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‘‘(B) with respect to any subsequent fiscal
year, the number of special needs adoptions in the
State in the fiscal year for which the number is the
greatest in the period that begins with fiscal year
1997 and ends with the fiscal year preceding such
subsequent fiscal year.
‘‘(h) LIMITATIONS ON AUTHORIZATION OF APPROPRIA-
TIONS.—
‘‘(1) IN
GENERAL.—For grants under subsection
(a), there are authorized to be appropriated to the Sec-
retary $20,000,000 for each of fiscal years 1999 through
2003.
‘‘(2) AVAILABILITY.—Amounts appropriated under
paragraph (1) are authorized to remain available until
expended, but not after fiscal year 2003.
‘‘(i) TECHNICAL ASSISTANCE.—
‘‘(1) IN GENERAL.—The Secretary may, directly or
through grants or contracts, provide technical assistance
to assist States and local communities to reach their tar-
gets for increased numbers of adoptions and, to the ex-
tent that adoption is not possible, alternative permanent
placements, for children in foster care.
‘‘(2) DESCRIPTION
OF
THE
CHARACTER
OF
THE
TECHNICAL ASSISTANCE.—The technical assistance pro-
vided under paragraph (1) may support the goal of en-
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couraging more adoptions out of the foster care system,
when adoptions promote the best interests of children,
and may include the following:
‘‘(A) The development of best practice guide-
lines for expediting termination of parental rights.
‘‘(B) Models to encourage the use of concur-
rent planning.
‘‘(C) The development of specialized units and
expertise in moving children toward adoption as a
permanency goal.
‘‘(D) The development of risk assessment tools
to facilitate early identification of the children who
will be at risk of harm if returned home.
‘‘(E) Models to encourage the fast tracking of
children who have not attained 1 year of age into
pre-adoptive placements.
‘‘(F) Development of programs that place chil-
dren into pre-adoptive families without waiting for
termination of parental rights.
‘‘(3) TARGETING
OF
TECHNICAL
ASSISTANCE
TO
THE COURTS.—Not less than 50 percent of any amount
appropriated pursuant to paragraph (4) shall be used to
provide technical assistance to the courts.
‘‘(4) LIMITATIONS ON AUTHORIZATION OF APPRO-
PRIATIONS.—To carry out this subsection, there are au-
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thorized to be appropriated to the Secretary of Health
and Human Services not to exceed $10,000,000 for each
of fiscal years 1998 through 2000.’’.
(b) DISCRETIONARY CAP ADJUSTMENT FOR ADOPTION
INCENTIVE PAYMENTS.—
(1) SECTION 251 AMENDMENT.—Section 251(b)(2)
of the Balanced Budget and Emergency Deficit Control
Act of 1985 (2 U.S.C. 901(b)(2)), as amended by sec-
tion 10203(a)(4) of the Balanced Budget Act of 1997,
is amended by adding at the end the following new sub-
paragraph:
‘‘(G) 
ADOPTION
INCENTIVE
PAYMENTS.—
Whenever a bill or joint resolution making appro-
priations for fiscal year 1999, 2000, 2001, 2002, or
2003 is enacted that specifies an amount for adop-
tion incentive payments pursuant to this part for
the Department of Health and Human Services—
‘‘(i) the adjustments for new budget au-
thority shall be the amounts of new budget au-
thority provided in that measure for adoption
incentive 
payments, 
but 
not 
to 
exceed
$20,000,000; and
‘‘(ii) the adjustment for outlays shall be
the additional outlays flowing from such
amount.’’.
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(2) SECTION 314 AMENDMENT.—Section 314(b) of
the Congressional Budget Act of 1974, as amended by
section 10114(a) of the Balanced Budget Act of 1997,
is amended—
(A) by striking ‘‘or’’ at the end of paragraph
(4);
(B) by striking the period at the end of para-
graph (5) and inserting ‘‘; or’’; and
(C) by adding at the end the following:
‘‘(6) in the case of an amount for adoption incentive
payments (as defined in section 251(b)(2)(G) of the Bal-
anced Budget and Emergency Deficit Control Act of
1985) for fiscal year 1999, 2000, 2001, 2002, or 2003
for the Department of Health and Human Services, an
amount not to exceed $20,000,000.’’.
SEC. 202. ADOPTIONS ACROSS STATE AND COUNTY JURISDIC-
TIONS.
(a) STATE PLAN FOR CHILD WELFARE SERVICES RE-
QUIREMENT.—Section 422(b) of the Social Security Act (42
U.S.C. 622(b)) is amended—
(1) in paragraph (10), by striking ‘‘and’’ at the
end;
(2) in paragraph (11), by striking the period and
inserting ‘‘; and’’; and
(3) by adding at the end the following:
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‘‘(12) contain assurances that the State shall de-
velop plans for the effective use of cross-jurisdictional re-
sources to facilitate timely adoptive or permanent place-
ments for waiting children.’’.
(b) CONDITION OF ASSISTANCE.—Section 474 of such
Act (42 U.S.C. 674) is amended by adding at the end the
following:
‘‘(e) Notwithstanding subsection (a), a State shall not be
eligible for any payment under this section if the Secretary
finds that, after the date of the enactment of this subsection,
the State has—
‘‘(1) denied or delayed the placement of a child for
adoption when an approved family is available outside of
the jurisdiction with responsibility for handling the case
of the child; or
‘‘(2) failed to grant an opportunity for a fair hear-
ing, as described in section 471(a)(12), to an individual
whose allegation of a violation of paragraph (1) of this
subsection is denied by the State or not acted upon by
the State with reasonable promptness.’’.
(c) STUDY
OF INTERJURISDICTIONAL ADOPTION IS-
SUES.—
(1) IN GENERAL.—The Comptroller General of the
United States shall—
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(A) the results of the study conducted under
paragraph (1); and
(B) recommendations on how to improve proce-
dures to facilitate the interjurisdictional adoption of
children, including interstate and intercounty adop-
tions, so that children will be assured timely and
permanent placements.
SEC. 203. PERFORMANCE OF STATES IN PROTECTING CHIL-
DREN.
(a) ANNUAL REPORT ON STATE PERFORMANCE.—Part
E of title IV of the Social Security Act (42 U.S.C. 670 et
seq.) is amended by adding at the end the following:
‘‘SEC. 479A. ANNUAL REPORT.
‘‘The Secretary, in consultation with Governors, State
legislatures, State and local public officials responsible for ad-
ministering child welfare programs, and child welfare advo-
cates, shall—
‘‘(1) develop a set of outcome measures (including
length of stay in foster care, number of foster care place-
ments, and number of adoptions) that can be used to as-
sess the performance of States in operating child protec-
tion and child welfare programs pursuant to parts B and
E to ensure the safety of children;
‘‘(2) to the maximum extent possible, the outcome
measures should be developed from data available from
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the Adoption and Foster Care Analysis and Reporting
System;
‘‘(3) develop a system for rating the performance of
States with respect to the outcome measures, and pro-
vide to the States an explanation of the rating system
and how scores are determined under the rating system;
‘‘(4) prescribe such regulations as may be necessary
to ensure that States provide to the Secretary the data
necessary to determine State performance with respect
to each outcome measure, as a condition of the State re-
ceiving funds under this part; and
‘‘(5) on May 1, 1999, and annually thereafter, pre-
pare and submit to the Congress a report on the per-
formance of each State on each outcome measure, which
shall examine the reasons for high performance and low
performance and, where possible, make recommendations
as to how State performance could be improved.’’.
(b) DEVELOPMENT
OF PERFORMANCE-BASED INCEN-
TIVE SYSTEM.—The Secretary of Health and Human Serv-
ices, in consultation with State and local public officials re-
sponsible for administering child welfare programs and child
welfare advocates, shall study, develop, and recommend to
Congress an incentive system to provide payments under
parts B and E of title IV of the Social Security Act (42
U.S.C. 620 et seq., 670 et seq.) to any State based on the
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State’s performance under such a system. Such a system
shall, to the extent the Secretary determines feasible and ap-
propriate, be based on the annual report required by section
479A of the Social Security Act (as added by subsection (a)
of this section) or on any proposed modifications of the an-
nual report. Not later than 6 months after the date of the
enactment of this Act, the Secretary shall submit to the Com-
mittee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate a progress re-
port on the feasibility, timetable, and consultation process for
conducting such a study. Not later than 15 months after
such date of enactment, the Secretary shall submit to the
Committee on Ways and Means of the House of Representa-
tives and the Committee on Finance of the Senate the final
report on a performance-based incentive system. The report
may include other recommendations for restructuring the pro-
gram and payments under parts B and E of title IV of the
Social Security Act.
TITLE III—ADDITIONAL
IMPROVEMENTS AND REFORMS
SEC. 301. EXPANSION OF CHILD WELFARE DEMONSTRATION
PROJECTS.
(a) IN GENERAL.—Section 1130(a) of the Social Secu-
rity Act (42 U.S.C. 1320a–9) is amended to read as follows:
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‘‘(a) 
AUTHORITY
TO
APPROVE
DEMONSTRATION
PROJECTS.—
‘‘(1) IN GENERAL.—The Secretary may authorize
States to conduct demonstration projects pursuant to
this section which the Secretary finds are likely to pro-
mote the objectives of part B or E of title IV.
‘‘(2) LIMITATION.—The Secretary may authorize
not more than 10 demonstration projects under para-
graph (1) in each of fiscal years 1998 through 2002.
‘‘(3) CERTAIN TYPES OF PROPOSALS REQUIRED TO
BE CONSIDERED.—
‘‘(A) If an appropriate application therefor is
submitted, the Secretary shall consider authorizing
a demonstration project which is designed to iden-
tify and address barriers that result in delays to
adoptive placements for children in foster care.
‘‘(B) If an appropriate application therefor is
submitted, the Secretary shall consider authorizing
a demonstration project which is designed to iden-
tify and address parental substance abuse problems
that endanger children and result in the placement
of children in foster care, including through the
placement of children with their parents in residen-
tial treatment facilities (including residential treat-
ment facilities for post-partum depression) that are
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specifically designed to serve parents and children
together in order to promote family reunification
and that can ensure the health and safety of the
children in such placements.
‘‘(C) If an appropriate application therefor is
submitted, the Secretary shall consider authorizing
a demonstration project which is designed to ad-
dress kinship care.
‘‘(4) LIMITATION ON ELIGIBILITY.—The Secretary
may not authorize a State to conduct a demonstration
project under this section if the State fails to provide
health insurance coverage to any child with special needs
(as determined under section 473(c)) for whom there is
in effect an adoption assistance agreement between a
State and an adoptive parent or parents.
‘‘(5) REQUIREMENT
TO
CONSIDER
EFFECT
OF
PROJECT
ON
TERMS
AND
CONDITIONS
OF
CERTAIN
COURT ORDERS.—In considering an application to con-
duct a demonstration project under this section that has
been submitted by a State in which there is in effect a
court order determining that the State’s child welfare
program has failed to comply with the provisions of part
B or E of title IV, or with the Constitution of the Unit-
ed States, the Secretary shall take into consideration the
effect of approving the proposed project on the terms
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and conditions of the court order related to the failure
to comply.’’.
(b) RULE OF CONSTRUCTION.—Nothing in the amend-
ment made by subsection (a) shall be construed as affecting
the terms and conditions of any demonstration project ap-
proved under section 1130 of the Social Security Act (42
U.S.C. 1320a–9) before the date of the enactment of this
Act.
(c) AUTHORITY
TO
EXTEND
DURATION
OF
DEM-
ONSTRATIONS.—Section 1130(d) of such Act (42 U.S.C.
1320a–9(d)) is amended by inserting ‘‘, unless in the judg-
ment of the Secretary, the demonstration project should be
allowed to continue’’ before the period.
SEC. 302. PERMANENCY HEARINGS.
Section 475(5)(C) of the Social Security Act (42 U.S.C.
675(5)(C)) is amended—
(1) by striking ‘‘dispositional’’ and inserting ‘‘per-
manency’’;
(2) by striking ‘‘eighteen’’ and inserting ‘‘12’’;
(3) by striking ‘‘original placement’’ and inserting
‘‘date the child is considered to have entered foster care
(as determined under subparagraph (F))’’; and
(4) by striking ‘‘future status of’’ and all that fol-
lows through ‘‘long term basis)’’ and inserting ‘‘perma-
nency plan for the child that includes whether, and if ap-