WELFARE REFORM LAW - H.R. 3734 TITLE I - BLOCK GRANTS FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES TITLE I--BLOCK GRANTS FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES SEC. 101. FINDINGS. The Congress makes the following findings: (1) Marriage is the foundation of a successful society. (2) Marriage is an essential institution of a successful society which promotes the interests of children. (3) Promotion of responsible fatherhood and motherhood is integral to successful child rearing and the well-being of children. (4) In 1992, only 54 percent of single-parent families with children had a child support order established and, of that 54 percent, only about one-half received the full amount due. Of the cases enforced through the public child support enforcement system, only 18 percent of the caseload has a collection. (5) The number of individuals receiving aid to families with dependent children (in this section referred to as `AFDC') has more than tripled since 1965. More than two-thirds of these recipients are children. Eighty-nine percent of children receiving AFDC benefits now live in homes in which no father is present. (A)(i) The average monthly number of children receiving AFDC benefits-- (I) was 3,300,000 in 1965; (II) was 6,200,000 in 1970; (III) was 7,400,000 in 1980; and (IV) was 9,300,000 in 1992. (ii) While the number of children receiving AFDC benefits increased nearly threefold between 1965 and 1992, the total number of children in the United States aged 0 to 18 has declined by 5.5 percent. (B) The Department of Health and Human Services has estimated that 12,000,000 children will receive AFDC benefits within 10 years. (C) The increase in the number of children receiving public assistance is closely related to the increase in births to unmarried women. Between 1970 and 1991, the percentage of live births to unmarried women increased nearly threefold, from 10.7 percent to 29.5 percent. (6) The increase of out-of-wedlock pregnancies and births is well documented as follows: (A) It is estimated that the rate of nonmarital teen pregnancy rose 23 percent from 54 pregnancies per 1,000 unmarried teenagers in 1976 to 66.7 pregnancies in 1991. The overall rate of nonmarital pregnancy rose 14 percent from 90.8 pregnancies per 1,000 unmarried women in 1980 to 103 in both 1991 and 1992. In contrast, the overall pregnancy rate for married couples decreased 7.3 percent between 1980 and 1991, from 126.9 pregnancies per 1,000 married women in 1980 to 117.6 pregnancies in 1991. (B) The total of all out-of-wedlock births between 1970 and 1991 has risen from 10.7 percent to 29.5 percent and if the current trend continues, 50 percent of all births by the year 2015 will be out-of-wedlock. (7) An effective strategy to combat teenage pregnancy must address the issue of male responsibility, including statutory rape culpability and prevention. The increase of teenage pregnancies among the youngest girls is particularly severe and is linked to predatory sexual practices by men who are significantly older. (A) It is estimated that in the late 1980's, the rate for girls age 14 and under giving birth increased 26 percent. (B) Data indicates that at least half of the children born to teenage mothers are fathered by adult men. Available data suggests that almost 70 percent of births to teenage girls are fathered by men over age 20. (C) Surveys of teen mothers have revealed that a majority of such mothers have histories of sexual and physical abuse, primarily with older adult men. (8) The negative consequences of an out-of-wedlock birth on the mother, the child, the family, and society are well documented as follows: (A) Young women 17 and under who give birth outside of marriage are more likely to go on public assistance and to spend more years on welfare once enrolled. These combined effects of `younger and longer' increase total AFDC costs per household by 25 percent to 30 percent for 17-year-olds. (B) Children born out-of-wedlock have a substantially higher risk of being born at a very low or moderately low birth weight. (C) Children born out-of-wedlock are more likely to experience low verbal cognitive attainment, as well as more child abuse, and neglect. (D) Children born out-of-wedlock were more likely to have lower cognitive scores, lower educational aspirations, and a greater likelihood of becoming teenage parents themselves. (E) Being born out-of-wedlock significantly reduces the chances of the child growing up to have an intact marriage. (F) Children born out-of-wedlock are 3 times more likely to be on welfare when they grow up. (9) Currently 35 percent of children in single-parent homes were born out-of-wedlock, nearly the same percentage as that of children in single-parent homes whose parents are divorced (37 percent). While many parents find themselves, through divorce or tragic circumstances beyond their control, facing the difficult task of raising children alone, nevertheless, the negative consequences of raising children in single-parent homes are well documented as follows: (A) Only 9 percent of married-couple families with children under 18 years of age have income below the national poverty level. In contrast, 46 percent of female-headed households with children under 18 years of age are below the national poverty level. (B) Among single-parent families, nearly 1/2 of the mothers who never married received AFDC while only 1/5 of divorced mothers received AFDC. (C) Children born into families receiving welfare assistance are 3 times more likely to be on welfare when they reach adulthood than children not born into families receiving welfare. (D) Mothers under 20 years of age are at the greatest risk of bearing low birth weight babies. (E) The younger the single-parent mother, the less likely she is to finish high school. (F) Young women who have children before finishing high school are more likely to receive welfare assistance for a longer period of time. (G) Between 1985 and 1990, the public cost of births to teenage mothers under the aid to families with dependent children program, the food stamp program, and the medicaid program has been estimated at $120,000,000,000. (H) The absence of a father in the life of a child has a negative effect on school performance and peer adjustment. (I) Children of teenage single parents have lower cognitive scores, lower educational aspirations, and a greater likelihood of becoming teenage parents themselves. (J) Children of single-parent homes are 3 times more likely to fail and repeat a year in grade school than are children from intact 2-parent families. (K) Children from single-parent homes are almost 4 times more likely to be expelled or suspended from school. (L) Neighborhoods with larger percentages of youth aged 12 through 20 and areas with higher percentages of single-parent households have higher rates of violent crime. (M) Of those youth held for criminal offenses within the State juvenile justice system, only 29.8 percent lived primarily in a home with both parents. In contrast to these incarcerated youth, 73.9 percent of the 62,800,000 children in the Nation's resident population were living with both parents. (10) Therefore, in light of this demonstration of the crisis in our Nation, it is the sense of the Congress that prevention of out-of-wedlock pregnancy and reduction in out-of-wedlock birth are very important Government interests and the policy contained in part A of title IV of the Social Security Act (as amended by section 103(a) of this Act) is intended to address the crisis. SEC. 102. REFERENCE TO SOCIAL SECURITY ACT. Except as otherwise specifically provided, wherever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. SEC. 103. BLOCK GRANTS TO STATES. (a) IN GENERAL- Part A of title IV (42 U.S.C. 601 et seq.) is amended-- (1) by striking all that precedes section 418 (as added by section 603(b)(2) of this Act) and inserting the following: `PART A--BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES `SEC. 401. PURPOSE. `(a) IN GENERAL- The purpose of this part is to increase the flexibility of States in operating a program designed to-- `(1) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; `(2) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; `(3) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and `(4) encourage the formation and maintenance of two-parent families. `(b) NO INDIVIDUAL ENTITLEMENT- This part shall not be interpreted to entitle any individual or family to assistance under any State program funded under this part. `SEC. 402. ELIGIBLE STATES; STATE PLAN. `(a) IN GENERAL- As used in this part, the term `eligible State' means, with respect to a fiscal year, a State that, during the 2-year period immediately preceding the fiscal year, has submitted to the Secretary a plan that the Secretary has found includes the following: `(1) OUTLINE OF FAMILY ASSISTANCE PROGRAM- `(A) GENERAL PROVISIONS- A written document that outlines how the State intends to do the following: `(i) Conduct a program, designed to serve all political subdivisions in the State (not necessarily in a uniform manner), that provides assistance to needy families with (or expecting) children and provides parents with job preparation, work, and support services to enable them to leave the program and become self-sufficient. `(ii) Require a parent or caretaker receiving assistance under the program to engage in work (as defined by the State) once the State determines the parent or caretaker is ready to engage in work, or once the parent or caretaker has received assistance under the program for 24 months (whether or not consecutive), whichever is earlier. `(iii) Ensure that parents and caretakers receiving assistance under the program engage in work activities in accordance with section 407. `(iv) Take such reasonable steps as the State deems necessary to restrict the use and disclosure of information about individuals and families receiving assistance under the program attributable to funds provided by the Federal Government. `(v) Establish goals and take action to prevent and reduce the incidence of out-of-wedlock pregnancies, with special emphasis on teenage pregnancies, and establish numerical goals for reducing the illegitimacy ratio of the State (as defined in section 403(a)(2)(B)) for calendar years 1996 through 2005. `(vi) Conduct a program, designed to reach State and local law enforcement officials, the education system, and relevant counseling services, that provides education and training on the problem of statutory rape so that teenage pregnancy prevention programs may be expanded in scope to include men. `(B) SPECIAL PROVISIONS- `(i) The document shall indicate whether the State intends to treat families moving into the State from another State differently than other families under the program, and if so, how the State intends to treat such families under the program. `(ii) The document shall indicate whether the State intends to provide assistance under the program to individuals who are not citizens of the United States, and if so, shall include an overview of such assistance. `(iii) The document shall set forth objective criteria for the delivery of benefits and the determination of eligibility and for fair and equitable treatment, including an explanation of how the State will provide opportunities for recipients who have been adversely affected to be heard in a State administrative or appeal process. `(iv) Not later than 1 year after the date of enactment of this Act, unless the chief executive officer of the State opts out of this provision by notifying the Secretary, a State shall, consistent with the exception provided in section 407(e)(2), require a parent or caretaker receiving assistance under the program who, after receiving such assistance for 2 months is not exempt from work requirements and is not engaged in work, as determined under section 407(c), to participate in community service employment, with minimum hours per week and tasks to be determined by the State. `(2) CERTIFICATION THAT THE STATE WILL OPERATE A CHILD SUPPORT ENFORCEMENT PROGRAM- A certification by the chief executive officer of the State that, during the fiscal year, the State will operate a child support enforcement program under the State plan approved under part D. `(3) CERTIFICATION THAT THE STATE WILL OPERATE A FOSTER CARE AND ADOPTION ASSISTANCE PROGRAM- A certification by the chief executive officer of the State that, during the fiscal year, the State will operate a foster care and adoption assistance program under the State plan approved under part E, and that the State will take such actions as are necessary to ensure that children receiving assistance under such part are eligible for medical assistance under the State plan under title XIX. `(4) CERTIFICATION OF THE ADMINISTRATION OF THE PROGRAM- A certification by the chief executive officer of the State specifying which State agency or agencies will administer and supervise the program referred to in paragraph (1) for the fiscal year, which shall include assurances that local governments and private sector organizations-- `(A) have been consulted regarding the plan and design of welfare services in the State so that services are provided in a manner appropriate to local populations; and `(B) have had at least 45 days to submit comments on the plan and the design of such services. `(5) CERTIFICATION THAT THE STATE WILL PROVIDE INDIANS WITH EQUITABLE ACCESS TO ASSISTANCE- A certification by the chief executive officer of the State that, during the fiscal year, the State will provide each member of an Indian tribe, who is domiciled in the State and is not eligible for assistance under a tribal family assistance plan approved under section 412, with equitable access to assistance under the State program funded under this part attributable to funds provided by the Federal Government. `(6) CERTIFICATION OF STANDARDS AND PROCEDURES TO ENSURE AGAINST PROGRAM FRAUD AND ABUSE- A certification by the chief executive officer of the State that the State has established and is enforcing standards and procedures to ensure against program fraud and abuse, including standards and procedures concerning nepotism, conflicts of interest among individuals responsible for the administration and supervision of the State program, kickbacks, and the use of political patronage. `(7) OPTIONAL CERTIFICATION OF STANDARDS AND PROCEDURES TO ENSURE THAT THE STATE WILL SCREEN FOR AND IDENTIFY DOMESTIC VIOLENCE- `(A) IN GENERAL- At the option of the State, a certification by the chief executive officer of the State that the State has established and is enforcing standards and procedures to-- `(i) screen and identify individuals receiving assistance under this part with a history of domestic violence while maintaining the confidentiality of such individuals; `(ii) refer such individuals to counseling and supportive services; and `(iii) waive, pursuant to a determination of good cause, other program requirements such as time limits (for so long as necessary) for individuals receiving assistance, residency requirements, child support cooperation requirements, and family cap provisions, in cases where compliance with such requirements would make it more difficult for individuals receiving assistance under this part to escape domestic violence or unfairly penalize such individuals who are or have been victimized by such violence, or individuals who are at risk of further domestic violence. `(B) DOMESTIC VIOLENCE DEFINED- For purposes of this paragraph, the term `domestic violence' has the same meaning as the term `battered or subjected to extreme cruelty', as defined in section 408(a)(7)(C)(iii). `(b) PUBLIC AVAILABILITY OF STATE PLAN SUMMARY- The State shall make available to the public a summary of any plan submitted by the State under this section. `SEC. 403. GRANTS TO STATES. `(a) GRANTS- `(1) FAMILY ASSISTANCE GRANT- `(A) IN GENERAL- Each eligible State shall be entitled to receive from the Secretary, for each of fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002, a grant in an amount equal to the State family assistance grant. `(B) STATE FAMILY ASSISTANCE GRANT DEFINED- As used in this part, the term `State family assistance grant' means the greatest of-- `(i) 1/3 of the total amount required to be paid to the State under former section 403 (as in effect on September 30, 1995) for fiscal years 1992, 1993, and 1994 (other than with respect to amounts expended by the State for child care under subsection (g) or (i) of former section 402 (as so in effect)); `(ii)(I) the total amount required to be paid to the State under former section 403 for fiscal year 1994 (other than with respect to amounts expended by the State for child care under subsection (g) or (i) of former section 402 (as so in effect)); plus `(II) an amount equal to 85 percent of the amount (if any) by which the total amount required to be paid to the State under former section 403(a)(5) for emergency assistance for fiscal year 1995 exceeds the total amount required to be paid to the State under former section 403(a)(5) for fiscal year 1994, if, during fiscal year 1994 or 1995, the Secretary approved under former section 402 an amendment to the former State plan with respect to the provision of emergency assistance; or `(iii) 4/3 of the total amount required to be paid to the State under former section 403 (as in effect on September 30, 1995) for the 1st 3 quarters of fiscal year 1995 (other than with respect to amounts expended by the State under the State plan approved under part F (as so in effect) or for child care under subsection (g) or (i) of former section 402 (as so in effect)), plus the total amount required to be paid to the State for fiscal year 1995 under former section 403(l) (as so in effect). `(C) TOTAL AMOUNT REQUIRED TO BE PAID TO THE STATE UNDER FORMER SECTION 403 DEFINED- As used in this part, the term `total amount required to be paid to the State under former section 403' means, with respect to a fiscal year-- `(i) in the case of a State to which section 1108 does not apply, the sum of-- `(I) the Federal share of maintenance assistance expenditures for the fiscal year, before reduction pursuant to subparagraph (B) or (C) of section 403(b)(2) (as in effect on September 30, 1995), as reported by the State on ACF Form 231; `(II) the Federal share of administrative expenditures (including administrative expenditures for the development of management information systems) for the fiscal year, as reported by the State on ACF Form 231; `(III) the Federal share of emergency assistance expenditures for the fiscal year, as reported by the State on ACF Form 231; `(IV) the Federal share of expenditures for the fiscal year with respect to child care pursuant to subsections (g) and (i) of former section 402 (as in effect on September 30, 1995), as reported by the State on ACF Form 231; and `(V) the Federal obligations made to the State under section 403 for the fiscal year with respect to the State program operated under part F (as in effect on September 30, 1995), as determined by the Secretary, including additional obligations or reductions in obligations made after the close of the fiscal year; and `(ii) in the case of a State to which section 1108 applies, the lesser of-- `(I) the sum described in clause (i); or `(II) the total amount certified by the Secretary under former section 403 (as in effect during the fiscal year) with respect to the territory. `(D) INFORMATION TO BE USED IN DETERMINING AMOUNTS- `(i) FOR FISCAL YEARS 1992 AND 1993- `(I) In determining the amounts described in subclauses (I) through (IV) of subparagraph (C)(i) for any State for each of fiscal years 1992 and 1993, the Secretary shall use information available as of April 28, 1995. `(II) In determining the amount described in subparagraph (C)(i)(V) for any State for each of fiscal years 1992 and 1993, the Secretary shall use information available as of January 6, 1995. `(ii) FOR FISCAL YEAR 1994- In determining the amounts described in subparagraph (C)(i) for any State for fiscal year 1994, the Secretary shall use information available as of April 28, 1995. `(iii) FOR FISCAL YEAR 1995- `(I) In determining the amount described in subparagraph (B)(ii)(II) for any State for fiscal year 1995, the Secretary shall use the information which was reported by the States and estimates made by the States with respect to emergency assistance expenditures and was available as of August 11, 1995. `(II) In determining the amounts described in subclauses (I) through (III) of subparagraph (C)(i) for any State for fiscal year 1995, the Secretary shall use information available as of October 2, 1995. `(III) In determining the amount described in subparagraph (C)(i)(IV) for any State for fiscal year 1995, the Secretary shall use information available as of February 28, 1996. `(IV) In determining the amount described in subparagraph (C)(i)(V) for any State for fiscal year 1995, the Secretary shall use information available as of October 5, 1995. `(E) APPROPRIATION- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002 such sums as are necessary for grants under this paragraph. `(2) BONUS TO REWARD DECREASE IN ILLEGITIMACY- `(A) IN GENERAL- Each eligible State shall be entitled to receive from the Secretary a grant for each bonus year for which the State demonstrates a net decrease in out-of-wedlock births. `(B) AMOUNT OF GRANT- `(i) IF 5 ELIGIBLE STATES- If there are 5 eligible States for a bonus year, the amount of the grant shall be $20,000,000. `(ii) IF FEWER THAN 5 ELIGIBLE STATES- If there are fewer than 5 eligible States for a bonus year, the amount of the grant shall be $25,000,000. `(C) DEFINITIONS- As used in this paragraph: `(i) ELIGIBLE STATE- `(I) IN GENERAL- The term `eligible State' means a State that the Secretary determines meets the following requirements: `(aa) The State demonstrates that the number of out-of-wedlock births that occurred in the State during the most recent 2-year period for which such information is available decreased as compared to the number of such births that occurred during the previous 2-year period, and the magnitude of the decrease for the State for the period is not exceeded by the magnitude of the corresponding decrease for 5 or more other States for the period. `(bb) The rate of induced pregnancy terminations in the State for the fiscal year is less than the rate of induced pregnancy terminations in the State for fiscal year 1995. `(II) DISREGARD OF CHANGES IN DATA DUE TO CHANGED REPORTING METHODS- In making the determination required by subclause (I), the Secretary shall disregard-- `(aa) any difference between the number of out-of-wedlock births that occurred in a State for a fiscal year and the number of out-of-wedlock births that occurred in a State for fiscal year 1995 which is attributable to a change in State methods of reporting data used to calculate the number of out-of-wedlock births; and `(bb) any difference between the rate of induced pregnancy terminations in a State for a fiscal year and such rate for fiscal year 1995 which is attributable to a change in State methods of reporting data used to calculate such rate. `(ii) BONUS YEAR- The term `bonus year' means fiscal years 1999, 2000, 2001, and 2002. `(D) APPROPRIATION- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1999 through 2002, such sums as are necessary for grants under this paragraph. `(3) SUPPLEMENTAL GRANT FOR POPULATION INCREASES IN CERTAIN STATES- `(A) IN GENERAL- Each qualifying State shall, subject to subparagraph (F), be entitled to receive from the Secretary-- `(i) for fiscal year 1998 a grant in an amount equal to 2.5 percent of the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and `(ii) for each of fiscal years 1999, 2000, and 2001, a grant in an amount equal to the sum of-- `(I) the amount (if any) required to be paid to the State under this paragraph for the immediately preceding fiscal year; and `(II) 2.5 percent of the sum of-- `(aa) the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and `(bb) the amount (if any) required to be paid to the State under this paragraph for the fiscal year preceding the fiscal year for which the grant is to be made. `(B) PRESERVATION OF GRANT WITHOUT INCREASES FOR STATES FAILING TO REMAIN QUALIFYING STATES- Each State that is not a qualifying State for a fiscal year specified in subparagraph (A)(ii) but was a qualifying State for a prior fiscal year shall, subject to subparagraph (F), be entitled to receive from the Secretary for the specified fiscal year, a grant in an amount equal to the amount required to be paid to the State under this paragraph for the most recent fiscal year for which the State was a qualifying State. `(C) QUALIFYING STATE- `(i) IN GENERAL- For purposes of this paragraph, a State is a qualifying State for a fiscal year if-- `(I) the level of welfare spending per poor person by the State for the immediately preceding fiscal year is less than the national average level of State welfare spending per poor person for such preceding fiscal year; and `(II) the population growth rate of the State (as determined by the Bureau of the Census) for the most recent fiscal year for which information is available exceeds the average population growth rate for all States (as so determined) for such most recent fiscal year. `(ii) STATE MUST QUALIFY IN FISCAL YEAR 1997- Notwithstanding clause (i), a State shall not be a qualifying State for any fiscal year after 1998 by reason of clause (i) if the State is not a qualifying State for fiscal year 1998 by reason of clause (i). `(iii) CERTAIN STATES DEEMED QUALIFYING STATES- For purposes of this paragraph, a State is deemed to be a qualifying State for fiscal years 1998, 1999, 2000, and 2001 if-- `(I) the level of welfare spending per poor person by the State for fiscal year 1994 is less than 35 percent of the national average level of State welfare spending per poor person for fiscal year 1994; or `(II) the population of the State increased by more than 10 percent from April 1, 1990 to July 1, 1994, according to the population estimates in publication CB94-204 of the Bureau of the Census. `(D) DEFINITIONS- As used in this paragraph: `(i) LEVEL OF WELFARE SPENDING PER POOR PERSON- The term `level of State welfare spending per poor person' 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 former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and `(bb) the amount (if any) paid to the State under this paragraph for the immediately preceding fiscal year; divided by `(II) the number of individuals, according to the 1990 decennial census, who were residents of the State and whose income was below the poverty line. `(ii) NATIONAL AVERAGE LEVEL OF STATE WELFARE SPENDING PER POOR PERSON- The term `national average level of State welfare spending per poor person' means, with respect to a fiscal year, an amount equal to-- `(I) the total amount required to be paid to the States under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; divided by `(II) the number of individuals, according to the 1990 decennial census, who were residents of any State and 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 fiscal years 1998, 1999, 2000, and 2001 such sums as are necessary for grants under this paragraph, in a total amount not to exceed $800,000,000. `(F) GRANTS REDUCED PRO RATA IF INSUFFICIENT APPROPRIATIONS- If the amount appropriated pursuant to this paragraph 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. `(G) BUDGET SCORING- Notwithstanding section 257(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985, the baseline shall assume that no grant shall be made under this paragraph after fiscal year 2001. `(4) BONUS TO REWARD HIGH PERFORMANCE STATES- `(A) IN GENERAL- The Secretary shall make a grant pursuant to this paragraph to each State for each bonus year for which the State is a high performing State. `(B) AMOUNT OF GRANT- `(i) IN GENERAL- Subject to clause (ii) of this subparagraph, the Secretary shall determine the amount of the grant payable under this paragraph to a high performing State for a bonus year, which shall be based on the score assigned to the State under subparagraph (D)(i) for the fiscal year that immediately precedes the bonus year. `(ii) LIMITATION- The amount payable to a State under this paragraph for a bonus year shall not exceed 5 percent of the State family assistance grant. `(C) FORMULA FOR MEASURING STATE PERFORMANCE- Not later than 1 year after the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the Secretary, in consultation with the National Governors' Association and the American Public Welfare Association, shall develop a formula for measuring State performance in operating the State program funded under this part so as to achieve the goals set forth in section 401(a). `(D) SCORING OF STATE PERFORMANCE; SETTING OF PERFORMANCE THRESHOLDS- For each bonus year, the Secretary shall-- `(i) use the formula developed under subparagraph (C) to assign a score to each eligible State for the fiscal year that immediately precedes the bonus year; and `(ii) prescribe a performance threshold in such a manner so as to ensure that-- `(I) the average annual total amount of grants to be made under this paragraph for each bonus year equals $200,000,000; and `(II) the total amount of grants to be made under this paragraph for all bonus years equals $1,000,000,000. `(E) DEFINITIONS- As used in this paragraph: `(i) BONUS YEAR- The term `bonus year' means fiscal years 1999, 2000, 2001, 2002, and 2003. `(ii) HIGH PERFORMING STATE- The term `high performing State' means, with respect to a bonus year, an eligible State whose score assigned pursuant to subparagraph (D)(i) for the fiscal year immediately preceding the bonus year equals or exceeds the performance threshold prescribed under subparagraph (D)(ii) for such preceding fiscal year. `(F) APPROPRIATION- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1999 through 2003 $1,000,000,000 for grants under this paragraph. `(b) CONTINGENCY FUND- `(1) ESTABLISHMENT- There is hereby established in the Treasury of the United States a fund which shall be known as the `Contingency Fund for State Welfare Programs' (in this section referred to as the `Fund'). `(2) DEPOSITS INTO FUND- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1997, 1998, 1999, 2000, and 2001 such sums as are necessary for payment to the Fund in a total amount not to exceed $2,000,000,000. `(3) GRANTS- `(A) PROVISIONAL PAYMENTS- If an eligible State submits to the Secretary a request for funds under this paragraph during an eligible month, the Secretary shall, subject to this paragraph, pay to the State, from amounts appropriated pursuant to paragraph (2), an amount equal to the amount of funds so requested. `(B) PAYMENT PRIORITY- The Secretary shall make payments under subparagraph (A) in the order in which the Secretary receives requests for such payments. `(C) LIMITATIONS- `(i) MONTHLY PAYMENT TO A STATE- The total amount paid to a single State under subparagraph (A) during a month shall not exceed 1/12 of 20 percent of the State family assistance grant. `(ii) PAYMENTS TO ALL STATES- The total amount paid to all States under subparagraph (A) during fiscal years 1997 through 2001 shall not exceed the total amount appropriated pursuant to paragraph (2). `(4) ANNUAL RECONCILIATION- Notwithstanding paragraph (3), at the end of each fiscal year, each State shall remit to the Secretary an amount equal to the amount (if any) by which the total amount paid to the State under paragraph (3) during the fiscal year exceeds-- `(A) the Federal medical assistance percentage for the State for the fiscal year (as defined in section 1905(b), as in effect on September 30, 1995) of the amount (if any) by which-- `(i) if the Secretary makes a payment to the State under section 418(a)(2) in the fiscal year-- `(I) the expenditures under the State program funded under this part for the fiscal year, excluding any amounts made available by the Federal Government (except amounts paid to the State under paragraph (3) during the fiscal year that have been expended by the State) and any amounts expended by the State during the fiscal year for child care; exceeds `(II) historic State expenditures (as defined in section 409(a)(7)(B)(iii)), excluding the expenditures by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994) for fiscal year 1994 minus any Federal payment with respect to such child care expenditures; or `(ii) if the Secretary does not make a payment to the State under section 418(a)(2) in the fiscal year-- `(I) the expenditures under the State program funded under this part for the fiscal year (excluding any amounts made available by the Federal Government, except amounts paid to the State under paragraph (3) during the fiscal year that have been expended by the State); exceeds `(II) historic State expenditures (as defined in section 409(a)(7)(B)(iii)); multiplied by `(B) 1/12 times the number of months during the fiscal year for which the Secretary makes a payment to the State under this subsection. `(5) ELIGIBLE MONTH- As used in paragraph (3)(A), the term `eligible month' means, with respect to a State, a month in the 2-month period that begins with any month for which the State is a needy State. `(6) NEEDY STATE- For purposes of paragraph (5), a State is a needy State for a month if-- `(A) the average rate of-- `(i) total unemployment in such State (seasonally adjusted) for the period consisting of the most recent 3 months for which data for all States are published equals or exceeds 6.5 percent; and `(ii) total unemployment in such State (seasonally adjusted) for the 3-month period equals or exceeds 110 percent of such average rate for either (or both) of the corresponding 3-month periods ending in the 2 preceding calendar years; or `(B) as determined by the Secretary of Agriculture (in the discretion of the Secretary of Agriculture), the monthly average number of individuals (as of the last day of each month) participating in the food stamp program in the State in the then most recently concluded 3-month period for which data are available exceeds by not less than 10 percent the lesser of-- `(i) the monthly average number of individuals (as of the last day of each month) in the State that would have participated in the food stamp program in the corresponding 3-month period in fiscal year 1994 if the amendments made by titles IV and VIII of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 had been in effect throughout fiscal year 1994; or `(ii) the monthly average number of individuals (as of the last day of each month) in the State that would have participated in the food stamp program in the corresponding 3-month period in fiscal year 1995 if the amendments made by titles IV and VIII of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 had been in effect throughout fiscal year 1995. `(7) OTHER TERMS DEFINED- As used in this subsection: `(A) STATE- The term `State' means each of the 50 States of the United States and the District of Columbia. `(B) SECRETARY- The term `Secretary' means the Secretary of the Treasury. `(8) ANNUAL REPORTS- The Secretary shall annually report to the Congress on the status of the Fund. `SEC. 404. USE OF GRANTS. `(a) GENERAL RULES- Subject to this part, a State to which a grant is made under section 403 may use the grant-- `(1) in any manner that is reasonably calculated to accomplish the purpose of this part, including to provide low income households with assistance in meeting home heating and cooling costs; or `(2) in any manner that the State was authorized to use amounts received under part A or F, as such parts were in effect on September 30, 1995. `(b) LIMITATION ON USE OF GRANT FOR ADMINISTRATIVE PURPOSES- `(1) LIMITATION- A State to which a grant is made under section 403 shall not expend more than 15 percent of the grant for administrative purposes. `(2) EXCEPTION- Paragraph (1) shall not apply to the use of a grant for information technology and computerization needed for tracking or monitoring required by or under this part. `(c) AUTHORITY TO TREAT INTERSTATE IMMIGRANTS UNDER RULES OF FORMER STATE- A State operating a program funded under this part may apply to a family the rules (including benefit amounts) of the program funded under this part of another State if the family has moved to the State from the other State and has resided in the State for less than 12 months. `(d) AUTHORITY TO USE PORTION OF GRANT FOR OTHER PURPOSES- `(1) IN GENERAL- A State may use not more than 30 percent of the amount of any grant made to the State under section 403(a) for a fiscal year to carry out a State program pursuant to any or all of the following provisions of law: `(A) Title XX of this Act. `(B) The Child Care and Development Block Grant Act of 1990. `(2) LIMITATION ON AMOUNT TRANSFERABLE TO TITLE XX PROGRAMS- Notwithstanding paragraph (1), not more than 1/3 of the total amount paid to a State under this part for a fiscal year that is used to carry out State programs pursuant to provisions of law specified in paragraph (1) may be used to carry out State programs pursuant to title XX. `(3) APPLICABLE RULES- `(A) IN GENERAL- Except as provided in subparagraph (B) of this paragraph, any amount paid to a State under this part that is used to carry out a State program pursuant to a provision of law specified in paragraph (1) shall not be subject to the requirements of this part, but shall be subject to the requirements that apply to Federal funds provided directly under the provision of law to carry out the program, and the expenditure of any amount so used shall not be considered to be an expenditure under this part. `(B) EXCEPTION RELATING TO TITLE XX PROGRAMS- All amounts paid to a State under this part that are used to carry out State programs pursuant to title XX shall be used only for programs and services to children or their families whose income is less than 200 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved. `(e) AUTHORITY TO RESERVE CERTAIN AMOUNTS FOR ASSISTANCE- A State may reserve amounts paid to the State under this part for any fiscal year for the purpose of providing, without fiscal year limitation, assistance under the State program funded under this part. `(f) AUTHORITY TO OPERATE EMPLOYMENT PLACEMENT PROGRAM- A State to which a grant is made under section 403 may use the grant to make payments (or provide job placement vouchers) to State-approved public and private job placement agencies that provide employment placement services to individuals who receive assistance under the State program funded under this part. `(g) IMPLEMENTATION OF ELECTRONIC BENEFIT TRANSFER SYSTEM- A State to which a grant is made under section 403 is encouraged to implement an electronic benefit transfer system for providing assistance under the State program funded under this part, and may use the grant for such purpose. `(h) USE OF FUNDS FOR INDIVIDUAL DEVELOPMENT ACCOUNTS- `(1) IN GENERAL- A State to which a grant is made under section 403 may use the grant to carry out a program to fund individual development accounts (as defined in paragraph (2)) established by individuals eligible for assistance under the State program funded under this part. `(2) INDIVIDUAL DEVELOPMENT ACCOUNTS- `(A) ESTABLISHMENT- Under a State program carried out under paragraph (1), an individual development account may be established by or on behalf of an individual eligible for assistance under the State program operated under this part for the purpose of enabling the individual to accumulate funds for a qualified purpose described in subparagraph (B). `(B) QUALIFIED PURPOSE- A qualified purpose described in this subparagraph is 1 or more of the following, as provided by the qualified entity providing assistance to the individual under this subsection: `(i) POSTSECONDARY EDUCATIONAL EXPENSES- Postsecondary educational expenses paid from an individual development account directly to an eligible educational institution. `(ii) FIRST HOME PURCHASE- Qualified acquisition costs with respect to a qualified principal residence for a qualified first-time homebuyer, if paid from an individual development account directly to the persons to whom the amounts are due. `(iii) BUSINESS CAPITALIZATION- Amounts paid from an individual development account directly to a business capitalization account which is established in a federally insured financial institution and is restricted to use solely for qualified business capitalization expenses. `(C) CONTRIBUTIONS TO BE FROM EARNED INCOME- An individual may only contribute to an individual development account such amounts as are derived from earned income, as defined in section 911(d)(2) of the Internal Revenue Code of 1986. `(D) WITHDRAWAL OF FUNDS- The Secretary shall establish such regulations as may be necessary to ensure that funds held in an individual development account are not withdrawn except for 1 or more of the qualified purposes described in subparagraph (B). `(3) REQUIREMENTS- `(A) IN GENERAL- An individual development account established under this subsection shall be a trust created or organized in the United States and funded through periodic contributions by the establishing individual and matched by or through a qualified entity for a qualified purpose (as described in paragraph (2)(B)). `(B) QUALIFIED ENTITY- As used in this subsection, the term `qualified entity' means-- `(i) a not-for-profit organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; or `(ii) a State or local government agency acting in cooperation with an organization described in clause (i). `(4) NO REDUCTION IN BENEFITS- Notwithstanding any other provision of Federal law (other than the Internal Revenue Code of 1986) that requires consideration of 1 or more financial circumstances of an individual, for the purpose of determining eligibility to receive, or the amount of, any assistance or benefit authorized by such law to be provided to or for the benefit of such individual, funds (including interest accruing) in an individual development account under this subsection shall be disregarded for such purpose with respect to any period during which such individual maintains or makes contributions into such an account. `(5) DEFINITIONS- As used in this subsection-- `(A) ELIGIBLE EDUCATIONAL INSTITUTION- The term `eligible educational institution' means the following: `(i) An institution described in section 481(a)(1) or 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1088(a)(1) or 1141(a)), as such sections are in effect on the date of the enactment of this subsection. `(ii) An area vocational education school (as defined in subparagraph (C) or (D) of section 521(4) of the Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2471(4))) which is in any State (as defined in section 521(33) of such Act), as such sections are in effect on the date of the enactment of this subsection. `(B) POST-SECONDARY EDUCATIONAL EXPENSES- The term `post-secondary educational expenses' means-- `(i) tuition and fees required for the enrollment or attendance of a student at an eligible educational institution, and `(ii) fees, books, supplies, and equipment required for courses of instruction at an eligible educational institution. `(C) QUALIFIED ACQUISITION COSTS- The term `qualified acquisition costs' means the costs of acquiring, constructing, or reconstructing a residence. The term includes any usual or reasonable settlement, financing, or other closing costs. `(D) QUALIFIED BUSINESS- The term `qualified business' means any business that does not contravene any law or public policy (as determined by the Secretary). `(E) QUALIFIED BUSINESS CAPITALIZATION EXPENSES- The term `qualified business capitalization expenses' means qualified expenditures for the capitalization of a qualified business pursuant to a qualified plan. `(F) QUALIFIED EXPENDITURES- The term `qualified expenditures' means expenditures included in a qualified plan, including capital, plant, equipment, working capital, and inventory expenses. `(G) QUALIFIED FIRST-TIME HOMEBUYER- `(i) IN GENERAL- The term `qualified first-time homebuyer' means a taxpayer (and, if married, the taxpayer's spouse) who has no present ownership interest in a principal residence during the 3-year period ending on the date of acquisition of the principal residence to which this subsection applies. `(ii) DATE OF ACQUISITION- The term `date of acquisition' means the date on which a binding contract to acquire, construct, or reconstruct the principal residence to which this subparagraph applies is entered into. `(H) QUALIFIED PLAN- The term `qualified plan' means a business plan which-- `(i) is approved by a financial institution, or by a nonprofit loan fund having demonstrated fiduciary integrity, `(ii) includes a description of services or goods to be sold, a marketing plan, and projected financial statements, and `(iii) may require the eligible individual to obtain the assistance of an experienced entrepreneurial advisor. `(I) QUALIFIED PRINCIPAL RESIDENCE- The term `qualified principal residence' means a principal residence (within the meaning of section 1034 of the Internal Revenue Code of 1986), the qualified acquisition costs of which do not exceed 100 percent of the average area purchase price applicable to such residence (determined in accordance with paragraphs (2) and (3) of section 143(e) of such Code). `(i) SANCTION WELFARE RECIPIENTS FOR FAILING TO ENSURE THAT MINOR DEPENDENT CHILDREN ATTEND SCHOOL- A State to which a grant is made under section 403 shall not be prohibited from sanctioning a family that includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government or under the food stamp program, as defined in section 3(h) of the Food Stamp Act of 1977, if such adult fails to ensure that the minor dependent children of such adult attend school as required by the law of the State in which the minor children reside. `(j) REQUIREMENT FOR HIGH SCHOOL DIPLOMA OR EQUIVALENT- A State to which a grant is made under section 403 shall not be prohibited from sanctioning a family that includes an adult who is older than age 20 and younger than age 51 and who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government or under the food stamp program, as defined in section 3(h) of the Food Stamp Act of 1977, if such adult does not have, or is not working toward attaining, a secondary school diploma or its recognized equivalent unless such adult has been determined in the judgment of medical, psychiatric, or other appropriate professionals to lack the requisite capacity to complete successfully a course of study that would lead to a secondary school diploma or its recognized equivalent. `SEC. 405. ADMINISTRATIVE PROVISIONS. `(a) QUARTERLY- The Secretary shall pay each grant payable to a State under section 403 in quarterly installments, subject to this section. `(b) NOTIFICATION- Not later than 3 months before the payment of any such quarterly installment to a State, the Secretary shall notify the State of the amount of any reduction determined under section 412(a)(1)(B) with respect to the State. `(c) COMPUTATION AND CERTIFICATION OF PAYMENTS TO STATES- `(1) COMPUTATION- The Secretary shall estimate the amount to be paid to each eligible State for each quarter under this part, such estimate to be based on a report filed by the State containing an estimate by the State of the total sum to be expended by the State in the quarter under the State program funded under this part and such other information as the Secretary may find necessary. `(2) CERTIFICATION- The Secretary of Health and Human Services shall certify to the Secretary of the Treasury the amount estimated under paragraph (1) with respect to a State, reduced or increased to the extent of any overpayment or underpayment which the Secretary of Health and Human Services determines was made under this part to the State for any prior quarter and with respect to which adjustment has not been made under this paragraph. `(d) PAYMENT METHOD- Upon receipt of a certification under subsection (c)(2) with respect to a State, the Secretary of the Treasury shall, through the Fiscal Service of the Department of the Treasury and before audit or settlement by the General Accounting Office, pay to the State, at the time or times fixed by the Secretary of Health and Human Services, the amount so certified. `SEC. 406. FEDERAL LOANS FOR STATE WELFARE PROGRAMS. `(a) LOAN AUTHORITY- `(1) IN GENERAL- The Secretary shall make loans to any loan-eligible State, for a period to maturity of not more than 3 years. `(2) LOAN-ELIGIBLE STATE- As used in paragraph (1), the term `loan-eligible State' means a State against which a penalty has not been imposed under section 409(a)(1). `(b) RATE OF INTEREST- The Secretary shall charge and collect interest on any loan made under this section at a rate equal to the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the period to maturity of the loan. `(c) USE OF LOAN- A State shall use a loan made to the State under this section only for any purpose for which grant amounts received by the State under section 403(a) may be used, including-- `(1) welfare anti-fraud activities; and `(2) the provision of assistance under the State program to Indian families that have moved from the service area of an Indian tribe with a tribal family assistance plan approved under section 412. `(d) LIMITATION ON TOTAL AMOUNT OF LOANS TO A STATE- The cumulative dollar amount of all loans made to a State under this section during fiscal years 1997 through 2002 shall not exceed 10 percent of the State family assistance grant. `(e) LIMITATION ON TOTAL AMOUNT OF OUTSTANDING LOANS- The total dollar amount of loans outstanding under this section may not exceed $1,700,000,000. `(f) APPROPRIATION- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated such sums as may be necessary for the cost of loans under this section. `SEC. 407. MANDATORY WORK REQUIREMENTS. `(a) PARTICIPATION RATE REQUIREMENTS- `(1) ALL FAMILIES- A State to which a grant is made under section 403 for a fiscal year shall achieve the minimum participation rate specified in the following table for the fiscal year with respect to all families receiving assistance under the State program funded under this part: -- [Bold->] The minimum [<-Bold] -- [Bold->] participation [<-Bold] [Bold->] `If the fiscal year is: [<-Bold] -- [Bold->] rate is: [<-Bold] 1997 --25 1998 --30 1999 --35 2000 --40 2001 --45 2002 or thereafter --50. `(2) 2-PARENT FAMILIES- A State to which a grant is made under section 403 for a fiscal year shall achieve the minimum participation rate specified in the following table for the fiscal year with respect to 2-parent families receiving assistance under the State program funded under this part: -- [Bold->] The minimum [<-Bold] -- [Bold->] participation [<-Bold] [Bold->] `If the fiscal year is: [<-Bold] -- [Bold->] rate is: [<-Bold] 1997 --75 1998 --75 1999 or thereafter --90. `(b) CALCULATION OF PARTICIPATION RATES- `(1) ALL FAMILIES- `(A) AVERAGE MONTHLY RATE- For purposes of subsection (a)(1), the participation rate for all families of a State for a fiscal year is the average of the participation rates for all families of the State for each month in the fiscal year. `(B) MONTHLY PARTICIPATION RATES- The participation rate of a State for all families of the State for a month, expressed as a percentage, is-- `(i) the number of families receiving assistance under the State program funded under this part that include an adult or a minor child head of household who is engaged in work for the month; divided by `(ii) the amount by which-- `(I) the number of families receiving such assistance during the month that include an adult or a minor child head of household receiving such assistance; exceeds `(II) the number of families receiving such assistance that are subject in such month to a penalty described in subsection (e)(1) but have not been subject to such penalty for more than 3 months within the preceding 12-month period (whether or not consecutive). `(2) 2-PARENT FAMILIES- `(A) AVERAGE MONTHLY RATE- For purposes of subsection (a)(2), the participation rate for 2-parent families of a State for a fiscal year is the average of the participation rates for 2-parent families of the State for each month in the fiscal year. `(B) MONTHLY PARTICIPATION RATES- The participation rate of a State for 2-parent families of the State for a month shall be calculated by use of the formula set forth in paragraph (1)(B), except that in the formula the term `number of 2-parent families' shall be substituted for the term `number of families' each place such latter term appears. `(3) PRO RATA REDUCTION OF PARTICIPATION RATE DUE TO CASELOAD REDUCTIONS NOT REQUIRED BY FEDERAL LAW- `(A) IN GENERAL- The Secretary shall prescribe regulations for reducing the minimum participation rate otherwise required by this section for a fiscal year by the number of percentage points equal to the number of percentage points (if any) by which-- `(i) the average monthly number of families receiving assistance during the immediately preceding fiscal year under the State program funded under this part is less than `(ii) the average monthly number of families that received aid under the State plan approved under part A (as in effect on September 30, 1995) during fiscal year 1995. The minimum participation rate shall not be reduced to the extent that the Secretary determines that the reduction in the number of families receiving such assistance is required by Federal law. `(B) ELIGIBILITY CHANGES NOT COUNTED- The regulations required by subparagraph (A) shall not take into account families that are diverted from a State program funded under this part as a result of differences in eligibility criteria under a State program funded under this part and eligibility criteria under the State program operated under the State plan approved under part A (as such plan and such part were in effect on September 30, 1995). Such regulations shall place the burden on the Secretary to prove that such families were diverted as a direct result of differences in such eligibility criteria. `(4) STATE OPTION TO INCLUDE INDIVIDUALS RECEIVING ASSISTANCE UNDER A TRIBAL FAMILY ASSISTANCE PLAN- For purposes of paragraphs (1)(B) and (2)(B), a State may, at its option, include families in the State that are receiving assistance under a tribal family assistance plan approved under section 412. `(5) STATE OPTION FOR PARTICIPATION REQUIREMENT EXEMPTIONS- For any fiscal year, a State may, at its option, not require an individual who is a single custodial parent caring for a child who has not attained 12 months of age to engage in work, and may disregard such an individual in determining the participation rates under subsection (a) for not more than 12 months. `(c) ENGAGED IN WORK- `(1) GENERAL RULES- `(A) ALL FAMILIES- For purposes of subsection (b)(1)(B)(i), a recipient is engaged in work for a month in a fiscal year if the recipient is participating in work activities for at least the minimum average number of hours per week specified in the following table during the month, not fewer than 20 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this subsection: [Bold->] [<-Bold] -- [Bold->] The minimum [<-Bold] [Bold->] `If the month is [<-Bold] -- [Bold->] average number of [<-Bold] [Bold->] in fiscal year: [<-Bold] -- [Bold->] hours per week is: [<-Bold] 1997 --20 1998 --20 1999 --25 2000 or thereafter --30. `(B) 2-PARENT FAMILIES- For purposes of subsection (b)(2)(B), an individual is engaged in work for a month in a fiscal year if-- `(i) the individual is making progress in work activities for at least 35 hours per week during the month, not fewer than 30 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this subsection; and `(ii) if the family of the individual receives federally-funded child care assistance and an adult in the family is not disabled or caring for a severely disabled child, the individual's spouse is making progress in work activities during the month, not fewer than 20 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), or (7) of subsection (d). `(2) LIMITATIONS AND SPECIAL RULES- `(A) NUMBER OF WEEKS FOR WHICH JOB SEARCH COUNTS AS WORK- `(i) LIMITATION- Notwithstanding paragraph (1) of this subsection, an individual shall not be considered to be engaged in work by virtue of participation in an activity described in subsection (d)(6) of a State program funded under this part, after the individual has participated in such an activity for 6 weeks (or, if the unemployment rate of the State is at least 50 percent greater than the unemployment rate of the United States, 12 weeks), or if the participation is for a week that immediately follows 4 consecutive weeks of such participation. `(ii) LIMITED AUTHORITY TO COUNT LESS THAN FULL WEEK OF PARTICIPATION- For purposes of clause (i) of this subparagraph, on not more than 1 occasion per individual, the State shall consider participation of the individual in an activity described in subsection (d)(6) for 3 or 4 days during a week as a week of participation in the activity by the individual. `(B) SINGLE PARENT WITH CHILD UNDER AGE 6 DEEMED TO BE MEETING WORK PARTICIPATION REQUIREMENTS IF PARENT IS ENGAGED IN WORK FOR 20 HOURS PER WEEK- For purposes of determining monthly participation rates under subsection (b)(1)(B)(i), a recipient in a 1-parent family who is the parent of a child who has not attained 6 years of age is deemed to be engaged in work for a month if the recipient is engaged in work for an average of at least 20 hours per week during the month. `(C) TEEN HEAD OF HOUSEHOLD WHO MAINTAINS SATISFACTORY SCHOOL ATTENDANCE DEEMED TO BE MEETING WORK PARTICIPATION REQUIREMENTS- For purposes of determining monthly participation rates under sub-section (b)(1)(B)(i), a recipient who is a single head of household and has not attained 20 years of age is deemed, subject to subparagraph (D) of this paragraph, to be engaged in work for a month in a fiscal year if the recipient-- `(i) maintains satisfactory attendance at secondary school or the equivalent during the month; or `(ii) participates in education directly related to employment for at least the minimum average number of hours per week specified in the table set forth in paragraph (1)(A) of this subsection. `(D) NUMBER OF PERSONS THAT MAY BE TREATED AS ENGAGED IN WORK BY VIRTUE OF PARTICIPATION IN VOCATIONAL EDUCATION ACTIVITIES OR BEING A TEEN HEAD OF HOUSEHOLD WHO MAINTAINS SATISFACTORY SCHOOL ATTENDANCE- For purposes of determining monthly participation rates under paragraphs (1)(B)(i) and (2)(B) of subsection (b), not more than 20 percent of individuals in all families and in 2-parent families may be determined to be engaged in work in the State for a month by reason of participation in vocational educational training or deemed to be engaged in work by reason of subparagraph (C) of this paragraph. `(d) WORK ACTIVITIES DEFINED- As used in this section, the term `work activities' means-- `(1) unsubsidized employment; `(2) subsidized private sector employment; `(3) subsidized public sector employment; `(4) work experience (including work associated with the refurbishing of publicly assisted housing) if sufficient private sector employment is not available; `(5) on-the-job training; `(6) job search and job readiness assistance; `(7) community service programs; `(8) vocational educational training (not to exceed 12 months with respect to any individual); `(9) job skills training directly related to employment; `(10) education directly related to employment, in the case of a recipient who has not received a high school diploma or a certificate of high school equivalency; `(11) satisfactory attendance at secondary school or in a course of study leading to a certificate of general equivalence, in the case of a recipient who has not completed secondary school or received such a certificate; and `(12) the provision of child care services to an individual who is participating in a community service program. `(e) PENALTIES AGAINST INDIVIDUALS- `(1) IN GENERAL- Except as provided in paragraph (2), if an individual in a family receiving assistance under the State program funded under this part refuses to engage in work required in accordance with this section, the State shall-- `(A) reduce the amount of assistance otherwise payable to the family pro rata (or more, at the option of the State) with respect to any period during a month in which the individual so refuses; or `(B) terminate such assistance, subject to such good cause and other exceptions as the State may establish. `(2) EXCEPTION- Notwithstanding paragraph (1), a State may not reduce or terminate assistance under the State program funded under this part based on a refusal of an individual to work if the individual is a single custodial parent caring for a child who has not attained 6 years of age, and the individual proves that the individual has a demonstrated inability (as determined by the State) to obtain needed child care, for 1 or more of the following reasons: `(A) Unavailability of appropriate child care within a reasonable distance from the individual's home or work site. `(B) Unavailability or unsuitability of informal child care by a relative or under other arrangements. `(C) Unavailability of appropriate and affordable formal child care arrangements. `(f) NONDISPLACEMENT IN WORK ACTIVITIES- `(1) IN GENERAL- Subject to paragraph (2), an adult in a family receiving assistance under a State program funded under this part attributable to funds provided by the Federal Government may fill a vacant employment position in order to engage in a work activity described in subsection (d). `(2) NO FILLING OF CERTAIN VACANCIES- No adult in a work activity described in subsection (d) which is funded, in whole or in part, by funds provided by the Federal Government shall be employed or assigned-- `(A) when any other individual is on layoff from the same or any substantially equivalent job; or `(B) if the employer has terminated the employment of any regular employee or otherwise caused an involuntary reduction of its workforce in order to fill the vacancy so created with an adult described in paragraph (1). `(3) GRIEVANCE PROCEDURE- A State with a program funded under this part shall establish and maintain a grievance procedure for resolving complaints of alleged violations of paragraph (2). `(4) NO PREEMPTION- Nothing in this subsection shall preempt or supersede any provision of State or local law that provides greater protection for employees from displacement. `(g) SENSE OF THE CONGRESS- It is the sense of the Congress that in complying with this section, each State that operates a program funded under this part is encouraged to assign the highest priority to requiring adults in 2-parent families and adults in single-parent families that include older preschool or school-age children to be engaged in work activities. `(h) SENSE OF THE CONGRESS THAT STATES SHOULD IMPOSE CERTAIN REQUIREMENTS ON NONCUSTODIAL, NONSUPPORTING MINOR PARENTS- It is the sense of the Congress that the States should require noncustodial, nonsupporting parents who have not attained 18 years of age to fulfill community work obligations and attend appropriate parenting or money management classes after school. `(i) REVIEW OF IMPLEMENTATION OF STATE WORK PROGRAMS- During fiscal year 1999, the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate shall hold hearings and engage in other appropriate activities to review the implementation of this section by the States, and shall invite the Governors of the States to testify before them regarding such implementation. Based on such hearings, such Committees may introduce such legislation as may be appropriate to remedy any problems with the State programs operated pursuant to this section. `SEC. 408. PROHIBITIONS; REQUIREMENTS. `(a) IN GENERAL- `(1) NO ASSISTANCE FOR FAMILIES WITHOUT A MINOR CHILD- A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to a family-- `(A) unless the family includes-- `(i) a minor child who resides with a custodial parent or other adult caretaker relative of the child; or `(ii) a pregnant individual; and `(B) if the family includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government, for 60 months (whether or not consecutive) after the date the State program funded under this part commences (unless an exception described in subparagraph (B), (C), or (D) of paragraph (7) applies). `(2) REDUCTION OR ELIMINATION OF ASSISTANCE FOR NONCOOPERATION IN ESTABLISHING PATERNITY OR OBTAINING CHILD SUPPORT- If the agency responsible for administering the State plan approved under part D determines that an individual is not cooperating with the State in establishing paternity or in establishing, modifying, or enforcing a support order with respect to a child of the individual, and the individual does not qualify for any good cause or other exception established by the State pursuant to section 454(29), then the State-- `(A) shall deduct from the assistance that would otherwise be provided to the family of the individual under the State program funded under this part an amount equal to not less than 25 percent of the amount of such assistance; and `(B) may deny the family any assistance under the State program. `(3) NO ASSISTANCE FOR FAMILIES NOT ASSIGNING CERTAIN SUPPORT RIGHTS TO THE STATE- `(A) IN GENERAL- A State to which a grant is made under section 403 shall require, as a condition of providing assistance to a family under the State program funded under this part, that a member of the family assign to the State any rights the family member may have (on behalf of the family member or of any other person for whom the family member has applied for or is receiving such assistance) to support from any other person, not exceeding the total amount of assistance so provided to the family, which accrue (or have accrued) before the date the family leaves the program, which assignment, on and after the date the family leaves the program, shall not apply with respect to any support (other than support collected pursuant to section 464) which accrued before the family received such assistance and which the State has not collected by-- `(i) September 30, 2000, if the assignment is executed on or after October 1, 1997, and before October 1, 2000; or `(ii) the date the family leaves the program, if the assignment is executed on or after October 1, 2000. `(B) LIMITATION- A State to which a grant is made under section 403 shall not require, as a condition of providing assistance to any family under the State program funded under this part, that a member of the family assign to the State any rights to support described in subparagraph (A) which accrue after the date the family leaves the program. `(4) NO ASSISTANCE FOR TEENAGE PARENTS WHO DO NOT ATTEND HIGH SCHOOL OR OTHER EQUIVALENT TRAINING PROGRAM- A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to an individual who has not attained 18 years of age, is not married, has a minor child at least 12 weeks of age in his or her care, and has not successfully completed a high-school education (or its equivalent), if the individual does not participate in-- `(A) educational activities directed toward the attainment of a high school diploma or its equivalent; or `(B) an alternative educational or training program that has been approved by the State. `(5) NO ASSISTANCE FOR TEENAGE PARENTS NOT LIVING IN ADULT-SUPERVISED SETTINGS- `(A) IN GENERAL- `(i) REQUIREMENT- Except as provided in subparagraph (B), a State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to an individual described in clause (ii) of this subparagraph if the individual and the minor child referred to in clause (ii)(II) do not reside in a place of residence maintained by a parent, legal guardian, or other adult relative of the individual as such parent's, guardian's, or adult relative's own home. `(ii) INDIVIDUAL DESCRIBED- For purposes of clause (i), an individual described in this clause is an individual who-- `(I) has not attained 18 years of age; and `(II) is not married, and has a minor child in his or her care. `(B) EXCEPTION- `(i) PROVISION OF, OR ASSISTANCE IN LOCATING, ADULT-SUPERVISED LIVING ARRANGEMENT- In the case of an individual who is described in clause (ii), the State agency referred to in section 402(a)(4) shall provide, or assist the individual in locating, a second chance home, maternity home, or other appropriate adult-supervised supportive living arrangement, taking into consideration the needs and concerns of the individual, unless the State agency determines that the individual's current living arrangement is appropriate, and thereafter shall require that the individual and the minor child referred to in subparagraph (A)(ii)(II) reside in such living arrangement as a condition of the continued receipt of assistance under the State program funded under this part attributable to funds provided by the Federal Government (or in an alternative appropriate arrangement, should circumstances change and the current arrangement cease to be appropriate). `(ii) INDIVIDUAL DESCRIBED- For purposes of clause (i), an individual is described in this clause if the individual is described in subparagraph (A)(ii), and-- `(I) the individual has no parent, legal guardian, or other appropriate adult relative described in subclause (II) of his or her own who is living or whose whereabouts are known; `(II) no living parent, legal guardian, or other appropriate adult relative, who would otherwise meet applicable State criteria to act as the individual's legal guardian, of such individual allows the individual to live in the home of such parent, guardian, or relative; `(III) the State agency determines that-- `(aa) the individual or the minor child referred to in subparagraph (A)(ii)(II) is being or has been subjected to serious physical or emotional harm, sexual abuse, or exploitation in the residence of the individual's own parent or legal guardian; or `(bb) substantial evidence exists of an act or failure to act that presents an imminent or serious harm if the individual and the minor child lived in the same residence with the individual's own parent or legal guardian; or `(IV) the State agency otherwise determines that it is in the best interest of the minor child to waive the requirement of subparagraph (A) with respect to the individual or the minor child. `(iii) SECOND-CHANCE HOME- For purposes of this subparagraph, the term `second-chance home' means an entity that provides individuals described in clause (ii) with a supportive and supervised living arrangement in which such individuals are required to learn parenting skills, including child development, family budgeting, health and nutrition, and other skills to promote their long-term economic independence and the well-being of their children. `(6) NO MEDICAL SERVICES- `(A) IN GENERAL- A State to which a grant is made under section 403 shall not use any part of the grant to provide medical services. `(B) EXCEPTION FOR PREPREGNANCY FAMILY PLANNING SERVICES- As used in subparagraph (A), the term `medical services' does not include prepregnancy family planning services. `(7) NO ASSISTANCE FOR MORE THAN 5 YEARS- `(A) IN GENERAL- A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to a family that includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government, for 60 months (whether or not consecutive) after the date the State program funded under this part commences, subject to this paragraph. `(B) MINOR CHILD EXCEPTION- In determining the number of months for which an individual who is a parent or pregnant has received assistance under the State program funded under this part, the State shall disregard any month for which such assistance was provided with respect to the individual and during which the individual was-- `(i) a minor child; and `(ii) not the head of a household or married to the head of a household. `(C) HARDSHIP EXCEPTION- `(i) IN GENERAL- The State may exempt a family from the application of subparagraph (A) by reason of hardship or if the family includes an individual who has been battered or subjected to extreme cruelty. `(ii) LIMITATION- The number of families with respect to which an exemption made by a State under clause (i) is in effect for a fiscal year shall not exceed 20 percent of the average monthly number of families to which assistance is provided under the State program funded under this part. `(iii) BATTERED OR SUBJECT TO EXTREME CRUELTY DEFINED- For purposes of clause (i), an individual has been battered or subjected to extreme cruelty if the individual has been subjected to-- `(I) physical acts that resulted in, or threatened to result in, physical injury to the individual; `(II) sexual abuse; `(III) sexual activity involving a dependent child; `(IV) being forced as the caretaker relative of a dependent child to engage in nonconsensual sexual acts or activities; `(V) threats of, or attempts at, physical or sexual abuse; `(VI) mental abuse; or `(VII) neglect or deprivation of medical care. `(D) DISREGARD OF MONTHS OF ASSISTANCE RECEIVED BY ADULT WHILE LIVING ON AN INDIAN RESERVATION OR IN AN ALASKAN NATIVE VILLAGE WITH 50 PERCENT UNEMPLOYMENT- In determining the number of months for which an adult has received assistance under the State program funded under this part, the State shall disregard any month during which the adult lived on an Indian reservation or in an Alaskan Native village if, during the month-- `(i) at least 1,000 individuals were living on the reservation or in the village ; and `(ii) at least 50 percent of the adults living on the reservation or in the village were unemployed. `(E) RULE OF INTERPRETATION- Subparagraph (A) shall not be interpreted to require any State to provide assistance to any individual for any period of time under the State program funded under this part. `(F) RULE OF INTERPRETATION- This part shall not be interpreted to prohibit any State from expending State funds not originating with the Federal Government on benefits for children or families that have become ineligible for assistance under the State program funded under this part by reason of subparagraph (A). `(8) DENIAL OF ASSISTANCE FOR 10 YEARS TO A PERSON FOUND TO HAVE FRAUDULENTLY MISREPRESENTED RESIDENCE IN ORDER TO OBTAIN ASSISTANCE IN 2 OR MORE STATES- A State to which a grant is made under section 403 shall not use any part of the grant to provide cash assistance to an individual during the 10-year period that begins on the date the individual is convicted in Federal or State court of having made a fraudulent statement or representation with respect to the place of residence of the individual in order to receive assistance simultaneously from 2 or more States under programs that are funded under this title, title XIX, or the Food Stamp Act of 1977, or benefits in 2 or more States under the supplemental security income program under title XVI. The preceding sentence shall not apply with respect to a conviction of an individual, for any month beginning after the President of the United States grants a pardon with respect to the conduct which was the subject of the conviction. `(9) DENIAL OF ASSISTANCE FOR FUGITIVE FELONS AND PROBATION AND PAROLE VIOLATORS- `(A) IN GENERAL- A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to any individual who is-- `(i) fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or an attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or `(ii) violating a condition of probation or parole imposed under Federal or State law. The preceding sentence shall not apply with respect to conduct of an individual, for any month beginning after the President of the United States grants a pardon with respect to the conduct. `(B) EXCHANGE OF INFORMATION WITH LAW ENFORCEMENT AGENCIES- If a State to which a grant is made under section 403 establishes safeguards against the use or disclosure of information about applicants or recipients of assistance under the State program funded under this part, the safeguards shall not prevent the State agency administering the program from furnishing a Federal, State, or local law enforcement officer, upon the request of the officer, with the current address of any recipient if the officer furnishes the agency with the name of the recipient and notifies the agency that-- `(i) the recipient-- `(I) is described in subparagraph (A); or `(II) has information that is necessary for the officer to conduct the official duties of the officer; and `(ii) the location or apprehension of the recipient is within such official duties. `(10) DENIAL OF ASSISTANCE FOR MINOR CHILDREN WHO ARE ABSENT FROM THE HOME FOR A SIGNIFICANT PERIOD- `(A) IN GENERAL- A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance for a minor child who has been, or is expected by a parent (or other caretaker relative) of the child to be, absent from the home for a period of 45 consecutive days or, at the option of the State, such period of not less than 30 and not more than 180 consecutive days as the State may provide for in the State plan submitted pursuant to section 402. `(B) STATE AUTHORITY TO ESTABLISH GOOD CAUSE EXCEPTIONS- The State may establish such good cause exceptions to subparagraph (A) as the State considers appropriate if such exceptions are provided for in the State plan submitted pursuant to section 402. `(C) DENIAL OF ASSISTANCE FOR RELATIVE WHO FAILS TO NOTIFY STATE AGENCY OF ABSENCE OF CHILD- A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance for an individual who is a parent (or other caretaker relative) of a minor child and who fails to notify the agency administering the State program funded under this part of the absence of the minor child from the home for the period specified in or provided for pursuant to subparagraph (A), by the end of the 5-day period that begins with the date that it becomes clear to the parent (or relative) that the minor child will be absent for such period so specified or provided for. `(11) MEDICAL ASSISTANCE REQUIRED TO BE PROVIDED FOR CERTAIN FAMILIES HAVING EARNINGS FROM EMPLOYMENT OR CHILD SUPPORT- `(A) EARNINGS FROM EMPLOYMENT- A State to which a grant is made under section 403 and which has a State plan approved under title XIX shall provide that in the case of a family that is treated (under section 1931(b)(1)(A) for purposes of title XIX) as receiving aid under a State plan approved under this part (as in effect on July 16, 1996), that would become ineligible for such aid because of hours of or income from employment of the caretaker relative (as defined under this part as in effect on such date) or because of section 402(a)(8)(B)(ii)(II) (as so in effect), and that was so treated as receiving such aid in at least 3 of the 6 months immediately preceding the month in which such ineligibility begins, the family shall remain eligible for medical assistance under the State's plan approved under title XIX for an extended period or periods as provided in section 1925 or 1902(e)(1) (as applicable), and that the family will be appropriately notified of such extension as required by section 1925(a)(2). `(B) CHILD SUPPORT- A State to which a grant is made under section 403 and which has a State plan approved under title XIX shall provide that in the case of a family that is treated (under section 1931(b)(1)(A) for purposes of title XIX) as receiving aid under a State plan approved under this part (as in effect on July 16, 1996), that would become ineligible for such aid as a result (wholly or partly) of the collection of child or spousal support under part D and that was so treated as receiving such aid in at least 3 of the 6 months immediately preceding the month in which such ineligibility begins, the family shall remain eligible for medical assistance under the State's plan approved under title XIX for an extended period or periods as provided in section 1931(c)(1). `(b) INDIVIDUAL RESPONSIBILITY PLANS- `(1) ASSESSMENT- The State agency responsible for administering the State program funded under this part shall make an initial assessment of the skills, prior work experience, and employability of each recipient of assistance under the program who-- `(A) has attained 18 years of age; or `(B) has not completed high school or obtained a certificate of high school equivalency, and is not attending secondary school. `(2) CONTENTS OF PLANS- `(A) IN GENERAL- On the basis of the assessment made under subsection (a) with respect to an individual, the State agency, in consultation with the individual, may develop an individual responsibility plan for the individual, which-- `(i) sets forth an employment goal for the individual and a plan for moving the individual immediately into private sector employment; `(ii) sets forth the obligations of the individual, which may include a requirement that the individual attend school, maintain certain grades and attendance, keep school age children of the individual in school, immunize children, attend parenting and money management classes, or do other things that will help the individual become and remain employed in the private sector; `(iii) to the greatest extent possible is designed to move the individual into whatever private sector employment the individual is capable of handling as quickly as possible, and to increase the responsibility and amount of work the individual is to handle over time; `(iv) describes the services the State will provide the individual so that the individual will be able to obtain and keep employment in the private sector, and describe the job counseling and other services that will be provided by the State; and `(v) may require the individual to undergo appropriate substance abuse treatment. `(B) TIMING- The State agency may comply with paragraph (1) with respect to an individual-- `(i) within 90 days (or, at the option of the State, 180 days) after the effective date of this part, in the case of an individual who, as of such effective date, is a recipient of aid under the State plan approved under part A (as in effect immediately before such effective date); or `(ii) within 30 days (or, at the option of the State, 90 days) after the individual is determined to be eligible for such assistance, in the case of any other individual. `(3) PENALTY FOR NONCOMPLIANCE BY INDIVIDUAL- In addition to any other penalties required under the State program funded under this part, the State may reduce, by such amount as the State considers appropriate, the amount of assistance otherwise payable under the State program to a family that includes an individual who fails without good cause to comply with an individual responsibility plan signed by the individual. `(4) STATE DISCRETION- The exercise of the authority of this subsection shall be within the sole discretion of the State. `(c) NONDISCRIMINATION PROVISIONS- The following provisions of law shall apply to any program or activity which receives funds provided under this part: `(1) The Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.). `(2) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). `(3) The Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.). `(4) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.). `(d) ALIENS- For special rules relating to the treatment of aliens, see section 402 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. `SEC. 409. PENALTIES. `(a) IN GENERAL- Subject to this section: `(1) USE OF GRANT IN VIOLATION OF THIS PART- `(A) GENERAL PENALTY- If an audit conducted under chapter 75 of title 31, United States Code, finds that an amount paid to a State under section 403 for a fiscal year has been used in violation of this part, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter by the amount so used. `(B) ENHANCED PENALTY FOR INTENTIONAL VIOLATIONS- If the State does not prove to the satisfaction of the Secretary that the State did not intend to use the amount in violation of this part, the Secretary shall further reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter by an amount equal to 5 percent of the State family assistance grant. `(2) FAILURE TO SUBMIT REQUIRED REPORT- `(A) IN GENERAL- If the Secretary determines that a State has not, within 1 month after the end of a fiscal quarter, submitted the report required by section 411(a) for the quarter, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 4 percent of the State family assistance grant. `(B) RESCISSION OF PENALTY- The Secretary shall rescind a penalty imposed on a State under subparagraph (A) with respect to a report if the State submits the report before the end of the fiscal quarter that immediately succeeds the fiscal quarter for which the report was required. `(3) FAILURE TO SATISFY MINIMUM PARTICIPATION RATES- `(A) IN GENERAL- If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has failed to comply with section 407(a) for the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not more than the applicable percentage of the State family assistance grant. `(B) APPLICABLE PERCENTAGE DEFINED- As used in subparagraph (A), the term `applicable percentage' means, with respect to a State-- `(i) if a penalty was not imposed on the State under subparagraph (A) for the immediately preceding fiscal year, 5 percent; or `(ii) if a penalty was imposed on the State under subparagraph (A) for the immediately preceding fiscal year, the lesser of-- `(I) the percentage by which the grant payable to the State under section 403(a)(1) was reduced for such preceding fiscal year, increased by 2 percentage points; or `(II) 21 percent. `(C) PENALTY BASED ON SEVERITY OF FAILURE- The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance, and may reduce the penalty if the noncompliance is due to circumstances that caused the State to become a needy State (as defined in section 403(b)(6)) during the fiscal year. `(4) FAILURE TO PARTICIPATE IN THE INCOME AND ELIGIBILITY VERIFICATION SYSTEM- If the Secretary determines that a State program funded under this part is not participating during a fiscal year in the income and eligibility verification system required by section 1137, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not more than 2 percent of the State family assistance grant. `(5) FAILURE TO COMPLY WITH PATERNITY ESTABLISHMENT AND CHILD SUPPORT ENFORCEMENT REQUIREMENTS UNDER PART D- Notwithstanding any other provision of this Act, if the Secretary determines that the State agency that administers a program funded under this part does not enforce the penalties requested by the agency administering part D against recipients of assistance under the State program who fail to cooperate in establishing paternity or in establishing, modifying, or enforcing a child support order in accordance with such part and who do not qualify for any good cause or other exception established by the State under section 454(29), the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year (without regard to this section) by not more than 5 percent. `(6) FAILURE TO TIMELY REPAY A FEDERAL LOAN FUND FOR STATE WELFARE PROGRAMS- If the Secretary determines that a State has failed to repay any amount borrowed from the Federal Loan Fund for State Welfare Programs established under section 406 within the period of maturity applicable to the loan, plus any interest owed on the loan, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter (without regard to this section) by the outstanding loan amount, plus the interest owed on the outstanding amount. The Secretary shall not forgive any outstanding loan amount or interest owed on the outstanding amount. `(7) FAILURE OF ANY STATE TO MAINTAIN CERTAIN LEVEL OF HISTORIC EFFORT- `(A) IN GENERAL- The Secretary shall reduce the grant payable to the State under section 403(a)(1) for fiscal year 1998, 1999, 2000, 2001, 2002, or 2003 by the amount (if any) by which qualified State expenditures for the then immediately preceding fiscal year are less than the applicable percentage of historic State expenditures with respect to such preceding fiscal year. `(B) DEFINITIONS- As used in this paragraph: `(i) QUALIFIED STATE EXPENDITURES- `(I) IN GENERAL- The term `qualified State expenditures' means, with respect to a State and a fiscal year, the total expenditures by the State during the fiscal year, under all State programs, for any of the following with respect to eligible families: `(aa) Cash assistance. `(bb) Child care assistance. `(cc) Educational activities designed to increase self-sufficiency, job training, and work, excluding any expenditure for public education in the State except expenditures which involve the provision of services or assistance to a member of an eligible family which is not generally available to persons who are not members of an eligible family. `(dd) Administrative costs in connection with the matters described in items (aa), (bb), (cc), and (ee), but only to the extent that such costs do not exceed 15 percent of the total amount of qualified State expenditures for the fiscal year. `(ee) Any other use of funds allowable under section 404(a)(1). `(II) EXCLUSION OF TRANSFERS FROM OTHER STATE AND LOCAL PROGRAMS- Such term does not include expenditures under any State or local program during a fiscal year, except to the extent that-- `(aa) the expenditures exceed the amount expended under the State or local program in the fiscal year most recently ending before the date of the enactment of this part; or `(bb) the State is entitled to a payment under former section 403 (as in effect immediately before such date of enactment) with respect to the expenditures. `(III) ELIGIBLE FAMILIES- As used in subclause (I), the term `eligible families' means families eligible for assistance under the State program funded under this part, and families that would be eligible for such assistance but for the application of section 408(a)(7) of this Act or section 402 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. `(ii) APPLICABLE PERCENTAGE- The term `applicable percentage' means for fiscal years 1997 through 2002, 80 percent (or, if the State meets the requirements of section 407(a) for the fiscal year, 75 percent) reduced (if appropriate) in accordance with subparagraph (C)(ii). `(iii) HISTORIC STATE EXPENDITURES- The term `historic State expenditures' means, with respect to a State, the lesser of-- `(I) the expenditures by the State under parts A and F (as in effect during fiscal year 1994) for fiscal year 1994; or `(II) the amount which bears the same ratio to the amount described in subclause (I) as-- `(aa) the State family assistance grant, plus the total amount required to be paid to the State under former section 403 for fiscal year 1994 with respect to amounts expended by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994); bears to `(bb) the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994. Such term does not include any expenditures under the State plan approved under part A (as so in effect) on behalf of individuals covered by a tribal family assistance plan approved under section 412, as determined by the Secretary. `(iv) EXPENDITURES BY THE STATE- The term `expenditures by the State' does not include-- `(I) any expenditures from amounts made available by the Federal Government; `(II) any State funds expended for the medicaid program under title XIX; `(III) any State funds which are used to match Federal funds; or `(IV) any State funds which are expended as a condition of receiving Federal funds under Federal programs other than under this part. Notwithstanding subclause (IV) of the preceding sentence, such term includes expenditures by a State for child care in a fiscal year to the extent that the total amount of such expenditures does not exceed an amount equal to the amount of State expenditures in fiscal year 1994 or 1995 (whichever is greater) that equal the non-Federal share for the programs described in section 418(a)(1)(A). `(8) SUBSTANTIAL NONCOMPLIANCE OF STATE CHILD SUPPORT ENFORCEMENT PROGRAM WITH REQUIREMENTS OF PART D- `(A) IN GENERAL- If a State program operated under part D is found as a result of a review conducted under section 452(a)(4) not to have complied substantially with the requirements of such part for any quarter, and the Secretary determines that the program is not complying substantially with such requirements at the time the finding is made, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the quarter and each subsequent quarter that ends before the 1st quarter throughout which the program is found to be in substantial compliance with such requirements by-- `(i) not less than 1 nor more than 2 percent; `(ii) not less than 2 nor more than 3 percent, if the finding is the 2nd consecutive such finding made as a result of such a review; or `(iii) not less than 3 nor more than 5 percent, if the finding is the 3rd or a subsequent consecutive such finding made as a result of such a review. `(B) DISREGARD OF NONCOMPLIANCE WHICH IS OF A TECHNICAL NATURE- For purposes of subparagraph (A) and section 452(a)(4), a State which is not in full compliance with the requirements of this part shall be determined to be in substantial compliance with such requirements only if the Secretary determines that any noncompliance with such requirements is of a technical nature which does not adversely affect the performance of the State's program operated under part D. `(9) FAILURE TO COMPLY WITH 5-YEAR LIMIT ON ASSISTANCE- If the Secretary determines that a State has not complied with section 408(a)(1)(B) during a fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 5 percent of the State family assistance grant. `(10) FAILURE OF STATE RECEIVING AMOUNTS FROM CONTINGENCY FUND TO MAINTAIN 100 PERCENT OF HISTORIC EFFORT- If, at the end of any fiscal year during which amounts from the Contingency Fund for State Welfare Programs have been paid to a State, the Secretary finds that the expenditures under the State program funded under this part for the fiscal year (excluding any amounts made available by the Federal Government) are less than 100 percent of historic State expenditures (as defined in paragraph (7)(B)(iii) of this subsection), the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by the total of the amounts so paid to the State. `(11) FAILURE TO MAINTAIN ASSISTANCE TO ADULT SINGLE CUSTODIAL PARENT WHO CANNOT OBTAIN CHILD CARE FOR CHILD UNDER AGE 6- `(A) IN GENERAL- If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has violated section 407(e)(2) during the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not more than 5 percent of the State family assistance grant. `(B) PENALTY BASED ON SEVERITY OF FAILURE- The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance. `(12) FAILURE TO EXPEND ADDITIONAL STATE FUNDS TO REPLACE GRANT REDUCTIONS- If the grant payable to a State under section 403(a)(1) for a fiscal year is reduced by reason of this subsection, the State shall, during the immediately succeeding fiscal year, expend under the State program funded under this part an amount equal to the total amount of such reductions. `(b) REASONABLE CAUSE EXCEPTION- `(1) IN GENERAL- The Secretary may not impose a penalty on a State under subsection (a) with respect to a requirement if the Secretary determines that the State has reasonable cause for failing to comply with the requirement. `(2) EXCEPTION- Paragraph (1) of this subsection shall not apply to any penalty under paragraph (7) or (8) of subsection (a). `(c) CORRECTIVE COMPLIANCE PLAN- `(1) IN GENERAL- `(A) NOTIFICATION OF VIOLATION- Before imposing a penalty against a State under subsection (a) with respect to a violation of this part, the Secretary shall notify the State of the violation and allow the State the opportunity to enter into a corrective compliance plan in accordance with this subsection which outlines how the State will correct the violation and how the State will insure continuing compliance with this part. `(B) 60-DAY PERIOD TO PROPOSE A CORRECTIVE COMPLIANCE PLAN- During the 60-day period that begins on the date the State receives a notice provided under sub-paragraph (A) with respect to a violation, the State may submit to the Federal Government a corrective compliance plan to correct the violation. `(C) CONSULTATION ABOUT MODIFICATIONS- During the 60-day period that begins with the date the Secretary receives a corrective compliance plan submitted by a State in accordance with subparagraph (B), the Secretary may consult with the State on modifications to the plan. `(D) ACCEPTANCE OF PLAN- A corrective compliance plan submitted by a State in accordance with subparagraph (B) is deemed to be accepted by the Secretary if the Secretary does not accept or reject the plan during 60-day period that begins on the date the plan is submitted. `(2) EFFECT OF CORRECTING VIOLATION- The Secretary may not impose any penalty under subsection (a) with respect to any violation covered by a State corrective compliance plan accepted by the Secretary if the State corrects the violation pursuant to the plan. `(3) EFFECT OF FAILING TO CORRECT VIOLATION- The Secretary shall assess some or all of a penalty imposed on a State under subsection (a) with respect to a violation if the State does not, in a timely manner, correct the violation pursuant to a State corrective compliance plan accepted by the Secretary. `(4) INAPPLICABILITY TO FAILURE TO TIMELY REPAY A FEDERAL LOAN FUND FOR A STATE WELFARE PROGRAM- This subsection shall not apply to the imposition of a penalty against a State under subsection (a)(6). `(d) LIMITATION ON AMOUNT OF PENALTIES- `(1) IN GENERAL- In imposing the penalties described in subsection (a), the Secretary shall not reduce any quarterly payment to a State by more than 25 percent. `(2) CARRYFORWARD OF UNRECOVERED PENALTIES- To the extent that paragraph (1) of this subsection prevents the Secretary from recovering during a fiscal year the full amount of penalties imposed on a State under subsection (a) of this section for a prior fiscal year, the Secretary shall apply any remaining amount of such penalties to the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year. `SEC. 410. APPEAL OF ADVERSE DECISION. `(a) IN GENERAL- Within 5 days after the date the Secretary takes any adverse action under this part with respect to a State, the Secretary shall notify the chief executive officer of the State of the adverse action, including any action with respect to the State plan submitted under section 402 or the imposition of a penalty under section 409. `(b) ADMINISTRATIVE REVIEW- `(1) IN GENERAL- Within 60 days after the date a State receives notice under subsection (a) of an adverse action, the State may appeal the action, in whole or in part, to the Departmental Appeals Board established in the Department of Health and Human Services (in this section referred to as the `Board') by filing an appeal with the Board. `(2) PROCEDURAL RULES- The Board shall consider an appeal filed by a State under paragraph (1) on the basis of such documentation as the State may submit and as the Board may require to support the final decision of the Board. In deciding whether to uphold an adverse action or any portion of such an action, the Board shall conduct a thorough review of the issues and take into account all relevant evidence. The Board shall make a final determination with respect to an appeal filed under paragraph (1) not less than 60 days after the date the appeal is filed. `(c) JUDICIAL REVIEW OF ADVERSE DECISION- `(1) IN GENERAL- Within 90 days after the date of a final decision by the Board under this section with respect to an adverse action taken against a State, the State may obtain judicial review of the final decision (and the findings incorporated into the final decision) by filing an action in-- `(A) the district court of the United States for the judicial district in which the principal or headquarters office of the State agency is located; or `(B) the United States District Court for the District of Columbia. `(2) PROCEDURAL RULES- The district court in which an action is filed under paragraph (1) shall review the final decision of the Board on the record established in the administrative proceeding, in accordance with the standards of review prescribed by subparagraphs (A) through (E) of section 706(2) of title 5, United States Code. The review shall be on the basis of the documents and supporting data submitted to the Board. `SEC. 411. DATA COLLECTION AND REPORTING. `(a) QUARTERLY REPORTS BY STATES- `(1) GENERAL REPORTING REQUIREMENT- `(A) CONTENTS OF REPORT- Each eligible State shall collect on a monthly basis, and report to the Secretary on a quarterly basis, the following disaggregated case record information on the families receiving assistance under the State program funded under this part: `(i) The county of residence of the family. `(ii) Whether a child receiving such assistance or an adult in the family is disabled. `(iii) The ages of the members of such families. `(iv) The number of individuals in the family, and the relation of each family member to the youngest child in the family. `(v) The employment status and earnings of the employed adult in the family. `(vi) The marital status of the adults in the family, including whether such adults have never married, are widowed, or are divorced. `(vii) The race and educational status of each adult in the family. `(viii) The race and educational status of each child in the family. `(ix) Whether the family received subsidized housing, medical assistance under the State plan approved under title XIX, food stamps, or subsidized child care, and if the latter 2, the amount received. `(x) The number of months that the family has received each type of assistance under the program. `(xi) If the adults participated in, and the number of hours per week of participation in, the following activities: `(I) Education. `(II) Subsidized private sector employment. `(III) Unsubsidized employment. `(IV) Public sector employment, work experience, or community service. `(V) Job search. `(VI) Job skills training or on-the-job training. `(VII) Vocational education. `(xii) Information necessary to calculate participation rates under section 407. `(xiii) The type and amount of assistance received under the program, including the amount of and reason for any reduction of assistance (including sanctions). `(xiv) Any amount of unearned income received by any member of the family. `(xv) The citizenship of the members of the family. `(xvi) From a sample of closed cases, whether the family left the program, and if so, whether the family left due to-- `(I) employment; `(II) marriage; `(III) the prohibition set forth in section 408(a)(7); `(IV) sanction; or `(V) State policy. `(B) USE OF ESTIMATES- `(i) AUTHORITY- A State may comply with subparagraph (A) by submitting an estimate which is obtained through the use of scientifically acceptable sampling methods approved by the Secretary. `(ii) SAMPLING AND OTHER METHODS- The Secretary shall provide the States with such case sampling plans and data collection procedures as the Secretary deems necessary to produce statistically valid estimates of the performance of State programs funded under this part. The Secretary may develop and implement procedures for verifying the quality of data submitted by the States. `(2) REPORT ON USE OF FEDERAL FUNDS TO COVER ADMINISTRATIVE COSTS AND OVERHEAD- The report required by paragraph (1) for a fiscal quarter shall include a statement of the percentage of the funds paid to the State under this part for the quarter that are used to cover administrative costs or overhead. `(3) REPORT ON STATE EXPENDITURES ON PROGRAMS FOR NEEDY FAMILIES- The report required by paragraph (1) for a fiscal quarter shall include a statement of the total amount expended by the State during the quarter on programs for needy families. `(4) REPORT ON NONCUSTODIAL PARENTS PARTICIPATING IN WORK ACTIVITIES- The report required by paragraph (1) for a fiscal quarter shall include the number of noncustodial parents in the State who participated in work activities (as defined in section 407(d)) during the quarter. `(5) REPORT ON TRANSITIONAL SERVICES- The report required by paragraph (1) for a fiscal quarter shall include the total amount expended by the State during the quarter to provide transitional services to a family that has ceased to receive assistance under this part because of employment, along with a description of such services. `(6) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary to define the data elements with respect to which reports are required by this subsection. `(b) ANNUAL REPORTS TO THE CONGRESS BY THE SECRETARY- Not later than 6 months after the end of fiscal year 1997, and each fiscal year thereafter, the Secretary shall transmit to the Congress a report describing-- `(1) whether the States are meeting-- `(A) the participation rates described in section 407(a); and `(B) the objectives of-- `(i) increasing employment and earnings of needy families, and child support collections; and `(ii) decreasing out-of-wedlock pregnancies and child poverty; `(2) the demographic and financial characteristics of families applying for assistance, families receiving assistance, and families that become ineligible to receive assistance; `(3) the characteristics of each State program funded under this part; and `(4) the trends in employment and earnings of needy families with minor children living at home. `SEC. 412. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES. `(a) GRANTS FOR INDIAN TRIBES- `(1) TRIBAL FAMILY ASSISTANCE GRANT- `(A) IN GENERAL- For each of fiscal years 1997, 1998, 1999, 2000, 2001, and 2002, the Secretary shall pay to each Indian tribe that has an approved tribal family assistance plan a tribal family assistance grant for the fiscal year in an amount equal to the amount determined under subparagraph (B), and shall reduce the grant payable under section 403(a)(1) to any State in which lies the service area or areas of the Indian tribe by that portion of the amount so determined that is attributable to expenditures by the State. `(B) AMOUNT DETERMINED- `(i) IN GENERAL- The amount determined under this subparagraph is an amount equal to the total amount of the Federal payments to a State or States under section 403 (as in effect during such fiscal year) for fiscal year 1994 attributable to expenditures (other than child care expenditures) by the State or States under parts A and F (as so in effect) for fiscal year 1994 for Indian families residing in the service area or areas identified by the Indian tribe pursuant to subsection (b)(1)(C) of this section. `(ii) USE OF STATE SUBMITTED DATA- `(I) IN GENERAL- The Secretary shall use State submitted data to make each determination under clause (i). `(II) DISAGREEMENT WITH DETERMINATION- If an Indian tribe or tribal organization disagrees with State submitted data described under subclause (I), the Indian tribe or tribal organization may submit to the Secretary such additional information as may be relevant to making the determination under clause (i) and the Secretary may consider such information before making such determination. `(2) GRANTS FOR INDIAN TRIBES THAT RECEIVED JOBS FUNDS- `(A) IN GENERAL- The Secretary shall pay to each eligible Indian tribe for each of fiscal years 1997, 1998, 1999, 2000, 2001, and 2002 a grant in an amount equal to the amount received by the Indian tribe in fiscal year 1994 under section 482(i) (as in effect during fiscal year 1994). `(B) ELIGIBLE INDIAN TRIBE- For purposes of subparagraph (A), the term `eligible Indian tribe' means an Indian tribe or Alaska Native organization that conducted a job opportunities and basic skills training program in fiscal year 1995 under section 482(i) (as in effect during fiscal year 1995). `(C) USE OF GRANT- Each Indian tribe to which a grant is made under this paragraph shall use the grant for the purpose of operating a program to make work activities available to members of the Indian tribe. `(D) APPROPRIATION- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated $7,638,474 for each fiscal year specified in subparagraph (A) for grants under subparagraph (A). `(b) 3-YEAR TRIBAL FAMILY ASSISTANCE PLAN- `(1) IN GENERAL- Any Indian tribe that desires to receive a tribal family assistance grant shall submit to the Secretary a 3-year tribal family assistance plan that-- `(A) outlines the Indian tribe's approach to providing welfare-related services for the 3-year period, consistent with this section; `(B) specifies whether the welfare-related services provided under the plan will be provided by the Indian tribe or through agreements, contracts, or compacts with intertribal consortia, States, or other entities; `(C) identifies the population and service area or areas to be served by such plan; `(D) provides that a family receiving assistance under the plan may not receive duplicative assistance from other State or tribal programs funded under this part; `(E) identifies the employment opportunities in or near the service area or areas of the Indian tribe and the manner in which the Indian tribe will cooperate and participate in enhancing such opportunities for recipients of assistance under the plan consistent with any applicable State standards; and `(F) applies the fiscal accountability provisions of section 5(f)(1) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450c(f)(1)), relating to the submission of a single-agency audit report required by chapter 75 of title 31, United States Code. `(2) APPROVAL- The Secretary shall approve each tribal family assistance plan submitted in accordance with paragraph (1). `(3) CONSORTIUM OF TRIBES- Nothing in this section shall preclude the development and submission of a single tribal family assistance plan by the participating Indian tribes of an intertribal consortium. `(c) MINIMUM WORK PARTICIPATION REQUIREMENTS AND TIME LIMITS- The Secretary, with the participation of Indian tribes, shall establish for each Indian tribe receiving a grant under this section minimum work participation requirements, appropriate time limits for receipt of welfare-related services under the grant, and penalties against individuals-- `(1) consistent with the purposes of this section; `(2) consistent with the economic conditions and resources available to each tribe; and `(3) similar to comparable provisions in section 407(e). `(d) EMERGENCY ASSISTANCE- Nothing in this section shall preclude an Indian tribe from seeking emergency assistance from any Federal loan program or emergency fund. `(e) ACCOUNTABILITY- Nothing in this section shall be construed to limit the ability of the Secretary to maintain program funding accountability consistent with-- `(1) generally accepted accounting principles; and `(2) the requirements of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450 et seq.). `(f) PENALTIES- `(1) Subsections (a)(1), (a)(6), and (b) of section 409, shall apply to an Indian tribe with an approved tribal assistance plan in the same manner as such subsections apply to a State. `(2) Section 409(a)(3) shall apply to an Indian tribe with an approved tribal assistance plan by substituting `meet minimum work participation requirements established under section 412(c)' for `comply with section 407(a)'. `(g) DATA COLLECTION AND REPORTING- Section 411 shall apply to an Indian tribe with an approved tribal family assistance plan. `(h) SPECIAL RULE FOR INDIAN TRIBES IN ALASKA- `(1) IN GENERAL- Notwithstanding any other provision of this section, and except as provided in paragraph (2), an Indian tribe in the State of Alaska that receives a tribal family assistance grant under this section shall use the grant to operate a program in accordance with requirements comparable to the requirements applicable to the program of the State of Alaska funded under this part. Comparability of programs shall be established on the basis of program criteria developed by the Secretary in consultation with the State of Alaska and such Indian tribes. `(2) WAIVER- An Indian tribe described in paragraph (1) may apply to the appropriate State authority to receive a waiver of the requirement of paragraph (1). `SEC. 413. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES. `(a) RESEARCH- The Secretary shall conduct research on the benefits, effects, and costs of operating different State programs funded under this part, including time limits relating to eligibility for assistance. The research shall include studies on the effects of different programs and the operation of such programs on welfare dependency, illegitimacy, teen pregnancy, employment rates, child well-being, and any other area the Secretary deems appropriate. The Secretary shall also conduct research on the costs and benefits of State activities under section 409. `(b) DEVELOPMENT AND EVALUATION OF INNOVATIVE APPROACHES TO REDUCING WELFARE DEPENDENCY AND INCREASING CHILD WELL-BEING- `(1) IN GENERAL- The Secretary may assist States in developing, and shall evaluate, innovative approaches for reducing welfare dependency and increasing the well-being of minor children living at home with respect to recipients of assistance under programs funded under this part. The Secretary may provide funds for training and technical assistance to carry out the approaches developed pursuant to this paragraph. `(2) EVALUATIONS- In performing the evaluations under paragraph (1), the Secretary shall, to the maximum extent feasible, use random assignment as an evaluation methodology. `(c) DISSEMINATION OF INFORMATION- The Secretary shall develop innovative methods of disseminating information on any research, evaluations, and studies conducted under this section, including the facilitation of the sharing of information and best practices among States and localities through the use of computers and other technologies. `(d) ANNUAL RANKING OF STATES AND REVIEW OF MOST AND LEAST SUCCESSFUL WORK PROGRAMS- `(1) ANNUAL RANKING OF STATES- The Secretary shall rank annually the States to which grants are paid under section 403 in the order of their success in placing recipients of assistance under the State program funded under this part into long-term private sector jobs, reducing the overall welfare caseload, and, when a practicable method for calculating this information becomes available, diverting individuals from formally applying to the State program and receiving assistance. In ranking States under this subsection, the Secretary shall take into account the average number of minor children living at home in families in the State that have incomes below the poverty line and the amount of funding provided each State for such families. `(2) ANNUAL REVIEW OF MOST AND LEAST SUCCESSFUL WORK PROGRAMS- The Secretary shall review the programs of the 3 States most recently ranked highest under paragraph (1) and the 3 States most recently ranked lowest under paragraph (1) that provide parents with work experience, assistance in finding employment, and other work preparation activities and support services to enable the families of such parents to leave the program and become self-sufficient. `(e) ANNUAL RANKING OF STATES AND REVIEW OF ISSUES RELATING TO OUT-OF-WEDLOCK BIRTHS- `(1) ANNUAL RANKING OF STATES- `(A) IN GENERAL- The Secretary shall annually rank States to which grants are made under section 403 based on the following ranking factors: `(i) ABSOLUTE OUT-OF-WEDLOCK RATIOS- The ratio represented by-- `(I) the total number of out-of-wedlock births in families receiving assistance under the State program under this part in the State for the most recent fiscal year for which information is available; over `(II) the total number of births in families receiving assistance under the State program under this part in the State for such year. `(ii) NET CHANGES IN THE OUT-OF-WEDLOCK RATIO- The difference between the ratio described in subparagraph (A)(i) with respect to a State for the most recent fiscal year for which such information is available and the ratio with respect to the State for the immediately preceding year. `(2) ANNUAL REVIEW- The Secretary shall review the programs of the 5 States most recently ranked highest under paragraph (1) and the 5 States most recently ranked the lowest under paragraph (1). `(f) STATE-INITIATED EVALUATIONS- A State shall be eligible to receive funding to evaluate the State program funded under this part if-- `(1) the State submits a proposal to the Secretary for the evaluation; `(2) the Secretary determines that the design and approach of the evaluation is rigorous and is likely to yield information that is credible and will be useful to other States; and `(3) unless otherwise waived by the Secretary, the State contributes to the cost of the evaluation, from non-Federal sources, an amount equal to at least 10 percent of the cost of the evaluation. `(g) REPORT ON CIRCUMSTANCES OF CERTAIN CHILDREN AND FAMILIES- `(1) IN GENERAL- Beginning 3 years after the date of the enactment of this Act, the Secretary of Health and Human Services shall prepare and submit to the Committees on Ways and Means and on Economic and Educational Opportunities of the House of Representatives and to the Committees on Finance and on Labor and Resources of the Senate annual reports that examine in detail the matters described in paragraph (2) with respect to each of the following groups for the period after such enactment: `(A) Individuals who were children in families that have become ineligible for assistance under a State program funded under this part by reason of having reached a time limit on the provision of such assistance. `(B) Children born after such date of enactment to parents who, at the time of such birth, had not attained 20 years of age. `(C) Individuals who, after such date of enactment, became parents before attaining 20 years of age. `(2) MATTERS DESCRIBED- The matters described in this paragraph are the following: `(A) The percentage of each group that has dropped out of secondary school (or the equivalent), and the percentage of each group at each level of educational attainment. `(B) The percentage of each group that is employed. `(C) The percentage of each group that has been convicted of a crime or has been adjudicated as a delinquent. `(D) The rate at which the members of each group are born, or have children, out-of-wedlock, and the percentage of each group that is married. `(E) The percentage of each group that continues to participate in State programs funded under this part. `(F) The percentage of each group that has health insurance provided by a private entity (broken down by whether the insurance is provided through an employer or otherwise), the percentage that has health insurance provided by an agency of government, and the percentage that does not have health insurance. `(G) The average income of the families of the members of each group. `(H) Such other matters as the Secretary deems appropriate. `(h) FUNDING OF STUDIES AND DEMONSTRATIONS- `(1) IN GENERAL- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated $15,000,000 for each of fiscal years 1997 through 2002 for the purpose of paying-- `(A) the cost of conducting the research described in subsection (a); `(B) the cost of developing and evaluating innovative approaches for reducing welfare dependency and increasing the well-being of minor children under subsection (b); `(C) the Federal share of any State-initiated study approved under subsection (f); and `(D) an amount determined by the Secretary to be necessary to operate and evaluate demonstration projects, relating to this part, that are in effect or approved under section 1115 as of September 30, 1995, and are continued after such date. `(2) ALLOCATION- Of the amount appropriated under paragraph (1) for a fiscal year-- `(A) 50 percent shall be allocated for the pur-poses described in subparagraphs (A) and (B) of paragraph (1), and `(B) 50 percent shall be allocated for the purposes described in subparagraphs (C) and (D) of paragraph (1). `(3) DEMONSTRATIONS OF INNOVATIVE STRATEGIES- The Secretary may implement and evaluate demonstrations of innovative and promising strategies which-- `(A) provide one-time capital funds to establish, expand, or replicate programs; `(B) test performance-based grant-to-loan financing in which programs meeting performance targets receive grants while programs not meeting such targets repay funding on a prorated basis; and `(C) test strategies in multiple States and types of communities. `(i) CHILD POVERTY RATES- `(1) IN GENERAL- Not later than 90 days after the date of the enactment of this part, and annually thereafter, the chief executive officer of each State shall submit to the Secretary a statement of the child poverty rate in the State as of such date of enactment or the date of the most recent prior statement under this paragraph. `(2) SUBMISSION OF CORRECTIVE ACTION PLAN- Not later than 90 days after the date a State submits a statement under paragraph (1) which indicates that, as a result of the amendments made by section 103 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the child poverty rate of the State has increased by 5 percent or more since the most recent prior statement under paragraph (1), the State shall prepare and submit to the Secretary a corrective action plan in accordance with paragraph (3). `(3) CONTENTS OF PLAN- A corrective action plan submitted under paragraph (2) shall outline the manner in which the State will reduce the child poverty rate in the State. The plan shall include a description of the actions to be taken by the State under such plan. `(4) COMPLIANCE WITH PLAN- A State that submits a corrective action plan that the Secretary has found contains the information required by this subsection shall implement the corrective action plan until the State determines that the child poverty rate in the State is less than the lowest child poverty rate on the basis of which the State was required to submit the corrective action plan. `(5) METHODOLOGY- The Secretary shall prescribe regulations establishing the methodology by which a State shall determine the child poverty rate in the State. The methodology shall take into account factors including the number of children who receive free or reduced-price lunches, the number of food stamp households, and the county-by-county estimates of children in poverty as determined by the Census Bureau. `SEC. 414. STUDY BY THE CENSUS BUREAU. `(a) IN GENERAL- The Bureau of the Census shall continue to collect data on the 1992 and 1993 panels of the Survey of Income and Program Participation as necessary to obtain such information as will enable interested persons to evaluate the impact of the amendments made by title I of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 on a random national sample of recipients of assistance under State programs funded under this part and (as appropriate) other low-income families, and in doing so, shall pay particular attention to the issues of out-of-wedlock birth, welfare dependency, the beginning and end of welfare spells, and the causes of repeat welfare spells, and shall obtain information about the status of children participating in such panels. `(b) APPROPRIATION- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated $10,000,000 for each of fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002 for payment to the Bureau of the Census to carry out subsection (a). `SEC. 415. WAIVERS. `(a) CONTINUATION OF WAIVERS- `(1) WAIVERS IN EFFECT ON DATE OF ENACTMENT OF WELFARE REFORM- `(A) IN GENERAL- Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of assistance under a State plan under this part (as in effect on September 30, 1996) is in effect as of the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (other than by section 103(c) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) shall not apply with respect to the State before the expiration (determined without regard to any extensions) of the waiver to the extent such amendments are inconsistent with the waiver. `(B) FINANCING LIMITATION- Notwithstanding any other provision of law, beginning with fiscal year 1996, a State operating under a waiver described in subparagraph (A) shall be entitled to payment under section 403 for the fiscal year, in lieu of any other payment provided for in the waiver. `(2) WAIVERS GRANTED SUBSEQUENTLY- `(A) IN GENERAL- Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of assistance under a State plan under this part (as in effect on September 30, 1996) is submitted to the Secretary before the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and approved by the Secretary on or before July 1, 1997, and the State demonstrates to the satisfaction of the Secretary that the waiver will not result in Federal expenditures under title IV of this Act (as in effect without regard to the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) that are greater than would occur in the absence of the waiver, the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (other than by section 103(c) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) shall not apply with respect to the State before the expiration (determined without regard to any extensions) of the waiver to the extent the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 are inconsistent with the waiver. `(B) NO EFFECT ON NEW WORK REQUIREMENTS- Notwithstanding subparagraph (A), a waiver granted under section 1115 or otherwise which relates to the provision of assistance under a State program funded under this part (as in effect on September 30, 1996) shall not affect the applicability of section 407 to the State. `(b) STATE OPTION TO TERMINATE WAIVER- `(1) IN GENERAL- A State may terminate a waiver described in subsection (a) before the expiration of the waiver. `(2) REPORT- A State which terminates a waiver under paragraph (1) shall submit a report to the Secretary summarizing the waiver and any available information concerning the result or effect of the waiver. `(3) HOLD HARMLESS PROVISION- `(A) IN GENERAL- Notwithstanding any other provision of law, a State that, not later than the date described in subparagraph (B) of this paragraph, submits a written request to terminate a waiver described in subsection (a) shall be held harmless for accrued cost neutrality liabilities incurred under the waiver. `(B) DATE DESCRIBED- The date described in this subparagraph is 90 days following the adjournment of the first regular session of the State legislature that begins after the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. `(c) SECRETARIAL ENCOURAGEMENT OF CURRENT WAIVERS- The Secretary shall encourage any State operating a waiver described in subsection (a) to continue the waiver and to evaluate, using random sampling and other characteristics of accepted scientific evaluations, the result or effect of the waiver. `(d) CONTINUATION OF INDIVIDUAL WAIVERS- A State may elect to continue 1 or more individual waivers described in sub-section (a). `SEC. 416. ADMINISTRATION. `The programs under this part and part D shall be administered by an Assistant Secretary for Family Support within the Department of Health and Human Services, who shall be appointed by the President, by and with the advice and consent of the Senate, and who shall be in addition to any other Assistant Secretary of Health and Human Services provided for by law, and the Secretary shall reduce the Federal workforce within the Department of Health and Human Services by an amount equal to the sum of 75 percent of the full-time equivalent positions at such Department that relate to any direct spending program, or any program funded through discretionary spending, that has been converted into a block grant program under the Personal Responsibility and Work Opportunity Act of 1996 and the amendments made by such Act, and by an amount equal to 75 percent of that portion of the total full-time equivalent departmental management positions at such Department that bears the same relationship to the amount appropriated for any direct spending program, or any program funded through discretionary spending, that has been converted into a block grant program under the Personal Responsibility and Work Opportunity Act of 1996 and the amendments made by such Act, as such amount relates to the total amount appropriated for use by such Department, and, notwithstanding any other provision of law, the Secretary shall take such actions as may be necessary, including reductions in force actions, consistent with sections 3502 and 3595 of title 5, United States Code, to reduce the full-time equivalent positions within the Department of Health and Human Services by 245 full-time equivalent positions related to the program converted into a block grant under the amendment made by section 2103 of the Personal Responsibility and Work Opportunity Act of 1996, and by 60 full-time equivalent managerial positions in the Department. `SEC. 417. LIMITATION ON FEDERAL AUTHORITY. `No officer or employee of the Federal Government may regulate the conduct of States under this part or enforce any pro-vision of this part, except to the extent expressly provided in this part.'; and (2) by inserting after such section 418 the following: `SEC. 419. DEFINITIONS. `As used in this part: `(1) ADULT- The term `adult' means an individual who is not a minor child. `(2) MINOR CHILD- The term `minor child' means an individual who-- `(A) has not attained 18 years of age; or `(B) has not attained 19 years of age and is a full-time student in a secondary school (or in the equivalent level of vocational or technical training). `(3) FISCAL YEAR- The term `fiscal year' means any 12-month period ending on September 30 of a calendar year. `(4) INDIAN, INDIAN TRIBE, AND TRIBAL ORGANIZATION- `(A) IN GENERAL- Except as provided in subparagraph (B), the terms `Indian', `Indian tribe', and `tribal organization' have the meaning given such terms by section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b). `(B) SPECIAL RULE FOR INDIAN TRIBES IN ALASKA- The term `Indian tribe' means, with respect to the State of Alaska, only the Metlakatla Indian Community of the Annette Islands Reserve and the following Alaska Native regional nonprofit corporations: `(i) Arctic Slope Native Association. `(ii) Kawerak, Inc. `(iii) Maniilaq Association. `(iv) Association of Village Council Presidents. `(v) Tanana Chiefs Conference. `(vi) Cook Inlet Tribal Council. `(vii) Bristol Bay Native Association. `(viii) Aleutian and Pribilof Island Association. `(ix) Chugachmuit. `(x) Tlingit Haida Central Council. `(xi) Kodiak Area Native Association. `(xii) Copper River Native Association. `(5) STATE- Except as otherwise specifically provided, the term `State' means the 50 States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, and American Samoa.'. (b) GRANTS TO OUTLYING AREAS- Section 1108 (42 U.S.C. 1308) is amended-- (1) by striking subsections (d) and (e); (2) by redesignating subsection (c) as subsection (f); and (3) by striking all that precedes subsection (c) and inserting the following: ` SEC. 1108. ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN ISLANDS, GUAM, AND AMERICAN SAMOA; LIMITATION ON TOTAL PAYMENTS. `(a) LIMITATION ON TOTAL PAYMENTS TO EACH TERRITORY- Notwithstanding any other provision of this Act, the total amount certified by the Secretary of Health and Human Services under titles I, X, XIV, and XVI, under parts A and E of title IV, and under subsection (b) of this section, for payment to any territory for a fiscal year shall not exceed the ceiling amount for the territory for the fiscal year. `(b) ENTITLEMENT TO MATCHING GRANT- `(1) IN GENERAL- Each territory shall be entitled to receive from the Secretary for each fiscal year a grant in an amount equal to 75 percent of the amount (if any) by which-- `(A) the total expenditures of the territory during the fiscal year under the territory programs funded under parts A and E of title IV; exceeds `(B) the sum of-- `(i) the amount of the family assistance grant payable to the territory without regard to section 409; and `(ii) the total amount expended by the territory during fiscal year 1995 pursuant to parts A and F of title IV (as so in effect), other than for child care. `(2) APPROPRIATION- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1997 through 2002, such sums as are necessary for grants under this paragraph. `(c) DEFINITIONS- As used in this section: `(1) TERRITORY- The term `territory' means Puerto Rico, the Virgin Islands, Guam, and American Samoa. `(2) CEILING AMOUNT- The term `ceiling amount' means, with respect to a territory and a fiscal year, the mandatory ceiling amount with respect to the territory, reduced for the fiscal year in accordance with subsection (e), and reduced by the amount of any penalty imposed on the territory under any provision of law specified in subsection (a) during the fiscal year. `(3) FAMILY ASSISTANCE GRANT- The term `family assistance grant' has the meaning given such term by section 403(a)(1)(B). `(4) MANDATORY CEILING AMOUNT- The term `mandatory ceiling amount' means-- `(A) $107,255,000 with respect to Puerto Rico; `(B) $4,686,000 with respect to Guam; `(C) $3,554,000 with respect to the Virgin Islands; and `(D) $1,000,000 with respect to American Samoa. `(5) TOTAL AMOUNT EXPENDED BY THE TERRITORY- The term `total amount expended by the territory'-- `(A) does not include expenditures during the fiscal year from amounts made available by the Federal Government; and `(B) when used with respect to fiscal year 1995, also does not include-- `(i) expenditures during fiscal year 1995 under subsection (g) or (i) of section 402 (as in effect on September 30, 1995); or `(ii) any expenditures during fiscal year 1995 for which the territory (but for section 1108, as in effect on September 30, 1995) would have received reimbursement from the Federal Government. `(d) AUTHORITY TO TRANSFER FUNDS TO CERTAIN PROGRAMS- A territory to which an amount is paid under subsection (b) of this section may use the amount in accordance with section 404(d). `(e) MAINTENANCE OF EFFORT- The ceiling amount with respect to a territory shall be reduced for a fiscal year by an amount equal to the amount (if any) by which-- `(1) the total amount expended by the territory under all programs of the territory operated pursuant to the provisions of law specified in subsection (a) (as such provisions were in effect for fiscal year 1995) for fiscal year 1995; exceeds `(2) the total amount expended by the territory under all programs of the territory that are funded under the provisions of law specified in subsection (a) for the fiscal year that immediately precedes the fiscal year referred to in the matter preceding paragraph (1).'. (c) ELIMINATION OF CHILD CARE PROGRAMS UNDER THE SOCIAL SECURITY ACT- (1) AFDC AND TRANSITIONAL CHILD CARE PROGRAMS- Section 402 (42 U.S.C. 602) is amended by striking sub-section (g). (2) AT-RISK CHILD CARE PROGRAM- (A) AUTHORIZATION- Section 402 (42 U.S.C. 602) is amended by striking subsection (i). (B) FUNDING PROVISIONS- Section 403 (42 U.S.C. 603) is amended by striking subsection (n). SEC. 104. SERVICES PROVIDED BY CHARITABLE, RELIGIOUS, OR PRIVATE ORGANIZATIONS. (a) IN GENERAL- (1) STATE OPTIONS- A State may-- (A) administer and provide services under the programs described in subparagraphs (A) and (B)(i) of paragraph (2) through contracts with charitable, religious, or private organizations; and (B) provide beneficiaries of assistance under the programs described in subparagraphs (A) and (B)(ii) of paragraph (2) with certificates, vouchers, or other forms of disbursement which are redeemable with such organizations. (2) PROGRAMS DESCRIBED- The programs described in this paragraph are the following programs: (A) A State program funded under part A of title IV of the Social Security Act (as amended by section 103(a) of this Act). (B) Any other program established or modified under title I or II of this Act, that-- (i) permits contracts with organizations; or (ii) permits certificates, vouchers, or other forms of disbursement to be provided to beneficiaries, as a means of providing assistance. (b) RELIGIOUS ORGANIZATIONS- The purpose of this section is to allow States to contract with religious organizations, or to allow religious organizations to accept certificates, vouchers, or other forms of disbursement under any program described in subsection (a)(2), on the same basis as any other nongovernmental provider without impairing the religious character of such organizations, and without diminishing the religious freedom of beneficiaries of assistance funded under such program. (c) NONDISCRIMINATION AGAINST RELIGIOUS ORGANIZATIONS- In the event a State exercises its authority under subsection (a), religious organizations are eligible, on the same basis as any other private organization, as contractors to provide assistance, or to accept certificates, vouchers, or other forms of disbursement, under any program described in subsection (a)(2) so long as the programs are implemented consistent with the Establishment Clause of the United States Constitution. Except as provided in subsection (k), neither the Federal Government nor a State receiving funds under such programs shall discriminate against an organization which is or applies to be a contractor to provide assistance, or which accepts certificates, vouchers, or other forms of disbursement, on the basis that the organization has a religious character. (d) RELIGIOUS CHARACTER AND FREEDOM- (1) RELIGIOUS ORGANIZATIONS- A religious organization with a contract described in subsection (a)(1)(A), or which accepts certificates, vouchers, or other forms of disbursement under subsection (a)(1)(B), shall retain its independence from Federal, State, and local governments, including such organization's control over the definition, development, practice, and expression of its religious beliefs. (2) ADDITIONAL SAFEGUARDS- Neither the Federal Government nor a State shall require a religious organization to-- (A) alter its form of internal governance; or (B) remove religious art, icons, scripture, or other symbols; in order to be eligible to contract to provide assistance, or to accept certificates, vouchers, or other forms of disbursement, funded under a program described in subsection (a)(2). (e) RIGHTS OF BENEFICIARIES OF ASSISTANCE- (1) IN GENERAL- If an individual described in paragraph (2) has an objection to the religious character of the organization or institution from which the individual receives, or would receive, assistance funded under any program described in subsection (a)(2), the State in which the individual resides shall provide such individual (if otherwise eligible for such assistance) within a reasonable period of time after the date of such objection with assistance from an alternative provider that is accessible to the individual and the value of which is not less than the value of the assistance which the individual would have received from such organization. (2) INDIVIDUAL DESCRIBED- An individual described in this paragraph is an individual who receives, applies for, or requests to apply for, assistance under a program described in subsection (a)(2). (f) EMPLOYMENT PRACTICES- A religious organization's exemption provided under section 702 of the Civil Rights Act of 1964 (42 U.S.C. 2000e-1a) regarding employment practices shall not be affected by its participation in, or receipt of funds from, programs described in subsection (a)(2). (g) NONDISCRIMINATION AGAINST BENEFICIARIES- Except as otherwise provided in law, a religious organization shall not discriminate against an individual in regard to rendering assistance funded under any program described in subsection (a)(2) on the basis of religion, a religious belief, or refusal to actively participate in a religious practice. (h) FISCAL ACCOUNTABILITY- (1) IN GENERAL- Except as provided in paragraph (2), any religious organization contracting to provide assistance funded under any program described in subsection (a)(2) shall be subject to the same regulations as other contractors to account in accord with generally accepted auditing principles for the use of such funds provided under such programs. (2) LIMITED AUDIT- If such organization segregates Federal funds provided under such programs into separate accounts, then only the financial assistance provided with such funds shall be subject to audit. (i) COMPLIANCE- Any party which seeks to enforce its rights under this section may assert a civil action for injunctive relief exclusively in an appropriate State court against the entity or agency that allegedly commits such violation. (j) LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES- No funds provided directly to institutions or organizations to provide services and administer programs under subsection (a)(1)(A) shall be expended for sectarian worship, instruction, or proselytization. (k) PREEMPTION- Nothing in this section shall be construed to preempt any provision of a State constitution or State statute that prohibits or restricts the expenditure of State funds in or by religious organizations. SEC. 105. CENSUS DATA ON GRANDPARENTS AS PRIMARY CAREGIVERS FOR THEIR GRANDCHILDREN. (a) IN GENERAL- Not later than 90 days after the date of the enactment of this Act, the Secretary of Commerce, in carrying out section 141 of title 13, United States Code, shall expand the data collection efforts of the Bureau of the Census (in this section referred to as the `Bureau') to enable the Bureau to collect statistically significant data, in connection with its decennial census and its mid-decade census, concerning the growing trend of grandparents who are the primary caregivers for their grandchildren. (b) EXPANDED CENSUS QUESTION- In carrying out subsection (a), the Secretary of Commerce shall expand the Bureau's census question that details households which include both grandparents and their grandchildren. The expanded question shall be formulated to distinguish between the following households: (1) A household in which a grandparent temporarily provides a home for a grandchild for a period of weeks or months during periods of parental distress. (2) A household in which a grandparent provides a home for a grandchild and serves as the primary caregiver for the grandchild. SEC. 106. REPORT ON DATA PROCESSING. (a) IN GENERAL- Within 6 months after the date of the enactment of this Act, the Secretary of Health and Human Services shall prepare and submit to the Congress a report on-- (1) the status of the automated data processing systems operated by the States to assist management in the admin-istration of State programs under part A of title IV of the Social Security Act (whether in effect before or after October 1, 1995); and (2) what would be required to establish a system cap-able of-- (A) tracking participants in public programs over time; and (B) checking case records of the States to determine whether individuals are participating in public programs of 2 or more States. (b) PREFERRED CONTENTS- The report required by subsection (a) should include-- (1) a plan for building on the automated data processing systems of the States to establish a system with the capabilities described in subsection (a)(2); and (2) an estimate of the amount of time required to establish such a system and of the cost of establishing such a system. SEC. 107. STUDY ON ALTERNATIVE OUTCOMES MEASURES. (a) STUDY- The Secretary shall, in cooperation with the States, study and analyze outcomes measures for evaluating the success of the States in moving individuals out of the welfare system through employment as an alternative to the minimum participation rates described in section 407 of the Social Security Act. The study shall include a determination as to whether such alternative outcomes measures should be applied on a national or a State-by-State basis and a preliminary assessment of the effects of section 409(a)(7)(C) of such Act. (b) REPORT- Not later than September 30, 1998, the Secretary shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Represen-tatives a report containing the findings of the study required by subsection (a). SEC. 108. CONFORMING AMENDMENTS TO THE SOCIAL SECURITY ACT. (a) AMENDMENTS TO TITLE II- (1) Section 205(c)(2)(C)(vi) (42 U.S.C. 405(c)(2)(C)(vi)), as so redesignated by section 321(a)(9)(B) of the Social Security Independence and Program Improvements Act of 1994, is amended-- (A) by inserting `an agency administering a program funded under part A of title IV or' before `an agency operating'; and (B) by striking `A or D of title IV of this Act' and inserting `D of such title'. (2) Section 228(d)(1) (42 U.S.C. 428(d)(1)) is amended by inserting `under a State program funded under' before `part A of title IV'. (b) AMENDMENTS TO PART B OF TITLE IV- Section 422(b)(2) (42 U.S.C. 622(b)(2)) is amended-- (1) by striking `plan approved under part A of this title' and inserting `program funded under part A'; and (2) by striking `part E of this title' and inserting `under the State plan approved under part E'. (c) AMENDMENTS TO PART D OF TITLE IV- (1) Section 451 (42 U.S.C. 651) is amended by striking `aid' and inserting `assistance under a State program funded'. (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is amended-- (A) by striking `aid to families with dependent children' and inserting `assistance under a State program funded under part A'; (B) by striking `such aid' and inserting `such assistance'; and (C) by striking `under section 402(a)(26) or' and inserting `pursuant to section 408(a)(3) or under section'. (3) Section 452(a)(10)(F) (42 U.S.C. 652(a)(10)(F)) is amended-- (A) by striking `aid under a State plan approved' and inserting `assistance under a State program funded'; and (B) by striking `in accordance with the standards referred to in section 402(a)(26)(B)(ii)' and inserting `by the State'. (4) Section 452(b) (42 U.S.C. 652(b)) is amended in the first sentence by striking `aid under the State plan approved under part A' and inserting `assistance under the State program funded under part A'. (5) Section 452(d)(3)(B)(i) (42 U.S.C. 652(d)(3)(B)(i)) is amended by striking `1115(c)' and inserting `1115(b)'. (6) Section 452(g)(2)(A)(ii)(I) (42 U.S.C. 652(g)(2)(A)(ii)(I)) is amended by striking `aid is being paid under the State's plan approved under part A or E' and inserting `assistance is being provided under the State program funded under part A'. (7) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is amended in the matter following clause (iii) by striking `aid was being paid under the State's plan approved under part A or E' and inserting `assistance was being provided under the State program funded under part A'. (8) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended in the matter following subparagraph (B)-- (A) by striking `who is a dependent child' and inserting `with respect to whom assistance is being provided under the State program funded under part A'; (B) by inserting `by the State' after `found'; and (C) by striking `to have good cause for refusing to cooperate under section 402(a)(26)' and inserting `to qualify for a good cause or other exception to cooperation pursuant to section 454(29)'. (9) Section 452(h) (42 U.S.C. 652(h)) is amended by striking `under section 402(a)(26)' and inserting `pursuant to section 408(a)(3)'. (10) Section 453(c)(3) (42 U.S.C. 653(c)(3)) is amended by striking `aid under part A of this title' and inserting `assistance under a State program funded under part A'. (11) Section 454(5)(A) (42 U.S.C. 654(5)(A)) is amended-- (A) by striking `under section 402(a)(26)' and inserting `pursuant to section 408(a)(3)'; and (B) by striking `; except that this paragraph shall not apply to such payments for any month following the first month in which the amount collected is sufficient to make such family ineligible for assistance under the State plan approved under part A;' and inserting a comma. (12) Section 454(6)(D) (42 U.S.C. 654(6)(D)) is amended by striking `aid under a State plan approved' and inserting `assistance under a State program funded'. (13) Section 456(a)(1) (42 U.S.C. 656(a)(1)) is amended by striking `under section 402(a)(26)'. (14) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is amended by striking `402(a)(26)' and inserting `408(a)(3)'. (15) Section 466(b)(2) (42 U.S.C. 666(b)(2)) is amended by striking `aid' and inserting `assistance under a State program funded'. (16) Section 469(a) (42 U.S.C. 669(a)) is amended-- (A) by striking `aid under plans approved' and inserting `assistance under State programs funded'; and (B) by striking `such aid' and inserting `such assistance'. (d) AMENDMENTS TO PART E OF TITLE IV- (1) Section 470 (42 U.S.C. 670) is amended-- (A) by striking `would be' and inserting `would have been'; and (B) by inserting `(as such plan was in effect on June 1, 1995)' after `part A'. (2) Section 471(a)(17) (42 U.S.C. 671(a)(17)) is amended by striking `plans approved under parts A and D' and inserting `program funded under part A and plan approved under part D'. (3) Section 472(a) (42 U.S.C. 672(a)) is amended-- (A) in the matter preceding paragraph (1)-- (i) by striking `would meet' and inserting `would have met'; (ii) by inserting `(as such sections were in effect on June 1, 1995)' after `407'; and (iii) by inserting `(as so in effect)' after `406(a)'; and (B) in paragraph (4)-- (i) in subparagraph (A)-- (I) by inserting `would have' after `(A)'; and (II) by inserting `(as in effect on June 1, 1995)' after `section 402'; and (ii) in subparagraph (B)(ii), by inserting `(as in effect on June 1, 1995)' after `406(a)'. (4) Section 472(h) (42 U.S.C. 672(h)) is amended to read as follows: `(h)(1) For purposes of title XIX, any child with respect to whom foster care maintenance payments are made under this section is deemed to be a dependent child as defined in section 406 (as in effect as of June 1, 1995) and deemed to be a recipient of aid to families with dependent children under part A of this title (as so in effect). For purposes of title XX, any child with respect to whom foster care maintenance payments are made under this section is deemed to be a minor child in a needy family under a State program funded under part A of this title and is deemed to be a recipient of assistance under such part. `(2) For purposes of paragraph (1), a child whose costs in a foster family home or child care institution are covered by the foster care maintenance payments being made with respect to the child's minor parent, as provided in section 475(4)(B), shall be considered a child with respect to whom foster care maintenance payments are made under this section.'. (5) Section 473(a)(2) (42 U.S.C. 673(a)(2)) is amended-- (A) in subparagraph (A)(i)-- (i) by inserting `(as such sections were in effect on June 1, 1995)' after `407'; (ii) by inserting `(as so in effect)' after `specified in section 406(a)'; and (iii) by inserting `(as such section was in effect on June 1, 1995)' after `403'; (B) in subparagraph (B)(i)-- (i) by inserting `would have' after `(B)(i)'; and (ii) by inserting `(as in effect on June 1, 1995)' after `section 402'; and (C) in subparagraph (B)(ii)(II), by inserting `(as in effect on June 1, 1995)' after `406(a)'. (6) Section 473(b) (42 U.S.C. 673(b)) is amended to read as follows: `(b)(1) For purposes of title XIX, any child who is described in paragraph (3) is deemed to be a dependent child as defined in section 406 (as in effect as of June 1, 1995) and deemed to be a recipient of aid to families with dependent children under part A of this title (as so in effect) in the State where such child resides. `(2) For purposes of title XX, any child who is described in paragraph (3) is deemed to be a minor child in a needy family under a State program funded under part A of this title and deemed to be a recipient of assistance under such part. `(3) A child described in this paragraph is any child-- `(A)(i) who is a child described in subsection (a)(2), and `(ii) with respect to whom an adoption assistance agreement is in effect under this section (whether or not adoption assistance payments are provided under the agreement or are being made under this section), including any such child who has been placed for adoption in accordance with applicable State and local law (whether or not an interlocutory or other judicial decree of adoption has been issued), or `(B) with respect to whom foster care maintenance payments are being made under section 472. `(4) For purposes of paragraphs (1) and (2), a child whose costs in a foster family home or child-care institution are covered by the foster care maintenance payments being made with respect to the child's minor parent, as provided in section 475(4)(B), shall be considered a child with respect to whom foster care maintenance payments are being made under section 472.'. (e) REPEAL OF PART F OF TITLE IV- Part F of title IV (42 U.S.C. 681-687) is repealed. (f) AMENDMENT TO TITLE X- Section 1002(a)(7) (42 U.S.C. 1202(a)(7)) is amended by striking `aid to families with dependent children under the State plan approved under section 402 of this Act' and inserting `assistance under a State program funded under part A of title IV'. (g) AMENDMENTS TO TITLE XI- (1) Section 1109 (42 U.S.C. 1309) is amended by striking `or part A of title IV,'. (2) Section 1115 (42 U.S.C. 1315) is amended-- (A) in subsection (a)(2)-- (i) by inserting `(A)' after `(2)'; (ii) by striking `403,'; (iii) by striking the period at the end and inserting `, and'; and (iv) by adding at the end the following new subparagraph: `(B) costs of such project which would not otherwise be a permissible use of funds under part A of title IV and which are not included as part of the costs of projects under section 1110, shall to the extent and for the period prescribed by the Secretary, be regarded as a permissible use of funds under such part.'; (B) in subsection (c)(3), by striking `the program of aid to families with dependent children' and inserting `part A of such title'; and (C) by striking subsection (b) and redesignating subsections (c) and (d) as subsections (b) and (c), respectively. (3) Section 1116 (42 U.S.C. 1316) is amended-- (A) in each of subsections (a)(1), (b), and (d), by striking `or part A of title IV,'; and (B) in subsection (a)(3), by striking `404,'. (4) Section 1118 (42 U.S.C. 1318) is amended-- (A) by striking `403(a),'; (B) by striking `and part A of title IV,'; and (C) by striking `, and shall, in the case of American Samoa, mean 75 per centum with respect to part A of title IV'. (5) Section 1119 (42 U.S.C. 1319) is amended-- (A) by striking `or part A of title IV'; and (B) by striking `403(a),'. (6) Section 1133(a) (42 U.S.C. 1320b-3(a)) is amended by striking `or part A of title IV,'. (7) Section 1136 (42 U.S.C. 1320b-6) is repealed. (8) Section 1137 (42 U.S.C. 1320b-7) is amended-- (A) in subsection (b), by striking paragraph (1) and inserting the following: `(1) any State program funded under part A of title IV of this Act;'; and (B) in subsection (d)(1)(B)-- (i) by striking `In this subsection--' and all that follows through `(ii) in' and inserting `In this subsection, in'; (ii) by redesignating subclauses (I), (II), and (III) as clauses (i), (ii), and (iii); and (iii) by moving such redesignated material 2 ems to the left. (h) AMENDMENT TO TITLE XIV- Section 1402(a)(7) (42 U.S.C. 1352(a)(7)) is amended by striking `aid to families with dependent children under the State plan approved under section 402 of this Act' and inserting `assistance under a State program funded under part A of title IV'. (i) AMENDMENT TO TITLE XVI AS IN EFFECT WITH RESPECT TO THE TERRITORIES- Section 1602(a)(11), as in effect without regard to the amendment made by section 301 of the Social Security Amendments of 1972 (42 U.S.C. 1382 note), is amended by striking `aid under the State plan approved' and inserting `assistance under a State program funded'. (j) AMENDMENT TO TITLE XVI AS IN EFFECT WITH RESPECT TO THE STATES- Section 1611(c)(5)(A) (42 U.S.C. 1382(c)(5)(A)) is amended to read as follows: `(A) a State program funded under part A of title IV,'. (k) AMENDMENT TO TITLE XIX- Section 1902(j) (42 U.S.C. 1396a(j)) is amended by striking `1108(c)' and inserting `1108(f)'. SEC. 109. CONFORMING AMENDMENTS TO THE FOOD STAMP ACT OF 1977 AND RELATED PROVISIONS. (a) Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended-- (1) in the second sentence of subsection (a), by striking `plan approved' and all that follows through `title IV of the Social Security Act' and inserting `program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)'; (2) in subsection (d)-- (A) in paragraph (5), by striking `assistance to families with dependent children' and inserting `assistance under a State program funded'; and (B) by striking paragraph (13) and redesignating paragraphs (14), (15), and (16) as paragraphs (13), (14), and (15), respectively; (3) in subsection (j), by striking `plan approved under part A of title IV of such Act (42 U.S.C. 601 et seq.)' and inserting `program funded under part A of title IV of the Act (42 U.S.C. 601 et seq.)'; and (4) by striking subsection (m). (b) Section 6 of such Act (7 U.S.C. 2015) is amended-- (1) in subsection (c)(5), by striking `the State plan approved' and inserting `the State program funded'; and (2) in subsection (e)(6), by striking `aid to families with dependent children' and inserting `benefits under a State program funded'. (c) Section 16(g)(4) of such Act (7 U.S.C. 2025(g)(4)) is amended by striking `State plans under the Aid to Families with Dependent Children Program under' and inserting `State programs funded under part A of'. (d) Section 17 of such Act (7 U.S.C. 2026) is amended-- (1) in the first sentence of subsection (b)(1)(A), by striking `to aid to families with dependent children under part A of title IV of the Social Security Act' and inserting `or are receiving assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)'; and (2) in subsection (b)(3), by adding at the end the following new subparagraph: `(I) The Secretary may not grant a waiver under this paragraph on or after the date of enactment of this subparagraph. Any reference in this paragraph to a provision of title IV of the Social Security Act shall be deemed to be a reference to such provision as in effect on the day before such date.'; (e) Section 20 of such Act (7 U.S.C. 2029) is amended-- (1) in subsection (a)(2)(B) by striking `operating--' and all that follows through `(ii) any other' and inserting `operating any'; and (2) in subsection (b)-- (A) in paragraph (1)-- (i) by striking `(b)(1) A household' and inserting `(b) A household'; and (ii) in subparagraph (B), by striking `training program' and inserting `activity'; (B) by striking paragraph (2); and (C) by redesignating subparagraphs (A) through (F) as paragraphs (1) through (6), respectively. (f) Section 5(h)(1) of the Agriculture and Consumer Protection Act of 1973 (Public Law 93-186; 7 U.S.C. 612c note) is amended by striking `the program for aid to families with dependent children' and inserting `the State program funded'. (g) Section 9 of the National School Lunch Act (42 U.S.C. 1758) is amended-- (1) in subsection (b)-- (A) in paragraph (2)(C)(ii)(II)-- (i) by striking `program for aid to families with dependent children' and inserting `State program funded'; and (ii) by inserting before the period at the end the following: `that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995'; and (B) in paragraph (6)-- (i) in subparagraph (A)(ii)-- (I) by striking `an AFDC assistance unit (under the aid to families with dependent children program authorized' and inserting `a family (under the State program funded'; and (II) by striking `, in a State' and all that follows through `9902(2)))' and inserting `that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995'; and (ii) in subparagraph (B), by striking `aid to families with dependent children' and inserting `assistance under the State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995'; and (2) in subsection (d)(2)(C)-- (A) by striking `program for aid to families with dependent children' and inserting `State program funded'; and (B) by inserting before the period at the end the following: `that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995'. (h) Section 17(d)(2)(A)(ii)(II) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(d)(2)(A)(ii)(II)) is amended-- (1) by striking `program for aid to families with dependent children established' and inserting `State program funded'; and (2) by inserting before the semicolon the following: `that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995'. SEC. 110. CONFORMING AMENDMENTS TO OTHER LAWS. (a) Subsection (b) of section 508 of the Unemployment Compensation Amendments of 1976 (42 U.S.C. 603a; Public Law 94-566; 90 Stat. 2689) is amended to read as follows: `(b) PROVISION FOR REIMBURSEMENT OF EXPENSES- For purposes of section 455 of the Social Security Act, expenses incurred to reimburse State employment offices for furnishing information requested of such offices-- `(1) pursuant to the third sentence of section 3(a) of the Act entitled `An Act to provide for the establishment of a national employment system and for cooperation with the States in the promotion of such system, and for other purposes', approved June 6, 1933 (29 U.S.C. 49b(a)), or `(2) by a State or local agency charged with the duty of carrying a State plan for child support approved under part D of title IV of the Social Security Act, shall be considered to constitute expenses incurred in the administration of such State plan.'. (b) Section 9121 of the Omnibus Budget Reconciliation Act of 1987 (42 U.S.C. 602 note) is repealed. (c) Section 9122 of the Omnibus Budget Reconciliation Act of 1987 (42 U.S.C. 602 note) is repealed. (d) Section 221 of the Housing and Urban-Rural Recovery Act of 1983 (42 U.S.C. 602 note), relating to treatment under AFDC of certain rental payments for federally assisted housing, is repealed. (e) Section 159 of the Tax Equity and Fiscal Responsibility Act of 1982 (42 U.S.C. 602 note) is repealed. (f) Section 202(d) of the Social Security Amendments of 1967 (81 Stat. 882; 42 U.S.C. 602 note) is repealed. (g) Section 903 of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988 (42 U.S.C. 11381 note), relating to demonstration projects to reduce number of AFDC families in welfare hotels, is amended-- (1) in subsection (a), by striking `aid to families with dependent children under a State plan approved' and inserting `assistance under a State program funded'; and (2) in subsection (c), by striking `aid to families with dependent children in the State under a State plan approved' and inserting `assistance in the State under a State program funded'. (h) The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is amended-- (1) in section 404C(c)(3) (20 U.S.C. 1070a-23(c)(3)), by striking `(Aid to Families with Dependent Children)'; and (2) in section 480(b)(2) (20 U.S.C. 1087vv(b)(2)), by striking `aid to families with dependent children under a State plan approved' and inserting `assistance under a State program funded'. (i) The Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2301 et seq.) is amended-- (1) in section 231(d)(3)(A)(ii) (20 U.S.C. 2341(d)(3)(A)(ii)), by striking `The program for aid to dependent children' and inserting `The State program funded'; (2) in section 232(b)(2)(B) (20 U.S.C. 2341a(b)(2)(B)), by striking `the program for aid to families with dependent children' and inserting `the State program funded'; and (3) in section 521(14)(B)(iii) (20 U.S.C. 2471(14)(B)(iii)), by striking `the program for aid to families with dependent children' and inserting `the State program funded'. (j) The Elementary and Secondary Education Act of 1965 (20 U.S.C. 2701 et seq.) is amended-- (1) in section 1113(a)(5) (20 U.S.C. 6313(a)(5)), by striking `Aid to Families with Dependent Children program' and inserting `State program funded under part A of title IV of the Social Security Act'; (2) in section 1124(c)(5) (20 U.S.C. 6333(c)(5)), by striking `the program of aid to families with dependent children under a State plan approved under' and inserting `a State program funded under part A of'; and (3) in section 5203(b)(2) (20 U.S.C. 7233(b)(2))-- (A) in subparagraph (A)(xi), by striking `Aid to Families with Dependent Children benefits' and inserting `assistance under a State program funded under part A of title IV of the Social Security Act'; and (B) in subparagraph (B)(viii), by striking `Aid to Families with Dependent Children' and inserting `assistance under the State program funded under part A of title IV of the Social Security Act'. (k) The 4th proviso of chapter VII of title I of Public Law 99-88 (25 U.S.C. 13d-1) is amended to read as follows: ` [Italic->] Provided further, [<-Italic] That general assistance payments made by the Bureau of Indian Affairs shall be made-- `(1) after April 29, 1985, and before October 1, 1995, on the basis of Aid to Families with Dependent Children (AFDC) standards of need; and `(2) on and after October 1, 1995, on the basis of standards of need established under the State program funded under part A of title IV of the Social Security Act, except that where a State ratably reduces its AFDC or State program payments, the Bureau shall reduce general assistance payments in such State by the same percentage as the State has reduced the AFDC or State program payment.'. (l) The Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.) is amended-- (1) in section 51(d)(9) (26 U.S.C. 51(d)(9)), by striking all that follows `agency as' and inserting `being eligible for financial assistance under part A of title IV of the Social Security Act and as having continually received such financial assistance during the 90-day period which immediately precedes the date on which such individual is hired by the employer.'; (2) in section 3304(a)(16) (26 U.S.C. 3304(a)(16)), by striking `eligibility for aid or services,' and all that follows through `children approved' and inserting `eligibility for assistance, or the amount of such assistance, under a State program funded'; (3) in section 6103(l)(7)(D)(i) (26 U.S.C. 6103(l)(7)(D)(i)), by striking `aid to families with dependent children provided under a State plan approved' and inserting `a State program funded'; (4) in section 6103(l)(10) (26 U.S.C. 6103(l)(10))-- (A) by striking `(c) or (d)' each place it appears and inserting `(c), (d), or (e)'; and (B) by adding at the end of subparagraph (B) the following new sentence: `Any return information disclosed with respect to section 6402(e) shall only be disclosed to officers and employees of the State agency requesting such information.'; (5) in section 6103(p)(4) (26 U.S.C. 6103(p)(4)), in the matter preceding subparagraph (A)-- (A) by striking `(5), (10)' and inserting `(5)'; and (B) by striking `(9), or (12)' and inserting `(9), (10), or (12)'; (6) in section 6334(a)(11)(A) (26 U.S.C. 6334(a)(11)(A)), by striking `(relating to aid to families with dependent children)'; (7) in section 6402 (26 U.S.C. 6402)-- (A) in subsection (a), by striking `(c) and (d)' and inserting `(c), (d), and (e)'; (B) by redesignating subsections (e) through (i) as subsections (f) through (j), respectively; and (C) by inserting after subsection (d) the following: `(e) COLLECTION OF OVERPAYMENTS UNDER TITLE IV-A OF THE SOCIAL SECURITY ACT- The amount of any overpayment to be refunded to the person making the overpayment shall be reduced (after reductions pursuant to subsections (c) and (d), but before a credit against future liability for an internal revenue tax) in accordance with section 405(e) of the Social Security Act (concerning recovery of overpayments to individuals under State plans approved under part A of title IV of such Act).'; and (8) in section 7523(b)(3)(C) (26 U.S.C. 7523(b)(3)(C)), by striking `aid to families with dependent children' and inserting `assistance under a State program funded under part A of title IV of the Social Security Act'. (m) Section 3(b) of the Wagner-Peyser Act (29 U.S.C. 49b(b)) is amended by striking `State plan approved under part A of title IV' and inserting `State program funded under part A of title IV'. (n) The Job Training Partnership Act (29 U.S.C. 1501 et seq.) is amended-- (1) in section 4(29)(A)(i) (29 U.S.C. 1503(29)(A)(i)), by striking `(42 U.S.C. 601 et seq.)'; (2) in section 106(b)(6)(C) (29 U.S.C. 1516(b)(6)(C)), by striking `State aid to families with dependent children records,' and inserting `records collected under the State program funded under part A of title IV of the Social Security Act,'; (3) in section 121(b)(2) (29 U.S.C. 1531(b)(2))-- (A) by striking `the JOBS program' and inserting `the work activities required under title IV of the Social Security Act'; and (B) by striking the second sentence; (4) in section 123(c) (29 U.S.C. 1533(c))-- (A) in paragraph (1)(E), by repealing clause (vi); and (B) in paragraph (2)(D), by repealing clause (v); (5) in section 203(b)(3) (29 U.S.C. 1603(b)(3)), by striking `, including recipients under the JOBS program'; (6) in subparagraphs (A) and (B) of section 204(a)(1) (29 U.S.C. 1604(a)(1) (A) and (B)), by striking `(such as the JOBS program)' each place it appears; (7) in section 205(a) (29 U.S.C. 1605(a)), by striking paragraph (4) and inserting the following: `(4) the portions of title IV of the Social Security Act relating to work activities;'; (8) in section 253 (29 U.S.C. 1632)-- (A) in subsection (b)(2), by repealing subparagraph (C); and (B) in paragraphs (1)(B) and (2)(B) of subsection (c), by striking `the JOBS program or' each place it appears; (9) in section 264 (29 U.S.C. 1644)-- (A) in subparagraphs (A) and (B) of subsection (b)(1), by striking `(such as the JOBS program)' each place it appears; and (B) in subparagraphs (A) and (B) of subsection (d)(3), by striking `and the JOBS program' each place it appears; (10) in section 265(b) (29 U.S.C. 1645(b)), by striking paragraph (6) and inserting the following: `(6) the portion of title IV of the Social Security Act relating to work activities;'; (11) in the second sentence of section 429(e) (29 U.S.C. 1699(e)), by striking `and shall be in an amount that does not exceed the maximum amount that may be provided by the State pursuant to section 402(g)(1)(C) of the Social Security Act (42 U.S.C. 602(g)(1)(C))'; (12) in section 454(c) (29 U.S.C. 1734(c)), by striking `JOBS and'; (13) in section 455(b) (29 U.S.C. 1735(b)), by striking `the JOBS program,'; (14) in section 501(1) (29 U.S.C. 1791(1)), by striking `aid to families with dependent children under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)' and inserting `assistance under the State program funded under part A of title IV of the Social Security Act'; (15) in section 506(1)(A) (29 U.S.C. 1791e(1)(A)), by striking `aid to families with dependent children' and inserting `assistance under the State program funded'; (16) in section 508(a)(2)(A) (29 U.S.C. 1791g(a)(2)(A)), by striking `aid to families with dependent children' and inserting `assistance under the State program funded'; and (17) in section 701(b)(2)(A) (29 U.S.C. 1792(b)(2)(A))-- (A) in clause (v), by striking the semicolon and inserting `; and'; and (B) by striking clause (vi). (o) Section 3803(c)(2)(C)(iv) of title 31, United States Code, is amended to read as follows: `(iv) assistance under a State program funded under part A of title IV of the Social Security Act;'. (p) Section 2605(b)(2)(A)(i) of the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8624(b)(2)(A)(i)) is amended to read as follows: `(i) assistance under the State program funded under part A of title IV of the Social Security Act;'. (q) Section 303(f)(2) of the Family Support Act of 1988 (42 U.S.C. 602 note) is amended-- (1) by striking `(A)'; and (2) by striking subparagraphs (B) and (C). (r) The Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 900 et seq.) is amended-- (1) in the first section 255(h) (2 U.S.C. 905(h)), by striking `Aid to families with dependent children (75-0412-0-1-609);' and inserting `Block grants to States for temporary assistance for needy families;'; and (2) in section 256 (2 U.S.C. 906)-- (A) by striking subsection (k); and (B) by redesignating subsection (l) as subsection (k). (s) The Immigration and Nationality Act (8 U.S.C. 1101 et seq.) is amended-- (1) in section 210(f) (8 U.S.C. 1160(f)), by striking `aid under a State plan approved under' each place it appears and inserting `assistance under a State program funded under'; (2) in section 245A(h) (8 U.S.C. 1255a(h))-- (A) in paragraph (1)(A)(i), by striking `program of aid to families with dependent children' and inserting `State program of assistance'; and (B) in paragraph (2)(B), by striking `aid to families with dependent children' and inserting `assistance under a State program funded under part A of title IV of the Social Security Act'; and (3) in section 412(e)(4) (8 U.S.C. 1522(e)(4)), by striking `State plan approved' and inserting `State program funded'. (t) Section 640(a)(4)(B)(i) of the Head Start Act (42 U.S.C. 9835(a)(4)(B)(i)) is amended by striking `program of aid to families with dependent children under a State plan approved' and inserting `State program of assistance funded'. (u) Section 9 of the Act of April 19, 1950 (64 Stat. 47, chapter 92; 25 U.S.C. 639) is repealed. (v) Subparagraph (E) of section 213(d)(6) of the School-To-Work Opportunities Act of 1994 (20 U.S.C. 6143(d)(6)) is amended to read as follows: `(E) part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) relating to work activities;'. (w) Section 552a(a)(8)(B)(iv)(III) of title 5, United States Code, is amended by striking `section 464 or 1137 of the Social Security Act' and inserting `section 404(e), 464, or 1137 of the Social Security Act'. SEC. 111. DEVELOPMENT OF PROTOTYPE OF COUNTERFEIT-RESISTANT SOCIAL SECURITY CARD REQUIRED. (a) DEVELOPMENT- (1) IN GENERAL- The Commissioner of Social Security (in this section referred to as the `Commissioner') shall, in accordance with this section, develop a prototype of a counterfeit-resistant social security card. Such prototype card shall-- (A) be made of a durable, tamper-resistant material such as plastic or polyester, (B) employ technologies that provide security features, such as magnetic stripes, holograms, and integrated circuits, and (C) be developed so as to provide individuals with reliable proof of citizenship or legal resident alien status. (2) ASSISTANCE BY ATTORNEY GENERAL- The Attorney General of the United States shall provide such information and assistance as the Commissioner deems necessary to enable the Commissioner to comply with this section. (b) STUDY AND REPORT- (1) IN GENERAL- The Commissioner shall conduct a study and issue a report to Congress which examines different methods of improving the social security card application process. (2) ELEMENTS OF STUDY- The study shall include an evaluation of the cost and work load implications of issuing a counterfeit-resistant social security card for all individuals over a 3-, 5-, and 10-year period. The study shall also evaluate the feasibility and cost implications of imposing a user fee for replacement cards and cards issued to individuals who apply for such a card prior to the scheduled 3-, 5-, and 10-year phase-in options. (3) DISTRIBUTION OF REPORT- The Commissioner shall submit copies of the report described in this subsection along with a facsimile of the prototype card as described in subsection (a) to the Committees on Ways and Means and Judiciary of the House of Representatives and the Committees on Finance and Judiciary of the Senate within 1 year after the date of the enactment of this Act. SEC. 112. MODIFICATIONS TO THE JOB OPPORTUNITIES FOR CERTAIN LOW-INCOME INDIVIDUALS PROGRAM. Section 505 of the Family Support Act of 1988 (42 U.S.C. 1315 note) is amended-- (1) in the heading, by striking `demonstration'; (2) by striking `demonstration' each place such term appears; (3) in subsection (a), by striking `in each of fiscal years' and all that follows through `10' and inserting `shall enter into agreements with'; (4) in subsection (b)(3), by striking `aid to families with dependent children under part A of title IV of the Social Security Act' and inserting `assistance under the program funded part A of title IV of the Social Security Act of the State in which the individual resides'; (5) in subsection (c)-- (A) in paragraph (1)(C), by striking `aid to families with dependent children under title IV of the Social Security Act' and inserting `assistance under a State program funded part A of title IV of the Social Security Act'; (B) in paragraph (2), by striking `aid to families with dependent children under title IV of such Act' and inserting `assistance under a State program funded part A of title IV of the Social Security Act'; (6) in subsection (d), by striking `job opportunities and basic skills training program (as provided for under title IV of the Social Security Act)' and inserting `the State program funded under part A of title IV of the Social Security Act'; and (7) by striking subsections (e) through (g) and inserting the following: `(e) AUTHORIZATION OF APPROPRIATIONS- For the purpose of conducting projects under this section, there is authorized to be appropriated an amount not to exceed $25,000,000 for any fiscal year.'. SEC. 113. SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL FOR TECHNICAL AND CONFORMING AMENDMENTS. Not later than 90 days after the date of the enactment of this Act, the Secretary of Health and Human Services and the Commissioner of Social Security, in consultation, as appropriate, with the heads of other Federal agencies, shall submit to the appropriate committees of Congress a legislative proposal proposing such technical and conforming amendments as are necessary to bring the law into conformity with the policy embodied in this title. SEC. 114. ASSURING MEDICAID COVERAGE FOR LOW-INCOME FAMILIES. (a) IN GENERAL- Title XIX is amended-- (1) by redesignating section 1931 as section 1932; and (2) by inserting after section 1930 the following new section: `ASSURING COVERAGE FOR CERTAIN LOW-INCOME FAMILIES `SEC. 1931. (a) REFERENCES TO TITLE IV-A ARE REFERENCES TO PRE-WELFARE-REFORM PROVISIONS- Subject to the succeeding provisions of this section, with respect to a State any reference in this title (or any other provision of law in relation to the operation of this title) to a provision of part A of title IV, or a State plan under such part (or a provision of such a plan), including income and resource standards and income and resource methodologies under such part or plan, shall be considered a reference to such a provision or plan as in effect as of July 16, 1996, with respect to the State. `(b) APPLICATION OF PRE-WELFARE-REFORM ELIGIBILITY CRITERIA- `(1) IN GENERAL- For purposes of this title, subject to paragraphs (2) and (3), in determining eligibility for medical assistance-- `(A) an individual shall be treated as receiving aid or assistance under a State plan approved under part A of title IV only if the individual meets-- `(i) the income and resource standards for determining eligibility under such plan, and `(ii) the eligibility requirements of such plan under subsections (a) through (c) of section 406 and section 407(a), as in effect as of July 16, 1996; and `(B) the income and resource methodologies under such plan as of such date shall be used in the determination of whether any individual meets income and resource standards under such plan. `(2) STATE OPTION- For purposes of applying this section, a State-- `(A) may lower its income standards applicable with respect to part A of title IV, but not below the income standards applicable under its State plan under such part on May 1, 1988; `(B) may increase income or resource standards under the State plan referred to in paragraph (1) over a period (beginning after July 16, 1996) by a percentage that does not exceed the percentage increase in the Consumer Price Index for all urban consumers (all items; United States city average) over such period; and `(C) may use income and resource methodologies that are less restrictive than the methodologies used under the State plan under such part as of July 16, 1996. `(3) OPTION TO TERMINATE MEDICAL ASSISTANCE FOR FAILURE TO MEET WORK REQUIREMENT- `(A) INDIVIDUALS RECEIVING CASH ASSISTANCE UNDER TANF- In the case of an individual who-- `(i) is receiving cash assistance under a State program funded under part A of title IV, `(ii) is eligible for medical assistance under this title on a basis not related to section 1902(l), and `(iii) has the cash assistance under such program terminated pursuant to section 407(e)(1)(B) (as in effect on or after the welfare reform effective date) because of refusing to work, the State may terminate such individual's eligibility for medical assistance under this title until such time as there no longer is a basis for the termination of such cash assistance because of such refusal. `(B) EXCEPTION FOR CHILDREN- Subparagraph (A) shall not be construed as permitting a State to terminate medical assistance for a minor child who is not the head of a household receiving assistance under a State program funded under part A of title IV. `(c) TREATMENT FOR PURPOSES OF TRANSITIONAL COVERAGE PROVISIONS- `(1) TRANSITION IN THE CASE OF CHILD SUPPORT COLLECTIONS- The provisions of section 406(h) (as in effect on July 16, 1996) shall apply, in relation to this title, with respect to individuals (and families composed of individuals) who are described in subsection (b)(1)(A), in the same manner as they applied before such date with respect to individuals who became ineligible for aid to families with dependent children as a result (wholly or partly) of the collection of child or spousal support under part D of title IV. `(2) TRANSITION IN THE CASE OF EARNINGS FROM EMPLOYMENT- For continued medical assistance in the case of individuals (and families composed of individuals) described in subsection (b)(1)(A) who would otherwise become ineligible because of hours or income from employment, see sections 1925 and 1902(e)(1). `(d) WAIVERS- In the case of a waiver of a provision of part A of title IV in effect with respect to a State as of July 16, 1996, or which is submitted to the Secretary before the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and approved by the Secretary on or before July 1, 1997, if the waiver affects eligibility of individuals for medical assistance under this title, such waiver may (but need not) continue to be applied, at the option of the State, in relation to this title after the date the waiver would otherwise expire. `(e) STATE OPTION TO USE 1 APPLICATION FORM- Nothing in this section, or part A of title IV, shall be construed as preventing a State from providing for the same application form for assistance under a State program funded under part A of title IV (on or after the welfare reform effective date) and for medical assistance under this title. `(f) ADDITIONAL RULES OF CONSTRUCTION- `(1) With respect to the reference in section 1902(a)(5) to a State plan approved under part A of title IV, a State may treat such reference as a reference either to a State program funded under such part (as in effect on and after the welfare reform effective date) or to the State plan under this title. `(2) Any reference in section 1902(a)(55) to a State plan approved under part A of title IV shall be deemed a reference to a State program funded under such part. `(3) In applying section 1903(f), the applicable income limitation otherwise determined shall be subject to increase in the same manner as income or resource standards of a State may be increased under subsection (b)(2)(B). `(g) RELATION TO OTHER PROVISIONS- The provisions of this section shall apply notwithstanding any other provision of this Act. `(h) TRANSITIONAL INCREASED FEDERAL MATCHING RATE FOR INCREASED ADMINISTRATIVE COSTS- `(1) IN GENERAL- Subject to the succeeding provisions of this subsection, the Secretary shall provide that with respect to administrative expenditures described in paragraph (2) the per centum specified in section 1903(a)(7) shall be increased to such percentage as the Secretary specifies. `(2) ADMINISTRATIVE EXPENDITURES DESCRIBED- The administrative expenditures described in this paragraph are expenditures described in section 1903(a)(7) that a State demonstrates to the satisfaction of the Secretary are attributable to administrative costs of eligibility determinations that (but for the enactment of this section) would not be incurred. `(3) LIMITATION- The total amount of additional Federal funds that are expended as a result of the application of this subsection for the period beginning with fiscal year 1997 and ending with fiscal year 2000 shall not exceed $500,000,000. In applying this paragraph, the Secretary shall ensure the equitable distribution of additional funds among the States. `(4) TIME LIMITATION- This subsection shall only apply with respect to a State for expenditures incurred during the first 12 calendar quarters in which the State program funded under part A of title IV (as in effect on and after the welfare reform effective date) is in effect. `(i) WELFARE REFORM EFFECTIVE DATE- In this section, the term `welfare reform effective date' means the effective date, with respect to a State, of title I of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (as specified in section 116 of such Act).'. (b) PLAN AMENDMENT- Section 1902(a) (42 U.S.C. 1396a(a)) is amended-- (1) by striking `and' at the end of paragraph (61), (2) by striking the period at the end of paragraph (62) and inserting `; and', and (3) by inserting after paragraph (62) the following new paragraph: `(63) provide for administration and determinations of eligibility with respect to individuals who are (or seek to be) eligible for medical assistance based on the application of section 1931.'. (c) EXTENSION OF WORK TRANSITION PROVISIONS- Sections 1902(e)(1)(B) and 1925(f) (42 U.S.C. 1396a(e)(1)(B), 1396r-6(f)) are each amended by striking `1998' and inserting `2001'. (d) ELIMINATION OF REQUIREMENT OF MINIMUM AFDC PAYMENT LEVELS- (1) Section 1902(c) (42 U.S.C. 1396a(c)) is amended by striking `if--' and all that follows and inserting the following: `if the State requires individuals described in subsection (l)(1) to apply for assistance under the State program funded under part A of title IV as a condition of applying for or receiving medical assistance under this title.'. (2) Section 1903(i) (42 U.S.C. 1396b(i)) is amended by striking paragraph (9). SEC. 115. DENIAL OF ASSISTANCE AND BENEFITS FOR CERTAIN DRUG-RELATED CONVICTIONS. (a) IN GENERAL- An individual convicted (under Federal or State law) of any offense which is classified as a felony by the law of the jurisdiction involved and which has as an element the possession, use, or distribution of a controlled substance (as defined in section 102(6) of the Controlled Substances Act (21 U.S.C. 802(6))) shall not be eligible for-- (1) assistance under any State program funded under part A of title IV of the Social Security Act, or (2) benefits under the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977) or any State program carried out under the Food Stamp Act of 1977. (b) EFFECTS ON ASSISTANCE AND BENEFITS FOR OTHERS- (1) PROGRAM OF TEMPORARY ASSISTANCE FOR NEEDY FAMILIES- The amount of assistance otherwise required to be provided under a State program funded under part A of title IV of the Social Security Act to the family members of an individual to whom subsection (a) applies shall be reduced by the amount which would have otherwise been made available to the individual under such part. (2) BENEFITS UNDER THE FOOD STAMP ACT OF 1977- The amount of benefits otherwise required to be provided to a household under the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977), or any State program carried out under the Food Stamp Act of 1977, shall be determined by considering the individual to whom subsection (a) applies not to be a member of such household, except that the income and resources of the individual shall be considered to be income and resources of the household. (c) ENFORCEMENT- A State that has not exercised its authority under subsection (d)(1)(A) shall require each individual applying for assistance or benefits referred to in subsection (a), during the application process, to state, in writing, whether the individual, or any member of the household of the individual, has been convicted of a crime described in subsection (a). (d) LIMITATIONS- (1) STATE ELECTIONS- (A) OPT OUT- A State may, by specific reference in a law enacted after the date of the enactment of this Act, exempt any or all individuals domiciled in the State from the application of subsection (a). (B) LIMIT PERIOD OF PROHIBITION- A State may, by law enacted after the date of the enactment of this Act, limit the period for which subsection (a) shall apply to any or all individuals domiciled in the State. (2) INAPPLICABILITY TO CONVICTIONS OCCURRING ON OR BEFORE ENACTMENT- Subsection (a) shall not apply to convictions occurring on or before the date of the enactment of this Act. (e) DEFINITIONS OF STATE- For purposes of this section, the term `State' has the meaning given it-- (1) in section 419(5) of the Social Security Act, when referring to assistance provided under a State program funded under part A of title IV of the Social Security Act, and (2) in section 3(m) of the Food Stamp Act of 1977, when referring to the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977) or any State program carried out under the Food Stamp Act of 1977. (f) RULE OF INTERPRETATION- Nothing in this section shall be construed to deny the following Federal benefits: (1) Emergency medical services under title XIX of the Social Security Act. (2) Short-term, noncash, in-kind emergency disaster relief. (3)(A) Public health assistance for immunizations. (B) Public health assistance for testing and treatment of communicable diseases if the Secretary of Health and Human Services determines that it is necessary to prevent the spread of such disease. (4) Prenatal care. (5) Job training programs. (6) Drug treatment programs. SEC. 116. EFFECTIVE DATE; TRANSITION RULE. (a) EFFECTIVE DATES- (1) IN GENERAL- Except as otherwise provided in this title, this title and the amendments made by this title shall take effect on July 1, 1997. (2) DELAYED EFFECTIVE DATE FOR CERTAIN PROVISIONS- Notwithstanding any other provision of this section, paragraphs (2), (3), (4), (5), (8), and (10) of section 409(a) and section 411(a) of the Social Security Act (as added by the amendments made by section 103(a) of this Act) shall not take effect with respect to a State until, and shall apply only with respect to conduct that occurs on or after, the later of-- (A) July 1, 1997; or (B) the date that is 6 months after the date the Secretary of Health and Human Services receives from the State a plan described in section 402(a) of the Social Security Act (as added by such amendment). (3) GRANTS TO OUTLYING AREAS- The amendments made by section 103(b) shall take effect on October 1, 1996. (4) ELIMINATION OF CHILD CARE PROGRAMS- The amendments made by section 103(c) shall take effect on October 1, 1996. (5) DEFINITIONS APPLICABLE TO NEW CHILD CARE ENTITLEMENT- Sections 403(a)(1)(C), 403(a)(1)(D), and 419(4) of the Social Security Act, as added by the amendments made by section 103(a) of this Act, shall take effect on October 1, 1996. (b) TRANSITION RULES- Effective on the date of the enactment of this Act: (1) STATE OPTION TO ACCELERATE EFFECTIVE DATE- (A) IN GENERAL- If the Secretary of Health and Human Services receives from a State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act), then-- (i) on and after the date of such receipt-- (I) except as provided in clause (ii), this title and the amendments made by this title (other than by section 103(c) of this Act) shall apply with respect to the State; and (II) the State shall be considered an eligible State for purposes of part A of title IV of the Social Security Act (as in effect pursuant to the amendments made by such section 103(a)); and (ii) during the period that begins on the date of such receipt and ends on June 30, 1997, there shall remain in effect with respect to the State-- (I) section 403(h) of the Social Security Act (as in effect on September 30, 1995); and (II) all State reporting requirements under parts A and F of title IV of the Social Security Act (as in effect on September 30, 1995), modified by the Secretary as appropriate, taking into account the State program under part A of title IV of the Social Security Act (as in effect pursuant to the amendments made by such section 103(a)). (B) LIMITATIONS ON FEDERAL OBLIGATIONS- (i) UNDER AFDC PROGRAM- The total obligations of the Federal Government to a State under part A of title IV of the Social Security Act (as in effect on September 30, 1995) with respect to expenditures in fiscal year 1997 shall not exceed an amount equal to the State family assistance grant. (ii) UNDER TEMPORARY FAMILY ASSISTANCE PROGRAM- Notwithstanding section 403(a)(1) of the Social Security Act (as in effect pursuant to the amendments made by section 103(a) of this Act), the total obligations of the Federal Government to a State under such section 403(a)(1)-- (I) for fiscal year 1996, shall be an amount equal to-- (aa) the State family assistance grant; multiplied by (bb) 1/366 of the number of days during the period that begins on the date the Secretary of Health and Human Services first receives from the State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act) and ends on September 30, 1996; and (II) for fiscal year 1997, shall be an amount equal to the lesser of-- (aa) the amount (if any) by which the State family assistance grant exceeds the total obligations of the Federal Government to the State under part A of title IV of the Social Security Act (as in effect on September 30, 1995) with respect to expenditures in fiscal year 1997; or (bb) the State family assistance grant, multiplied by 1/365 of the number of days during the period that begins on October 1, 1996, or the date the Secretary of Health and Human Services first receives from the State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act), whichever is later, and ends on September 30, 1997. (iii) CHILD CARE OBLIGATIONS EXCLUDED IN DETERMINING FEDERAL AFDC OBLIGATIONS- As used in this subparagraph, the term `obligations of the Federal Government to the State under part A of title IV of the Social Security Act' does not include any obligation of the Federal Government with respect to child care expenditures by the State. (C) SUBMISSION OF STATE PLAN FOR FISCAL YEAR 1996 OR 1997 DEEMED ACCEPTANCE OF GRANT LIMITATIONS AND FORMULA AND TERMINATION OF AFDC ENTITLEMENT- The submission of a plan by a State pursuant to subparagraph (A) is deemed to constitute-- (i) the State's acceptance of the grant reductions under subparagraph (B) (including the formula for computing the amount of the reduction); and (ii) the termination of any entitlement of any individual or family to benefits or services under the State AFDC program. (D) DEFINITIONS- As used in this paragraph: (i) STATE AFDC PROGRAM- The term `State AFDC program' means the State program under parts A and F of title IV of the Social Security Act (as in effect on September 30, 1995). (ii) STATE- The term `State' means the 50 States and the District of Columbia. (iii) STATE FAMILY ASSISTANCE GRANT- The term `State family assistance grant' means the State family assistance grant (as defined in section 403(a)(1)(B) of the Social Security Act, as added by the amendment made by section 103(a)(1) of this Act). (2) CLAIMS, ACTIONS, AND PROCEEDINGS- The amendments made by this title shall not apply with respect to-- (A) powers, duties, functions, rights, claims, penalties, or obligations applicable to aid, assistance, or services provided before the effective date of this title under the provisions amended; and (B) administrative actions and proceedings commenced before such date, or authorized before such date to be commenced, under such provisions. (3) CLOSING OUT ACCOUNT FOR THOSE PROGRAMS TERMINATED OR SUBSTANTIALLY MODIFIED BY THIS TITLE- In closing out accounts, Federal and State officials may use scientifically acceptable statistical sampling techniques. Claims made with respect to State expenditures under a State plan approved under part A of title IV of the Social Security Act (as in effect on September 30, 1995) with respect to assistance or services provided on or before September 30, 1995, shall be treated as claims with respect to expenditures during fiscal year 1995 for purposes of reimbursement even if payment was made by a State on or after October 1, 1995. Each State shall complete the filing of all claims under the State plan (as so in effect) within 2 years after the date of the enactment of this Act. The head of each Federal department shall-- (A) use the single audit procedure to review and resolve any claims in connection with the close out of programs under such State plans; and (B) reimburse States for any payments made for assistance or services provided during a prior fiscal year from funds for fiscal year 1995, rather than from funds authorized by this title. (4) CONTINUANCE IN OFFICE OF ASSISTANT SECRETARY FOR FAMILY SUPPORT- The individual who, on the day before the effective date of this title, is serving as Assistant Secretary for Family Support within the Department of Health and Human Services shall, until a successor is appointed to such position-- (A) continue to serve in such position; and (B) except as otherwise provided by law-- (i) continue to perform the functions of the Assistant Secretary for Family Support under section 417 of the Social Security Act (as in effect before such effective date); and (ii) have the powers and duties of the Assistant Secretary for Family Support under section 416 of the Social Security Act (as in effect pursuant to the amendment made by section 103(a)(1) of this Act). (c) TERMINATION OF ENTITLEMENT UNDER AFDC PROGRAM- Effective October 1, 1996, no individual or family shall be entitled to any benefits or services under any State plan approved under part A or F of title IV of the Social Security Act (as in effect on September 30, 1995).