[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 982 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 982

  To reconnect welfare families to the world of work, make work pay, 
strengthen families, require personal responsibility, and support State 
                              flexibility.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 16, 1995

    Mr. Deal of Georgia (for himself, Mr. Clement, Mr. Tanner, Mr. 
   Stenholm, Mrs. Lincoln, Ms. Thurman, Mr. Brewster, Mr. Hayes, Mr. 
    Holden, Mr. Laughlin, Mr. Lipinski, Mr. McHale, Mr. Minge, Mr. 
  Montgomery, and Mr. Peterson of Minnesota) introduced the following 
  bill; which was referred to the Committee on Ways and Means and, in 
addition, to the Committees on Economic and Educational Opportunities, 
 Commerce, Agriculture, Banking and Financial Services, the Judiciary, 
   and the Budget, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
  To reconnect welfare families to the world of work, make work pay, 
strengthen families, require personal responsibility, and support State 
                              flexibility.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Individual Responsibility Act of 
1995''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents of this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Amendment of the Social Security Act.
             TITLE I--TIME-LIMITED TRANSITIONAL ASSISTANCE

Sec. 101. Limitation on duration of AFDC benefits.
Sec. 102. Job search requirement.
Sec. 103. Establishment of Federal data base.
                        TITLE II--MAKE WORK PAY

                        Subtitle A--Health Care

Sec. 201. Transitional medicaid benefits.
                  Subtitle B--Earned Income Tax Credit

Sec. 211. Notice of availability required to be provided to applicants 
                            and former recipients of AFDC, food stamps, 
                            and medicaid.
Sec. 212. Notice of availability of earned income tax credit and 
                            dependent care tax credit to be included on 
                            W-4 form.
                         Subtitle C--Child Care

Sec. 221. Dependent care credit to be refundable; high-income taxpayers 
                            ineligible for credit.
Sec. 222. Funding of child care services.
                    Subtitle D--AFDC Work Disregards

Sec. 231. Option to increase disregard of earned income.
Sec. 232. State option to establish voluntary diversion program.
Sec. 233. Elimination of quarters of coverage requirement for married 
                            teens under AFDC-UP program.
                   Subtitle E--AFDC Asset Limitations

Sec. 241. Increase in resource thresholds; separate threshold for 
                            vehicles.
Sec. 242. Limited disregard of amounts saved for post-secondary 
                            education, the purchase of a first home, or 
                            the establishment or operation of a 
                            microenterprise.
                   TITLE III--THE WORK FIRST PROGRAM

Sec. 301. Work first program.
Sec. 302. Regulations.
Sec. 303. Applicability to States.
Sec. 304. Sense of the Congress relating to availability of work first 
                            program in rural areas.
 TITLE IV--FAMILY RESPONSIBILITY AND IMPROVED CHILD SUPPORT ENFORCEMENT

Subtitle A--Enhancement of Ability to Identify and Locate Noncustodial 
                                Parents

Sec. 401. Expansion of functions of Federal Parent Locator Service.
Sec. 402. Expansion of data bases accessed by parent locator systems.
Sec. 403. National parent locator network.
Sec. 404. Private access to locate and enforcement services.
                  Subtitle B--Paternity Establishment

Sec. 411. Sense of the Congress.
Sec. 412. Availability of parenting social services for new fathers.
Sec. 413. Cooperation requirement and good cause exception.
Sec. 414. Elimination of $50 child support pass-through to AFDC 
                            recipients.
Sec. 415. Federal matching payments.
Sec. 416. Performance-based incentives and penalties.
Sec. 417. State laws concerning paternity establishment.
  Subtitle C--Improvement of Child Support Order Establishment Process

Sec. 421. National Child Support Guidelines Commission.
Sec. 422. State laws providing expedited procedures.
                 Subtitle D--Child Support Enforcement

Sec. 431. National reporting of new hires and child support 
                            information.
Sec. 432. Certain benefits subject to garnishment.
Sec. 433. Seizure of lottery winnings, settlements, payouts, awards, 
                            and bequests, and sale of forfeited 
                            property, to pay child support arrearages.
Sec. 434. Reporting of child support arrearages to credit bureaus.
Sec. 435. Liability of grandparents for financial support of children 
                            of their minor children.
Sec. 436. Sense of the Congress regarding programs for noncustodial 
                            parents unable to meet child support 
                            obligations.
Sec. 437. Distribution of payments.
Sec. 438. Due process rights.
Sec. 439. Use of social security numbers.
Sec. 440. Adoption of uniform State laws.
Sec. 441. State law authorizing suspension of licenses.
Sec. 442. Treatment of support obligations under bankruptcy code.
Sec. 443. Federal income tax refund offset.
              TITLE V--TEEN PREGNANCY AND FAMILY STABILITY

                        Subtitle A--Federal Role

Sec. 501. State option to deny AFDC for additional children.
Sec. 502. Minors receiving AFDC required to live under responsible 
                            adult supervision.
Sec. 503. Task force to reduce teenage pregnancy.
Sec. 504. Incentive for teen parents to attend school.
Sec. 505. State option to disregard 100-hour rule under AFDC-UP 
                            program.
Sec. 506. State option to disregard 6-month limitation on AFDC-UP 
                            benefits.
Sec. 507. Elimination of quarters of coverage requirement under AFDC-UP 
                            program for families in which both parents 
                            are teens.
Sec. 508. Denial of Federal housing benefits to minors who bear 
                            children out-of-wedlock.
Sec. 509. State option to deny AFDC to minor parents.
                         Subtitle B--State Role

Sec. 511. Teenage pregnancy prevention and family stability.
Sec. 512. Availability of family planning services.
                    TITLE VI--PROGRAM SIMPLIFICATION

                Subtitle A--Increased State Flexibility

Sec. 601. State option to provide AFDC through electronic benefit 
                            transfer systems.
Sec. 602. Deadline for action on application for waiver of requirement 
                            applicable to program of aid to families 
                            with dependent children.
        Subtitle B--Coordination of AFDC and Food Stamp Programs

Sec. 611. Amendments to part A of title IV of the Social Security Act.
Sec. 612. Amendments to the Food Stamp Act of 1977.
                      Subtitle C--Fraud Reduction

Sec. 631. Sense of the Congress in support of the efforts of the 
                            administration to address the problems of 
                            fraud and abuse in the supplemental 
                            security income program.
Sec. 632. Study on feasibility of single tamper-proof identification 
                            card to serve programs under both the 
                            Social Security Act and health reform 
                            legislation.
                   Subtitle D--Additional Provisions

Sec. 641. State options regarding unemployed parent program.
Sec. 642. Definition of essential person.
Sec. 643. ``Fill-the-gap'' budgeting.
Sec. 644. Repeal of requirement to make certain supplemental payments 
                            in States paying less than their needs 
                            standards.
Sec. 645. Collection of AFDC overpayments from Federal tax refunds.
Sec. 646. Territories.
Sec. 647. Disregard of student income.
Sec. 648. Lump-sum income.
                          TITLE VII--FINANCING

Subtitle A--Ineligibility of Certain Aliens for Certain Social Services

Sec. 701. Certain aliens ineligible for aid to families with dependent 
                            children.
Sec. 702. Certain aliens ineligible for supplemental security income 
                            benefits.
Sec. 703. Disqualification of certain aliens to receive food stamp 
                            benefits.
Sec. 704. Certain aliens ineligible for medical assistance under 
                            medicaid.
            Subtitle B--Other Provisions Relating to Aliens

Sec. 711. Sponsor responsibility for costs of income-based cash public 
                            assistance provided to an alien.
Sec. 712. Enforcement of affidavits of support or financial 
                            responsibility by State and local 
                            governments providing assistance.
Sec. 713. Authority to States and localities to limit assistance to 
                            aliens and to distinguish among classes of 
                            aliens in providing income-based cash 
                            public assistance.
Sec. 714. Grants to States to compensate for resident lawful aliens.
      Subtitle C--Limitation on Emergency Assistance Expenditures

Sec. 721. Limitation on expenditures for emergency assistance.
         Subtitle D--Family Day Care Homes Program Improvements

Sec. 731. Improvement of operation of family or group day care homes 
                            located in low- and moderate-income areas 
                            under the child and adult care food program 
                            under the National School Lunch Act.
                     Subtitle E--Deficit Reduction

Sec. 741. Dedication of savings to deficit reduction.
                       Subtitle F--Tax Provisions

Sec. 751. Certain Federal assistance includible in gross income.
Sec. 752. Earned income tax credit denied to individuals not authorized 
                            to be employed in the United States.
Sec. 753. Phaseout of earned income credit for individuals having more 
                            than $2,500 of taxable interest and 
                            dividends.
Sec. 754. Treatment of children receiving AFDC benefits under earned 
                            income credit.
                         TITLE VIII--SSI REFORM

Sec. 801. Limitation on payment of supplemental security income 
                            benefits for children by reason of 
                            disability.
                        TITLE IX--EFFECTIVE DATE

Sec. 901. Effective date.

SEC. 3. AMENDMENT OF THE SOCIAL SECURITY ACT.

    Except as otherwise expressly provided, wherever in this Act an 
amendment or repeal 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 a section or other provision of the Social Security Act.

             TITLE I--TIME-LIMITED TRANSITIONAL ASSISTANCE

SEC. 101. LIMITATION ON DURATION OF AFDC BENEFITS.

    Section 402(a) (42 U.S.C. 602(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (44);
            (2) by striking the period at the end of paragraph (45) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (45) the following:
            ``(46) in the case of a State that has exercised the option 
        provided for in paragraph (52), provide that--
                    ``(A) a family shall not be eligible for aid under 
                the State plan if a member of the family is--
                            ``(i) prohibited from participating in the 
                        State program established under subpart 1 of 
                        part F by reason of section 487(b); or
                            ``(ii) prohibited from participating in the 
                        State program established under subpart 2 of 
                        part F by reason of section 489(a)(4); and
                    ``(B) each member of the family shall be considered 
                to be receiving such aid for purposes of eligibility 
                for medical assistance under the State plan approved 
                under title XIX for so long as the family would be 
                eligible for such aid but for subparagraph (A).''.

SEC. 102. JOB SEARCH REQUIREMENT.

    Section 402(a) (42 U.S.C. 602(a)), as amended by section 101 of 
this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (45);
            (2) by striking the period at the end of paragraph (46) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (46) the following:
            ``(47) provide that participation in job search activities 
        shall be a condition of eligibility for aid under the State 
        plan, except during any period of unsubsidized full-time 
        employment in the private sector.''.

SEC. 103. ESTABLISHMENT OF FEDERAL DATA BASE.

    Section 402 (42 U.S.C. 602) is amended by inserting after 
subsection (c) the following:
    ``(d) The Secretary shall establish and maintain a data base of 
participants in State programs established under parts F and G which 
shall be made available to the States for use in administering 
subsection (a)(46).''.

                        TITLE II--MAKE WORK PAY

                        Subtitle A--Health Care

SEC. 201. TRANSITIONAL MEDICAID BENEFITS.

    (a) Extension of Medicaid Enrollment for Former AFDC Recipients for 
1 Additional Year.--
            (1) In general.--Section 1925(b)(1) (42 U.S.C. 1396r-
        6(b)(1)) is amended by striking the period at the end and 
        inserting the following: ``, and that the State shall offer to 
        each such family the option of extending coverage under this 
        subsection for any of the first 2 succeeding 6-month periods, 
        in the same manner and under the same conditions as the option 
        of extending coverage under this subsection for the first 
        succeeding 6-month period.''.
            (2) Conforming amendments.--Section 1925(b) (42 U.S.C. 
        1396r-6(b)) is amended--
                    (A) in the heading, by striking ``Extension'' and 
                inserting ``Extensions'';
                    (B) in the heading of paragraph (1), by striking 
                ``Requirement'' and inserting ``In general'';
                    (C) in paragraph (2)(B)(ii)--
                            (i) in the heading, by striking ``period'' 
                        and inserting ``periods'', and
                            (ii) by striking ``in the period'' and 
                        inserting ``in each of the 6-month periods'';
                    (D) in paragraph (3)(A), by striking ``the 6-month 
                period'' and inserting ``any 6-month period'';
                    (E) in paragraph (4)(A), by striking ``the 
                extension period'' and inserting ``any extension 
                period''; and
                    (F) in paragraph (5)(D)(i), by striking ``is a 3-
                month period'' and all that follows and inserting the 
                following: ``is, with respect to a particular 6-month 
                additional extension period provided under this 
                subsection, a 3-month period beginning with the 1st or 
                4th month of such extension period.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to calendar quarters beginning on or after October 1, 1997, 
without regard to whether or not final regulations to carry out such 
amendments have been promulgated by such date.

                  Subtitle B--Earned Income Tax Credit

SEC. 211. NOTICE OF AVAILABILITY REQUIRED TO BE PROVIDED TO APPLICANTS 
              AND FORMER RECIPIENTS OF AFDC, FOOD STAMPS, AND MEDICAID.

    (a) AFDC.--Section 402(a) (42 U.S.C. 602(a)), as amended by 
sections 101 and 102 of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (46);
            (2) by striking the period at the end of paragraph (47) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (47) the following:
            ``(48) provide that the State agency must provide written 
        notice of the existence and availability of the earned income 
        credit under section 32 of the Internal Revenue Code of 1986 
        to--
                    ``(A) any individual who applies for aid under the 
                State plan, upon receipt of the application; and
                    ``(B) any individual whose aid under the State plan 
                is terminated, in the notice of termination of 
                benefits.''.
    (b) Food Stamps.--Section 11(e) of the Food Stamp Act of 1977 (7 
U.S.C. 2020(e)) is amended--
            (1) in paragraph (24) by striking ``and'' at the end;
            (2) in paragraph (25) by striking the period at the end and 
        inserting ``; and''; and
            (3) by inserting after paragraph (25) the following:
            ``(26) that whenever a household applies for food stamp 
        benefits, and whenever such benefits are terminated with 
        respect to a household, the State agency shall provide to each 
        member of such household notice of--
                    ``(A) the existence of the earned income tax credit 
                under section 32 of the Internal Revenue Code of 1986; 
                and
                    ``(B) the fact that such credit may be applicable 
                to such member.''.
    (c) Medicaid.--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 adding at the end the following new paragraph:
            ``(63) provide that the State shall provide notice of the 
        existence and availability of the earned income tax credit 
        under section 32 of the Internal Revenue Code of 1986 to each 
        individual applying for medical assistance under the State plan 
        and to each individual whose eligibility for medical assistance 
        under the State plan is terminated.''.

SEC. 212. NOTICE OF AVAILABILITY OF EARNED INCOME TAX CREDIT AND 
              DEPENDENT CARE TAX CREDIT TO BE INCLUDED ON W-4 FORM.

    Section 11114 of the Omnibus Budget Reconciliation Act of 1990 (26 
U.S.C. 21 note), relating to program to increase public awareness, is 
amended by adding at the end the following new sentence: ``Such means 
shall include printing a notice of the availability of such credits on 
the forms used by employees to determine the proper number of 
withholding exemptions under chapter 24 of the Internal Revenue Code of 
1986.''.

                         Subtitle C--Child Care

SEC. 221. DEPENDENT CARE CREDIT TO BE REFUNDABLE; HIGH-INCOME TAXPAYERS 
              INELIGIBLE FOR CREDIT.

    (a) Credit To Be Refundable.--
            (1) In general.--Section 21 of the Internal Revenue Code of 
        1986 (relating to expenses for household and dependent care 
        services necessary for gainful employment) is hereby moved to 
        subpart C of part IV of subchapter A of chapter 1 of such Code 
        (relating to refundable credits) and inserted after section 34.
            (2) Technical amendments.--
                    (A) Section 35 of such Code is redesignated as 
                section 36.
                    (B) Section 21 of such Code is redesignated as 
                section 35.
                    (C) Paragraph (1) of section 35(a) of such Code (as 
                redesignated by subparagraph (B)) is amended by 
                striking ``this chapter'' and inserting ``this 
                subtitle''.
                    (D) Subparagraph (C) of section 129(a)(2) of such 
                Code is amended by striking ``section 21(e)'' and 
                inserting ``section 35(e)''.
                    (E) Paragraph (2) of section 129(b) of such Code is 
                amended by striking ``section 21(d)(2)'' and inserting 
                ``section 35(d)(2)''.
                    (F) Paragraph (1) of section 129(e) of such Code is 
                amended by striking ``section 21(b)(2)'' and inserting 
                ``section 35(b)(2)''.
                    (G) Subsection (e) of section 213 of such Code is 
                amended by striking ``section 21'' and inserting 
                ``section 35''.
                    (H) Paragraph (2) of section 1324(b) of title 31, 
                United States Code, is amended by inserting before the 
                period ``, or from section 35 of such Code''.
                    (I) The table of sections for subpart C of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 35 and inserting 
                the following:

                              ``Sec. 35. Expenses for household and 
                                        dependent care services 
                                        necessary for gainful 
                                        employment.
                              ``Sec. 36. Overpayments of tax.''.
                    (J) The table of sections for subpart A of such 
                part IV is amended by striking the item relating to 
                section 21.
    (b) Higher-Income Taxpayers Ineligible for Credit.--Subsection (a) 
of section 35 of such Code, as redesignated by subsection (a), is 
amended by adding at the end the following new paragraph:
            ``(3) Phaseout of credit for higher-income taxpayers.--The 
        amount of the credit which would (but for this paragraph) be 
        allowed by this section shall be reduced (but not below zero) 
        by an amount which bears the same ratio to such amount of 
        credit as the excess of the taxpayer's adjusted gross income 
        for the taxable year over $70,000 bears to $20,000. Any 
        reduction determined under the preceding sentence which is not 
        a multiple of $10 shall be rounded to the nearest multiple of 
        $10.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

SEC. 222. FUNDING OF CHILD CARE SERVICES.

    (a) Elimination of Child Care Programs.--
            (1) AFDC and transitional child care programs.--
                    (A) Repealer.--Section 402(g) (42 U.S.C. 602(g)) is 
                hereby repealed.
                    (B) Conforming amendments.--
                            (i) Section 403(a)(3) (42 U.S.C. 603(a)(3)) 
                        is amended by striking ``other than services 
                        furnished pursuant to section 402(g)''.
                            (ii) Section 403(e) (42 U.S.C. 603(e)) is 
                        amended--
                                    (I) by striking ``, 402(a)(43), and 
                                402(g)(1),'' and inserting ``and 
                                402(a)(43)''; and
                                    (II) by striking the 2nd sentence.
            (2) At-risk child care program.--Sections 402(i) and 403(n) 
        (42 U.S.C. 602(i) and 603(n)) are hereby repealed.
            (3) Elimination of financial assistance for direct child 
        care services under the child care and development block grant 
        act of 1990.--The Child Care and Development Block Grant Act of 
        1990 (42 U.S.C. 9858 et seq.) is amended--
                    (A) in section 658B by striking ``$750,000,000'' 
                and all that follows through ``1995'', and inserting 
                ``$235,000,000 for fiscal year 1996, $240,000,000 for 
                fiscal year 1997, and $250,000,000 for fiscal year 
                1998'',
                    (B) by striking sections 658D, 658I, 658K, 658L, 
                658M, and 658N,
                    (C) in section 658E--
                            (i) in subsection (a)--
                                    (I) by striking ``including--'' and 
                                all that follows through ``(1)'' and 
                                inserting ``including'', and
                                    (II) by striking ``; and'' and all 
                                that follows through ``subsection 
                                (c)'',
                            (ii) by striking subsections (b) and (c), 
                        and
                            (iii) by redesignating subsection (d) as 
                        subsection (b),
                    (D) in section 658F(b)(2) by striking ``referred to 
                in section 658E(c)(2)(F)'' and inserting ``applicable 
                under State and local law'',
                    (E) in sections 658G and 658H(a) by striking ``of 
                the amounts reserved by such State under section 
                658E(c)(3)(C)'' and inserting ``such assistance'',
                    (F) in section 658J--
                            (i) in subsection (a) by striking ``section 
                        658(d)'' and inserting ``section 658'',
                            (ii) in subsection (b)--
                                    (I) by striking ``Payment.--'' and 
                                all that follows through ``paragraph 
                                (2),'' and inserting ``Payment.--The'', 
                                and
                                    (II) by striking paragraph (2),
                    (G) in section 658P--
                            (i) by striking paragraphs (1), (2), (4), 
                        (5), (6), (8), (9), and (12, and
                            (ii) by redesignating paragraphs (3), (7), 
                        (10), (11), (13), and (14) as paragraphs (1), 
                        (2), (3), (4), (5), and (6), respectively, and
                    (H) by redesignating sections 658E, 658F, 658G, 
                658H, 658J, 658O, 658P, 658Q, 658R, and 658S as 
                sections 658D, 658E, 658F, 658G, 658H, 658I, 658J, 
                658K, 658L, and 658M, respectively.
    (b) Funding of Child Care Services Through Social Services Block 
Grant Program.--Title XX (42 U.S.C. 1397-1397f) is amended by adding at 
the end the following:

``SEC. 2008. CHILD CARE.

    ``(a) Conditional Entitlement.--In addition to any payment under 
section 2002 or 2007, each State with a plan approved under this 
section for a fiscal year shall be entitled to payment of an amount 
equal to the special allotment of the State for the fiscal year.
    ``(b) State Plans.--
            ``(1) Content.--A plan meets the requirements of this 
        paragraph if the plan--
                    ``(A) identifies an appropriate State agency to be 
                the lead agency responsible for administering at the 
                State level, and coordinating with local governments, 
                the activities of the State pursuant to this section;
                    ``(B) describes the activities the State will carry 
                out with funds provided under this section;
                    ``(C) provides assurances that the funds provided 
                under this section will be used to supplement, not 
                supplant, State and local funds as well as Federal 
                funds provided under any Act and applied to child care 
                activities in the State during fiscal year 1989;
                    ``(D) provides assurances that the State will not 
                expend more than 7 percent of the funds provided to the 
                States under this section for the fiscal year for 
                administrative expenses;
                    ``(E) provides assurances that, in providing child 
                care assistance, the State will give priority to 
                families with low income and families living in a low-
                income geographical area;
                    ``(F) ensures that child care providers reimbursed 
                under this section meet applicable standards of State 
                and local law;
                    ``(G) provides assurances that the lead agency will 
                coordinate the use of funds provided under this section 
                with the use of other Federal resources for child care 
                provided under this Act, and with other Federal, State, 
                or local child care and preschool programs operated in 
                the State;
                    ``(H) provides for the establishment of such fiscal 
                and accounting procedures as may be necessary to--
                            ``(i) ensure a proper accounting of Federal 
                        funds received by the State under this section; 
                        and
                            ``(ii) ensure the proper verification of 
                        the reports submitted by the State under 
                        subsection (f)(2);
                    ``(I) provides assurances that the State will not 
                impose more stringent standards and licening or 
                regulatory requirements on child care providers 
                receiving funds provided under this section than those 
                imposed on other child care providers in the State; and
                    ``(J) provides assurances that the State will not 
                implement any policy or practice which has the effect 
                of significantly restricting parental choice by--
                            ``(i) expressly or effectively excluding 
                        any category of care or type of provider within 
                        a category of care;
                            ``(ii) limiting parental access to or 
                        choices from among various categories of care 
                        or types of providers; or
                            ``(iii) excluding a significant number of 
                        providers in any category of care.
            ``(2) Form.--A State may submit a plan that meets the 
        requirements of paragraph (1) in the form of amendments to the 
        State plan submitted pursuant to section 658E of the Child Care 
        and Development Block Grant Act of 1990, as in effect before 
        the effective date of section 222 of the Individual 
        Responsibility Act of 1995.
            ``(3) Approval.--Not later than 90 days after the date the 
        State submits a plan to the Secretary under this subsection, 
        the Secretary shall either approve or disapprove the plan. If 
        the Secretary disapproves the plan, the Secretary shall provide 
        the State with an explanation and recommendations for changes 
        in the plan to gain approval.
    ``(c) Special Allotments.--
            ``(1) In general.--The special allotment of a State for a 
        fiscal year equals the amount that bears the same ratio to the 
        amount specified in paragraph (2) for the fiscal year, as the 
        number of children who have not attained 13 years of age and 
        are residing with families in the State bears to the total 
        number of such children in all States with plans approved under 
        this section for the fiscal year, determined on the basis of 
        the most recent data available from the Department of Commerce 
        at the time the special allotment is determined.
            ``(2) Amount specified.--The amount specified in this 
        paragraph is--
                    ``(A) $1,150,000,000 for fiscal year 1997; and
                    ``(B) $1,200,000,000 for each of fiscal years 1998, 
                1999, and 2000.
    ``(d) Payments to States.--
            ``(1) Payments.--The Secretary shall provide funds to each 
        State with a plan approved under this section for a fiscal year 
        from the special allotment of the State for the fiscal year, in 
        accordance with section 6503 of title 31, United States Code.
            ``(2) Expenditure of funds by states.--Except as provided 
        in paragraph (3)(A), each State to which funds are paid under 
        this section for a fiscal year shall expend such funds in the 
        fiscal year or in the immediately succeeding fiscal year.
            ``(3) Redistribution of unexpended special allotments.--
                    ``(A) Remittance to the secretary.--Each State to 
                which funds are paid under this section for a fiscal 
                year shall remit to the Secretary that part of such 
                funds which the State intends not to, or does not, 
                expend in the fiscal year or in the immediately 
                succeeding fiscal year.
                    ``(B) Redistribution.--The Secretary shall increase 
                the special allotment of each State with a plan 
                approved under this part for a fiscal year that does 
                not remit any amount to the Secretary for the fiscal 
                year by an amount equal to--
                            ``(i) the aggregate of the amounts remitted 
                        pursuant to subparagraph (A) for the fiscal 
                        year; multiplied by
                            ``(ii) the adjusted State share for the 
                        fiscal year.
                    ``(C) Adjusted state share.--As used in 
                subparagraph (B)(ii), the term `adjusted State share' 
                means, with respect to a fiscal year--
                            ``(i) the special allotment of the State 
                        for the fiscal year (before any increase under 
                        subparagraph (B)); divided by
                            ``(ii)(I) the sum of the special allotments 
                        of all States with plans approved under this 
                        part for the fiscal year; minus
                            ``(II) the aggregate of the amounts 
                        remitted to the Secretary pursuant to 
                        subparagraph (A) for the fiscal year.
    ``(e) Use of Funds.--
            ``(1) In general.--Funds provided under this section shall 
        be used to expand parent choices in selecting child care, to 
        address deficiencies in the supply of child care, and to expand 
        and improve child care services, with an emphasis on providing 
        such services to low-income families and geographical areas. 
        Subject to the approval of the Secretary, States to which funds 
        are paid under this section shall use such funds to carry out 
        child care programs and activities through cash grants, 
        certificates, or contracts with families, or public or private 
        entities as the State determines appropriate.
            ``(2) Specific uses.--Each State to which funds are paid 
        under this section may expend such funds for--
                    ``(A) child care services for infants, sick 
                children, children with special needs, and children of 
                adolescent parents;
                    ``(B) after-school and before-school programs and 
                programs during nontraditional hours for the children 
                of working parents;
                    ``(C) programs for the recruitment and training of 
                day care workers, including older Americans;
                    ``(D) grant and loan programs to enable child care 
                workers and providers to meet State and local standards 
                and requirements;
                    ``(E) child care information and referral services;
                    ``(F) child care programs developed by public and 
                private sector partnerships;
                    ``(G) liability insurance pools to serve child care 
                providers;
                    ``(H) programs to promote and ensure the health and 
                safety of children and caregivers, to improve the 
                quality of all types of child care, and to train child 
                care providers in health and safety practices;
                    ``(I) State efforts to provide technical assistance 
                designed to help providers improve the services offered 
                to parents and children; and
                    ``(J) other child care-related programs consistent 
                with the purpose of this section and approved by the 
                Secretary.
            ``(3) Methods of funding.--Funds for child care services 
        under this title shall be for the benefit of parents and shall 
        be provided through contracts or grants with public or private 
        providers or through child care certificates given directly to 
        parents.
            ``(4) Parental rights of choice.--Any parent who receives a 
        child care certificate under this title may use such 
        certificate with any child care provider, including those 
        providers which have religious activities, if such provider is 
        freely chosen by the parent from among the available 
        alternatives.
            ``(5) Child care certificates.--
                    ``(A) In general.--For purposes of this title, a 
                child care certificate is a certificate issued by a 
                State directly to a parent or legal guardian for use 
                only as payment for child care services in any child 
                care facility eligible to receive funds under this Act.
                    ``(B) Redemption.--If the demand for child care 
                services of families qualified to receive such services 
                from a State under this Act exceeds the available 
                supply of such services, the State shall ration 
                assistance to obtain such services using procedures 
                that do not disadvantage parents using child care 
                certificates, relative to other methods of financing, 
                in either the waiting period or the pecuniary value of 
                such services.
                    ``(C) Commencement of certificate program.--
                Beginning not later than 1 year after the date of the 
                enactment of this section, each State that receives 
                funds under this title shall offer a child care 
                certificate program in accordance with this section.
                    ``(D) Authority to use child care funds for 
                certificate program.--Each State to which funds are 
                paid under this title may use the funds provided to the 
                State under this title which are required to be used 
                for child care activities to plan and establish the 
                State's child care certificate program.
            ``(6) Option of receiving a child care certificate.--Each 
        parent or legal guardian who receives assistance pursuant to 
        this title shall be provided with the option of enrolling their 
        child with an eligible child care provider that receives funds 
        through grants, contracts, or child care certificates provided 
        under this title. Such parent shall have the right to use such 
        certificates to purchase child care services from an eligible 
        provider of their choice.
            ``(7) Rights of religious child care providers.--
        Notwithstanding any other provision of law, a religious child 
        care provider who receives funds under this Act may require 
        adherence by employees to the religious tenets or teachings of 
        the provider.
            ``(8) Eligible child care providers.--Any child care 
        provider who meets applicable standards of State and local law 
        shall be eligible to receive funds under this section. As used 
        in this paragraph, the term `child care provider' includes--
                    ``(A) units of State and local governments, and 
                elementary, secondary, and post-secondary educational 
                institutions;
                    ``(B) nonprofit organizations under subsections (c) 
                and (d) of section 501 of the Internal Revenue Code of 
                1986;
                    ``(C) professional or employee associations;
                    ``(D) consortia of small businesses; and
                    ``(E) proprietary for-profit entities, relatives, 
                informal day care homes, religious child care 
                providers, day care centers, and any other entities 
                that the State determines appropriate subject to 
                approval of the Secretary.
            ``(9) Prohibited uses.--Any State to which funds are paid 
        under this section may not use such funds--
                    ``(A) to satisfy any State matching requirement 
                imposed under any Federal grant;
                    ``(B) for the purchase or improvement of land, or 
                the purchase, construction, or permanent improvement 
                (other than minor remodeling) of any building or other 
                facility; or
                    ``(C) to provide any service which the State makes 
                generally available to the residents of the State 
                without cost to such residents and without regard to 
                the income of such residents.
    ``(f) Reporting Requirements.--
            ``(1) Notice to secretary of unexpended funds.--Each State 
        which has not completely expended the funds paid to the State 
        under this section for a fiscal year in the fiscal year or the 
        immediately succeeding fiscal year shall notify the Secretary 
        of any amount not so expended.
            ``(2) State reports on use of funds.--Not later than 18 
        months after the date of the enactment of this section, and 
        each year thereafter, the State shall prepare and submit to the 
        Secretary, in such form as the Secretary shall prescribe, a 
        report describing the State's use of funds paid to the State 
        under this section, including--
                    ``(A) the number, type, and distribution of 
                services and programs under this section;
                    ``(B) the average cost of child care, by type of 
                provider;
                    ``(C) the number of children serviced under this 
                section;
                    ``(D) the average income and distribution of 
                incomes of the families being served;
                    ``(E) efforts undertaken by the State pursuant to 
                this section to promote and ensure health and safety 
                and improve quality; and
                    ``(F) such other information as the Secretary 
                considers appropriate.
            ``(3) Guidelines for state reports; coordination with 
        reports under section 2006.--Within 6 months after the date of 
        the enactment of this section, the Secretary shall establish 
        guidelines for State reports under paragraph (2). To the extent 
        feasible, the Secretary shall coordinate such reporting 
        requirement with the reports required under section 2006 and, 
        as the Secretary deems appropriate, with other reporting 
        requirements placed on States as a condition of receipt of 
        other Federal funds which support child care.
            ``(4) Reports by the secretary.--
                    ``(A) Reports to the congress of summary of state 
                reports.--The Secretary shall annually summarize the 
                information reported to the Secretary pursuant to 
                paragraph (2) and provide such summary to the Congress.
                    ``(B) Reports to the states on effective 
                practices.--The Secretary shall annually provide the 
                States with a report on particularly effective 
practices and programs supported by funds paid to the State under this 
section, which ensure the health and safety of children in care, 
promote quality child care, and provide training to all types of 
providers.
    ``(g) Administration and Enforcement.--
            ``(1) Administration.--The Secretary shall--
                    ``(A) coordinate all activities of the Department 
                of Health and Human Services relating to child care, 
                and, to the maximum extent practicable, coordinate such 
                activities with similar activities of other Federal 
                entities;
                    ``(B) collect, publish, and make available to the 
                public a listing of State child care standards at least 
                once every 3 years; and
                    ``(C) provide technical assistance to assist States 
                to carry out this section, including assistance on a 
                reimbursable basis.
            ``(2) Enforcement.--
                    ``(A) Review of compliance with state plan.--The 
                Secretary shall review and monitor State compliance 
                with this section and the plans approved under this 
                section for the State, and shall have the power to 
                terminate payments to the State in accordance with 
                subparagraph (B).
                    ``(B) Noncompliance.--
                            ``(i) In general.--If the Secretary, after 
                        reasonable notice to a State and opportunity 
                        for a hearing, finds that--
                                    ``(I) there has been a failure by 
                                the State to comply substantially with 
                                any provision or requirement set forth 
                                in the plan approved under this section 
                                for the State; or
                                    ``(II) in the operation of any 
                                program for which assistance is 
                                provided under this section there is a 
                                failure by the State to comply 
                                substantially with any provision of 
                                this section;
                        the Secretary shall notify the State of the 
                        findings and that no further payments may be 
                        made to such State under this section (or, in 
                        the case of noncompliance in the operation of a 
                        program or activity, that no further payments 
                        to the State will be made with respect to such 
                        program or activity) until the Secretary is 
                        satisfied that there is no longer any such 
                        failure to comply or that the noncompliance 
                        will be promptly corrected.
                            ``(ii) Additional sanctions.--In the case 
                        of a finding of noncompliance made pursuant to 
                        clause (i), the Secretary may, in addition to 
                        imposing the sanctions described in such 
                        subparagraph, impose the other appropriate 
                        sanctions, including recoupment of money 
                        improperly expended for purposes prohibited or 
                        not authorized by this section, and 
                        disqualification from the receipt of financial 
                        assistance under this section.
                            ``(iii) Notice.--The notice required under 
                        subparagraph (A) shall include a specific 
                        identification of any additional sanction being 
                        imposed under clause (ii).
                    ``(C) Issuance of rules.--The Secretary shall 
                establish by rule procedures for--
                            ``(i) receiving, processing, and 
                        determining the validity of complaints 
                        concerning any failure of a State to comply 
                        with the State plan or any requirement of this 
                        section; and
                            ``(ii) imposing sanctions under this 
                        subsection.

``SEC. 2009. CHILD CARE DURING PARTICIPATION IN EMPLOYMENT, EDUCATION, 
              AND TRAINING; EXTENDED ELIGIBILITY.

    ``(a) Child Care Guarantee.--
            ``(1) In general.--Each State agency referred to in section 
        2008(b)(1)(A) shall guarantee child care in accordance with 
        section 2008--
                    ``(A) for any individual who is participating in an 
                education or training activity (including participation 
                in a program established under part F of title IV) if 
                the State agency approves the activity and determines 
                that the individual is participating satisfactorily in 
                the activity; and
                    ``(B) to the extent that the State agency 
                determines that such care is necessary for the 
                employment of an individual, if the family of which the 
                individual is a member has ceased to receive aid under 
                the State plan approved under part A of title IV by 
                reason of increased hours of, or income from, such 
                employment or by reason of section 
                402(a)(8)(B)(ii)(II), subject to paragraph (2) of this 
                subsection.
            ``(2) Limitations on eligibility for transitional child 
        care.--A family shall not be eligible for child care under 
        paragraph (1)(B)--
                    ``(A) for more than 12 months after the last month 
                for which the family received aid described in such 
                paragraph;
                    ``(B) if the family did not receive such aid in at 
                least 3 of the most recent 6 months in which the family 
                received such aid;
                    ``(C) if the family does not include a child who is 
                (or, if needy, would be) a dependent child (within the 
                meaning of part A of title IV);
                    ``(D) for any month beginning after the caretaker 
                relative (within the meaning of such part) in the 
                family has terminated his or her employment without 
                good cause; or
                    ``(E) with respect to a child, for any month 
                beginning after the caretaker relative in the family 
                has refused to cooperate with the State in establishing 
                or enforcing the obligation of any parent of the child 
                to provide support for the child, without good cause as 
                determined by the State agency in accordance with 
                standards prescribed by the Secretary which shall take 
                into consideration the best interests of the child.
    ``(b) State Entitlement to Payments.--Each State with a plan 
approved under section 2008 shall be entitled to receive from the 
Secretary for any fiscal year an amount equal to--
            ``(1) the total amount expended by the State to carry out 
        subsection (a) during the fiscal year; multiplied by
            ``(2) the greater of--
                    ``(A) 70 percent; or
                    ``(B) the Federal medical assistance percentage (as 
                defined in the last sentence of section 1118, increased 
                by 10 percentage points.''.
    (c) Effective Date.--The amendments and repeals made by this 
section shall take effect on October 1, 1996.

                    Subtitle D--AFDC Work Disregards

SEC. 231. OPTION TO INCREASE DISREGARD OF EARNED INCOME.

    Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)) is amended--
            (1) by striking ``and'' at the end of clause (vii); and
            (2) by adding at the end the following:
                    ``(ix) if electing to disregard clauses (ii) and 
                (iv), shall disregard from the earned income of any 
                child, relative, or other individual specified in 
                clause (ii) an amount equal to not less than the first 
                $120 and not more than the first $225 of the total of 
                such earned income not disregarded under any other 
                clause of this subparagraph, plus not more than one 
                third of the remainder of such earned income; and''.

SEC. 232. STATE OPTION TO ESTABLISH VOLUNTARY DIVERSION PROGRAM.

    Section 402(a) (42 U.S.C. 602(a)), as amended by sections 101, 102, 
and 211(a) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (47);
            (2) by striking the period at the end of paragraph (48) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (48) the following:
            ``(49) at the option of the State, and in such part or 
        parts of the State as the State may select, provide that--
                    ``(A) upon the recommendation of the caseworker who 
                is handling the case of a family eligible for aid under 
                the State plan, the State shall, in lieu of any other 
                payment under the State plan to a family during a 3-
                month period, make a lump-sum payment to the family for 
                the 3-month period in an amount not to exceed 3 times 
                the amount of the monthly benefit to which the family 
                is entitled under the State plan;
                    ``(B) a lump-sum payment pursuant to subparagraph 
                (A) shall not be made more than once to any family; and
                    ``(C) if, during a 3-month period for which the 
                State has made a lump-sum payment to a family pursuant 
                to subparagraph (A), the family applies for and (but 
                for the lump-sum payment) would be eligible for aid 
                under the State plan for a greater monthly benefit than 
                the monthly benefit to which the family was entitled 
                under the State plan at the time of the calculation of 
                the lump sum payment, then, notwithstanding 
                subparagraph (A), the State shall, for that part of the 
                3-month period that remains after the family becomes 
                eligible for the greater monthly benefit, provide 
                monthly benefits to the family in an amount not to 
                exceed--
                            ``(i) 3 times the amount by which the 
                        greater monthly benefit exceeds the former 
                        monthly benefit; divided by
                            ``(ii) the whole number of months remaining 
                        in the 3-month period.''.

SEC. 233. ELIMINATION OF QUARTERS OF COVERAGE REQUIREMENT FOR MARRIED 
              TEENS UNDER AFDC-UP PROGRAM.

    Section 407(b)(1)(A)(iii)(I) (42 U.S.C. 607(b)(1)(A)(iii)(I)) is 
amended by inserting ``except in the case of a family in which the 
parents are married and neither parent has attained 20 years of age,'' 
after ``(I)''.

                   Subtitle E--AFDC Asset Limitations

SEC. 241. INCREASE IN RESOURCE THRESHOLDS; SEPARATE THRESHOLD FOR 
              VEHICLES.

    Section 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)) is amended--
            (1) by striking ``$1,000 or such lower amount as the State 
        may determine'' and inserting ``$2,000''; and
            (2) in clause (i), by striking ``such amount as the 
        Secretary may prescribe'' and inserting ``the dollar amount 
        prescribed by the Secretary of Agriculture under section 5(g) 
        of the Food Stamp Act of 1977''.

SEC. 242. LIMITED DISREGARD OF AMOUNTS SAVED FOR POST-SECONDARY 
              EDUCATION, THE PURCHASE OF A FIRST HOME, OR THE 
              ESTABLISHMENT OR OPERATION OF A MICROENTERPRISE.

    (a) Disregard From Resources.--Section 402(a)(7)(B) (42 U.S.C. 
602(a)(7)(B)) is amended--
            (1) by striking ``or'' before ``(iv)''; and
            (2) by inserting ``, or (v) any amount not exceeding $8,000 
        in 1 qualified asset account (as defined in section 406(i)) of 
        1 member of such family'' before ``; and''.
    (b) Disregard From Income.--
            (1) In general.--Section 402(a)(8)(A) (42 U.S.C. 
        602(a)(8)(A)), as amended by section 231 of this Act, is 
        amended--
                    (A) by striking ``and'' at the end of clause 
                (viii); and
                    (B) by inserting after clause (ix) the following 
                new clause:
                            ``(x) shall disregard any interest or 
                        income earned on a qualified asset account (as 
                        defined in section 406(i)) and paid into the 
                        account, to the extent that the total amount in 
                        the account, after such payment, does not 
                        exceed $8,000; and''.
            (2) Nonrecurring lump sum exempt from lump sum rule.--
        Section 402(a)(17) (42 U.S.C. 602(a)(17)) is amended by adding 
        at the end the following: ``; and that this paragraph shall not 
        apply to earned or unearned income received in a month on a 
        nonrecurring basis to the extent that such income is placed in 
        a qualified asset account (as defined in section 406(i)) the 
        total amount in which, after such placement, does not exceed 
        $8,000;''.
            (3) Treatment as income.--Section 402(a)(7) (42 U.S.C. 
        602(a)(7)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (B);
                    (B) by striking the semicolon at the end of 
                subparagraph (C) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(D) shall treat as income any distribution from a 
                qualified asset account (as defined in section 
                406(i)(1)) that is not a qualified distribution (as 
                defined in section 406(i)(2));''.
    (c) Definitions.--Section 406 (42 U.S.C. 606) is amended by adding 
at the end the following:
    ``(i)(1) The term `qualified asset account' means a mechanism 
approved by the State (such as individual retirement accounts, escrow 
accounts, or savings bonds) that allows savings of an individual 
receiving aid to families with dependent children to be used for a 
purpose described in paragraph (2).
    ``(2) The term `qualified distribution' means a distribution for 
expenses directly related to 1 or more of the following purposes:
            ``(A) The attendance of a member of the family at any 
        postsecondary education program.
            ``(B) The purchase of residential real property for the 
        family that the family intends to occupy, if no member of the 
        family has an ownership interest in such a property.
            ``(C) The establishment or operation of a microenterprise 
        owned by a member of the family.
    ``(j) The term `microenterprise' means a commercial enterprise 
which has 5 or fewer employees, 1 or more of whom owns the 
enterprise.''.

                   TITLE III--THE WORK FIRST PROGRAM

SEC. 301. WORK FIRST PROGRAM.

    (a) State Plan Requirement.--Section 402(a) (42 U.S.C. 602(a)), as 
amended by sections 101, 102, 211(a), and 232 of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (48);
            (2) by striking the period at the end of paragraph (49) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (49) the following:
            ``(50) provide that the State--
                    ``(A) has in effect and operation--
                            ``(i) a work first program that meets the 
                        requirements of subpart 1 of part F (or, for 
                        any fiscal year for which the Secretary has 
                        approved a State plan under subpart 2 of part 
                        F, such subpart 2); and
                            ``(ii) at the option of the State, a 
                        community service program that meets the 
                        requirements of part G; and
                    ``(B) must provide to participants in such programs 
                such case management services as are necessary to 
                ensure the integrated provision of benefits and 
                services under such programs.''.
    (b) Establishment and Operation of Program.--Title IV (42 U.S.C. 
601 et seq.) is amended by striking part F and inserting the following:

                      ``Part F--Work First Program

                       ``Subpart 1--Federal Model

``SEC. 481. ESTABLISHMENT AND OPERATION OF STATE PROGRAMS.

    ``A work first program meets the requirements of this subpart if 
the program meets the following requirements:
            ``(1) Objective.--The objective of the program is for each 
        program participant to find and hold a full-time unsubsidized 
        paid job, and for this goal to be achieved in a cost-effective 
        fashion.
            ``(2) Method.--The method of the program is to connect 
        recipients of aid to families with dependent children with the 
        private sector labor market as soon as possible and offer them 
        the support and skills necessary to remain in the labor market. 
        Each component of the program should be permeated with an 
        emphasis on employment and with an understanding that minimum 
        wage jobs are a stepping stone to more highly paid employment.
            ``(3) Job creation.--The creation of jobs, with an emphasis 
        on private sector jobs, shall be a component of the program and 
        shall be a priority for each State office with responsibilities 
        under the program.
            ``(4) Use of incentives.--The State shall use incentives to 
        change the culture of each State office with responsibilities 
        under the State plan approved under part A, improve the 
        performance of employees, and ensure that the objective of each 
        employee of each such State office is to find an unsubsidized 
        paid job for each program participant.
            ``(5) Caseworker training.--The State shall provide such 
        training to caseworkers and related personnel (including 
        through the use of incentives) as may be necessary to ensure 
        successful job placements that result in full-time public or 
        private employment (outside the State agencies with 
        responsibilities under part A) for program participants. The 
        State shall reward any caseworker who enters an agreement of 
        mutual responsibility with a program participant that provides 
        for education or training activities as well as work.
            ``(6) Reports.--Each office with responsibility for 
        operating the program shall make monthly statistical reports to 
        the governing body of the State, county, and city in which 
        located, of job placements and the number of program 
        participants who are no longer receiving aid under the State 
        plan approved under part A as a result of participation in the 
        program.
            ``(7) Case management teams.--
                    ``(A) Duties.--The program requires the State to 
                assign to each individual required or allowed to 
                participate in the program a case management team that 
                shall meet with the program participant and develop an 
                agreement of mutual responsibility for the individual.
                    ``(B) Deadline.--
                            ``(i) In general.--The case management team 
                        shall comply with subparagraph (A) with respect 
                        to a program participant within 30 days (or, at 
                        the option of the State, within a period not 
                        exceeding 90 days) after the later of--
                                    ``(I) the date the application of 
                                the program participant for aid under 
                                the State plan approved under part A 
                                was approved; or
                                    ``(II) the date this subpart first 
                                applies to the State.
                            ``(ii) Repeat participants.--Within 30 days 
                        after the State makes a determination under 
                        section 487(b)(2) to allow an individual to 
                        participate in the program, the case management 
                        team shall meet with the individual and develop 
                        an agreement of mutual responsibility for the 
                        individual.
            ``(8) Agreements of mutual responsibility.--The agreement 
        of mutual responsibility for a participant shall--
                    ``(A) contain an individualized comprehensive plan, 
                developed by the team and the participant, to move the 
                participant into a full-time unsubsidized job, through 
                activities under section 482, 483, 484, 485, or 486;
                    ``(B) to the greatest extent possible, be designed 
                to move the participant as quickly as possible into 
                whatever type and amount of work as the participant is 
                capable of handling, and increases the responsibility 
                and amount of work over time until the participant is 
                able to work full-time;
                    ``(C) where necessary, provide for education or 
                training of the participant;
                    ``(D) provide that aid under the State plan is to 
                be paid to the participant based on the number of hours 
                that the participant spends in activities provided for 
                in the agreement;
                    ``(E) provide that the participant shall spend at 
                least 30 hours per week in activities provided for in 
                the agreement;
                    ``(F) provide that the participant shall accept any 
                bona fide offer of unsubsidized full-time employment, 
                unless the participant has good cause for not doing so; 
                and
                    ``(G) at the option of the State, require the 
                participant to undergo appropriate substance abuse 
                treatment.
            ``(9) Options for participants.--The case manager for a 
        program participant shall present the participant with each 
        option offered under the State program through which the 
        participant will, over time, be moved into full-time 
        unsubsidized employment.
            ``(10) One-stop employment shops.--
                    ``(A) In general.--In carrying out the program, the 
                State shall utilize and make available to each program 
                participant, through the establishment and operation or 
                utilization of appropriate Federal or State one-stop 
                employment shops, services under programs carried out 
                under the following provisions of law:
                            ``(i) Part A of title II of the Job 
                        Training Partnership Act (29 U.S.C. 1601 et 
                        seq.) (relating to the adult training program).
                            ``(ii) Part B of title II of such Act (29 
                        U.S.C. 1630 et seq.) (relating to the summer 
                        youth employment and training programs).
                            ``(iii) Part C of title II of such Act (29 
                        U.S.C. 1641 et seq.) (relating to the youth 
                        training program).
                            ``(iv) Title III of such Act (29 U.S.C. 
                        1651 et seq.) (relating to employment and 
                        training assistance for dislocated workers).
                            ``(v) Part B of title IV of such Act (29 
                        U.S.C. 1691 et seq.) (relating to the Job 
                        Corps).
                            ``(vi) The Carl D. Perkins Vocational and 
                        Applied Technology Education Act (20 U.S.C. 
                        2301 et seq.).
                            ``(vii) The Adult Education Act (20 U.S.C. 
                        1201 et seq.).
                            ``(viii) Part B of chapter 1 of title I of 
                        the Elementary and Secondary Education Act of 
                        1965 (20 U.S.C. 2741 et seq.) (relating to Even 
                        Start family literacy programs).
                            ``(ix) Subtitle A of title VII of the 
                        Stewart B. Mckinney Homeless Assistance Act (42 
                        U.S.C. 11421) (relating to adult education for 
                        the homeless).
                            ``(x) Subtitle B of title VII of such Act 
                        (42 U.S.C. 11431 et seq.) (relating to 
                        education for homeless children and youth).
                            ``(xi) Subtitle C of title VII of such Act 
                        (42 U.S.C. 11441) (relating to job training for 
                        the homeless).
                            ``(xii) The School-to-Work Opportunities 
                        Act of 1994.
                            ``(xiii) The National and Community Service 
                        Act of 1990 (42 U.S.C. 12501 et seq.).
                            ``(xiv) The National Skill Standards Act of 
                        1994.
                    ``(B) Coordination.--In utilizing appropriate 
                Federal or State one-stop employment shops described in 
                subparagraph (A), the State shall ensure coordination 
                between the caseworker of each program participant and 
                the administrators of the programs carried out under 
                the provisions of law described in such subparagraph.
            ``(11) Penalties for refusal to work.--The amount of aid 
        otherwise payable under the State plan approved under part A to 
        a family that includes an individual who fails without good 
        cause to comply with an agreement of mutual responsibility 
        signed by the individual shall be reduced for 1 month by 25 
        percent for each act of noncompliance.

``SEC. 482. REVAMPED JOBS PROGRAM.

    ``A State that establishes a program under this subpart may operate 
a program similar to the program known as the `GAIN Program' that has 
been operated by Riverside County, California, under Federal law in 
effect immediately before the date this subpart first applies to the 
State of California.

``SEC. 483. USE OF PLACEMENT COMPANIES.

    ``(a) In General.--A State that establishes a program under this 
subpart may enter into contracts with private companies (whether 
operated for profit or not for profit) for the placement of 
participants in the program in positions of full-time employment, 
preferably in the private sector, for wages sufficient to eliminate the 
need of such participants for cash assistance.
    ``(b) Required Contract Terms.--Each contract entered into under 
this section with a company shall meet the following requirements:
            ``(1) Provision of job readiness and support services.--The 
        contract shall require the company to provide, to any program 
        participant who presents to the company a voucher issued under 
        subsection (d) intensive personalized support and job readiness 
        services designed to prepare the individual for employment and 
        ensure the continued success of the individual in employment.
            ``(2) Payments.--
                    ``(A) In general.--The contract shall provide for 
                payments to be made to the company with respect to each 
                program participant who presents to the company a 
                voucher issued under subsection (d).
                    ``(B) Structure.--The contract shall provide for 
                the majority of the amounts to be paid under the 
                contract with respect to a program participant, to be 
                paid after the company has placed the participant in a 
                position of full-time employment and the participant 
                has been employed in the position for such period of 
                not less than 5 months as the State deems appropriate.
    ``(c) Competitive Bidding Required.--Contracts under this section 
shall be awarded only after competitive bidding.
    ``(d) Vouchers.--The State shall issue a voucher to each program 
participant whose agreement of mutual responsibility provides for the 
use of placement companies under this section, indicating that the 
participant is eligible for the services of such a company.

``SEC. 484. TEMPORARY SUBSIDIZED JOB CREATION.

    ``A State that establishes a program under this subpart may 
establish a program similar to the program known as `JOBS Plus' that 
has been operated by the State of Oregon under Federal law in effect 
immediately before the date this subpart first applies to the State of 
Oregon.

``SEC. 485. MICROENTERPRISE.

    ``(a) Grants and Loans to Nonprofit Organizations for the Provision 
of Technical Assistance, Training, and Credit to Low Income 
Entrepreneurs.--A State that establishes a program under this subpart 
may make grants and loans to nonprofit organizations to provide 
technical assistance, training, and credit to low income entrepreneurs 
for the purpose of establishing microenterprises.
    ``(b) Microenterprise Defined.--For purposes of this subsection, 
the term `microenterprise' means a commercial enterprise which has 5 or 
fewer employees, 1 or more of whom owns the enterprise.

``SEC. 486. WORK SUPPLEMENTATION PROGRAM.

    ``(a) In General.--A State that establishes a program under this 
subpart may institute a work supplementation program under which the 
State, to the extent it considers appropriate, may reserve the sums 
that would otherwise be payable to participants in the program as aid 
to families with dependent children and use the sums instead for the 
purpose of providing and subsidizing jobs for the participants (as 
described in subsection (c)(3)(A) and (B)), as an alternative to the 
aid to families with dependent children that would otherwise be so 
payable to the participants.
    ``(b) State Flexibility.--
            ``(1) Nothing in this subpart, or in any State plan 
        approved under part A, shall be construed to prevent a State 
        from operating (on such terms and conditions and in such cases 
        as the State may find to be necessary or appropriate) a work 
        supplementation program in accordance with this section and 
        section 484 (as in effect immediately before the date this 
        subpart first applies to the State).
            ``(2) Notwithstanding section 402(a)(23) or any other 
        provision of law, a State may adjust the levels of the 
        standards of need under the State plan as the State determines 
        to be necessary and appropriate for carrying out a work 
        supplementation program under this section.
            ``(3) Notwithstanding section 402(a)(1) or any other 
        provision of law, a State operating a work supplementation 
        program under this section may provide that the need standards 
        in effect in those areas of the State in which the program is 
        in operation may be different from the need standards in effect 
        in the areas in which the program is not in operation, and the 
        State may provide that the need standards for categories of 
        recipients may vary among such categories to the extent the 
        State determines to be appropriate on the basis of ability to 
        participate in the work supplementation program.
            ``(4) Notwithstanding any other provision of law, a State 
        may make such further adjustments in the amounts of the aid to 
        families with dependent children paid under the plan to 
        different categories of recipients (as determined under 
        paragraph (3)) in order to offset increases in benefits from 
        needs-related programs (other than the State plan approved 
        under part A) as the State determines to be necessary and 
        appropriate to further the purposes of the work supplementation 
        program.
            ``(5) In determining the amounts to be reserved and used 
        for providing and subsidizing jobs under this section as 
        described in subsection (a), the State may use a sampling 
        methodology.
            ``(6) Notwithstanding section 402(a)(8) or any other 
        provision of law, a State operating a work supplementation 
        program under this section--
                    ``(A) may reduce or eliminate the amount of earned 
                income to be disregarded under the State plan as the 
                State determines to be necessary and appropriate to 
                further the purposes of the work supplementation 
                program; and
                    ``(B) during 1 or more of the first 9 months of an 
                individual's employment pursuant to a program under 
                this subpart, may apply to the wages of the individual 
                the provisions of subparagraph (A)(iv) of section 
                402(a)(8) without regard to the provisions of 
                subparagraph (B)(ii)(II) of such section.
    ``(c) Rules Relating to Supplemented Jobs.--
            ``(1) A work supplementation program operated by a State 
        under this section may provide that any individual who is an 
        eligible individual (as determined under paragraph (2)) shall 
        take a supplemented job (as defined in paragraph (3)) to the 
        extent that supplemented jobs are available under the program. 
        Payments by the State to individuals or to employers under the 
        work supplementation program shall be treated as expenditures 
        incurred by the State for aid to families with dependent 
        children except as limited by subsection (d).
            ``(2) For purposes of this section, an eligible individual 
        is an individual who is in a category which the State 
        determines should be eligible to participate in the work 
        supplementation program, and who would, at the time of 
        placement in the job involved, be eligible for aid to families 
        with dependent children under an approved State plan if the 
        State did not have a work supplementation program in effect.
            ``(3) For purposes of this subsection, a supplemented job 
        is--
                    ``(A) a job provided to an eligible individual by 
                the State or local agency administering the State plan 
                under part A; or
                    ``(B) a job provided to an eligible individual by 
                any other employer for which all or part of the wages 
                are paid by the State or local agency.
        A State may provide or subsidize under the program any job 
        which the State determines to be appropriate.
            ``(4) At the option of the State, individuals who hold 
        supplemented jobs under a State's work supplementation program 
        shall be exempt from the retrospective budgeting requirements 
        imposed pursuant to section 402(a)(13)(A)(ii) (and the amount 
        of the aid which is payable to the family of any such 
        individual for any month, or which would be so payable but for 
        the individual's participation in the work supplementation 
        program, shall be determined on the basis of the income and 
        other relevant circumstances in that month).
    ``(d) Cost Limitation.--The amount of the Federal payment to a 
State under section 403 for expenditures incurred in making payments to 
individuals and employers under a work supplementation program under 
this subsection shall not exceed an amount equal to the amount which 
would otherwise be payable under such section if the family of each 
individual employed in the program established in the State under this 
section had received the maximum amount of aid to families with 
dependent children payable under the State plan to such a family with 
no income (without regard to adjustments under subsection (b)) for the 
lesser of--
            ``(1) 9 months; or
            ``(2) the number of months in which the individual was 
        employed in the program.
    ``(e) Rules of Interpretation.--
            ``(1) This section shall not be construed as requiring the 
        State or local agency administering the State plan to provide 
        employee status to an eligible individual to whom the State or 
        local agency provides a job under the work supplementation 
        program (or with respect to whom the State or local agency 
        provides all or part of the wages paid to the individual by 
        another entity under the program), or as requiring any State or 
        local agency to provide that an eligible individual filling a 
        job position provided by another entity under the program be 
        provided employee status by the entity during the first 13 
        weeks the individual fills the position.
            ``(2) Wages paid under a work supplementation program shall 
        be considered to be earned income for purposes of any provision 
        of law.
    ``(f) Preservation of Medicaid Eligibility.--Any State that chooses 
to operate a work supplementation program under this section shall 
provide that any individual who participates in the program, and any 
child or relative of the individual (or other individual living in the 
same household as the individual) who would be eligible for aid to 
families with dependent children under the State plan approved under 
part A if the State did not have a work supplementation program, shall 
be considered individuals receiving aid to families with dependent 
children under the State plan approved under part A for purposes of 
eligibility for medical assistance under the State plan approved under 
title XIX.

``SEC. 487. PARTICIPATION RULES.

    ``(a) In General.--Except as provided in subsection (b), a State 
that establishes a program under this subpart may require any 
individual receiving aid under the State plan approved under part A to 
participate in the program.
    ``(b) 2-Year Limitation on Participation.--
            ``(1) In general.--Except as provided in paragraph (2), an 
        individual may not participate in a State program established 
        under this subpart if the individual has participated in the 
State program established under this subpart or subpart 2 for 24 months 
after the date the individual first signed an agreement of mutual 
responsibility under either such subpart, excluding any month during 
which the individual worked for an average of at least 30 hours per 
week in a private sector job.
            ``(2) Authority to allow repeat participation.--
                    ``(A) In general.--Subject to subparagraph (B) of 
                this paragraph, a State may allow an individual who, by 
                reason of paragraph (1), would be prohibited from 
                participating in the State program established under 
                this subpart to participate in the program for such 
                additional period or periods as the State determines 
                appropriate, if the individual has participated for 24 
                months in a State program established under part G.
                    ``(B) Limitation on percentage of repeat 
                participants.--
                            ``(i) In general.--Except as provided in 
                        clause (ii) of this subparagraph, the number of 
                        individuals allowed under subparagraph (A) to 
                        participate during a program year in a State 
                        program established under this subpart shall 
                        not exceed 10 percent of the total number of 
                        individuals who participated in the program 
                        during the immediately preceding program year.
                            ``(ii) Authority to increase limitation.--
                                    ``(I) Petition.--A State may 
                                request the Secretary to increase the 
                                percentage limitation imposed by clause 
                                (i) to not more than 15 percent.
                                    ``(II) Authority to grant 
                                request.--The Secretary may approve a 
                                request made pursuant to subclause (I) 
                                if the Secretary deems it appropriate. 
                                The Secretary shall develop 
                                recommendations on the criteria that 
                                should be applied in evaluating 
                                requests under subclause (I).

``SEC. 488. CASELOAD PARTICIPATION RATES; PERFORMANCE MEASURES.

    ``(a) Participation Rates.--
            ``(1) Requirement.--A State that operates a program under 
        this subpart shall achieve a participation rate for the 
        following fiscal years of not less than the following 
        percentage:

``Fiscal year:                                              Percentage:
    1997..........................................                   16
    1998..........................................                   20
    1999..........................................                   24
    2000..........................................                   28
    2001..........................................                   32
    2002..........................................                   40
    2003 or later.................................                  52.
            ``(2) Participation rate defined.--As used in this 
        subsection, the term `participation rate' means, with respect 
        to a State and a fiscal year, an amount equal to--
                    ``(A) the average monthly number of individuals 
                who, during the fiscal year, participate in the State 
                program established under this subpart or the State 
                program (if any) established under part G; divided by
                    ``(B) the average monthly number of individuals 
                who, during the fiscal year, are adult recipients of 
                aid under the State plan approved under part A or 
                participate in the State program (if any) established 
                under part G.
            ``(3) State compliance reports.--Each State that operates a 
        program under this part for a fiscal year shall submit to the 
        Secretary a report on the participation rate of the State for 
        the fiscal year.
            ``(4) Effect of failure to meet participation rates.--
                    ``(A) In general.--If a State reports that the 
                State has failed to achieve the participation rate 
                required by paragraph (1) for the fiscal year, the 
                Secretary may make recommendations for changes in the 
                State program established under this subpart and (if 
                the State has established a program under part G) the 
                State program established under part G. The State may 
                elect to follow such recommendations, and shall 
                demonstrate to the Secretary how the State will achieve 
                the required participation rates.
                    ``(B) Second consecutive failure.--Notwithstanding 
                subparagraph (A), if a State fails to achieve the 
                participation rate required by paragraph (1) for 2 
                consecutive fiscal years, the Secretary may require the 
                State to make changes in the State program established 
                under this subpart and (if the State has established a 
                program under part G) the State program established 
                under part G.
    ``(b) Performance Standards.--The Secretary shall develop standards 
to be used to measure the effectiveness of the programs established 
under this subpart and part G in moving recipients of aid under the 
State plan approved under part A into full-time unsubsidized 
employment.
    ``(c) Performance-Based Measures.--
            ``(1) Establishment.--The Secretary shall, by regulation, 
        establish measures of the effectiveness of the State programs 
        established under this subpart and under part G in moving 
        recipients of aid under the State plan approved under part A 
        into full-time unsubsidized employment, based on the 
        performance of such programs.
            ``(2) Annual compliance reports.--Each State that operates 
        a program under this part shall submit to the Secretary annual 
        reports that compare the achievements of the program with the 
        performance-based measures established under paragraph (1).

                   ``Subpart 2--Optional State Plans

``SEC. 489. STATE ROLE.

    ``(a) Program Requirements.--Any State may establish and operate a 
work first program that meets the following requirements:
            ``(1) Objective.--The objective of the program is for each 
        program participant to find and hold a full-time unsubsidized 
        paid job, and for this goal to be achieved in a cost-effective 
        fashion.
            ``(2) Method.--The method of the program is to connect 
        recipients of aid to families with dependent children with the 
        private sector labor market as soon as possible and offer them 
        the support and skills necessary to remain in the labor market. 
        Each component of the program should be permeated with an 
        emphasis on employment and with an understanding that minimum 
        wage jobs are a stepping stone to more highly paid employment.
            ``(3) Job creation.--The creation of jobs, with an emphasis 
        on private sector jobs, shall be a component of the program and 
        shall be a priority for each State office with responsibilities 
        under the program.
            ``(4) 2-year limitation on participation.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an individual may not participate in 
                a State program established under this subpart if the 
                individual has participated in the State program 
                established under subpart 1 or this subpart for 24 
                months after the date the individual first signed an 
                agreement of mutual responsibility under either such 
                subpart, excluding any month during which the 
                individual worked for an average of at least 30 hours 
                per week in a private sector job.
                    ``(B) Authority to allow repeat participation.--
                Subject to subparagraph (C), a State may allow an 
                individual who, by reason of subparagraph (A), would be 
                prohibited from participating in the State program 
                established under this subpart to participate in the 
                program for such additional period or periods as the 
                State determines appropriate, if the individual has 
                participated for 24 months in the State community 
                service program established under part G.
                    ``(C) Limitation on percentage of repeat 
                participants.--
                            ``(i) In general.--Except as provided in 
                        clause (ii) of this subparagraph, the number of 
                        individuals allowed under subparagraph (A) to 
                        participate during a program year in a State 
                        program established under this subpart shall 
                        not exceed 10 percent of the total number of 
                        individuals who participated in the program 
                        during the immediately preceding program year.
                            ``(ii) Authority to increase limitation.--
                                    ``(I) Petition.--A State may 
                                request the Secretary to increase the 
                                percentage limitation imposed by clause 
                                (i) to not more than 15 percent.
                                    ``(II) Authority to grant 
                                request.--The Secretary may approve a 
                                request made pursuant to subclause (I) 
                                if the Secretary deems it appropriate. 
                                The Secretary shall develop 
                                recommendations on the criteria that 
                                should be applied in evaluating 
                                requests under subclause (I).
            ``(5) Agreements of mutual responsibility.--The State 
        agency shall develop an agreement of mutual responsibility for 
        each program participant.
            ``(6) Penalties for refusal to work.--The State shall 
        reduce, by such amount as the State considers appropriate, the 
        amount of aid payable under the State plan approved under part 
A to a family that includes an individual who fails without good cause 
to comply with the requirements of the program.
            ``(7) Caseload particpation rates.--
                    ``(A) Requirement.--A State that operates a program 
                under this subpart shall achieve a participation rate 
                for the following fiscal years of not less than the 
                following percentage:

``Fiscal year:                                              Percentage:
    1997..........................................                   16
    1998..........................................                   20
    1999..........................................                   24
    2000..........................................                   28
    2001..........................................                   32
    2002..........................................                   40
    2003 or later.................................                  52.
                    ``(B) Participation rate defined.--As used in this 
                section, the term `participation rate' means, with 
                respect to a State and a fiscal year, an amount equal 
                to--
                            ``(i) the average monthly number of 
                        individuals who, during the fiscal year, 
                        participate in the State program established 
                        under this subpart or the State program (if 
                        any) established under part G; divided by
                            ``(ii) the average monthly number of 
                        individuals who, during the fiscal year, are 
                        adult recipients of aid under the State plan 
                        approved under part A or participate in the 
                        State program (if any) established under part 
                        G.
    ``(b) Annual Reports.--
            ``(1) Compliance with performance measures.--Each State 
        that operates a program under this subpart shall submit to the 
        Secretary annual reports that compare the achievements of the 
        program with the performance-based measures established under 
        section 490(b).
            ``(2) Compliance with participation rates.--Each State that 
        operates a program under this subpart for a fiscal year shall 
        submit to the Secretary a report on the participation rate of 
        the State for the fiscal year.

``SEC. 490. FEDERAL ROLE.

    ``(a) Approval of State Plans.--The Secretary shall approve any 
State plan that provides for the establishment and operation of a work 
first program that meets the requirements of section 489.
    ``(b) Performance-Based Measures.--The Secretary shall, by 
regulation, establish measures of the effectiveness of the State 
program established under this subpart and (if the State has 
established a program under part G) the State program established under 
part G in moving recipients of aid under the State plan approved under 
part A into full-time unsubsidized employment, based on the performance 
of such programs.
    ``(c) Effect of Failure To Meet Participation Rates.--
            ``(1) In general.--If a State reports that the State has 
        failed to achieve the participation rate required by section 
        489(a)(7) for the fiscal year, the Secretary may make 
        recommendations for changes in the State program established 
        under this subpart and (if the State has established a program 
        under part G) the State program established under part G. The 
        State may elect to follow such recommendations, and shall 
        demonstrate to the Secretary how the State will achieve the 
        required participation rates.
            ``(2) Second consecutive failure.--Notwithstanding 
        paragraph (1), if the State has failed to achieve the 
        participation rates required by section 489(a)(7) for 2 
        consecutive fiscal years, the Secretary may require the State 
        to make changes in the State program established under this 
        subpart and (if the State has established a program under part 
        G) the State program established under part G.

                  ``Part G--Community Service Program

``SEC. 491. ESTABLISHMENT AND OPERATION OF PROGRAM.

    ``(a) In General.--A State that establishes a work first program 
under a subpart of part F may establish and carry out a community 
service program that meets the requirements of this part.
    ``(b) Objective.--The objective of the community service program is 
for each program participant to find and hold a full-time unsubsidized 
paid job, and for this goal to be achieved in a cost-effective fashion.
    ``(c) Case Management Teams.--The State shall assign to each 
program participant a case management team that shall meet with the 
participant and assist the participant to choose the most suitable 
community service job under subsection (d) and to eventually obtain a 
full-time unsubsidized paid job.
    ``(d) Provision of Community Service Job.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), the State shall provide each participant with a full-time 
        community service job under which the participant works a 
        minimum of 30 hours per week and is paid at a rate which is not 
        greater than 75 percent of the maximum amount of aid payable 
        under the State plan approved under part A to a family of the 
        same size and composition with no income.
            ``(2) Exception.--(A) If the participant has obtained 
        unsubsidized part-time employment in the private sector, the 
        State shall provide the participant with a part-time community 
        service job.
            ``(B) If the State provides a participant a part-time 
        community service job under subparagraph (A), such State shall 
        ensure that the total number of hours that the participant 
        works in a week is at least 30 hours.
            ``(3) Waiver.--(A) The State may submit to the Secretary a 
        request for a waiver of the 30-hour per week work requirement 
        described in paragraph (1) if such requirement is too 
        financially burdensome for the State to meet.
            ``(B) Any waiver granted under subparagraph (A) shall 
        require the State--
                    ``(i) to ensure that each participant works part-
                time at the community service job; and
                    ``(ii) to meet such 30-hour per week work 
                requirement by the year 2001.
            ``(4) Wages not considered earned income.--Wages paid under 
        a community service program shall not be considered to be 
        earned income for purposes of any provision of law.
            ``(5) Community service job defined.--For purposes of this 
        section, the term `community service job' means--
                    ``(A) a job provided to a participant by the State 
                administering the State plan under part A; or
                    ``(B) a job provided to a participant by any other 
                employer for which all or part of the wages are paid by 
                the State.
        A State may provide or subsidize under the program any job 
        which the State determines to be appropriate.
    ``(e) Job Search Requirement.--The State shall require each 
participant to spend a minimum of 5 hours per week on activities 
related to securing unsubsidized full-time employment in the private 
sector.
    ``(f) Duration of Participation.--
            ``(1) In general.--Except as provided in paragraph (2), an 
        individual may not participate for more than 2 years in a 
        community service program under this part.
            ``(2) Authority to allow repeated participation.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                State may allow an individual who, by reason of 
paragraph (1), would be prohibited from participating in the State 
program established under this subpart to participate in the program 
for such additional period or periods as the State determines 
appropriate.
                    ``(B) Limitation on percentage of repeat 
                participants.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the number of individuals allowed 
                        under subparagraph (A) to participate during a 
                        program year in a State program established 
                        under this subpart shall not exceed 10 percent 
                        of the total number of individuals who 
                        participated in the program during the 
                        immediately preceding program year.
                            ``(ii) Authority to increase limitation.--
                                    ``(I) Petition.--A State may 
                                request the Secretary to increase the 
                                percentage limitation imposed by clause 
                                (i) to not more than 15 percent.
                                    ``(II) Authority to grant 
                                request.--The Secretary may approve a 
                                request made pursuant to subclause (I) 
                                if the Secretary deems it appropriate. 
                                The Secretary shall develop 
                                recommendations on the criteria that 
                                should be applied in evaluating 
                                requests under subclause (I).
    ``(g) Use of Placement Companies.--A State that establishes a 
community service program under this part may enter into contracts with 
private companies (whether operated for profit or not for profit) for 
the placement of participants in the program in positions of full-time 
employment, preferably in the private sector, for wages sufficient to 
eliminate the need of such participants for cash assistance in 
accordance with section 483.
    ``(h) Temporary Subsidized Job Creation.--A State that establishes 
a community service program under this part may establish a program 
similar to the program operated by the State of Oregon, which is known 
as `JOBS Plus'.
    ``(i) Work Supplementation Program.--
            ``(1) In general.--A State that establishes a community 
        service program under this part may institute a work 
        supplementation program under which the State, to the extent it 
        considers appropriate, may reserve the sums that would 
        otherwise be payable to participants in the program as a 
        community service minimum wage and use the sums instead for the 
        purpose of providing and subsidizing private sector jobs for 
        the participants.
            ``(2) Employer agreement.--An employer who provides a 
        private sector job to a participant under paragraph (1) shall 
        agree to provide to the participant an amount in wages equal to 
        the poverty threshold for a family of three.
    ``(j) Failure To Comply With Agreement of Mutual Responsibility or 
Other Act of Noncompliance.--
            ``(1) In general.--Subject to paragraph (2), if the program 
        participant fails without good cause to comply with an 
        agreement of mutual responsibility signed by the participant, 
        or the participant otherwise engages in any other act of 
        noncompliance, the State shall reduce, by such amount as the 
        State considers appropriate, the amount of aid payable to the 
        participant under part G.
            ``(2) Maximum of 3 community service jobs.--A program 
        participant may not receive more than 3 community service jobs 
        under the program.
            ``(3) Determination of act of noncompliance.--For purposes 
        of this subsection, the term `act of noncompliance' shall be 
determined by the State or the employer and shall include failure by 
the participant to accept an offer of full-time employment in the 
private sector without good reason.''.
    (c) Funding.--Section 403 (42 U.S.C. 603) is amended by inserting 
after subsection (b) the following:
    ``(c)(1) Each State that is operating a program in accordance with 
subpart 1 of part F (or in accordance with a plan approved under 
subpart 2 of part F) and a program in accordance with part G shall be 
entitled to payments under subsection (d) for any fiscal year in an 
amount equal to the sum of the applicable percentages (specified in 
such subsection) of its expenditures to carry out such programs 
(subject to limitations prescribed by or pursuant to such parts or this 
section on expenditures that may be included for purposes of 
determining payment under subsection (d)), but such payments for any 
fiscal year in the case of any State may not exceed the limitation 
determined under paragraph (2) with respect to the State.
    ``(2) The limitation determined under this paragraph with respect 
to a State for any fiscal year is the amount that bears the same ratio 
to the amount specified in paragraph (3) for such fiscal year as the 
average monthly number of adult recipients (as defined in paragraph 
(4)) in the State in the preceding fiscal year bears to the average 
monthly number of such recipients in all the States for such preceding 
year.
    ``(3)(A) The amount specified in this paragraph is--
            ``(i) $1,500,000,000 for fiscal year 1997;
            ``(iii) $2,000,000,000 for fiscal year 1998;
            ``(iv) $2,600,000,000 for fiscal year 1999;
            ``(v) $3,100,000,000 for fiscal year 2000; and
            ``(vi) the amount determined under subparagraph (B) for 
        fiscal year 2001 and each succeeding fiscal year.
    ``(B) The amount determined under this subparagraph for a fiscal 
year is the product of the following:
            ``(i) The amount specified in this paragraph for the 
        immediately preceding fiscal year.
            ``(ii) 1.00 plus the percentage (if any) by which--
                    ``(I) the average of the Consumer Price Index (as 
                defined in section 1(f)(5) of the Internal Revenue Code 
                of 1986) for the most recent 12-month period for which 
                such information is available; exceeds
                    ``(II) the average of the Consumer Price Index (as 
                so defined) for the 12-month period ending on June 30 
                of the 2nd preceding fiscal year.
            ``(iii) The amount that bears the same ratio to the amount 
        specified in this paragraph for the immediately preceding 
        fiscal year as the number of individuals whom the Secretary 
        estimates will participate in programs operated under part F or 
        G during the fiscal year bears to the total number of 
        individuals who participated in such programs during such 
        preceding fiscal year.
    ``(4) For purposes of this subsection, the term `adult recipient' 
in the case of any State means an individual other than a dependent 
child (unless such child is the custodial parent of another dependent 
child) whose needs are met (in whole or in part) with payments of aid 
to families with dependent children.
    ``(d)(1) In lieu of any payment under subsection (a), the Secretary 
shall pay to each State that is operating a program in accordance with 
subpart 1 of part F (or in accordance with a plan approved under 
subpart 2 of part F) and a program in accordance with part G, and to 
which section 1108 does not apply, with respect to expenditures by the 
State to carry out such programs, an amount equal to 70 percent, or the 
Federal medical assistance percentage (as defined in section 1905(b)) 
increased by 10 percentage points, whichever is the greater, of the 
total amount expended during the quarter for the operation and 
administration of such programs.
    ``(2) In lieu of any payment under subsection (a), the Secretary 
shall pay to each State that is operating a program in accordance with 
subpart 1 of part F (or in accordance with a plan approved under 
subpart 2 of part F) and a program in accordance with part G, and to 
which section 1108 applies, with respect to expenditures by the State 
to carry out such programs (including expenditures for child care under 
section 402(g)(1)(A)), an amount equal to--
            ``(A) with respect to so much of such expenditures in a 
        fiscal year as do not exceed the State's expenditures in the 
        fiscal year 1987 with respect to which payments were made to 
        such State from its allotment for such fiscal year pursuant to 
        part C of this title as then in effect, 90 percent; and
            ``(B) with respect to so much of such expenditures in a 
        fiscal year as exceed the amount described in subparagraph 
        (A)--
                    ``(i) 50 percent, in the case of expenditures for 
                administrative costs made by a State in operating such 
                programs for such fiscal year (other than the personnel 
                costs for staff employed full-time in the operation of 
                such program) and the costs of transportation and other 
                work-related supportive services under section 
                402(g)(2); and
                    ``(ii) 70 percent or the Federal medical assistance 
                percentage (as defined in the last sentence of section 
                1118) increased by 10 percentage points, whichever is 
                the greater, in the case of expenditures made by a 
                State in operating such programs for such fiscal year 
                (other than for costs described in clause (i)).
    ``(3) With respect to the amount for which payment is made to a 
State under paragraph (2)(A), the State's expenditures for the costs of 
operating such programs may be in cash or in kind, fairly evaluated.
    ``(4) Not more than 10 percent of the amount payable to a State 
under this subsection for a quarter may be for expenditures made during 
the quarter with respect to program participants who are not eligible 
for aid under the State plan approved under part A.''.
    (d) Enforcement of Performance Standards.--Section 403(d) (42 
U.S.C. 603), as added by subsection (c) of this section, is amended by 
adding at the end the following:
    ``(5) If the Secretary determines that the programs established by 
a State under parts F and G, as a whole, have failed for a fiscal year 
to meet the performance standards developed by the State under section 
481(12), the Secretary shall, notwithstanding whichever of paragraph 
(1) or (2) of this subsection applies to the State, pay to the State an 
amount equal to the sum of 50 percent of the total amount expended 
during the fiscal year for the operation and administration of such 
programs in accordance with the State plans approved under parts F and 
G.''.
    (e) Conforming Amendments.--
            (1) Section 402(a) (42 U.S.C. 602(a)) is amended by 
        striking paragraph (19).
            (2) Section 403 (42 U.S.C. 603) is amended by striking 
        subsections (k) and (l).
            (3) Section 407(b)(1)(B) (42 U.S.C. 607(b)(1)(B)) is 
        amended--
                    (A) by adding ``and'' at the end of clause (iii);
                    (B) by striking ``; and'' at the end of clause (iv) 
                and inserting a period; and
                    (C) by striking clause (v).
            (4) Section 407(b)(2)(B)(ii)(I) (42 U.S.C. 
        607(b)(2)(B)(ii)(I)) is amended by striking ``under section 
        402(a)(19) or''.
            (5) Section 407(b)(2)(C) (42 U.S.C. 607(b)(2)(C)) is 
        amended by striking ``section 402(a)(19) and''.
            (6) Section 1115(b)(2)(A) (42 U.S.C. 1315(b)(2)(A)) is 
        amended by striking ``, and 402(a)(19) (relating to the work 
        incentive program)''.
            (7) Section 1108 (42 U.S.C. 1308) is amended--
                    (A) in subsection (a), by striking ``or, in the 
                case of part A of title IV, section 403(k)''; and
                    (B) in subsection (d), by striking ``(exclusive of 
                any amounts on account of services and items to which, 
                in the case of part A of such title, section 403(k) 
                applies)''.
            (8) Section 1902(a)(19)(A)(i)(I) (42 U.S.C. 
        1396a(a)(19)(A)(i)(I)) is amended by striking ``482(e)(6)'' and 
        inserting ``486(f)''.
            (9) Section 1928(a)(1) (42 U.S.C. 1396s(a)(1)) is amended 
        by striking ``482(e)(6)'' and inserting ``486(f)''.
    (f) Intent of the Congress.--The Congress intends for State 
activities under section 484 of the Social Security Act (as added by 
the amendment made by section 301(b) of this Act) to emphasize the use 
of the funds that would otherwise be used to provide individuals with 
aid to families with dependent children under part A of title IV of the 
Social Security Act and with food stamp benefits under the Food Stamp 
Act of 1977, to subsidize the wages of such individuals in temporary 
jobs.
    (g) Sense of the Congress.--It is the sense of the Congress that 
States should target individuals who have not attained 25 years of age 
for participation in the program established by the State under part F 
of title IV of the Social Security Act (as added by the amendment made 
by section 301(b) of this section) in order to break the cycle of 
welfare dependency.

SEC. 302. REGULATIONS.

    The Secretary of Health and Human Services shall prescribe such 
regulations as may be necessary to implement the amendments made by 
this title.

SEC. 303. APPLICABILITY TO STATES.

    (a) State Option to Accelerate Applicability.--If a State formally 
notifies the Secretary of Health and Human Services that the State 
desires to accelerate the applicability to the State of the amendments 
made by this title, the amendments shall apply to the State on and 
after such earlier date as the State may select.
    (b) State Option to Delay Applicability Until Waivers Expire.--The 
amendments made by this title shall not apply to a State with respect 
to which there is in effect a waiver issued under section 1115 of the 
Social Security Act for the State program established under part F of 
title IV of such Act, until the waiver expires, if the State formally 
notifies the Secretary of Health and Human Services that the State 
desires to so delay such effective date.
    (c) Authority of the Secretary of Health and Human Services to 
Delay Applicability to a State.--If a State formally notifies the 
Secretary of Health and Human Services that the State desires to delay 
the applicability to the State of the amendments made by this title, 
the amendments shall apply to the State on and after any later date 
agreed upon by the Secretary and the State.

SEC. 304. SENSE OF THE CONGRESS RELATING TO AVAILABILITY OF WORK FIRST 
              PROGRAM IN RURAL AREAS.

    It is the sense of the Congress that the Secretary of Health and 
Human Services and the States should consider the needs of rural areas 
in designing State plans under parts F and G of title IV of the Social 
Security Act.

 TITLE IV--FAMILY RESPONSIBILITY AND IMPROVED CHILD SUPPORT ENFORCEMENT

Subtitle A--Enhancement of Ability to Identify and Locate Noncustodial 
                                Parents

SEC. 401. EXPANSION OF FUNCTIONS OF FEDERAL PARENT LOCATOR SERVICE.

    (a) In General.--Section 453 (42 U.S.C. 653) is amended--
            (1) in subsection (a), by striking ``enforcing support 
        obligations against such parent'' and inserting ``establishing 
        parentage, establishing, modifying, and enforcing child support 
        obligations, and enforcing child visitation rights and 
        responsibilities, and which shall use safeguards to prevent the 
        disclosure of information in cases that would jeopardize the 
        safety of the custodial parent or any child of the custodial 
        parent'';
            (2) in subsection (b), by inserting after the 2nd sentence 
        the following: ``Information with respect to an absent parent 
        shall not be disclosed to any person if the disclosure would 
        jeopardize the safety of the custodial parent or any child of 
        the custodial parent. Information with respect to an absent 
        parent shall not be disclosed to any person (other than the 
        custodial parent) unless the custodial parent has been notified 
        in advance of the disclosure.''; and
            (3) in subsection (d), by inserting ``and such reasonable 
        fees'' after ``such documents''.
    (b) Sense of the Congress.--It is the sense of the Congress that--
            (1) the denial of visitation rights under a child support 
        order should be treated as irrelevant in any action brought to 
        enforce the support provisions of the order; and
            (2) the failure to pay child support pursuant to a child 
        support order should be treated as irrelevant in any action 
        brought to enforce visitation rights under the order.

SEC. 402. EXPANSION OF DATA BASES ACCESSED BY PARENT LOCATOR SYSTEMS.

    (a) Additional Information for Federal Parent Locator Service.--
Section 453 (42 U.S.C. 653) is amended--
            (1) in subsection (b), by striking ``the most recent 
        address and place of employment'' and inserting ``the most 
        recent residential address, employer name and address, and 
        amounts and nature of income and assets'';
            (2) in subsection (c)(3), by striking ``the resident 
        parent'' and inserting ``either parent''; and
            (3) in subsection (e), by adding at the end the following:
    ``(4) The Secretary of the Treasury shall enter into an agreement 
with the Secretary to provide prompt access by the Secretary (in 
accordance with this subsection and section 6103(l)(6) of the Internal 
Revenue Code of 1986) to the quarterly estimated Federal income tax 
returns filed by individuals with the Internal Revenue Service.''.
    (b) Automated Data Processing Requirements.--
            (1) Revised requirements.--
                    (A) State plan requirement.--Section 454(16) (42 
                U.S.C. 654(16)) is amended--
                            (i) by striking ``, at the option of the 
                        State,'';
                            (ii) by inserting ``and operation by the 
                        State agency'' after ``for the establishment'';
                            (iii) by inserting ``meeting the 
                        requirements of section 454A'' after 
                        ``information retrieval system'';
                            (iv) by striking ``in the State and 
                        localities thereof, so as (A)'' and inserting 
                        ``so as'';
                            (v) by striking ``(i)''; and
                            (v) by striking ``(including'' and all that 
                        follows and inserting a semicolon.
                    (B) Automated data processing.--Part D of title IV 
                (42 U.S.C. 651-669) is amended by inserting after 
                section 454 the following:

                      ``automated data processing

    ``Sec. 454A. (a) In General.--In order to meet the requirements of 
this section, for purposes of the requirement of section 454(16), a 
State agency shall have in operation a single statewide automated data 
processing and information retrieval system which has the capability to 
perform the tasks specified in this section, and performs such tasks 
with the frequency and in the manner specified in this part or in 
regulations or guidelines of the Secretary.
    ``(b) Program Management.--The automated system required under this 
section shall perform such functions as the Secretary may specify 
relating to management of the program under this part, including--
            ``(1) controlling and accounting for use of Federal, State, 
        and local funds to carry out such program; and
            ``(2) maintaining the data necessary to meet Federal 
        reporting requirements on a timely basis.
    ``(c) Calculation of Performance Indicators.--In order to enable 
the Secretary to determine the incentive and penalty adjustments 
required by sections 452(g) and 458, the State agency shall--
            ``(1) use the automated system--
                    ``(A) to maintain the requisite data on State 
                performance with respect to paternity establishment and 
                child support enforcement in the State; and
                    ``(B) to calculate the IV-D paternity establishment 
                percentage and overall performance in child support 
                enforcement for the State for each fiscal year; and
            ``(2) have in place systems controls to ensure the 
        completeness, and reliability of, and ready access to, the data 
        described in paragraph (1)(A), and the accuracy of the 
        calculations described in paragraph (1)(B).
    ``(d) Information Integrity and Security.--The State agency shall 
have in effect safeguards on the integrity, accuracy, and completeness 
of, access to, and use of data in the automated system required under 
this section, which shall include the following (in addition to such 
other safeguards as the Secretary specifies in regulations):
            ``(1) Policies restricting access.--Written policies 
        concerning access to data by State agency personnel, and 
        sharing of data with other persons, which--
                    ``(A) permit access to and use of data only to the 
                extent necessary to carry out program responsibilities;
                    ``(B) specify the data which may be used for 
                particular program purposes, and the personnel 
                permitted access to such data; and
                    ``(C) ensure that data obtained or disclosed for a 
                limited program purpose is not used or redisclosed for 
                another, impermissible purpose.
            ``(2) Systems controls.--Systems controls (such as 
        passwords or blocking of fields) to ensure strict adherence to 
        the policies specified under paragraph (1).
            ``(3) Monitoring of access.--Routine monitoring of access 
        to and use of the automated system, through methods such as 
        audit trails and feedback mechanisms, to guard against and 
        promptly identify unauthorized access or use.
            ``(4) Training and information.--The State agency shall 
        have in effect procedures to ensure that all personnel 
        (including State and local agency staff and contractors) who 
        may have access to or be required to use sensitive or 
        confidential program data are fully informed of applicable 
        requirements and penalties, and are adequately trained in 
        security procedures.
            ``(5) Penalties.--The State agency shall have in effect 
        administrative penalties (up to and including dismissal from 
        employment) for unauthorized access to, or disclosure or use 
        of, confidential data.
    ``(e) Central Case Registry.--
            ``(1) In general.--The automated system required under this 
        section shall perform the functions, in accordance with the 
        provisions of this subsection, of a single central registry 
        containing records with respect to each case in which services 
        are being provided by the State agency, using such standardized 
        data elements (such as names, social security numbers or other 
        uniform identification numbers, dates of birth, and case 
        identification numbers), and containing such other information 
        (such as information on case status) as the Secretary may 
        require.
            ``(2) Payment records.--Each case record in the central 
        registry with respect to which a child support order has been 
        established shall include a record of--
                    ``(A) the amount of monthly (or other periodic) 
                support owed under the support order, and other amounts 
                due or overdue (including arrears, interest or late 
                payment penalties, and fees);
                    ``(B) the date on which the support obligation will 
                terminate under such order;
                    ``(C) all child support and related amounts 
                collected (including such amounts as fees, late payment 
                penalties, and interest on arrearages); and
                    ``(D) the distribution of such amounts collected.
            ``(3) Updating and monitoring.--The State agency shall 
        promptly establish and maintain, and regularly monitor, case 
        records in the registry required by this subsection, on the 
        basis of--
                    ``(A) information on administrative actions and 
                administrative and judicial proceedings and orders 
                relating to paternity and support;
                    ``(B) information obtained from matches with 
                Federal, State, or local data sources;
                    ``(C) information on support collections and 
                distributions; and
                    ``(D) any other relevant information.
    ``(f) Data Matches and Other Disclosures of Information.--The 
automated system required under this section shall have the capacity, 
and be used by the State agency, to extract data at such times, and in 
such standardized format or formats, as may be required by the 
Secretary, and to share and match data with, and receive data from, 
other data bases and data matching services, in order to obtain (or 
provide) information necessary to enable the State agency (or Secretary 
or other State or Federal agencies) to carry out responsibilities under 
this part. Data matching activities of the State agency shall include 
at least the following:
            ``(1) National child support registry.--Furnish to the 
        registry established under section 452(a)(11) (and update as 
        necessary, with information including notice of expiration of 
        orders) minimal information (to be specified by the Secretary) 
        on each child support case in the central case registry.
            ``(2) Federal parent locator service.--Exchange data with 
        the Federal Parent Locator Service for the purposes specified 
        in section 453.
            ``(3) AFDC and medicaid agencies.--Exchange data with State 
        agencies (of the State and of other States) administering the 
        programs under part A and title XIX, as necessary for the 
        performance of State agency responsibilities under this part 
        and under such programs.
            ``(4) Intra- and interstate data matches.--Exchange data 
        with other agencies of the State, agencies of other States, and 
        interstate information networks, as necessary and appropriate 
        to carry out (or assist other States to carry out) the purposes 
        of this part.''.
                    (C) Implementation timetable.--Section 454(24) (42 
                U.S.C. 654(24)) is amended to read as follows:
            ``(24) provide that the State will have in effect an 
        automated data processing and information retrieval system--
                    ``(A) by October 1, 1995, meeting all requirements 
                of this part which were enacted on or before the date 
                of enactment of the Family Support Act of 1988; and
                    ``(B) by October 1, 1998, meeting all requirements 
                of this part enacted on or before the date of enactment 
                of the Individual Responsibility Act of 1995 (but this 
                provision shall not be construed to alter earlier 
                deadlines specified for elements of such system);''.
            (2) Special federal matching rate for development costs of 
        automated systems.--Section 455(a) (42 U.S.C. 655(a)) is 
        amended--
                    (A) in paragraph (1)(B)--
                            (i) by striking ``90 percent'' and 
                        inserting ``the percent specified in paragraph 
                        (3)'';
                            (ii) by striking ``so much of''; and
                            (iii) by striking ``which the Secretary'' 
                        and all that follows and inserting ``, and''; 
                        and
                    (B) by adding at the end the following:
    ``(3)(A) The Secretary shall pay to each State, for each quarter in 
fiscal year 1995, 90 percent of so much of State expenditures described 
in subparagraph (1)(B) as the Secretary finds are for a system meeting 
the requirements specified in section 454(16), or meeting such 
requirements without regard to clause (D) thereof.
    ``(B)(i) The Secretary shall pay to each State, for each quarter in 
fiscal years 1996 through 2000, the percentage specified in clause (ii) 
of so much of State expenditures described in subparagraph (1)(B) as 
the Secretary finds are for a system meeting the requirements specified 
in section 454(16) and 454A, subject to clause (iii).
    ``(ii) The percentage specified in this clause, for purposes of 
clause (i), is the higher of--
            ``(I) 80 percent, or
            ``(II) the percentage otherwise applicable to Federal 
        payments to the State under subparagraph (A) (as adjusted 
        pursuant to section 458).
    ``(iii) Notwithstanding any other provision of this section, the 
total amount payable by the Secretary with respect to expenditures 
during fiscal years specified in clause (i) shall not exceed 
$260,000,000, to be distributed among the States, and to be made 
available at such time or times over the five-year period, as is 
provided in regulations issued by the Secretary, taking into account 
the relative size of State caseloads and the level of automation needed 
to meet the requirements of this part, and payments under clause (i) 
shall be made to a State at such times and in such a manner as provided 
in the advance planning document approved under section 452(d).''.
            (3) Conforming amendment.--Section 123(c) of the Family 
        Support Act of 1988 (102 Stat. 2352) is repealed.
    (c) Maintenance of Federal Child Support Order Registry.--Section 
452(a) (42 U.S.C 652(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (9);
            (2) by striking the period at the end of the 2nd sentence 
        of paragraph (10) and inserting ``; and''; and
            (3) by adding at the end the following:
            ``(11) maintain a registry of all child support orders 
        transmitted pursuant to section 454A(f)(1).''.
    (d) Sense of the Congress.--It is the sense of the Congress that 
the Secretary of Health and Human Services should investigate, pursuant 
to section 453(e) of the Social Security Act, accessing Federal data 
banks that are not linked to the Parent Locator Service which are more 
than marginally useful in locating absent parents.

SEC. 403. NATIONAL PARENT LOCATOR NETWORK.

    (a) Establishment.--Section 453 (42 U.S.C. 653) is amended by 
adding at the end the following:
    ``(g) The Secretary shall expand the Parent Locator Service to 
establish a national network based on the comprehensive statewide child 
support enforcement systems developed by the States, to--
            ``(1) allow each State to--
                    ``(A) locate any absent parent who owes child 
                support, for whom a child support obligation is being 
                established, or for whom an order for visitation is 
                being enforced, by--
                            ``(i) accessing the records of other State 
                        agencies and sources of locate information 
                        directly from one computer system to another; 
                        and
                            ``(ii) accessing Federal sources of locate 
                        information in the same fashion;
                    ``(B) access the files of other States to determine 
                whether there are other child support orders and obtain 
                the details of those orders;
                    ``(C) provide for automated data linkage whenever 
                available at reasonable cost; and
                    ``(D) direct locate requests to individual States 
                or Federal agencies, broadcast requests to selected 
                States, or broadcast cases to all States when there is 
                no indication of the source of needed information;
            ``(2) provide for a maximum of 48-hour turnaround time for 
        information to be broadcast and returned to a requesting State;
            ``(3) provide ready access to courts of the information on 
        the network; and
            ``(4) access the central case registry established pursuant 
        to 454A(e).''.
    (b) Sense of the Congress.--It is the sense of the Congress that 
the national network established under section 453(g) of the Social 
Security Act should be used to access State records only through the 
agency that administers the State plan approved under part D of title 
IV of such Act.

SEC. 404. PRIVATE ACCESS TO LOCATE AND ENFORCEMENT SERVICES.

    Section 466(a) (42 U.S.C. 666(a)), is amended by inserting after 
paragraph (11) the following:
            ``(12)(A) Procedures under which private attorneys and pro 
        se obligees must be given access to State locate resources and 
        through enforcement techniques of the State child support 
        enforcement agency, for the purpose of establishing, modifying, 
        and enforcing child support, visitation, and parentage orders, 
        in accordance with safeguards established--
                    ``(i) to provide the custodial parent advance 
                notice of any release of information with respect to a 
                noncustodial parent; and
                    ``(ii) to prevent release of information with 
                respect to a noncustodial parent if the release may 
                jeopardize the safety of the noncustodial parent, the 
                custodial parent, or any child of either parent; and
            ``(B) The procedures described in subparagraph (A) must 
        require the State--
                    ``(i) to develop and publish guidelines 
                implementing the safeguards described in subparagraph 
                (A); and
                    ``(ii) if the State provides for reasonable fees 
                for the access referred to in subparagraph (A), to 
                establish such fees in accordance with guidelines 
                developed and published by the State that set schedules 
                for such fees.''.

                  Subtitle B--Paternity Establishment

SEC. 411. SENSE OF THE CONGRESS.

    It is the sense of the Congress that social services should be 
provided in hospitals to women who have become pregnant as a result of 
rape or incest.

SEC. 412. AVAILABILITY OF PARENTING SOCIAL SERVICES FOR NEW FATHERS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by section 404 of 
this Act, is amended by inserting after paragraph (12) the following:
            ``(13) Procedures for providing new fathers with positive 
        parenting counseling that stresses the importance of paying 
        child support in a timely manner, in accordance with 
        regulations prescribed by the Secretary.''.

SEC. 413. COOPERATION REQUIREMENT AND GOOD CAUSE EXCEPTION.

    (a) Child Support Enforcement Requirements.--Section 454 (42 U.S.C. 
654) is amended--
            (1) by striking ``and'' at the end of paragraph (23);
            (2) by striking the period at the end of paragraph (24) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (24) the following:
            ``(25) provide that the State agency administering the plan 
        under this part--
                    ``(A) will make the determination specified under 
                paragraph (4), as to whether an individual is 
                cooperating with efforts to establish paternity and 
                secure support (or has good cause not to cooperate with 
                such efforts) for purposes of the requirements of 
                sections 402(a)(26) and 1912;
                    ``(B) will advise individuals, both orally and in 
                writing, of the grounds for good cause exceptions to 
                the requirement to cooperate with such efforts;
                    ``(C) will take the best interests of the child 
                into consideration in making the determination whether 
                such individual has good cause not to cooperate with 
                such efforts;
                    ``(D)(i) will make the initial determination as to 
                whether an individual is cooperating (or has good cause 
                not to cooperate) with efforts to establish paternity 
                within 10 days after such individual is referred to 
                such State agency by the State agency administering the 
                program under part A of title XIX;
                    ``(ii) will make redeterminations as to cooperation 
                or good cause at appropriate intervals; and
                    ``(iii) will promptly notify the individual, and 
                the State agencies administering such programs, of each 
                such determination and redetermination;
                    ``(E) with respect to any child born on or after 
                the date 10 months after enactment of this provision, 
                will not determine (or redetermine) the mother (or 
                other custodial relative) of such child to be 
                cooperating with efforts to establish paternity unless 
                such individual furnishes--
                            ``(i) the name of the putative father (or 
                        fathers); and
                            ``(ii) sufficient additional information to 
                        enable the State agency, if reasonable efforts 
                        were made, to verify the identity of the person 
                        named as the putative father (including such 
                        information as the putative father's present 
                        address, telephone number, date of birth, past 
                        or present place of employment, school 
                        previously or currently attended, and names and 
                        addresses of parents, friends, or relatives 
                        able to provide location information, or other 
                        information that could enable service of 
                        process on such person), and
                    ``(F)(i) (where a custodial parent who was 
                initially determined not to be cooperating (or to have 
                good cause not to cooperate) is later determined to be 
                cooperating or to have good cause not to cooperate) 
                will immediately notify the State agencies 
                administering the programs under part A of title XIX 
                that this eligibility condition has been met; and
                    ``(ii) (where a custodial parent was initially 
                determined to be cooperating (or to have good cause not 
                to cooperate)) will not later determine such individual 
                not to be cooperating (or not to have good cause not to 
                cooperate) until such individual has been afforded an 
                opportunity for a hearing.''.
    (b) AFDC Amendments.--
            (1) Section 402(a)(11) (42 U.S.C. 602(a)(11)) is amended by 
        striking ``furnishing of'' and inserting ``application for''.
            (2) Section 402(a)(26) (42 U.S.C. 602(a)(26)) is amended--
                    (A) in each of subparagraphs (A) and (B), by 
                redesignating clauses (i) and (ii) as subclauses (I) 
                and (II);
                    (B) by indenting and redesignating subparagraphs 
                (A), (B), and (C) as clauses (i), (ii), and (iv), 
                respectively;
                    (C) in clause (ii), as redesignated--
                            (i) by striking ``is claimed, or in 
                        obtaining any other payments or property due 
                        such applicant or such child,'' and inserting 
                        ``is claimed;''; and
                            (ii) by striking ``unless'' and all that 
                        follows through ``aid is claimed; and'';
                    (D) by adding after clause (ii) the following new 
                clause:
                            ``(iii) to cooperate with the State in 
                        obtaining any other payments or property due 
                        such applicant or such child; and'';
                    (E) in the matter preceding clause (i) (as so 
                redesignated) to read as follows:
            ``(26) provide--
                    ``(A) that, as a condition of eligibility for aid, 
                each applicant or recipient will be required (subject 
                to subparagraph (C))--'';
                    (F) in subparagraph (A)(iv), as redesignated, by 
                striking ``, unless such individual'' and all that 
                follows through ``individuals involved'';
                    (G) by adding at the end the following new 
                subparagraphs:
                    ``(B) that the State agency will immediately refer 
                each applicant requiring paternity establishment 
services to the State agency administering the program under part D;
                    ``(C) that an individual will not be required to 
                cooperate with the State, as provided under 
                subparagraph (A), if the individual is found to have 
                good cause for refusing to cooperate, as determined in 
                accordance with standards prescribed by the Secretary, 
                which standards shall take into consideration the best 
                interests of the child on whose behalf aid is claimed--
                            ``(i) to the satisfaction of the State 
                        agency administering the program under part D, 
                        as determined in accordance with section 
                        454(25), with respect to the requirements under 
                        clauses (i) and (ii) of subparagraph (A); and
                            ``(ii) to the satisfaction of the State 
                        agency administering the program under this 
                        part, with respect to the requirements under 
                        clauses (iii) and (iv) of subparagraph (A);
                    ``(D) that (except as provided in subparagraph (E)) 
                an applicant requiring paternity establishment services 
                (other than an individual eligible for emergency 
                assistance as defined in section 406(e)) shall not be 
                eligible for any aid under a State plan approved under 
                this part until such applicant--
                            ``(i) has furnished to the agency 
                        administering the State plan under part D the 
                        information specified in section 454(25)(E); or
                            ``(ii) has been determined by such agency 
                        to have good cause not to cooperate;
                    ``(E) that the provisions of subparagraph (D) shall 
                not apply--
                            ``(i) if the State agency specified in such 
                        subparagraph has not, within 10 days after such 
                        individual was referred to such agency, 
                        provided the notification required by section 
                        454(25)(D)(iii), until such notification is 
                        received; and
                            ``(ii) if such individual appeals a 
                        determination that the individual lacks good 
                        cause for noncooperation, until after such 
                        determination is affirmed after notice and 
                        opportunity for a hearing; and''; and
                    (H)(i) by relocating and redesignating as 
                subparagraph (F) the text at the end of subparagraph 
                (A)(ii) beginning with ``that, if the relative'' and 
                all that follows through the semicolon;
                    (ii) in subparagraph (F), as so redesignated and 
                relocated, by striking ``subparagraphs (A) and (B) of 
                this paragraph'' and inserting ``subparagraph (A)''; 
                and
                    (iii) by striking ``and'' at the end of 
                subparagraph (a)(ii).
    (c) Medicaid Amendments.--Section 1912(a) (42 U.S.C. 1396k(a)) is 
amended--
            (1) in paragraph (1)(B), by inserting ``(except as provided 
        in paragraph (2))'' after ``to cooperate with the State'';
            (2) in subparagraphs (B) and (C) of paragraph (1) by 
        striking ``, unless'' and all that follows and inserting a 
        semicolon; and
            (3) by redesignating paragraph (2) as paragraph (5), and 
        inserting after paragraph (1) the following new paragraphs:
            ``(2) provide that the State agency will immediately refer 
        each applicant or recipient requiring paternity establishment 
        services to the State agency administering the program under 
        part D of title IV;
            ``(3) provide that an individual will not be required to 
        cooperate with the State, as provided under paragraph (1), if 
        the individual is found to have good cause for refusing to 
        cooperate, as determined in accordance with standards 
        prescribed by the Secretary, which standards shall take into 
        consideration the best interests of the individuals involved--
                    ``(A) to the satisfaction of the State agency 
                administering the program under part D, as determined 
                in accordance with section 454(25), with respect to the 
                requirements to cooperate with efforts to establish 
                paternity and to obtain support (including medical 
                support) from a parent; and
                    ``(B) to the satisfaction of the State agency 
                administering the program under this title, with 
                respect to other requirements to cooperate under 
                paragraph (1);
            ``(4) provide that (except as provided in paragraph (5)) an 
        applicant requiring paternity establishment services (other 
        than an individual eligible for emergency assistance as defined 
        in section 406(e), or presumptively eligible pursuant to 
        section 1920) shall not be eligible for medical assistance 
        under this title until such applicant--
                    ``(i) has furnished to the agency administering the 
                State plan under part D of title IV the information 
                specified in section 454(25)(E); or
                    ``(ii) has been determined by such agency to have 
                good cause not to cooperate; and
            ``(5) provide that the provisions of paragraph (4) shall 
        not apply with respect to an applicant--
                    ``(i) if such agency has not, within 10 days after 
                such individual was referred to such agency, provided 
                the notification required by section 454(25)(D)(iii), 
                until such notification is received); and
                    ``(ii) if such individual appeals a determination 
                that the individual lacks good cause for 
                noncooperation, until after such determination is 
                affirmed after notice and opportunity for a hearing.''.
    (d) Effective Date.--The amendments made by this section shall be 
effective with respect to applications filed in or after the first 
calendar quarter beginning 10 months or more after the date of the 
enactment of this Act (or such earlier quarter as the State may select) 
for aid under a State plan approved under part A of title IV or for 
medical assistance under a State plan approved under title XIX.

SEC. 414. ELIMINATION OF $50 CHILD SUPPORT PASS-THROUGH TO AFDC 
              RECIPIENTS.

    (a) In General.--Section 457(b) (42 U.S.C. 657(b)) is amended--
            (1) by striking paragraph (1) and redesignating paragraphs 
        (2), (3), and (4) as paragraphs (1), (2), and (3), 
        respectively;
            (2) in paragraph (1) (as so redesignated), by striking 
        ``which are in excess of any amount paid to the family under 
        paragraph (1)'';
            (3) in paragraph (2) (as so redesignated), by striking 
        ``(2)'' and inserting ``(1)''; and
            (4) in paragraph (3) (as so redesignated), by striking ``, 
        (2), and (3)'' and inserting ``and (2)''.
    (b) Elimination of $50 Child Support Disregard Under AFDC.--Section 
402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)) is amended by striking clause 
(vi).

SEC. 415. FEDERAL MATCHING PAYMENTS.

    (a) Increased Base Matching Rate.--Section 455(a)(2) (42 U.S.C. 
655(a)(2)) is amended to read as follows:
            ``(2) The applicable percent for a quarter for purposes of 
        paragraph (1)(A) is--
                    ``(A) for fiscal year 1996, 69 percent;
                    ``(B) for fiscal year 1997, 72 percent; and
                    ``(C) for fiscal year 1998 and succeeding fiscal 
                years, 75 percent.''.
    (b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is 
amended--
            (1) in subsection (a)(1), in the matter preceding 
        subparagraph (A), by striking ``From'' and inserting ``Subject 
        to subsection (c), from''; and
            (2) by inserting after subsection (b) the following:
    ``(c) Maintenance of Effort.--Notwithstanding subsection (a), total 
expenditures for the State program under this part for fiscal year 1996 
and each succeeding fiscal year, reduced by the percentage specified 
for such fiscal year under subparagraph (A), (B), or (C)(i) of 
paragraph (2), shall not be less than such total expenditures for 
fiscal year 1995, reduced by 66 percent.''.

SEC. 416. PERFORMANCE-BASED INCENTIVES AND PENALTIES.

    (a) Incentive Adjustments to Federal Matching Rate.--Section 458 
(42 U.S.C. 658) is amended to read as follows:

                ``incentive adjustments to matching rate

    ``Sec. 458. (a) Incentive Adjustment.--
            ``(1) In general.--In order to encourage and reward State 
        child support enforcement programs which perform in an 
        effective manner, the Federal matching rate for payments to a 
        State under section 455(a)(1)(A), for each fiscal year 
        beginning on or after October 1, 1997, shall be increased by a 
        factor reflecting the sum of the applicable incentive 
        adjustments (if any) determined in accordance with regulations 
        under this section with respect to Statewide paternity 
        establishment and the overall performance of the State in child 
        support enforcement.
            ``(2) Standards.--
                    ``(A) In general.--The Secretary shall specify in 
                regulations--
                            ``(i) the levels of accomplishment, and 
                        rates of improvement as alternatives to such 
                        levels, which States must attain to qualify for 
                        incentive adjustments under this section; and
                            ``(ii) the amounts of incentive adjustment 
                        that shall be awarded to States achieving 
                        specified accomplishment or improvement levels, 
                        which amounts shall be graduated, ranging up 
                        to--
                                    ``(I) 5 percentage points, in 
                                connection with Statewide paternity 
                                establishment; and
                                    ``(II) 10 percentage points, in 
                                connection with overall performance in 
                                child support enforcement.
                    ``(B) Limitation.--In setting performance standards 
                pursuant to subparagraph (A)(i) and adjustment amounts 
                pursuant to subparagraph (A)(ii), the Secretary shall 
                ensure that the aggregate number of percentage point 
                increases as incentive adjustments to all States do not 
                exceed such aggregate increases as assumed by the 
                Secretary in estimates of the cost of this section as 
                of June 1994, unless the aggregate performance of all 
                States exceeds the projected aggregate performance of 
                all States in such cost estimates.
            ``(3) Determination of incentive adjustment.--
                    ``(A) Use of performace indicators.--The Secretary 
                shall, for fiscal year 1998 and each succeeding fiscal 
                year, determine the amount (if any) of incentive 
                adjustment for each State on the basis of the data 
                submitted by the State pursuant to section 454(15)(B) 
                with respect to performance indicators established by 
                the Secretary.
                    ``(B) Minimum performance required.--
                            ``(i) In general.--The Secretary shall not 
                        determine an incentive adjustment for a State 
                        for a fiscal year if the level of performance 
                        of the State for the fiscal year with respect 
                        to such performance indicators is below than 
                        the performance threshhold established by the 
                        Secretary for the State for the fiscal year.
                            ``(ii) Establishment of state performance 
                        threshhold.--The performance threshhold with 
                        respect to such performance indicators for a 
                        State and a fiscal year shall be at or above 
                        the greater of--
                                    ``(I) the national average level of 
                                performace with respect to such 
                                indicators, as of the date of the 
                                enactment of this section; or
                                    ``(II) the level of performance of 
                                the State with respect to such 
                                indicators for the immediately 
                                preceding fiscal year.
                    ``(C) Deadline for issuance of regulations.--Within 
                90 days after the date of the enactment of this 
                section, the Secretary shall issue regulations setting 
                forth the criteria for awarding incentive adjustments.
            ``(4) Fiscal year subject to incentive adjustment.--The 
        total percentage point increase determined pursuant to this 
        section with respect to a State program in a fiscal year shall 
        apply as an adjustment to the percent applicable under section 
        455(a)(2) for payments to such State for the succeeding fiscal 
        year.
    ``(b) Definitions.--As used in subsection (a):
            ``(1) Statewide paternity establishment percentage.--The 
        term `Statewide paternity establishment percentage' means, with 
        respect to a fiscal year, the ratio (expressed as a percentage) 
        of--
                    ``(A) the total number of out-of-wedlock children 
                in the State under one year of age for whom paternity 
                is established or acknowledged during the fiscal year, 
                to
                    ``(B) the total number of children born out of 
                wedlock in the State during such fiscal year.
            ``(2) Overall performance of the state in child support 
        enforcement.--The term `overall performance of the State in 
        child support enforcement' means a measure or measures of the 
        effectiveness of the State agency in a fiscal year which takes 
        into account factors including--
                    ``(A) the percentage of cases requiring a child 
                support order in which such an order was established;
                    ``(B) the percentage of cases in which child 
                support is being paid;
                    ``(C) the ratio of child support collected to child 
                support due; and
                    ``(D) the cost-effectiveness of the State program, 
                as determined in accordance with standards established 
                by the Secretary in regulations.''.
    (b) Title IV-D Payment Adjustment.--Section 455(a)(2) (42 U.S.C. 
655(a)(2)), as amended by section 415(a) of this Act, is amended--
            (1) by striking the period at the end of subparagraph (C) 
        and inserting a semicolon; and
            (2) by adding after and below subparagraph (C), flush with 
        the left margin of the subsection, the following:
``increased by the incentive adjustment factor (if any) determined by 
the Secretary pursuant to section 458.''.
    (c) Conforming Amendments.--Section 454(22) (42 U.S.C. 654(22)) is 
amended--
            (1) by striking ``incentive payments'' the 1st place such 
        term appears and inserting ``incentive adjustments''; and
            (2) by striking ``any such incentive payments made to the 
        State for such period'' and inserting ``any increases in 
        Federal payments to the State resulting from such incentive 
        adjustments''.
    (d) Calculation of IV-D Paternity Establishment Percentage.--
            (1) Section 452(g)(1) (42 U.S.C. 652(g)(1)) is amended in 
        the matter preceding subparagraph (A) by inserting ``its 
        overall performance in child support enforcement is 
        satisfactory (as defined in section 458(b) and regulations of 
        the Secretary), and'' after ``1994,''.
            (2) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is 
        amended in the matter preceding clause (i)--
                    (A) by striking ``paternity establishment 
                percentage'' and inserting ``IV-D paternity 
                establishment percentage''; and
                    (B) by striking ``(or all States, as the case may 
                be)''.
            (3) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is amended--
                    (A) by striking subparagraph (A) and redesignating 
                subparagraphs (B) and (C) as subparagraphs (A) and (B), 
                respectively;
                    (B) in subparagraph (A) (as so redesignated), by 
                striking ``the percentage of children born out-of-
                wedlock in a State'' and inserting ``the percentage of 
                children in a State who are born out of wedlock or for 
                whom support has not been established''; and
                    (C) in subparagraph (B) (as so redesignated)--
                            (i) by inserting ``and overall performance 
                        in child support enforcement'' after 
                        ``paternity establishment percentages''; and
                            (ii) by inserting ``and securing support'' 
                        before the period.
    (e) Title IV-A Payment Reduction.--Section 403 (42 U.S.C. 603) is 
amended--
            (1) in subsection (a), by striking ``1958--'' and inserting 
        ``1958--'' (subject to subsection (h))--'';
            (2) in subsection (h), by striking all that precedes 
        paragraph (3) and inserting the following:
    ``(h)(1) If the Secretary finds, with respect to a State program 
under this part in a fiscal year beginning on or after October 1, 
1996--
            ``(A)(i) on the basis of data submitted by a State pursuant 
        to section 454(15)(B), that the State program in such fiscal 
        year failed to achieve the IV-D paternity establishment 
        percentage (as defined in section 452(g)(2)(A)) or the 
        appropriate level of overall performance in child support 
        enforcement (as defined in section 458(b)(2)), or to meet other 
        performance measures that may be established by the Secretary, 
        or
            ``(ii) on the basis of an audit or audits of such State 
        data conducted pursuant to section 452(a)(4)(C), that the State 
        data submitted pursuant to section 454(15)(B) is incomplete or 
        unreliable; and
            ``(B) that, with respect to the succeeding fiscal year--
                    ``(i) the State failed to take sufficient 
                corrective action to achieve the appropriate 
                performance levels as described in subparagraph (A)(i), 
                or
                    ``(ii) the data submitted by the State pursuant to 
                section 454(15)(B) is incomplete or unreliable,
the amounts otherwise payable to the State under this part for quarters 
following the end of such succeeding fiscal year, prior to quarters 
following the end of the first quarter throughout which the State 
program is in compliance with such performance requirement, shall be 
reduced by the percentage specified in paragraph (2).
    ``(2) The reductions required under paragraph (1) shall be--
            ``(A) not less than 1 nor more than 2 percent, or
            ``(B) not less than 2 nor more than 3 percent, if the 
        finding is the 2nd consecutive finding made pursuant to 
        paragraph (1), or
            ``(C) not less than 3 nor more than 5 percent, if the 
        finding is the 3rd or a subsequent consecutive such finding.''; 
        and
            (3) in subsection (h)(3), by striking ``not in full 
        compliance'' and all that follows and inserting ``determined as 
        a result of an audit to have submitted incomplete or unreliable 
        data pursuant to section 454(15)(B), shall be determined to 
        have submitted adequate data if the Secretary determines that 
        the extent of the incompleteness or unreliability of the data 
        is of a technical nature which does not adversely affect the 
        determination of the level of the State's performance.''.
    (f) Effective Dates.--
            (1) Incentive adjustments.--(A) The amendments made by 
        subsections (a), (b), and (c) shall become effective October 1, 
        1996, except to the extent provided in subparagraph (B).
            (B) Section 458 of the Social Security Act, as in effect 
        immediately before the date of the enactment of this section, 
        shall be effective for purposes of incentive payments to States 
        for fiscal years before fiscal year 1998.
            (2) Penalty reductions.--(A) The amendments made by 
        subsection (d) shall become effective with respect to calendar 
        quarters beginning on and after the date of enactment of this 
        Act.
            (B) The amendments made by subsection (e) shall become 
        effective with respect to calendar quarters beginning on and 
        after the date that is 1 year after the date of enactment of 
        this Act.

SEC. 417. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT.

    Section 466(a)(5) (42 U.S.C. 666(a)(5)) is amended--
            (1) by striking ``(5)'' and inserting ``(5) Pro- cedures 
        concerning paternity establish- ment.--'';
            (2) in subparagraph (A)--
                    (A) by striking ``(A)'' and inserting ``(A) 
                Establishment process available from before birth until 
                age eighteen.--'';
                    (B) by indenting clause (ii) 2 ems from the left 
                margin; and
                    (C) by adding at the end the following:
                            ``(iii) Procedures which permit the 
                        initiation of proceedings to establish 
                        paternity before the birth of the child 
                        concerned.'';
            (3) in subparagraph (B)--
                    (A) by striking ``(B)'' and inserting ``(B) 
                Procedures concerning genetic testing.--(i)'';
                    (B) in clause (i) (as so redesignated), by 
                inserting before the period ``, where such request is 
                supported by a sworn statement by such party setting 
                forth facts establishing a reasonable possibility of 
                the requisite sexual contact'';
                    (C) by adding at the end the following:
                            ``(ii) Procedures which require the State 
                        agency, in any case in which such agency orders 
                        genetic testing--
                                    ``(I) to pay costs of such tests, 
                                subject to recoupment (where the State 
                                so elects) from the putative father if 
                                paternity is established; and
                                    ``(II) to obtain additional testing 
                                in any case where an original test 
                                result is disputed, upon request and 
                                advance payment by the disputing 
                                party.'';
            (4) by striking subparagraph (C) and inserting the 
        following:
                    ``(C) Voluntary acknowledgment procedure.--
                Procedures for a simple civil process for voluntarily 
                acknowledging paternity under which--
                            ``(i) the benefits, rights and 
                        responsibilities of acknowledging paternity are 
                        explained to unwed parents;
                            ``(ii) due process safeguards are afforded; 
                        and
                            ``(iii) hospitals and other health care 
                        facilities providing inpatient or outpatient 
                        maternity and pediatric services are required, 
                        as a condition of participation in the State 
                        program under title XIX--
                                    ``(I) to explain to unwed parents 
                                the matters specified in clause (i);
                                    ``(II) to make available the 
                                voluntary acknowledgment procedure 
                                required under this subparagraph; and
                                    ``(III) (in the case of hospitals 
                                providing maternity services) to have 
                                facilities for obtaining blood or other 
                                genetic samples from the mother, 
                                putative father, and child for genetic 
                                testing; to inform the mother and 
                                putative father of the availability of 
                                such testing (at their expense); and to 
                                obtain such samples upon request of 
                                both such individuals;'';
            (5) by striking subparagraphs (D) and (E) and inserting the 
        following:
                    ``(D) Legal status of acknowledgment.--Procedures 
                under which--
                            ``(i) a voluntary acknowledgment of 
                        paternity creates, at State option, either--
                                    ``(I) a conclusive presumption of 
                                paternity, or
                                    ``(II) a rebuttable presumption 
                                which becomes a conclusive presumption 
                                within one year, unless rebutted or 
                                invalidated by an intervening 
                                determination which reaches a contrary 
                                conclusion;
                            ``(ii) (at State option), notwithstanding 
                        clause (i), upon the request of a party, a 
                        determination of paternity based on an 
                        acknowledgment may be vacated on the basis of 
                        new evidence, the existence of fraud, or the 
                        best interests of the child; and
                            ``(iii) a voluntary acknowledgment of 
                        paternity is admissible as evidence of 
                        paternity, and as a basis for seeking a support 
                        order, without requiring any further 
                        proceedings to establish paternity.
                    ``(E) Bar on acknowledgment ratification 
                proceedings.--Procedures under which no judicial or 
                administrative proceedings are required or permitted to 
                ratify an unchallenged acknowledgment of paternity.'';
            (6) by striking subparagraph (F) and inserting the 
        following:
                    ``(F) Admissibility of genetic testing results.--
                Procedures--
                            ``(i) requiring that the State admit into 
                        evidence, for purposes of establishing 
                        paternity, results of any genetic test that 
                        is--
                                    ``(I) of a type generally 
                                acknowledged, by accreditation bodies 
                                designated by the Secretary, as 
                                reliable evidence of paternity; and
                                    ``(II) performed by a laboratory 
                                approved by such an accreditation body;
                            ``(ii) that any objection to genetic 
                        testing results must be made in writing not 
                        later than a specified number of days before 
                        any hearing at which such results may be 
                        introduced into evidence (or, at State option, 
                        not later than a specified number of days after 
                        receipt of such results); and
                            ``(iii) that, if no objection is made, the 
                        test results are admissible as evidence of 
                        paternity without the need for foundation 
                        testimony or other proof of authenticity or 
                        accuracy.''; and
            (7) by adding at the end the following:
                                    ``(I) No right to jury trial.--
                                Procedures providing that the parties 
                                to an action to establish paternity are 
                                not entitled to jury trial.
                    ``(J) Temporary support order based on probable 
                paternity in contested cases.--Procedures which require 
                that a temporary order be issued, upon motion by a 
                party, requiring the provision of child support pending 
                an administrative or judicial determination of 
                parentage, where there is clear and convincing evidence 
                of paternity (on the basis of genetic tests or other 
                evidence).
                    ``(K) Proof of certain support and paternity 
                establishment costs.--Procedures under which bills for 
                pregnancy, childbirth, and genetic testing are 
                admissible as evidence without requiring third-party 
                foundation testimony, and shall constitute prima facie 
                evidence of amounts incurred for such services and 
                testing on behalf of the child.
                    ``(L) Waiver of state debts for cooperation.--
                Procedures under which the tribunal establishing 
                paternity and support has discretion to waive rights to 
                all or part of amounts owed to the State (but not to 
                the mother) for costs related to pregnancy, childbirth, 
                and genetic testing and for public assistance paid to 
                the family where the father cooperates or acknowledges 
                paternity before or after genetic testing.
                    ``(M) Standing of putative fathers.--Procedures 
                ensuring that the putative father has a reasonable 
                opportunity to initiate a paternity action.''.

  Subtitle C--Improvement of Child Support Order Establishment Process

SEC. 421. NATIONAL CHILD SUPPORT GUIDELINES COMMISSION.

    (a) Establishment.--There is hereby established a commission to be 
known as the ``National Child Support Guidelines Commission'' (in this 
section referred to as the ``Commission'').
    (b) General Duties.--The Commission shall convene a conference to 
study the desirability of a national child support guideline, and if 
such guideline is advisable, the Commission shall develop for 
congressional consideration a national child support guideline that is 
based on the conference's study of various guideline models, the 
deficiencies of such models, and any needed improvements, taking into 
consideration differences in the cost of living in different areas of 
the United States. In developing such guideline, the Commission shall 
consider indexing the guideline to the cost of living, specifying 
minimum (rather than maximum) amounts, or using other methodologies to 
reflect such differences.
    (c) Membership.--
            (1) Number; appointment.--
                    (A) In general.--The Commission shall be composed 
                of 9 individuals appointed jointly by the Secretary of 
                Health and Human Services and the Congress, not later 
                than 6 months after the date of the enactment of this 
                Act.
                    (B) Qualifications of members.--Members of the 
                Commission shall be appointed from among those who are 
                able to provide expertise and experience in the 
                evaluation and development of child support guidelines.
            (2) Terms of office.--Each member shall be appointed for a 
        term of 2 years. A vacancy in the Commission shall be filled in 
        the manner in which the original appointment was made.
    (d) Commission Powers, Compensation, Access to Information, and 
Supervision.--The first sentence of subparagraph (C), the first and 
third sentences of subparagraph (D), subparagraph (F) (except with 
respect to the conduct of medical studies), clauses (ii) and (iii) of 
subparagraph (G), and subparagraph (H) of section 1886(e)(6) of the 
Social Security Act shall apply to the Commission in the same manner in 
which such provisions apply to the Prospective Payment Assessment 
Commission.
    (e) Report.--Not later than 2 years after the appointment of 
members, the Commission shall submit to the President, the Committee on 
Ways and Means of the House of Representatives, and the Committee on 
Finance of the Senate, a report on the results of the study described 
in subsection (b) and the final assessment by the Commission of issues 
relating to a national child support guideline.
    (f) Termination.--The Commission shall terminate upon the 
submission of the report described in subsection (e).

SEC. 422. STATE LAWS PROVIDING EXPEDITED PROCEDURES.

    (a) State Law Requirements.--Section 466 (42 U.S.C. 666) is 
amended--
            (1) in subsection (a)(2), by striking the 1st sentence and 
        inserting the following: ``Expedited administrative and 
        judicial procedures (including the procedures specified in 
        subsection (c)) for establishing paternity and for 
        establishing, modifying, and enforcing support obligations.''; 
        and
            (2) by inserting after subsection (b) the following:
    ``(c) Expedited Procedures.--
            ``(1) Administrative action by state agency.--Procedures 
        which give the State agency the authority (and recognize and 
        enforce the authority of State agencies of other States), 
        without the necessity of obtaining an order from any other 
        judicial or administrative tribunal (but subject to due process 
        safeguards, including (as appropriate) requirements for notice, 
        opportunity to contest the action, and opportunity for an 
        appeal on the record to an independent administrative or 
        judicial tribunal), to take the following actions relating to 
        establishment or enforcement of orders:
                    ``(A) Establish or modify support amount.--To 
                establish the amount of support awards in all cases in 
                which services are being provided under this part, and 
                to modify the amount of such awards under all orders 
                included in the central case registry established under 
                section 454A(e) (including orders entered by a court), 
                in accordance with the guidelines established under 
                section 467.
                    ``(B) Genetic testing.--To order genetic testing 
                for the purpose of paternity establishment as provided 
                in section 466(a)(5).
                    ``(C) Default orders.--To enter a default order, 
                upon a showing of service of process and any additional 
                showing required by State law--
                            ``(i) establishing paternity, in the case 
                        of any putative father who refuses to submit to 
                        genetic testing; and
                            ``(ii) establishing or modifying a support 
                        obligation, in the case of a parent (or other 
                        obligor or obligee) who fails to respond to 
                        notice to appear at a proceeding for such 
                        purpose.
                    ``(D) Subpoenas.--To subpoena any financial or 
                other information needed to establish, modify, or 
                enforce an order, and to sanction failure to respond to 
                any such subpoena.
                    ``(E) Access to personal and financial 
                information.--To obtain access, subject to safeguards 
                on privacy and information security, to the following 
                records (including automated access, in the case of 
                records maintained in automated data bases):
                            ``(i) records of other State and local 
                        government agencies, including--
                                    ``(I) vital statistics (including 
                                records of marriage, birth, and 
                                divorce);
                                    ``(II) State and local tax and 
                                revenue records (including information 
                                on residence address, employer, income 
                                and assets);
                                    ``(III) records concerning real and 
                                titled personal property;
                                    ``(IV) records of occupational and 
                                professional licenses, and records 
                                concerning the ownership and control of 
                                corporations, partnerships, and other 
                                business entities;
                                    ``(V) employment security records;
                                    ``(VI) records of agencies 
                                administering public assistance 
                                programs;
                                    ``(VII) records of the motor 
                                vehicle department; and
                                    ``(VIII) corrections records; and
                            ``(ii) certain records held by private 
                        entities, including--
                                    ``(I) customer records of public 
                                utilities and cable television 
                                companies; and
                                    ``(II) information (including 
                                information on assets and liabilities) 
                                on individuals who owe or are owed 
                                support (or against or with respect to 
                                whom a support obligation is sought) 
                                held by financial institutions (subject 
                                to limitations on liability of such 
                                entities arising from affording such 
                                access).
                    ``(F) Income withholding.--To order income 
                withholding in accordance with subsections (a)(1) and 
                (b) of section 466.
                    ``(G) Secure assets to satisfy arrearages.--For the 
                purpose of securing overdue support--
                            ``(i) to intercept and seize any periodic 
                        or lump-sum payment to the obligor by or 
                        through a State or local government agency, 
                        including--
                                    ``(I) unemployment compensation, 
                                workers' compensation, and other 
                                benefits;
                                    ``(II) judgments and settlements in 
                                cases under the jurisdiction of the 
                                State or local government; and
                                    ``(III) lottery winnings;
                            ``(ii) to attach and seize assets of the 
                        obligor held by financial institutions;
                            ``(iii) to attach public and private 
                        retirement funds in appropriate cases, as 
                        determined by the Secretary; and
                            ``(iv) to impose liens in accordance with 
                        paragraph (a)(4) and, in appropriate cases, to 
                        force sale of property and distribution of 
                        proceeds.
                    ``(H) Increase monthly payments.--For the purpose 
                of securing overdue support, to increase the amount of 
                monthly support payments to include amounts for 
                arrearages (subject to such conditions or restrictions 
                as the State may provide).
                    ``(I) Suspension of drivers' licenses.--To suspend 
                drivers' licenses of individuals owing past-due 
                support, in accordance with subsection (a)(16).
            ``(2) Substantive and procedural rules.--The expedited 
        procedures required under subsection (a)(2) shall include the 
        following rules and authority, applicable with respect to all 
        proceedings to establish paternity or to establish, modify, or 
        enforce support orders:
                    ``(A) Locator information; presumptions concerning 
                notice.--Procedures under which--
                            ``(i) the parties to any paternity or child 
                        support proceedings are required (subject to 
                        privacy safeguards) to file with the tribunal 
                        before entry of an order, and to update as 
                        appropriate, information on location and 
                        identity (including social security number, 
                        residential and mailing addresses, telephone 
                        number, driver's license number, and name, 
                        address, telephone number, and employer 
                        identification number of employer); and
                            ``(ii) in any subsequent child support 
                        enforcement action between the same parties, 
                        the tribunal shall be authorized, upon 
                        sufficient showing that diligent effort has 
                        been made to ascertain such a party's current 
                        location, to deem due process requirements for 
                        notice and service of process to be met, with 
                        respect to such party, by delivery to the most 
                        recent residential or employer address so filed 
                        pursuant to clause (i).
                    ``(B) Statewide jurisdiction.--Procedures under 
                which--
                            ``(i) the State agency and any 
                        administrative or judicial tribunal with 
                        authority to hear child support and paternity 
                        cases exerts statewide jurisdiction over the 
                        parties, and orders issued in such cases have 
                        statewide effect; and
                            ``(ii) in the case of a State in which 
                        orders in such cases are issued by local 
                        jurisdictions, a case may be transferred 
                        between jurisdictions in the State without need 
                        for any additional filing by the petitioner, or 
                        service of process upon the respondent, to 
                        retain jurisdiction over the parties.''.
    (b) Exceptions From State Law Requirements.--Section 466(d) is 
amended--
            (1) by striking ``(d) If'' and inserting the following:
    ``(d) Exemptions From Requirements.--
            ``(1) In general.--Subject to paragraph (2), if''; and
            (2) by adding at the end the following:
            ``(2) Non-exempt requirements.--The Secretary shall not 
        grant an exemption from the requirements of--
                    ``(A) subsection (a)(5) (concerning procedures for 
                paternity establishment);
                    ``(B) subsection (a)(10) (concerning modification 
                of orders);
                    ``(C) subsection (a)(12) (concerning recording of 
                orders in the central State case registry);
                    ``(D) subsection (a)(13) (concerning recording of 
                social security numbers);
                    ``(E) subsection (a)(14) (concerning interstate 
                enforcement); or
                    ``(F) subsection (c) (concerning expedited 
                procedures), other than paragraph (1)(A) thereof 
                (concerning establishment or modification of support 
                amount).''.
    (c) Automation of State Agency Functions.--Section 454A, as added 
by section 402(b)(1)(B) of this Act, is amended by adding at the end 
the following:
    ``(g) Expedited Administrative Procedures.--The automated system 
required under this section shall be used, to the maximum extent 
feasible, to implement the expedited administrative procedures required 
under section 466(c).''.

                 Subtitle D--Child Support Enforcement

SEC. 431. NATIONAL REPORTING OF NEW HIRES AND CHILD SUPPORT 
              INFORMATION.

    (a) Federal Implementation of System.--
            (1) In general.--The Secretary of the Treasury, in 
        consultation with the Secretary of Labor, shall establish a 
        system of reporting of new employees by requiring employers to 
        provide a copy of every new employee's W-4 form to the 
        employment security agency of the State in which the employment 
        is located.
            (2) Expanded use of form.--The Secretary of the Treasury 
        shall modify the W-4 form to be completed by a new employee to 
        enable the employee to indicate on the form--
                    (A) whether the employee owes child support, and if 
                so--
                            (i) to whom the support is payable and the 
                        amount of the support payable; and
                            (ii) whether the support is to be paid 
                        through wage withholding; and
                    (B) whether health care insurance is available to 
                the new employee, and, if so, whether the new employee 
                has obtained such insurance for the dependent children 
                of the new employee.
            (3) Employer withholding obligation.--
                    (A) In general.--Subtitle C of the Internal Revenue 
                Code of 1986 (relating to employment taxes) is amended 
                by inserting after chapter 24 the following new 
                chapter:

  ``CHAPTER 24A--COLLECTION OF CHILD SUPPORT OBLIGATIONS AT SOURCE ON 
                                 WAGES

                              ``Sec. 3411. Child support obligations 
                                        collected at source.

``SEC. 3411. CHILD SUPPORT OBLIGATIONS COLLECTED AT SOURCE.

    ``(a) Requirement of Withholding.--Every employer making payment of 
wages shall deduct and withhold upon such wages a specified child 
support obligation amount.
    ``(b) Specified Child Support Obligation Amount.--For purposes of 
this chapter, the specified child support obligation amount with 
respect to any employee shall be determined based on--
            ``(1) information provided by the employee, or (if an 
        agency of the State in which the employer is located notifies 
        the employer that such information is inaccurate) information 
        provided by the agency; and
            ``(2) information contained in any wage withholding order 
        received by the employer from any State.
    ``(c) Liability for Payment.--The employer shall be liable for the 
payment of the specified child support obligation amount to the 
individual entitled to such payment.
    ``(d) Special Rules.--For purposes of this chapter (and so much of 
subtitle F as relates to this chapter), any specified child support 
obligation amount shall be treated as if it were a tax withheld under 
chapter 24 and rules similar to the rules of such chapter shall 
apply.''.
                    (B) Clerical amendment.--The table of chapters of 
                subtitle C of the Internal Revenue Code of 1986 is 
                amended by inserting after the item relating to chapter 
                24 the following new item:

                              ``Chapter 24A. Child support obligations 
                                        collected at source.''.
            (4) Withheld child support obligations reported on w-2 
        forms.--Subsection (a) of section 6051 of the Internal Revenue 
        Code of 1986 (relating to receipts for employees) is amended by 
        striking ``and'' at the end of paragraph (8), by striking the 
        period at the end of paragraph (9) and inserting ``, and'', and 
        by inserting after paragraph (9) the following new paragraph:
            ``(10) the total amount of specified child support 
        obligations withheld under section 3411.''.
    (b) State Implementation of System.--Section 466(a) (42 U.S.C. 
666(a)), as amended by sections 404 and 412 of this Act, is amended by 
inserting after paragraph (13) the following:
            ``(14) Procedures under which the State shall--
                    ``(A) use the Parent Locator Service established 
                under section 453 to access information in the national 
                registry of child support orders maintained pursuant to 
                section 452(a)(11) with respect to new employee, 
                compare such information with the information reported 
                on W-4 forms of new employees, and identify child 
                support obligations not reported on such forms;
                    ``(B) if child support information from the W-4 
                form of a new employee agrees with information with 
                respect to the new employee in the national registry of 
                child support orders maintained pursuant to section 
                452(a)(11), notify the individual owed the support (or 
                the individual's designee) of such information;
                    ``(C) notify an employer of any new employee who 
                has not reported on the W-4 form a child support 
                obligation of the new employee, using the wage 
                withholding order developed under section 452(a)(12);
                    ``(D) impose monetary penalties on--
                            ``(i) any individual who owes child support 
                        and fails to report the obligation to provide 
                        the support on a Federal income tax W-4 form at 
                        time of employment;
                            ``(ii) any employer who fails to forward a 
                        W-4 form for a new employee to the State 
                        employment security agency within 10 calendar 
                        days of the date of the first payroll from 
                        which the new employee is paid; and
                            ``(iii) any employer who fails to withhold 
                        from the pay of any new employee who reports a 
                        child support obligation on a W-4 form an 
                        amount equal to the support owed, or fails to 
                        pay to the individual owed the obligation the 
                        amount so withheld, within 10 calendar days of 
                        the date of the payroll, using electronic funds 
                        transfer, if possible, unless otherwise 
                        notified by a State agency;
                    ``(E) provide the services described in this 
                paragraph to any individual owed child support who 
                applies for assistance under the State plan; and
                    ``(F) on request of another State, broadcast over 
                the Parent Locator Service to such other State child 
                support information from W-4 forms that have been sent 
                to the State employment security agency.''.
    (c) Uniform Withholding Order.--Section 452(a) (42 U.S.C. 652(a)), 
as amended by section 402(c) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (10);
            (2) by striking the period at the end of paragraph (11) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (11) the following:
            ``(12) develop a uniform order to be used in all cases in 
        which income is to be withheld for the payment of child 
        support, which shall contain the name of the individual whose 
        income is to be withheld, the number of children covered by the 
        order, and the individual or State to whom the withheld income 
        is to be paid, and be generic to allow for the service of the 
        order on all sources of income.''.

SEC. 432. CERTAIN BENEFITS SUBJECT TO GARNISHMENT.

    (a) Federal Death Benefits, Black Lung Benefits, and Veterans 
Benefits.--Section 462(f)(2) (42 U.S.C. 662(f)(2)) is amended by 
striking ``(not including'' and all that follows through 
``compensation)''.
    (b) Workers' Compensation.--Section 462(f) (42 U.S.C. 662(f)) is 
amended--
            (1) by striking ``or'' at the end of paragraph (1);
            (2) by striking the period at the end of paragraph (2) and 
        inserting ``, or''; and
            (3) by adding at the end the following:
            ``(3) workers' compensation benefits.''.

SEC. 433. SEIZURE OF LOTTERY WINNINGS, SETTLEMENTS, PAYOUTS, AWARDS, 
              AND BEQUESTS, AND SALE OF FORFEITED PROPERTY, TO PAY 
              CHILD SUPPORT ARREARAGES.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 404, 412, 
and 431(b) of this Act, is amended by inserting after paragraph (14) 
the following:
            ``(15) Procedures, in addition to other income withholding 
        procedures, under which a lien is imposed against property with 
        the following effect:
                    ``(A) The distributor of the winnings from a State 
                lottery or State-sanctioned or tribal-sanctioned 
                gambling house or casino shall--
                            ``(i) suspend payment of the winnings from 
                        the person otherwise entitled to the payment 
                        until an inquiry is made to and a response is 
                        received from the State child support 
                        enforcement agency as to whether the person 
                        owes a child support arrearage; and
                            ``(ii) if there is such an arrearage, 
                        withhold from the payment the lesser of the 
                        amount of the payment or the amount of the 
                        arrearage, and pay the amount withheld to the 
                        agency for distribution.
                    ``(B) The person required to make a payment under a 
                policy of insurance or a settlement of a claim made 
                with respect to the policy shall--
                            ``(i) suspend the payment until an inquiry 
                        is made to and a response received from the 
                        agency as to whether the person otherwise 
                        entitled to the payment owes a child support 
                        arrearage; and
                            ``(ii) if there is such an arrearage, 
                        withhold from the payment the lesser of the 
                        amount of the payment or the amount of the 
                        arrearage, and pay the amount withheld to the 
                        agency for distribution.
                    ``(C) The payor of any amount pursuant to an award, 
                judgment, or settlement in any action brought in 
                Federal or State court shall--
                            ``(i) suspend the payment of the amount 
                        until an inquiry is made to and a response is 
                        received from the agency as to whether the 
                        person otherwise entitled to the payment owes a 
                        child support arrearage; and
                            ``(ii) if there is such an arrearage, 
                        withhold from the payment the lesser of the 
                        amount of the payment or the amount of the 
                        arrearage, and pay the amount withheld to the 
                        agency for distribution.
                    ``(D) If the State seizes property forfeited to the 
                State by an individual by reason of a criminal 
                conviction, the State shall--
                            ``(i) hold the property until an inquiry is 
                        made to and a response is received from the 
                        agency as to whether the individual owes a 
                        child support arrearage; and
                            ``(ii) if there is such an arrearage, sell 
                        the property and, after satisfying the claims 
                        of all other private or public claimants to the 
                        property and deducting from the proceeds of the 
                        sale the attendant costs (such as for towing, 
                        storage, and the sale), pay the lesser of the 
                        remaining proceeds or the amount of the 
                        arrearage directly to the agency for 
                        distribution.
                    ``(E) Any person required to make a payment in 
                respect of a decedent shall--
                            ``(i) suspend the payment until an inquiry 
                        is made to and a response received from the 
                        agency as to whether the person otherwise 
                        entitled to the payment owes a child support 
                        arrearage; and
                            ``(ii) if there is such an arrearage, 
                        withhold from the payment the lesser of the 
                        amount of the payment or the amount of the 
                        arrearage, and pay the amount withheld to the 
                        agency for distribution.''.

SEC. 434. REPORTING OF CHILD SUPPORT ARREARAGES TO CREDIT BUREAUS.

    Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended--
            (1) by inserting ``(A)'' after ``(7)'';
            (2) by redesignating subparagraphs (A), (B), and (C) as 
        clauses (i), (ii), and (iii), respectively; and
            (3) by adding after and below the end the following:
            ``(B) Procedures requiring any court or administrative 
        agency of the State, at the time the court or agency issues or 
        modifies a child support order, to report to each consumer 
        reporting agency (as so defined)--
                    ``(i) the name of the individual on whom the order 
                imposes an obligation to pay child support pursuant to 
                the order; and
                    ``(ii) the amount of the obligation.''.

SEC. 435. LIABILITY OF GRANDPARENTS FOR FINANCIAL SUPPORT OF CHILDREN 
              OF THEIR MINOR CHILDREN.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 404, 412, 
431(b), and 433 of this Act, is amended by inserting after paragraph 
(15) the following:
            ``(16) Procedures under which each parent of an individual 
        who has not attained 18 years of age is liable for the 
        financial support of any child of the individual to the extent 
        that the individual is unable to provide such support. The 
        preceding sentence shall not apply to the State if the State 
        plan explicitly provides for such inapplicability.''.

SEC. 436. SENSE OF THE CONGRESS REGARDING PROGRAMS FOR NONCUSTODIAL 
              PARENTS UNABLE TO MEET CHILD SUPPORT OBLIGATIONS.

    It is the sense of the Congress that the States should develop 
programs, such as the program of the State of Wisconsin known as the 
``Children's First Program'', that are designed to work with 
noncustodial parents who are unable to meet their child support 
obligations.

SEC. 437. DISTRIBUTION OF PAYMENTS.

    (a) Distributions Through State Child Support Enforcement Agency to 
Former Assistance Recipients.--Section 454(5) (42 U.S.C. 654(5)) is 
amended--
            (1) in subparagraph (A)--
                    (A) by inserting ``except as otherwise specifically 
                provided in section 464 or 466(a)(3),'' after ``is 
                effective,''; and
                    (B) by striking ``except that'' and all that 
                follows through the semicolon; and
            (2) in subparagraph (B), by striking ``, except'' and all 
        that follows through ``medical assistance''.
    (b) Distribution to a Family Currently Receiving AFDC.--Section 457 
(42 U.S.C. 657), as amended by section 414(a) of this Act, is amended--
            (1) by striking subsection (a) and redesignating subsection 
        (b) as subsection (a); and
            (2) in subsection (a) (as so redesignated)--
                    (A) by striking all that precedes paragraph (1) and 
                inserting the following:
    ``(a) In the Case of a Family Receiving AFDC.--Amounts collected 
under this part during any month as support of a child who is receiving 
aid under a State plan approved under part A (or of a parent or 
caretaker relative of such a child) shall be distributed as follows:'';
                    (B) in paragraph (2)--
                            (i) by striking ``assistance payments to 
                        the family'' and inserting ``payments of aid to 
                        the family under the State plan approved under 
                        part A''; and
                            (ii) by striking ``and'' at the end; and
                    (C) by striking paragraph (3) and inserting the 
                following:
            ``(3) from any remainder, amounts which have been assigned 
        pursuant to section 402(a)(26) and are not in excess of 
        unreimbursed payments of aid to the family under the State plan 
        approved under part A shall be (A) retained by the State or (B) 
        if no such payments by the State are unreimbursed, paid to any 
        other State that may have made such unreimbursed payments (with 
        appropriate reimbursement of the Federal Government to the 
        extent of its participation in the financing); and
            ``(4) any remainder shall be paid to the family.''.
    (c) Distribution to a Family Not Receiving AFDC.--Section 457(c) 
(42 U.S.C. 6576(c)) is amended to read as follows:
    ``(c) In Case of Family Not Receiving AFDC.--Amounts collected by a 
State agency under this part during any month as support of a child who 
is not receiving aid under a State plan approved under part A (or of a 
parent or caretaker relative of such a child) shall (subject to the 
remaining provisions of this section) be distributed as follows:
            ``(1) First, amounts equal to the total of such support 
        owed for such month shall be paid to the family.
            ``(2) Second, from any remainder, amounts equal to 
        arrearages of such support obligations which have not been 
        assigned pursuant to section 402(a)(26) (and amounts equal to 
        such arrearages which have been so assigned, but which 
        represent support for months during which such child did not 
        receive aid under the State plan approved under part A) shall 
        be paid to the family.
            ``(3) Third, from any remainder, amounts equal to 
        arrearages of such support obligations assigned to the State 
        shall be retained by the State to reimburse the State for 
        payments of aid to the family under the State plan approved 
        under part A (with appropriate reimbursement of the Federal 
        Government to the extent of its participation in the 
        financing).
            ``(4) Fourth, from any remainder, amounts equal to 
        arrearages of such support obligations assigned to another 
        State pursuant to part A shall be paid to such other State to 
        reimburse such other State for payments of aid to the family 
        under the plan approved under part A of such other State, in 
        the order in which such payments occurred (with appropriate 
        reimbursement of the Federal Government to the extent of its 
        participation in the financing).
            ``(5) Fifth, any remainder shall be paid to the family.''.
    (d) Distribution to a Child Receiving Assistance Under Part E of 
Title IV.--Section 457(d) (42 U.S.C. 657(d)) is amended by striking 
``(d) Notwithstanding the preceding provisions of this section, 
amounts'' and inserting the following:
    ``(d) In Case of a Child Receiving Assistance Under Part E.--
Amounts''.
    (e) Suspension or Cancellation of Debts Upon Marriage of Parents.--
Section 457 (42 U.S.C. 657) is amended by adding at the end the 
following:
    ``(e) Suspension or Cancellation of Debts to State Upon Marriage of 
Parents.--
            ``(1) Circumstances requiring suspension or cancellation.--
        In any case in which a State has been assigned rights to 
        support owed with respect to a child who is receiving or has 
        received assistance under part A and--
                    ``(A) the parent owing such support marries (or 
                remarries) the parent with whom such child is living 
                and to whom such support is owed and applies to the 
                State for relief under this subsection;
                    ``(B) the State determines (in accordance with 
                procedures and criteria established by the Secretary) 
                that the marriage is not a sham marriage entered into 
                solely to satisfy this subsection; and
                    ``(C) the combined income of such parents is less 
                than twice the Federal poverty line,
        the State shall afford relief to the parent owing such support 
        in accordance with paragraph (2).
            ``(2) Suspension or cancellation.--In the case of a 
        marriage or remarriage described in paragraph (1), the State 
        shall either--
                    ``(A) cancel all debts owed to the State pursuant 
                to such assignment; or
                    ``(B) suspend collection of such debts for the 
                duration of such marriage, and cancel such debts if 
                such duration extends beyond the end of the period with 
                respect to which support is owed.
            ``(3) Notice required.--The State shall notify custodial 
        parents of children who are receiving aid under part A of the 
        relief available under this subsection to individuals who marry 
        (or remarry).''.
    (f) Regulations.--The Secretary of Health and Human Services shall 
promulgate regulations under part D of title IV of the Social Security 
Act, establishing a uniform nationwide standard for allocation of child 
support collections from an obligor owing support to more than 1 
family.
    (g) Assignment of Support Rights.--Section 402(a)(26)(A)(i), as so 
redesignated by section 413(b)(2) of this Act, is amended--
            (1) by striking ``(I)''; and
            (2) by striking ``, and (II)'' and all that follows before 
        the semicolon and inserting ``for periods during which the 
        applicant is receiving aid under this part''.
    (h) Clerical Amendment.--Section 454 (42 U.S.C. 654) is amended--
            (1) in paragraph (11), by striking ``(11)'' and inserting 
        ``(11)(A)''; and
            (2) by redesignating paragraph (12) as subparagraph (B) of 
        paragraph (11).
    (i) Effective Date.--The amendments made by this section shall be 
effective with respect to calendar quarters beginning on or after 
October 1, 1988.

SEC. 438. DUE PROCESS RIGHTS.

    (a) In General.--Section 454 (42 U.S.C. 654), as amended by section 
437(h)(2) of this Act, is amended by inserting after paragraph (11) the 
following:
            ``(12) provide for procedures to ensure that--
                    ``(A) individuals who are parties to cases in which 
                services are being provided under this part--
                            ``(i) receive notice of all proceedings in 
                        which support obligations might be established 
                        or modified; and
                            ``(ii) receive a copy of any order 
                        establishing or modifying a child support 
                        obligation within 14 days after issuance of 
                        such order; and
                    ``(B) individuals receiving services under this 
                part have access to a fair hearing or other formal 
                complaint procedure, meeting standards established by 
                the Secretary, that ensures prompt consideration and 
                resolution of complaints (but the resort to such 
                procedure shall not stay the enforcement of any support 
                order);''.
    (b) Effective Date.--The amendments made by this section shall 
become effective on October 1, 1996.

SEC. 439. USE OF SOCIAL SECURITY NUMBERS.

    (a) State Law Requirement.--Section 466(a) (42 U.S.C. 666(a)), as 
amended by sections 404, 412, 431(b), 433, and 435 of this Act, is 
amended by inserting after paragraph (16) the following:
            ``(17) Social security numbers required.--Procedures 
        requiring the recording of social security numbers--
                    ``(A) of both parties on marriage licenses and 
                divorce decrees; and
                    ``(B) of both parents, on birth records and child 
                support and paternity orders.''.
    (b) Clarification of Federal Policy.--Section 205(c)(2)(C)(ii) (42 
U.S.C. 405(c)(2)(C)(ii)) is amended by striking the 3rd sentence and 
inserting ``This clause shall not be considered to authorize disclosure 
of such numbers except as provided in the preceding sentence.''.

SEC. 440. ADOPTION OF UNIFORM STATE LAWS.

    (a) In General.--Section 466(a) (42 U.S.C. 666(a)), as amended by 
sections 404, 412, 431(b), 433, 435, and 439(a) of this Act, is amended 
by inserting after paragraph (17) the following:
            ``(18) Interstate enforcement.--
                    ``(A) Adoption of uifsa.--Procedures under which 
                the State adopts in its entirety (with the 
                modifications and additions specified in this 
                paragraph) not later than January 1, 1996, and uses on 
                and after such date, the Uniform Interstate Family 
                Support Act, as approved by the National Conference of 
                Commissioners on Uniform State Laws in August, 1992.
            ``(B) Expanded application of uifsa.--The State law adopted 
        pursuant to subparagraph (A) shall be applied to any case--
                    ``(i) involving an order established or modified in 
                one State and for which a subsequent modification is 
                sought in another State; or
                    ``(ii) in which interstate activity is required to 
                enforce an order.
            ``(C) Long-arm jurisdiction, based on residence of child.--
        The State law adopted pursuant to subparagraph (A) shall 
        presume that, in the case where a child meets the criteria for 
        residence in the State, a tribunal of the State having 
        jurisdiction over such child has jurisdiction over both parents 
        of such child, if parentage has been legally established or 
        acknowledged, or may be presumed under the laws of the State.
            ``(D) Jurisdiction to modify orders.--For purposes of the 
        State law adopted pursuant to subparagraph (A), section 
        611(a)(1) of such Uniform Act shall be amended to read as 
        follows:
            ```(1) the following requirements are met:
            ```(i) the child, the individual obligee, and the obligor--
                    ```(I) do not reside in the issuing State; and
                    ```(II) either reside in this State or are subject 
                to the jurisdiction of this State pursuant to section 
                201; and
            ```(ii) (in any case where another State is exercising or 
        seeks to exercise jurisdiction to modify the order) the 
        conditions of section 204 are met to the same extent as 
        required for proceedings to establish orders; or'.
            ``(E) Parties' option concerning jurisdiction.--The State 
        law adopted pursuant to subparagraph (A) shall allow parties, 
        by agreement, to permit a State that issued an order to retain 
        jurisdiction which the State would otherwise lose under the 
        provisions of such law.
            ``(F) Service of process.--The State law adopted pursuant 
        to subparagraph (A) shall recognize as valid, for purposes of 
        any proceeding subject to such State law, service of process 
        upon persons in the State (and proof of such service) by any 
        means acceptable in another State which is the initiating or 
        responding State in such proceeding.
            ``(G) Cooperation by employers.--The State law adopted 
        pursuant to subparagraph (A) shall provide for the use of 
        procedures (including sanctions for noncompliance) under which 
        all entities in the State (including for-profit, nonprofit, and 
        governmental employers) are required to provide promptly, in 
        response to a request by the State agency of that or any other 
        State administering a program under this part, information on 
        the employment, compensation, and benefits of any individual 
        employed by such entity as an employee or contractor.''.
    (b) Expedited Appeal of Constitutional Challenge.--(1) An appeal 
may be taken directly to the Supreme Court of the United States from 
any interlocutory or final judgment, decree, or order issued by a 
United States district court ruling upon the constitutionality of 
section 466(a)(18)(C) of the Social Security Act, as added by 
subsection (a) of this section.
    (2) The Supreme Court shall, if it has not previously ruled on the 
question, accept jurisdiction over, and advance on the docket, and 
expedite to the greatest extent possible, such appeal. All cases 
raising such question shall be consolidated to the maximum extent 
permissible under applicable rules of civil procedure.

SEC. 441. STATE LAW AUTHORIZING SUSPENSION OF LICENSES.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 404, 412, 
431(b), 433, 435, 439(a), and 440(a) of this Act, is amended by 
inserting after paragraph (18) the following:
            ``(19) Authority to withhold or suspend licenses.--
        Procedures under which the State has (and uses in appropriate 
        cases) authority (subject to appropriate due process 
        safeguards) to withhold or suspend, or to restrict the use of 
        driver's licenses, professional and occupational licenses, and 
        recreational licenses of individuals owing overdue child 
        support or failing, after receiving appropriate notice, to 
        comply with subpoenas or warrants relating to paternity or 
        child support proceedings.''.

SEC. 442. TREATMENT OF SUPPORT OBLIGATIONS UNDER BANKRUPTCY CODE.

    (a) No Stay of Proceedings.--Section 362(b)(2) of title 11, United 
States Code, is amended to read as follows:
            ``(2) under subsection (a) of this section--
                    ``(A) of the commencement or continuation of a 
                judicial or administrative proceeding, or other action 
                under State or territorial law by a governmental unit, 
                against the debtor to establish paternity, to establish 
                or modify an obligation to pay for the support of a 
                spouse, former spouse, or child of the debtor, or to 
                establish a schedule for payment of such support 
                (including any arrearages); or
                    ``(B) of the collection of alimony, maintenance, or 
                support from property that is not property of the 
                estate;''.
    (b) Streamlined Filing Procedure for Support Creditor.--Section 501 
of title 11, United States Code, is amended by adding at the end the 
following new subsection:
    ``(e)(1) The creditor of a claim that is excepted from discharge 
under section 523(a)(5) may file such claim by delivering to the clerk 
of the bankruptcy court in which a petition under this title is 
pending, in person or by registered mail, the claim form promulgated 
under paragraph (2). Such a creditor, filing a claim in such a manner, 
shall not be required to make a personal appearance before the court, 
to be represented by counsel admitted to practice in the jurisdiction 
in which such court is located, to comply with any local rules not 
specified pursuant to paragraph (2), or to pay any filing fees or other 
charges in connection with the filing of such claim.
    ``(2) The Judicial Conference of the United States shall 
promulgate, not later than June 30, 1995--
            ``(A) a standardized, simplified form for filing claims 
        described in paragraph (1); and
            ``(B) procedural guidelines for the use of such form, which 
        rules shall be designed to minimize the burden on support 
        creditors of filing such claims.''.
    (c) Treatment as Preferred Unsecured Creditor.--Section 507(a) of 
title 11, United States Code, is amended--
            (1) by striking ``(8) Eighth,'' and inserting ``(9) 
        Ninth,''; and
            (2) by inserting after paragraph (7) the following new 
        paragraph:
            ``(8) Eighth, unsecured claims for alimony, maintenance, or 
        support of a spouse, former spouse, or child of the debtor 
        allowed under section 502 of this title, to the full extent of 
        such claims, and in accordance with any payment schedule 
        established as described in section 362(b)(2).''.
    (d) Payment Schedule in Chapter 13 Plans.--Section 1322(a)(2) of 
title 11, United States Code, is amended by inserting before the 
semicolon ``(except that the plan shall provide, in the case of a debt 
not subject to discharge under section 523(a)(5), for payment in 
accordance with any payment schedule included in the order providing 
for alimony, maintenance, or support)''.
    (e) Effective Date.--The amendments made by this section shall 
become effective October 1, 1995.

SEC. 443. FEDERAL INCOME TAX REFUND OFFSET.

    (a) Changed Order of Refund Distribution Under Internal Revenue 
Code.--(1) Section 6402(c) of the Internal Revenue Code of 1986 is 
amended--
            (A) by striking ``The amount'' and inserting the following:
            ``(1) In general.--The amount'';
            (B) by striking ``paid to the State. A reduction'' and 
        inserting ``paid to the State.
            ``(2) Priorities for offset. A reduction'';
            (C) by striking ``shall be applied first'' and inserting 
        ``shall be applied (after any reduction under subsection (d) on 
        account of a debt owed to the Department of Education or 
        Department of Health and Human Services with respect to a 
        student loan) first'';
            (D) by striking ``has been assigned'' and inserting ``has 
        not been assigned''; and
            (E) by striking ``and shall be applied'' and all that 
        follows and inserting ``and shall thereafter be applied to 
        satisfy any past-due support that has been so assigned.''.
    (2) Section 6402(d)(2) of such Code is amended by striking ``after 
such overpayment'' and all that follows through ``Social Security Act 
and'' and inserting ``(A) before such overpayment is reduced pursuant 
to subsection (c), in the case of a debt owed to the Department of 
Education or Department of Health and Human Services with respect to a 
student loan, (B) after such overpayment is reduced pursuant to 
subsection (c), in the case of any other debt, and (C) in either 
case,''.
    (b) Elimination of Disparities in Treatment of Assigned and Non-
Assigned Arrearages.--(1) Section 464(a) (42 U.S.C. 664(a)) is 
amended--
            (A) by striking ``(a)'' and inserting the following:
    ``(a) Offset Authorized.--'';
            (B) in paragraph (1)--
                    (i) in the 1st sentence, by striking ``which has 
                been assigned to such State pursuant to section 
                402(a)(26) or section 471(a)(17)''; and
                    (ii) in the 2nd sentence, by striking ``in 
                accordance with section 457(b)(4) or (d)(3)'' and 
                inserting ``as provided in paragraph (2)'';
            (C) by striking paragraph (2) and inserting the following:
            ``(2) The State agency shall distribute amounts paid by the 
        Secretary of the Treasury pursuant to paragraph (1)--
                    ``(A) in accordance with section 457(a)(4) or 
                (d)(3), in the case of past-due support assigned to a 
                State pursuant to section 402(a)(26) or section 
                471(a)(17); and
                    ``(B) to or on behalf of the child to whom the 
                support was owed, in the case of past-due support not 
                so assigned.''; and
                    (D) in paragraph (3)--
                            (i) by striking ``or (2)'' each place such 
                        term appears; and
                            (ii) in subparagraph (B), by striking 
                        ``under paragraph (2)'' and inserting ``on 
                        account of past-due support described in 
                        paragraph (2)(B)''.
            (2) Section 464(b) (42 U.S.C. 664(b)) is amended--
                    (A) by striking ``(b)(1)'' and inserting the 
                following:
    ``(b) Regulations.--''; and
                    (B) by striking paragraph (2).
            (3) Section 464(c) (42 U.S.C. 664(c)) is amended--
                    (A) by striking ``(c)(1) Except as provided in 
                paragraph (2), as'' and inserting the following:
    ``(c) Definition.--As''; and
                    (B) by striking paragraphs (2) and (3).
    (c) Effective Date.--The amendments made by this section shall 
become effective October 1, 1996.

              TITLE V--TEEN PREGNANCY AND FAMILY STABILITY

                        Subtitle A--Federal Role

SEC. 501. STATE OPTION TO DENY AFDC FOR ADDITIONAL CHILDREN.

    (a) In General.--Section 402(a) (42 U.S.C. 602(a)), as amended by 
sections 101, 102, 211(a), 232, and 301(a) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (49);
            (2) by striking the period at the end of paragraph (50) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (50) the following:
            ``(51) at the option of the State, provide that--
                    ``(A) notwithstanding paragraph (7)(A), the needs 
                of a child will not be taken into account in making the 
                determination under paragraph (7) with respect to the 
                family of the child if the child was born (other than 
                as a result of rape or incest) to a member of the 
                family--
                            ``(i) while the family was a recipient of 
                        aid under the State plan; or
                            ``(ii) during the 6-month period ending 
                        with the date the family applied for such aid; 
                        and
                    ``(B) if the amount of aid payable to a family 
                under the State plan is reduced by reason of 
                subparagraph (A), each member of the family shall be 
                considered to be receiving such aid for purposes of 
                eligibility for medical assistance under the State plan 
                approved under title XIX for so long as such aid would 
                otherwise not be so reduced.''.
    (b) Applicability.--The amendments made by subsection (a) shall 
apply to payments under a State plan approved under part A of title IV 
of the Social Security Act for months beginning after the date of the 
enactment of this Act, and to payments to States under such part for 
quarters beginning after such date.

SEC. 502. MINORS RECEIVING AFDC REQUIRED TO LIVE UNDER RESPONSIBLE 
              ADULT SUPERVISION.

    Section 402(a)(43) (42 U.S.C. 602(a)(43)) is amended--
            (1) by striking ``at the option of the State,''; and
            (2) by striking ``18'' and inserting ``19''.

SEC. 503. TASK FORCE TO REDUCE TEENAGE PREGNANCY.

    The Secretary of Education, in conjunction with the Secretary of 
Health and Human Services, shall establish a task force to--
            (1) educate children regarding the risks involved in 
        choosing parenthood at an early age;
            (2) ensure that every potential parent is given the 
        opportunity to avoid unintended births through reproductive 
        family planning and education;
            (3) encourage States to use funds received under title XX 
        of the Social Security Act for comprehensive services to youth 
        in high risk areas through community organizations, and 
        schools; and
            (4) encourage States to work with schools for the early 
        identification and referral of children at risk for parenthood 
        at an early age.

SEC. 504. INCENTIVE FOR TEEN PARENTS TO ATTEND SCHOOL.

    Section 402(a) (42 U.S.C. 602(a)), as amended by sections 101, 102, 
211(a), 232, 301(a), and 501(a) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (50);
            (2) by striking the period at the end of paragraph (51) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (51) the following:
            ``(52) provide that the amount of aid otherwise payable 
        under the plan for a month to a family that includes a parent 
        who has not attained 20 years of age and has not completed 
        secondary school (or received a certificate of high school 
        equivalency) shall be--
                    ``(A) reduced by 25 percent if, during the 
                immediately preceding month, the parent has failed 
                without good cause (as defined by the State in 
                consultation with the Secretary) to maintain minimum 
                attendance (as defined by the State in consultation 
                with the Secretary) at an educational institution; or
                    ``(B) increased by 25 percent if, during the 
                immediately preceding month, the parent has maintained 
                minimum attendance (as defined by the State in 
                consultation with the Secretary) at an educational 
                institution.''.

SEC. 505. STATE OPTION TO DISREGARD 100-HOUR RULE UNDER AFDC-UP 
              PROGRAM.

    Section 407(a) (42 U.S.C. 607(a)) is amended--
            (1) by inserting ``(1)'' after ``(a)''; and
            (2) by adding at the end the following:
    ``(2) A standard prescribed pursuant to paragraph (1) that imposes 
a limit on the amount of time during which a parent who is the 
principal earner in a family in which both parents are married may be 
employed during a month shall not apply to a State if the State plan 
under this part explicitly provides for such inapplicability.''.

SEC. 506. STATE OPTION TO DISREGARD 6-MONTH LIMITATION ON AFDC-UP 
              BENEFITS.

    Section 407(b)(2)(B) (42 U.S.C. 607(b)(2)(B)) is amended by adding 
at the end the following:
    ``(iv) A regulation prescribed by the Secretary that limits the 
length of time with respect to which a family of a dependent child in 
which both parents are married may receive aid to families with 
dependent children by reason of this section shall not apply to a State 
if the State plan under this part explicitly provides for such 
inapplicability.''.

SEC. 507. ELIMINATION OF QUARTERS OF COVERAGE REQUIREMENT UNDER AFDC-UP 
              PROGRAM FOR FAMILIES IN WHICH BOTH PARENTS ARE TEENS.

    Section 407(b)(1)(A)(iii) (42 U.S.C. 607(b)(1)(A)(iii)) is amended 
by striking ``(iii)(I)'' and inserting ``(iii) neither of the child's 
parents have attained 20 years of age, and (I)''.

SEC. 508. DENIAL OF FEDERAL HOUSING BENEFITS TO MINORS WHO BEAR 
              CHILDREN OUT-OF-WEDLOCK.

    (a) Prohibition of Assistance.--Notwithstanding any other provision 
of law, a household whose head of household is an individual who has 
borne a child out-of-wedlock before attaining 18 years of age may not 
be provided Federal housing assistance for a dwelling unit, unless--
            (1) after the birth of the child--
                    (A) the individual marries an individual who has 
                been determined by the relevant State to be the 
                biological father of the child; or
                    (B) the biological parent of the child has legal 
                custody of the child and marries an individual who 
                legally adopts the child;
            (2) the individual is a biological and custodial parent of 
        another child who was not born out-of-wedlock; or
            (3) eligibility for such Federal housing assistance is 
        based in whole or in part on any disability or handicap of a 
        member of the household.
    (b) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Covered program.--The term ``covered program'' means--
                    (A) the program of rental assistance on behalf of 
                low-income families provided under section 8 of the 
                United States Housing Act of 1937 (42 U.S.C. 1437f);
                    (B) the public housing program under title I of the 
                United States Housing Act of 1937 (42 U.S.C. 1437 et 
                seq.);
                    (C) the program of rent supplement payments on 
                behalf of qualified tenants pursuant to contracts 
                entered into under section 101 of the Housing and Urban 
                Development Act of 1965 (12 U.S.C. 1701s);
                    (D) the program of interest reduction payments 
                pursuant to contracts entered into by the Secretary of 
                Housing and Urban Development under section 236 of the 
                National Housing Act (12 U.S.C. 1715z-1);
                    (E) the program for mortgage insurance provided 
                pursuant to sections 221(d) (3) or (4) of the National 
                Housing Act (12 U.S.C. 1715l(d)) for multifamily 
                housing for low- and moderate-income families;
                    (F) the rural housing loan program under section 
                502 of the Housing Act of 1949 (42 U.S.C. 1472);
                    (G) the rural housing loan guarantee program under 
                section 502(h) of the Housing Act of 1949 (42 U.S.C. 
                1472(h));
                    (H) the loan and grant programs under section 504 
                of the Housing Act of 1949 (42 U.S.C. 1474) for repairs 
                and improvements to rural dwellings;
                    (I) the program of loans for rental and cooperative 
                rural housing under section 515 of the Housing Act of 
                1949 (42 U.S.C. 1485);
                    (J) the program of rental assistance payments 
                pursuant to contracts entered into under section 
                521(a)(2)(A) of the Housing Act of 1949 (42 U.S.C. 
                1490a(a)(2)(A));
                    (K) the loan and assistance programs under sections 
                514 and 516 of the Housing Act of 1949 (42 U.S.C. 1484, 
                1486) for housing for farm labor;
                    (L) the program of grants and loans for mutual and 
                self-help housing and technical assistance under 
                section 523 of the Housing Act of 1949 (42 U.S.C. 
                1490c);
                    (M) the program of grants for preservation and 
                rehabilitation of housing under section 533 of the 
                Housing Act of 1949 (42 U.S.C. 1490m); and
                    (N) the program of site loans under section 524 of 
                the Housing Act of 1949 (42 U.S.C. 1490d).
            (2) Covered project.--The term ``covered project'' means 
        any housing for which Federal housing assistance is provided 
        that is attached to the project or specific dwelling units in 
        the project.
            (3) Federal housing assistance.--The term ``Federal housing 
        assistance'' means--
                    (A) assistance provided under a covered program in 
                the form of any contract, grant, loan, subsidy, 
                cooperative agreement, loan or mortgage guarantee or 
                insurance, or other financial assistance; or
                    (B) occupancy in a dwelling unit that is--
                            (i) provided assistance under a covered 
                        program; or
                            (ii) located in a covered project and 
                        subject to occupancy limitations under a 
                        covered program that are based on income.
            (4) State.--The term ``State'' means the States of the 
        United States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Commonwealth of the Northern Mariana Islands, 
        Guam, the Virgin Islands, American Samoa, and any other 
        territory or possession of the United States.
    (c) Limitations on Applicability.--Subsection (a) shall not apply 
to Federal housing assistance provided for a household pursuant to an 
application or request for such assistance made by such household 
before the effective date of this Act if the household was receiving 
such assistance on the effective date of this Act.

SEC. 509. STATE OPTION TO DENY AFDC TO MINOR PARENTS.

    (a) In General.--Section 402(a) (42 U.S.C. 602(a)), as amended by 
sections 101, 102, 211(a), 232, 301(a), 501(a), and 504 of this Act, is 
amended--
            (1) by striking ``and'' at the end of paragraph (51);
            (2) by striking the period at the end of paragraph (52) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (52) the following:
            ``(53) at the option of the State, provide that--
                    ``(A) in making the determination under paragraph 
                (7) with respect to a family, the State may disregard 
                the needs of any family member who is a parent and has 
                not attained 18 years of age or such lesser age as the 
                State may prescribe; and
                    ``(B) if the amount of aid payable to a family 
                under the State plan is reduced by reason of 
                subparagraph (A), each member of the family shall be 
                considered to be receiving such aid for purposes of 
                eligibility for medical assistance under the State plan 
                approved under title XIX for so long as such aid would 
                otherwise not be so reduced.''.
    (b) Applicability.--The amendments made by subsection (a) shall 
apply to payments under a State plan approved under part A of title IV 
of the Social Security Act for months beginning on or after January 1, 
1998, and to payments to States under such part for quarters beginning 
after such date.

                         Subtitle B--State Role

SEC. 511. TEENAGE PREGNANCY PREVENTION AND FAMILY STABILITY.

    (a) Findings.--The Congress finds that--
            (1) long-term welfare dependency is increasing driven by 
        illegitimate births;
            (2) too many teens are becoming parents and too few are 
        able to responsibly care for and nurture their children;
            (3) new research has shown that spending time in a single-
        parent family puts children at substantially increased risk of 
        dropping out of high school, having a child out-of-wedlock, or 
        being neither in school nor at work; and
            (4) between 1986 and 1991, the rate of births to teens aged 
        15 to 19 rose 24 percent, from 50.2 to 62.1 births per 1,000 
        females.
    (b) Sense of the Congress.--It is the sense of the Congress that--
            (1) children should be educated about the risks involved in 
        choosing parenthood at an early age;
            (2) reproductive family planning and education should be 
        made available to every potential parent so as to give such 
        parents the opportunity to avoid unintended births;
            (3) States should use funds provided under title XX of the 
        Social Security Act to provide comprehensive services to youth 
        in high risk neighborhoods, through community organizations, 
        churches, and schools; and
            (4) States should work with schools for the early 
        identification and referral of children at risk for parenthood 
        at an early age.

SEC. 512. AVAILABILITY OF FAMILY PLANNING SERVICES.

    Section 402(a)(15)(A) (42 U.S.C. 602(a)(15)(A)) is amended by 
striking ``out of wedlock''.

                    TITLE VI--PROGRAM SIMPLIFICATION

                Subtitle A--Increased State Flexibility

SEC. 601. STATE OPTION TO PROVIDE AFDC THROUGH ELECTRONIC BENEFIT 
              TRANSFER SYSTEMS.

    Section 402(a) (42 U.S.C. 602(a)), as amended by sections 101, 102, 
211(a), 232, 301(a), 501(a), 504, and 509(a) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (52);
            (2) by striking the period at the end of paragraph (53) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (53) the following:
            ``(54) at the option of the State, provide for the payment 
        of aid under the State plan through the use of electronic 
        benefit transfer systems.''.

SEC. 602. DEADLINE FOR ACTION ON APPLICATION FOR WAIVER OF REQUIREMENT 
              APPLICABLE TO PROGRAM OF AID TO FAMILIES WITH DEPENDENT 
              CHILDREN.

    Section 1115 (42 U.S.C. 1315) is amended by adding at the end the 
following:
    ``(e) The Secretary shall approve or deny an application for a 
waiver under this section with respect to a requirement of section 402, 
not later than 90 days after the Secretary receives the application, 
unless otherwise agreed upon by the Secretary and the applicant.''.

        Subtitle B--Coordination of AFDC and Food Stamp Programs

SEC. 611. AMENDMENTS TO PART A OF TITLE IV OF THE SOCIAL SECURITY ACT.

    (a) State Option to Use Income and Eligibility Verification 
System.--Section 1137(b) (42 U.S.C. 1320b-7(b)) is amended--
            (1) by striking paragraphs (1) and (4), and redesignating 
        paragraphs (2), (3), and (5) as paragraphs (1), (2), and (3), 
        respectively; and
            (2) in paragraph (2) (as so redesignated), by adding ``or'' 
        at the end.
    (b) State Option to use Retrospective Budgeting Without Monthly 
Reporting.--Section 402(a)(13) (42 U.S.C. 602(a)(13)) is amended--
            (1) by striking all that precedes subparagraph (A) and 
        inserting the following:
            ``(13) provide, at the option of the State and with respect 
        to such category or categories as the State may select and 
        identify in the State plan, that--''; and
            (2) in each of subparagraphs (A) and (B), by striking ``, 
        in the case of families who are required to report monthly to 
        the State agency pursuant to paragraph (14)''.
    (c) Exclusion From Income of All Income of Dependent Child Who is a 
Student.--Section 402(a)(8)(A)(i) (42 U.S.C. 602(a)(8)(A)(i)) is 
amended--
            (1) by striking ``earned''; and
            (2) by inserting ``applying for or'' before ``receiving''.
    (d) Exclusion From Income of Certain Energy Assistance Payments 
Based on Need.--
            (1) In general.--Section 402(a)(8)(A) (42 U.S.C. 
        602(a)(8)(A)), as amended by sections 231 and 242(b)(1) of this 
        Act, is amended--
                    (A) by striking ``and'' at the end of clause (ix); 
                and
                    (B) by adding at the end the following:
                    ``(xi) shall disregard any energy or utility-cost 
                assistance payment based on need, that is paid to any 
                member of the family under--
                            ``(I) a State or local general assistance 
                        program; or
                            ``(II) another basic assistance program 
                        comparable to general assistance (as determined 
                        by the Secretary); and''.
            (2) Inclusion of energy assistance provided under the 
        liheap program.--Section 402(a)(8)(B) (42 U.S.C. 602(a)(8)(B)) 
        is amended--
                    (A) by striking ``and'' at the end of clause (i); 
                and
                    (B) by adding at the end the following:
                            ``(iii) shall not disregard any assistance 
                        provided directly to, or indirectly for the 
                        benefit of, any person described in 
                        subparagraph (A)(ii) under the Low-Income Home 
                        Energy Assistance Act of 1981, notwithstanding 
                        section 2605(f)(1) of such Act; and''.
    (e) Applicability to AFDC of Future Income Exclusions Under Food 
Stamp Program.--Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)), as 
amended by sections 231, 242(b)(1) of this Act and by subsection (d)(1) 
of this section, is amended--
            (1) by striking ``and'' at the end of clause (x); and
            (2) by adding at the end the following:
                    ``(xii) shall disregard from the income of any 
                child, relative, or other individual described in 
                clause (ii) applying for aid under the State plan, any 
                child, relative, or other individual so described 
                receiving such aid, or both, any funds that a Federal 
                statute (enacted after the date of the enactment of 
                this clause) excludes from income for purposes of 
                determining eligibility for benefits under the food 
                stamp program under the Food Stamp Act of 1977, the 
                level of benefits under the program, or both, 
                respectively.''.
    (f) Exclusion of Earnings From State Training Programs Under the 
Job Training Partnership Act.--Section 402(a)(8)(A)(v) (42 U.S.C. 
602(a)(8)(A)(v)) is amended to read as follows:
                    ``(v) with respect to earned income from an on-the-
                job training program under section 204(b)(1)(C) or 
                264(c)(1)(A) of the Job Training Partnership Act--
                            ``(I) shall disregard such earned income 
                        received by any dependent child applying for or 
                        receiving aid to families with dependent 
                        children; and
                            ``(II) notwithstanding section 142(b) of 
                        the Job Training Partnership Act, shall not 
                        disregard such earned income received by any 
                        other individual (living in the same home as 
                        the dependent child) whose needs are taken into 
                        account in making such determination;''.
    (g) Use of Food Stamp Program Lump-Sum Payment Rule.--Section 
402(a)(17) (42 U.S.C. 602(a)(17)) is amended by inserting ``(excluding 
income tax refunds, rebates, or credits, cash donations based on need 
that are received from 1 or more private nonprofit charitable 
organizations, but not in excess of $300 in the aggregate in a quarter, 
retroactive lump-sum social security or railroad retirement pension 
payments and retroactive lump-sum insurance settlements)'' after 
``unearned income''.
    (h) Periodic Reviews.--Section 402(a) (42 U.S.C. 602(a)), as 
amended by sections 101, 102, 211(a), 232, 301(a), 501(a), 504, 509(a), 
and 601 of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (53);
            (2) by striking the period at the end of paragraph (54) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (54) the following:
            ``(55) provide that the State shall, not less frequently 
        than annually review each determination made under the State 
        plan with respect to the eligibility of each recipient of aid 
        under the State plan;''.
    (i) Exclusion From Resources of Essen- tial Employment-Related 
Property.--Section 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)), as amended by 
section 242(a) of this Act, is amended--
            (1) by striking ``or'' at the end of clause (iv); and
            (2) by inserting ``, or (vi) the value of real and tangible 
        personal property (other than currency, commercial paper, and 
        similar property) of a family member that is essential to the 
        employment or self-employment of the member, until the 
        expiration of the 1-year period beginning on the date the 
        member ceases to be so employed or so self-employed'' before 
        the semicolon.
    (j) Exclusion From Resources of Equity in Certain Income-Producing 
Real Property.--Section 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)), as 
amended by section 242(a) of this Act and by subsection (i) of this 
section, is amended--
            (1) by striking ``or'' at the end of clause (v); and
            (2) by inserting ``, or (vii) the equity of any member of 
        the family in real property to which 1 or more members of the 
        family have sole and clear title, that the State agency 
        determines is producing income consistent with the fair market 
        value of the property'' before the semicolon.
    (k) Exclusion From Resources of Life Insurance Policies.--Section 
402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)), as amended by section 242(a) of 
this Act and by subsections (i) and (j) of this section, is amended--
            (1) by striking ``or'' at the end of clause (vi); and
            (2) by inserting ``, or (viii) any life insurance policy'' 
        before the semicolon.
    (l) Exclusion From Resources of Real Property That the Family Is 
Making a Good Faith Effort to Sell.--Section 402(a)(7)(B)(iii) (42 
U.S.C. 602(a)(7)(B)(iii)) is amended--
            (1) by striking ``for such period or periods of time as the 
        Secretary may prescribe''; and
            (2) by striking ``any such period'' and inserting ``any 
        period during which the family is making such an effort''.
    (m) Prompt Restoration of Benefits Wrongfully Denied.--Section 
402(a) (42 U.S.C. 602(a)), as amended by sections 101, 102, 211(a), 
232, 301(a), 501(a), 504, 509(a), and 601 of this Act and by subsection 
(h) of this section, is amended--
            (1) by striking ``and'' at the end of paragraph (54);
            (2) by striking the period at the end of paragraph (55) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (55) the following:
            ``(56) provide that, upon receipt of a request from a 
        family for the payment of any amount of aid under the State 
        plan the payment of which to the family has been wrongfully 
        denied or terminated, the State shall promptly pay the amount 
        to the family if the wrongful denial or termination occurred 
        not more than 1 year before the date of the request or the date 
        the State agency is notified or otherwise discovers the 
        wrongful denial or termination.''.

SEC. 612. AMENDMENTS TO THE FOOD STAMP ACT OF 1977.

    (a) Certification Period.--(1) Section 3(c) of the Food Stamp Act 
of 1977 (7 U.S.C. 2012(c)) is amended to read as follows:
    ``(c) `Certification period' means the period specified by the 
State agency for which households shall be eligible to receive 
authorization cards, except that such period shall be--
            ``(1) 24 months for households in which all adult members 
        are elderly or disabled; and
            ``(2) not more than 12 months for all other households.''.
    (2) Section 6(c)(1)(C) of the Food Stamp Act of 1977 (7 U.S.C. 
2015(c)(1)(C)) is amended--
            (A) in clause (ii) by adding ``and'' at the end;
            (B) in clause (iii) by striking ``; and'' at the end and 
        inserting a period; and
            (C) by striking clause (iv).
    (b) Inclusion of Energy Assistance in Income.--
            (1) Amendments to the Food Stamp Act of 1977.--Section 5 of 
        the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended--
            (A) in subsection (d)--
                    (i) by striking paragraph (11); and
                    (ii) by redesignating paragraphs (12) through (16) 
                as paragraphs (11) through (15), respectively; and
            (B) in subsection (k)--
                    (i) in paragraph (1)(B) by striking ``, not 
                including energy or utility-cost assistance,''; and
                    (ii) in paragraph (2)--
                            (I) by striking subparagraph (C); and
                            (II) by redesignating subparagraphs (D) 
                        through (H) as subparagraphs (C) through (J), 
                        respectively.
            (2) Amendments to the Low-Income Home Energy Assistance Act 
        of 1981.--Section 2605(f) of the Low-Income Home Energy 
        Assistance Act of 1981 (42 U.S.C. 8624(f)) is amended--
                    (A) in paragraph (1) by striking ``food stamps,''; 
                and
                    (B) by amending paragraph (2) to read as follows:
    ``(2) Paragraph (1) shall not apply for any purpose under the Food 
Stamp Act of 1977.''.
    (c) Exclusion of Certain JTPA Income.--Section 5(d) of the Food 
Stamp Act of 1977 (7 U.S.C. 2014(d)), as amended by subsection (b), is 
amended--
            (1) by striking ``and (15)'' and inserting ``(15)''; and
            (2) by inserting before the period the following:
``, and (16) income received under the Job Training Partnership Act by 
a household member who is less than 19 years of age''.
    (d) Exclusion of Educational Assistance From Income.--Section 5(d) 
of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)) is amended--
    (1) by amending paragraph (3) to read as follows: ``(3) all 
educational loans on which payment is deferred (including any loan 
origination fees or insurance premiums associated with such loans), 
grants, scholarships, fellowships, veterans' educational benefits, and 
the like awarded to a household member enrolled at a recognized 
institution of post-secondary education, at a school for the 
handicapped, in a vocational education program, or in a program that 
provides for completion of a secondary school diploma or obtaining the 
equivalent thereof,''; and
    (2) in paragraph (5) by striking ``and no portion'' and all that 
follows through ``reimbursement''.
    (e) Limitation on Additional Earned Income Deduction.--The 3rd 
sentence of section 5(e) of the Food Stamp Act of 1977 (7 U.S.C. 
2014(e)) is amended by striking ``earned income that'' and all that 
follows through ``report'', and inserting ``determining an overissuance 
due to the failure of a household to report earned income''.
    (f) Exclusion of Essential Employment-Related Property.--Section 
5(g)(3) of the Food Stamp Act of 1977 (7 U.S.C. 2014(g)(3)) is amended 
to read as follows:
    ``(3) The value of real and tangible personal property (other than 
currency, commercial paper, and similar property) of a household member 
that is essential to the employment or self-employment of such member 
shall be excluded by the Secretary from financial resources until the 
expiration of the 1-year period beginning on the date such member 
ceases to be so employed or so self-employed.''.
    (g) Exclusion of Life Insurance Policies.--Section 5(g) of the Food 
Stamp Act of 1977 (7 U.S.C. 2014(g)) is amended by adding at the end 
the following:
    ``(6) The Secretary shall exclude from financial resources the cash 
value of any life insurance policy owned by a member of a household.''.
    (h) In-Tandem Exclusions From Income.--Section 5 of the Food Stamp 
Act of 1977 (7 U.S.C. 2014) is amended by adding at the end the 
following:
    ``(n) Whenever a Federal statute enacted after the date of the 
enactment of this Act excludes funds from income for purposes of 
determining eligibility, benefit levels, or both under State plans 
approved under part A of title IV of the Social Security Act, then such 
funds shall be excluded from income for purposes of determining 
eligibility, benefit levels, or both, respectively, under the food 
stamp program of households all of whose members receive benefits under 
a State plan approved under part A of title IV of the Social Security 
Act.''.
    (i) Application of Amendments.--The amendments made by this section 
shall not apply with respect to certification periods beginning before 
the effective date of this section.

                      Subtitle C--Fraud Reduction

SEC. 631. SENSE OF THE CONGRESS IN SUPPORT OF THE EFFORTS OF THE 
              ADMINISTRATION TO ADDRESS THE PROBLEMS OF FRAUD AND ABUSE 
              IN THE SUPPLEMENTAL SECURITY INCOME PROGRAM.

    The Congress hereby expresses support for the efforts of the Social 
Security Administration to reduce fraud and abuse in the supplemental 
security income program under title XVI of the Social Security Act by 
implementing a structured approach to disability decisionmaking that 
takes into consideration the large number of disability claims received 
while providing a basis for consistent, equitable decisionmaking by 
claims adjudicators at each level, that provides for the following:
            (1) A simplification of the monetary guidelines for 
        determining whether an individual (except those filing for 
        benefits based on blindness) is engaging in substantial gainful 
        activity.
            (2) The replacement of a threshold severity requirement for 
        determining whether a claimant has a medically determinable 
        impairment with a threshold inquiry as to whether the claimant 
        has a medically determinable physical or mental impairment that 
        can be demonstrated by acceptable clinical and laboratory 
        diagnostic techniques.
            (3) The comparison of an impairment referred to in 
        paragraph (2) with an index of disabling impairments that 
        contains fewer impairments, has less detail and complexity, and 
        does not rely on the concept of ``medical equivalence''.
            (4)(A) The consideration of whether an individual has the 
        ability to perform substantial gainful activity despite any 
        functional loss caused by a medically determinable physical or 
        mental impairment.
            (B) The definition of the physical and mental requirements 
        of substantial gainful activity.
            (C) The objective measurement, to the extent possible, of 
        whether an individual meets such requirements.
            (D) The development, with the assistance of the medical 
        community and other outside experts from disability programs, 
        of standardized criteria which can be used to measure an 
        individual's functional ability.
            (E) The assumption by the Social Security Administration of 
        primary responsibility for documenting functional ability using 
        the standardized measurement criteria, with the goal of 
        developing functional assessment instruments that are 
        standardized, accurately measure an individual's functional 
        abilities, and are universally accepted by the public, the 
        advocacy community, and health care professionals.
            (F) The use of the results of the standardized functional 
        measurement with a new standard to describe basic physical and 
        mental demands of a baseline of work that represents 
        substantial gainful activity and that exists in significant 
        numbers in the national economy.
            (5)(A) An evaluation of whether a child is engaging in 
        substantial gainful activity, whether a child has a medically 
        determinable physical or mental impairment that will meet the 
        duration requirement, and whether a child has an impairment 
        that meets the criteria in the index of disabling impairments.
            (B) The development, with the assistance of the medical 
        community and educational experts, of standardized criteria 
        which can be used to measure a child's functional ability to 
        perform a baseline of functions that are comparable to the 
        baseline of occupational demands for an adult.
            (C) The conduct of research to specifically identify a 
        skill acquisition threshold to measure broad areas required to 
develop the ability to perform substantial gainful activity.

SEC. 632. STUDY ON FEASIBILITY OF SINGLE TAMPER-PROOF IDENTIFICATION 
              CARD TO SERVE PROGRAMS UNDER BOTH THE SOCIAL SECURITY ACT 
              AND HEALTH REFORM LEGISLATION.

    (a) Study.--As soon as practicable after the date of the enactment 
of this Act, the Commissioner of Social Security shall conduct a study 
of the feasibility of issuing, in counterfeit-resistant form, a single 
identification card which would combine the features of the social 
security card now issued pursuant to section 205 of the Social Security 
Act and any health security card which may be provided for in health 
reform legislation enacted in the 104th Congress. In such study, the 
Commissioner shall devote particular consideration to--
            (1) employment in such card of finger-print identification, 
        bar code validation, a photograph, a hologram, or any other 
        identifiable feature,
            (2) the efficiencies and economies which may be achieved by 
        combining the features of the social security card as currently 
        issued and the features of any health security card which might 
        be issued under health reform legislation, and
            (3) any costs and risks which might result from combining 
        such features in a single identification card and possible 
        means of alleviating any such costs and risks.
    (b) Report.--The Commissioner of Social Security shall, not later 
than 1 year after the date of the enactment of this Act, transmit a 
report to each House of the Congress setting forth the Commissioner's 
findings from the study conducted pursuant to subsection (a). Such 
report may include such recommendations for administrative or 
legislative changes as the Commissioner considers appropriate.

                   Subtitle D--Additional Provisions

SEC. 641. STATE OPTIONS REGARDING UNEMPLOYED PARENT PROGRAM.

    (a) Duration of Unemployment and Recency-of-Work Tests.--Section 
407(b)(1)(A) (42 U.S.C. 607(b)(1)(A)), as amended by section 507 of 
this Act, is amended--
            (1) by striking the matter preceding clause (i) and 
        inserting the following:
            ``(A) subject to paragraph (2), shall provide for the 
        payment of aid to families with dependent children with respect 
        to a dependent child within the meaning of subsection (a)--''.
            (2) in clause (i), by striking ``whichever'' and inserting 
        ``when, if the State chooses to so require (and specifies in 
        its State plan), whichever'';
            (3) in clause (ii), by inserting ``when'' before such 
        parent; and
            (4) in clause (iii), by inserting ``when, if the State 
        chooses to so require (and so specifies in its State plan)'' 
        after ``(iii)''.
    (b) State Option To Expand Program.--Section 407(a) (42 U.S.C. 
607(a)) is amended by inserting ``or the unemployment (as defined (if 
at all) by the State in the State plan approved under section 402)'' 
before ``of the parent''.
    (c) Effective Date.--Subsection (b) and the amendments made by 
subsection (a) shall become effective October 1, 1996.

SEC. 642. DEFINITION OF ESSENTIAL PERSON.

    (a) General Requirement.--Section 402 (42 U.S.C. 602), as amended 
by section 222(a)(1)(A) of this Act, is amended by inserting after 
subsection (f) the following:
    ``(g) In order that the State may include the needs of an 
individual in determining the needs of the dependent child and relative 
with whom the child is living, such individual must be living in the 
same home as such child and relative, and--
            ``(1) furnishing personal services required because of the 
        relative's physical or mental inability to provide care 
        necessary for herself or himself or for the dependent child 
        (which, for purposes of this subsection only, includes a child 
        receiving supplemental security income benefits under title 
        XVI); or
            ``(2) furnishing child care services, or care for an 
        incapacitated member of the family, that is necessary to permit 
        the caretaker relative--
                    ``(A) to engage in full or part-time employment 
                outside the home, or
                    ``(B) to attend a course of education designed to 
                lead to a high school diploma (or its equivalent) or a 
                course of training on a full or part-time basis, or to 
                participate in the program under part F on a full or 
                part-time basis.''.

SEC. 643. ``FILL-THE-GAP'' BUDGETING.

    (a) In General.--Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)), as 
amended by sections 231, 242(b)(1), and 611(d)(1) of this Act, is 
amended--
            (1) by striking ``and'' at the end of clause (xi); and
            (2) by adding at the end the following:
                    ``(xiii) in addition to any other amounts required 
                or permitted by this paragraph to be disregarded in a 
                month, may exempt countable income identified in the 
                State plan by type or source and by amount, but in an 
                amount not exceeding the difference between the State's 
                standard of need applicable to the family and the 
                amount from which all remaining nonexempt income is 
                subtracted to determine the amount of aid payable under 
                the State plan to a family of the same size with no 
                other income;''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on October 1, 1997.

SEC. 644. REPEAL OF REQUIREMENT TO MAKE CERTAIN SUPPLEMENTAL PAYMENTS 
              IN STATES PAYING LESS THAN THEIR NEEDS STANDARDS.

    Section 402(a)(28) (42 U.S.C. 602(a)(28)) is hereby repealed.

SEC. 645. COLLECTION OF AFDC OVERPAYMENTS FROM FEDERAL TAX REFUNDS.

    (a) Authority to Intercept Tax Refund.--(1) Part A of title IV (42 
U.S.C. 601-617) is amended by adding at the end the following:

         ``collection of overpayments from federal tax refunds

    ``Sec. 418. (a) Upon receiving notice from a State agency 
administering a plan approved under this part that a named individual 
has been overpaid under the State plan approved under this part, the 
Secretary of the Treasury shall determine whether any amounts as 
refunds of Federal taxes paid are payable to such individual, 
regardless of whether such individual filed a tax return as a married 
or unmarried individual. If the Secretary of the Treasury finds that 
any such amount is payable, he shall withhold from such refunds an 
amount equal to the overpayment sought to be collected by the State and 
pay such amount to the State agency.
    ``(b) The Secretary of the Treasury shall issue regulations, 
approved by the Secretary of Health and Human Services, that provide--
            ``(1) that a State may only submit under subsection (a) 
        requests for collection of overpayments with respect to 
        individuals (A) who are no longer receiving aid under the State 
        plan approved under this part, (B) with respect to whom the 
        State has already taken appropriate action under State law 
        against the income or resources of the individuals or families 
        involved as required under section 402(a)(22) (B), and (C) to 
        whom the State agency has given notice of its intent to request 
        withholding by the Secretary of the Treasury from their income 
        tax refunds;
            ``(2) that the Secretary of the Treasury will give a timely 
        and appropriate notice to any other person filing a joint 
        return with the individual whose refund is subject to 
        withholding under subsection (a); and
            ``(3) the procedures that the State and the Secretary of 
        the Treasury will follow in carrying out this section which, to 
        the maximum extent feasible and consistent with the specific 
        provisions of this section, will be the same as those issued 
        pursuant to section 464(b) applicable to collection of past-due 
        child support.''.
    (2) Section 6402 of the Internal Revenue Code of 1986 (as amended 
by section 443(a) of this Act) is amended--
            (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:
    ``(g) 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 418 
of the Social Security Act (concerning recovery of overpayments to 
individuals under State plans approved under part A of title IV of such 
Act).''.
    (b) Conforming Amendment.--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 419, 464, or 1137 of 
the Social Security Act.''

SEC. 646. TERRITORIES.

    (a) In General.--Section 1108(a) (42 U.S.C. 1308(a)) is amended 
striking paragraphs (1), (2), and (3) and inserting the following:
            ``(1) for payment to Puerto Rico shall not exceed--
                    ``(A) $82,000,000 with respect to fiscal years 
                1994, 1995, and 1996, and
                    ``(B) $102,500,000 or, if greater, such amount 
                adjusted by the CPI (as prescribed in subsection (f)) 
                for fiscal year 1997 and each fiscal year thereafter;
            ``(2) for payment to the Virgin Islands shall not exceed--
                    ``(A) $2,800,000 with respect to fiscal years 1994, 
                1995, and 1996, and
                    ``(B) $3,500,000 or, if greater, such amount 
                adjusted by the CPI (as prescribed in subsection (f)) 
                for fiscal year 1997 and each fiscal year thereafter; 
                and
            ``(3) for payment to Guam shall not exceed--
                    ``(A) $3,800,000 with respect to fiscal year 1994, 
                1995, and 1996, and
                    ``(B) $4,750,000 or, if greater, such amount 
                adjusted by the CPI (as prescribed in subsection (f)), 
                for fiscal year 1997 and each fiscal year 
                thereafter.''.
    (b) CPI Adjustment.--Section 1108 (42 U.S.C. 1308) is amended by 
adding at the end the following:
    ``(f) For purposes of subsection (a), an amount is `adjusted by the 
CPI' for months in calendar year by multiplying that amount by the 
ratio of the Consumer Price Index as prepared by the Department of 
Labor for--
            ``(1) the third quarter of the preceding calendar year, to
            ``(2) the third quarter of calendar year 1996, and rounding 
        the product, if not a multiple of $10,000, to the nearer 
        multiple of $10,000.''.

SEC. 647. DISREGARD OF STUDENT INCOME.

    (a) In General.--Section 402(a)(8)(A)(i) (42 U.S.C. 
602(a)(8)(A)(i)) is amended by striking ``dependent child'' and all 
that follows and inserting ``individual who has not attained 19 years 
of age and is an elementary or secondary school student''.
    (b) Conforming Amendments.--Section 402(a) (42 U.S.C. 602(a)) is 
amended--
            (1) in paragraph (8)(A)(vii)--
                    (A) by striking ``a dependent child who is a full-
                time student'' and inserting ``an individual who has 
                not attained 19 years of age and is an elementary or 
                secondary school student''; and
                    (B) by striking ``such child'' and inserting ``such 
                individual''; and
            (2) in paragraph (18), by striking ``of a dependent child'' 
        and inserting ``of an individual under age 19''.

SEC. 648. LUMP-SUM INCOME.

    Section 402(a)(8)(A) (42 U.S.C. 602(a)(8)(A)), as amended by 
sections 231, 242(b)(1), 611(d)(1), and 643(a) of this Act, is 
amended--
            (1) by striking ``and'' at the end of clause (xii); and
            (2) by adding at the end the following:
                    ``(xiv) shall disregard from the income of any 
                family member any amounts of income received in the 
                form of nonrecurring lump-sum payments other than 
                payments made pursuant to an order for child or spousal 
                support being enforced by the agency administering the 
                State plan approved under part D;''.

                          TITLE VII--FINANCING

Subtitle A--Ineligibility of Certain Aliens for Certain Social Services

SEC. 701. CERTAIN ALIENS INELIGIBLE FOR AID TO FAMILIES WITH DEPENDENT 
              CHILDREN.

    (a) In General.--Section 402(a)(33) (42 U.S.C. 602(a)) is amended--
            (1) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii), respectively;
            (2) by inserting ``(A)'' after ``(33)'';
            (3) by adding ``and'' at the end; and
            (4) by adding after and below the end the following:
            ``(B) provide that, notwithstanding subparagraph (A), an 
        alien shall not be eligible for aid under the State plan, 
        unless--
                    ``(i) the alien has been lawfully admitted to the 
                United States for permanent residence, has attained 75 
                years of age, and has resided in the United States for 
                at least 5 years;
                    ``(ii) the alien has been lawfully admitted to the 
                United States pursuant to section 207 of the 
                Immigration and Nationality Act, and the 6-year period 
                that begins with the date the alien was admitted to the 
                United States has not expired;
                    ``(iii) the alien has been granted asylum under 
                section 208 of the Immigration and Nationality Act, and 
                the 6-year period that begins with the date the alien 
                was so granted asylum has not expired; or
                    ``(iv) the alien--
                            ``(I) is a veteran (as defined in section 
                        101 of title 38, United States Code) with a 
                        discharge characterized as an honorable 
                        discharge,
                            ``(II) is on active duty (other than active 
                        duty for training) in the Armed Forces of the 
                        United States, or
                            ``(III) is the spouse or unmarried 
                        dependent child of an individual described in 
                        subclause (I) or (II).''.
    (b) Effective Dates.--
            (1) General effective date.--Except as provided in 
        paragraph (2), the amendments made by subsection (a) shall take 
        effect on October 1, 1995, or on the first day of the first 
        month beginning after the date of the enactment of this Act, 
        whichever occurs later, and shall apply to payments under part 
        A of title IV of the Social Security Act for quarters beginning 
        on or after such date, without regard to whether or not 
        regulations to carry out such amendments have been promulgated 
        by such date.
            (2) Special effective date.--If an alien has applied for 
        and is eligible for aid under a State plan approved under part 
        A of title IV of the Social Security Act, immediately before 
        the amendments made by subsection (a) takes effect in 
        accordance with paragraph (1), then such amendments shall not 
        be effective with respect to such alien until October 1, 1996.

SEC. 702. CERTAIN ALIENS INELIGIBLE FOR SUPPLEMENTAL SECURITY INCOME 
              BENEFITS.

    (a) In General.--Section 1614(a) (42 U.S.C. 1382c(a)) is amended by 
adding at the end the following:
    ``(5) Notwithstanding any other provision of this title, an alien 
shall not be eligible for benefits under this title unless--
            ``(A) the alien has been lawfully admitted to the United 
        States for permanent residence, has attained 75 years of age, 
        and has resided in the United States for at least 5 years;
            ``(B) the alien has been lawfully admitted to the United 
        States pursuant to section 207 of the Immigration and 
        Nationality Act, and the 6-year period that begins with the 
        date the alien was admitted to the United States has not 
        expired;
            ``(C) the alien has been granted asylum under section 208 
        of the Immigration and Nationality Act, and the 6-year period 
        that begins with the date the alien was so granted asylum has 
        not expired; or
            ``(D) the alien--
                    ``(i) is a veteran (as defined in section 101 of 
                title 38, United States Code) with a discharge 
                characterized as an honorable discharge,
                    ``(ii) is on active duty (other than active duty 
                for training) in the Armed Forces of the United States, 
                or
                    ``(iii) is the spouse or unmarried dependent child 
                of an individual described in clause (i) or (ii).''.
    (b) Effective Dates.--
            (1) General effective date.--Except as provided in 
        paragraph (2), the amendment made by subsection (a) shall take 
        effect on October 1, 1995, or on the first day of the first 
        month beginning after the date of the enactment of this Act, 
        whichever occurs later, and shall apply to payments for months 
        beginning on or after such date, without regard to whether or 
        not regulations to carry out such amendment have been 
        promulgated by such date.
            (2) Special effective date.--If an alien has applied for 
        and is eligible for supplemental security income benefits under 
        title XVI of the Social Security Act immediately before the 
        amendments made by subsection (a) take effect in accordance 
        with paragraph (1), then such amendment shall not be effective 
        with respect to such alien until October 1, 1996.

SEC. 703. DISQUALIFICATION OF CERTAIN ALIENS TO RECEIVE FOOD STAMP 
              BENEFITS.

    (a) Amendment.--Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 
2015) is amended by adding at the end the following:
    ``(i) An alien who is otherwise eligible to participate in the food 
stamp program shall not be eligible to participate in the food stamp 
program unless--
            ``(1) the alien has been lawfully admitted to the United 
        States for permanent residence, has attained 75 years of age, 
        and has resided in the United States for at least 5 years;
            ``(2) the alien has been lawfully admitted to the United 
        States pursuant to section 207 of the Immigration and 
        Nationality Act, and the 6-year period that begins with the 
        date the alien was admitted to the United States has not 
        expired;
            ``(3) the alien has been granted asylum under section 208 
        of the Immigration and Nationality Act, and the 6-year period 
        that begins with the date the alien was so granted asylum has 
        not expired; or
            ``(4) the alien--
                    ``(A) is a veteran (as defined in section 101 of 
                title 38, United States Code) with a discharge 
                characterized as an honorable discharge,
                    ``(B) is on active duty (other than active duty for 
                training) in the Armed Forces of the United States, or
                    ``(C) is the spouse or unmarried dependent child of 
                an individual described in subparagraph (A) or (B).''.
    (b) Effective Dates and Application of Amendment.--
            (1) General effective date.--Except as provided in 
        paragraphs (2) and (3), the amendment made by subsection (a) 
        shall take effect on October 1, 1995, or on the first day of 
        the first month beginning after the date of the enactment of 
        this Act, whichever occurs later.
            (2) Special effective date.--Except as provided in 
        paragraph (3), if an alien is participating in the food stamp 
        program immediately before the amendment made by subsection (a) 
        takes effect in accordance with paragraph (1), then such 
        amendment shall not be effective with respect to such alien 
        until October 1, 1996.
            (3) Application to certification periods.--The amendment 
        made by subsection (a) shall not apply with respect to an alien 
        for certification periods beginning before the date such 
        amendment is effective with respect to such alien.

SEC. 704. CERTAIN ALIENS INELIGIBLE FOR MEDICAL ASSISTANCE UNDER 
              MEDICAID.

    (a) In General.--Section 1903(v) (42 U.S.C. 1396b(v)(1)) is 
amended--
            (1) in paragraph (1)--
                    (A) by striking ``paragraph (2)'' and inserting 
                ``paragraphs (2) and (4)'', and
                    (B) by striking ``who is not lawfully admitted'' 
                and all that follows and inserting a period;
            (2) in paragraph (2), by striking ``described in paragraph 
        (1)''; and
            (3) by adding at the end the following new paragraph:
    ``(4) The limitation on payments provided under paragraph (1) shall 
not apply with respect to medical assistance furnished to an alien--
            ``(A) who has been lawfully admitted to the United States 
        for permanent residence, is 75 years of age or older, and has 
        resided in the United States for at least 5 years;
            ``(B) who has been lawfully admitted to the United States 
        pursuant to section 207 of the Immigration and Nationality Act, 
        during the 6-year period beginning on the date such alien was 
        so admitted to the United States;
            ``(C) who has been granted asylum under section 208 of the 
        Immigration and Nationality Act, during the 6-year period 
        beginning on the date the alien was so granted asylum; or
            ``(D) the alien--
                    ``(i) is a veteran (as defined in section 101 of 
                title 38, United States Code) with a discharge 
                characterized as an honorable discharge,
                    ``(ii) is on active duty (other than active duty 
                for training) in the Armed Forces of the United States, 
                or
                    ``(iii) is the spouse or unmarried dependent child 
                of an individual described in clause (i) or (ii).''.
    (b) Effective Dates.--
            (1) General effective date.--Except as provided in 
        paragraph (2), the amendments made by subsection (a) shall take 
        effect on October 1, 1995, or on the first day of the first 
        month beginning after the date of the enactment of this Act, 
        whichever occurs later, and shall apply to medical assistance 
        furnished to an alien during quarters beginning on or after 
        such date, without regard to whether or not regulations to 
        carry out such amendments have been promulgated by such date.
            (2) Special effective date.--If an alien is eligible for 
        medical assistance under a State plan under title XIX of the 
        Social Security Act immediately before the amendments made by 
        subsection (a) take effect in accordance with paragraph (1), 
        then such amendments shall not be effective with respect to 
        such alien until October 1, 1996.

            Subtitle B--Other Provisions Relating to Aliens

SEC. 711. SPONSOR RESPONSIBILITY FOR COSTS OF INCOME-BASED CASH PUBLIC 
              ASSISTANCE PROVIDED TO AN ALIEN.

    An affidavit of support or similar document of financial 
responsibility with respect to the admission into the United States of 
an alien under the Immigration and Nationality Act shall provide that 
the sponsor shall be liable for any costs incurred by any State or a 
political subdivision of a State for income-based cash public 
assistance provided to such alien until the date on which the alien 
becomes a citizen of the United States.

SEC. 712. ENFORCEMENT OF AFFIDAVITS OF SUPPORT OR FINANCIAL 
              RESPONSIBILITY BY STATE AND LOCAL GOVERNMENTS PROVIDING 
              ASSISTANCE.

    An affidavit of support or document of financial responsibility 
referred to in section 711 may be enforced with respect to an alien 
against the alien's sponsor in a civil suit brought by the Attorney 
General or a State or political subdivision of a State in the United 
States district court for the district in which the sponsor resides for 
the recovery of any costs incurred by any State or political 
subdivision of a State for income-based cash public assistance provided 
to such alien for which the sponsor agreed to be liable under such an 
affidavit or document. A sponsor or the sponsor's estate shall not be 
liable under such an affidavit or document if the sponsor dies or is 
adjudicated a bankrupt under title 11, United States Code.

SEC. 713. AUTHORITY TO STATES AND LOCALITIES TO LIMIT ASSISTANCE TO 
              ALIENS AND TO DISTINGUISH AMONG CLASSES OF ALIENS IN 
              PROVIDING INCOME-BASED CASH PUBLIC ASSISTANCE.

    (a) In General.--Subject to subsection (b) and notwithstanding any 
other provision of law, a State or local government may prohibit or 
otherwise limit or restrict the eligibility of aliens or classes of 
aliens for programs of income-based cash public assistance furnished 
under the law of the State or a political subdivision of a State.
    (b) Limitation.--The authority under subsection (a) may be 
exercised only to the extent that any prohibitions, limitations, or 
restrictions are not inconsistent with the eligibility requirements for 
comparable Federal programs or are less restrictive. For the purposes 
of this section, attribution to an alien of a sponsor's income and 
resources for purposes of determining the eligibility for and amount of 
benefits of an alien shall be considered less restrictive than a 
prohibition of eligibility.
    (c) Verification of Status.--Notwithstanding any other provision of 
law, pursuant to the authority of subsection (a) a State or local 
government may verify the citizenship or alien status of any individual 
for purposes of eligibility for any program of income-based cash public 
assistance.

SEC. 714. GRANTS TO STATES TO COMPENSATE FOR RESIDENT LAWFUL ALIENS.

    (a) In General.--
            (1) Eligible States.--Except as otherwise provided in this 
        section, a State shall be entitled to a grant under this 
        section for a fiscal year if the number of lawful aliens 
        residing in the State for the preceding fiscal year is not less 
        than 4 percent of the total number of lawful aliens residing in 
        the United States for the preceding fiscal year, as determined 
        by the Attorney General.
            (2) Allocation of Funds.--The amount appropriated under 
        subsection (b) shall be allocated among the eligible States by 
        allocating to each such State an amount which bears the same 
        ratio to such amount as the number of lawful aliens residing in 
        the eligible State for the preceding fiscal year bears to the 
        number of such aliens residing in all eligible States for such 
        fiscal year.
            (3) Determination of Number of Lawful Resident Aliens.--For 
        purposes of this section, the Attorney General shall determine 
        the number of lawful aliens residing in each State on the basis 
        of the most recent satisfactory data available from the 
        Immigration and Naturalization Service. The Commissioner of 
        Immigration and Naturalization shall collect and transmit, in a 
        timely fashion, the information required by this section to the 
        Attorney General.
            (4) Definition.--For purposes of this section--
                    (A) the term ``State'' includes the District of 
                Columbia; and
                    (B) the term ``lawful alien'' means an alien who is 
                lawfully residing in the United States under the 
                immigration laws of the United States at the time such 
                alien is counted for purposes of this section.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated $1,500,000,000 for each of the fiscal years 1997, 1998, 
1999, and 2000 to carry out this section.
    (c) Duration of Assistance.--During the period beginning October 1, 
1996, and ending September 30, 2000, the Attorney General shall, in 
accordance with the provisions of this section, make payments to States 
for grants made on the basis of entitlements created under this 
section.

      Subtitle C--Limitation on Emergency Assistance Expenditures

SEC. 721. LIMITATION ON EXPENDITURES FOR EMERGENCY ASSISTANCE.

    (a) In General.--Section 403(a)(5) (42 U.S.C. 602(a)(5)) is amended 
to read as follows:
            ``(5) in the case of any State, an amount equal to the 
        lesser of--
                    ``(A) 50 percent of the total amount expended under 
                the State plan during such quarter as emergency 
                assistance to needy families with children; or
                    ``(B) the greater of--
                            ``(i) the total amount expended under the 
                        State plan during the fiscal year that 
                        immediately precedes the fiscal year in which 
                        the quarter occurs; multiplied by
                                    ``(I) 4 percent, if the national 
                                unemployment rate for the United States 
                                (as determined by the Secretary of 
                                Labor) for the 3rd or 4th quarter of 
                                the immediately preceding fiscal year 
                                is at least 7 percent; or
                                    ``(II) 3 percent, otherwise; or
                            ``(ii) the total amount expended under the 
                        State plan during fiscal year 1995 as emergency 
                        assistance to needy families with children.''.
    (b) Authority of States To Define Emergency Assistance.--Section 
406(e)(1) (42 U.S.C. 606(e)(1)) is amended to read as follows:
    ``(e)(1)(A) The term `emergency assistance to needy families with 
children' means emergency assistance furnished by an eligible State 
with respect to an eligible needy child to avoid destitution of the 
child or to provide living arrangements in a home for the child.
    ``(B) As used in this paragraph:
            ``(i) The term `emergency assistance' means emergency 
        assistance as provided for in the State plan approved under 
        section 402 of an eligible State, but shall not include care 
        for an eligible needy child or other member of the household in 
        which the child is living to the extent that the child or other 
        member is entitled to such care as medical assistance under the 
        State plan under title XIX.
            ``(ii) The term `eligible needy child' means a needy 
        child--
                    ``(I) who has not attained 21 years of age;
                    ``(II) who is or (within such period as the 
                Secretary may specify) has been living with any 
                relative specified in subsection (a)(1) in a place of 
                residence maintained by 1 or more of such relatives as 
                the home of the relative or relatives;
                    ``(III) who is without available resources; and
                    ``(IV) whose requirement for emergency assistance 
                did not arise because the child or relative refused 
                without good cause to accept employment or training for 
                employment.
            ``(iii) The term ``eligible State'' means a State whose 
        State plan approved under section 402 includes provision for 
        emergency assistance.''.

         Subtitle D--Family Day Care Homes Program Improvements

SEC. 731. IMPROVEMENT OF OPERATION OF FAMILY OR GROUP DAY CARE HOMES 
              LOCATED IN LOW- AND MODERATE-INCOME AREAS UNDER THE CHILD 
              AND ADULT CARE FOOD PROGRAM UNDER THE NATIONAL SCHOOL 
              LUNCH ACT.

    (a) In General.--Section 17(f)(3)(A) of the National School Lunch 
Act (42 U.S.C. 1766(f)(3)(A)) is amended to read as follows:
    ``(A)(i) Institutions that participate in the program under this 
section as family or group day care home sponsoring organizations shall 
be provided, for payment to such homes, a reimbursement factor in 
accordance with this subparagraph for the cost of obtaining and 
preparing food and prescribed labor costs, involved in providing meals 
under this section.
    ``(ii)(I) A low- or moderate-income family or group day care home 
shall be provided a reimbursement factor without a requirement for 
documentation of the costs described in clause (i), except that 
reimbursement shall not be provided under this clause for meals or 
supplements served to the children of a person acting as a family or 
group day care home provider unless such children meet the eligibility 
standards for free or reduced price meals under section 9 of this Act. 
The reimbursement factors applied to such a home shall be the factors 
in effect on the date of enactment of the Individual Responsibility Act 
of 1995. The reimbursement factors under this subparagraph shall be 
adjusted on July 1 of each year to reflect changes in the Consumer 
Price Index for food away from home for the most recent 12-month period 
for which such data are available. The reimbursement factors under this 
subparagraph shall be rounded to the nearest one-fourth cent.
    ``(II) For purposes of this clause, the term `low- or moderate-
income family or group day care home' means--
            ``(aa) a family or group day care home that is located in a 
        census tract area in which at least 50 percent of the children 
        residing in such area are members of households whose incomes 
        meet the eligibility standards for free or reduced price meals 
        under section 9 of this Act, as determined by the family or 
        group day care home sponsoring organization using census tract 
        data provided to such organization by the State agency in 
        accordance with subparagraph (B)(i);
            ``(bb) a family or group day care home that is located in 
        an area served by a school in which at least 50 percent of the 
        total number of children enrolled are certified to receive free 
        or reduced price meals under this Act or the Child Nutrition 
        Act of 1966 (42 U.S.C. 1771 et seq.), as determined by the 
        family or group day care home sponsoring organization using 
        data provided to such organization by the State agency in 
        accordance with subparagraph (B)(ii); or
            ``(cc) a family or group day care home that is operated by 
        a provider whose household meets the eligibility standards for 
        free or reduced price meals under section 9 of this Act.
    ``(iii)(I) Except as provided for in subclause (II), with respect 
to meals or supplements served under this clause by a family or group 
day care home that does not meet the criteria set forth in clause 
(ii)(II), the reimbursement factors shall be--
            ``(aa) $1.2525 for lunches and suppers;
            ``(bb) $.525 for breakfasts; and
            ``(cc) $.25 for supplements.
Such factors shall be adjusted on July 1, 1995, and each July 1 
thereafter to reflect changes in the Consumer Price Index for food away 
from home for the most recent 12-month period for which such data are 
available. The reimbursement factors under this clause shall be rounded 
to the nearest one-fourth cent. A family or group day care home shall 
be provided a reimbursement factor under this subclause without a 
requirement for documentation of the costs described in clause (i), 
except that reimbursement shall not be provided under this clause for 
meals or supplements served to the children of a person acting as a 
family or group day care home provider unless such children meet the 
eligibility standards for free or reduced price meals under section 9 
of this Act.
    ``(II) A family or group day care home that does not meet the 
criteria set forth in clause (ii)(II), may elect to be provided a 
reimbursement factor determined in accordance with the following 
requirements:
            ``(aa) With respect to meals or supplements served under 
        this subsection to children who are members of households whose 
        incomes meet the eligibility standards for free or reduced 
        price meals under section 9 of this Act, the family or group 
        day care home shall be provided reimbursement factors set by 
        the Secretary in accordance with subclause (ii)(I).
            ``(bb) With respect to meals or supplements served under 
        this subsection to children who are members of households whose 
incomes do not meet such eligibility standards, the family or group day 
care home shall be provided a reimbursement factor in accordance with 
subclause (I).
    ``(III) A family or group day care home electing to use the 
procedures under subclause (II) may consider a child with a parent 
participating in the work first program established under part F of 
title IV of the Social Security Act, the community service program 
established under part G of such title, the transitional child care 
program under title IV of such Act, the at-risk child care program 
under title IV of such Act, or a State child care program with an 
income eligibility limit that does not exceed the eligibility standard 
for free or reduced price meals under section 9 of this Act, to be a 
child who is a member of a household whose income meets the eligibility 
standards under section 9 of this Act. A family or group day care home 
may elect to receive the reimbursement factors prescribed under clause 
(ii)(I) solely for such children if it does not wish to have income 
statements collected from parents.
    ``(IV) The Secretary shall prescribe simplified meal counting and 
reporting procedures for use by family and group day care homes that 
elect to use the procedures under clause (iii)(II) and by family and 
group day care home sponsoring organizations that serve such homes. 
Such procedures may include the following:
            ``(aa) Setting an annual percentage for each such home of 
        the number of meals served that are to be reimbursed in 
        accordance with the reimbursement factors prescribed under 
        clause (ii)(I) and an annual percentage of the number of meals 
        served that are to be reimbursed in accordance with the 
        reimbursement factors prescribed under clause (ii)(II), based 
        on the incomes of children enrolled in the home in a specified 
        month or other period.
            ``(bb) Setting blended reimbursement factors for a home 
        annually based on the incomes of children enrolled in the home 
        in a specified month or period.
            ``(cc) Placing a home into one of several reimbursement 
        categories annually based on the percentage of children in the 
        home whose households have incomes that meet the eligibility 
        standards under section 9 of this Act.
            ``(dd) Such other simplified procedures as the Secretary 
        may prescribe.''.
    (b) Provision of Data to Family or Group Day Care Homes.--Section 
17(f)(3) of such Act (42 U.S.C. 1766(f)(3)) is amended--
            (1) by redesignating subparagraphs (B) and (C) as 
        subparagraphs (D) and (E), respectively; and
            (2) by inserting after subparagraph (A) (as amended by 
        subsection (a)) the following new subparagraph:
    ``(B)(i) The Secretary shall provide to each State agency 
administering a child and adult care food program under this section 
data from the most recent decennial census for which such data are 
available showing which census tracts in the State meet the 
requirements of subparagraph (A)(ii)(II)(aa). The State agency shall 
provide such data to family or group day care home sponsoring 
organizations located in the State.
    ``(ii) Each State agency administering a child and adult care food 
program under this section shall annually provide to family or group 
day care home sponsoring organizations located in the State a list of 
all schools in the State in which at least 50 percent of the children 
are enrolled are certified to receive free or reduced price meals under 
this Act or the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.). 
The Secretary shall direct State agencies administering the school 
lunch program under this Act and the school breakfast program under the 
Child Nutrition Act of 1966 to collect this information annually and to 
provide it on a timely basis to the State agency administering the 
program under this section.''.
    (c) Grants to States To Provide Assistance to Family or Group Day 
Care Homes.--Section 17(f)(3) of such Act (42 U.S.C. 1766(f)(3)) is 
amended by inserting after subparagraph (B) (as added by subsection 
(b)(2)) the following new subparagraph:
    ``(C)(i) From amounts appropriated to carry out this section, the 
Secretary shall reserve $2,000,000 in fiscal year 1995 and $5,000,000 
in fiscal year 1996 to provide grants to States for the purpose of 
providing grants to family and day care home sponsoring organizations 
and other appropriate organizations to secure and provide training, 
materials, automated data processing assistance, and other assistance 
for the staff of such sponsoring organizations and for family and group 
day care homes in order to assist in the implementation of the 
requirements contained in subparagraph (A).
    ``(ii) From amounts appropriated to carry out this section, the 
Secretary shall reserve $5,000,000 in fiscal year 1997 and in each 
fiscal year thereafter to provide grants to States for the purpose of 
making grants to family or group day care home sponsoring organizations 
and other appropriate organizations to assist low- or moderate-income 
family or group day care homes (as such term is defined in subparagraph 
(A)(ii)(II)) become licensed or registered for the program under this 
section or overcome other barriers to the program.''.
    (d) Effective Dates.--(1) The amendments made by subsections (a) 
and (b) shall take effect on July 1, 1996.
    (2) The amendments made by subsection (c) shall take effect on the 
date of the enactment of this Act.

                     Subtitle E--Deficit Reduction

SEC. 741. DEDICATION OF SAVINGS TO DEFICIT REDUCTION.

    Upon the enactment of this Act, the Director of the Office of 
Management and Budget shall make downward adjustments in the 
discretionary spending limits (new budget authority and outlays), as 
adjusted, set forth in 601(a)(2) of the Congressional Budget Act of 
1974 for each of fiscal years 1996 through 1998 as follows:
            (1) For fiscal year 1996, reduce new budget authority by 
        $750,000,000 and reduce outlays by $750,000,000.
            (2) For fiscal year 1997, reduce new budget authority by 
        $750,000,000 and reduce outlays by $750,000,000.
            (3) For fiscal year 1998, reduce new budget authority by 
        $800,000,000 and reduce outlays by $800,000,000.

                       Subtitle F--Tax Provisions

SEC.751. CERTAIN FEDERAL ASSISTANCE INCLUDIBLE IN GROSS INCOME.

    (a) In General.--Part II of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically included 
in gross income) is amended by adding at the end the following new 
section:

``SEC. 91. CERTAIN FEDERAL ASSISTANCE.

    ``(a) In General.--Gross income shall include an amount equal to 
the specified Federal assistance received by the taxpayer during the 
taxable year.
    ``(b) Specified Federal Assistance.--For purposes of this section--
            ``(1) In general.--The term `specified Federal assistance' 
        means--
                    ``(A) aid provided under a State plan approved 
                under part A of title IV of the Social Security Act 
                (relating to aid to families with dependent children),
                    ``(B) assistance provided under any food stamp 
                program, and
                    ``(C) assistance provided under section 8 of the 
                United States Housing Act of 1937.
            ``(2) Special rule.--In the case of assistance provided 
        under a program described in subsection (d)(2), such term shall 
        include only the assistance required to be provided under 
        section 21 or 22 (as the case may be) of the Food Stamp Act of 
        1977.
    ``(c) Individuals Subject To Tax.--For purposes of this section--
            ``(1) AFDC.--Aid described in subsection (b)(1)(A) shall be 
        treated as received by the relative with whom the dependent 
        child is living (within the meaning of section 406(c) of the 
        Social Security Act).
            ``(2) Food stamps and section 8 housing.--In the case of 
        assistance described in subparagraph (B) or (C) of subsection 
        (b)(1)--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), such assistance shall be treated as 
                received ratably by each of the individuals taken into 
                account in determining the amount of such assistance 
                for the benefit of such individuals.
                    ``(B) Assistance to children treated as received by 
                parents, etc.--The amount of assistance which would 
                (but for this subparagraph) be treated as received by a 
                child shall be treated as received as follows:
                            ``(i) If there is an includible parent, 
                        such amount shall be treated as received by the 
                        includible parent (or if there is more than 1 
                        includible parent, as received ratably by each 
                        includible parent).
                            ``(ii) If there is no includible parent and 
                        there is an includible grandparent, such amount 
                        shall be treated as received by the includible 
                        grandparent (or if there is more than 1 
                        includible grandparent, as received ratably by 
                        each includible grandparent).
                            ``(iii) If there is no includible parent or 
                        grandparent, such amount shall be treated as 
                        received ratably by each includible adult.
                    ``(C) Definitions.--For purposes of subparagraph 
                (B)--
                            ``(i) Child.--The term `child' means any 
                        individual who has not attained age 16 as of 
                        the close of the taxable year. Such term shall 
                        not include any individual who is an includible 
                        parent of a child (as defined in the preceding 
                        sentence).
                            ``(ii) Adult.--The term `adult' means any 
                        individual who is not a child.
                            ``(iii) Includible.--The term `includible' 
                        means, with respect to any individual, an 
                        individual who is included in determining the 
                        amount of assistance paid to the household 
                        which includes the child.
                            ``(iv) Parent.--The term `parent' includes 
                        the stepfather and stepmother of the child.
                            ``(v) Grandparent.--The term `grandparent' 
                        means any parent of a parent of the child.
    ``(d) Food Stamp Program.--For purposes of subsection (b), the term 
`food stamp program' means--
            ``(1) the food stamp program (as defined in section 3(h) of 
        the Food Stamp Act of 1977), and
            ``(2) the portion of the program under sections 21 and 22 
        of such Act which provides food assistance.''
    (b) Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of such Code is amended by adding at the end the 
        following new section:

``SEC. 6050Q. PAYMENTS OF CERTAIN FEDERAL ASSISTANCE.

    ``(a) Requirement of Reporting.--The appropriate official shall 
make a return, according to the forms and regulations prescribed by the 
Secretary, setting forth--
            ``(1) the aggregate amount of specified Federal assistance 
        paid to any individual during any calendar year, and
            ``(2) the name, address, and TIN of such individual.
    ``(b) Statements To Be Furnished to Persons With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each individual whose name is required 
to be set forth in such return a written statement showing --
            ``(1) the name of the agency making the payments, and
            ``(2) the aggregate amount of payments made to the 
        individual which are required to be shown on such return.
The written statement required under the preceding sentence shall be 
furnished to the individual on or before January 31 of the year 
following the calendar year for which the return under subsection (a) 
was required to be made.
    ``(c) Definitions and Special Rule.--For purposes of this section--
            ``(1) Appropriate official.--The term `appropriate 
        official' means--
                    ``(A) in the case of specified Federal assistance 
                described in section 91(b)(1)(A), the head of the State 
                agency administering the plan under which such 
                assistance is provided,
                    ``(B) in the case of specified Federal assistance 
                described in section 91(b)(1)(B), the head of the State 
                agency administering the program under which such 
                assistance is provided, and
                    ``(C) in the case of specified Federal assistance 
                described in section 91(b)(1)(C), the head of the State 
                pubic housing agency administering the program under 
                which such assistance is provided.
            ``(2) Specified federal assistance.--The term `specified 
        Federal assistance' has the meaning given such term by section 
        91(b).
            ``(3) Amounts treated as paid.--The rules of section 91(c) 
        shall apply for purposes of determining to whom specified 
        Federal assistance is paid.''
            (2) Penalties.--
                    (A) Subparagraph (B) of section 6724(b)(1) of such 
                Code is amended by redesignating clauses (ix) through 
                (xiv) as clauses (x) through (xv), respectively, and by 
                inserting after clause (viii) the following new clause:
                            ``(ix) section 6050Q (relating to payments 
                        of certain Federal assistance),''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by redesignating subparagraphs (Q) through 
                (T) as subparagraphs (R) through (U), respectively, and 
                by inserting after subparagraph (P) the following new 
                subparagraph:
                    ``(Q) section 6050Q(b) (relating to payments of 
                certain Federal assistance),''.
    (c) Clerical Amendments.--
            (1) The table of sections for part II of subchapter B of 
        chapter 1 of such Code is amended by adding at the end the 
        following new item:

                              ``Sec. 91. Certain Federal assistance.''
            (2) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 of such Code is amended by adding at 
        the end the following new item:

                              ``Sec. 6050Q. Payments of certain Federal 
                                        assistance.''
    (d) Effective Date.--The amendments made by this section shall 
apply to benefits received after December 31, 1995.

SEC. 752. EARNED INCOME TAX CREDIT DENIED TO INDIVIDUALS NOT AUTHORIZED 
              TO BE EMPLOYED IN THE UNITED STATES.

    (a) In General.--Section 32(c)(1) of the Internal Revenue Code of 
1986 (relating to individuals eligible to claim the earned income tax 
credit) is amended by adding at the end the following new subparagraph:
                    ``(F) Identification number requirement.--The term 
                `eligible individual' does not include any individual 
                who does not include on the return of tax for the 
                taxable year--
                            ``(i) such individual's taxpayer 
                        identification number, and
                            ``(ii) if the individual is married (within 
                        the meaning of section 7703), the taxpayer 
                        identification number of such individual's 
                        spouse.''
    (b) Special Identification Number.--Section 32 of such Code is 
amended by adding at the end the following new subsection:
    ``(k) Identification Numbers.--Solely for purposes of subsections 
(c)(1)(F) and (c)(3)(D), a taxpayer identification number means a 
social security number issued to an individual by the Social Security 
Administration (other than a social security number issued pursuant to 
clause (II) (or that portion of clause (III) that relates to clause 
(II)) of section 205(c)(2)(B)(i) of the Social Security Act).''
    (c) Extension of Procedures Applicable To Mathematical or Clerical 
Errors.--Section 6213(g)(2) of such Code (relating to the definition of 
mathematical or clerical errors) is amended by striking ``and'' at the 
end of subparagraph (D), by striking the period at the end of 
subparagraph (E) and inserting ``, and'', and by inserting after 
subparagraph (E) the following new subparagraph:
                    ``(F) an omission of a correct taxpayer 
                identification number required under section 32 
                (relating to the earned income tax credit) to be 
                included on a return.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 753. PHASEOUT OF EARNED INCOME CREDIT FOR INDIVIDUALS HAVING MORE 
              THAN $2,500 OF TAXABLE INTEREST AND DIVIDENDS.

    (a) In General.--Section 32 of the Internal Revenue Code of 1986 is 
amended by redesignating subsections (i) and (j) as subsections (j) and 
(k), respectively, and by inserting after subsection (h) the following 
new subsection:
    ``(i) Phaseout of Credit for Individuals Having More Than $2,500 of 
Taxable Interest and Dividends.--If the aggregate amount of interest 
and dividends includible in the gross income of the taxpayer for the 
taxable year exceeds $2,500, the amount of the credit which would (but 
for this subsection) be allowed under this section for such taxable 
year shall be reduced (but not below zero) by an amount which bears the 
same ratio to such amount of credit as such excess bears to $650.''
    (b) Inflation Adjustment.--Subsection (j) of section 32 of such 
Code (relating to inflation adjustments), as redesignated by subsection 
(a), is amended by striking paragraph (2) and by inserting the 
following new paragraphs:
            ``(2) Interest and dividend income limitation.--In the case 
        of a taxable year beginning in a calendar year after 1996, each 
        dollar amount contained in subsection (i) shall be increased by 
        an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 1995' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(3) Rounding.--If any amount as adjusted under paragraph 
        (1) or (2) is not a multiple of $10, such dollar amount shall 
        be rounded to the nearest multiple of $10.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 754. TREATMENT OF CHILDREN RECEIVING AFDC BENEFITS UNDER EARNED 
              INCOME CREDIT.

    (a) In General.--Subparagraph (A) of section 32(c)(3) of the 
Internal Revenue Code of 1986 (defining qualifying child) is amended by 
striking ``and'' at the end of clause (iii), by striking the period at 
the end of clause (iv) and inserting ``, and'', and by adding at the 
end the following new clause:
                            ``(v) who, if such individual is taken into 
                        account in determining aid provided under a 
                        State plan approved under part A of title IV of 
                        the Social Security Act (relating to aid to 
                        families with dependent children), is taken 
                        into account as a member of the family of the 
                        taxpayer.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1995.

                         TITLE VIII--SSI REFORM

SEC. 801. LIMITATION ON PAYMENT OF SUPPLEMENTAL SECURITY INCOME 
              BENEFITS FOR CHILDREN BY REASON OF DISABILITY.

    (a) In General.--Title XVI of the Social Security Act, as in effect 
pursuant to the amendment made by section 301 of the Social Security 
Amendments of 1972, (42 U.S.C. 1381 et seq.) is amended by inserting 
after section 1611 the following:

``SEC. 1611A. LIMITATION ON BENEFITS FOR CHILDREN BY REASON OF 
              DISABILITY.

    ``(a) In General.--The amount of benefits payable under this title 
by reason of disability for any fiscal year, to or for the use of 
individuals who have not attained 18 years of age, shall not exceed the 
amount appropriated pursuant to section 1601(b) for the fiscal year.
    ``(b) Manner of Reducing Benefits.--If the Commissioner has reason 
to believe that the amount appropriated pursuant to section 1601(b) for 
a fiscal year will not be sufficient to enable the payment of benefits 
otherwise payable under this title by reason of disability for the 
fiscal year, to or for the use of individuals who have not attained 18 
years of age, then the Commissioner shall reduce, by such equal 
percentage as is necessary to comply with subsection (a), the amount of 
benefits otherwise so payable under this title for each month that is 
in the fiscal year and that begins after the first date the 
Commissioner has such reason to believe.''.
    (b) Limitations on Authorization of Appropriations for Payment of 
Benefits for Children by Reason of Disability.--Section 1601 of such 
title (42 U.S.C. 1381) is amended--
            (1) by inserting ``(a)'' before ``For'';
            (2) by inserting ``(but not for the purpose of paying cash 
        benefits by reason of disability to or for the use of 
        individuals who have not attained 18 years of age)'' after 
        ``disabled''; and
            (3) by adding at the end the following:
    ``(b) For the purpose of paying cash benefits under this title by 
reason of disability to or for the use of individuals who have not 
attained 18 years of age, there are authorized to be appropriated not 
more than $4,520,000,000 for each fiscal year.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to benefits payable for months after February 1996.

                        TITLE IX--EFFECTIVE DATE

SEC. 901. EFFECTIVE DATE.

    Except as otherwise provided in this Act, this Act and the 
amendments made by this Act shall take effect on October 1, 1996.
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