to the number of percent-
age points (if any) by which—
‘‘(i) the number of families receiving
assistance during the fiscal year under the
State program funded under this part is
less than
‘‘(ii) the number of families that re-
ceived aid under the State plan approved
under part A (as in effect on September
30, 1995) during fiscal year 1994 or 1995,
whichever is the greater.
The minimum participation rate shall not be re-
duced to the extent that the Secretary deter-
mines that the reduction in the number of fami-
lies receiving such assistance is required by
Federal law.
‘‘(B) ELIGIBILITY CHANGES NOT COUNT-
ED.—The regulations described in subpara-
graph (A) shall not take into account families
that are diverted from a State program funded
under this part as a result of differences in eli-
gibility criteria under a State program funded
under this part and eligibility criteria under the
State program operated under the State plan
approved under part A (as such plan and such
part were in effect on September 30, 1995).
Such regulations shall place the burden on the
Secretary to prove that such families were di-
verted as a direct result of differences in such
eligibility criteria.
‘‘(4) STATE OPTION TO INCLUDE INDIVIDUALS
RECEIVING ASSISTANCE UNDER A TRIBAL FAMILY
ASSISTANCE
PLAN.—For purposes of paragraphs
(1)(B) and (2)(B), a State may, at its option, in-
clude families receiving assistance under a tribal
family assistance plan approved under section 412.
‘‘(5) STATE
OPTION
FOR
PARTICIPATION
RE-
QUIREMENT EXEMPTIONS.—For any fiscal year, a
State may, at its option, not require an individual
who is a single custodial parent caring for a child
who has not attained 12 months of age to engage in
work and may disregard such an individual in deter-
mining the participation rates under subsection (a).
‘‘(c) ENGAGED IN WORK.—
‘‘(1) ALL
FAMILIES.—For purposes of sub-
section (b)(1)(B)(i), a recipient is engaged in work
for a month in a fiscal year if the recipient is par-
ticipating in such activities for at least the minimum
average number of hours per week specified in the
following table during the month, not fewer than 20
hours per week of which are attributable to an activ-
ity described in paragraph (1), (2), (3), (4), (5), (7),
or (8) of subsection (d) (or, if the participation of
the recipient in an activity described in subsection
(d)(6) has been taken into account for purposes of
paragraph (1) or (2) of subsection (b) for fewer than
4 weeks in the fiscal year, an activity described in
subsection (d)(6)):
The minimum
‘‘If the month is
average number of
in fiscal year:
hours per week is:
1996 ...............................................................
1997 ...............................................................
1998 ...............................................................
1999 or thereafter .........................................
25.
‘‘(2) 2-PARENT
FAMILIES.—For purposes of
subsection (b)(2)(B)(i), an adult is engaged in work
for a month in a fiscal year if the adult is making
progress in such activities for at least 25 hours per
week during the month, not fewer than 20 hours per
week of which are attributable to an activity de-
scribed in paragraph (1), (2), (3), (4), (5), (7), or
(8) of subsection (d) (or, if the participation of the
recipient in an activity described in subsection (d)(6)
has been taken into account for purposes of para-
graph (1) or (2) of subsection (b) for fewer than 8
weeks (no more than 4 of which may be consecutive)
in the fiscal year, an activity described in subsection
(d)(6)).
‘‘(3) LIMITATION ON VOCATIONAL EDUCATION
ACTIVITIES COUNTED AS WORK.—For purposes of
determining monthly participation rates under para-
graphs (1)(B)(i) and (2)(B)(i) of subsection (b), not
more than 20 percent of adults in all families and
in 2-parent families determined to be engaged in
work in the State for a month may meet the work
activity requirement through participation in voca-
tional educational training.
‘‘(4) OPTION TO REDUCE NUMBER OF HOURS
OF WORK REQUIRED OF SINGLE PARENTS WITH A
CHILD UNDER AGE 6.—Notwithstanding paragraph
(1), a State may reduce to 20 the number of hours
per week during which a single custodial parent is
required pursuant to this section to engage in work
activities if the family of the parent includes an indi-
vidual who has not attained 6 years of age.
‘‘(d) WORK ACTIVITIES DEFINED.—As used in this
section, the term ‘work activities’ means—
‘‘(1) unsubsidized employment;
‘‘(2) subsidized private sector employment;
‘‘(3) subsidized public sector employment;
‘‘(4) work experience (including work associated
with the refurbishing of publicly assisted housing) if
sufficient private sector employment is not available;
‘‘(5) on-the-job training;
‘‘(6) job search and job readiness assistance;
‘‘(7) community service programs;
‘‘(8) vocational educational training (not to ex-
ceed 12 months with respect to any individual);
‘‘(9) job skills training directly related to em-
ployment;
‘‘(10) education directly related to employment,
in the case of a recipient who has not received a
high school diploma or a certificate of high school
equivalency; and
‘‘(11) satisfactory attendance at secondary
school, in the case of a recipient who—
‘‘(A) has not completed secondary school;
and
‘‘(B) is a dependent child, or a head of
household who has not attained 20 years of age.
‘‘(e) PENALTIES AGAINST INDIVIDUALS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if an adult in a family receiving assist-
ance under the State program funded under this
part refuses to engage in work required in accord-
ance with this section, the State shall—
‘‘(A) reduce the amount of assistance oth-
erwise payable to the family pro rata (or more,
at the option of the State) with respect to any
period during a month in which the adult so re-
fuses; or
‘‘(B) terminate such assistance,
subject to such good cause and other exceptions as
the State may establish.
‘‘(2) EXCEPTION.—Notwithstanding paragraph
(1), a State may not reduce or terminate assistance
under the State program funded under this part
based on a refusal of an adult to work if the adult
is a single custodial parent caring for a child who
has not attained 11 years of age, and the adult
proves that the adult has a demonstrated inability
(as determined by the State) to obtain needed child
care, for 1 or more of the following reasons:
‘‘(A) Unavailability of appropriate child
care within a reasonable distance from the indi-
vidual’s home or work site.
‘‘(B) Unavailability or unsuitability of in-
formal child care by a relative or under other
arrangements.
‘‘(C) Unavailability of appropriate and af-
fordable formal child care arrangements.
‘‘(f) NONDISPLACEMENT IN WORK ACTIVITIES.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
an adult in a family receiving assistance under a
State program funded under this part attributable to
funds provided by the Federal Government may fill
a vacant employment position in order to engage in
a work activity described in subsection (d).
‘‘(2) NO FILLING OF CERTAIN VACANCIES.—No
adult in a work activity described in subsection (d)
which is funded, in whole or in part, by funds pro-
vided by the Federal Government shall be employed
or assigned—
‘‘(A) when any other individual is on layoff
from the same or any substantially equivalent
job; or
‘‘(B) if the employer has terminated the
employment of any regular employee or other-
wise caused an involuntary reduction of its
workforce in order to fill the vacancy so created
with an adult described in paragraph (1).
‘‘(3) NO PREEMPTION.—Nothing in this sub-
section shall preempt or supersede any provision of
State or local law that provides greater protection
for employees from displacement.
‘‘(g) INDIVIDUAL RESPONSIBILITY PLANS.—
‘‘(1) ASSESSMENT.—The State agency respon-
sible for administering the State program funded
under this part shall make an initial assessment of
the skills, prior work experience, and employability
of each applicant for, or recipient of, assistance
under the program who—
‘‘(A) has attained 18 years of age; or
‘‘(B) has not completed high school or ob-
tained a certificate of high school equivalency,
and is not attending secondary school.
‘‘(2) CONTENTS OF PLANS.—
‘‘(A) IN GENERAL.—On the basis of the
assessment made under paragraph (1) with re-
spect to an individual, the State agency, in con-
sultation with the individual, shall develop an
individual responsibility plan for the individual,
which—
‘‘(i) shall provide that participation by
the individual in job search activities shall
be a condition of eligibility for assistance
under the State program funded under this
part, except during any period for which
the individual is employed full-time in an
unsubsidized job in the private sector;
‘‘(ii) sets forth an employment goal
for the individual and a plan for moving
the individual immediately into private sec-
tor employment;
‘‘(iii) sets forth the obligations of the
individual, which may include a require-
ment that the individual attend school,
maintain certain grades and attendance,
keep school age children of the individual
in 
school, 
immunize 
children, 
attend
parenting and money management classes,
or do other things that will help the indi-
vidual become and remain employed in the
private sector;
‘‘(iv) to the greatest extent possible
shall be designed to move the individual
into whatever private sector employment
the individual is capable of handling as
quickly as possible, and to increase the re-
sponsibility and amount of work the indi-
vidual is to handle over time;
‘‘(v) shall describe the services the
State will provide the individual so that the
individual will be able to obtain and keep
employment in the private sector, and de-
scribe the job counseling and other services
that will be provided by the State; and
‘‘(vi) at the option of the State, may
require the individual to undergo appro-
priate substance abuse treatment.
‘‘(B) TIMING.—The State agency shall
comply with subparagraph (A) with respect to
an individual—
‘‘(i) within 90 days (or, at the option
of the State, 180 days) after the effective
date of this part, in the case of an individ-
ual who, as of such effective date, is a re-
cipient of aid under the State plan ap-
proved under part A (as in effect imme-
diately before such effective date); or
‘‘(ii) within 30 days (or, at the option
of the State, 90 days) after the individual
is determined to be eligible for such assist-
ance, in the case of any other individual.
‘‘(3) PROVISION
OF
PROGRAM
AND
EMPLOY-
MENT INFORMATION.—The State shall inform all ap-
plicants for and recipients of assistance under the
State program funded under this part of all avail-
able services under the program for which they are
eligible.
‘‘(4) PENALTY FOR NONCOMPLIANCE BY INDI-
VIDUAL.—The State shall reduce, by such amount
as the State considers appropriate, the amount of
assistance otherwise payable under the State pro-
gram funded under this part to a family that in-
cludes an individual who fails without good cause to
comply with an individual responsibility plan signed
by the individual.
‘‘(h) SENSE OF THE CONGRESS.—It is the sense of
the Congress that in complying with this section, each
State that operates a program funded under this part is
encouraged to assign the highest priority to requiring
adults in 2-parent families and adults in single-parent
families that include older preschool or school-age children
to be engaged in work activities.
‘‘(i) SENSE
OF
THE
CONGRESS
THAT
STATES
SHOULD IMPOSE CERTAIN REQUIREMENTS
ON NON-
CUSTODIAL, NONSUPPORTING MINOR PARENTS.—It is the
sense of the Congress that the States should require non-
custodial, nonsupporting parents who have not attained 18
years of age to fulfill community work obligations and at-
tend appropriate parenting or money management classes
after school.
‘‘SEC. 408. PROHIBITIONS; REQUIREMENTS.
‘‘(a) IN GENERAL.—
‘‘(1) NO ASSISTANCE FOR FAMILIES WITHOUT A
MINOR CHILD.—A State to which a grant is made
under section 403 shall not use any part of the
grant to provide assistance to a family, unless the
family includes—
‘‘(A) a minor child who resides with a cus-
todial parent or other adult caretaker relative of
the child; or
‘‘(B) a pregnant individual.
‘‘(2) NO
ADDITIONAL
CASH
ASSISTANCE
FOR
CHILDREN BORN TO FAMILIES RECEIVING ASSIST-
ANCE.—
‘‘(A) GENERAL RULE.—A State to which a
grant is made under section 403 shall not use
any part of the grant to provide cash benefits
for a minor child who is born to—
‘‘(i) a recipient of assistance under
the program operated under this part; or
‘‘(ii) a person who received such as-
sistance at any time during the 10-month
period ending with the birth of the child.
‘‘(B) EXCEPTION
FOR
CHILDREN
BORN
INTO FAMILIES WITH NO OTHER CHILDREN.—
Subparagraph (A) shall not apply to a minor
child who is born into a family that does not in-
clude any other children.
‘‘(C) EXCEPTION
FOR
VOUCHERS.—Sub-
paragraph (A) shall not apply to vouchers
which are provided in lieu of cash benefits and
which may be used only to pay for particular
goods and services specified by the State as
suitable for the care of the child involved.
‘‘(D) EXCEPTION FOR RAPE OR INCEST.—
Subparagraph (A) shall not apply with respect
to a child who is born as a result of rape or in-
cest.
‘‘(E) STATE ELECTION TO OPT OUT.—Sub-
paragraph (A) shall not apply to a State if
State law specifically exempts the State pro-
gram funded under this part from the applica-
tion of subparagraph (A).
‘‘(F) SUBSTITUTION OF FAMILY CAPS IN
EFFECT UNDER WAIVERS.—Subparagraph (A)
shall not apply to a State—
‘‘(i) if, as of the date of the enactment
of this part, there is in effect a waiver ap-
proved by the Secretary under section
1115 which permits the State to deny aid
under the State plan approved under part
A of this title (as in effect without regard
to the amendments made by title I of the
Bipartisan Welfare Reform Act of 1996) to
a family by reason of the birth of a child
to a family member otherwise eligible for
such aid; and
‘‘(ii) for so long as the State contin-
ues to implement such policy under the
State program funded under this part,
under rules prescribed by the State.
‘‘(3) REDUCTION OR ELIMINATION OF ASSIST-
ANCE FOR NONCOOPERATION IN CHILD SUPPORT.—
If the agency responsible for administering the State
plan approved under part D determines that an indi-
vidual is not cooperating with the State in establish-
ing, modifying, or enforcing a support order with re-
spect to a child of the individual, then the State—
‘‘(A) shall deduct from the assistance that
would otherwise be provided to the family of the
individual under the State program funded
under this part the share of such assistance at-
tributable to the individual; and
‘‘(B) may deny the family any assistance
under the State program.
‘‘(4) NO ASSISTANCE FOR FAMILIES NOT AS-
SIGNING
CERTAIN
SUPPORT
RIGHTS
TO
THE
STATE.—
‘‘(A) IN GENERAL.—A State to which a
grant is made under section 403 shall require,
as a condition of providing assistance to a fam-
ily under the State program funded under this
part, that a member of the family assign to the
State any rights the family member may have
(on behalf of the family member or of any other
person for whom the family member has applied
for or is receiving such assistance) to support
from any other person, not exceeding the total
amount of assistance so provided to the family,
which accrue (or have accrued) before the date
the family leaves the program, which assign-
ment, on and after the date the family leaves
the program, shall not apply with respect to any
support (other than support collected pursuant
to section 464) which accrued before the family
received such assistance and which the State
has not collected by—
‘‘(i) September 30, 2000, if the as-
signment is executed on or after October 1,
1997, and before October 1, 2000; or
‘‘(ii) the date the family leaves the
program, if the assignment is executed on
or after October 1, 2000.
‘‘(B) LIMITATION.—A State to which a
grant is made under section 403 shall not re-
quire, as a condition of providing assistance to
any family under the State program funded
under this part, that a member of the family
assign to the State any rights to support de-
scribed in subparagraph (A) which accrue after
the date the family leaves the program, except
to the extent necessary to enable the State to
comply with section 457.
‘‘(5) NO ASSISTANCE FOR TEENAGE PARENTS
WHO
DO
NOT
ATTEND
HIGH
SCHOOL
OR
OTHER
EQUIVALENT
TRAINING
PROGRAM.—A State to
which a grant is made under section 403 shall not
use any part of the grant to provide assistance to an
individual who has not attained 18 years of age, is
not married, has a minor child at least 12 weeks of
age in his or her care, and has not successfully com-
pleted a high-school education (or its equivalent), if
the individual does not participate in—
‘‘(A) educational activities directed toward
the attainment of a high school diploma or its
equivalent; or
‘‘(B) an alternative educational or training
program that has been approved by the State.
‘‘(6) NO ASSISTANCE FOR TEENAGE PARENTS
NOT LIVING IN ADULT-SUPERVISED SETTINGS.—
‘‘(A) IN GENERAL.—
‘‘(i) REQUIREMENT.—Except as pro-
vided in subparagraph (B), a State to
which a grant is made under section 403
shall not use any part of the grant to pro-
vide assistance to an individual described
in clause (ii) of this subparagraph if the
individual and the minor child referred to
in clause (ii)(II) do not reside in a place of
residence maintained by a parent, legal
guardian, or other adult relative of the in-
and the minor child referred to in subpara-
graph (A)(ii)(II) reside in such living ar-
rangement as a condition of the continued
receipt of assistance under the State pro-
gram funded under this part attributable
to funds provided by the Federal Govern-
ment (or in an alternative appropriate ar-
rangement, should circumstances change
and the current arrangement cease to be
appropriate).
‘‘(ii) INDIVIDUAL
DESCRIBED.—For
purposes of clause (i), an individual is de-
scribed in this clause if the individual is
described in subparagraph (A)(ii), and—
‘‘(I) the individual has no parent,
legal guardian or other appropriate
adult relative described in subclause
(II) of his or her own who is living or
whose whereabouts are known;
‘‘(II) no living parent, legal
guardian, or other appropriate adult
relative, who would otherwise meet
applicable State criteria to act as the
individual’s legal guardian, of such in-
dividual allows the individual to live in
the home of such parent, guardian, or
relative;
‘‘(III) the State agency deter-
mines that—
‘‘(aa) the individual or the
minor child referred to in sub-
paragraph (A)(ii)(II) is being or
has been subjected to serious
physical or emotional harm, sex-
ual abuse, or exploitation in the
residence of the individual’s own
parent or legal guardian; or
‘‘(bb) substantial evidence
exists of an act or failure to act
that presents an imminent or se-
rious harm if the individual and
the minor child lived in the same
residence with the individual’s
own parent or legal guardian; or
‘‘(IV) the State agency otherwise
determines that it is in the best inter-
est of the minor child to waive the re-
quirement of subparagraph (A) with
respect to the individual or the minor
child.
‘‘(iii) SECOND-CHANCE
HOME.—For
purposes of this subparagraph, the term
‘second-chance home’ means an entity that
provides individuals described in clause (ii)
with a supportive and supervised living ar-
rangement in which such individuals are
required to learn parenting skills, including
child development, family budgeting, health
and nutrition, and other skills to promote
their long-term economic independence and
the well-being of their children.
‘‘(7) NO MEDICAL SERVICES.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), a State to which a grant is
made under section 403 shall not use any part
of the grant to provide medical services.
‘‘(B) EXCEPTION FOR FAMILY PLANNING
SERVICES.—As used in subparagraph (A), the
term ‘medical services’ does not include family
planning services.
‘‘(8) NO
ASSISTANCE
FOR
MORE
THAN
YEARS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraphs (B) and (C), a State to which a
grant is made under section 403 shall not use
any part of the grant to provide cash assistance
to a family that includes an adult who has re-
ceived assistance under any State program
funded under this part attributable to funds
provided by the Federal Government, for 60
months (whether or not consecutive) after the
date the State program funded under this part
commences.
‘‘(B) MINOR CHILD EXCEPTION.—In deter-
mining the number of months for which an in-
dividual who is a parent or pregnant has re-
ceived assistance under the State program
funded under this part, the State shall dis-
regard any month for which such assistance
was provided with respect to the individual and
during which the individual was—
‘‘(i) a minor child; and
‘‘(ii) not the head of a household or
married to the head of a household.
‘‘(C) HARDSHIP EXCEPTION.—
‘‘(i) IN GENERAL.—The State may ex-
empt a family from the application of sub-
paragraph (A) by reason of hardship or if
the family includes an individual who has
been battered or subjected to extreme cru-
elty.
‘‘(ii) LIMITATION.—The number of
families with respect to which an exemp-
tion made by a State under clause (i) is in
effect for a fiscal year shall not exceed 20
percent of the average monthly number of
families to which assistance is provided
under the State program funded under this
part.
‘‘(iii) BATTERED OR SUBJECT TO EX-
TREME CRUELTY DEFINED.—For purposes
of clause (i), an individual has been bat-
tered or subjected to extreme cruelty if the
individual has been subjected to—
‘‘(I) physical acts that resulted
in, or threatened to result in, physical
injury to the individual;
‘‘(II) sexual abuse;
‘‘(III) sexual activity involving a
dependent child;
‘‘(IV) being forced as the care-
taker relative of a dependent child to
engage in nonconsensual sexual acts
or activities;
‘‘(V) threats of, or attempts at,
physical or sexual abuse;
‘‘(VI) mental abuse; or
‘‘(VII) neglect or deprivation of
medical care.
‘‘(D) RULE
OF
INTERPRETATION.—Sub-
paragraph (A) shall not be interpreted to re-
quire any State to provide assistance to any in-
dividual for any period of time under the State
program funded under this part.
‘‘(9) DENIAL OF ASSISTANCE FOR 10 YEARS TO
A PERSON FOUND TO HAVE FRAUDULENTLY MIS-
REPRESENTED RESIDENCE IN ORDER TO OBTAIN AS-
SISTANCE IN 2 OR MORE STATES.—A State to which
a grant is made under section 403 shall not use any
part of the grant to provide cash assistance to an in-
dividual during the 10-year period that begins on
the date the individual is convicted in Federal or
State court of having made a fraudulent statement
or representation with respect to the place of resi-
dence of the individual in order to receive assistance
simultaneously from 2 or more States under pro-
grams that are funded under this title, title XIX, or
the Food Stamp Act of 1977, or benefits in 2 or
more States under the supplemental security income
program under title XVI.
‘‘(10) DENIAL OF ASSISTANCE FOR FUGITIVE
FELONS
AND
PROBATION
AND
PAROLE
VIOLA-
TORS.—
‘‘(A) IN GENERAL.—A State to which a
grant is made under section 403 shall not use
any part of the grant to provide assistance to
any individual who is—
‘‘(i) fleeing to avoid prosecution, or
custody or confinement after conviction,
under the laws of the place from which the
individual flees, for a crime, or an attempt
to commit a crime, which is a felony under
the laws of the place from which the indi-
vidual flees, or which, in the case of the
State of New Jersey, is a high mis-
demeanor under the laws of such State; or
‘‘(ii) violating a condition of probation
or parole imposed under Federal or State
law.
‘‘(B) EXCHANGE OF INFORMATION WITH
LAW ENFORCEMENT AGENCIES.—If a State to
which a grant is made under section 403 estab-
lishes safeguards against the use or disclosure
of information about applicants or recipients of
assistance under the State program funded
under this part, the safeguards shall not pre-
vent the State agency administering the pro-
gram from furnishing a Federal, State, or local
law enforcement officer, upon the request of the
officer, with the current address of any recipi-
ent if the officer furnishes the agency with the
name of the recipient and notifies the agency
that—
‘‘(i) the recipient—
‘‘(I) is described in subparagraph
(A); or
‘‘(II) has information that is nec-
essary for the officer to conduct the
official duties of the officer; and
‘‘(ii) the location or apprehension of
the recipient is within such official duties.
‘‘(11) DENIAL
OF
ASSISTANCE
FOR
MINOR
CHILDREN WHO ARE ABSENT FROM THE HOME FOR
A SIGNIFICANT PERIOD.—
‘‘(A) IN GENERAL.—A State to which a
grant is made under section 403 shall not use
any part of the grant to provide assistance for
a minor child who has been, or is expected by
a parent (or other caretaker relative) of the
child to be, absent from the home for a period
of 45 consecutive days or, at the option of the
State, such period of not less than 30 and not
more than 90 consecutive days as the State
may provide for in the State plan submitted
pursuant to section 402.
‘‘(B) STATE
AUTHORITY
TO
ESTABLISH
GOOD CAUSE EXCEPTIONS.—The State may es-
tablish such good cause exceptions to subpara-
graph (A) as the State considers appropriate if
such exceptions are provided for in the State
plan submitted pursuant to section 402.
‘‘(C) DENIAL
OF
ASSISTANCE
FOR
REL-
ATIVE WHO FAILS TO NOTIFY STATE AGENCY
OF ABSENCE OF CHILD.—A State to which a
grant is made under section 403 shall not use
any part of the grant to provide assistance for
an individual who is a parent (or other care-
taker relative) of a minor child and who fails to
notify the agency administering the State pro-
gram funded under this part of the absence of
the minor child from the home for the period
specified in or provided for pursuant to sub-
paragraph (A), by the end of the 5-day period
that begins with the date that it becomes clear
to the parent (or relative) that the minor child
will be absent for such period so specified or
provided for.
‘‘(12) INCOME SECURITY PAYMENTS NOT TO BE
DISREGARDED
IN
DETERMINING
THE
AMOUNT
OF
ASSISTANCE TO BE PROVIDED TO A FAMILY.—If a
State to which a grant is made under section 403
uses any part of the grant to provide assistance for
any individual who is receiving a payment under a
State plan for old-age assistance approved under
section 2, a State program funded under part B that
provides cash payments for foster care, or the sup-
plemental security income program under title XVI,
then the State shall not disregard the payment in
determining the amount of assistance to be provided
under the State program funded under this part,
from funds provided by the Federal Government, to
the family of which the individual is a member.
‘‘(13) PROVISION OF VOUCHERS TO FAMILIES
DENIED CASH ASSISTANCE DUE TO STATE-IMPOSED
TIME LIMITS.—
‘‘(A) REQUIREMENT.—If a family is denied
assistance under the State program funded
under this part by reason of a time limit im-
posed by the State other than pursuant to para-
graph (8), the State shall provide vouchers to
the family in accordance with subparagraph
(B).
‘‘(B) CHARACTERISTICS OF VOUCHERS.—
The vouchers referred to in subparagraph (A)
shall be—
‘‘(i) in an amount equal to the
amount determined by the State to meet
the needs of only the child or children in
the family, which shall be determined in
the same manner as the State would other-
wise determines the needs of the child or
children under the program;
‘‘(ii) designed appropriately to pay a
third party for goods and services to be
provided by the third party to the child or
children in the family; and
‘‘(iii) redeemable by a third party de-
scribed in clause (ii) for a dollar amount
equal to the amount of the voucher.
‘‘(b) ALIENS.—For special rules relating to the treat-
ment of aliens, see section 402 of the Bipartisan Welfare
Reform Act of 1996.
‘‘SEC. 409. PENALTIES.
‘‘(a) IN GENERAL.—Subject to this section:
‘‘(1) FAILURE
TO
SUBMIT
REQUIRED
RE-
PORT.—
‘‘(A) IN GENERAL.—If the Secretary deter-
mines that a State has not, within 1 month
after the end of a fiscal quarter, submitted the
report required by section 411(a) for the quar-
ter, the Secretary shall reduce the grant pay-
able to the State under section 403(a)(1) for
the immediately succeeding fiscal year by an
amount equal to 4 percent of the State family
assistance grant.
‘‘(B) RESCISSION OF PENALTY.—The Sec-
retary shall rescind a penalty imposed on a
State under subparagraph (A) with respect to a
report for a fiscal quarter if the State submits
the report before the end of the immediately
succeeding fiscal quarter.
‘‘(2) FAILURE TO PARTICIPATE IN THE INCOME
AND
ELIGIBILITY
VERIFICATION
SYSTEM.—If the
Secretary determines that a State program funded
under this part is not participating during a fiscal
year in the income and eligibility verification system
required by section 1137, the Secretary shall reduce
the grant payable to the State under section
403(a)(1) for the immediately succeeding fiscal year
by an amount equal to not more than 2 percent of
the State family assistance grant.
‘‘(3) FAILURE TO COMPLY WITH PATERNITY ES-
TABLISHMENT AND CHILD SUPPORT ENFORCEMENT
REQUIREMENTS UNDER PART D.—Notwithstanding
any other provision of this Act, if the Secretary de-
termines that the State agency that administers a
program funded under this part does not enforce the
penalties requested by the agency administering part
D against recipients of assistance under the State
program who fail to cooperate in establishing pater-
nity in accordance with such part, the Secretary
shall reduce the grant payable to the State under
section 403(a)(1) for the immediately succeeding fis-
cal year (without regard to this section) by not more
than 5 percent.
‘‘(4) FAILURE TO TIMELY REPAY A FEDERAL
LOAN FUND FOR STATE WELFARE PROGRAMS.—If
the Secretary determines that a State has failed to
repay any amount borrowed from the Federal Loan
Fund for State Welfare Programs established under
section 406 within the period of maturity applicable
to the loan, plus any interest owed on the loan, the
Secretary shall reduce the grant payable to the State
under section 403(a)(1) for the immediately succeed-
ing fiscal year quarter (without regard to this sec-
tion) by the outstanding loan amount, plus the inter-
est owed on the outstanding amount. The Secretary
shall not forgive any outstanding loan amount or in-
terest owed on the outstanding amount.
‘‘(5) FAILURE
OF
ANY
STATE
TO
MAINTAIN
CERTAIN LEVEL OF HISTORIC EFFORT.—
‘‘(A) IN
GENERAL.—The Secretary shall
reduce the grant payable to the State under
section 403(a)(1) for fiscal year 1997, 1998,
1999, 2000, 2001, or 2002 by the amount (if
any) by which qualified State expenditures for
the then immediately preceding fiscal year is
less than the applicable percentage of historic
State expenditures with respect to the fiscal
year.
‘‘(B) DEFINITIONS.—As used in this para-
graph:
‘‘(i) 
QUALIFIED
STATE
EXPENDI-
TURES.—
‘‘(I) IN
GENERAL.—The term
‘qualified State expenditures’ means,
with respect to a State and a fiscal
year, the total expenditures by the
State during the fiscal year, under all
State programs, for any of the follow-
ing with respect to eligible families:
‘‘(aa) Cash assistance.
‘‘(bb) Child care assistance.
‘‘(cc) Educational activities
designed to increase self-suffi-
ciency, job training, and work,
excluding any expenditure for
public education in the State ex-
cept expenditures which involve
the provision of services or assist-
ance to a member of an eligible
family which is not generally
available to persons who are not
members of eligible families.
‘‘(dd) Administrative costs
in connection with the matters
described in items (aa), (bb),
(cc), and (ee), but only to the ex-
tent that such costs do not ex-
ceed 15 percent of the total
amount of qualified State ex-
penditures for the fiscal year.
‘‘(ee) Any other use of funds
allowable 
under 
section
404(a)(1).
‘‘(II) EXCLUSION OF TRANSFERS
FROM OTHER STATE AND LOCAL PRO-
GRAMS.—Such term does not include
expenditures under any State or local
program during a fiscal year, except
to the extent that—
‘‘(aa) such expenditures ex-
ceed the amount expended under
the State or local program in the
fiscal year most recently ending
before the date of the enactment
of this part; or
‘‘(bb) the State is entitled to
a payment under former section
403 (as in effect immediately be-
fore such date of enactment) with
respect to such expenditures.
‘‘(III) ELIGIBLE
FAMILIES.—As
used in subclause (I), the term ‘eligi-
ble families’ means families eligible
for assistance under the State pro-
gram funded under this part, and
families who would be eligible for such
assistance but for the application of
paragraph (2) or (8) of section 408(a)
of this Act or section 402 of the Bi-
partisan Welfare Reform Act of 1996.
‘‘(ii) APPLICABLE PERCENTAGE.—The
term ‘applicable percentage’ means—
‘‘(I) for fiscal year 1996, 85 per-
cent; and
‘‘(II) for fiscal years 1997, 1998,
1999, 2000, and 2001, 85 percent ad-
justed (if appropriate) in accordance
with subparagraph (C).
‘‘(iii) 
HISTORIC
STATE
EXPENDI-
TURES.—The term ‘historic State expendi-
tures’ means, with respect to a State and
a fiscal year specified in subparagraph (A),
the lesser of—
‘‘(I) the expenditures by the
State under parts A and F (as in ef-
fect during fiscal year 1994) for fiscal
year 1994; or
‘‘(II) the amount which bears the
same ratio to the amount described in
subclause (I) as—