To establish demonstration projects to provide family income to respond to significant transitions, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Family Income to Respond to 
Significant Transitions Insurance Act''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Nearly every industrialized nation other than the 
        United States, and most developing nations, provide parents 
        with paid leave for infant care.
            (2)(A) Parents' interactions with their infants have a 
        major influence on the physical, cognitive, and social 
        development of the infants; and
            (B) optimal development of an infant depends on a strong 
        attachment between an infant and the infant's parents.
            (3) Nearly two-thirds of employees, who need to take family 
        or medical leave, but do not take the leave, report that they 
        cannot afford to take the leave.
            (4) Although some employees in the United States receive 
        wage replacement during periods of family or medical leave, the 
        benefit of wage replacement is not shared equally in the 
        workforce, as demonstrated by the fact that--
                    (A) employees with less education and lower income 
                are less likely to receive wage replacement than 
                employees with more education and higher salaries; and
                    (B) female employees, employees from racial 
                minority groups, and younger employees are slightly 
                less likely to receive wage replacement than male 
                employees, white employees, and older employees, 
                respectively.
            (5) In order to cope financially with taking family or 
        medical leave, of persons taking that leave without full wage 
        replacement--
                    (A) 40 percent cut their leave short;
                    (B) 39 percent put off paying bills;
                    (C) 25 percent borrowed money; and
                    (D) 9 percent obtained public assistance.
            (6) Taking family or medical leave often drives employees 
        earning low wages into poverty, and 21 percent of such low-wage 
        employees who take family or medical leave without full wage 
        replacement resort to public assistance.
            (7) Studies document shortages in the supply of infant 
        care, and that the shortages are expected to worsen as welfare 
        reform measures are implemented.
            (8) Compared to 30 years ago, families have experienced an 
        average decrease of 22 hours per week in time that parents 
        spend with their children.

SEC. 3. PURPOSES.

    The purposes of this Act are--
            (1) to establish a demonstration program that supports the 
        efforts of States and political subdivisions to provide partial 
        or full wage replacement, often referred to as FIRST insurance, 
        to new parents so that the new parents are able to spend time 
        with a new infant or newly adopted child, and to other 
        employees; and
            (2) to learn about the most effective mechanisms for 
        providing the wage replacement assistance.

SEC. 4. DEFINITIONS.

    In this Act:
            (1) Secretary.--The term ``Secretary'' means the Secretary 
        of Labor, acting after consultation with the Secretary of 
        Health and Human Services.
            (2) Son or daughter; state.--The terms ``son or daughter'' 
        and ``State'' have the meanings given the terms in section 101 
        of the Family and Medical Leave Act of 1993 (29 U.S.C. 2611).

SEC. 5. DEMONSTRATION PROJECTS.

    (a) Grants.--The Secretary shall make grants to eligible entities 
to pay for the Federal share of the cost of carrying out projects that 
assist families by providing, through various mechanisms, wage 
replacement for eligible individuals responding to caregiving needs 
resulting from the birth or adoption of a son or daughter or other 
family caregiving needs. The Secretary shall make the grants for 
periods of 5 years.
    (b) Eligible Entities.--To be eligible to receive a grant under 
this section, an entity shall be a State or political subdivision of a 
State.
    (c) Use of Funds.--
            (1) In general.--An entity that receives a grant under this 
        section may use the funds made available through the grant to 
        provide partial or full wage replacement as described in 
        subsection (a) to eligible individuals--
                    (A) directly;
                    (B) through an insurance program, such as a State 
                temporary disability insurance program or the State 
                unemployment compensation benefit program;
                    (C) through a private disability or other insurance 
                plan, or another mechanism provided by a private 
                employer; or
                    (D) through another mechanism.
            (2) Administrative costs.--No entity may use more than 10 
        percent of the total funds made available through the grant 
        during the 5-year period of the grant to pay for the 
        administrative costs relating to a project described in 
        subsection (a).
    (d) Eligible Individuals.--To be eligible to receive wage 
replacement under subsection (a), an individual shall--
            (1) meet such eligibility criteria as the eligible entity 
        providing the wage replacement may specify in an application 
        described in subsection (e); and
            (2) be--
                    (A) an individual who is taking leave, under the 
                Family and Medical Leave Act of 1993 (29 U.S.C. 2601 et 
                seq.), other Federal, State, or local law, or a private 
                plan, for a reason described in subparagraph (A) or (B) 
                of section 102(a)(1) of the Family and Medical Leave 
                Act of 1993 (29 U.S.C. 2612(a)(1));
                    (B) at the option of the eligible entity, an 
                individual who--
                            (i) is taking leave, under that Act, other 
                        Federal, State, or local law, or a private 
                        plan, for a reason described in subparagraph 
                        (C) or (D) of section 102(a)(1) of the Family 
                        and Medical Leave Act of 1993 (29 U.S.C. 
                        2612(a)(1)); or
                            (ii) leaves employment because the 
                        individual has elected to care for a son or 
                        daughter under age one; or
                    (C) at the option of the eligible entity, an 
                individual with other characteristics specified by the 
                eligible entity in an application described in 
                subsection (e).
    (e) Application.--To be eligible to receive a grant under this 
section, an entity shall submit an application to the Secretary, at 
such time, in such manner, and containing such information as the 
Secretary may require, including, at a minimum--
            (1) a plan for the project to be carried out with the 
        grant;
            (2) information demonstrating that the applicant consulted 
        representatives of employers and employees, including labor 
        organizations, in developing the plan;
            (3) estimates of the costs and benefits of the project;
            (4)(A) information on the number and type of families to be 
        covered by the project, and the extent of such coverage in the 
        area served under the grant; and
            (B) information on any criteria or characteristics that the 
        entity will use to determine whether an individual is eligible 
        for wage replacement under subsection (a), as described in 
        paragraphs (1) and (2)(C) of subsection (d);
            (5) if the project will expand on State and private systems 
        of wage replacement for eligible individuals, information on 
        the manner in which the project will expand on the systems;
            (6) information demonstrating the manner in which the wage 
        replacement assistance provided through the project will assist 
        families in which an individual takes leave as described in 
        subsection (d)(1); and
            (7) an assurance that the applicant will participate in 
        efforts to evaluate the effectiveness of the project.
    (f) Selection Criteria.--In selecting entities to receive grants 
for projects under this section, the Secretary shall--
            (1) take into consideration--
                    (A) the scope of the proposed projects;
                    (B) the cost-effectiveness, feasibility, and 
                financial soundness of the proposed projects;
                    (C) the extent to which the proposed projects would 
                expand access to wage replacement in response to family 
                caregiving needs, particularly for low-wage employees, 
in the area served by the grant; and
                    (D) the benefits that would be offered to families 
                and children through the proposed projects; and
            (2) to the extent feasible, select entities proposing 
        projects that utilize diverse mechanisms, including expansion 
        of State unemployment compensation benefit programs and 
        establishment or expansion of State temporary disability 
        insurance programs, to provide the wage replacement.
    (g) Federal Share.--
            (1) In general.--The Federal share of the cost described in 
        subsection (a) shall be--
                    (A) 50 percent for the first year of the grant 
                period;
                    (B) 40 percent for the second year of that period;
                    (C) 30 percent for the third year of that period; 
                and
                    (D) 20 percent for each subsequent year.
            (2) Non-federal share.--The non-Federal share of the cost 
        may be in cash or in kind, fairly evaluated, including plant, 
        equipment, and services and may be provided from State, local, 
        or private sources, or Federal sources other than this Act.
    (h) Supplement Not Supplant.--Funds appropriated pursuant to the 
authority of this Act shall be used to supplement and not supplant 
other Federal, State, and local public funds and private funds expended 
to provide wage replacement.
    (i) Effect on Existing Rights.--Nothing in this Act shall be 
construed to supersede, preempt, or otherwise infringe on the 
provisions of any collective bargaining agreement or any employment 
benefit program or plan that provides greater rights to employees than 
the rights established under this Act.

SEC. 6. EVALUATIONS AND REPORTS.

    (a) Available Funds.--The Secretary shall use not more than 2 
percent of the funds made available under section 5 to carry out this 
section.
    (b) Evaluations.--The Secretary shall, directly or by contract, 
evaluate the effectiveness of projects carried out with grants made 
under section 5, including conducting--
            (1) research relating to the projects, including research 
        comparing--
                    (A) the scope of the projects, including the type 
                of insurance or other wage replacement mechanism used, 
                the method of financing used, the eligibility 
                requirements, the level of the wage replacement benefit 
                provided (such as the percentage of salary replaced), 
                and the length of the benefit provided, for the 
                projects;
                    (B) the utilization of the projects, including the 
                characteristics of individuals who benefit from the 
                projects, particularly low-wage workers, and factors 
                that determine the ability of eligible individuals to 
                obtain wage replacement through the projects; and
                    (C) the costs of and savings achieved by the 
                projects, including the cost-effectiveness of the 
                projects and their benefits for children and families;
            (2) analysis of the overall need for wage replacement; and
            (3) analysis of the impact of the projects on the overall 
        availability of wage replacement.
    (c) Reports.--
            (1) Initial report.--Not later than 3 years after the 
        beginning of the grant period for the first grant made under 
        section 5, the Secretary shall prepare and submit to Congress a 
        report that contains information resulting from the evaluations 
        conducted under subsection (b).
            (2) Subsequent reports.--Not later than 4 years after the 
        beginning of that grant period, and annually thereafter, the 
        Secretary shall prepare and submit to Congress a report that 
        contains--
                    (A) information resulting from the evaluations 
                conducted under subsection (b); and
                    (B) usage data for the demonstration projects, for 
                the most recent year for which data are available.

SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this Act 
$400,000,000 for fiscal year 2002 and such sums as may be necessary for 
each subsequent fiscal year.

Summary: Family Income to Respond to Significant Transitions Insurance Act - Directs the Secretary of Labor to make grants to a State or local government to pay for the Federal share of the cost of carrying out projects that assist families by providing wage replacement for eligible individuals who are responding to caregiving needs resulting from the birth or adoption of a son or daughter or other family caregiving needs.