‘‘(i) the total number of countable 
hours (as defined in subsection (c)) with 
respect to the counted families for the 
State for the month; divided by 
‘‘(ii) 160 multiplied by the number of 
counted families for the State for the 
month. 
‘‘(B) COUNTED FAMILIES DEFINED.—
‘‘(i) IN GENERAL.—In subparagraph 
(A), the term ‘counted family’ means, with 
respect to a State and a month, a family 
that includes a work-eligible individual and 
that receives assistance in the month under 
the State program funded under this part, 
subject to clause (ii). 
‘‘(ii) STATE
OPTION
TO
EXCLUDE 
CERTAIN
FAMILIES.—At the option of a 
State, the term ‘counted family’ shall not 
include—
‘‘(I) a family in the first month 
for which the family receives assist-
ance from a State program funded 
under this part on the basis of the 
most recent application for such as-
sistance; or
‘‘(II) on a case-by-case basis, a 
family in which the youngest child has 
not attained 12 months of age. 
‘‘(iii) STATE OPTION TO INCLUDE IN-
DIVIDUALS RECEIVING ASSISTANCE UNDER 
A
TRIBAL
FAMILY
ASSISTANCE
PLAN
OR 
TRIBAL WORK PROGRAM.—At the option of 
a State, the term ‘counted family’ may in-
clude families in the State that are receiv-
ing assistance under a tribal family assist-
ance plan approved under section 412 or 
under a tribal work program to which 
funds are provided under this part. 
‘‘(C) WORK-ELIGIBLE
INDIVIDUAL
DE-
FINED.—In this section, the term ‘work-eligible 
individual’ means an individual—
‘‘(i) who is married or a single head 
of household; and 
‘‘(ii) whose needs are (or, but for 
sanctions under this part that have been in 
effect for more than 3 months (whether or 
not consecutive) in the preceding 12 
months or under part D, would be) in-
cluded in determining the amount of cash 
assistance to be provided to the family
under the State program funded under this 
part.’’. 
(c) RECALIBRATION
OF
CASELOAD
REDUCTION 
CREDIT.—
(1) IN GENERAL.—Section 407(b)(3)(A)(ii) (42 
U.S.C. 607(b)(3)(A)(ii)) is amended to read as fol-
lows: 
‘‘(ii) the average monthly number of 
families that received assistance under the 
State program funded under this part dur-
ing the base year.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
407(b)(3)(B) (42 U.S.C. 607(b)(3)(B)) is amended 
by striking ‘‘and eligibility criteria’’ and all that fol-
lows through the close parenthesis and inserting 
‘‘and the eligibility criteria in effect during the then 
applicable base year’’. 
(3) BASE YEAR DEFINED.—Section 407(b)(3) 
(42 U.S.C. 607(b)(3)) is amended by adding at the 
end the following: 
‘‘(C) BASE YEAR DEFINED.—In this para-
graph, the term ‘base year’ means, with respect 
to a fiscal year—
‘‘(i) if the fiscal year is fiscal year 
2006, fiscal year 1996;
‘‘(ii) if the fiscal year is fiscal year 
2007, fiscal year 1998; 
‘‘(iii) if the fiscal year is fiscal year 
2008, fiscal year 2001; or 
‘‘(iv) if the fiscal year is fiscal year 
2009 or any succeeding fiscal year, the 
then 4th preceding fiscal year.’’. 
(d) SUPERACHIEVER CREDIT.—Section 407(b) (42 
U.S.C. 607(b)) is amended by striking paragraphs (4) and 
(5) and inserting the following: 
‘‘(4) SUPERACHIEVER CREDIT.—
‘‘(A) IN
GENERAL.—The participation 
rate, determined under paragraphs (1) and (2) 
of this subsection, of a superachiever State for 
a fiscal year shall be increased by the lesser 
of—
‘‘(i) the amount (if any) of the super-
achiever credit applicable to the State; or 
‘‘(ii) the number of percentage points 
(if any) by which the minimum participa-
tion rate required by subsection (a) for the 
fiscal year exceeds 50 percent. 
‘‘(B) SUPERACHIEVER
STATE.—For pur-
poses of subparagraph (A), a State is a super-
achiever State if the State caseload for fiscal
year 2001 has declined by at least 60 percent 
from the State caseload for fiscal year 1995. 
‘‘(C) AMOUNT
OF
CREDIT.—The super-
achiever credit applicable to a State is the num-
ber of percentage points (if any) by which the 
decline referred to in subparagraph (B) exceeds 
60 percent. 
‘‘(D) DEFINITIONS.—In this paragraph: 
‘‘(i) STATE
CASELOAD
FOR
FISCAL 
YEAR 2001.—The term ‘State caseload for 
fiscal year 2001’ means the average 
monthly number of families that received 
assistance during fiscal year 2001 under 
the State program funded under this part. 
‘‘(ii) STATE
CASELOAD
FOR
FISCAL 
YEAR 1995.—The term ‘State caseload for 
fiscal year 1995’ means the average 
monthly number of families that received 
aid under the State plan approved under 
part A (as in effect on September 30, 
1995) during fiscal year 1995.’’. 
(e) COUNTABLE HOURS.—Section 407 of such Act 
(42 U.S.C. 607) is amended by striking subsections (c) 
and (d) and inserting the following: 
‘‘(c) COUNTABLE HOURS.—
‘‘(1) DEFINITION.—In subsection (b)(2), the 
term ‘countable hours’ means, with respect to a fam-
ily for a month, the total number of hours in the 
month in which any member of the family who is a 
work-eligible individual is engaged in a direct work 
activity or other activities specified by the State (ex-
cluding an activity that does not address a purpose 
specified in section 401(a)), subject to the other pro-
visions of this subsection. 
‘‘(2) LIMITATIONS.—Subject to such regula-
tions as the Secretary may prescribe: 
‘‘(A) MINIMUM WEEKLY AVERAGE OF 24 
HOURS
OF
DIRECT
WORK
ACTIVITIES
RE-
QUIRED.—If the work-eligible individuals in a 
family are engaged in a direct work activity for 
an average total of fewer than 24 hours per 
week in a month, then the number of countable 
hours with respect to the family for the month 
shall be zero. 
‘‘(B) MAXIMUM WEEKLY AVERAGE OF 16 
HOURS OF OTHER ACTIVITIES.—An average of 
not more than 16 hours per week of activities 
specified by the State (subject to the exclusion 
described in paragraph (1)) may be considered
countable hours in a month with respect to a 
family. 
‘‘(3) SPECIAL RULES.—For purposes of para-
graph (1): 
‘‘(A) PARTICIPATION
IN
QUALIFIED
AC-
TIVITIES.—
‘‘(i) IN GENERAL.—If, with the ap-
proval of the State, the work-eligible indi-
viduals in a family are engaged in 1 or 
more qualified activities for an average 
total of at least 24 hours per week in a 
month, then all such engagement in the 
month shall be considered engagement in a 
direct work activity, subject to clause (iii). 
‘‘(ii) 
QUALIFIED
ACTIVITY
DE-
FINED.—The 
term 
‘qualified 
activity’ 
means an activity specified by the State 
(subject to the exclusion described in para-
graph (1)) that meets such standards and 
criteria as the State may specify, includ-
ing—
‘‘(I) substance abuse counseling 
or treatment; 
‘‘(II) 
rehabilitation 
treatment 
and services;
‘‘(III) work-related education or 
training directed at enabling the fam-
ily member to work; 
‘‘(IV) job search or job readiness 
assistance; and 
‘‘(V) any other activity that ad-
dresses a purpose specified in section 
401(a). 
‘‘(iii) LIMITATION.—
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), clause (i) 
shall not apply to a family for more 
than 3 months in any period of 24 
consecutive months. 
‘‘(II) SPECIAL RULE APPLICABLE 
TO
EDUCATION
AND
TRAINING.—A 
State may, on a case-by-case basis, 
apply clause (i) to a work-eligible indi-
vidual so that participation by the in-
dividual in education or training, if 
needed to permit the individual to 
complete a certificate program or 
other work-related education or train-
ing directed at enabling the individual 
to fill a known job need in a local
area, may be considered countable 
hours with respect to the family of the 
individual for not more than 4 months 
in any period of 24 consecutive 
months. 
‘‘(B) SCHOOL
ATTENDANCE
BY
TEEN 
HEAD
OF
HOUSEHOLD.—The 
work-eligible 
members of a family shall be considered to be 
engaged in a direct work activity for an average 
of 40 hours per week in a month if the family 
includes an individual who is married, or is a 
single head of household, who has not attained 
20 years of age, and the individual—
‘‘(i) maintains satisfactory attendance 
at secondary school or the equivalent in 
the month; or 
‘‘(ii) participates in education directly 
related to employment for an average of at 
least 20 hours per week in the month. 
‘‘(d) DIRECT WORK ACTIVITY.—In this section, the 
term ‘direct work activity’ means—
‘‘(1) unsubsidized employment; 
‘‘(2) subsidized private sector employment; 
‘‘(3) subsidized public sector employment; 
‘‘(4) on-the-job training;
‘‘(5) supervised work experience; or 
‘‘(6) supervised community service.’’. 
(f) PENALTIES
AGAINST
INDIVIDUALS.—Section 
407(e)(1) (42 U.S.C. 607(e)(1)) is amended to read as 
follows: 
‘‘(1) REDUCTION OR TERMINATION OF ASSIST-
ANCE.—
‘‘(A) IN GENERAL.—Except as provided in 
paragraph (2), if an individual in a family re-
ceiving assistance under a State program fund-
ed under this part fails to engage in activities 
required in accordance with this section, or 
other activities required by the State under the 
program, and the family does not otherwise en-
gage in activities in accordance with the self-
sufficiency plan established for the family pur-
suant to section 408(b), the State shall—
‘‘(i) if the failure is partial or persists 
for not more than 1 month—
‘‘(I) reduce the amount of assist-
ance otherwise payable to the family 
pro rata (or more, at the option of the 
State) with respect to any period dur-
ing a month in which the failure oc-
curs; or
‘‘(II) terminate all assistance to 
the family, subject to such good cause 
exceptions as the State may establish; 
or 
‘‘(ii) if the failure is total and persists 
for at least 2 consecutive months, termi-
nate all cash payments to the family in-
cluding qualified State expenditures (as de-
fined in section 409(a)(7)(B)(i)) for at 
least 1 month and thereafter until the 
State determines that the individual has 
resumed full participation in the activities, 
subject to such good cause exceptions as 
the State may establish. 
‘‘(B) SPECIAL RULE.—
‘‘(i) IN GENERAL.—In the event of a 
conflict between a requirement of clause 
(i)(II) or (ii) of subparagraph (A) and a 
requirement of a State constitution, or of 
a State statute that, before 1966, obligated 
local government to provide assistance to 
needy parents and children, the State con-
stitutional or statutory requirement shall 
control.
‘‘(ii) LIMITATION.—Clause (i) of this 
subparagraph shall not apply after the 1-
year period that begins with the date of 
the enactment of this subparagraph.’’. 
(g) CONFORMING AMENDMENTS.—
(1) Section 407(f) (42 U.S.C. 607(f)) is amend-
ed in each of paragraphs (1) and (2) by striking 
‘‘work activity described in subsection (d)’’ and in-
serting ‘‘direct work activity’’. 
(2) The heading of section 409(a)(14) (42 
U.S.C. 609(a)(14)) is amended by inserting ‘‘or re-
fusing to engage in activities under a family self-suf-
ficiency plan’’ after ‘‘work’’. 
SEC. 111. MAINTENANCE OF EFFORT. 
(a) IN GENERAL.—Section 409(a)(7) (42 U.S.C. 
609(a)(7)) is amended—
(1) in subparagraph (A), by striking ‘‘fiscal 
year 1998, 1999, 2000, 2001, 2002, 2003, 2004, 
2005, or 2006’’ and inserting ‘‘fiscal year 2006, 
2007, 2008, 2009, 2010, or 2011’’; and 
(2) in subparagraph (B)(ii)—
(A) by inserting ‘‘preceding’’ before ‘‘fiscal 
year’’; and 
(B) by striking ‘‘for fiscal years 1997 
through 2005,’’.
(b) STATE SPENDING
ON PROMOTING HEALTHY 
MARRIAGE.—
(1) IN GENERAL.—Section 404 (42 U.S.C. 604) 
is amended by adding at the end the following: 
‘‘(l) MARRIAGE PROMOTION.—A State, territory, or 
tribal organization to which a grant is made under section 
403(a)(2) may use a grant made to the State, territory, 
or tribal organization under any other provision of section 
403 for marriage promotion activities, and the amount of 
any such grant so used shall be considered State funds 
for purposes of section 403(a)(2).’’. 
(2) FEDERAL
TANF
FUNDS
USED
FOR
MAR-
RIAGE PROMOTION DISREGARDED FOR PURPOSES OF 
MAINTENANCE OF EFFORT REQUIREMENT.—Section 
409(a)(7)(B)(i) (42 U.S.C. 609(a)(7)(B)(i)), as 
amended by section 103(c) of this Act, is amended 
by adding at the end the following: 
‘‘(VI) EXCLUSION
OF
FEDERAL 
TANF
FUNDS
USED
FOR
MARRIAGE 
PROMOTION
ACTIVITIES.—Such term 
does not include the amount of any 
grant made to the State under section 
403 that is expended for a marriage 
promotion activity.’’.
SEC. 112. PERFORMANCE IMPROVEMENT. 
(a) STATE
PLANS.—Section 402(a) (42 U.S.C. 
602(a)) is amended—
(1) in paragraph (1)—
(A) in subparagraph (A)—
(i) by redesignating clause (vi) and 
clause (vii) (as added by section 103(a) of 
this Act) as clauses (vii) and (viii), respec-
tively; and 
(ii) by striking clause (v) and insert-
ing the following: 
‘‘(v) The document shall—
‘‘(I) describe how the State will 
pursue ending dependence of needy 
families on government benefits and 
reducing poverty by promoting job 
preparation and work; 
‘‘(II) describe how the State will 
encourage the formation and mainte-
nance of healthy 2-parent married 
families, encourage responsible father-
hood, and prevent and reduce the inci-
dence of out-of-wedlock pregnancies; 
‘‘(III) include specific, numerical, 
and measurable performance objec-
tives for accomplishing subclauses (I)
and (II), and with respect to sub-
clause (I), include objectives con-
sistent with the criteria used by the 
Secretary in establishing performance 
targets under section 403(a)(4)(B) if 
available; and 
‘‘(IV) describe the methodology 
that the State will use to measure 
State performance in relation to each 
such objective. 
‘‘(vi) Describe any strategies and pro-
grams the State may be undertaking to ad-
dress—
‘‘(I) employment retention and 
advancement for recipients of assist-
ance under the program, including 
placement into high-demand jobs, and 
whether the jobs are identified using 
labor market information; 
‘‘(II) efforts to reduce teen preg-
nancy; 
‘‘(III) services for struggling and 
noncompliant families, and for clients 
with special problems; and
‘‘(IV) program integration, in-
cluding the extent to which employ-
ment and training services under the 
program are provided through the 
One-Stop 
delivery 
system 
created 
under the Workforce Investment Act 
of 1998, and the extent to which 
former recipients of such assistance 
have access to additional core, inten-
sive, or training services funded 
through such Act.’’; and 
(B) in subparagraph (B), by striking 
clause (iii) (as so redesignated by section 
107(b)(1) of this Act) and inserting the fol-
lowing: 
‘‘(iii) The document shall describe 
strategies and programs the State is un-
dertaking to engage religious organizations 
in the provision of services funded under 
this part and efforts related to section 104 
of the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996. 
‘‘(iv) The document shall describe 
strategies to improve program manage-
ment and performance.’’; and
(2) in paragraph (4), by inserting ‘‘and tribal’’ 
after ‘‘that local’’. 
(b) CONSULTATION WITH STATE REGARDING PLAN 
AND DESIGN OF TRIBAL PROGRAMS.—Section 412(b)(1) 
(42 U.S.C. 612(b)(1)) 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) provides an assurance that the State 
in which the tribe is located has been consulted 
regarding the plan and its design.’’. 
(c) PERFORMANCE MEASURES.—Section 413 (42 
U.S.C. 613) is amended by adding at the end the fol-
lowing: 
‘‘(k) PERFORMANCE IMPROVEMENT.—The Secretary, 
in consultation with the States, shall develop uniform per-
formance measures designed to assess the degree of effec-
tiveness, and the degree of improvement, of State pro-
grams funded under this part in accomplishing the pur-
poses of this part.’’. 
(d) 
ANNUAL
RANKING
OF
STATES.—Section 
413(d)(1) (42 U.S.C. 613(d)(1)) is amended by striking 
‘‘long-term private sector jobs’’ and inserting ‘‘private sec-
tor jobs, the success of the recipients in retaining employ-
ment, the ability of the recipients to increase their wages’’. 
SEC. 113. DATA COLLECTION AND REPORTING. 
(a) CONTENTS OF REPORT.—Section 411(a)(1)(A) 
(42 U.S.C. 611(a)(1)(A)) is amended—
(1) in the matter preceding clause (i), by insert-
ing ‘‘and on families receiving assistance under 
State programs funded with other qualified State ex-
penditures (as defined in section 409(a)(7)(B))’’ be-
fore the colon; 
(2) in clause (vii), by inserting ‘‘and minor par-
ent’’ after ‘‘of each adult’’; 
(3) in clause (viii), by striking ‘‘and educational 
level’’; 
(4) in clause (ix), by striking ‘‘, and if the lat-
ter 2, the amount received’’; 
(5) in clause (x)—
(A) by striking ‘‘each type of’’; and 
(B) by inserting before the period ‘‘and, if 
applicable, the reason for receipt of the assist-
ance for a total of more than 60 months’’; 
(6) in clause (xi), by striking the subclauses 
and inserting the following: 
‘‘(I) Subsidized private sector 
employment.