Welfare Reauthorization: A Side-By-Side Comparison of Current Law and Pending Welfare Reauthorization Proposals
Released: 2005-12-05T00:00:00

Introduction

The 109th Congress is considering legislation to reauthorize and amend programs that werecreated or revised in the 1996 welfare reform law. (1) Early in the 109th Congress, the Senate Finance and Health,Education, Labor, and Pensions Committees approved and reported their welfare reauthorizationlegislation (respectively, S. 667 and S. 525 ). Neither bill has yet seenaction in the full Senate.

In the House, a welfare reauthorization proposal ( H.R. 240 ), introduced by the HouseRepublican Leadership, has also failed to reach the floor.

On November 18, 2005, the House passed its budget reconciliation bill ( S. 1932 ), which includes welfare reauthorization legislation similar to that which passed the House in2002 and 2003. (The House-passed version of S. 1932 is H.R. 4241 asamended and approved by the House.) Welfare reauthorization legislation was not included in theSenate-passed reconciliation bill.

This report compares the welfare reauthorization policies proposed in the Senate committeebills with those included in the House-passed budget reconciliation bill. It is not a comparison ofwelfare provisions in the House and Senate reconciliation bills. (Such a comparison, which displaysHouse-passed welfare provisions with corresponding "No Provision" entries for the Senate-passedversion of reconciliation, is available from the Congressional Research Service upon request.)

The original funding authority for the block grant of Temporary Assistance for NeedyFamilies (TANF), the Child Care and Development Block Grant (CCDBG), abstinence education,and transitional medical assistance (TMA) under Medicaid expired on September 30, 2002. Fundingand program authority for TANF, mandatory child care, abstinence education, and TMA have beencontinued by special temporary extension legislation since then, with the latest extension set toexpire on December 31, 2005. CCDBG discretionary funding has been provided, absentauthorization, in annual appropriation bills. Also included in "welfare reauthorization" legislationhave been initiatives to create a responsible fatherhood grant program, revise the Child SupportEnforcement program, amend child welfare programs, and make some changes to SupplementalSecurity Income, as well as create new "superwaiver" authority.

Summary of Similarities and Differences in the Bills

Most of the welfare reauthorization provisions approved early in 2005 have counterparts inthe House budget reconciliation bill. There are notable exceptions. S. 667 (the FinanceCommittee bill) would extend the abstinence education state grant program and revise and extendTMA through FY2010, whereas the House budget reconciliation bill includes none of thoseprovisions. Further, the House reconciliation bill, unlike the Senate committee bills or the earlierHouse Republican Leadership welfare reauthorization bill ( H.R. 240 ), includes someadditional provisions that would reduce spending, including proposals to reduce federal matchingfunds for state Child Support Enforcement programs and to revise foster care and adoption assistanceeligibility rules to negate a court ruling that expanded eligibility for these programs in certain states.

Table 1 summarizes what provisions are included in the Senate committee bills and theHouse reconciliation bill. Note that when provisions are included in both, they still may differsignificantly in their details. These differences are the subject of the remainder of this report.

Table 1. Welfare Reauthorization Provisions Included in SenateCommittee Bills and House Budget Reconciliation Bill

Source: Congressional Research Service (CRS).

Temporary Assistance for Needy Families Block Grant

The Senate-committee and House welfare reauthorization proposals have many similarities,with both extending basic TANF funding at current levels through FY2010 and incorporatingPresident Bush's proposal to provide categorical "marriage promotion" grants. (2) Both bills also raise TANFwork participation standards, though the two differ in terms of how much more work would berequired and what activities count toward the participation standards.

TANF Funding Provisions. Both theSenate-committee and House bills have very similar funding provisions, although they do differ insome details. The major differences between the two proposals are in the contingency fund andbonuses.

Basic Funding. The 1996 welfare reform law ( P.L.104-193 ) entitled states to a basic TANF block grant equal to peak expenditures in the pre-1996welfare programs during the FY1992 to FY1995 period. It also established a maintenance of effort(MOE) requirement that states continue to spend at least 75% (80% if a state failed TANF workparticipation requirements) of what they spent in these programs in FY1994. Cash welfare caseloadswere at their peak in the mid-1990s; both the basic TANF grant and the MOE are legislatively fixed: they did not change when cash welfare caseloads declined in the mid- and late-1990s, nor did theyincrease when caseloads in some states increased during the recent economic slump. Neither thebasic TANF block grant nor the MOE has been adjusted for inflation.

Both the Senate-committee and House proposals would continue both the basic block grantand the MOE at their current funding levels (without inflation or caseload adjustment) throughFY2010.

Supplemental Grants. During the consideration oflegislation that led to the 1996 welfare law, fixed funding based on historical expenditures wasthought to disadvantage two groups of states: (1) those that experience relatively high populationgrowth; and (2) those that had historically low grant levels relative to poverty in the state. Therefore,additional funding in the form of supplemental grants was provided to states that met criteria of highpopulation growth and/or low historic grants per poor person. Supplemental grants have beenprovided to 17 states: Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho,Louisiana, Mississippi, Montana, New Mexico, Nevada, North Carolina, Tennessee, Texas, andUtah.

Currently, supplemental grants total $319 million per year. Both the Senate and Houseproposals would continue supplemental grants for the same 17 states at the current funding levelthrough FY2009 (unlike other grants, which expire in FY2010).

Contingency Funds. The fixed basic grant underTANF also led to concerns of inadequate funding during economic downturns. TANF includes acontingency fund, which is designed to provide extra matching grants to states that meet criteria ofeconomic need (based on unemployment rates and food stamp caseloads) and have stateexpenditures in excess of their FY1994 level.

The two bills differ substantially in their proposed revisions to the TANF contingency fund. The House budget reconciliation bill would continue the fund under existing rules, with somerelatively minor modifications: allowing some additional state spending to count toward meetingthe FY1994 funding level threshold and modifications to increase grants for states that qualify forfunds for only part of the year.

The Senate Finance Committee proposal fully revamps the contingency fund. It wouldeliminate the requirement that states increase expenditures from their own funds above the regularTANF MOE level and would eliminate the matching requirements. Instead, it requires that unspentTANF balances be below a certain threshold to qualify for contingency funds. The Senate committeeproposal would base contingency grants on a portion of the estimated cost of increased cashassistance caseloads. It also would revise the criteria of economic need for a state.

Bonus Funds. Current TANF law provides "bonusfunds" to states that rank high on a set of outcomes that seek to measure whether they are achievingthe block grant's goals. It has a "High Performance Bonus" of $200 million per year for states thatrank high in achieving employment and certain other outcomes, as well as a second $100 million peryear bonus paid to the five states with the greatest reduction in out-of-wedlock birth ratios that alsohave a decline in abortions.

The Senate Finance Committee bill scales back bonuses, by eliminating the $100 million peryear bonus for reductions in out-of-wedlock births, and reducing and refocusing the "HighPerformance Bonus" on employment outcomes. Funding reductions are used to "pay for" grants topromote healthy marriages and responsible fatherhood initiatives (see a discussion of theseinitiatives, below). The House budget reconciliation bill eliminates both TANF bonuses, in part topay for grants to promote healthy marriage and in part achieving budget reductions.

Uses of Grants and Program Requirements. Federal TANF grants and MOE funds can be used for a wide range of benefits, services, andactivities to assist low-income families with children and to further TANF goals of reducingout-of-wedlock births and promoting two-parent families. TANF grants can also be transferred toother block grant programs: up to 30% of the grant can be transferred to the Child Care andDevelopment Fund (CCDF) and to the Social Services Block Grant. The limit on transfers to SSBGalone is set at 4.25% (though annual appropriations have restored the SSBG transfer limit to itsoriginal limit of 10% set in the 1996 welfare law). Within the overall 30% limit, federal TANFfunds may also be used as the state match for federal reverse commuter grants if the program benefitswelfare families.

Both bills would set the SSBG transfer limit permanently at 10%. The House budgetreconciliation bill would raise the overall transfer limit to 50%; the Senate Finance Committeeproposal would retain the current 30% transfer limit.

Both bills include provisions to ease some rules regarding use of TANF funds. Both Houseand Senate committee bills would:

Allow states to use carryover TANF funds for any TANF benefit and service. Current law restricts the use of carryover funds for the provision of"assistance."

Narrow the definition of "assistance" to exclude all child care andtransportation aid. TANF funds spent on assistance trigger certain program requirements, such aswork requirements, time limits, assignment of child support payments, and data reporting. Undercurrent regulations, child care and transportation aid for nonworking families is counted as assistanceand triggers these requirements. The bills would eliminate such aid from the definition of"assistance," freeing from these requirements nonworking families that receive only child care ortransportation aid.

Work Requirements. Both the Senate FinanceCommittee bill and the House budget reconciliation bill incorporate the Bush Administration's"universal engagement" proposal, which requires states to develop a self-sufficiency plan for allTANF adult recipients to monitor progress toward that plan. The House budget reconciliation billalso requires states to end benefits ("full family sanction") for families that fail to comply with workparticipation rules.

Both the Senate Finance Committee bill and House budget reconciliation bill wouldsubstantially revise TANF work participation standards. Both bills would raise work participationstandards that states must meet from the current law's standard of 50% to 70%, raise the requiredhours of working to receive full credit and provide partial credit for participating families that do notmeet the full credit standard, and revise the list of activities that recipients may participate in forstates to receive credit toward TANF standards. However, the bills differ in how they do these threethings.

Participation Standards. Current law requires statesto have a specified percentage of their families with an adult recipient (or minor head of household)participating in creditable work activities. The current participation standard is 50%. States aresubject to an additional participation rate standard for two-parent families, currently 90%. Theparticipation rate standards may be reduced for caseload reductions (not attributable to policychanges) that occurred since enactment of welfare reform (FY1995). This "caseload reductioncredit" has had a large effect on participation standards, reducing the standard considerably from itsstatutory rate. In FY2003, the standard was reduced to 0% for 20 states.

Both the Senate Finance Committee bill and the House budget reconciliation bill would raisethe work participation standard for all families to 70% by FY2010, and eliminate the separatestandard for two-parent families. Both bills would also change the credits that reduce these standardsfrom their statutory rate (i.e., reduce the 70% standard to a lower rate), but they do so in differentways. The House bill would retain, but revise, the current law caseload reduction credit so thatcaseload change would be measured from a more recent year (rather than the pre-welfare reformcaseload level of 1995). Ultimately, caseload reduction would be measured based on the most recentfour years. The House bill also includes a provision to give an additional credit to states thatachieved a caseload reduction of 60% or more from FY1995 to FY2001.

The Senate Finance Committee bill retains the current caseload reduction credit for FY2006and FY2007, but beginning in FY2008 would replace the caseload reduction credit with a credit foremployed welfare leavers. The bill would also cap all credits against the participation standard, sothat the minimum effective standard would be 10% in FY2006, 20% in FY2007, 30% in FY2008,40% in FY2009, and 50% in FY2010. There is no such minimum effective standard in the Housebill.

Hours Standards. Current law requires that a familybe considered participating only if it participates for a minimum number of hours per week in amonth. Under current law, 20 hours are required for single parents with a pre-school child (underthe age of 6), and 30 hours are required for other families. Higher hours are set for the purposes ofthe two-parent work participation rate.

Both the Senate Finance Committee bill and the House budget reconciliation bill raise thehours standards. The House bill incorporates a 40-hour workweek standard for full credit, but wouldalso provide "partial" credit for families with at least 24 hours of participation. No speciallower-hour standard would be provided for single parents with preschoolers.

The Senate Finance Committee bill also raises the hours standard for full credit, but to alesser extent than proposed in the House bill. Single parents with a pre-school child would be givenfull credit for participation at 24 hours per week, and other single-parent families would be given fullcredit at 34 hours per week. Partial credit for single parent families would be provided at 20 hoursper week. Higher hours requirements would apply to two-parent families.

Creditable Activities. Current law lists 12 activitiesthat may be counted toward TANF work participation standards. The bulk of countable participationis in a subset of "core" activities focused on work, time-limited job search (countable for six weeksin a fiscal year, 12 weeks if criteria of economic need are met), time-limited vocational educationaltraining (12 months in a lifetime), and community service and work experience. In meeting thegeneral 30-hour-per-week standard, hours in educational activities are countable only for familieswho are also participating in at least 20 hours per week of "core" activities. Post-secondaryeducation, other than that considered "vocational educational training," does not count towardcurrent law federal TANF work participation standards.

The House budget reconciliation bill and the Senate Finance Committee bill differsignificantly on the types of activities that are countable as core activities toward the participationstandards. The House bill narrows the list of core activities by eliminating job search and vocationaleducation. Instead, the bill would give states almost total discretion to define activities that wouldbe countable for three months in a 24-month period (four months to complete training), but oncethose months are exhausted, the only activities that would count toward the "core" work participationstandards are work, on-the-job training, community service, or work experience. Moreover, sincejob search and vocational education would be countable as sole or primary activities only during thethree (or four) months that the state would have discretion, any weeks of participation in job searchreduce the number of weeks that vocational education counts toward the participation standards.

On the other hand, the Senate Finance Committee bill retains the current law list of coreactivities. It too provides states additional discretion by permitting states to count an expanded listof activities for three months in a 24-month period (longer for rehabilitative activities). However,this additional discretion is provided in addition to, rather than instead of, six weeks of job searchand 12 months of vocational educational training, which are retained as "core" activities.

Both the House budget reconciliation bill and the Senate Finance Committee bill would givestates additional discretion in defining activities countable once a family has met the "core" workrequirement (generally, 24 hours per week in core activities). The House bill would allow states todefine activities for families with at least 24 hours in core activities; the Senate Finance Committeebill would allow states to count an expanded set of activities for single-parent families with at least24 hours per week in core activities.

The Senate Finance Committee proposal includes some additional options for countingparticipation in activities toward TANF work standards. It would allow states to have up to 10% oftheir caseload enrolled in a special program of two- or four-year undergraduate education orvocational educational training. This program is modeled after the "Parents as Scholars" programthat has operated in Maine using TANF MOE funds. It also allows for participation in rehabilitativeactivities for disabled persons (including treatment of drug and alcohol abuse) if they combinerehabilitation with at least 10 hours of "core" activities and if the state develops a collaborativerelationship between agencies and entities providing rehabilitative services and the state TANFagency. Additionally, the Senate Finance Committee bill allows caring for a disabled family memberto count as a work activity under certain circumstances.

Marriage Promotion Grants and Family FormationIssues. Current law allows states to use TANF funds for any activity "reasonablycalculated" to achieve a TANF purpose. One of the statutory purposes of TANF is to enddependency of needy parents on government benefits, and one of the stated means to end suchdependency is "marriage." Another of the statutory purposes of TANF is to promote the formationand maintenance of two-parent families. "Promoting marriage" is a currently allowable use of TANFfunds.

Both the Senate Finance Committee and House budget reconciliation bills would carve outspecial "marriage promotion grants" from existing TANF funding. Both bills include $100 millionin competitively awarded matching funds for states, territories, and tribes for marriage promotionactivities. The bills would allow states to use other federal TANF funds or state funds as the matchfor these new marriage promotion grants.

Both bills also would provide an additional $100 million for research and demonstrations. The House budget reconciliation bill would require that these funds be used "primarily" for marriagepromotion; the Senate Finance Committee bill would require that 80% of these funds be used formarriage promotion.

Marriage promotion activities listed in both bills are: public advertising campaigns on thevalue of marriage and skills needed to increase marital stability and health; education in high schoolson the value of marriage; marriage education and marriage and relationship skills programs fornonmarried parents or expectant parents; pre-marital education on marriage for engaged couples;marriage enhancement and marriage skills training for married couples; divorce education programs;and marriage mentoring programs. Programs to reduce the disincentives to marriage in need-basedprograms could be funded from these grants only if offered in conjunction with other marriageactivities.

Both bills have requirements that grantees of marriage promotion grants consider domesticviolence issues and that participation in marriage promotion activities be voluntary. The Senatecommittee bill also includes a prohibition (not in the House bill) against states sanctioning familiesreceiving TANF assistance for not participating in marriage promotion activities.

Child Care

While the House budget reconciliation legislation consolidates a package of provisionsembodying "child care reauthorization" in a single bill (3) , at this point, on the Senate side, reauthorization provisions remaindivided between the two bills, S. 667 and S. 525 (The Caring for ChildrenAct of 2005). The Finance Committee-passed bill (S. 667) contains the proposedmandatory funding appropriation for Child Care and Development Block Grant (CCDBG) programs,while the HELP Committee-passed bill (S. 525) includes proposed discretionary fundingauthorization, and all provisions relating to the reauthorization of the CCDBG Act. Therefore, inthe child care section of Table 2 , most provisions in the Senate column are drawn from S.525, with the notable exception of the mandatory (or "entitlement") funding provision,which falls under the Finance Committee's jurisdiction, and is therefore included in S. 667. A summary of provisions included in both the House bill and Senate committee legislation follows,with more detail found in Table 2 .

Discretionary Authorization. The discretionaryportion of child care funding is authorized by the Child Care and Development Block Grant Act (asamended in 1996). Under current law, discretionary CCDBG funding is authorized at $1 billionannually. However, actual appropriation levels, determined during the annual appropriationsprocess, have exceeded the authorized level (e.g., FY2005 = $2.1 billion). Both the House budgetreconciliation bill and S. 525 propose to authorize discretionary funding at $2.3 billionin FY2006, rising by $200 million each year, up to $3.1 billion in FY2010.

Mandatory Appropriation. Mandatory fundingfor the CCDBG was preappropriated in Section 418 of the Social Security Act for FY1997-2002,as part of the welfare law of 1996 ( P.L. 104-193 ). A series of temporary extensions have continuedthat funding at the FY2002 rate of $2.717 billion since the close of FY2002. (The most recentextension runs through December 31, 2005.)

The House budget reconciliation bill proposes to increase mandatory child care funding by$500 million over five years (FY2006- FY2010), appropriating $2.917 billion for FY2006, $2.767billion for FY2007, $2.817 billion for FY2008, $2.867 billion for FY2009, and $2.917 billion forFY2010. (This reflects half of the $1 billion increase that had earlier been proposed in H.R. 240 .) The Senate committee bill, S. 667 , proposes to increasemandatory funding by $6 billion over five years (FY2006-FY2010), appropriating $3.617 billion forFY2006; $3.717 billion for FY2007; $3.917 billion for FY2008; $4.017 billion for FY2009; and$4.317 billion for FY2010. Puerto Rico would receive $75 million of the $6 billion, whereas undercurrent law (as well as the House bill), Puerto Rico receives no mandatory child care funding.

Authority to Transfer TANF Funds. Undercurrent law, states have the authority to transfer up to 30% of their annual TANF block grant to theCCDBG (only 20% if they choose to transfer 10% to the Social Services Block Grant). S. 667 would maintain current law, whereas the House bill would allow states totransfer up to 50% of their annual TANF grants to the CCDBG.

Use of Funds for Direct Services. Current lawincludes no provision requiring a given percentage of funds appropriated under the CCDBG Act tobe spent on direct services. S. 525 would require that after the reservation of set-asides,at least 70% of the funds remaining be used to fund direct services (as defined by the state). TheHouse bill has no comparable provision.

Option to Use Excess Funds for Increasing PaymentRates. S. 525 would allow states that receive funding above theirFY2005 levels to use a portion of the excess to support payment rate increases for providers and toestablish tiered payment rates. On a related note, the bill (S. 525) would also add to thestatute stricter requirements to set payment rates in accordance with biennial market rate surveys.

Quality Set-Aside. Current law requires that atleast 4% of each state's total CCDBG expenditures (from all sources -- e.g., mandatory,discretionary, matching funds) be used for quality activities, described as providing comprehensiveconsumer education to parents and the public, activities that increase parental choice, and activitiesdesigned to improve the quality and availability of child care in the state.

Both the House budget reconciliation bill and the HELP Committee's S. 525 would raise the percentage of CCDBG funds that must be spent for quality activities to a minimumof 6%.

Definition of "Quality Activities". Both billsprovide greater detail than current law in terms of defining what is classified as a "quality activity." In each, categories of activities are outlined to include school readiness activities (including activitiesto enhance early literacy); training and professional development for staff; and initiatives orprograms to promote or increase retention of qualified staff. The categories reflect a new emphasison school readiness as a goal of the CCDBG. The Senate committee bill ( S. 525 ) alsospecifies that quality funds could be spent on evaluating and assessing the quality of programs, andtheir effectiveness in improving overall school preparedness. While S. 525 clearly statesthat quality funds must be spent for any of the six listed purposes, the House bill provides threebroad categories, similar in topic to those in S. 525, with a fourth, more general categoryof "other activities as approved by the state."

Eligibility. Federal law currently requires thatchildren eligible for services under the CCDBG must have family income that does not exceed 85%of the state median (for a family of that size). However, states have the discretion to adopt incomeeligibility limits below this federal maximum. Both the House budget reconciliation bill and S. 525 propose to eliminate the federal maximum of 85% of state median income (SMI)from the CCDBG law, replacing it with a provision allowing states to set income eligibility levels(with no federal ceiling), with priorities based on need.

State Plan Requirements. Under current CCDBGlaw, states are required to submit plans every two years, certifying that their CCDBG programsinclude specified elements addressing areas such as parental choice, parental access, consumereducation, licensing, and health and safety requirements.

Both the House budget reconciliation bill and the HELP Committee's S. 525 would amend current law to require that additional elements be certified in their state plans. Areasthat would be modified or added relate to providing consumer education information; describing ordemonstrating state coordination of child care services with other early childhood educationprograms; certifying compliance with the quality set-aside percentage requirement; and addressingspecial needs child care.

Unlike the House bill, S. 525 includes provisions requiring that in their stateplans, states demonstrate that the process for redetermining eligibility occur no more frequently thanevery six months (with limited exceptions), and also that the state plan describe any trainingrequirements in effect for child care providers. The Senate committee bill would also put into statutethe requirement that the provider payment rates, described in the state plan, be set in accordance witha statistically valid and reliable biennial survey of market rates (without reducing the number offamilies served). State plans would also be required to include the results of those surveys and tocontain a description of how the state will provide for timely payment to providers. Results of thesurvey would also be required to be made available to the public no later than 30 days after thesurvey's completion.

Data Collection and Reporting Requirements. Current law specifies a set of data reporting requirements for states to collect in the administrationof their CCDBG programs. States collect data on a monthly basis and submit to the Department ofHealth and Human Services (HHS) disaggregated data on a quarterly basis. An aggregate report is required to be submitted to HHS on an annual basis.

S. 525 would retain the quarterly reporting in current law, but would amend thelist of data elements that states would be required to collect on a monthly basis. (See Table 2 fordetails.) It would also eliminate the separate annual report, instead requiring that the fourth quarterlyreport include information on the annual number and type of child care providers and the methodof payment they receive. S. 667 would also extend CCDBG reporting to TANF-fundedchild care. The House bill would retain current law, containing none of these provisions.

Waivers in Response to Gulf Hurricanes. TheHouse budget reconciliation bill would provide the Secretary of HHS with the authority to waive ormodify certain CCDBG provisions for states affected by Hurricanes Katrina and Rita. Provisionsthat could be waived include those relating to the federal income eligibility limits, the workrequirements, states' use of quality funds, and any provision that prevents children designated asevacuees from receiving priority services over any children not already receiving CCDBG services. No similar provisions are included in S. 525 .

Other Provisions. Titles II and III of S. 525 propose provisions that stand apart from CCDBG law or Section 418 of theSocial Security Act. Title II of the bill contains provisions to enhance security at child care centersin federal facilities, and Title III would establish a small business child care grant program, throughwhich competitive grants would be awarded to states for establishment and operation ofemployer-operated child care programs. The House budget reconciliation bill includes no similarprovisions.

Responsible Fatherhood

To improve the long-term outlook for children in single-parent families, federal, state, andlocal governments, along with public and private organizations, are supporting programs andactivities that promote the financial and personal responsibility of noncustodial fathers to theirchildren and increase the participation of fathers in the lives of their children. These programs havecome to be known as "responsible fatherhood" programs. Most fatherhood programs include mediacampaigns that emphasize the importance of emotional, physical, psychological, and financialconnections of fathers to their children. Most fatherhood programs also include parenting education; responsible decision-making; mediation services for both parents; providing an understanding of theCSE program; conflict resolution, coping with stress, and problem-solving skills; peer support; andjob-training opportunities (skills development, interviewing skills, job search, job-retention skills,job-advancement skills, etc.).

Sources of federal funding for fatherhood programs include TANF block grant funds, TANFstate Maintenance-of-Effort (MOE) funding, welfare-to-work funds, Child Support Enforcement(CSE) funds, and Social Services Block Grant (Title XX) funds. Even so, the federal governmentdoes not currently earmark a specific amount of funding exclusively for responsible fatherhoodprograms.

Beginning with the 106th Congress, both the House and Senate have introduced a numberof bills that contain responsible fatherhood provisions, but so far none of the bills have been passedby both Houses of Congress. In the 109th Congress, both S. 667 and the House budgetreconciliation bill would include funding for responsible fatherhood grant programs.

S. 667 as approved by the Senate Finance Committee would establish fivecomponents for the responsible fatherhood program for FY2006 through FY2010. It would (1)appropriate $20 million for a grant program for up to 10 programs; (2) appropriate $30 million forgrants for eligible entities (local government, local public agency, community-based or nonprofitorganization, or private entity, including any charitable or faith-based organizations, or Indian tribeor tribal organization) to conduct demonstration programs; (3) authorize $5 million for a nationallyrecognized nonprofit fatherhood promotion organization to develop and promote a responsiblefatherhood media campaign and establish a national clearinghouse to help states and communitiesin their efforts to promote both marriage and responsible fatherhood; (4) authorize a $20 millionblock grant for states to conduct responsible fatherhood media campaigns (authorize $1 million ofthe $20 million for an evaluation); and (5) authorize $1 million for a nationally recognized nonprofitresearch and education fatherhood organization to establish a national resource center for responsiblefatherhood.

The House Budget Reconciliation proposal as approved by the Committee on Ways andMeans would establish four components for the responsible fatherhood program for FY2006 throughFY2010. It would (1) authorize competitive grants for responsible fatherhood projects to public andnonprofit community entities, including religious organizations, and to Indian tribes and tribalorganizations, for demonstration service projects and activities designed to test the effectiveness ofvarious approaches to accomplish the four specified responsible fatherhood program objectives --eligible entities would be allowed to apply for either full service grants or limited purpose grants of$25,000 or less per fiscal year; (2) authorize funding for two multicity, multistate fatherhooddemonstration projects to be developed and conducted by a national nonprofit fatherhood promotionorganization; (3) authorize funding for an evaluation of the competitive grant projects and themulticity, multistate demonstration projects; and (4) authorize the Secretary of HHS by grant, contract, or cooperative agreement to carry out projects and activities of national significance relatingto fatherhood promotion -- such projects or activities could include collection and dissemination ofinformation, media campaigns, technical assistance to public and private entities, and research. Thebill would authorize $20 million for each of the years FY2006 through FY2010, and stipulates thatno more 15% of the annual appropriations can be used for the multicity, multistate demonstrations,the evaluations, and the projects of national significance.

The Committee on Education and the Workforce shared jurisdiction with the Committee onWays and Means with respect to fatherhood programs. The Committee on Education and theWorkforce's fatherhood program is identical to that of the Committee on Ways and Means exceptthat it would include five components rather than four and stipulate that no more than 35% of the$20 million annual authorization could be used for the multicity, multistate demonstrations, theeconomic incentives demonstrations, the evaluations, and the projections of national significance. In addition to the four components in the Ways and Means Committee proposal, the Committee onEducation and the Workforce's proposal would authorize the HHS Secretary to make grants availablefor FY2006 through FY2010 for two to five demonstration projects that test the use of economicincentives combined with a comprehensive approach to addressing employment barriers toencourage noncustodial parents to enter the workforce and to contribute financially and emotionallyto their children. The fatherhood demonstration projects would be developed and conducted by anational nonprofit fatherhood promotion organization that meets the qualifications specified in thebill. The bill would stipulate that out of the set-aside monies, at least $5 million is to be allocatedfor the economic incentive demonstration project. ( Note: All of the responsible fatherhoodprovisions in both House Committee bills are included in the House-passed budget reconciliationbill.)

Child Support Enforcement

The CSE program, Part D of Title IV of the Social Security Act, was enacted in January 1975( P.L. 93-647 ). The CSE program is administered by the Office of Child Support Enforcement(OCSE) in the Department of HHS, and funded by general revenues. All 50 states, the District ofColumbia, Guam, Puerto Rico, and the Virgin Islands operate CSE programs and are entitled tofederal matching funds. The following families automatically qualify for CSE services (free ofcharge): families receiving TANF benefits (Title IV-A), foster care payments (Title IV-E), orMedicaid coverage (Title XIX). Collections on behalf of families receiving TANF benefits are usedto reimburse state and federal governments for TANF payments made to the family. Other familiesmust apply for CSE services, and states must charge an application fee that cannot exceed $25. Child support collected on behalf of nonwelfare families goes to the family (usually through the statedisbursement unit).

Services. The CSE program provides sevenmajor services on behalf of children: (1) parent location, (2) paternity establishment, (3)establishment of child support orders, (4) review and modification of support orders, (5) collectionof support payments, (6) distribution of support payments, and (7) establishment and enforcementof medical support.

Enforcement Techniques. Collection methodsused by CSE agencies include income withholding, intercept of federal and state income tax refunds,intercept of unemployment compensation, liens against property, security bonds, and reporting childsupport obligations to credit bureaus. All jurisdictions also have civil or criminal contempt-of-courtprocedures and criminal nonsupport laws. Building on legislation ( P.L. 102-521 ) enacted in 1992, P.L. 105-187 , the Deadbeat Parents Punishment Act of 1998, established two new federal criminaloffenses (subject to a two-year maximum prison term) with respect to noncustodial parents whorepeatedly fail to financially support children who reside with custodial parents in another state orwho flee across state lines to avoid supporting them.

P.L. 104-193 required states to implement expedited procedures that allow them to secureassets to satisfy an arrearage by intercepting or seizing periodic or lump sum payments (such asunemployment and workers' compensation), lottery winnings, awards, judgements, or settlements,and assets of the debtor parent held by public or private retirement funds, and financial institutions. It required states to implement procedures under which the state would have authority to withhold,suspend, or restrict use of driver's licenses, professional and occupational licenses, and recreationaland sporting licenses of persons who owe past-due support or who fail to comply with subpoenasor warrants relating to paternity or child support proceedings. It also required states to conductquarterly data matches with financial institutions in the state in order to identify and seize thefinancial resources of debtor noncustodial parents. P.L. 104-193 authorized the Secretary of Stateto deny, revoke, or restrict passports of debtor parents. P.L. 104-193 also required states to enact andimplement the Uniform Interstate Family Support Act (UIFSA), and expand full faith and creditprocedures. P.L. 104-193 also clarified which court has jurisdiction in cases involving multiple childsupport orders.

Financing. The federal government currentlyreimburses each state 66% of the cost of administering its CSE program. It also refunds states 90%of the laboratory costs of establishing paternity. In addition, the federal government pays states anincentive payment to encourage them to operate effective programs. P.L. 104-193 required the HHSSecretary in consultation with the state CSE directors to develop a new cost-neutral system ofincentive payments to states. P.L. 105-200 , the Child Support Performance and Incentive Act of1998, established a new cost-neutral incentive payment system. The statutory limit of CSE incentivepayments for FY2005 is $446 million.

S. 667 and House Budget Reconciliation Bill: MajorProvisions Related to Child Support Enforcement. Over the years, the CSEprogram has evolved into a multifaceted program. While cost-recovery still remains an importantfunction of the program, other aspects of the program include service delivery and promotion ofself-sufficiency and parental responsibility.

The CSE program has helped strengthen families by securing financial support for childrenfrom their noncustodial parent on a consistent and continuing basis and by helping some families toremain self-sufficient and off public assistance by providing the requisite CSE services. Childsupport payments now are generally recognized as a very important income source for single-parentfamilies. On average child support constitutes 17% of family income for households that receiveit (2001 data). Among poor families who receive it, child support constitutes about 30% of familyincome (2001 data).

Both S. 667 and the House budget reconciliation bill would seek to improve theCSE program and raise collections so as to increase the economic independence of former welfarefamilies and provide a stable source of income for all single-parent families with a noncustodialparent. Although both bills share identical objectives with respect to simplifying CSE assignmentand distribution rules and strengthening the "family-first" policies started in the1996 welfare reformlaw, the approaches used differ. Both bills would revise some CSE enforcement tools and addothers. This section of the report does not discuss all of the CSE provisions included in S.667 and the House bill. For a description of all of the CSE provisions in S. 667as reported by the Senate Finance Committee and the House budget reconciliation bill, see Table2 in the last section of this report.

The Congressional Budget Office (CBO) estimates that the Senate FinanceCommittee-reported bill would increase federal outlays in the CSE program by $628 million overthe period FY2006-FY2010, whereas the House budget reconciliation bill would reduce federaloutlays in the CSE program by $4.899 billion over the period FY2006-FY2010. The following twoCSE provisions in the House bill comprise most of the budget reductions (i.e., savings): a phased-inreduction of the matching rate for administrative expenses from 66% to 50%, which saves $3.8billion over the five-year period; and an elimination of the federal match when states spend CSEincentive payments (i.e., reinvest CSE incentive payments back into the program), saving $1.6billion over the five-year period.

Assignment of Child Support Rights. As a conditionof receiving TANF benefits, a family must assign their child support rights to the state. Assignmentrules determine who has legal claim on the child support payments owed by the noncustodial parent. The child support assignment covers any child support that accrues while the family receives TANFbenefits as well as any child support that accrued before the family started receiving TANF benefits. Assigned child support collections are not paid to families, but rather this revenue is kept by statesand the federal government as partial reimbursement for welfare benefits. Nonwelfare families whoapply for CSE services do not assign their child support rights to the state and thereby receive all ofthe child support collected on their behalf.

An extremely important feature of the assignment process is the date on which an assignmentwas entered. If the assignment was entered on or before September 30, 1997, then pre-assistanceand during-assistance arrearages are "permanently assigned" to the state. If the assignment wasentered on or after October 1, 1997, then only the arrearages which accumulate while the familyreceives assistance are "permanently assigned." The family's pre-assistance arrearages are"temporarily assigned" and the right to those arrearages goes back to the family when it leaves TANF(unless the arrearages are collected through the federal income tax refund offset program).

Under S. 667 as reported by the Senate Finance Committee, the child supportassignment would only cover any child support that accrues while the family receives TANFbenefits. This would mean that any child support arrearages that accrued before the family startedreceiving TANF benefits would not have to be assigned to the state (even temporarily) and therebyany child support collected on behalf of the former-TANF family for pre-assistance arrearages wouldgo to the family. The House bill includes a similar provision.

Distribution of Child Support. Distribution rulesdetermine the order in which child support collections are paid in accordance with the assignmentrules. In other words, the distribution rules determine which claim is paid first when a child supportcollection occurs. The order of payment of the child support collection is of tremendous importancebecause in many cases past-due child support (i.e., arrearages) are never fully paid.

TANF Families. While the family receives TANF benefits, the state ispermitted to retain any current support and any assigned arrearages it collects up to the cumulativeamount of TANF benefits which has been paid to the family. The 1996 welfare law ( P.L. 104-193 )repealed the $50 required pass through and gave states the choice to decide how much, if any, of thestate share (some, all, none) of child support payments collected on behalf of TANF families to sendthe family. States also decide whether to treat child support payments as income to the family. While states have discretion over their share of child support collections, P.L. 104-193 requiredstates to pay the federal government the federal government's share of child support collectionscollected on behalf of TANF families. This means that the state, and not the federal government,bears the entire cost of any child support passed through to (and disregarded by) families. As ofAugust 2004, 18 states were continuing the $50 (or higher in one state) pass-through and disregardpolicy that had been in effect pre-1996.

Both bills would provide incentives (in the form of federal cost sharing) to states to directmore of the child support collected on behalf of TANF families to the families themselves (oftenreferred to as a "family-first" policy), as opposed to using such collections to reimburse state andfederal coffers for welfare benefits paid to the families. However, the approaches of the bills differwith respect to the amount of federal cost-sharing provided and whether to help states pay for thecurrent cost of their CSE pass-through and disregard policies or to encourage states to establish suchpolicies or increase the pass-through and disregard already in place.

Under S. 667 as reported by the Senate Finance Committee, the federalgovernment would share in the costs of the entire amount of pass-through and disregard policies usedby states. S. 667 would allow states to pay up to $400 per month in child support collectedon behalf of a TANF (or foster care) family ($600 per month to a family with two or more children)to the family and would not require the state to pay the federal government the federal share of thosepayments. In order for the federal government to share in the cost of the child support pass-through,the state would be required to disregard (i.e., not count) the child support collection paid to thefamily in determining the family's TANF benefit.

Unlike S. 667 , the House bill is intended to provide states with an incentive toincrease their pass-through and disregard policies. The House budget reconciliation bill would allowstates to increase the amount of collected child support they pay to families receiving TANF benefitsand would not require the state to pay the federal government the federal share of the increasedpayments. The subsidized child support pass-through payments would be the amount above anypayments the state was making on December 31, 2001. The House bill would limit the federalgovernment's cost-sharing of the new pass-through payments to the greater of $100 per month or $50per month more than the state previously was sharing with the family. In order for the federalgovernment to share in the cost of an increase in the child support pass-through, the state would berequired to disregard (i.e., not count) the child support collection paid to the family in determiningthe family's TANF benefit.

Former TANF Families. Pursuant to the 1996 welfare reform law ( P.L.104-193 ), beginning on October 1, 2000, states must distribute to former TANF families thefollowing child support collections first before the state and the federal government are reimbursed(the "family-first" policy): (1) all current child support, (2) any child support arrearages that accrueafter the family leaves TANF (these arrearages are called never-assigned arrearages), plus (3) anyarrearages that accrued before the family began receiving TANF benefits. (Any child supportarrearages that accrue during the time the family is on TANF belong to the state and federalgovernment.)

One of the goals of the 1996 welfare reform law with regard to CSE distribution provisionswas to create a distribution priority that favored families once they leave the TANF rolls. Thus,generally speaking, under current law, child support that accrues before and after a family receivesTANF goes to the family, whereas child support that accrues while the family is receiving TANFgoes to the state. This additional family income is expected to reduce dependence on publicassistance by both promoting exit from TANF and preventing entry and re-entry to TANF.

S. 667 as reported by the Senate Finance Committee would give states the optionof distributing to former TANF families the full amount of child support collected on their behalf(i.e., both current support and all child support arrearages -- including arrearages collected throughthe federal income tax refund offset program). S. 667 would simplify the CSE distributionprocess and eliminate the special treatment of child support arrearages collected through the federalincome tax refund offset program. Under S. 667 the federal government would share withthe states the costs of paying child support arrearages to the family first.

Similarly, the House bill would give states the option of distributing to former TANF familiesthe full amount of child support collected on their behalf. Under the House bill, the federalgovernment would share with the states the costs of paying child support arrearages accrued whilethe family received TANF as well as costs associated with passing through to the family childsupport collected through the federal income tax refund offset program, if the state chose the"family-first" option.

Expansion of Collection/Enforcement Tools. Bothbills would include identical or similar provisions with respect to (1) lowering the threshold amountfor denial of a passport to a noncustodial parent who owes past-due child support; (2) easing thecollection of child support from veterans' benefits; (3) allowing states to use the federal income taxrefund offset program to collect past-due child support for persons not on TANF who are no longerminors; (4) authorizing the HHS Secretary to compare information of noncustodial parents who owepast-due child support with information maintained by insurers concerning insurance payments andto furnish any information resulting from a match to CSE agencies so they can pursue child supportarrearages; and (5) allowing an assisting state to establish a child support interstate case based onanother state's request for assistance (thereby enabling an assisting state to use the CSE statewideautomated data processing and information retrieval system for interstate cases).

Additional provisions that would expand and/or enhance the ability of states to collect childsupport payments are contained in S. 667 as reported by the Senate Finance Committee. They include (1) authorizing the HHS Secretary to act on behalf of states to seize financial assets(held by a multi-state financial institution) of noncustodial parents who owe child support; (2)facilitating the collection of child support from Social Security benefits; (3) requiring that medicalsupport for a child be provided by either or both parents; and (4) requiring the CSE agency to notifyhealth care plan administrators under certain circumstances when a child loses health care coverage.

Other Provisions. Both bills include provisions thatwould (1) require states to review and if appropriate adjust child support orders of TANF familiesevery three years; (2) require the HHS Secretary to submit a report to Congress on the proceduresstates use to locate custodial parents for whom child support has been collected but not yetdistributed; (3) establish a minimum funding level for technical assistance; (4) establish a minimumfunding level for the Federal Parent Locator Service; and (5) designate Indian tribes and tribalorganizations as persons authorized to have access to information in the Federal Parent LocatorService.

S. 667 includes provisions that would (1) increase funding for the CSE accessand visitation program; (2) require states to adopt a later version of the Uniform Interstate FamilySupport Act (UIFSA) so as to facilitate the collection of child support payments in interstate cases;and (3) allow the state of Texas to continue to operate its CSE program for automatic monitoring andenforcement of court orders on behalf of nonwelfare families without applying for a federal waiver.

The House budget reconciliation bill includes provision that would (1) establish a $25 annualfee for individuals who have never been on TANF but receive CSE services and who received atleast $500 in any given year; (2) gradually reduce the general CSE federal rate of 66% to 50% (overthe period FY2007-FY2010); and (3) eliminate the federal match on CSE incentive payments thatstates, in compliance with federal law, reinvest back into the CSE program.

Other Programs

In addition to reauthorizing and modifying the programs discussed above, the Senate welfarereauthorization bill ( S. 667 ) and the House budget reconciliation bill would modifysome other programs:

Transitional Medical Assistance (TMA) , which is a program that extends atleast six and up to 12 additional months of Medicaid coverage for families leaving welfare for work. Authority for the TMA program is scheduled to expire on December 31, 2005 at which time, absentcongressional action, four months of Medicaid coverage to such families would be provided. S. 667 would extend 12-month TMA through the end of FY2010 and provide stateoptions to reduce required beneficiary reporting of income to continue to receive TMA after sixmonths and allow for up to 24 months of TMA. The House reconciliation bill would not extendTMA beyond December 31, 2005. (4)

State abstinence education grants. The program providing grants to statesfor abstinence-only education is scheduled to expire on December 31, 2005. S. 667 would extend this program through FY2010. The House budget reconciliation bill would not includean extension of this program.

Child welfare programs. Both S. 667 and the House budgetreconciliation bills would extend the authority for states to operate child welfare "waiver" programsthrough FY2010. The House bill would add additional instructions to HHS regarding waiverapproval policies and availability of waiver reports. The Senate committee bill would allow Indiantribes to receive direct federal funding to operate foster care and adoption assistance programs andwould also permit Puerto Rico to receive limited additional federal foster care funds. The Housebudget reconciliation bill includes two provisions intended to reduce federal outlays for foster careand adoption assistance: 1) it seeks to nullify a court rule (known as the Rosales case) that expandseligibility for foster care in certain states; and 2) it limits the period of time partial federalreimbursement of foster care costs can be provided for children who are placed with relatives whoare not licensed to provide foster care, and it requires states seeking this partial federal matching onbehalf of children who are at "imminent risk" of removal from their homes to redetermine the statusof these children as "candidates" for foster care every six months.

Supplemental Security Income (SSI). Both S. 667 and the Housebudget reconciliation bill would require that a certain percentage of disability determinations by statedisability agencies be reviewed by the federal government. S. 667 would also extend theperiod of SSI eligibility for refugees and asylees from seven to nine years. The House bill attemptsto achieve budget reductions by requiring that certain back payments be paid in installments overtime, rather than in one lump sum.

Detailed Comparison of Senate Committee Bills and the House Budget Reconciliation Bill

Table 2 provides a detailed comparison of welfare and related provisions in the two Senatecommittee bills ( S. 667 and S. 525 ) and the House budget reconciliationbill. For the Senate proposals, the table notes both the bill and section numbers. The House budgetreconciliation bill is organized by Titles reflecting each House committee's legislative changes. Thewelfare and related proposals are found both in Title II, from the Education and WorkforceCommittee, and Title VIII of the bill, from the Ways and Means Committee. In most respects, thecommittees reported identical legislative language. In those cases, Table 2 provides both sectionreferences for identical provisions. In cases where the two committees reported different provisions,the table separately indicates the Education and the Workforce and Ways and Means provisions.

The House budget reconciliation bill is an omnibus bill that includes many provisionsunrelated to welfare reform programs. Those provisions are not discussed in this report and notshown on the table. Further, S. 667 makes a number of changes to the earned incomeand child tax credits. The tax provisions of S. 667 are also not addressed in this report orshown on the table.

Table 2. Comparison of Current Law with S. 667/525 and the House Budget Reconciliation Bill WelfareProvisions