State for a fiscal year is less than 40 per-
cent but exceeds by at least 5 percentage
points the current payment performance
level of the State for the immediately pre-
ceding fiscal year, then the applicable per-
centage with respect to the State’s current
payment performance level is 50 percent.
‘‘(D) COLLECTIONS
ON
CHILD
SUPPORT
ARREARAGES.—
‘‘(i) DETERMINATION OF ARREARAGE
PAYMENT PERFORMANCE LEVEL.—The ar-
rearage payment performance level for a
State for a fiscal year is equal to the total
number of cases under the State plan ap-
proved under this part in which payments
of past-due child support were received
during the fiscal year and part or all of the
payments were distributed to the family to
whom the past-due child support was owed
(or, if all past-due child support owed to
the family was, at the time of receipt, sub-
ject to an assignment to the State, part or
all of the payments were retained by the
State) divided by the total number of cases
under the State plan in which there is
past-due child support, expressed as a per-
centage.
‘‘(ii) DETERMINATION OF APPLICABLE
PERCENTAGE.—The applicable percentage
with respect to a State’s arrearage pay-
ment performance level is as follows:
‘‘If the arrearage payment performance level is:
The applicable
percentage is:
At least:
But less than:
80% ......................................
..............................................
100
79% ......................................
80% ......................................
78% ......................................
79% ......................................
77% ......................................
78% ......................................
76% ......................................
77% ......................................
75% ......................................
76% ......................................
74% ......................................
75% ......................................
73% ......................................
74% ......................................
72% ......................................
73% ......................................
71% ......................................
72% ......................................
70% ......................................
71% ......................................
69% ......................................
70% ......................................
68% ......................................
69% ......................................
67% ......................................
68% ......................................
66% ......................................
67% ......................................
65% ......................................
66% ......................................
64% ......................................
65% ......................................
63% ......................................
64% ......................................
62% ......................................
63% ......................................
61% ......................................
62% ......................................
60% ......................................
61% ......................................
59% ......................................
60% ......................................
58% ......................................
59% ......................................
57% ......................................
58% ......................................
56% ......................................
57% ......................................
55% ......................................
56% ......................................
54% ......................................
55% ......................................
53% ......................................
54% ......................................
52% ......................................
53% ......................................
51% ......................................
52% ......................................
50% ......................................
51% ......................................
49% ......................................
50% ......................................
48% ......................................
49% ......................................
47% ......................................
48% ......................................
46% ......................................
47% ......................................
45% ......................................
46% ......................................
44% ......................................
45% ......................................
43% ......................................
44% ......................................
42% ......................................
43% ......................................
‘‘If the arrearage payment performance level is:
The applicable
percentage is:
At least:
But less than:
41% ......................................
42% ......................................
40% ......................................
41% ......................................
0% ........................................
40% ......................................
0.
Notwithstanding the preceding sentence, if
the arrearage payment performance level
of a State for a fiscal year is less than 40
percent but exceeds by at least 5 percent-
age points the arrearage payment perform-
ance level of the State for the immediately
preceding fiscal year, then the applicable
percentage with respect to the State’s ar-
rearage payment performance level is 50
percent.
‘‘(E) COST-EFFECTIVENESS.—
‘‘(i) DETERMINATION
OF
COST-EF-
FECTIVENESS PERFORMANCE LEVEL.—The
cost-effectiveness performance level for a
State for a fiscal year is equal to the total
amount collected during the fiscal year
under the State plan approved under this
part divided by the total amount expended
during the fiscal year under the State plan,
expressed as a ratio.
‘‘(ii) DETERMINATION OF APPLICABLE
PERCENTAGE.—The applicable percentage
with respect to a State’s cost-effectiveness
performance level is as follows:
‘‘If the cost effectiveness performance level is:
The applicable
percentage is:
At least:
But less than:
5.00 ......................................
..............................................
100
4.50 ......................................
4.99 ......................................
4.00 ......................................
4.50 ......................................
3.50 ......................................
4.00 ......................................
3.00 ......................................
3.50 ......................................
2.50 ......................................
3.00 ......................................
2.00 ......................................
2.50 ......................................
0.00 ......................................
2.00 ......................................
0.
‘‘(c) TREATMENT OF INTERSTATE COLLECTIONS.—
In computing incentive payments under this section, sup-
port which is collected by a State at the request of another
State shall be treated as having been collected in full by
both States, and any amounts expended by a State in car-
rying out a special project assisted under section 455(e)
shall be excluded.
‘‘(d) ADMINISTRATIVE PROVISIONS.—The amounts
of the incentive payments to be made to the States under
this section for a fiscal year shall be estimated by the Sec-
retary at or before the beginning of the fiscal year on the
basis of the best information available. The Secretary shall
make the payments for the fiscal year, on a quarterly basis
(with each quarterly payment being made no later than
the beginning of the quarter involved), in the amounts so
estimated, reduced or increased to the extent of any over-
payments or underpayments which the Secretary deter-
mines were made under this section to the States involved
for prior periods and with respect to which adjustment has
not already been made under this subsection. Upon the
making of any estimate by the Secretary under the preced-
ing sentence, any appropriations available for payments
under this section are deemed obligated.
‘‘(e) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary governing the cal-
culation of incentive payments under this section, includ-
ing directions for excluding from the calculations certain
closed cases and cases over which the States do not have
jurisdiction.
‘‘(f) REINVESTMENT.—A State to which a payment
is made under this section shall expend the full amount
of the payment—
‘‘(1) to carry out the State plan approved under
this part; or
‘‘(2) for any activity (including cost-effective
contracts with local agencies) approved by the Sec-
retary, whether or not the expenditures for which
are eligible for reimbursement under this part, which
may contribute to improving the effectiveness or effi-
ciency of the State program operated under this
part.’’.
(b) TRANSITION RULE.—Notwithstanding any other
provision of law—
(1) for fiscal year 2000, the Secretary shall re-
duce by 1⁄3 the amount otherwise payable to a State
under section 458 of the Social Security Act, and
shall reduce by 2⁄3 the amount otherwise payable to
a State under section 458A of such Act; and
(2) for fiscal year 2001, the Secretary shall re-
duce by 2⁄3 the amount otherwise payable to a State
under section 458 of the Social Security Act, and
shall reduce by 1⁄3 the amount otherwise payable to
a State under section 458A of such Act.
(c) REGULATIONS.—Within 9 months after the date
of the enactment of this section, the Secretary of Health
and Human Services shall prescribe regulations governing
the implementation of section 458A of the Social Security
Act when such section takes effect and the implementation
of subsection (b) of this section.
(d) STUDIES.—
(1) GENERAL REVIEW OF NEW INCENTIVE PAY-
MENT SYSTEM.—
(A) 
IN
GENERAL.—The 
Secretary 
of
Health and Human Services shall conduct a
study of the implementation of the incentive
payment system established by section 458A of
the Social Security Act, in order to identify the
problems and successes of the system.
(B) REPORTS TO THE CONGRESS.—
(i) REPORT ON VARIATIONS IN STATE
PERFORMANCE ATTRIBUTABLE TO DEMO-
GRAPHIC VARIABLES.—Not later than Oc-
tober 1, 2000, the Secretary shall submit
to the Congress a report that identifies any
demographic or economic variables that ac-
count for differences in the performance
levels achieved by the States with respect
to the performance measures used in the
system, and contains the recommendations
of the Secretary for such adjustments to
the system as may be necessary to ensure
that the relative performance of States is
measured from a baseline that takes ac-
count of any such variables.
(ii) INTERIM REPORT.—Not later than
March 1, 2001, the Secretary shall submit
to the Congress an interim report that con-
tains the findings of the study required by
subparagraph (A).
(iii) FINAL REPORT.—Not later than
October 1, 2003, the Secretary shall sub-
mit to the Congress a final report that
contains the final findings of the study re-
quired by subparagraph (A). The report
shall include any recommendations for
changes in the system that the Secretary
determines would improve the operation of
the child support enforcement program.
(2) DEVELOPMENT OF MEDICAL SUPPORT IN-
CENTIVE.—
(A) 
IN
GENERAL.—The 
Secretary 
of
Health and Human Services, in consultation
with State directors of programs operated
under part D of title IV of the Social Security
Act and representatives of children potentially
eligible for medical support, shall develop a per-
formance measure based on the effectiveness of
States in establishing and enforcing medical
support obligations, and shall make rec-
ommendations for the incorporation of the
measure, in a revenue neutral manner, into the
incentive payment system established by section
458A of the Social Security Act.
(B) REPORT.—Not later than October 1,
1999, the Secretary shall submit to the Con-
gress a report that describes the performance
measure and contains the recommendations re-
quired by subparagraph (A).
(e) TECHNICAL AMENDMENTS.—
(1) IN GENERAL.—Section 341 of the Personal
Responsibility and Work Opportunity Reconciliation
Act of 1996 (42 U.S.C. 658 note) is amended—
(A) by striking subsection (a) and redesig-
nating subsections (b), (c), and (d) as sub-
sections (a), (b), and (c), respectively; and
(B) in subsection (c) (as so redesig-
nated)—
(i) by striking paragraph (1) and in-
serting the following:
‘‘(1) CONFORMING AMENDMENTS TO PRESENT
SYSTEM.—The amendments made by subsection (a)
of this section shall become effective with respect to
a State as of the date the amendments made by sec-
tion 103(a) (without regard to section 116(a)(2))
first apply to the State.’’; and
(ii) in paragraph (2), by striking
‘‘(c)’’ and inserting ‘‘(b)’’.
(2) EFFECTIVE DATE.—The amendments made
by this section shall take effect as if included in the
enactment of section 341 of the Personal Respon-
sibility and Work Opportunity Reconciliation Act of
1996.
(f) ELIMINATION OF PREDECESSOR INCENTIVE PAY-
MENT SYSTEM.—
(1) REPEAL.—Section 458 of the Social Secu-
rity Act (42 U.S.C. 658) is repealed.
(2) CONFORMING AMENDMENTS.—
(A) Section 458A of the Social Security
Act (42 U.S.C. 658a) is redesignated as section
458.
(B) Subsection (d)(1) of this section is
amended by striking ‘‘458A’’ and inserting
‘‘458’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on October 1,
2001.
(g) GENERAL EFFECTIVE DATE.—Except as other-
wise provided in this section, the amendments made by
this section shall take effect on October 1, 1999.
TITLE III—ADOPTION
PROVISIONS
SEC. 301. MORE FLEXIBLE PENALTY PROCEDURE TO BE AP-
PLIED FOR FAILING TO PERMIT INTERJURIS-
DICTIONAL ADOPTION.
(a) Section 474(d) of the Social Security Act (42
U.S.C. 674(d)) is amended in each of paragraphs (1) and
(2) by inserting ‘‘or subsection (e) of this section’’ after
‘‘section 471(a)(18)’’.
(b) Section 474(e) of such Act (42 U.S.C. 674(e))
is amended—
(1) by striking all that precedes paragraph (1)
and inserting the following:
‘‘(e) As a condition of receiving funds under this part,
a State shall not—’’;
(2) in paragraph (1), by striking ‘‘denied or de-
layed’’ and inserting ‘‘deny or delay’’; and
(3) in paragraph (2), by striking ‘‘failed’’ and
inserting ‘‘fail’’.
(c) RETROACTIVITY.—The amendments made by this
section shall take effect as if included in section 202(b)
of the Adoption and Safe Families Act of 1997.
SEC. 302. TECHNICAL CORRECTIONS.
Section 473A(c)(2)(B) of the Social Security Act (42
U.S.C. 673b(c)(2)(B)) is amended—
(1) by striking ‘‘November 30, 1997’’ and in-
serting ‘‘April 30, 1998’’; and
(2) by striking ‘‘March 1, 1998’’ and inserting
‘‘July 1, 1998’’.
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