SECTION 1. EXTENSION AND EXPANSION OF TANF SUPPLEMENTAL GRANTS.

    (a) In General.--Section 403(a)(3) of the Social Security Act (42 
U.S.C. 603(a)(3)) is amended to read as follows:
            ``(3) Supplemental grant for certain states.--
                    ``(A) In general.--Each qualifying State shall, 
                subject to subparagraphs (B) and (F), be entitled to 
                receive from the Secretary for each of fiscal years 
                2009 and 2010 the following:
                            ``(i) Qualifying states that received a 
                        supplemental grant for fiscal year 2008 and 
                        have below average tanf resources per child.--
                        In the case of a qualifying State that is 
                        described in clauses (i) and (ii) of 
                        subparagraph (C), an amount equal to the sum 
                        of--
                                    ``(I) the total amount required to 
                                be paid to the State under this 
                                paragraph (as in effect on October 1, 
                                2007) for fiscal year 2008; and
                                    ``(II) the lesser of--
                                            ``(aa) the amount equal to 
                                        2.5 percent of the total amount 
                                        required to be paid to the 
                                        State under paragraph (1) for 
                                        the fiscal year, and
                                            ``(bb) $2,500,000.
                            ``(ii) Qualifying states that did not 
                        receive a supplemental grant for fiscal year 
                        2009 and have below average tanf resources per 
                        child.--In the case of a qualifying State that 
                        is only described in clause (ii) of 
                        subparagraph (C), an amount equal to the lesser 
                        of--
                                    ``(I) the amount equal to 10 
                                percent of the total amount required to 
                                be paid to the State under paragraph 
                                (1) for the fiscal year, and
                                    ``(II) $10,000,000.
                            ``(iii) Other qualifying states.--In the 
                        case of a qualifying State that is only 
                        described in clause (i) of subparagraph (C), 
                        the total amount required to be paid to the 
                        State under this paragraph (as in effect on 
                        October 1, 2007) for fiscal year 2008.
                    ``(B) Limitation.--The amount to be paid to a State 
                under clause (i)(II) or (ii) of subparagraph (A) for 
                any fiscal year shall be reduced (but not below zero) 
                by the amount that is equal to the excess, if any, of--
                            ``(i) the product obtained by multiplying--
                                    ``(I) the level of welfare spending 
                                per poor child by the State (calculated 
                                without regard to any reduction made 
                                under this subparagraph) for such 
                                fiscal year; by
                                    ``(II) the number of children under 
                                the age of 18, according to the 2006 
                                American Community Survey, who were 
                                residents of the State and who were 
                                members of families whose income was 
                                below the poverty line; over
                            ``(ii) the product obtained by 
                        multiplying--
                                    ``(I) the national average level of 
                                State welfare spending per poor child 
                                for such fiscal year; by
                                    ``(II) the number of children under 
                                the age of 18, according to the 2006 
                                American Community Survey, who were 
                                residents of the State and who were 
                                members of families whose income was 
                                below the poverty line.
                    ``(C) Qualifying state.--For purposes of this 
                paragraph, a State is a qualifying State for a fiscal 
                year if--
                            ``(i) the State was entitled to receive a 
                        grant under this paragraph (as in effect on 
                        October 1, 2007) for fiscal year 2008; or
                            ``(ii) the level of welfare spending per 
                        poor child by the State for fiscal year 2008 is 
                        less than the national average level of State 
                        welfare spending per poor child for such fiscal 
                        year.
                    ``(D) Definitions.--In this paragraph:
                            ``(i) Level of welfare spending per poor 
                        child.--The term `level of welfare spending per 
                        poor child' means, with respect to a State and 
                        a fiscal year--
                                    ``(I) the sum of--
                                            ``(aa) the total amount 
                                        required to be paid to the 
                                        State under paragraph (1) for 
                                        such fiscal year;
                                            ``(bb) the total amount 
                                        required to be paid to the 
                                        State, if any, under this 
                                        paragraph (as in effect on 
                                        October 1, 2007) for such 
                                        fiscal year; and
                                            ``(cc) 80 percent of the 
                                        historic State expenditures (as 
                                        defined in section 
                                        409(a)(7)(B)(iii)); divided by
                                    ``(II) the number of children under 
                                the age of 18, according to the 2006 
                                American Community Survey, who were 
                                residents of the State and who were 
                                members of families whose income was 
                                below the poverty line.
                            ``(ii) National average level of state 
                        welfare spending per poor child.--The term 
                        `national average level of State welfare 
                        spending per poor child' means, with respect to 
                        a fiscal year, an amount equal to--
                                    ``(I) the sum of--
                                            ``(aa) the total amount 
                                        required to be paid to the 
                                        States under paragraph (1) for 
                                        such fiscal year;
                                            ``(bb) the total amount 
                                        required to be paid to the 
                                        States under this paragraph for 
                                        such fiscal year; and
                                            ``(cc) the aggregate amount 
                                        for all States of 80 percent of 
                                        the historic State expenditures 
                                        (as defined in section 
                                        409(a)(7)(B)(iii)) for each 
                                        State; divided by
                                    ``(II) the number of children under 
                                the age of 18, according to the 2006 
                                American Community Survey, who were 
                                residents of any State and who were 
                                members of families whose income was 
                                below the poverty line.
                            ``(iii) State.--The term `State' means each 
                        of the 50 States of the United States and the 
                        District of Columbia.
                    ``(E) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for each of fiscal 
                years 2009 and 2010 such sums as are necessary for 
                grants under this paragraph, in a total amount not to 
                exceed $470,000,000 for each such fiscal year.
                    ``(F) Grants reduced pro rata if insufficient 
                appropriations.--If the amount appropriated pursuant to 
                subparagraph (E) for a fiscal year is less than the 
                total amount of payments otherwise required to be made 
                under this paragraph for the fiscal year, then the 
                amount otherwise payable to any State for the fiscal 
                year under this paragraph shall be reduced by a 
                percentage equal to the amount so appropriated divided 
                by such total amount.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2008.
Output: Amends part A (Temporary Assistance for Needy Families) (TANF) of title IV of the Social Security Act to change the TANF supplemental grant for population increases in certain states into simply a supplemental grant for certain states, for FY2009 and FY2010, including both qualifying states that received and qualifying states that did not receive a supplemental grant for FY2008, if their TANF resources are below average.