[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1956 Placed on Calendar Senate (PCS)]
Calendar No. 494
104th CONGRESS
2d Session
S. 1956
_______________________________________________________________________
A BILL
To provide for reconciliation pursuant to section 202(a) of the
concurrent resolution on the budget for fiscal year 1997.
_______________________________________________________________________
July 16, 1996
Read twice and placed on the calendar
Calendar No. 494
104th CONGRESS
2d Session
S. 1956
To provide for reconciliation pursuant to section 202(a) of the
concurrent resolution on the budget for fiscal year 1997.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 16, 1996
Mr. Domenici, from the Committee on the Budget, reported the following
original bill; which was read twice and placed on the calendar
_______________________________________________________________________
A BILL
To provide for reconciliation pursuant to section 202(a) of the
concurrent resolution on the budget for fiscal year 1997.
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 ``Personal Responsibility, Work
Opportunity, and Medicaid Restructuring Act of 1996''.
TITLE I--AGRICULTURE AND RELATED PROVISIONS
SEC. 1001. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the ``Agricultural
Reconciliation Act of 1996''.
(b) Table of Contents.--The table of contents of this title is as
follows:
Sec. 1001. Short title; table of contents.
Subtitle A--Food Stamps and Commodity Distribution
Chapter 1--Food Stamp Program
Sec. 1111. Definition of certification period.
Sec. 1112. Definition of coupon.
Sec. 1113. Treatment of children living at home.
Sec. 1114. Adjustment of thrifty food plan.
Sec. 1115. Definition of homeless individual.
Sec. 1116. State option for eligibility standards.
Sec. 1117. Earnings of students.
Sec. 1118. Energy assistance.
Sec. 1119. Deductions from income.
Sec. 1120. Vehicle allowance.
Sec. 1121. Vendor payments for transitional housing counted as income.
Sec. 1122. Simplified calculation of income for the self-employed.
Sec. 1123. Doubled penalties for violating food stamp program
requirements.
Sec. 1124. Disqualification of convicted individuals.
Sec. 1125. Disqualification.
Sec. 1126. Caretaker exemption.
Sec. 1127. Employment and training.
Sec. 1128. Food stamp eligibility.
Sec. 1129. Comparable treatment for disqualification.
Sec. 1130. Disqualification for receipt of multiple food stamp
benefits.
Sec. 1131. Disqualification of fleeing felons.
Sec. 1132. Cooperation with child support agencies.
Sec. 1133. Disqualification relating to child support arrears.
Sec. 1134. Work requirement.
Sec. 1135. Encouragement of electronic benefit transfer systems.
Sec. 1136. Value of minimum allotment.
Sec. 1137. Benefits on recertification.
Sec. 1138. Optional combined allotment for expedited households.
Sec. 1139. Failure to comply with other means-tested public assistance
programs.
Sec. 1140. Allotments for households residing in centers.
Sec. 1141. Condition precedent for approval of retail food stores and
wholesale food concerns.
Sec. 1142. Authority to establish authorization periods.
Sec. 1143. Information for verifying eligibility for authorization.
Sec. 1144. Waiting period for stores that fail to meet authorization
criteria.
Sec. 1145. Operation of food stamp offices.
Sec. 1146. State employee and training standards.
Sec. 1147. Exchange of law enforcement information.
Sec. 1148. Expedited coupon service.
Sec. 1149. Withdrawing fair hearing requests.
Sec. 1150. Income, eligibility, and immigration status verification
systems.
Sec. 1151. Disqualification of retailers who intentionally submit
falsified applications.
Sec. 1152. Disqualification of retailers who are disqualified under the
WIC program.
Sec. 1153. Collection of overissuances.
Sec. 1154. Authority to suspend stores violating program requirements
pending administrative and judicial review.
Sec. 1155. Expanded criminal forfeiture for violations.
Sec. 1156. Limitation on Federal match.
Sec. 1157. Standards for administration.
Sec. 1158. Work supplementation or support program.
Sec. 1159. Waiver authority.
Sec. 1160. Response to waivers.
Sec. 1161. Employment initiatives program.
Sec. 1162. Reauthorization.
Sec. 1163. Simplified food stamp program.
Sec. 1164. State food assistance block grant.
Chapter 2--Commodity Distribution Programs
Sec. 1171. Emergency food assistance program.
Sec. 1172. Food bank demonstration project.
Sec. 1173. Hunger prevention programs.
Sec. 1174. Report on entitlement commodity processing.
Subtitle B--Child Nutrition Programs
Chapter 1--Amendments to the National School Lunch Act
Sec. 1201. State disbursement to schools.
Sec. 1202. Nutritional and other program requirements.
Sec. 1203. Free and reduced price policy statement.
Sec. 1204. Special assistance.
Sec. 1205. Miscellaneous provisions and definitions.
Sec. 1206. Summer food service program for children.
Sec. 1207. Commodity distribution.
Sec. 1208. Child and adult care food program.
Sec. 1209. Pilot projects.
Sec. 1210. Reduction of paperwork.
Sec. 1211. Information on income eligibility.
Sec. 1212. Nutrition guidance for child nutrition programs.
Chapter 2--Amendments to the Child Nutrition Act of 1966
Sec. 1251. Special milk program.
Sec. 1252. Free and reduced price policy statement.
Sec. 1253. School breakfast program authorization.
Sec. 1254. State administrative expenses.
Sec. 1255. Regulations.
Sec. 1256. Prohibitions.
Sec. 1257. Miscellaneous provisions and definitions.
Sec. 1258. Accounts and records.
Sec. 1259. Special supplemental nutrition program for women, infants,
and children.
Sec. 1260. Cash grants for nutrition education.
Sec. 1261. Nutrition education and training.
Sec. 1262. Rounding rules.
Subtitle A--Food Stamps and Commodity Distribution
CHAPTER 1--FOOD STAMP PROGRAM
SEC. 1111. DEFINITION OF CERTIFICATION PERIOD.
Section 3(c) of the Food Stamp Act of 1977 (7 U.S.C. 2012(c)) is
amended by striking ``Except as provided'' and all that follows and
inserting the following: ``The certification period shall not exceed 12
months, except that the certification period may be up to 24 months if
all adult household members are elderly or disabled. A State agency
shall have at least 1 contact with each certified household every 12
months.''.
SEC. 1112. DEFINITION OF COUPON.
Section 3(d) of the Food Stamp Act of 1977 (7 U.S.C. 2012(d)) is
amended by striking ``or type of certificate'' and inserting ``type of
certificate, authorization card, cash or check issued in lieu of a
coupon, or access device, including an electronic benefit transfer card
or personal identification number,''.
SEC. 1113. TREATMENT OF CHILDREN LIVING AT HOME.
The second sentence of section 3(i) of the Food Stamp Act of 1977
(7 U.S.C. 2012(i)) is amended by striking ``(who are not themselves
parents living with their children or married and living with their
spouses)''.
SEC. 1114. ADJUSTMENT OF THRIFTY FOOD PLAN.
The second sentence of section 3(o) of the Food Stamp Act of 1977
(7 U.S.C. 2012(o)) is amended--
(1) by striking ``shall (1) make'' and inserting the
following: ``shall--
``(1) make'';
(2) by striking ``scale, (2) make'' and inserting the
following: ``scale;
``(2) make'';
(3) by striking ``Alaska, (3) make'' and inserting the
following: ``Alaska;
``(3) make''; and
(4) by striking ``Columbia, (4) through'' and all that
follows through the end of the subsection and inserting the
following: ``Columbia; and
``(4) on October 1, 1996, and each October 1 thereafter,
adjust the cost of the diet to reflect the cost of the diet in
the preceding June, and round the result to the nearest lower
dollar increment for each household size, except that on
October 1, 1996, the Secretary may not reduce the cost of the
diet in effect on September 30, 1996.''.
SEC. 1115. DEFINITION OF HOMELESS INDIVIDUAL.
Section 3(s)(2)(C) of the Food Stamp Act of 1977 (7 U.S.C.
2012(s)(2)(C)) is amended by inserting ``for not more than 90 days''
after ``temporary accommodation''.
SEC. 1116. STATE OPTION FOR ELIGIBILITY STANDARDS.
Section 5(b) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)) is
amended by striking ``(b) The Secretary'' and inserting the following:
``(b) Eligibility Standards.--Except as otherwise provided in this
Act, the Secretary''.
SEC. 1117. EARNINGS OF STUDENTS.
Section 5(d)(7) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)(7))
is amended by striking ``21'' and inserting ``19''.
SEC. 1118. ENERGY ASSISTANCE.
(a) In General.--Section 5(d) of the Food Stamp Act of 1977 (7
U.S.C. 2014(d)) is amended by striking paragraph (11) and inserting the
following: ``(11) a 1-time payment or allowance made under a Federal or
State law for the costs of weatherization or emergency repair or
replacement of an unsafe or inoperative furnace or other heating or
cooling device,''.
(b) Conforming Amendments.--
(1) Section 5(k) of the Food Stamp Act of 1977 (7 U.S.C.
2014(k)) is amended--
(A) in paragraph (1)--
(i) in subparagraph (A), by striking ``plan
for aid to families with dependent children
approved'' and inserting ``program funded'';
and
(ii) in subparagraph (B), by striking ``,
not including energy or utility-cost
assistance,'';
(B) in paragraph (2), by striking subparagraph (C)
and inserting the following:
``(C) a payment or allowance described in subsection
(d)(11);''; and
(C) by adding at the end the following:
``(4) Third party energy assistance payments.--
``(A) Energy assistance payments.--For purposes of
subsection (d)(1), a payment made under a Federal or
State law to provide energy assistance to a household
shall be considered money payable directly to the
household.
``(B) Energy assistance expenses.--For purposes of
subsection (e)(7), an expense paid on behalf of a
household under a Federal or State law to provide
energy assistance shall be considered an out-of-pocket
expense incurred and paid by the household.''.
(2) Section 2605(f) of the Low-Income Home Energy
Assistance Act of 1981 (42 U.S.C. 8624(f)) is amended--
(A) by striking ``(f)(1) Notwithstanding'' and
inserting ``(f) Notwithstanding'';
(B) in paragraph (1), by striking ``food stamps,'';
and
(C) by striking paragraph (2).
SEC. 1119. DEDUCTIONS FROM INCOME.
(a) In General.--Section 5 of the Food Stamp Act of 1977 (7 U.S.C.
2014) is amended by striking subsection (e) and inserting the
following:
``(e) Deductions From Income.--
``(1) Standard deduction.--
``(A) In general.--The Secretary shall allow a
standard deduction for each household in the 48
contiguous States and the District of Columbia, Alaska,
Hawaii, Guam, and the Virgin Islands of the United
States of--
``(i) for fiscal year 1996, $134, $229,
$189, $269, and $118, respectively;
``(ii) for fiscal year 1997, $132, $225,
$186, $265, and $116, respectively; and
``(iii) for fiscal years 1998 through 2002,
$122, $208, $172, $245, and $107, respectively.
``(B) Adjustment for inflation.--On October 1,
2002, and each October 1 thereafter, the Secretary
shall adjust the standard deduction to the nearest
lower dollar increment to reflect changes in the
Consumer Price Index for all urban consumers published
by the Bureau of Labor Statistics, for items other than
food, for the 12-month period ending the preceding June
30.
``(2) Earned income deduction.--
``(A) Definition of earned income.--In this
paragraph, the term `earned income' does not include--
``(i) income excluded by subsection (d); or
``(ii) any portion of income earned under a
work supplementation or support program, as
defined under section 16(b), that is
attributable to public assistance.
``(B) Deduction.--Except as provided in
subparagraph (C), a household with earned income shall
be allowed a deduction of 20 percent of all earned
income to compensate for taxes, other mandatory
deductions from salary, and work expenses.
``(C) Exception.--The deduction described in
subparagraph (B) shall not be allowed with respect to
determining an overissuance due to the failure of a
household to report earned income in a timely manner.
``(3) Dependent care deduction.--
``(A) In general.--A household shall be entitled,
with respect to expenses (other than excluded expenses
described in subparagraph (B)) for dependent care, to a
dependent care deduction, the maximum allowable level
of which shall be $200 per month for each dependent
child under 2 years of age and $175 per month for each
other dependent, for the actual cost of payments
necessary for the care of a dependent if the care
enables a household member to accept or continue
employment, or training or education that is
preparatory for employment.
``(B) Excluded expenses.--The excluded expenses
referred to in subparagraph (A) are--
``(i) expenses paid on behalf of the
household by a third party;
``(ii) amounts made available and excluded,
for the expenses referred to in subparagraph
(A), under subsection (d)(3); and
``(iii) expenses that are paid under
section 6(d)(4).
``(4) Deduction for child support payments.--
``(A) In general.--A household shall be entitled to
a deduction for child support payments made by a
household member to or for an individual who is not a
member of the household if the household member is
legally obligated to make the payments.
``(B) Methods for determining amount.--The
Secretary may prescribe by regulation the methods,
including calculation on a retrospective basis, that a
State agency shall use to determine the amount of the
deduction for child support payments.
``(5) Homeless shelter allowance.--Under rules prescribed
by the Secretary, a State agency may develop a standard
homeless shelter allowance, which shall not exceed $143 per
month, for such expenses as may reasonably be expected to be
incurred by households in which all members are homeless
individuals but are not receiving free shelter throughout the
month. A State agency that develops the allowance may use the
allowance in determining eligibility and allotments for the
households. The State agency may make a household with
extremely low shelter costs ineligible for the allowance.
``(6) Excess medical expense deduction.--
``(A) In general.--A household containing an
elderly or disabled member shall be entitled, with
respect to expenses other than expenses paid on behalf
of the household by a third party, to an excess medical
expense deduction for the portion of the actual costs
of allowable medical expenses, incurred by the elderly
or disabled member, exclusive of special diets, that
exceeds $35 per month.
``(B) Method of claiming deduction.--
``(i) In general.--A State agency shall
offer an eligible household under subparagraph
(A) a method of claiming a deduction for
recurring medical expenses that are initially
verified under the excess medical expense
deduction in lieu of submitting information on,
or verification of, actual expenses on a
monthly basis.
``(ii) Method.--The method described in
clause (i) shall--
``(I) be designed to minimize the
burden for the eligible elderly or
disabled household member choosing to
deduct the recurrent medical expenses
of the member pursuant to the method;
``(II) rely on reasonable estimates
of the expected medical expenses of the
member for the certification period
(including changes that can be
reasonably anticipated based on
available information about the medical
condition of the member, public or
private medical insurance coverage, and
the current verified medical expenses
incurred by the member); and
``(III) not require further
reporting or verification of a change
in medical expenses if such a change
has been anticipated for the
certification period.
``(7) Excess shelter expense deduction.--
``(A) In general.--A household shall be entitled,
with respect to expenses other than expenses paid on
behalf of the household by a third party, to an excess
shelter expense deduction to the extent that the
monthly amount expended by a household for shelter
exceeds an amount equal to 50 percent of monthly
household income after all other applicable deductions
have been allowed.
``(B) Maximum amount of deduction.--
``(i) Through december 31, 1996.--In the
case of a household that does not contain an
elderly or disabled individual, during the 15-
month period ending December 31, 1996, the
excess shelter expense deduction shall not exceed--
``(I) in the 48 contiguous States
and the District of Columbia, $247 per
month; and
``(II) in Alaska, Hawaii, Guam, and
the Virgin Islands of the United
States, $429, $353, $300, and $182 per
month, respectively.
``(i) After december 31, 1996.--In the case
of a household that does not contain an elderly
or disabled individual, after December 31,
1996, the excess shelter expense deduction
shall not exceed--
``(I) in the 48 contiguous States
and the District of Columbia, $342 per
month; and
``(II) in Alaska, Hawaii, Guam, and
the Virgin Islands of the United
States, $594, $489, $415, and $252 per
month, respectively.
``(C) Standard utility allowance.--
``(i) In general.--In computing the excess
shelter expense deduction, a State agency may
use a standard utility allowance in accordance
with regulations promulgated by the Secretary,
except that a State agency may use an allowance
that does not fluctuate within a year to
reflect seasonal variations.
``(ii) Restrictions on heating and cooling
expenses.--An allowance for a heating or
cooling expense may not be used in the case of
a household that--
``(I) does not incur a heating or
cooling expense, as the case may be;
``(II) does incur a heating or
cooling expense but is located in a
public housing unit that has central
utility meters and charges households,
with regard to the expense, only for
excess utility costs; or
``(III) shares the expense with,
and lives with, another individual not
participating in the food stamp
program, another household
participating in the food stamp
program, or both, unless the allowance
is prorated between the household and
the other individual, household, or
both.
``(iii) Mandatory allowance.--
``(I) In general.--A State agency
may make the use of a standard utility
allowance mandatory for all households
with qualifying utility costs if--
``(aa) the State agency has
developed 1 or more standards
that include the cost of
heating and cooling and 1 or
more standards that do not
include the cost of heating and
cooling; and
``(bb) the Secretary finds
that the standards will not
result in an increased cost to
the Secretary.
``(II) Household election.--A State
agency that has not made the use of a
standard utility allowance mandatory
under subclause (I) shall allow a
household to switch, at the end of a
certification period, between the
standard utility allowance and a
deduction based on the actual utility
costs of the household.
``(iv) Availability of allowance to
recipients of energy assistance.--
``(I) In general.--Subject to
subclause (II), if a State agency
elects to use a standard utility
allowance that reflects heating or
cooling costs, the standard utility
allowance shall be made available to
households receiving a payment, or on
behalf of which a payment is made,
under the Low-Income Home Energy
Assistance Act of 1981 (42 U.S.C. 8621
et seq.) or other similar energy
assistance program, if the household
still incurs out-of-pocket heating or
cooling expenses in excess of any
assistance paid on behalf of the
household to an energy provider.
``(II) Separate allowance.--A State
agency may use a separate standard
utility allowance for households on
behalf of which a payment described in
subclause (I) is made, but may not be
required to do so.
``(III) States not electing to use
separate allowance.--A State agency
that does not elect to use a separate
allowance but makes a single standard
utility allowance available to
households incurring heating or cooling
expenses (other than a household
described in subclause (I) or (II) of
clause (ii)) may not be required to
reduce the allowance due to the
provision (directly or indirectly) of
assistance under the Low-Income Home
Energy Assistance Act of 1981 (42
U.S.C. 8621 et seq.).
``(IV) Proration of assistance.--
For the purpose of the food stamp
program, assistance provided under the
Low-Income Home Energy Assistance Act
of 1981 (42 U.S.C. 8621 et seq.) shall
be considered to be prorated over the
entire heating or cooling season for
which the assistance was provided.''.
(b) Conforming Amendment.--Section 11(e)(3) of the Food Stamp Act
of 1977 (7 U.S.C. 2020(e)(3)) is amended by striking ``. Under rules
prescribed'' and all that follows through ``verifies higher expenses''.
SEC. 1120. VEHICLE ALLOWANCE.
Section 5(g) of the Food Stamp Act of 1977 (7 U.S.C. 2014(g)) is
amended by striking paragraph (2) and inserting the following:
``(2) Included assets.--
``(A) In general.--Subject to the other provisions
of this paragraph, the Secretary shall, in prescribing
inclusions in, and exclusions from, financial
resources, follow the regulations in force as of June
1, 1982 (other than those relating to licensed vehicles
and inaccessible resources).
``(B) Additional included assets.--The Secretary
shall include in financial resources--
``(i) any boat, snowmobile, or airplane
used for recreational purposes;
``(ii) any vacation home;
``(iii) any mobile home used primarily for
vacation purposes;
``(iv) subject to subparagraph (C), any
licensed vehicle that is used for household
transportation or to obtain or continue
employment to the extent that the fair market
value of the vehicle exceeds $4,600 through
September 30, 1996, and $5,100 beginning
October 1, 1996; and
``(v) any savings or retirement account
(including an individual account), regardless
of whether there is a penalty for early
withdrawal.
``(C) Excluded vehicles.--A vehicle (and any other
property, real or personal, to the extent the property
is directly related to the maintenance or use of the
vehicle) shall not be included in financial resources
under this paragraph if the vehicle is--
``(i) used to produce earned income;
``(ii) necessary for the transportation of
a physically disabled household member; or
``(iii) depended on by a household to carry
fuel for heating or water for home use and
provides the primary source of fuel or water,
respectively, for the household.''.
SEC. 1121. VENDOR PAYMENTS FOR TRANSITIONAL HOUSING COUNTED AS INCOME.
Section 5(k)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2014(k)(2))
is amended--
(1) by striking subparagraph (F); and
(2) by redesignating subparagraphs (G) and (H) as
subparagraphs (F) and (G), respectively.
SEC. 1122. SIMPLIFIED CALCULATION OF INCOME FOR THE SELF-EMPLOYED.
Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended
by adding at the end the following:
``(n) Simplified Calculation of Income for the Self-Employed.--
``(1) In general.--Not later than 1 year after the date of
enactment of this subsection, the Secretary shall establish a
procedure, designed to not increase Federal costs, by which a
State may use a reasonable estimate of income excluded under
subsection (d)(9) in lieu of calculating the actual cost of
producing self-employment income.
``(2) Inclusive of all types of income.--The procedure
established under paragraph (1) shall allow a State to estimate
income for all types of self-employment income.
``(3) Differences for different types of income.--The
procedure established under paragraph (1) may differ for
different types of self-employment income.''.
SEC. 1123. DOUBLED PENALTIES FOR VIOLATING FOOD STAMP PROGRAM
REQUIREMENTS.
Section 6(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2015(b)(1))
is amended--
(1) in clause (i), by striking ``six months'' and inserting
``1 year''; and
(2) in clause (ii), by striking ``1 year'' and inserting
``2 years''.
SEC. 1124. DISQUALIFICATION OF CONVICTED INDIVIDUALS.
Section 6(b)(1)(iii) of the Food Stamp Act of 1977 (7 U.S.C.
2015(b)(1)(iii)) is amended--
(1) in subclause (II), by striking ``or'' at the end;
(2) in subclause (III), by striking the period at the end
and inserting ``; or''; and
(3) by inserting after subclause (III) the following:
``(IV) a conviction of an offense under subsection
(b) or (c) of section 15 involving an item covered by
subsection (b) or (c) of section 15 having a value of
$500 or more.''.
SEC. 1125. DISQUALIFICATION.
(a) In General.--Section 6(d) of the Food Stamp Act of 1977 (7
U.S.C. 2015(d)) is amended by striking ``(d)(1) Unless otherwise
exempted by the provisions'' and all that follows through the end of
paragraph (1) and inserting the following:
``(d) Conditions of Participation.--
``(1) Work requirements.--
``(A) In general.--No physically and mentally fit
individual over the age of 15 and under the age of 60
shall be eligible to participate in the food stamp
program if the individual--
``(i) refuses, at the time of application
and every 12 months thereafter, to register for
employment in a manner prescribed by the
Secretary;
``(ii) refuses without good cause to
participate in an employment and training
program established under paragraph (4), to the
extent required by the State agency;
``(iii) refuses without good cause to
accept an offer of employment, at a site or
plant not subject to a strike or lockout at the
time of the refusal, at a wage not less than
the higher of--
``(I) the applicable Federal or
State minimum wage; or
``(II) 80 percent of the wage that
would have governed had the minimum
hourly rate under section 6(a)(1) of
the Fair Labor Standards Act of 1938
(29 U.S.C. 206(a)(1)) been applicable
to the offer of employment;
``(iv) refuses without good cause to
provide a State agency with sufficient
information to allow the State agency to
determine the employment status or the job
availability of the individual;
``(v) voluntarily and without good cause--
``(I) quits a job; or
``(II) reduces work effort and,
after the reduction, the individual is
working less than 30 hours per week; or
``(vi) fails to comply with section 20.
``(B) Household ineligibility.--If an individual
who is the head of a household becomes ineligible to
participate in the food stamp program under
subparagraph (A), the household shall, at the option of
the State agency, become ineligible to participate in
the food stamp program for a period, determined by the
State agency, that does not exceed the lesser of--
``(i) the duration of the ineligibility of
the individual determined under subparagraph
(C); or
``(ii) 180 days.
``(C) Duration of ineligibility.--
``(i) First violation.--The first time that
an individual becomes ineligible to participate
in the food stamp program under subparagraph
(A), the individual shall remain ineligible
until the later of--
``(I) the date the individual
becomes eligible under subparagraph
(A);
``(II) the date that is 1 month
after the date the individual became
ineligible; or
``(III) a date determined by the
State agency that is not later than 3
months after the date the individual
became ineligible.
``(ii) Second violation.--The second time
that an individual becomes ineligible to
participate in the food stamp program under
subparagraph (A), the individual shall remain
ineligible until the later of--
``(I) the date the individual
becomes eligible under subparagraph
(A);
``(II) the date that is 3 months
after the date the individual became
ineligible; or
``(III) a date determined by the
State agency that is not later than 6
months after the date the individual
became ineligible.
``(iii) Third or subsequent violation.--The
third or subsequent time that an individual
becomes ineligible to participate in the food
stamp program under subparagraph (A), the
individual shall remain ineligible until the
later of--
``(I) the date the individual
becomes eligible under subparagraph
(A);
``(II) the date that is 6 months
after the date the individual became
ineligible;
``(III) a date determined by the
State agency; or
``(IV) at the option of the State
agency, permanently.
``(D) Administration.--
``(i) Good cause.--The Secretary shall
determine the meaning of good cause for the
purpose of this paragraph.
``(ii) Voluntary quit.--The Secretary shall
determine the meaning of voluntarily quitting
and reducing work effort for the purpose of
this paragraph.
``(iii) Determination by state agency.--
``(I) In general.--Subject to
subclause (II) and clauses (i) and
(ii), a State agency shall determine--
``(aa) the meaning of any
term used in subparagraph (A);
``(bb) the procedures for
determining whether an
individual is in compliance
with a requirement under
subparagraph (A); and
``(cc) whether an
individual is in compliance
with a requirement under
subparagraph (A).
``(II) Not less restrictive.--A
State agency may not use a meaning,
procedure, or determination under
subclause (I) that is less restrictive
on individuals receiving benefits under
this Act than a comparable meaning,
procedure, or determination under a
State program funded under part A of
title IV of the Social Security Act (42
U.S.C. 601 et seq.).
``(iv) Strike against the government.--For
the purpose of subparagraph (A)(v), an employee
of the Federal Government, a State, or a
political subdivision of a State, who is
dismissed for participating in a strike against
the Federal Government, the State, or the
political subdivision of the State shall be
considered to have voluntarily quit without
good cause.
``(v) Selecting a head of household.--
``(I) In general.--For purposes of
this paragraph, the State agency shall
allow the household to select any adult
parent of a child in the household as
the head of the household if all adult
household members making application
under the food stamp program agree to
the selection.
``(II) Time for making
designation.--A household may designate
the head of the household under
subclause (I) each time the household
is certified for participation in the
food stamp program, but may not change
the designation during a certification
period unless there is a change in the
composition of the household.
``(vi) Change in head of household.--If the
head of a household leaves the household during
a period in which the household is ineligible
to participate in the food stamp program under
subparagraph (B)--
``(I) the household shall, if
otherwise eligible, become eligible to
participate in the food stamp program;
and
``(II) if the head of the household
becomes the head of another household,
the household that becomes headed by
the individual shall become ineligible
to participate in the food stamp
program for the remaining period of
ineligibility.''.
(b) Conforming Amendment.--
(1) The second sentence of section 17(b)(2) of the Food
Stamp Act of 1977 (7 U.S.C. 2026(b)(2)) is amended by striking
``6(d)(1)(i)'' and inserting ``6(d)(1)(A)(i)''.
(2) Section 20 of the Food Stamp Act of 1977 (7 U.S.C.
2029) is amended by striking subsection (f) and inserting the
following:
``(f) Disqualification.--An individual or a household may become
ineligible under section 6(d)(1) to participate in the food stamp
program for failing to comply with this section.''.
SEC. 1126. CARETAKER EXEMPTION.
Section 6(d)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(2))
is amended by striking subparagraph (B) and inserting the following:
``(B) a parent or other member of a household with responsibility for
the care of (i) a dependent child under the age of 6 or any lower age
designated by the State agency that is not under the age of 1; or (ii)
an incapacitated person;''.
SEC. 1127. EMPLOYMENT AND TRAINING.
(a) In General.--Section 6(d)(4) of the Food Stamp Act of 1977 (7
U.S.C. 2015(d)(4)) is amended--
(1) by striking ``(4)(A) Not later than April 1, 1987,
each'' and inserting the following:
``(4) Employment and training.--
``(A) In general.--
``(i) Implementation.--Each'';
(2) in subparagraph (A)--
(A) by inserting ``work,'' after ``skills,
training,''; and
(B) by adding at the end the following:
``(ii) Statewide workforce development
system.--Each component of an employment and
training program carried out under this
paragraph shall be delivered through a statewide workforce development
system, unless the component is not available locally through such a
system.'';
(3) in subparagraph (B)--
(A) in the matter preceding clause (i), by striking
the colon at the end and inserting the following: ``,
except that the State agency shall retain the option to
apply employment requirements prescribed under this
subparagraph to a program applicant at the time of
application:'';
(B) in clause (i), by striking ``with terms and
conditions'' and all that follows through ``time of
application''; and
(C) in clause (iv)--
(i) by striking subclauses (I) and (II);
and
(ii) by redesignating subclauses (III) and
(IV) as subclauses (I) and (II), respectively;
(4) in subparagraph (D)--
(A) in clause (i), by striking ``to which the
application'' and all that follows through ``30 days or
less'';
(B) in clause (ii), by striking ``but with
respect'' and all that follows through ``child care'';
and
(C) in clause (iii), by striking ``, on the basis
of'' and all that follows through ``clause (ii)'' and
inserting ``the exemption continues to be valid'';
(5) in subparagraph (E), by striking the third sentence;
(6) in subparagraph (G)--
(A) by striking ``(G)(i) The State'' and inserting
``(G) The State''; and
(B) by striking clause (ii);
(7) in subparagraph (H), by striking ``(H)(i) The
Secretary'' and all that follows through ``(ii) Federal funds''
and inserting ``(H) Federal funds'';
(8) in subparagraph (I)(i)(II), by striking ``, or was in
operation,'' and all that follows through ``Social Security
Act'' and inserting the following: ``), except that no such
payment or reimbursement shall exceed the applicable local
market rate'';
(9)(A) by striking subparagraphs (K) and (L) and inserting
the following:
``(K) Limitation on funding.--Notwithstanding any
other provision of this paragraph, the amount of funds
a State agency uses to carry out this paragraph
(including funds used to carry out subparagraph (I))
for participants who are receiving benefits under a
State program funded under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.) shall not
exceed the amount of funds the State agency used in
fiscal year 1995 to carry out this paragraph for
participants who were receiving benefits in fiscal year
1995 under a State program funded under part A of title
IV of the Act (42 U.S.C. 601 et seq.).''; and
(B) by redesignating subparagraphs (M) and (N) as
subparagraphs (L) and (M), respectively; and
(10) in subparagraph (L), as so redesignated--
(A) by striking ``(L)(i) The Secretary'' and
inserting ``(L) The Secretary''; and
(B) by striking clause (ii).
(b) Funding.--Section 16(h) of the Food Stamp Act of 1977 (7 U.S.C.
2025(h)) is amended by striking ``(h)(1)(A) The Secretary'' and all
that follows through the end of paragraph (1) and inserting the
following:
``(h) Funding of Employment and Training Programs.--
``(1) In general.--
``(A) Amounts.--To carry out employment and
training programs, the Secretary shall reserve for
allocation to State agencies from funds made available
for each fiscal year under section 18(a)(1) the amount
of--
``(i) for fiscal year 1996, $75,000,000;
and
``(ii) for each of fiscal years 1997
through 2002, $85,000,000.
``(B) Allocation.--The Secretary shall allocate the
amounts reserved under subparagraph (A) among the State
agencies using a reasonable formula (as determined by
the Secretary) that gives consideration to the
population in each State affected by section 6(o).
``(C) Reallocation.--
``(i) Notification.--A State agency shall
promptly notify the Secretary if the State
agency determines that the State agency will
not expend all of the funds allocated to the
State agency under subparagraph (B).
``(ii) Reallocation.--On notification under
clause (i), the Secretary shall reallocate the
funds that the State agency will not expend as
the Secretary considers appropriate and
equitable.
``(D) Minimum allocation.--Notwithstanding
subparagraphs (A) through (C), the Secretary shall
ensure that each State agency operating an employment
and training program shall receive not less than
$50,000 for each fiscal year.''.
(c) Additional Matching Funds.--Section 16(h)(2) of the Food Stamp
Act of 1977 (7 U.S.C. 2025(h)(2)) is amended by inserting before the
period at the end the following: ``, including the costs for case
management and casework to facilitate the transition from economic
dependency to self-sufficiency through work''.
(d) Reports.--Section 16(h) of the Food Stamp Act of 1977 (7 U.S.C.
2025(h)) is amended--
(1) in paragraph (5)--
(A) by striking ``(5)(A) The Secretary'' and
inserting ``(5) The Secretary''; and
(B) by striking subparagraph (B); and
(2) by striking paragraph (6).
SEC. 1128. FOOD STAMP ELIGIBILITY.
The third sentence of section 6(f) of the Food Stamp Act of 1977 (7
U.S.C. 2015(f)) is amended by inserting ``, at State option,'' after
``less''.
SEC. 1129. COMPARABLE TREATMENT FOR DISQUALIFICATION.
(a) In General.--Section 6 of the Food Stamp Act of 1977 (7 U.S.C.
2015) is amended by adding at the end the following:
``(i) Comparable Treatment for Disqualification.--
``(1) In general.--If a disqualification is imposed on a
member of a household for a failure of the member to perform an
action required under a Federal, State, or local law relating
to a means-tested public assistance program, the State agency
may impose the same disqualification on the member of the
household under the food stamp program.
``(2) Rules and procedures.--If a disqualification is
imposed under paragraph (1) for a failure of an individual to
perform an action required under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.), the State agency
may use the rules and procedures that apply under part A of
title IV of the Act to impose the same disqualification under
the food stamp program.
``(3) Application after disqualification period.--A member
of a household disqualified under paragraph (1) may, after the
disqualification period has expired, apply for benefits under
this Act and shall be treated as a new applicant, except that a
prior disqualification under subsection (d) shall be considered in
determining eligibility.''.
(b) State Plan Provisions.--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 a semicolon; and
(3) by adding at the end the following:
``(26) the guidelines the State agency uses in carrying out
section 6(i); and''.
(c) Conforming Amendment.--Section 6(d)(2)(A) of the Food Stamp Act
of 1977 (7 U.S.C. 2015(d)(2)(A)) is amended by striking ``that is
comparable to a requirement of paragraph (1)''.
SEC. 1130. DISQUALIFICATION FOR RECEIPT OF MULTIPLE FOOD STAMP
BENEFITS.
Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended
by section 1129, is amended by adding at the end the following:
``(j) Disqualification for Receipt of Multiple Food Stamp
Benefits.--An individual shall be ineligible to participate in the food
stamp program as a member of any household for a 10-year period if the
individual is found by a State agency to have made, or is convicted in
a Federal or State court of having made, a fraudulent statement or
representation with respect to the identity or place of residence of
the individual in order to receive multiple benefits simultaneously
under the food stamp program.''.
SEC. 1131. DISQUALIFICATION OF FLEEING FELONS.
Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended
by section 1130, is amended by adding at the end the following:
``(k) Disqualification of Fleeing Felons.--No member of a household
who is otherwise eligible to participate in the food stamp program
shall be eligible to participate in the program as a member of that or
any other household during any period during which the individual is--
``(1) fleeing to avoid prosecution, or custody or
confinement after conviction, under the law of the place from
which the individual is fleeing, for a crime, or attempt to
commit a crime, that is a felony under the law of the place
from which the individual is fleeing or that, in the case of
New Jersey, is a high misdemeanor under the law of New Jersey;
or
``(2) violating a condition of probation or parole imposed
under a Federal or State law.''.
SEC. 1132. COOPERATION WITH CHILD SUPPORT AGENCIES.
Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended
by section 1131, is amended by adding at the end the following:
``(l) Custodial Parent's Cooperation With Child Support Agencies.--
``(1) In general.--At the option of a State agency, subject
to paragraphs (2) and (3), no natural or adoptive parent or
other individual (collectively referred to in this subsection
as `the individual') who is living with and exercising parental
control over a child under the age of 18 who has an absent
parent shall be eligible to participate in the food stamp
program unless the individual cooperates with the State agency
administering the program established under part D of title IV
of the Social Security Act (42 U.S.C. 651 et seq.)--
``(A) in establishing the paternity of the child
(if the child is born out of wedlock); and
``(B) in obtaining support for--
``(i) the child; or
``(ii) the individual and the child.
``(2) Good cause for noncooperation.--Paragraph (1) shall
not apply to the individual if good cause is found for refusing
to cooperate, as determined by the State agency in accordance
with standards prescribed by the Secretary in consultation with
the Secretary of Health and Human Services. The standards shall
take into consideration circumstances under which cooperation
may be against the best interests of the child.
``(3) Fees.--Paragraph (1) shall not require the payment of
a fee or other cost for services provided under part D of title
IV of the Social Security Act (42 U.S.C. 651 et seq.).
``(m) Noncustodial Parent's Cooperation With Child Support
Agencies.--
``(1) In general.--At the option of a State agency, subject
to paragraphs (2) and (3), a putative or identified
noncustodial parent of a child under the age of 18 (referred to
in this subsection as `the individual') shall not be eligible
to participate in the food stamp program if the individual
refuses to cooperate with the State agency administering the
program established under part D of title IV of the Social
Security Act (42 U.S.C. 651 et seq.)--
``(A) in establishing the paternity of the child
(if the child is born out of wedlock); and
``(B) in providing support for the child.
``(2) Refusal to cooperate.--
``(A) Guidelines.--The Secretary, in consultation
with the Secretary of Health and Human Services, shall
develop guidelines on what constitutes a refusal to
cooperate under paragraph (1).
``(B) Procedures.--The State agency shall develop
procedures, using guidelines developed under
subparagraph (A), for determining whether an individual
is refusing to cooperate under paragraph (1).
``(3) Fees.--Paragraph (1) shall not require the payment of
a fee or other cost for services provided under part D of title
IV of the Social Security Act (42 U.S.C. 651 et seq.).
``(4) Privacy.--The State agency shall provide safeguards
to restrict the use of information collected by a State agency
administering the program established under part D of title IV
of the Social Security Act (42 U.S.C. 651 et seq.) to purposes
for which the information is collected.''.
SEC. 1133. DISQUALIFICATION RELATING TO CHILD SUPPORT ARREARS.
Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended
by section 1132, is amended by adding at the end the following:
``(n) Disqualification for Child Support Arrears.--
``(1) In general.--At the option of a State agency, no
individual shall be eligible to participate in the food stamp
program as a member of any household during any month that the
individual is delinquent in any payment due under a court order
for the support of a child of the individual.
``(2) Exceptions.--Paragraph (1) shall not apply if--
``(A) a court is allowing the individual to delay
payment; or
``(B) the individual is complying with a payment
plan approved by a court or the State agency designated
under part D of title IV of the Social Security Act (42
U.S.C. 651 et seq.) to provide support for the child of
the individual.''.
SEC. 1134. WORK REQUIREMENT.
(a) In General.--Section 6 of the Food Stamp Act of 1977 (7 U.S.C.
2015), as amended by section 1133, is amended by adding at the end the
following:
``(o) Work Requirement.--
``(1) Definition of work program.--In this subsection, the
term `work program' means--
``(A) a program under the Job Training Partnership
Act (29 U.S.C. 1501 et seq.);
``(B) a program under section 236 of the Trade Act
of 1974 (19 U.S.C. 2296); or
``(C) a program of employment or training operated
or supervised by a State or political subdivision of a
State that meets standards approved by the Governor of
the State, including a program under subsection (d)(4),
other than a job search program or a job search
training program.
``(2) Work requirement.--Subject to the other provisions of
this subsection, no individual shall be eligible to participate
in the food stamp program as a member of any household if,
during the preceding 12-month period, the individual received
food stamp benefits for not less than 4 months during which the
individual did not--
``(A) work 20 hours or more per week, averaged
monthly;
``(B) participate in and comply with the
requirements of a work program for 20 hours or more per
week, as determined by the State agency;
``(C) participate in and comply with the
requirements of a program under section 20 or a
comparable program established by a State or political
subdivision of a State; or
``(D) receive an exemption under paragraph (6).
``(3) Exception.--Paragraph (2) shall not apply to an
individual if the individual is--
``(A) under 18 or over 50 years of age;
``(B) medically certified as physically or mentally
unfit for employment;
``(C) a parent or other member of a household with
responsibility for a dependent child;
``(D) otherwise exempt under subsection (d)(2); or
``(E) a pregnant woman.
``(4) Waiver.--
``(A) In general.--On the request of a State
agency, the Secretary may waive the applicability of
paragraph (2) to any group of individuals in the State
if the Secretary makes a determination that the area in
which the individuals reside--
``(i) has an unemployment rate of over 10
percent; or
``(ii) does not have a sufficient number of
jobs to provide employment for the individuals.
``(B) Response.--The Secretary shall respond to a
request made pursuant to subparagraph (A) not later
than 15 days after the State agency makes the request.
``(C) Report.--The Secretary shall report the basis
for a waiver under subparagraph (A) to the Committee on
Agriculture of the House of Representatives and the
Committee on Agriculture, Nutrition, and Forestry of
the Senate.
``(5) Subsequent eligibility.--
``(A) In general.--An individual shall become
eligible to participate in the food stamp program if,
during a 30-day period, the individual--
``(i) works 80 or more hours;
``(ii) participates in and complies with
the requirements of a work program for 80 or
more hours, as determined by a State agency; or
``(iii) participates in and complies with
the requirements of a program under section 20
or a comparable program established by a State
or political subdivision of a State.
``(B) After becoming eligible.--An individual shall
remain subject to paragraph (2) during any 12-month
period subsequent to becoming eligible to participate
in the food stamp program under subparagraph (A),
except that the term `preceding 12-month period' in
paragraph (2) shall mean the preceding period beginning
on the date the individual most recently satisfied the
requirements of subparagraph (A).
``(6) State agency exemptions.--
``(A) In general.--A State agency may exempt an
individual for purposes of paragraph (2)(D)--
``(i) by reason of hardship; or
``(ii) if the individual participates in
and complies with the requirements of a program
of job search or job search training under
clauses (i) or (ii) of subsection (d)(4)(B)
that requires an average of not less than 20
hours per week of participation.
``(B) Limitation on hardship exemption.--The
average monthly number of individuals receiving
benefits due to a hardship exemption granted by a State
agency under subparagraph (A)(i) for a fiscal year may
not exceed 10 percent of the average monthly number of
individuals receiving allotments during the fiscal year
in the State who are not exempt from the requirements
of this subsection under paragraph (3) or (4).
``(C) Limitation on job search exemption.--A State
agency may not exempt an individual under subparagraph
(A)(ii) for more than 1 month during any 12-month
period.''.
(b) Transition Provision.--During the 1-year period beginning on
the date of enactment of this Act, the term ``preceding 12-month
period'' in section 6(o) of the Food Stamp Act of 1977, as added by
subsection (a), means the preceding period that begins on the date of
enactment of this Act.
SEC. 1135. ENCOURAGEMENT OF ELECTRONIC BENEFIT TRANSFER SYSTEMS.
(a) In General.--Section 7(i) of the Food Stamp Act of 1977 (7
U.S.C. 2016(i)) is amended--
(1) by striking paragraph (1) and inserting the following:
``(1) Electronic benefit transfers.--
``(A) Implementation.--Not later than October 1,
2002, each State agency shall implement an electronic
benefit transfer system under which household benefits
determined under section 8(a) or 26 are issued from and
stored in a central databank, unless the Secretary
provides a waiver for a State agency that faces unusual
barriers to implementing an electronic benefit transfer
system.
``(B) Timely implementation.--Each State agency is
encouraged to implement an electronic benefit transfer
system under subparagraph (A) as soon as practicable.
``(C) State flexibility.--Subject to paragraph (2),
a State agency may procure and implement an electronic
benefit transfer system under the terms, conditions,
and design that the State agency considers appropriate.
``(D) Operation.--An electronic benefit transfer
system should take into account generally accepted
standard operating rules based on--
``(i) commercial electronic funds transfer
technology;
``(ii) the need to permit interstate
operation and law enforcement monitoring; and
``(iii) the need to permit monitoring and
investigations by authorized law enforcement
agencies.'';
(2) in paragraph (2)--
(A) by striking ``effective no later than April 1,
1992,'';
(B) in subparagraph (A)--
(i) by striking ``, in any 1 year,''; and
(ii) by striking ``on-line'';
(C) by striking subparagraph (D) and inserting the
following:
``(D)(i) measures to maximize the security of a
system using the most recent technology available that
the State agency considers appropriate and cost
effective and which may include personal identification
numbers, photographic identification on electronic
benefit transfer cards, and other measures to protect
against fraud and abuse; and
``(ii) effective not later than 2 years after the
date of enactment of this clause, to the extent
practicable, measures that permit a system to
differentiate items of food that may be acquired with
an allotment from items of food that may not be
acquired with an allotment;'';
(D) in subparagraph (G), by striking ``and'' at the
end;
(E) in subparagraph (H), by striking the period at
the end and inserting ``; and''; and
(F) by adding at the end the following:
``(I) procurement standards.''; and
(3) by adding at the end the following:
``(7) Replacement of benefits.--Regulations issued by the
Secretary regarding the replacement of benefits and liability
for replacement of benefits under an electronic benefit
transfer system shall be similar to the regulations in effect
for a paper-based food stamp issuance system.
``(8) Replacement card fee.--A State agency may collect a
charge for replacement of an electronic benefit transfer card
by reducing the monthly allotment of the household receiving
the replacement card.
``(9) Optional photographic identification.--
``(A) In general.--A State agency may require that
an electronic benefit card contain a photograph of 1 or
more members of a household.
``(B) Other authorized users.--If a State agency
requires a photograph on an electronic benefit card
under subparagraph (A), the State agency shall
establish procedures to ensure that any other
appropriate member of the household or any authorized
representative of the household may utilize the card.
``(10) Applicable law.--Disclosures, protections,
responsibilities, and remedies established by the Federal
Reserve Board under section 904 of the Electronic Fund Transfer
Act (15 U.S.C. 1693b) shall not apply to benefits under this
Act delivered through any electronic benefit transfer
system.''.
(b) Sense of Congress.--It is the sense of Congress that a State
that operates an electronic benefit transfer system under the Food
Stamp Act of 1977 (7 U.S.C. 2011 et seq.) should operate the system in
a manner that is compatible with electronic benefit transfer systems
operated by other States.
SEC. 1136. VALUE OF MINIMUM ALLOTMENT.
The proviso in section 8(a) of the Food Stamp Act of 1977 (7 U.S.C.
2017(a)) is amended by striking ``, and shall be adjusted'' and all
that follows through ``$5''.
SEC. 1137. BENEFITS ON RECERTIFICATION.
Section 8(c)(2)(B) of the Food Stamp Act of 1977 (7 U.S.C.
2017(c)(2)(B)) is amended by striking ``of more than one month''.
SEC. 1138. OPTIONAL COMBINED ALLOTMENT FOR EXPEDITED HOUSEHOLDS.
Section 8(c) of the Food Stamp Act of 1977 (7 U.S.C. 2017(c)) is
amended by striking paragraph (3) and inserting the following:
``(3) Optional combined allotment for expedited
households.--A State agency may provide to an eligible
household applying after the 15th day of a month, in lieu of
the initial allotment of the household and the regular
allotment of the household for the following month, an
allotment that is equal to the total amount of the initial
allotment and the first regular allotment. The allotment shall
be provided in accordance with section 11(e)(3) in the case of
a household that is not entitled to expedited service and in
accordance with paragraphs (3) and (9) of section 11(e) in the
case of a household that is entitled to expedited service.''.
SEC. 1139. FAILURE TO COMPLY WITH OTHER MEANS-TESTED PUBLIC ASSISTANCE
PROGRAMS.
Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is amended
by striking subsection (d) and inserting the following:
``(d) Reduction of Public Assistance Benefits.--
``(1) In general.--If the benefits of a household are
reduced under a Federal, State, or local law relating to a
means-tested public assistance program for the failure of a
member of the household to perform an action required under the
law or program, for the duration of the reduction--
``(A) the household may not receive an increased
allotment as the result of a decrease in the income of
the household to the extent that the decrease is the
result of the reduction; and
``(B) the State agency may reduce the allotment of
the household by not more than 25 percent.
``(2) Rules and procedures.--If the allotment of a
household is reduced under this subsection for a failure to
perform an action required under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.), the State agency
may use the rules and procedures that apply under part A of
title IV of the Act to reduce the allotment under the food
stamp program.''.
SEC. 1140. ALLOTMENTS FOR HOUSEHOLDS RESIDING IN CENTERS.
Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is amended
by adding at the end the following:
``(f) Allotments for Households Residing in Centers.--
``(1) In general.--In the case of an individual who resides
in a center for the purpose of a drug or alcoholic treatment
program described in the last sentence of section 3(i), a State
agency may provide an allotment for the individual to--
``(A) the center as an authorized representative of
the individual for a period that is less than 1 month;
and
``(B) the individual, if the individual leaves the
center.
``(2) Direct payment.--A State agency may require an
individual referred to in paragraph (1) to designate the center
in which the individual resides as the authorized
representative of the individual for the purpose of receiving
an allotment.''.
SEC. 1141. CONDITION PRECEDENT FOR APPROVAL OF RETAIL FOOD STORES AND
WHOLESALE FOOD CONCERNS.
Section 9(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2018(a)(1))
is amended by adding at the end the following: ``No retail food store
or wholesale food concern of a type determined by the Secretary, based
on factors that include size, location, and type of items sold, shall
be approved to be authorized or reauthorized for participation in the
food stamp program unless an authorized employee of the Department of
Agriculture, a designee of the Secretary, or, if practicable, an
official of the State or local government designated by the Secretary
has visited the store or concern for the purpose of determining whether
the store or concern should be approved or reauthorized, as
appropriate.''.
SEC. 1142. AUTHORITY TO ESTABLISH AUTHORIZATION PERIODS.
Section 9(a) of the Food Stamp Act of 1977 (7 U.S.C. 2018(a)) is
amended by adding at the end the following:
``(3) Authorization periods.--The Secretary shall establish
specific time periods during which authorization to accept and
redeem coupons, or to redeem benefits through an electronic
benefit transfer system, shall be valid under the food stamp
program.''.
SEC. 1143. INFORMATION FOR VERIFYING ELIGIBILITY FOR AUTHORIZATION.
Section 9(c) of the Food Stamp Act of 1977 (7 U.S.C. 2018(c)) is
amended--
(1) in the first sentence, by inserting ``, which may
include relevant income and sales tax filing documents,'' after
``submit information''; and
(2) by inserting after the first sentence the following:
``The regulations may require retail food stores and wholesale
food concerns to provide written authorization for the
Secretary to verify all relevant tax filings with appropriate
agencies and to obtain corroborating documentation from other
sources so that the accuracy of information provided by the
stores and concerns may be verified.''.
SEC. 1144. WAITING PERIOD FOR STORES THAT FAIL TO MEET AUTHORIZATION
CRITERIA.
Section 9(d) of the Food Stamp Act of 1977 (7 U.S.C. 2018(d)) is
amended by adding at the end the following: ``A retail food store or
wholesale food concern that is denied approval to accept and redeem
coupons because the store or concern does not meet criteria for
approval established by the Secretary may not, for at least 6 months,
submit a new application to participate in the program. The Secretary
may establish a longer time period under the preceding sentence,
including permanent disqualification, that reflects the severity of the
basis of the denial.''.
SEC. 1145. OPERATION OF FOOD STAMP OFFICES.
Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020), as
amended by sections 1119(b) and 1129(b), is amended--
(1) in subsection (e)--
(A) by striking paragraph (2) and inserting the
following:
``(2)(A) that the State agency shall establish procedures
governing the operation of food stamp offices that the State
agency determines best serve households in the State, including
households with special needs, such as households with elderly
or disabled members, households in rural areas with low-income
members, homeless individuals, households residing on
reservations, and households in areas in which a substantial
number of members of low-income households speak a language
other than English.
``(B) In carrying out subparagraph (A), a State agency--
``(i) shall provide timely, accurate, and fair
service to applicants for, and participants in, the
food stamp program;
``(ii) shall develop an application containing the
information necessary to comply with this Act;
``(iii) shall permit an applicant household to
apply to participate in the program on the same day
that the household first contacts a food stamp office
in person during office hours;
``(iv) shall consider an application that contains
the name, address, and signature of the applicant to be
filed on the date the applicant submits the
application;
``(v) shall require that an adult representative of
each applicant household certify in writing, under
penalty of perjury, that--
``(I) the information contained in the
application is true; and
``(II) all members of the household are
citizens or are aliens eligible to receive food
stamps under section 6(f);
``(vi) shall provide a method of certifying and
issuing coupons to eligible homeless individuals, to
ensure that participation in the food stamp program is
limited to eligible households; and
``(vii) may establish operating procedures that
vary for local food stamp offices to reflect regional
and local differences within the State.
``(C) Nothing in this Act shall prohibit the use of
signatures provided and maintained electronically, storage of
records using automated retrieval systems only, or any other
feature of a State agency's application system that does not
rely exclusively on the collection and retention of paper
applications or other records.
``(D) The signature of any adult under this paragraph shall
be considered sufficient to comply with any provision of
Federal law requiring a household member to sign an application
or statement.'';
(B) in paragraph (3)--
(i) by striking ``shall--'' and all that
follows through ``provide each'' and inserting
``shall provide each''; and
(ii) by striking ``(B) assist'' and all
that follows through ``representative of the
State agency;'';
(C) by striking paragraphs (14) and (25);
(D)(i) by redesignating paragraphs (15) through
(24) as paragraphs (14) through (23), respectively; and
(ii) by redesignating paragraph (26), as paragraph
(24); and
(2) in subsection (i)--
(A) by striking ``(i) Notwithstanding'' and all
that follows through ``(2)'' and inserting the
following:
``(i) Application and Denial Procedures.--
``(1) Application procedures.--Notwithstanding any other
provision of law,''; and
(B) by striking ``; (3) households'' and all that
follows through ``title IV of the Social Security Act.
No'' and inserting a period and the following:
``(2) Denial and termination.--Except in a case of
disqualification as a penalty for failure to comply with a
public assistance program rule or regulation, no''.
SEC. 1146. STATE EMPLOYEE AND TRAINING STANDARDS.
Section 11(e)(6) of the Food Stamp Act of 1977 (7 U.S.C.
2020(e)(6)) is amended--
(1) by striking ``that (A) the'' and inserting ``that--
``(A) the'';
(2) by striking ``Act; (B) the'' and inserting ``Act; and
``(B) the'';
(3) in subparagraph (B), by striking ``United States Civil
Service Commission'' and inserting ``Office of Personnel
Management''; and
(4) by striking subparagraphs (C) through (E).
SEC. 1147. EXCHANGE OF LAW ENFORCEMENT INFORMATION.
Section 11(e)(8) of the Food Stamp Act of 1977 (7 U.S.C.
2020(e)(8)) is amended--
(1) by striking ``that (A) such'' and inserting the
following: ``that--
``(A) the'';
(2) by striking ``law, (B) notwithstanding'' and inserting
the following: ``law;
``(B) notwithstanding'';
(3) by striking ``Act, and (C) such'' and inserting the
following: ``Act;
``(C) the''; and
(4) by adding at the end the following:
``(D) notwithstanding any other provision of law,
the address, social security number, and, if available,
photograph of any member of a household shall be made
available, on request, to any Federal, State, or local
law enforcement officer if the officer furnishes the
State agency with the name of the member and notifies
the agency that--
``(i) the member--
``(I) is fleeing to avoid
prosecution, or custody or confinement
after conviction, for a crime (or
attempt to commit a crime) that, under
the law of the place the member is
fleeing, is a felony (or, in the case
of New Jersey, a high misdemeanor), or
is violating a condition of probation
or parole imposed under Federal or
State law; or
``(II) has information that is
necessary for the officer to conduct an
official duty related to subclause (I);
``(ii) locating or apprehending the member
is an official duty; and
``(iii) the request is being made in the
proper exercise of an official duty; and
``(E) the safeguards shall not prevent compliance
with paragraph (16);''.
SEC. 1148. EXPEDITED COUPON SERVICE.
Section 11(e)(9) of the Food Stamp Act of 1977 (7 U.S.C.
2020(e)(9)) is amended--
(1) in subparagraph (A)--
(A) by striking ``five days'' and inserting ``7
days''; and
(B) by inserting ``and'' at the end;
(2) by striking subparagraphs (B) and (C);
(3) by redesignating subparagraph (D) as subparagraph (B);
and
(4) in subparagraph (B), as so redesignated, by striking
``, (B), or (C)''.
SEC. 1149. WITHDRAWING FAIR HEARING REQUESTS.
Section 11(e)(10) of the Food Stamp Act of 1977 (7 U.S.C.
2020(e)(10)) is amended by inserting before the semicolon at the end a
period and the following: ``At the option of a State, at any time prior
to a fair hearing determination under this paragraph, a household may
withdraw, orally or in writing, a request by the household for the fair
hearing. If the withdrawal request is an oral request, the State agency
shall provide a written notice to the household confirming the
withdrawal request and providing the household with an opportunity to
request a hearing''.
SEC. 1150. INCOME, ELIGIBILITY, AND IMMIGRATION STATUS VERIFICATION
SYSTEMS.
Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020) is
amended--
(1) in subsection (e)(18), as redesignated by section
1145(1)(D)--
(A) by striking ``that information is'' and
inserting ``at the option of the State agency, that
information may be''; and
(B) by striking ``shall be requested'' and
inserting ``may be requested''; and
(2) by adding at the end the following:
``(p) State Verification Option.--Notwithstanding any other
provision of law, in carrying out the food stamp program, a State
agency shall not be required to use an income and eligibility or an
immigration status verification system established under section 1137
of the Social Security Act (42 U.S.C. 1320b-7).''.
SEC. 1151. DISQUALIFICATION OF RETAILERS WHO INTENTIONALLY SUBMIT
FALSIFIED APPLICATIONS.
Section 12(b) of the Food Stamp Act of 1977 (7 U.S.C. 2021(b)) is
amended--
(1) in paragraph (2), by striking ``and'' at the end;
(2) in paragraph (3), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(4) for a reasonable period of time to be determined by
the Secretary, including permanent disqualification, on the
knowing submission of an application for the approval or
reauthorization to accept and redeem coupons that contains
false information about a substantive matter that was a part of
the application.''.
SEC. 1152. DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED UNDER THE
WIC PROGRAM.
Section 12 of the Food Stamp Act of 1977 (7 U.S.C. 2021) is amended
by adding at the end the following:
``(g) Disqualification of Retailers Who Are Disqualified Under the
WIC Program.--
``(1) In general.--The Secretary shall issue regulations
providing criteria for the disqualification under this Act of
an approved retail food store and a wholesale food concern that
is disqualified from accepting benefits under the special
supplemental nutrition program for women, infants, and children
established under section 17 of the Child Nutrition Act of 1966
(7 U.S.C. 1786).
``(2) Terms.--A disqualification under paragraph (1)--
``(A) shall be for the same length of time as the
disqualification from the program referred to in
paragraph (1);
``(B) may begin at a later date than the
disqualification from the program referred to in
paragraph (1); and
``(C) notwithstanding section 14, shall not be
subject to judicial or administrative review.''.
SEC. 1153. COLLECTION OF OVERISSUANCES.
(a) Collection of Overissuances.--Section 13 of the Food Stamp Act
of 1977 (7 U.S.C. 2022) is amended--
(1) by striking subsection (b) and inserting the following:
``(b) Collection of Overissuances.--
``(1) In general.--Except as otherwise provided in this
subsection, a State agency shall collect any overissuance of
coupons issued to a household by--
``(A) reducing the allotment of the household;
``(B) withholding amounts from unemployment
compensation from a member of the household under
subsection (c);
``(C) recovering from Federal pay or a Federal
income tax refund under subsection (d); or
``(D) any other means.
``(2) Cost effectiveness.--Paragraph (1) shall not apply if
the State agency demonstrates to the satisfaction of the
Secretary that all of the means referred to in paragraph (1)
are not cost effective.
``(3) Maximum reduction absent fraud.--If a household
received an overissuance of coupons without any member of the
household being found ineligible to participate in the program
under section 6(b)(1) and a State agency elects to reduce the
allotment of the household under paragraph (1)(A), the State
agency shall not reduce the monthly allotment of the household
under paragraph (1)(A) by an amount in excess of the greater
of--
``(A) 10 percent of the monthly allotment of the
household; or
``(B) $10.
``(4) Procedures.--A State agency shall collect an
overissuance of coupons issued to a household under paragraph
(1) in accordance with the requirements established by the
State agency for providing notice, electing a means of payment,
and establishing a time schedule for payment.''; and
(2) in subsection (d)--
(A) by striking ``as determined under subsection
(b) and except for claims arising from an error of the
State agency,'' and inserting ``, as determined under
subsection (b)(1),''; and
(B) by inserting before the period at the end the
following: ``or a Federal income tax refund as
authorized by section 3720A of title 31, United States
Code''.
(b) Conforming Amendments.--Section 11(e)(8)(C) of the Food Stamp
Act of 1977 (7 U.S.C. 2020(e)(8)(C)) is amended--
(1) by striking ``and excluding claims'' and all that
follows through ``such section''; and
(2) by inserting before the semicolon at the end the
following: ``or a Federal income tax refund as authorized by
section 3720A of title 31, United States Code''.
(c) Retention Rate.--The proviso of the first sentence of section
16(a) of the Food Stamp Act of 1977 (7 U.S.C. 2025(a)) is amended by
striking ``25 percent during the period beginning October 1, 1990'' and
all that follows through ``error of a State agency'' and inserting the
following: ``25 percent of the overissuances collected by the State
agency under section 13, except those overissuances arising from an
error of the State agency''.
SEC. 1154. AUTHORITY TO SUSPEND STORES VIOLATING PROGRAM REQUIREMENTS
PENDING ADMINISTRATIVE AND JUDICIAL REVIEW.
Section 14(a) of the Food Stamp Act of 1977 (7 U.S.C. 2023(a)) is
amended--
(1) by redesignating the first through seventeenth
sentences as paragraphs (1) through (17), respectively; and
(2) by adding at the end the following:
``(18) Suspension of stores pending review.--
Notwithstanding any other provision of this subsection, any
permanent disqualification of a retail food store or wholesale
food concern under paragraph (3) or (4) of section 12(b) shall
be effective from the date of receipt of the notice of
disqualification. If the disqualification is reversed through
administrative or judicial review, the Secretary shall not be
liable for the value of any sales lost during the
disqualification period.''.
SEC. 1155. EXPANDED CRIMINAL FORFEITURE FOR VIOLATIONS.
(a) Forfeiture of Items Exchanged in Food Stamp Trafficking.--The
first sentence of section 15(g) of the Food Stamp Act of 1977 (7 U.S.C.
2024(g)) is amended by striking ``or intended to be furnished''.
(b) Criminal Forfeiture.--Section 15 of the Food Stamp Act of 1977
(7 U.S.C. 2024) is amended by adding at the end the following:
``(h) Criminal Forfeiture.--
``(1) In general.--In imposing a sentence on a person
convicted of an offense in violation of subsection (b) or (c),
a court shall order, in addition to any other sentence imposed
under this section, that the person forfeit to the United
States all property described in paragraph (2).
``(2) Property subject to forfeiture.--All property, real
and personal, used in a transaction or attempted transaction,
to commit, or to facilitate the commission of, a violation
(other than a misdemeanor) of subsection (b) or (c), or
proceeds traceable to a violation of subsection (b) or (c),
shall be subject to forfeiture to the United States under
paragraph (1).
``(3) Interest of owner.--No interest in property shall be
forfeited under this subsection as the result of any act or
omission established by the owner of the interest to have been
committed or omitted without the knowledge or consent of the
owner.
``(4) Proceeds.--The proceeds from any sale of forfeited
property and any monies forfeited under this subsection shall
be used--
``(A) first, to reimburse the Department of Justice
for the costs incurred by the Department to initiate
and complete the forfeiture proceeding;
``(B) second, to reimburse the Department of
Agriculture Office of Inspector General for any costs
the Office incurred in the law enforcement effort
resulting in the forfeiture;
``(C) third, to reimburse any Federal or State law
enforcement agency for any costs incurred in the law
enforcement effort resulting in the forfeiture; and
``(D) fourth, by the Secretary to carry out the
approval, reauthorization, and compliance
investigations of retail stores and wholesale food
concerns under section 9.''.
SEC. 1156. LIMITATION ON FEDERAL MATCH.
Section 16(a)(4) of the Food Stamp Act of 1977 (7 U.S.C.
2025(a)(4)) is amended by inserting after the comma at the end the
following: ``but not including recruitment activities,''.
SEC. 1157. STANDARDS FOR ADMINISTRATION.
(a) In General.--Section 16 of the Food Stamp Act of 1977 (7 U.S.C.
2025) is amended by striking subsection (b).
(b) Conforming Amendments.--
(1) The first sentence of section 11(g) of the Food Stamp
Act of 1977 (7 U.S.C. 2020(g)) is amended by striking ``the
Secretary's standards for the efficient and effective
administration of the program established under section
16(b)(1) or''.
(2) Section 16(c)(1)(B) of the Food Stamp Act of 1977 (7
U.S.C. 2025(c)(1)(B)) is amended by striking ``pursuant to
subsection (b)''.
SEC. 1158. WORK SUPPLEMENTATION OR SUPPORT PROGRAM.
Section 16 of the Food Stamp Act of 1977 (7 U.S.C. 2025), as
amended by section 1157(a), is amended by inserting after subsection
(a) the following:
``(b) Work Supplementation or Support Program.--
``(1) Definition of work supplementation or support
program.--In this subsection, the term `work supplementation or
support program' means a program under which, as determined by
the Secretary, public assistance (including any benefits
provided under a program established by the State and the food
stamp program) is provided to an employer to be used for hiring
and employing a public assistance recipient who was not
employed by the employer at the time the public assistance
recipient entered the program.
``(2) Program.--A State agency may elect to use an amount
equal to the allotment that would otherwise be issued to a
household under the food stamp program, but for the operation
of this subsection, for the purpose of subsidizing or
supporting a job under a work supplementation or support
program established by the State.
``(3) Procedure.--If a State agency makes an election under
paragraph (2) and identifies each household that participates
in the food stamp program that contains an individual who is
participating in the work supplementation or support program--
``(A) the Secretary shall pay to the State agency
an amount equal to the value of the allotment that the
household would be eligible to receive but for the
operation of this subsection;
``(B) the State agency shall expend the amount
received under subparagraph (A) in accordance with the
work supplementation or support program in lieu of
providing the allotment that the household would
receive but for the operation of this subsection;
``(C) for purposes of--
``(i) sections 5 and 8(a), the amount
received under this subsection shall be
excluded from household income and resources;
and
``(ii) section 8(b), the amount received
under this subsection shall be considered to be
the value of an allotment provided to the
household; and
``(D) the household shall not receive an allotment
from the State agency for the period during which the
member continues to participate in the work
supplementation or support program.
``(4) Other work requirements.--No individual shall be
excused, by reason of the fact that a State has a work
supplementation or support program, from any work requirement
under section 6(d), except during the periods in which the
individual is employed under the work supplementation or
support program.
``(5) Length of participation.--A State agency shall
provide a description of how the public assistance recipients
in the program shall, within a specific period of time, be
moved from supplemented or supported employment to employment
that is not supplemented or supported.
``(6) Displacement.--A work supplementation or support
program shall not displace the employment of individuals who
are not supplemented or supported.''.
SEC. 1159. WAIVER AUTHORITY.
Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C.
2026(b)(1)) is amended--
(1) by redesignating subparagraph (B) as subparagraph (C);
and
(2) in subparagraph (A)--
(A) in the first sentence, by striking ``benefits
to eligible households, including'' and inserting the
following: ``benefits to eligible households, and may
waive any requirement of this Act to the extent
necessary for the project to be conducted.
``(B) Project requirements.--
``(i) Program goal.--The Secretary may not
conduct a project under subparagraph (A)
unless--
``(I) the project is consistent
with the goal of the food stamp program
of providing food assistance to raise
levels of nutrition among low-income
individuals; and
``(II) the project includes an
evaluation to determine the effects of
the project.
``(ii) Permissible projects.--The Secretary
may conduct a project under subparagraph (A)
to--
``(I) improve program
administration;
``(II) increase the self-
sufficiency of food stamp recipients;
``(III) test innovative welfare
reform strategies; or
``(IV) allow greater conformity
with the rules of other programs than
would be allowed but for this
paragraph.
``(iii) Restrictions on permissible
projects.--If the Secretary finds that a
project under subparagraph (A) would reduce
benefits by more than 20 percent for more than
15 percent of households in the area subject to
the project (not including any household whose
benefits are reduced due to a failure to comply
with work or other conduct requirements), the
project--
``(I) may not include more than 15
percent of the State's food stamp
household, unless the Secretary
determines that including a larger
percentage of the food stamp household
is justified by the nature of the
project; and
``(II) shall continue for not more
than 5 years after the date of
implementation, unless the Secretary
approves an extension requested by the
State agency at any time.
``(iv) Impermissible projects.--The
Secretary may not conduct a project under
subparagraph (A) that--
``(I) involves the payment of the
value of an allotment in the form of
cash, unless the project was approved
prior to the date of enactment of this
subparagraph;
``(II) has the effect of
substantially transferring funds made
available under this Act to services or
benefits provided primarily through
another public assistance program, or
using the funds for any purpose other
than the purchase of food, program
administration, or an employment or
training program;
``(III) is inconsistent with--
``(aa) the last 2 sentences
of section 3(i);
``(bb) the last sentence of
section 5(a), insofar as a
waiver denies assistance on the
basis of nonfinancial criteria
to an otherwise eligible
household or individual if the
household or individual has not
failed to comply with any work,
behavioral, or other conduct
requirement under this or
another program;
``(cc) section 5(c)(2);
``(dd) paragraph (2)(B),
(4)(F)(i), or (4)(K) of section
6(d);
``(ee) section 8(b);
``(ff) subsection (a), (c),
(g), (h)(2), or (h)(3) of
section 16;
``(gg) this paragraph; or
``(hh) subsection (a)(1) or
(g)(1) of section 20; or
``(IV) is not limited to a specific
time period.
``(v) Additional included projects.--Pilot
or experimental projects may include'';
(B) by striking ``to aid to families with dependent
children under part A of title IV of the Social
Security Act'' and inserting ``are receiving assistance
under a State program funded under part A of title IV
of the Social Security Act (42 U.S.C. 601 et seq.)'';
and
(C) by striking ``coupons. The Secretary'' and all
that follows through ``Any pilot'' and inserting the
following: ``coupons.
``(vi) Cash payment pilot projects.--Any
pilot''.
SEC. 1160. RESPONSE TO WAIVERS.
Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C.
2026(b)(1)), as amended by section 1159, is amended by adding at the
end the following:
``(D) Response to waivers.--
``(i) Response.--Not later than 60 days
after the date of receiving a request for a
waiver under subparagraph (A), the Secretary
shall provide a response that--
``(I) approves the waiver request;
``(II) denies the waiver request
and describes any modification needed
for approval of the waiver request;
``(III) denies the waiver request
and describes the grounds for the
denial; or
``(IV) requests clarification of
the waiver request.
``(ii) Failure to respond.--If the
Secretary does not provide a response in
accordance with clause (i), the waiver shall be
considered approved, unless the approval is
specifically prohibited by this Act.
``(iii) Notice of denial.--On denial of a
waiver request under clause (i)(III), the
Secretary shall provide a copy of the waiver
request and a description of the reasons for
the denial to the Committee on Agriculture of
the House of Representatives and the Committee
on Agriculture, Nutrition, and Forestry of the
Senate.''.
SEC. 1161. EMPLOYMENT INITIATIVES PROGRAM.
Section 17 of the Food Stamp Act of 1977 (7 U.S.C. 2026) is amended
by striking subsection (d) and inserting the following:
``(d) Employment Initiatives Program.--
``(1) Election to participate.--
``(A) In general.--Subject to the other provisions
of this subsection, a State may elect to carry out an
employment initiatives program under this subsection.
``(B) Requirement.--A State shall be eligible to
carry out an employment initiatives program under this
subsection only if not less than 50 percent of the
households in the State that received food stamp
benefits during the summer of 1993 also received
benefits under a State program funded under part A of
title IV of the Social Security Act (42 U.S.C. 601 et
seq.) during the summer of 1993.
``(2) Procedure.--
``(A) In general.--A State that has elected to
carry out an employment initiatives program under
paragraph (1) may use amounts equal to the food stamp
allotments that would otherwise be issued to a
household under the food stamp program, but for the
operation of this subsection, to provide cash benefits
in lieu of the food stamp allotments to the household
if the household is eligible under paragraph (3).
``(B) Payment.--The Secretary shall pay to each
State that has elected to carry out an employment
initiatives program under paragraph (1) an amount equal
to the value of the allotment that each household
participating in the program in the State would be
eligible to receive under this Act but for the
operation of this subsection.
``(C) Other provisions.--For purposes of the food
stamp program (other than this subsection)--
``(i) cash assistance under this subsection
shall be considered to be an allotment; and
``(ii) each household receiving cash
benefits under this subsection shall not
receive any other food stamp benefit during the
period for which the cash assistance is
provided.
``(D) Additional payments.--Each State that has
elected to carry out an employment initiatives program
under paragraph (1) shall--
``(i) increase the cash benefits provided
to each household participating in the program
in the State under this subsection to
compensate for any State or local sales tax
that may be collected on purchases of food by
the household, unless the Secretary determines
on the basis of information provided by the
State that the increase is unnecessary on the
basis of the limited nature of the items
subject to the State or local sales tax; and
``(ii) pay the cost of any increase in cash
benefits required by clause (i).
``(3) Eligibility.--A household shall be eligible to
receive cash benefits under paragraph (2) if an adult member of
the household--
``(A) has worked in unsubsidized employment for not
less than the preceding 90 days;
``(B) has earned not less than $350 per month from
the employment referred to in subparagraph (A) for not
less than the preceding 90 days;
``(C)(i) is receiving benefits under a State
program funded under part A of title IV of the Social
Security Act (42 U.S.C. 601 et seq.); or
``(ii) was receiving benefits under a State program
funded under part A of title IV of the Social Security
Act (42 U.S.C. 601 et seq.) at the time the member
first received cash benefits under this subsection and
is no longer eligible for the State program because of
earned income;
``(D) is continuing to earn not less than $350 per
month from the employment referred to in subparagraph
(A); and
``(E) elects to receive cash benefits in lieu of
food stamp benefits under this subsection.
``(4) Evaluation.--A State that operates a program under
this subsection for 2 years shall provide to the Secretary a
written evaluation of the impact of cash assistance under this
subsection. The State agency, with the concurrence of the
Secretary, shall determine the content of the evaluation.''.
SEC. 1162. REAUTHORIZATION.
The first sentence of section 18(a)(1) of the Food Stamp Act of
1977 (7 U.S.C. 2027(a)(1)) is amended by striking ``1991 through 1997''
and inserting ``1996 through 2002''.
SEC. 1163. SIMPLIFIED FOOD STAMP PROGRAM.
(a) In General.--The Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.)
is amended by adding at the end the following:
``SEC. 26. SIMPLIFIED FOOD STAMP PROGRAM.
``(a) Definition of Federal Costs.--In this section, the term
`Federal costs' does not include any Federal costs incurred under
section 17.
``(b) Election.--Subject to subsection (d), a State may elect to
carry out a Simplified Food Stamp Program (referred to in this section
as a `Program'), statewide or in a political subdivision of the State,
in accordance with this section.
``(c) Operation of Program.--If a State elects to carry out a
Program, within the State or a political subdivision of the State--
``(1) only households in which all members receive
assistance under a State program funded under part A of title
IV of the Social Security Act (42 U.S.C. 601 et seq.) shall
receive benefits under the Program;
``(2) a household in which all members receive assistance
under a State program funded under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.) shall automatically
be eligible to participate in the Program; and
``(3) subject to subsection (f), benefits under the Program
shall be determined under rules and procedures established by
the State under--
``(A) a State program funded under part A of title
IV of the Social Security Act (42 U.S.C. 601 et seq.);
``(B) the food stamp program (other than section
27); or
``(C) a combination of a State program funded under
part A of title IV of the Social Security Act (42
U.S.C. 601 et seq.) and the food stamp program (other
than section 27).
``(d) Approval of Program.--
``(1) State plan.--A State agency may not operate a Program
unless the Secretary approves a State plan for the operation of
the Program under paragraph (2).
``(2) Approval of plan.--The Secretary shall approve any
State plan to carry out a Program if the Secretary determines
that the plan--
``(A) complies with this section; and
``(B) contains sufficient documentation that the
plan will not increase Federal costs for any fiscal
year.
``(e) Increased Federal Costs.--
``(1) Determination.--
``(A) In general.--The Secretary shall determine
whether a Program being carried out by a State agency
is increasing Federal costs under this Act.
``(B) No excluded households.--In making a
determination under subparagraph (A), the Secretary
shall not require the State agency to collect or report
any information on households not included in the
Program.
``(C) Alternative accounting periods.--The
Secretary may approve the request of a State agency to
apply alternative accounting periods to determine if
Federal costs do not exceed the Federal costs had the
State agency not elected to carry out the Program.
``(2) Notification.--If the Secretary determines that the
Program has increased Federal costs under this Act for any
fiscal year or any portion of any fiscal year, the Secretary
shall notify the State not later than 30 days after the
Secretary makes the determination under paragraph (1).
``(3) Enforcement.--
``(A) Corrective action.--Not later than 90 days
after the date of a notification under paragraph (2),
the State shall submit a plan for approval by the
Secretary for prompt corrective action that is designed
to prevent the Program from increasing Federal costs
under this Act.
``(B) Termination.--If the State does not submit a
plan under subparagraph (A) or carry out a plan
approved by the Secretary, the Secretary shall
terminate the approval of the State agency operating
the Program and the State agency shall be ineligible to
operate a future Program.
``(f) Rules and Procedures.--
``(1) In general.--In operating a Program, a State or
political subdivision of a State may follow the rules and
procedures established by the State or political subdivision
under a State program funded under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.) or under the food
stamp program.
``(2) Standardized deductions.--In operating a Program, a
State or political subdivision of a State may standardize the
deductions provided under section 5(e). In developing the
standardized deduction, the State shall consider the work
expenses, dependent care costs, and shelter costs of
participating households.
``(3) Requirements.--In operating a Program, a State or
political subdivision shall comply with the requirements of--
``(A) subsections (a) through (g) of section 7;
``(B) section 8(a) (except that the income of a
household may be determined under a State program
funded under part A of title IV of the Social Security
Act (42 U.S.C. 601 et seq.));
``(C) subsection (b) and (d) of section 8;
``(D) subsections (a), (c), (d), and (n) of section
11;
``(E) paragraph (3) of section 11(e), to the extent
that the paragraph requires that an eligible household
be certified and receive an allotment for the period of
application not later than 30 days after filing an
application;
``(F) paragraphs (8), (12), (16), (18), (20), (24),
and (25) of section 11(e);
``(G) section 11(e)(10) (or a comparable
requirement established by the State under a State
program funded under part A of title IV of the Social
Security Act (42 U.S.C. 601 et seq.)); and
``(H) section 16.
``(4) Limitation on eligibility.--Notwithstanding any other
provision of this section, a household may not receive benefits
under this section as a result of the eligibility of the
household under a State program funded under part A of title IV
of the Social Security Act (42 U.S.C. 601 et seq.), unless the
Secretary determines that any household with income above 130
percent of the poverty guidelines is not eligible for the
program.''.
(b) State Plan Provisions.--Section 11(e) of the Food Stamp Act of
1977 (7 U.S.C. 2020(e)), as amended by sections 1129(b) and 1145, is
amended by adding at the end the following:
``(25) if a State elects to carry out a Simplified Food
Stamp Program under section 26, the plans of the State agency
for operating the program, including--
``(A) the rules and procedures to be followed by
the State agency to determine food stamp benefits;
``(B) how the State agency will address the needs
of households that experience high shelter costs in
relation to the incomes of the households; and
``(C) a description of the method by which the
State agency will carry out a quality control system
under section 16(c).''.
(c) Conforming Amendments.--
(1) Section 8 of the Food Stamp Act of 1977 (7 U.S.C.
2017), as amended by section 1140, is amended--
(A) by striking subsection (e); and
(B) by redesignating subsection (f) as subsection
(e).
(2) Section 17 of the Food Stamp Act of 1977 (7 U.S.C.
2026) is amended--
(A) by striking subsection (i); and
(B) by redesignating subsections (j) through (l) as
subsections (i) through (k), respectively.
SEC. 1164. STATE FOOD ASSISTANCE BLOCK GRANT.
(a) In General.--The Food Stamp Act of 1977 (7 U.S.C. 2011 et
seq.), as amended by section 1163, is amended by adding at the end the
following:
``SEC. 27. STATE FOOD ASSISTANCE BLOCK GRANT.
``(a) Definitions.--In this section:
``(1) Food assistance.--The term `food assistance' means
assistance that may be used only to obtain food, as defined in
section 3(g).
``(2) State.--The term `State' means each of the 50 States,
the District of Columbia, Guam, and the Virgin Islands of the
United States.
``(b) Establishment.--The Secretary shall establish a program to
make grants to States in accordance with this section to provide--
``(1) food assistance to needy individuals and families
residing in the State; and
``(2) funds for administrative costs incurred in providing
the assistance.
``(c) Election.--
``(1) In general.--A State may annually elect to
participate in the program established under subsection (b) if
the State--
``(A) has fully implemented an electronic benefit
transfer system that operates in the entire State;
``(B) has a payment error rate under section 16(c)
that is not more than 6 percent as announced most
recently by the Secretary; or
``(C) has a payment error rate in excess of 6
percent and agrees to contribute non-Federal funds for
the fiscal year of the grant, for benefits and
administration of the State's food assistance program,
in an amount determined under paragraph (2).
``(2) State mandatory contributions.--
``(A) In general.--In the case of a State that
elects to participate in the program under paragraph
(1)(C), the State shall agree to contribute, for a
fiscal year, an amount equal to--
``(i)(I) the food stamp benefits issued in
the State; multiplied by
``(II) the payment error rate of the State
under section 16(c); minus
``(ii)(I) the food stamp benefits issued in
the State; multiplied by
``(II) 6 percent.
``(B) Determination.--Notwithstanding sections 13
and 14, the calculation of the contribution shall be
based solely on the determination of the Secretary of
the payment error rate under section 16(c).
``(C) Data.--For purposes of implementing
subparagraph (A) for a fiscal year, the Secretary shall
use the data for the most recent fiscal year available.
``(3) Election limitation.--
``(A) Re-entering food stamp program.--A State that
elects to participate in the program under paragraph
(1) may in a subsequent year decline to elect to
participate in the program established under subsection
(b) and instead participate in the food stamp program
in accordance with the other sections of this Act.
``(B) Limitation.--Subsequent to reentering the
food stamp program under subparagraph (A), the State
shall only be eligible to participate in the food stamp
program in accordance with the other sections of this
Act and shall not be eligible to elect to participate
in the program established under subsection (b).
``(4) Program exclusive.--
``(A) In general.--A State that is participating in
the program established under subsection (b) shall not
be subject to, or receive any benefit under, this Act
except as provided in this section.
``(B) Contract with federal government.--Nothing in
this section shall prohibit a State from contracting
with the Federal Government for the provision of
services or materials necessary to carry out a program
under this section.
``(d) Lead Agency.--A State desiring to receive a grant under this
section shall designate, in an application submitted to the Secretary
under subsection (e)(1), an appropriate State agency responsible for
the administration of the program under this section as the lead
agency.
``(e) Application and Plan.--
``(1) Application.--To be eligible to receive assistance
under this section, a State shall prepare and submit to the
Secretary an application at such time, in such manner, and
containing such information as the Secretary shall by
regulation require, including--
``(A) an assurance that the State will comply with
the requirements of this section;
``(B) a State plan that meets the requirements of
paragraph (3); and
``(C) an assurance that the State will comply with
the requirements of the State plan under paragraph (3).
``(2) Annual plan.--The State plan contained in the
application under paragraph (1) shall be submitted for approval
annually.
``(3) Requirements of plan.--
``(A) Lead agency.--The State plan shall identify
the lead agency.
``(B) Use of block grant funds.--The State plan
shall provide that the State shall use the amounts
provided to the State for each fiscal year under this
section--
``(i) to provide food assistance to needy
individuals and families residing in the State,
other than residents of institutions who are
ineligible for food stamps under section 3(i);
and
``(ii) to pay administrative costs incurred
in providing the assistance.
``(C) Groups served.--The State plan shall describe
how and to what extent the program will serve specific
groups of individuals and families and how the
treatment will differ from treatment under the food
stamp program under the other sections of this Act of
the individuals and families, including--
``(i) elderly individuals and families;
``(ii) migrants or seasonal farmworkers;
``(iii) homeless individuals and families;
``(iv) individuals and families who live in
institutions eligible under section 3(i);
``(v) individuals and families with
earnings; and
``(vi) members of Indian tribes or tribal
organizations.
``(D) Assistance for entire state.--The State plan
shall provide that benefits under this section shall be
available throughout the entire State.
``(E) Notice and hearings.--The State plan shall
provide that an individual or family who applies for,
or receives, assistance under this section shall be
provided with notice of, and an opportunity for a
hearing on, any action under this section that
adversely affects the individual or family.
``(F) Assessment of needs.--The State plan shall
assess the food and nutrition needs of needy persons
residing in the State.
``(G) Eligibility standards.--The State plan shall
describe the income, resource, and other eligibility
standards that are established for the receipt of
assistance under this section.
``(H) Disqualification of fleeing felons.--The
State plan shall provide for the disqualification of
any individual who would be disqualified from
participating in the food stamp program under section
6(k).
``(I) Receiving benefits in more than 1
jurisdiction.--The State plan shall establish a system
for the exchange of information with other States to
verify the identity and receipt of benefits by
recipients.
``(J) Privacy.--The State plan shall provide for
safeguarding and restricting the use and disclosure of
information about any individual or family receiving
assistance under this section.
``(K) Other information.--The State plan shall
contain such other information as may be required by
the Secretary.
``(4) Approval of application and plan.--The Secretary
shall approve an application and State plan that satisfies the
requirements of this section.
``(f) No Individual or Family Entitlement to Assistance.--Nothing
in this section--
``(1) entitles any individual or family to assistance under
this section; or
``(2) limits the right of a State to impose additional
limitations or conditions on assistance under this section.
``(g) Benefits for Aliens.--
``(1) Eligibility.--No individual who is an alien shall be
eligible to receive benefits under a State plan approved under
subsection (e)(4) if the individual is not eligible to
participate in the food stamp program due to the alien status
of the individual.
``(2) Income.--The State plan shall provide that the income
of an alien shall be determined in accordance with sections
5(i) and 6(f).
``(h) Employment and Training.--
``(1) Work requirements.--No individual or household shall
be eligible to receive benefits under a State plan funded under
this section if the individual or household is not eligible to
participate in the food stamp program under subsection (d) or
(o) of section 6.
``(2) Work programs.--Each State shall implement an
employment and training program in accordance with the terms
and conditions of section 6(d)(4) for individuals under the
program and shall be eligible to receive funding under section
16(h).
``(i) Enforcement.--
``(1) Review of compliance with state plan.--The Secretary
shall review and monitor State compliance with this section and
the State plan approved under subsection (e)(4).
``(2) Noncompliance.--
``(A) 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 State plan
approved under subsection (e)(4); or
``(ii) in the operation of any program or
activity 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 finding and
that no further grants will be made to the State under
this section (or, in the case of noncompliance in the
operation of a program or activity, that no further
grants to the State will be made with respect to the
program or activity) until the Secretary is satisfied
that there is no longer any failure to comply or that
the noncompliance will be promptly corrected.
``(B) Other penalties.--In the case of a finding of
noncompliance made pursuant to subparagraph (A), the
Secretary may, in addition to, or in lieu of, imposing
the penalties described in subparagraph (A), impose
other appropriate penalties, 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.
``(C) Notice.--The notice required under
subparagraph (A) shall include a specific
identification of any additional penalty being imposed
under subparagraph (B).
``(3) Issuance of regulations.--The Secretary shall
establish by regulation procedures for--
``(A) receiving, processing, and determining the
validity of complaints made to the Secretary concerning
any failure of a State to comply with the State plan or
any requirement of this section; and
``(B) imposing penalties under this section.
``(j) Grant.--
``(1) In general.--For each fiscal year, the Secretary
shall pay to a State that has an application approved by the
Secretary under subsection (e)(4) an amount that is equal to
the grant of the State under subsection (m) for the fiscal
year.
``(2) Method of grant.--The Secretary shall make a grant to
a State for a fiscal year under this section by issuing 1 or
more letters of credit for the fiscal year, with necessary
adjustments on account of overpayments or underpayments, as
determined by the Secretary.
``(3) Spending of grants by state.--
``(A) In general.--Except as provided in
subparagraph (B), a grant to a State determined under
subsection (m)(1) for a fiscal year may be expended by
the State only in the fiscal year.
``(B) Carryover.--The State may reserve up to 10
percent of a grant determined under subsection (m)(1)
for a fiscal year to provide assistance under this
section in subsequent fiscal years, except that the
reserved funds may not exceed 30 percent of the total
grant received under this section for a fiscal year.
``(4) Food assistance and administrative expenditures.--In
each fiscal year, not more than 6 percent of the Federal and
State funds required to be expended by a State under this
section shall be used for administrative expenses.
``(5) Provision of food assistance.--A State may provide
food assistance under this section in any manner determined
appropriate by the State, such as electronic benefit transfer
limited to food purchases, coupons limited to food purchases,
or direct provision of commodities.
``(k) Quality Control.--Each State participating in the program
established under this section shall maintain a system in accordance
with, and shall be subject to, section 16(c), including sanctions and
eligibility for incentive payment under section 16(c), adjusted for
State specific characteristics under regulations issued by the
Secretary.
``(l) Nondiscrimination.--
``(1) In general.--No person with responsibility for the
operation of a program, project, or activity under this section
may discriminate with respect to the program, project, or
activity because of race, religion, color, national origin,
sex, disability, or age.
``(2) Enforcement.--The powers, remedies, and procedures
set forth in title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d et seq.) may be used by the Secretary to enforce
paragraph (1).
``(m) Grant Calculation.--
``(1) State grant.--
``(A) In general.--Except as provided in this
paragraph, from the amounts made available under
section 18 for each fiscal year, the Secretary shall
provide a grant to each State participating in the
program established under this section an amount that
is equal to the sum of--
``(i) the greater of, as determined by the
Secretary--
``(I) the total dollar value of all
benefits issued under the food stamp
program established under this Act by
the State during fiscal year 1994; or
``(II) the average per fiscal year
of the total dollar value of all
benefits issued under the food stamp
program by the State during each of
fiscal years 1992 through 1994; and
``(ii) the greater of, as determined by the
Secretary--
``(I) the total amount received by
the State for administrative costs
under section 16(a) (not including any
adjustment under section 16(c)) for
fiscal year 1994; or
``(II) the average per fiscal year
of the total amount received by the
State for administrative costs under
section 16(a) (not including any
adjustment under section 16(c)) for
each of fiscal years 1992 through 1994.
``(B) Limitation for fiscal year 1997.--No grant to
a State that elects to receive funding under this
section for fiscal year 1997 shall exceed--
``(i) the sum of--
``(I) the amount of all benefits
issued under the food stamp program by
the State during fiscal year 1996; and
``(II) the amount received by the
State for administrative costs under
section 16(a) (not including any
adjustment under section 16(c)) for
fiscal year 1996; multiplied by
``(ii) the ratio (as projected by the
Director of the Congressional Budget Office in
the most recent estimate made prior to the date
of enactment of this section of the effects of
the Agricultural Reconciliation Act of 1996)
of--
``(I) the cost to the Secretary of
all benefits and administrative
reimbursements under the food stamp
program, as amended by the Agricultural
Reconciliation Act of 1996, for fiscal
year 1997; to
``(II) such costs and
reimbursements for fiscal year 1996.
``(C) Limitation after fiscal year 1997.--No grant
to a State that elects to receive funding under this
section for fiscal year 1998 or a subsequent fiscal
year shall exceed the cost to the Secretary of all
benefits and administrative reimbursements for the
State under the food stamp program for fiscal year
1997.
``(D) Insufficient funds.--If the Secretary finds
that the total amount of grants to which States would
otherwise be entitled for a fiscal year under this
paragraph will exceed the amount of funds that will be
made available to provide the grants for the fiscal
year, the Secretary shall reduce the grants made to
States under this subsection, on a pro rata basis, to
the extent necessary.
``(2) Reduction.--The Secretary shall reduce the grant of a
State by the amount a State has agreed to contribute under
subsection (c)(1)(C).''.
(b) Employment and Training Funding.--Section 16(h) of the Food
Stamp Act of 1977 (7 U.S.C. 2025(a)), as amended by section 1127(d)(2),
is amended by adding at the end the following:
``(6) Block grant states.--Each State electing to operate a
program under section 27 shall--
``(A) in lieu of payments under paragraph (1),
receive the greater of--
``(i) the total dollar value of the funds
received under paragraph (1) by the State for
fiscal year 1994; or
``(ii) the average per fiscal year of the
total dollar value of all funds received under
paragraph (1) by the State for each of fiscal
years 1992 through 1994; and
``(B) be eligible to receive funds under paragraph
(2), within the limitations established in section
6(d)(4)(K).''.
(c) Research on Optional State Food Assistance Block Grant.--
Section 17 of the Food Stamp Act of 1977 (7 U.S.C. 2026), as amended by
section 1163(c)(2), is amended by adding at the end the following:
``(l) Research on Optional State Food Assistance Block Grant.--The
Secretary may conduct research on the effects and costs of a State
program carried out under section 27.''.
CHAPTER 2--COMMODITY DISTRIBUTION PROGRAMS
SEC. 1171. EMERGENCY FOOD ASSISTANCE PROGRAM.
(a) Definitions.--Section 201A of the Emergency Food Assistance Act
of 1983 (Public Law 98-8; 7 U.S.C. 612c note) is amended to read as
follows:
``SEC. 201A. DEFINITIONS.
``In this Act:
``(1) Additional commodities.--The term `additional
commodities' means commodities made available under section 214
in addition to the commodities made available under sections
202 and 203D.
``(2) Average monthly number of unemployed persons.--The
term `average monthly number of unemployed persons' means the
average monthly number of unemployed persons in each State
during the most recent fiscal year for which information
concerning the number of unemployed persons is available, as
determined by the Bureau of Labor Statistics of the Department
of Labor.
``(3) Eligible recipient agency.--The term `eligible
recipient agency' means a public or nonprofit organization
that--
``(A) administers--
``(i) an emergency feeding organization;
``(ii) a charitable institution (including
a hospital and a retirement home, but excluding
a penal institution) to the extent that the
institution serves needy persons;
``(iii) a summer camp for children, or a
child nutrition program providing food service;
``(iv) a nutrition project operating under
the Older Americans Act of 1965 (42 U.S.C. 3001
et seq.), including a project that operates a
congregate nutrition site and a project that
provides home-delivered meals; or
``(v) a disaster relief program;
``(B) has been designated by the appropriate State
agency, or by the Secretary; and
``(C) has been approved by the Secretary for
participation in the program established under this
Act.
``(4) Emergency feeding organization.--The term `emergency
feeding organization' means a public or nonprofit organization
that administers activities and projects (including the
activities and projects of a charitable institution, a food
bank, a food pantry, a hunger relief center, a soup kitchen, or
a similar public or private nonprofit eligible recipient
agency) providing nutrition assistance to relieve situations of
emergency and distress through the provision of food to needy
persons, including low-income and unemployed persons.
``(5) Food bank.--The term `food bank' means a public or
charitable institution that maintains an established operation
involving the provision of food or edible commodities, or the
products of food or edible commodities, to food pantries, soup
kitchens, hunger relief centers, or other food or feeding
centers that, as an integral part of their normal activities,
provide meals or food to feed needy persons on a regular basis.
``(6) Food pantry.--The term `food pantry' means a public
or private nonprofit organization that distributes food to low-
income and unemployed households, including food from sources
other than the Department of Agriculture, to relieve situations
of emergency and distress.
``(7) Poverty line.--The term `poverty line' has the
meaning provided in section 673(2) of the Community Services
Block Grant Act (42 U.S.C. 9902(2)).
``(8) Soup kitchen.--The term `soup kitchen' means a public
or charitable institution that, as an integral part of the
normal activities of the institution, maintains an established
feeding operation to provide food to needy homeless persons on
a regular basis.
``(9) Total value of additional commodities.--The term
`total value of additional commodities' means the actual cost
of all additional commodities that are paid by the Secretary
(including the distribution and processing costs incurred by
the Secretary).
``(10) Value of additional commodities allocated to each
state.--The term `value of additional commodities allocated to
each State' means the actual cost of additional commodities
allocated to each State that are paid by the Secretary
(including the distribution and processing costs incurred by
the Secretary).''.
(b) State Plan.--Section 202A of the Emergency Food Assistance Act
of 1983 (Public Law 98-8; 7 U.S.C. 612c note) is amended to read as
follows:
``SEC. 202A. STATE PLAN.
``(a) In General.--To receive commodities under this Act, a State
shall submit a plan of operation and administration every 4 years to
the Secretary for approval. The plan may be amended at any time, with
the approval of the Secretary.
``(b) Requirements.--Each plan shall--
``(1) designate the State agency responsible for
distributing the commodities received under this Act;
``(2) set forth a plan of operation and administration to
expeditiously distribute commodities under this Act;
``(3) set forth the standards of eligibility for recipient
agencies; and
``(4) set forth the standards of eligibility for individual
or household recipients of commodities, which shall require--
``(A) individuals or households to be comprised of
needy persons; and
``(B) individual or household members to be
residing in the geographic location served by the
distributing agency at the time of applying for
assistance.
``(c) State Advisory Board.--The Secretary shall encourage each
State receiving commodities under this Act to establish a State
advisory board consisting of representatives of all entities in the
State, both public and private, interested in the distribution of
commodities received under this Act.''.
(c) Authorization of Appropriations for Administrative Funds.--
Section 204(a)(1) of the Emergency Food Assistance Act of 1983 (Public
Law 98-8; 7 U.S.C. 612c note) is amended--
(1) in the first sentence, by striking ``for State and
local'' and all that follows through ``under this title'' and
inserting ``to pay for the direct and indirect administrative
costs of the States related to the processing, transporting,
and distributing to eligible recipient agencies of commodities
provided by the Secretary under this Act and commodities
secured from other sources''; and
(2) by striking the fourth sentence.
(d) Delivery of Commodities.--Section 214 of the Emergency Food
Assistance Act of 1983 (Public Law 98-8; 7 U.S.C. 612c note) is
amended--
(1) by striking subsections (a) through (e) and (j);
(2) by redesignating subsections (f) through (i) as
subsections (a) through (d), respectively;
(3) in subsection (b), as redesignated by paragraph (2)--
(A) in the first sentence, by striking ``subsection
(f) or subsection (j) if applicable,'' and inserting
``subsection (a),''; and
(B) in the second sentence, by striking
``subsection (f)'' and inserting ``subsection (a)'';
(4) by striking subsection (c), as redesignated by
paragraph (2), and inserting the following:
``(c) Administration.--
``(1) In general.--Commodities made available for each
fiscal year under this section shall be delivered at reasonable
intervals to States based on the grants calculated under
subsection (a), or reallocated under subsection (b), before
December 31 of the following fiscal year.
``(2) Entitlement.--Each State shall be entitled to receive
the value of additional commodities determined under subsection
(a).''; and
(5) in subsection (d), as redesignated by paragraph (2), by
striking ``or reduce'' and all that follows through ``each
fiscal year''.
(e) Technical Amendments.--The Emergency Food Assistance Act of
1983 (Public Law 98-8; 7 U.S.C. 612c note) is amended--
(1) in the first sentence of section 203B(a), by striking
``203 and 203A of this Act'' and inserting ``203A'';
(2) in section 204(a), by striking ``title'' each place it
appears and inserting ``Act'';
(3) in the first sentence of section 210(e), by striking
``(except as otherwise provided for in section 214(j))''; and
(4) by striking section 212.
(f) Report on EFAP.--Section 1571 of the Food Security Act of 1985
(Public Law 99-198; 7 U.S.C. 612c note) is repealed.
(g) Availability of Commodities Under the Food Stamp Program.--The
Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), as amended by section
1164(a), is amended by adding at the end the following:
``SEC. 28. AVAILABILITY OF COMMODITIES FOR THE EMERGENCY FOOD
ASSISTANCE PROGRAM.
``(a) Purchase of Commodities.--From amounts appropriated under
this Act, for each of fiscal years 1997 through 2002, the Secretary
shall purchase $100,000,000 of a variety of nutritious and useful
commodities of the types that the Secretary has the authority to
acquire through the Commodity Credit Corporation or under section 32 of
the Act entitled `An Act to amend the Agricultural Adjustment Act, and
for other purposes', approved August 24, 1935 (7 U.S.C. 612c), and
distribute the commodities to States for distribution in accordance
with section 214 of the Emergency Food Assistance Act of 1983 (Public
Law 98-8; 7 U.S.C. 612c note).
``(b) Basis for Commodity Purchases.--In purchasing commodities
under subsection (a), the Secretary shall, to the extent practicable
and appropriate, make purchases based on--
``(1) agricultural market conditions;
``(2) preferences and needs of States and distributing
agencies; and
``(3) preferences of recipients.''.
(h) Effective Date.--The amendments made by subsection (d) shall
become effective on October 1, 1996.
SEC. 1172. FOOD BANK DEMONSTRATION PROJECT.
Section 3 of the Charitable Assistance and Food Bank Act of 1987
(Public Law 100-232; 7 U.S.C. 612c note) is repealed.
SEC. 1173. HUNGER PREVENTION PROGRAMS.
The Hunger Prevention Act of 1988 (Public Law 100-435; 7 U.S.C.
612c note) is amended--
(1) by striking section 110;
(2) by striking subtitle C of title II; and
(3) by striking section 502.
SEC. 1174. REPORT ON ENTITLEMENT COMMODITY PROCESSING.
Section 1773 of the Food, Agriculture, Conservation, and Trade Act
of 1990 (Public Law 101-624; 7 U.S.C. 612c note) is amended by striking
subsection (f).
Subtitle B--Child Nutrition Programs
CHAPTER 1--AMENDMENTS TO THE NATIONAL SCHOOL LUNCH ACT
SEC. 1201. STATE DISBURSEMENT TO SCHOOLS.
(a) In General.--Section 8 of the National School Lunch Act (42
U.S.C. 1757) is amended--
(1) in the third sentence, by striking ``Nothing'' and all
that follows through ``educational agency to'' and inserting
``The State educational agency may'';
(2) by striking the fourth and fifth sentences;
(3) by redesignating the first through seventh sentences,
as amended by paragraph (2), as subsections (a) through (g),
respectively;
(4) in subsection (b), as redesignated by paragraph (3), by
striking ``the preceding sentence'' and inserting ``subsection
(a)''; and
(5) in subsection (d), as redesignated by paragraph (3), by
striking ``Such food costs'' and inserting ``Use of funds paid
to States''.
(b) Definition of Child.--Section 12(d) of the National School
Lunch Act (42 U.S.C. 1760(d)) is amended by adding at the end the
following:
``(9) Child.--
``(A) In general.--The term `child' includes an
individual, regardless of age, who--
``(i) is determined by a State educational
agency, in accordance with regulations
prescribed by the Secretary, to have 1 or more
mental or physical disabilities; and
``(ii) is attending any institution, as
defined in section 17(a), or any nonresidential
public or nonprofit private school of high
school grade or under, for the purpose of
participating in a school program established
for individuals with mental or physical
disabilities.
``(B) Relationship to child and adult care food
program.--No institution that is not otherwise eligible
to participate in the program under section 17 shall be
considered eligible because of this paragraph.''.
SEC. 1202. NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS.
(a) Nutritional Standards.--Section 9(a) of the National School
Lunch Act (42 U.S.C. 1758(a)) is amended--
(1) in paragraph (2)--
(A) by striking ``(2)(A) Lunches'' and inserting
``(2) Lunches'';
(B) by striking subparagraph (B); and
(C) by redesignating clauses (i) and (ii) as
subparagraphs (A) and (B), respectively;
(2) by striking paragraph (3); and
(3) by redesignating paragraph (4) as paragraph (3).
(b) Eligibility Guidelines.--Section 9(b) of the National School
Lunch Act (42 U.S.C. 1758(b)) is amended--
(1) in paragraph (2)--
(A) by striking subparagraph (A); and
(B) by redesignating subparagraphs (B) and (C) as
subparagraphs (A) and (B), respectively;
(2) in paragraph (5), by striking the third sentence; and
(3) in paragraph (6)(B), by striking ``paragraph (2)(C)''
and inserting ``paragraph (2)(B)''.
(c) Utilization of Agricultural Commodities.--Section 9(c) of the
National School Lunch Act (42 U.S.C. 1758(c)) is amended--
(1) in the fifth sentence, by striking ``of the provisions
of law referred to in the preceding sentence'' and inserting
``provision of law''; and
(2) by striking the second, fourth, and sixth sentences.
(d) Conforming Amendment.--The last sentence of section 9(d)(1) of
the National School Lunch Act (42 U.S.C. 1758(d)(1)) is amended by
striking ``subsection (b)(2)(C)'' and inserting ``subsection
(b)(2)(B)''.
(e) Nutritional Information.--Section 9(f) of the National School
Lunch Act (42 U.S.C. 1758(f)) is amended--
(1) by striking paragraph (1);
(2) by striking ``(2)'';
(3) by redesignating subparagraphs (A) through (D) as
paragraphs (1) through (4), respectively;
(4) by striking paragraph (1), as redesignated by paragraph
(3), and inserting the following:
``(1) Nutritional requirements.--Except as provided in
paragraph (2), not later than the first day of the 1996-1997
school year, each school that is participating in the school
lunch or school breakfast program shall serve lunches and
breakfasts under the program that--
``(A) are consistent with the goals of the most
recent Dietary Guidelines for Americans published under
section 301 of the National Nutrition Monitoring and
Related Research Act of 1990 (7 U.S.C. 5341); and
``(B) provide, on the average over each week, at
least--
``(i) with respect to school lunches, \1/3\
of the daily recommended dietary allowance
established by the Food and Nutrition Board of
the National Research Council of the National
Academy of Sciences; and
``(ii) with respect to school breakfasts,
\1/4\ of the daily recommended dietary
allowance established by the Food and Nutrition
Board of the National Research Council of the
National Academy of Sciences.'';
(5) in paragraph (3), as redesignated by paragraph (3)--
(A) by redesignating clauses (i) and (ii) as
subparagraphs (A) and (B), respectively; and
(B) in subparagraph (A), as so redesignated, by
redesignating subclauses (I) and (II) as clauses (i)
and (ii), respectively; and
(6) in paragraph (4), as redesignated by paragraph (3)--
(A) by redesignating clauses (i) and (ii) as
subparagraphs (A) and (B), respectively; and
(B) in subparagraph (A), as so redesignated--
(i) by redesignating subclauses (I) and
(II) as clauses (i) and (ii), respectively; and
(ii) in clause (ii), as so redesignated, by
striking ``subparagraph (C)'' and inserting
``paragraph (3)''.
(f) Use of Resources.--Section 9 of the National School Lunch Act
(42 U.S.C. 1758) is amended by striking subsection (h).
SEC. 1203. FREE AND REDUCED PRICE POLICY STATEMENT.
Section 9(b)(2) of the National School Lunch Act (42 U.S.C.
1758(b)(2)), as amended by section 1202(b)(1), is amended by adding at
the end the following:
``(C) Free and reduced price policy statement.--
After the initial submission, a school food authority
shall not be required to submit a free and reduced
price policy statement to a State educational agency
under this Act unless there is a substantive change in
the free and reduced price policy of the school food
authority. A routine change in the policy of a school
food authority, such as an annual adjustment of the
income eligibility guidelines for free and reduced
price meals, shall not be sufficient cause for
requiring the school food authority to submit a policy
statement.''.
SEC. 1204. SPECIAL ASSISTANCE.
(a) Extension of Payment Period.--Section 11(a)(1)(D)(i) of the
National School Lunch Act (42 U.S.C. 1759a(a)(1)(D)(i)) is amended by
striking ``, on the date of enactment of this subparagraph,''.
(b) Applicability of Other Provisions.--Section 11 of the National
School Lunch Act (42 U.S.C. 1759a) is amended--
(1) by striking subsection (d);
(2) in subsection (e)(2)--
(A) by striking ``The'' and inserting ``On request
of the Secretary, the''; and
(B) by striking ``each month''; and
(3) by redesignating subsections (e) and (f) as subsections
(d) and (e), respectively.
SEC. 1205. MISCELLANEOUS PROVISIONS AND DEFINITIONS.
(a) Accounts and Records.--The second sentence of section 12(a) of
the National School Lunch Act (42 U.S.C. 1760(a)) is amended by
striking ``at all times be available'' and inserting ``be available at
any reasonable time''.
(b) Restriction on Requirements.--Section 12(c) of the National
School Lunch Act (42 U.S.C. 1760(c)) is amended by striking ``neither
the Secretary nor the State shall'' and inserting ``the Secretary shall
not''.
(c) Definitions.--Section 12(d) of the National School Lunch Act
(42 U.S.C. 1760(d)), as amended by section 1201(b), is amended--
(1) in paragraph (1), by striking ``the Trust Territory of
the Pacific Islands'' and inserting ``the Commonwealth of the
Northern Mariana Islands'';
(2) by striking paragraphs (3) and (4); and
(3) by redesignating paragraphs (1), (2), and (5) through
(9) as paragraphs (6), (7), (3), (4), (2), (5), and (1),
respectively, and rearranging the paragraphs so as to appear in
numerical order.
(d) Adjustments to National Average Payment Rates.--Section 12(f)
of the National School Lunch Act (42 U.S.C. 1760(f)) is amended by
striking ``the Trust Territory of the Pacific Islands,''.
(e) Expedited Rulemaking.--Section 12(k) of the National School
Lunch Act (42 U.S.C. 1760(k)) is amended--
(1) by striking paragraphs (1), (2), and (5); and
(2) by redesignating paragraphs (3) and (4) as paragraphs
(1) and (2), respectively.
(f) Waiver.--Section 12(l) of the National School Lunch Act (42
U.S.C. 1760(l)) is amended--
(1) in paragraph (2)(A)--
(A) in clause (iii), by adding ``and'' at the end;
(B) in clause (iv), by striking the semicolon at
the end and inserting a period; and
(C) by striking clauses (v) through (vii);
(2) in paragraph (3)--
(A) in subparagraph (A), by striking ``(A)''; and
(B) by striking subparagraphs (B) through (D);
(3) in paragraph (4)--
(A) in the matter preceding subparagraph (A), by
striking ``of any requirement relating'' and inserting
``that increases Federal costs or that relates'';
(B) by striking subparagraph (D);
(C) by redesignating subparagraphs (E) through (N)
as subparagraphs (D) through (M), respectively; and
(D) in subparagraph (L), as redesignated by
subparagraph (C), by striking ``and'' at the end and
inserting ``or''; and
(4) in paragraph (6)--
(A) by striking ``(A)(i)'' and all that follows
through ``(B)''; and
(B) by redesignating clauses (i) through (iv) as
subparagraphs (A) through (D), respectively.
(g) Food and Nutrition Projects.--Section 12 of the National School
Lunch Act (42 U.S.C. 1760) is amended by striking subsection (m).
(h) Simplified Administration of School Meal and Other Nutrition
Programs.--Section 12 of the National School Lunch Act (42 U.S.C.
1760), as amended by subsection (g), is amended by adding at the end
the following:
``(m) Simplified Administration of School Meal and Other Nutrition
Programs.--Notwithstanding any other provision of law, no assistance or
benefits provided under the programs established under the following
provisions of law shall be contingent on the citizenship or immigration
status of any applicant or recipient:
``(1) This Act.
``(2) The Child Nutrition Act of 1966 (42 U.S.C. 1771 et
seq.);
``(3) Section 4 of the Agriculture and Consumer Protection
Act of 1973 (Public Law 93-86; 7 U.S.C. 612c note).
``(4) The Emergency Food Assistance Act of 1983 (Public Law
98-8; 7 U.S.C. 612c note).
``(5) The food distribution program on Indian reservations
established under section 4(b) of Public Law 88-525 (7 U.S.C.
2013(b)).''.
SEC. 1206. SUMMER FOOD SERVICE PROGRAM FOR CHILDREN.
(a) Establishment of Program.--Section 13(a) of the National School
Lunch Act (42 U.S.C. 1761(a)) is amended--
(1) in paragraph (1)--
(A) in the first sentence, by striking ``initiate,
maintain, and expand'' and inserting ``initiate and
maintain''; and
(B) in subparagraph (E) of the second sentence, by
striking ``the Trust Territory of the Pacific
Islands,''; and
(2) in paragraph (7)(A), by striking ``Except as provided
in subparagraph (C), private'' and inserting ``Private''.
(b) Service Institutions.--Section 13(b) of the National School
Lunch Act (42 U.S.C. 1761(b)) is amended by striking ``(b)(1)'' and all
that follows through the end of paragraph (1) and inserting the
following:
``(b) Service Institutions.--
``(1) Payments.--
``(A) In general.--Except as otherwise provided in
this paragraph, payments to service institutions shall
equal the full cost of food service operations (which
cost shall include the costs of obtaining, preparing,
and serving food, but shall not include administrative
costs).
``(B) Maximum amounts.--Subject to subparagraph
(C), payments to any institution under subparagraph (A)
shall not exceed--
``(i) $1.93 for each lunch and supper
served;
``(ii) $1.13 for each breakfast served; and
``(iii) 46 cents for each meal supplement
served.
``(C) Adjustments.--Amounts specified in
subparagraph (B) shall be adjusted on January 1, 1997,
and each January 1 thereafter, to the nearest lower
cent increment to reflect changes for the 12-month
period ending the preceding November 30 in the series
for food away from home of the Consumer Price Index for
All Urban Consumers published by the Bureau of Labor
Statistics of the Department of Labor. Each adjustment
shall be based on the unrounded adjustment for the
prior 12-month period.''.
(c) Administration of Service Institutions.--Section 13(b)(2) of
the National School Lunch Act (42 U.S.C. 1761(b)(2)) is amended--
(1) in the first sentence, by striking ``four meals'' and
inserting ``3 meals, or 2 meals and 1 supplement,''; and
(2) by striking the second sentence.
(d) Reimbursements.--Section 13(c)(2) of the National School Lunch
Act (42 U.S.C. 1761(c)(2)) is amended--
(1) by striking subparagraphs (A), (C), (D), and (E);
(2) by striking ``(B)'';
(3) by striking ``, and such higher education
institutions,''; and
(4) by striking ``without application'' and inserting
``upon showing residence in areas in which poor economic
conditions exist or on the basis of income eligibility
statements for children enrolled in the program''.
(e) Advance Program Payments.--Section 13(e)(1) of the National
School Lunch Act (42 U.S.C. 1761(e)(1)) is amended--
(1) by striking ``institution: Provided, That (A) the'' and
inserting ``institution. The'';
(2) by inserting ``(excluding a school)'' after ``any
service institution''; and
(3) by striking ``responsibilities, and (B) no'' and
inserting ``responsibilities. No''.
(f) Food Requirements.--Section 13(f) of the National School Lunch
Act (42 U.S.C. 1761(f)) is amended--
(1) by redesignating the first through seventh sentences as
paragraphs (1) through (7), respectively;
(2) by striking paragraph (3), as redesignated by paragraph
(1);
(3) in paragraph (4), as redesignated by paragraph (1), by
striking ``the first sentence'' and inserting ``paragraph
(1)'';
(4) in subparagraph (B) of paragraph (6), as redesignated
by paragraph (1), by striking ``that bacteria levels'' and all
that follows through the period at the end and inserting
``conformance with standards set by local health
authorities.''; and
(5) by redesignating paragraphs (4) through (7), as
redesignated by paragraph (1), as paragraphs (3) through (6),
respectively.
(g) Permitting Offer Versus Serve.--Section 13(f) of the National
School Lunch Act (42 U.S.C. 1761(f)), as amended by subsection (f), is
amended by adding at the end the following:
``(7) Offer versus serve.--A school food authority
participating as a service institution may permit a child
attending a site on school premises operated directly by the
authority to refuse 1 or more items of a meal that the child
does not intend to consume, under rules that the school uses
for school meals programs. A refusal of an offered food item
shall not affect the amount of payments made under this section
to a school for the meal.''.
(h) Food Service Management Companies.--Section 13(l) of the
National School Lunch Act (42 U.S.C. 1761(l)) is amended--
(1) by striking paragraph (4);
(2) in paragraph (5), by striking the first sentence; and
(3) by redesignating paragraph (5) as paragraph (4).
(i) Records.--The second sentence of section 13(m) of the National
School Lunch Act (42 U.S.C. 1761(m)) is amended by striking ``at all
times be available'' and inserting ``be available at any reasonable
time''.
(j) Removing Mandatory Notice to Institutions.--Section 13(n)(2) of
the National School Lunch Act (42 U.S.C. 1761(n)(2)) is amended by
striking ``, and its plans and schedule for informing service
institutions of the availability of the program''.
(k) Plan.--Section 13(n) of the National School Lunch Act (42
U.S.C. 1761(n)) is amended--
(1) in paragraph (2), by striking ``including the State's
methods of assessing need,'';
(2) by striking paragraph (3);
(3) in paragraph (4), by striking ``and schedule''; and
(4) by redesignating paragraphs (4) through (7) as
paragraphs (3) through (6), respectively.
(l) Monitoring and Training.--Section 13(q) of the National School
Lunch Act (42 U.S.C. 1761(q)) is amended--
(1) by striking paragraphs (2) and (4);
(2) in paragraph (3), by striking ``paragraphs (1) and (2)
of this subsection'' and inserting ``paragraph (1)''; and
(3) by redesignating paragraph (3) as paragraph (2).
(m) Expired Program.--Section 13 of the National School Lunch Act
(42 U.S.C. 1761) is amended--
(1) by striking subsection (p); and
(2) by redesignating subsections (q) and (r) as subsections
(p) and (q), respectively.
(n) Effective Date.--The amendments made by subsection (b) shall
become effective on January 1, 1997.
SEC. 1207. COMMODITY DISTRIBUTION.
(a) Cereal and Shortening in Commodity Donations.--Section 14(b) of
the National School Lunch Act (42 U.S.C. 1762a(b)) is amended--
(1) by striking paragraph (1); and
(2) by redesignating paragraphs (2) and (3) as paragraphs
(1) and (2), respectively.
(b) Impact Study and Purchasing Procedures.--Section 14(d) of the
National School Lunch Act (42 U.S.C. 1762a(d)) is amended by striking
the second and third sentences.
(c) Advisory Council.--Section 14(e) of the National School Lunch
Act (42 U.S.C. 1762a(e)) is amended by striking ``educational''.
(d) Cash Compensation for Pilot Project Schools.--Section 14(g) of
the National School Lunch Act (42 U.S.C. 1762a(g)) is amended by
striking paragraph (3).
SEC. 1208. CHILD AND ADULT CARE FOOD PROGRAM.
(a) Establishment of Program.--Section 17 of the National School
Lunch Act (42 U.S.C. 1766) is amended in the first sentence of
subsection (a), by striking ``initiate, maintain, and expand'' and
inserting ``initiate and maintain''.
(b) Payments to Sponsor Employees.--Paragraph (2) of the last
sentence of section 17(a) of the National School Lunch Act (42 U.S.C.
1766(a)) is amended--
(1) in subparagraph (B), by striking ``and'' at the end;
(2) in subparagraph (C), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following:
``(D) in the case of a family or group day care
home sponsoring organization that employs more than 1
employee, the organization does not base payments to an
employee of the organization on the number of family or
group day care homes recruited.''.
(c) Technical Assistance.--The last sentence of section 17(d)(1) of
the National School Lunch Act (42 U.S.C. 1766(d)(1)) is amended by
striking ``, and shall provide technical assistance'' and all that
follows through ``its application''.
(d) Reimbursement of Child Care Institutions.--Section 17(f)(2)(B)
of the National School Lunch Act (42 U.S.C. 1766(f)(2)(B)) is amended
by striking ``two meals and two supplements or three meals and one
supplement'' and inserting ``2 meals and 1 supplement''.
(e) Improved Targeting of Day Care Home Reimbursements.--
(1) Restructured day care home reimbursements.--Section
17(f)(3) of the National School Lunch Act (42 U.S.C.
1766(f)(3)) is amended by striking ``(3)(A) Institutions'' and
all that follows through the end of subparagraph (A) and
inserting the following:
``(3) Reimbursement of family or group day care home
sponsoring organizations.--
``(A) Reimbursement factor.--
``(i) In general.--An institution that
participates in the program under this section
as a family or group day care home sponsoring
organization shall be provided, for payment to
a home sponsored by the organization,
reimbursement factors 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) Tier i family or group day care
homes.--
``(I) Definition of tier i family
or group day care home.--In this
paragraph, the term `tier I family or
group day care home' means--
``(aa) a family or group
day care home that is located
in a geographic area, as
defined by the Secretary based
on census data, in which at
least 50 percent of the
children residing in the area
are members of households whose
incomes meet the income
eligibility guidelines for free
or reduced price meals under
section 9;
``(bb) a family or group
day care home that is located
in an area served by a school
enrolling elementary students
in which at least 50 percent of
the total number of children
enrolled are certified eligible
to receive free or reduced
price school meals under this
Act or the Child Nutrition Act
of 1966 (42 U.S.C. 1771 et
seq.); or
``(cc) a family or group
day care home that is operated
by a provider whose household
meets the income eligibility
guidelines for free or reduced
price meals under section 9 and
whose income is verified by the
sponsoring or organization of
the home under regulations
established by the Secretary.
``(II) Reimbursement.--Except as
provided in subclause (III), a tier I
family or group day care home shall be
provided reimbursement factors under
this clause without a requirement for
documentation of the costs described in
clause (i), except that reimbursement
shall not be provided under this
subclause for meals or supplements
served to the children of a person
acting as a family or group day care
home provider unless the children meet
the income eligibility guidelines for
free or reduced price meals under
section 9.
``(III) Factors.--Except as
provided in subclause (IV), the
reimbursement factors applied to a home
referred to in subclause (II) shall be
the factors in effect on July 1, 1996.
``(IV) Adjustments.--The
reimbursement factors under this
subparagraph shall be adjusted on July
1, 1997, and each July 1 thereafter, to
reflect changes in the Consumer Price
Index for food at home for the most
recent 12-month period for which the
data are available. The reimbursement
factors under this subparagraph shall
be rounded to the nearest lower cent
increment and based on the unrounded
adjustment in effect on June 30 of the
preceding school year.
``(iii) Tier ii family or group day care
homes.--
``(I) In general.--
``(aa) Factors.--Except as
provided 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)(I), the
reimbursement factors shall be
$1 for lunches and suppers, 30
cents for breakfasts, and 15
cents for supplements.
``(bb) Adjustments.--The
factors shall be adjusted on
July 1, 1997, and each July 1
thereafter, to reflect changes
in the Consumer Price Index for
food at home for the most
recent 12-month period for
which the data are available.
The reimbursement factors under
this item shall be rounded down
to the nearest lower cent
increment and based on the
unrounded adjustment for the
preceding 12-month period.
``(cc) Reimbursement.--A
family or group day care home
shall be provided reimbursement
factors under this subclause
without a requirement for
documentation of the costs
described in clause (i), except
that reimbursement shall not be
provided under this subclause
for meals or supplements served
to the children of a person
acting as a family or group day
care home provider unless the
children meet the income
eligibility guidelines for free
or reduced price meals under
section 9.
``(II) Other factors.--A family or
group day care home that does not meet
the criteria set forth in clause
(ii)(I) may elect to be provided
reimbursement factors determined in
accordance with the following
requirements:
``(aa) Children eligible
for free or reduced price
meals.--In the case of meals or
supplements served under this
subsection to children who are
members of households whose
incomes meet the income
eligibility guidelines for free
or reduced price meals under
section 9, the family or group
day care home shall be provided
reimbursement factors set by
the Secretary in accordance
with clause (ii)(III).
``(bb) Ineligible
children.--In the case of meals
or supplements served under
this subsection to children who
are members of households whose
incomes do not meet the income
eligibility guidelines, the
family or group day care home
shall be provided reimbursement
factors in accordance with
subclause (I).
``(III) Information and
determinations.--
``(aa) In general.--If a
family or group day care home
elects to claim the factors
described in subclause (II),
the family or group day care
home sponsoring organization
serving the home shall collect
the necessary income
information, as determined by
the Secretary, from any parent
or other caretaker to make the
determinations specified in
subclause (II) and shall make
the determinations in
accordance with rules
prescribed by the Secretary.
``(bb) Categorical
eligibility.--In making a
determination under item (aa),
a family or group day care home
sponsoring organization may
consider a child participating
in or subsidized under, or a
child with a parent
participating in or subsidized
under, a federally or State
supported child care or other
benefit program with an income
eligibility limit that does not
exceed the eligibility standard
for free or reduced price meals
under section 9 to be a child
who is a member of a household
whose income meets the income
eligibility guidelines under
section 9.
``(cc) Factors for children
only.--A family or group day
care home may elect to receive
the reimbursement factors prescribed under clause (ii)(III) solely for
the children participating in a program referred to in item (bb) if the
home elects not to have income statements collected from parents or
other caretakers.
``(IV) Simplified meal counting and
reporting procedures.--The Secretary
shall prescribe simplified meal
counting and reporting procedures for
use by a family or group day care home
that elects to claim the factors under
subclause (II) and by a family or group
day care home sponsoring organization
that sponsors the home. The procedures
the Secretary prescribes may include 1
or more of the following:
``(aa) Setting an annual
percentage for each home of the
number of meals served that are
to be reimbursed in accordance
with the reimbursement factors
prescribed under clause
(ii)(III) and an annual
percentage of the number of
meals served that are to be
reimbursed in accordance with
the reimbursement factors
prescribed under subclause (I),
based on the family income of
children enrolled in the home
in a specified month or other
period.
``(bb) Placing a home into
1 of 2 or more reimbursement
categories annually based on
the percentage of children in
the home whose households have
incomes that meet the income
eligibility guidelines under
section 9, with each such
reimbursement category carrying
a set of reimbursement factors
such as the factors prescribed
under clause (ii)(III) or
subclause (I) or factors
established within the range of
factors prescribed under clause
(ii)(III) and subclause (I).
``(cc) Such other
simplified procedures as the
Secretary may prescribe.
``(V) Minimum verification
requirements.--The Secretary may
establish any minimum verification
requirements that are necessary to
carry out this clause.''.
(2) Grants to states to provide assistance to family or
group day care homes.--Section 17(f)(3) of the National School
Lunch Act (42 U.S.C. 1766(f)(3)) is amended by adding at the
end the following:
``(D) Grants to states to provide assistance to
family or group day care homes.--
``(i) In general.--
``(I) Reservation.--From amounts
made available to carry out this
section, the Secretary shall reserve
$5,000,000 of the amount made available
for fiscal year 1997.
``(II) Purpose.--The Secretary
shall use the funds made available
under subclause (I) to provide grants
to States for the purpose of
providing--
``(aa) assistance,
including grants, to family and
day care home sponsoring
organizations and other
appropriate organizations, in
securing and providing
training, materials, automated
data processing assistance, and
other assistance for the staff
of the sponsoring
organizations; and
``(bb) training and other
assistance to family and group
day care homes in the
implementation of the amendment
to subparagraph (A) made by
section 1208(e)(1) of the
Agricultural Reconciliation Act
of 1996.
``(ii) Allocation.--The Secretary shall
allocate from the funds reserved under clause
(i)(I)--
``(I) $30,000 in base funding to
each State; and
``(II) any remaining amount among
the States, based on the number of
family day care homes participating in
the program in a State during fiscal
year 1995 as a percentage of the number
of all family day care homes
participating in the program during
fiscal year 1995.
``(iii) Retention of funds.--Of the amount
of funds made available to a State for fiscal
year 1997 under clause (i), the State may
retain not to exceed 30 percent of the amount
to carry out this subparagraph.
``(iv) Additional payments.--Any payments
received under this subparagraph shall be in
addition to payments that a State receives
under subparagraph (A).''.
(3) Provision of data.--Section 17(f)(3) of the National
School Lunch Act (42 U.S.C. 1766(f)(3)), as amended by
paragraph (2), is amended by adding at the end the following:
``(E) Provision of data to family or group day care
home sponsoring organizations.--
``(i) Census data.--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 survey or other appropriate census
survey for which the data are available showing
which areas in the State meet the requirements
of subparagraph (A)(ii)(I)(aa). The State
agency shall provide the data to family or
group day care home sponsoring organizations
located in the State.
``(ii) School data.--
``(I) In general.--A State agency
administering the school lunch program
under this Act or the school breakfast
program under the Child Nutrition Act
of 1966 (42 U.S.C. 1771 et seq.) shall
provide to approved family or group day
care home sponsoring organizations a
list of schools serving elementary
school children in the State in which
not less than \1/2\ of the children
enrolled are certified to receive free
or reduced price meals. The State
agency shall collect the data necessary
to create the list annually and provide
the list on a timely basis to any
approved family or group day care home
sponsoring organization that requests
the list.
``(II) Use of data from preceding
school year.--In determining for a
fiscal year or other annual period
whether a home qualifies as a tier I
family or group day care home under
subparagraph (A)(ii)(I), the State
agency administering the program under
this section, and a family or group day
care home sponsoring organization,
shall use the most current available
data at the time of the determination.
``(iii) Duration of determination.--For
purposes of this section, a determination that
a family or group day care home is located in
an area that qualifies the home as a tier I
family or group day care home (as the term is
defined in subparagraph (A)(ii)(I)), shall be
in effect for 3 years (unless the determination
is made on the basis of census data, in which
case the determination shall remain in effect
until more recent census data are available)
unless the State agency determines that the
area in which the home is located no longer
qualifies the home as a tier I family or group
day care home.''.
(4) Conforming amendments.--Section 17(c) of the National
School Lunch Act (42 U.S.C. 1766(c)) is amended by inserting
``except as provided in subsection (f)(3),'' after ``For
purposes of this section,'' each place it appears in paragraphs
(1), (2), and (3).
(f) Reimbursement.--Section 17(f) of the National School Lunch Act
(42 U.S.C. 1766(f)) is amended--
(1) in paragraph (3)--
(A) in subparagraph (B), by striking the third and
fourth sentences; and
(B) in subparagraph (C)(ii), by striking ``conduct
outreach'' and all that follows through ``may become''
and inserting ``assist unlicensed family or group day
care homes in becoming''; and
(2) in the first sentence of paragraph (4), by striking
``shall'' and inserting ``may''.
(g) Nutritional Requirements.--Section 17(g)(1) of the National
School Lunch Act (42 U.S.C. 1766(g)(1)) is amended--
(1) in subparagraph (A), by striking the second sentence;
and
(2) in subparagraph (B), by striking the second sentence.
(h) Elimination of State Paperwork and Outreach Burden.--Section 17
of the National School Lunch Act (42 U.S.C. 1766) is amended by
striking subsection (k) and inserting the following:
``(k) Training and Technical Assistance.--A State participating in
the program established under this section shall provide sufficient
training, technical assistance, and monitoring to facilitate effective
operation of the program. The Secretary shall assist the State in
developing plans to fulfill the requirements of this subsection.''.
(i) Records.--The second sentence of section 17(m) of the National
School Lunch Act (42 U.S.C. 1766(m)) is amended by striking ``at all
times'' and inserting ``at any reasonable time''.
(j) Information for Parents.--Section 17 of the National School
Lunch Act (42 U.S.C. 1766) is amended by striking subsection (q) and
inserting the following:
``(q) Information for Parents.--The State agency shall ensure that,
at least once a year, child care institutions provide written
information to parents that includes--
``(1) basic information on the benefits of the special
supplemental nutrition program for women, infants, and children
authorized under section 17 of the Child Nutrition Act of 1966
(42 U.S.C. 1786);
``(2) information on the maximum income limits, according
to family size, applicable to the program; and
``(3) information on where parents may apply to participate
in the program.''.
(k) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall become effective on the
date of enactment of this Act.
(2) Improved targeting of day care home reimbursements.--
The amendments made by paragraphs (1) and (4) of subsection (e)
shall become effective on July 1, 1997.
(3) Regulations.--
(A) Interim regulations.--Not later than January 1,
1997, the Secretary of Agriculture shall issue interim
regulations to implement--
(i) the amendments made by paragraphs (1),
(3), and (4) of subsection (e); and
(ii) section 17(f)(3)(C) of the National
School Lunch Act (42 U.S.C. 1766(f)(3)(C)).
(B) Final regulations.--Not later than July 1,
1997, the Secretary of Agriculture shall issue final
regulations to implement the provisions of law referred
to in subparagraph (A).
(l) Study of Impact of Amendments on Program Participation and
Family Day Care Licensing.--
(1) In general.--The Secretary of Agriculture, in
conjunction with the Secretary of Health and Human Services,
shall study the impact of the amendments made by this section
on--
(A) the number of family day care homes
participating in the child and adult care food program
established under section 17 of the National School
Lunch Act (42 U.S.C. 1766);
(B) the number of day care home sponsoring
organizations participating in the program;
(C) the number of day care homes that are licensed,
certified, registered, or approved by each State in
accordance with regulations issued by the Secretary;
(D) the rate of growth of the numbers referred to
in subparagraphs (A) through (C);
(E) the nutritional adequacy and quality of meals
served in family day care homes that--
(i) received reimbursement under the
program prior to the amendments made by this
section but do not receive reimbursement after
the amendments made by this section; or
(ii) received full reimbursement under the
program prior to the amendments made by this
section but do not receive full reimbursement
after the amendments made by this section; and
(F) the proportion of low-income children
participating in the program prior to the amendments
made by this section and the proportion of low-income
children participating in the program after the
amendments made by this section.
(2) Required data.--Each State agency participating in the
child and adult care food program under section 17 of the
National School Lunch Act (42 U.S.C. 1766) shall submit to the
Secretary of Agriculture data on--
(A) the number of family day care homes
participating in the program on June 30, 1997, and June
30, 1998;
(B) the number of family day care homes licensed,
certified, registered, or approved for service on June
30, 1997, and June 30, 1998; and
(C) such other data as the Secretary may require to
carry out this subsection.
(3) Submission of report.--Not later than 2 years after the
date of enactment of this section, the Secretary of Agriculture
shall submit the study required under this subsection to the
Committee on Economic and Educational Opportunities of the
House of Representatives and the Committee on Agriculture,
Nutrition, and Forestry of the Senate.
SEC. 1209. PILOT PROJECTS.
(a) Universal Free Pilot.--Section 18(d) of the National School
Lunch Act (42 U.S.C. 1769(d)) is amended--
(1) by striking paragraph (3); and
(2) by redesignating paragraphs (4) and (5) as paragraphs
(3) and (4), respectively.
(b) Demonstration Project Outside School Hours.--Section 18(e) of
the National School Lunch Act (42 U.S.C. 1769(e)) is amended--
(1) in paragraph (1)--
(A) in subparagraph (A)--
(i) by striking ``(A)''; and
(ii) by striking ``shall'' and inserting
``may''; and
(B) by striking subparagraph (B); and
(2) by striking paragraph (5) and inserting the following:
``(5) Authorization of appropriations.--There are
authorized to be appropriated to carry out this subsection such
sums as are necessary for each of fiscal years 1997 and
1998.''.
(c) Eliminating Projects.--Section 18 of the National School Lunch
Act (42 U.S.C. 1769) is amended--
(1) by striking subsections (a) and (g) through (i); and
(2) by redesignating subsections (b) through (f), as so
amended, as subsections (a) through (e), respectively.
(d) Conforming Amendment.--Section 17B(d)(1)(A) of the National
School Lunch Act (42 U.S.C. 1766b(d)(1)(A)) is amended by striking
``18(c)'' and inserting ``18(b)''.
SEC. 1210. REDUCTION OF PAPERWORK.
Section 19 of the National School Lunch Act (42 U.S.C. 1769a) is
repealed.
SEC. 1211. INFORMATION ON INCOME ELIGIBILITY.
Section 23 of the National School Lunch Act (42 U.S.C. 1769d) is
repealed.
SEC. 1212. NUTRITION GUIDANCE FOR CHILD NUTRITION PROGRAMS.
Section 24 of the National School Lunch Act (42 U.S.C. 1769e) is
repealed.
CHAPTER 2--AMENDMENTS TO THE CHILD NUTRITION ACT OF 1966
SEC. 1251. SPECIAL MILK PROGRAM.
Section 3(a)(3) of the Child Nutrition Act of 1966 (42 U.S.C.
1772(a)(3)) is amended by striking ``the Trust Territory of the Pacific
Islands'' and inserting ``the Commonwealth of the Northern Mariana
Islands''.
SEC. 1252. FREE AND REDUCED PRICE POLICY STATEMENT.
Section 4(b)(1) of the Child Nutrition Act of 1966 (42 U.S.C.
1773(b)(1)) is amended by adding at the end the following:
``(E) Free and reduced price policy statement.--
After the initial submission, a school food authority
shall not be required to submit a free and reduced
price policy statement to a State educational agency
under this Act unless there is a substantive change in
the free and reduced price policy of the school food
authority. A routine change in the policy of a school
food authority, such as an annual adjustment of the
income eligibility guidelines for free and reduced
price meals, shall not be sufficient cause for
requiring the school food authority to submit a policy
statement.''.
SEC. 1253. SCHOOL BREAKFAST PROGRAM AUTHORIZATION.
(a) Training and Technical Assistance in Food Preparation.--Section
4(e)(1)(B) of the Child Nutrition Act of 1966 (42 U.S.C. 1773(e)(1)(B))
is amended by striking the second sentence.
(b) Expansion of Program; Startup and Expansion Costs.--
(1) In general.--Section 4 of the Child Nutrition Act of
1966 (42 U.S.C. 1773) is amended by striking subsections (f)
and (g).
(2) Effective date.--The amendments made by paragraph (1)
shall become effective on October 1, 1996.
SEC. 1254. STATE ADMINISTRATIVE EXPENSES.
(a) Use of Funds for Commodity Distribution Administration;
Studies.--Section 7 of the Child Nutrition Act of 1966 (42 U.S.C. 1776)
is amended--
(1) by striking subsections (e) and (h); and
(2) by redesignating subsections (f), (g), and (i) as
subsections (e), (f), and (g), respectively.
(b) Approval of Changes.--Section 7(e) of the Child Nutrition Act
of 1966 (42 U.S.C. 1776(e)), as so redesignated, is amended--
(1) by striking ``each year an annual plan'' and inserting
``the initial fiscal year a plan''; and
(2) by adding at the end the following: ``After submitting
the initial plan, a State shall be required to submit to the
Secretary for approval only a substantive change in the
plan.''.
SEC. 1255. REGULATIONS.
Section 10(b) of the Child Nutrition Act of 1966 (42 U.S.C.
1779(b)) is amended--
(1) in paragraph (1), by striking ``(1)''; and
(2) by striking paragraphs (2) through (4).
SEC. 1256. PROHIBITIONS.
Section 11(a) of the Child Nutrition Act of 1966 (42 U.S.C.
1780(a)) is amended by striking ``neither the Secretary nor the State
shall'' and inserting ``the Secretary shall not''.
SEC. 1257. MISCELLANEOUS PROVISIONS AND DEFINITIONS.
Section 15 of the Child Nutrition Act of 1966 (42 U.S.C. 1784) is
amended--
(1) in paragraph (1), by striking ``the Trust Territory of
the Pacific Islands'' and inserting ``the Commonwealth of the
Northern Mariana Islands''; and
(2) in the first sentence of paragraph (3)--
(A) in subparagraph (A), by inserting ``and'' at
the end; and
(B) by striking ``, and (C)'' and all that follows
through ``Governor of Puerto Rico''.
SEC. 1258. ACCOUNTS AND RECORDS.
The second sentence of section 16(a) of the Child Nutrition Act of
1966 (42 U.S.C. 1785(a)) is amended by striking ``at all times be
available'' and inserting ``be available at any reasonable time''.
SEC. 1259. SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS,
AND CHILDREN.
(a) Definitions.--Section 17(b) of the Child Nutrition Act of 1966
(42 U.S.C. 1786(b)) is amended--
(1) in paragraph (15)(B)(iii), by inserting ``of not more
than 365 days'' after ``accommodation''; and
(2) in paragraph (16)--
(A) in subparagraph (A), by adding ``and'' at the
end; and
(B) in subparagraph (B), by striking ``; and'' and
inserting a period; and
(C) by striking subparagraph (C).
(b) Secretary's Promotion of WIC.--Section 17(c) of the Child
Nutrition Act of 1966 (42 U.S.C. 1786(c)) is amended by striking
paragraph (5).
(c) Eligible Participants.--Section 17(d) of the Child Nutrition
Act of 1966 (42 U.S.C. 1786(d)) is amended by striking paragraph (4).
(d) Nutrition Education and Drug Abuse Education.--Section 17(e) of
the Child Nutrition Act of 1966 (42 U.S.C. 1786(e)) is amended--
(1) in the first sentence of paragraph (1), by striking
``shall ensure'' and all that follows through ``is provided''
and inserting ``shall provide nutrition education and may
provide drug abuse education'';
(2) in paragraph (2), by striking the third sentence;
(3) in paragraph (4)--
(A) in the matter preceding subparagraph (A), by
striking ``shall'';
(B) by striking subparagraph (A);
(C) by redesignating subparagraphs (B) and (C) as
subparagraphs (A) and (B), respectively;
(D) in subparagraph (A), as so redesignated--
(i) by inserting ``shall'' before
``provide''; and
(ii) by striking ``and'' at the end;
(E) in subparagraph (B), as so redesignated--
(i) by inserting ``shall'' before
``provide''; and
(ii) by striking the period at the end and
inserting ``; and''; and
(F) by adding at the end the following:
``(C) may provide a local agency with materials describing
other programs for which a participant in the program may be
eligible.'';
(4) in paragraph (5), by striking ``The State agency shall
ensure that each'' and inserting ``Each''; and
(5) by striking paragraph (6).
(e) State Plan.--Section 17(f) of the Child Nutrition Act of 1966
(42 U.S.C. 1786(f)) is amended--
(1) in paragraph (1)--
(A) in subparagraph (A)--
(i) by striking ``annually to the
Secretary, by a date specified by the
Secretary, a'' and inserting ``to the
Secretary, by a date specified by the
Secretary, an initial''; and
(ii) by adding at the end the following:
``After submitting the initial plan, a State
shall be required to submit to the Secretary
for approval only a substantive change in the
plan.'';
(B) in subparagraph (C)--
(i) by striking clause (iii) and inserting
the following:
``(iii) a plan to coordinate operations under the program
with other services or programs that may benefit participants
in, and applicants for, the program;'';
(ii) in clause (vi), by inserting after
``in the State'' the following: ``(including a
plan to improve access to the program for
participants and prospective applicants who are
employed, or who reside, in rural areas)'';
(iii) in clause (vii), by striking ``to
provide program benefits'' and all that follows
through ``emphasis on'' and inserting ``for'';
(iv) by striking clauses (ix), (x), and
(xii);
(v) in clause (xiii), by striking ``may
require'' and inserting ``may reasonably
require'';
(vi) by redesignating clauses (xi) and
(xiii), as so amended, as clauses (ix) and (x),
respectively; and
(vii) in clause (ix), as so redesignated,
by adding ``and'' at the end;
(C) by striking subparagraph (D); and
(D) by redesignating subparagraph (E) as
subparagraph (D);
(2) by striking paragraphs (2), (6), (8), and (22);
(3) in the second sentence of paragraph (5), by striking
``at all times be available'' and inserting ``be available at
any reasonable time'';
(4) in paragraph (9)(B), by striking the second sentence;
(5) in the first sentence of paragraph (11), by striking
``, including standards that will ensure sufficient State
agency staff'';
(6) in paragraph (12), by striking the third sentence;
(7) in paragraph (17), by striking ``and to accommodate''
and all that follows through ``facilities'';
(8) in paragraph (19), by striking ``shall'' and inserting
``may''; and
(9) by redesignating paragraphs (3), (4), (5), (7), (9)
through (21), (23), and (24) as paragraphs (2), (3), (4), (5),
(6) through (18), (19), and (20), respectively.
(f) Information.--Section 17(g) of the Child Nutrition Act of 1966
(42 U.S.C. 1786(g)) is amended--
(1) in paragraph (5), by striking ``the report required
under subsection (d)(4)'' and inserting ``reports on program
participant characteristics''; and
(2) by striking paragraph (6).
(g) Procurement of Infant Formula.--
(1) In general.--Section 17(h) of the Child Nutrition Act
of 1966 (42 U.S.C. 1786(h)) is amended--
(A) in paragraph (4)(E), by striking ``and, on''
and all that follows through ``(d)(4)'';
(B) in paragraph (8)--
(i) by striking subparagraphs (A), (C), and
(M);
(ii) in subparagraph (G)--
(I) in clause (i), by striking
``(i)''; and
(II) by striking clauses (ii)
through (ix);
(iii) in subparagraph (I), by striking
``Secretary--'' and all that follows through
``(v) may'' and inserting ``Secretary may'';
(iv) by redesignating subparagraphs (B) and
(D) through (L) as subparagraphs (A) and (B)
through (J), respectively;
(v) in subparagraph (A)(i), as so
redesignated, by striking ``subparagraphs (C),
(D), and (E)(iii), in carrying out subparagraph
(A),'' and inserting ``subparagraphs (B) and
(C)(iii),'';
(vi) in subparagraph (B)(i), as so
redesignated, by striking ``subparagraph (B)''
each place it appears and inserting
``subparagraph (A)''; and
(vii) in subparagraph (C)(iii), as so
redesignated, by striking ``subparagraph (B)''
and inserting ``subparagraph (A)''; and
(C) in paragraph (10)(B)--
(i) in clause (i), by adding ``and'' at the
end;
(ii) in clause (ii), by striking ``; and''
and inserting a period; and
(iii) by striking clause (iii).
(2) Application.--The amendments made by paragraph (1)
shall not apply to a contract for the procurement of infant
formula under section 17(h)(8) of the Child Nutrition Act of
1966 (42 U.S.C. 1786(h)(8)) that is in effect on the date of
enactment of this subsection.
(h) National Advisory Council on Maternal, Infant, and Fetal
Nutrition.--Section 17(k)(3) of the Child Nutrition Act of 1966 (42
U.S.C. 1786(k)(3)) is amended by striking ``Secretary shall designate''
and inserting ``Council shall elect''.
(i) Completed Study; Community College Demonstration; Grants for
Information and Data System.--Section 17 of the Child Nutrition Act of
1966 (42 U.S.C. 1786) is amended by striking subsections (n), (o), and
(p).
(j) Disqualification of Vendors Who Are Disqualified Under the Food
Stamp Program.--Section 17 of the Child Nutrition Act of 1966 (42
U.S.C. 1786), as amended by subsection (i), is amended by adding at the
end the following:
``(n) Disqualification of Vendors Who Are Disqualified Under the
Food Stamp Program.--
``(1) In general.--The Secretary shall issue regulations
providing criteria for the disqualification under this section
of an approved vendor that is disqualified from accepting
benefits under the food stamp program established under the
Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.).
``(2) Terms.--A disqualification under paragraph (1)--
``(A) shall be for the same period as the
disqualification from the program referred to in
paragraph (1);
``(B) may begin at a later date than the
disqualification from the program referred to in
paragraph (1); and
``(C) shall not be subject to judicial or
administrative review.''.
SEC. 1260. CASH GRANTS FOR NUTRITION EDUCATION.
Section 18 of the Child Nutrition Act of 1966 (42 U.S.C. 1787) is
repealed.
SEC. 1261. NUTRITION EDUCATION AND TRAINING.
(a) Findings.--Section 19 of the Child Nutrition Act of 1966 (42
U.S.C. 1788) is amended--
(1) in subsection (a), by striking ``that--'' and all that
follows through the period at the end and inserting ``that
effective dissemination of scientifically valid information to
children participating or eligible to participate in the school
lunch and related child nutrition programs should be
encouraged.''; and
(2) in the first sentence of subsection (b), by striking
``encourage'' and all that follows through ``establishing'' and
inserting ``establish''.
(b) Use of Funds.--Section 19(f) of the Child Nutrition Act of 1966
(42 U.S.C. 1788(f)) is amended--
(1) in paragraph (1)--
(A) by striking subparagraph (B); and
(B) in subparagraph (A)--
(i) by striking ``(A)'';
(ii) by striking clauses (ix) through
(xix);
(iii) by redesignating clauses (i) through
(viii) and (xx) as subparagraphs (A) through
(H) and (I), respectively;
(iv) in subparagraph (I), as so
redesignated, by striking the period at the end
and inserting ``; and''; and
(v) by adding at the end the following:
``(J) other appropriate related activities, as determined
by the State.'';
(2) by striking paragraphs (2) and (4); and
(3) by redesignating paragraph (3) as paragraph (2).
(c) Accounts, Records, and Reports.--The second sentence of section
19(g)(1) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(g)(1)) is
amended by striking ``at all times be available'' and inserting ``be
available at any reasonable time''.
(d) State Coordinators for Nutrition; State Plan.--Section 19(h) of
the Child Nutrition Act of 1966 (42 U.S.C. 1788(h)) is amended--
(1) in the second sentence of paragraph (1)--
(A) by striking ``as provided in paragraph (2) of
this subsection''; and
(B) by striking ``as provided in paragraph (3) of
this subsection'';
(2) in paragraph (2), by striking the second and third
sentences; and
(3) by striking paragraph (3).
(e) Authorization of Appropriations.--Section 19(i) of the Child
Nutrition Act of 1966 (42 U.S.C. 1788(i)) is amended--
(1) in the first sentence of paragraph (2)(A), by striking
``and each succeeding fiscal year'';
(2) by redesignating paragraphs (3) and (4) as paragraphs
(4) and (5), respectively; and
(3) by inserting after paragraph (2) the following:
``(3) Fiscal years 1997 through 2002.--
``(A) In general.--There are authorized to be
appropriated to carry out this section $10,000,000 for
each of fiscal years 1997 through 2002.
``(B) Grants.--
``(i) In general.--Grants to each State
from the amounts made available under
subparagraph (A) shall be based on a rate of 50
cents for each child enrolled in schools or
institutions within the State, except that no
State shall receive an amount less than $75,000
per fiscal year.
``(ii) Insufficient funds.--If the amount
made available for any fiscal year is
insufficient to pay the amount to which each
State is entitled under clause (i), the amount
of each grant shall be ratably reduced.''.
(f) Assessment.--Section 19 of the Child Nutrition Act of 1966 (42
U.S.C. 1788) is amended by striking subsection (j).
(g) Effective Date.--The amendments made by subsection (e) shall
become effective on October 1, 1996.
SEC. 1262. ROUNDING RULES.
(a) Special Milk Price Program Rates.--Section 3(a)(8) of the Child
Nutrition Act of 1966 (42 U.S.C. 1772(a)(8)) is amended by striking
``one-fourth cent'' and inserting ``lower cent increment''.
(b) Reduced Price Breakfast Rates.--Section 4(b) of the Child
Nutrition Act of 1966 (42 U.S.C. 1773(b)) is amended--
(1) in the second sentence of paragraph (1)(B), by striking
``one-fourth cent'' and inserting ``lower cent increment''; and
(2) in paragraph (2)(B)(ii), by striking ``one-fourth
cent'' and inserting ``lower cent increment''.
(c) Commodity Rate.--The second sentence of section 6(e)(1)(B) of
the National School Lunch Act (42 U.S.C. 1755(e)(1)(B)) is amended by
striking ``\1/4\ cent'' and inserting ``lower cent increment''.
(d) Lunch, Breakfast, and Supplement Rates.--The third sentence of
section 11(a)(3)(B) of the National School Lunch Act (42 U.S.C.
1759a(a)(3)(B)) is amended by striking ``one-fourth cent'' and
inserting ``lower cent increment''.
(e) Effective Date.--The amendments made by this section shall
become effective on July 1, 1996.
TITLE II--COMMITTEE ON FINANCE
Subtitle A--Welfare Reform
SEC. 2001. SHORT TITLE OF SUBTITLE.
This subtitle may be cited as the ``Personal Responsibility and
Work Opportunity Act of 1996''.
SEC. 2002. TABLE OF CONTENTS OF SUBTITLE.
The table of contents for this subtitle is as follows:
Subtitle A--Welfare Reform
Sec. 2001. Short title.
Sec. 2002. Table of contents.
Chapter 1--Block Grants for Temporary Assistance for Needy Families
Sec. 2101. Findings.
Sec. 2102. Reference to Social Security Act.
Sec. 2103. Block grants to States.
Sec. 2104. Services provided by charitable, religious, or private
organizations.
Sec. 2105. Census data on grandparents as primary caregivers for their
grandchildren.
Sec. 2106. Report on data processing.
Sec. 2107. Study on alternative outcomes measures.
Sec. 2108. Welfare Formula Fairness Commission.
Sec. 2109. Conforming amendments to the Social Security Act.
Sec. 2110. Conforming amendments to the Food Stamp Act of 1977 and
related provisions.
Sec. 2111. Conforming amendments to other laws.
Sec. 2112. Development of prototype of counterfeit-resistant social
security card required.
Sec. 2113. Disclosure of receipt of Federal funds.
Sec. 2114. Modifications to the job opportunities for certain low-
income individuals program.
Sec. 2115. Secretarial submission of legislative proposal for technical
and conforming amendments.
Sec. 2116. Effective date; transition rule.
Chapter 2--Supplemental Security Income
Sec. 2200. Referesubchapter a--eligibility restrictions
Sec. 2201. Denial of SSI benefits for 10 years to individuals found to
have fraudulently misrepresented residence
in order to obtain benefits simultaneously
in 2 or more States.
Sec. 2202. Denial of SSI benefits for fugitive felons and probation and
parole violators.
Sec. 2203. Treatment of prisoners.
Sec. 2204. Effsubchapter b--benefits for disabled children
Sec. 2211. Definition and eligibility rules.
Sec. 2212. Eligibility redeterminations and continuing disability
reviews.
Sec. 2213. Additional accountability requirements.
Sec. 2214. Reduction in cash benefits payable to institutionalized
individuals whose medical costs are covered
by private insurance.
Sec. 2215. Resubchapter c--additional enforcement provision
Sec. 2221. Installment payment of large past-due supplemental security
income benefits.
Sec. 2222. Regsubchapter d--state supplementation programs
Sec. 2225. Repeal of maintenance of effort requirements applicable to
optional State programs for supplementation
subchapter e--studies regarding supplemental security income program
Sec. 2231. Annual report on the supplemental security income program.
Sec. 2232. Study by General Accounting Office.
Chapter 3--Child Support
Sec.subchapter a--eligibility for services; distribution of payments
Sec. 2301. State obligation to provide child support enforcement
services.
Sec. 2302. Distribution of child support collections.
Sec. 2303. Privacy safeguards.
Sec. 2304. Rightssubchapter b--locate and case tracking
Sec. 2311. State case registry.
Sec. 2312. Collection and disbursement of support payments.
Sec. 2313. State directory of new hires.
Sec. 2314. Amendments concerning income withholding.
Sec. 2315. Locator information from interstate networks.
Sec. 2316. Expansion of the Federal Parent Locator Service.
Sec. 2317. Collection and use of social security numbers for use in
subchapter c--streamlining and uniformity of procedures
Sec. 2321. Adoption of uniform State laws.
Sec. 2322. Improvements to full faith and credit for child support
orders.
Sec. 2323. Administrative enforcement in interstate cases.
Sec. 2324. Use of forms in interstate enforcement.
Sec. 2325. State subchapter d--paternity establishment
Sec. 2331. State laws concerning paternity establishment.
Sec. 2332. Outreach for voluntary paternity establishment.
Sec. 2333. Cooperation by applicants for and recipients of part A
subchapter e--program administration and funding
Sec. 2341. Performance-based incentives and penalties.
Sec. 2342. Federal and State reviews and audits.
Sec. 2343. Required reporting procedures.
Sec. 2344. Automated data processing requirements.
Sec. 2345. Technical assistance.
Sec. subchapter f--establishment and modification of support orders
Sec. 2351. Simplified process for review and adjustment of child
support orders.
Sec. 2352. Furnishing consumer reports for certain purposes relating to
child support.
Sec. 2353. Nonliability for financial institutions providing financial
records to State child support enforcement
subchapter g--enforcement of support orderses.
Sec. 2361. Internal Revenue Service collection of arrearages.
Sec. 2362. Authority to collect support from Federal employees.
Sec. 2363. Enforcement of child support obligations of members of the
Armed Forces.
Sec. 2364. Voiding of fraudulent transfers.
Sec. 2365. Work requirement for persons owing past-due child support.
Sec. 2366. Definition of support order.
Sec. 2367. Reporting arrearages to credit bureaus.
Sec. 2368. Liens.
Sec. 2369. State law authorizing suspension of licenses.
Sec. 2370. Denial of passports for nonpayment of child support.
Sec. 2371. International support enforcement.
Sec. 2372. Financial institution data matches.
Sec. 2373. Enforcement of orders against paternal or maternal
grandparents in cases of minor parents.
Sec. 2374. Nondischargeability in bankruptcy of certain debts for the
subchapter h--medical support
Sec. 2376. Correction to ERISA definition of medical child support
order.
Sec.subchapter i--enhancing responsibility and opportunity for non-
residential parents
Sec. 238subchapter j--effective dates and conforming amendments
Sec. 2391. Effective dates and conforming amendments.
Chapter 4--Restricting Welfare and Public Benefits for Aliens
Sec. 2400. Statements of national policy concerning welfare and
subchapter a--eligibility for federal benefits
Sec. 2401. Aliens who are not qualified aliens ineligible for Federal
public benefits.
Sec. 2402. Limited eligibility of qualified aliens for certain Federal
programs.
Sec. 2403. Five-year limited eligibility of qualified aliens for
Federal means-tested public benefit.
Ssubchapter b--eligibility for state and local public benefits programs
Sec. 2411. Aliens who are not qualified aliens or nonimmigrants
ineligible for State and local public
benefits.
Sec. 2412. State authority to limit eligibility of qualified aliens for
subchapter c--attribution of income and affidavits of support
Sec. 2421. Federal attribution of sponsor's income and resources to
alien.
Sec. 2422. Authority for States to provide for attribution of sponsors
income and resources to the alien with
respect to State programs.
Sec. 2423. Requirements for sponsor's affidavit of support.
Sec. 2424. Cosignatusubchapter d--general provisions
Sec. 2431. Definitions.
Sec. 2432. Verification of eligibility for Federal public benefits.
Sec. 2433. Statutory construction.
Sec. 2434. Communication between State and local government agencies
and the Immigration and Naturalization
Service.
Sec.subchapter e--conforming amendments relating to assisted housing
Sesubchapter f--earned income credit denied to unauthorized employees
Sec. 2451. Earned income credit denied to individuals not authorized to
be employed in the United States.
Chapter 5--Reductions in Federal Government Positions
Sec. 2501. Reductions.
Sec. 2502. Reductions in Federal bureaucracy.
Sec. 2503. Reducing personnel in Washington, D.C. area.
Sec. 2504. Downward adjustment of discretionary spending limits.
Chapter 6--Reform of Public Housing
Sec. 2601. Failure to comply with other welfare and public assistance
programs.
Sec. 2602. Fraud under means-tested welfare and public assistance
programs.
Chapter 7--Technical Amendments Relating to Child Protection Programs
Sec. 2701. Extension of enhanced funding for implementation of
statewide automated child welfare
information systems.
Sec. 2702. Redesignation of section 1123.
Chapter 8--Child Care
Sec. 2801. Short title and references.
Sec. 2802. Goals.
Sec. 2803. Authorization of appropriations and entitlement authority.
Sec. 2804. Lead agency.
Sec. 2805. Application and plan.
Sec. 2806. Limitation on State allotments.
Sec. 2807. Activities to improve the quality of child care.
Sec. 2808. Repeal of early childhood development and before- and after-
school care requirement.
Sec. 2809. Administration and enforcement.
Sec. 2810. Payments.
Sec. 2811. Annual report and audits.
Sec. 2812. Report by the Secretary.
Sec. 2813. Allotments.
Sec. 2814. Definitions.
Sec. 2815. Repeals.
Sec. 2816. Effective date.
Chapter 9--Miscellaneous
Sec. 2901. Appropriation by State legislatures.
Sec. 2902. Sanctioning for testing positive for controlled substances.
Sec. 2903. Reduction in block grants to States for social services.
Sec. 2904. Elimination of housing assistance with respect to fugitive
felons and probation and parole violators.
Sec. 2905. Sense of the Senate regarding enterprise zones.
Sec. 2906. Sense of the Senate regarding the inability of the non-
custodial parent to pay child support.
Sec. 2907. Establishing national goals to prevent teenage pregnancies.
Sec. 2908. Sense of the Senate regarding enforcement of statutory rape
laws.
Sec. 2909. Abstinence education.
Sec. 2910. Provisions to encourage electronic benefit transfer systems.
Sec. 2911. Rules relating to denial of earned income credit on basis of
disqualified income.
Sec. 2912. Modification of adjusted gross income definition for earned
income credit.
Sec. 2913. Suspension of inflation adjustments for individuals with no
qualifying children.
CHAPTER 1--BLOCK GRANTS FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES
SEC. 2101. FINDINGS.
The Congress makes the following findings:
(1) Marriage is the foundation of a successful society.
(2) Marriage is an essential institution of a successful
society which promotes the interests of children.
(3) Promotion of responsible fatherhood and motherhood is
integral to successful child rearing and the well-being of
children.
(4) In 1992, only 54 percent of single-parent families with
children had a child support order established and, of that 54
percent, only about one-half received the full amount due. Of
the cases enforced through the public child support enforcement
system, only 18 percent of the caseload has a collection.
(5) The number of individuals receiving aid to families
with dependent children (in this section referred to as
``AFDC'') has more than tripled since 1965. More than two-
thirds of these recipients are children. Eighty-nine percent of
children receiving AFDC benefits now live in homes in which no
father is present.
(A)(i) The average monthly number of children
receiving AFDC benefits--
(I) was 3,300,000 in 1965;
(II) was 6,200,000 in 1970;
(III) was 7,400,000 in 1980; and
(IV) was 9,300,000 in 1992.
(ii) While the number of children receiving AFDC
benefits increased nearly threefold between 1965 and
1992, the total number of children in the United States
aged 0 to 18 has declined by 5.5 percent.
(B) The Department of Health and Human Services has
estimated that 12,000,000 children will receive AFDC
benefits within 10 years.
(C) The increase in the number of children
receiving public assistance is closely related to the
increase in births to unmarried women. Between 1970 and
1991, the percentage of live births to unmarried women
increased nearly threefold, from 10.7 percent to 29.5
percent.
(6) The increase of out-of-wedlock pregnancies and births
is well documented as follows:
(A) It is estimated that the rate of nonmarital
teen pregnancy rose 23 percent from 54 pregnancies per
1,000 unmarried teenagers in 1976 to 66.7 pregnancies
in 1991. The overall rate of nonmarital pregnancy rose
14 percent from 90.8 pregnancies per 1,000 unmarried
women in 1980 to 103 in both 1991 and 1992. In
contrast, the overall pregnancy rate for married
couples decreased 7.3 percent between 1980 and 1991,
from 126.9 pregnancies per 1,000 married women in 1980
to 117.6 pregnancies in 1991.
(B) The total of all out-of-wedlock births between
1970 and 1991 has risen from 10.7 percent to 29.5
percent and if the current trend continues, 50 percent
of all births by the year 2015 will be out-of-wedlock.
(7) The negative consequences of an out-of-wedlock birth on
the mother, the child, the family, and society are well
documented as follows:
(A) Young women 17 and under who give birth outside
of marriage are more likely to go on public assistance
and to spend more years on welfare once enrolled. These
combined effects of ``younger and longer'' increase
total AFDC costs per household by 25 percent to 30
percent for 17-year-olds.
(B) Children born out-of-wedlock have a
substantially higher risk of being born at a very low
or moderately low birth weight.
(C) Children born out-of-wedlock are more likely to
experience low verbal cognitive attainment, as well as
more child abuse, and neglect.
(D) Children born out-of-wedlock were more likely
to have lower cognitive scores, lower educational
aspirations, and a greater likelihood of becoming
teenage parents themselves.
(E) Being born out-of-wedlock significantly reduces
the chances of the child growing up to have an intact
marriage.
(F) Children born out-of-wedlock are 3 times more
likely to be on welfare when they grow up.
(8) Currently 35 percent of children in single-parent homes
were born out-of-wedlock, nearly the same percentage as that of
children in single-parent homes whose parents are divorced (37
percent). While many parents find themselves, through divorce
or tragic circumstances beyond their control, facing the
difficult task of raising children alone, nevertheless, the
negative consequences of raising children in single-parent
homes are well documented as follows:
(A) Only 9 percent of married-couple families with
children under 18 years of age have income below the
national poverty level. In contrast, 46 percent of
female-headed households with children under 18 years
of age are below the national poverty level.
(B) Among single-parent families, nearly \1/2\ of
the mothers who never married received AFDC while only
\1/5\ of divorced mothers received AFDC.
(C) Children born into families receiving welfare
assistance are 3 times more likely to be on welfare
when they reach adulthood than children not born into
families receiving welfare.
(D) Mothers under 20 years of age are at the
greatest risk of bearing low-birth-weight babies.
(E) The younger the single parent mother, the less
likely she is to finish high school.
(F) Young women who have children before finishing
high school are more likely to receive welfare
assistance for a longer period of time.
(G) Between 1985 and 1990, the public cost of
births to teenage mothers under the aid to families
with dependent children program, the food stamp
program, and the medicaid program has been estimated at
$120,000,000,000.
(H) The absence of a father in the life of a child
has a negative effect on school performance and peer
adjustment.
(I) Children of teenage single parents have lower
cognitive scores, lower educational aspirations, and a
greater likelihood of becoming teenage parents
themselves.
(J) Children of single-parent homes are 3 times
more likely to fail and repeat a year in grade school
than are children from intact 2-parent families.
(K) Children from single-parent homes are almost 4
times more likely to be expelled or suspended from
school.
(L) Neighborhoods with larger percentages of youth
aged 12 through 20 and areas with higher percentages of
single-parent households have higher rates of violent crime.
(M) Of those youth held for criminal offenses
within the State juvenile justice system, only 29.8
percent lived primarily in a home with both parents. In
contrast to these incarcerated youth, 73.9 percent of
the 62,800,000 children in the Nation's resident
population were living with both parents.
(9) Therefore, in light of this demonstration of the crisis
in our Nation, it is the sense of the Congress that prevention
of out-of-wedlock pregnancy and reduction in out-of-wedlock
birth are very important Government interests and the policy
contained in part A of title IV of the Social Security Act (as
amended by section 2103(a) of this Act) is intended to address
the crisis.
SEC. 2102. REFERENCE TO SOCIAL SECURITY ACT.
Except as otherwise specifically provided, wherever in this chapter
an amendment is expressed in terms of an amendment to or repeal of a
section or other provision, the reference shall be considered to be
made to that section or other provision of the Social Security Act.
SEC. 2103. BLOCK GRANTS TO STATES.
(a) In General.--Part A of title IV (42 U.S.C. 601 et seq.) is
amended--
(1) by striking all that precedes section 418 (as added by
section 2803(b)(2) of this Act) and inserting the following:
``PART A--BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY
FAMILIES
``SEC. 401. PURPOSE.
``(a) In General.--The purpose of this part is to increase the
flexibility of States in operating a program designed to--
``(1) provide assistance to needy families so that children
may be cared for in their own homes or in the homes of
relatives;
``(2) end the dependence of needy parents on government
benefits by promoting job preparation, work, and marriage;
``(3) prevent and reduce the incidence of out-of-wedlock
pregnancies and establish annual numerical goals for preventing
and reducing the incidence of these pregnancies; and
``(4) encourage the formation and maintenance of two-parent
families.
``(b) No Individual Entitlement.--This part shall not be
interpreted to entitle any individual or family to assistance under any
State program funded under this part.
``SEC. 402. ELIGIBLE STATES; STATE PLAN.
``(a) In General.--As used in this part, the term `eligible State'
means, with respect to a fiscal year, a State that, during the 2-year
period immediately preceding the fiscal year, has submitted to the
Secretary a plan that the Secretary has found includes the following:
``(1) Outline of family assistance program.--
``(A) General provisions.--A written document that
outlines how the State intends to do the following:
``(i) Conduct a program, designed to serve
all political subdivisions in the State (not
necessarily in a uniform manner), that provides
assistance to needy families with (or
expecting) children and provides parents with
job preparation, work, and support services to
enable them to leave the program and become
self-sufficient.
``(ii) Require a parent or caretaker
receiving assistance under the program to
engage in work (as defined by the State) once
the State determines the parent or caretaker is
ready to engage in work, or once the parent or
caretaker has received assistance under the
program for 24 months (whether or not
consecutive), whichever is earlier.
``(iii) Ensure that parents and caretakers
receiving assistance under the program engage
in work activities in accordance with section
407.
``(iv) Take such reasonable steps as the
State deems necessary to restrict the use and
disclosure of information about individuals and
families receiving assistance under the program
attributable to funds provided by the Federal
Government.
``(v) Establish goals and take action to
prevent and reduce the incidence of out-of-
wedlock pregnancies, with special emphasis on
teenage pregnancies, and establish numerical
goals for reducing the illegitimacy ratio of
the State (as defined in section 403(a)(2)(B))
for calendar years 1996 through 2005.
``(vi) Determine, on an objective and
equitable basis, the needs of and the amount of
assistance to be provided to needy families,
and, except as provided in subparagraph (B),
treat families of similar needs and
circumstances similarly.
``(vii) Grant an opportunity for a fair
hearing before the appropriate State agency to
any individual to whom assistance under the
program is denied, reduced, or terminated, or
whose request for such assistance is not acted
on with reasonable promptness.
``(B) Special provisions.--
``(i) The document shall indicate whether
the State intends to treat families moving into
the State from another State differently than
other families under the program, and if so,
how the State intends to treat such families
under the program.
``(ii) The document shall indicate whether
the State intends to provide assistance under
the program to individuals who are not citizens
of the United States, and if so, shall include
an overview of such assistance.
``(2) Certification that the state will operate a child
support enforcement program.--A certification by the chief
executive officer of the State that, during the fiscal year,
the State will operate a child support enforcement program
under the State plan approved under part D.
``(3) Certification that the state will operate a foster
care and adoption assistance program.--A certification by the
chief executive officer of the State that, during the fiscal
year, the State will operate a foster care and adoption
assistance program under the State plan approved under part E,
and that the State will take such actions as are necessary to
ensure that children receiving assistance under such part are
eligible for medical assistance under the State plan under
title XIX (or XV, if applicable).
``(4) Certification of the administration of the program.--
A certification by the chief executive officer of the State
specifying which State agency or agencies will administer and
supervise the program referred to in paragraph (1) for the
fiscal year, which shall include assurances that local
governments and private sector organizations--
``(A) have been consulted regarding the plan and
design of welfare services in the State so that
services are provided in a manner appropriate to local
populations; and
``(B) have had at least 45 days to submit comments
on the plan and the design of such services.
``(5) Certification that the state will provide indians
with equitable access to assistance.--A certification by the
chief executive officer of the State that, during the fiscal
year, the State will provide each Indian who is a member of an
Indian tribe in the State that does not have a tribal family
assistance plan approved under section 412 with equitable
access to assistance under the State program funded under this part
attributable to funds provided by the Federal Government.
``(6) Certification of standards and procedures to ensure
against program fraud and abuse.--A certification by the chief
executive officer of the State that the State has established
and is enforcing standards and procedures to ensure against
program fraud and abuse, including standards and procedures
concerning nepotism, conflicts of interest among individuals
responsible for the administration and supervision of the State
program, kickbacks, and the use of political patronage.
``(b) Public Availability of State Plan Summary.--The State shall
make available to the public a summary of any plan submitted by the
State under this section.
``SEC. 403. GRANTS TO STATES.
``(a) Grants.--
``(1) Family assistance grant.--
``(A) In general.--Each eligible State shall be
entitled to receive from the Secretary, for each of
fiscal years 1996, 1997, 1998, 1999, 2000, and 2001 a
grant in an amount equal to the State family assistance
grant.
``(B) State family assistance grant defined.--As
used in this part, the term `State family assistance
grant' means the greatest of--
``(i) \1/3\ of the total amount required to
be paid to the State under former section 403
(as in effect on September 30, 1995) for fiscal
years 1992, 1993, and 1994 (other than with
respect to amounts expended by the State for
child care under subsection (g) or (i) of
former section 402 (as so in effect));
``(ii)(I) the total amount required to be
paid to the State under former section 403 for
fiscal year 1994 (other than with respect to
amounts expended by the State for child care
under subsection (g) or (i) of former section
402 (as so in effect)); plus
``(II) an amount equal to 85 percent of the
amount (if any) by which the total amount
required to be paid to the State under former
section 403(a)(5) for emergency assistance for
fiscal year 1995 exceeds the total amount
required to be paid to the State under former
section 403(a)(5) for fiscal year 1994, if,
during fiscal year 1994 or 1995, the Secretary
approved under former section 402 an amendment
to the former State plan to allow the provision
of emergency assistance in the context of
family preservation; or
``(iii) \4/3\ of the total amount required
to be paid to the State under former section
403 (as in effect on September 30, 1995) for
the 1st 3 quarters of fiscal year 1995 (other
than with respect to amounts expended by the
State under the State plan approved under part
F (as so in effect) or for child care under
subsection (g) or (i) of former section 402 (as
so in effect)), plus the total amount required
to be paid to the State for fiscal year 1995
under former section 403(l) (as so in effect).
``(C) Total amount required to be paid to the state
under former section 403 defined.--As used in this
part, the term `total amount required to be paid to the
State under former section 403' means, with respect to
a fiscal year--
``(i) in the case of a State to which
section 1108 does not apply, the sum of--
``(I) the Federal share of
maintenance assistance expenditures for
the fiscal year, before reduction
pursuant to subparagraph (B) or (C) of
section 403(b)(2) (as in effect on
September 30, 1995), as reported by the
State on ACF Form 231;
``(II) the Federal share of
administrative expenditures (including
administrative expenditures for the
development of management information
systems) for the fiscal year, as
reported by the State on ACF Form 231;
``(III) the Federal share of
emergency assistance expenditures for
the fiscal year, as reported by the
State on ACF Form 231;
``(IV) the Federal share of
expenditures for the fiscal year with
respect to child care pursuant to
subsections (g) and (i) of former
section 402 (as in effect on September
30, 1995), as reported by the State on
ACF Form 231; and
``(V) the aggregate amount required
to be paid to the State for the fiscal
year with respect to the State program
operated under part F (as in effect on
September 30, 1995), as determined by
the Secretary, including additional
obligations or reductions in
obligations made after the close of the
fiscal year; and
``(ii) in the case of a State to which
section 1108 applies, the lesser of--
``(I) the sum described in clause
(i); or
``(II) the total amount certified
by the Secretary under former section
403 (as in effect during the fiscal
year) with respect to the territory.
``(D) Information to be used in determining
amounts.--
``(i) For fiscal years 1992 and 1993.--
``(I) In determining the amounts
described in subclauses (I) through
(IV) of subparagraph (C)(i) for any
State for each of fiscal years 1992 and
1993, the Secretary shall use
information available as of April 28,
1995.
``(II) In determining the amount
described in subparagraph (C)(i)(V) for
any State for each of fiscal years 1992
and 1993, the Secretary shall use
information available as of January 6,
1995.
``(ii) For fiscal year 1994.--In
determining the amounts described in
subparagraph (C)(i) for any State for fiscal
year 1994, the Secretary shall use information
available as of April 28, 1995.
``(iii) For fiscal year 1995.--
``(I) In determining the amount
described in subparagraph (B)(ii)(II)
for any State for fiscal year 1995, the
Secretary shall use the information
which was reported by the States and
estimates made by the States with
respect to emergency assistance
expenditures and was available as of
August 11, 1995.
``(II) In determining the amounts
described in subclauses (I) through
(III) of subparagraph (C)(i) for any
State for fiscal year 1995, the
Secretary shall use information
available as of October 2, 1995.
``(III) In determining the amount
described in subparagraph (C)(i)(IV)
for any State for fiscal year 1995, the
Secretary shall use information
available as of February 28, 1996.
``(IV) In determining the amount
described in subparagraph (C)(i)(V) for
any State for fiscal year 1995, the
Secretary shall use information
available as of October 5, 1995.
``(E) Appropriation.--Out of any money in the
Treasury of the United States not otherwise
appropriated, there are appropriated for fiscal years
1996, 1997, 1998, 1999, 2000, and 2001 such sums as are
necessary for grants under this paragraph.
``(2) Grant to reward states that reduce out-of-wedlock
births.--
``(A) In general.--Each eligible State shall be
entitled to receive from the Secretary for fiscal year
1998 or any succeeding fiscal year, a grant in an
amount equal to the State family assistance grant
multiplied by--
``(i) 5 percent if--
``(I) the illegitimacy ratio of the
State for the fiscal year is at least 1
percentage point lower than the
illegitimacy ratio of the State for
fiscal year 1995; and
``(II) the rate of induced
pregnancy terminations in the State for
the fiscal year is less than the rate
of induced pregnancy terminations in
the State for fiscal year 1995; or
``(ii) 10 percent if--
``(I) the illegitimacy ratio of the
State for the fiscal year is at least 2
percentage points lower than the
illegitimacy ratio of the State for
fiscal year 1995; and
``(II) the rate of induced
pregnancy terminations in the State for
the fiscal year is less than the rate
of induced pregnancy terminations in
the State for fiscal year 1995.
``(B) Illegitimacy ratio.--As used in this
paragraph, the term `illegitimacy ratio' means, with
respect to a State and a fiscal year--
``(i) the number of out-of-wedlock births
that occurred in the State during the most
recent fiscal year for which such information
is available; divided by
``(ii) the number of births that occurred
in the State during the most recent fiscal year
for which such information is available.
``(C) Disregard of changes in data due to changed
reporting methods.--For purposes of subparagraph (A),
the Secretary shall disregard--
``(i) any difference between the
illegitimacy ratio of a State for a fiscal year
and the illegitimacy ratio of the State for
fiscal year 1995 which is attributable to a
change in State methods of reporting data used
to calculate the illegitimacy ratio; and
``(ii) any difference between the rate of
induced pregnancy terminations in a State for a
fiscal year and such rate for fiscal year 1995
which is attributable to a change in State
methods of reporting data used to calculate
such rate.
``(D) Appropriation.--Out of any money in the
Treasury of the United States not otherwise
appropriated, there are appropriated for fiscal year
1998 and for each succeeding fiscal year such sums as
are necessary for grants under this paragraph.
``(3) Supplemental grant for population increases in
certain states.--
``(A) In general.--Each qualifying State shall,
subject to subparagraph (F), be entitled to receive
from the Secretary--
``(i) for fiscal year 1998 a grant in an
amount equal to 2.5 percent of the total amount
required to be paid to the State under former
section 403 (as in effect during fiscal year
1994) for fiscal year 1994; and
``(ii) for each of fiscal years 1999, 2000,
and 2001, a grant in an amount equal to the sum
of--
``(I) the amount (if any) required
to be paid to the State under this
paragraph for the immediately preceding
fiscal year; and
``(II) 2.5 percent of the sum of--
``(aa) the total amount
required to be paid to the
State under former section
403 (as in effect during fiscal year 1994) for fiscal year 1994; and
``(bb) the amount (if any)
required to be paid to the
State under this paragraph for
the fiscal year preceding the
fiscal year for which the grant
is to be made.
``(B) Preservation of grant without increases for
states failing to remain qualifying states.--Each State
that is not a qualifying State for a fiscal year
specified in subparagraph (A)(ii) but was a qualifying
State for a prior fiscal year shall, subject to
subparagraph (F), be entitled to receive from the
Secretary for the specified fiscal year, a grant in an
amount equal to the amount required to be paid to the
State under this paragraph for the most recent fiscal
year for which the State was a qualifying State.
``(C) Qualifying state.--
``(i) In general.--For purposes of this
paragraph, a State is a qualifying State for a
fiscal year if--
``(I) the level of welfare spending
per poor person by the State for the
immediately preceding fiscal year is
less than the national average level of
State welfare spending per poor person
for such preceding fiscal year; and
``(II) the population growth rate
of the State (as determined by the
Bureau of the Census) for the most
recent fiscal year for which
information is available exceeds the
average population growth rate for all
States (as so determined) for such most
recent fiscal year.
``(ii) State must qualify in fiscal year
1998.--Notwithstanding clause (i), a State
shall not be a qualifying State for any fiscal
year after 1998 by reason of clause (i) if the
State is not a qualifying State for fiscal year
1998 by reason of clause (i).
``(iii) Certain states deemed qualifying
states.--For purposes of this paragraph, a
State is deemed to be a qualifying State for
fiscal years 1998, 1999, 2000, and 2001 if--
``(I) the level of welfare spending
per poor person by the State for fiscal
year 1997 is less than 35 percent of
the national average level of State
welfare spending per poor person for
fiscal year 1996; or
``(II) the population of the State
increased by more than 10 percent from
April 1, 1990 to July 1, 1994,
according to the population estimates
in publication CB94-204 of the Bureau
of the Census.
``(D) Definitions.--As used in this paragraph:
``(i) Level of welfare spending per poor
person.--The term `level of State welfare
spending per poor person' means, with respect
to a State and a fiscal year--
``(I) the sum of--
``(aa) the total amount
required to be paid to the
State under former section 403
(as in effect during fiscal
year 1994) for fiscal year
1994; and
``(bb) the amount (if any)
paid to the State under this
paragraph for the immediately
preceding fiscal year; divided
by
``(II) the number of individuals,
according to the 1990 decennial census,
who were residents of the State and
whose income was below the poverty
line.
``(ii) National average level of state
welfare spending per poor person.--The term
`national average level of State welfare
spending per poor person' means, with respect
to a fiscal year, an amount equal to--
``(I) the total amount required to
be paid to the States under former
section 403 (as in effect during fiscal
year 1994) for fiscal year 1994;
divided by
``(II) the number of individuals,
according to the 1990 decennial census,
who were residents of any State and
whose income was below the poverty
line.
``(iii) State.--The term `State' means each
of the 50 States of the United States and the
District of Columbia.
``(E) Appropriation.--Out of any money in the
Treasury of the United States not otherwise
appropriated, there are appropriated for fiscal years
1998, 1999, 2000, and 2001 such sums as are necessary
for grants under this paragraph, in a total amount not
to exceed $800,000,000.
``(F) Grants reduced pro rata if insufficient
appropriations.--If the amount appropriated pursuant to
this paragraph for a fiscal year is less than the total
amount of payments otherwise required to be made under
this paragraph for the fiscal year, then the amount
otherwise payable to any State for the fiscal year
under this paragraph shall be reduced by a percentage
equal to the amount so appropriated divided by such
total amount.
``(G) Budget scoring.--Notwithstanding section
257(b)(2) of the Balanced Budget and Emergency Deficit
Control Act of 1985, the baseline shall assume that no
grant shall be made under this paragraph after fiscal
year 2000.
``(4) Bonus to reward high performance states.--
``(A) In general.--The Secretary shall make a grant
pursuant to this paragraph to each State for each bonus
year for which the State is a high performing State.
``(B) Amount of grant.--
``(i) In general.--Subject to clause (ii)
of this subparagraph, the Secretary shall
determine the amount of the grant payable under
this paragraph to a high performing State for a
bonus year, which shall be based on the score
assigned to the State under subparagraph (D)(i)
for the fiscal year that immediately precedes
the bonus year.
``(ii) Limitation.--The amount payable to a
State under this paragraph for a bonus year
shall not exceed 5 percent of the State family
assistance grant.
``(C) Formula for measuring state performance.--Not
later than 1 year after the date of the enactment of
the Personal Responsibility and Work Opportunity Act of
1996, the Secretary, in consultation with the National
Governors' Association and the American Public Welfare
Association, shall develop a formula for measuring
State performance in operating the State program funded
under this part so as to achieve the goals set forth in
section 401(a). Such formula shall emphasize the extent
to which the State increases the number of families
that become ineligible for assistance under the State
program funded under this part as a result of
unsubsidized employment.
``(D) Scoring of state performance; setting of
performance thresholds.--For each bonus year, the
Secretary shall--
``(i) use the formula developed under
subparagraph (C) to assign a score to each
eligible State for the fiscal year that
immediately precedes the bonus year; and
``(ii) prescribe a performance threshold in
such a manner so as to ensure that--
``(I) the average annual total
amount of grants to be made under this
paragraph for each bonus year equals
the amount specified for such bonus
year in subparagraph (E)(ii); and
``(II) the total amount of grants
to be made under this paragraph for all
bonus years equals $1,000,000,000.
``(E) Definitions.--As used in this paragraph:
``(i) Bonus year.--The term `bonus year'
means fiscal years 1999, 2000, 2001, 2002, and
2003.
``(ii) The amount specified for such bonus
year.--The term `the amount specified for such
bonus year' means the following:
``(I) For fiscal years 1999, 2000,
2001, and 2002, $175,000,000.
``(II) For fiscal year 2003,
$300,000,000.
``(iii) High performing state.--The term
`high performing State' means, with respect a
bonus year, an eligible State whose score
assigned pursuant to subparagraph (D)(i) for
the fiscal year immediately preceding the bonus
year equals or exceeds the performance
threshold prescribed under subparagraph (D)(ii)
for such preceding fiscal year.
``(F) Appropriation.--Out of any money in the
Treasury of the United States not otherwise
appropriated, there are appropriated for fiscal years
1999 through 2003 $1,000,000,000 for grants under this
paragraph.
``(b) Contingency Fund.--
``(1) Establishment.--There is hereby established in the
Treasury of the United States a fund which shall be known as
the `Contingency Fund for State Welfare Programs' (in this
section referred to as the `Fund').
``(2) Deposits into fund.--Out of any money in the Treasury
of the United States not otherwise appropriated, there are
appropriated for fiscal years 1998, 1999, 2000, and 2001 such
sums as are necessary for payment to the Fund in a total amount
not to exceed $2,000,000,000.
``(3) Grants.--
``(A) Provisional payments.--If an eligible State
submits to the Secretary a request for funds under this
paragraph during an eligible month, the Secretary
shall, subject to this paragraph, pay to the State,
from amounts appropriated pursuant to paragraph (2), an
amount equal to the amount of funds so requested.
``(B) Payment priority.--The Secretary shall make
payments under subparagraph (A) in the order in which
the Secretary receives requests for such payments.
``(C) Limitations.--
``(i) Monthly payment to a state.--The
total amount paid to a single State under
subparagraph (A) during a month shall not
exceed \1/12\ of 20 percent of the State family
assistance grant.
``(ii) Payments to all states.--The total
amount paid to all States under subparagraph
(A) during fiscal years 1998 through 2001 shall
not exceed the total amount appropriated
pursuant to paragraph (2).
``(4) Annual reconciliation.--Notwithstanding paragraph
(3), at the end of each fiscal year, each State shall remit to
the Secretary an amount equal to the amount (if any) by which
the total amount paid to the State under paragraph (3) during
the fiscal year exceeds--
``(A) the Federal medical assistance percentage for
the State for the fiscal year (as defined in section
1905(b), as in effect on September 30, 1995) of the
amount (if any) by which the expenditures under the
State program funded under this part for the fiscal
year exceed historic State expenditures (as defined in
section 409(a)(7)(B)(iii)); multiplied by
``(B) \1/12\ times the number of months during the
fiscal year for which the Secretary makes a payment to
the State under this subsection.
``(5) Eligible month.--As used in paragraph (3)(A), the
term `eligible month' means, with respect to a State, a month
in the 2-month period that begins with any month for which the
State is a needy State.
``(6) Needy state.--For purposes of paragraph (5), a State
is a needy State for a month if--
``(A) the average rate of--
``(i) total unemployment in such State
(seasonally adjusted) for the period consisting
of the most recent 3 months for which data for
all States are published equals or exceeds 6.5
percent; and
``(ii) total unemployment in such State
(seasonally adjusted) for the 3-month period
equals or exceeds 110 percent of such average
rate for either (or both) of the corresponding
3-month periods ending in the 2 preceding
calendar years; or
``(B) as determined by the Secretary of Agriculture
(in the discretion of the Secretary of Agriculture),
the monthly average number of individuals (as of the
last day of each month) participating in the food stamp
program in the State in the then most recently
concluded 3-month period for which data are available
exceeds by not less than 10 percent the lesser of--
``(i) the monthly average number of
individuals (as of the last day of each month)
in the State that would have participated in
the food stamp program in the corresponding 3-
month period in fiscal year 1994 if the
amendments made by chapter 4 of the Personal
Responsibility and Work Opportunity Act of 1996
and the amendments made by chapter 1 of
subtitle A of title I of the Agricultural
Reconciliation Act of 1996 had been in effect
throughout fiscal year 1994; or
``(ii) the monthly average number of
individuals (as of the last day of each month)
in the State that would have participated in
the food stamp program in the corresponding 3-
month period in fiscal year 1995 if the
amendments made by chapter 4 of the Personal
Responsibility and Work Opportunity Act of 1996
and the amendments made by chapter 1 of
subtitle A of title I of the Agricultural
Reconciliation Act of 1996 had been in effect
throughout fiscal year 1995.
``(7) Other terms defined.--As used in this subsection:
``(A) State.--The term `State' means each of the 50
States of the United States and the District of
Columbia.
``(B) Secretary.--The term `Secretary' means the
Secretary of the Treasury.
``(8) Annual reports.--The Secretary shall annually report
to the Congress on the status of the Fund.
``(9) Budget scoring.--Notwithstanding section 257(b)(2) of
the Balanced Budget and Emergency Deficit Control Act of 1985,
the baseline shall assume that no grant shall be made under
this subsection after fiscal year 2001.
``SEC. 404. USE OF GRANTS.
``(a) General Rules.--Subject to this part, a State to which a
grant is made under section 403 may use the grant--
``(1) in any manner that is reasonably calculated to
accomplish the purpose of this part, including to provide low
income households with assistance in meeting home heating and
cooling costs; or
``(2) in any manner that the State was authorized to use
amounts received under part A or F, as such parts were in
effect on September 30, 1995.
``(b) Limitation on Use of Grant for Administrative Purposes.--
``(1) Limitation.--A State to which a grant is made under
section 403 shall not expend more than 15 percent of the grant
for administrative purposes.
``(2) Exception.--Paragraph (1) shall not apply to the use
of a grant for information technology and computerization
needed for tracking or monitoring required by or under this part.
``(c) Authority To Treat Interstate Immigrants Under Rules of
Former State.--A State operating a program funded under this part may
apply to a family the rules (including benefit amounts) of the program
funded under this part of another State if the family has moved to the
State from the other State and has resided in the State for less than
12 months.
``(d) Authority To Use Portion of Grant for Other Purposes.--
``(1) In general.--A State may use not more than 30 percent
of the amount of the grant made to the State under section 403
for a fiscal year to carry out a State program pursuant to the
Child Care and Development Block Grant Act of 1990.
``(2) Applicable rules.--Any amount paid to the State under
this part that is used to carry out a State program pursuant to
a provision of law specified or described in paragraph (1)
shall not be subject to the requirements of this part, but
shall be subject to the requirements that apply to Federal
funds provided directly under the provision of law to carry out
the program.
``(e) Authority To Reserve Certain Amounts for Assistance.--A State
may reserve amounts paid to the State under this part for any fiscal
year for the purpose of providing, without fiscal year limitation,
assistance under the State program funded under this part.
``(f) Authority To Operate Employment Placement Program.--A State
to which a grant is made under section 403 may use the grant to make
payments (or provide job placement vouchers) to State-approved public
and private job placement agencies that provide employment placement
services to individuals who receive assistance under the State program
funded under this part.
``(g) Implementation of Electronic Benefit Transfer System.--A
State to which a grant is made under section 403 is encouraged to
implement an electronic benefit transfer system for providing
assistance under the State program funded under this part, and may use
the grant for such purpose.
``SEC. 405. ADMINISTRATIVE PROVISIONS.
``(a) Quarterly.--The Secretary shall pay each grant payable to a
State under section 403 in quarterly installments.
``(b) Notification.--Not later than 3 months before the payment of
any such quarterly installment to a State, the Secretary shall notify
the State of the amount of any reduction determined under section
412(a)(1)(B) with respect to the State.
``(c) Computation and Certification of Payments to States.--
``(1) Computation.--The Secretary shall estimate the amount
to be paid to each eligible State for each quarter under this
part, such estimate to be based on a report filed by the State
containing an estimate by the State of the total sum to be
expended by the State in the quarter under the State program
funded under this part and such other information as the
Secretary may find necessary.
``(2) Certification.--The Secretary of Health and Human
Services shall certify to the Secretary of the Treasury the
amount estimated under paragraph (1) with respect to a State,
reduced or increased to the extent of any overpayment or
underpayment which the Secretary of Health and Human Services
determines was made under this part to the State for any prior
quarter and with respect to which adjustment has not been made
under this paragraph.
``(d) Payment Method.--Upon receipt of a certification under
subsection (c)(2) with respect to a State, the Secretary of the
Treasury shall, through the Fiscal Service of the Department of the
Treasury and before audit or settlement by the General Accounting
Office, pay to the State, at the time or times fixed by the Secretary
of Health and Human Services, the amount so certified.
``(e) Collection of State Overpayments to Families From Federal Tax
Refunds.--
``(1) In general.--Upon receiving notice from the Secretary
of Health and Human Services that a State agency administering
a program funded under this part has notified the Secretary
that a named individual has been overpaid under the State
program funded 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 the
individual filed a tax return as a married or unmarried
individual. If the Secretary of the Treasury finds that any
such amount is so payable, the Secretary 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.
``(2) Regulations.--The Secretary of the Treasury shall
issue regulations, after review by the Secretary of Health and
Human Services, that provide--
``(A) that a State may only submit under paragraph
(1) requests for collection of overpayments with
respect to individuals--
``(i) who are no longer receiving
assistance under the State program funded under
this part;
``(ii) 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 to collect the
past-due legally enforceable debt; and
``(iii) to whom the State agency has given
notice of its intent to request withholding by
the Secretary of the Treasury from the income
tax refunds of such individuals;
``(B) 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 paragraph (1); and
``(C) the procedures that the State and the
Secretary of the Treasury will follow in carrying out
this subsection which, to the maximum extent feasible
and consistent with the provisions of this subsection,
will be the same as those issued pursuant to section
464(b) applicable to collection of past-due child
support.
``SEC. 406. FEDERAL LOANS FOR STATE WELFARE PROGRAMS.
``(a) Loan Authority.--
``(1) In general.--The Secretary shall make loans to any
loan-eligible State, for a period to maturity of not more than
3 years.
``(2) Loan-eligible state.--As used in paragraph (1), the
term `loan-eligible State' means a State against which a
penalty has not been imposed under section 409(a)(1).
``(b) Rate of Interest.--The Secretary shall charge and collect
interest on any loan made under this section at a rate equal to the
current average market yield on outstanding marketable obligations of
the United States with remaining periods to maturity comparable to the
period to maturity of the loan.
``(c) Use of Loan.--A State shall use a loan made to the State
under this section only for any purpose for which grant amounts
received by the State under section 403(a) may be used, including--
``(1) welfare anti-fraud activities; and
``(2) the provision of assistance under the State program
to Indian families that have moved from the service area of an
Indian tribe with a tribal family assistance plan approved
under section 412.
``(d) Limitation on Total Amount of Loans to a State.--The
cumulative dollar amount of all loans made to a State under this
section during fiscal years 1997 through 2001 shall not exceed 10
percent of the State family assistance grant.
``(e) Limitation on Total Amount of Outstanding Loans.--The total
dollar amount of loans outstanding under this section may not exceed
$1,700,000,000.
``(f) Appropriation.--Out of any money in the Treasury of the
United States not otherwise appropriated, there are appropriated such
sums as may be necessary for the cost of loans under this section.
``SEC. 407. MANDATORY WORK REQUIREMENTS.
``(a) Participation Rate Requirements.--
``(1) All families.--A State to which a grant is made under
section 403 for a fiscal year shall achieve the minimum
participation rate specified in the following table for the
fiscal year with respect to all families receiving assistance
under the State program funded under this part:
The minimum
participation
``If the fiscal year is:
rate is:
1996....................... 15
1997....................... 25
1998....................... 30
1999....................... 35
2000....................... 40
2001....................... 45
2002 and thereafter........ 50.
``(2) 2-parent families.--A State to which a grant is made
under section 403 for a fiscal year shall achieve the minimum
participation rate specified in the following table for the
fiscal year with respect to 2-parent families receiving
assistance under the State program funded under this part:
The minimum
participation
``If the fiscal year is:
rate is:
1996....................... 50
1997....................... 75
1998....................... 75
1999 and thereafter........ 90.
``(b) Calculation of Participation Rates.--
``(1) All families.--
``(A) Average monthly rate.--For purposes of
subsection (a)(1), the participation rate for all
families of a State for a fiscal year is the average of
the participation rates for all families of the State
for each month in the fiscal year.
``(B) Monthly participation rates.--The
participation rate of a State for all families of the
State for a month, expressed as a percentage, is--
``(i) the number of families receiving
assistance under the State program funded under
this part that include an adult who is engaged
in work for the month; divided by
``(ii) the amount by which--
``(I) the number of families
receiving such assistance during the
month that include an adult receiving
such assistance; exceeds
``(II) the number of families
receiving such assistance that are
subject in such month to a penalty
described in subsection (e)(1) but have
not been subject to such penalty for
more than 3 months within the preceding
12-month period (whether or not
consecutive).
``(2) 2-parent families.--
``(A) Average monthly rate.--For purposes of
subsection (a)(2), the participation rate for 2-parent
families of a State for a fiscal year is the average of
the participation rates for 2-parent families of the
State for each month in the fiscal year.
``(B) Monthly participation rates.--The
participation rate of a State for 2-parent families of
the State for a month shall be calculated by use of the
formula set forth in paragraph (1)(B), except that in
the formula the term `number of 2-parent families'
shall be substituted for the term `number of families'
each place such latter term appears.
``(3) Pro rata reduction of participation rate due to
caseload reductions not required by federal law.--
``(A) In general.--The Secretary shall prescribe
regulations for reducing the minimum participation rate
otherwise required by this section for a fiscal year by
the number of percentage points equal to the number of percentage
points (if any) by which--
``(i) the average monthly number of
families receiving assistance during the fiscal
year under the State program funded under this
part is less than
``(ii) the average monthly number of
families that received aid under the State plan
approved under part A (as in effect on
September 30, 1995) during fiscal year 1995.
The minimum participation rate shall not be reduced to
the extent that the Secretary determines that the
reduction in the number of families receiving such
assistance is required by Federal law.
``(B) Eligibility changes not counted.--The
regulations described in subparagraph (A) shall not
take into account families that are diverted from a
State program funded under this part as a result of
differences in eligibility criteria under a State
program funded under this part and eligibility criteria
under the State program operated under the State plan
approved under part A (as such plan and such part were
in effect on September 30, 1995). Such regulations
shall place the burden on the Secretary to prove that
such families were diverted as a direct result of
differences in such eligibility criteria.
``(4) State option to include individuals receiving
assistance under a tribal family assistance plan.--For purposes
of paragraphs (1)(B) and (2)(B), a State may, at its option,
include families receiving assistance under a tribal family
assistance plan approved under section 412.
``(5) State option for participation requirement
exemptions.--
``(A) In general.--For any fiscal year, a State
may, at its option, not require an individual who is a
single custodial parent caring for a child who has not
attained 12 months of age to engage in work and may
disregard such an individual in determining the
participation rates under subsection (a).
``(B) Limitation.--The exemption described in
subparagraph (A) may only be applied to a single
custodial parent for a total of 12 months (whether or
not consecutive).
``(c) Engaged in Work.--
``(1) All families.--For purposes of subsection
(b)(1)(B)(i), a recipient is engaged in work for a month in a
fiscal year if the recipient is participating in work
activities for at least the minimum average number of hours per
week specified in the following table during the month, not
fewer than 20 hours per week of which are attributable to an
activity described in paragraph (1), (2), (3), (4), (5), (6),
(7), or (8) of subsection (d):
The minimum
``If the month is
average number of
in fiscal year:
hours per week is:
1996....................... 20
1997....................... 20
1998....................... 20
1999....................... 25
2000....................... 30
2001....................... 30
2002 and thereafter........ 35.
``(2) 2-parent families.--For purposes of subsection
(b)(2)(B)(i)--
``(A) an adult is engaged in work for a month in a
fiscal year if the adult is making progress in work
activities for at least 35 hours per week during the
month, not fewer than 30 hours per week of which are
attributable to an activity described in paragraph (1),
(2), (3), (4), (5), (6), (7), or (8) of subsection (d);
and
``(B) if the family of such adult receives
federally-funded child care assistance, if the adult's
spouse is making progress in work activities for at
least 20 hours per week during the month which are
attributable to an activity described in paragraph (1),
(2), (3), (4), (5), or (7) of subsection (d).
``(3) Limitation on number of weeks for which job search
counts as work.--Notwithstanding paragraphs (1) and (2), an
individual shall not be considered to be engaged in work by
virtue of participation in an activity described in subsection
(d)(6), after the individual has participated in such an
activity for 4 weeks (except if the unemployment rate in the
State is above the national average, in which case, 12 weeks)
in a fiscal year. An individual shall be considered to be
participating in such an activity for a week if the individual
participates in such an activity at any time during the week.
``(4) Limitation on vocational education activities counted
as work.--For purposes of determining monthly participation
rates under paragraphs (1)(B)(i) and (2)(B)(i) of subsection
(b), not more than 20 percent of adults in all families and in
2-parent families determined to be engaged in work in the State
for a month may meet the work activity requirement through
participation in vocational educational training.
``(5) Single parent with child under age 6 deemed to be
meeting work participation requirements if parent is engaged in
work for 20 hours per week.--For purposes of determining
monthly participation rates under subsection (b)(1)(B)(i), a
recipient in a 1-parent family who is the parent of a child who
has not attained 6 years of age is deemed to be engaged in work
for a month if the recipient is engaged in work for an average
of at least 20 hours per week during the month.
``(6) Teen head of household who maintains satisfactory
school attendance deemed to be meeting work participation
requirements.--For purposes of determining monthly
participation rates under subsection (b)(1)(B)(i), a recipient
who is a single head of household and has not attained 20 years
of age is deemed to be engaged in work for a month in a fiscal
year if the recipient--
``(A) maintains satisfactory attendance at
secondary school or the equivalent during the month; or
``(B) participates in education directly related to
employment for at least the minimum average number of
hours per week specified in the table set forth in
paragraph (1).
``(d) Work Activities Defined.--As used in this section, the term
`work activities' means--
``(1) unsubsidized employment;
``(2) subsidized private sector employment;
``(3) subsidized public sector employment;
``(4) work experience (including work associated with the
refurbishing of publicly assisted housing) if sufficient
private sector employment is not available;
``(5) on-the-job training;
``(6) job search and job readiness assistance;
``(7) community service programs;
``(8) vocational educational training (not to exceed 12
months with respect to any individual);
``(9) job skills training directly related to employment;
``(10) education directly related to employment, in the
case of a recipient who has not attained 20 years of age, and
has not received a high school diploma or a certificate of high
school equivalency; and
``(11) satisfactory attendance at secondary school, in the
case of a recipient who--
``(A) has not completed secondary school; and
``(B) is a dependent child, or a head of household
who has not attained 20 years of age.
``(e) Penalties Against Individuals.--
``(1) In general.--Except as provided in paragraph (2), if
an adult in a family receiving assistance under the State
program funded under this part refuses to engage in work
required in accordance with this section, the State shall--
``(A) reduce the amount of assistance otherwise
payable to the family pro rata (or more, at the
option of the State) with respect to any period during a month in which
the adult so refuses; or
``(B) terminate such assistance,
subject to such good cause and other exceptions as the State
may establish.
``(2) Exception.--
``(A) In general.--Notwithstanding paragraph (1), a
State may not reduce or terminate assistance under the
State program funded under this part based on a refusal
of an adult to work if the adult is a single custodial
parent caring for a child who has not attained 11 years
of age, and the adult proves that the adult has a
demonstrated inability (as determined by the State) to
obtain needed child care, for 1 or more of the
following reasons:
``(i) Unavailability of appropriate child
care within a reasonable distance from the
individual's home or work site.
``(ii) Unavailability or unsuitability of
informal child care by a relative or under
other arrangements.
``(iii) Unavailability of appropriate and
affordable formal child care arrangements.
``(B) Included in determination of participation
rates.--A State may not disregard an adult for which
the exception described in subparagraph (A) applies
from determination of the participation rates under
subsection (a).
``(f) Nondisplacement in Work Activities.--
``(1) In general.--Subject to paragraph (2), an adult in a
family receiving assistance under a State program funded under
this part attributable to funds provided by the Federal
Government may fill a vacant employment position in order to
engage in a work activity described in subsection (d).
``(2) No filling of certain vacancies.--No work assignment
to an adult in a family receiving assistance under a State
program funded under this part shall result in--
``(A) the displacement of any currently employed
worker (including any partial displacement of such
worker through such matters as a reduction in the hours
of overtime work, wages, or employment benefits), or in
the impairment of any contract for services in
existence as of the date of the enactment of the
Personal Responsibility and Work Opportunity Act of
1996, or in the impairment of any collective bargaining
agreement in existence as of such date; and
``(B) the termination of the employment of any
regular employee or any other involuntary reduction of
an employer's workforce in order to fill the vacancy so
created with an adult described in paragraph (1).
``(3) Grievance procedure.--A State with a program funded
under this part shall establish and maintain a grievance
procedure for resolving complaints of alleged violations of the
provisions of paragraph (2) and for providing adequate remedies
for any such violations established. The grievance procedure
established under this paragraph shall include an opportunity
for a hearing.
``(4) No preemption.--Nothing in this subsection shall
preempt or supersede any provision of State or local law that
provides greater protection for employees from displacement.
``(g) Sense of the Congress.--It is the sense of the Congress that
in complying with this section, each State that operates a program
funded under this part is encouraged to assign the highest priority to
requiring adults in 2-parent families and adults in single-parent
families that include older preschool or school-age children to be
engaged in work activities.
``(h) Sense of the Congress That States Should Impose Certain
Requirements on Noncustodial, Nonsupporting Minor Parents.--It is the
sense of the Congress that the States should require noncustodial,
nonsupporting parents who have not attained 18 years of age to fulfill
community work obligations and attend appropriate parenting or money
management classes after school.
``SEC. 408. PROHIBITIONS; REQUIREMENTS.
``(a) In General.--
``(1) No assistance for families without a minor child.--A
State to which a grant is made under section 403 shall not use
any part of the grant to provide assistance to a family--
``(A) unless the family includes--
``(i) a minor child who resides with a
custodial parent or other adult caretaker
relative of the child; or
``(ii) a pregnant individual; and
``(B) if such family includes an adult who has
received assistance under any State program funded
under this part attributable to funds provided by the
Federal Government, for 60 months (whether or not
consecutive) after the date the State program funded
under this part commences (unless an exception
described in subparagraph (B) or (C) of paragraph (8)
applies).
``(2) No additional cash assistance for children born to
families receiving assistance.--
``(A) General rule.--A State to which a grant is
made under section 403 shall not use any part of the
grant to provide cash benefits for a minor child who is
born to--
``(i) a recipient of assistance under the
program operated under this part; or
``(ii) a person who received such
assistance at any time during the 10-month
period ending with the birth of the child.
``(B) Exception for children born into families
with no other children.--Subparagraph (A) shall not
apply to a minor child who is born into a family that
does not include any other children.
``(C) Exception for rape or incest.--Subparagraph
(A) shall not apply with respect to a child who is born
as a result of rape or incest.
``(D) State election to opt out.--Subparagraph (A)
shall not apply to a State if State law specifically
exempts the State program funded under this part from
the application of subparagraph (A).
``(E) Substitution of family caps in effect under
waivers or current state law.--Subparagraph (A) shall
not apply to a State--
``(i) if, not earlier than 2 years prior to
the date of the enactment of this part, the
State enacted a law permitting the State to
deny aid or assistance to a family by reason of
the birth of a child to a family member
otherwise eligible for such aid or assistance;
or
``(ii) if, as of the date of the enactment
of this part--
``(I) the State has in effect a
waiver approved by the Secretary under
section 1115 which permits the State to
deny aid under the State plan approved
under part A of this title (as in
effect without regard to the amendments
made by chapter 1 of the Personal
Responsibility and Work Opportunity Act
of 1996) to a family by reason of the
birth of a child to a family member
otherwise eligible for such aid; and
``(II) the State continues to
implement such policy under the State
program funded under this part
(regardless of the expiration of the
waiver), under rules prescribed by the
State.
``(3) Reduction or elimination of assistance for
noncooperation in establishing paternity or obtaining child
support.--If the agency responsible for administering the State
plan approved under part D determines that an individual is not
cooperating with the State in establishing paternity or in
establishing, modifying, or enforcing a support order with respect to a
child of the individual, and the individual does not qualify for any
good cause or other exception established by the State pursuant to
section 454(29), then the State--
``(A) shall deduct not less than 25 percent of the
assistance that would otherwise be provided to the
family of the individual under the State program funded
under this part; and
``(B) may deny the family any assistance under the
State program.
``(4) No assistance for families not assigning certain
support rights to the state.--
``(A) In general.--A State to which a grant is made
under section 403 shall require, as a condition of
providing assistance to a family under the State
program funded under this part, that a member of the
family assign to the State any rights the family member
may have (on behalf of the family member or of any
other person for whom the family member has applied for
or is receiving such assistance) to support from any
other person, not exceeding the total amount of
assistance so provided to the family, which accrue (or
have accrued) before the date the family leaves the
program, which assignment, on and after the date the
family leaves the program, shall not apply with respect
to any support (other than support collected pursuant
to section 464) which accrued before the family
received such assistance and which the State has not
collected by--
``(i) September 30, 2000, if the assignment
is executed on or after October 1, 1997, and
before October 1, 2000; or
``(ii) the date the family leaves the
program, if the assignment is executed on or
after October 1, 2000.
``(B) Limitation.--A State to which a grant is made
under section 403 shall not require, as a condition of
providing assistance to any family under the State
program funded under this part, that a member of the
family assign to the State any rights to support
described in subparagraph (A) which accrue after the
date the family leaves the program.
``(5) No assistance for teenage parents who do not attend
high school or other equivalent training program.--A State to
which a grant is made under section 403 shall not use any part
of the grant to provide assistance to an individual who has not
attained 18 years of age, is not married, has a minor child at
least 12 weeks of age in his or her care, and has not
successfully completed a high-school education (or its
equivalent), if the individual does not participate in--
``(A) educational activities directed toward the
attainment of a high school diploma or its equivalent;
or
``(B) an alternative educational or training
program that has been approved by the State.
``(6) No assistance for teenage parents not living in
adult-supervised settings.--
``(A) In general.--
``(i) Requirement.--Except as provided in
subparagraph (B), a State to which a grant is
made under section 403 shall not use any part
of the grant to provide assistance to an
individual described in clause (ii) of this
subparagraph if the individual and the minor
child referred to in clause (ii)(II) do not
reside in a place of residence maintained by a
parent, legal guardian, or other adult relative
of the individual as such parent's, guardian's,
or adult relative's own home.
``(ii) Individual described.--For purposes
of clause (i), an individual described in this
clause is an individual who--
``(I) has not attained 18 years of
age; and
``(II) is not married, and has a
minor child in his or her care.
``(B) Exception.--
``(i) Provision of, or assistance in
locating, adult-supervised living
arrangement.--In the case of an individual who
is described in clause (ii), the State agency
referred to in section 402(a)(4) shall provide,
or assist the individual in locating, a second
chance home, maternity home, or other
appropriate adult-supervised supportive living
arrangement, taking into consideration the
needs and concerns of the individual, and
thereafter shall require that the individual
and the minor child referred to in subparagraph
(A)(ii)(II) reside in such living arrangement
as a condition of the continued receipt of
assistance under the State program funded under
this part attributable to funds provided by the
Federal Government (or in an alternative
appropriate arrangement, should circumstances
change and the current arrangement cease to be
appropriate).
``(ii) Individual described.--For purposes
of clause (i), an individual is described in
this clause if the individual is described in
subparagraph (A)(ii), and--
``(I) the individual has no parent,
legal guardian or other appropriate
adult relative described in subclause
(II) of his or her own who is living or
whose whereabouts are known;
``(II) no living parent, legal
guardian, or other appropriate adult
relative, who would otherwise meet
applicable State criteria to act as the
individual's legal guardian, of such
individual allows the individual to
live in the home of such parent,
guardian, or relative;
``(III) the State agency determines
that--
``(aa) the individual or
the minor child referred to in
subparagraph (A)(ii)(II) is
being or has been subjected to
serious physical or emotional
harm, sexual abuse, or
exploitation in the residence
of the individual's own parent
or legal guardian; or
``(bb) substantial evidence
exists of an act or failure to
act that presents an imminent
or serious harm if the
individual and the minor child
lived in the same residence
with the individual's own
parent or legal guardian; or
``(IV) the State agency otherwise
determines that it is in the best
interest of the minor child to waive
the requirement of subparagraph (A)
with respect to the individual or the
minor child.
``(iii) Second-chance home.--For purposes
of this subparagraph, the term `second-chance
home' means an entity that provides individuals
described in clause (ii) with a supportive and
supervised living arrangement in which such
individuals are required to learn parenting
skills, including child development, family
budgeting, health and nutrition, and other
skills to promote their long-term economic
independence and the well-being of their
children.
``(7) No medical services.--
``(A) In general.--Except as provided in
subparagraph (B), a State to which a grant is made
under section 403 shall not use any part of the grant
to provide medical services.
``(B) Exception for family planning services.--As
used in subparagraph (A), the term `medical services'
does not include family planning services.
``(8) No assistance for more than 5 years.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), a State to which a grant is
made under section 403 shall not use any part of the
grant to provide assistance to a family that includes
an adult who has received assistance under any State
program funded under this part attributable to funds
provided by the Federal Government, for 60 months
(whether or not consecutive) after the date the State
program funded under this part commences.
``(B) Minor child exception.--In determining the
number of months for which an individual who is a
parent or pregnant has received assistance under the
State program funded under this part, the State shall
disregard any month for which such assistance was
provided with respect to the individual and during
which the individual was--
``(i) a minor child; and
``(ii) not the head of a household or
married to the head of a household.
``(C) Hardship exception.--
``(i) In general.--The State may exempt a
family from the application of subparagraph (A)
of this paragraph, or subparagraph (B) of
paragraph (1), by reason of hardship or if the
family includes an individual who has been
battered or subjected to extreme cruelty.
``(ii) Limitation.--The number of families
with respect to which an exemption made by a
State under clause (i) is in effect for a
fiscal year shall not exceed 20 percent of the
average monthly number of families to which
assistance is provided under the State program
funded under this part.
``(iii) Battered or subject to extreme
cruelty defined.--For purposes of clause (i),
an individual has been battered or subjected to
extreme cruelty if the individual has been
subjected to--
``(I) physical acts that resulted
in, or threatened to result in,
physical injury to the individual;
``(II) sexual abuse;
``(III) sexual activity involving a
dependent child;
``(IV) being forced as the
caretaker relative of a dependent child
to engage in nonconsensual sexual acts
or activities;
``(V) threats of, or attempts at,
physical or sexual abuse;
``(VI) mental abuse; or
``(VII) neglect or deprivation of
medical care.
``(D) Rule of interpretation.--Subparagraph (A) of
this paragraph and subparagraph (B) of paragraph (1)
shall not be interpreted to require any State to
provide assistance to any individual for any period of
time under the State program funded under this part.
``(9) Denial of assistance for 10 years to a person found
to have fraudulently misrepresented residence in order to
obtain assistance in 2 or more states.--A State to which a
grant is made under section 403 shall not use any part of the
grant to provide cash assistance to an individual during the
10-year period that begins on the date the individual is
convicted in Federal or State court of having made a fraudulent
statement or representation with respect to the place of
residence of the individual in order to receive assistance
simultaneously from 2 or more States under programs that are
funded under this title, title XV or XIX, or the Food Stamp Act
of 1977, or benefits in 2 or more States under the supplemental
security income program under title XVI. The preceding sentence
shall not apply with respect to a conviction of an individual,
for any month beginning after the President of the United
States grants a pardon with respect to the conduct which was the
subject of the conviction.
``(10) Denial of assistance for fugitive felons and
probation and parole violators.--
``(A) In general.--A State to which a grant is made
under section 403 shall not use any part of the grant
to provide assistance to any individual who is--
``(i) fleeing to avoid prosecution, or
custody or confinement after conviction, under
the laws of the place from which the individual
flees, for a crime, or an attempt to commit a
crime, which is a felony under the laws of the
place from which the individual flees, or
which, in the case of the State of New Jersey,
is a high misdemeanor under the laws of such
State; or
``(ii) violating a condition of probation
or parole imposed under Federal or State law.
The preceding sentence shall not apply with respect to
conduct of an individual, for any month beginning after
the President of the United States grants a pardon with
respect to the conduct.
``(B) Exchange of information with law enforcement
agencies.--If a State to which a grant is made under
section 403 establishes safeguards against the use or
disclosure of information about applicants or
recipients of assistance under the State program funded
under this part, the safeguards shall not prevent the
State agency administering the program from furnishing
a Federal, State, or local law enforcement officer,
upon the request of the officer, with the current
address of any recipient if the officer furnishes the
agency with the name of the recipient and notifies the
agency that--
``(i) the recipient--
``(I) is described in subparagraph
(A); or
``(II) has information that is
necessary for the officer to conduct
the official duties of the officer; and
``(ii) the location or apprehension of the
recipient is within such official duties.
``(11) Denial of assistance for minor children who are
absent from the home for a significant period.--
``(A) In general.--A State to which a grant is made
under section 403 shall not use any part of the grant
to provide assistance for a minor child who has been,
or is expected by a parent (or other caretaker
relative) of the child to be, absent from the home for
a period of 45 consecutive days or, at the option of
the State, such period of not less than 30 and not more
than 180 consecutive days as the State may provide for
in the State plan submitted pursuant to section 402.
``(B) State authority to establish good cause
exceptions.--The State may establish such good cause
exceptions to subparagraph (A) as the State considers
appropriate if such exceptions are provided for in the
State plan submitted pursuant to section 402.
``(C) Denial of assistance for relative who fails
to notify state agency of absence of child.--A State to
which a grant is made under section 403 shall not use
any part of the grant to provide assistance for an
individual who is a parent (or other caretaker
relative) of a minor child and who fails to notify the
agency administering the State program funded under
this part of the absence of the minor child from the
home for the period specified in or provided for
pursuant to subparagraph (A), by the end of the 5-day
period that begins with the date that it becomes clear
to the parent (or relative) that the minor child will
be absent for such period so specified or provided for.
``(12) Medical assistance required to be provided for 1
year for families becoming ineligible for assistance under this
part due to increased earnings from employment or collection of
child support.--
``(A) In general.--A State to which a grant is made
under section 403 shall take such action as may be
necessary to ensure that, if any family becomes
ineligible to receive assistance under the State
program funded under this part as a result of--
``(i) increased earnings from employment;
``(ii) the collection or increased
collection of child or spousal support;
``(iii) a combination of the matters
described in clauses (i) and (ii); or
``(iv) during the 1-year period that begins
on July 1, 1997 (or the date described in
section 2116(b)(1)(A) of the Personal
Responsibility and Work Opportunity Act of
1996, if earlier), as a result of the State
revising the standards and criteria under the
State plan for determining eligibility for
assistance under this part,
and such family received such assistance in at least 3
of the 6 months immediately preceding the month in
which such ineligibility begins, the family shall be
eligible for medical assistance under the State's plan
approved under title XIX (or, if applicable, title XV)
during the immediately succeeding 12-month period for
so long as family income (as defined by the State),
excluding any refund of Federal income taxes made by
reason of section 32 of the Internal Revenue Code of
1986 (relating to earned income tax credit) and any
payment made by an employer under section 3507 of such
Code (relating to advance payment of earned income
credit), is less than the poverty line, and that the
family will be appropriately notified of such
eligibility.
``(B) Exception.--No medical assistance may be
provided under subparagraph (A) to any family that
contains an individual who has had all or part of any
assistance provided under this part withheld, deducted,
or denied as a result of the application of--
``(i) a preceding paragraph of this
subsection;
``(ii) section 407(e)(1); or
``(iii) in the case of a family described
in clause (iv) of subparagraph (A), a sanction
imposed under the State plan under this part
(as in effect on June 30, 1997 (or the day
before the date described in section
2116(b)(1)(A) of the Personal Responsibility
and Work Opportunity Act of 1996, if earlier)).
``(b) Aliens.--For special rules relating to the treatment of
aliens, see section 2402 of the Personal Responsibility and Work
Opportunity Act of 1996.
``(c) Nondiscrimination Provisions.--Any program or activity that
receives funds under this part shall be subject to enforcement
authorized under the following provisions of law:
``(1) The Age Discrimination Act of 1975 (42 U.S.C. 6101 et
seq.).
``(2) Section 504 of the Rehabilitation Act of 1973 (29
U.S.C. 794).
``(3) The Americans with Disabilities Act of 1990 (42
U.S.C. 12101 et seq.).
``(4) Title VI of the Civil Rights Act of 1964 (42 U.S.C.
2000d et seq.).
``SEC. 409. PENALTIES.
``(a) In General.--Subject to this section:
``(1) Use of grant in violation of this part.--
``(A) General penalty.--If an audit conducted under
chapter 75 of title 31, United States Code, finds that
an amount paid to a State under section 403 for a
fiscal year has been used in violation of this part,
the Secretary shall reduce the grant payable to the
State under section 403(a)(1) for the immediately
succeeding fiscal year quarter by the amount so used.
``(B) Enhanced penalty for intentional
violations.--If the State does not prove to the
satisfaction of the Secretary that the State did not
intend to use the amount in violation of this part, the
Secretary shall further reduce the grant payable to the
State under section 403(a)(1) for the immediately
succeeding fiscal year quarter by an amount equal to 5
percent of the State family assistance grant.
``(2) Failure to submit required report.--
``(A) In general.--If the Secretary determines that
a State has not, within 1 month after the end of a
fiscal quarter, submitted the report required by
section 411(a) for the quarter, the Secretary shall
reduce the grant payable to the State under section
403(a)(1) for the immediately succeeding fiscal year by
an amount equal to 4 percent of the State family
assistance grant.
``(B) Rescission of penalty.--The Secretary shall
rescind a penalty imposed on a State under subparagraph
(A) with respect to a report if the State submits the
report before the end of the fiscal quarter that
immediately succeeds the fiscal quarter for which the
report was required.
``(3) Failure to satisfy minimum participation rates.--
``(A) In general.--If the Secretary determines that
a State to which a grant is made under section 403 for
a fiscal year has failed to comply with section 407(a)
for the fiscal year, the Secretary shall reduce the
grant payable to the State under section 403(a)(1) for
the immediately succeeding fiscal year by an amount
equal to not more than 5 percent of the State family
assistance grant.
``(B) Penalty based on severity of failure.--The
Secretary shall impose reductions under subparagraph
(A) based on the degree of noncompliance.
``(C) Additional penalty for consecutive
noncompliance.--Notwithstanding the limitation
described in subparagraph (A), the Secretary shall
reduce the grant payable to the State under section
403(a)(1) for a fiscal year, in addition to the
reduction imposed under subparagraph (A), by an amount
equal to 5 percent of the State family assistance
grant, if the Secretary determines that the State
failed to comply with section 407(a) for 2 or more
consecutive preceding fiscal years.
``(4) Failure to participate in the income and eligibility
verification system.--If the Secretary determines that a State
program funded under this part is not participating during a
fiscal year in the income and eligibility verification system
required by section 1137, the Secretary shall reduce the grant
payable to the State under section 403(a)(1) for the
immediately succeeding fiscal year by an amount equal to not
more than 2 percent of the State family assistance grant.
``(5) Failure to comply with paternity establishment and
child support enforcement requirements under part d.--
Notwithstanding any other provision of this Act, if the
Secretary determines that the State agency that administers a
program funded under this part does not enforce the penalties
requested by the agency administering part D against recipients
of assistance under the State program who fail to cooperate in
establishing paternity or in establishing, modifying, or
enforcing a child support order in accordance with such part
and who do not qualify for any good cause or other exception
established by the State under section 454(29), the Secretary
shall reduce the grant payable to the State under section
403(a)(1) for the immediately succeeding fiscal year (without
regard to this section) by not more than 5 percent.
``(6) Failure to timely repay a federal loan fund for state
welfare programs.--If the Secretary determines that a State has
failed to repay any amount borrowed from the Federal Loan Fund
for State Welfare Programs established under section 406 within
the period of maturity applicable to the loan, plus any
interest owed on the loan, the Secretary shall reduce the grant
payable to the State under section 403(a)(1) for the
immediately succeeding fiscal year quarter (without regard to
this section) by the outstanding loan amount, plus the interest
owed on the outstanding amount. The Secretary shall not forgive
any outstanding loan amount or interest owed on the outstanding
amount.
``(7) Failure of any state to maintain certain level of
historic effort.--
``(A) In general.--The Secretary shall reduce the
grant payable to the State under section 403(a)(1) for
fiscal year 1998, 1999, 2000, 2001, or 2002 by the
amount (if any) by which qualified State expenditures
for the then immediately preceding fiscal year are less
than the applicable percentage of historic State
expenditures with respect to such preceding fiscal
year.
``(B) Definitions.--As used in this paragraph:
``(i) Qualified state expenditures.--
``(I) In general.--The term
`qualified State expenditures' means,
with respect to a State and a fiscal
year, the total expenditures by the
State during the fiscal year, under all
State programs, for any of the
following with respect to eligible
families:
``(aa) Cash assistance.
``(bb) Child care
assistance.
``(cc) Educational
activities designed to increase
self-sufficiency, job training,
and work, excluding any
expenditure for public
education in the State except
expenditures which involve the
provision of services or
assistance to a member of an
eligible family which is not
generally available to persons
who are not members of an
eligible family.
``(dd) Administrative costs
in connection with the matters
described in items (aa), (bb),
(cc), and (ee), but only to the
extent that such costs do not
exceed 15 percent of the total
amount of qualified State
expenditures for the fiscal
year.
``(ee) Any other use of
funds allowable under section
404(a)(1).
``(II) Exclusion of transfers from
other state and local programs.--Such
term does not include expenditures
under any State or local program during
a fiscal year, except to the extent
that--
``(aa) such expenditures
exceed the amount expended
under the State or local
program in the fiscal year most
recently ending before the date
of the enactment of the
Personal Responsibility and
Work Opportunity Act of 1996;
or
``(bb) the State is
entitled to a payment under
former section 403 (as in
effect immediately before such
date of enactment) with respect
to such expenditures.
``(III) Eligible families.--As used
in subclause (I), the term `eligible
families' means families eligible for
assistance under the State program
funded under this part, and families
that would be eligible for such
assistance but for the application of
section 408(a)(8) of this Act or
section 2402 of the Personal
Responsibility and Work Opportunity Act
of 1996.
``(ii) Applicable percentage.--The term
`applicable percentage' means for fiscal years
1997 through 2001, 80 percent reduced (if
appropriate) in accordance with subparagraph (C)(ii).
``(iii) Historic state expenditures.--The
term `historic State expenditures' means, with
respect to a State, the lesser of--
``(I) the expenditures by the State
under parts A and F (as in effect
during fiscal year 1994) for fiscal
year 1994; or
``(II) the amount which bears the
same ratio to the amount described in
subclause (I) as--
``(aa) the State family
assistance grant, plus the
total amount required to be
paid to the State under former
section 403 for fiscal year
1994 with respect to amounts
expended by the State for child
care under subsection (g) or
(i) of section 402 (as in
effect during fiscal year
1994); bears to
``(bb) the total amount
required to be paid to the
State under former section 403
(as in effect during fiscal
year 1994) for fiscal year
1994.
Such term does not include any expenditures
under the State plan approved under part A (as
so in effect) on behalf of individuals covered
by a tribal family assistance plan approved
under section 412, as determined by the
Secretary.
``(iv) Expenditures by the state.--The term
`expenditures by the State' does not include--
``(I) any expenditures from amounts
made available by the Federal
Government;
``(II) State funds expended for the
medicaid program under title XV or XIX;
or
``(III) any State funds which are
used to match Federal funds or are
expended as a condition of receiving
Federal funds under Federal programs
other than under this part.
``(C) Applicable percentage reduced for high
performance states.--
``(i) Determination of high performance
states.--The Secretary shall use the formula
developed under section 403(a)(4)(C) to assign
a score to each eligible State that represents
the performance of the State program funded
under this part for each fiscal year, and shall
prescribe a performance threshold which the
Secretary shall use to determine whether to
reduce the applicable percentage with respect
to any eligible State for a fiscal year.
``(ii) Reduction proportional to
performance.--The Secretary shall reduce the
applicable percentage for a fiscal year with
respect to each eligible State by an amount
which is directly proportional to the amount
(if any) by which the score assigned to the
State under clause (i) for the immediately
preceding fiscal year exceeds the performance
threshold prescribed under clause (i) for such
preceding fiscal year, subject to clause (iii).
``(iii) Limitation on reduction.--The
applicable percentage for a fiscal year with
respect to a State may not be reduced by more
than 8 percentage points under this
subparagraph.
``(8) Substantial noncompliance of state child support
enforcement program with requirements of part d.--
``(A) In general.--If a State program operated
under part D is found as a result of a review conducted
under section 452(a)(4) not to have complied
substantially with the requirements of such part for
any quarter, and the Secretary determines that the
program is not complying substantially with such
requirements at the time the finding is made, the
Secretary shall reduce the grant payable to the State
under section 403(a)(1) for the quarter and each subsequent quarter
that ends before the 1st quarter throughout which the program is found
to be in substantial compliance with such requirements by--
``(i) not less than 1 nor more than 2
percent;
``(ii) not less than 2 nor more than 3
percent, if the finding is the 2nd consecutive
such finding made as a result of such a review;
or
``(iii) not less than 3 nor more than 5
percent, if the finding is the 3rd or a
subsequent consecutive such finding made as a
result of such a review.
``(B) Disregard of noncompliance which is of a
technical nature.--For purposes of subparagraph (A) and
section 452(a)(4), a State which is not in full
compliance with the requirements of this part shall be
determined to be in substantial compliance with such
requirements only if the Secretary determines that any
noncompliance with such requirements is of a technical
nature which does not adversely affect the performance
of the State's program operated under part D.
``(9) Failure of state receiving amounts from contingency
fund to maintain 100 percent of historic effort.--If, at the
end of any fiscal year during which amounts from the
Contingency Fund for State Welfare Programs have been paid to a
State, the Secretary finds that the expenditures under the
State program funded under this part for the fiscal year are
less than 100 percent of historic State expenditures (as
defined in paragraph (7)(B)(iii) of this subsection), the
Secretary shall reduce the grant payable to the State under
section 403(a)(1) for the immediately succeeding fiscal year by
the total of the amounts so paid to the State.
``(10) Failure to comply with provisions of this part or
the state plan.--If, after reasonable notice and opportunity
for hearing, the Secretary determines that during a fiscal year
a State has not substantially complied with any provision of
this part or of the State plan, the Secretary shall, if a
preceding paragraph of this subsection does not apply to such
noncompliance, reduce the grant payable to the State under
section 403(a)(1) for the immediately succeeding fiscal year by
an amount equal to not more than 5 percent of the State family
assistance grant, and shall continue to impose such reduction
during each succeeding fiscal year until the Secretary
determines that the State no longer is in noncompliance with
such provision.
``(11) Failure to comply with 5-year limit on assistance.--
If the Secretary determines that during a fiscal year a State
has not complied with the provisions of section 408(a)(1)(B),
the Secretary shall reduce the grant payable to the State under
section 403(a)(1) for the immediately succeeding fiscal year by
an amount equal to 5 percent of the State family assistance
grant.
``(12) Required replacement of grant fund reductions caused
by penalties.--If the grant payable to a State under section
403(a)(1) for a fiscal year is reduced by reason of this
subsection, the State shall, during the immediately succeeding
fiscal year, expend under the State program funded under this
part an amount equal to the total amount of such reductions.
``(b) Reasonable Cause Exception.--
``(1) In general.--The Secretary may not impose a penalty
on a State under subsection (a) with respect to a requirement
if the Secretary determines that the State has reasonable cause
for failing to comply with the requirement.
``(2) Exception.--Paragraph (1) of this subsection shall
not apply to any penalty under paragraph (6) or (7) of
subsection (a).
``(c) Corrective Compliance Plan.--
``(1) In general.--
``(A) Notification of violation.--Before imposing a
penalty against a State under subsection (a) with
respect to a violation of this part, the Secretary
shall notify the State of the violation and allow the
State the opportunity to enter into a corrective
compliance plan in accordance with this subsection
which outlines how the State will correct the violation
and how the State will insure continuing compliance
with this part.
``(B) 60-day period to propose a corrective
compliance plan.--During the 60-day period that begins
on the date the State receives a notice provided under
subparagraph (A) with respect to a violation, the State
may submit to the Federal Government a corrective
compliance plan to correct the violation.
``(C) Consultation about modifications.--During the
60-day period that begins with the date the Secretary
receives a corrective compliance plan submitted by a
State in accordance with subparagraph (B), the
Secretary may consult with the State on modifications
to the plan.
``(D) Acceptance of plan.-- A corrective compliance
plan submitted by a State in accordance with
subparagraph (B) is deemed to be accepted by the
Secretary if the Secretary does not accept or reject
the plan during 60-day period that begins on the date
the plan is submitted.
``(2) Effect of correcting violation.--The Secretary may
not impose any penalty under subsection (a) with respect to any
violation covered by a State corrective compliance plan
accepted by the Secretary if the State corrects the violation
pursuant to the plan.
``(3) Effect of failing to correct violation.--The
Secretary shall assess some or all of a penalty imposed on a
State under subsection (a) with respect to a violation if the
State does not, in a timely manner, correct the violation
pursuant to a State corrective compliance plan accepted by the
Secretary.
``(4) Inapplicability to failure to timely repay a federal
loan fund for a state welfare program.--This subsection shall
not apply to the imposition of a penalty against a State under
subsection (a)(6).
``(d) Limitation on Amount of Penalty.--
``(1) In general.--In imposing the penalties described in
subsection (a), the Secretary shall not reduce any quarterly
payment to a State by more than 25 percent.
``(2) Carryforward of unrecovered penalties.--To the extent
that paragraph (1) of this subsection prevents the Secretary
from recovering during a fiscal year the full amount of
penalties imposed on a State under subsection (a) of this
section for a prior fiscal year, the Secretary shall apply any
remaining amount of such penalties to the grant payable to the
State under section 403(a)(1) for the immediately succeeding
fiscal year.
``SEC. 410. APPEAL OF ADVERSE DECISION.
``(a) In General.--Within 5 days after the date the Secretary takes
any adverse action under this part with respect to a State, the
Secretary shall notify the chief executive officer of the State of the
adverse action, including any action with respect to the State plan
submitted under section 402 or the imposition of a penalty under
section 409.
``(b) Administrative Review.--
``(1) In general.--Within 60 days after the date a State
receives notice under subsection (a) of an adverse action, the
State may appeal the action, in whole or in part, to the
Departmental Appeals Board established in the Department of
Health and Human Services (in this section referred to as the
`Board') by filing an appeal with the Board.
``(2) Procedural rules.--The Board shall consider an appeal
filed by a State under paragraph (1) on the basis of such
documentation as the State may submit and as the Board may
require to support the final decision of the Board. In deciding
whether to uphold an adverse action or any portion of such an action,
the Board shall conduct a thorough review of the issues and take into
account all relevant evidence. The Board shall make a final
determination with respect to an appeal filed under paragraph (1) not
less than 60 days after the date the appeal is filed.
``(c) Judicial Review of Adverse Decision.--
``(1) In general.--Within 90 days after the date of a final
decision by the Board under this section with respect to an
adverse action taken against a State, the State may obtain
judicial review of the final decision (and the findings
incorporated into the final decision) by filing an action in--
``(A) the district court of the United States for
the judicial district in which the principal or
headquarters office of the State agency is located; or
``(B) the United States District Court for the
District of Columbia.
``(2) Procedural rules.--The district court in which an
action is filed under paragraph (1) shall review the final
decision of the Board on the record established in the
administrative proceeding, in accordance with the standards of
review prescribed by subparagraphs (A) through (E) of section
706(2) of title 5, United States Code. The review shall be on
the basis of the documents and supporting data submitted to the
Board.
``SEC. 411. DATA COLLECTION AND REPORTING.
``(a) Quarterly Reports by States.--
``(1) General reporting requirement.--
``(A) Contents of report.--Each eligible State
shall collect on a monthly basis, and report to the
Secretary on a quarterly basis, the following
disaggregated case record information on the families
receiving assistance under the State program funded
under this part:
``(i) The county of residence of the
family.
``(ii) Whether a child receiving such
assistance or an adult in the family is
disabled.
``(iii) The ages of the members of such
families.
``(iv) The number of individuals in the
family, and the relation of each family member
to the youngest child in the family.
``(v) The employment status and earnings of
the employed adult in the family.
``(vi) The marital status of the adults in
the family, including whether such adults have
never married, are widowed, or are divorced.
``(vii) The race and educational status of
each adult in the family.
``(viii) The race and educational status of
each child in the family.
``(ix) Whether the family received
subsidized housing, medical assistance under
the State plan under title XV or the State plan
approved under title XIX, food stamps, or
subsidized child care, and if the latter 2, the
amount received.
``(x) The number of months that the family
has received each type of assistance under the
program.
``(xi) If the adults participated in, and
the number of hours per week of participation
in, the following activities:
``(I) Education.
``(II) Subsidized private sector
employment.
``(III) Unsubsidized employment.
``(IV) Public sector employment,
work experience, or community service.
``(V) Job search.
``(VI) Job skills training or on-
the-job training.
``(VII) Vocational education.
``(xii) Information necessary to calculate
participation rates under section 407.
``(xiii) The type and amount of assistance
received under the program, including the
amount of and reason for any reduction of
assistance (including sanctions).
``(xiv) Any amount of unearned income
received by any member of the family.
``(xv) The citizenship of the members of
the family.
``(xvi) From a sample of closed cases,
whether the family left the program, and if so,
whether the family left due to--
``(I) employment;
``(II) marriage;
``(III) the prohibition set forth
in section 408(a)(8);
``(IV) sanction; or
``(V) State policy.
``(B) Use of estimates.--
``(i) Authority.--A State may comply with
subparagraph (A) by submitting an estimate
which is obtained through the use of
scientifically acceptable sampling methods
approved by the Secretary.
``(ii) Sampling and other methods.--The
Secretary shall provide the States with such
case sampling plans and data collection
procedures as the Secretary deems necessary to
produce statistically valid estimates of the
performance of State programs funded under this
part. The Secretary may develop and implement
procedures for verifying the quality of data
submitted by the States.
``(2) Report on use of federal funds to cover
administrative costs and overhead.--The report required by
paragraph (1) for a fiscal quarter shall include a statement of
the percentage of the funds paid to the State under this part
for the quarter that are used to cover administrative costs or
overhead.
``(3) Report on state expenditures on programs for needy
families.--The report required by paragraph (1) for a fiscal
quarter shall include a statement of the total amount expended
by the State during the quarter on programs for needy families.
``(4) Report on noncustodial parents participating in work
activities.--The report required by paragraph (1) for a fiscal
quarter shall include the number of noncustodial parents in the
State who participated in work activities (as defined in
section 407(d)) during the quarter.
``(5) Report on transitional services.--The report required
by paragraph (1) for a fiscal quarter shall include the total
amount expended by the State during the quarter to provide
transitional services to a family that has ceased to receive
assistance under this part because of employment, along with a
description of such services.
``(6) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to define the data elements
with respect to which reports are required by this subsection.
``(b) Annual Reports to the Congress by the Secretary.--Not later
than 6 months after the end of fiscal year 1997, and each fiscal year
thereafter, the Secretary shall transmit to the Congress a report
describing--
``(1) whether the States are meeting--
``(A) the participation rates described in section
407(a); and
``(B) the objectives of--
``(i) increasing employment and earnings of
needy families, and child support collections;
and
``(ii) decreasing out-of-wedlock
pregnancies and child poverty;
``(2) the demographic and financial characteristics of
families applying for assistance, families receiving
assistance, and families that become ineligible to receive
assistance;
``(3) the characteristics of each State program funded
under this part; and
``(4) the trends in employment and earnings of needy
families with minor children living at home.
``SEC. 412. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES.
``(a) Grants for Indian Tribes.--
``(1) Tribal family assistance grant.--
``(A) In general.--For each of fiscal years 1997,
1998, 1999, 2000, and 2001, the Secretary shall pay to
each Indian tribe that has an approved tribal family
assistance plan a tribal family assistance grant for
the fiscal year in an amount equal to the amount
determined under subparagraph (B), and shall reduce the
grant payable under section 403(a)(1) to any State in
which lies the service area or areas of the Indian
tribe by that portion of the amount so determined that
is attributable to expenditures by the State.
``(B) Amount determined.--
``(i) In general.--The amount determined
under this subparagraph is an amount equal to
the total amount of the Federal payments to a
State or States under section 403 (as in effect
during such fiscal year) for fiscal year 1994
attributable to expenditures (other than child
care expenditures) by the State or States under
parts A and F (as so in effect) for fiscal year
1994 for Indian families residing in the
service area or areas identified by the Indian
tribe pursuant to subsection (b)(1)(C) of this
section.
``(ii) Use of state submitted data.--
``(I) In general.--The Secretary
shall use State submitted data to make
each determination under clause (i).
``(II) Disagreement with
determination.--If an Indian tribe or
tribal organization disagrees with
State submitted data described under
subclause (I), the Indian tribe or
tribal organization may submit to the
Secretary such additional information
as may be relevant to making the
determination under clause (i) and the
Secretary may consider such information
before making such determination.
``(2) Grants for indian tribes that received jobs funds.--
``(A) In general.--The Secretary shall pay to each
eligible Indian tribe for each of fiscal years 1996,
1997, 1998, 1999, 2000, and 2001 a grant in an amount
equal to the amount received by the Indian tribe in
fiscal year 1994 under section 482(i) (as in effect
during fiscal year 1994).
``(B) Eligible indian tribe.--For purposes of
subparagraph (A), the term `eligible Indian tribe'
means an Indian tribe or Alaska Native organization
that conducted a job opportunities and basic skills
training program in fiscal year 1995 under section
482(i) (as in effect during fiscal year 1995).
``(C) Use of grant.--Each Indian tribe to which a
grant is made under this paragraph shall use the grant
for the purpose of operating a program to make work
activities available to members of the Indian tribe.
``(D) Appropriation.--Out of any money in the
Treasury of the United States not otherwise
appropriated, there are appropriated $7,638,474 for
each fiscal year specified in subparagraph (A) for
grants under subparagraph (A).
``(b) 3-Year Tribal Family Assistance Plan.--
``(1) In general.--Any Indian tribe that desires to receive
a tribal family assistance grant shall submit to the Secretary
a 3-year tribal family assistance plan that--
``(A) outlines the Indian tribe's approach to
providing welfare-related services for the 3-year
period, consistent with this section;
``(B) specifies whether the welfare-related
services provided under the plan will be provided by
the Indian tribe or through agreements, contracts, or
compacts with intertribal consortia, States, or other
entities;
``(C) identifies the population and service area or
areas to be served by such plan;
``(D) provides that a family receiving assistance
under the plan may not receive duplicative assistance
from other State or tribal programs funded under this
part;
``(E) identifies the employment opportunities in or
near the service area or areas of the Indian tribe and
the manner in which the Indian tribe will cooperate and
participate in enhancing such opportunities for
recipients of assistance under the plan consistent with
any applicable State standards; and
``(F) applies the fiscal accountability provisions
of section 5(f)(1) of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450c(f)(1)),
relating to the submission of a single-agency audit
report required by chapter 75 of title 31, United
States Code.
``(2) Approval.--The Secretary shall approve each tribal
family assistance plan submitted in accordance with paragraph
(1).
``(3) Consortium of tribes.--Nothing in this section shall
preclude the development and submission of a single tribal
family assistance plan by the participating Indian tribes of an
intertribal consortium.
``(c) Minimum Work Participation Requirements and Time Limits.--The
Secretary, with the participation of Indian tribes, shall establish for
each Indian tribe receiving a grant under this section minimum work
participation requirements, appropriate time limits for receipt of
welfare-related services under the grant, and penalties against
individuals--
``(1) consistent with the purposes of this section;
``(2) consistent with the economic conditions and resources
available to each tribe; and
``(3) similar to comparable provisions in section 407(d).
``(d) Emergency Assistance.--Nothing in this section shall preclude
an Indian tribe from seeking emergency assistance from any Federal loan
program or emergency fund.
``(e) Accountability.--Nothing in this section shall be construed
to limit the ability of the Secretary to maintain program funding
accountability consistent with--
``(1) generally accepted accounting principles; and
``(2) the requirements of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450 et seq.).
``(f) Penalties.--
``(1) Subsections (a)(1), (a)(6), and (b) of section 409,
shall apply to an Indian tribe with an approved tribal
assistance plan in the same manner as such subsections apply to
a State.
``(2) Section 409(a)(3) shall apply to an Indian tribe with
an approved tribal assistance plan by substituting `meet
minimum work participation requirements established under
section 412(c)' for `comply with section 407(a)'.
``(g) Data Collection and Reporting.--Section 411 shall apply to an
Indian tribe with an approved tribal family assistance plan.
``(h) Special Rule for Indian Tribes in Alaska.--
``(1) In general.--Notwithstanding any other provision of
this section, and except as provided in paragraph (2), an
Indian tribe in the State of Alaska that receives a tribal
family assistance grant under this section shall use the grant
to operate a program in accordance with requirements comparable
to the requirements applicable to the program of the State of
Alaska funded under this part. Comparability of programs shall
be established on the basis of program criteria developed by
the Secretary in consultation with the State of Alaska and such
Indian tribes.
``(2) Waiver.--An Indian tribe described in paragraph (1)
may apply to the appropriate State authority to receive a
waiver of the requirement of paragraph (1).
``SEC. 413. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES.
``(a) Research.--The Secretary shall conduct research on the
benefits, effects, and costs of operating different State programs
funded under this part, including time limits relating to eligibility
for assistance. The research shall include studies on the effects of
different programs and the operation of such programs on welfare
dependency, illegitimacy, teen pregnancy, employment rates, child well-
being, and any other area the Secretary deems appropriate. The
Secretary shall also conduct research on the costs and benefits of
State activities under section 409.
``(b) Development and Evaluation of Innovative Approaches To
Reducing Welfare Dependency and Increasing Child Well-Being.--
``(1) In general.--The Secretary may assist States in
developing, and shall evaluate, innovative approaches for
reducing welfare dependency and increasing the well-being of
minor children living at home with respect to recipients of
assistance under programs funded under this part. The Secretary
may provide funds for training and technical assistance to
carry out the approaches developed pursuant to this paragraph.
``(2) Evaluations.--In performing the evaluations under
paragraph (1), the Secretary shall, to the maximum extent
feasible, use random assignment as an evaluation methodology.
``(c) Dissemination of Information.--The Secretary shall develop
innovative methods of disseminating information on any research,
evaluations, and studies conducted under this section, including the
facilitation of the sharing of information and best practices among
States and localities through the use of computers and other
technologies.
``(d) Annual Ranking of States and Review of Most and Least
Successful Work Programs.--
``(1) Annual ranking of states.--The Secretary shall rank
annually the States to which grants are paid under section 403
in the order of their success in placing recipients of
assistance under the State program funded under this part into
long-term private sector jobs, reducing the overall welfare
caseload, and, when a practicable method for calculating this
information becomes available, diverting individuals from
formally applying to the State program and receiving
assistance. In ranking States under this subsection, the
Secretary shall take into account the average number of minor
children living at home in families in the State that have
incomes below the poverty line and the amount of funding
provided each State for such families.
``(2) Annual review of most and least successful work
programs.--The Secretary shall review the programs of the 3
States most recently ranked highest under paragraph (1) and the
3 States most recently ranked lowest under paragraph (1) that
provide parents with work experience, assistance in finding
employment, and other work preparation activities and support
services to enable the families of such parents to leave the
program and become self-sufficient.
``(e) Annual Ranking of States and Review of Issues Relating to
Out-of-Wedlock Births.--
``(1) Annual ranking of states.--
``(A) In general.--The Secretary shall annually
rank States to which grants are made under section 403
based on the following ranking factors:
``(i) Absolute out-of-wedlock ratios.--The
ratio represented by--
``(I) the total number of out-of-
wedlock births in families receiving
assistance under the State program
under this part in the State for the
most recent fiscal year for which
information is available; over
``(II) the total number of births
in families receiving assistance under
the State program under this part in
the State for such year.
``(ii) Net changes in the out-of-wedlock
ratio.--The difference between the ratio
described in subparagraph (A)(i) with respect
to a State for the most recent fiscal year for
which such information is available and the
ratio with respect to the State for the
immediately preceding year.
``(2) Annual review.--The Secretary shall review the
programs of the 5 States most recently ranked highest under
paragraph (1) and the 5 States most recently ranked the lowest
under paragraph (1).
``(f) State-Initiated Evaluations.--A State shall be eligible to
receive funding to evaluate the State program funded under this part
if--
``(1) the State submits a proposal to the Secretary for the
evaluation;
``(2) the Secretary determines that the design and approach
of the evaluation is rigorous and is likely to yield
information that is credible and will be useful to other
States; and
``(3) unless otherwise waived by the Secretary, the State
contributes to the cost of the evaluation, from non-Federal
sources, an amount equal to at least 10 percent of the cost of
the evaluation.
``(g) Funding of Studies and Demonstrations.--
``(1) In general.--Out of any money in the Treasury of the
United States not otherwise appropriated, there are
appropriated $15,000,000 for each of fiscal years 1998 through
2001, for the purpose of paying--
``(A) the cost of conducting the research described
in subsection (a);
``(B) the cost of developing and evaluating
innovative approaches for reducing welfare dependency
and increasing the well-being of minor children under
subsection (b);
``(C) the Federal share of any State-initiated
study approved under subsection (f); and
``(D) an amount determined by the Secretary to be
necessary to operate and evaluate demonstration
projects, relating to this part, that are in effect or
approved under section 1115 as of September 30, 1995,
and are continued after such date.
``(2) Allocation.--Of the amount appropriated under
paragraph (1) for a fiscal year--
``(A) 50 percent shall be allocated for the
purposes described in subparagraphs (A) and (B) of
paragraph (1), and
``(B) 50 percent shall be allocated for the
purposes described in subparagraphs (C) and (D) of
paragraph (1).
``(3) Demonstrations of innovative strategies.--The
Secretary may implement and evaluate demonstrations of
innovative and promising strategies which--
``(A) provide one-time capital funds to establish,
expand, or replicate programs;
``(B) test performance-based grant-to-loan
financing in which programs meeting performance targets
receive grants while programs not meeting such targets
repay funding on a prorated basis; and
``(C) test strategies in multiple States and types
of communities.
``SEC. 414. STUDY BY THE CENSUS BUREAU.
``(a) In General.--The Bureau of the Census shall expand the Survey
of Income and Program Participation as necessary to obtain such
information as will enable interested persons to evaluate the impact of
the amendments made by chapter 1 of the Personal Responsibility and
Work Opportunity Act of 1996 on a random national sample of recipients
of assistance under State programs funded under this part and (as
appropriate) other low income families, and in doing so, shall pay
particular attention to the issues of out-of-wedlock birth, welfare
dependency, the beginning and end of welfare spells, and the causes of
repeat welfare spells.
``(b) Appropriation.--Out of any money in the Treasury of the
United States not otherwise appropriated, there are appropriated
$10,000,000 for each of fiscal years 1998, 1999, 2000, 2001, and 2002
for payment to the Bureau of the Census to carry out subsection (a).
``SEC. 415. WAIVERS.
``(a) Continuation of Waivers.--
``(1) Waivers in effect on date of enactment of welfare
reform.--Except as provided in paragraph (3), if any waiver
granted to a State under section 1115 or otherwise which
relates to the provision of assistance under a State plan under
this part (as in effect on September 30, 1996) is in effect as
of the date of the enactment of the Personal Responsibility and
Work Opportunity Act of 1996, the amendments made by such Act
(other than by section 2103(d) of such Act) shall not apply
with respect to the State before the expiration (determined
without regard to any extensions) of the waiver to the extent
such amendments are inconsistent with the waiver.
``(2) Waivers granted subsequently.--Except as provided in
paragraph (3), if any waiver granted to a State under section
1115 or otherwise which relates to the provision of assistance
under a State plan under this part (as in effect on September
30, 1996) is submitted to the Secretary before the date of the
enactment of the Personal Responsibility and Work Opportunity
Act of 1996 and approved by the Secretary on or before July 1,
1997, and the State demonstrates to the satisfaction of the
Secretary that the waiver will not result in Federal
expenditures under title IV of this Act (as in effect without
regard to the amendments made by the Personal Responsibility
and Work Opportunity Act of 1996) that are greater than would
occur in the absence of the waiver, the amendments made by the
Personal Responsibility and Work Opportunity Act of 1996 (other
than by section 2103(d) of such Act) shall not apply with
respect to the State before the expiration (determined without
regard to any extensions) of the waiver to the extent the
amendments made by the Personal Responsibility and Work
Opportunity Act of 1996 are inconsistent with the waiver.
``(3) Financing limitation.--Notwithstanding any other
provision of law, beginning with fiscal year 1996, a State
operating under a waiver described in paragraph (1) shall be
entitled to payment under section 403 for the fiscal year, in
lieu of any other payment provided for in the waiver.
``(b) State Option To Terminate Waiver.--
``(1) In general.--A State may terminate a waiver described
in subsection (a) before the expiration of the waiver.
``(2) Report.--A State which terminates a waiver under
paragraph (1) shall submit a report to the Secretary
summarizing the waiver and any available information concerning
the result or effect of the waiver.
``(3) Hold harmless provision.--
``(A) In general.--Notwithstanding any other
provision of law, a State that, not later than the date
described in subparagraph (B), submits a written
request to terminate a waiver described in subsection
(a) shall be held harmless for accrued cost neutrality
liabilities incurred under the waiver.
``(B) Date described.--The date described in this
subparagraph is 90 days following the adjournment of
the first regular session of the State legislature that
begins after the date of the enactment of the Personal
Responsibility and Work Opportunity Act of 1996.
``(c) Secretarial Encouragement of Current Waivers.--The Secretary
shall encourage any State operating a waiver described in subsection
(a) to continue the waiver and to evaluate, using random sampling and
other characteristics of accepted scientific evaluations, the result or
effect of the waiver.
``(d) Continuation of Individual Waivers.--A State may elect to
continue 1 or more individual waivers described in subsection (a).
``SEC. 416. ADMINISTRATION.
``The programs under this part and part D shall be administered by
an Assistant Secretary for Family Support within the Department of
Health and Human Services, who shall be appointed by the President, by
and with the advice and consent of the Senate, and who shall be in
addition to any other Assistant Secretary of Health and Human Services
provided for by law, and the Secretary shall reduce the Federal
workforce within the Department of Health and Human Services by an
amount equal to the sum of 75 percent of the full-time equivalent
positions at such Department that relate to any direct spending
program, or any program funded through discretionary spending, that has
been converted into a block grant program under the Personal
Responsibility and Work Opportunity Act of 1996 and the amendments made
by such Act, and by an amount equal to 75 percent of that portion of
the total full-time equivalent departmental management positions at
such Department that bears the same relationship to the amount
appropriated for any direct spending program, or any program funded
through discretionary spending, that has been converted into a block
grant program under the Personal Responsibility and Work Opportunity
Act of 1996 and the amendments made by such Act, as such amount relates
to the total amount appropriated for use by such Department, and,
notwithstanding any other provision of law, the Secretary shall take
such actions as may be necessary, including reductions in force
actions, consistent with sections 3502 and 3595 of title 5, United
States Code, to reduce the full-time equivalent positions within the
Department of Health and Human Services by 245 full-time equivalent
positions related to the program converted into a block grant under the
amendment made by section 2103 of the Personal Responsibility and Work
Opportunity Act of 1996, and by 60 full-time equivalent managerial
positions in the Department.
``SEC. 417. LIMITATION ON FEDERAL AUTHORITY.
``No officer or employee of the Federal Government may regulate the
conduct of States under this part or enforce any provision of this
part, except to the extent expressly provided in this part.''; and
(2) by inserting after such section 418 the following:
``SEC. 419. DEFINITIONS.
``As used in this part:
``(1) Adult.--The term `adult' means an individual who is
not a minor child.
``(2) Minor child.--The term `minor child' means an
individual who--
``(A) has not attained 18 years of age; or
``(B) has not attained 19 years of age and is a
full-time student in a secondary school (or in the
equivalent level of vocational or technical training).
``(3) Fiscal year.--The term `fiscal year' means any 12-
month period ending on September 30 of a calendar year.
``(4) Indian, indian tribe, and tribal organization.--
``(A) In general.--Except as provided in
subparagraph (B), the terms `Indian', `Indian tribe',
and `tribal organization' have the meaning given such
terms by section 4 of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450b).
``(B) Special rule for indian tribes in alaska.--
The term `Indian tribe' means, with respect to the
State of Alaska, only the Metlakatla Indian Community
of the Annette Islands Reserve and the following Alaska
Native regional nonprofit corporations:
``(i) Arctic Slope Native Association.
``(ii) Kawerak, Inc.
``(iii) Maniilaq Association.
``(iv) Association of Village Council
Presidents.
``(v) Tanana Chiefs Conference.
``(vi) Cook Inlet Tribal Council.
``(vii) Bristol Bay Native Association.
``(viii) Aleutian and Pribilof Island
Association.
``(ix) Chugachmuit.
``(x) Tlingit Haida Central Council.
``(xi) Kodiak Area Native Association.
``(xii) Copper River Native Association.
``(5) State.--
``(A) In general.--Except as otherwise specifically
provided, the term `State' means the 50 States of the
United States, the District of Columbia, the
Commonwealth of Puerto Rico, the United States Virgin
Islands, Guam, and American Samoa.
``(B) State option to contract to provide
services.--The term `State' includes the--
``(i) administration and provision of
services under the program funded under this
part, or under the programs funded under parts
B and E of this title, through contracts with
charitable, religious, or private
organizations; and
``(ii) provision to beneficiaries of
assistance under such programs with
certificates, vouchers, or other forms of
disbursement which are redeemable with such
organizations.''.
(b) Grants to Outlying Areas.--Section 1108 (42 U.S.C. 1308) is
amended--
(1) by redesignating subsection (c) as subsection (g);
(2) by striking all that precedes subsection (c) and
inserting the following:
``SEC. 1108. ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN ISLANDS,
GUAM, AND AMERICAN SAMOA; LIMITATION ON TOTAL PAYMENTS.
``(a) Limitation on Total Payments to Each Territory.--
Notwithstanding any other provision of this Act, the total amount
certified by the Secretary of Health and Human Services under titles I,
X, XIV, and XVI, under parts A and E of title IV, and under subsection
(b) of this section, for payment to any territory for a fiscal year
shall not exceed the ceiling amount for the territory for the fiscal
year.
``(b) Entitlement to Matching Grant.--
``(1) In general.--Each territory shall be entitled to
receive from the Secretary for each fiscal year a grant in an
amount equal to 75 percent of the amount (if any) by which--
``(A) the total expenditures of the territory
during the fiscal year under the territory programs
funded under parts A and E of title IV; exceeds
``(B) the sum of--
``(i) the total amount required to be paid
to the territory (other than with respect to
child care) under former section 403 (as in
effect on September 30, 1995) for fiscal year
1995, which shall be determined by applying
subparagraphs (C) and (D) of section 403(a)(1)
to the territory;
``(ii) the total amount required to be paid
to the territory under former section 434 (as
so in effect) for fiscal year 1995; and
``(iii) the total amount expended by the
territory during fiscal year 1995 pursuant to
parts A and F of title IV (as so in effect),
other than for child care.
``(2) Use of grant.--Any territory to which a grant is made
under paragraph (1) may expend the amount under any program
operated or funded under any provision of law specified in
subsection (a).
``(c) Definitions.--As used in this section:
``(1) Territory.--The term `territory' means Puerto Rico,
the Virgin Islands, Guam, and American Samoa.
``(2) Ceiling amount.--The term `ceiling amount' means,
with respect to a territory and a fiscal year, the mandatory
ceiling amount with respect to the territory, reduced for the
fiscal year in accordance with subsection (e).
``(3) Mandatory ceiling amount.--The term `mandatory
ceiling amount' means--
``(A) $102,040,000 with respect to for Puerto Rico;
``(B) $4,683,000 with respect to Guam;
``(C) $3,554,000 with respect to the Virgin
Islands; and
``(D) $1,000,000 with respect to American Samoa.
``(4) Total amount expended by the territory.--The term
`total amount expended by the territory'--
``(A) does not include expenditures during the
fiscal year from amounts made available by the Federal
Government; and
``(B) when used with respect to fiscal year 1995,
also does not include--
``(i) expenditures during fiscal year 1995
under subsection (g) or (i) of section 402 (as
in effect on September 30, 1995); or
``(ii) any expenditures during fiscal year
1995 for which the territory (but for section
1108, as in effect on September 30, 1995) would
have received reimbursement from the Federal
Government.
``(d) Authority to Transfer Funds Among Programs.--Notwithstanding
any other provision of this Act, any territory to which an amount is
paid under any provision of law specified in subsection (a) may use
part or all of the amount to carry out any program operated by the
territory, or funded, under any other such provision of law.
``(e) Maintenance of Effort.--The ceiling amount with respect to a
territory shall be reduced for a fiscal year by an amount equal to the
amount (if any) by which--
``(1) the total amount expended by the territory under all
programs of the territory operated pursuant to the provisions
of law specified in subsection (a) (as such provisions were in
effect for fiscal year 1995) for fiscal year 1995; exceeds
``(2) the total amount expended by the territory under all
programs of the territory that are funded under the provisions
of law specified in subsection (a) for the fiscal year that
immediately precedes the fiscal year referred to in the matter
preceding paragraph (1).''; and
(3) by striking subsections (d) and (e).
(c) Repeal of Provisions Requiring Reduction of Medicaid Payments
to States That Reduce Welfare Payment Levels.--
(1) Section 1903(i) (42 U.S.C. 1396b(i)) is amended by
striking paragraph (9).
(2) Section 1902 (42 U.S.C. 1396a) is amended by striking
subsection (c).
(d) Elimination of Child Care Programs Under the Social Security
Act.--
(1) AFDC and transitional child care programs.--Section 402
(42 U.S.C. 602) is amended by striking subsection (g).
(2) At-risk child care program.--
(A) Authorization.--Section 402 (42 U.S.C. 602) is
amended by striking subsection (i).
(B) Funding provisions.--Section 403 (42 U.S.C.
603) is amended by striking subsection (n).
SEC. 2104. SERVICES PROVIDED BY CHARITABLE, RELIGIOUS, OR PRIVATE
ORGANIZATIONS.
(a) In General.--
(1) State options.--A State may--
(A) administer and provide services under the
programs described in subparagraphs (A) and (B)(i) of
paragraph (2) through contracts with charitable,
religious, or private organizations; and
(B) provide beneficiaries of assistance under the
programs described in subparagraphs (A) and (B)(ii) of
paragraph (2) with certificates, vouchers, or other
forms of disbursement which are redeemable with such
organizations.
(2) Programs described.--The programs described in this
paragraph are the following programs:
(A) A State program funded under part A of title IV
of the Social Security Act (as amended by section
2103(a) of this Act).
(B) Any other program established or modified under
chapter 1 or 2 of this subtitle, that--
(i) permits contracts with organizations;
or
(ii) permits certificates, vouchers, or
other forms of disbursement to be provided to
beneficiaries, as a means of providing
assistance.
(b) Religious Organizations.--The purpose of this section is to
allow States to contract with religious organizations, or to allow
religious organizations to accept certificates, vouchers, or other
forms of disbursement under any program described in subsection (a)(2),
on the same basis as any other nongovernmental provider without
impairing the religious character of such organizations, and without
diminishing the religious freedom of beneficiaries of assistance funded
under such program.
(c) Nondiscrimination Against Religious Organizations.--In the
event a State exercises its authority under subsection (a), religious
organizations are eligible, on the same basis as any other private
organization, as contractors to provide assistance, or to accept
certificates, vouchers, or other forms of disbursement, under any
program described in subsection (a)(2) so long as the programs are
implemented consistent with the Establishment Clause of the United
States Constitution. Except as provided in subsection (k), neither the
Federal Government nor a State receiving funds under such programs
shall discriminate against an organization which is or applies to be a
contractor to provide assistance, or which accepts certificates,
vouchers, or other forms of disbursement, on the basis that the
organization has a religious character.
(d) Religious Character and Freedom.--
(1) Religious organizations.--A religious organization with
a contract described in subsection (a)(1)(A), or which accepts
certificates, vouchers, or other forms of disbursement under
subsection (a)(1)(B), shall retain its independence from
Federal, State, and local governments, including such
organization's control over the definition, development,
practice, and expression of its religious beliefs.
(2) Additional safeguards.--Neither the Federal Government
nor a State shall require a religious organization to--
(A) alter its form of internal governance; or
(B) remove religious art, icons, scripture, or
other symbols;
in order to be eligible to contract to provide assistance, or
to accept certificates, vouchers, or other forms of
disbursement, funded under a program described in subsection
(a)(2).
(e) Rights of Beneficiaries of Assistance.--
(1) In general.--If an individual described in paragraph
(2) has an objection to the religious character of the
organization or institution from which the individual receives,
or would receive, assistance funded under any program described
in subsection (a)(2), the State in which the individual resides
shall provide such individual (if otherwise eligible for such
assistance) within a reasonable period of time after the date
of such objection with assistance from an alternative provider
that is accessible to the individual and the value of which is
not less than the value of the assistance which the individual
would have received from such organization.
(2) Individual described.--An individual described in this
paragraph is an individual who receives, applies for, or
requests to apply for, assistance under a program described in
subsection (a)(2).
(f) Employment Practices.--A religious organization's exemption
provided under section 702 of the Civil Rights Act of 1964 (42 U.S.C.
2000e-1a) regarding employment practices shall not be affected by its
participation in, or receipt of funds from, programs described in
subsection (a)(2).
(g) Nondiscrimination Against Beneficiaries.--Except as otherwise
provided in law, a religious organization shall not discriminate
against an individual in regard to rendering assistance funded under
any program described in subsection (a)(2) on the basis of religion, a
religious belief, or refusal to actively participate in a religious
practice.
(h) Fiscal Accountability.--
(1) In general.--Except as provided in paragraph (2), any
religious organization contracting to provide assistance funded
under any program described in subsection (a)(2) shall be
subject to the same regulations as other contractors to account
in accord with generally accepted auditing principles for the
use of such funds provided under such programs.
(2) Limited audit.--If such organization segregates Federal
funds provided under such programs into separate accounts, then
only the financial assistance provided with such funds shall be
subject to audit.
(i) Compliance.--Any party which seeks to enforce its rights under
this section may assert a civil action for injunctive relief
exclusively in an appropriate State court against the entity or agency
that allegedly commits such violation.
(j) Limitations on Use of Funds for Certain Purposes.--No funds
provided directly to institutions or organizations to provide services
and administer programs under subsection (a)(1)(A) shall be expended
for sectarian worship, instruction, or proselytization.
(k) Preemption.--Nothing in this section shall be construed to
preempt any provision of a State constitution or State statute that
prohibits or restricts the expenditure of State funds in or by
religious organizations.
SEC. 2105. CENSUS DATA ON GRANDPARENTS AS PRIMARY CAREGIVERS FOR THEIR
GRANDCHILDREN.
(a) In General.--Not later than 90 days after the date of the
enactment of this Act, the Secretary of Commerce, in carrying out
section 141 of title 13, United States Code, shall expand the data
collection efforts of the Bureau of the Census (in this section
referred to as the ``Bureau'') to enable the Bureau to collect
statistically significant data, in connection with its decennial census
and its mid-decade census, concerning the growing trend of grandparents
who are the primary caregivers for their grandchildren.
(b) Expanded Census Question.--In carrying out subsection (a), the
Secretary of Commerce shall expand the Bureau's census question that
details households which include both grandparents and their
grandchildren. The expanded question shall be formulated to distinguish
between the following households:
(1) A household in which a grandparent temporarily provides
a home for a grandchild for a period of weeks or months during
periods of parental distress.
(2) A household in which a grandparent provides a home for
a grandchild and serves as the primary caregiver for the
grandchild.
SEC. 2106. REPORT ON DATA PROCESSING.
(a) In General.--Within 6 months after the date of the enactment of
this Act, the Secretary of Health and Human Services shall prepare and
submit to the Congress a report on--
(1) the status of the automated data processing systems
operated by the States to assist management in the
administration of State programs under part A of title IV of
the Social Security Act (whether in effect before or after
October 1, 1995); and
(2) what would be required to establish a system capable
of--
(A) tracking participants in public programs over
time; and
(B) checking case records of the States to
determine whether individuals are participating in
public programs of 2 or more States.
(b) Preferred Contents.--The report required by subsection (a)
should include--
(1) a plan for building on the automated data processing
systems of the States to establish a system with the
capabilities described in subsection (a)(2); and
(2) an estimate of the amount of time required to establish
such a system and of the cost of establishing such a system.
SEC. 2107. STUDY ON ALTERNATIVE OUTCOMES MEASURES.
(a) Study.--The Secretary shall, in cooperation with the States,
study and analyze outcomes measures for evaluating the success of the
States in moving individuals out of the welfare system through
employment as an alternative to the minimum participation rates
described in section 407 of the Social Security Act. The study shall
include a determination as to whether such alternative outcomes
measures should be applied on a national or a State-by-State basis and
a preliminary assessment of the effects of section 409(a)(7)(C) of such
Act.
(b) Report.--Not later than September 30, 1998, the Secretary shall
submit to the Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives a report containing the
findings of the study required by subsection (a).
SEC. 2108. WELFARE FORMULA FAIRNESS COMMISSION.
(a) Establishment.--There is established a commission to be known
as the Welfare Formula Fairness Commission (in this section referred to
as the ``Commission'').
(b) Membership.--
(1) Composition.--The Commission shall be composed of 13
members, of whom--
(A) 3 shall be appointed by the President, of whom
not more than 2 shall be of the same political party;
(B) 3 shall be appointed by the Majority Leader of
the Senate;
(C) 2 shall be appointed by the Minority Leader of
the Senate;
(D) 3 shall be appointed by the Speaker of the
House of Representatives; and
(E) 2 shall be appointed by the Minority Leader of
the House of Representatives.
(2) Date.--The appointments of the members of the
Commission shall be made not later than 30 days after the date
of the enactment of this Act.
(c) Period of Appointment; Vacancies.--Members shall be appointed
for the life of the Commission. Any vacancy in the Commission shall not
affect its powers, but shall be filled in the same manner as the
original appointment.
(d) Initial Meeting.--Not later than 30 days after the date on
which all members of the Commission have been appointed, the Commission
shall hold its first meeting.
(e) Meetings.--The Commission shall meet at the call of the Chair.
(f) Quorum.--A majority of the members of the Commission shall
constitute a quorum, but a lesser number of members may hold hearings.
(g) Chair and Vice Chair.--The Commission shall select a Chair and
Vice Chair from among its members.
(h) Duties of the Commission.--
(1) Study.--The Commission shall study--
(A) the temporary assistance for needy families
block grant program established under part A of title
IV of the Social Security Act, as amended by section
2103 of this Act; and
(B) the funding formulas applied, the bonus
payments provided, and the work requirements
established under such program.
(2) Report.--Not later than September 1, 1998, the
Commission shall submit a report to the Congress on the matters
studied under paragraph (1).
(i) Powers of the Commission.--
(1) Hearings.--The Commission may hold such hearings, sit
and act at such times and places, take such testimony, and
receive such evidence as the Commission considers advisable to carry
out the purposes of this section.
(2) Information from federal agencies.--The Commission may
secure directly from any Federal department or agency such
information as the Commission considers necessary to carry out
the provisions of this section. Upon request of the Chair of
the Commission, the head of such department or agency shall
furnish such information to the Commission.
(3) Postal services.--The Commission may use the United
States mails in the same manner and under the same conditions
as other departments and agencies of the Federal Government.
(4) Gifts.--The Commission may accept, use, and dispose of
gifts or donations of services or property.
(j) Personnel Matters.--
(1) Compensation of members.--Each member of the Commission
who is not an officer or employee of the Federal Government
shall be compensated at a rate equal to the daily equivalent of
the annual rate of basic pay prescribed for level IV of the
Executive Schedule under section 5315 of title 5, United States
Code, for each day (including travel time) during which such
member is engaged in the performance of the duties of the
Commission. All members of the Commission who are officers or
employees of the United States shall serve without compensation
in addition to that received for their services as officers or
employees of the United States.
(2) Travel expenses.--The members of the Commission shall
be allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of business
in the performance of services for the Commission.
(3) Staff.--
(A) In general.--The Chair of the Commission may,
without regard to the civil service laws and
regulations, appoint and terminate an executive
director and such other additional personnel as may be
necessary to enable the Commission to perform its
duties. The employment of an executive director shall
be subject to confirmation by the Commission.
(B) Compensation.--The Chair of the Commission may
fix the compensation of the executive director and
other personnel without regard to the provisions of
chapter 51 and subchapter III of chapter 53 of title 5,
United States Code, relating to classification of
positions and General Schedule pay rates, except that
the rate of pay for the executive director and other
personnel may not exceed the rate payable for level V
of the Executive Schedule under section 5316 of such
title.
(4) Detail of government employees.--Any Federal Government
employee may be detailed to the Commission without
reimbursement, and such detail shall be without interruption or
loss of civil service status or privilege.
(5) Procurement of temporary and intermittent services.--
The Chair of the Commission may procure temporary and
intermittent services under section 3109(b) of title 5, United
States Code, at rates for individuals which do not exceed the
daily equivalent of the annual rate of basic pay prescribed for
level V of the Executive Schedule under section 5316 of such
title.
(k) Termination of the Commission.--The Commission shall terminate
not later than December 31, 1998.
(l) Authorization of Appropriations.--There is authorized to be
appropriated to the Commission such sums as are necessary to carry out
the purposes of this section.
SEC. 2109. CONFORMING AMENDMENTS TO THE SOCIAL SECURITY ACT.
(a) Amendments to Part D of Title IV.--
(1) Section 451 (42 U.S.C. 651) is amended by striking
``aid'' and inserting ``assistance under a State program
funded''.
(2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is
amended--
(A) by striking ``aid to families with dependent
children'' and inserting ``assistance under a State
program funded under part A'';
(B) by striking ``such aid'' and inserting ``such
assistance''; and
(C) by striking ``under section 402(a)(26) or'' and
inserting ``pursuant to section 408(a)(4) or under
section''.
(3) Section 452(a)(10)(F) (42 U.S.C. 652(a)(10)(F)) is
amended--
(A) by striking ``aid under a State plan approved''
and inserting ``assistance under a State program
funded''; and
(B) by striking ``in accordance with the standards
referred to in section 402(a)(26)(B)(ii)'' and
inserting ``by the State''.
(4) Section 452(b) (42 U.S.C. 652(b)) is amended in the
first sentence by striking ``aid under the State plan approved
under part A'' and inserting ``assistance under the State
program funded under part A''.
(5) Section 452(d)(3)(B)(i) (42 U.S.C. 652(d)(3)(B)(i)) is
amended by striking ``1115(c)'' and inserting ``1115(b)''.
(6) Section 452(g)(2)(A)(ii)(I) (42 U.S.C.
652(g)(2)(A)(ii)(I)) is amended by striking ``aid is being paid
under the State's plan approved under part A or E'' and
inserting ``assistance is being provided under the State
program funded under part A''.
(7) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is
amended in the matter following clause (iii) by striking ``aid
was being paid under the State's plan approved under part A or
E'' and inserting ``assistance was being provided under the
State program funded under part A''.
(8) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended in
the matter following subparagraph (B)--
(A) by striking ``who is a dependent child'' and
inserting ``with respect to whom assistance is being
provided under the State program funded under part A'';
(B) by inserting ``by the State'' after ``found'';
and
(C) by striking ``to have good cause for refusing
to cooperate under section 402(a)(26)'' and inserting
``to qualify for a good cause or other exception to
cooperation pursuant to section 454(29)''.
(9) Section 452(h) (42 U.S.C. 652(h)) is amended by
striking ``under section 402(a)(26)'' and inserting ``pursuant
to section 408(a)(4)''.
(10) Section 453(c)(3) (42 U.S.C. 653(c)(3)) is amended by
striking ``aid under part A of this title'' and inserting
``assistance under a State program funded under part A''.
(11) Section 454(5)(A) (42 U.S.C. 654(5)(A))) is amended--
(A) by striking ``under section 402(a)(26)'' and
inserting ``pursuant to section 408(a)(4)''; and
(B) by striking ``; except that this paragraph
shall not apply to such payments for any month
following the first month in which the amount collected
is sufficient to make such family ineligible for
assistance under the State plan approved under part
A;'' and inserting a comma.
(12) Section 454(6)(D) (42 U.S.C. 654(6)(D)) is amended by
striking ``aid under a State plan approved'' and inserting
``assistance under a State program funded''.
(13) Section 456(a)(1) (42 U.S.C. 656(a)(1)) is amended by
striking ``under section 402(a)(26)''.
(14) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is
amended by striking ``402(a)(26)'' and inserting ``408(a)(3)''.
(15) Section 466(b)(2) (42 U.S.C. 666(b)(2)) is amended by
striking ``aid'' and inserting ``assistance under a State
program funded''.
(16) Section 469(a) (42 U.S.C. 669(a)) is amended--
(A) by striking ``aid under plans approved'' and
inserting ``assistance under State programs funded'';
and
(B) by striking ``such aid'' and inserting ``such
assistance''.
(b) Repeal of Part F of Title IV.--Part F of title IV (42 U.S.C.
681-687) is repealed.
(c) Amendment to Title X.--Section 1002(a)(7) (42 U.S.C.
1202(a)(7)) is amended by striking ``aid to families with dependent
children under the State plan approved under section 402 of this Act''
and inserting ``assistance under a State program funded under part A of
title IV''.
(d) Amendments to Title XI.--
(1) Section 1109 (42 U.S.C. 1309) is amended by striking
``or part A of title IV,''.
(2) Section 1115 (42 U.S.C. 1315) is amended--
(A) in subsection (a)(2)--
(i) by inserting ``(A)'' after ``(2)'';
(ii) by striking ``403,'';
(iii) by striking the period at the end and
inserting ``, and''; and
(iv) by adding at the end the following new
subparagraph:
``(B) costs of such project which would not otherwise be a
permissible use of funds under part A of title IV and which are
not included as part of the costs of projects under section
1110, shall to the extent and for the period prescribed by the
Secretary, be regarded as a permissible use of funds under such
part.''; and
(B) in subsection (c)(3), by striking ``the program
of aid to families with dependent children'' and
inserting ``part A of such title''.
(3) Section 1116 (42 U.S.C. 1316) is amended--
(A) in each of subsections (a)(1), (b), and (d), by
striking ``or part A of title IV,''; and
(B) in subsection (a)(3), by striking ``404,''.
(4) Section 1118 (42 U.S.C. 1318) is amended--
(A) by striking ``403(a),'';
(B) by striking ``and part A of title IV,''; and
(C) by striking ``, and shall, in the case of
American Samoa, mean 75 per centum with respect to part
A of title IV''.
(5) Section 1119 (42 U.S.C. 1319) is amended--
(A) by striking ``or part A of title IV''; and
(B) by striking ``403(a),''.
(6) Section 1133(a) (42 U.S.C. 1320b-3(a)) is amended by
striking ``or part A of title IV,''.
(7) Section 1136 (42 U.S.C. 1320b-6) is repealed.
(8) Section 1137 (42 U.S.C. 1320b-7) is amended--
(A) in subsection (b), by striking paragraph (1)
and inserting the following:
``(1) any State program funded under part A of title IV of
this Act;''; and
(B) in subsection (d)(1)(B)--
(i) by striking ``In this subsection--''
and all that follows through ``(ii) in'' and
inserting ``In this subsection, in'';
(ii) by redesignating subclauses (I), (II),
and (III) as clauses (i), (ii), and (iii); and
(iii) by moving such redesignated material
2 ems to the left.
(e) Amendment to Title XIV.--Section 1402(a)(7) (42 U.S.C.
1352(a)(7)) is amended by striking ``aid to families with dependent
children under the State plan approved under section 402 of this Act''
and inserting ``assistance under a State program funded under part A of
title IV''.
(f) Amendment to Title XVI as in Effect With Respect to the
Territories.--Section 1602(a)(11), as in effect without regard to the
amendment made by section 301 of the Social Security Amendments of 1972
(42 U.S.C. 1382 note), is amended by striking ``aid under the State
plan approved'' and inserting ``assistance under a State program
funded''.
(g) Amendment to Title XVI as in Effect With Respect to the
States.--Section 1611(c)(5)(A) (42 U.S.C. 1382(c)(5)(A)) is amended to
read as follows: ``(A) a State program funded under part A of title
IV,''.
(h) Amendment to Title XIX.--Section 1902(j) (42 U.S.C. 1396a(j))
is amended by striking ``1108(c)'' and inserting ``1108(g)''.
SEC. 2110. CONFORMING AMENDMENTS TO THE FOOD STAMP ACT OF 1977 AND
RELATED PROVISIONS.
(a) Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is
amended--
(1) in the second sentence of subsection (a), by striking
``plan approved'' and all that follows through ``title IV of
the Social Security Act'' and inserting ``program funded under
part A of title IV of the Social Security Act (42 U.S.C. 601 et
seq.)'';
(2) in subsection (d)--
(A) in paragraph (5), by striking ``assistance to
families with dependent children'' and inserting
``assistance under a State program funded''; and
(B) by striking paragraph (13) and redesignating
paragraphs (14), (15), and (16) as paragraphs (13),
(14), and (15), respectively;
(3) in subsection (j), by striking ``plan approved under
part A of title IV of such Act (42 U.S.C. 601 et seq.)'' and
inserting ``program funded under part A of title IV of the Act
(42 U.S.C. 601 et seq.)''; and
(4) by striking subsection (m) and redesignating subsection
(n), as added by section 1122, as subsection (m).
(b) Section 6 of such Act (7 U.S.C. 2015) is amended--
(1) in subsection (c)(5), by striking ``the State plan
approved'' and inserting ``the State program funded''; and
(2) in subsection (e)(6), by striking ``aid to families
with dependent children'' and inserting ``benefits under a
State program funded''.
(c) Section 16(g)(4) of such Act (7 U.S.C. 2025(g)(4)) is amended
by striking ``State plans under the Aid to Families with Dependent
Children Program under'' and inserting ``State programs funded under
part A of''.
(d) Section 17(b)(3) of such Act (7 U.S.C. 2026(b)(3)) is amended
by adding at the end the following new subparagraph:
``(I) The Secretary may not grant a waiver under this paragraph on
or after October 1, 1995. Any reference in this paragraph to a
provision of title IV of the Social Security Act shall be deemed to be
a reference to such provision as in effect on September 30, 1995.''.
(e) Section 20 of such Act (7 U.S.C. 2029) is amended--
(1) in subsection (a)(2)(B) by striking ``operating--'' and
all that follows through ``(ii) any other'' and inserting
``operating any''; and
(2) in subsection (b)--
(A) in paragraph (1)--
(i) by striking ``(b)(1) A household'' and
inserting ``(b) A household''; and
(ii) in subparagraph (B), by striking
``training program'' and inserting
``activity'';
(B) by striking paragraph (2); and
(C) by redesignating subparagraphs (A) through (F)
as paragraphs (1) through (6), respectively.
(f) Section 5(h)(1) of the Agriculture and Consumer Protection Act
of 1973 (Public Law 93-186; 7 U.S.C. 612c note) is amended by striking
``the program for aid to families with dependent children'' and
inserting ``the State program funded''.
(g) Section 9 of the National School Lunch Act (42 U.S.C. 1758) is
amended--
(1) in subsection (b)--
(A) in paragraph (2)(B)(ii)(II), as amended by
section 1202(b)--
(i) by striking ``program for aid to
families with dependent children'' and
inserting ``State program funded''; and
(ii) by inserting before the period at the
end the following: ``(42 U.S.C. 601 et seq.)
that the Secretary determines complies with
standards established by the Secretary that
ensure that the standards under the State
program are comparable to or more restrictive
than those in effect on June 1, 1995''; and
(B) in paragraph (6)--
(i) in subparagraph (A)(ii)--
(I) by striking ``an AFDC
assistance unit (under the aid to
families with dependent children
program authorized'' and inserting ``a
family (under the State program
funded''; and
(II) by striking ``, in a State''
and all that follows through
``9902(2)))'' and inserting ``that the
Secretary determines complies with
standards established by the Secretary
that ensure that the standards under
the State program are comparable to or
more restrictive than those in effect
on June 1, 1995''; and
(ii) in subparagraph (B), by striking ``aid
to families with dependent children'' and
inserting ``assistance under the State program
funded under part A of title IV of the Social
Security Act (42 U.S.C. 601 et seq.) that the
Secretary determines complies with standards
established by the Secretary that ensure that
the standards under the State program are
comparable to or more restrictive than those in
effect on June 1, 1995''; and
(2) in subsection (d)(2)(C)--
(A) by striking ``program for aid to families with
dependent children'' and inserting ``State program
funded''; and
(B) by inserting before the period at the end the
following: ``(42 U.S.C. 601 et seq.) that the Secretary
determines complies with standards established by the
Secretary that ensure that the standards under the
State program are comparable to or more restrictive
than those in effect on June 1, 1995''.
(h) Section 17(d)(2)(A)(ii)(II) of the Child Nutrition Act of 1966
(42 U.S.C. 1786(d)(2)(A)(ii)(II)) is amended--
(1) by striking ``program for aid to families with
dependent children established'' and inserting ``State program
funded''; and
(2) by inserting before the semicolon the following: ``(42
U.S.C. 601 et seq.) that the Secretary determines complies with
standards established by the Secretary that ensure that the
standards under the State program are comparable to or more
restrictive than those in effect on June 1, 1995''.
SEC. 2111. CONFORMING AMENDMENTS TO OTHER LAWS.
(a) Subsection (b) of section 508 of the Unemployment Compensation
Amendments of 1976 (42 U.S.C. 603a; Public Law 94-566; 90 Stat. 2689)
is amended to read as follows:
``(b) Provision for Reimbursement of Expenses.--For purposes of
section 455 of the Social Security Act, expenses incurred to reimburse
State employment offices for furnishing information requested of such
offices--
``(1) pursuant to the third sentence of section 3(a) of the
Act entitled `An Act to provide for the establishment of a
national employment system and for cooperation with the States
in the promotion of such system, and for other purposes',
approved June 6, 1933 (29 U.S.C. 49b(a)), or
``(2) by a State or local agency charged with the duty of
carrying a State plan for child support approved under part D
of title IV of the Social Security Act,
shall be considered to constitute expenses incurred in the
administration of such State plan.''.
(b) Section 9121 of the Omnibus Budget Reconciliation Act of 1987
(42 U.S.C. 602 note) is repealed.
(c) Section 9122 of the Omnibus Budget Reconciliation Act of 1987
(42 U.S.C. 602 note) is repealed.
(d) Section 221 of the Housing and Urban-Rural Recovery Act of 1983
(42 U.S.C. 602 note), relating to treatment under AFDC of certain
rental payments for federally assisted housing, is repealed.
(e) Section 159 of the Tax Equity and Fiscal Responsibility Act of
1982 (42 U.S.C. 602 note) is repealed.
(f) Section 202(d) of the Social Security Amendments of 1967 (81
Stat. 882; 42 U.S.C. 602 note) is repealed.
(g) Section 903 of the Stewart B. McKinney Homeless Assistance
Amendments Act of 1988 (42 U.S.C. 11381 note), relating to
demonstration projects to reduce number of AFDC families in welfare
hotels, is amended--
(1) in subsection (a), by striking ``aid to families with
dependent children under a State plan approved'' and inserting
``assistance under a State program funded''; and
(2) in subsection (c), by striking ``aid to families with
dependent children in the State under a State plan approved''
and inserting ``assistance in the State under a State program
funded''.
(h) The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is
amended--
(1) in section 404C(c)(3) (20 U.S.C. 1070a-23(c)(3)), by
striking ``(Aid to Families with Dependent Children)''; and
(2) in section 480(b)(2) (20 U.S.C. 1087vv(b)(2)), by
striking ``aid to families with dependent children under a
State plan approved'' and inserting ``assistance under a State
program funded''.
(i) The Carl D. Perkins Vocational and Applied Technology Education
Act (20 U.S.C. 2301 et seq.) is amended--
(1) in section 231(d)(3)(A)(ii) (20 U.S.C.
2341(d)(3)(A)(ii)), by striking ``The program for aid to
dependent children'' and inserting ``The State program
funded'';
(2) in section 232(b)(2)(B) (20 U.S.C. 2341a(b)(2)(B)), by
striking ``the program for aid to families with dependent
children'' and inserting ``the State program funded''; and
(3) in section 521(14)(B)(iii) (20 U.S.C.
2471(14)(B)(iii)), by striking ``the program for aid to
families with dependent children'' and inserting ``the State
program funded''.
(j) The Elementary and Secondary Education Act of 1965 (20 U.S.C.
2701 et seq.) is amended--
(1) in section 1113(a)(5) (20 U.S.C. 6313(a)(5)), by
striking ``Aid to Families with Dependent Children program''
and inserting ``State program funded under part A of title IV
of the Social Security Act'';
(2) in section 1124(c)(5) (20 U.S.C. 6333(c)(5)), by
striking ``the program of aid to families with dependent
children under a State plan approved under'' and inserting ``a
State program funded under part A of''; and
(3) in section 5203(b)(2) (20 U.S.C. 7233(b)(2))--
(A) in subparagraph (A)(xi), by striking ``Aid to
Families with Dependent Children benefits'' and
inserting ``assistance under a State program funded
under part A of title IV of the Social Security Act'';
and
(B) in subparagraph (B)(viii), by striking ``Aid to
Families with Dependent Children'' and inserting
``assistance under the State program funded under part
A of title IV of the Social Security Act''.
(k) The 4th proviso of chapter VII of title I of Public Law 99-88
(25 U.S.C. 13d-1) is amended to read as follows: ``Provided further,
That general assistance payments made by the Bureau of Indian Affairs
shall be made--
``(1) after April 29, 1985, and before October 1, 1995, on
the basis of Aid to Families with Dependent Children (AFDC)
standards of need; and
``(2) on and after October 1, 1995, on the basis of
standards of need established under the State program funded
under part A of title IV of the Social Security Act,
except that where a State ratably reduces its AFDC or State program
payments, the Bureau shall reduce general assistance payments in such
State by the same percentage as the State has reduced the AFDC or State
program payment.''.
(l) The Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.) is
amended--
(1) in section 51(d)(9) (26 U.S.C. 51(d)(9)), by striking
all that follows ``agency as'' and inserting ``being eligible
for financial assistance under part A of title IV of the Social
Security Act and as having continually received such financial
assistance during the 90-day period which immediately precedes
the date on which such individual is hired by the employer.'';
(2) in section 3304(a)(16) (26 U.S.C. 3304(a)(16)), by
striking ``eligibility for aid or services,'' and all that
follows through ``children approved'' and inserting
``eligibility for assistance, or the amount of such assistance,
under a State program funded'';
(3) in section 6103(l)(7)(D)(i) (26 U.S.C.
6103(l)(7)(D)(i)), by striking ``aid to families with dependent
children provided under a State plan approved'' and inserting
``a State program funded'';
(4) in section 6103(l)(10) (26 U.S.C. 6103(l)(10))--
(A) by striking ``(c) or (d)'' each place it
appears and inserting ``(c), (d), or (e)''; and
(B) by adding at the end of subparagraph (B) the
following new sentence: ``Any return information
disclosed with respect to section 6402(e) shall only be
disclosed to officers and employees of the State agency
requesting such information.'';
(5) in section 6103(p)(4) (26 U.S.C. 6103(p)(4)), in the
matter preceding subparagraph (A)--
(A) by striking ``(5), (10)'' and inserting
``(5)''; and
(B) by striking ``(9), or (12)'' and inserting
``(9), (10), or (12)'';
(6) in section 6334(a)(11)(A) (26 U.S.C. 6334(a)(11)(A)),
by striking ``(relating to aid to families with dependent
children)'';
(7) in section 6402 (26 U.S.C. 6402)--
(A) in subsection (a), by striking ``(c) and (d)''
and inserting ``(c), (d), and (e)'';
(B) by redesignating subsections (e) through (i) as
subsections (f) through (j), respectively; and
(C) by inserting after subsection (d) the
following:
``(e) Collection of Overpayments Under Title IV-A of the Social
Security Act.--The amount of any overpayment to be refunded to the
person making the overpayment shall be reduced (after reductions
pursuant to subsections (c) and (d), but before a credit against future
liability for an internal revenue tax) in accordance with section
405(e) of the Social Security Act (concerning recovery of overpayments
to individuals under State plans approved under part A of title IV of
such Act).''; and
(8) in section 7523(b)(3)(C) (26 U.S.C. 7523(b)(3)(C)), by
striking ``aid to families with dependent children'' and
inserting ``assistance under a State program funded under part
A of title IV of the Social Security Act''.
(m) Section 3(b) of the Wagner-Peyser Act (29 U.S.C. 49b(b)) is
amended by striking ``State plan approved under part A of title IV''
and inserting ``State program funded under part A of title IV''.
(n) The Job Training Partnership Act (29 U.S.C. 1501 et seq.) is
amended--
(1) in section 4(29)(A)(i) (29 U.S.C. 1503(29)(A)(i)), by
striking ``(42 U.S.C. 601 et seq.)'';
(2) in section 106(b)(6)(C) (29 U.S.C. 1516(b)(6)(C)), by
striking ``State aid to families with dependent children
records,'' and inserting ``records collected under the State
program funded under part A of title IV of the Social Security
Act,'';
(3) in section 121(b)(2) (29 U.S.C. 1531(b)(2))--
(A) by striking ``the JOBS program'' and inserting
``the work activities required under title IV of the
Social Security Act''; and
(B) by striking the second sentence;
(4) in section 123(c) (29 U.S.C. 1533(c))--
(A) in paragraph (1)(E), by repealing clause (vi);
and
(B) in paragraph (2)(D), by repealing clause (v);
(5) in section 203(b)(3) (29 U.S.C. 1603(b)(3)), by
striking ``, including recipients under the JOBS program'';
(6) in subparagraphs (A) and (B) of section 204(a)(1) (29
U.S.C. 1604(a)(1) (A) and (B)), by striking ``(such as the JOBS
program)'' each place it appears;
(7) in section 205(a) (29 U.S.C. 1605(a)), by striking
paragraph (4) and inserting the following:
``(4) the portions of title IV of the Social Security Act
relating to work activities;'';
(8) in section 253 (29 U.S.C. 1632)--
(A) in subsection (b)(2), by repealing subparagraph
(C); and
(B) in paragraphs (1)(B) and (2)(B) of subsection
(c), by striking ``the JOBS program or'' each place it
appears;
(9) in section 264 (29 U.S.C. 1644)--
(A) in subparagraphs (A) and (B) of subsection
(b)(1), by striking ``(such as the JOBS program)'' each
place it appears; and
(B) in subparagraphs (A) and (B) of subsection
(d)(3), by striking ``and the JOBS program'' each place
it appears;
(10) in section 265(b) (29 U.S.C. 1645(b)), by striking
paragraph (6) and inserting the following:
``(6) the portion of title IV of the Social Security Act
relating to work activities;'';
(11) in the second sentence of section 429(e) (29 U.S.C.
1699(e)), by striking ``and shall be in an amount that does not
exceed the maximum amount that may be provided by the State
pursuant to section 402(g)(1)(C) of the Social Security Act (42
U.S.C. 602(g)(1)(C))'';
(12) in section 454(c) (29 U.S.C. 1734(c)), by striking
``JOBS and'';
(13) in section 455(b) (29 U.S.C. 1735(b)), by striking
``the JOBS program,'';
(14) in section 501(1) (29 U.S.C. 1791(1)), by striking
``aid to families with dependent children under part A of title
IV of the Social Security Act (42 U.S.C. 601 et seq.)'' and
inserting ``assistance under the State program funded under
part A of title IV of the Social Security Act'';
(15) in section 506(1)(A) (29 U.S.C. 1791e(1)(A)), by
striking ``aid to families with dependent children'' and
inserting ``assistance under the State program funded'';
(16) in section 508(a)(2)(A) (29 U.S.C. 1791g(a)(2)(A)), by
striking ``aid to families with dependent children'' and
inserting ``assistance under the State program funded''; and
(17) in section 701(b)(2)(A) (29 U.S.C. 1792(b)(2)(A))--
(A) in clause (v), by striking the semicolon and
inserting ``; and''; and
(B) by striking clause (vi).
(o) Section 3803(c)(2)(C)(iv) of title 31, United States Code, is
amended to read as follows:
``(iv) assistance under a State program funded under part A
of title IV of the Social Security Act;''.
(p) Section 2605(b)(2)(A)(i) of the Low-Income Home Energy
Assistance Act of 1981 (42 U.S.C. 8624(b)(2)(A)(i)) is amended to read
as follows:
``(i) assistance under the State program
funded under part A of title IV of the Social
Security Act;''.
(q) Section 303(f)(2) of the Family Support Act of 1988 (42 U.S.C.
602 note) is amended--
(1) by striking ``(A)''; and
(2) by striking subparagraphs (B) and (C).
(r) The Balanced Budget and Emergency Deficit Control Act of 1985
(2 U.S.C. 900 et seq.) is amended--
(1) in the first section 255(h) (2 U.S.C. 905(h)), by
striking ``Aid to families with dependent children (75-0412-0-
1-609);'' and inserting ``Block grants to States for temporary
assistance for needy families;''; and
(2) in section 256 (2 U.S.C. 906)--
(A) by striking subsection (k); and
(B) by redesignating subsection (l) as subsection
(k).
(s) The Immigration and Nationality Act (8 U.S.C. 1101 et seq.) is
amended--
(1) in section 210(f) (8 U.S.C. 1160(f)), by striking ``aid
under a State plan approved under'' each place it appears and
inserting ``assistance under a State program funded under'';
(2) in section 245A(h) (8 U.S.C. 1255a(h))--
(A) in paragraph (1)(A)(i), by striking ``program
of aid to families with dependent children'' and
inserting ``State program of assistance''; and
(B) in paragraph (2)(B), by striking ``aid to
families with dependent children'' and inserting
``assistance under a State program funded under part A
of title IV of the Social Security Act''; and
(3) in section 412(e)(4) (8 U.S.C. 1522(e)(4)), by striking
``State plan approved'' and inserting ``State program funded''.
(t) Section 640(a)(4)(B)(i) of the Head Start Act (42 U.S.C.
9835(a)(4)(B)(i)) is amended by striking ``program of aid to families
with dependent children under a State plan approved'' and inserting
``State program of assistance funded''.
(u) Section 9 of the Act of April 19, 1950 (64 Stat. 47, chapter
92; 25 U.S.C. 639) is repealed.
(v) Subparagraph (E) of section 213(d)(6) of the School-To-Work
Opportunities Act of 1994 (20 U.S.C. 6143(d)(6)) is amended to read as
follows:
``(E) part A of title IV of the Social Security Act
(42 U.S.C. 601 et seq.) relating to work activities;''.
(w) Section 552a(a)(8)(B)(iv)(III) of title 5, United States Code,
is amended by striking ``section 464 or 1137 of the Social Security
Act'' and inserting ``section 404(e), 464, or 1137 of the Social
Security Act''.
SEC. 2112. DEVELOPMENT OF PROTOTYPE OF COUNTERFEIT-RESISTANT SOCIAL
SECURITY CARD REQUIRED.
(a) Development.--
(1) In general.--The Commissioner of Social Security (in
this section referred to as the ``Commissioner'') shall, in
accordance with this section, develop a prototype of a
counterfeit-resistant social security card. Such prototype card
shall--
(A) be made of a durable, tamper-resistant material
such as plastic or polyester,
(B) employ technologies that provide security
features, such as magnetic stripes, holograms, and
integrated circuits, and
(C) be developed so as to provide individuals with
reliable proof of citizenship or legal resident alien
status.
(2) Assistance by attorney general.--The Attorney General
of the United States shall provide such information and
assistance as the Commissioner deems necessary to enable the
Commissioner to comply with this section.
(b) Study and Report.--
(1) In general.--The Commissioner shall conduct a study and
issue a report to the Congress which examines different methods
of improving the social security card application process.
(2) Elements of study.--The study shall include an
evaluation of the cost and work load implications of issuing a
counterfeit-resistant social security card for all individuals
over a 3-, 5-, and 10-year period. The study shall also
evaluate the feasibility and cost implications of imposing a user fee
for replacement cards and cards issued to individuals who apply for
such a card prior to the scheduled 3-, 5-, and 10-year phase-in
options.
(3) Distribution of report.--The Commissioner shall submit
copies of the report described in this subsection along with a
facsimile of the prototype card as described in subsection (a)
to the Committees on Ways and Means and Judiciary of the House
of Representatives and the Committees on Finance and Judiciary
of the Senate within 1 year after the date of the enactment of
this Act.
SEC. 2113. DISCLOSURE OF RECEIPT OF FEDERAL FUNDS.
(a) In General.--Whenever an organization that accepts Federal
funds under this subtitle or the amendments made by this subtitle makes
any communication that in any way intends to promote public support or
opposition to any policy of a Federal, State, or local government
through any broadcasting station, newspaper, magazine, outdoor
advertising facility, direct mailing, or any other type of general
public advertising, such communication shall state the following:
``This was prepared and paid for by an organization that accepts
taxpayer dollars.''.
(b) Failure To Comply.--If an organization makes any communication
described in subsection (a) and fails to provide the statement required
by that subsection, such organization shall be ineligible to receive
Federal funds under this subtitle or the amendments made by this
subtitle.
(c) Definition.--For purposes of this section, the term
``organization'' means an organization described in section 501(c) of
the Internal Revenue Code of 1986.
(d) Effective Dates.--This section shall take effect--
(1) with respect to printed communications 1 year after the
date of enactment of this Act; and
(2) with respect to any other communication on the date of
enactment of this Act.
SEC. 2114. MODIFICATIONS TO THE JOB OPPORTUNITIES FOR CERTAIN LOW-
INCOME INDIVIDUALS PROGRAM.
Section 505 of the Family Support Act of 1988 (42 U.S.C. 1315 note)
is amended--
(1) in the heading, by striking ``demonstration'';
(2) by striking ``demonstration'' each place such term
appears;
(3) in subsection (a), by striking ``in each of fiscal
years'' and all that follows through ``10'' and inserting
``shall enter into agreements with'';
(4) in subsection (b)(3), by striking ``aid to families
with dependent children under part A of title IV of the Social
Security Act'' and inserting ``assistance under the program
funded part A of title IV of the Social Security Act of the
State in which the individual resides'';
(5) in subsection (c)--
(A) in paragraph (1)(C), by striking ``aid to
families with dependent children under title IV of the
Social Security Act'' and inserting ``assistance under
a State program funded part A of title IV of the Social
Security Act''; and
(B) in paragraph (2), by striking ``aid to families
with dependent children under title IV of such Act''
and inserting ``assistance under a State program funded
part A of title IV of the Social Security Act'';
(6) in subsection (d), by striking ``job opportunities and
basic skills training program (as provided for under title IV
of the Social Security Act)'' and inserting ``the State program
funded under part A of title IV of the Social Security Act'';
and
(7) by striking subsections (e) through (g) and inserting
the following:
``(e) Authorization of Appropriations.--For the purpose of
conducting projects under this section, there is authorized to be
appropriated an amount not to exceed $25,000,000 for any fiscal
year.''.
SEC. 2115. SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL FOR TECHNICAL
AND CONFORMING AMENDMENTS.
Not later than 90 days after the date of the enactment of this Act,
the Secretary of Health and Human Services and the Commissioner of
Social Security, in consultation, as appropriate, with the heads of
other Federal agencies, shall submit to the appropriate committees of
the Congress a legislative proposal proposing such technical and
conforming amendments as are necessary to bring the law into conformity
with the policy embodied in this chapter.
SEC. 2116. EFFECTIVE DATE; TRANSITION RULE.
(a) Effective Dates.--
(1) In general.--Except as otherwise provided in this
chapter, this chapter and the amendments made by this chapter
shall take effect on July 1, 1997.
(2) Delayed effective date for certain provisions.--
Notwithstanding any other provision of this section, paragraphs
(2), (3), (4), (5), (8), and (10) of section 409(a) and section
411(a) of the Social Security Act (as added by the amendments
made by section 2103(a) of this Act) shall not take effect with
respect to a State until, and shall apply only with respect to
conduct that occurs on or after, the later of--
(A) July 1, 1997; or
(B) the date that is 6 months after the date the
Secretary of Health and Human Services receives from
the State a plan described in section 402(a) of the
Social Security Act (as added by such amendment).
(3) Elimination of child care programs.--The amendments
made by section 2103(d) shall take effect on October 1, 1996.
(4) Definitions applicable to new child care entitlement.--
Sections 403(a)(1)(C), 403(a)(1)(D), and 419(4) of the Social
Security Act, as added by the amendments made by section
2103(a) of this Act, shall take effect on October 1, 1996.
(b) Transition Rules.--Effective on the date of the enactment of
this Act:
(1) State option to accelerate effective date.--
(A) In general.--If the Secretary of Health and
Human Services receives from a State a plan described
in section 402(a) of the Social Security Act (as added
by the amendment made by section 2103(a)(1) of this
Act), then--
(i) on and after the date of such receipt--
(I) except as provided in clause
(ii), this chapter and the amendments
made by this chapter (other than by
section 2103(d) of this Act) shall
apply with respect to the State; and
(II) the State shall be considered
an eligible State for purposes of part
A of title IV of the Social Security
Act (as in effect pursuant to the
amendments made by such section
2103(a)); and
(ii) during the period that begins on the
date of such receipt and ends on June 30, 1997,
there shall remain in effect with respect to
the State--
(I) section 403(h) of the Social
Security Act (as in effect on September
30, 1995); and
(II) all State reporting
requirements under parts A and F of
title IV of the Social Security Act (as
in effect on September 30, 1995),
modified by the Secretary as
appropriate, taking into account the
State program under part A of title IV
of the Social Security Act (as in
effect pursuant to the amendments made
by such section 2103(a)).
(B) Limitations on federal obligations.--
(i) Under afdc program.--The total
obligations of the Federal Government to a
State under part A of title IV of the Social
Security Act (as in effect on September 30,
1995) with respect to expenditures in fiscal
year 1997 shall not exceed an amount equal to the State family
assistance grant.
(ii) Under temporary family assistance
program.--Notwithstanding section 403(a)(1) of
the Social Security Act (as in effect pursuant
to the amendments made by section 2103(a) of
this Act), the total obligations of the Federal
Government to a State under such section
403(a)(1)--
(I) for fiscal year 1996, shall be
an amount equal to--
(aa) the State family
assistance grant; multiplied by
(bb) \1/366\ of the number
of days during the period that
begins on the date the
Secretary of Health and Human
Services first receives from
the State a plan described in
section 402(a) of the Social
Security Act (as added by the
amendment made by section
2103(a)(1) of this Act) and
ends on September 30, 1996; and
(II) for fiscal year 1997, shall be
an amount equal to the lesser of--
(aa) the amount (if any) by
which the State family
assistance grant exceeds the
total obligations of the
Federal Government to the State
under part A of title IV of the
Social Security Act (as in
effect on September 30, 1995)
with respect to expenditures in
fiscal year 1997; or
(bb) the State family
assistance grant, multiplied by
\1/365\ of the number of days
during the period that begins
on October 1, 1996, or the date
the Secretary of Health and
Human Services first receives
from the State a plan described
in section 402(a) of the Social
Security Act (as added by the
amendment made by section
2103(a)(1) of this Act),
whichever is later, and ends on
September 30, 1997.
(iii) Child care obligations excluded in
determining federal afdc obligations.--As used
in this subparagraph, the term ``obligations of
the Federal Government to the State under part
A of title IV of the Social Security Act'' does
not include any obligation of the Federal
Government with respect to child care
expenditures by the State.
(C) Submission of state plan for fiscal year 1996
or 1997 deemed acceptance of grant limitations and
formula and termination of afdc entitlement.--The
submission of a plan by a State pursuant to
subparagraph (A) is deemed to constitute--
(i) the State's acceptance of the grant
reductions under subparagraph (B) (including
the formula for computing the amount of the
reduction); and
(ii) the termination of any entitlement of
any individual or family to benefits or
services under the State AFDC program.
(D) Definitions.--As used in this paragraph:
(i) State afdc program.--The term ``State
AFDC program'' means the State program under
parts A and F of title IV of the Social
Security Act (as in effect on September 30,
1995).
(ii) State.--The term ``State'' means the
50 States and the District of Columbia.
(iii) State family assistance grant.--The
term ``State family assistance grant'' means
the State family assistance grant (as defined
in section 403(a)(1)(B) of the Social Security
Act, as added by the amendment made by section
2103(a)(1) of this Act).
(2) Claims, actions, and proceedings.--The amendments made
by this chapter shall not apply with respect to--
(A) powers, duties, functions, rights, claims,
penalties, or obligations applicable to aid,
assistance, or services provided before the effective
date of this chapter under the provisions amended; and
(B) administrative actions and proceedings
commenced before such date, or authorized before such
date to be commenced, under such provisions.
(3) Closing out account for those programs terminated or
substantially modified by this chapter.--In closing out
accounts, Federal and State officials may use scientifically
acceptable statistical sampling techniques. Claims made with
respect to State expenditures under a State plan approved under
part A of title IV of the Social Security Act (as in effect on
September 30, 1995) with respect to assistance or services
provided on or before September 30, 1995, shall be treated as
claims with respect to expenditures during fiscal year 1995 for
purposes of reimbursement even if payment was made by a State
on or after October 1, 1995. Each State shall complete the
filing of all claims under the State plan (as so in effect)
within 2 years after the date of the enactment of this Act. The
head of each Federal department shall--
(A) use the single audit procedure to review and
resolve any claims in connection with the close out of
programs under such State plans; and
(B) reimburse States for any payments made for
assistance or services provided during a prior fiscal
year from funds for fiscal year 1995, rather than from
funds authorized by this chapter.
(4) Continuance in office of assistant secretary for family
support.--The individual who, on the day before the effective
date of this chapter, is serving as Assistant Secretary for
Family Support within the Department of Health and Human
Services shall, until a successor is appointed to such
position--
(A) continue to serve in such position; and
(B) except as otherwise provided by law--
(i) continue to perform the functions of
the Assistant Secretary for Family Support
under section 417 of the Social Security Act
(as in effect before such effective date); and
(ii) have the powers and duties of the
Assistant Secretary for Family Support under
section 416 of the Social Security Act (as in
effect pursuant to the amendment made by
section 2103(a)(1) of this Act).
(c) Termination of Entitlement Under AFDC Program.--Effective
October 1, 1996, no individual or family shall be entitled to any
benefits or services under any State plan approved under part A or F of
title IV of the Social Security Act (as in effect on September 30,
1995).
CHAPTER 2--SUPPLEMENTAL SECURITY INCOME
SEC. 2200. REFERENCE TO SOCIAL SECURITY ACT.
Except as otherwise specifically provided, wherever in this chapter
an amendment is expressed in terms of an amendment to or repeal of a
section or other provision, the reference shall be considered to be
made to that section or other provision of the Social Security Act.
Subchapter A--Eligibility Restrictions
SEC. 2201. DENIAL OF SSI BENEFITS FOR 10 YEARS TO INDIVIDUALS FOUND TO
HAVE FRAUDULENTLY MISREPRESENTED RESIDENCE IN ORDER TO
OBTAIN BENEFITS SIMULTANEOUSLY IN 2 OR MORE STATES.
(a) In General.--Section 1611(e) (42 U.S.C. 1382(e)), as amended by
section 105(b)(4) of the Contract with America Advancement Act of 1996,
is amended by redesignating paragraph (5) as paragraph (3) and by
adding at the end the following new paragraph:
``(4)(A) No person shall be considered an eligible individual or
eligible spouse for purposes of this title during the 10-year period
that begins on the date the person is convicted in Federal or State
court of having made a fraudulent statement or representation with
respect to the place of residence of the person in order to receive
assistance simultaneously from 2 or more States under programs that are
funded under title IV, title XV, title XIX, or the Food Stamp Act of
1977, or benefits in 2 or more States under the supplemental security
income program under this title.
``(B) As soon as practicable after the conviction of a person in a
Federal or State court as described in subparagraph (A), an official of
such court shall notify the Commissioner of such conviction.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 2202. DENIAL OF SSI BENEFITS FOR FUGITIVE FELONS AND PROBATION AND
PAROLE VIOLATORS.
(a) In General.--Section 1611(e) (42 U.S.C. 1382(e)), as amended by
section 2201(a) of this Act, is amended by adding at the end the
following new paragraph:
``(5) No person shall be considered an eligible individual or
eligible spouse for purposes of this title with respect to any month if
during such month the person is--
``(A) fleeing to avoid prosecution, or custody or
confinement after conviction, under the laws of the place from
which the person flees, for a crime, or an attempt to commit a
crime, which is a felony under the laws of the place from which
the person flees, or which, in the case of the State of New
Jersey, is a high misdemeanor under the laws of such State; or
``(B) violating a condition of probation or parole imposed
under Federal or State law.''.
(b) Exchange of Information.--Section 1611(e) (42 U.S.C. 1382(e)),
as amended by section 2201(a) of this Act and subsection (a) of this
section, is amended by adding at the end the following new paragraph:
``(6) Notwithstanding any other provision of law (other than
section 6103 of the Internal Revenue Code of 1986), the Commissioner
shall furnish any Federal, State, or local law enforcement officer,
upon the written request of the officer, with the current address,
Social Security number, and photograph (if applicable) of any recipient
of benefits under this title, if the officer furnishes the Commissioner
with the name of the recipient, and other identifying information as
reasonably required by the Commissioner to establish the unique
identity of the recipient, and notifies the Commissioner that--
``(A) the recipient--
``(i) is described in subparagraph (A) or (B) of
paragraph (5); or
``(ii) has information that is necessary for the
officer to conduct the officer's official duties; and
``(B) the location or apprehension of the recipient is
within the officer's official duties.''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 2203. TREATMENT OF PRISONERS.
(a) Implementation of Prohibition Against Payment of Benefits to
Prisoners.--Section 1611(e)(1) (42 U.S.C. 1382(e)(1)) is amended by
adding at the end the following new subparagraph:
``(I)(i) The Commissioner shall enter into a contract, with any
interested State or local institution referred to in subparagraph (A),
under which--
``(I) the institution shall provide to the Commissioner, on
a monthly basis, the names, social security account numbers,
dates of birth, and such other identifying information
concerning the inmates of the institution as the Commissioner
may require for the purpose of carrying out paragraph (1); and
``(II) the Commissioner shall pay to any such institution,
with respect to each inmate of the institution who is eligible
for a benefit under this title for the month preceding the
first month throughout which such inmate is in such institution
and becomes ineligible for such benefit (or becomes eligible
only for a benefit payable at a reduced rate) as a result of
the application of this paragraph, an amount not to exceed $400
if the institution furnishes the information described in
subclause (I) to the Commissioner within 30 days after such
individual becomes an inmate of such institution, or an amount
not to exceed $200 if the institution furnishes such
information after 30 days after such date but within 90 days
after such date.
``(ii) The provisions of section 552a of title 5, United States
Code, shall not apply to any agreement entered into under clause (i) or
to information exchanged pursuant to such agreement.
``(iii) Payments to institutions required by clause (i)(II) shall
be made from funds otherwise available for the payment of benefits
under this title and shall be treated as direct spending for purposes
of the Balanced Budget and Emergency Deficit Control Act of 1985.''.
(b) Denial of SSI Benefits for 10 Years to a Person Found To Have
Fraudulently Obtained SSI Benefits While in Prison.--
(1) In general.--Section 1611(e)(1) (42 U.S.C. 1382(e)(1)),
as amended by subsection (a) of this section, is amended by
adding at the end the following new subparagraph:
``(J) In any case in which the Commissioner of Social Security
finds that a person has made a fraudulent statement or representation
in order to obtain or to continue to receive benefits under this title
while being an inmate in a penal institution, such person shall not be
considered an eligible individual or eligible spouse for any month
ending during the 10-year period beginning on the date on which such
person ceases being such an inmate.''.
(2) Effective date.--The amendment made by this subsection
shall apply with respect to statements or representations made
on or after the date of the enactment of this Act.
(c) Study of Other Potential Improvements in the Collection of
Information Respecting Public Inmates.--
(1) Study.--The Commissioner of Social Security shall
conduct a study of the desirability, feasibility, and cost of--
(A) establishing a system under which Federal,
State, and local courts would furnish to the
Commissioner such information respecting court orders
by which individuals are confined in jails, prisons, or
other public penal, correctional, or medical facilities
as the Commissioner may require for the purpose of
carrying out section 1611(e)(1) of the Social Security
Act; and
(B) requiring that State and local jails, prisons,
and other institutions that enter into contracts with
the Commissioner under section 1611(e)(1)(I) of the
Social Security Act furnish the information required by
such contracts to the Commissioner by means of an
electronic or other sophisticated data exchange system.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Commissioner of Social Security
shall submit a report on the results of the study conducted
pursuant to this subsection to the Committee on Finance of the
Senate and the Committee on Ways and Means of the House of
Representatives.
SEC. 2204. EFFECTIVE DATE OF APPLICATION FOR BENEFITS.
(a) In General.--Subparagraphs (A) and (B) of section 1611(c)(7)
(42 U.S.C. 1382(c)(7)) are amended to read as follows:
``(A) the first day of the month following the date such
application is filed, or
``(B) the first day of the month following the date such
individual becomes eligible for such benefits with respect to
such application.''.
(b) Special Rule Relating to Emergency Advance Payments.--Section
1631(a)(4)(A) (42 U.S.C. 1383(a)(4)(A)) is amended--
(1) by inserting ``for the month following the date the
application is filed'' after ``is presumptively eligible for
such benefits''; and
(2) by inserting ``, which shall be repaid through
proportionate reductions in such benefits over a period of not
more than 6 months'' before the semicolon.
(c) Conforming Amendments.--
(1) Section 1614(b) (42 U.S.C. 1382c(b)) is amended by
striking ``at the time the application or request is filed''
and inserting ``on the first day of the month following the
date the application or request is filed''.
(2) Section 1631(g)(3) (42 U.S.C. 1382j(g)(3)) is amended
by inserting ``following the month'' after ``beginning with the
month''.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to applications for benefits under title XVI of the
Social Security Act filed on or after the date of the enactment
of this Act, without regard to whether regulations have been
issued to implement such amendments.
(2) Benefits under title xvi.--For purposes of this
subsection, the term ``benefits under title XVI of the Social
Security Act'' includes supplementary payments pursuant to an
agreement for Federal administration under section 1616(a) of
the Social Security Act, and payments pursuant to an agreement
entered into under section 212(b) of Public Law 93-66.
Subchapter B--Benefits for Disabled Children
SEC. 2211. DEFINITION AND ELIGIBILITY RULES.
(a) Definition of Childhood Disability.--Section 1614(a)(3) (42
U.S.C. 1382c(a)(3)), as amended by section 105(b)(1) of the Contract
with America Advancement Act of 1996, is amended--
(1) in subparagraph (A), by striking ``An individual'' and
inserting ``Except as provided in subparagraph (C), an
individual'';
(2) in subparagraph (A), by striking ``(or, in the case of
an individual under the age of 18, if he suffers from any
medically determinable physical or mental impairment of
comparable severity)'';
(3) by redesignating subparagraphs (C) through (I) as
subparagraphs (D) through (J), respectively;
(4) by inserting after subparagraph (B) the following new
subparagraph:
``(C) An individual under the age of 18 shall be considered
disabled for the purposes of this title if that individual has a
medically determinable physical or mental impairment, which results in
marked and severe functional limitations, and which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months. Notwithstanding the
preceding sentence, no individual under the age of 18 who engages in
substantial gainful activity (determined in accordance with regulations
prescribed pursuant to subparagraph (E)) may be considered to be
disabled.''; and
(5) in subparagraph (F), as redesignated by paragraph (3),
by striking ``(D)'' and inserting ``(E)''.
(b) Request for Comments to Improve Disability Evaluation.--Not
later than 60 days after the date of the enactment of this Act, and
annually thereafter, the Commissioner of Social Security shall issue a
request for comments in the Federal Register regarding improvements to
the disability evaluation and determination procedures for individuals
under age 18 to ensure the comprehensive assessment of such
individuals, including--
(1) additions to conditions which should be presumptively
disabling at birth or ages 0 through 3 years;
(2) specific changes in individual listings in the Listing
of Impairments set forth in appendix 1 of subpart P of part 404
of title 20, Code of Federal Regulations;
(3) improvements in regulations regarding determinations
based on regulations providing for medical and functional
equivalence to such Listing of Impairments, and consideration
of multiple impairments; and
(4) any other changes to the disability determination
procedures.
(c) Changes to Childhood SSI Regulations.--
(1) Modification to medical criteria for evaluation of
mental and emotional disorders.--The Commissioner of Social
Security shall modify sections 112.00C.2. and 112.02B.2.c.(2)
of appendix 1 to subpart P of part 404 of title 20, Code of
Federal Regulations, to eliminate references to maladaptive
behavior in the domain of personal/behavorial function.
(2) Discontinuance of individualized functional
assessment.--The Commissioner of Social Security shall
discontinue the individualized functional assessment for
children set forth in sections 416.924d and 416.924e of title
20, Code of Federal Regulations.
(d) Medical Improvement Review Standard as it Applies to
Individuals Under the Age of 18.--Section 1614(a)(4) (42 U.S.C.
1382(a)(4)) is amended--
(1) by redesignating subclauses (I) and (II) of clauses (i)
and (ii) of subparagraph (B) as items (aa) and (bb),
respectively;
(2) by redesignating clauses (i) and (ii) of subparagraphs
(A) and (B) as subclauses (I) and (II), respectively;
(3) by redesignating subparagraphs (A) through (C) as
clauses (i) through (iii), respectively;
(4) by inserting before clause (i) (as redesignated by
paragraph (3)) the following new subparagraph:
``(A) in the case of an individual who is age 18 or older--
'';
(5) by inserting after and below subparagraph (A)(iii) (as
so redesignated) the following new subparagraph:
``(B) in the case of an individual who is under the age of
18--
``(i) substantial evidence which demonstrates that
there has been medical improvement in the individual's
impairment or combination of impairments, and that such
impairment or combination of impairments no longer
results in marked and severe functional limitations; or
``(ii) substantial evidence which demonstrates
that, as determined on the basis of new or improved
diagnostic techniques or evaluations, the individual's
impairment or combination of impairments, is not as
disabling as it was considered to be at the time of the
most recent prior decision that the individual was
under a disability or continued to be under a
disability, and such impairment or combination of
impairments does not result in marked and severe
functional limitations; or'';
(6) by redesignating subparagraph (D) as subparagraph (C)
and by inserting in such subparagraph ``in the case of any
individual,'' before ``substantial evidence''; and
(7) in the first sentence following subparagraph (C) (as
redesignated by paragraph (6)), by--
(A) inserting ``(i)'' before ``to restore''; and
(B) inserting ``, or (ii) in the case of an
individual under the age of 18, to eliminate or improve
the individual's impairment or combination of
impairments so that it no longer results in marked and
severe functional limitations'' immediately before the
period.
(e) Effective Dates, Etc.--
(1) Effective dates.--
(A) Subsections (a) and (c).--
(i) In general.--The provisions of, and
amendments made by, subsections (a) and (c)
shall apply to any individual who applies for,
or whose claim is finally adjudicated with
respect to, benefits under title XVI of the Social Security Act on or
after the date of the enactment of this Act, without regard to whether
regulations have been issued to implement such provisions and
amendments.
(ii) Determination of final adjudication.--
For purposes of clause (i), no individual's
claim with respect to such benefits may be
considered to be finally adjudicated before
such date of enactment if, on or after such
date, there is pending a request for either
administrative or judicial review with respect
to such claim that has been denied in whole, or
there is pending, with respect to such claim,
readjudication by the Commissioner of Social
Security pursuant to relief in a class action
or implementation by the Commissioner of a
court remand order.
(B) Subsection (d).--The amendments made by
subsection (d) shall apply with respect to benefits
under title XVI of the Social Security Act for months
beginning on or after the date of the enactment of this
Act, without regard to whether regulations have been
issued to implement such amendments.
(2) Application to current recipients.--
(A) Eligibility redeterminations.--During the
period beginning on the date of the enactment of this
Act and ending on the date which is 1 year after such
date of enactment, the Commissioner of Social Security
shall redetermine the eligibility of any individual
under age 18 who is receiving supplemental security
income benefits by reason of disability under title XVI
of the Social Security Act as of the date of the
enactment of this Act and whose eligibility for such
benefits may terminate by reason of the provisions of,
or amendments made by, subsections (a) and (c) of this
section. With respect to any redetermination under this
subparagraph--
(i) section 1614(a)(4) of the Social
Security Act (42 U.S.C. 1382c(a)(4)) shall not
apply;
(ii) the Commissioner of Social Security
shall apply the eligibility criteria for new
applicants for benefits under title XVI of such
Act;
(iii) the Commissioner shall give such
redetermination priority over all continuing
eligibility reviews and other reviews under
such title; and
(iv) such redetermination shall be counted
as a review or redetermination otherwise
required to be made under section 208 of the
Social Security Independence and Program
Improvements Act of 1994 or any other provision
of title XVI of the Social Security Act.
(B) Grandfather provision.--The provisions of, and
amendments made by, subsections (a) and (c) of this
section, and the redetermination under subparagraph
(A), shall only apply with respect to the benefits of
an individual described in subparagraph (A) for months
beginning on or after the later of July 1, 1997, or the
date of the redetermination with respect to such
individual.
(C) Notice.--Not later than January 1, 1997, the
Commissioner of Social Security shall notify an
individual described in subparagraph (A) of the
provisions of this paragraph.
(3) Report.--The Commissioner of Social Security shall
report to the Congress regarding the progress made in
implementing the provisions of, and amendments made by, this
section on child disability evaluations not later than 180 days
after the date of the enactment of this Act.
(4) Regulations.--Notwithstanding any other provision of
law, the Commissioner of Social Security shall submit for
review to the committees of jurisdiction in the Congress any
final regulation pertaining to the eligibility of individuals
under age 18 for benefits under title XVI of the Social
Security Act at least 45 days before the effective date of such
regulation. The submission under this paragraph shall include
supporting documentation providing a cost analysis, workload impact,
and projections as to how the regulation will effect the future number
of recipients under such title.
(5) Appropriations.--
(A) In general.--Out of any money in the Treasury
not otherwise appropriated, there are authorized to be
appropriated and are hereby appropriated, to remain
available without fiscal year limitation, $200,000,000
for fiscal year 1997, $75,000,000 for fiscal year 1998,
and $25,000,000 for fiscal year 1999, for the
Commissioner of Social Security to utilize only for
continuing disability reviews and redeterminations
under title XVI of the Social Security Act, with
reviews and redeterminations for individuals affected
by the provisions of subsection (b) given highest
priority.
(B) Additional funds.--Amounts appropriated under
subparagraph (A) shall be in addition to any funds
otherwise appropriated for continuing disability
reviews and redeterminations under title XVI of the
Social Security Act.
(6) Benefits under title xvi.--For purposes of this
subsection, the term ``benefits under title XVI of the Social
Security Act'' includes supplementary payments pursuant to an
agreement for Federal administration under section 1616(a) of
the Social Security Act, and payments pursuant to an agreement
entered into under section 212(b) of Public Law 93-66.
SEC. 2212. ELIGIBILITY REDETERMINATIONS AND CONTINUING DISABILITY
REVIEWS.
(a) Continuing Disability Reviews Relating to Certain Children.--
Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as redesignated by
section 2211(a)(3) of this Act, is amended--
(1) by inserting ``(i)'' after ``(H)''; and
(2) by adding at the end the following new clause:
``(ii)(I) Not less frequently than once every 3 years, the
Commissioner shall review in accordance with paragraph (4) the
continued eligibility for benefits under this title of each individual
who has not attained 18 years of age and is eligible for such benefits
by reason of an impairment (or combination of impairments) which is
likely to improve (or, at the option of the Commissioner, which is
unlikely to improve).
``(II) A representative payee of a recipient whose case is reviewed
under this clause shall present, at the time of review, evidence
demonstrating that the recipient is, and has been, receiving treatment,
to the extent considered medically necessary and available, of the
condition which was the basis for providing benefits under this title.
``(III) If the representative payee refuses to comply without good
cause with the requirements of subclause (II), the Commissioner of
Social Security shall, if the Commissioner determines it is in the best
interest of the individual, promptly suspend payment of benefits to the
representative payee, and provide for payment of benefits to an
alternative representative payee of the individual or, if the interest
of the individual under this title would be served thereby, to the
individual.
``(IV) Subclause (II) shall not apply to the representative payee
of any individual with respect to whom the Commissioner determines such
application would be inappropriate or unnecessary. In making such
determination, the Commissioner shall take into consideration the
nature of the individual's impairment (or combination of impairments).
Section 1631(c) shall not apply to a finding by the Commissioner that
the requirements of subclause (II) should not apply to an individual's
representative payee.''.
(b) Disability Eligibility Redeterminations Required for SSI
Recipients Who Attain 18 Years of Age.--
(1) In general.--Section 1614(a)(3)(H) (42 U.S.C.
1382c(a)(3)(H)), as amended by subsection (a) of this section,
is amended by adding at the end the following new clause:
``(iii) If an individual is eligible for benefits under this title
by reason of disability for the month preceding the month in which the
individual attains the age of 18 years, the Commissioner shall
redetermine such eligibility--
``(I) during the 1-year period beginning on the
individual's 18th birthday; and
``(II) by applying the criteria used in determining the
initial eligibility for applicants who are age 18 or older.
With respect to a redetermination under this clause, paragraph (4)
shall not apply and such redetermination shall be considered a
substitute for a review or redetermination otherwise required under any
other provision of this subparagraph during that 1-year period.''.
(2) Conforming repeal.--Section 207 of the Social Security
Independence and Program Improvements Act of 1994 (42 U.S.C.
1382 note; 108 Stat. 1516) is hereby repealed.
(c) Continuing Disability Review Required for Low Birth Weight
Babies.--Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as amended
by subsections (a) and (b) of this section, is amended by adding at the
end the following new clause:
``(iv)(I) Not later than 12 months after the birth of an
individual, the Commissioner shall review in accordance with paragraph
(4) the continuing eligibility for benefits under this title by reason
of disability of such individual whose low birth weight is a
contributing factor material to the Commissioner's determination that
the individual is disabled.
``(II) A review under subclause (I) shall be considered a
substitute for a review otherwise required under any other provision of
this subparagraph during that 12-month period.
``(III) A representative payee of a recipient whose case is
reviewed under this clause shall present, at the time of review,
evidence demonstrating that the recipient is, and has been, receiving
treatment, to the extent considered medically necessary and available,
of the condition which was the basis for providing benefits under this
title.
``(IV) If the representative payee refuses to comply without good
cause with the requirements of subclause (III), the Commissioner of
Social Security shall, if the Commissioner determines it is in the best
interest of the individual, promptly suspend payment of benefits to the
representative payee, and provide for payment of benefits to an
alternative representative payee of the individual or, if the interest
of the individual under this title would be served thereby, to the
individual.
``(V) Subclause (III) shall not apply to the representative payee
of any individual with respect to whom the Commissioner determines such
application would be inappropriate or unnecessary. In making such
determination, the Commissioner shall take into consideration the
nature of the individual's impairment (or combination of impairments).
Section 1631(c) shall not apply to a finding by the Commissioner that
the requirements of subclause (III) should not apply to an individual's
representative payee.''.
(d) Effective Date.--The amendments made by this section shall
apply to benefits for months beginning on or after the date of the
enactment of this Act, without regard to whether regulations have been
issued to implement such amendments.
SEC. 2213. ADDITIONAL ACCOUNTABILITY REQUIREMENTS.
(a) Requirement To Establish Account.--Section 1631(a)(2) (42
U.S.C. 1383(a)(2)) is amended--
(1) by redesignating subparagraphs (F) and (G) as
subparagraphs (G) and (H), respectively; and
(2) by inserting after subparagraph (E) the following new
subparagraph:
``(F)(i)(I) Each representative payee of an eligible individual
under the age of 18 who is eligible for the payment of benefits
described in subclause (II) shall establish on behalf of such
individual an account in a financial institution into which such
benefits shall be paid, and shall thereafter maintain such account for
use in accordance with clause (ii).
``(II) Benefits described in this subclause are past-due monthly
benefits under this title (which, for purposes of this subclause,
include State supplementary payments made by the Commissioner pursuant
to an agreement under section 1616 or section 212(b) of Public Law 93-
66) in an amount (after any withholding by the Commissioner for
reimbursement to a State for interim assistance under subsection (g))
that exceeds the product of--
``(aa) 6, and
``(bb) the maximum monthly benefit payable under this title
to an eligible individual.
``(ii)(I) A representative payee may use funds in the account
established under clause (i) to pay for allowable expenses described in
subclause (II).
``(II) An allowable expense described in this subclause is an
expense for--
``(aa) education or job skills training;
``(bb) personal needs assistance;
``(cc) special equipment;
``(dd) housing modification;
``(ee) medical treatment;
``(ff) therapy or rehabilitation; or
``(gg) any other item or service that the Commissioner
determines to be appropriate;
provided that such expense benefits such individual and, in the case of
an expense described in item (cc), (dd), (ff), or (gg), is related to
the impairment (or combination of impairments) of such individual.
``(III) The use of funds from an account established under clause
(i) in any manner not authorized by this clause--
``(aa) by a representative payee shall be considered a
misapplication of benefits for all purposes of this paragraph,
and any representative payee who knowingly misapplies benefits
from such an account shall be liable to the Commissioner in an
amount equal to the total amount of such benefits; and
``(bb) by an eligible individual who is his or her own
payee shall be considered a misapplication of benefits for all
purposes of this paragraph and the total amount of such
benefits so used shall be considered to be the uncompensated
value of a disposed resource and shall be subject to the
provisions of section 1613(c).
``(IV) This clause shall continue to apply to funds in the account
after the child has reached age 18, regardless of whether benefits are
paid directly to the beneficiary or through a representative payee.
``(iii) The representative payee may deposit into the account
established pursuant to clause (i)--
``(I) past-due benefits payable to the eligible individual
in an amount less than that specified in clause (i)(II), and
``(II) any other funds representing an underpayment under
this title to such individual, provided that the amount of such
underpayment is equal to or exceeds the maximum monthly benefit
payable under this title to an eligible individual.
``(iv) The Commissioner of Social Security shall establish a system
for accountability monitoring whereby such representative payee shall
report, at such time and in such manner as the Commissioner shall
require, on activity respecting funds in the account established
pursuant to clause (i).''.
(b) Conforming Amendments.--
(1) Exclusion from resources.--Section 1613(a) (42 U.S.C.
1382b(a)) is amended--
(A) by striking ``and'' at the end of paragraph
(10);
(B) by striking the period at the end of paragraph
(11) and inserting ``; and''; and
(C) by inserting after paragraph (11) the following
new paragraph:
``(12) any account, including accrued interest or other
earnings thereon, established and maintained in accordance with
section 1631(a)(2)(F).''.
(2) Exclusion from income.--Section 1612(b) (42 U.S.C.
1382a(b)) is amended--
(A) by striking ``and'' at the end of paragraph
(19);
(B) by striking the period at the end of paragraph
(20) and inserting ``; and''; and
(C) by adding at the end the following new
paragraph:
``(21) the interest or other earnings on any account
established and maintained in accordance with section
1631(a)(2)(F).''.
(c) Effective Date.--The amendments made by this section
shall apply to payments made after the date of the enactment of
this Act.
SEC. 2214. REDUCTION IN CASH BENEFITS PAYABLE TO INSTITUTIONALIZED
INDIVIDUALS WHOSE MEDICAL COSTS ARE COVERED BY PRIVATE
INSURANCE.
(a) In General.--Section 1611(e)(1)(B) (42 U.S.C. 1382(e)(1)(B)) is
amended--
(1) by striking ``title XIX, or'' and inserting ``title XV
or XIX,''; and
(2) by inserting ``or, in the case of an eligible
individual under the age of 18, receiving payments (with
respect to such individual) under any health insurance policy
issued by a private provider of such insurance'' after
``section 1614(f)(2)(B),''.
(b) Effective Date.--The amendment made by this section shall apply
to benefits for months beginning 90 or more days after the date of the
enactment of this Act, without regard to whether regulations have been
issued to implement such amendments.
SEC. 2215. REGULATIONS.
Within 3 months after the date of the enactment of this Act, the
Commissioner of Social Security shall prescribe such regulations as may
be necessary to implement the amendments made by this subchapter.
Subchapter C--Additional Enforcement Provision
SEC. 2221. INSTALLMENT PAYMENT OF LARGE PAST-DUE SUPPLEMENTAL SECURITY
INCOME BENEFITS.
(a) In General.--Section 1631(a) (42 U.S.C. 1383) is amended by
adding at the end the following new paragraph:
``(10)(A) If an individual is eligible for past-due monthly
benefits under this title in an amount that (after any withholding for
reimbursement to a State for interim assistance under subsection (g))
equals or exceeds the product of--
``(i) 12, and
``(ii) the maximum monthly benefit payable under this title
to an eligible individual (or, if appropriate, to an eligible
individual and eligible spouse),
then the payment of such past-due benefits (after any such
reimbursement to a State) shall be made in installments as provided in
subparagraph (B).
``(B)(i) The payment of past-due benefits subject to this
subparagraph shall be made in not to exceed 3 installments that are
made at 6-month intervals.
``(ii) Except as provided in clause (iii), the amount of each of
the first and second installments may not exceed an amount equal to the
product of clauses (i) and (ii) of subparagraph (A).
``(iii) In the case of an individual who has--
``(I) outstanding debt attributable to--
``(aa) food,
``(bb) clothing,
``(cc) shelter, or
``(dd) medically necessary services, supplies or
equipment, or medicine; or
``(II) current expenses or expenses anticipated in the near
term attributable to--
``(aa) medically necessary services, supplies or
equipment, or medicine, or
``(bb) the purchase of a home, and
such debt or expenses are not subject to reimbursement by a public
assistance program, the Secretary under title XVIII, a State plan
approved under title XV or XIX, or any private entity legally liable to
provide payment pursuant to an insurance policy, pre-paid plan, or
other arrangement, the limitation specified in clause (ii) may be
exceeded by an amount equal to the total of such debt and expenses.
``(C) This paragraph shall not apply to any individual who, at the
time of the Commissioner's determination that such individual is
eligible for the payment of past-due monthly benefits under this
title--
``(i) is afflicted with a medically determinable impairment
that is expected to result in death within 12 months; or
``(ii) is ineligible for benefits under this title and the
Commissioner determines that such individual is likely to
remain ineligible for the next 12 months.
``(D) For purposes of this paragraph, the term `benefits under this
title' includes supplementary payments pursuant to an agreement for
Federal administration under section 1616(a), and payments pursuant to
an agreement entered into under section 212(b) of Public Law 93-66.''.
(b) Conforming Amendment.--Section 1631(a)(1) (42 U.S.C.
1383(a)(1)) is amended by inserting ``(subject to paragraph (10))''
immediately before ``in such installments''.
(c) Effective Date.--
(1) In general.--The amendments made by this section are
effective with respect to past-due benefits payable under title
XVI of the Social Security Act after the third month following
the month in which this Act is enacted.
(2) Benefits payable under title xvi.--For purposes of this
subsection, the term ``benefits payable under title XVI of the
Social Security Act'' includes supplementary payments pursuant
to an agreement for Federal administration under section
1616(a) of the Social Security Act, and payments pursuant to an
agreement entered into under section 212(b) of Public Law 93-
66.
SEC. 2222. REGULATIONS.
Within 3 months after the date of the enactment of this Act, the
Commissioner of Social Security shall prescribe such regulations as may
be necessary to implement the amendments made by this subchapter.
Subchapter D--State Supplementation Programs
SEC. 2225. REPEAL OF MAINTENANCE OF EFFORT REQUIREMENTS APPLICABLE TO
OPTIONAL STATE PROGRAMS FOR SUPPLEMENTATION OF SSI
BENEFITS.
Section 1618 (42 U.S.C. 1382g) is hereby repealed.
Subchapter E--Studies Regarding Supplemental Security Income Program
SEC. 2231. ANNUAL REPORT ON THE SUPPLEMENTAL SECURITY INCOME PROGRAM.
Title XVI (42 U.S.C. 1381 et seq.), as amended by section 2201(c)
of this Act, is amended by adding at the end the following new section:
``annual report on program
``Sec. 1637. (a) Not later than May 30 of each year, the
Commissioner of Social Security shall prepare and deliver a report
annually to the President and the Congress regarding the program under
this title, including--
``(1) a comprehensive description of the program;
``(2) historical and current data on allowances and
denials, including number of applications and allowance rates
for initial determinations, reconsideration determinations,
administrative law judge hearings, appeals council reviews, and
Federal court decisions;
``(3) historical and current data on characteristics of
recipients and program costs, by recipient group (aged, blind,
disabled adults, and disabled children);
``(4) historical and current data on prior enrollment by
recipients in public benefit programs, including State programs
funded under part A of title IV of the Social Security Act and
State general assistance programs;
``(5) projections of future number of recipients and
program costs, through at least 25 years;
``(6) number of redeterminations and continuing disability
reviews, and the outcomes of such redeterminations and reviews;
``(7) data on the utilization of work incentives;
``(8) detailed information on administrative and other
program operation costs;
``(9) summaries of relevant research undertaken by the
Social Security Administration, or by other researchers;
``(10) State supplementation program operations;
``(11) a historical summary of statutory changes to this
title; and
``(12) such other information as the Commissioner deems
useful.
``(b) Each member of the Social Security Advisory Board shall be
permitted to provide an individual report, or a joint report if agreed,
of views of the program under this title, to be included in the annual
report required under this section.''.
SEC. 2232. STUDY BY GENERAL ACCOUNTING OFFICE.
Not later than January 1, 1999, the Comptroller General of the
United States shall study and report on--
(1) the impact of the amendments made by, and the
provisions of, this chapter on the supplemental security income
program under title XVI of the Social Security Act; and
(2) extra expenses incurred by families of children
receiving benefits under such title that are not covered by
other Federal, State, or local programs.
CHAPTER 3--CHILD SUPPORT
SEC. 2300. REFERENCE TO SOCIAL SECURITY ACT.
Except as otherwise specifically provided, wherever in this chapter
an amendment is expressed in terms of an amendment to or repeal of a
section or other provision, the reference shall be considered to be
made to that section or other provision of the Social Security Act.
Subchapter A--Eligibility for Services; Distribution of Payments
SEC. 2301. STATE OBLIGATION TO PROVIDE CHILD SUPPORT ENFORCEMENT
SERVICES.
(a) State Plan Requirements.--Section 454 (42 U.S.C. 654) is
amended--
(1) by striking paragraph (4) and inserting the following
new paragraph:
``(4) provide that the State will--
``(A) provide services relating to the
establishment of paternity or the establishment,
modification, or enforcement of child support
obligations, as appropriate, under the plan with
respect to--
``(i) each child for whom (I) assistance is
provided under the State program funded under
part A of this title, (II) benefits or services
for foster care maintenance are provided under
the State program funded under part E of this
title, (III) medical assistance is provided
under the State plan under title XV, or (IV)
medical assistance is provided under the State
plan approved under title XIX, unless, in
accordance with paragraph (29), good cause or
other exceptions exist;
``(ii) any other child, if an individual
applies for such services with respect to the
child; and
``(B) enforce any support obligation established
with respect to--
``(i) a child with respect to whom the
State provides services under the plan; or
``(ii) the custodial parent of such a
child;''; and
(2) in paragraph (6)--
(A) by striking ``provide that'' and inserting
``provide that--'';
(B) by striking subparagraph (A) and inserting the
following new subparagraph:
``(A) services under the plan shall be made
available to residents of other States on the same
terms as to residents of the State submitting the
plan;'';
(C) in subparagraph (B), by inserting ``on
individuals not receiving assistance under any State
program funded under part A'' after ``such services
shall be imposed'';
(D) in each of subparagraphs (B), (C), (D), and
(E)--
(i) by indenting the subparagraph in the
same manner as, and aligning the left margin of
the subparagraph with the left margin of, the
matter inserted by subparagraph (B) of this
paragraph; and
(ii) by striking the final comma and
inserting a semicolon; and
(E) in subparagraph (E), by indenting each of
clauses (i) and (ii) 2 additional ems.
(b) Continuation of Services for Families Ceasing To Receive
Assistance Under the State Program Funded Under Part A.--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 adding after paragraph (24) the following new
paragraph:
``(25) provide that if a family with respect to which
services are provided under the plan ceases to receive
assistance under the State program funded under part A, the
State shall provide appropriate notice to the family and
continue to provide such services, subject to the same
conditions and on the same basis as in the case of other
individuals to whom services are furnished under the plan,
except that an application or other request to continue
services shall not be required of such a family and paragraph
(6)(B) shall not apply to the family.''.
(c) Conforming Amendments.--
(1) Section 452(b) (42 U.S.C. 652(b)) is amended by
striking ``454(6)'' and inserting ``454(4)''.
(2) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is
amended by striking ``454(6)'' each place it appears and
inserting ``454(4)(A)(ii)''.
(3) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is
amended by striking ``in the case of overdue support which a
State has agreed to collect under section 454(6)'' and
inserting ``in any other case''.
(4) Section 466(e) (42 U.S.C. 666(e)) is amended by
striking ``paragraph (4) or (6) of section 454'' and inserting
``section 454(4)''.
SEC. 2302. DISTRIBUTION OF CHILD SUPPORT COLLECTIONS.
(a) In General.--Section 457 (42 U.S.C. 657) is amended to read as
follows:
``SEC. 457. DISTRIBUTION OF COLLECTED SUPPORT.
``(a) In General.--Subject to subsection (e), an amount collected
on behalf of a family as support by a State pursuant to a plan approved
under this part shall be distributed as follows:
``(1) Families receiving assistance.--In the case of a
family receiving assistance from the State, the State shall--
``(A) pay to the Federal Government the Federal
share of the amount so collected; and
``(B) retain, or distribute to the family, the
State share of the amount so collected.
``(2) Families that formerly received assistance.--In the
case of a family that formerly received assistance from the
State:
``(A) Current support payments.--To the extent that
the amount so collected does not exceed the amount
required to be paid to the family for the month in
which collected, the State shall distribute the amount
so collected to the family.
``(B) Payments of arrearages.--To the extent that
the amount so collected exceeds the amount required to
be paid to the family for the month in which collected,
the State shall distribute the amount so collected as
follows:
``(i) Distribution of arrearages that
accrued after the family ceased to receive
assistance.--
``(I) Pre-october 1997.--Except as
provided in subclause (II), the
provisions of this section (other than
subsection (b)(1)) as in effect and
applied on the day before the date of
the enactment of section 2302 of the
Personal Responsibility and Work
Opportunity Act of 1996 shall apply
with respect to the distribution of
support arrearages that--
``(aa) accrued after the
family ceased to receive
assistance, and
``(bb) are collected before
October 1, 1997.
``(II) Post-september 1997.--With
respect to the amount so collected on
or after October 1, 1997 (or before
such date, at the option of the
State)--
``(aa) In general.--The
State shall first distribute
the amount so collected (other
than any amount described in
clause (iv)) to the family to
the extent necessary to satisfy
any support arrearages with respect to the family that accrued after
the family ceased to receive assistance from the State.
``(bb) Reimbursement of
governments for assistance
provided to the family.--After
the application of division
(aa) and clause (ii)(II)(aa)
with respect to the amount so
collected, the State shall
retain the State share of the
amount so collected, and pay to
the Federal Government the
Federal share (as defined in
subsection (c)(2)) of the
amount so collected, but only
to the extent necessary to
reimburse amounts paid to the
family as assistance by the
State.
``(cc) Distribution of the
remainder to the family.--To
the extent that neither
division (aa) nor division (bb)
applies to the amount so
collected, the State shall
distribute the amount to the
family.
``(ii) Distribution of arrearages that
accrued before the family received
assistance.--
``(I) Pre-october 2000.--Except as
provided in subclause (II), the
provisions of this section (other than
subsection (b)(1)) as in effect and
applied on the day before the date of
the enactment of section 2302 of the
Personal Responsibility and Work
Opportunity Act of 1996 shall apply
with respect to the distribution of
support arrearages that--
``(aa) accrued before the
family received assistance, and
``(bb) are collected before
October 1, 2000.
``(II) Post-september 2000.--
Unless, based on the report required by
paragraph (4), the Congress determines
otherwise, with respect to the amount
so collected on or after October 1,
2000 (or before such date, at the
option of the State)--
``(aa) In general.--The
State shall first distribute
the amount so collected (other
than any amount described in
clause (iv)) to the family to
the extent necessary to satisfy
any support arrearages with
respect to the family that
accrued before the family
received assistance from the
State.
``(bb) Reimbursement of
governments for assistance
provided to the family.--After
the application of clause
(i)(II)(aa) and division (aa)
with respect to the amount so
collected, the State shall
retain the State share of the
amount so collected, and pay to
the Federal Government the
Federal share (as defined in
subsection (c)(2)) of the
amount so collected, but only
to the extent necessary to
reimburse amounts paid to the
family as assistance by the
State.
``(cc) Distribution of the
remainder to the family.--To
the extent that neither
division (aa) nor division (bb)
applies to the amount so
collected, the State shall
distribute the amount to the
family.
``(iii) Distribution of arrearages that
accrued while the family received assistance.--
In the case of a family described in this
subparagraph, the provisions of paragraph (1)
shall apply with respect to the distribution of
support arrearages that accrued while the
family received assistance.
``(iv) Amounts collected pursuant to
section 464.--Notwithstanding any other
provision of this section, any amount of
support collected pursuant to section 464 shall
be retained by the State to the extent past-due
support has been assigned to the State as a
condition of receiving assistance from the
State, up to the amount necessary to reimburse
the State for amounts paid to the family as
assistance by the State. The State shall pay to
the Federal Government the Federal share of the
amounts so retained. To the extent the amount
collected pursuant to section 464 exceeds the
amount so retained, the State shall distribute
the excess to the family.
``(v) Ordering rules for distributions.--
For purposes of this subparagraph, unless an
earlier effective date is required by this
section, effective October 1, 2000, the State
shall treat any support arrearages collected,
except for amounts collected pursuant to
section 464, as accruing in the following
order:
``(I) To the period after the
family ceased to receive assistance.
``(II) To the period before the
family received assistance.
``(III) To the period while the
family was receiving assistance.
``(3) Families that never received assistance.--In the case
of any other family, the State shall distribute the amount so
collected to the family.
``(4) Study and report.--Not later than October 1, 1998,
the Secretary shall report to the Congress the Secretary's
findings with respect to--
``(A) whether the distribution of post-assistance
arrearages to families has been effective in moving
people off of welfare and keeping them off of welfare;
``(B) whether early implementation of a pre-
assistance arrearage program by some States has been
effective in moving people off of welfare and keeping
them off of welfare;
``(C) what the overall impact has been of the
amendments made by the Personal Responsibility and Work
Opportunity Act of 1996 with respect to child support
enforcement in moving people off of welfare and keeping
them off of welfare; and
``(D) based on the information and data the
Secretary has obtained, what changes, if any, should
be made in the policies related to the distribution of child support
arrearages.
``(b) Continuation Of Assignments.--Any rights to support
obligations, which were assigned to a State as a condition of receiving
assistance from the State under part A and which were in effect on the
day before the date of the enactment of the Personal Responsibility and
Work Opportunity Act of 1996, shall remain assigned after such date.
``(c) Definitions.--As used in subsection (a):
``(1) Assistance.--The term `assistance from the State'
means--
``(A) assistance under the State program funded
under part A or under the State plan approved under
part A of this title (as in effect on the day before
the date of the enactment of the Personal
Responsibility and Work Opportunity Act of 1996); and
``(B) foster care maintenance payments under the
State plan approved under part E of this title.
``(2) Federal share.--The term `Federal share' means that
portion of the amount collected resulting from the application
of the Federal medical assistance percentage in effect for the
fiscal year in which the amount is collected.
``(3) Federal medical assistance percentage.--The term
`Federal medical assistance percentage' means--
``(A) the Federal medical assistance percentage (as
defined in section 1118), in the case of Puerto Rico,
the Virgin Islands, Guam, and American Samoa; or
``(B) the Federal medical assistance percentage (as
defined in section 1905(b), as in effect on September
30, 1996) in the case of any other State.
``(4) State share.--The term `State share' means 100
percent minus the Federal share.
``(d) Hold Harmless Provision.--If the amounts collected which
could be retained by the State in the fiscal year (to the extent
necessary to reimburse the State for amounts paid to families as
assistance by the State) are less than the State share of the amounts
collected in fiscal year 1995 (determined in accordance with section
457 as in effect on the day before the date of the enactment of the
Personal Responsibility and Work Opportunity Act of 1996), the State
share for the fiscal year shall be an amount equal to the State share
in fiscal year 1995.
``(e) Gap Payments not Subject to Distribution Under This
Section.--At State option, this section shall not apply to any amount
collected on behalf of a family as support by the State (and paid to
the family in addition to the amount of assistance otherwise payable to
the family) pursuant to a plan approved under this part if such amount
would have been paid to the family by the State under section
402(a)(28), as in effect and applied on the day before the date of the
enactment of section 2302 of the Personal Responsibility and Work
Opportunity Act of 1996. For purposes of subsection (d), the State
share of such amount paid to the family shall be considered amounts
which could be retained by the State if such payments were reported by
the State as part of the State share of amounts collected in fiscal
year 1995.''.
(b) Conforming Amendments.--
(1) Section 464(a)(1) (42 U.S.C. 664(a)(1)) is amended by
striking ``section 457(b)(4) or (d)(3)'' and inserting
``section 457''.
(2) Section 454 (42 U.S.C. 654) is amended--
(A) in paragraph (11)--
(i) by striking ``(11)'' and inserting
``(11)(A)''; and
(ii) by inserting after the semicolon
``and''; and
(B) by redesignating paragraph (12) as subparagraph
(B) of paragraph (11).
(c) Effective Dates.--
(1) In General.--Except as provided in paragraph (2), the
amendments made by this section shall be effective on October
1, 1996, or earlier at the State's option.
(2) Conforming amendments.--The amendments made by
subsection (b)(2) shall become effective on the date of the
enactment of this Act.
SEC. 2303. PRIVACY SAFEGUARDS.
(a) State Plan Requirement.--Section 454 (42 U.S.C. 654), as
amended by section 2301(b) of this Act, is amended--
(1) by striking ``and'' at the end of paragraph (24);
(2) by striking the period at the end of paragraph (25) and
inserting ``; and''; and
(3) by adding after paragraph (25) the following new
paragraph:
``(26) will have in effect safeguards, applicable to all
confidential information handled by the State agency, that are
designed to protect the privacy rights of the parties,
including--
``(A) safeguards against unauthorized use or
disclosure of information relating to proceedings or
actions to establish paternity, or to establish or
enforce support;
``(B) prohibitions against the release of
information on the whereabouts of 1 party to another
party against whom a protective order with respect to
the former party has been entered; and
``(C) prohibitions against the release of
information on the whereabouts of 1 party to another
party if the State has reason to believe that the
release of the information may result in physical or
emotional harm to the former party.''.
(b) Effective Date.--The amendment made by subsection (a) shall
become effective on October 1, 1997.
SEC. 2304. RIGHTS TO NOTIFICATION OF HEARINGS.
(a) In General.--Section 454 (42 U.S.C. 654), as amended by section
2302(b)(2) of this Act, is amended by inserting after paragraph (11)
the following new paragraph:
``(12) provide for the establishment of procedures to
require the State to provide individuals who are applying for
or receiving services under the State plan, or who are parties
to cases in which services are being provided under the State
plan--
``(A) with notice of all proceedings in which
support obligations might be established or modified;
and
``(B) with a copy of any order establishing or
modifying a child support obligation, or (in the case
of a petition for modification) a notice of
determination that there should be no change in the
amount of the child support award, within 14 days after
issuance of such order or determination;''.
(b) Effective Date.--The amendment made by subsection (a) shall
become effective on October 1, 1997.
Subchapter B--Locate and Case Tracking
SEC. 2311. STATE CASE REGISTRY.
Section 454A, as added by section 2344(a)(2) of this Act, is
amended by adding at the end the following new subsections:
``(e) State Case Registry.--
``(1) Contents.--The automated system required by this
section shall include a registry (which shall be known as the
`State case registry') that contains records with respect to--
``(A) each case in which services are being
provided by the State agency under the State plan
approved under this part; and
``(B) each support order established or modified in
the State on or after October 1, 1998.
``(2) Linking of local registries.--The State case registry
may be established by linking local case registries of support
orders through an automated information network, subject to
this section.
``(3) Use of standardized data elements.--Such records
shall use standardized data elements for both parents (such as
names, social security numbers and other uniform identification
numbers, dates of birth, and case identification numbers), and
contain such other information (such as on case status) as the
Secretary may require.
``(4) Payment records.--Each case record in the State case
registry with respect to which services are being provided
under the State plan approved under this part and with respect
to which a support order has been established shall include a
record of--
``(A) the amount of monthly (or other periodic)
support owed under the order, and other amounts
(including arrearages, interest or late payment
penalties, and fees) due or overdue under the order;
``(B) any amount described in subparagraph (A) that
has been collected;
``(C) the distribution of such collected amounts;
``(D) the birth date of any child for whom the
order requires the provision of support; and
``(E) the amount of any lien imposed with respect
to the order pursuant to section 466(a)(4).
``(5) Updating and monitoring.--The State agency operating
the automated system required by this section shall promptly
establish and update, maintain, and regularly monitor, case
records in the State case registry with respect to which
services are being provided under the State plan approved under
this part, 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 comparison with
Federal, State, or local sources of information;
``(C) information on support collections and
distributions; and
``(D) any other relevant information.
``(f) Information Comparisons and Other Disclosures of
Information.--The State shall use the automated system required by this
section to extract information from (at such times, and in such
standardized format or formats, as may be required by the Secretary),
to share and compare information with, and to receive information from,
other data bases and information comparison services, in order to
obtain (or provide) information necessary to enable the State agency
(or the Secretary or other State or Federal agencies) to carry out this
part, subject to section 6103 of the Internal Revenue Code of 1986.
Such information comparison activities shall include the following:
``(1) Federal case registry of child support orders.--
Furnishing to the Federal Case Registry of Child Support Orders
established under section 453(h) (and update as necessary, with
information including notice of expiration of orders) the
minimum amount of information on child support cases recorded
in the State case registry that is necessary to operate the
registry (as specified by the Secretary in regulations).
``(2) Federal parent locator service.--Exchanging
information with the Federal Parent Locator Service for the
purposes specified in section 453.
``(3) Temporary family assistance and medicaid agencies.--
Exchanging information with State agencies (of the State and of
other States) administering programs funded under part A,
programs operated under a State plan under title XV or a State
plan approved under title XIX, and other programs designated by
the Secretary, as necessary to perform State agency
responsibilities under this part and under such programs.
``(4) Intrastate and interstate information comparisons.--
Exchanging information 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.''.
SEC. 2312. COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.
(a) State Plan Requirement.--Section 454 (42 U.S.C. 654), as
amended by sections 2301(b) and 2303(a) of this Act, is amended--
(1) by striking ``and'' at the end of paragraph (25);
(2) by striking the period at the end of paragraph (26) and
inserting ``; and''; and
(3) by adding after paragraph (26) the following new
paragraph:
``(27) provide that, on and after October 1, 1998, the
State agency will--
``(A) operate a State disbursement unit in
accordance with section 454B; and
``(B) have sufficient State staff (consisting of
State employees) and (at State option) contractors
reporting directly to the State agency to--
``(i) monitor and enforce support
collections through the unit in cases being
enforced by the State pursuant to section
454(4) (including carrying out the automated
data processing responsibilities described in
section 454A(g)); and
``(ii) take the actions described in
section 466(c)(1) in appropriate cases.''.
(b) Establishment of State Disbursement Unit.--Part D of title IV
(42 U.S.C. 651-669), as amended by section 2344(a)(2) of this Act, is
amended by inserting after section 454A the following new section:
``SEC. 454B. COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.
``(a) State Disbursement Unit.--
``(1) In general.--In order for a State to meet the
requirements of this section, the State agency must establish
and operate a unit (which shall be known as the `State
disbursement unit') for the collection and disbursement of
payments under support orders--
``(A) in all cases being enforced by the State
pursuant to section 454(4); and
``(B) in all cases not being enforced by the State
under this part in which the support order is initially
issued in the State on or after January 1, 1994, and in
which the wages of the noncustodial parent are subject
to withholding pursuant to section 466(a)(8)(B).
``(2) Operation.--The State disbursement unit shall be
operated--
``(A) directly by the State agency (or 2 or more
State agencies under a regional cooperative agreement),
or (to the extent appropriate) by a contractor
responsible directly to the State agency; and
``(B) except in cases described in paragraph
(1)(B), in coordination with the automated system
established by the State pursuant to section 454A.
``(3) Linking of local disbursement units.--The State
disbursement unit may be established by linking local
disbursement units through an automated information network,
subject to this section, if the Secretary agrees that the
system will not cost more nor take more time to establish or
operate than a centralized system. In addition, employers shall
be given 1 location to which income withholding is sent.
``(b) Required Procedures.--The State disbursement unit shall use
automated procedures, electronic processes, and computer-driven
technology to the maximum extent feasible, efficient, and economical,
for the collection and disbursement of support payments, including
procedures--
``(1) for receipt of payments from parents, employers, and
other States, and for disbursements to custodial parents and
other obligees, the State agency, and the agencies of other
States;
``(2) for accurate identification of payments;
``(3) to ensure prompt disbursement of the custodial
parent's share of any payment; and
``(4) to furnish to any parent, upon request, timely
information on the current status of support payments under an
order requiring payments to be made by or to the parent.
``(c) Timing of Disbursements.--
``(1) In general.--Except as provided in paragraph (2), the
State disbursement unit shall distribute all amounts payable
under section 457(a) within 2 business days after receipt from
the employer or other source of periodic income, if sufficient
information identifying the payee is provided.
``(2) Permissive retention of arrearages.--The State
disbursement unit may delay the distribution of collections
toward arrearages until the resolution of any timely appeal
with respect to such arrearages.
``(d) Business Day Defined.--As used in this section, the term
`business day' means a day on which State offices are open for regular
business.''.
(c) Use of Automated System.--Section 454A, as added by section
2344(a)(2) and as amended by section 2311 of this Act, is amended by
adding at the end the following new subsection:
``(g) Collection and Distribution of Support Payments.--
``(1) In general.--The State shall use the automated system
required by this section, to the maximum extent feasible, to
assist and facilitate the collection and disbursement of
support payments through the State disbursement unit operated
under section 454B, through the performance of functions,
including, at a minimum--
``(A) transmission of orders and notices to
employers (and other debtors) for the withholding of
wages and other income--
``(i) within 2 business days after receipt
of notice of, and the income source subject to,
such withholding from a court, another State,
an employer, the Federal Parent Locator
Service, or another source recognized by the
State; and
``(ii) using uniform formats prescribed by
the Secretary;
``(B) ongoing monitoring to promptly identify
failures to make timely payment of support; and
``(C) automatic use of enforcement procedures
(including procedures authorized pursuant to section
466(c)) if payments are not timely made.
``(2) Business day defined.--As used in paragraph (1), the
term `business day' means a day on which State offices are open
for regular business.''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall become effective on
October 1, 1998.
(2) Limited exception to unit handling payments.--
Notwithstanding section 454B(b)(1) of the Social Security Act,
as added by this section, any State which, as of the date of
the enactment of this Act, processes the receipt of child
support payments through local courts may, at the option of the
State, continue to process through September 30, 1999, such
payments through such courts as processed such payments on or
before such date of enactment.
SEC. 2313. STATE DIRECTORY OF NEW HIRES.
(a) State Plan Requirement.--Section 454 (42 U.S.C. 654), as
amended by sections 2301(b), 2303(a) and 2312(a) of this Act, is
amended--
(1) by striking ``and'' at the end of paragraph (26);
(2) by striking the period at the end of paragraph (27) and
inserting ``; and''; and
(3) by adding after paragraph (27) the following new
paragraph:
``(28) provide that, on and after October 1, 1997, the
State will operate a State Directory of New Hires in accordance
with section 453A.''.
(b) State Directory of New Hires.--Part D of title IV (42 U.S.C.
651-669) is amended by inserting after section 453 the following new
section:
``SEC. 453A. STATE DIRECTORY OF NEW HIRES.
``(a) Establishment.--
``(1) In general.--
``(A) Requirement for States that have no
directory.--Except as provided in subparagraph (B), not
later than October 1, 1997, each State shall establish
an automated directory (to be known as the `State Directory of New
Hires') which shall contain information supplied in accordance with
subsection (b) by employers on each newly hired employee.
``(B) States with new hire reporting in
existence.--A State which has a new hire reporting law
in existence on the date of the enactment of this
section may continue to operate under the State law,
but the State must meet the requirements of subsection
(g)(2) not later than October 1, 1997, and the
requirements of this section (other than subsection
(g)(2)) not later than October 1, 1998.
``(2) Definitions.--As used in this section:
``(A) Employee.--The term `employee'--
``(i) means an individual who is an
employee within the meaning of chapter 24 of
the Internal Revenue Code of 1986; and
``(ii) does not include an employee of a
Federal or State agency performing intelligence
or counterintelligence functions, if the head
of such agency has determined that reporting
pursuant to paragraph (1) with respect to the
employee could endanger the safety of the
employee or compromise an ongoing investigation
or intelligence mission.
``(B) Employer.--
``(i) In general.--The term `employer' has
the meaning given such term in section 3401(d)
of the Internal Revenue Code of 1986 and
includes any governmental entity and any labor
organization.
``(ii) Labor organization.--The term `labor
organization' shall have the meaning given such
term in section 2(5) of the National Labor
Relations Act, and includes any entity (also
known as a `hiring hall') which is used by the
organization and an employer to carry out
requirements described in section 8(f)(3) of
such Act of an agreement between the
organization and the employer.
``(b) Employer Information.--
``(1) Reporting requirement.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), each employer shall furnish
to the Directory of New Hires of the State in which a
newly hired employee works, a report that contains the
name, address, and social security number of the
employee, and the name and address of, and identifying
number assigned under section 6109 of the Internal
Revenue Code of 1986 to, the employer.
``(B) Multistate employers.--An employer that has
employees who are employed in 2 or more States and that
transmits reports magnetically or electronically may
comply with subparagraph (A) by designating 1 State in
which such employer has employees to which the employer
will transmit the report described in subparagraph (A),
and transmitting such report to such State. Any
employer that transmits reports pursuant to this
subparagraph shall notify the Secretary in writing as
to which State such employer designates for the purpose
of sending reports.
``(C) Federal government employers.--Any
department, agency, or instrumentality of the United
States shall comply with subparagraph (A) by
transmitting the report described in subparagraph (A)
to the National Directory of New Hires established
pursuant to section 453.
``(2) Timing of report.--Each State may provide the time
within which the report required by paragraph (1) shall be made
with respect to an employee, but such report shall be made--
``(A) not later than 20 days after the date the
employer hires the employee; or
``(B) in the case of an employer transmitting
reports magnetically or electronically, by 2
monthly transmissions (if necessary) not less than 12 days nor more
than 16 days apart.
``(c) Reporting Format and Method.--Each report required by
subsection (b) shall be made on a W-4 form or, at the option of the
employer, an equivalent form, and may be transmitted by 1st class mail,
magnetically, or electronically.
``(d) Civil Money Penalties on Noncomplying Employers.--The State
shall have the option to set a State civil money penalty which shall be
less than--
``(1) $25; or
``(2) $500 if, under State law, the failure is the result
of a conspiracy between the employer and the employee to not
supply the required report or to supply a false or incomplete
report.
``(e) Entry of Employer Information.--Information shall be entered
into the data base maintained by the State Directory of New Hires
within 5 business days of receipt from an employer pursuant to
subsection (b).
``(f) Information Comparisons.--
``(1) In general.--Not later than May 1, 1998, an agency
designated by the State shall, directly or by contract, conduct
automated comparisons of the social security numbers reported
by employers pursuant to subsection (b) and the social security
numbers appearing in the records of the State case registry for
cases being enforced under the State plan.
``(2) Notice of match.--When an information comparison
conducted under paragraph (1) reveals a match with respect to
the social security number of an individual required to provide
support under a support order, the State Directory of New Hires
shall provide the agency administering the State plan approved
under this part of the appropriate State with the name,
address, and social security number of the employee to whom the
social security number is assigned, and the name and address
of, and identifying number assigned under section 6109 of the
Internal Revenue Code of 1986 to, the employer.
``(g) Transmission of Information.--
``(1) Transmission of wage withholding notices to
employers.--Within 2 business days after the date information
regarding a newly hired employee is entered into the State
Directory of New Hires, the State agency enforcing the
employee's child support obligation shall transmit a notice to
the employer of the employee directing the employer to withhold
from the wages of the employee an amount equal to the monthly
(or other periodic) child support obligation (including any
past due support obligation) of the employee, unless the
employee's wages are not subject to withholding pursuant to
section 466(b)(3).
``(2) Transmissions to the national directory of new
hires.--
``(A) New hire information.--Within 3 business days
after the date information regarding a newly hired
employee is entered into the State Directory of New
Hires, the State Directory of New Hires shall furnish
the information to the National Directory of New Hires.
``(B) Wage and unemployment compensation
information.--The State Directory of New Hires shall,
on a quarterly basis, furnish to the National Directory
of New Hires extracts of the reports required under
section 303(a)(6) to be made to the Secretary of Labor
concerning the wages and unemployment compensation paid
to individuals, by such dates, in such format, and
containing such information as the Secretary of Health
and Human Services shall specify in regulations.
``(3) Business day defined.--As used in this subsection,
the term `business day' means a day on which State offices are
open for regular business.
``(h) Other Uses of New Hire Information.--
``(1) Location of child support obligors.--The agency
administering the State plan approved under this part shall use
information received pursuant to subsection (f)(2) to locate
individuals for purposes of establishing paternity and establishing,
modifying, and enforcing child support obligations.
``(2) Verification of eligibility for certain programs.--A
State agency responsible for administering a program specified
in section 1137(b) shall have access to information reported by
employers pursuant to subsection (b) of this section for
purposes of verifying eligibility for the program.
``(3) Administration of employment security and workers'
compensation.--State agencies operating employment security and
workers' compensation programs shall have access to information
reported by employers pursuant to subsection (b) for the
purposes of administering such programs.''.
(c) Quarterly Wage Reporting.--Section 1137(a)(3) (42 U.S.C. 1320b-
7(a)(3)) is amended--
(1) by inserting ``(including State and local governmental
entities and labor organizations (as defined in section
453A(a)(2)(B)(iii))'' after ``employers''; and
(2) by inserting ``, and except that no report shall be
filed with respect to an employee of a State or local agency
performing intelligence or counterintelligence functions, if
the head of such agency has determined that filing such a
report could endanger the safety of the employee or compromise
an ongoing investigation or intelligence mission'' after
``paragraph (2)''.
SEC. 2314. AMENDMENTS CONCERNING INCOME WITHHOLDING.
(a) Mandatory Income Withholding.--
(1) In general.--Section 466(a)(1) (42 U.S.C. 666(a)(1)) is
amended to read as follows:
``(1)(A) Procedures described in subsection (b) for the
withholding from income of amounts payable as support in cases
subject to enforcement under the State plan.
``(B) Procedures under which the wages of a person with a
support obligation imposed by a support order issued (or
modified) in the State before October 1, 1996, if not otherwise
subject to withholding under subsection (b), shall become
subject to withholding as provided in subsection (b) if
arrearages occur, without the need for a judicial or
administrative hearing.''.
(2) Conforming amendments.--
(A) Section 466(b) (42 U.S.C. 666(b)) is amended in
the matter preceding paragraph (1), by striking
``subsection (a)(1)'' and inserting ``subsection
(a)(1)(A)''.
(B) Section 466(b)(4) (42 U.S.C. 666(b)(4)) is
amended to read as follows:
``(4)(A) Such withholding must be carried out in full
compliance with all procedural due process requirements of the
State, and the State must send notice to each noncustodial
parent to whom paragraph (1) applies--
``(i) that the withholding has commenced; and
``(ii) of the procedures to follow if the
noncustodial parent desires to contest such withholding
on the grounds that the withholding or the amount
withheld is improper due to a mistake of fact.
``(B) The notice under subparagraph (A) of this paragraph
shall include the information provided to the employer under
paragraph (6)(A).''.
(C) Section 466(b)(5) (42 U.S.C. 666(b)(5)) is
amended by striking all that follows ``administered
by'' and inserting ``the State through the State
disbursement unit established pursuant to section 454B,
in accordance with the requirements of section 454B.''.
(D) Section 466(b)(6)(A) (42 U.S.C. 666(b)(6)(A))
is amended--
(i) in clause (i), by striking ``to the
appropriate agency'' and all that follows and
inserting ``to the State disbursement unit
within 5 business days after the date the
amount would (but for this subsection) have
been paid or credited to the employee, for
distribution in accordance with this part. The
employer shall comply with the procedural rules relating to income
withholding of the State in which the employee works, regardless of the
State where the notice originates.'';
(ii) in clause (ii), by inserting ``be in a
standard format prescribed by the Secretary,
and'' after ``shall''; and
(iii) by adding at the end the following
new clause:
``(iii) As used in this subparagraph, the term `business
day' means a day on which State offices are open for regular
business.''.
(E) Section 466(b)(6)(D) (42 U.S.C. 666(b)(6)(D))
is amended by striking ``any employer'' and all that
follows and inserting ``any employer who--
``(i) discharges from employment, refuses to
employ, or takes disciplinary action against any
noncustodial parent subject to wage withholding
required by this subsection because of the existence of
such withholding and the obligations or additional
obligations which it imposes upon the employer; or
``(ii) fails to withhold support from wages or to
pay such amounts to the State disbursement unit in
accordance with this subsection.''.
(F) Section 466(b) (42 U.S.C. 666(b)) is amended by
adding at the end the following new paragraph:
``(11) Procedures under which the agency administering the
State plan approved under this part may execute a withholding
order without advance notice to the obligor, including issuing
the withholding order through electronic means.''.
(b) Conforming Amendment.--Section 466(c) (42 U.S.C. 666(c)) is
repealed.
SEC. 2315. LOCATOR INFORMATION FROM INTERSTATE NETWORKS.
Section 466(a) (42 U.S.C. 666(a)) is amended by inserting after
paragraph (11) the following new paragraph:
``(12) Locator information from interstate networks.--
Procedures to ensure that all Federal and State agencies
conducting activities under this part have access to any system
used by the State to locate an individual for purposes relating
to motor vehicles or law enforcement.''.
SEC. 2316. EXPANSION OF THE FEDERAL PARENT LOCATOR SERVICE.
(a) Expanded Authority To Locate Individuals and Assets.--Section
453 (42 U.S.C. 653) is amended--
(1) in subsection (a), by striking all that follows
``subsection (c))'' and inserting ``, for the purpose of
establishing parentage, establishing, setting the amount of,
modifying, or enforcing child support obligations, or enforcing
child custody or visitation orders--
``(1) information on, or facilitating the discovery of, the
location of any individual--
``(A) who is under an obligation to pay child
support or provide child custody or visitation rights;
``(B) against whom such an obligation is sought;
``(C) to whom such an obligation is owed,
including the individual's social security number (or numbers),
most recent address, and the name, address, and employer
identification number of the individual's employer;
``(2) information on the individual's wages (or other
income) from, and benefits of, employment (including rights to
or enrollment in group health care coverage); and
``(3) information on the type, status, location, and amount
of any assets of, or debts owed by or to, any such
individual.''; and
(2) in subsection (b)--
(A) in the matter preceding paragraph (1), by
striking ``social security'' and all that follows
through ``absent parent'' and inserting ``information
described in subsection (a)''; and
(B) in the flush paragraph at the end, by adding
the following: ``No information shall be disclosed to
any person if the State has notified the Secretary that
the State has reasonable evidence of domestic violence or child abuse
and the disclosure of such information could be harmful to the
custodial parent or the child of such parent. Information received or
transmitted pursuant to this section shall be subject to the safeguard
provisions contained in section 454(26).''.
(b) Authorized Person for Information Regarding Visitation
Rights.--Section 453(c) (42 U.S.C. 653(c)) is amended--
(1) in paragraph (1), by striking ``support'' and inserting
``support or to seek to enforce orders providing child custody
or visitation rights''; and
(2) in paragraph (2), by striking ``, or any agent of such
court; and'' and inserting ``or to issue an order against a
resident parent for child custody or visitation rights, or any
agent of such court;''.
(c) Reimbursement for Information From Federal Agencies.--Section
453(e)(2) (42 U.S.C. 653(e)(2)) is amended in the 4th sentence by
inserting ``in an amount which the Secretary determines to be
reasonable payment for the information exchange (which amount shall not
include payment for the costs of obtaining, compiling, or maintaining
the information)'' before the period.
(d) Reimbursement for Reports by State Agencies.--Section 453 (42
U.S.C. 653) is amended by adding at the end the following new
subsection:
``(g) Reimbursement for Reports by State Agencies.--The Secretary
may reimburse Federal and State agencies for the costs incurred by such
entities in furnishing information requested by the Secretary under
this section in an amount which the Secretary determines to be
reasonable payment for the information exchange (which amount shall not
include payment for the costs of obtaining, compiling, or maintaining
the information).''.
(e) Conforming Amendments.--
(1) Sections 452(a)(9), 453(a), 453(b), 463(a), 463(e), and
463(f) (42 U.S.C. 652(a)(9), 653(a), 653(b), 663(a), 663(e),
and 663(f)) are each amended by inserting ``Federal'' before
``Parent'' each place such term appears.
(2) Section 453 (42 U.S.C. 653) is amended in the heading
by adding ``federal'' before ``parent''.
(f) New Components.--Section 453 (42 U.S.C. 653), as amended by
subsection (d) of this section, is amended by adding at the end the
following new subsections:
``(h) Federal Case Registry of Child Support Orders.--
``(1) In general.--Not later than October 1, 1998, in order
to assist States in administering programs under State plans
approved under this part and programs funded under part A, and
for the other purposes specified in this section, the Secretary
shall establish and maintain in the Federal Parent Locator
Service an automated registry (which shall be known as the
`Federal Case Registry of Child Support Orders'), which shall
contain abstracts of support orders and other information
described in paragraph (2) with respect to each case in each
State case registry maintained pursuant to section 454A(e), as
furnished (and regularly updated), pursuant to section 454A(f),
by State agencies administering programs under this part.
``(2) Case information.--The information referred to in
paragraph (1) with respect to a case shall be such information
as the Secretary may specify in regulations (including the
names, social security numbers or other uniform identification
numbers, and State case identification numbers) to identify the
individuals who owe or are owed support (or with respect to or
on behalf of whom support obligations are sought to be
established), and the State or States which have the case.
``(i) National Directory of New Hires.--
``(1) In general.--In order to assist States in
administering programs under State plans approved under this
part and programs funded under part A, and for the other
purposes specified in this section, the Secretary shall, not later than
October 1, 1997, establish and maintain in the Federal Parent Locator
Service an automated directory to be known as the National Directory of
New Hires, which shall contain the information supplied pursuant to
section 453A(g)(2).
``(2) Entry of data.--Information shall be entered into the
data base maintained by the National Directory of New Hires
within 2 business days of receipt pursuant to section
453A(g)(2).
``(3) Administration of federal tax laws.--The Secretary of
the Treasury shall have access to the information in the
National Directory of New Hires for purposes of administering
section 32 of the Internal Revenue Code of 1986, or the advance
payment of the earned income tax credit under section 3507 of
such Code, and verifying a claim with respect to employment in
a tax return.
``(4) List of multistate employers.--The Secretary shall
maintain within the National Directory of New Hires a list of
multistate employers that report information regarding newly
hired employees pursuant to section 453A(b)(1)(B), and the
State which each such employer has designated to receive such
information.
``(j) Information Comparisons and Other Disclosures.--
``(1) Verification by social security administration.--
``(A) In general.--The Secretary shall transmit
information on individuals and employers maintained
under this section to the Social Security
Administration to the extent necessary for verification
in accordance with subparagraph (B).
``(B) Verification by ssa.--The Social Security
Administration shall verify the accuracy of, correct,
or supply to the extent possible, and report to the
Secretary, the following information supplied by the
Secretary pursuant to subparagraph (A):
``(i) The name, social security number, and
birth date of each such individual.
``(ii) The employer identification number
of each such employer.
``(2) Information comparisons.--For the purpose of locating
individuals in a paternity establishment case or a case
involving the establishment, modification, or enforcement of a
support order, the Secretary shall--
``(A) compare information in the National Directory
of New Hires against information in the support case
abstracts in the Federal Case Registry of Child Support
Orders not less often than every 2 business days; and
``(B) within 2 business days after such a
comparison reveals a match with respect to an
individual, report the information to the State agency
responsible for the case.
``(3) Information comparisons and disclosures of
information in all registries for title iv program purposes.--
To the extent and with the frequency that the Secretary
determines to be effective in assisting States to carry out
their responsibilities under programs operated under this part
and programs funded under part A, the Secretary shall--
``(A) compare the information in each component of
the Federal Parent Locator Service maintained under
this section against the information in each other such
component (other than the comparison required by
paragraph (2)), and report instances in which such a
comparison reveals a match with respect to an
individual to State agencies operating such programs;
and
``(B) disclose information in such registries to
such State agencies.
``(4) Provision of new hire information to the social
security administration.--The National Directory of New Hires
shall provide the Commissioner of Social Security with all
information in the National Directory.
``(5) Research.--The Secretary may provide access to
information reported by employers pursuant to section 453A(b)
for research purposes found by the Secretary to be likely to
contribute to achieving the purposes of part A or this part,
but without personal identifiers.
``(k) Fees.--
``(1) For ssa verification.--The Secretary shall reimburse
the Commissioner of Social Security, at a rate negotiated
between the Secretary and the Commissioner, for the costs
incurred by the Commissioner in performing the verification
services described in subsection (j).
``(2) For information from state directories of new
hires.--The Secretary shall reimburse costs incurred by State
directories of new hires in furnishing information as required
by subsection (j)(3), at rates which the Secretary determines
to be reasonable (which rates shall not include payment for the
costs of obtaining, compiling, or maintaining such
information).
``(3) For information furnished to state and federal
agencies.--A State or Federal agency that receives information
from the Secretary pursuant to this section shall reimburse the
Secretary for costs incurred by the Secretary in furnishing the
information, at rates which the Secretary determines to be
reasonable (which rates shall include payment for the costs of
obtaining, verifying, maintaining, and comparing the
information).
``(l) Restriction on Disclosure and Use.--Information in the
Federal Parent Locator Service, and information resulting from
comparisons using such information, shall not be used or disclosed
except as expressly provided in this section, subject to section 6103
of the Internal Revenue Code of 1986.
``(m) Information Integrity and Security.--The Secretary shall
establish and implement safeguards with respect to the entities
established under this section designed to--
``(1) ensure the accuracy and completeness of information
in the Federal Parent Locator Service; and
``(2) restrict access to confidential information in the
Federal Parent Locator Service to authorized persons, and
restrict use of such information to authorized purposes.
``(n) Federal Government Reporting.--Each department, agency, and
instrumentality of the United States shall on a quarterly basis report
to the Federal Parent Locator Service the name and social security
number of each employee and the wages paid to the employee during the
previous quarter, except that such a report shall not be filed with
respect to an employee of a department, agency, or instrumentality
performing intelligence or counterintelligence functions, if the head
of such department, agency, or instrumentality has determined that
filing such a report could endanger the safety of the employee or
compromise an ongoing investigation or intelligence mission.''.
(g) Conforming Amendments.--
(1) To part d of title iv of the social security act.--
(A) Section 454(8)(B) (42 U.S.C. 654(8)(B)) is
amended to read as follows:
``(B) the Federal Parent Locator Service
established under section 453;''.
(B) Section 454(13) (42 U.S.C.654(13)) is amended
by inserting ``and provide that information requests by
parents who are residents of other States be treated
with the same priority as requests by parents who are
residents of the State submitting the plan'' before the
semicolon.
(2) To federal unemployment tax act.--Section 3304(a)(16)
of the Internal Revenue Code of 1986 is amended--
(A) by striking ``Secretary of Health, Education,
and Welfare'' each place such term appears and
inserting ``Secretary of Health and Human Services'';
(B) in subparagraph (B), by striking ``such
information'' and all that follows and inserting
``information furnished under subparagraph (A) or (B)
is used only for the purposes authorized under such
subparagraph;'';
(C) by striking ``and'' at the end of subparagraph
(A);
(D) by redesignating subparagraph (B) as
subparagraph (C); and
(E) by inserting after subparagraph (A) the
following new subparagraph:
``(B) wage and unemployment compensation information
contained in the records of such agency shall be furnished to
the Secretary of Health and Human Services (in accordance with
regulations promulgated by such Secretary) as necessary for the
purposes of the National Directory of New Hires established
under section 453(i) of the Social Security Act, and''.
(3) To state grant program under title iii of the social
security act.--Subsection (h) of section 303 (42 U.S.C. 503) is
amended to read as follows:
``(h)(1) The State agency charged with the administration of the
State law shall, on a reimbursable basis--
``(A) disclose quarterly, to the Secretary of Health and
Human Services, wage and claim information, as required
pursuant to section 453(i)(1), contained in the records of such
agency;
``(B) ensure that information provided pursuant to
subparagraph (A) meets such standards relating to correctness
and verification as the Secretary of Health and Human Services,
with the concurrence of the Secretary of Labor, may find
necessary; and
``(C) establish such safeguards as the Secretary of Labor
determines are necessary to insure that information disclosed
under subparagraph (A) is used only for purposes of section
453(i)(1) in carrying out the child support enforcement program
under title IV.
``(2) Whenever the Secretary of Labor, after reasonable notice and
opportunity for hearing to the State agency charged with the
administration of the State law, finds that there is a failure to
comply substantially with the requirements of paragraph (1), the
Secretary of Labor shall notify such State agency that further payments
will not be made to the State until the Secretary of Labor is satisfied
that there is no longer any such failure. Until the Secretary of Labor
is so satisfied, the Secretary shall make no future certification to
the Secretary of the Treasury with respect to the State.
``(3) For purposes of this subsection--
``(A) the term `wage information' means information
regarding wages paid to an individual, the social security
account number of such individual, and the name, address,
State, and the Federal employer identification number of the
employer paying such wages to such individual; and
``(B) the term `claim information' means information
regarding whether an individual is receiving, has received, or
has made application for, unemployment compensation, the amount
of any such compensation being received (or to be received by
such individual), and the individual's current (or most recent)
home address.''.
(4) Disclosure of certain information to agents of child
support enforcement agencies.--
(A) In general.--Paragraph (6) of section 6103(l)
of the Internal Revenue Code of 1986 (relating to
disclosure of return information to Federal, State, and
local child support enforcement agencies) is amended by
redesignating subparagraph (B) as subparagraph (C) and
by inserting after subparagraph (A) the following new
subparagraph:
``(B) Disclosure to certain agents.--The following
information disclosed to any child support enforcement
agency under subparagraph (A) with respect to any
individual with respect to whom child support
obligations are sought to be established or enforced
may be disclosed by such agency to any agent of such
agency which is under contract with such agency to
carry out the purposes described in subparagraph (C):
``(i) The address and social security
account number (or numbers) of such individual.
``(ii) The amount of any reduction under
section 6402(c) (relating to offset of past-due
support against overpayments) in any
overpayment otherwise payable to such
individual.''.
(B) Conforming amendments.--
(i) Paragraph (3) of section 6103(a) of
such Code is amended by striking ``(l)(12)''
and inserting ``paragraph (6) or (12) of
subsection (l)''.
(ii) Subparagraph (C) of section 6103(l)(6)
of such Code, as redesignated by subsection
(a), is amended to read as follows:
``(C) Restriction on disclosure.--Information may
be disclosed under this paragraph only for purposes of,
and to the extent necessary in, establishing and
collecting child support obligations from, and
locating, individuals owing such obligations.''.
(iii) The material following subparagraph
(F) of section 6103(p)(4) of such Code is
amended by striking ``subsection (l)(12)(B)''
and inserting ``paragraph (6)(A) or (12)(B) of
subsection (l)''.
(h) Requirement for Cooperation.--The Secretary of Labor and the
Secretary of Health and Human Services shall work jointly to develop
cost-effective and efficient methods of accessing the information in
the various State directories of new hires and the National Directory
of New Hires as established pursuant to the amendments made by this
subchapter. In developing these methods the Secretaries shall take into
account the impact, including costs, on the States, and shall also
consider the need to insure the proper and authorized use of wage
record information.
SEC. 2317. COLLECTION AND USE OF SOCIAL SECURITY NUMBERS FOR USE IN
CHILD SUPPORT ENFORCEMENT.
Section 466(a) (42 U.S.C. 666(a)), as amended by section 2315 of
this Act, is amended by inserting after paragraph (12) the following
new paragraph:
``(13) Recording of social security numbers in certain
family matters.--Procedures requiring that the social security
number of--
``(A) any applicant for a professional license,
commercial driver's license, occupational license, or
marriage license be recorded on the application;
``(B) any individual who is subject to a divorce
decree, support order, or paternity determination or
acknowledgment be placed in the records relating to the
matter; and
``(C) any individual who has died be placed in the
records relating to the death and be recorded on the
death certificate.
For purposes of subparagraph (A), if a State allows the use of
a number other than the social security number, the State shall
so advise any applicants.''.
Subchapter C--Streamlining and Uniformity of Procedures
SEC. 2321. ADOPTION OF UNIFORM STATE LAWS.
Section 466 (42 U.S.C. 666) is amended by adding at the end the
following new subsection:
``(f) Uniform Interstate Family Support Act.--
``(1) Enactment and use.--In order to satisfy section
454(20)(A), on and after January 1, 1998, each State must have
in effect the Uniform Interstate Family Support Act, as
approved by the American Bar Association on February 9, 1993,
together with any amendments officially adopted before January
1, 1998 by the National Conference of Commissioners on Uniform
State Laws.
``(2) Employers to follow procedural rules of state where
employee works.--The State law enacted pursuant to paragraph
(1) shall provide that an employer that receives an income withholding
order or notice pursuant to section 501 of the Uniform Interstate
Family Support Act follow the procedural rules that apply with respect
to such order or notice under the laws of the State in which the
obligor works.''.
SEC. 2322. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD SUPPORT
ORDERS.
Section 1738B of title 28, United States Code, is amended--
(1) in subsection (a)(2), by striking ``subsection (e)''
and inserting ``subsections (e), (f), and (i)'';
(2) in subsection (b), by inserting after the 2nd
undesignated paragraph the following:
```child's home State' means the State in which a child lived with
a parent or a person acting as parent for at least 6 consecutive months
immediately preceding the time of filing of a petition or comparable
pleading for support and, if a child is less than 6 months old, the
State in which the child lived from birth with any of them. A period of
temporary absence of any of them is counted as part of the 6-month
period.'';
(3) in subsection (c), by inserting ``by a court of a
State'' before ``is made'';
(4) in subsection (c)(1), by inserting ``and subsections
(e), (f), and (g)'' after ``located'';
(5) in subsection (d)--
(A) by inserting ``individual'' before
``contestant''; and
(B) by striking ``subsection (e)'' and inserting
``subsections (e) and (f)'';
(6) in subsection (e), by striking ``make a modification of
a child support order with respect to a child that is made''
and inserting ``modify a child support order issued'';
(7) in subsection (e)(1), by inserting ``pursuant to
subsection (i)'' before the semicolon;
(8) in subsection (e)(2)--
(A) by inserting ``individual'' before
``contestant'' each place such term appears; and
(B) by striking ``to that court's making the
modification and assuming'' and inserting ``with the
State of continuing, exclusive jurisdiction for a court
of another State to modify the order and assume'';
(9) by redesignating subsections (f) and (g) as subsections
(g) and (h), respectively;
(10) by inserting after subsection (e) the following new
subsection:
``(f) Recognition of Child Support Orders.--If 1 or more child
support orders have been issued with regard to an obligor and a child,
a court shall apply the following rules in determining which order to
recognize for purposes of continuing, exclusive jurisdiction and
enforcement:
``(1) If only 1 court has issued a child support order, the
order of that court must be recognized.
``(2) If 2 or more courts have issued child support orders
for the same obligor and child, and only 1 of the courts would
have continuing, exclusive jurisdiction under this section, the
order of that court must be recognized.
``(3) If 2 or more courts have issued child support orders
for the same obligor and child, and more than 1 of the courts
would have continuing, exclusive jurisdiction under this
section, an order issued by a court in the current home State
of the child must be recognized, but if an order has not been
issued in the current home State of the child, the order most
recently issued must be recognized.
``(4) If 2 or more courts have issued child support orders
for the same obligor and child, and none of the courts would
have continuing, exclusive jurisdiction under this section, a
court may issue a child support order, which must be
recognized.
``(5) The court that has issued an order recognized under
this subsection is the court having continuing, exclusive
jurisdiction.'';
(11) in subsection (g) (as so redesignated)--
(A) by striking ``Prior'' and inserting
``Modified''; and
(B) by striking ``subsection (e)'' and inserting
``subsections (e) and (f)'';
(12) in subsection (h) (as so redesignated)--
(A) in paragraph (2), by inserting ``including the
duration of current payments and other obligations of
support'' before the comma; and
(B) in paragraph (3), by inserting ``arrears
under'' after ``enforce''; and
(13) by adding at the end the following new subsection:
``(i) Registration for Modification.--If there is no individual
contestant or child residing in the issuing State, the party or support
enforcement agency seeking to modify, or to modify and enforce, a child
support order issued in another State shall register that order in a
State with jurisdiction over the nonmovant for the purpose of
modification.''.
SEC. 2323. ADMINISTRATIVE ENFORCEMENT IN INTERSTATE CASES.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections 2315 and
2317(a) of this Act, is amended by inserting after paragraph (13) the
following new paragraph:
``(14) Administrative enforcement in interstate cases.--
Procedures under which--
``(A)(i) the State shall respond within 5 business
days to a request made by another State to enforce a
support order; and
``(ii) the term `business day' means a day on which
State offices are open for regular business;
``(B) the State may, by electronic or other means,
transmit to another State a request for assistance in a
case involving the enforcement of a support order,
which request--
``(i) shall include such information as
will enable the State to which the request is
transmitted to compare the information about
the case to the information in the data bases
of the State; and
``(ii) shall constitute a certification by
the requesting State--
``(I) of the amount of support
under the order the payment of which is
in arrears; and
``(II) that the requesting State
has complied with all procedural due
process requirements applicable to the
case;
``(C) if the State provides assistance to another
State pursuant to this paragraph with respect to a
case, neither State shall consider the case to be
transferred to the caseload of such other State; and
``(D) the State shall maintain records of--
``(i) the number of such requests for
assistance received by the State;
``(ii) the number of cases for which the
State collected support in response to such a
request; and
``(iii) the amount of such collected
support.''.
SEC. 2324. USE OF FORMS IN INTERSTATE ENFORCEMENT.
(a) Promulgation.--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 paragraph (10) and
inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(11) not later than October 1, 1996, after consulting
with the State directors of programs under this part,
promulgate forms to be used by States in interstate cases for--
``(A) collection of child support through income
withholding;
``(B) imposition of liens; and
``(C) administrative subpoenas.''.
(b) Use by States.--Section 454(9) (42 U.S.C. 654(9)) is amended--
(1) by striking ``and'' at the end of subparagraph (C);
(2) by inserting ``and'' at the end of subparagraph (D);
and
(3) by adding at the end the following new subparagraph:
``(E) not later than March 1, 1997, in using the
forms promulgated pursuant to section 452(a)(11) for
income withholding, imposition of liens, and issuance
of administrative subpoenas in interstate child support
cases;''.
SEC. 2325. STATE LAWS PROVIDING EXPEDITED PROCEDURES.
(a) State Law Requirements.--Section 466 (42 U.S.C. 666), as
amended by section 2314 of this Act, is amended--
(1) in subsection (a)(2), by striking the first 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 new
subsection:
``(c) Expedited Procedures.--The procedures specified in this
subsection are the following:
``(1) Administrative action by state agency.--Procedures
which give the State agency the authority to take the following
actions relating to establishment of paternity or to
establishment, modification, or enforcement of support orders,
without the necessity of obtaining an order from any other
judicial or administrative tribunal, and to recognize and
enforce the authority of State agencies of other States to take
the following actions:
``(A) Genetic testing.--To order genetic testing
for the purpose of paternity establishment as provided
in section 466(a)(5).
``(B) Financial or other information.--To subpoena
any financial or other information needed to establish,
modify, or enforce a support order, and to impose
penalties for failure to respond to such a subpoena.
``(C) Response to state agency request.--To require
all entities in the State (including for-profit,
nonprofit, and governmental employers) 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, and to
sanction failure to respond to any such request.
``(D) Access to certain records.--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.
``(ii) Certain records held by private
entities with respect to individuals who owe or
are owed support (or against or with respect to
whom a support obligation is sought), consisting of--
``(I) the names and addresses of
such individuals and the names and
addresses of the employers of such
individuals, as appearing in customer
records of public utilities and cable
television companies; and
``(II) information (including
information on assets and liabilities)
on such individuals held by financial
institutions,
subject to the nonliability of such entities
arising from affording such access under this
subparagraph.
``(E) Change in payee.--In cases in which support
is subject to an assignment in order to comply with a
requirement imposed pursuant to part A or section 1912,
or to a requirement to pay through the State
disbursement unit established pursuant to section 454B,
upon providing notice to obligor and obligee, to direct
the obligor or other payor to change the payee to the
appropriate government entity.
``(F) Income withholding.--To order income
withholding in accordance with subsections (a)(1)(A)
and (b) of section 466.
``(G) Securing assets.--In cases in which there is
a support arrearage, to secure assets to satisfy the
arrearage by--
``(i) intercepting or seizing periodic or
lump-sum payments from--
``(I) a State or local agency,
including unemployment compensation,
workers' compensation, and other
benefits; and
``(II) judgments, settlements, and
lotteries;
``(ii) attaching and seizing assets of the
obligor held in financial institutions;
``(iii) attaching public and private
retirement funds; and
``(iv) imposing liens in accordance with
subsection (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 limitations
as the State may provide.
Such procedures shall be 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.
``(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) each party to any paternity or child
support proceeding is required (subject to
privacy safeguards) to file with the tribunal
and the State case registry upon entry of an
order, and to update as appropriate,
information on location and identity of the
party, including social security number,
residential and mailing addresses, telephone
number, driver's license number, and name,
address, and telephone number of employer; and
``(ii) in any subsequent child support
enforcement action between the parties, upon
sufficient showing that diligent effort has
been made to ascertain the location of such a
party, the tribunal may deem State due process
requirements for notice and service of process
to be met with respect to the party, upon
delivery of written notice to the most recent
residential or employer address filed with the tribunal 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
``(ii) in a State in which orders are
issued by courts or administrative tribunals, a
case may be transferred between local
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.
``(3) Coordination with erisa.--Notwithstanding subsection
(d) of section 514 of the Employee Retirement Income Security
Act of 1974 (relating to effect on other laws), nothing in this
subsection shall be construed to alter, amend, modify,
invalidate, impair, or supersede subsections (a), (b), and (c)
of such section 514 as it applies with respect to any procedure
referred to in paragraph (1) and any expedited procedure
referred to in paragraph (2), except to the extent that such
procedure would be consistent with the requirements of section
206(d)(3) of such Act (relating to qualified domestic relations
orders) or the requirements of section 609(a) of such Act
(relating to qualified medical child support orders) if the
reference in such section 206(d)(3) to a domestic relations
order and the reference in such section 609(a) to a medical
child support order were a reference to a support order
referred to in paragraphs (1) and (2) relating to the same
matters, respectively.''.
(b) Automation of State Agency Functions.--Section 454A, as added
by section 2344(a)(2) and as amended by sections 2311 and 2312(c) of
this Act, is amended by adding at the end the following new subsection:
``(h) Expedited Administrative Procedures.--The automated system
required by this section shall be used, to the maximum extent feasible,
to implement the expedited administrative procedures required by
section 466(c).''.
Subchapter D--Paternity Establishment
SEC. 2331. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT.
(a) State Laws Required.--Section 466(a)(5) (42 U.S.C. 666(a)(5))
is amended to read as follows:
``(5) Procedures concerning paternity establishment.--
``(A) Establishment process available from birth
until age 18.--
``(i) Procedures which permit the
establishment of the paternity of a child at
any time before the child attains 18 years of
age.
``(ii) As of August 16, 1984, clause (i)
shall also apply to a child for whom paternity
has not been established or for whom a
paternity action was brought but dismissed
because a statute of limitations of less than
18 years was then in effect in the State.
``(B) Procedures concerning genetic testing.--
``(i) Genetic testing required in certain
contested cases.--Procedures under which the
State is required, in a contested paternity
case (unless otherwise barred by State law) to
require the child and all other parties (other
than individuals found under section 454(29) to
have good cause and other exceptions for
refusing to cooperate) to submit to genetic
tests upon the request of any such party, if
the request is supported by a sworn statement
by the party--
``(I) alleging paternity, and
setting forth facts establishing a
reasonable possibility of the requisite
sexual contact between the parties; or
``(II) denying paternity, and
setting forth facts establishing a
reasonable possibility of the
nonexistence of sexual contact between
the parties.
``(ii) Other requirements.--Procedures
which require the State agency, in any case in
which the agency orders genetic testing--
``(I) to pay costs of such tests,
subject to recoupment (if the State so
elects) from the alleged father if
paternity is established; and
``(II) to obtain additional testing
in any case if an original test result
is contested, upon request and advance
payment by the contestant.
``(C) Voluntary paternity acknowledgment.--
``(i) Simple civil process.--Procedures for
a simple civil process for voluntarily
acknowledging paternity under which the State
must provide that, before a mother and a
putative father can sign an acknowledgment of
paternity, the mother and the putative father
must be given notice, orally and in writing, of
the alternatives to, the legal consequences of,
and the rights (including, if 1 parent is a
minor, any rights afforded due to minority
status) and responsibilities that arise from,
signing the acknowledgment.
``(ii) Hospital-based program.--Such
procedures must include a hospital-based
program for the voluntary acknowledgment of
paternity focusing on the period immediately
before or after the birth of a child, unless
good cause and other exceptions exist which--
``(I) shall be defined, taking into
account the best interests of the
child, and
``(II) shall be applied in each
case,
by, at the option of the State, the State
agency administering the State program under
part A, this part, title XV, or title XIX.
``(iii) Paternity establishment services.--
``(I) State-offered services.--Such
procedures must require the State
agency responsible for maintaining
birth records to offer voluntary
paternity establishment services.
``(II) Regulations.--
``(aa) Services offered by
hospitals and birth record
agencies.--The Secretary shall
prescribe regulations governing
voluntary paternity
establishment services offered
by hospitals and birth record
agencies.
``(bb) Services offered by
other entities.--The Secretary
shall prescribe regulations
specifying the types of other
entities that may offer
voluntary paternity
establishment services, and
governing the provision of such
services, which shall include a
requirement that such an entity
must use the same notice
provisions used by, use the
same materials used by, provide
the personnel providing such
services with the same training
provided by, and evaluate the
provision of such services in
the same manner as the
provision of such services is
evaluated by, voluntary
paternity establishment
programs of hospitals and birth
record agencies.
``(iv) Use of paternity acknowledgment
affidavit.--Such procedures must require the
State to develop and use an affidavit for the
voluntary acknowledgment of paternity which
includes the minimum requirements of the
affidavit specified by the Secretary under
section 452(a)(7) for the voluntary acknowledgment of paternity, and to
give full faith and credit to such an affidavit signed in any other
State according to its procedures.
``(D) Status of signed paternity acknowledgment.--
``(i) Inclusion in birth records.--
Procedures under which the name of the father
shall be included on the record of birth of the
child of unmarried parents only if--
``(I) the father and mother have
signed a voluntary acknowledgment of
paternity; or
``(II) a court or an administrative
agency of competent jurisdiction has
issued an adjudication of paternity.
Nothing in this clause shall preclude a State
agency from obtaining an admission of paternity
from the father for submission in a judicial or
administrative proceeding, or prohibit the
issuance of an order in a judicial or
administrative proceeding which bases a legal
finding of paternity on an admission of
paternity by the father and any other
additional showing required by State law.
``(ii) Legal finding of paternity.--
Procedures under which a signed voluntary
acknowledgment of paternity is considered a
legal finding of paternity, subject to the
right of any signatory to rescind the
acknowledgment within the earlier of--
``(I) 60 days; or
``(II) the date of an
administrative or judicial proceeding
relating to the child (including a
proceeding to establish a support
order) in which the signatory is a
party.
``(iii) Contest.--Procedures under which,
after the 60-day period referred to in clause
(ii), a signed voluntary acknowledgment of
paternity may be challenged in court only on
the basis of fraud, duress, or material mistake
of fact, with the burden of proof upon the
challenger, and under which the legal
responsibilities (including child support
obligations) of any signatory arising from the
acknowledgment may not be suspended during the
challenge, except for good cause shown.
``(E) Bar on acknowledgment ratification
proceedings.--Procedures under which judicial or
administrative proceedings are not required or
permitted to ratify an unchallenged acknowledgment of
paternity.
``(F) Admissibility of genetic testing results.--
Procedures--
``(i) requiring the admission into
evidence, for purposes of establishing
paternity, of the results of any genetic test
that is--
``(I) of a type generally
acknowledged as reliable by
accreditation bodies designated by the
Secretary; and
``(II) performed by a laboratory
approved by such an accreditation body;
``(ii) requiring an objection to genetic
testing results to be made in writing not later
than a specified number of days before any
hearing at which the results may be introduced
into evidence (or, at State option, not later
than a specified number of days after receipt
of the results); and
``(iii) making the test results admissible
as evidence of paternity without the need for
foundation testimony or other proof of
authenticity or accuracy, unless objection is
made.
``(G) Presumption of paternity in certain cases.--
Procedures which create a rebuttable or, at the option
of the State, conclusive presumption of paternity upon
genetic testing results indicating a threshold
probability that the alleged father is the father of
the child.
``(H) Default orders.--Procedures requiring a
default order to be entered in a paternity case upon a
showing of service of process on the defendant and any
additional showing required by State law.
``(I) No right to jury trial.--Procedures providing
that the parties to an action to establish paternity
are not entitled to a trial by jury.
``(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, if 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 or for
testing on behalf of the child.
``(L) Standing of putative fathers.--Procedures
ensuring that the putative father has a reasonable
opportunity to initiate a paternity action.
``(M) Filing of acknowledgments and adjudications
in state registry of birth records.--Procedures under
which voluntary acknowledgments and adjudications of
paternity by judicial or administrative processes are
filed with the State registry of birth records for
comparison with information in the State case
registry.''.
(b) National Paternity Acknowledgment Affidavit.--Section 452(a)(7)
(42 U.S.C. 652(a)(7)) is amended by inserting ``, and specify the
minimum requirements of an affidavit to be used for the voluntary
acknowledgment of paternity which shall include the social security
number of each parent and, after consultation with the States, other
common elements as determined by such designee'' before the semicolon.
(c) Conforming Amendment.--Section 468 (42 U.S.C. 668) is amended
by striking ``a simple civil process for voluntarily acknowledging
paternity and''.
SEC. 2332. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT.
Section 454(23) (42 U.S.C. 654(23)) is amended by inserting ``and
will publicize the availability and encourage the use of procedures for
voluntary establishment of paternity and child support by means the
State deems appropriate'' before the semicolon.
SEC. 2333. COOPERATION BY APPLICANTS FOR AND RECIPIENTS OF PART A
ASSISTANCE.
Section 454 (42 U.S.C. 654), as amended by sections 2301(b),
2303(a), 2312(a), and 2313(a) of this Act, is amended--
(1) by striking ``and'' at the end of paragraph (27);
(2) by striking the period at the end of paragraph (28) and
inserting ``; and''; and
(3) by inserting after paragraph (28) the following new
paragraph:
``(29) provide that the State agency responsible for
administering the State plan--
``(A) shall make the determination (and
redetermination at appropriate intervals) as to whether
an individual who has applied for or is receiving
assistance under the State program funded under part A,
the State program under title XV, or the State program
under title XIX is cooperating in good faith with the
State in establishing the paternity of, or in
establishing, modifying, or enforcing a support order
for, any child of the individual by providing the State
agency with the name of, and such other information as
the State agency may require with respect to, the
noncustodial parent of the child, subject to good cause
and other exceptions which--
``(i) shall be defined, taking into account
the best interests of the child, and
``(ii) shall be applied in each case,
by, at the option of the State, the State agency
administering the State program under part A, this
part, title XV, or title XIX;
``(B) shall require the individual to supply
additional necessary information and appear at
interviews, hearings, and legal proceedings;
``(C) shall require the individual and the child to
submit to genetic tests pursuant to judicial or
administrative order;
``(D) may request that the individual sign a
voluntary acknowledgment of paternity, after notice of
the rights and consequences of such an acknowledgment,
but may not require the individual to sign an
acknowledgment or otherwise relinquish the right to
genetic tests as a condition of cooperation and
eligibility for assistance under the State program
funded under part A, the State program under title XV,
or the State program under title XIX; and
``(E) shall promptly notify the individual and the
State agency administering the State program funded
under part A, the State agency administering the State
program under title XV, and the State agency
administering the State program under title XIX, of
each such determination, and if noncooperation is
determined, the basis therefore.''.
Subchapter E--Program Administration and Funding
SEC. 2341. PERFORMANCE-BASED INCENTIVES AND PENALTIES.
(a) Development of New System.--The Secretary of Health and Human
Services, in consultation with State directors of programs under part D
of title IV of the Social Security Act, shall develop a new incentive
system to replace, in a revenue neutral manner, the system under
section 458 of such Act. The new system shall provide additional
payments to any State based on such State's performance under such a
program. Not later than November 1, 1996, the Secretary shall report on
the new system to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate.
(b) Conforming Amendments to Present System.--Section 458 (42
U.S.C. 658) is amended--
(1) in subsection (a), by striking ``aid to families with
dependent children under a State plan approved under part A of
this title'' and inserting ``assistance under a program funded
under part A'';
(2) in subsection (b)(1)(A), by striking ``section
402(a)(26)'' and inserting ``section 408(a)(4)'';
(3) in subsections (b) and (c)--
(A) by striking ``AFDC collections'' each place it
appears and inserting ``title IV-A collections'', and
(B) by striking ``non-AFDC collections'' each place
it appears and inserting ``non-title IV-A
collections''; and
(4) in subsection (c), by striking ``combined AFDC/non-AFDC
administrative costs'' both places it appears and inserting
``combined title IV-A/non-title IV-A administrative costs''.
(c) Calculation of Paternity Establishment Percentage.--
(1) Section 452(g)(1)(A) (42 U.S.C. 652(g)(1)(A)) is
amended by striking ``75'' and inserting ``90''.
(2) Section 452(g)(1) (42 U.S.C. 652(g)(1)) is amended--
(A) by redesignating subparagraphs (B) through (E)
as subparagraphs (C) through (F), respectively, and by
inserting after subparagraph (A) the following new
subparagraph:
``(B) for a State with a paternity establishment percentage
of not less than 75 percent but less than 90 percent for such
fiscal year, the paternity establishment percentage of the
State for the immediately preceding fiscal year plus 2 percentage
points;''; and
(B) by adding at the end the following new flush
sentence:
``In determining compliance under this section, a State may use as its
paternity establishment percentage either the State's IV-D paternity
establishment percentage (as defined in paragraph (2)(A)) or the
State's statewide paternity establishment percentage (as defined in
paragraph (2)(B)).''.
(3) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended--
(A) in subparagraph (A)--
(i) in the matter preceding clause (i)--
(I) by striking ``paternity
establishment percentage'' and
inserting ``IV-D paternity
establishment percentage''; and
(II) by striking ``(or all States,
as the case may be)''; and
(ii) by striking ``and'' at the end
thereof;
(B) by redesignating subparagraph (B) as
subparagraph (C) and by inserting after subparagraph
(A) the following new subparagraph:
``(B) the term `statewide paternity establishment
percentage' means, with respect to a State for a fiscal year,
the ratio (expressed as a percentage) that the total number of
minor children--
``(i) who have been born out of wedlock, and
``(ii) the paternity of whom has been established
or acknowledged during the fiscal year,
bears to the total number of children born out of wedlock
during the preceding fiscal year; and''.
(4) 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; and
(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''.
(d) Effective Dates.--
(1) Incentive adjustments.--
(A) In general.--The system developed under subsection (a)
and the amendments made by subsection (b) shall become
effective on October 1, 1998, except to the extent provided in
subparagraph (B).
(B) Application of section 458.--Section 458 of the Social
Security Act, as in effect on the day 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 1999.
(2) Penalty reductions.--The amendments made by subsection
(c) shall become effective with respect to calendar quarters
beginning on or after the date of the enactment of this Act.
SEC. 2342. FEDERAL AND STATE REVIEWS AND AUDITS.
(a) State Agency Activities.--Section 454 (42 U.S.C. 654) is
amended--
(1) in paragraph (14), by striking ``(14)'' and inserting
``(14)(A)'';
(2) by redesignating paragraph (15) as subparagraph (B) of
paragraph (14); and
(3) by inserting after paragraph (14) the following new
paragraph:
``(15) provide for--
``(A) a process for annual reviews of and reports
to the Secretary on the State program operated under
the State plan approved under this part, including such
information as may be necessary to measure State
compliance with Federal requirements for expedited
procedures, using such standards and procedures as are
required by the Secretary, under which the State
agency will determine the extent to which the program is operated in
compliance with this part; and
``(B) a process of extracting from the automated
data processing system required by paragraph (16) and
transmitting to the Secretary data and calculations
concerning the levels of accomplishment (and rates of
improvement) with respect to applicable performance
indicators (including paternity establishment
percentages) to the extent necessary for purposes of
sections 452(g) and 458;''.
(b) Federal Activities.--Section 452(a)(4) (42 U.S.C. 652(a)(4)) is
amended to read as follows:
``(4)(A) review data and calculations transmitted by State
agencies pursuant to section 454(15)(B) on State program
accomplishments with respect to performance indicators for
purposes of subsection (g) of this section and section 458;
``(B) review annual reports submitted pursuant to section
454(15)(A) and, as appropriate, provide to the State comments,
recommendations for additional or alternative corrective
actions, and technical assistance; and
``(C) conduct audits, in accordance with the Government
auditing standards of the Comptroller General of the United
States--
``(i) at least once every 3 years (or more
frequently, in the case of a State which fails to meet
the requirements of this part concerning performance
standards and reliability of program data) to assess
the completeness, reliability, and security of the data
and the accuracy of the reporting systems used in
calculating performance indicators under subsection (g)
of this section and section 458;
``(ii) of the adequacy of financial management of
the State program operated under the State plan
approved under this part, including assessments of--
``(I) whether Federal and other funds made
available to carry out the State program are
being appropriately expended, and are properly
and fully accounted for; and
``(II) whether collections and
disbursements of support payments are carried
out correctly and are fully accounted for; and
``(iii) for such other purposes as the Secretary
may find necessary;''.
(c) Effective Date.--The amendments made by this section shall be
effective with respect to calendar quarters beginning 12 months or more
after the date of the enactment of this Act.
SEC. 2343. REQUIRED REPORTING PROCEDURES.
(a) Establishment.--Section 452(a)(5) (42 U.S.C. 652(a)(5)) is
amended by inserting ``, and establish procedures to be followed by
States for collecting and reporting information required to be provided
under this part, and establish uniform definitions (including those
necessary to enable the measurement of State compliance with the
requirements of this part relating to expedited processes) to be
applied in following such procedures'' before the semicolon.
(b) State Plan Requirement.--Section 454 (42 U.S.C. 654), as
amended by sections 2301(b), 2303(a), 2312(a), 2313(a), and 2333 of
this Act, is amended--
(1) by striking ``and'' at the end of paragraph (28);
(2) by striking the period at the end of paragraph (29) and
inserting ``; and''; and
(3) by adding after paragraph (29) the following new
paragraph:
``(30) provide that the State shall use the definitions
established under section 452(a)(5) in collecting and reporting
information as required under this part.''.
SEC. 2344. AUTOMATED DATA PROCESSING REQUIREMENTS.
(a) Revised Requirements.--
(1) In general.--Section 454(16) (42 U.S.C. 654(16)) is
amended--
(A) by striking ``, at the option of the State,'';
(B) by inserting ``and operation by the State
agency'' after ``for the establishment'';
(C) by inserting ``meeting the requirements of
section 454A'' after ``information retrieval system'';
(D) by striking ``in the State and localities
thereof, so as (A)'' and inserting ``so as'';
(E) by striking ``(i)''; and
(F) by striking ``(including'' and all that follows
and inserting a semicolon.
(2) Automated data processing.--Part D of title IV (42
U.S.C. 651-669) is amended by inserting after section 454 the
following new section:
``SEC. 454A. AUTOMATED DATA PROCESSING.
``(a) In General.--In order for a State to meet the requirements of
this section, the State agency administering the State program under
this part 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 with the frequency and in
the manner required by or under this part.
``(b) Program Management.--The automated system required by this
section shall perform such functions as the Secretary may specify
relating to management of the State program under this part,
including--
``(1) controlling and accounting for use of Federal, State,
and local funds in carrying out the program; and
``(2) maintaining the data necessary to meet Federal
reporting requirements under this part on a timely basis.
``(c) Calculation of Performance Indicators.--In order to enable
the Secretary to determine the incentive payments 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 paternity establishment
percentage 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 by this
section, which shall include the following (in addition to such other
safeguards as the Secretary may specify 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 the State program under
this part; and
``(B) specify the data which may be used for
particular program purposes, and the personnel
permitted access to such data.
``(2) Systems controls.--Systems controls (such as
passwords or blocking of fields) to ensure strict adherence to
the policies described in 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.--Procedures to ensure that
all personnel (including State and local agency staff and
contractors) who may have access to or be required to use
confidential program data are informed of applicable
requirements and penalties (including those in section 6103 of
the Internal Revenue Code of 1986), and are adequately trained
in security procedures.
``(5) Penalties.--Administrative penalties (up to and
including dismissal from employment) for unauthorized access
to, or disclosure or use of, confidential data.''.
(3) Regulations.--The Secretary of Health and Human
Services shall prescribe final regulations for implementation
of section 454A of the Social Security Act not later than 2
years after the date of the enactment of this Act.
(4) Implementation timetable.--Section 454(24) (42 U.S.C.
654(24)), as amended by section 2303(a)(1) of this Act, 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, 1997, which meets 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, 2000, which meets all
requirements of this part enacted on or before the date
of the enactment of the Personal Responsibility and
Work Opportunity Act of 1996, except that such deadline
shall be extended by 1 day for each day (if any) by
which the Secretary fails to meet the deadline imposed
by section 2344(a)(3) of the Personal Responsibility
and Work Opportunity Act of 1996;''.
(b) Special Federal Matching Rate for Development Costs of
Automated Systems.--
(1) In general.--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 new
paragraph:
``(3)(A) The Secretary shall pay to each State, for each quarter in
fiscal years 1996 and 1997, 90 percent of so much of the State
expenditures described in paragraph (1)(B) as the Secretary finds are
for a system meeting the requirements specified in section 454(16) (as
in effect on September 30, 1995) but limited to the amount approved for
States in the advance planning documents of such States submitted on or
before September 30, 1995. Notwithstanding the preceding sentence, any
payment to a State with respect to fiscal year 1997 shall be made in
one payment in fiscal year 1998.
``(B)(i) The Secretary shall pay to each State, for each quarter in
fiscal years 1996 through 2001, the percentage specified in clause (ii)
of so much of the State expenditures described in paragraph (1)(B) as
the Secretary finds are for a system meeting the requirements of
sections 454(16) and 454A.
``(ii) The percentage specified in this clause is 80 percent.''.
(2) Temporary limitation on payments under special federal
matching rate.--
(A) In general.--The Secretary of Health and Human
Services may not pay more than $400,000,000 in the
aggregate under section 455(a)(3)(B) of the Social
Security Act for fiscal years 1996 through 2001.
(B) Allocation of limitation among states.--The
total amount payable to a State under section
455(a)(3)(B) of such Act for fiscal years 1996 through
2001 shall not exceed the limitation determined for the
State by the Secretary of Health and Human Services in
regulations.
(C) Allocation formula.--The regulations referred
to in subparagraph (B) shall prescribe a formula for
allocating the amount specified in subparagraph (A)
among States with plans approved under part D of
title IV of the Social Security Act, which shall take into account--
(i) the relative size of State caseloads
under such part; and
(ii) the level of automation needed to meet
the automated data processing requirements of
such part.
(c) Conforming Amendment.--Section 123(c) of the Family Support Act
of 1988 (102 Stat. 2352; Public Law 100-485) is repealed.
SEC. 2345. TECHNICAL ASSISTANCE.
(a) For Training of Federal and State Staff, Research and
Demonstration Programs, and Special Projects of Regional or National
Significance.--Section 452 (42 U.S.C. 652) is amended by adding at the
end the following new subsection:
``(j) Out of any money in the Treasury of the United States not
otherwise appropriated, there is hereby appropriated to the Secretary
for each fiscal year (beginning with fiscal year 1998) an amount equal
to 1 percent of the total amount paid to the Federal Government
pursuant to section 457(a) during the immediately preceding fiscal year
(as determined on the basis of the most recent reliable data available
to the Secretary as of the end of the 3rd calendar quarter following
the end of such preceding fiscal year), to cover costs incurred by the
Secretary for--
``(1) information dissemination and technical assistance to
States, training of State and Federal staff, staffing studies,
and related activities needed to improve programs under this
part (including technical assistance concerning State automated
systems required by this part); and
``(2) research, demonstration, and special projects of
regional or national significance relating to the operation of
State programs under this part.
The amount appropriated under this subsection shall remain available
until expended.''.
(b) Operation of Federal Parent Locator Service.--Section 453 (42
U.S.C. 653), as amended by section 2316 of this Act, is amended by
adding at the end the following new subsection:
``(o) Recovery of Costs.--Out of any money in the Treasury of the
United States not otherwise appropriated, there is hereby appropriated
to the Secretary for each fiscal year an amount equal to 2 percent of
the total amount paid to the Federal Government pursuant to section
457(a) during the immediately preceding fiscal year (as determined on
the basis of the most recent reliable data available to the Secretary
as of the end of the 3rd calendar quarter following the end of such
preceding fiscal year), to cover costs incurred by the Secretary for
operation of the Federal Parent Locator Service under this section, to
the extent such costs are not recovered through user fees.''.
SEC. 2346. REPORTS AND DATA COLLECTION BY THE SECRETARY.
(a) Annual Report to Congress.--
(1) Section 452(a)(10)(A) (42 U.S.C. 652(a)(10)(A)) is
amended--
(A) by striking ``this part;'' and inserting ``this
part, including--''; and
(B) by adding at the end the following new clauses:
``(i) the total amount of child support
payments collected as a result of services
furnished during the fiscal year to individuals
receiving services under this part;
``(ii) the cost to the States and to the
Federal Government of so furnishing the
services; and
``(iii) the number of cases involving
families--
``(I) who became ineligible for
assistance under State programs funded
under part A during a month in the
fiscal year; and
``(II) with respect to whom a child
support payment was received in the
month;''.
(2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is
amended--
(A) in the matter preceding clause (i)--
(i) by striking ``with the data required
under each clause being separately stated for
cases'' and inserting ``separately stated for
cases'';
(ii) by striking ``cases where the child
was formerly receiving'' and inserting ``or
formerly received'';
(iii) by inserting ``or 1912'' after
``471(a)(17)''; and
(iv) by inserting ``for'' before ``all
other'';
(B) in each of clauses (i) and (ii), by striking
``, and the total amount of such obligations'';
(C) in clause (iii), by striking ``described in''
and all that follows and inserting ``in which support
was collected during the fiscal year;'';
(D) by striking clause (iv); and
(E) by redesignating clause (v) as clause (vii),
and inserting after clause (iii) the following new
clauses:
``(iv) the total amount of support
collected during such fiscal year and
distributed as current support;
``(v) the total amount of support collected
during such fiscal year and distributed as
arrearages;
``(vi) the total amount of support due and
unpaid for all fiscal years; and''.
(3) Section 452(a)(10)(G) (42 U.S.C. 652(a)(10)(G)) is
amended by striking ``on the use of Federal courts and''.
(4) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended--
(A) in subparagraph (H), by striking ``and'';
(B) in subparagraph (I), by striking the period and
inserting ``; and''; and
(C) by inserting after subparagraph (I) the
following new subparagraph:
``(J) compliance, by State, with the standards
established pursuant to subsections (h) and (i).''.
(5) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended by
striking all that follows subparagraph (J), as added by
paragraph (4).
(b) Effective Date.--The amendments made by subsection (a) shall be
effective with respect to fiscal year 1997 and succeeding fiscal years.
Subchapter F--Establishment and Modification of Support Orders
SEC. 2351. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF CHILD
SUPPORT ORDERS.
Section 466(a)(10) (42 U.S.C. 666(a)(10)) is amended to read as
follows:
``(10) Review and adjustment of support orders upon
request.--Procedures under which the State shall review and
adjust each support order being enforced under this part if
there is an assignment under part A or upon the request of
either parent, and may review and adjust any other support
order being enforced under this part. Such procedures shall
provide the following:
``(A) In general.--
``(i) 3-year cycle.--Except as provided in
subparagraphs (B) and (C), the State shall
review and, as appropriate, adjust the support
order every 3 years, taking into account the
best interests of the child involved.
``(ii) Methods of adjustment.--The State
may elect to review and, if appropriate, adjust
an order pursuant to clause (i) by--
``(I) reviewing and, if
appropriate, adjusting the order in
accordance with the guidelines
established pursuant to section 467(a)
if the amount of the child support
award under the order differs from the
amount that would be awarded in
accordance with the guidelines; or
``(II) applying a cost-of-living
adjustment to the order in accordance
with a formula developed by the State
and permit either party to contest the
adjustment, within 30 days after the
date of the notice of the adjustment,
by making a request for review and, if
appropriate, adjustment of the order in
accordance with the child support
guidelines established pursuant to
section 467(a).
``(iii) No proof of change in circumstances
necessary.--Any adjustment under this
subparagraph (A) shall be made without a
requirement for proof or showing of a change in
circumstances.
``(B) Automated method.--The State may use
automated methods (including automated comparisons with
wage or State income tax data) to identify orders
eligible for review, conduct the review, identify
orders eligible for adjustment, and apply the
appropriate adjustment to the orders eligible for
adjustment under the threshold established by the
State.
``(C) Request upon substantial change in
circumstances.--The State shall, at the request of
either parent subject to such an order or of any State
child support enforcement agency, review and, if
appropriate, adjust the order in accordance with the
guidelines established pursuant to section 467(a) based
upon a substantial change in the circumstances of
either parent.
``(D) Notice of right to review.--The State shall
provide notice not less than once every 3 years to the
parents subject to such an order informing them of
their right to request the State to review and, if
appropriate, adjust the order pursuant to this
paragraph. The notice may be included in the order.''.
SEC. 2352. FURNISHING CONSUMER REPORTS FOR CERTAIN PURPOSES RELATING TO
CHILD SUPPORT.
Section 604 of the Fair Credit Reporting Act (15 U.S.C. 1681b) is
amended by adding at the end the following new paragraphs:
``(4) In response to a request by the head of a State or local
child support enforcement agency (or a State or local government
official authorized by the head of such an agency), if the person
making the request certifies to the consumer reporting agency that--
``(A) the consumer report is needed for the purpose of
establishing an individual's capacity to make child support
payments or determining the appropriate level of such payments;
``(B) the paternity of the consumer for the child to which
the obligation relates has been established or acknowledged by
the consumer in accordance with State laws under which the
obligation arises (if required by those laws);
``(C) the person has provided at least 10 days' prior
notice to the consumer whose report is requested, by certified
or registered mail to the last known address of the consumer,
that the report will be requested; and
``(D) the consumer report will be kept confidential, will
be used solely for a purpose described in subparagraph (A), and
will not be used in connection with any other civil,
administrative, or criminal proceeding, or for any other
purpose.
``(5) To an agency administering a State plan under section 454 of
the Social Security Act (42 U.S.C. 654) for use to set an initial or
modified child support award.''.
SEC. 2353. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL
RECORDS TO STATE CHILD SUPPORT ENFORCEMENT AGENCIES IN
CHILD SUPPORT CASES.
Part D of title IV (42 U.S.C. 651-669) is amended by adding at the
end the following:
``SEC. 469A. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING
FINANCIAL RECORDS TO STATE CHILD SUPPORT ENFORCEMENT
AGENCIES IN CHILD SUPPORT CASES.
``(a) In General.--Notwithstanding any other provision of Federal
or State law, a financial institution shall not be liable under any
Federal or State law to any person for disclosing any financial record
of an individual to a State child support enforcement agency attempting
to establish, modify, or enforce a child support obligation of such
individual.
``(b) Prohibition of Disclosure of Financial Record Obtained by
State Child Support Enforcement Agency.--A State child support
enforcement agency which obtains a financial record of an individual
from a financial institution pursuant to subsection (a) may disclose
such financial record only for the purpose of, and to the extent
necessary in, establishing, modifying, or enforcing a child support
obligation of such individual.
``(c) Civil Damages for Unauthorized Disclosure.--
``(1) Disclosure by state officer or employee.--If any
person knowingly, or by reason of negligence, discloses a
financial record of an individual in violation of subsection
(b), such individual may bring a civil action for damages
against such person in a district court of the United States.
``(2) No liability for good faith but erroneous
interpretation.--No liability shall arise under this subsection
with respect to any disclosure which results from a good faith,
but erroneous, interpretation of subsection (b).
``(3) Damages.--In any action brought under paragraph (1),
upon a finding of liability on the part of the defendant, the
defendant shall be liable to the plaintiff in an amount equal
to the sum of--
``(A) the greater of--
``(i) $1,000 for each act of unauthorized
disclosure of a financial record with respect
to which such defendant is found liable; or
``(ii) the sum of--
``(I) the actual damages sustained
by the plaintiff as a result of such
unauthorized disclosure; plus
``(II) in the case of a willful
disclosure or a disclosure which is the
result of gross negligence, punitive
damages; plus
``(B) the costs (including attorney's fees) of the
action.
``(d) Definitions.--For purposes of this section--
``(1) Financial institution.--The term `financial
institution' means--
``(A) a depository institution, as defined in
section 3(c) of the Federal Deposit Insurance Act (12
U.S.C. 1813(c));
``(B) an institution-affiliated party, as defined
in section 3(u) of such Act (12 U.S.C. 1813(u));
``(C) any Federal credit union or State credit
union, as defined in section 101 of the Federal Credit
Union Act (12 U.S.C. 1752), including an institution-
affiliated party of such a credit union, as defined in
section 206(r) of such Act (12 U.S.C. 1786(r)); and
``(D) any benefit association, insurance company,
safe deposit company, money-market mutual fund, or
similar entity authorized to do business in the State.
``(2) Financial record.--The term `financial record' has
the meaning given such term in section 1101 of the Right to
Financial Privacy Act of 1978 (12 U.S.C. 3401).''.
Subchapter G--Enforcement of Support Orders
SEC. 2361. INTERNAL REVENUE SERVICE COLLECTION OF ARREARAGES.
(a) Collection of Fees.--Section 6305(a) of the Internal Revenue
Code of 1986 (relating to collection of certain liability) is amended--
(1) by striking ``and'' at the end of paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting ``, and'';
(3) by adding at the end the following new paragraph:
``(5) no additional fee may be assessed for adjustments to
an amount previously certified pursuant to such section 452(b)
with respect to the same obligor.''; and
(4) by striking ``Secretary of Health, Education, and
Welfare'' each place it appears and inserting ``Secretary of
Health and Human Services''.
(b) Effective Date.--The amendments made by this section shall
become effective October 1, 1997.
SEC. 2362. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL EMPLOYEES.
(a) Consolidation and Streamlining of Authorities.--Section 459 (42
U.S.C. 659) is amended to read as follows:
``SEC. 459. CONSENT BY THE UNITED STATES TO INCOME WITHHOLDING,
GARNISHMENT, AND SIMILAR PROCEEDINGS FOR ENFORCEMENT OF
CHILD SUPPORT AND ALIMONY OBLIGATIONS.
``(a) Consent to Support Enforcement.--Notwithstanding any other
provision of law (including section 207 of this Act and section 5301 of
title 38, United States Code), effective January 1, 1975, moneys (the
entitlement to which is based upon remuneration for employment) due
from, or payable by, the United States or the District of Columbia
(including any agency, subdivision, or instrumentality thereof) to any
individual, including members of the Armed Forces of the United States,
shall be subject, in like manner and to the same extent as if the
United States or the District of Columbia were a private person, to
withholding in accordance with State law enacted pursuant to
subsections (a)(1) and (b) of section 466 and regulations of the
Secretary under such subsections, and to any other legal process
brought, by a State agency administering a program under a State plan
approved under this part or by an individual obligee, to enforce the
legal obligation of the individual to provide child support or alimony.
``(b) Consent to Requirements Applicable to Private Person.--With
respect to notice to withhold income pursuant to subsection (a)(1) or
(b) of section 466, or any other order or process to enforce support
obligations against an individual (if the order or process contains or
is accompanied by sufficient data to permit prompt identification of
the individual and the moneys involved), each governmental entity
specified in subsection (a) shall be subject to the same requirements
as would apply if the entity were a private person, except as otherwise
provided in this section.
``(c) Designation of Agent; Response to Notice or Process--
``(1) Designation of agent.--The head of each agency
subject to this section shall--
``(A) designate an agent or agents to receive
orders and accept service of process in matters
relating to child support or alimony; and
``(B) annually publish in the Federal Register the
designation of the agent or agents, identified by title
or position, mailing address, and telephone number.
``(2) Response to notice or process.--If an agent
designated pursuant to paragraph (1) of this subsection
receives notice pursuant to State procedures in effect pursuant
to subsection (a)(1) or (b) of section 466, or is effectively
served with any order, process, or interrogatory, with respect
to an individual's child support or alimony payment
obligations, the agent shall--
``(A) as soon as possible (but not later than 15
days) thereafter, send written notice of the notice or
service (together with a copy of the notice or
service) to the individual at the duty station or last-known home
address of the individual;
``(B) within 30 days (or such longer period as may
be prescribed by applicable State law) after receipt of
a notice pursuant to such State procedures, comply with
all applicable provisions of section 466; and
``(C) within 30 days (or such longer period as may
be prescribed by applicable State law) after effective
service of any other such order, process, or
interrogatory, respond to the order, process, or
interrogatory.
``(d) Priority of Claims.--If a governmental entity specified in
subsection (a) receives notice or is served with process, as provided
in this section, concerning amounts owed by an individual to more than
1 person--
``(1) support collection under section 466(b) must be given
priority over any other process, as provided in section
466(b)(7);
``(2) allocation of moneys due or payable to an individual
among claimants under section 466(b) shall be governed by
section 466(b) and the regulations prescribed under such
section; and
``(3) such moneys as remain after compliance with
paragraphs (1) and (2) shall be available to satisfy any other
such processes on a first-come, first-served basis, with any
such process being satisfied out of such moneys as remain after
the satisfaction of all such processes which have been
previously served.
``(e) No Requirement to Vary Pay Cycles.--A governmental entity
that is affected by legal process served for the enforcement of an
individual's child support or alimony payment obligations shall not be
required to vary its normal pay and disbursement cycle in order to
comply with the legal process.
``(f) Relief From Liability.--
``(1) Neither the United States, nor the government of the
District of Columbia, nor any disbursing officer shall be
liable with respect to any payment made from moneys due or
payable from the United States to any individual pursuant to
legal process regular on its face, if the payment is made in
accordance with this section and the regulations issued to
carry out this section.
``(2) No Federal employee whose duties include taking
actions necessary to comply with the requirements of subsection
(a) with regard to any individual shall be subject under any
law to any disciplinary action or civil or criminal liability
or penalty for, or on account of, any disclosure of information
made by the employee in connection with the carrying out of
such actions.
``(g) Regulations.--Authority to promulgate regulations for the
implementation of this section shall, insofar as this section applies
to moneys due from (or payable by)--
``(1) the United States (other than the legislative or
judicial branches of the Federal Government) or the government
of the District of Columbia, be vested in the President (or the
designee of the President);
``(2) the legislative branch of the Federal Government, be
vested jointly in the President pro tempore of the Senate and
the Speaker of the House of Representatives (or their
designees), and
``(3) the judicial branch of the Federal Government, be
vested in the Chief Justice of the United States (or the
designee of the Chief Justice).
``(h) Moneys Subject to Process.--
``(1) In general.--Subject to paragraph (2), moneys paid or
payable to an individual which are considered to be based upon
remuneration for employment, for purposes of this section--
``(A) consist of--
``(i) compensation paid or payable for
personal services of the individual, whether
the compensation is denominated as wages,
salary, commission, bonus, pay, allowances, or
otherwise (including severance pay, sick pay,
and incentive pay);
``(ii) periodic benefits (including a
periodic benefit as defined in section
228(h)(3)) or other payments--
``(I) under the insurance system
established by title II;
``(II) under any other system or
fund established by the United States
which provides for the payment of
pensions, retirement or retired pay,
annuities, dependents' or survivors'
benefits, or similar amounts payable on
account of personal services performed
by the individual or any other
individual;
``(III) as compensation for death
under any Federal program;
``(IV) under any Federal program
established to provide `black lung'
benefits; or
``(V) by the Secretary of Veterans
Affairs as compensation for a service-
connected disability paid by the
Secretary to a former member of the
Armed Forces who is in receipt of
retired or retainer pay if the former
member has waived a portion of the
retired or retainer pay in order to
receive such compensation; and
``(iii) worker's compensation benefits paid
under Federal or State law but
``(B) do not include any payment--
``(i) by way of reimbursement or otherwise,
to defray expenses incurred by the individual
in carrying out duties associated with the
employment of the individual; or
``(ii) as allowances for members of the
uniformed services payable pursuant to chapter
7 of title 37, United States Code, as
prescribed by the Secretaries concerned
(defined by section 101(5) of such title) as
necessary for the efficient performance of
duty.
``(2) Certain amounts excluded.--In determining the amount
of any moneys due from, or payable by, the United States to any
individual, there shall be excluded amounts which--
``(A) are owed by the individual to the United
States;
``(B) are required by law to be, and are, deducted
from the remuneration or other payment involved,
including Federal employment taxes, and fines and
forfeitures ordered by court-martial;
``(C) are properly withheld for Federal, State, or
local income tax purposes, if the withholding of the
amounts is authorized or required by law and if amounts
withheld are not greater than would be the case if the
individual claimed all dependents to which he was
entitled (the withholding of additional amounts
pursuant to section 3402(i) of the Internal Revenue
Code of 1986 may be permitted only when the individual
presents evidence of a tax obligation which supports
the additional withholding);
``(D) are deducted as health insurance premiums;
``(E) are deducted as normal retirement
contributions (not including amounts deducted for
supplementary coverage); or
``(F) are deducted as normal life insurance
premiums from salary or other remuneration for
employment (not including amounts deducted for
supplementary coverage).
``(i) Definitions.--For purposes of this section--
``(1) United states.--The term `United States' includes any
department, agency, or instrumentality of the legislative,
judicial, or executive branch of the Federal Government, the
United States Postal Service, the Postal Rate Commission, any
Federal corporation created by an Act of Congress that is
wholly owned by the Federal Government, and the governments of
the territories and possessions of the United States.
``(2) Child support.--The term `child support', when used
in reference to the legal obligations of an individual to
provide such support, means amounts required to be paid under a
judgment, decree, or order, whether temporary, final, or
subject to modification, issued by a court or an administrative
agency of competent jurisdiction, for the support and
maintenance of a child, including a child who has attained the
age of majority under the law of the issuing State, or a child
and the parent with whom the child is living, which provides
for monetary support, health care, arrearages or reimbursement,
and which may include other related costs and fees, interest
and penalties, income withholding, attorney's fees, and other
relief.
``(3) Alimony.--
``(A) In general.--The term `alimony', when used in
reference to the legal obligations of an individual to
provide the same, means periodic payments of funds for
the support and maintenance of the spouse (or former
spouse) of the individual, and (subject to and in
accordance with State law) includes separate
maintenance, alimony pendente lite, maintenance, and
spousal support, and includes attorney's fees,
interest, and court costs when and to the extent that
the same are expressly made recoverable as such
pursuant to a decree, order, or judgment issued in
accordance with applicable State law by a court of
competent jurisdiction.
``(B) Exceptions.--Such term does not include--
``(i) any child support; or
``(ii) any payment or transfer of property
or its value by an individual to the spouse or
a former spouse of the individual in compliance
with any community property settlement,
equitable distribution of property, or other
division of property between spouses or former
spouses.
``(4) Private person.--The term `private person' means a
person who does not have sovereign or other special immunity or
privilege which causes the person not to be subject to legal
process.
``(5) Legal process.--The term `legal process' means any
writ, order, summons, or other similar process in the nature of
garnishment--
``(A) which is issued by--
``(i) a court or an administrative agency
of competent jurisdiction in any State,
territory, or possession of the United States;
``(ii) a court or an administrative agency
of competent jurisdiction in any foreign
country with which the United States has
entered into an agreement which requires the
United States to honor the process; or
``(iii) an authorized official pursuant to
an order of such a court or an administrative
agency of competent jurisdiction or pursuant to
State or local law; and
``(B) which is directed to, and the purpose of
which is to compel, a governmental entity which holds
moneys which are otherwise payable to an individual to
make a payment from the moneys to another party in
order to satisfy a legal obligation of the individual
to provide child support or make alimony payments.''.
(b) Conforming Amendments.--
(1) To part d of title iv.--Sections 461 and 462 (42 U.S.C.
661 and 662) are repealed.
(2) To title 5, united states code.--Section 5520a of title
5, United States Code, is amended, in subsections (h)(2) and
(i), by striking ``sections 459, 461, and 462 of the Social
Security Act (42 U.S.C. 659, 661, and 662)'' and inserting
``section 459 of the Social Security Act (42 U.S.C. 659)''.
(c) Military Retired and Retainer Pay.--
(1) Definition of court.--Section 1408(a)(1) of title 10,
United States Code, is amended--
(A) by striking ``and'' at the end of subparagraph
(B);
(B) by striking the period at the end of
subparagraph (C) and inserting ``; and''; and
(C) by adding after subparagraph (C) the following
new subparagraph:
``(D) any administrative or judicial tribunal of a
State competent to enter orders for support or
maintenance (including a State agency administering a
program under a State plan approved under part D of
title IV of the Social Security Act), and, for purposes
of this subparagraph, the term `State' includes the
District of Columbia, the Commonwealth of Puerto Rico,
the Virgin Islands, Guam, and American Samoa.''.
(2) Definition of court order.--Section 1408(a)(2) of such
title is amended--
(A) by inserting ``or a support order, as defined
in section 453(p) of the Social Security Act (42 U.S.C.
653(p)),'' before ``which--'';
(B) in subparagraph (B)(i), by striking ``(as
defined in section 462(b) of the Social Security Act
(42 U.S.C. 662(b)))'' and inserting ``(as defined in
section 459(i)(2) of the Social Security Act (42 U.S.C.
659(i)(2)))''; and
(C) in subparagraph (B)(ii), by striking ``(as
defined in section 462(c) of the Social Security Act
(42 U.S.C. 662(c)))'' and inserting ``(as defined in
section 459(i)(3) of the Social Security Act (42 U.S.C.
659(i)(3)))''.
(3) Public payee.--Section 1408(d) of such title is
amended--
(A) in the heading, by inserting ``(or for Benefit
of)'' before ``Spouse or''; and
(B) in paragraph (1), in the 1st sentence, by
inserting ``(or for the benefit of such spouse or
former spouse to a State disbursement unit established
pursuant to section 454B of the Social Security Act or
other public payee designated by a State, in accordance
with part D of title IV of the Social Security Act, as
directed by court order, or as otherwise directed in
accordance with such part D)'' before ``in an amount
sufficient''.
(4) Relationship to part d of title iv.--Section 1408 of
such title is amended by adding at the end the following new
subsection:
``(j) Relationship to Other Laws.--In any case involving an order
providing for payment of child support (as defined in section 459(i)(2)
of the Social Security Act) by a member who has never been married to
the other parent of the child, the provisions of this section shall not
apply, and the case shall be subject to the provisions of section 459
of such Act.''.
(d) Effective Date.--The amendments made by this section shall
become effective 6 months after the date of the enactment of this Act.
SEC. 2363. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEMBERS OF THE
ARMED FORCES.
(a) Availability of Locator Information.--
(1) Maintenance of address information.--The Secretary of
Defense shall establish a centralized personnel locator service
that includes the address of each member of the Armed Forces
under the jurisdiction of the Secretary. Upon request of the
Secretary of Transportation, addresses for members of the Coast
Guard shall be included in the centralized personnel locator
service.
(2) Type of address.--
(A) Residential address.--Except as provided in
subparagraph (B), the address for a member of the Armed
Forces shown in the locator service shall be the
residential address of that member.
(B) Duty address.--The address for a member of the
Armed Forces shown in the locator service shall be the
duty address of that member in the case of a member--
(i) who is permanently assigned overseas,
to a vessel, or to a routinely deployable unit;
or
(ii) with respect to whom the Secretary
concerned makes a determination that the
member's residential address should not be
disclosed due to national security or safety
concerns.
(3) Updating of locator information.--Within 30 days after
a member listed in the locator service establishes a new
residential address (or a new duty address, in the case of a
member covered by paragraph (2)(B)), the Secretary concerned
shall update the locator service to indicate the new address of
the member.
(4) Availability of information.--The Secretary of Defense
shall make information regarding the address of a member of the
Armed Forces listed in the locator service available, on
request, to the Federal Parent Locator Service established
under section 453 of the Social Security Act.
(b) Facilitating Granting of Leave for Attendance at Hearings.--
(1) Regulations.--The Secretary of each military
department, and the Secretary of Transportation with respect to
the Coast Guard when it is not operating as a service in the
Navy, shall prescribe regulations to facilitate the granting of
leave to a member of the Armed Forces under the jurisdiction of
that Secretary in a case in which--
(A) the leave is needed for the member to attend a
hearing described in paragraph (2);
(B) the member is not serving in or with a unit
deployed in a contingency operation (as defined in
section 101 of title 10, United States Code); and
(C) the exigencies of military service (as
determined by the Secretary concerned) do not otherwise
require that such leave not be granted.
(2) Covered hearings.--Paragraph (1) applies to a hearing
that is conducted by a court or pursuant to an administrative
process established under State law, in connection with a civil
action--
(A) to determine whether a member of the Armed
Forces is a natural parent of a child; or
(B) to determine an obligation of a member of the
Armed Forces to provide child support.
(3) Definitions.--For purposes of this subsection--
(A) The term ``court'' has the meaning given that
term in section 1408(a) of title 10, United States
Code.
(B) The term ``child support'' has the meaning
given such term in section 459(i) of the Social
Security Act (42 U.S.C. 659(i)).
(c) Payment of Military Retired Pay in Compliance With Child
Support Orders.--
(1) Date of certification of court order.--Section 1408 of
title 10, United States Code, as amended by section 2362(c)(4)
of this Act, is amended--
(A) by redesignating subsections (i) and (j) as
subsections (j) and (k), respectively; and
(B) by inserting after subsection (h) the following
new subsection:
``(i) Certification Date.--It is not necessary that the date of a
certification of the authenticity or completeness of a copy of a court
order for child support received by the Secretary concerned for the
purposes of this section be recent in relation to the date of receipt
by the Secretary.''.
(2) Payments consistent with assignments of rights to
states.--Section 1408(d)(1) of such title is amended by
inserting after the 1st sentence the following new sentence:
``In the case of a spouse or former spouse who, pursuant to
section 408(a)(4) of the Social Security Act (42 U.S.C.
608(a)(4)), assigns to a State the rights of the spouse or
former spouse to receive support, the Secretary concerned may
make the child support payments referred to in the preceding
sentence to that State in amounts consistent with that
assignment of rights.''.
(3) Arrearages owed by members of the uniformed services.--
Section 1408(d) of such title is amended by adding at the end
the following new paragraph:
``(6) In the case of a court order for which effective service is
made on the Secretary concerned on or after the date of the enactment
of this paragraph and which provides for payments from the disposable
retired pay of a member to satisfy the amount of child support set
forth in the order, the authority provided in paragraph (1) to make
payments from the disposable retired pay of a member to satisfy the
amount of child support set forth in a court order shall apply to
payment of any amount of child support arrearages set forth in that
order as well as to amounts of child support that currently become
due.''.
(4) Payroll deductions.--The Secretary of Defense shall
begin payroll deductions within 30 days after receiving notice
of withholding, or for the 1st pay period that begins after
such 30-day period.
SEC. 2364. VOIDING OF FRAUDULENT TRANSFERS.
Section 466 (42 U.S.C. 666), as amended by section 2321 of this
Act, is amended by adding at the end the following new subsection:
``(g) Laws Voiding Fraudulent Transfers.--In order to satisfy
section 454(20)(A), each State must have in effect--
``(1)(A) the Uniform Fraudulent Conveyance Act of 1981;
``(B) the Uniform Fraudulent Transfer Act of 1984; or
``(C) another law, specifying indicia of fraud which create
a prima facie case that a debtor transferred income or property
to avoid payment to a child support creditor, which the
Secretary finds affords comparable rights to child support
creditors; and
``(2) procedures under which, in any case in which the
State knows of a transfer by a child support debtor with
respect to which such a prima facie case is established, the
State must--
``(A) seek to void such transfer; or
``(B) obtain a settlement in the best interests of
the child support creditor.''.
SEC. 2365. WORK REQUIREMENT FOR PERSONS OWING PAST-DUE CHILD SUPPORT.
(a) In General.--Section 466(a) (42 U.S.C. 666(a)), as amended by
sections 2315, 2317(a), and 2323 of this Act, is amended by inserting
after paragraph (14) the following new paragraph:
``(15) Procedures to ensure that persons owing past-due
support work or have a plan for payment of such support.--
``(A) In general.--Procedures under which the State
has the authority, in any case in which an individual
owes past-due support with respect to a child receiving
assistance under a State program funded under part A,
to issue an order or to request that a court or an
administrative process established pursuant to State
law issue an order that requires the individual to--
``(i) pay such support in accordance with a
plan approved by the court, or, at the option
of the State, a plan approved by the State
agency administering the State program under
this part; or
``(ii) if the individual is subject to such
a plan and is not incapacitated, participate in
such work activities (as defined in section
407(d)) as the court, or, at the option of the
State, the State agency administering the State
program under this part, deems appropriate.
``(B) Past-due support defined.--For purposes of
subparagraph (A), the term `past-due support' means the
amount of a delinquency, determined under a court
order, or an order of an administrative process
established under State law, for support
and maintenance of a child, or of a child and the parent with whom the
child is living.''.
(b) Conforming Amendment.--The flush paragraph at the end of
section 466(a) (42 U.S.C. 666(a)) is amended by striking ``and (7)''
and inserting ``(7), and (15)''.
SEC. 2366. DEFINITION OF SUPPORT ORDER.
Section 453 (42 U.S.C. 653) as amended by sections 2316 and 2345(b)
of this Act, is amended by adding at the end the following new
subsection:
``(p) Support Order Defined.--As used in this part, the term
`support order' means a judgment, decree, or order, whether temporary,
final, or subject to modification, issued by a court or an
administrative agency of competent jurisdiction, for the support and
maintenance of a child, including a child who has attained the age of
majority under the law of the issuing State, or a child and the parent
with whom the child is living, which provides for monetary support,
health care, arrearages, or reimbursement, and which may include
related costs and fees, interest and penalties, income withholding,
attorneys' fees, and other relief.''.
SEC. 2367. REPORTING ARREARAGES TO CREDIT BUREAUS.
Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended to read as
follows:
``(7) Reporting arrearages to credit bureaus.--
``(A) In general.--Procedures (subject to
safeguards pursuant to subparagraph (B)) requiring the
State to report periodically to consumer reporting
agencies (as defined in section 603(f) of the Fair
Credit Reporting Act (15 U.S.C. 1681a(f)) the name of
any noncustodial parent who is delinquent in the
payment of support, and the amount of overdue support
owed by such parent.
``(B) Safeguards.--Procedures ensuring that, in
carrying out subparagraph (A), information with respect
to a noncustodial parent is reported--
``(i) only after such parent has been
afforded all due process required under State
law, including notice and a reasonable
opportunity to contest the accuracy of such
information; and
``(ii) only to an entity that has furnished
evidence satisfactory to the State that the
entity is a consumer reporting agency (as so
defined).''.
SEC. 2368. LIENS.
Section 466(a)(4) (42 U.S.C. 666(a)(4)) is amended to read as
follows:
``(4) Liens.--Procedures under which--
``(A) liens arise by operation of law against real
and personal property for amounts of overdue support
owed by a noncustodial parent who resides or owns
property in the State; and
``(B) the State accords full faith and credit to
liens described in subparagraph (A) arising in another
State, when the State agency, party, or other entity
seeking to enforce such a lien complies with the
procedural rules relating to recording or serving liens
that arise within the State, except that such rules may
not require judicial notice or hearing prior to the
enforcement of such a lien.''.
SEC. 2369. STATE LAW AUTHORIZING SUSPENSION OF LICENSES.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections 2315,
2317(a), 2323, and 2365 of this Act, is amended by inserting after
paragraph (15) the following:
``(16) Authority to withhold or suspend licenses.--
Procedures under which the State has (and uses in appropriate
cases) authority to withhold or suspend, or to restrict the use
of driver's licenses, professional and occupational licenses,
and recreational licenses of individuals owing overdue support
or failing, after receiving appropriate notice, to comply with
subpoenas or warrants relating to paternity or child support
proceedings.''.
SEC. 2370. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD SUPPORT.
(a) HHS Certification Procedure.--
(1) Secretarial responsibility.--Section 452 (42 U.S.C.
652), as amended by section 2345 of this Act, is amended by
adding at the end the following new subsection:
``(k)(1) If the Secretary receives a certification by a State
agency in accordance with the requirements of section 454(31) that an
individual owes arrearages of child support in an amount exceeding
$5,000, the Secretary shall transmit such certification to the
Secretary of State for action (with respect to denial, revocation, or
limitation of passports) pursuant to paragraph (2).
``(2) The Secretary of State shall, upon certification by the
Secretary transmitted under paragraph (1), refuse to issue a passport
to such individual, and may revoke, restrict, or limit a passport
issued previously to such individual.
``(3) The Secretary and the Secretary of State shall not be liable
to an individual for any action with respect to a certification by a
State agency under this section.''.
(2) State agency responsibility.--Section 454 (42 U.S.C.
654), as amended by sections 2301(b), 2303(a), 2312(b),
2313(a), 2333, and 2343(b) of this Act, is amended--
(A) by striking ``and'' at the end of paragraph
(29);
(B) by striking the period at the end of paragraph
(30) and inserting ``; and''; and
(C) by adding after paragraph (30) the following
new paragraph:
``(31) provide that the State agency will have in effect a
procedure for certifying to the Secretary, for purposes of the
procedure under section 452(k), determinations that individuals
owe arrearages of child support in an amount exceeding $5,000,
under which procedure--
``(A) each individual concerned is afforded notice
of such determination and the consequences thereof, and
an opportunity to contest the determination; and
``(B) the certification by the State agency is
furnished to the Secretary in such format, and
accompanied by such supporting documentation, as the
Secretary may require.''.
(b) Effective Date.--This section and the amendments made by this
section shall become effective October 1, 1997.
SEC. 2371. INTERNATIONAL SUPPORT ENFORCEMENT.
(a) Authority for International Agreements.--Part D of title IV, as
amended by section 2362(a) of this Act, is amended by adding after
section 459 the following new section:
``SEC. 459A. INTERNATIONAL SUPPORT ENFORCEMENT.
``(a) Authority for Declarations.--
``(1) Declaration.--The Secretary of State, with the
concurrence of the Secretary of Health and Human Services, is
authorized to declare any foreign country (or a political
subdivision thereof) to be a foreign reciprocating country if
the foreign country has established, or undertakes to
establish, procedures for the establishment and enforcement of
duties of support owed to obligees who are residents of the
United States, and such procedures are substantially in
conformity with the standards prescribed under subsection (b).
``(2) Revocation.--A declaration with respect to a foreign
country made pursuant to paragraph (1) may be revoked if the
Secretaries of State and Health and Human Services determine
that--
``(A) the procedures established by the foreign
country regarding the establishment and enforcement of
duties of support have been so changed, or the foreign
country's implementation of such procedures is so
unsatisfactory, that such procedures do not meet the
criteria for such a declaration; or
``(B) continued operation of the declaration is not
consistent with the purposes of this part.
``(3) Form of declaration.--A declaration under paragraph
(1) may be made in the form of an international agreement, in
connection with an international agreement or corresponding
foreign declaration, or on a unilateral basis.
``(b) Standards for Foreign Support Enforcement Procedures.--
``(1) Mandatory elements.--Support enforcement procedures
of a foreign country which may be the subject of a declaration
pursuant to subsection (a)(1) shall include the following
elements:
``(A) The foreign country (or political subdivision
thereof) has in effect procedures, available to
residents of the United States--
``(i) for establishment of paternity, and
for establishment of orders of support for
children and custodial parents; and
``(ii) for enforcement of orders to provide
support to children and custodial parents,
including procedures for collection and
appropriate distribution of support payments
under such orders.
``(B) The procedures described in subparagraph (A),
including legal and administrative assistance, are
provided to residents of the United States at no cost.
``(C) An agency of the foreign country is
designated as a Central Authority responsible for--
``(i) facilitating support enforcement in
cases involving residents of the foreign
country and residents of the United States; and
``(ii) ensuring compliance with the
standards established pursuant to this
subsection.
``(2) Additional elements.--The Secretary of Health and
Human Services and the Secretary of State, in consultation with
the States, may establish such additional standards as may be
considered necessary to further the purposes of this section.
``(c) Designation of United States Central Authority.--It shall be
the responsibility of the Secretary of Health and Human Services to
facilitate support enforcement in cases involving residents of the
United States and residents of foreign countries that are the subject
of a declaration under this section, by activities including--
``(1) development of uniform forms and procedures for use
in such cases;
``(2) notification of foreign reciprocating countries of
the State of residence of individuals sought for support
enforcement purposes, on the basis of information provided by
the Federal Parent Locator Service; and
``(3) such other oversight, assistance, and coordination
activities as the Secretary may find necessary and appropriate.
``(d) Effect on Other Laws.--States may enter into reciprocal
arrangements for the establishment and enforcement of support
obligations with foreign countries that are not the subject of a
declaration pursuant to subsection (a), to the extent consistent with
Federal law.''.
(b) State Plan Requirement.--Section 454 (42 U.S.C. 654), as
amended by sections 2301(b), 2303(a), 2312(b), 2313(a), 2333, 2343(b),
and 2370(a)(2) of this Act, is amended--
(1) by striking ``and'' at the end of paragraph (30);
(2) by striking the period at the end of paragraph (31) and
inserting ``; and''; and
(3) by adding after paragraph (31) the following new
paragraph:
``(32)(A) provide that any request for services under this
part by a foreign reciprocating country or a foreign country
with which the State has an arrangement described in section
459A(d)(2) shall be treated as a request by a State;
``(B) provide, at State option, notwithstanding paragraph
(4) or any other provision of this part, for services under the
plan for enforcement of a spousal support order not described
in paragraph (4)(B) entered by such a country (or subdivision);
and
``(C) provide that no applications will be required from,
and no costs will be assessed for such services against, the
foreign reciprocating country or foreign obligee (but costs may
at State option be assessed against the obligor).''.
SEC. 2372. FINANCIAL INSTITUTION DATA MATCHES.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections 2315,
2317(a), 2323, 2365, and 2369 of this Act, is amended by inserting
after paragraph (16) the following new paragraph:
``(17) Financial institution data matches.--
``(A) In general.--Procedures under which the State
agency shall enter into agreements with financial
institutions doing business in the State--
``(i) to develop and operate, in
coordination with such financial institutions,
a data match system, using automated data
exchanges to the maximum extent feasible, in
which each such financial institution is
required to provide for each calendar quarter
the name, record address, social security
number or other taxpayer identification number,
and other identifying information for each
noncustodial parent who maintains an account at
such institution and who owes past-due support,
as identified by the State by name and social
security number or other taxpayer
identification number; and
``(ii) in response to a notice of lien or
levy, encumber or surrender, as the case may
be, assets held by such institution on behalf
of any noncustodial parent who is subject to a
child support lien pursuant to paragraph (4).
``(B) Reasonable fees.--The State agency may pay a
reasonable fee to a financial institution for
conducting the data match provided for in subparagraph
(A)(i), not to exceed the actual costs incurred by such
financial institution.
``(C) Liability.--A financial institution shall not
be liable under any Federal or State law to any
person--
``(i) for any disclosure of information to
the State agency under subparagraph (A)(i);
``(ii) for encumbering or surrendering any
assets held by such financial institution in
response to a notice of lien or levy issued by
the State agency as provided for in
subparagraph (A)(ii); or
``(iii) for any other action taken in good
faith to comply with the requirements of
subparagraph (A).
``(D) Definitions.--For purposes of this
paragraph--
``(i) Financial institution.--The term
`financial institution' has the meaning given
to such term by section 469A(d)(1).
``(ii) Account.--The term `account' means a
demand deposit account, checking or negotiable
withdrawal order account, savings account, time
deposit account, or money-market mutual fund
account.''.
SEC. 2373. ENFORCEMENT OF ORDERS AGAINST PATERNAL OR MATERNAL
GRANDPARENTS IN CASES OF MINOR PARENTS.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections 2315,
2317(a), 2323, 2365, 2369, and 2372 of this Act, is amended by
inserting after paragraph (17) the following new paragraph:
``(18) Enforcement of orders against paternal or maternal
grandparents.--Procedures under which, at the State's option,
any child support order enforced under this part with respect
to a child of minor parents, if the custodial parent of such child is
receiving assistance under the State program under part A, shall be
enforceable, jointly and severally, against the parents of the
noncustodial parent of such child.''.
SEC. 2374. NONDISCHARGEABILITY IN BANKRUPTCY OF CERTAIN DEBTS FOR THE
SUPPORT OF A CHILD.
(a) Amendment to Title 11 of the United States Code.--Section
523(a) of title 11, United States Code, is amended--
(1) by striking ``or'' at the end of paragraph (16);
(2) by striking the period at the end of paragraph (17) and
inserting ``; or'';
(3) by adding at the end the following:
``(18) owed under State law to a State or municipality that
is--
``(A) in the nature of support, and
``(B) enforceable under part D of title IV of the
Social Security Act (42 U.S.C. 601 et seq.).'', and
(3) in paragraph (5), by striking ``section 402(a)(26)''
and inserting ``section 408(a)(4)''.
(b) Amendment to the Social Security Act.--Section 456(b) (42
U.S.C. 656(b)) is amended to read as follows:
``(b) Nondischargeability.--A debt (as defined in section 101 of
title 11 of the United States Code) owed under State law to a State (as
defined in such section) or municipality (as defined in such section)
that is in the nature of support and that is enforceable under this
part is not released by a discharge in bankruptcy under title 11 of the
United States Code.''.
(c) Application of Amendments.--The amendments made by this section
shall apply only with respect to cases commenced under title 11 of the
United States Code after the date of the enactment of this Act.
Subchapter H--Medical Support
SEC. 2376. CORRECTION TO ERISA DEFINITION OF MEDICAL CHILD SUPPORT
ORDER.
(a) In General.--Section 609(a)(2)(B) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1169(a)(2)(B)) is amended--
(1) by striking ``issued by a court of competent
jurisdiction'';
(2) by striking the period at the end of clause (ii) and
inserting a comma; and
(3) by adding, after and below clause (ii), the following:
``if such judgment, decree, or order (I) is issued by a
court of competent jurisdiction or (II) is issued
through an administrative process established under
State law and has the force and effect of law under
applicable State law.''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
take effect on the date of the enactment of this Act.
(2) Plan amendments not required until january 1, 1997.--
Any amendment to a plan required to be made by an amendment
made by this section shall not be required to be made before
the 1st plan year beginning on or after January 1, 1997, if--
(A) during the period after the date before the
date of the enactment of this Act and before such 1st
plan year, the plan is operated in accordance with the
requirements of the amendments made by this section;
and
(B) such plan amendment applies retroactively to
the period after the date before the date of the
enactment of this Act and before such 1st plan year.
A plan shall not be treated as failing to be operated in
accordance with the provisions of the plan merely because it
operates in accordance with this paragraph.
SEC. 2377. ENFORCEMENT OF ORDERS FOR HEALTH CARE COVERAGE.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections 2315,
2317(a), 2323, 2365, 2369, 2372, and 2373 of this Act, is amended by
inserting after paragraph (18) the following new paragraph:
``(19) Health care coverage.--Procedures under which all
child support orders enforced pursuant to this part shall
include a provision for the health care coverage of the child,
and in the case in which a noncustodial parent provides such
coverage and changes employment, and the new employer provides
health care coverage, the State agency shall transfer notice of
the provision to the employer, which notice shall operate to
enroll the child in the noncustodial parent's health plan,
unless the noncustodial parent contests the notice.''.
Subchapter I--Enhancing Responsibility and Opportunity for Non-
Residential Parents
SEC. 2381. GRANTS TO STATES FOR ACCESS AND VISITATION PROGRAMS.
Part D of title IV (42 U.S.C. 651-669), as amended by section 2353
of this Act, is amended by adding at the end the following new section:
``SEC. 469B. GRANTS TO STATES FOR ACCESS AND VISITATION PROGRAMS.
``(a) In General.--The Administration for Children and Families
shall make grants under this section to enable States to establish and
administer programs to support and facilitate noncustodial parents'
access to and visitation of their children, by means of activities
including mediation (both voluntary and mandatory), counseling,
education, development of parenting plans, visitation enforcement
(including monitoring, supervision and neutral drop-off and pickup),
and development of guidelines for visitation and alternative custody
arrangements.
``(b) Amount of Grant.--The amount of the grant to be made to a
State under this section for a fiscal year (beginning with fiscal year
1998) shall be an amount equal to the lesser of--
``(1) 90 percent of State expenditures during the fiscal
year for activities described in subsection (a); or
``(2) the allotment of the State under subsection (c) for
the fiscal year.
``(c) Allotments to States.--
``(1) In general.--The allotment of a State for a fiscal
year is the amount that bears the same ratio to $10,000,000 for
grants under this section for the fiscal year as the number of
children in the State living with only 1 biological parent
bears to the total number of such children in all States.
``(2) Minimum allotment.--The Administration for Children
and Families shall adjust allotments to States under paragraph
(1) as necessary to ensure that no State is allotted less
than--
``(A) $50,000 for fiscal year 1998 or 1999 or
``(B) $100,000 for any succeeding fiscal year.
``(d) No Supplantation of State Expenditures for Similar
Activities.--A State to which a grant is made under this section may
not use the grant to supplant expenditures by the State for activities
specified in subsection (a), but shall use the grant to supplement such
expenditures at a level at least equal to the level of such
expenditures for fiscal year 1995.
``(e) State Administration.--Each State to which a grant is made
under this section--
``(1) may administer State programs funded with the grant,
directly or through grants to or contracts with courts, local
public agencies, or nonprofit private entities;
``(2) shall not be required to operate such programs on a
statewide basis; and
``(3) shall monitor, evaluate, and report on such programs
in accordance with regulations prescribed by the Secretary.''.
Subchapter J--Effective Dates and Conforming Amendments
SEC. 2391. EFFECTIVE DATES AND CONFORMING AMENDMENTS.
(a) In General.--Except as otherwise specifically provided (but
subject to subsections (b) and (c))--
(1) the provisions of this chapter requiring the enactment
or amendment of State laws under section 466 of the Social
Security Act, or revision of State plans under section 454 of
such Act, shall be effective with respect to periods beginning
on and after October 1, 1996; and
(2) all other provisions of this chapter shall become
effective upon the date of the enactment of this Act.
(b) Grace Period for State Law Changes.--The provisions of this
chapter shall become effective with respect to a State on the later
of--
(1) the date specified in this chapter, or
(2) the effective date of laws enacted by the legislature
of such State implementing such provisions,
but in no event later than the 1st day of the 1st calendar quarter
beginning after the close of the 1st regular session of the State
legislature that begins after the date of the enactment of this Act.
For purposes of the previous sentence, in the case of a State that has
a 2-year legislative session, each year of such session shall be deemed
to be a separate regular session of the State legislature.
(c) Grace Period for State Constitutional Amendment.--A State shall
not be found out of compliance with any requirement enacted by this
chapter if the State is unable to so comply without amending the State
constitution until the earlier of--
(1) 1 year after the effective date of the necessary State
constitutional amendment; or
(2) 5 years after the date of the enactment of this Act.
(d) Conforming Amendments.--
(1) The following provisions are amended by striking
``absent'' each place it appears and inserting
``noncustodial'':
(A) Section 451 (42 U.S.C. 651).
(B) Subsections (a)(1), (a)(8), (a)(10)(E),
(a)(10)(F), (f), and (h) of section 452 (42 U.S.C.
652).
(C) Section 453(f) (42 U.S.C. 653(f)).
(D) Paragraphs (8), (13), and (21)(A) of section
454 (42 U.S.C. 654).
(E) Section 455(e)(1) (42 U.S.C. 655(e)(1)).
(F) Section 458(a) (42 U.S.C. 658(a)).
(G) Subsections (a), (b), and (c) of section 463
(42 U.S.C. 663).
(H) Subsections (a)(3)(A), (a)(3)(C), (a)(6), and
(a)(8)(B)(ii), the last sentence of subsection (a), and
subsections (b)(1), (b)(3)(B), (b)(3)(B)(i),
(b)(6)(A)(i), (b)(8), (b)(9), and (e) of section 466
(42 U.S.C. 666).
(2) The following provisions are amended by striking ``an
absent'' each place it appears and inserting ``a
noncustodial'':
(A) Paragraphs (2) and (3) of section 453(c) (42
U.S.C. 653(c)).
(B) Subparagraphs (B) and (C) of section 454(9) (42
U.S.C. 654(9)).
(C) Section 456(a)(3) (42 U.S.C. 656(a)(3)).
(D) Subsections (a)(3)(A), (a)(6), (a)(8)(B)(i),
(b)(3)(A), and (b)(3)(B) of section 466 (42 U.S.C.
666).
(E) Paragraphs (2) and (4) of section 469(b) (42
U.S.C. 669(b)).
CHAPTER 4--RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS
SEC. 2400. STATEMENTS OF NATIONAL POLICY CONCERNING WELFARE AND
IMMIGRATION.
The Congress makes the following statements concerning national
policy with respect to welfare and immigration:
(1) Self-sufficiency has been a basic principle of United
States immigration law since this country's earliest
immigration statutes.
(2) It continues to be the immigration policy of the United
States that--
(A) aliens within the Nation's borders not depend
on public resources to meet their needs, but rather
rely on their own capabilities and the resources of
their families, their sponsors, and private
organizations, and
(B) the availability of public benefits not
constitute an incentive for immigration to the United
States.
(3) Despite the principle of self-sufficiency, aliens have
been applying for and receiving public benefits from Federal,
State, and local governments at increasing rates.
(4) Current eligibility rules for public assistance and
unenforceable financial support agreements have proved wholly
incapable of assuring that individual aliens not burden the
public benefits system.
(5) It is a compelling government interest to enact new
rules for eligibility and sponsorship agreements in order to
assure that aliens be self-reliant in accordance with national
immigration policy.
(6) It is a compelling government interest to remove the
incentive for illegal immigration provided by the availability
of public benefits.
(7) With respect to the State authority to make
determinations concerning the eligibility of qualified aliens
for public benefits in this chapter, a State that chooses to
follow the Federal classification in determining the
eligibility of such aliens for public assistance shall be
considered to have chosen the least restrictive means available
for achieving the compelling governmental interest of assuring
that aliens be self-reliant in accordance with national
immigration policy.
Subchapter A--Eligibility for Federal Benefits
SEC. 2401. ALIENS WHO ARE NOT QUALIFIED ALIENS INELIGIBLE FOR FEDERAL
PUBLIC BENEFITS.
(a) In General.--Notwithstanding any other provision of law and
except as provided in subsection (b), an alien who is not a qualified
alien (as defined in section 2431) is not eligible for any Federal
public benefit (as defined in subsection (c)).
(b) Exceptions.--
(1) Subsection (a) shall not apply with respect to the
following Federal public benefits:
(A) Emergency medical services under title XV or
XIX of the Social Security Act.
(B) Short-term, non-cash, in-kind emergency
disaster relief.
(C)(i) Public health assistance for immunizations.
(ii) Public health assistance for testing and
treatment of a communicable disease if the Secretary of
Health and Human Services determines that it is
necessary to prevent the spread of such disease.
(D) Programs, services, or assistance (such as soup
kitchens, crisis counseling and intervention, and
short-term shelter) specified by the Attorney General,
in the Attorney General's sole and unreviewable
discretion after consultation with appropriate Federal
agencies and departments, which (i) deliver in-kind
services at the community level, including through
public or private nonprofit agencies; (ii) do not
condition the provision of assistance, the amount of
assistance provided, or the cost of assistance provided
on the individual recipient's income or resources; and
(iii) are necessary for the protection of life or
safety.
(E) Programs for housing or community development
assistance or financial assistance administered by the
Secretary of Housing and Urban Development, any program
under title V of the Housing Act of 1949, or any
assistance under section 306C of the Consolidated Farm
and Rural Development Act, to the extent that the alien
is receiving such a benefit on the date of the enactment of this Act.
(2) Subsection (a) shall not apply to any benefit payable
under title II of the Social Security Act to an alien who is
lawfully present in the United States as determined by the
Attorney General, to any benefit if nonpayment of such benefit
would contravene an international agreement described in
section 233 of the Social Security Act, to any benefit if
nonpayment would be contrary to section 202(t) of the Social
Security Act, or to any benefit payable under title II of the
Social Security Act to which entitlement is based on an
application filed in or before the month in which this Act
becomes law.
(c) Federal Public Benefit Defined.--
(1) Except as provided in paragraph (2), for purposes of
this chapter the term ``Federal public benefit'' means--
(A) any grant, contract, loan, professional
license, or commercial license provided by an agency of
the United States or by appropriated funds of the
United States; and
(B) any retirement, welfare, health, disability,
public or assisted housing, postsecondary education,
food assistance, unemployment benefit, or any other
similar benefit for which payments or assistance are
provided to an individual, household, or family
eligibility unit by an agency of the United States or
by appropriated funds of the United States.
(2) Such term shall not apply--
(A) to any contract, professional license, or
commercial license for a nonimmigrant whose visa for
entry is related to such employment in the United
States; or
(B) with respect to benefits for an alien who as a
work authorized nonimmigrant or as an alien lawfully
admitted for permanent residence under the Immigration
and Nationality Act qualified for such benefits and for
whom the United States under reciprocal treaty
agreements is required to pay benefits, as determined
by the Attorney General, after consultation with the
Secretary of State.
SEC. 2402. LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR CERTAIN FEDERAL
PROGRAMS.
(a) Limited Eligibility for Specified Federal Programs.--
(1) In general.--Notwithstanding any other provision of law
and except as provided in paragraph (2), an alien who is a
qualified alien (as defined in section 2431) is not eligible
for any specified Federal program (as defined in paragraph
(3)).
(2) Exceptions.--
(A) Time-limited exception for refugees and
asylees.--Paragraph (1) shall not apply to an alien
until 5 years after the date--
(i) an alien is admitted to the United
States as a refugee under section 207 of the
Immigration and Nationality Act;
(ii) an alien is granted asylum under
section 208 of such Act; or
(iii) an alien's deportation is withheld
under section 243(h) of such Act.
(B) Certain permanent resident aliens.--Paragraph
(1) shall not apply to an alien who--
(i) is lawfully admitted to the United
States for permanent residence under the
Immigration and Nationality Act; and
(ii)(I) has worked 40 qualifying quarters
of coverage as defined under title II of the
Social Security Act or can be credited with
such qualifying quarters as provided under
section 435, and (II) did not receive any
Federal means-tested public benefit (as defined
in section 2403(c)) during any such quarter.
(C) Veteran and active duty exception.--Paragraph
(1) shall not apply to an alien who is lawfully
residing in any State and is--
(i) a veteran (as defined in section 101 of
title 38, United States Code) with a discharge
characterized as an honorable discharge and not
on account of alienage,
(ii) on active duty (other than active duty
for training) in the Armed Forces of the United
States, or
(iii) the spouse or unmarried dependent
child of an individual described in clause (i)
or (ii).
(D) Transition for aliens currently receiving
benefits.--
(i) SSI.--
(I) In general.--With respect to
the specified Federal program described
in paragraph (3)(A), during the period
beginning on the date of the enactment
of this Act and ending on the date
which is 1 year after such date of
enactment, the Commissioner of Social
Security shall redetermine the
eligibility of any individual who is
receiving benefits under such program
as of the date of the enactment of this
Act and whose eligibility for such
benefits may terminate by reason of the
provisions of this subsection.
(II) Redetermination criteria.--
With respect to any redetermination
under subclause (I), the Commissioner
of Social Security shall apply the
eligibility criteria for new applicants
for benefits under such program.
(III) Grandfather provision.--The
provisions of this subsection and the
redetermination under subclause (I),
shall only apply with respect to the
benefits of an individual described in
subclause (I) for months beginning on
or after the date of the
redetermination with respect to such
individual.
(IV) Notice.--Not later than
January 1, 1997, the Commissioner of
Social Security shall notify an
individual described in subclause (I)
of the provisions of this clause.
(ii) Food stamps.--
(I) In general.--With respect to
the specified Federal program described
in paragraph (3)(B), during the period
beginning on the date of enactment of
this Act and ending on the date which
is 1 year after the date of enactment,
the State agency shall, at the time of
the recertification, recertify the
eligibility of any individual who is
receiving benefits under such program
as of the date of enactment of this Act
and whose eligibility for such benefits
may terminate by reason of the
provisions of this subsection.
(II) Recertification criteria.--
With respect to any recertification
under subclause (I), the State agency
shall apply the eligibility criteria
for applicants for benefits under such
program.
(III) Grandfather provision.--The
provisions of this subsection and the
recertification under subclause (I)
shall only apply with respect to the
eligibility of an alien for a program
for months beginning on or after the
date of recertification, if on the date
of enactment of this Act the alien is
lawfully residing in any State and is
receiving benefits under such program
on such date of enactment.
(3) Specified federal program defined.--For purposes of
this chapter, the term ``specified Federal program'' means any
of the following:
(A) SSI.--The supplemental security income program
under title XVI of the Social Security Act, including
supplementary payments pursuant to an agreement for
Federal administration under section 1616(a) of the Social Security Act
and payments pursuant to an agreement entered into under section 212(b)
of Public Law 93-66.
(B) Food stamps.--The food stamp program as defined
in section 3(h) of the Food Stamp Act of 1977.
(b) Limited Eligibility for Designated Federal Programs.--
(1) In general.--Notwithstanding any other provision of law
and except as provided in section 2403 and paragraph (2), a
State is authorized to determine the eligibility of an alien
who is a qualified alien (as defined in section 2431) for any
designated Federal program (as defined in paragraph (3)).
(2) Exceptions.--Qualified aliens under this paragraph
shall be eligible for any designated Federal program.
(A) Time-limited exception for refugees and
asylees.--
(i) An alien who is admitted to the United
States as a refugee under section 207 of the
Immigration and Nationality Act until 5 years
after the date of an alien's entry into the
United States.
(ii) An alien who is granted asylum under
section 208 of such Act until 5 years after the
date of such grant of asylum.
(iii) An alien whose deportation is being
withheld under section 243(h) of such Act until
5 years after such withholding.
(B) Certain permanent resident aliens.--An alien
who--
(i) is lawfully admitted to the United
States for permanent residence under the
Immigration and Nationality Act; and
(ii)(I) has worked 40 qualifying quarters
of coverage as defined under title II of the
Social Security Act or can be credited with
such qualifying quarters as provided under
section 2435, and (II) did not receive any
Federal means-tested public benefit (as defined
in section 2403(c)) during any such quarter.
(C) Veteran and active duty exception.--An alien
who is lawfully residing in any State and is--
(i) a veteran (as defined in section 101 of
title 38, United States Code) with a discharge
characterized as an honorable discharge and not
on account of alienage,
(ii) on active duty (other than active duty
for training) in the Armed Forces of the United
States, or
(iii) the spouse or unmarried dependent
child of an individual described in clause (i)
or (ii).
(D) Transition for those currently receiving
benefits.--An alien who on the date of the enactment of
this Act is lawfully residing in any State and is
receiving benefits under such program on the date of
the enactment of this Act shall continue to be eligible
to receive such benefits until January 1, 1997.
(3) Designated federal program defined.--For purposes of
this chapter, the term ``designated Federal program'' means any
of the following:
(A) Temporary assistance for needy families.--The
program of block grants to States for temporary
assistance for needy families under part A of title IV
of the Social Security Act.
(B) Social services block grant.--The program of
block grants to States for social services under title
XX of the Social Security Act.
(C) Medicaid.--The program of medical assistance
under title XV and XIX of the Social Security Act.
SEC. 2403. FIVE-YEAR LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR
FEDERAL MEANS-TESTED PUBLIC BENEFIT.
(a) In General.--Notwithstanding any other provision of law and
except as provided in subsection (b), an alien who is a qualified alien
(as defined in section 2431) and who enters the United States on or
after the date of the enactment of this Act is not eligible for any
Federal means-tested public benefit (as defined in subsection (c)) for
a period of five years beginning on the date of the alien's entry into
the United States with a status within the meaning of the term
``qualified alien''.
(b) Exceptions.--The limitation under subsection (a) shall not
apply to the following aliens:
(1) Exception for refugees and asylees.--
(A) An alien who is admitted to the United States
as a refugee under section 207 of the Immigration and
Nationality Act.
(B) An alien who is granted asylum under section
208 of such Act.
(C) An alien whose deportation is being withheld
under section 243(h) of such Act.
(2) Veteran and active duty exception.--An alien who is
lawfully residing in any State and is--
(A) a veteran (as defined in section 101 of title
38, United States Code) with a discharge characterized
as an honorable discharge and not on account of
alienage,
(B) on active duty (other than active duty for
training) in the Armed Forces of the United States, or
(C) the spouse or unmarried dependent child of an
individual described in subparagraph (A) or (B).
(c) Federal Means-tested Public Benefit Defined.--
(1) Except as provided in paragraph (2), for purposes of
this chapter, the term ``Federal means-tested public benefit''
means a public benefit (including cash, medical, housing, and
food assistance and social services) of the Federal Government
in which the eligibility of an individual, household, or family
eligibility unit for benefits, or the amount of such benefits,
or both are determined on the basis of income, resources, or
financial need of the individual, household, or unit.
(2) Such term does not include the following:
(A) Emergency medical services under title XV or
XIX of the Social Security Act.
(B) Short-term, non-cash, in-kind emergency
disaster relief.
(C) Assistance or benefits under the National
School Lunch Act.
(D) Assistance or benefits under the Child
Nutrition Act of 1966.
(E)(i) Public health assistance for immunizations.
(ii) Public health assistance for testing and
treatment of a communicable disease if the Secretary of
Health and Human Services determines that it is
necessary to prevent the spread of such disease.
(F) Payments for foster care and adoption
assistance under part E of title IV of the Social
Security Act for a child who would, in the absence of
subsection (a), be eligible to have such payments made
on the child's behalf under such part, but only if the
foster or adoptive parent or parents of such child are
not described under subsection (a).
(G) Programs, services, or assistance (such as soup
kitchens, crisis counseling and intervention, and
short-term shelter) specified by the Attorney General,
in the Attorney General's sole and unreviewable
discretion after consultation with appropriate Federal
agencies and departments, which (i) deliver in-kind
services at the community level, including through
public or private nonprofit agencies; (ii) do not
condition the provision of assistance, the amount of
assistance provided, or the cost of assistance provided
on the individual recipient's income or resources; and
(iii) are necessary for the protection of life or safety.
(H) Programs of student assistance under titles IV,
V, IX, and X of the Higher Education Act of 1965.
(I) Means-tested programs under the Elementary and
Secondary Education Act of 1965.
SEC. 2404. NOTIFICATION AND INFORMATION REPORTING.
(a) Notification.--Each Federal agency that administers a program
to which section 2401, 2402, or 2403 applies shall, directly or through
the States, post information and provide general notification to the
public and to program recipients of the changes regarding eligibility
for any such program pursuant to this subchapter.
(b) Information Reporting Under Title IV of the Social Security
Act.--Part A of title IV of the Social Security Act, as amended by
section 2103(a) of this Act, is amended by inserting the following new
section after section 411:
``SEC. 411A. STATE REQUIRED TO PROVIDE CERTAIN INFORMATION.
``Each State to which a grant is made under section 403 shall, at
least 4 times annually and upon request of the Immigration and
Naturalization Service, furnish the Immigration and Naturalization
Service with the name and address of, and other identifying information
on, any individual who the State knows is unlawfully in the United
States.''.
(c) SSI.--Section 1631(e) of such Act (42 U.S.C. 1383(e)) is
amended--
(1) by redesignating the paragraphs (6) and (7) inserted by
sections 206(d)(2) and 206(f)(1) of the Social Security
Independence and Programs Improvement Act of 1994 (Public Law
103-296; 108 Stat. 1514, 1515) as paragraphs (7) and (8),
respectively; and
(2) by adding at the end the following new paragraph:
``(9) Notwithstanding any other provision of law, the Commissioner
shall, at least 4 times annually and upon request of the Immigration
and Naturalization Service (hereafter in this paragraph referred to as
the `Service'), furnish the Service with the name and address of, and
other identifying information on, any individual who the Commissioner
knows is unlawfully in the United States, and shall ensure that each
agreement entered into under section 1616(a) with a State provides that
the State shall furnish such information at such times with respect to
any individual who the State knows is unlawfully in the United
States.''.
(d) Information Reporting for Housing Programs.--Title I of the
United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended
by adding at the end the following new section:
``SEC. 27. PROVISION OF INFORMATION TO LAW ENFORCEMENT AND OTHER
AGENCIES.
``Notwithstanding any other provision of law, the Secretary shall,
at least 4 times annually and upon request of the Immigration and
Naturalization Service (hereafter in this section referred to as the
`Service'), furnish the Service with the name and address of, and other
identifying information on, any individual who the Secretary knows is
unlawfully in the United States, and shall ensure that each contract
for assistance entered into under section 6 or 8 of this Act with a
public housing agency provides that the public housing agency shall
furnish such information at such times with respect to any individual
who the public housing agency knows is unlawfully in the United
States.''.
Subchapter B--Eligibility for State and Local Public Benefits Programs
SEC. 2411. ALIENS WHO ARE NOT QUALIFIED ALIENS OR NONIMMIGRANTS
INELIGIBLE FOR STATE AND LOCAL PUBLIC BENEFITS.
(a) In General.--Notwithstanding any other provision of law and
except as provided in subsections (b) and (d), an alien who is not--
(1) a qualified alien (as defined in section 2431),
(2) a nonimmigrant under the Immigration and Nationality
Act, or
(3) an alien who is paroled into the United States under
section 212(d)(5) of such Act for less than one year,
is not eligible for any State or local public benefit (as defined in
subsection (c)).
(b) Exceptions.--Subsection (a) shall not apply with respect to the
following State or local public benefits:
(1) Emergency medical services under title XV or XIX of the
Social Security Act.
(2) Short-term, non-cash, in-kind emergency disaster
relief.
(3)(A) Public health assistance for immunizations.
(B) Public health assistance for testing and treatment of a
communicable disease if the Secretary of Health and Human
Services determines that it is necessary to prevent the spread
of such disease.
(4) Programs, services, or assistance (such as soup
kitchens, crisis counseling and intervention, and short-term
shelter) specified by the Attorney General, in the Attorney
General's sole and unreviewable discretion after consultation
with appropriate Federal agencies and departments, which (A)
deliver in-kind services at the community level, including
through public or private nonprofit agencies; (B) do not
condition the provision of assistance, the amount of assistance
provided, or the cost of assistance provided on the individual
recipient's income or resources; and (C) are necessary for the
protection of life or safety.
(c) State or Local Public Benefit Defined.--
(1) Except as provided in paragraph (2), for purposes of
this subchapter the term ``State or local public benefit''
means--
(A) any grant, contract, loan, professional
license, or commercial license provided by an agency of
a State or local government or by appropriated funds of
a State or local government; and
(B) any retirement, welfare, health, disability,
public or assisted housing, postsecondary education,
food assistance, unemployment benefit, or any other
similar benefit for which payments or assistance are
provided to an individual, household, or family
eligibility unit by an agency of a State or local
government or by appropriated funds of a State or local
government.
(2) Such term shall not apply--
(A) to any contract, professional license, or
commercial license for a nonimmigrant whose visa for
entry is related to such employment in the United
States; or
(B) with respect to benefits for an alien who as a
work authorized nonimmigrant or as an alien lawfully
admitted for permanent residence under the Immigration
and Nationality Act qualified for such benefits and for
whom the United States under reciprocal treaty
agreements is required to pay benefits, as determined
by the Secretary of State, after consultation with the
Attorney General.
(d) State Authority To Provide for Eligibility of Illegal Aliens
for State and Local Public Benefits.--A State may provide that an alien
who is not lawfully present in the United States is eligible for any
State or local public benefit for which such alien would otherwise be
ineligible under subsection (a) only through the enactment of a State
law after the date of the enactment of this Act which affirmatively
provides for such eligibility.
SEC. 2412. STATE AUTHORITY TO LIMIT ELIGIBILITY OF QUALIFIED ALIENS FOR
STATE PUBLIC BENEFITS.
(a) In General.--Notwithstanding any other provision of law and
except as provided in subsection (b), a State is authorized to
determine the eligibility for any State public benefits (as defined in
subsection (c) of an alien who is a qualified alien (as defined in
section 2431), a nonimmigrant under the Immigration and Nationality
Act, or an alien who is paroled into the United States under section
212(d)(5) of such Act for less than one year.
(b) Exceptions.--Qualified aliens under this subsection shall be
eligible for any State public benefits.
(1) Time-limited exception for refugees and asylees.--
(A) An alien who is admitted to the United States
as a refugee under section 207 of the Immigration and
Nationality Act until 5 years after the date of an
alien's entry into the United States.
(B) An alien who is granted asylum under section
208 of such Act until 5 years after the date of such
grant of asylum.
(C) An alien whose deportation is being withheld
under section 243(h) of such Act until 5 years after
such withholding.
(2) Certain permanent resident aliens.--An alien who--
(A) is lawfully admitted to the United States for
permanent residence under the Immigration and
Nationality Act; and
(B)(i) has worked 40 qualifying quarters of
coverage as defined under title II of the Social
Security Act or can be credited with such qualifying
quarters as provided under section 2435, and (ii) did
not receive any Federal means-tested public benefit (as
defined in section 2403(c)) during any such quarter.
(3) Veteran and active duty exception.--An alien who is
lawfully residing in any State and is--
(A) a veteran (as defined in section 101 of title
38, United States Code) with a discharge characterized
as an honorable discharge and not on account of
alienage,
(B) on active duty (other than active duty for
training) in the Armed Forces of the United States, or
(C) the spouse or unmarried dependent child of an
individual described in subparagraph (A) or (B).
(4) Transition for those currently receiving benefits.--An
alien who on the date of the enactment of this Act is lawfully
residing in any State and is receiving benefits on the date of
the enactment of this Act shall continue to be eligible to
receive such benefits until January 1, 1997.
(c) State Public Benefits Defined.--The term ``State public
benefits'' means any means-tested public benefit of a State or
political subdivision of a State under which the State or political
subdivision specifies the standards for eligibility, and does not
include any Federal public benefit.
Subchapter C--Attribution of Income and Affidavits of Support
SEC. 2421. FEDERAL ATTRIBUTION OF SPONSOR'S INCOME AND RESOURCES TO
ALIEN.
(a) In General.--Notwithstanding any other provision of law, in
determining the eligibility and the amount of benefits of an alien for
any Federal means-tested public benefits program (as defined in section
2403(c)), the income and resources of the alien shall be deemed to
include the following:
(1) The income and resources of any person who executed an
affidavit of support pursuant to section 213A of the
Immigration and Nationality Act (as added by section 2423) on
behalf of such alien.
(2) The income and resources of the spouse (if any) of the
person.
(b) Application.--Subsection (a) shall apply with respect to an
alien until such time as the alien--
(1) achieves United States citizenship through
naturalization pursuant to chapter 2 of title III of the
Immigration and Nationality Act; or
(2)(A) has worked 40 qualifying quarters of coverage as
defined under title II of the Social Security Act or can be
credited with such qualifying quarters as provided under
section 2435, and (B) did not receive any Federal means-tested
public benefit (as defined in section 2403(c)) during any such
quarter.
(c) Review of Income and Resources of Alien Upon Reapplication.--
Whenever an alien is required to reapply for benefits under any Federal
means-tested public benefits program, the applicable agency shall
review the income and resources attributed to the alien under
subsection (a).
(d) Application.--
(1) If on the date of the enactment of this Act, a Federal
means-tested public benefits program attributes a sponsor's
income and resources to an alien in determining the alien's
eligibility and the amount of benefits for an alien, this
section shall apply to any such determination beginning on the
day after the date of the enactment of this Act.
(2) If on the date of the enactment of this Act, a Federal
means-tested public benefits program does not attribute a
sponsor's income and resources to an alien in determining the
alien's eligibility and the amount of benefits for an alien,
this section shall apply to any such determination beginning
180 days after the date of the enactment of this Act.
SEC. 2422. AUTHORITY FOR STATES TO PROVIDE FOR ATTRIBUTION OF SPONSORS
INCOME AND RESOURCES TO THE ALIEN WITH RESPECT TO STATE
PROGRAMS.
(a) Optional Application to State Programs.--Except as provided in
subsection (b), in determining the eligibility and the amount of
benefits of an alien for any State public benefits (as defined in
section 2412(c)), the State or political subdivision that offers the
benefits is authorized to provide that the income and resources of the
alien shall be deemed to include--
(1) the income and resources of any individual who executed
an affidavit of support pursuant to section 213A of the
Immigration and Nationality Act (as added by section 2423) on
behalf of such alien, and
(2) the income and resources of the spouse (if any) of the
individual.
(b) Exceptions.--Subsection (a) shall not apply with respect to the
following State public benefits:
(1) Emergency medical services.
(2) Short-term, non-cash, in-kind emergency disaster
relief.
(3) Programs comparable to assistance or benefits under the
National School Lunch Act.
(4) Programs comparable to assistance or benefits under the
Child Nutrition Act of 1966.
(5)(A) Public health assistance for immunizations.
(B) Public health assistance for testing and treatment of a
communicable disease if the appropriate chief State health
official determines that it is necessary to prevent the spread
of such disease.
(6) Payments for foster care and adoption assistance.
(7) Programs, services, or assistance (such as soup
kitchens, crisis counseling and intervention, and short-term
shelter) specified by the Attorney General of a State, after
consultation with appropriate agencies and departments, which
(A) deliver in-kind services at the community level, including
through public or private nonprofit agencies; (B) do not
condition the provision of assistance, the amount of assistance
provided, or the cost of assistance provided on the individual
recipient's income or resources; and (C) are necessary for the
protection of life or safety.
SEC. 2423. REQUIREMENTS FOR SPONSOR'S AFFIDAVIT OF SUPPORT.
(a) In General.--Title II of the Immigration and Nationality Act is
amended by inserting after section 213 the following new section:
``requirements for sponsor's affidavit of support
``Sec. 213A. (a) Enforceability.--(1) No affidavit of support may
be accepted by the Attorney General or by any consular officer to
establish that an alien is not excludable as a public charge under
section 212(a)(4) unless such affidavit is executed as a contract--
``(A) which is legally enforceable against the sponsor by
the sponsored alien, the Federal Government, and by any State
(or any political subdivision of such State) which provides any
means-tested public benefits program, but not later than 10 years after
the alien last receives any such benefit;
``(B) in which the sponsor agrees to financially support
the alien, so that the alien will not become a public charge;
and
``(C) in which the sponsor agrees to submit to the
jurisdiction of any Federal or State court for the purpose of
actions brought under subsection (e)(2).
``(2) A contract under paragraph (1) shall be enforceable with
respect to benefits provided to the alien until such time as the alien
achieves United States citizenship through naturalization pursuant to
chapter 2 of title III.
``(b) Forms.--Not later than 90 days after the date of enactment of
this section, the Attorney General, in consultation with the Secretary
of State and the Secretary of Health and Human Services, shall
formulate an affidavit of support consistent with the provisions of
this section.
``(c) Remedies.--Remedies available to enforce an affidavit of
support under this section include any or all of the remedies described
in section 3201, 3203, 3204, or 3205 of title 28, United States Code,
as well as an order for specific performance and payment of legal fees
and other costs of collection, and include corresponding remedies
available under State law. A Federal agency may seek to collect amounts
owed under this section in accordance with the provisions of subchapter
II of chapter 37 of title 31, United States Code.
``(d) Notification of Change of Address.--
``(1) In general.--The sponsor shall notify the Attorney
General and the State in which the sponsored alien is currently
resident within 30 days of any change of address of the sponsor
during the period specified in subsection (a)(2).
``(2) Penalty.--Any person subject to the requirement of
paragraph (1) who fails to satisfy such requirement shall be
subject to a civil penalty of--
``(A) not less than $250 or more than $2,000, or
``(B) if such failure occurs with knowledge that
the alien has received any means-tested public benefit,
not less than $2,000 or more than $5,000.
``(e) Reimbursement of Government Expenses.--(1)(A) Upon
notification that a sponsored alien has received any benefit under any
means-tested public benefits program, the appropriate Federal, State,
or local official shall request reimbursement by the sponsor in the
amount of such assistance.
``(B) The Attorney General, in consultation with the Secretary of
Health and Human Services, shall prescribe such regulations as may be
necessary to carry out subparagraph (A).
``(2) If within 45 days after requesting reimbursement, the
appropriate Federal, State, or local agency has not received a response
from the sponsor indicating a willingness to commence payments, an
action may be brought against the sponsor pursuant to the affidavit of
support.
``(3) If the sponsor fails to abide by the repayment terms
established by such agency, the agency may, within 60 days of such
failure, bring an action against the sponsor pursuant to the affidavit
of support.
``(4) No cause of action may be brought under this subsection later
than 10 years after the alien last received any benefit under any
means-tested public benefits program.
``(5) If, pursuant to the terms of this subsection, a Federal,
State, or local agency requests reimbursement from the sponsor in the
amount of assistance provided, or brings an action against the sponsor
pursuant to the affidavit of support, the appropriate agency may
appoint or hire an individual or other person to act on behalf of such
agency acting under the authority of law for purposes of collecting any
moneys owed. Nothing in this subsection shall preclude any appropriate
Federal, State, or local agency from directly requesting reimbursement
from a sponsor for the amount of assistance provided, or from bringing
an action against a sponsor pursuant to an affidavit of support.
``(f) Definitions.--For the purposes of this section--
``(1) Sponsor.--The term `sponsor' means an individual
who--
``(A) is a citizen or national of the United States
or an alien who is lawfully admitted to the United
States for permanent residence;
``(B) is 18 years of age or over;
``(C) is domiciled in any of the 50 States or the
District of Columbia; and
``(D) is the person petitioning for the admission
of the alien under section 204.
``(2) Means-tested public benefits program.--The term
`means-tested public benefits program' means a program of
public benefits (including cash, medical, housing, and food
assistance and social services) of the Federal Government or of
a State or political subdivision of a State in which the
eligibility of an individual, household, or family eligibility
unit for benefits under the program, or the amount of such
benefits, or both are determined on the basis of income,
resources, or financial need of the individual, household, or
unit.''.
(b) Clerical Amendment.--The table of contents of such Act is
amended by inserting after the item relating to section 213 the
following:
``Sec. 213A. Requirements for sponsor's affidavit of support.''.
(c) Effective Date.--Subsection (a) of section 213A of the
Immigration and Nationality Act, as inserted by subsection (a) of this
section, shall apply to affidavits of support executed on or after a
date specified by the Attorney General, which date shall be not earlier
than 60 days (and not later than 90 days) after the date the Attorney
General formulates the form for such affidavits under subsection (b) of
such section.
(d) Benefits Not Subject to Reimbursement.--Requirements for
reimbursement by a sponsor for benefits provided to a sponsored alien
pursuant to an affidavit of support under section 213A of the
Immigration and Nationality Act shall not apply with respect to the
following:
(1) Emergency medical services under title XV or XIX of the
Social Security Act.
(2) Short-term, non-cash, in-kind emergency disaster
relief.
(3) Assistance or benefits under the National School Lunch
Act.
(4) Assistance or benefits under the Child Nutrition Act of
1966.
(5)(A) Public health assistance for immunizations.
(B) Public health assistance for testing and treatment of a
communicable disease if the Secretary of Health and Human
Services determines that it is necessary to prevent the spread
of such disease.
(6) Payments for foster care and adoption assistance under
part E of title IV of the Social Security Act for a child, but
only if the foster or adoptive parent or parents of such child
are not otherwise ineligible pursuant to section 2403 of this
Act.
(7) Programs, services, or assistance (such as soup
kitchens, crisis counseling and intervention, and short-term
shelter) specified by the Attorney General, in the Attorney
General's sole and unreviewable discretion after consultation
with appropriate Federal agencies and departments, which (A)
deliver in-kind services at the community level, including
through public or private nonprofit agencies; (B) do not
condition the provision of assistance, the amount of assistance
provided, or the cost of assistance provided on the individual
recipient's income or resources; and (C) are necessary for the
protection of life or safety.
(8) Programs of student assistance under titles IV, V, IX,
and X of the Higher Education Act of 1965.
SEC. 2424. COSIGNATURE OF ALIEN STUDENT LOANS.
Section 484(b) of the Higher Education Act of 1965 (20 U.S.C.
1091(b)) is amended by adding at the end the following new paragraph:
``(6) Notwithstanding sections 427(a)(2)(A), 428B(a),
428C(b)(4)(A), and 464(c)(1)(E), or any other provision of this title,
a student who is an alien lawfully admitted for permanent residence
under the Immigration and Nationality Act shall not be eligible for a
loan under this title unless the loan is endorsed and cosigned by the
alien's sponsor under section 213A of the Immigration and Nationality
Act or by another creditworthy individual who is a United States
citizen.''.
Subchapter D--General Provisions
SEC. 2431. DEFINITIONS.
(a) In General.--Except as otherwise provided in this chapter, the
terms used in this chapter have the same meaning given such terms in
section 101(a) of the Immigration and Nationality Act.
(b) Qualified Alien.--For purposes of this chapter, the term
``qualified alien'' means an alien who, at the time the alien applies
for, receives, or attempts to receive a Federal public benefit, is--
(1) an alien who is lawfully admitted for permanent
residence under the Immigration and Nationality Act,
(2) an alien who is granted asylum under section 208 of
such Act,
(3) a refugee who is admitted to the United States under
section 207 of such Act,
(4) an alien who is paroled into the United States under
section 212(d)(5) of such Act for a period of at least 1 year,
(5) an alien whose deportation is being withheld under
section 243(h) of such Act, or
(6) an alien who is granted conditional entry pursuant to
section 203(a)(7) of such Act as in effect prior to April 1,
1980.
SEC. 2432. VERIFICATION OF ELIGIBILITY FOR FEDERAL PUBLIC BENEFITS.
(a) In General.--Not later than 18 months after the date of the
enactment of this Act, the Attorney General of the United States, after
consultation with the Secretary of Health and Human Services, shall
promulgate regulations requiring verification that a person applying
for a Federal public benefit (as defined in section 2401(c)), to which
the limitation under section 2401 applies, is a qualified alien and is
eligible to receive such benefit. Such regulations shall, to the extent
feasible, require that information requested and exchanged be similar
in form and manner to information requested and exchanged under section
1137 of the Social Security Act.
(b) State Compliance.--Not later than 24 months after the date the
regulations described in subsection (a) are adopted, a State that
administers a program that provides a Federal public benefit shall have
in effect a verification system that complies with the regulations.
(c) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to carry out the purpose of
this section.
SEC. 2433. STATUTORY CONSTRUCTION.
(a) Limitation.--
(1) Nothing in this chapter may be construed as an
entitlement or a determination of an individual's eligibility
or fulfillment of the requisite requirements for any Federal,
State, or local governmental program, assistance, or benefits.
For purposes of this chapter, eligibility relates only to the
general issue of eligibility or ineligibility on the basis of
alienage.
(2) Nothing in this chapter may be construed as addressing
alien eligibility for a basic public education as determined by
the Supreme Court of the United States under Plyler v. Doe (457
U.S. 202)(1982).
(b) Not Applicable to Foreign Assistance.--This chapter does not
apply to any Federal, State, or local governmental program, assistance,
or benefits provided to an alien under any program of foreign
assistance as determined by the Secretary of State in consultation with
the Attorney General.
(c) Severability.--If any provision of this chapter or the
application of such provision to any person or circumstance is held to
be unconstitutional, the remainder of this chapter and the application
of the provisions of such to any person or circumstance shall not be
affected thereby.
SEC. 2434. COMMUNICATION BETWEEN STATE AND LOCAL GOVERNMENT AGENCIES
AND THE IMMIGRATION AND NATURALIZATION SERVICE.
Notwithstanding any other provision of Federal, State, or local
law, no State or local government entity may be prohibited, or in any
way restricted, from sending to or receiving from the Immigration and
Naturalization Service information regarding the immigration status,
lawful or unlawful, of an alien in the United States.
SEC. 2435. QUALIFYING QUARTERS.
For purposes of this chapter, in determining the number of
qualifying quarters of coverage under title II of the Social Security
Act an alien shall be credited with--
(1) all of the qualifying quarters of coverage as defined
under title II of the Social Security Act worked by a parent of
such alien while the alien was under age 18 if the parent did
not receive any Federal means-tested public benefit (as defined
in section 2403(c)) during any such quarter, and
(2) all of the qualifying quarters worked by a spouse of
such alien during their marriage if the spouse did not receive
any Federal means-tested public benefit (as defined in section
2403(c)) during any such quarter and the alien remains married
to such spouse or such spouse is deceased.
Subchapter E--Conforming Amendments Relating to Assisted Housing
SEC. 2441. CONFORMING AMENDMENTS RELATING TO ASSISTED HOUSING.
(a) Limitations on Assistance.--Section 214 of the Housing and
Community Development Act of 1980 (42 U.S.C. 1436a) is amended--
(1) by striking ``Secretary of Housing and Urban
Development'' each place it appears and inserting ``applicable
Secretary'';
(2) in subsection (b), by inserting after ``National
Housing Act,'' the following: ``the direct loan program under
section 502 of the Housing Act of 1949 or section 502(c)(5)(D),
504, 521(a)(2)(A), or 542 of such Act, subtitle A of title III
of the Cranston-Gonzalez National Affordable Housing Act,'';
(3) in paragraphs (2) through (6) of subsection (d), by
striking ``Secretary'' each place it appears and inserting
``applicable Secretary'';
(4) in subsection (d), in the matter following paragraph
(6), by striking ``the term `Secretary''' and inserting ``the
term `applicable Secretary'''; and
(5) by adding at the end the following new subsection:
``(h) For purposes of this section, the term `applicable Secretary'
means--
``(1) the Secretary of Housing and Urban Development, with
respect to financial assistance administered by such Secretary
and financial assistance under subtitle A of title III of the
Cranston-Gonzalez National Affordable Housing Act; and
``(2) the Secretary of Agriculture, with respect to
financial assistance administered by such Secretary.''.
(b) Conforming Amendments.--Section 501(h) of the Housing Act of
1949 (42 U.S.C. 1471(h)) is amended--
(1) by striking ``(1)'';
(2) by striking ``by the Secretary of Housing and Urban
Development''; and
(3) by striking paragraph (2).
Subchapter F--Earned Income Credit Denied to Unauthorized Employees
SEC. 2451. EARNED INCOME 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
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:
``(l) 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 a comma, and by inserting after
subparagraph (E) the following new subparagraphs:
``(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, and
``(G) an entry on a return claiming the credit
under section 32 with respect to net earnings from
self-employment described in section 32(c)(2)(A) to the
extent the tax imposed by section 1401 (relating to
self-employment tax) on such net earnings has not been
paid.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
CHAPTER 5--REDUCTIONS IN FEDERAL GOVERNMENT POSITIONS
SEC. 2501. REDUCTIONS.
(a) Definitions.--As used in this section:
(1) Appropriate effective date.--The term ``appropriate
effective date'', used with respect to a Department referred to
in this section, means the date on which all provisions of this
Act (other than chapter 2 of this subtitle) that the Department
is required to carry out, and amendments and repeals made by
such Act to provisions of Federal law that the Department is
required to carry out, are effective.
(2) Covered activity.--The term ``covered activity'', used
with respect to a Department referred to in this section, means
an activity that the Department is required to carry out
under--
(A) a provision of this Act (other than chapter 2
of this subtitle); or
(B) a provision of Federal law that is amended or
repealed by this Act (other than chapter 2 of this
subtitle).
(b) Reports.--
(1) Contents.--Not later than December 31, 1996, each
Secretary referred to in paragraph (2) shall prepare and submit
to the relevant committees described in paragraph (3) a report
containing--
(A) the determinations described in subsection (c);
(B) appropriate documentation in support of such
determinations; and
(C) a description of the methodology used in making
such determinations.
(2) Secretary.--The Secretaries referred to in this
paragraph are--
(A) the Secretary of Agriculture;
(B) the Secretary of Education;
(C) the Secretary of Labor;
(D) the Secretary of Housing and Urban Development;
and
(E) the Secretary of Health and Human Services.
(3) Relevant committees.--The relevant Committees described
in this paragraph are the following:
(A) With respect to each Secretary described in
paragraph (2), the Committee on Government Reform and
Oversight of the House of Representatives and the
Committee on Governmental Affairs of the Senate.
(B) With respect to the Secretary of Agriculture,
the Committee on Agriculture and the Committee on
Economic and Educational Opportunities of the House of
Representatives and the Committee on Agriculture,
Nutrition, and Forestry of the Senate.
(C) With respect to the Secretary of Education, the
Committee on Economic and Educational Opportunities of
the House of Representatives and the Committee on Labor
and Human Resources of the Senate.
(D) With respect to the Secretary of Labor, the
Committee on Economic and Educational Opportunities of
the House of Representatives and the Committee on Labor
and Human Resources of the Senate.
(E) With respect to the Secretary of Housing and
Urban Development, the Committee on Banking and
Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of
the Senate.
(F) With respect to the Secretary of Health and
Human Services, the Committee on Economic and
Educational Opportunities of the House of
Representatives, the Committee on Labor and Human
Resources of the Senate, the Committee on Ways and
Means of the House of Representatives, and the
Committee on Finance of the Senate.
(4) Report on changes.--Not later than December 31, 1997,
and each December 31 thereafter, each Secretary referred to in
paragraph (2) shall prepare and submit to the relevant
Committees described in paragraph (3), a report concerning any
changes with respect to the determinations made under
subsection (c) for the year in which the report is being
submitted.
(c) Determinations.--Not later than December 31, 1996, each
Secretary referred to in subsection (b)(2) shall determine--
(1) the number of full-time equivalent positions required
by the Department headed by such Secretary to carry out the
covered activities of the Department, as of the day before the
date of enactment of this Act;
(2) the number of such positions required by the Department
to carry out the activities, as of the appropriate effective
date for the Department; and
(3) the difference obtained by subtracting the number
referred to in paragraph (2) from the number referred to in
paragraph (1).
(d) Actions.--Each Secretary referred to in subsection (b)(2) shall
take such actions as may be necessary, including reduction in force
actions, consistent with sections 3502 and 3595 of title 5, United
States Code, to reduce the number of positions of personnel of the
Department--
(1) not later than 30 days after the appropriate effective
date for the Department involved, by at least 50 percent of the
difference referred to in subsection (c)(3); and
(2) not later than 13 months after such appropriate
effective date, by at least the remainder of such difference
(after the application of paragraph (1)).
(e) Consistency.--
(1) Education.--The Secretary of Education shall carry out
this section in a manner that enables the Secretary to meet the
requirements of this section.
(2) Labor.--The Secretary of Labor shall carry out this
section in a manner that enables the Secretary to meet the
requirements of this section.
(3) Health and human services.--The Secretary of Health and
Human Services shall carry out this section in a manner that
enables the Secretary to meet the requirements of this section
and sections 502 and 503.
(f) Calculation.--In determining, under subsection (c), the number
of full-time equivalent positions required by a Department to carry out
a covered activity, a Secretary referred to in subsection (b)(2) shall
include the number of such positions occupied by personnel carrying out
program functions or other functions (including budgetary, legislative,
administrative, planning, evaluation, and legal functions) related to
the activity.
(g) General Accounting Office Report.--Not later than July 1, 1997,
the Comptroller General of the United States shall prepare and submit
to the committees described in subsection (b)(3), a report concerning
the determinations made by each Secretary under subsection (c). Such
report shall contain an analysis of the determinations made by each
Secretary under subsection (c) and a determination as to whether
further reductions in full-time equivalent positions are appropriate.
SEC. 2502. REDUCTIONS IN FEDERAL BUREAUCRACY.
(a) In General.--The Secretary of Health and Human Services shall
reduce the Federal workforce within the Department of Health and Human
Services by an amount equal to the sum of--
(1) 75 percent of the full-time equivalent positions at
such Department that relate to any direct spending program, or
any program funded through discretionary spending, that has
been converted into a block grant program under this Act and
the amendments made by this Act; and
(2) an amount equal to 75 percent of that portion of the
total full-time equivalent departmental management positions at
such Department that bears the same relationship to the amount
appropriated for the programs referred to in paragraph (1) as
such amount relates to the total amount appropriated for use by
such Department.
(b) Reductions in the Department of Health and Human Services.--
Notwithstanding any other provision of this Act, the Secretary of
Health and Human Services shall take such actions as may be necessary,
including reductions in force actions, consistent with sections 3502
and 3595 of title 5, United States Code, to reduce the full-time
equivalent positions within the Department of Health and Human
Services--
(1) by 245 full-time equivalent positions related to the
program converted into a block grant under the amendment made
by section 103; and
(2) by 60 full-time equivalent managerial positions in the
Department.
SEC. 2503. REDUCING PERSONNEL IN WASHINGTON, D.C. AREA.
In making reductions in full-time equivalent positions, the
Secretary of Health and Human Services is encouraged to reduce
personnel in the Washington, D.C., area office (agency headquarters)
before reducing field personnel.
SEC. 2504. DOWNWARD ADJUSTMENT OF DISCRETIONARY SPENDING LIMITS.
The discretionary spending limits (new budget authority and
outlays) for fiscal years 1997 and 1998 set forth in section 601(a)(2)
of the Congressional Budget Act of 1974, as adjusted in strict
conformance with section 251 of the Balanced Budget and Emergency
Deficit Control Act of 1985, shall be reduced, as calculated by the
Director of the Office of Management and Budget, in amounts equal to
the aggregate amounts of savings resulting from the reductions imposed
as a result of this chapter in each of fiscal years 1997 and 1998.
CHAPTER 6--REFORM OF PUBLIC HOUSING
SEC. 2601. FAILURE TO COMPLY WITH OTHER WELFARE AND PUBLIC ASSISTANCE
PROGRAMS.
Title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et
seq.), as amended by section 2404(d) of this Act, is amended by adding
at the end the following new section:
``SEC. 28. FAILURE TO COMPLY WITH OTHER WELFARE AND PUBLIC ASSISTANCE
PROGRAMS.
``(a) In General.--If the benefits of a family are reduced under a
Federal, State, or local law relating to welfare or a public assistance
program for the failure of any member of the family to perform an
action required under the law or program, the family may not, for the
duration of the reduction, receive any increased assistance under this
Act as the result of a decrease in the income of the family to the
extent that the decrease in income is the result of the benefits
reduction.
``(b) Exception.--Subsection (a) shall not apply in any case in
which the benefits of a family are reduced because the welfare or
public assistance program to which the Federal, State, or local law
relates limits the period during which benefits may be provided under
the program.''.
SEC. 2602. FRAUD UNDER MEANS-TESTED WELFARE AND PUBLIC ASSISTANCE
PROGRAMS.
(a) In General.--If an individual's benefits under a Federal,
State, or local law relating to a means-tested welfare or a public
assistance program are reduced because of an act of fraud by the
individual under the law or program, the individual may not, for the
duration of the reduction, receive an increased benefit under any other
means-tested welfare or public assistance program for which Federal
funds are appropriated as a result of a decrease in the income of the
individual (determined under the applicable program) attributable to
such reduction.
(b) Welfare or Public Assistance Programs for Which Federal Funds
Are Appropriated.--For purposes of subsection (a), the term ``means-
tested welfare or public assistance program for which Federal funds are
appropriated'' includes the food stamp program under the Food Stamp Act
of 1977 (7 U.S.C. 2011 et seq.), any program of public or assisted
housing under title I of the United States Housing Act of 1937 (42
U.S.C. 1437 et seq.), and State programs funded under part A of title
IV of the Social Security Act (42 U.S.C. 601 et seq.).
CHAPTER 7--TECHNICAL AMENDMENTS RELATING TO CHILD PROTECTION PROGRAMS
SEC. 2701. EXTENSION OF ENHANCED FUNDING FOR IMPLEMENTATION OF
STATEWIDE AUTOMATED CHILD WELFARE INFORMATION SYSTEMS.
Section 474(a)(3)(B) of the Social Security Act (42 U.S.C.
674(a)(3)(B)) is amended by inserting ``(of, if the quarter is in
fiscal year 1997, 75 percent)'' after ``50 percent'' each place it
appears.
SEC. 2702. REDESIGNATION OF SECTION 1123.
The Social Security Act is amended by redesignating section 1123,
the second place it appears (42 U.S.C. 1320a-1a), as section 1123A.
CHAPTER 8--CHILD CARE
SEC. 2801. SHORT TITLE AND REFERENCES.
(a) Short Title.--This chapter may be cited as the ``Child Care and
Development Block Grant Amendments of 1996''.
(b) References.--Except as otherwise expressly provided, whenever
in this chapter 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
Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858 et
seq.).
SEC. 2802. GOALS.
(a) Goals.--Section 658A (42 U.S.C. 9801 note) is amended--
(1) in the section heading by inserting ``and goals'' after
``title'';
(2) by inserting ``(a) Short Title.--'' before ``This'';
and
(3) by adding at the end the following:
``(b) Goals.--The goals of this subchapter are--
``(1) to allow each State maximum flexibility in developing
child care programs and policies that best suit the needs of
children and parents within such State;
``(2) to promote parental choice to empower working parents
to make their own decisions on the child care that best suits
their family's needs;
``(3) to encourage States to provide consumer education
information to help parents make informed choices about child
care;
``(4) to assist States to provide child care to parents
trying to achieve independence from public assistance; and
``(5) to assist States in implementing the health, safety,
licensing, and registration standards established in State
regulations.''.
SEC. 2803. AUTHORIZATION OF APPROPRIATIONS AND ENTITLEMENT AUTHORITY.
(a) In General.--Section 658B (42 U.S.C. 9858) is amended to read
as follows:
``SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.
``There is authorized to be appropriated to carry out this
subchapter $1,000,000,000 for each of the fiscal years 1996 through
2002.''.
(b) Social Security Act.--Part A of title IV of the Social Security
Act (42 U.S.C. 601 et seq.) is amended by adding at the end the
following:
``SEC. 418. FUNDING FOR CHILD CARE.
``(a) General Child Care Entitlement.--
``(1) General entitlement.--Subject to the amount
appropriated under paragraph (3), each State shall, for the
purpose of providing child care assistance, be entitled to
payments under a grant under this subsection for a fiscal year
in an amount equal to--
``(A) the sum of the total amount required to be
paid to the State under former section 403 for fiscal
year 1994 or 1995 (whichever is greater) with respect
to amounts expended for child care under section--
``(i) 402(g) of this Act (as such section
was in effect before October 1, 1995); and
``(ii) 402(i) of this Act (as so in
effect); or
``(B) the average of the total amounts required to
be paid to the State for fiscal years 1992 through 1994
under the sections referred to in subparagraph (A);
whichever is greater.
``(2) Remainder.--
``(A) Grants.--The Secretary shall use any amounts
appropriated for a fiscal year under paragraph (3), and
remaining after the reservation described in paragraph
(4) and after grants are awarded under paragraph (1),
to make grants to States under this paragraph.
``(B) Amount.--Subject to subparagraph (C), the
amount of a grant awarded to a State for a fiscal year
under this paragraph shall be based on the formula used
for determining the amount of Federal payments to the
State under section 403(n) (as such section was in
effect before October 1, 1995).
``(C) Matching requirement.--The Secretary shall
pay to each eligible State in a fiscal year an amount,
under a grant under subparagraph (A), equal to the
Federal medical assistance percentage for such State
for fiscal year 1995 (as defined in section 1905(b)) of
so much of the expenditures by the State for child care
in such year as exceed the State set-aside for such
State under paragraph (1)(A) for such year and the
amount of State expenditures in fiscal year 1994 (or
fiscal year 1995, whichever is greater) that equal the
non-Federal share for the programs described in
subparagraph (A) of paragraph (1).
``(D) Redistribution.--
``(i) In general.--With respect to any
fiscal year, if the Secretary determines (in
accordance with clause (ii)) that amounts under
any grant awarded to a State under this
paragraph for such fiscal year will not be used
by such State during such fiscal year for
carrying out the purpose for which the grant is
made, the Secretary shall make such amounts
available in the subsequent fiscal year for carrying out such purpose
to 1 or more States which apply for such funds to the extent the
Secretary determines that such States will be able to use such
additional amounts for carrying out such purpose. Such available
amounts shall be redistributed to a State pursuant to section 402(i)
(as such section was in effect before October 1, 1995) by substituting
`the number of children residing in all States applying for such funds'
for `the number of children residing in the United States in the second
preceding fiscal year'.
``(ii) Time of determination and
distribution.--The determination of the
Secretary under clause (i) for a fiscal year
shall be made not later than the end of the
first quarter of the subsequent fiscal year.
The redistribution of amounts under clause (i)
shall be made as close as practicable to the
date on which such determination is made. Any
amount made available to a State from an
appropriation for a fiscal year in accordance
with this subparagraph shall, for purposes of
this part, be regarded as part of such State's
payment (as determined under this subsection)
for the fiscal year in which the redistribution
is made.
``(3) Appropriation.--There are authorized to be
appropriated, and there are appropriated, to carry out this
section--
``(A) $1,967,000,000 for fiscal year 1997;
``(B) $2,067,000,000 for fiscal year 1998;
``(C) $2,167,000,000 for fiscal year 1999;
``(D) $2,367,000,000 for fiscal year 2000;
``(E) $2,567,000,000 for fiscal year 2001; and
``(F) $2,717,000,000 for fiscal year 2002.
``(4) Indian tribes.--The Secretary shall reserve not more
than 1 percent of the aggregate amount appropriated to carry
out this section in each fiscal year for payments to Indian
tribes and tribal organizations.
``(b) Use of Funds.--
``(1) In general.--Amounts received by a State under this
section shall only be used to provide child care assistance.
Amounts received by a State under a grant under subsection
(a)(1) shall be available for use by the State without fiscal
year limitation.
``(2) Use for certain populations.--A State shall ensure
that not less than 70 percent of the total amount of funds
received by the State in a fiscal year under this section are
used to provide child care assistance to families who are
receiving assistance under a State program under this part,
families who are attempting through work activities to
transition off of such assistance program, and families who are
at risk of becoming dependent on such assistance program.
``(c) Application of Child Care and Development Block Grant Act of
1990.--Notwithstanding any other provision of law, amounts provided to
a State under this section shall be transferred to the lead agency
under the Child Care and Development Block Grant Act of 1990,
integrated by the State into the programs established by the State
under such Act, and be subject to requirements and limitations of such
Act.
``(d) Definition.--As used in this section, the term `State' means
each of the 50 States or the District of Columbia.''.
SEC. 2804. LEAD AGENCY.
Section 658D(b) (42 U.S.C. 9858b(b)) is amended--
(1) in paragraph (1)--
(A) in subparagraph (A), by striking ``State'' the
first place that such appears and inserting
``governmental or nongovernmental''; and
(B) in subparagraph (C), by inserting ``with
sufficient time and Statewide distribution of the
notice of such hearing,'' after ``hearing in the
State''; and
(2) in paragraph (2), by striking the second sentence.
SEC. 2805. APPLICATION AND PLAN.
Section 658E (42 U.S.C. 9858c) is amended--
(1) in subsection (b)--
(A) by striking ``implemented--'' and all that
follows through ``(2)'' and inserting ``implemented'';
and
(B) by striking ``for subsequent State plans'';
(2) in subsection (c)--
(A) in paragraph (2)--
(i) in subparagraph (A)--
(I) in clause (i) by striking ``,
other than through assistance provided
under paragraph (3)(C),''; and
(II) by striking ``except'' and all
that follows through ``1992'', and
inserting ``and provide a detailed
description of the procedures the State
will implement to carry out the
requirements of this subparagraph'';
(ii) in subparagraph (B)--
(I) by striking ``Provide
assurances'' and inserting ``Certify'';
and
(II) by inserting before the period
at the end ``and provide a detailed
description of such procedures'';
(iii) in subparagraph (C)--
(I) by striking ``Provide
assurances'' and inserting ``Certify'';
and
(II) by inserting before the period
at the end ``and provide a detailed
description of how such record is
maintained and is made available'';
(iv) by amending subparagraph (D) to read
as follows:
``(D) Consumer education information.--Certify that
the State will collect and disseminate to parents of
eligible children and the general public, consumer
education information that will promote informed child
care choices.'';
(v) in subparagraph (E), to read as
follows:
``(E) Compliance with state licensing
requirements.--
``(i) In general.--Certify that the State
has in effect licensing requirements applicable
to child care services provided within the
State, and provide a detailed description of
such requirements and of how such requirements
are effectively enforced. Nothing in the
preceding sentence shall be construed to
require that licensing requirements be applied
to specific types of providers of child care
services.
``(ii) Indian tribes and tribal
organizations.--In lieu of any licensing and
regulatory requirements applicable under State
and local law, the Secretary, in consultation
with Indian tribes and tribal organizations,
shall develop minimum child care standards
(that appropriately reflect tribal needs and
available resources) that shall be applicable
to Indian tribes and tribal organizations
receiving assistance under this subchapter.'';
(vi) by striking subparagraph (F);
(vii) in subparagraph (G)--
(I) by redesignating such
subparagraph as subparagraph (F);
(II) by striking ``Provide
assurances'' and inserting ``Certify'';
and
(III) by striking ``as described in
subparagraph (F)''; and
(viii) by striking subparagraphs (H), (I),
and (J) and inserting the following:
``(G) Meeting the needs of certain populations.--
Demonstrate the manner in which the State will meet the
specific child care needs of families who are receiving
assistance under a State program under part A of title
IV of the Social Security Act, families who are attempting through work
activities to transition off of such assistance program, and families
that are at risk of becoming dependent on such assistance program.'';
(B) in paragraph (3)--
(i) in subparagraph (A), by striking ``(B)
and (C)'' and inserting ``(B) through (D)'';
(ii) in subparagraph (B)--
(I) by striking ``.--Subject to the
reservation contained in subparagraph
(C), the'' and inserting ``and related
activities.--The'';
(II) in clause (i) by striking ``;
and'' at the end and inserting a
period;
(III) by striking ``for--'' and all
that follows through ``section
658E(c)(2)(A)'' and inserting ``for
child care services on sliding fee
scale basis, activities that improve
the quality or availability of such
services, and any other activity that
the State deems appropriate to realize
any of the goals specified in
paragraphs (2) through (5) of section
658A(b)''; and
(IV) by striking clause (ii);
(iii) by amending subparagraph (C) to read
as follows:
``(C) Limitation on administrative costs.--Not more
than 5 percent of the aggregate amount of funds
available to the State to carry out this subchapter by
a State in each fiscal year may be expended for
administrative costs incurred by such State to carry
out all of its functions and duties under this
subchapter. As used in the preceding sentence, the term
`administrative costs' shall not include the costs of
providing direct services.''; and
(iv) by adding at the end thereof the
following:
``(D) Assistance for certain families.--A State
shall ensure that a substantial portion of the amounts
available (after the State has complied with the
requirement of section 418(b)(2) of the Social Security
Act with respect to each of the fiscal years 1997
through 2002) to the State to carry out activities
under this subchapter in each fiscal year is used to
provide assistance to low-income working families other
than families described in paragraph (2)(F).''; and
(C) in paragraph (4)(A)--
(i) by striking ``provide assurances'' and
inserting ``certify'';
(ii) in the first sentence by inserting
``and shall provide a summary of the facts
relied on by the State to determine that such
rates are sufficient to ensure such access''
before the period; and
(iii) by striking the last sentence.
SEC. 2806. LIMITATION ON STATE ALLOTMENTS.
Section 658F(b) (42 U.S.C. 9858d(b)) is amended--
(1) in paragraph (1), by striking ``No'' and inserting
``Except as provided for in section 658O(c)(6), no''; and
(2) in paragraph (2), by striking ``referred to in section
658E(c)(2)(F)''.
SEC. 2807. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.
Section 658G (42 U.S.C. 9858e) is amended to read as follows:
``SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.
``A State that receives funds to carry out this subchapter for a
fiscal year, shall use not less than 3 percent of the amount of such
funds for activities that are designed to provide comprehensive
consumer education to parents and the public, activities that increase
parental choice, and activities designed to improve the quality and
availability of child care (such as resource and referral services).''.
SEC. 2808. REPEAL OF EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-
SCHOOL CARE REQUIREMENT.
Section 658H (42 U.S.C. 9858f) is repealed.
SEC. 2809. ADMINISTRATION AND ENFORCEMENT.
Section 658I(b) (42 U.S.C. 9858g(b)) is amended--
(1) in paragraph (1), by striking ``, and shall have'' and
all that follows through ``(2)''; and
(2) in the matter following clause (ii) of paragraph
(2)(A), by striking ``finding and that'' and all that follows
through the period and inserting ``finding and shall require
that the State reimburse the Secretary for any funds that were
improperly expended for purposes prohibited or not authorized
by this subchapter, that the Secretary deduct from the
administrative portion of the State allotment for the following
fiscal year an amount that is less than or equal to any
improperly expended funds, or a combination of such options.''.
SEC. 2810. PAYMENTS.
Section 658J(c) (42 U.S.C. 9858h(c)) is amended by striking
``expended'' and inserting ``obligated''.
SEC. 2811. ANNUAL REPORT AND AUDITS.
Section 658K (42 U.S.C. 9858i) is amended--
(1) in the section heading by striking ``annual report''
and inserting ``reports'';
(2) in subsection (a), to read as follows:
``(a) Reports.--
``(1) Collection of information by states.--
``(A) In general.--A State that receives funds to
carry out this subchapter shall collect the information
described in subparagraph (B) on a monthly basis.
``(B) Required information.--The information
required under this subparagraph shall include, with
respect to a family unit receiving assistance under
this subchapter information concerning--
``(i) family income;
``(ii) county of residence;
``(iii) the gender, race, and age of
children receiving such assistance;
``(iv) whether the family includes only 1
parent;
``(v) the sources of family income,
including the amount obtained from (and
separately identified)--
``(I) employment, including self-
employment;
``(II) cash or other assistance
under part A of title IV of the Social
Security Act;
``(III) housing assistance;
``(IV) assistance under the Food
Stamp Act of 1977; and
``(V) other assistance programs;
``(vi) the number of months the family has
received benefits;
``(vii) the type of child care in which the
child was enrolled (such as family child care,
home care, or center-based child care);
``(viii) whether the child care provider
involved was a relative;
``(ix) the cost of child care for such
families; and
``(x) the average hours per week of such
care;
during the period for which such information is
required to be submitted.
``(C) Submission to secretary.--A State described
in subparagraph (A) shall, on a quarterly basis, submit
the information required to be collected under
subparagraph (B) to the Secretary.
``(D) Sampling.--The Secretary may disapprove the
information collected by a State under this paragraph
if the State uses sampling methods to collect such
information.
``(2) Biannual reports.--Not later than December 31, 1997,
and every 6 months thereafter, a State described in paragraph
(1)(A) shall prepare and submit to the Secretary a report that
includes aggregate data concerning--
``(A) the number of child care providers that
received funding under this subchapter as
separately identified based on the types of providers listed in section
658P(5);
``(B) the monthly cost of child care services, and
the portion of such cost that is paid for with
assistance provided under this subchapter, listed by
the type of child care services provided;
``(C) the number of payments made by the State
through vouchers, contracts, cash, and disregards under
public benefit programs, listed by the type of child
care services provided;
``(D) the manner in which consumer education
information was provided to parents and the number of
parents to whom such information was provided; and
``(E) the total number (without duplication) of
children and families served under this subchapter;
during the period for which such report is required to be
submitted.''; and
(2) in subsection (b)--
(A) in paragraph (1) by striking ``a application''
and inserting ``an application'';
(B) in paragraph (2) by striking ``any agency
administering activities that receive'' and inserting
``the State that receives''; and
(C) in paragraph (4) by striking ``entitles'' and
inserting ``entitled''.
SEC. 2812. REPORT BY THE SECRETARY.
Section 658L (42 U.S.C. 9858j) is amended--
(1) by striking ``1993'' and inserting ``1997'';
(2) by striking ``annually'' and inserting ``biennially'';
and
(3) by striking ``Education and Labor'' and inserting
``Economic and Educational Opportunities''.
SEC. 2813. ALLOTMENTS.
Section 658O (42 U.S.C. 9858m) is amended--
(1) in subsection (a)--
(A) in paragraph (1)
(i) by striking ``Possessions'' and
inserting ``possessions'';
(ii) by inserting ``and'' after
``States,''; and
(iii) by striking ``, and the Trust
Territory of the Pacific Islands''; and
(B) in paragraph (2), by striking ``3 percent'' and
inserting ``1 percent'';
(2) in subsection (c)--
(A) in paragraph (5) by striking ``our'' and
inserting ``out''; and
(B) by adding at the end thereof the following new
paragraph:
``(6) Construction or renovation of facilities.--
``(A) Request for use of funds.--An Indian tribe or
tribal organization may submit to the Secretary a
request to use amounts provided under this subsection
for construction or renovation purposes.
``(B) Determination.--With respect to a request
submitted under subparagraph (A), and except as
provided in subparagraph (C), upon a determination by
the Secretary that adequate facilities are not
otherwise available to an Indian tribe or tribal
organization to enable such tribe or organization to
carry out child care programs in accordance with this
subchapter, and that the lack of such facilities will
inhibit the operation of such programs in the future,
the Secretary may permit the tribe or organization to
use assistance provided under this subsection to make
payments for the construction or renovation of
facilities that will be used to carry out such
programs.
``(C) Limitation.--The Secretary may not permit an
Indian tribe or tribal organization to use amounts
provided under this subsection for construction or
renovation if such use will result in a decrease in the
level of child care services provided by the tribe or
organization as compared to the level of such services provided by the
tribe or organization in the fiscal year preceding the year for which
the determination under subparagraph (A) is being made.
``(D) Uniform procedures.--The Secretary shall
develop and implement uniform procedures for the
solicitation and consideration of requests under this
paragraph.''; and
(3) in subsection (e), by adding at the end thereof the
following new paragraph:
``(4) Indian tribes or tribal organizations.--Any portion
of a grant or contract made to an Indian tribe or tribal
organization under subsection (c) that the Secretary determines
is not being used in a manner consistent with the provision of
this subchapter in the period for which the grant or contract
is made available, shall be allotted by the Secretary to other
tribes or organizations that have submitted applications under
subsection (c) in accordance with their respective needs.''.
SEC. 2814. DEFINITIONS.
Section 658P (42 U.S.C. 9858n) is amended--
(1) in paragraph (2), in the first sentence by inserting
``or as a deposit for child care services if such a deposit is
required of other children being cared for by the provider''
after ``child care services''; and
(2) by striking paragraph (3);
(3) in paragraph (4)(B), by striking ``75 percent'' and
inserting ``85 percent'';
(4) in paragraph (5)(B)--
(A) by inserting ``great grandchild, sibling (if
such provider lives in a separate residence),'' after
``grandchild,'';
(B) by striking ``is registered and''; and
(C) by striking ``State'' and inserting
``applicable''.
(5) by striking paragraph (10);
(6) in paragraph (13)--
(A) by inserting ``or'' after ``Samoa,''; and
(B) by striking ``, and the Trust Territory of the
Pacific Islands'';
(7) in paragraph (14)--
(A) by striking ``The term'' and inserting the
following:
``(A) In general.--The term''; and
(B) by adding at the end thereof the following new
subparagraph:
``(B) Other organizations.--Such term includes a
Native Hawaiian Organization, as defined in section
4009(4) of the Augustus F. Hawkins-Robert T. Stafford
Elementary and Secondary School Improvement Amendments
of 1988 (20 U.S.C. 4909(4)) and a private nonprofit
organization established for the purpose of serving
youth who are Indians or Native Hawaiians.''.
SEC. 2815. REPEALS.
(a) Child Development Associate Scholarship Assistance Act of
1985.--Title VI of the Human Services Reauthorization Act of 1986 (42
U.S.C. 10901-10905) is repealed.
(b) State Dependent Care Development Grants Act.--Subchapter E of
chapter 8 of subtitle A of title VI of the Omnibus Budget
Reconciliation Act of 1981 (42 U.S.C. 9871-9877) is repealed.
(c) Programs of National Significance.--Title X of the Elementary
and Secondary Education Act of 1965, as amended by Public Law 103-382
(108 Stat. 3809 et seq.), is amended--
(1) in section 10413(a) by striking paragraph (4),
(2) in section 10963(b)(2) by striking subparagraph (G),
and
(3) in section 10974(a)(6) by striking subparagraph (G).
(d) Native Hawaiian Family-Based Education Centers.--Section 9205
of the Native Hawaiian Education Act, as amended by section 101 of
Public Law 103-382, (108 Stat. 3794) is repealed.
SEC. 2816. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this chapter
and the amendments made by this chapter shall take effect on October 1,
1996.
(b) Exception.--The amendment made by section 2803(a) shall take
effect on the date of enactment of this Act.
CHAPTER 9--MISCELLANEOUS
SEC. 2901. APPROPRIATION BY STATE LEGISLATURES.
(a) In General.--Any funds received by a State under the provisions
of law specified in subsection (b) shall be subject to appropriation by
the State legislature, consistent with the terms and conditions
required under such provisions of law.
(b) Provisions of Law.--The provisions of law specified in this
subsection are the following:
(1) Part A of title IV of the Social Security Act (relating
to block grants for temporary assistance for needy families).
(2) Section 27 of the Food Stamp Act of 1977 (relating to
the optional State food assistance block grant).
(3) The Child Care and Development Block Grant Act of 1990
(relating to block grants for child care).
SEC. 2902. SANCTIONING FOR TESTING POSITIVE FOR CONTROLLED SUBSTANCES.
Notwithstanding any other provision of law, States shall not be
prohibited by the Federal Government from testing welfare recipients
for use of controlled substances nor from sanctioning welfare
recipients who test positive for use of controlled substances.
SEC. 2903. REDUCTION IN BLOCK GRANTS TO STATES FOR SOCIAL SERVICES.
Section 2003(c) of the Social Security Act (42 U.S.C. 1397b(c)) is
amended--
(1) by striking ``and'' at the end of paragraph (4); and
(2) by striking paragraph (5) and inserting the following:
``(5) $2,800,000,000 for each of the fiscal years 1990
through 1995;
``(6) $2,381,000,000 for the fiscal year 1996;
``(7) $2,240,000,000 for each of the fiscal years 1997
through 2002; and
``(8) $2,800,000,000 for the fiscal year 2003 and each
succeeding fiscal year.''.
SEC. 2904. ELIMINATION OF HOUSING ASSISTANCE WITH RESPECT TO FUGITIVE
FELONS AND PROBATION AND PAROLE VIOLATORS.
(a) Eligibility for Assistance.--The United States Housing Act of
1937 (42 U.S.C. 1437 et seq.) is amended--
(1) in section 6(l)--
(A) in paragraph (5), by striking ``and'' at the
end;
(B) in paragraph (6), by striking the period at the
end and inserting ``; and''; and
(C) by inserting immediately after paragraph (6)
the following new paragraph:
``(7) provide that it shall be cause for immediate
termination of the tenancy of a public housing tenant if such
tenant--
``(A) is fleeing to avoid prosecution, or custody
or confinement after conviction, under the laws of the
place from which the individual flees, for a crime, or
attempt to commit a crime, which is a felony under the
laws of the place from which the individual flees, or
which, in the case of the State of New Jersey, is a
high misdemeanor under the laws of such State; or
``(2) is violating a condition of probation or parole
imposed under Federal or State law.''; and
(2) in section 8(d)(1)(B)--
(A) in clause (iii), by striking ``and'' at the
end;
(B) in clause (iv), by striking the period at the
end and inserting ``; and''; and
(C) by adding after clause (iv) the following new
clause:
``(v) it shall be cause for termination of
the tenancy of a tenant if such tenant--
``(I) is fleeing to avoid
prosecution, or custody or confinement
after conviction, under the laws of the
place from which the individual flees,
for a crime, or attempt to commit a
crime, which is a felony under the laws
of the place from which the individual
flees, or which, in the case of the
State of New Jersey, is a high
misdemeanor under the laws of such
State; or
``(II) is violating a condition of
probation or parole imposed under
Federal or State law;''.
(b) Provision of Information to Law Enforcement Agencies.--Title I
of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.), as
amended by sections 2404(d) and 2601 of this Act, is amended by adding
at the end the following:
``SEC. 29. EXCHANGE OF INFORMATION WITH LAW ENFORCEMENT AGENCIES.
``Notwithstanding any other provision of law, each public housing
agency that enters into a contract for assistance under section 6 or 8
of this Act with the Secretary shall furnish any Federal, State, or
local law enforcement officer, upon the request of the officer, with
the current address, Social Security number, and photograph (if
applicable) of any recipient of assistance under this Act, if the
officer--
``(1) furnishes the public housing agency with the name of
the recipient; and
``(2) notifies the agency that--
``(A) such recipient--
``(i) is fleeing to avoid prosecution, or
custody or confinement after conviction, under
the laws of the place from which the individual
flees, for a crime, or attempt to commit a
crime, which is a felony under the laws of the
place from which the individual flees, or
which, in the case of the State of New Jersey,
is a high misdemeanor under the laws of such
State; or
``(ii) is violating a condition of
probation or parole imposed under Federal or
State law; or
``(iii) has information that is necessary
for the officer to conduct the officer's
official duties;
``(B) the location or apprehension of the recipient
is within such officer's official duties; and
``(C) the request is made in the proper exercise of
the officer's official duties.''.
SEC. 2905. SENSE OF THE SENATE REGARDING ENTERPRISE ZONES.
(a) Findings.--The Senate finds that:
(1) Many of the Nation's urban centers are places with high
levels of poverty, high rates of welfare dependency, high crime
rates, poor schools, and joblessness;
(2) Federal tax incentives and regulatory reforms can
encourage economic growth, job creation and small business
formation in many urban centers;
(3) Encouraging private sector investment in America's
economically distressed urban and rural areas is essential to
breaking the cycle of poverty and the related ills of crime,
drug abuse, illiteracy, welfare dependency, and unemployment;
(4) The empowerment zones enacted in 1993 should be
enhanced by providing incentives to increase entrepreneurial
growth, capital formation, job creation, educational
opportunities, and home ownership in the designated communities
and zones.
(b) Sense of the Senate.--Therefore, it is the Sense of the Senate
that the Congress should adopt enterprise zone legislation in the One
Hundred Fourth Congress, and that such enterprise zone legislation
provide the following incentives and provisions:
(1) Federal tax incentives that expand access to capital,
increase the formation and expansion of small businesses, and
promote commercial revitalization;
(2) Regulatory reforms that allow localities to petition
Federal agencies, subject to the relevant agencies' approval,
for waivers or modifications of regulations to improve job
creation, small business formation and expansion, community
development, or economic revitalization objectives of the
enterprise zones;
(3) Home ownership incentives and grants to encourage
resident management of public housing and home ownership of
public housing;
(4) School reform pilot projects in certain designated
enterprise zones to provide low-income parents with new and
expanded educational options for their children's elementary
and secondary schooling.
SEC. 2906. SENSE OF THE SENATE REGARDING THE INABILITY OF THE NON-
CUSTODIAL PARENT TO PAY CHILD SUPPORT.
It is the sense of the Senate that--
(a) States should diligently continue their efforts to
enforce child support payments by the non-custodial parent to
the custodial parent, regardless of the employment status or
location of the non-custodial parent; and
(b) States are encouraged to pursue pilot programs in which
the parents of a non-adult, non-custodial parent who refuses to
or is unable to pay child support must--
(1) pay or contribute to the child support owed by
the non-custodial parent; or
(2) otherwise fulfill all financial obligations and
meet all conditions imposed on the non-custodial
parent, such as participation in a work program or
other related activity.
SEC. 2907. ESTABLISHING NATIONAL GOALS TO PREVENT TEENAGE PREGNANCIES.
(a) In General.--Not later than January 1, 1997, the Secretary of
Health and Human Services shall establish and implement a strategy
for--
(1) preventing out-of-wedlock teenage pregnancies, and
(2) assuring that at least 25 percent of the communities in
the United States have teenage pregnancy prevention programs in
place.
(b) Report.--Not later than June 30, 1998, and annually thereafter,
the Secretary shall report to the Congress with respect to the progress
that has been made in meeting the goals described in paragraphs (1) and
(2) of subsection (a).
SEC. 2908. SENSE OF THE SENATE REGARDING ENFORCEMENT OF STATUTORY RAPE
LAWS.
It is the sense of the Senate that States and local jurisdictions
should aggressively enforce statutory rape laws.
SEC. 2909. ABSTINENCE EDUCATION.
(a) Increases in Funding.--Section 501(a) of the Social Security
Act (42 U.S.C. 701(a)) is amended in the matter preceding paragraph (1)
by striking ``Fiscal year 1990 and each fiscal year thereafter'' and
inserting ``Fiscal years 1990 through 1995 and $761,000,000 for fiscal
year 1996 and each fiscal year thereafter''.
(b) Abstinence Education.--Section 501(a)(1) of such Act (42 U.S.C.
701(a)(1)) is amended--
(1) in subparagraph (C), by striking ``and'' at the end;
(2) in subparagraph (D), by adding ``and'' at the end; and
(3) by adding at the end the following new subparagraph:
``(E) to provide abstinence education, and at the
option of the State, where appropriate, mentoring,
counseling, and adult supervision to promote abstinence
from sexual activity, with a focus on those groups
which are most likely to bear children out-of-
wedlock.''.
(c) Abstinence Education Defined.--Section 501(b) of such Act (42
U.S.C. 701(b)) is amended by adding at the end the following new
paragraph:
``(5) Abstinence education.--For purposes of this
subsection, the term `abstinence education' means an
educational or motivational program which--
``(A) has as its exclusive purpose, teaching the
social, psychological, and health gains to be realized
by abstaining from sexual activity;
``(B) teaches abstinence from sexual activity
outside marriage as the expected standard for all
school age children;
``(C) teaches that abstinence from sexual activity
is the only certain way to avoid out-of-wedlock
pregnancy, sexually transmitted diseases, and other
associated health problems;
``(D) teaches that a mutually faithful monogamous
relationship in context of marriage is the expected
standard of human sexual activity;
``(E) teaches that sexual activity outside of the
context of marriage is likely to have harmful
psychological and physical effects;
``(F) teaches that bearing children out-of-wedlock
is likely to have harmful consequences for the child,
the child's parents, and society;
``(G) teaches young people how to reject sexual
advances and how alcohol and drug use increases
vulnerability to sexual advances; and
``(H) teaches the importance of attaining self-
sufficiency before engaging in sexual activity.''.
(d) Set-Aside.--
(1) In general.--Section 502(c) of such Act (42 U.S.C.
702(c)) is amended in the matter preceding paragraph (1) by
striking ``From'' and inserting ``Except as provided in
subsection (e), from''.
(2) Set-aside.--Section 502 of such Act (42 U.S.C. 702) is
amended by adding at the end the following new subsection:
``(e) Of the amounts appropriated under section 501(a) for any
fiscal year, the Secretary shall set aside $75,000,000 for abstinence
education in accordance with section 501(a)(1)(E).''.
SEC. 2910. PROVISIONS TO ENCOURAGE ELECTRONIC BENEFIT TRANSFER SYSTEMS.
Section 904 of the Electronic Fund Transfer Act (15 U.S.C. 1693b)
is amended--
(1) by striking ``(d) In the event'' and inserting ``(d)
Applicability to Service Providers Other Than Certain Financial
Institutions.--
``(1) In general.--In the event''; and
(2) by adding at the end the following new paragraph:
``(2) State and local government electronic benefit
transfer programs.--
``(A) Exemption generally.--The disclosures,
protections, responsibilities, and remedies established
under this title, and any regulation prescribed or
order issued by the Board in accordance with this
title, shall not apply to any electronic benefit
transfer program established under State or local law
or administered by a State or local government.
``(B) Exception for direct deposit into recipient's
account.--Subparagraph (A) shall not apply with respect
to any electronic funds transfer under an electronic
benefit transfer program for deposits directly into a
consumer account held by the recipient of the benefit.
``(C) Rule of construction.--No provision of this
paragraph may be construed as--
``(i) affecting or altering the protections
otherwise applicable with respect to benefits
established by Federal, State, or local law; or
``(ii) otherwise superseding the
application of any State or local law.
``(D) Electronic benefit transfer program
defined.--For purposes of this paragraph, the term
`electronic benefit transfer program'--
``(i) means a program under which a
government agency distributes needs-tested
benefits by establishing accounts to be
accessed by recipients electronically, such as
through automated teller machines, or point-of-sale terminals; and
``(ii) does not include employment-related
payments, including salaries and pension,
retirement, or unemployment benefits
established by Federal, State, or local
governments.''.
SEC. 2911. RULES RELATING TO DENIAL OF EARNED INCOME CREDIT ON BASIS OF
DISQUALIFIED INCOME.
(a) Reduction in Disqualified Income Threshold.--
(1) In general.--Paragraph (1) of section 32(i) of the
Internal Revenue Code of 1986 (relating to denial of credit for
individuals having excessive investment income) is amended by
striking ``$2,350'' and inserting ``$2,200''.
(2) Adjustment for inflation.--Subsection (j) of section 32
of such Code is amended to read as follows:
``(j) Inflation Adjustments.--
``(1) In general.--In the case of any taxable year
beginning after 1996, each of the dollar amounts in subsections
(b)(2)(A) and (i)(1) 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.
``(2) Rounding.--
``(A) In general.--If any dollar amount in
subsection (b)(2), after being increased under
paragraph (1), is not a multiple of $10, such dollar
amount shall be rounded to the nearest multiple of $10.
``(B) Disqualified income threshold amount.--If the
dollar amount in subsection (i)(1), after being
increased under paragraph (1), is not a multiple of
$50, such amount shall be rounded to the next lowest
multiple of $50.''.
(3) Conforming amendments.--The table contained in section
32(b)(2)(A) of the Internal Revenue Code of 1986 is amended--
(1) by striking ``$6,000'' and inserting ``$6,330'',
(2) by striking ``$11,000'' both places it appears and
inserting ``$11,610'',
(3) by striking ``$8,425'' and inserting ``$8,890'',
(4) by striking ``$4,000'' and inserting ``$4,220'', and
(5) by striking ``$5,000'' and inserting ``$5,280''.
(b) Definition of Disqualified Income.--Paragraph (2) of section
32(i) of such Code (defining disqualified income) is amended by
striking ``and'' at the end of subparagraph (B), by striking the period
at the end of subparagraph (C) and inserting a comma, and by adding at
the end the following new subparagraphs:
``(D) the capital gain net income (as defined in
section 1222) of the taxpayer for such taxable year,
and
``(E) the excess (if any) of--
``(i) the aggregate income from all passive
activities for the taxable year (determined
without regard to any amount included in earned
income under subsection (c)(2) or described in
a preceding subparagraph), over
``(ii) the aggregate losses from all
passive activities for the taxable year (as so
determined).
For purposes of subparagraph (E), the term `passive activity'
has the meaning given such term by section 469.''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 1995.
(2) Advance payment individuals.--In the case of any
individual who on or before June 26, 1996, has in effect an
earned income eligibility certificate for the individual's
taxable year beginning in 1996, the amendments made by this
section shall apply to taxable years beginning after December 31, 1996.
SEC. 2912. MODIFICATION OF ADJUSTED GROSS INCOME DEFINITION FOR EARNED
INCOME CREDIT.
(a) In General.--Subsections (a)(2)(B), (c)(1)(C), and (f)(2)(B) of
section 32 of the Internal Revenue Code of 1986 are each amended by
striking ``adjusted gross income'' each place it appears and inserting
``modified adjusted gross income''.
(b) Modified Adjusted Gross Income Defined.--Section 32(c) of such
Code (relating to definitions and special rules) is amended by adding
at the end the following new paragraph:
``(5) Modified adjusted gross income.--
``(A) In general.--The term `modified adjusted
gross income' means adjusted gross income--
``(i) increased by the sum of the amounts
described in subparagraph (B), and
``(ii) determined without regard to the
amounts described in subparagraph (C).
``(B) Nontaxable income taken into account.--
Amounts described in this subparagraph are--
``(i) interest received or accrued during
the taxable year which is exempt from tax
imposed by this chapter, and
``(ii) amounts received as a pension or
annuity, and any distributions or payments
received from an individual retirement plan, by
the taxpayer during the taxable year to the
extent not included in gross income.
Clause (ii) shall not include any amount which is not
includible in gross income by reason of section 402(c),
403(a)(4), 403(b)(8), 408(d) (3), (4), or (5), or
457(e)(10).
``(C) Certain amounts disregarded.--An amount is
described in this subparagraph if it is--
``(i) the amount of losses from sales or
exchanges of capital assets in excess of gains
from such sales or exchanges to the extent such
amount does not exceed the amount under section
1211(b)(1),
``(ii) the net loss from estates and
trusts,
``(iii) the excess (if any) of amounts
described in subsection (i)(2)(C)(ii) over the
amounts described in subsection (i)(2)(C)(i)
(relating to nonbusiness rents and royalties),
and
``(iv) the net loss from the carrying on of
trades or businesses, computed separately with
respect to--
``(I) trades or businesses (other
than farming) conducted as sole
proprietorships,
``(II) trades or businesses of
farming conducted as sole
proprietorships, and
``(III) other trades or businesses.
For purposes of clause (iv), there shall not be taken
into account items which are attributable to a trade or
business which consists of the performance of services
by the taxpayer as an employee.''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 1995.
(2) Advance payment individuals.--In the case of any
individual who on or before June 26, 1996, has in effect an
earned income eligibility certificate for the individual's
taxable year beginning in 1996, the amendments made by this
section shall apply to taxable years beginning after December
31, 1996.
SEC. 2913. SUSPENSION OF INFLATION ADJUSTMENTS FOR INDIVIDUALS WITH NO
QUALIFYING CHILDREN.
(a) In General.--Subsection (j) of section 32 of the Internal
Revenue Code of 1986, as amended by section 2911(a)(2) of this Act, is
amended by adding at the end the following new paragraph:
``(3) No adjustment for individuals with no qualifying
children.--This subsection shall not apply to each dollar
amount contained in subsection (b)(2)(A) with respect to
individuals with no qualifying children.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 1996.
Subtitle B--Restructuring Medicaid
SEC. 2920. SHORT TITLE OF SUBTITLE.
This subtitle may be cited as the ``Medicaid Restructuring Act of
1996''.
SEC. 2921. TABLE OF CONTENTS OF SUBTITLE.
The table of contents for this subtitle is as follows:
Sec. 2920. Short title of subtitle.
Sec. 2921. Table of contents of subtitle.
Sec. 2922. Finding; goals for medicaid restructuring.
Sec. 2923. Restructuring the medicaid program.
Sec. 2924. State election; termination of current program; and
transition.
Sec. 2925. Integration demonstration project.
Sec. 2926. National Commission on Medicaid and State-Based Health Care
Reform.
SEC. 2922. FINDING; GOALS FOR MEDICAID RESTRUCTURING.
(a) Finding.--The Congress finds that the National Governors'
Association on February 6, 1996, adopted unanimously and on a
bipartisan basis goals to guide the restructuring of the medicaid
program.
(b) Goals for Restructuring.--The following are the 4 primary goals
so adopted:
(1) The basic health care needs of the nation's most
vulnerable populations must be guaranteed.
(2) The growth in health care expenditures must be brought
under control.
(3) States must have maximum flexibility in the design and
implementation of cost-effective systems of care.
(4) States must be protected from unanticipated program
costs resulting from economic fluctuations in the business
cycle, changing demographics, and natural disasters.
SEC. 2923. RESTRUCTURING THE MEDICAID PROGRAM.
The Social Security Act is amended by inserting after title XIV the
following new title:
``TITLE XV--PROGRAM OF MEDICAL ASSISTANCE FOR LOW-INCOME INDIVIDUALS
``table of contents of title
``Sec. 1500. Purpose; State plans.
``Part A--Eligibility and Benefits
``Sec. 1501. Guaranteed eligibility and benefits.
``Sec. 1502. Other provisions relating to eligibility and benefits.
``Sec. 1503. Limitations on cost-sharing.
``Sec. 1504. Requirements relating to medical assistance provided
through managed care arrangements.
``Sec. 1505. Preventing spousal impoverishment.
``Sec. 1506. Preventing family impoverishment.
``Sec. 1507. State flexibility.
``Sec. 1508. Private rights of action.
``Part B--Payments to States
``Sec. 1511. Allotment of funds among States.
``Sec. 1512. Payments to States.
``Sec. 1513. Limitation on use of funds; disallowance.
``Part C--Establishment and Amendment of State Plans
``Sec. 1521. Description of strategic objectives and performance goals.
``Sec. 1522. Annual reports.
``Sec. 1523. Periodic, independent evaluations.
``Sec. 1524. Description of process for State plan development.
``Sec. 1525. Consultation in State plan development.
``Sec. 1526. Submittal and approval of State plans.
``Sec. 1527. Submittal and approval of plan amendments.
``Sec. 1528. Process for State withdrawal from program.
``Sec. 1529. Sanctions for noncompliance.
``Sec. 1530. Secretarial authority.
``Part D--Program Integrity and Quality
``Sec. 1551. Use of audits to achieve fiscal integrity.
``Sec. 1552. Fraud prevention program.
``Sec. 1553. Information concerning sanctions taken by State licensing
authorities against health care
practitioners and providers.
``Sec. 1554. State fraud control units.
``Sec. 1555. Recoveries from third parties and others.
``Sec. 1556. Assignment of rights of payment.
``Sec. 1557. Quality assurance requirements for nursing facilities.
``Sec. 1558. Other provisions promoting program integrity.
``Part E--General Provisions
``Sec. 1571. Definitions.
``Sec. 1572. Treatment of territories.
``Sec. 1573. Description of treatment of Indian Health Service
facilities and related programs.
``Sec. 1574. Application of certain general provisions.
``Sec. 1575. Optional master drug rebate agreements.
``SEC. 1500. PURPOSE; STATE PLANS.
``(a) Purpose.--The purpose of this title is to provide funds to
States to enable them to provide medical assistance to low-income
individuals and families in a more effective, efficient, and responsive
manner.
``(b) State Plan Required.--A State is not eligible for payment
under section 1512 unless the State has submitted to the Secretary
under part C a plan (in this title referred to as a `State plan')
that--
``(1) sets forth how the State intends to use the funds
provided under this title to provide medical assistance to
needy individuals and families consistent with the provisions
of this title, and
``(2) is approved under such part.
``(c) Continued Approval.--An approved State plan shall continue in
effect unless and until--
``(1) the State amends the plan under section 1527,
``(2) the State terminates participation under this title
under section 1528, or
``(3) the Secretary finds substantial noncompliance of the
plan with the requirements of this title under section 1529.
``(d) State Entitlement.--This title constitutes budget authority
in advance of appropriations Acts and represents the obligation of the
Federal Government to provide for the payment to States (and, beginning
on October 1, 1997, to facilities or programs described in section
1512(f)(3)(B)(iii)) of amounts provided under part B.
``(e) Effective Date.--No State is eligible for payments under
section 1512 for any calendar quarter beginning before October 1, 1996.
``Part A--Eligibility and Benefits
``SEC. 1501. GUARANTEED ELIGIBILITY AND BENEFITS.
``(a) Guaranteed Coverage and Benefits for Certain Populations.--
``(1) In general.--Each State plan shall provide for making
medical assistance available for benefits in the guaranteed
benefit package (as defined in paragraph (2)) to individuals
within each of the following categories:
``(A) Poor pregnant women.--Pregnant women with
family income below 133 percent of the poverty line.
``(B) Children under 6.--Children under 6 years of
age whose family income does not exceed 133 percent of
the poverty line.
``(C) Children 6 to 19.--Children born after
September 30, 1983, who are over 5 years of age, but
under 19 years of age, whose family income does not
exceed 100 percent of the poverty line.
``(D) Disabled individuals.--As elected by the
State under paragraph (3), either--
``(i) disabled individuals (as defined by
the State) who meet the income and resource
standards established under the plan, or
``(ii) individuals who are under 65 years
of age, who are disabled (as determined under
section 1614(a)(3)), and who, using the
methodology provided for determining
eligibility for payment of supplemental
security income benefits under title XVI, meet
the income and resource standards for payment
of such benefits.
``(E) Poor elderly individuals.--Subject to
paragraph (4), elderly individuals who, using the
methodology provided for determining eligibility for
payment of supplemental security income benefits under
title XVI, meet the income and resource standards for
payment of such benefits.
``(F) Children receiving foster care or adoption
assistance.--Subject to paragraph (5), children who
meet the requirements for receipt of foster care
maintenance payments or adoption assistance under title
IV.
``(G) Certain low-income families.--Subject to
paragraph (6), individuals and members of families who
meet current AFDC income, resource, and eligibility
standards (as defined in paragraph (6)(C)) in the
State.
``(2) Guaranteed benefits package.--
``(A) In general.--In this title, the term
`guaranteed benefit package' means benefits (in an
amount, duration, and scope specified under the State
plan) for at least the following categories of
services:
``(i) Inpatient and outpatient hospital
services.
``(ii) Physicians' surgical and medical
services.
``(iii) Laboratory and x-ray services.
``(iv) Nursing facility services.
``(v) Home health care.
``(vi) Federally-qualified health center
services and rural health clinic services.
``(vii) Immunizations for children (in
accordance with a schedule for immunizations
established by the Health Department of the
State in consultation with the State agency
responsible for the administration of the
plan).
``(viii) Prepregnancy family planning
services and supplies (as specified by the
State).
``(ix) Prenatal care.
``(x) Physician assistant services (to the
extent such services are authorized under State
law or regulation), pediatric and family nurse
practitioner services and nurse midwife
services.
``(xi) EPSDT services (as defined in
section 1571(e)) for individuals who are under
the age of 21.
``(B) Amount, duration, and scope.--
``(i) In general.--The amount, duration,
and scope of benefits specified under the State
plan must be sufficient to reasonably achieve
the purpose of the benefit. A State may
establish criteria, including medical
necessity, utilization review, and cost
effectiveness of alternative covered services,
for purposes of limiting the amount, duration,
and scope of benefits provided under the State
plan.
``(ii) Epsdt services.--The amount,
duration, and scope of EPSDT services for
individuals who are under the age of 21 may not
be less than the amount, duration, and scope of
such services provided under the State plan
under title XIX (as in effect on June 1, 1996).
``(3) State election of disabled individuals to be
guaranteed coverage.--
``(A) In general.--Each State shall specify in its
State plan, before the beginning of each Federal fiscal
year, whether to guarantee coverage of disabled
individuals under the plan under the option described
in paragraph (1)(D)(i) or under the option described in
paragraph (1)(D)(ii). An election under this paragraph
shall continue in effect for the subsequent fiscal year
unless the election is changed before the beginning of
the fiscal year.
``(B) Consequences of election.--
``(i) State flexible definition option.--If
a State elects the option described in
paragraph (1)(D)(i) for a fiscal year--
``(I) the State plan must provide
under section 1502(c) for a set aside
of funds for disabled individuals for
the fiscal year, and
``(II) disabled individuals are not
taken into account in determining a
State supplemental umbrella allotment
under section 1511(g).
``(ii) SSI definition option.--If a State
elects the option described in paragraph
(1)(D)(ii) for a fiscal year--
``(I) section 1502(c) shall not
apply for the fiscal year, and
``(II) the State is eligible for an
increase under section 1511(g) in its
outlay allotment for the fiscal year
based on an increase in the number of
guaranteed and optional disabled
individuals covered under the plan.
``(4) Continuation of special eligibility standards for
section 209(b) states.--
``(A) In general.--A section 209(b) State (as
defined in subparagraph (B)) may elect to treat any
reference in paragraph (1)(E) to `elderly individuals
who meet the income and resource standards for the
payment of supplemental security income benefits under
title XVI' as a reference to `elderly individuals who
meet the standards described in the first sentence of
section 1902(f) (as in effect on the day before the
date of the enactment of this title)'.
``(B) Section 209(b) state defined.--In
subparagraph (A), the term `section 209(b) State' means
a State to which section 1902(f) applied as of the day
before the date of the enactment of this title.
``(5) Option for application of current requirements for
certain children.--A State may elect to apply paragraph (1)(F)
by treating any reference to `requirements for receipt of
foster care maintenance payments or adoption assistance under
title IV' as a reference to `requirements for receipt of foster
care maintenance payments or adoption assistance as in effect
under its State plan under part E of title IV as of the date of
the enactment of this title'.
``(6) Special rules for low-income families.--
``(A) Optional use of lower national average
standards.--In the case of a State in which the current
AFDC income, resource, and eligibility standards are
above the national average of the current AFDC income,
resource, and eligibility standards for the 50 States
and the District of Columbia, as determined and
published by the Secretary, in applying paragraph
(1)(G), the State may elect to substitute such national
average income, resource, and eligibility standards for
the current AFDC income, resource, and eligibility
standards in that State.
``(B) Optional eligibility based on link to other
assistance.--
``(i) In general.--Subject to clause (ii),
in the case of a State which maintains a link
between eligibility for aid or assistance under
one or more parts of title IV and eligibility
for medical assistance under this title, in
applying paragraph (1)(G), the State may elect
to treat any reference in such paragraph to
`individuals and members of families who meet
current AFDC income, resource, and eligibility
standards in the State' as a reference to
`members of families who are receiving
assistance under a State plan under part A or E
of title IV'.
``(ii) Limitation on election.--A State may
only make the election described in clause (i)
if, and so long as, the State demonstrates to
the satisfaction of the Secretary that the such
election does not result in Federal
expenditures under this title (taking into
account any supplemental amounts provided
pursuant to section 1511(g)) that are greater
than the Federal expenditures that would have
been made under this title if the State had not
made such election.
``(C) Current afdc income, resource, and
eligibility standards defined.--In this subsection, the
term `current AFDC income, resource, and eligibility
standards' means, with respect to a State, the income,
resource, and eligibility standards for the payment of
assistance under the State plan under part A or E of
title IV (as in effect as of May 1, 1996).
``(D) Medical assistance required to be provided
for 1 year for certain low-income families during the
transition from welfare to work.--Each State plan shall
provide that medical assistance under this title for a
family described in section 408(a)(12) of this Act
shall be provided to such family in accordance with
such section.
``(E) State option to continue to provide medical
assistance during the transition from welfare to
work.--Nothing in this title shall be construed as
preventing a State from continuing to provide medical
assistance under a State plan under this title to an
individual or a member of such individual's family
who--
``(i) is eligible for medical assistance
under this title as a result of a link between
eligibility for such medical assistance and aid
or assistance under one or more parts of title
IV or any other program of assistance based on
need; and
``(ii) because of hours of, or income from,
employment is no longer eligible for such aid
or assistance.
``(7) Methodology.--Family income shall be determined for
purposes of subparagraphs (A) through (C) of paragraph (1) in
the same manner (and using the same methodology) as income was
determined under the State medicaid plan under section 1902(l)
(as in effect as of May 1, 1996).
``(b) Guaranteed Coverage of Medicare Premiums and Cost-Sharing for
Certain Medicare Beneficiaries.--
``(1) Guaranteed eligibility.--Each State plan shall
provide--
``(A) for making medical assistance available for
required medicare cost-sharing (as defined in paragraph
(2)) for qualified medicare beneficiaries described in
paragraph (3);
``(B) for making medical assistance available for
payment of medicare premiums under section 1818A for
qualified disabled and working individuals described in
paragraph (4); and
``(C) for making medical assistance available for
payment of medicare premiums under section 1839 for
individuals who would be qualified medicare
beneficiaries described in paragraph (3) but for the
fact that their income exceeds 100 percent, but is less
than 120 percent, of the poverty line for a family of
the size involved.
``(2) Required medicare cost-sharing defined.--
``(A) In general.--In this subsection, the term
`required medicare cost-sharing' means, with respect to
an individual, costs incurred for medicare cost-sharing
described in paragraphs (1) through (4) of section
1571(c) (and, at the option of a State, section
1571(c)(5))) without regard to whether the costs
incurred were for items and services for which medical
assistance is otherwise available under the plan.
``(B) Limitation on obligation for certain cost-
sharing assistance.--In the case of medical assistance
furnished under this title for medicare cost-sharing
described in paragraph (2), (3), or (4) of section
1571(c) relating to the furnishing of a service or item
to a medicare beneficiary, nothing in this title shall
be construed as preventing a State plan--
``(i) from limiting the assistance to the
amount (if any) by which (I) the amount that is
otherwise payable under the plan for the item
or service for eligible individuals who are not
such medicare beneficiaries (or, if payments
for such items or services are made on a
capitated basis, an amount reasonably related
or derived from such capitated payment amount),
exceeds (II) the amount of payment (if any)
made under title XVIII with respect to the
service or item, and
``(ii) if the amount described in subclause
(II) of clause (i) exceeds the amount described
in subclause (I) of such clause, from treating
the amount paid under title XVIII as payment in
full and not requiring or providing for any
additional medical assistance under this
subsection.
``(3) Qualified medicare beneficiary defined.--In this
subsection, the term `qualified medicare beneficiary' means an
individual--
``(A) who is entitled to hospital insurance
benefits under part A of title XVIII (including an
individual entitled to such benefits pursuant to an
enrollment under section 1818, but not including an
individual entitled to such benefits only pursuant to
an enrollment under section 1818A),
``(B) whose income (as determined under section
1612 for purposes of the supplemental security income
program, except as provided in paragraph (5)) does not
exceed 100 percent of the poverty line applicable to a
family of the size involved, and
``(C) whose resources (as determined under section
1613 for purposes of the supplemental security income
program) do not exceed twice the maximum amount of
resources that an individual may have and obtain
benefits under that program.
``(4) Qualified disabled and working individual defined.--
In this subsection, the term `qualified disabled and working
individual' means an individual--
``(A) who is entitled to enroll for hospital
insurance benefits under part A of title XVIII under
section 1818A;
``(B) whose income (as determined under section
1612 for purposes of the supplemental security income
program) does not exceed 200 percent of the poverty
line applicable to a family of the size involved;
``(C) whose resources (as determined under section
1613 for purposes of the supplemental security income
program) do not exceed twice the maximum amount of
resources that an individual or a couple (in the case
of an individual with a spouse) may have and obtain
benefits for supplemental security income benefits
under title XVI; and
``(D) who is not otherwise eligible for medical
assistance under this title.
``(5) Income determinations.--
``(A) In general.--In determining under this
subsection the income of an individual who is entitled
to monthly insurance benefits under title II for a
transition month (as defined in subparagraph (B)) in a
year, such income shall not include any amounts
attributable to an increase in the level of monthly
insurance benefits payable under such title which have
occurred pursuant to section 215(i) for benefits
payable for months beginning with December of the
previous year.
``(B) Transition month defined.--For purposes of
subparagraph (A), the term `transition month' means
each month in a year through the month following the
month in which the annual revision of the poverty line
is published.
``SEC. 1502. OTHER PROVISIONS RELATING TO ELIGIBILITY AND BENEFITS.
``(a) Optional Eligibility Groups for Which Umbrella Supplemental
Funding Is Available.--In addition to the guaranteed coverage
categories described in section 1501(a)(1), the following are
population groups with respect to which supplemental allotments may be
made under section 1511(g), but only if (for the individual involved)
medical assistance is made available under the State plan for the
guaranteed benefit package (as defined in section 1501(a)(2)):
``(1) Certain disabled individuals.--Individuals (not
described in section 1501(a)(1)(D)(ii)) who are disabled (as
determined under section 1614(a)(3)), covered under the State
plan, and meet the eligibility standards for coverage under the
State medicaid plan under title XIX (as in effect as of May 1,
1996).
``(2) Certain elderly individuals.--Elderly individuals
(not described in section 1501(a)(1)(E)) who are covered under
the State plan and who meet the eligibility standards for
coverage under the State medicaid plan under title XIX (as in
effect as of May 1, 1996) other than solely on the basis of being an
individual described in section 1902(a)(10)(E).
Eligibility under paragraphs (1) and (2) shall be determined using the
methodologies that are not more restrictive than the methodologies used
under the State medicaid plan as in effect as of May 1, 1996.
``(b) Other Provisions Relating to General Eligibility and
Benefits.--
``(1) General description.--Each State plan shall include a
description (consistent with this title) of the following:
``(A) General eligibility guidelines.--The general
eligibility guidelines of the plan for eligible low-
income individuals, including--
``(i) for individuals other than those
covered under subsection (a) or (b) of section
1501, any limitations as to the duration of
eligibility,
``(ii) any eligibility standards relating
to age, income and resources (including any
standards relating to spenddowns and
disposition of resources), residency,
disability status, immigration status, or
employment status of individuals,
``(iii) methods of establishing and
continuing eligibility and enrollment,
including the methodology for computing family
income,
``(iv) the eligibility standards in the
plan that protect the income and resources of a
married individual who is living in the
community and whose spouse is residing in an
institution in order to prevent the
impoverishment of the community spouse, and
``(v) for individuals other than those
covered under subsection (a) or (b) of section
1501, any other standards relating to
eligibility for medical assistance under the
plan.
``(B) Scope of assistance.--The amount, duration,
and scope of health care services and items covered
under the plan, including differences among different
eligible population groups. The amount, duration, and
scope of benefits specified shall comport with
requirements of section 1501(a)(2)(B)(i).
``(C) Delivery method.--The State's approach to
delivery of medical assistance, including a general
description of--
``(i) the use (or intended use) of
vouchers, fee-for-service, or managed care
arrangements (such as capitated health care
plans, case management, and case coordination);
and
``(ii) utilization control systems.
``(D) Fee-for-service benefits.--To the extent that
medical assistance is furnished on a fee-for-service
basis--
``(i) how the State determines the
qualifications of health care providers
eligible to provide such assistance; and
``(ii) how the State determines rates of
reimbursement for providing such assistance.
``(E) Cost-sharing.--Beneficiary cost-sharing (if
any), including variations in such cost-sharing by
population group or type of service and financial
responsibilities of parents of recipients who are
children and the spouses of recipients.
``(F) Utilization incentives.--Incentives or
requirements (if any) to encourage the appropriate
utilization of services.
``(G) Support for certain hospitals.--
``(i) In general.--With respect to
hospitals described in clause (ii) located in
the State, a description of the extent to which
provisions are made for expenditures for items
and services furnished by such hospitals and
covered under the State plan.
``(ii) Hospitals described.--A hospital
described in this clause is a short-term acute
care general hospital or a children's hospital,
the low-income utilization rate of which
exceeds the lesser of--
``(I) 1 standard deviation above
the mean low-income utilization rate
for hospitals receiving payments under
a State plan in the State in which such
hospital is located, or
``(II) 1\1/4\ standard deviations
above the mean low-income utilization
rate for hospitals receiving such
payments in the 50 States and the
District of Columbia.
``(iii) Low-income utilization rate.--For
purposes of clause (ii), the term `low-income
utilization rate' means, for a hospital, a
fraction (expressed as a percentage), the
numerator of which is the hospital's number of
patient days attributable to patients who (for
such days) were eligible for medical assistance
under a State plan or were uninsured in a
period, and the denominator of which is the
total number of the hospital's patient days in
that period.
``(iv) Patient days.--For purposes of
clause (iii), the term `patient day' includes
each day in which--
``(I) an individual, including a
newborn, is an inpatient in the
hospital, whether or not the individual
is in a specialized ward and whether or
not the individual remains in the
hospital for lack of suitable placement
elsewhere; or
``(II) an individual makes one or
more outpatient visits to the hospital.
``(H) Implementation of set asides for rural health
clinics and federally-qualified health centers and
utilization of services.--How the State will implement
the funding requirements imposed under subsection (e)
and how the State will utilize facilities described in
such subsection to provide services under the State
plan.
``(2) Conditions for guarantees and relation of guarantees
to financing.--The guarantees of States required under
subsection (a) and (b) of section 1501 and subsection (d) of
this section are subject to the limitations on payment to the
States provided under section 1511 (including the provisions of
subsection (g), relating to supplemental umbrella allotments).
In submitting a plan under this title, a State voluntarily
agrees to accept payment amounts provided under such section as
full payment from the Federal Government in return for
providing for the benefits (including the guaranteed benefit
package) under this title.
``(3) Secondary payment.--Nothing in this section shall be
construed as preventing a State from denying benefits to an
individual to the extent such benefits are available to the
individual under the medicare program under title XVIII or
under another public or private health care insurance program.
``(4) Residency requirement.--In the case of an individual
who--
``(A) is described in section 1501(a)(1),
``(B) changed residence from another State to the
State, and
``(C) has resided in the State for less than 180
days,
the State may limit the benefits provided to such individual in
the guaranteed benefits package under paragraph (2) of section
1501(a) to the amount, duration, and scope of benefits
available under the State plan of the individual's previous
State of residence.
``(5) Access to services.--
``(A) Primary care services.--The State plan shall
contain provisions which ensure that an eligible low-
income individual has access to primary care services
within 30 miles of such individual's residence, or, in the case of an
eligible low-income individual residing in a rural area, within a
reasonable distance of such individual's residence, as determined by
the Secretary.
``(B) Nursing facilities.--The State plan shall
contain provisions which ensure that an eligible low-
income individual has access to nursing facility
services within 50 miles of such individual's
residence, or, in the case of an eligible low-income
individual residing in a rural area, within a
reasonable distance of such individual's residence, as
determined by the Secretary.
``(6) Services for individuals with developmental
disabilities.--The State plan shall contain provisions which
ensure--
``(A) compliance with the minimum health, safety,
and welfare standards for individuals with
developmental disabilities who receive services in an
intermediate care facility for the mentally retarded,
home and community-based health care services and
related supportive services, community supported living
arrangements, and transitional living arrangements
established under section 1558(c)(2); and
``(B) that treatment services provided for each
such individual are based on an individualized plan
which includes a goal to maintain, enhance, or support,
or prevent or minimize the deterioration of skills to
maximize the potential and independence of the
individual.
``(c) Set-Aside of Funds for the Low-Income Disabled.--
``(1) In general.--In the case of a State that has elected
the option described in section 1501(a)(1)(D)(i) for a fiscal
year, the State plan shall provide that the percentage of funds
expended under the plan for medical assistance for eligible
low-income individuals who are not elderly individuals and who
are eligible for such assistance on the basis of a disability,
including being blind, for the fiscal year is not less than the
minimum low-income-disabled percentage specified in paragraph
(2) of the total funds expended under the plan for medical
assistance for the fiscal year.
``(2) Minimum low-income-disabled percentage.--The minimum
low-income-disabled percentage specified in this paragraph for
a State is equal to 90 percent of the percentage of the
expenditures under title XIX for medical assistance in the
State during Federal fiscal year 1995 which was attributable to
expenditures for medical assistance for benefits furnished to
individuals whose coverage (at such time) was on a basis
directly related to disability status, including being blind.
``(3) Computations.--States shall calculate the minimum
percentage under paragraph (2) in a reasonable manner
consistent with reports submitted to the Secretary for the
fiscal years involved and medical assistance attributable to
the exception provided under section 1903(v)(2) shall not be
considered to be expenditures for medical assistance.
``(d) Preexisting Condition Exclusions.--Notwithstanding any other
provision of this title--
``(1) a State plan may not deny or exclude coverage of any
item or service for an eligible individual for benefits under
the State plan for such item or service on the basis of a
preexisting condition; and
``(2) if a State contracts or makes other arrangements
(through the eligible individual or through another entity)
with a capitated health care organization, insurer, or other
entity, for the provision of items or services to eligible
individuals under the State plan and the State permits such
organization, insurer, or other entity to exclude coverage of a
covered item or service on the basis of a preexisting
condition, the State shall provide, through its State plan, for
such coverage (through direct payment or otherwise) for any
such covered item or service denied or excluded on the basis of
a preexisting condition.
``(e) Set Aside of Funds for Services Provided at Federally-
Qualified Health Centers and Rural Health Clinics.--
``(1) Rural health clinic services.--A State plan shall
provide that the amount of funds expended under the plan for
medical assistance for services provided at rural health
clinics (as defined in section 1571(f)(1)), for eligible low-
income individuals for a fiscal year is not less than 95
percent of the rural health clinic base year expenditures (as
defined in paragraph (3)(A)), increased annually by the State
percentage growth factor (as defined in section 1511(g)(3)(C)).
``(2) Federally-qualified health center services.--A State
plan shall provide that the amount of funds expended under the
plan for medical assistance for services provided at federally-
qualified health centers (as defined in section 1571(f)(2)(B)),
for eligible low-income individuals for a fiscal year is not
less than 95 percent of the federally-qualified health center
base year expenditures (as defined in paragraph (3)(B)),
increased annually by the State percentage growth factor (as
defined in section 1511(g)(3)(C)).
``(3) Base year expenditures defined.--
``(A) Rural health clinic base year expenditures.--
For purposes of paragraph (1), the term `rural health
clinic base year expenditures' means, with respect to a
State, the annual expenditures under title XIX for
medical assistance in the State which were attributable
to expenditures for medical assistance for services
provided at rural health clinics (as defined in section
1571(f)(1)) located in the State, during Federal fiscal
year 1995 or 1996, whichever is greater.
``(B) Federally-qualified health center base year
expenditures.--For purposes of paragraph (2), the term
`federally-qualified health center base year
expenditures' means, with respect to a State, the
annual expenditures under title XIX for medical
assistance in the State which were attributable to
expenditures for medical assistance for services
provided at federally-qualified health centers (as
defined in section 1571(f)(2)(B)) located in the State,
during Federal fiscal year 1995 or 1996, whichever is
greater.
``(C) Notice.--For each fiscal year, the Secretary
shall provide each State with notice of the amount of
funds required under this subsection to be expended
during such fiscal year for medical assistance for
services provided at rural health clinics and
federally-qualified health centers located in the
State.
``(4) No waiver.--No waiver of the requirements of this
subsection may be granted under this title, section 1115 of
this Act, or any other provision of law.
``(f) Parity for mental health services.--
``(1) In general.--A State plan may not impose treatment
limits or financial requirements on mental illness services
which are not imposed on services for other illnesses or
diseases. The plan may require pre-admission screening, prior
authorization of services, or other mechanisms limiting
coverage of mental illness services to services that are
medically necessary.
``(2) Construction.--Except as provided in section 1508, no
person or entity may bring an action against a State based on
its failure to comply with the requirements of paragraph (1).
``SEC. 1503. LIMITATIONS ON COST-SHARING.
``(a) Guaranteed Population.--The State plan may not impose any
cost-sharing with respect to any benefit provided to an individual
described in section 1501(a), or with respect to any required medicare
cost-sharing provided for an individual described in subsection (b) of
such section, except to the extent such cost-sharing could have been
imposed against such an individual for such benefit, or such required
medicare cost-sharing, under the State plan under title XIX, or under a
waiver of the requirements of such plan granted to any State (as such
plan (or waiver) is in effect on the date of the enactment of the
Medicaid Restructuring Act of 1996).
``(b) Optional Population.--
``(1) Benefits described in the guaranteed benefit
package.--The State plan may impose cost-sharing with respect
to any benefit described in the guaranteed benefit package in
section 1501(a)(2) provided to an eligible low-income
individual who is not described in subsection (a) or (b) of
section 1501, but only to the extent such cost-sharing could
have been imposed against such an individual for such benefit
under the State plan under title XIX, or under a waiver of the
requirements of such plan granted to any State (as such plan
(or waiver) is in effect on the date of the enactment of the
Medicaid Restructuring Act of 1996).
``(2) Other benefits.--The State plan may impose cost-
sharing with respect to any benefit not described in the
guaranteed benefit package described in section 1501(a)(2)
provided to an eligible low-income individual who is not
described in subsection (a) or (b) of section 1501. Such cost-
sharing may be imposed in a manner that reflects such economic
factors, employment status, and family size with respect to
each such individual as the State determines appropriate.
``(c) Certain Cost-Sharing Permitted.--Nothing in this section
shall be construed as preventing a State plan (consistent with
subsections (a) and (b))--
``(1) from imposing cost-sharing to discourage the
inappropriate use of emergency medical services delivered
through a hospital emergency room, a medical transportation
provider, or otherwise,
``(2) from imposing premiums and cost-sharing
differentially in order to encourage the use of primary and
preventive care and discourage unnecessary or less economical
care,
``(3) from scaling cost-sharing in a manner that reflects
economic factors, employment status, and family size, or
``(4) from scaling cost-sharing based on the availability
to the individual or family of other health insurance coverage.
``(d) Prohibition on Balance Billing.--An individual eligible for
benefits for items and services under the State plan who is furnished
such an items or service by a provider under the plan may not be billed
by the provider for such item or service, other than such amount of
cost-sharing as is permitted with this section.
``(e) No Denial of Services Due to An Inability To Pay Cost-
Sharing.--
``(1) In general.--No provider of items or services under
the State plan may refuse to provide such items or services to
an individual eligible for such items or services based on the
individual's inability to pay a cost-sharing charge.
``(2) Individual remains liable.--An individual who is
subject to a cost-sharing charge for an item or service under
this section and who receives such item or service despite such
individual's inability to pay such charge, shall remain liable
for such charge.
``(f) Public Notice.--If any charges are imposed under the State
plan for cost-sharing, such cost-sharing shall be pursuant to a public
cost-sharing schedule.
``(g) Cost-Sharing Defined.--In this section, the term `cost-
sharing' includes copayments, deductibles, coinsurance, enrollment
fees, premiums, and other charges for the provision of health care
services.
``SEC. 1504. REQUIREMENTS RELATING TO MEDICAL ASSISTANCE PROVIDED
THROUGH MANAGED CARE ARRANGEMENTS.
``(a) Solvency Standards for Capitated Health Care Organizations.--
``(1) In general.--A State may not contract with a
capitated health care organization, as defined in subsection
(e)(1), for the provision of medical assistance under a State
plan under which the organization is--
``(A) at full financial risk, as defined by the
State, unless the organization meets solvency standards
established by the State for private health maintenance
organizations or is described in paragraph (4) and
meets other solvency standards established by the
State, so long as such standards are adequate to
protect against the risk of insolvency, or
``(B) is not at such risk, unless the organization
meets solvency standards that are established under the
State plan.
``(2) Treatment of public entities.--Paragraph (1) shall
not apply to an organization that is a public entity or if the
solvency of such organization is guaranteed by the State.
``(3) Transition.--In the case of a capitated health care
organization that as of the date of the enactment of this title
has entered into a contract with a State for the provision of
medical assistance under title XIX under which the organization
assumes full financial risk and is receiving capitation
payments, paragraph (1) shall not apply to such organization
until 3 years after the date of the enactment of this title.
``(4) Organization described.--An organization described in
this paragraph is a capitated health care organization which is
(or is controlled by) one or more Federally-qualified health
centers or rural health clinics. For purposes of this
paragraph, the term `control' means the possession, whether
direct or indirect, of the power to direct or cause the
direction of the management and policies of a capitated health
care organization through membership, board representation, or
an ownership interest equal to or greater than 50.1 percent.
``(b) Description of Process for Developing Capitation Payment
Rates.--
``(1) In general.--If a State contracts (or intends to
contract) with a capitated health care organization (as defined
in subsection (e)(1)) under which the State makes a capitation
payment (as defined in subsection (e)(2)) to the organization
for providing or arranging for the provision of medical
assistance under the State plan for a group of services,
including at least inpatient hospital services and physicians'
services, the plan shall include a description of the
following:
``(A) Use of actuarial science.--The extent and
manner in which the State uses actuarial science--
``(i) to analyze and project health care
expenditures and utilization for individuals
enrolled (or to be enrolled) in such an
organization under the State plan; and
``(ii) to develop capitation payment rates,
including a brief description of the general
methodologies used by actuaries.
``(B) Qualifications of organizations.--The general
qualifications, including any accreditation, State
licensure or certification, or provider network
standards, required by the State for participation of
capitated health care organizations under the State
plan.
``(C) Dissemination process.--The process used by
the State under paragraph (2) and otherwise to
disseminate, before entering into contracts with
capitated health care organizations, actuarial
information to such organizations on the historical
fee-for-service costs (or, if not available, other
recent financial data associated with providing covered
services) and utilization associated with individuals
described in subparagraph (A)(i).
``(2) Public notice and comment.--Under the State plan the
State shall provide a process for providing, before the
beginning of each contract year--
``(A) public notice of--
``(i) the amounts of the capitation
payments (if any) made under the plan for the
contract year preceding the public notice, and
``(ii)(I) the information described under
paragraph (1)(A) with respect to capitation
payments for the contract year involved, or
(II) amounts of the capitation payments the
State expects to make for the contract year
involved,
unless such information is designated as proprietary
and not subject to public disclosure under State law,
and
``(B) an opportunity for receiving public comment
on the amounts and information for which notice is
provided under subparagraph (A).
``(c) Quality Assurance Standards.--
``(1) Choice of provider.--If a State requires an
individual eligible for medical assistance under the State plan
under this title to enroll with a capitated health care
organization or with a primary care case management provider as
a condition of receiving such assistance, the State shall
permit such individual to choose a provider of such
assistance--
``(A) from among not less than 2 capitated health
care organizations; or
``(B) from either a capitated health care
organization or a primary care case management
provider.
``(2) No required enrollment for special needs
individuals.--
``(A) In general.--A State may not require an
individual who is a special needs individual (as
described in subparagraph (B)) to enroll with a
capitated health care organization as a condition of
receiving medical assistance under the State plan under
this title.
``(B) Special needs individuals described.--In this
paragraph, a `special needs individual' means any of
the following:
``(i) Special needs child.--An individual
who is under 19 years of age who--
``(I) is eligible for supplemental
security income under title XVI;
``(II) is described under section
501(a)(1)(D);
``(III) is a child described in
section 1571(b)(1)(B); or
``(IV) is in foster care or is
otherwise in an out-of-home placement.
``(ii) Homeless individuals.--An individual
who is homeless (without regard to whether the
individual is a member of a family),
including--
``(I) an individual whose primary
residence during the night is a
supervised public or private facility
that provides temporary living
accommodations; or
``(II) an individual who is a
resident in transitional housing.
``(iii) Migrant agricultural workers.--A
migratory agricultural worker or a seasonal
agricultural worker (as such terms are defined
in section 329 of the Public Health Service
Act), or the spouse or dependent of such a
worker.
``(3) Default enrollment.--
``(A) Establishment of process.--A State may
establish a default enrollment process under which any
individual who does not enroll with a capitated health
care organization during the enrollment period
specified by the State shall be enrolled by the State
with such an organization in accordance with such
process.
``(B) Limitation.--A State may not enroll an
individual using the default enrollment process
established by the State with a capitated health
care organization which is not in compliance with the requirements of
this section.
``(4) Availability of services.--A State may not contract
with a capitated health care organization to provide medical
assistance under the State plan under this title unless such
organization delivers medical assistance to an enrollee with
such organization under this title in a manner which makes such
assistance, when medically necessary, available and accessible
24 hours a day and 7 days a week.
``(5) Adequate number of providers.--A State may not
contract with a capitated health care organization to provide
medical assistance under the State plan under this title unless
such organization contracts with a reasonable number of primary
care and specialty care providers to meet the health care needs
of enrollees with such organizations under this title.
``(6) Prohibitions.--
``(A) In general.--A State shall prohibit a
capitated health care organization that the State
enters into a contract with to provide medical
assistance under a State plan under this title from--
``(i) discriminating on the basis of health
status or anticipated need for services in the
enrollment, reenrollment, or disenrollment of
such an individual;
``(ii) obtaining the enrollment of such an
individual through fraudulent or coercive
means;
``(iii) distributing marketing materials
within the State that contain false or
materially misleading information; and
``(iv) having--
``(I) a person described in
subparagraph (B) as a director,
officer, partner, or person with
beneficial ownership of more than 5
percent of the organization's equity;
or
``(II) an employment, consulting,
or other agreement with a person
described in subparagraph (B) for the
provision of items and services that
are significant and material to the
organization's obligations under its
contract with the State.
``(B) Persons described.--A person is described in
this subparagraph if such person--
``(i) is debarred or suspended by the
Federal Government, pursuant to the Federal
acquisition regulation, from Government
contracting and subcontracting;
``(ii) is an affiliate (within the meaning
of the Federal acquisition regulation) of a
person described in clause (i); or
``(iii) is excluded from participation in
any program under title XVIII or any State
health care program, as defined in section
1128(h).
``(7) Audits, inspections, and external reviews.--
``(A) By the state.--A State shall require a
capitated health care organization that the State
enters into a contract with to provide medical
assistance under a State plan under this title to
provide such financial information as the State may
specify and to allow the State to audit and inspect the
records of the organization to verify such information.
``(B) Independent, external reviews.--A State may
not enter into a contract with a capitated health care
organization to provide medical assistance under the
State plan under this title unless the organization has
a contract with a utilization and quality control
organization under part B of title XI, an entity which
meets the requirements of section 1152, as determined
by the Secretary, or a private accreditation body, to
conduct, on an annual basis, an independent, external
review of the quality of the services provided by the organization.
``(8) Establishment of sanctions for noncompliance with
standards.--A State shall establish sanctions, including
intermediate sanctions and civil money penalties, which may be
imposed against a capitated health care organization with a
contract to provide medical assistance under the State plan
under this title for--
``(A) noncompliance with the requirements of this
subsection; or
``(B) failure to provide medically necessary
services required under such contract.
``(d) Authority to Contract with Primary Care Case Management
Providers.--
``(1) In general.--A State may contract with a primary care
case management provider (as defined under subsection (e)(3))
for the provision of case management services to an eligible
low-income individual under the State plan.
``(2) Default enrollment.--If a State establishes a default
enrollment process under subsection (c)(3), the State may
enroll an individual who does not enroll with a capitated
health care organization or with a primary care case management
provider during the enrollment period specified by the State
with a primary care case management provider using such
process.
``(e) Definitions.--In this title:
``(1) Capitated health care organization.--The term
`capitated health care organization' means a health maintenance
organization or any other entity (including a health insuring
organization, managed care organization, prepaid health plan,
integrated service network, or similar entity) which under
State law is permitted to accept capitation payments for
providing (or arranging for the provision of) a group of items
and services including at least inpatient hospital services and
physicians' services.
``(2) Capitation payment.--The term `capitation payment'
means, with respect to payment, payment on a prepaid capitation
basis or any other risk basis to an entity for the entity's
provision (or arranging for the provision) of a group of items
and services, including at least inpatient hospital services
and physicians' services.
``(3) Primary care case management provider.--The term
`primary care case management provider' means a health care
provider that--
``(A) is a physician, group of physicians, a
Federally-qualified health center, a rural health
clinic, or an entity employing or having other
arrangements with physicians that provides or arranges
for the provision of one or more items and services to
individuals eligible for medical assistance under the
State plan under this title;
``(B) receives a fixed fee per enrollee for a
specified period for providing case management services
(including approving and arranging for the provision of
health care items and services on a referral basis) to
enrolled individuals; and
``(C) is not an entity that is at full financial
risk, as defined by the State.
``SEC. 1505. PREVENTING SPOUSAL IMPOVERISHMENT.
``(a) Special Treatment for Institutionalized Spouses.--
``(1) Supersedes other provisions.--In determining the
eligibility for medical assistance of an institutionalized
spouse (as defined in subsection (h)(1)), the provisions of
this section supersede any other provision of this title which
is inconsistent with them.
``(2) Does not affect certain determinations.--Except as
this section specifically provides, this section does not apply
to--
``(A) the determination of what constitutes income
or resources, or
``(B) the methodology and standards for determining
and evaluating income and resources.
``(3) No application in commonwealths and territories.--
This section shall only apply to a State that is one of the 50
States or the District of Columbia.
``(b) Rules for Treatment of Income.--
``(1) Separate treatment of income.--During any month in
which an institutionalized spouse is in the institution, except
as provided in paragraph (2), no income of the community spouse
shall be deemed available to the institutionalized spouse.
``(2) Attribution of income.--In determining the income of
an institutionalized spouse or community spouse for purposes of
the post-eligibility income determination described in
subsection (d), except as otherwise provided in this section
and regardless of any State laws relating to community property
or the division of marital property, the following rules apply:
``(A) Non-trust property.--Subject to subparagraphs
(C) and (D), in the case of income not from a trust,
unless the instrument providing the income otherwise
specifically provides--
``(i) if payment of income is made solely
in the name of the institutionalized spouse or
the community spouse, the income shall be
considered available only to that respective
spouse,
``(ii) if payment of income is made in the
names of the institutionalized spouse and the
community spouse, \1/2\ of the income shall be
considered available to each of them, and
``(iii) if payment of income is made in the
names of the institutionalized spouse or the
community spouse, or both, and to another
person or persons, the income shall be
considered available to each spouse in
proportion to the spouse's interest (or, if
payment is made with respect to both spouses
and no such interest is specified, \1/2\ of the
joint interest shall be considered available to
each spouse).
``(B) Trust property.--In the case of a trust--
``(i) except as provided in clause (ii),
income shall be attributed in accordance with
the provisions of this title; and
``(ii) income shall be considered available
to each spouse as provided in the trust, or, in
the absence of a specific provision in the
trust--
``(I) if payment of income is made
solely to the institutionalized spouse
or the community spouse, the income
shall be considered available only to
that respective spouse,
``(II) if payment of income is made
to both the institutionalized spouse
and the community spouse, \1/2\ of the
income shall be considered available to
each of them, and
``(III) if payment of income is
made to the institutionalized spouse or
the community spouse, or both, and to
another person or persons, the income
shall be considered available to each
spouse in proportion to the spouse's
interest (or, if payment is made with
respect to both spouses and no such
interest is specified, \1/2\ of the
joint interest shall be considered
available to each spouse).
``(C) Property with no instrument.--In the case of
income not from a trust in which there is no instrument
establishing ownership, subject to subparagraph (D),
\1/2\ of the income shall be considered to be available
to the institutionalized spouse and \1/2\ to the
community spouse.
``(D) Rebutting ownership.--The rules of
subparagraphs (A) and (C) are superseded to the extent
that an institutionalized spouse can establish, by a
preponderance of the evidence, that the
ownership interests in income are other than as provided under such
subparagraphs.
``(c) Rules for Treatment of Resources.--
``(1) Computation of spousal share at time of
institutionalization.--
``(A) Total joint resources.--There shall be
computed (as of the beginning of the first continuous
period of institutionalization of the institutionalized
spouse)--
``(i) the total value of the resources to
the extent either the institutionalized spouse
or the community spouse has an ownership
interest, and
``(ii) a spousal share which is equal to
\1/2\ of such total value.
``(B) Assessment.--At the request of an
institutionalized spouse or community spouse, at the
beginning of the first continuous period of
institutionalization of the institutionalized spouse
and upon the receipt of relevant documentation of
resources, the State shall promptly assess and document
the total value described in subparagraph (A)(i) and
shall provide a copy of such assessment and
documentation to each spouse and shall retain a copy of
the assessment for use under this section. If the
request is not part of an application for medical
assistance under this title, the State may, at its
option as a condition of providing the assessment,
require payment of a fee not exceeding the reasonable
expenses of providing and documenting the assessment.
At the time of providing the copy of the assessment,
the State shall include a notice indicating that the
spouse will have a right to a fair hearing under
subsection (e)(2).
``(2) Attribution of resources at time of initial
eligibility determination.--In determining the resources of an
institutionalized spouse at the time of application for medical
assistance under this title, regardless of any State laws
relating to community property or the division of marital
property--
``(A) except as provided in subparagraph (B), all
the resources held by either the institutionalized
spouse, community spouse, or both, shall be considered
to be available to the institutionalized spouse, and
``(B) resources shall be considered to be available
to an institutionalized spouse, but only to the extent
that the amount of such resources exceeds the amount
computed under subsection (f)(2)(A) (as of the time of
application for medical assistance).
``(3) Assignment of support rights.--The institutionalized
spouse shall not be ineligible by reason of resources
determined under paragraph (2) to be available for the cost of
care where--
``(A) the institutionalized spouse has assigned to
the State any rights to support from the community
spouse,
``(B) the institutionalized spouse lacks the
ability to execute an assignment due to physical or
mental impairment but the State has the right to bring
a support proceeding against a community spouse without
such assignment, or
``(C) the State determines that denial of
eligibility would work an undue hardship.
``(4) Separate treatment of resources after eligibility for
medical assistance established.--During the continuous period
in which an institutionalized spouse is in an institution and
after the month in which an institutionalized spouse is
determined to be eligible for medical assistance under this
title, no resources of the community spouse shall be deemed
available to the institutionalized spouse.
``(5) Resources defined.--In this section, the term
`resources' does not include--
``(A) resources excluded under subsection (a) or
(d) of section 1613, and
``(B) resources that would be excluded under
section 1613(a)(2)(A) but for the limitation on total
value described in such section.
``(d) Protecting Income for Community Spouse.--
``(1) Allowances to be offset from income of
institutionalized spouse.--After an institutionalized spouse is
determined or redetermined to be eligible for medical
assistance, in determining the amount of the spouse's income
that is to be applied monthly to payment for the costs of care
in the institution, there shall be deducted from the spouse's
monthly income the following amounts in the following order:
``(A) A personal needs allowance (described in
paragraph (2)(A)), in an amount not less than the
amount specified in paragraph (2)(C).
``(B) A community spouse monthly income allowance
(as defined in paragraph (3)), but only to the extent
income of the institutionalized spouse is made
available to (or for the benefit of) the community
spouse.
``(C) A family allowance, for each family member,
equal to at least \1/3\ of the amount by which the
amount described in paragraph (4)(A)(i) exceeds the
amount of the monthly income of that family member.
``(D) Amounts for incurred expenses for medical or
remedial care for the institutionalized spouse as
provided under paragraph (6).
In subparagraph (C), the term `family member' only includes
minor or dependent children, dependent parents, or dependent
siblings of the institutionalized or community spouse who are
residing with the community spouse.
``(2) Personal needs allowance.--
``(A) In general.--The State plan must provide
that, in the case of an institutionalized individual or
couple described in subparagraph (B), in determining
the amount of the individual's or couple's income to be
applied monthly to payment for the cost of care in an
institution, there shall be deducted from the monthly
income (in addition to other allowances otherwise
provided under the plan) a monthly personal needs
allowance--
``(i) which is reasonable in amount for
clothing and other personal needs of the
individual (or couple) while in an institution,
and
``(ii) which is not less (and may be
greater) than the minimum monthly personal
needs allowance described in subparagraph (C).
``(B) Institutionalized individual or couple
defined.--In this paragraph, the term
`institutionalized individual or couple' means an
individual or married couple--
``(i) who is an inpatient (or who are
inpatients) in a medical institution or nursing
facility for which payments are made under this
title throughout a month, and
``(ii) who is or are determined to be
eligible for medical assistance under the State
plan.
``(C) Minimum allowance.--The minimum monthly
personal needs allowance described in this subparagraph
is $40 for an institutionalized individual and $80 for
an institutionalized couple (if both are aged, blind,
or disabled, and their incomes are considered available
to each other in determining eligibility).
``(3) Community spouse monthly income allowance defined.--
``(A) In general.--In this section (except as
provided in subparagraph (B)), the community spouse
monthly income allowance for a community spouse is an
amount by which--
``(i) except as provided in subsection (e),
the minimum monthly maintenance needs allowance
(established under and in accordance with
paragraph (4)) for the spouse, exceeds
``(ii) the amount of monthly income
otherwise available to the community spouse
(determined without regard to such an
allowance).
``(B) Court ordered support.--If a court has
entered an order against an institutionalized spouse
for monthly income for the support of the community
spouse, the community spouse monthly income allowance
for the spouse shall be not less than the amount of the
monthly income so ordered.
``(4) Establishment of minimum monthly maintenance needs
allowance.--
``(A) In general.--Each State shall establish a
minimum monthly maintenance needs allowance for each
community spouse which, subject to subparagraph (B), is
equal to or exceeds--
``(i) 150 percent of \1/12\ of the poverty
line applicable to a family unit of 2 members,
plus
``(ii) an excess shelter allowance (as
defined in paragraph (4)).
A revision of the poverty line referred to in clause
(i) shall apply to medical assistance furnished during
and after the second calendar quarter that begins after
the date of publication of the revision.
``(B) Cap on minimum monthly maintenance needs
allowance.--The minimum monthly maintenance needs
allowance established under subparagraph (A) may not
exceed $1,500 (subject to adjustment under subsections
(e) and (g)).
``(5) Excess shelter allowance defined.--In paragraph
(4)(A)(ii), the term `excess shelter allowance' means, for a
community spouse, the amount by which the sum of--
``(A) the spouse's expenses for rent or mortgage
payment (including principal and interest), taxes and
insurance and, in the case of a condominium or
cooperative, required maintenance charge, for the
community spouse's principal residence, and
``(B) the standard utility allowance (used by the
State under section 5(e) of the Food Stamp Act of 1977)
or, if the State does not use such an allowance, the
spouse's actual utility expenses,
exceeds 30 percent of the amount described in paragraph
(4)(A)(i), except that, in the case of a condominium or
cooperative, for which a maintenance charge is included under
subparagraph (A), any allowance under subparagraph (B) shall be
reduced to the extent the maintenance charge includes utility
expenses.
``(6) Treatment of incurred expenses.--With respect to the
post-eligibility treatment of income under this section, there
shall be disregarded reparation payments made by the Federal
Republic of Germany and, there shall be taken into account
amounts for incurred expenses for medical or remedial care that
are not subject to payment by a third party, including--
``(A) medicare and other health insurance premiums,
deductibles, or coinsurance, and
``(B) necessary medical or remedial care recognized
under State law but not covered under the State plan
under this title, subject to reasonable limits the
State may establish on the amount of these expenses.
``(e) Notice and Fair Hearing.--
``(1) Notice.--Upon--
``(A) a determination of eligibility for medical
assistance of an institutionalized spouse, or
``(B) a request by either the institutionalized
spouse, or the community spouse, or a representative
acting on behalf of either spouse,
each State shall notify both spouses (in the case described in
subparagraph (A)) or the spouse making the request (in the case
described in subparagraph (B)) of the amount of the community
spouse monthly income allowance (described in subsection
(d)(1)(B)), of the amount of any family allowances (described
in subsection (d)(1)(C)), of the method for computing the
amount of the community spouse resources allowance permitted
under subsection (f), and of the spouse's right to a fair hearing under
the State plan respecting ownership or availability of income or
resources, and the determination of the community spouse monthly income
or resource allowance.
``(2) Fair hearing.--
``(A) In general.--If either the institutionalized
spouse or the community spouse is dissatisfied with a
determination of--
``(i) the community spouse monthly income
allowance;
``(ii) the amount of monthly income
otherwise available to the community spouse (as
applied under subsection (d)(3)(A)(ii));
``(iii) the computation of the spousal
share of resources under subsection (c)(1);
``(iv) the attribution of resources under
subsection (c)(2); or
``(v) the determination of the community
spouse resource allowance (as defined in
subsection (f)(2));
such spouse is entitled to a fair hearing under the
State plan with respect to such determination if an
application for benefits under this title has been made
on behalf of the institutionalized spouse. Any such
hearing respecting the determination of the community
spouse resource allowance shall be held within 30 days
of the date of the request for the hearing.
``(B) Revision of minimum monthly maintenance needs
allowance.--If either such spouse establishes that the
community spouse needs income, above the level
otherwise provided by the minimum monthly maintenance
needs allowance, due to exceptional circumstances
resulting in significant financial duress, there shall
be substituted, for the minimum monthly maintenance
needs allowance in subsection (d)(3)(A)(i), an amount
adequate to provide such additional income as is
necessary.
``(C) Revision of community spouse resource
allowance.--If either such spouse establishes that the
community spouse resource allowance (in relation to the
amount of income generated by such an allowance) is
inadequate to raise the community spouse's income to
the minimum monthly maintenance needs allowance, there
shall be substituted, for the community spouse resource
allowance under subsection (f)(2), an amount adequate
to provide such a minimum monthly maintenance needs
allowance.
``(f) Permitting Transfer of Resources to Community Spouse.--
``(1) In general.--An institutionalized spouse may, without
regard to any other provision of the State plan to the
contrary, transfer an amount equal to the community spouse
resource allowance (as defined in paragraph (2)), but only to
the extent the resources of the institutionalized spouse are
transferred to, or for the sole benefit of, the community
spouse. The transfer under the preceding sentence shall be made
as soon as practicable after the date of the initial
determination of eligibility, taking into account such time as
may be necessary to obtain a court order under paragraph (3).
``(2) Community spouse resource allowance defined.--In
paragraph (1), the `community spouse resource allowance' for a
community spouse is an amount (if any) by which--
``(A) the greatest of--
``(i) $12,000 (subject to adjustment under
subsection (g)), or, if greater (but not to
exceed the amount specified in clause (ii)(II))
an amount specified under the State plan,
``(ii) the lesser of (I) the spousal share
computed under subsection (c)(1), or (II)
$60,000 (subject to adjustment under subsection
(g)),
``(iii) the amount established under
subsection (e)(2), or
``(iv) the amount transferred under a court
order under paragraph (3);
exceeds
``(B) the amount of the resources otherwise
available to the community spouse (determined without
regard to such an allowance).
``(3) Transfers under court orders.--If a court has entered
an order against an institutionalized spouse for the support of
the community spouse, any provisions under the plan relating to
transfers or disposals of assets for less than fair market
value shall not apply to amounts of resources transferred
pursuant to such order for the support of the spouse or a
family member (as defined in subsection (d)(1)).
``(g) Indexing Dollar Amounts.--For services furnished during a
calendar year after 1989, the dollar amounts specified in subsections
(d)(3)(C), (f)(2)(A)(i), and (f)(2)(A)(ii)(II) shall be increased by
the same percentage as the percentage increase in the consumer price
index for all urban consumers (all items; U.S. city average) between
September 1988 and the September before the calendar year involved.
``(h) Definitions.--In this section:
``(1) Institutionalized spouse.--The term
`institutionalized spouse' means an individual--
``(A)(i) who is in a medical institution or nursing
facility, or
``(ii) at the option of the State (I) who would be
eligible under the State plan under this title if such
individual was in a medical institution, (II) with
respect to whom there has been a determination that but
for the provision of home or community-based services
such individual would require the level of care
provided in a hospital, nursing facility or
intermediate care facility for the mentally retarded
the cost of which could be reimbursed under the plan,
and (III) who will receive home or community-based
services pursuant the plan; and
``(B) is married to a spouse who is not in a
medical institution or nursing facility;
but does not include any such individual who is not likely to
meet the requirements of subparagraph (A) for at least 30
consecutive days.
``(2) Community spouse.--The term `community spouse' means
the spouse of an institutionalized spouse.
``SEC. 1506. PREVENTING FAMILY IMPOVERISHMENT.
``(a) Responsibilities for Long-term Care Generally.--A State plan
may not--
``(1) require an adult child or any other individual (other
than the applicant or recipient of services or the spouse of
such an applicant or recipient) to contribute to the cost of
covered nursing facility services and other long-term care
services under the plan; and
``(2) take into account with respect to such services the
financial responsibility of any individual for any applicant or
recipient of assistance under the plan unless such applicant or
recipient is such individual's spouse or such individual's
child who is under age 21 or (with respect to States eligible
to participate in the State program established under title
XVI), is blind or permanently and totally disabled, or is blind
or disabled as defined in section 1614 (with respect to States
which are not eligible to participate in such program).
``(b) Limitations on Liens.--
``(1) In general.--No lien may be imposed against the
property of any individual prior to the individual's death on
account of medical assistance paid or to be paid on the
individual's behalf under a State plan, except--
``(A) pursuant to the judgment of a court on
account of benefits incorrectly paid on behalf of such
individual; or
``(B) in the case of the real property of an
individual--
``(i) who is an inpatient in a nursing
facility, intermediate care facility for the
mentally retarded, or other medical
institution, if such individual is required, as
a condition of receiving services in such
institution under the plan, to spend for costs
of medical care all but a minimal amount of the
individual's income required for personal
needs, and
``(ii) with respect to whom the State
determines, after notice and opportunity for a
hearing (in accordance with procedures
established by the State), that the individual
cannot reasonably be expected to be discharged
from the medical institution and to return
home,
except as provided in paragraph (2).
``(2) Exception.--No lien may be imposed under paragraph
(1)(B) on such individual's home if--
``(A) the spouse of such individual,
``(B) such individual's child who is under age 21,
or (with respect to States eligible to participate in
the State program established under title XVI) is blind
or permanently and totally disabled, or (with respect
to States which are not eligible to participate in such
program) is blind or disabled as defined in section
1614, or
``(C) a sibling of such individual (who has an
equity interest in such home and who was residing in
such individual's home for a period of at least one
year immediately before the date of the individual's
admission to the medical institution),
is lawfully residing in such home.
``(3) Dissolution upon return home.--Any lien imposed with
respect to an individual pursuant to paragraph (1)(B) shall
dissolve upon that individual's discharge from the medical
institution and return home.
``SEC. 1507. STATE FLEXIBILITY.
``(a) State Flexibility in Benefits, Provider Payments,
Geographical Coverage Area, and Selection of Providers.--The State
under its State plan may--
``(1) specify those items and services for which medical
assistance is provided (consistent with guarantees under
subsections (a) and (b) of section 1501), the providers which
may provide such items and services, and the amount and
frequency of providing such items and services;
``(2) specify the extent to which the same medical
assistance will be provided in all geographical areas or
political subdivisions of the State, so long as medical
assistance is made available in all such areas or subdivisions;
``(3) specify the extent to which the medical assistance
made available to any individual eligible for medical
assistance is comparable in amount, duration, or scope to the
medical assistance made available to any other such individual;
and
``(4) specify the extent to which an individual eligible
for medical assistance with respect to an item or service may
choose to obtain such assistance from any institution, agency,
or person qualified to provide the item or service.
``(b) State Flexibility With Respect to Managed Care.--Nothing in
this title shall be construed--
``(1) to limit a State's ability to contract with, on a
capitated basis or otherwise, health care plans or individual
health care providers for the provision or arrangement of
medical assistance,
``(2) to limit a State's ability to contract with health
care plans or other entities for case management services or
for coordination of medical assistance, or
``(3) to restrict a State from establishing capitation
rates on the basis of competition among health care plans or
negotiations between the State and one or more health care
plans.
``SEC. 1508. PRIVATE RIGHTS OF ACTION.
``(a) Limitation on Federal Causes of Action.--Except as provided
in this section, no person or entity may bring an action against a
State in Federal court based on its failure to comply with any
requirement of this title.
``(b) State Causes of Action.--
``(1) Administrative and judicial procedures.--A State plan
shall provide for--
``(A) an administrative procedure whereby an
individual alleging a denial of benefits under the
State plan may receive a hearing regarding such denial,
and
``(B) judicial review, through a private right of
action in a State court by an individual or class of
individuals, regarding such a denial, but a State may
require exhaustion of administrative remedies before
such an action may be taken.
The administrative procedure under subparagraph (A) shall
include impartial decision makers, a fair process, and timely
decisions.
``(2) Writ of certiorari.--An individual or class may file
a petition for certiorari before the Supreme Court of the
United States in a case of a denial of benefits under the State
plan to review a determination of the highest court of a State
regarding such denial.
(3) Construction.--Nothing in this subsection shall be
construed as requiring a State to provide a private right of
action in State court by a provider, health plan, or a class of
providers or health plans.
``(c) Secretarial Relief.--
``(1) In general.--The Secretary may bring an action in
Federal court against a State and on behalf of an individual or
class of individuals in order to assure that a State provides
benefits to individuals and classes of individuals as
guaranteed under subsection (a) or (b) of section 1501 under
its State plan.
``(2) No private right.--No action may be brought in any
court against the Secretary based on the Secretary's bringing,
or failure to bring, an action under paragraph (1).
``(3) Construction.--Nothing in this title shall be
construed as authorizing the Secretary to bring an action on
behalf of a provider, health plan, or a class of providers or
health plans.
``Part B--Payments to States
``SEC. 1511. ALLOTMENT OF FUNDS AMONG STATES.
``(a) Allotments.--
``(1) Computation.--The Secretary shall provide for the
computation of State obligation and outlay allotments in
accordance with this section for each fiscal year beginning
with fiscal year 1997. Nothing in this part shall be construed
as authorizing payment under this part to any State for fiscal
year 1996.
``(2) Limitation on obligations.--
``(A) In general.--Subject to the succeeding
provisions of this paragraph, the Secretary shall not
enter into obligations with any State under this title
for a fiscal year in excess of the sum of the following
allotments for the State for the fiscal year:
``(i) Base obligation allotment.--The
amount of the base obligation allotment for
that State for the fiscal year under paragraph
(4).
``(ii) Supplemental allotment for certain
aliens.--The amount of any supplemental
allotment for that State for the fiscal year
under subsection (f).
``(iii) Supplemental per beneficiary
umbrella allotment.--The amount of any
supplemental per beneficiary umbrella allotment
for that State for the fiscal year under
subsection (g).
The sum of the base obligation allotments for all States in any
fiscal year (excluding amounts carried over under subparagraph
(B) and excluding changes in allotments effected under
paragraph (4)(D)) shall not exceed the aggregate limit on new
base obligation authority specified in paragraph (3) for that fiscal
year.
``(B) Adjustments.--
``(i) Carryover of base allotment
permitted.--Subject to clauses (ii), if the
amount of obligations entered into under this
part with a State for quarters in a fiscal year
is less than the amount of the obligation
allotment under this section to the State for
the fiscal year, the amount of the difference
(less any amount computed under clause (iii))
shall be added to the amount of the State
obligation allotment otherwise provided under
this section for the succeeding fiscal year.
``(ii) No carryover permitted for states
receiving supplemental umbrella allotments.--
Clause (i) shall not apply, insofar as it
permits a carryover for a State from a
particular year to the next year, if in the
particular year the State receives a
supplemental umbrella allotment under
subsection (g).
``(iii) No carryover of alien supplemental
allotment.--The amount of any carryover under
clause (i) from a fiscal year shall be reduced
by the amount (if any) by which the amount of
the outlays for expenditures described in
subsection (f) for the fiscal year is less than
the amount of any supplemental allotment
provided under the respective subsection for
the State and fiscal year involved.
``(C) Reduction for new obligations under title xix
in fiscal year 1997.--The amount of the base obligation
allotment otherwise provided under this section for
fiscal year 1997 for a State shall be reduced by the
amount of the obligations entered into with respect to
the State under section 1903(a) during such fiscal
year.
``(D) No effect on prior year obligations.--
Subparagraph (A) shall not apply to or affect
obligations for a fiscal year prior to fiscal year
1997.
``(E) Obligation.--For purposes of this section,
the Secretary's establishment of an estimate under
section 1512(b) of the amount a State is entitled to
receive for a quarter (taking into account any
adjustments described in such subsection) beginning
during or after fiscal year 1997 shall be treated as
the obligation of such amount for the State as of the
first day of the quarter.
``(F) Relation to guarantees.--The Federal
Government's obligations for payments under this title
are limited as provided under subparagraph (A) and are
only subject to adjustment based on any guarantee
provided under section 1501 as provided under
subsection (g).
``(3) Aggregate limit on new base obligation authority.--
``(A) In general.--For purposes of this subsection,
subject to subparagraph (C), the `aggregate limit on
new base obligation authority', for a fiscal year, is
the base pool amount under subsection (b) for the
fiscal year, divided by the payout adjustment factor
(described in subparagraph (B)) for the fiscal year.
``(B) Payout adjustment factor.--For purposes of
this subsection, the `payout adjustment factor'--
``(i) for fiscal year 1997 is 0.950,
``(ii) for fiscal year 1998 is 0.986, and
``(iii) for a subsequent fiscal year is
0.998.
``(C) Transitional adjustment for pre-fiscal year
1997-obligation outlays.--In order to account for pre-
fiscal year 1997-obligation outlays described in
paragraph (4)(C)(iv), in determining the aggregate
limit on new obligation authority under subparagraph
(A) for fiscal year 1997, the pool amount for such fiscal year is equal
to--
``(i) the pool amount for such year,
reduced by
``(ii) $12,000,000,000.
``(4) Base obligation allotments.--
``(A) General rule for 50 states and the district
of columbia.--Except as provided in this paragraph, the
`base obligation allotment' for any of the 50 States or
the District of Columbia for a fiscal year (beginning
with fiscal year 1997) is an amount that bears the same
ratio to the base outlay allotment under subsection
(c)(2) for such State or District (not taking into
account any adjustment due to an election under
subsection (c)(4)) for the fiscal year as the ratio
of--
``(i) the aggregate limit on new base
obligation authority (less the total of the
obligation allotments under subparagraph (B))
for the fiscal year, to
``(ii) the base pool amount (less the sum
of the base outlay allotments for the
territories) for such fiscal year.
``(B) Territories.--The base obligation allotment
for each of the Commonwealths and territories for a
fiscal year is the base outlay allotment for such
Commonwealth or Territory (as determined under
subsection (c)(5)) for the fiscal year divided by the
payout adjustment factor for the fiscal year (as
defined in paragraph (3)(B)).
``(C) Transitional rule for fiscal year 1997.--
``(i) In general.--The obligation amount
for fiscal year 1997 for any State (including
the District of Columbia, a Commonwealth, or
Territory) is determined according to the
formula: A=(B-C)/D, where--
``(I) `A' is the base obligation
amount for such State,
``(II) `B' is the base outlay
allotment of such State for fiscal year
1997, as determined under subsection
(c),
``(III) `C' is the amount of the
pre-enactment-obligation outlays (as
established for such State under clause
(ii)), and
``(IV) `D' is the payout adjustment
factor for such fiscal year (as defined
in paragraph (3)(B)).
``(ii) Pre-fiscal year 1997-obligation
outlay amounts.--Not later than November 1,
1996, the Secretary shall estimate (based on
the best data available) and publish in the
Federal Register the amount of the pre-fiscal
year 1997-obligation outlays (as defined in
clause (iv)) for each State (including the
District of Columbia, Commonwealths, and
Territories). The total of such amounts shall
equal the dollar amount specified in paragraph
(3)(C)(ii).
``(iii) Agreement.--The submission of a
State plan by a State under this title is
deemed to constitute the State's acceptance of
the obligation allotment limitations under this
subsection, including the formula for computing
the amount of the base obligation allotment and
any supplemental obligation allotments.
``(iv) Pre-fiscal year 1997-obligation
outlays defined.--In this subsection, the term
`pre-fiscal year 1997-obligation outlays'
means, for a State, the outlays of the Federal
Government that result from obligations that
have been incurred under title XIX with respect
to the State before October 1, 1996, but for
which payments to States have not been made as
of such date.
``(D) Adjustment to reflect adoption of alternative
growth formula.--Any State that has elected an
alternative growth formula under subsection (c)(4)
which increases or decreases the dollar amount of an outlay allotment
for a fiscal year is deemed to have increased or decreased,
respectively, its obligation amount for such fiscal year by the amount
of such increase or decrease.
``(E) Transitional correction for fiscal year
1997.--
``(i) In general.--The base obligation
amount for fiscal year 1998 for any State
described in clause (ii) shall be increased by
the amount by which the amount described in
clause (ii)(I) exceeds the amount described in
clause (ii)(II), divided by the payout
adjustment factor specified in paragraph (3)(B)
for fiscal year 1997. The increase under this
clause shall be paid to a State in the first
quarter of fiscal year 1998.
``(ii) States described.--A State described
in this clause is a State for which--
``(I) the amount of the pre-fiscal
year 1997-obligation outlays (as
established for such State under
subparagraph (C)(ii)), exceeded
``(II) the outlays of the Federal
Government during fiscal year 1997 that
are attributable to obligations that
were incurred under title XIX with
respect to the State before October 1,
1996, but for which payments to States
had not been made as of such date.
``(5) Sequence of obligations.--For purposes of carrying
out this title, payments under section 1512 to a State eligible
for a supplemental outlay allotment that are attributable to--
``(A) expenditures for medical assistance described
in the second sentence of subsection (f)(1) or the
second sentence of subsection (h)(1) shall first be
counted toward the supplemental outlay allotment
provided under subsection (f) or (h), respectively,
rather than toward the base outlay allotment otherwise
provided under this section; or
``(B) subsection (g) (relating to the umbrella
fund) shall first be counted toward the allotment
provided other than under such subsection, and then to
such subsection.
``(b) Base Pool of Available Funds.--
``(1) In general.--For purposes of this section, the `base
pool amount' under this subsection for--
``(A) fiscal year 1996 is $96,601,037,894,
``(B) fiscal year 1997 is $103,447,755,053,
``(C) fiscal year 1998 is $108,430,173,129,
``(D) fiscal year 1999 is $113,652,562,483,
``(E) fiscal year 2000 is $119,126,480,999,
``(F) fiscal year 2001 is $124,864,043,230,
``(G) fiscal year 2002 is $130,877,947,213, and
``(H) each subsequent fiscal year is the pool
amount under this paragraph for the previous fiscal
year increased by the lesser of 4.82 percent or the
annual percentage increase in the gross domestic
product for the 12-month period ending in June before
the beginning of that subsequent fiscal year.
``(2) National growth percentage.--For purposes of this
section for a fiscal year (beginning with fiscal year 1997),
the `national growth percentage' is the percentage by which--
``(A) the base pool amount under paragraph (1) for
the fiscal year, exceeds
``(B) such base pool amount for the previous fiscal
year.
``(c) State Base Outlay Allotments.--
``(1) Fiscal year 1996.--
``(A) In general.--For each of the 50 States and
the District of Columbia, the amount of the State base
outlay allotment under this subsection for fiscal year
1996 is, subject to paragraph (4), determined in
accordance with the following table:
``State or District: Outlay allotment (in dollars):
Alabama........................
1,517,652,207
Alaska.........................
204,933,213
Arizona........................
1,385,781,297
Arkansas.......................
1,011,457,933
California.....................
8,946,838,461
Colorado.......................
757,492,679
Connecticut....................
1,463,011,635
Delaware.......................
212,327,763
District of Columbia...........
501,412,091
Florida........................
3,715,624,180
Georgia........................
2,426,320,602
Hawaii.........................
323,124,375
Idaho..........................
278,329,686
Illinois.......................
3,467,274,342
Indiana........................
1,952,467,267
Iowa...........................
835,235,895
Kansas.........................
713,700,869
Kentucky.......................
1,577,828,832
Louisiana......................
2,622,000,000
Maine..........................
694,220,790
Maryland.......................
1,369,699,847
Massachusetts..................
2,870,346,862
Michigan.......................
3,465,182,886
Minnesota......................
1,793,776,356
Mississippi....................
1,261,781,330
Missouri.......................
1,849,248,945
Montana........................
312,212,472
Nebraska.......................
463,900,417
Nevada.........................
257,896,453
New Hampshire..................
560,000,000
New Jersey.....................
2,854,621,241
New Mexico.....................
634,756,945
New York.......................
12,901,793,038
North Carolina.................
2,587,883,809
North Dakota...................
241,168,563
Ohio...........................
4,034,049,690
Oklahoma.......................
911,198,775
Oregon.........................
1,088,670,440
Pennsylvania...................
4,454,423,400
Rhode Island...................
545,686,262
South Carolina.................
1,621,021,815
South Dakota...................
262,804,959
Tennessee......................
2,519,934,251
Texas..........................
6,351,909,343
Utah...........................
484,274,254
Vermont........................
248,158,729
Virginia.......................
1,144,962,509
Washington.....................
1,763,460,996
West Virginia..................
1,156,813,157
Wisconsin......................
1,709,500,642
Wyoming........................
132,915,390.
``(2) For subsequent fiscal years.--
``(A) In general.--Subject to the succeeding
provisions of this subsection, the amount of the State
base outlay allotment under this subsection for one of
the 50 States and the District of Columbia for a fiscal
year (beginning with fiscal year 1997) is equal to the
product of--
``(i) the needs-based amount determined
under subparagraph (B) for such State or
District for the fiscal year, and
``(ii) the adjustment factor described in
subparagraph (C) for the fiscal year.
``(B) Needs-based amount.--The needs-based amount
under this subparagraph for a State or the District of
Columbia for a fiscal year is equal to the product of--
``(i) the State's or District's aggregate
expenditure need for the fiscal year (as
determined under subsection (d)), and
``(ii) the State's or District's old
Federal medical assistance percentage (as
defined in section 1512(d)) for the fiscal year
(or, in the case of fiscal year 1997, the
Federal medical assistance percentage
determined under section 1905(b) for fiscal
year 1996).
``(C) Adjustment factor.--The adjustment factor
under this subparagraph for a fiscal year is such
proportion so that, when it is applied under
subparagraph (A)(ii) for the fiscal year (taking into
account the floors and ceilings under paragraph (3)),
the total of the base outlay allotments under this
subsection for all the 50 States and the District of
Columbia for the fiscal year (not taking into account
any increase in a base outlay allotment for a fiscal
year attributable to the election of an alternative
growth formula under paragraph (4)) is equal to the
amount by which (i) the base pool amount for the fiscal
year (as determined under subsection (b)), exceeds (ii)
the sum of the base outlay allotments provided under
paragraph (5) for the Commonwealths and Territories for the fiscal
year.
``(3) Floors and ceilings.--
``(A) Floors.--Subject to the ceiling established
under subparagraph (B), in no case shall the amount of
the State base outlay allotment under paragraph (2) for
a fiscal year be less than the greatest of the
following:
``(i) In general.--Beginning with fiscal
year 1998, 0.24 percent of the pool amount for
the fiscal year.
``(ii) Floor based on previous year's
outlay allotment.--Subject to clause (iii)--
``(I) for fiscal year 1997, 103.5
percent of the amount of the State base
outlay allotment under this subsection
for fiscal year 1996,
``(II) for fiscal year 1998, 103
percent of the amount of the State base
outlay allotment under this subsection
for fiscal year 1997,
``(III) for fiscal year 1999, 102.5
percent of the amount of the State base
outlay allotment under this subsection
for fiscal year 1998,
``(IV) for fiscal year 2000, 102.25
percent of the amount of the State base
outlay allotment under this subsection
for fiscal year 1999, and
``(V) for each of fiscal years 2001
and 2002, 102 percent of the amount of
the State base outlay allotment under
this subsection for the previous fiscal
year.
``(iii) Floor based on outlay allotment
growth rate in first year.--Beginning with
fiscal year 1998, in the case of a State for
which the outlay allotment under this
subsection for fiscal year 1997 exceeded its
outlay allotment under this subsection for the
previous fiscal year by more than 95 percent of
the national growth percentage for fiscal year
1997, 90 percent of the national growth
percentage for the fiscal year involved.
``(B) Ceilings.--
``(i) In general.--Subject to clause (ii),
in no case shall the amount of the State base
outlay allotment under paragraph (2) for a
fiscal year be greater than the product of--
``(I) the State base outlay
allotment under this subsection for the
State for the preceding fiscal year,
and
``(II) the applicable percent
(specified in clause (ii) or (iii)) for
the fiscal year involved.
``(ii) General rule for applicable
percent.--For purposes of clause (i), subject
to clause (iii), the `applicable percent' for
fiscal year 1997 is 126.98 percent and for a
subsequent fiscal year is 133 percent of the
national growth percentage for the fiscal year.
``(iii) Special rule.--For a fiscal year
after fiscal year 1997, in the case of a State
(among the 50 States and the District of
Columbia) that is one of the 10 States with the
lowest Federal spending per resident-in-poverty
rates (as determined under clause (iv)) for the
fiscal year, the `applicable percent' is 150
percent of the national growth percentage for
the fiscal year.
``(iv) Determination of federal spending
per resident-in-poverty rate.--For purposes of
clause (iii), the `Federal spending per
resident-in-poverty rate' for a State for a
fiscal year is equal to--
``(I) the State's outlay allotment
under this subsection for the previous
fiscal year (determined without regard
to paragraph (4)), divided by
``(II) the average annual number of
residents of the State in poverty (as
defined in subsection (d)(2)) with
respect to the fiscal year.
``(C) Special rule.--
``(i) In general.--Notwithstanding the
preceding subparagraphs of this paragraph, the
State base outlay allotment for--
``(I) Louisiana, subject to
subclause (II), for each of the fiscal
years 1997 through 2000, is
$2,622,000,000,
``(II) Louisiana for fiscal year
1997 only, as otherwise determined,
shall be increased by $37,048,207, and
``(III) Nevada for each of fiscal
years 1997, 1998, and 1999, as
otherwise determined, shall be
increased by $90,000,000.
``(ii) Exception.--A State described in
subclause (I) of clause (i) may apply to the
Secretary for use of the State base outlay
allotment otherwise determined under this
subsection for any fiscal year, if such State
notifies the Secretary not later than March 1
preceding such fiscal year that such State will
be able to expend sufficient State funds in
such fiscal year to qualify for such allotment.
``(iii) Treatment of increase as
supplemental allotment.--Any increase in an
outlay allotment under clause (i)(II) or
(i)(III) shall not be taken into account for
purposes of determining--
``(I) the adjustment factor under
paragraph (2) for fiscal year 1997,
``(II) any State base outlay
allotment for a fiscal year after
fiscal year 1997,
``(III) the base pool amount for a
fiscal year after fiscal year 1997, or
``(IV) determination of the
national growth percentage for any
fiscal year.
``(4) Election of alternative growth formula.--
``(A) Election.--In order to reduce variations in
increases in outlay allotments over time, any of the 50
States or the District of Columbia may elect (by notice
provided to the Secretary by not later than April 1,
1997) to adopt an alternative growth rate formula under
this paragraph for the determination of the State's
base outlay allotment in fiscal year 1997 and for the
increase in the amount of such allotment in subsequent
fiscal years.
``(B) Formula.--The alternative growth formula
under this paragraph may be any formula under which a
portion of the State base outlay allotment for fiscal
year 1997 under paragraph (1) is deferred and applied
to increase the amount of its base outlay allotment for
one or more subsequent fiscal years, so long as the
total amount of such increases for all such subsequent
fiscal years does not exceed the amount of the base
outlay allotment deferred from fiscal year 1997.
``(5) Commonwealths and territories.--
``(A) In general.--The base outlay allotment for
each of the Commonwealths and Territories for a fiscal
year is the maximum amount that could have been
certified under section 1108(c) (as in effect on the
day before the date of the enactment of this title)
with respect to the Commonwealth or Territory for the
fiscal year with respect to title XIX, if the national
growth percentage (as determined under subsection
(b)(2)) for the fiscal year had been substituted
(beginning with fiscal year 1997) for the percentage
increase referred to in section 1108(c)(1)(B) (as so in
effect).
``(B) Disregard of rounding requirements.--For
purposes of subparagraph (A), the rounding requirements
under section 1108(c) shall not apply.
``(C) Limitation on total amount for fiscal year
1996.--Notwithstanding the provisions of subparagraph
(A), the total amount of the base outlay allotments for
the Commonwealths and Territories for fiscal year 1996
may not exceed $139,950,000.
``(d) State Aggregate Expenditure Need Determined.--
``(1) In general.--For purposes of subsection (c), the
`State aggregate expenditure need' for a State or the District
of Columbia for a fiscal year is equal to the product of the
following 4 factors:
``(A) Program need.--The program need for the State
for the fiscal year, as determined under paragraph (2).
``(B) Health care cost index.--The health care cost
index for the State (as determined under paragraph (3))
for the most recent fiscal year for which data are
available.
``(C) Projected inflation.--The CPI increase factor
for the fiscal year (as defined in subsection
(g)(4)(C)).
``(D) National average spending per resident in
poverty.--The national average spending per resident in
poverty (as determined under paragraph (4)).
``(2) Program need.--
``(A) In general.--In this subsection and subject
to subparagraph (D), the `program need' of a State for
a fiscal year is equal to the sum, for each of the
population groups described in subparagraph (B), of the
product described in subparagraph (C) for that
population group.
``(B) Population groups described.--The population
groups described in this subparagraph are as follows:
``(i) Individuals between 60 and 85.--
Individuals who are least 60, but less than 85,
years of age.
``(ii) Individuals 85 or older.--
Individuals who are 85 years of age or older.
``(iii) Disabled individuals.--Individuals
who are eligible for medical assistance because
such individuals are blind or disabled and are
not described in clause (i) or (ii).
``(iv) Children.--Individuals described in
subsection (g)(2)(B).
``(v) Other individuals.--Individuals not
described in a previous clause of this
subparagraph.
``(C) Product described.--The product described in
this subparagraph, with respect to a population group
for a fiscal year for a State (or District), is the
product of the following 2 factors for that group,
year, and State (or District):
``(i) Weighting factor reflecting relative
need for the group.--For all States, the
national average per recipient expenditures
under this title in the 50 States and the
District of Columbia for individuals in such
group, as determined under subparagraph (E),
divided by the national average of such
averages for all such groups (weighted by the
number of recipients in each group).
``(ii) Number of needy in group.--The
product of--
``(I) for all groups, the average
annual number of residents in poverty
in such State or District (based on
data made generally available by the
Bureau of the Census from the Current
Population Survey) for the most recent
3-calendar-year period (ending before
the fiscal year) for which such data
are available; and
``(II) the proportion, of all
individuals who received medical
assistance under this title in such
State or District, that were
individuals in such group.
In clause (ii)(II), the term `resident in
poverty' means an individual whose family
income does not exceed the poverty threshold
(as such terms are defined by the Office of
Management and Budget and are generally
interpreted and applied by the Bureau of the
Census for the year involved).
``(D) Floors and ceilings on program need.--
``(i) In general.--In no case shall the
value of the program need for a State for a
fiscal year be less than 90 percent, or be more
than 115 percent, of the program need based on
national averages (determined under clause
(ii)) for that State for the fiscal year.
``(ii) Program need based on national
averages.--For purposes of clause (i), the
`program need based on national average' for a
fiscal year is equal to the sum of the product
(for each of the population groups) of the
following 3 factors (for that group, year, and
State or District):
``(I) Weighting factor for group.--
The weighting factor for the group
(described in subparagraph (C)(i)).
``(II) Total number of needy in
state.--For all groups, the average
annual number of residents in poverty
in such State or District (as defined
in subparagraph (C)(ii)(I)).
``(III) National proportion of
needy in group.--The proportion, of all
individuals who received medical
assistance under this title in all of
the States and the District in all such
groups, that were individuals in such
group.
``(E) Determination of national averages and
proportions.--The national averages per recipient and
the proportions referred to in subparagraph (C)(ii) and
(C)(iii), respectively, shall be determined by the
Secretary using the most recent data available.
``(F) Expenditure defined.--For purposes of this
paragraph, the term `expenditure' means medical vendor
payments by basis of eligibility as reported by HCFA
Form 2082.
``(3) Health care cost index.--
``(A) In general.--In this section, the `health
care cost index' for a State or the District of
Columbia for a fiscal year is the sum of--
``(i) 0.15, and
``(ii) 0.85 multiplied by the ratio of (I)
the annual average wages for hospital employees
in such State or District for the fiscal year
(as determined under subparagraph (B)), to (II)
the annual average wages for hospital employees
in the 50 States and the District of Columbia
for such year (as determined under such
subparagraph).
``(B) Determination of annual average wages of
hospital employees.--The Secretary shall provide for
the determination of annual average wages for hospital
employees in a State or the District of Columbia and,
collectively, in the 50 States and the District of
Columbia for a fiscal year based on the area wage data
applicable to hospitals under section 1886(d)(2)(E)
(or, if such data no longer exists, comparable data of
hospital wages) for discharges occurring during the
fiscal year involved.
``(4) National average spending per resident in poverty.--
For purposes of this subsection, the `national average spending
per resident in poverty'--
``(A) for fiscal year 1997 is equal to--
``(i) the sum (for each of the 50 States
and the District of Columbia) of the total of
the Federal and State expenditures under title
XIX for calendar quarters in fiscal year 1994, increased by the
percentage by which (I) the base pool amount for fiscal year 1997,
exceeds (II) $83,213,431,458 (which represents Federal medicaid
expenditures for such States and District for fiscal year 1994);
divided by
``(ii) the sum of the number of residents
in poverty (as defined in paragraph
(2)(C)(ii)(I)) for all of the 50 States and the
District of Columbia for fiscal year 1994; and
``(B) for a succeeding fiscal year is equal to the
national average spending per resident in poverty under
this paragraph for the preceding fiscal year increased
by the national growth percentage (as defined in
subsection (b)(2)) for the fiscal year involved.
``(e) Publication of Obligation and Outlay Allotments.--
``(1) Notice of preliminary allotments.--Not later than
April 1 before the beginning of each fiscal year (beginning
with fiscal year 1997), the Secretary shall initially compute,
after consultation with the Comptroller General, and publish in
the Federal Register notice of the proposed base obligation
allotment, base outlay allotment, and supplemental allotments
under subsections (f) and (h) for each State under this section
(not taking into account subsection (a)(2)(B)) for the fiscal
year. The Secretary shall include in the notice a description
of the methodology and data used in deriving such allotments
for the year.
``(2) Review by gao.--The Comptroller General shall submit
to Congress by not later than May 15 of each such fiscal year,
a report analyzing such allotments and the extent to which they
comply with the precise requirements of this section.
``(3) Notice of final allotments.--Not later than July 1
before the beginning of each such fiscal year, the Secretary,
taking into consideration the analysis contained in the report
of the Comptroller General under paragraph (2), shall compute
and publish in the Federal Register notice of the final
allotments under this section (both taking into account and not
taking into account subsection (a)(2)(B)) for the fiscal year.
The Secretary shall include in the notice a description of any
changes in such allotments from the initial allotments
published under paragraph (1) for the fiscal year and the
reasons for such changes. Once published under this paragraph,
the Secretary is not authorized to change such allotments.
``(4) GAO report on final allotments.--The Comptroller
General shall submit to Congress by not later than August 1 of
each such fiscal year, a report analyzing the final allotments
under paragraph (3) and the extent to which they comply with
the precise requirements of this section.
``(5) Transitional rule for fiscal year 1997.--With respect
to fiscal year 1997, the deadlines under the previous
provisions of this subsection shall be extended by a number of
days equal to the number of days between May 1, 1996, and the
date of the enactment of this title.
``(f) Supplemental Allotment for Certain Health Care Services to
Certain Aliens.--
``(1) In general.--For purposes of this section for each of
fiscal years 1998 through 2002 in the case of a subsection (f)
supplemental allotment eligible State, the amount of the
supplemental allotment under this subsection is the amount
provided under paragraph (2) for the State for that year. Such
amount may only be used for the purpose of providing medical
assistance for care and services for aliens described in
paragraph (1) of section 1513(f) and for which the exception
described in paragraph (2) of such section applies. Section
1512(f)(4) shall apply to such assistance in the same manner as
it applies to medical assistance described in such section.
``(2) Supplemental amount.--
``(A) In general.--For purposes of paragraph (1),
the supplemental amount for a subsection (f)
supplemental allotment eligible State for a fiscal year
is equal to the subsection (f) supplemental allotment
ratio (as defined in subparagraph (C)) multiplied by
the subsection (f) supplemental pool amount (specified
in subparagraph (D)) for the fiscal year.
``(B) Subsection (f) supplemental allotment
eligible state.--In this subsection, the term
`subsection (f) supplemental allotment eligible State'
means one of the 15 States with the highest ratio of
undocumented alien residents to the total population
for such State.
``(C) Subsection (f) supplemental allotment
ratio.--In this paragraph, the `subsection (f)
supplemental allotment ratio' for a State is the ratio
of--
``(i) the number of undocumented aliens
residing in the State, to
``(ii) the sum of such numbers for all
subsection (f) supplemental allotment eligible
States.
``(D) Subsection (f) supplemental pool amount.--In
this paragraph, the `subsection (f) supplemental pool
amount'--
``(i) for fiscal year 1998 is $389,800,000,
``(ii) for fiscal year 1999 is
$489,800,000,
``(iii) for fiscal year 2000 is
$589,800,000,
``(iv) for fiscal year 2001 is
$689,800,000, and
``(v) for fiscal year 2002 is $789,800,000.
``(E) Determination of number.--
``(i) In general.--The number of
undocumented aliens residing in a State under
this paragraph--
``(I) for fiscal year 1998 shall be
determined based on estimates of the
resident illegal alien population
residing in each State prepared by the
Statistics Division of the Immigration
and Naturalization Service as of
October 1992, and
``(II) for a subsequent fiscal year
shall be determined based on the most
recent updated estimate made under
clause (ii).
``(ii) Updating estimate.--For each fiscal
year beginning with fiscal year 1999, the
Secretary, in consultation with the Commission
of the Immigration and Naturalization Service,
States, and outside experts, shall estimate the
number of undocumented aliens residing in each
of the 50 States and the District of Columbia.
``(g) Supplemental Per Beneficiary Umbrella Allotment for States
with Excess Growth in Certain Population Groups.--
``(1) In general.--Subject to paragraphs (5) through (7),
for purposes of this section the amount of the supplemental
allotment under this subsection for a State for a fiscal year
(beginning with fiscal year 1997) is the sum, for each
supplemental allotment population group described in paragraph
(2), of the product of the following:
``(A) Excess number of individuals.--The excess
number of individuals (if any, determined under
paragraph (3)) for State and the fiscal year who are in
the population group.
``(B) Applicable per beneficiary amount.--The
applicable per beneficiary amount (determined under
paragraph (4)) for the State and fiscal year for the
population group.
``(C) FMAP.--The old Federal medical assistance
percentage (as defined in section 1512(d)) for the
State and fiscal year.
``(2) Supplemental allotment population group.--In this
subsection, each of the following shall be considered to be a
separate `supplemental allotment population group':
``(A) Poor pregnant women.--Individuals described
in section 1501(a)(1)(A).
``(B) Poor children.--Individuals (not described in
subparagraph (C))--
``(i) described in subparagraph (B) or (C)
of section 1501(a)(1), or
``(ii) described in subparagraph (F) or (G)
of section 1501(a)(1) who are under 21 years of
age and who are not pregnant women.
``(C) Poor disabled individuals.--Only in the case
of a State that has elected the option (of guaranteeing
coverage of disabled individuals) described in section
1501(a)(1)(D)(ii) for the fiscal year (and, in the case
of a fiscal year after fiscal year 1997, for the
previous fiscal year), individuals--
``(i) who are described in such section; or
``(ii) who are described in section 1502(a)
under paragraph (1) of that section.
``(D) Poor elderly individuals.--Individuals who
are--
``(i) described in section 1501(a)(1)(E);
or
``(ii) described in section 1502(a) under
paragraph (2) of that section.
``(E) Qualified medicare beneficiaries.--
Individuals described in section 1501(b)(1)(A) who are
not described in subparagraph (D).
``(F) Qualified disabled and working individuals.--
Individuals described in section 1501(b)(1)(B) who are
not described in subparagraph (D).
``(G) Certain other medicare beneficiaries.--
Individuals described in section 1501(b)(1)(C) who are
not described in subparagraph (D).
``(H) Other poor adults.--Individuals described in
section 1501(a)(1)(G) who are not within a population
group described in a previous subparagraph.
``(3) Excess number of individuals.--
``(A) In general.--In this subsection, the `excess
number of individuals', for a State for a fiscal year
with respect to a supplemental allotment population
group, is equal to the amount (if any) by which--
``(i) the number of full-year equivalent
individuals in the population group for the
State and fiscal year, exceeds
``(ii) the anticipated number of such
individuals (as determined under subparagraph
(B)) for the State and fiscal year in such
group.
``(B) Anticipated number.--
``(i) In general.--In subparagraph (A)(ii),
the `anticipated number' of individuals for a
State in a supplemental allotment population
group for--
``(I) fiscal year 1997 is equal to
the number of full-year equivalent
individuals in such group enrolled in
the State medicaid plan under title XIX
in fiscal year 1996 increased by the
percentage increase factor (described
in clause (ii)) for fiscal year 1997;
or
``(II) a subsequent fiscal year is
equal to the number of full-year
equivalent individuals in the
population group for the State for the
previous fiscal year increased by the
percentage increase factor (described
in clause (ii)) for that subsequent
fiscal year.
``(ii) Percentage increase factor.--For
purposes of this subparagraph, the `percentage
increase factor' for a fiscal year is equal to
zero or, if greater, the number of percentage
points by which (I) the State percentage growth
factor (as defined in subparagraph (C)) for the
fiscal year, exceeds (II) the percentage
increase in the consumer price index for all
urban consumers (U.S. city average) during the
12-month period beginning with July before the
beginning of the fiscal year.
``(C) State percentage growth factor.--In this
paragraph, the term `State percentage growth factor'
means, for a State for a fiscal year, the percentage by
which (i) the State outlay allotment for the State for
the fiscal year (determined under this section without
regard to this subsection or subsection (f) or (h)),
exceeds (ii) such outlay allotment for such State for
the preceding fiscal year (as so determined).
``(D) Individuals count only once.--An individual
may at any time not be counted in more than one
supplemental allotment population group.
``(4) Applicable per beneficiary amount.--
``(A) In general.--In this subsection, subject to
subparagraph (D), the `applicable per beneficiary
amount', for a State for a fiscal year for a
supplemental allotment population group, is equal to
the base per beneficiary amount (determined under
subparagraph (B)) for the State for the group,
increased by the Secretary's estimate of the increase
in the per beneficiary expenditures under this title
(and title XIX) for States between fiscal year 1995 and
fiscal year 1996, and further increased (for each
subsequent fiscal year up to the fiscal year involved
and in a compounded manner) by the CPI increase factor
(as defined in subparagraph (C)) for each such fiscal
year.
``(B) Base per beneficiary amount.--
``(i) In general.--The Secretary shall
determine for each State a base per beneficiary
amount for each supplemental allotment
population group equal to--
``(I) the sum of the total
expenditure amounts described in
clauses (ii) and (iii), divided by
``(II) the full-year equivalent
number of such individuals in such
group enrolled under the State plan
under title XIX for fiscal year 1995.
``(ii) Medical assistance expenditures.--
The total expenditure amount described in this
clause, with respect to a supplemental
allotment population group, is the total amount
of expenditures for which Federal financial
participation was provided to the State under
paragraphs (1) and (5) of section 1903(a) for
fiscal year 1995 with respect to medical
assistance furnished with respect to
individuals included in such group. Such amount
shall not include expenditures attributable to
payment adjustments under section 1923.
``(iii) Administrative expenditures.--The
total expenditure amount described in this
clause, with respect to a supplemental
allotment population group, is the product of--
``(I) the total amount of
administrative expenditures for which
Federal financial participation was
provided to the State under section
1903(a) (other than paragraphs (1) and
(5) of such section) for fiscal year
1995, and
``(II) the ratio described in
clause (iv) for the population group.
``(iv) Ratio described.--The ratio described in
this clause for a group is the ratio of--
``(I) the total amount of
expenditures described in clause (ii)
for the group, to
``(II) the total amount of
expenditures described in such clause
for all individuals under the State
plan under title XIX in the base fiscal
year.
``(C) CPI increase factor.--In subparagraph (A),
the `CPI increase factor' for a fiscal year is the
percentage by which--
``(i) the Secretary's estimate of the
average value of the consumer price index for
all urban consumers (all items, U.S. city
average) for months in the fiscal year, exceeds
``(ii) the average value of such index for
months in the previous fiscal year.
``(D) Special rules for certain medicare
beneficiaries.--
``(i) Qualified disabled and working
individuals.--In the case of the supplemental
allotment population group described in
paragraph (2)(F), the `applicable per
beneficiary amount', for all States for a
fiscal year is the sum of the medicare premiums
applied under section 1818A for months in the
fiscal year.
``(ii) Other medicare beneficiaries.--In
the case of the supplemental allotment
population group described in paragraph (2)(G),
the `applicable per beneficiary amount', for
all States for a fiscal year is the sum of the
medicare premiums applied under section 1839
for months in the fiscal year.
``(5) Conditions for access to umbrella supplemental
allotment.--
``(A) In general.--A State may receive a
supplemental umbrella allotment under this subsection
for a fiscal year only if the following conditions are
met:
``(i) The State provides assurances
satisfactory to the Secretary that it will
obligate during the fiscal year the full amount
of the allotment otherwise provided under this
section for the fiscal year.
``(ii) The State provides assurances
satisfactory to the Secretary that any amount
attributable to a carryover from a previous
fiscal year under subsection (a)(2)(B) shall
also be obligated under the plan by the end of
the fiscal year.
``(iii) The State submits to the Secretary
on a periodic basis such reports on numbers of
individuals within each supplemental allotment
population group as the Secretary may determine
necessary to assure the accuracy of the
supplemental umbrella allotments under this
subsection. The Secretary may not require the
submission of such reports more frequently than
quarterly.
``(iv) The State provides assurances
satisfactory to the Secretary that it has in
effect such data collection procedures as may
be necessary to provide for the reports
described in clause (iii).
``(B) Estimate.--The amount of any supplemental
allotment under this subsection shall be estimated in
advance of the fiscal year involved, based on data
required to be reported under subparagraph (A)(iii).
The Secretary is authorized to adjust such data on a
preliminary basis if the Secretary determines that the
estimates do not reasonably reflect the actual excess
number of individuals in the supplemental allotment
population groups for the fiscal year involved. Section
1512(b)(6) provides for adjustment of payments of the
supplemental allotment under this subsection based on a
final determination using data on actual numbers of
individual in each supplemental allotment population
group.
``(6) Adjustment in allotment for savings from slower
population growth.--
``(A) In general.--The amount of the supplemental
umbrella allotment to a State under this subsection for
a fiscal year shall be reduced (but not below zero) by
the sum, for each supplemental allotment population
group described in paragraph (2), of the product of the
following:
``(i) Less-than-anticipated number of
individuals.--The less-than-anticipated number
of individuals (if any, determined under
subparagraph (B)) for State and the fiscal year
who are in the population group.
``(ii) Applicable per beneficiary amount.--
The applicable per beneficiary
amount (determined under paragraph (4)) for the State and fiscal year
for the population group.
``(iii) FMAP.--The old Federal medical
assistance percentage (as defined in section
1512(d)) for the State and fiscal year.
``(B) Less-than-anticipated number of
individuals.--In this paragraph, the `less-than-
anticipated number of individuals', for a State for a
fiscal year with respect to a supplemental allotment
population group, is equal to the amount (if any) by
which--
``(i) the anticipated number of such
individuals (as determined under paragraph
(3)(B)) for the State and fiscal year in such
group, exceeds
``(ii) the number of full-year equivalent
individuals in the population group for the
State and fiscal year.
``(7) Special rule for fiscal year 1997.--In applying this
subsection to fiscal year 1997--
``(A) in determining the excess number of
individuals under paragraph (3)--
``(i) the number of full-year equivalent
individuals shall only be determined based on
the portion of fiscal year 1997 in which the
State plan is in effect under this title, and
``(ii) the anticipated number of such
individuals (referred to in paragraph
(3)(A)(ii)) shall be the anticipated number
otherwise determined multiplied by the
proportion of fiscal year 1997 in which such
State plan will be in effect; and
``(B) if the State plan is effective before April
1, 1997, the amount of the supplemental allotment
otherwise determined under this subsection shall be
multiplied by the ratio of the portion of fiscal year
1997 that occurs on or after April 1, 1997, to the
total portion of such fiscal year in which the State
plan is in effect.
``SEC. 1512. PAYMENTS TO STATES.
``(a) Amount of Payment.--From the allotment of a State under
section 1511 for a fiscal year, subject to the succeeding provisions of
this title, the Secretary shall pay to each State which has a State
plan approved under part C, for each quarter in the fiscal year--
``(1) an amount equal to the applicable Federal medical
assistance percentage (as defined in subsection (c)) of the
total amount expended during such quarter as medical assistance
under the plan; plus
``(2) an amount equal to the applicable Federal medical
assistance percentage of the total amount expended during such
quarter for medically-related services (as defined in section
1571(g)); plus
``(3) subject to section 1513(c)--
``(A) an amount equal to 90 percent of the amounts
expended during such quarter for the design,
development, and installation of information systems
and for providing incentives to promote the enforcement
of medical support orders, plus
``(B) an amount equal to 75 percent of the amounts
expended during such quarter for medical personnel,
administrative support of medical personnel, operation
and maintenance of information systems, modification of
information systems, quality assurance activities,
utilization review, medical and peer review, anti-fraud
activities, independent evaluations, independent,
external quality review programs for capitated health
care organizations, coordination of benefits, and
meeting reporting requirements under this title, plus
``(C) an amount equal to 50 percent of so much of
the remainder of the amounts expended during such
quarter as are expended by the State in the
administration of the State plan.
``(b) Payment Process.--
``(1) Quarterly estimates.--Prior to the beginning of each
quarter, the Secretary shall estimate the amount to which a
State will be entitled under subsection (a) for such quarter, such
estimates to be based on (A) a report filed by the State containing its
estimate of the total sum to be expended in such quarter in accordance
with the provisions of such subsections, and stating the amount
appropriated or made available by the State and its political
subdivisions for such expenditures in such quarter, and if such amount
is less than the State's proportionate share of the total sum of such
estimated expenditures, the source or sources from which the difference
is expected to be derived, and (B) such other investigation as the
Secretary may find necessary.
``(2) Payment.--
``(A) In general.--The Secretary shall then pay to
the State, in such installments as the Secretary may
determine and in accordance with section 6503(a) of
title 31, United States Code, the amount so estimated,
reduced or increased to the extent of any overpayment
or underpayment which the Secretary determines was made
under this section (or section 1903) to such State for
any prior quarter and with respect to which adjustment
has not already been made under this subsection (or
under section 1903(d)).
``(B) Treatment as overpayments.--Expenditures for
which payments were made to the State under subsection
(a) shall be treated as an overpayment to the extent
that the State or local agency administering such plan
has been reimbursed for such expenditures by a third
party pursuant to the provisions of its plan in
compliance with section 1555.
``(C) Recovery of overpayments.--For purposes of
this subsection, when an overpayment is discovered,
which was made by a State to a person or other entity,
the State shall have a period of 60 days in which to
recover or attempt to recover such overpayment before
adjustment is made in the Federal payment to such State
on account of such overpayment. Except as otherwise
provided in subparagraph (D), the adjustment in the
Federal payment shall be made at the end of the 60
days, whether or not recovery was made.
``(D) No adjustment for uncollectables.--In any
case where the State is unable to recover a debt which
represents an overpayment (or any portion thereof) made
to a person or other entity on account of such debt
having been discharged in bankruptcy or otherwise being
uncollectable, no adjustment shall be made in the
Federal payment to such State on account of such
overpayment (or portion thereof).
``(3) Federal share of recoveries.--The pro rata share to
which the United States is equitably entitled, as determined by
the Secretary, of the net amount recovered during any quarter
by the State or any political subdivision thereof with respect
to medical assistance furnished under the State plan shall be
considered an overpayment to be adjusted under this subsection.
``(4) Timing of obligation of funds.--Upon the making of
any estimate by the Secretary under this subsection, any
appropriations available for payments under this section shall
be deemed obligated.
``(5) Disallowances.--In any case in which the Secretary
estimates that there has been an overpayment under this section
to a State on the basis of a claim by such State that has been
disallowed by the Secretary under section 1116(d) or in the
case described in paragraph (6)(C), and such State disputes
such disallowance or an adjustment under such paragraph, the
amount of the Federal payment in controversy shall, at the
option of the State, be retained by such State or recovered by
the Secretary pending a final determination with respect to
such payment amount. If such final determination is to the
effect that any amount was properly disallowed, and the State
chose to retain payment of the amount in controversy, the
Secretary shall offset, from any subsequent payments made to
such State under this title, an amount equal to the proper
amount of the disallowance plus interest on such amount
disallowed for the period beginning on the date such amount was
disallowed and ending on the date of such final determination at a rate
(determined by the Secretary) based on the average of the bond
equivalent of the weekly 90-day treasury bill auction rates during such
period.
``(6) Adjustments in payments reflecting over- and under-
estimations of supplemental umbrella allotment.--
``(A) In general.--Based on data reported under
section 1511(g)(5)(A)(iii) and annual audits provided
for under section 1551(a) on the actual excess number
of individuals in each population group for a fiscal
year, the Secretary shall determine the final amount of
the supplemental umbrella allotment for each State for
the fiscal year and whether, based on such final
amount, the amount of payment made for the fiscal year
was greater, or less, than the amount that should have
been paid if payments had been made based on such final
amount.
``(B) Payment in case of underestimation.--If the
Secretary determines under subparagraph (A) there was
an underpayment to a State, the Secretary shall
increase the amount of the next quarterly payment under
this section to the State by the amount of such
underpayment.
``(C) Offsetting of payments in case of
overestimation.--If the Secretary determines under
subparagraph (A) there was an overpayment to a State,
the Secretary shall, subject to the procedures provided
under paragraph (5), decrease the amount of the payment
for the next quarter (or, at the discretion of the
Secretary, over a period of not more than 4 calendar
quarters) by the amount of such overpayment. In the
case in which a State seeks review of such a
determination in accordance with the procedures under
paragraph (5), the Secretary shall provide for
completion of such review process within 1 year after
the date the State requests such review.
``(c) Applicable Federal Medical Assistance Percentage Defined.--In
this section, except as provided in subsection (f), the term
`applicable Federal medical assistance percentage' means, with respect
to one of the 50 States or the District of Columbia, at the State's or
District's option--
``(1) the old Federal medical assistance percentage (as
determined in subsection (d));
``(2) the lesser of--
``(A) new Federal medical assistance percentage (as
determined under subsection (e)) or
``(B) the old Federal medical assistance percentage
plus 10 percentage points; or
``(3) 60 percent.
``(d) Old Federal Medical Assistance Percentage.--
``(1) In general.--Except as provided in paragraph (2) and
subsection (f), the term `old Federal medical assistance
percentage' for any State is 100 percent less the State
percentage; and the State percentage is that percentage which
bears the same ratio to 45 percent as the square of the per
capita income of such State bears to the square of the per
capita income of the continental United States (including
Alaska) and Hawaii.
``(2) Limitation on range.--In no case shall the old
Federal medical assistance percentage be less than 50 percent
or more than 83 percent.
``(3) Promulgation.--The old Federal medical assistance
percentage for any State shall be determined and promulgated in
accordance with the provisions of section 1101(a)(8)(B).
``(e) New Federal Medical Assistance Percentage Defined.--
``(1) In general.--
``(A) Term defined.--Except as provided in
paragraph (3) and subsection (f), the term `new Federal
medical assistance percentage' means, for each of the 50 States and the
District of Columbia, 100 percent reduced by the product 0.39 and the
ratio of--
``(i)(I) for each of the 50 States, the
total taxable resources (TTR) ratio of the
State specified in subparagraph (B), or
``(II) for the District of Columbia, the
per capita income ratio specified in
subparagraph (C),
to--
``(ii) the aggregate expenditure need ratio
of the State or District, as described in
subparagraph (D).
``(B) Total taxable resources (ttr) ratio.--For
purposes of subparagraph (A)(i)(I), the total taxable
resources (TTR) ratio for each of the 50 States is--
``(i) an amount equal to the most recent 3-
year average of the total taxable resources
(TTR) of the State, as determined by the
Secretary of the Treasury, divided by
``(ii) an amount equal to the sum of the 3-
year averages determined under clause (i) for
each of the 50 States.
``(C) Per capita income ratio.--For purposes of
subparagraph (A)(i)(II), the per capita income ratio of
the District of Columbia is--
``(i) an amount equal to the most recent 3-
year average of the total personal income of
the District of Columbia, as determined in
accordance with the provisions of section
1101(a)(8)(B), divided by
``(ii) an amount equal to the total
personal income of the continental United
States (including Alaska) and Hawaii, as
determined under section 1101(a)(8)(B).
``(D) Aggregate expenditure need ratio.--For
purposes of subparagraph (A), with respect to each of
the 50 States and the District of Columbia for a fiscal
year, the aggregate expenditure need ratio is--
``(i) the State aggregate expenditure need
(as defined in section 1511(d)) for the State
for the fiscal year, divided by
``(ii) the sum of such State aggregate
expenditure needs for the 50 States and the
District of Columbia for the fiscal year.
``(2) Limitation on range.--Except as provided in
subsection (f), the new Federal medical assistance percentage
shall in no case be less than 60 percent or greater than 83
percent.
``(3) Promulgation.--The new Federal medical assistance
percentage for any State shall be promulgated in a timely
manner consistent with the promulgation of the old Federal
medical assistance percentage under section 1101(a)(8)(B).
``(f) Special Rules.--For purposes of this title--
``(1) Commonwealths and territories.--In the case of Puerto
Rico, the Virgin Islands, Guam, the Northern Mariana Islands,
and American Samoa, the old and new Federal medical assistance
percentages are 50 percent.
``(2) Alaska.--In the case of Alaska, the old Federal
medical assistance percentage is that percentage which bears
the same ratio to 45 percent as the square of the adjusted per
capita income of such State bears to the square of the per
capita income of the continental United States. For purposes of
the preceding sentence, the adjusted per capita income for
Alaska shall be determined by dividing the State's most recent
3-year average per capita by the health care cost index for
such State (as determined under section 1511(d)(3)).
``(3) Indian health service and related facilities and
programs.--
``(A) Fiscal year 1997.--
``(i) In general.--During fiscal year 1997,
the Secretary shall reimburse a State for
amounts expended under the State plan as
medical assistance for services which are received through an Indian
Health Service facility whether operated by the Indian Health Service
or by an Indian tribe or tribal organization (as defined in section 4
of the Indian Health Care Improvement Act) in the same manner and under
the same Federal medical assistance percentage as such amounts were
reimbursed under title XIX (as in effect on June 1, 1996).
``(ii) Eligible providers under a state
plan.--A program described in subclause (II) or
(III) of clause (iii) shall be an eligible
provider under the State plan of the State in
which such program is located and may receive
reimbursement under the State plan for medical
assistance for services provided by such
program.
``(iii) Rule of construction.--Nothing in
clause (i) or (ii) shall be construed as
increasing the obligation or outlay allotment
established for a State under section 1511 for
fiscal year 1997.
``(B) Fiscal year 1998 and thereafter.--Beginning
on October 1, 1997, the following shall apply:
``(i) Providers under a state plan.--
``(I) In general.--Subject to the
succeeding provisions of this
paragraph, a facility or program
described in clause (iii) shall be an
eligible provider under the State plan
of the State in which such facility or
program is located and shall receive
payments under the State plan for
medical assistance for services
provided at such facility or by such
program.
``(II) Election of provider
reimbursement rate.--A facility or
program described in clause (iii) shall
elect one of the following provider
reimbursement rates to apply to medical
assistance provided by such facility or
through such program under the State
plan:
``(aa) The provider
reimbursement rate established
under the State plan of the
State in which such facility or
program is located.
``(bb) The provider
reimbursement rate established
by the Secretary for such
facilities or programs.
``(ii) Federal Indian Medicaid
Allocation.--
``(I) Appropriation.--Out of any
money in the Treasury of the United
States not otherwise appropriated,
there are appropriated for fiscal years
1998 through 2002, $2,401,000,000 for
reimbursement of amounts expended as
medical assistance for services
provided by a facility or program
described in clause (iii).
``(II) Reimbursement to states.--
Subject to the limitation for a fiscal
year described in subclause (III), the
Secretary shall reimburse a State with
one or more facilities or programs
described in clause (iii) for payments
made under the State plan for medical
assistance provided by such facilities
or through such programs.
``(III) Limitation on
reimbursement.--Subject to subclause
(IV), the total amount paid with
respect to the amounts expended as
medical assistance for services
provided by facilities or programs
described in clause (iii) shall not
exceed the following:
``(aa) For fiscal year
1998, $393,100,000.
``(bb) For fiscal year
1999, $459,200,000.
``(cc) For fiscal year
2000, $486,300,000.
``(dd) For fiscal year
2001, $515,500,000.
``(ee) For fiscal year
2002, $546,900,000.
``(IV) Carryover permitted.--The
limitation described in subclause (II)
for a fiscal year shall be increased by
the amount, if any, of any funds
remaining from the limitation described
in such subclause for the preceding
fiscal year.
``(iii) Fmap.--The old and new Federal
medical assistance percentages shall be 100
percent with respect to the amounts expended as
medical assistance for services provided by--
``(I) an Indian Health Service
facility;
``(II) an Indian health program
operated by an Indian tribe or tribal
organization (as defined in section 4
of the Indian Health Care Improvement
Act) pursuant to a contract, grant,
cooperative agreement, or compact with
the Indian Health Service under the
Indian Self-Determination Act; or
``(III) an urban Indian health
program operated by an urban Indian
organization pursuant to a grant or
contract with the Indian Health Service
under title V of the Indian Health Care
Improvement Act.
``(iv) No cost-sharing.--Notwithstanding
the provisions of section 1503 or any other
provision of this title, no State plan shall
impose any cost-sharing, as defined in section
1503(g), on any individual who is an Indian for
services provided to such an individual by a
facility or program described in clause (iii).
``(v) Agreements between states and indian
tribes.--A State and an Indian tribe may enter
into an agreement for the provision of medical
services that are not inconsistent with the
provisions of this paragraph.
``(C) Indian and indian tribe defined.--For
purposes of this title, the terms `Indian' and `Indian
tribe' have the meaning given such terms in section 4
of the Indian Self-Determination and Education
Assistance Act (25 U.S.C. 450b(d)).
``(D) Study.--The Comptroller General shall study
the impact of the amendment to the Social Security Act
made by section 2923 of the Medicaid Restructuring Act
of 1996 on the provision of health care to Indians and,
beginning October 1, 1996, and every third fiscal year
thereafter, shall submit a report to the Congress
containing the findings and recommendations resulting
from such study.
``(4) No state matching required for certain
expenditures.--In applying subsection (a)(1) with respect to
medical assistance provided to unlawful aliens pursuant to the
exception specified in section 1513(f)(2), payment shall be
made for the amount of such assistance without regard to any
need for a State match.
``(5) Special transitional rule.--
``(A) In general.--Notwithstanding subsections (a)
and (f), in order to receive the full State outlay
allotment described in section 1511(c)(3)(C)(i), a
State described in subparagraph (C) shall expend State
funds in a fiscal year (before fiscal year 2000) under
a State plan under this title in an amount not less
than the adjusted base year State expenditures, plus
the applicable percentage of the difference between
such expenditures and the amount necessary to qualify
for the full State outlay allotment so described in
such fiscal year as determined under this section
without regard to this paragraph.
``(B) Reduction in allotment if expenditure not
met.--In the event a State described in subparagraph
(C) fails to expend State funds in an amount required
by subparagraph (A) for a fiscal year, the outlay allotment described
in section 1511(c)(3)(C)(i) for such year for such State shall be
reduced by an amount which bears the same ratio to such outlay
allotment as the State funds expended in such fiscal year bears to the
amount required by subparagraph (A).
``(C) Adjusted base year state expenditures.--For
purposes of this paragraph, the term `adjusted base
year State expenditures' means, for Louisiana,
$355,000,000.
``(D) Applicable percentage.--For purposes of this
paragraph, the applicable percentage for a fiscal year
is specified in the following table:
Applicable
``Fiscal year: Percentage:
1996.......................................... 20
1997.......................................... 40
1998.......................................... 60
1999.......................................... 80.
``(6) Treatment of expenditures attributable to umbrella
fund.--The `applicable Federal medical assistance percentage'
with respect to amounts attributable to supplemental amounts
described in section 1511(g), is the old Federal medical
assistance percentage.
``(g) Use of Local Funds.--
``(1) In general.--Subject to paragraph (2), a State may
use local funds to meet the non-Federal share of the
expenditures under the State plan with respect to which
payments may be made under this section.
``(2) Limitation.--For any fiscal year local funds may not
exceed 40 percent of the total of the non-Federal share of such
expenditures for the fiscal year.
``(h) Permitting Inter-Governmental Funds Transfers.--
``(1) In general.--Public funds, as defined in paragraph
(2), may be considered as the State's share in determining
State financial participation under this title.
``(2) Public funds defined.--For purposes of this
subsection, the term `public funds' means funds--
``(A) that are--
``(i) appropriated directly to the State or
to the local agency administering the State
plan under this title, or transferred from
other public agencies (including Indian tribes)
to the State or local agency and under its
administrative control, or
``(ii) certified by the contributing public
agency as representing expenditures eligible
for Federal financial participation under this
title; and
``(B) that--
``(i) are not Federal funds, or
``(ii) are Federal funds authorized by
Federal law to be used to match other Federal
funds.
``(i) Application of Provider Tax and Donation Restrictions.--The
provisions of section 1903(w) (as in effect on June 1, 1996) shall
apply under this title in the same manner as they applied under title
XIX (as of such date).
``SEC. 1513. LIMITATION ON USE OF FUNDS; DISALLOWANCE.
``(a) In General.--Funds provided to a State under this title shall
only be used to carry out the purposes of this title.
``(b) Disallowances For Excluded Providers.--
``(1) In general.--Payment shall not be made to a State
under this part for expenditures for items and services
furnished--
``(A) by a provider who was excluded from
participation under title V, XVIII, or XX or under this
title pursuant to section 1128, 1128A, 1156, or
1842(j)(2), or
``(B) under the medical direction or on the
prescription of a physician who was so excluded, if the
provider of the services knew or had reason to know of
the exclusion.
``(2) Exception for emergency services.--Subparagraph (A)
shall not apply to emergency items or services, not including
hospital emergency room services.
``(c) Limitations on Payments for Medically-Related Services and
Administrative Expenses.--
``(1) In general.--No Federal financial assistance is
available for expenditures under the State plan for--
``(A) medically-related services for a quarter to
the extent such expenditures exceed 5 percent of the
total expenditures under the plan for the quarter, or
``(B) total administrative expenses (other than
expenses described in paragraph (2) during the first 8
quarters in which the plan is in effect under this
title) for quarters in a fiscal year to the extent such
expenditures exceed the sum of $20,000,000 plus 10
percent of the total expenditures under the plan for
the year.
``(2) Administrative expenses not subject to limitation.--
The administrative expenses referred to in this paragraph are
expenditures under the State plan for the following activities:
``(A) Quality assurance.
``(B) The development and operation of the
certification program for nursing facilities and
intermediate care facilities for the mentally retarded
under section 1557.
``(C) Utilization review activities, including
medical activities and activities of peer review
organizations.
``(D) Inspection and oversight of providers and
capitated health care organizations.
``(E) Anti-fraud activities.
``(F) Independent evaluations.
``(G) Activities required to meet reporting
requirements under this title.
``(d) Treatment of Third Party Liability.--No payment shall be made
to a State under this part for expenditures for medical assistance
provided for an individual under its State plan to the extent that a
private insurer (as defined by the Secretary by regulation and
including a group health plan (as defined in section 607(1) of the
Employee Retirement Income Security Act of 1974), a service benefit
plan, and a health maintenance organization) would have been obligated
to provide such assistance but for a provision of its insurance
contract which has the effect of limiting or excluding such obligation
because the individual is eligible for or is provided medical
assistance under the plan.
``(e) Secondary Payer Provisions.--Except as otherwise provided by
law, no payment shall be made to a State under this part for
expenditures for medical assistance provided for an individual under
its State plan to the extent that payment has been made or can
reasonably be expected to be made promptly (as determined in accordance
with regulations) under any other federally operated or financed health
care insurance program, other than an insurance program operated or
financed by the Indian Health Service, as identified by the Secretary.
For purposes of this subsection, rules similar to the rules for
overpayments under section 1512(b) shall apply.
``(f) Limitation on Payments For Services to Nonlawful Aliens.--
``(1) In general.--Notwithstanding the preceding provisions
of this section, except as provided in paragraph (2), no
payment may be made to a State under this part for medical
assistance furnished to an alien who is not lawfully admitted
for permanent residence or otherwise permanently residing in
the United States under color of law.
``(2) Exception.--Payment may be made under this section
for care and services that are furnished to an alien described
in paragraph (1) only if--
``(A) such care and services are necessary for the
treatment of an emergency medical condition of the
alien (or, at the option of the State, for prenatal
care),
``(B) such alien otherwise meets the eligibility
requirements for medical assistance under the State
plan (other than a requirement of the receipt of aid or
assistance under title IV, supplemental security
income benefits under title XVI, or a State supplementary payment), and
``(C) such care and services are not related to an
organ transplant procedure.
``(3) Emergency medical condition defined.--For purposes of
this subsection, the term `emergency medical condition' means a
medical condition (including emergency labor and delivery)
manifesting itself by acute symptoms of sufficient severity
(including severe pain) such that the absence of immediate
medical attention could reasonably be expected to result in--
``(A) placing the patient's health in serious
jeopardy,
``(B) serious impairment to bodily functions, or
``(C) serious dysfunction of any bodily organ or
part.
``(g) Limitation on Payment for Certain Outpatient Prescription
Drugs.--
``(1) In general.--No payment may be made to a State under
this part for medical assistance for covered outpatient drugs
(as defined in section 1575(i)(2)) of a manufacturer provided
under the State plan unless the manufacturer (as defined in
section 1575(i)(4)) of the drug--
``(A) has entered into a master rebate agreement
with the Secretary under section 1575,
``(B) is otherwise complying with the provisions of
such section,
``(C) is complying with the provisions of section
8126 of title 38, United States Code, including the
requirement of entering into a master agreement with
the Secretary of Veterans Affairs under such section,
and
``(D) subject to paragraph (4), is complying with
the provisions of section 340B of the Public Health
Service Act, including the requirement of entering into
an agreement with the Secretary under such section.
``(2) Construction.--Nothing in this subsection shall be
construed as requiring a State to participate in the master
rebate agreement under section 1575.
``(3) Effect of subsequent amendments.--For purposes of
subparagraphs (C) and (D), in determining whether a
manufacturer is in compliance with the requirements of section
8126 of title 38, United States Code, or section 340B of the
Public Health Service Act--
``(A) the Secretary shall not take into account any
amendments to such sections that are enacted after the
enactment of title VI of the Veterans Health Care Act
of 1992, and
``(B) a manufacturer is deemed to meet such
requirements if the manufacturer establishes to the
satisfaction of the Secretary that the manufacturer
would comply (and has offered to comply) with the
provisions of such sections (as in effect immediately
after the enactment of the Veterans Health Care Act of
1992) and would have entered into an agreement under
such section (as such section was in effect at such
time), but for a legislative change in such section
after the date of the enactment of the Veterans Health
Care Act of 1992.
``(4) Effect of establishment of alternative mechanism
under public health service act.--If the Secretary does not
establish a mechanism to ensure against duplicate discounts or
rebates under section 340B(a)(5)(A) of the Public Health
Service Act within 12 months of the date of the enactment of
such section, the following requirements shall apply:
``(A) Each covered entity under such section shall
inform the State when it is seeking reimbursement from
the State plan for medical assistance with respect to a
unit of any covered outpatient drug which is subject to
an agreement under section 340B(a) of such Act.
``(B) Each such State shall provide a means by
which such an entity shall indicate on any drug
reimbursement claims form (or format, where electronic
claims management is used) that a unit of the drug that
is the subject of the form is subject to an agreement
under section 340B of such Act, and not submit to any
manufacturer a claim for a rebate payment with respect
to such a drug.
``(h) Limitation on Payment for Abortions.--
``(1) In general.--Payment shall not be made to a State
under this part for any amount expended under the State plan to
pay for any abortion or to assist in the purchase, in whole or
in part, of health benefit coverage that includes coverage of
abortion.
``(2) Exception.--Paragraph (1) shall not apply to an
abortion--
``(A) if the pregnancy is the result of an act of
rape or incest, or
``(B) in the case where a woman suffers from a
physical disorder, illness, or injury that would, as
certified by a physician, place the woman in danger of
death unless an abortion is performed.
``(i) Limitation on Payment for Assisting Deaths.--Payment shall
not be made to a State under this part for amounts expended under the
State plan to pay for, or to assist in the purchase, in whole or in
part, of health benefit coverage that includes payment for any drug,
biological product, or service which was furnished for the purpose of
causing, or assisting in causing, the death, suicide, euthanasia, or
mercy killing of a person.
``(j) No supplantation of state health funds.--A State may not
replace State funds expended for the provision of health care services
as of the date of June 1, 1996 with Federal funds received under this
title.
``Part C--Establishment and Amendment of State Plans
``SEC. 1521. DESCRIPTION OF STRATEGIC OBJECTIVES AND PERFORMANCE GOALS.
``(a) Description.--A State plan shall include a description of the
strategic objectives and performance goals the State has established
for providing health care services to low-income populations under this
title, including a general description of the manner in which the plan
is designed to meet these objectives and goals.
``(b) Certain Objectives and Goals Required.--A State plan shall
include strategic objectives and performance goals relating to rates of
childhood immunizations, reductions in infant mortality and morbidity,
and standards of care and access to services for children with special
health care needs (as defined by the State).
``(c) Considerations.--In specifying these objectives and goals the
State may consider factors such as the following:
``(1) The State's priorities with respect to providing
assistance to low-income populations.
``(2) The State's priorities with respect to the general
public health and the health status of individuals eligible for
assistance under the State plan.
``(3) The State's financial resources, the particular
economic conditions in the State, and relative adequacy of the
health care infrastructure in different regions of the State.
``(d) Performance Measures.--To the extent practicable--
``(1) one or more performance goals shall be established by
the State for each strategic objective identified in the State
plan; and
``(2) the State plan shall describe, how program
performance will be--
``(A) measured through objective, independently
verifiable means, and
``(B) compared against performance goals, in order
to determine the State's performance under this title.
``(e) Period Covered.--
``(1) Strategic objectives.--The strategic objectives shall
cover a period of not less than 5 years and shall be updated
and revised at least every 3 years.
``(2) Performance goals.--The performance goals shall be
established for dates that are not more than 3 years apart.
``SEC. 1522. ANNUAL REPORTS.
``(a) In General.--In the case of a State with a State plan that is
in effect for part or all of a fiscal year, no later than March 31
following such fiscal year the State shall prepare and submit to the
Secretary and the Congress a report on program activities and
performance under this title for such fiscal year.
``(b) Contents.--Each annual report under this section for a fiscal
year shall include the following:
``(1) Expenditure and beneficiary summary.--
``(A) Initial summary.--For the report for fiscal
year 1997, a summary of all expenditures under the
State plan during the fiscal year as follows:
``(i) Aggregate medical assistance
expenditures, disaggregated to the extent
required to determine compliance with the set-
aside requirements of subsections (c) and (e)
of section 1502, and to determine the program
need of the State under section 1511(d)(2).
``(ii) For each general category of
eligible individuals (specified in subsection
(c)(1)), aggregate medical assistance
expenditures and the total and average number
of eligible individuals under the State plan.
``(iii) By each general category of
eligible individuals, total expenditures for
each of the categories of health care items and
services (specified in subsection (c)(2)) which
are covered under the State plan and provided
on a fee-for-service basis.
``(iv) By each general category of eligible
individuals, total expenditures for payments to
capitated health care organizations (as defined
in section 1504(d)(1)).
``(v) Total administrative expenditures.
``(B) Subsequent summaries.--For reports for each
succeeding fiscal year, a summary of--
``(i) all expenditures under the State
plan, and
``(ii) the total and average number of
eligible individuals under the State plan for
each general category of eligible individuals.
``(2) Utilization summary.--
``(A) Initial summary.--For the report for fiscal
year 1997, summary statistics on the utilization of
health care services under the State plan during the
year as follows:
``(i) For each general category of eligible
individuals and for each of the categories of
health care items and services which are
covered under the State plan and provided on a
fee-for-service basis, the number and
percentage of persons who received such a type
of service or item during the period covered by
the report.
``(ii) Summary of health care utilization
data reported to the State by capitated health
care organizations.
``(B) Subsequent summaries.--For reports for each
succeeding fiscal year, summary statistics on the
utilization of health care services under the State
plan.
``(3) Achievement of performance goals.--With respect to
each performance goal established under section 1521 and
applicable to the year involved--
``(A) a brief description of the goal;
``(B) a description of the methods to be used to
measure the attainment of such goal;
``(C) data on the actual performance with respect
to the goal;
``(D) a review of the extent to which the goal was
achieved, based on such data; and
``(E) if a performance goal has not been met--
``(i) why the goal was not met, and
``(ii) actions to be taken in response to
such performance, including adjustments in
performance goals or program activities for
subsequent years.
``(4) Program evaluations.--A summary of the findings of
evaluations under section 1523 completed during the fiscal year
covered by the report.
``(5) Fraud and abuse and quality control activities.--A
general description of the State's activities under part D to
detect and deter fraud and abuse and to assure quality of
services provided under the program.
``(6) Plan administration.--
``(A) A description of the administrative roles and
responsibilities of entities in the State responsible
for administration of this title.
``(B) Organizational charts for each entity in the
State primarily responsible for activities under this
title.
``(C) A brief description of each interstate
compact (if any) the State has entered into with other
States with respect to activities under this title.
``(D) General citations to the State statutes and
administrative rules governing the State's activities
under this title.
``(c) Description of Categories.--In this section:
``(1) General categories of eligible individuals.--Each of
the following is a general category of eligible individuals:
``(A) Pregnant women.
``(B) Children.
``(C) Blind or disabled adults who are not elderly
individuals.
``(D) Elderly individuals.
``(E) Other adults.
``(2) Categories of health care items and services.--The
health care items and services described in each paragraph of
section 1571(a) shall be considered a separate category of
health care items and services.
``(d) Development of Uniform Data Collection System.--The Secretary
shall develop a uniform data collection system for the provision of
information under this section.
``SEC. 1523. PERIODIC, INDEPENDENT EVALUATIONS.
``(a) In General.--During fiscal year 1999 and every third fiscal
year thereafter, each State shall provide for an evaluation of the
operation of its State plan under this title. Such evaluation shall
include an assessment of how successfully the State is implementing the
funding requirements imposed under section 1502(e) and the manner in
which the State has utilized Federally-qualified health centers and
rural health clinics to provide services under the State plan.
``(b) Independent.--Each such evaluation with respect to an
activity under the State plan shall be conducted by an entity that is
neither responsible under State law for the submission of the State
plan (or part thereof) nor responsible for administering (or
supervising the administration of) the activity. If consistent with the
previous sentence, such an entity may be a college or university, a
State agency, a legislative branch agency in a State, or an independent
contractor.
``(c) Research Design.--Each such evaluation shall be conducted in
accordance with a research design that is based on generally accepted
models of survey design and sampling and statistical analysis.
``SEC. 1524. DESCRIPTION OF PROCESS FOR STATE PLAN DEVELOPMENT.
``Each State plan shall include a description of the process under
which the plan shall be developed and implemented in the State
(consistent with section 1525).
``SEC. 1525. CONSULTATION IN STATE PLAN DEVELOPMENT.
``(a) Public Notice Process.--Before submitting a State plan or a
plan amendment described in subsection (c) to the Secretary under part
C, a State shall provide--
``(1) public notice respecting the submittal of the
proposed plan or amendment, including a general description of
the plan or amendment,
``(2) a means for the public to inspect or obtain a copy
(at reasonable charge) of the proposed plan or amendment,
``(3) an opportunity for submittal and consideration of
public comments on the proposed plan or amendment, and
``(4) for consultation with one or more advisory committees
established and maintained by the State.
The previous sentence shall not apply to a revision of a State plan (or
revision of an amendment to a plan) made by a State under section
1529(c)(1) or to a plan amendment withdrawal described in section
1529(c)(4).
``(b) Contents of Notice.--A notice under subsection (a)(1) for a
proposed plan or amendment shall include a description of--
``(1) the general purpose of the proposed plan or amendment
(including applicable effective dates),
``(2) where the public may inspect the proposed plan or
amendment,
``(3) how the public may obtain a copy of the proposed plan
or amendment and the applicable charge (if any) for the copy,
and
``(4) how the public may submit comments on the proposed
plan or amendment, including any deadlines applicable to
consideration of such comments.
``(c) Amendments Described.--An amendment to a State plan described
in this subsection is an amendment which makes a material and
substantial change in eligibility under the State plan or the benefits
provided under the plan or a material or substantial change in the
manner in which the State will comply with subsection (b)(1)(H) or (e)
of section 1502.
``(d) Publication.--Notices under this section may be published (as
selected by the State) in one or more daily newspapers of general
circulation in the State or in any publication used by the State to
publish State statutes or rules.
``(e) Comparable Process.--A separate notice, or notices, shall not
be required under this section for a State if notice of the State plan
or an amendment to the plan will be provided under a process specified
in State law that is substantially equivalent to the notice process
specified in this section.
``(f) Provider payment rates.--Each State shall provide public
notice, in accordance with the provisions of this section, of proposed
payment rates and the methodologies underlying the establishment of
such rates, for all providers (including institutional providers) of
services under the State plan under this title. A State shall publish
final payment rates, the methodologies underlying the establishment of
such rates, and justifications for such rates. Such justifications may
take in account public comments received by the State (if any) in one
or more daily newspapers of general circulation in the State or in any
publication used by the State to publish State statutes or rules.
``SEC. 1526. SUBMITTAL AND APPROVAL OF STATE PLANS.
``(a) Submittal.--As a condition of receiving funding under part B,
each State shall submit to the Secretary a State plan that meets the
applicable requirements of this title.
``(b) Approval.--Except as the Secretary may provide under section
1529 (including subsection (b) relating to noncompliance with required
guarantees), a State plan submitted under subsection (a)--
``(1) shall be approved for purposes of this title, and
``(2) shall be effective beginning on a date that is
specified in the plan, but in no case earlier than 60 days
after the date the plan is submitted.
``(c) Construction.--Nothing in this section shall be construed as
prohibiting a State from submitting a State plan that includes the
coverage and benefits (including those provided under a waiver granted
under section 1115) of its State plan under title XIX (as in effect as
of the date of the enactment of the Medicaid Restructuring Act of
1996), so long as such plan complies with the applicable requirements
of this title, including the guarantees under section 1501, and remains
subject to the funding provisions of section 1511.
``SEC. 1527. SUBMITTAL AND APPROVAL OF PLAN AMENDMENTS.
``(a) Submittal of Amendments.--A State may amend, in whole or in
part, its State plan at any time through transmittal of a plan
amendment under this section.
``(b) Approval.--Except as the Secretary may provide under section
1529 (including subsection (b) relating to noncompliance with required
guarantees), an amendment to a State plan submitted under subsection
(a)--
``(1) shall be approved for purposes of this title, and
``(2) shall be effective as provided in subsection (c).
``(c) Effective Dates for Amendments.--
``(1) In general.--Subject to the succeeding provisions of
this subsection, an amendment to a State plan shall take effect
on one or more effective dates specified in the amendment.
``(2) Amendments relating to eligibility or benefits.--
Except as provided in paragraph (4)--
``(A) Notice requirement.--Any plan amendment that
eliminates or restricts eligibility or benefits under
the plan may not take effect unless the State certifies
that it has provided prior or contemporaneous public
notice of the change, in a form and manner provided
under applicable State law.
``(B) Timely transmittal.--Any plan amendment that
eliminates or restricts eligibility or benefits under
the plan shall not be effective for longer than a 60-
day period unless the amendment has been transmitted to
the Secretary before the end of such period.
``(3) Other amendments.--Subject to paragraph (4), any plan
amendment that is not described in paragraph (2) becomes
effective in a State fiscal year may not remain in effect after
the end of such fiscal year (or, if later, the end of the 90-
day period on which it becomes effective) unless the amendment
has been transmitted to the Secretary.
``(4) Exception.--The requirements of paragraphs (2) and
(3) shall not apply to a plan amendment that is submitted on a
timely basis pursuant to a court order or an order of the
Secretary.
``SEC. 1528. PROCESS FOR STATE WITHDRAWAL FROM PROGRAM.
``(a) In General.--A State may rescind its State plan and
discontinue participation in the program under this title at any time
after providing--
``(1) the public with 90 days prior notice in a publication
in one or more daily newspapers of general circulation in the
State or in any publication used by the State to publish State
statutes or rules, and
``(2) the Secretary with 90 days prior written notice.
``(b) Effective Date.--Such discontinuation shall not apply to
payments under part B for expenditures made for items and services
furnished under the State plan before the effective date of the
discontinuation.
``(c) Proration of Allotments.--In the case of any withdrawal under
this section other than at the end of a Federal fiscal year,
notwithstanding any provision of section 1511 to the contrary, the
Secretary shall provide for such appropriate proration of the
application of allotments under section 1511 as is appropriate.
``SEC. 1529. SANCTIONS FOR NONCOMPLIANCE.
``(a) Prompt Review of Plan Submittals.--The Secretary shall
promptly review State plans and plan amendments submitted under this
part to determine if they substantially comply with the requirements of
this title.
``(b) Determinations of Noncompliance with Certain Guarantees.--
``(1) At time of plan or amendment submittal.--If the
Secretary determines that a State plan or plan amendment
submitted under this part violates the guarantees of coverage
and benefits under subsections (a) and (b) of section 1501, the
Secretary shall notify the State in writing of such
determination and shall issue an order specifying that the plan
or amendment, insofar as it is in violation with such
requirement, shall not be effective, except as provided in
subsection (d), as of the date specified in the order.
``(2) Violations in administration of plan.--If the
Secretary determines, after reasonable notice and opportunity
for a hearing for the State, that in the administration of a
State plan there is a violation of guarantee of coverage and
benefits under subsection (a) or (b) of section 1501, or of the
funding requirements under section 1502(e), the Secretary shall
provide the State with written notice of the determination and
with an order to remedy such violation. Such an order shall
become effective prospectively, as specified in the order,
after the date of receipt of such written notice. Such an order may
include the withholding of funds, consistent with subsection (g), for
parts of the State plan affected by such violation, until the Secretary
is satisfied that the violation has been corrected.
``(3) Consultation with state.--Before making a
determination adverse to a State under this section, the
Secretary shall--
``(A) reasonably consult with the State involved,
``(B) offer the State a reasonable opportunity to
clarify the submission and submit further information
to substantiate compliance with the requirements of
subsections (a) and (b) of section 1501 and of section
1502(e), and
``(C) reasonably consider any such clarifications
and information submitted.
``(4) Justification of any inconsistencies in
determinations.--If the Secretary makes a determination under
this section that is, in whole or in part, inconsistent with
any previous determination issued by the Secretary under this
title, the Secretary shall include in the determination a
detailed explanation and justification for any such difference.
``(c) Determinations of Other Substantial Noncompliance.--
``(1) At time of plan or amendment submittal.--
``(A) In general.--If the Secretary, during the 30-
day period beginning on the date of submittal of a
State plan or plan amendment--
``(i) determines that the plan or amendment
substantially violates (within the meaning of
paragraph (5)) a requirement of this title, and
``(ii) provides written notice of such
determination to the State,
the Secretary shall issue an order specifying that the
plan or amendment, insofar as it is in substantial
violation of such a requirement, shall not be
effective, except as provided in subsection (d),
beginning at the end of a period of not less than 30
days (or 120 days in the case of the initial submission
of the State plan) specified in the order beginning on
the date of the notice of the determination.
``(B) Extension of time periods.--The time periods
specified in subparagraph (A) may be extended by
written agreement of the Secretary and the State
involved.
``(2) Violations in administration of plan.--
``(A) In general.--If the Secretary determines,
after reasonable notice and opportunity for a hearing
for the State, that in the administration of a State
plan there is a substantial violation of a requirement
of this title, the Secretary shall provide the State
with written notice of the determination and with an
order to remedy such violation. Such an order shall
become effective prospectively, as specified in the
order, after the date of receipt of such written
notice. Such an order may include the withholding of
funds, consistent with subsection (g), for parts of the
State plan affected by such violation, until the
Secretary is satisfied that the violation has been
corrected.
``(B) Effectiveness.--If the Secretary issues an
order under paragraph (1), the order shall become
effective, except as provided in subsection (d),
beginning at the end of a period (of not less than 30
days) specified in the order beginning on the date of
the notice of the determination to the State.
``(C) Timeliness of determinations relating to
report-based compliance.--The Secretary shall make
determinations under this paragraph respecting
violations relating to information contained in an
annual report under section 1522, an independent
evaluation under section 1523, or an audit report under
section 1551 not later than 30 days after the date of
transmittal of the report or evaluation to the
Secretary.
``(3) Consultation with state.--Before making a
determination adverse to a State under this section, the
Secretary shall (within any time periods provided under this
section)--
``(A) reasonably consult with the State involved,
``(B) offer the State a reasonable opportunity to
clarify the submission and submit further information
to substantiate compliance with the requirements of
this title, and
``(C) reasonably consider any such clarifications
and information submitted.
``(4) Justification of any inconsistencies in
determinations.--If the Secretary makes a determination under
this section that is, in whole or in part, inconsistent with
any previous determination issued by the Secretary under this
title, the Secretary shall include in the determination a
detailed explanation and justification for any such difference.
``(5) Substantial violation defined.--For purposes of this
title, a State plan (or amendment to such a plan) or the
administration of the State plan is considered to
`substantially violate' a requirement of this title if a
provision of the plan or amendment (or an omission from the
plan or amendment) or the administration of the plan--
``(A) is material and substantial in nature and
effect, and
``(B) is inconsistent with an express requirement
of this title.
A failure to meet a strategic objective or performance goal (as
described in section 1521) shall not be considered to
substantially violate a requirement of this title.
``(6) Relation to other provision.--This subsection shall
not apply to violation of a requirement of subsection (a) or
(b) of section 1501 or of section 1502(e).
``(d) State Response to Orders.--
``(1) State response by revising plan.--
``(A) In general.--Insofar as an order under
subsection (b)(1) or (c)(1) relates to a violation by a
State plan or plan amendment, a State may respond
(before the date the order becomes effective) to such
an order by submitting a written revision of the State
plan or plan amendment to comply with the requirements
of this title.
``(B) Review of revision.--In the case of
submission of such a revision, the Secretary shall
promptly review the submission and shall, in the case
of an order under subsection (c)(1), withhold any
action on the order during the period of such review.
``(C) Secretarial response.--
``(i) Orders relating to guarantees.--In
the case of a revision submitted in response to
an order under subsection (b)(1), the revision
shall not be considered to have corrected the
deficiency unless the Secretary determines and
notifies the State that the State plan or amendment, as proposed to be
revised, complies with the requirements of subsections (a) and (b) of
section 1501, or of section 1502(e) (as the case may be). If the
Secretary determines that the revision does not correct the deficiency,
the Secretary shall notify the State in writing of such determination
and the State may respond by seeking reconsideration or a hearing under
paragraph (2).
``(ii) Other orders.--In the case of a
revision submitted in response to an order
under subsection (c)(1), the revision shall be
considered to have corrected the deficiency
(and the order rescinded insofar as it relates
to such deficiency) unless the Secretary
determines and notifies the State in writing,
within 15 days after the date the Secretary
receives the revision, that the State plan or
amendment, as proposed to be revised, still
substantially violates a requirement of this
title. In such case the State may respond by
seeking reconsideration or a hearing under
paragraph (2).
``(D) Revision retroactive.--If the revision
provides for compliance (in the case of an order under
subsection (b)(1)) or substantial compliance (in the
case of an order under subsection (c)(1)), the revision
may be treated, at the option of the State, as being
effective either as of the effective date of the
provision to which it relates or such later date as the
State and Secretary may agree.
``(2) State response by seeking reconsideration or an
administrative hearing.--A State may respond to an order under
subsection (b) or (c) by filing a request with the Secretary
for--
``(A) a reconsideration of the determination,
pursuant to subsection (e)(1), or
``(B) a review of the determination through an
administrative hearing, pursuant to subsection (e)(2).
In such case for an order under subsection (c), the order shall
not take effect before the completion of the reconsideration or
hearing.
``(3) State response by corrective action plan.--
``(A) In general.--In the case of an order
described in subsection (b)(2) or (c)(2) that relates
to a violation in the administration of the State plan,
a State may respond to such an order by submitting a
corrective action plan with the Secretary to correct
deficiencies in the administration of the plan which
are the subject of the order.
``(B) Review of corrective action plan.--In the
case of a corrective action plan submitted in response
to an order under subsection (c)(2), the Secretary
shall withhold any action on the order for a period
(not to exceed 30 days) during which the Secretary
reviews the corrective action plan.
``(C) Secretarial response.--
``(i) Orders relating to guarantees.--In
the case of a corrective action plan submitted
in response to an order under subsection
(b)(2), the plan shall not be considered to
have corrected the deficiency unless the
Secretary determines and notifies the State
that the State's administration of the State
plan, as proposed to be corrected in the plan,
will not violate a requirement of subsection
(a) or (b) of section 1501, or of section
1502(e) (as the case may be). If the Secretary
determines that the plan does not correct the
deficiency, the Secretary shall notify the
State in writing of such determination and the
State may respond by seeking reconsideration or
a hearing under paragraph (2).
``(ii) Other orders.--In the case of a
corrective action plan submitted in response to
an order under subsection (c)(2), the
corrective action plan shall be considered to have corrected the
deficiency (and the order rescinded insofar as it relates to such
deficiency) unless the Secretary determines and notifies the State in
writing, within 15 days after the date the Secretary receives the
corrective action plan, that the State's administration of the State
plan, as proposed to be corrected in the plan, will still substantially
violate a requirement of this title. In such case the State may respond
by seeking reconsideration or a hearing under paragraph (2).
``(4) State response by withdrawal of plan amendment;
failure to respond.--Insofar as an order relates to a violation
in a plan amendment submitted, a State may respond to such an
order by withdrawing the plan amendment and the State plan
shall be treated as though the amendment had not been made.
``(e) Administrative Review and Hearing.--
``(1) Reconsideration.--Within 30 days after the date of
receipt of a request under subsection (d)(2)(A), the Secretary
shall notify the State of the time and place at which a hearing
will be held for the purpose of reconsidering the Secretary's
determination. The hearing shall be held not less than 20 days
nor more than 60 days after the date notice of the hearing is
furnished to the State, unless the Secretary and the State
agree in writing to holding the hearing at another time. The
Secretary shall affirm, modify, or reverse the original
determination within 60 days of the conclusion of the hearing.
``(2) Administrative hearing.--Within 30 days after the
date of receipt of a request under subsection (d)(2)(B), an
administrative law judge shall schedule a hearing for the
purpose of reviewing the Secretary's determination. The hearing
shall be held not less than 20 days nor more than 60 days after
the date notice of the hearing is furnished to the State,
unless the Secretary and the State agree in writing to holding
the hearing at another time. The administrative law judge shall
affirm, modify, or reverse the determination within 60 days of
the conclusion of the hearing.
``(f) Judicial Review.--
``(1) In general.--A State which is dissatisfied with a
final determination made by the Secretary under subsection
(e)(1) or a final determination of an administrative law judge
under subsection (e)(2) may, within 60 days after it has been
notified of such determination, file with the United States
court of appeals for the circuit in which the State is located
a petition for review of such determination. A copy of the
petition shall be forthwith transmitted by the clerk of the
court to the Secretary and, in the case of a determination
under subsection (e)(2), to the administrative law judge
involved. The Secretary (or judge involved) thereupon shall
file in the court the record of the proceedings on which the
final determination was based, as provided in section 1502 of
title 28, United States Code. Except as provided in section
1508, only the Secretary, in accordance with this title, may
compel a State under Federal law to comply with the provisions
of this title or a State plan, or otherwise enforce a provision
of this title against a State, and no action may be filed under
Federal law against a State in relation to the State's
compliance, or failure to comply, with the provisions of this
title or of a State plan except under section 1508 or by the
Secretary as provided under this subsection.
``(2) Standard for review.--The findings of fact by the
Secretary or administrative law judge, if supported by
substantial evidence, shall be conclusive, but the court, for
good cause shown, may remand the case to the Secretary or judge
to take further evidence, and the Secretary or judge may
thereupon make new or modified findings of fact and may modify
a previous determination, and shall certify to the court the
transcript and record of the further proceedings. Such new or
modified findings of fact shall likewise be conclusive if supported by
substantial evidence.
``(3) Jurisdiction of appellate court.--The court shall
have jurisdiction to affirm the action of the Secretary or
judge or to set it aside, in whole or in part. The judgment of
the court shall be subject to review by the Supreme Court of
the United States upon certiorari or certification as provided
in section 1254 of title 28, United States Code.
``(g) Withholding of Funds.--
``(1) In general.--Any order under this section relating to
the withholding of funds shall be effective not earlier than
the effective date of the order and shall only relate to the
portions of a State plan or administration thereof which
violate a requirement of subsection (a) or (b) of section 1501,
section 1502(e), or substantially violate another requirement
of this title. In the case of a failure to meet a set-aside
requirement under subsection (c) or (e) of section 1502, any
withholding shall only apply to the extent of such failure.
``(2) Suspension of withholding.--The Secretary may suspend
withholding of funds under paragraph (1) during the period
reconsideration or administrative and judicial review is
pending under subsection (e) or (f).
``(3) Restoration of funds.--Any funds withheld under this
subsection under an order shall be immediately restored to a
State--
``(A) to the extent and at the time the order is--
``(i) modified or withdrawn by the
Secretary upon reconsideration,
``(ii) modified or reversed by an
administrative law judge, or
``(iii) set aside (in whole or in part) by
an appellate court; or
``(B) when the Secretary determines that the
deficiency which was the basis for the order is
corrected;
``(C) when the Secretary determines that violation
which was the basis for the order is resolved or the
amendment which was the basis for the order is
withdrawn; or
``(D) at any time upon the initiative of the
Secretary.
``(4) Direct payment of certain funds withheld.--In the
case of an order to withhold funds for failure to meet a set-
aside requirement imposed under section 1502(e), the Secretary
shall, during the period such order is in effect, pay directly
to rural health clinics and federally-qualified health centers
located in the State an amount equal to the amount that should
have been paid to such clinics and centers by the State under
section 1502(e).
``(h) Individual Complaint Process.--The Secretary shall provide
for a process under which an individual may notify the Secretary
concerning a State's failure to provide medical assistance as required
under the State plan or otherwise comply with the requirements of this
title or such plan, including any failure to comply with a requirement
of subsection (a) or (b) of section 1501. If the Secretary finds that
there is a pattern of complaints with respect to a State or that a
particular failure or finding of noncompliance is egregious, the
Secretary shall notify the chief executive officer of the State of such
finding and shall notify the Congress if the State fails to respond to
such notification within a reasonable period of time.
``SEC. 1530. SECRETARIAL AUTHORITY.
``(a) Negotiated Agreement and Dispute Resolution.--
``(1) Negotiations.--Nothing in this part shall be
construed as preventing the Secretary and a State from at any
time negotiating a satisfactory resolution to any dispute
concerning the approval of a State plan (or amendments to a
State plan) or the compliance of a State plan (including its
administration) with requirements of this title.
``(2) Cooperation.--The Secretary shall act in a
cooperative manner with the States in carrying out this title.
In the event of a dispute between a State and the Secretary,
the Secretary shall, whenever practicable, engage in informal
dispute resolution activities in lieu of formal enforcement or
sanctions under section 1529.
``(b) Limitations on Delegation of Decisionmaking Authority.--The
Secretary may not delegate (other than to the Administrator of the
Health Care Financing Administration) the authority to make
determinations or reconsiderations respecting the approval of State
plans (or amendments to such plans) or the compliance of a State plan
(including its administration) with requirements of this title. Such
Administrator may not further delegate such authority to any
individual, including any regional official of such Administration.
``(c) Requiring Formal Rulemaking for Changes in Secretarial
Administration.--The Secretary shall carry out the administration of
the program under this title only through a prospective formal
rulemaking process, including issuing notices of proposed rulemaking,
publishing proposed rules or modifications to rules in the Federal
Register, and soliciting public comment.
``Part D--Program Integrity and Quality
``SEC. 1551. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.
``(a) Financial Audits of Program.--
``(1) In general.--Each State plan shall provide for an
annual audit of the State's expenditures from amounts received
under this title, in compliance with chapter 75 of title 31,
United States Code.
``(2) Verification audits.--If, after consultation with the
State and the Comptroller General and after a fair hearing, the
Secretary determines that a State's audit under paragraph (1)
was performed in substantial violation of chapter 75 of title
31, United States Code, the Secretary may--
``(A) require that the State provide for a
verification audit in compliance with such chapter, or
``(B) conduct such a verification audit.
``(3) Availability of audit reports.--Within 30 days after
completion of each audit or verification audit under this
subsection, the State shall--
``(A) provide the Secretary with a copy of the
audit report, including the State's response to any
recommendations of the auditor, and
``(B) make the audit report available for public
inspection in the same manner as proposed State plan
amendments are made available under section 1525.
``(b) Fiscal Controls.--
``(1) In general.--With respect to the accounting and
expenditure of funds under this title, each State shall adopt
and maintain such fiscal controls, accounting procedures, and
data processing safeguards as the State deems reasonably
necessary to assure the fiscal integrity of the State's
activities under this title.
``(2) Consistency with generally accepted accounting
principles.--Such controls and procedures shall be generally
consistent with generally accepted accounting principles as
recognized by the Governmental Accounting Standards Board or
the Comptroller General.
``(c) Audits of Providers.--Each State plan shall provide that the
records of any entity providing items or services for which payment may
be made under the plan may be audited as necessary to ensure that
proper payments are made under the plan.
``SEC. 1552. FRAUD PREVENTION PROGRAM.
``(a) Establishment.--Each State plan shall provide for the
establishment and maintenance of an effective program for the detection
and prevention of fraud and abuse by beneficiaries, providers, and
others in connection with the operation of the program.
``(b) Program Requirements.--The program established pursuant to
subsection (a) shall include at least the following requirements:
``(1) Disclosure of information.--Any disclosing entity (as
defined in section 1124(a)) receiving payments under the State
plan shall comply with the requirements of section 1124.
``(2) Supply of information.--An entity (other than an
individual practitioner or a group of practitioners) that
furnishes, or arranges for the furnishing of, an item or
service under the State plan shall supply upon request
specifically addressed to the entity by the Secretary or the
State agency the information described in section 1128(b)(9).
``(3) Exclusion.--
``(A) In general.--The State plan shall exclude any
specified individual or entity from participation in
the plan for the period specified by the Secretary when
required by the Secretary to do so pursuant to section
1128 or section 1128A, and provide that no payment may
be made under the plan with respect to any item or
service furnished by such individual or entity during
such period.
``(B) Authority.--In addition to any other
authority, a State may exclude any individual or entity
for purposes of participating under the State plan for
any reason for which the Secretary could exclude the
individual or entity from participation in a program
under title XVIII or under section 1128, 1128A, or
1866(b)(2).
``(4) Notice.--The State plan shall provide that whenever a
provider of services or any other person is terminated,
suspended, or otherwise sanctioned or prohibited from
participating under the plan, the State agency responsible for
administering the plan shall promptly notify the Secretary and,
in the case of a physician, the State medical licensing board
of such action.
``(5) Access to information.--The State plan shall provide
that the State will provide information and access to certain
information respecting sanctions taken against health care
practitioners and providers by State licensing authorities in
accordance with section 1553.
``SEC. 1553. INFORMATION CONCERNING SANCTIONS TAKEN BY STATE LICENSING
AUTHORITIES AGAINST HEALTH CARE PRACTITIONERS AND
PROVIDERS.
``(a) Information Reporting Requirement.--The requirement referred
to in section 1552(b)(5) is that the State must provide for the
following:
``(1) Information reporting system.--The State must have in
effect a system of reporting the following information with
respect to formal proceedings (as defined by the Secretary in
regulations) concluded against a health care practitioner or
entity by any authority of the State (or of a political
subdivision thereof) responsible for the licensing of health
care practitioners (or any peer review organization or private
accreditation entity reviewing the services provided by health
care practitioners) or entities:
``(A) Any adverse action taken by such licensing
authority as a result of the proceeding, including any
revocation or suspension of a license (and the length
of any such suspension), reprimand, censure, or
probation.
``(B) Any dismissal or closure of the proceedings
by reason of the practitioner or entity surrendering
the license or leaving the State or jurisdiction.
``(C) Any other loss of the license of the
practitioner or entity, whether by operation of law,
voluntary surrender, or otherwise.
``(D) Any negative action or finding by such
authority, organization, or entity regarding the
practitioner or entity.
``(2) Access to documents.--The State must provide the
Secretary (or an entity designated by the Secretary) with
access to such documents of the authority described in paragraph (1) as
may be necessary for the Secretary to determine the facts and
circumstances concerning the actions and determinations described in
such paragraph for the purpose of carrying out this Act.
``(b) Form of Information.--The information described in subsection
(a)(1) shall be provided to the Secretary (or to an appropriate private
or public agency, under suitable arrangements made by the Secretary
with respect to receipt, storage, protection of confidentiality, and
dissemination of information) in such a form and manner as the
Secretary determines to be appropriate in order to provide for
activities of the Secretary under this Act and in order to provide,
directly or through suitable arrangements made by the Secretary,
information--
``(1) to agencies administering Federal health care
programs, including private entities administering such
programs under contract,
``(2) to licensing authorities described in subsection
(a)(1),
``(3) to State agencies administering or supervising the
administration of State health care programs (as defined in
section 1128(h)),
``(4) to utilization and quality control peer review
organizations described in part B of title XI and to
appropriate entities with contracts under section 1154(a)(4)(C)
with respect to eligible organizations reviewed under the
contracts,
``(5) to State fraud control units (as defined in section
1534),
``(6) to hospitals and other health care entities (as
defined in section 431 of the Health Care Quality Improvement
Act of 1986), with respect to physicians or other licensed
health care practitioners that have entered (or may be
entering) into an employment or affiliation relationship with,
or have applied for clinical privileges or appointments to the
medical staff of, such hospitals or other health care entities
(and such information shall be deemed to be disclosed pursuant
to section 427 of, and be subject to the provisions of, that
Act),
``(7) to the Attorney General and such other law
enforcement officials as the Secretary deems appropriate, and
``(8) upon request, to the Comptroller General,
in order for such authorities to determine the fitness of
individuals to provide health care services, to protect the
health and safety of individuals receiving health care through
such programs, and to protect the fiscal integrity of such
programs.
``(c) Confidentiality of Information Provided.--The Secretary shall
provide for suitable safeguards for the confidentiality of the
information furnished under subsection (a). Nothing in this subsection
shall prevent the disclosure of such information by a party which is
otherwise authorized, under applicable State law, to make such
disclosure.
``(d) Appropriate Coordination.--The Secretary shall provide for
the maximum appropriate coordination in the implementation of
subsection (a) of this section and section 422 of the Health Care
Quality Improvement Act of 1986 and section 1128E.
``SEC. 1554. STATE FRAUD CONTROL UNITS.
``(a) In General.--Each State plan shall provide for a State fraud
control unit described in subsection (b) that effectively carries out
the functions and requirements described in such subsection, unless the
State demonstrates to the satisfaction of the Secretary that the
effective operation of such a unit in the State would not be cost-
effective because minimal fraud exists in connection with the provision
of covered services to eligible individuals under the plan, and that
beneficiaries under the plan will be protected from abuse and neglect
in connection with the provision of medical assistance under the plan
without the existence of such a unit.
``(b) Units Described.--For purposes of this section, the term
`State fraud control unit' means a single identifiable entity of the
State government which meets the following requirements:
``(1) Organization.--The entity--
``(A) is a unit of the office of the State Attorney
General or of another department of State government
which possesses statewide authority to prosecute
individuals for criminal violations;
``(B) is in a State the constitution of which does
not provide for the criminal prosecution of individuals
by a statewide authority and has formal procedures
that--
``(i) assure its referral of suspected
criminal violations relating to the program
under this title to the appropriate authority
or authorities in the State for prosecution,
and
``(ii) assure its assistance of, and
coordination with, such authority or
authorities in such prosecutions; or
``(C) has a formal working relationship with the
office of the State Attorney General and has formal
procedures (including procedures for its referral of
suspected criminal violations to such office) which
provide effective coordination of activities between
the entity and such office with respect to the
detection, investigation, and prosecution of suspected
criminal violations relating to the program under this
title.
``(2) Independence.--The entity is separate and distinct
from any State agency that has principal responsibilities for
administering or supervising the administration of the State
plan.
``(3) Function.--The entity's function is conducting a
statewide program for the investigation and prosecution of
violations of all applicable State laws regarding any and all
aspects of fraud in connection with any aspect of the provision
of medical assistance and the activities of providers of such
assistance under the State plan.
``(4) Review of complaints.--The entity has procedures for
reviewing complaints of the abuse and neglect of patients of
health care facilities which receive payments under the State
plan under this title, and, where appropriate, for acting upon
such complaints under the criminal laws of the State or for
referring them to other State agencies for action.
``(5) Overpayments.--
``(A) In general.--The entity provides for the
collection, or referral for collection to a single
State agency, of overpayments that are made under the
State plan to health care providers and that are
discovered by the entity in carrying out its
activities.
``(B) Treatment of certain overpayments.--If an
overpayment is the direct result of the failure of the
provider (or the provider's billing agent) to adhere to
a change in the State's billing instructions, the
entity may recover the overpayment only if the entity
demonstrates that the provider (or the provider's
billing agent) received prior written or electronic
notice of the change in the billing instructions before
the submission of the claims on which the overpayment
is based.
``(6) Personnel.--The entity employs such auditors,
attorneys, investigators, and other necessary personnel and is
organized in such a manner as is necessary to promote the
effective and efficient conduct of the entity's activities.
``SEC. 1555. RECOVERIES FROM THIRD PARTIES AND OTHERS.
``(a) Third Party Liability.--Each State plan shall provide for
reasonable steps--
``(1) to ascertain the legal liability of third parties to
pay for care and services available under the plan, including
the collection of sufficient information to enable States to
pursue claims against third parties, and
``(2) to seek reimbursement for medical assistance provided
to the extent legal liability is established where the amount
expected to be recovered exceeds the costs of the recovery.
``(b) Beneficiary Protection.--
``(1) In general.--Each State plan shall provide that in
the case of a person furnishing services under the plan for
which a third party may be liable for payment--
``(A) the person may not seek to collect from the
individual (or financially responsible relative)
payment of an amount for the service more than could be
collected under the plan in the absence of such third
party liability, and
``(B) may not refuse to furnish services to such an
individual because of a third party's potential
liability for payment for the service.
``(2) Penalty.--A State plan may provide for a reduction of
any payment amount otherwise due with respect to a person who
furnishes services under the plan in an amount equal to up to 3
times the amount of any payment sought to be collected by that
person in violation of paragraph (1)(A).
``(c) General Liability.--The State shall prohibit any health
insurer, including a group health plan as defined in section 607 of the
Employee Retirement Income Security Act of 1974, a service benefit
plan, or a health maintenance organization, in enrolling an individual
or in making any payments for benefits to the individual or on the
individual's behalf, from taking into account that the individual is
eligible for or is provided medical assistance under a State plan for
any State.
``(d) Acquisition of Rights of Beneficiaries.--To the extent that
payment has been made under a State plan in any case where a third
party has a legal liability to make payment for such assistance, the
State shall have in effect laws under which, to the extent that payment
has been made under the plan for health care items or services
furnished to an individual, the State is considered to have acquired
the rights of such individual to payment by any other party for such
health care items or services.
``(e) Assignment of Medical Support Rights.--The State plan shall
provide for mandatory assignment of rights of payment for medical
support and other medical care owed to recipients in accordance with
section 1556.
``(f) Required Laws Relating to Medical Child Support.--
``(1) In general.--Each State with a State plan under this
title shall have in effect the following laws:
``(A) A law that prohibits an insurer from denying
enrollment of a child under the health coverage of the
child's parent on the ground that--
``(i) the child was born out of wedlock,
``(ii) the child is not claimed as a
dependent on the parent's Federal income tax
return, or
``(iii) the child does not reside with the
parent or in the insurer's service area.
``(B) In any case in which a parent is required by
a court or administrative order to provide health
coverage for a child and the parent is eligible for
family health coverage through an insurer, a law that
requires such insurer--
``(i) to permit such parent to enroll under
such family coverage any such child who is
otherwise eligible for such coverage (without
regard to any enrollment season restrictions);
``(ii) if such a parent is enrolled but
fails to make application to obtain coverage of
such child, to enroll such child under such
family coverage upon application by the child's
other parent or by the State agency
administering the program under this title or
part D of title IV; and
``(iii) not to disenroll, or eliminate
coverage of, such a child unless the insurer is
provided satisfactory written evidence that--
``(I) such court or administrative
order is no longer in effect, or
``(II) the child is or will be
enrolled in comparable health coverage
through another insurer which will take
effect not later than the effective
date of such disenrollment.
``(C) In any case in which a parent is required by
a court or administrative order to provide health
coverage for a child and the parent is eligible for
family health coverage through an employer doing
business in the State, a law that requires such
employer--
``(i) to permit such parent to enroll under
such family coverage any such child who is
otherwise eligible for such coverage (without
regard to any enrollment season restrictions);
``(ii) if such a parent is enrolled but
fails to make application to obtain coverage of
such child, to enroll such child under such
family coverage upon application by the child's
other parent or by the State agency
administering the program under this title or
part D of title IV; and
``(iii) not to disenroll (or eliminate
coverage of) any such child unless--
``(I) the employer is provided
satisfactory written evidence that such
court or administrative order is no
longer in effect, or the child is or
will be enrolled in comparable health
coverage which will take effect not
later than the effective date of such
disenrollment, or
``(II) the employer has eliminated
family health coverage for all of its
employees; and
``(iv) to withhold from such employee's
compensation the employee's share (if any) of
premiums for health coverage (except that the
amount so withheld may not exceed the maximum
amount permitted to be withheld under section
303(b) of the Consumer Credit Protection Act),
and to pay such share of premiums to the
insurer, except that the Secretary may provide
by regulation for appropriate circumstances
under which an employer may withhold less than
such employee's share of such premiums.
``(D) A law that prohibits an insurer from imposing
requirements on a State agency, which has been assigned
the rights of an individual eligible for medical
assistance under this title and covered for health
benefits from the insurer, that are different from
requirements applicable to an agent or assignee of any
other individual so covered.
``(E) A law that requires an insurer, in any case
in which a child has health coverage through the
insurer of a noncustodial parent--
``(i) to provide such information to the
custodial parent as may be necessary for the
child to obtain benefits through such coverage,
``(ii) to permit the custodial parent (or
provider, with the custodial parent's approval)
to submit claims for covered services without
the approval of the noncustodial parent, and
``(iii) to make payment on claims submitted
in accordance with clause (ii) directly to such
custodial parent, the provider, or the State
agency.
``(F) A law that permits the State agency under
this title to garnish the wages, salary, or other
employment income of, and requires withholding amounts
from State tax refunds to, any person who--
``(i) is required by court or
administrative order to provide coverage of the
costs of health services to a child who is
eligible for medical assistance under this
title,
``(ii) has received payment from a third
party for the costs of such services to such
child, but
``(iii) has not used such payments to
reimburse, as appropriate, either the other
parent or guardian of such child or the
provider of such services,
to the extent necessary to reimburse the State agency
for expenditures for such costs under its plan under
this title, but any claims for current or past-due
child support shall take priority over any such claims
for the costs of such services.
``(2) Definition.--For purposes of this subsection, the
term `insurer' includes a group health plan, as defined in
section 607(1) of the Employee Retirement Income Security Act
of 1974, a health maintenance organization, and an entity
offering a service benefit plan.
``(g) Estate Recoveries and Liens Permitted.--
``(1) In general.--A State may take such actions as it
considers appropriate to adjust or recover from the individual
or the individual's estate any amounts paid as medical
assistance to or on behalf of the individual under the State
plan, including through the imposition of liens against the
property or estate of the individual to the extent consistent
with section 1506.
``(2) No lien on family farms.--For purposes of paragraph
(1), a State may not impose a lien on the family farm owned by
the individual that is the principal residence (within the
meaning of section 1034 of the Internal Revenue Code of 1986)
of such individual as a condition of the spouse of the
individual receiving nursing facility or other long term care
benefits under the State plan.
``(3) No lien on trusts of disabled individuals under age
65.--No lien may be imposed against a trust containing the
assets of an individual under age 65 who is disabled (as
defined in section 1614(a)(3)) and which is established for the
benefit of such individual by a parent, grandparent, legal
guardian of the individual, or a court, if the State will
receive all amounts remaining in the trust upon the death of
such individual up to an amount equal to the total medical
assistance paid on behalf of the individual under a State plan
under this title.
``SEC. 1556. ASSIGNMENT OF RIGHTS OF PAYMENT.
``(a) In General.--For the purpose of assisting in the collection
of medical support payments and other payments for medical care owed to
recipients of medical assistance under the State plan, each State plan
shall--
``(1) provide that, as a condition of eligibility for
medical assistance under the plan to an individual who has the
legal capacity to execute an assignment for himself, the
individual is required--
``(A) to assign the State any rights, of the
individual or of any other person who is eligible for
medical assistance under the plan and on whose behalf
the individual has the legal authority to execute an
assignment of such rights, to support (specified as
support for the purpose of medical care by a court or
administrative order) and to payment for medical care
from any third party,
``(B) to cooperate with the State (i) in
establishing the paternity of such person (referred to
in subparagraph (A)) if the person is a child born out
of wedlock, and (ii) in obtaining support and payments
(described in subparagraph (A)) for himself and for
such person, unless (in either case) the individual is
a pregnant woman or the individual is found to have
good cause for refusing to cooperate as determined by
the State, and
``(C) to cooperate with the State in identifying,
and providing information to assist the State in
pursuing, any third party who may be liable to pay for
care and services available under the plan, unless such
individual has good cause for refusing to cooperate as
determined by the State; and
``(2) provide for entering into cooperative arrangements,
including financial arrangements, with any appropriate agency
of any State (including, with respect to the enforcement and
collection of rights of payment for medical care by or through
a parent, with a State's agency established or designated under
section 454(3)) and with appropriate courts and law enforcement
officials, to assist the agency or agencies administering the plan with
respect to--
``(A) the enforcement and collection of rights to
support or payment assigned under this section, and
``(B) any other matters of common concern.
``(b) Use of Amounts Collected.--Such part of any amount collected
by the State under an assignment made under the provisions of this
section shall be retained by the State as is necessary to reimburse it
for medical assistance payments made on behalf of an individual with
respect to whom such assignment was executed (with appropriate
reimbursement of the Federal Government to the extent of its
participation in the financing of such medical assistance), and the
remainder of such amount collected shall be paid to such individual.
``SEC. 1557. QUALITY ASSURANCE REQUIREMENTS FOR NURSING FACILITIES.
``(a) Nursing Facility Defined.--In this title, the term `nursing
facility' means an institution (or a distinct part of an institution)
which--
``(1) is primarily engaged in providing to residents--
``(A) skilled nursing care and related services for
residents who require medical or nursing care,
``(B) rehabilitation services for the
rehabilitation of injured, disabled, or sick persons,
or
``(C) on a regular basis, health-related care and
services to individuals who because of their mental or
physical condition require care and services (above the
level of room and board) which can be made available to
them only through institutional facilities,
and is not primarily for the care and treatment of mental
diseases;
``(2) has in effect a transfer agreement (meeting the
requirements of section 1861(l)) with one or more hospitals
having agreements in effect under section 1866; and
``(3) meets the requirements for a nursing facility
described in subsections (b), (c), and (d) of this section.
Such term also includes any facility which is located in a State on an
Indian reservation and is certified by the Secretary as meeting the
requirements of paragraph (1) and subsections (b), (c), and (d).
``(b) Requirements Relating to Provision of Services.--
``(1) Quality of life.--
``(A) In general.--A nursing facility must care for
its residents in such a manner and in such an
environment as will promote maintenance or enhancement
of the quality of life of each resident.
``(B) Quality assessment and assurance.--A nursing
facility must maintain a quality assessment and
assurance committee, consisting of the director of
nursing services, a physician designated by the
facility, and at least 3 other members of the
facility's staff, which (i) meets at least quarterly to
identify issues with respect to which quality
assessment and assurance activities are necessary and
(ii) develops and implements appropriate plans of
action to correct identified quality deficiencies. A
State or the Secretary may not require disclosure of
the records of such committee except insofar as such
disclosure is related to the compliance of such
committee with the requirements of this subparagraph.
``(2) Scope of services and activities under plan of
care.--A nursing facility must provide services and activities
to attain or maintain the highest practicable physical, mental,
and psychosocial well-being of each resident in accordance with
a written plan of care which--
``(A) describes the medical, nursing, and
psychosocial needs of the resident and how such needs
will be met;
``(B) is initially prepared, with the participation
to the extent practicable of the resident or the
resident's family or legal representative, by a team
which includes the resident's attending physician and a
registered professional nurse with responsibility for the resident; and
``(C) is periodically reviewed and revised by such
team after each assessment under paragraph (3).
``(3) Residents' assessment.--
``(A) Requirement.--A nursing facility must conduct
a comprehensive, accurate, standardized, reproducible
assessment of each resident's functional capacity,
which assessment--
``(i) describes the resident's capability
to perform daily life functions and significant
impairments in functional capacity;
``(ii) is based on a uniform minimum data
set specified by the Secretary under subsection
(f)(6)(A);
``(iii) uses an instrument which is
specified by the State under subsection (e)(5);
and
``(iv) includes the identification of
medical problems.
``(B) Certification.--
``(i) In general.--Each such assessment
must be conducted or coordinated (with the
appropriate participation of health
professionals) by a registered professional
nurse who signs and certifies the completion of
the assessment. Each individual who completes a
portion of such an assessment shall sign and
certify as to the accuracy of that portion of
the assessment.
``(ii) Penalty for falsification.--
``(I) An individual who willfully
and knowingly certifies under clause
(i) a material and false statement in a
resident assessment is subject to a
civil money penalty of not more than
$1,000 with respect to each assessment.
``(II) An individual who willfully
and knowingly causes another individual
to certify under clause (i) a material
and false statement in a resident
assessment is subject to a civil money
penalty of not more than $5,000 with
respect to each assessment.
``(III) The provisions of section
1128A (other than subsections (a) and
(b)) shall apply to a civil money
penalty under this clause in the same
manner as such provisions apply to a
penalty or proceeding under section
1128A(a).
``(iii) Use of independent assessors.--If a
State determines, under a survey under
subsection (g) or otherwise, that there has
been a knowing and willful certification of
false assessments under this paragraph, the
State may require (for a period specified by
the State) that resident assessments under this
paragraph be conducted and certified by
individuals who are independent of the facility
and who are approved by the State.
``(C) Frequency.--
``(i) In general.--Such an assessment must
be conducted--
``(I) promptly upon (but no later
than 14 days after the date of)
admission for each individual admitted;
``(II) promptly after a significant
change in the resident's physical or
mental condition; and
``(III) in no case less often than
once every 12 months.
``(ii) Resident review.--The nursing
facility must examine each resident no less
frequently than once every 3 months and, as
appropriate, revise the resident's assessment
to assure the continuing accuracy of the
assessment.
``(D) Use.--The results of such an assessment shall
be used in developing, reviewing, and revising the
resident's plan of care under paragraph (2).
``(E) Coordination.--Such assessments shall be
coordinated with any State-required preadmission
screening program to the maximum extent practicable in
order to avoid duplicative testing and effort. In
addition, a nursing facility shall notify the State
mental health authority or State mental retardation or
developmental disability authority, as applicable,
promptly after a significant change in the physical or
mental condition of a resident who is mentally ill or
mentally retarded.
``(4) Provision of services and activities.--
``(A) In general.--To the extent needed to fulfill
all plans of care described in paragraph (2), a nursing
facility must provide (or arrange for the provision
of)--
``(i) nursing and related services and
specialized rehabilitative services to attain
or maintain the highest practicable physical,
mental, and psychosocial well-being of each
resident;
``(ii) medically-related social services to
attain or maintain the highest practicable
physical, mental, and psychosocial well-being
of each resident;
``(iii) pharmaceutical services (including
procedures that assure the accurate acquiring,
receiving, dispensing, and administering of all
drugs and biologicals) to meet the needs of
each resident;
``(iv) dietary services that assure that
the meals meet the daily nutritional and
special dietary needs of each resident;
``(v) an on-going program, directed by a
qualified professional, of activities designed
to meet the interests and the physical, mental,
and psychosocial well-being of each resident;
``(vi) routine dental services (to the
extent covered under the State plan) and
emergency dental services to meet the needs of
each resident; and
``(vii) treatment and services required by
mentally ill and mentally retarded residents
not otherwise provided or arranged for (or
required to be provided or arranged for) by the
State.
The services provided or arranged by the facility must
meet professional standards of quality.
``(B) Qualified persons providing services.--
Services described in clauses (i), (ii), (iii), (iv),
and (vi) of subparagraph (A) must be provided by
qualified persons in accordance with each resident's
written plan of care.
``(C) Required nursing care; facility waivers.--
``(i) General requirements.--A nursing
facility--
``(I) except as provided in clause
(ii), must provide 24-hour licensed
nursing services which are sufficient
to meet the nursing needs of its
residents, and
``(II) except as provided in clause
(ii), must use the services of a
registered professional nurse for at
least 8 consecutive hours a day, 7 days
a week.
``(ii) Waiver by state.--To the extent that
a facility is unable to meet the requirements
of clause (i), a State may waive such
requirements with respect to the facility if--
``(I) the facility demonstrates to
the satisfaction of the State that the
facility has been unable, despite
diligent efforts (including offering
wages at the community prevailing rate
for nursing facilities), to recruit
appropriate personnel,
``(II) the State determines that a
waiver of the requirement will not
endanger the health or safety of
individuals staying in the facility,
``(III) the State finds that, for
any such periods in which licensed
nursing services are not available, a
registered professional nurse or a
physician is obligated to respond immediately to telephone calls from
the facility,
``(IV) the State agency granting a
waiver of such requirements provides
notice of the waiver to the State long-
term care ombudsman (established under
section 307(a)(12) of the Older
Americans Act of 1965) and the
protection and advocacy system in the
State for the mentally ill and the
mentally retarded, and
``(V) the nursing facility that is
granted such a waiver by a State
notifies residents of the facility (or,
where appropriate, the guardians or
legal representatives of such
residents) and members of their
immediate families of the waiver.
A waiver under this clause shall be subject to
annual review and to the review of the
Secretary and subject to clause (iii) shall be
accepted by the Secretary for purposes of this
title to the same extent as is the State's
certification of the facility. In granting or
renewing a waiver, a State may require the
facility to use other qualified, licensed
personnel.
``(iii) Assumption of waiver authority by
secretary.--If the Secretary determines that a
State has shown a clear pattern and practice of
allowing waivers in the absence of diligent
efforts by facilities to meet the staffing
requirements, the Secretary shall assume and
exercise the authority of the State to grant
waivers.
``(5) Required training of nurse aides.--
``(A) In general.--(i) Except as provided in clause
(ii), a nursing facility must not use on a full-time
basis any individual as a nurse aide in the facility,
for more than 4 months unless the individual--
``(I) has completed a training and
competency evaluation program, or a competency
evaluation program, approved by the State under
subsection (e)(1)(A), and
``(II) is competent to provide nursing or
nursing-related services.
``(ii) A nursing facility must not use on a
temporary, per diem, leased, or on any other basis
other than as a permanent employee any individual as a
nurse aide in the facility, unless the individual meets
the requirements described in clause (i).
``(B) Offering competency evaluation programs for
current employees.--A nursing facility must provide,
for individuals used as a nurse aide by the facility,
for a competency evaluation program approved by the
State under subsection (e)(1) and such preparation as
may be necessary for the individual to complete such a
program.
``(C) Competency.--The nursing facility must not
permit an individual, other than in a training and
competency evaluation program approved by the State, to
serve as a nurse aide or provide services of a type for
which the individual has not demonstrated competency
and must not use such an individual as a nurse aide
unless the facility has inquired of any State registry
established under subsection (e)(2)(A) that the
facility believes will include information concerning
the individual.
``(D) Re-training required.--For purposes of
subparagraph (A), if, since an individual's most recent
completion of a training and competency evaluation
program, there has been a continuous period of 24
consecutive months during none of which the individual
performed nursing or nursing-related services for
monetary compensation, such individual shall complete a
new training and competency evaluation program, or a
new competency evaluation program.
``(E) Regular in-service education.--The nursing
facility must provide such regular performance review
and regular in-service education as assures that individuals used as
nurse aides are competent to perform services as nurse aides, including
training for individuals providing nursing and nursing-related services
to residents with cognitive impairments.
``(F) Nurse aide defined.--In this paragraph, the
term `nurse aide' means any individual providing
nursing or nursing-related services to residents in a
nursing facility, but does not include an individual--
``(i) who is a licensed health professional
(as defined in subparagraph (G)) or a
registered dietitian, or
``(ii) who volunteers to provide such
services without monetary compensation.
``(G) Licensed health professional defined.--In
this paragraph, the term `licensed health professional'
means a physician, physician assistant, nurse
practitioner, physical, speech, or occupational
therapist, physical or occupational therapy assistant,
registered professional nurse, licensed practical
nurse, or licensed or certified social worker.
``(6) Physician supervision and clinical records.--A
nursing facility must--
``(A) require that the health care of every
resident be provided under the supervision of a
physician (or, at the option of a State, under the
supervision of a nurse practitioner, clinical nurse
specialist, or physician assistant who is not an
employee of the facility but who is working in
collaboration with a physician);
``(B) provide for having a physician available to
furnish necessary medical care in case of emergency;
and
``(C) maintain clinical records on all residents,
which records include the plans of care (described in
paragraph (2)) and the residents' assessments
(described in paragraph (3)), as well as the results of
any pre-admission screening conducted under subsection
(e)(7).
``(7) Required social services.--In the case of a nursing
facility with more than 120 beds, the facility must have at
least one social worker (with at least a bachelor's degree in
social work or similar professional qualifications) employed
full-time to provide or assure the provision of social
services.
``(c) Requirements Relating to Residents' Rights.--
``(1) General rights.--
``(A) Specified rights.--A nursing facility must
protect and promote the rights of each resident,
including each of the following rights:
``(i) Free choice.--The right to choose a
personal attending physician, to be fully
informed in advance about care and treatment,
to be fully informed in advance of any changes
in care or treatment that may affect the
resident's well-being, and (except with respect
to a resident adjudged incompetent) to
participate in planning care and treatment or
changes in care and treatment.
``(ii) Free from restraints.--The right to
be free from physical or mental abuse, corporal
punishment, involuntary seclusion, and any
physical or chemical restraints imposed for
purposes of discipline or convenience and not
required to treat the resident's medical
symptoms. Restraints may only be imposed--
``(I) to ensure the physical safety
of the resident or other residents, and
``(II) only upon the written order
of a physician that specifies the
duration and circumstances under which
the restraints are to be used (except
in emergency circumstances specified by
the Secretary until such an order could
reasonably be obtained).
``(iii) Privacy.--The right to privacy with
regard to accommodations, medical treatment,
written and telephonic communications, visits,
and meetings of family and of resident groups.
``(iv) Confidentiality.--The right to
confidentiality of personal and clinical
records and to access to current clinical
records of the resident upon request by the
resident or the resident's legal
representative, within 24 hours (excluding
hours occurring during a weekend or holiday)
after making such a request.
``(v) Accommodation of needs.--The right--
``(I) to reside and receive
services with reasonable accommodation
of individual needs and preferences,
except where the health or safety of
the individual or other residents would
be endangered, and
``(II) to receive notice before the
room or roommate of the resident in the
facility is changed.
``(vi) Grievances.--The right to voice
grievances with respect to treatment or care
that is (or fails to be) furnished, without
discrimination or reprisal for voicing the
grievances and the right to prompt efforts by
the facility to resolve grievances the resident
may have, including those with respect to the
behavior of other residents.
``(vii) Participation in resident and
family groups.--The right of the resident to
organize and participate in resident groups in
the facility and the right of the resident's
family to meet in the facility with the
families of other residents in the facility.
``(viii) Participation in other
activities.--The right of the resident to
participate in social, religious, and community
activities that do not interfere with the
rights of other residents in the facility.
``(ix) Examination of survey results.--The
right to examine, upon reasonable request, the
results of the most recent survey of the
facility conducted by the Secretary or a State
with respect to the facility and any plan of
correction in effect with respect to the
facility.
``(x) Refusal of certain transfers.--The
right to refuse a transfer to another room
within the facility, if a purpose of the
transfer is to relocate the resident from a
portion of the facility that is not a skilled
nursing facility (for purposes of title XVIII)
to a portion of the facility that is such a
skilled nursing facility.
``(xi) Other rights.--Any other right
established by the Secretary.
Clause (i) shall not be construed as precluding a State
from requiring a resident of a nursing facility to
choose a personal attending physician who participates
in a managed care network under a contract with the
State to provide medical assistance under this title.
Clause (iii) shall not be construed as requiring the
provision of a private room. A resident's exercise of a
right to refuse transfer under clause (x) shall not
affect the resident's eligibility or entitlement to
medical assistance under this title or a State's
entitlement to Federal medical assistance under this
title with respect to services furnished to such a
resident.
``(B) Notice of rights.--A nursing facility must--
``(i) inform each resident, orally and in
writing at the time of admission to the
facility, of the resident's legal rights during
the stay at the facility and of the
requirements and procedures for establishing
eligibility for medical assistance under
this title, including the right to request an assessment under section
1505(c)(1)(B);
``(ii) make available to each resident,
upon reasonable request, a written statement of
such rights (which statement is updated upon
changes in such rights) including the notice
(if any) of the State developed under
subsection (e)(6);
``(iii) inform each resident who is
entitled to medical assistance under this
title--
``(I) at the time of admission to
the facility or, if later, at the time
the resident becomes eligible for such
assistance, of the items and services
that are included in nursing facility
services under the State plan and for
which the resident may not be charged,
and of those other items and services
that the facility offers and for which
the resident may be charged and the
amount of the charges for such items
and services, and
``(II) of changes in the items and
services described in subclause (I) and
of changes in the charges imposed for
items and services described in that
subclause; and
``(iv) inform each other resident, in
writing before or at the time of admission and
periodically during the resident's stay, of
services available in the facility and of
related charges for such services, including
any charges for services not covered under
title XVIII or by the facility's basic per diem
charge.
The written description of legal rights under this
subparagraph shall include a description of the
protection of personal funds under paragraph (6) and a
statement that a resident may file a complaint with a
State survey and certification agency respecting
resident abuse and neglect and misappropriation of
resident property in the facility.
``(C) Rights of incompetent residents.--In the case
of a resident adjudged incompetent under the laws of a
State, the rights of the resident under this title
shall devolve upon, and, to the extent judged necessary
by a court of competent jurisdiction, be exercised by,
the person appointed under State law to act on the
resident's behalf.
``(D) Use of psychopharmacologic drugs.--
Psychopharmacologic drugs may be administered only on
the orders of a physician and only as part of a plan
(included in the written plan of care described in
paragraph (2)) designed to eliminate or modify the
symptoms for which the drugs are prescribed and only
if, at least annually an independent, external
consultant reviews the appropriateness of the drug plan
of each resident receiving such drugs.
``(2) Transfer and discharge rights.--
``(A) In general.--A nursing facility must permit
each resident to remain in the facility and must not
transfer or discharge the resident from the facility
unless--
``(i) the transfer or discharge is
necessary to meet the resident's welfare and
the resident's welfare cannot be met in the
facility;
``(ii) the transfer or discharge is
appropriate because the resident's health has
improved sufficiently so the resident no longer
needs the services provided by the facility;
``(iii) the safety of individuals in the
facility is endangered;
``(iv) the health of individuals in the
facility would otherwise be endangered;
``(v) the resident has failed, after
reasonable and appropriate notice, to pay (or
to have paid under this title or title XVIII on
the resident's behalf) for a stay at the
facility; or
``(vi) the facility ceases to operate.
In each of the cases described in clauses (i) through
(iv), the basis for the transfer or discharge must be
documented in the resident's clinical record. In the
cases described in clauses (i) and (ii), the
documentation must be made by the resident's physician,
and in the case described in clause (iv) the
documentation must be made by a physician. For purposes
of clause (v), in the case of a resident who becomes
eligible for assistance under this title after
admission to the facility, only charges which may be
imposed under this title shall be considered to be
allowable.
``(B) Pre-transfer and pre-discharge notice.--
``(i) In general.--Before effecting a
transfer or discharge of a resident, a nursing
facility must--
``(I) notify the resident (and, if
known, an immediate family member of
the resident or legal representative)
of the transfer or discharge and the
reasons therefor,
``(II) record the reasons in the
resident's clinical record (including
any documentation required under
subparagraph (A)), and
``(III) include in the notice the
items described in clause (iii).
``(ii) Timing of notice.--The notice under
clause (i)(I) must be made at least 30 days in
advance of the resident's transfer or discharge
except--
``(I) in a case described in clause
(iii) or (iv) of subparagraph (A);
``(II) in a case described in
clause (ii) of subparagraph (A), where
the resident's health improves
sufficiently to allow a more immediate
transfer or discharge;
``(III) in a case described in
clause (i) of subparagraph (A), where a
more immediate transfer or discharge is
necessitated by the resident's urgent
medical needs; or
``(IV) in a case where a resident
has not resided in the facility for 30
days.
In the case of such exceptions, notice must be
given as many days before the date of the
transfer or discharge as is practicable.
``(iii) Items included in notice.--Each
notice under clause (i) must include--
``(I) notice of the resident's
right to appeal the transfer or
discharge under the State process
established under subsection (e)(3);
``(II) the name, mailing address,
and telephone number of the State long-
term care ombudsman (established under
title III or VII of the Older Americans
Act of 1965);
``(III) in the case of residents
with developmental disabilities, the
mailing address and telephone number of
the agency responsible for the
protection and advocacy system for
developmentally disabled individuals
established under part C of the
Developmental Disabilities Assistance
and Bill of Rights Act; and
``(IV) in the case of mentally ill
residents (as defined in subsection
(e)(7)(G)(i)), the mailing address and
telephone number of the agency
responsible for the protection and
advocacy system for mentally ill
individuals established under the
Protection and Advocacy for Mentally
Ill Individuals Act.
``(C) Orientation.--A nursing facility must provide
sufficient preparation and orientation to residents to
ensure safe and orderly transfer or discharge from the
facility.
``(D) Notice on bed-hold policy and readmission.--
``(i) Notice before transfer.--Before a
resident of a nursing facility is transferred
for hospitalization or therapeutic leave, a
nursing facility must provide written
information to the resident and an immediate
family member or legal representative
concerning--
``(I) the provisions of the State
plan under this title regarding the
period (if any) during which the
resident will be permitted under the
State plan to return and resume
residence in the facility, and
``(II) the policies of the facility
regarding such a period, which policies
must be consistent with clause (iii).
``(ii) Notice upon transfer.--At the time
of transfer of a resident to a hospital or for
therapeutic leave, a nursing facility must
provide written notice to the resident and an
immediate family member or legal representative
of the duration of any period described in
clause (i).
``(iii) Permitting resident to return.--A
nursing facility must establish and follow a
written policy under which a resident--
``(I) who is eligible for medical
assistance for nursing facility
services under a State plan,
``(II) who is transferred from the
facility for hospitalization or
therapeutic leave, and
``(III) whose hospitalization or
therapeutic leave exceeds a period paid
for under the State plan for the
holding of a bed in the facility for
the resident,
will be permitted to be readmitted to the
facility immediately upon the first
availability of a bed in a room (not including
a private room) in the facility if, at the time
of readmission, the resident requires the
services provided by the facility.
``(3) Access and visitation rights.--A nursing facility
must--
``(A) permit immediate access to any resident by
any representative of the Secretary, by any
representative of the State, by an ombudsman or agency
described in subclause (II), (III), or (IV) of
paragraph (2)(B)(iii), or by the resident's individual
physician;
``(B) permit immediate access to a resident,
subject to the resident's right to deny or withdraw
consent at any time, by immediate family or other
relatives of the resident;
``(C) permit immediate access to a resident,
subject to reasonable restrictions and the resident's
right to deny or withdraw consent at any time, by
others who are visiting with the consent of the
resident;
``(D) permit reasonable access to a resident by any
entity or individual that provides health, social,
legal, or other services to the resident, subject to
the resident's right to deny or withdraw consent at any
time; and
``(E) permit representatives of the State ombudsman
(described in paragraph (2)(B)(iii)(II)), with the
permission of the resident (or the resident's legal
representative) and consistent with State law, to
examine a resident's clinical records.
``(4) Equal access to quality care.--
``(A) In general.--A nursing facility must
establish and maintain identical policies and practices
regarding transfer, discharge, and the provision of
services required under the State plan for all
individuals regardless of source of payment.
``(B) Construction.--
``(i) Nothing prohibiting any charges for
non-medical assistance patients.--Subparagraph
(A) shall not be construed as prohibiting a
nursing facility from charging any amount
for services furnished, consistent with the notice in paragraph (1)(B)
describing such charges.
``(ii) No additional services required.--
Subparagraph (A) shall not be construed as
requiring a State to offer additional services
on behalf of a resident than are otherwise
provided under the State plan.
``(5) Admissions Policy.--
``(A) Admissions.--With respect to admissions
practices, a nursing facility must--
``(i)(I) not require individuals applying
to reside or residing in the facility to waive
their rights to benefits under a State plan
under this title or title XVIII, (II) not
require oral or written assurance that such
individuals are not eligible for, or will not
apply for, benefits under a State plan under
this title or title XVIII, and (III)
prominently display in the facility written
information, and provide to such individuals
oral and written information, about how to
apply for and use such benefits and how to
receive refunds for previous payments covered
by such benefits;
``(ii) not require a third party guarantee
of payment to the facility as a condition of
admission (or expedited admission) to, or
continued stay in, the facility; and
``(iii) in the case of an individual who is
provided medical assistance for nursing
facility services, not charge, solicit, accept,
or receive, in addition to any amount otherwise
required to be paid under the State plan under
this title, any gift, money, donation, or other
consideration as a precondition of admitting
(or expediting the admission of) the individual
to the facility or as a requirement for the
individual's continued stay in the facility.
``(B) Construction.--
``(i) No preemption of stricter
standards.--Subparagraph (A) shall not be
construed as preventing States or political
subdivisions therein from prohibiting, under
State or local law, the discrimination against
individuals who are provided medical assistance
under the State plan with respect to admissions
practices of nursing facilities.
``(ii) Contracts with legal
representatives.--Subparagraph (A)(ii) shall
not be construed as preventing a facility from
requiring an individual, who has legal access
to a resident's income or resources available
to pay for care in the facility, to sign a
contract (without incurring personal financial
liability) to provide payment from the
resident's income or resources for such care.
``(iii) Charges for additional services
requested.--Subparagraph (A)(iii) shall not be
construed as preventing a facility from
charging a resident, eligible for medical
assistance under the State plan, for items or
services the resident has requested and
received and that are not specified in the
State plan as included in covered nursing
facility services.
``(iv) Bona fide contributions.--
Subparagraph (A)(iii) shall not be construed as
prohibiting a nursing facility from soliciting,
accepting, or receiving a charitable,
religious, or philanthropic contribution from
an organization or from a person unrelated to
the resident (or potential resident), but only
to the extent that such contribution is not a
condition of admission, expediting admission,
or continued stay in the facility.
``(6) Protection of resident funds.--
``(A) In general.--The nursing facility--
``(i) may not require residents to deposit
their personal funds with the facility, and
``(ii) upon the written authorization of
the resident, must hold, safeguard, and account
for such personal funds under a system
established and maintained by the facility in
accordance with this paragraph.
``(B) Management of personal funds.--Upon written
authorization of a resident under subparagraph (A)(ii),
the facility must manage and account for the personal
funds of the resident deposited with the facility as
follows:
``(i) Deposit.--The facility must deposit
any amount of personal funds in excess of $50
with respect to a resident in an interest
bearing account (or accounts) that is separate
from any of the facility's operating accounts
and credits all interest earned on such
separate account to such account. With respect
to any other personal funds, the facility must
maintain such funds in a non-interest bearing
account or petty cash fund.
``(ii) Accounting and records.--The
facility must assure a full and complete
separate accounting of each such resident's
personal funds, maintain a written record of
all financial transactions involving the
personal funds of a resident deposited with the
facility, and afford the resident (or a legal
representative of the resident) reasonable
access to such record.
``(iii) Notice of certain balances.--The
facility must notify each resident receiving
medical assistance under the State plan when
the amount in the resident's account reaches
$200 less than the dollar amount determined
under section 1611(a)(3)(B) and the fact that
if the amount in the account (in addition to
the value of the resident's other nonexempt
resources) reaches the amount determined under
such section the resident may lose eligibility
for such medical assistance or for benefits
under title XVI.
``(iv) Conveyance upon death.--Upon the
death of a resident with such an account, the
facility must convey promptly the resident's
personal funds (and a final accounting of such
funds) to the individual administering the
resident's estate. All other personal property,
including medical records, shall be considered
part of the resident's estate and shall only be
released to the administrator of the estate.
``(C) Assurance of financial security.--The
facility must purchase a surety bond, or otherwise
provide assurance satisfactory to the State, to assure
the security of all personal funds of residents
deposited with the facility.
``(D) Limitation on charges to personal funds.--The
facility may not impose a charge against the personal
funds of a resident for any item or service for which
payment is made under this title or title XVIII.
``(7) Limitation on charges in case of medical-assistance-
eligible individuals.--
``(A) In general.--A nursing facility may not
impose charges, for certain medical-assistance-eligible
individuals for nursing facility services covered by
the State under its plan under this title, that exceed
the payment amounts established by the State for such
services under this title.
``(B) Certain medical-assistance-eligible
individuals defined.--In subparagraph (A), the term
`certain medical-assistance-eligible individual' means
an individual who is entitled to medical assistance for
nursing facility services in the facility under this
title but with respect to whom such benefits are not
being paid because, in determining the amount of the
individual's income to be applied monthly to payment
for the costs of such services, the amount of such
income exceeds the payment amounts established by the State for such
services under this title.
``(8) Posting of survey results.--A nursing facility must
post in a place readily accessible to residents, and family
members and legal representatives of residents, the results of
the most recent survey of the facility conducted under
subsection (g).
``(d) Requirements Relating to Administration and Other Matters.--
``(1) Administration.--
``(A) In general.--A nursing facility must be
administered in a manner that enables it to use its
resources effectively and efficiently to attain or
maintain the highest practicable physical, mental, and
psychosocial well-being of each resident (consistent
with requirements established under subsection (f)(5)).
``(B) Required notices.--If a change occurs in--
``(i) the persons with an ownership or
control interest (as defined in section
1124(a)(3)) in the facility,
``(ii) the persons who are officers,
directors, agents, or managing employees (as
defined in section 1126(b)) of the facility,
``(iii) the corporation, association, or
other company responsible for the management of
the facility, or
``(iv) the individual who is the
administrator or director of nursing of the
facility,
the nursing facility must provide notice to the State
agency responsible for the licensing of the facility,
at the time of the change, of the change and of the
identity of each new person, company, or individual
described in the respective clause.
``(C) Nursing facility administrator.--The
administrator of a nursing facility, whether
freestanding or hospital-based, must meet such
standards as are established by the Secretary under
subsection (f)(4).
``(2) Licensing and life safety code.--
``(A) Licensing.--A nursing facility must be
licensed under applicable State and local law.
``(B) Life safety code.--A nursing facility must
meet such provisions of such edition (as specified by
the Secretary in regulation) of the Life Safety Code of
the National Fire Protection Association as are
applicable to nursing homes; except that--
``(i) the Secretary may waive, for such
periods as he deems appropriate, specific
provisions of such Code which if rigidly
applied would result in unreasonable hardship
upon a facility, but only if such waiver would
not adversely affect the health and safety of
residents or personnel, and
``(ii) the provisions of such Code shall
not apply in any State if the Secretary finds
that in such State there is in effect a fire
and safety code, imposed by State law, which
adequately protects residents of and personnel
in nursing facilities.
``(3) Sanitary and infection control and physical
environment.--A nursing facility must--
``(A) establish and maintain an infection control
program designed to provide a safe, sanitary, and
comfortable environment in which residents reside and
to help prevent the development and transmission of
disease and infection, and
``(B) be designed, constructed, equipped, and
maintained in a manner to protect the health and safety
of residents, personnel, and the general public.
``(4) Miscellaneous.--
``(A) Compliance with federal, state, and local
laws and professional standards.--A nursing facility,
whether freestanding or hospital-based, must operate
and provide services in compliance with all applicable
Federal, State, and local laws and regulations
(including the requirements of section 1124) and with accepted
professional standards and principles which apply to professionals
providing services in such a facility.
``(B) Other.--A nursing facility must meet such
other requirements relating to the health and safety of
residents or relating to the physical facilities
thereof as the Secretary may find necessary.
``(e) State Requirements Relating to Nursing Facility
Requirements.--A State with a State plan under this title shall provide
for the following:
``(1) Specification and review of nurse aide training and
competency evaluation programs and of nurse aide competency
evaluation programs.--The State must--
``(A) specify those training and competency
evaluation programs, and those competency evaluation
programs, that the State approves for purposes of
subsection (b)(5) and that meet the requirements
established under subsection (f)(2), and
``(B) provide for the review and reapproval of such
programs, at a frequency and using a methodology
consistent with the requirements established under
subsection (f)(2)(A)(iii).
``(2) Nurse aide registry.--
``(A) In general.--The State shall establish and
maintain a registry of all individuals who have
satisfactorily completed a nurse aide training and
competency evaluation program, or a nurse aide
competency evaluation program, approved under paragraph
(1) in the State, or any individual described in
subsection (f)(2)(B)(ii) or in subparagraph (B), (C),
or (D) of section 6901(b)(4) of the Omnibus Budget
Reconciliation Act of 1989.
``(B) Information in registry.--The registry under
subparagraph (A) shall provide (in accordance with
regulations of the Secretary) for the inclusion of
specific documented findings by a State under
subsection (g)(1)(C) of resident neglect or abuse or
misappropriation of resident property involving an
individual listed in the registry, as well as any brief
statement of the individual disputing the findings. The
State shall make available to the public information in
the registry. In the case of inquiries to the registry
concerning an individual listed in the registry, any
information disclosed concerning such a finding shall
also include disclosure of any such statement in the
registry relating to the finding or a clear and
accurate summary of such a statement.
``(C) Prohibition against charges.--A State may not
impose any charges on a nurse aide relating to the
registry established and maintained under subparagraph
(A).
``(3) State appeals process for transfers and discharges.--
The State must provide for a fair mechanism, meeting the
guidelines established under subsection (f)(3), for hearing
appeals on transfers and discharges of residents of such
facilities.
``(4) Nursing facility administrator standards.--The State
must implement and enforce the nursing facility administrator
standards developed under subsection (f)(4) respecting the
qualification of administrators of nursing facilities. Any such
standards promulgated shall apply to administrators of
hospital-based facilities as well as administrators of
freestanding facilities.
``(5) Specification of resident assessment instrument.--The
State shall specify the instrument to be used by nursing
facilities in the State in complying with the requirement of
subsection (b)(3)(A)(iii). Such instrument shall be--
(A) one of the instruments designated under
subsection (f)(6)(B), or
(B) an instrument which the Secretary has approved
as being consistent with the minimum data set of core
elements, common definitions, and utilization guidelines specified by
the Secretary under subsection (f)(6)(A).
``(6) Notice of rights.--Each State shall develop (and
periodically update) a written notice of the rights and
obligations of residents of nursing facilities (and spouses of
such residents) under this title.
``(7) State requirements for preadmission screening and
resident review.--
``(A) Preadmission screening.--
``(i) In general.--The State must have in
effect a preadmission screening program, for
identifying mentally ill and mentally retarded
individuals (as defined in subparagraph (B))
who are admitted to nursing facilities and for
determining whether they require the level of
services of such a facility.
``(ii) State requirement for resident
review.--The State shall notify the State
mental health authority or the State mental
retardation or developmental disability
authority, as appropriate, of the individuals
so identified.
``(B) Definitions.--In this paragraph:
``(i) An individual is considered to be
`mentally ill' if the individual has a serious
mental illness (as defined by the Secretary in
consultation with the National Institute of
Mental Health) and does not have a primary
diagnosis of dementia (including Alzheimer's
disease or a related disorder) or a diagnosis
(other than a primary diagnosis) of dementia
and a primary diagnosis that is not a serious
mental illness.
``(ii) An individual is considered to be
`mentally retarded' if the individual is
mentally retarded or a person with a related
condition.
``(f) Responsibilities Relating to Nursing Facility Requirements.--
``(1) General responsibility.--It is the duty and
responsibility of the Secretary to assure that requirements
which govern the provision of care in nursing facilities under
State plans approved under this title, and the enforcement of
such requirements, are adequate to protect the health, safety,
welfare, and rights of residents and to promote the effective
and efficient use of public moneys.
``(2) Requirements for nurse aide training and competency
evaluation programs and for nurse aide competency evaluation
programs.--
``(A) In general.--For purposes of subsections
(b)(5) and (e)(1)(A), the Secretary shall establish--
``(i) requirements for the approval of
nurse aide training and competency evaluation
programs, including requirements relating to
(I) the areas to be covered in such a program
(including at least basic nursing skills,
personal care skills, recognition of mental
health and social service needs, care of
cognitively impaired residents, basic
restorative services, and residents' rights)
and content of the curriculum, (II) minimum
hours of initial and ongoing training and
retraining (including not less than 75 hours in
the case of initial training), (III)
qualifications of instructors, and (IV)
procedures for determination of competency;
``(ii) requirements for the approval of
nurse aide competency evaluation programs,
including requirement relating to the areas to
be covered in such a program, including at
least basic nursing skills, personal care
skills, recognition of mental health and social
service needs, care of cognitively impaired
residents, basic restorative services, and
residents' rights, and procedures for
determination of competency;
``(iii) requirements respecting the minimum
frequency and methodology to be used by a
State in reviewing such programs' compliance with the requirements for
such programs; and
``(iv) requirements, under both such
programs, that--
``(I) provide procedures for
determining competency that permit a
nurse aide, at the nurse aide's option,
to establish competency through
procedures or methods other than the
passing of a written examination and to
have the competency evaluation
conducted at the nursing facility at
which the aide is (or will be) employed
(unless the facility is described in
subparagraph (B)(iii)(I)),
``(II) prohibit the imposition on a
nurse aide who is employed by (or who
has received an offer of employment
from) a facility on the date on which
the aide begins either such program of
any charges (including any charges for
textbooks and other required course
materials and any charges for the
competency evaluation) for either such
program, and
``(III) in the case of a nurse aide
not described in subclause (II) who is
employed by (or who has received an
offer of employment from) a facility
not later than 12 months after
completing either such program, the
State shall provide for the
reimbursement of costs incurred in
completing such program on a prorata
basis during the period in which the
nurse aide is so employed.
``(B) Approval of certain programs.--Such
requirements--
``(i) may permit approval of programs
offered by or in facilities, as well as outside
facilities (including employee organizations);
``(ii) shall permit a State to find that an
individual who has completed (before July 1,
1989) a nurse aide training and competency
evaluation program shall be deemed to have
completed such a program approved under
subsection (b)(5) if the State determines that,
at the time the program was offered, the
program met the requirements for approval under
such paragraph; and
``(iii) subject to subparagraph (C), shall
prohibit approval of such a program--
``(I) offered by or in a nursing
facility which, within the previous 2
years--
``(a) has operated under a
waiver under subsection
(b)(4)(C)(ii) that was granted
on the basis of a demonstration
that the facility is unable to
provide the nursing care
required under subsection
(b)(4)(C)(i) for a period in
excess of 48 hours during a
week;
``(b) has been subject to
an extended (or partial
extended) survey under section
1819(g)(2)(B)(i) or subsection
(g)(2)(B)(i); or
``(c) has been assessed a
civil money penalty described
in section 1819(h)(2)(B)(ii) or
subsection (h)(2)(A)(ii) of not
less than $5,000, or has been
subject to a remedy described
in subsection (h)(1)(B)(i),
clauses (i), (iii), or (iv) of
subsection (h)(2)(A), clauses
(i) or (iii) of section
1819(h)(2)(B), or section
1819(h)(4), or
``(II) offered by or in a nursing
facility unless the State makes the
determination, upon an individual's
completion of the program, that the
individual is competent to provide
nursing and nursing-related services in
nursing facilities.
A State may not delegate (through subcontract
or otherwise) its responsibility under clause
(iii)(II) to the nursing facility.
``(C) Waiver authorized.--Clause (iii) of
subparagraph (B) shall not apply to a program offered
in (but not by) a nursing facility in a State if the
State--
``(i) determines that there is no other
such program offered within a reasonable
distance of the facility,
``(ii) ensures, through an oversight
effort, that an adequate environment exists for
operating the program in the facility, and
``(iii) provides notice of such
determination and assurances to the State long-
term care ombudsman.
``(3) Federal guidelines for state appeals process for
transfers and discharges.--For purposes of subsections
(c)(2)(B)(iii) and (e)(3), the Secretary shall establish
guidelines for minimum standards which State appeals processes
under subsection (e)(3) must meet to provide a fair mechanism
for hearing appeals on transfers and discharges of residents
from nursing facilities.
``(4) Qualification of administrators.--For purposes of
subsections (d)(1)(C) and (e)(4), the Secretary shall develop
standards to be applied in assuring the qualifications of
administrators of nursing facilities. Any such standards must
apply to administrators of hospital-based facilities as well as
administrators of freestanding facilities.
``(5) Criteria for administration.--The Secretary shall
establish criteria for assessing a nursing facility's
compliance with the requirement of subsection (d)(1) with
respect to--
``(A) its governing body and management,
``(B) agreements with hospitals regarding transfers
of residents to and from the hospitals and to and from
other nursing facilities,
``(C) disaster preparedness,
``(D) direction of medical care by a physician,
``(E) laboratory and radiological services,
``(F) clinical records, and
``(G) resident and advocate participation.
``(6) Specification of resident assessment data set and
instruments.--The Secretary shall--
``(A) specify a minimum data set of core elements
and common definitions for use by nursing facilities in
conducting the assessments required under subsection
(b)(3), and establish guidelines for utilization of the
data set; and
``(B) designate one or more instruments which are
consistent with the specification made under
subparagraph (A) and which a State may specify under
subsection (e)(5)(A) for use by nursing facilities in
complying with the requirements of subsection
(b)(3)(A)(iii).
``(7) List of items and services furnished in nursing
facilities not chargeable to the personal funds of a
resident.--The Secretary shall issue regulations that define
those costs which may be charged to the personal funds of
residents in nursing facilities who are individuals receiving
medical assistance with respect to nursing facility services
under this title and those costs which are to be included in
the payment amount under this title for nursing facility
services.
``(8) Criteria for monitoring state waivers.--The Secretary
shall develop criteria and procedures for monitoring State
performances in granting waivers pursuant to subsection
(b)(4)(C)(ii).
``(g) Survey and Certification Process.--
``(1) State and federal responsibility.--
``(A) In general.--Under each State plan under this
title, the State shall be responsible for certifying,
in accordance with surveys conducted under paragraph
(2), the compliance of nursing facilities (other than
facilities of the State) with the requirements of
subsections (b), (c), and (d). The Secretary shall
be responsible for certifying, in accordance with surveys conducted
under paragraph (2), the compliance of State nursing facilities with
the requirements of such subsections.
``(B) Educational program.--Each State shall
conduct periodic educational programs for the staff and
residents (and their representatives) of nursing
facilities in order to present current regulations,
procedures, and policies under this section.
``(C) Investigation of allegations of resident
neglect and abuse and misappropriation of resident
property.--The State shall provide, through the agency
responsible for surveys and certification of nursing
facilities under this subsection, for a process for the
receipt and timely review and investigation of
allegations of neglect and abuse and misappropriation
of resident property by a nurse aide of a resident in a
nursing facility or by another individual used by the
facility in providing services to such a resident. The
State shall, after notice to the individual involved
and a reasonable opportunity for a hearing for the
individual to rebut allegations, make a finding as to
the accuracy of the allegations. If the State finds
that a nurse aide has neglected or abused a resident or
misappropriated resident property in a facility, the
State shall notify the nurse aide and the registry of
such finding. If the State finds that any other
individual used by the facility has neglected or abused
a resident or misappropriated resident property in a
facility, the State shall notify the appropriate
licensure authority. A State shall not make a finding
that an individual has neglected a resident if the
individual demonstrates that such neglect was caused by
factors beyond the control of the individual.
``(2) Surveys.--
``(A) Annual standard survey.--
``(i) In general.--Each nursing facility
shall be subject to a standard survey, to be
conducted without any prior notice to the
facility. Any individual who notifies (or
causes to be notified) a nursing facility of
the time or date on which such a survey is
scheduled to be conducted is subject to a civil
money penalty of not to exceed $2,000. The
provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil
money penalty under the previous sentence in
the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
The Secretary shall review each State's
procedures for scheduling and conduct of
standard surveys to assure that the State has
taken all reasonable steps to avoid giving
notice of such a survey through the scheduling
procedures and the conduct of the surveys
themselves.
``(ii) Contents.--Each standard survey
shall include, for a case-mix stratified sample
of residents--
``(I) a survey of the quality of
care furnished, as measured by
indicators of medical, nursing, and
rehabilitative care, dietary and
nutrition services, activities and
social participation, and sanitation,
infection control, and the physical
environment,
``(II) written plans of care
provided under subsection (b)(2) and an
audit of the residents' assessments
under subsection (b)(3) to determine
the accuracy of such assessments and
the adequacy of such plans of care, and
``(III) a review of compliance with
residents' rights under subsection (c).
``(iii) Frequency.--
``(I) In general.--Each nursing
facility shall be subject to a standard
survey not later than 15 months after
the date of the previous standard
survey conducted under this subparagraph. The statewide average
interval between standard surveys of a nursing facility shall not
exceed 12 months.
``(II) Special surveys.--If not
otherwise conducted under subclause
(I), a standard survey (or an
abbreviated standard survey) may be
conducted within 2 months of any change
of ownership, administration,
management of a nursing facility, or
director of nursing in order to
determine whether the change has
resulted in any decline in the quality
of care furnished in the facility.
``(B) Extended surveys.--
``(i) In general.--Each nursing facility
which is found, under a standard survey, to
have provided substandard quality of care shall
be subject to an extended survey. Any other
facility may, at the Secretary's or State's
discretion, be subject to such an extended
survey (or a partial extended survey).
``(ii) Timing.--The extended survey shall
be conducted immediately after the standard
survey (or, if not practicable, not later than
2 weeks after the date of completion of the
standard survey).
``(iii) Contents.--In such an extended
survey, the survey team shall review and
identify the policies and procedures which
produced such substandard quality of care and
shall determine whether the facility has
complied with all the requirements described in
subsections (b), (c), and (d). Such review
shall include an expansion of the size of the
sample of residents' assessments reviewed and a
review of the staffing, of in-service training,
and, if appropriate, of contracts with
consultants.
``(iv) Construction.--Nothing in this
paragraph shall be construed as requiring an
extended or partial extended survey as a
prerequisite to imposing a sanction against a
facility under subsection (h) on the basis of
findings in a standard survey.
``(C) Survey protocol.--Standard and extended
surveys shall be conducted--
``(i) based upon the protocol which the
Secretary has developed, tested, and validated,
as of the date of the enactment of this title,
and
``(ii) by individuals, of a survey team,
who meet such minimum qualifications as the
Secretary establishes.
``(D) Consistency of surveys.--Each State shall
implement programs to measure and reduce inconsistency
in the application of survey results among surveyors.
``(E) Survey teams.--
``(i) In general.--Surveys under this
subsection shall be conducted by a
multidisciplinary team of professionals
(including a registered professional nurse).
``(ii) Prohibition of conflicts of
interest.--A State may not use as a member of a
survey team under this subsection an individual
who is serving (or has served within the
previous 2 years) as a member of the staff of,
or as a consultant to, the facility surveyed
respecting compliance with the requirements of
subsections (b), (c), and (d), or who has a
personal or familial financial interest in the
facility being surveyed.
``(iii) Training.--The Secretary shall
provide for the comprehensive training of State
and Federal surveyors in the conduct of
standard and extended surveys under this
subsection, including the auditing of resident
assessments and plans of care. No individual
shall serve as a member of a survey team unless
the individual has successfully completed a
training and testing program in survey and certification techniques
that has been approved by the Secretary.
``(3) Validation surveys.--
``(A) In general.--The Secretary shall conduct
onsite surveys of a representative sample of nursing
facilities in each State, within 2 months of the date
of surveys conducted under paragraph (2) by the State,
in a sufficient number to allow inferences about the
adequacies of each State's surveys conducted under
paragraph (2). In conducting such surveys, the
Secretary shall use the same survey protocols as the
State is required to use under paragraph (2). If the
State has determined that an individual nursing
facility meets the requirements of subsections (b),
(c), and (d), but the Secretary determines that the
facility does not meet such requirements, the
Secretary's determination as to the facility's
noncompliance with such requirements is binding and
supersedes that of the State survey.
``(B) Scope.--With respect to each State, the
Secretary shall conduct surveys under subparagraph (A)
each year with respect to at least 5 percent of the
number of nursing facilities surveyed by the State in
the year, but in no case less than 5 nursing facilities
in the State.
``(C) Reduction in administrative costs for
substandard performance.--If the Secretary finds, on
the basis of such surveys, that a State has failed to
perform surveys as required under paragraph (2) or that
a State's survey and certification performance
otherwise is not adequate, the Secretary may provide
for the training of survey teams in the State and shall
provide for a reduction of the payment otherwise made
to the State under section 1512(a)(3)(C) with respect
to a quarter equal to 33 percent multiplied by a
fraction, the denominator of which is equal to the
total number of residents in nursing facilities
surveyed by the Secretary that quarter and the
numerator of which is equal to the total number of
residents in nursing facilities which were found
pursuant to such surveys to be not in compliance with
any of the requirements of subsections (b), (c), and
(d). A State that is dissatisfied with the Secretary's
findings under this subparagraph may obtain
reconsideration and review of the findings under
section 1116 in the same manner as a State may seek
reconsideration and review under that section of the
Secretary's determination under section 1116(a)(1).
``(D) Special surveys of compliance.--Where the
Secretary has reason to question the compliance of a
nursing facility with any of the requirements of
subsections (b), (c), and (d), the Secretary may
conduct a survey of the facility and, on the basis of
that survey, make independent and binding
determinations concerning the extent to which the
nursing facility meets such requirements.
``(4) Investigation of complaints and monitoring nursing
facility compliance.--Each State shall maintain procedures and
adequate staff to--
``(A) investigate complaints of violations of
requirements by nursing facilities, and
``(B) monitor, on-site, on a regular, as needed
basis, a nursing facility's compliance with the
requirements of subsections (b), (c), and (d), if--
``(i) the facility has been found not to be
in compliance with such requirements and is in
the process of correcting deficiencies to
achieve such compliance;
``(ii) the facility was previously found
not to be in compliance with such requirements,
has corrected deficiencies to achieve such
compliance, and verification of continued
compliance is indicated; or
``(iii) the State has reason to question
the compliance of the facility with such
requirements.
A State may maintain and utilize a specialized team
(including an attorney, an auditor, and appropriate
health care professionals) for the purpose of
identifying, surveying, gathering and preserving
evidence, and carrying out appropriate enforcement
actions against substandard nursing facilities.
``(5) Disclosure of results of inspections and
activities.--
``(A) Public information.--Each State, and the
Secretary, shall make available to the public--
``(i) information respecting all surveys
and certifications made respecting nursing
facilities, including statements of
deficiencies, within 14 calendar days after
such information is made available to those
facilities, and approved plans of correction,
``(ii) copies of cost reports of such
facilities filed under this title or under
title XVIII,
``(iii) copies of statements of ownership
under section 1124, and
``(iv) information disclosed under section
1126.
``(B) Notice to ombudsman.--Each State shall notify
the State long-term care ombudsman (established under
title III or VII of the Older Americans Act of 1965 in
accordance with section 712 of the Act) of the State's
findings of noncompliance with any of the requirements
of subsections (b), (c), and (d), or of any adverse
action taken against a nursing facility under
paragraphs (1), (2), or (3) of subsection (h), with
respect to a nursing facility in the State.
``(C) Notice to physicians and nursing facility
administrator licensing board.--If a State finds that a
nursing facility has provided substandard quality of
care, the State shall notify--
``(i) the attending physician of each
resident with respect to which such finding is
made, and
``(ii) any State board responsible for the
licensing of the nursing facility administrator
of the facility.
``(D) Access to fraud control units.--Each State
shall provide its State fraud and abuse control unit
(established under section 1554) with access to all
information of the State agency responsible for surveys
and certifications under this subsection.
``(h) Enforcement Process.--
``(1) In general.--If a State finds, on the basis of a
standard, extended, or partial extended survey under subsection
(g)(2) or otherwise, that a nursing facility no longer meets a
requirement of subsection (b), (c), or (d)--
``(A) the State shall require the facility to
correct the deficiency involved;
``(B) if the State finds that the facility's
deficiencies immediately jeopardize the health or
safety of its residents, the State shall take immediate
action to remove the jeopardy and correct the
deficiencies through the remedy specified in paragraph
(2)(A)(iii), or terminate the facility's participation
under the State plan and may provide, in addition, for
one or more of the other remedies described in
paragraph (2); and
``(C) if the State finds that the facility's
deficiencies do not immediately jeopardize the health
or safety of its residents, the State may--
``(i) terminate the facility's
participation under the State plan,
``(ii) provide for one or more of the
remedies described in paragraph (2), or
``(iii) do both.
Nothing in this paragraph shall be construed as restricting the
remedies available to a State to remedy a nursing facility's
deficiencies. If a State finds that a nursing facility meets
the requirements of subsections (b), (c), and (d), but, as of a
previous period, did not meet such requirements, the State may
provide for a civil money penalty under paragraph (2)(A)(ii)
for the days in which it finds that the facility was not in compliance
with such requirements.
``(2) Specified remedies.--
``(A) Listing.--Except as provided in subparagraph
(B), each State shall establish by law (whether statute
or regulation) at least the following remedies:
``(i) Denial of payment under the State
plan with respect to any individual admitted to
the nursing facility involved after such notice
to the public and to the facility as may be
provided for by the State.
``(ii) A civil money penalty assessed and
collected, with interest, for each day in which
the facility is or was out of compliance with a
requirement of subsection (b), (c), or (d).
Funds collected by a State as a result of
imposition of such a penalty (or as a result of
the imposition by the State of a civil money
penalty for activities described in subsections
(b)(3)(B)(ii)(I), (b)(3)(B)(ii)(II), or
(g)(2)(A)(i)) shall be applied to the
protection of the health or property of
residents of nursing facilities that the State
or the Secretary finds deficient, including
payment for the costs of relocation of
residents to other facilities, maintenance of
operation of a facility pending correction of
deficiencies or closure, and reimbursement of
residents for personal funds lost.
``(iii) The appointment of temporary
management to oversee the operation of the
facility and to assure the health and safety of
the facility's residents, where there is a need
for temporary management while--
``(I) there is an orderly closure
of the facility, or
``(II) improvements are made in
order to bring the facility into
compliance with all the requirements of
subsections (b), (c), and (d).
The temporary management under this clause
shall not be terminated under subclause (II)
until the State has determined that the
facility has the management capability to
ensure continued compliance with all the
requirements of subsections (b), (c), and (d).
``(iv) The authority, in the case of an
emergency, to close the facility, to transfer
residents in that facility to other facilities,
or both.
The State also shall specify criteria, as to when and
how each of such remedies is to be applied, the amounts
of any fines, and the severity of each of these
remedies, to be used in the imposition of such
remedies. Such criteria shall be designed so as to
minimize the time between the identification of
violations and final imposition of the remedies and
shall provide for the imposition of incrementally more
severe fines for repeated or uncorrected deficiencies.
In addition, the State may provide for other specified
remedies, such as directed plans of correction.
``(B) Guidance and alternative remedies.--(i) The
Secretary shall provide through regulations guidance to
States in establishing remedies under clauses (i)
through (iv) of subparagraph (A).
``(ii) A State may establish alternative remedies
(other than termination of participation) other than
those described in clauses (i) through (iv) of
subparagraph (A), if the State demonstrates to the
Secretary's satisfaction that the alternative remedies
are as effective in deterring noncompliance and
correcting deficiencies as those described in such
subparagraph.
``(C) Assuring prompt compliance.--If a nursing
facility has not complied with any of the requirements
of subsections (b), (c), and (d), within 3 months after
the date the facility is found to be out of compliance with such
requirements, the State shall impose the remedy described in
subparagraph (A)(i) for all individuals who are admitted to the
facility after such date.
``(D) Repeated noncompliance.--In the case of a
nursing facility which, on 3 consecutive standard
surveys conducted under subsection (g)(2), has been
found to have provided substandard quality of care, the
State shall (regardless of what other remedies are
provided)--
``(i) impose the remedy described in
subparagraph (A)(i), and
``(ii) monitor the facility under
subsection (g)(4)(B),
until the facility has demonstrated, to the
satisfaction of the State, that it is in compliance
with the requirements of subsections (b), (c), and (d),
and that it will remain in compliance with such
requirements.
``(E) Funding.--The reasonable expenditures of a
State to provide for temporary management and other
expenses associated with implementing the remedies
described in clauses (iii) and (iv) of subparagraph (A)
shall be considered, for purposes of section
1512(a)(3)(C), to be necessary for the proper and
efficient administration of the State plan.
``(F) Incentives for high quality care.--In
addition to the remedies specified in this paragraph, a
State may establish a program to reward, through public
recognition, incentive payments, or both, nursing
facilities that provide the highest quality care to
residents who are entitled to medical assistance under
this title. For purposes of section 1512(a)(3)(C),
proper expenses incurred by a State in carrying out
such a program shall be considered to be expenses
necessary for the proper and efficient administration
of the State plan.
``(3) Secretarial authority.--
``(A) For state nursing facilities.--With respect
to a State nursing facility, the Secretary shall have
the authority and duties of a State under this
subsection, including the authority to impose remedies
described in clauses (i), (ii), and (iii) of paragraph
(2)(A). Nothing in this subparagraph shall be construed
as restricting the remedies available to the Secretary
to remedy a nursing facility's deficiencies.
``(B) Other nursing facilities.--With respect to
any other nursing facility in a State, if the Secretary
finds that a nursing facility no longer meets a
requirement of subsection (b), (c), (d), or (e), and
further finds that the facility's deficiencies--
``(i) immediately jeopardize the health or
safety of its residents, the Secretary shall
take immediate action to remove the jeopardy
and correct the deficiencies through the remedy
specified in subparagraph (C)(iii), or
terminate the facility's participation under
the State plan and may provide, in addition,
for one or more of the other remedies described
in subparagraph (C); or
``(ii) do not immediately jeopardize the
health or safety of its residents, the
Secretary may impose any of the remedies
described in subparagraph (C).
Nothing in this subparagraph shall be construed as
restricting the remedies available to the Secretary to
remedy a nursing facility's deficiencies. If the
Secretary finds that a nursing facility meets such
requirements but, as of a previous period, did not meet
such requirements, the Secretary may provide for a
civil money penalty under subparagraph (C)(ii) for the
days on which he finds that the facility was not in
compliance with such requirements.
``(C) Specified remedies.--The remedies specified
in this subparagraph are as follows:
``(i) Denial of payment.--Denial of any
further payments to the State in accordance
with section 1529(f) for medical assistance
furnished by the facility to all individuals in the facility or to
individuals admitted to the facility after the effective date of the
finding.
``(ii) Authority with respect to civil
money penalties.--Imposition of a civil money
penalty against the facility in an amount not
to exceed $10,000 for each day of
noncompliance. The provisions of section 1128A
(other than subsections (a) and (b)) shall
apply to a civil money penalty under the
previous sentence in the same manner as such
provisions apply to a penalty or proceeding
under section 1128A(a).
``(iii) Appointment of temporary
management.--Appointment of temporary
management to oversee the operation of the
facility and to assure the health and safety of
the facility's residents, where there is a need
for temporary management while--
``(I) there is an orderly closure
of the facility, or
``(II) improvements are made in
order to bring the facility into
compliance with all the requirements of
subsections (b), (c), and (d).
The temporary management under this clause
shall not be terminated under subclause (II)
until the Secretary has determined that the
facility has the management capability to
ensure continued compliance with all the
requirements of subsections (b), (c), and (d).
The Secretary shall specify criteria, as to when and
how each of such remedies is to be applied, the amounts
of any fines, and the severity of each of these
remedies, to be used in the imposition of such
remedies. Such criteria shall be designed so as to
minimize the time between the identification of
violations and final imposition of the remedies and
shall provide for the imposition of incrementally more
severe fines for repeated or uncorrected deficiencies.
In addition, the Secretary may provide for other
specified remedies, such as directed plans of
correction.
``(D) Continuation of payments pending
remediation.--The Secretary may continue payments, over
a period of not longer than 6 months after the
effective date of the findings, under this title with
respect to a nursing facility not in compliance with a
requirement of subsection (b), (c), or (d), if--
``(i) the State survey agency finds that it
is more appropriate to take alternative action
to assure compliance of the facility with the
requirements than to terminate the
certification of the facility,
``(ii) the State has submitted a plan and
timetable for corrective action to the
Secretary for approval and the Secretary
approves the plan of corrective action, and
``(iii) the State agrees to repay to the
Federal Government payments received under this
subparagraph if the corrective action is not
taken in accordance with the approved plan and
timetable.
The Secretary shall establish guidelines for approval
of corrective actions requested by States under this
subparagraph.
``(4) Special rules regarding payments to facilities.--
``(A) Continuation of payments pending
remediation.--The State or the Secretary, as
appropriate, may continue payments, over a period of
not longer than 6 months after the effective date of
the findings, under this title with respect to a
nursing facility not in compliance with a requirement
of subsection (b), (c), or (d). The State may continue
such payments only if--
``(i) the State survey agency finds that it
is more appropriate to take alternative action
to assure compliance of the facility with the
requirements than to terminate the
certification of the facility,
``(ii) the State has submitted a plan and
timetable for corrective action to the
Secretary for approval and the Secretary
approves the plan of corrective action, and
``(iii) the State agrees to repay to the
Federal Government payments received under this
subparagraph if the corrective action is not
taken in accordance with the approved plan and
timetable.
The Secretary shall establish guidelines for approval
of corrective actions requested by States under this
subparagraph.
``(B) Effective period of denial of payment.--A
finding to deny payment under this subsection shall
terminate when the State or Secretary (as the case may
be) finds that the facility is in substantial
compliance with all the requirements of subsections
(b), (c), and (d).
``(5) Immediate termination of participation for facility
where state or secretary finds noncompliance and immediate
jeopardy.--If either the State or the Secretary finds that a
nursing facility has not met a requirement of subsection (b),
(c), or (d), and finds that the failure immediately jeopardizes
the health or safety of its residents, the State or the
Secretary, respectively shall notify the other of such finding,
and the State or the Secretary, respectively, shall take
immediate action to remove the jeopardy and correct the
deficiencies through the remedy specified in paragraph
(2)(A)(iii) or (3)(C)(iii), or terminate the facility's
participation under the State plan. If the facility's
participation in the State plan is terminated by either the
State or the Secretary, the State shall provide for the safe
and orderly transfer of the residents eligible under the State
plan consistent with the requirements of subsection (c)(2).
``(6) Special rules where state and secretary do not agree
on finding of noncompliance.--
``(A) State finding of noncompliance and no
secretarial finding of noncompliance.--If the Secretary
finds that a nursing facility has met all the
requirements of subsections (b), (c), and (d), but a
State finds that the facility has not met such
requirements and the failure does not immediately
jeopardize the health or safety of its residents, the
State's findings shall control and the remedies imposed
by the State shall be applied.
``(B) Secretarial finding of noncompliance and no
state finding of noncompliance.--If the Secretary finds
that a nursing facility has not met all the
requirements of subsections (b), (c), and (d), and that
the failure does not immediately jeopardize the health
or safety of its residents, but the State has not made
such a finding, the Secretary--
``(i) may impose any remedies specified in
paragraph (3)(C) with respect to the facility,
and
``(ii) shall (pending any termination by
the Secretary) permit continuation of payments
in accordance with paragraph (3)(D).
``(7) Special rules for timing of termination of
participation where remedies overlap.--If both the Secretary
and the State find that a nursing facility has not met all the
requirements of subsections (b), (c), and (d), and neither
finds that the failure immediately jeopardizes the health or
safety of its residents--
``(A)(i) if both find that the facility's
participation under the State plan should be
terminated, the State's timing of any termination shall
control so long as the termination date does not occur
later than 6 months after the date of the finding to
terminate;
``(ii) if the Secretary, but not the State, finds
that the facility's participation under the State plan
should be terminated, the Secretary shall (pending any
termination by the Secretary) permit continuation of
payments in accordance with paragraph (3)(D); or
``(iii) if the State, but not the Secretary, finds
that the facility's participation under the State plan
should be terminated, the State's decision to
terminate, and timing of such termination, shall
control; and
``(B)(i) if the Secretary or the State, but not
both, establishes one or more remedies which are
additional or alternative to the remedy of terminating
the facility's participation under the State plan, such
additional or alternative remedies shall also be
applied, or
``(ii) if both the Secretary and the State
establish one or more remedies which are additional or
alternative to the remedy of terminating the facility's
participation under the State plan, only the additional
or alternative remedies of the Secretary shall apply.
``(8) Construction.--The remedies provided under this
subsection are in addition to those otherwise available under
Federal or State law and shall not be construed as limiting
such other remedies, including any remedy available to an
individual at common law. The remedies described in clauses
(i), (iii), and (iv) of paragraph (2)(A) may be imposed during
the pendency of any hearing. The provisions of this subsection
shall apply to a nursing facility (or portion thereof)
notwithstanding that the facility (or portion thereof) also is
a skilled nursing facility for purposes of title XVIII.
``(9) Sharing of information.--Notwithstanding any other
provision of law, all information concerning nursing facilities
required by this section to be filed with the Secretary or a
State agency shall be made available by such facilities to
Federal or State employees for purposes consistent with the
effective administration of programs established under this
title and title XVIII, including investigations by State fraud
control units.
``(i) Construction.--Where requirements or obligations under this
section are identical to those provided under section 1819 of this Act,
the fulfillment of those requirements or obligations under section 1819
shall be considered to be the fulfillment of the corresponding
requirements or obligations under this section.
``(j) Report.--Not later than 2 years after the date of the
enactment of the Medicaid Restructuring Act of 1996, and annually
thereafter, the Secretary shall submit a report to the Congress
analyzing--
``(1) the differences between the reimbursement rates
established under the State plan under this title, and the
reimbursement rates that applied under the State plan under
title XIX (as in effect on the date of the enactment of such
Act) for nursing facility services and other medical assistance
provided by such facilities; and
``(2) whether and how such differences have affected the
quality of such services or assistance.
``SEC. 1558. OTHER PROVISIONS PROMOTING PROGRAM INTEGRITY.
``(a) Public Access to Survey Results.--Each State plan shall
provide that upon completion of a survey of any health care facility or
organization by a State agency to carry out the plan, the agency shall
make public in readily available form and place the pertinent findings
of the survey relating to the compliance of the facility or
organization with requirements of law.
``(b) Record Keeping.--Each State plan shall provide for agreements
with persons or institutions providing services under the plan under
which the person or institution agrees--
``(1) to keep such records, including ledgers, books, and
original evidence of costs, as are necessary to fully disclose
the extent of the services provided to individuals receiving
assistance under the plan, and
``(2) to furnish the State agency with such information
regarding any payments claimed by such person or institution
for providing services under the plan, as the State agency may
from time to time request.
``(c) Quality Assurance.--
``(1) In general.--Each State plan shall provide a program
to--
``(A) ensure the quality of services provided under
the plan, including such services provided to
individuals with chronic mental or physical illness;
and
``(B) measure, evaluate, and improve the quality of
care delivered under such plan, including services
delivered by a capitated health care organization or
through a primary care case management provider.
``(2) Establishment of minimum standards for services for
individuals with developmental disabilities.--
``(A) In general.--The Secretary, in consultation
with the States, shall establish, monitor, and enforce
minimum health, safety, and welfare standards for
eligible low-income individuals with developmental
disabilities who receive intermediate care facility
services for the mentally retarded, home and community-
based health care services and related supportive
services, community supported living arrangements,
assisted living arrangements, and transitional living
arrangements in the community. Such standards shall
ensure that individuals receiving such services are
protected from neglect, physical and sexual abuse,
financial exploitation, inappropriate involuntary
restraint, and the provision of health care services by
unqualified personnel.
``(B) Public participation.--The State plan shall
contain provisions that ensure the involvement of
consumers, family members, and the local community in
planning the provision of such services to such
individuals and ensuring the quality assurance of such
services.
``(d) Prohibition Against Conflicts of Interest.--Each State plan
shall provide that each State or local officer or employee who is
responsible for the expenditure of substantial amounts of funds under
the State plan, each individual who formerly was such an officer or
employee, and each partner of such an officer or employee shall be
prohibited from committing any act, in relation to any activity under
the plan, the commission of which, in connection with any activity
concerning the United States Government, by an officer or employee of
the United States Government, an individual who was such an officer or
employee, or a partner of such an officer or employee is prohibited by
section 207 or 208 of title 18, United States Code.
``(e) Nondiscrimination Provisions.--Any program or activity that
receives funds under this part shall be subject to enforcement
authorized under the following provisions of law:
``(1) The Age Discrimination Act of 1975 (42 U.S.C. 6101 et
seq.).
``(2) Section 504 of the Rehabilitation Act of 1973 (29
U.S.C. 794).
``(3) The Americans with Disabilities Act of 1990 (42
U.S.C. 12101 et seq.).
``(4) Title VI of the Civil Rights Act of 1964 (42 U.S.C.
2000d et seq.).
``Part E--General Provisions
``SEC. 1571. DEFINITIONS.
``(a) Medical Assistance.--For purposes of this title, the term
`medical assistance' means payment of part or all of the cost of any of
the following, or assistance in the purchase, in whole or in part, of
health benefit coverage that includes any of the following, for
eligible low-income individuals (as defined in subsection (b)) as
specified under the State plan:
``(1) Inpatient hospital services.
``(2) Outpatient hospital services.
``(3) Physician services.
``(4) Surgical services.
``(5) Clinic services and other ambulatory health care
services.
``(6) Nursing facility services.
``(7) Intermediate care facility services for the mentally
retarded.
``(8) Prescription drugs and biologicals and the
administration of such drugs and biologicals, only if such
drugs and biologicals are not furnished for the purpose of
causing, or assisting in causing, the death, suicide,
euthanasia, or mercy killing of a person.
``(9) Over-the-counter medications.
``(10) Laboratory and radiological services.
``(11) Prepregnancy family planning services and supplies.
``(12) Inpatient mental health services, including services
furnished in a State-operated mental hospital, and residential
or other 24-hour therapeutically planned structured services,
except that for individuals not less than age 22 and not more
than age 64, such services shall be limited to acute services
only.
``(13) Outpatient and intensive community-based mental
health services, including psychiatric rehabilitation, day
treatment, intensive in-home services for children, and partial
hospitalization.
``(14) Durable medical equipment and other medically-
related or remedial devices (such as prosthetic devices,
implants, eyeglasses, hearing aids, dental devices, and
adaptive devices).
``(15) Disposable medical supplies.
``(16) Home and community-based health care services and
related supportive services (such as home health nursing
services, home health aide services, personal care, assistance
with activities of daily living, chore services, day care
services, respite care services, training for family members,
and minor modifications to the home).
``(17) Community supported living arrangements, assisted
living arrangements, and transitional living arrangements in
the community.
``(18) Nursing care services (such as nurse practitioner
services, nurse midwife services, advanced practice nurse
services, private duty nursing care, pediatric nurse services,
and respiratory care services) in a home, school, or other
setting.
``(19) Abortion only if necessary to save the life of the
mother or if the pregnancy is the result of an act of rape or
incest.
``(20) Dental services.
``(21) Inpatient substance abuse treatment services and
residential substance abuse treatment services.
``(22) Outpatient substance abuse treatment services.
``(23) Case management services.
``(24) Care coordination services.
``(25) Physical therapy, occupational therapy, and services
for individuals with speech, hearing, and language disorders.
``(26) Hospice care.
``(27) Any other medical, diagnostic, screening,
preventive, restorative, remedial, therapeutic, or
rehabilitative services (whether in a facility, home, school,
or other setting) if recognized by State law and only if the
service is--
``(A) prescribed by or furnished by a physician or
other licensed or registered practitioner within the
scope of practice as defined by State law,
``(B) performed under the general supervision or at
the direction of a physician, or
``(C) furnished by a health care facility that is
operated by a State or local government or is licensed
under State law and operating within the scope of the
license.
``(28) Premiums, or capitation payments (as defined in
section 1504(e)(2)) for private health care insurance coverage,
including private long-term care insurance coverage.
``(29) Medical transportation.
``(30) Medicare cost-sharing (as defined in subsection
(c)).
``(31) Enabling services (such as transportation,
translation, and outreach services) only if designed to
increase the accessibility of primary and preventive health
care services for eligible low-income individuals.
``(32) Federally-qualified health center services (as
defined in subsection (f)(2)(A)), capitation payments (as
defined in section 1504(e)(2)) provided by a State to a
capitated health care organization which is (or is controlled
by, as determined under section 1504(a)(4)) one or more
Federally-qualified health centers (as defined in subsection
(f)(2)(B)), and supplemental payments to a Federally-qualified
health center (as so defined) that participates in a capitated
health care organization which is (or is controlled by, as
determined under section 1504(a)(4)) one or more Federally-
qualified health centers (as so defined).
``(33) Rural health clinic services (as defined in
subsection (f)(1)), capitation payments (as defined in section
1504(e)(2)) provided by a State to a capitated health care
organization which is (or is controlled by, as determined under
section 1504(a)(4)) one or more rural health clinics (as
defined in subsection (f)(1)), and supplemental payments to a
rural health clinic (as so defined) that participates in a
capitated health care organization which is (or is controlled
by, as determined under section 1504(a)(4)) one or more rural
health clinics (as so defined).
``(34) Physician assistant services (to the extent such
services are authorized under State law or regulation).
``(35) Any other health care services or items specified by
the Secretary and not excluded under this section.
``(b) Eligible Low-Income Individual.--
``(1) State plan eligibility standards.--
``(A) In general.--The term `eligible low-income
individual' means an individual--
``(i) who has been determined eligible by
the State for medical assistance under the
State plan and is not an inmate of a public
institution (except as a patient in a State
psychiatric hospital), and
``(ii) whose family income (as determined
under the plan) does not exceed a percentage
(specified in the State plan and not to exceed
275 percent) of the poverty line for a family
of the size involved.
``(B) Continuation of katie beckett eligibility.--
At the option of a State, subparagraph (A)(ii) shall
not apply in the case of an individual who--
``(i) is 18 years of age or younger and
qualifies as a disabled individual under
section 1614(a); and
``(ii) with respect to whom there has been
a determination by the State that--
``(I) the individual requires a
level of care provided in a hospital,
nursing facility, or intermediate care
facility for the mentally retarded; and
``(II) it is appropriate to provide
such care for the individual outside
such an institution.
``(2) Amount of income.--In determining the amount of
income under paragraph (1)(B), a State may exclude costs
incurred for medical care or other types of remedial care
recognized by the State.
``(3) Computation of income for certain children.--In
determining the amount of family income under paragraph (1)(B)
in the case of a child described in section 1501(a)(1)(F), the
State shall only count the income of the child and not that of
the family in which the child is placed.
``(c) Medicare Cost-Sharing.--For purposes of this title, the term
`medicare cost-sharing' means any of the following:
``(1)(A) Premiums under section 1839.
``(B) Premiums under section 1818 or 1818A.
``(2) Coinsurance under title XVIII (including coinsurance
described in section 1813).
``(3) Deductibles established under title XVIII (including
those described in sections 1813 and 1833(b)).
``(4) The difference between the amount that is paid under
section 1833(a) and the amount that would be paid under such
section if any reference to `80 percent' therein were deemed a
reference to `100 percent'.
``(5) Premiums for enrollment of an individual with an
eligible organization under section 1876.
``(d) Additional Definitions.--For purposes of this title:
``(1) Child.--The term `child' means an individual under 19
years of age.
``(2) Elderly individual.--The term `elderly individual'
means an individual who has attained retirement age, as defined
under section 216(l)(1).
``(3) Poverty line defined.--The term `poverty line' has
the meaning given such term in section 673(2) of the Community
Services Block Grant Act (42 U.S.C. 9902(2)), including any
revision required by such section.
``(4) Pregnant woman.--The term `pregnant woman' includes a
woman during the 60-day period beginning on the last day of the
pregnancy.
``(e) EPSDT Services.--In this title, the term `EPSDT services'
means `early and periodic screening, diagnostic, and treatment
services' as defined in section 1905(r) (as in effect on June 1, 1996).
``(f) Center and Clinic Services.--In this title:
``(1) Rural health clinic related definitions.--The terms
`rural health clinic services' and `rural health clinic' have
the meanings given such terms in section 1861(aa), except that
(A) clause (ii) of section 1861(aa)(2) shall not apply to such
terms, and (B) the physician arrangement required under section
1861(aa)(2)(B) shall only apply with respect to rural health
clinic services and, with respect to other ambulatory care
services, the physician arrangement required shall be only such
as may be required under the State plan for those services.
``(2) Federally-qualified health center related
definitions.--
``(A) Services.--
``(i) In general.--The term `Federally-
qualified health center services' means
services of the type described in subparagraphs
(A) through (C) of section 1861(aa)(1), and any
other ambulatory care services which are
otherwise included in the State plan, when
furnished to an individual as a patient of a
Federally-qualified health center and, for this
purpose, any reference to a rural health clinic
or a physician described in section
1861(aa)(2)(B) is deemed a reference to a
Federally-qualified health center or a
physician at the center, respectively.
``(ii) Certain supplemental payments
included.--
``(B) Center.--The term `Federally-qualified health
center' means a entity which--
``(i) is receiving a grant under section
329, 330, 340, or 340A of the Public Health
Service Act,
``(ii)(I) is receiving funding from such a
grant under a contract with the recipient of
such a grant, and
``(II) meets the requirements to receive a
grant under section 329, 330, 340, or 340A of
such Act,
``(iii) based on the recommendation of the
Health Resources and Services Administration
within the Public Health Service, is determined
by the Secretary to meet the requirements for
receiving such a grant, or
``(iv) was treated by the Secretary, for
purposes of part B of title XVIII, as a
comprehensive Federally funded health center as
of January 1, 1990;
and includes an outpatient health program or facility
operated by a tribe or tribal organization under the
Indian Self-Determination Act (Public Law 93-638) or by
an urban Indian organization receiving funds under
title V of the Indian Health Care Improvement Act for
the provision of primary health services. In applying
clause (ii), the Secretary may waive any requirement
referred to in such clause for up to 2 years for good
cause shown.
``(g) Medically-Related Services.--In this title, the term
`medically-related services' means services reasonably related to, or
in direct support of, the State's attainment of one or more of the
strategic objectives and performance goals established under section
1521, but does not include items and services included on the list
under subsection (a).
``SEC. 1572. TREATMENT OF TERRITORIES.
``Notwithstanding any other requirement of this title, the
Secretary may waive or modify any requirement of this title with
respect to the medical assistance program for a State other than the 50
States and the District of Columbia, other than a waiver of--
``(1) the applicable Federal medical assistance percentage,
``(2) the limitation on total payments in a fiscal year to
the amount of the allotment under section 1511(c), or
``(3) the requirement that payment may be made for medical
assistance only with respect to amounts expended by the State
for care and services described in section 1571(a) and
medically-related services (as defined in section 1571(g)).
``SEC. 1573. DESCRIPTION OF TREATMENT OF INDIAN HEALTH SERVICE
FACILITIES AND RELATED PROGRAMS.
``In the case of a State in which one or more facilities of the
Indian Health Service is located or in which a facility or program
described in section 1512(f)(3)(iii) is located, the State plan shall
include a description of--
``(1) what provision (if any) has been made for payment for
items and services furnished by such facilities or through such
programs, and
``(2) the manner in which medical assistance for low-income
eligible individuals who are Indians will be provided, as
determined by the State in consultation with the appropriate
Indian tribes and tribal organizations.
``SEC. 1574. APPLICATION OF CERTAIN GENERAL PROVISIONS.
``The following sections in part A of title XI shall apply to
States under this title in the same manner as they applied to a State
under title XIX:
``(1) Section 1101(a)(1) (relating to definition of State).
``(2) Section 1116 (relating to administrative and judicial
review), but only insofar as consistent with the provisions of
part B.
``(3) Section 1124 (relating to disclosure of ownership and
related information).
``(4) Section 1126 (relating to disclosure of information
about certain convicted individuals).
``(5) Section 1128B(d) (relating to criminal penalties for
certain additional charges).
``(6) Section 1132 (relating to periods within which claims
must be filed).
``SEC. 1575. OPTIONAL MASTER DRUG REBATE AGREEMENTS.
``(a) Requirement for Manufacturer To Enter Into Agreement.--
``(1) In general.--Pursuant to section 1513(f), in order
for payment to be made to a State under part B for medical
assistance for covered outpatient drugs of a manufacturer, the
manufacturer shall enter into and have in effect a master rebate
agreement described in subsection (b) with the Secretary on behalf of
States electing to participate in the agreement.
``(2) Coverage of drugs not covered under rebate
agreements.--Nothing in this section shall be construed to
prohibit a State in its discretion from providing coverage
under its State plan of a covered outpatient drug for which no
rebate agreement is in effect under this section.
``(3) Effect on existing agreements.--If a State has a
rebate agreement in effect with a manufacturer on the date of
the enactment of this section which provides for a minimum
aggregate rebate equal to or greater than the minimum aggregate
rebate which would otherwise be paid under the master agreement
under this section, at the option of the State--
``(A) such agreement shall be considered to meet
the requirements of the master rebate agreement, and
``(B) the State shall be considered to have elected
to participate in the master rebate agreement.
``(4) Limitation on prices of drugs purchased by covered
entities.--
``(A) Agreement with secretary.--A manufacturer
meets the requirements of this paragraph if the
manufacturer has entered into an agreement with the
Secretary that meets the requirements of section 340B
of the Public Health Service Act with respect to
covered outpatient drugs purchased by a covered entity
on or after the first day of the first month that
begins after the date of the enactment of title VI of
the Veterans Health Care Act of 1992.
``(B) Covered entity defined.--In this subsection,
the term `covered entity' means an entity described in
subsection (a)(4) of section 340B of the Public Health
Service Act.
``(C) Establishment of alternative mechanism to
ensure against duplicate discounts or rebates.--If the
Secretary does not establish a mechanism under section
340B(a)(5)(A) of the Public Health Service Act within
12 months of the date of the enactment of such section,
the following requirements shall apply:
``(i) Each covered entity shall inform the
single State agency under this title when it is
seeking reimbursement for medical assistance
with respect to a unit of any covered
outpatient drug which is subject to an
agreement under section 340B(a) of such Act.
``(ii) Each such single State agency shall
provide a means by which a covered entity shall
indicate on any drug reimbursement claims form
(or format, where electronic claims management
is used) that a unit of the drug that is the
subject of the form is subject to an agreement
under section 340B of such Act, and not submit
to any manufacturer a claim for a rebate
payment under subsection (b) with respect to
such a drug.
``(D) Effect of subsequent amendments.--In
determining whether an agreement under subparagraph (A)
meets the requirements of section 340B of the Public
Health Service Act, the Secretary shall not take into
account any amendments to such section that are enacted
after the enactment of title VI of the Veterans Health
Care Act of 1992.
``(E) Determination of compliance.--A manufacturer
is deemed to meet the requirements of this paragraph if
the manufacturer establishes to the satisfaction of the
Secretary that the manufacturer would comply (and has
offered to comply) with the provisions of section 340B
of the Public Health Service Act (as in effect
immediately after the enactment title VI of the
Veterans Health Care Act of 1992, and would
have entered into an agreement under such section (as such section was
in effect at such time), but for a legislative change in such section
after such enactment.
``(b) Terms of Rebate Agreement.--
``(1) Periodic rebates.--The master rebate agreement under
this section shall require the manufacturer to provide, to the
State plan of each State participating in the agreement, a
rebate for a rebate period in an amount specified in subsection
(c) for covered outpatient drugs of the manufacturer dispensed
after the effective date of the agreement, for which payment
was made under the plan for such period. Such rebate shall be
paid by the manufacturer not later than 30 days after the date
of receipt of the information described in paragraph (2) for
the period involved.
``(2) State provision of information.--
``(A) State responsibility.--Each State
participating in the master rebate agreement shall
report to each manufacturer not later than 60 days
after the end of each rebate period and in a form
consistent with a standard reporting format established
by the Secretary, information on the total number of
units of each dosage form and strength and package size
of each covered outpatient drug, for which payment was
made under the State plan for the period, and shall
promptly transmit a copy of such report to the
Secretary.
``(B) Audits.--A manufacturer may audit the
information provided (or required to be provided) under
subparagraph (A). Adjustments to rebates shall be made
to the extent that information indicates that
utilization was greater or less than the amount
previously specified.
``(3) Manufacturer provision of price information.--
``(A) In general.--Each manufacturer which is
subject to the master rebate agreement under this
section shall report to the Secretary--
``(i) not later than 30 days after the last
day of each rebate period under the agreement,
on the average manufacturer price (as defined
in subsection (i)(1)) and, for single source
drugs and innovator multiple source drugs, the
manufacturer's best price (as defined in
subsection (c)(1)(C)) for each covered
outpatient drug for the rebate period under the
agreement, and
``(ii) not later than 30 days after the
date of entering into an agreement under this
section, on the average manufacturer price (as
defined in subsection (i)(1)) as of October 1,
1990, for each of the manufacturer's covered
outpatient drugs.
``(B) Verification surveys of average manufacturer
price.--The Secretary may survey wholesalers and
manufacturers that directly distribute their covered
outpatient drugs, when necessary, to verify
manufacturer prices reported under subparagraph (A).
The Secretary may impose a civil monetary penalty in an
amount not to exceed $10,000 on a wholesaler,
manufacturer, or direct seller, if the wholesaler,
manufacturer, or direct seller of a covered outpatient
drug refuses a request for information by the Secretary
in connection with a survey under this subparagraph.
The provisions of section 1128A (other than subsections
(a) (with respect to amounts of penalties or additional
assessments) and (b)) shall apply to a civil money
penalty under this subparagraph in the same manner as
such provisions apply to a penalty or proceeding under
section 1128A(a).
``(C) Penalties.--
``(i) Failure to provide timely
information.--In the case of a manufacturer
which is subject to the master rebate agreement
that fails to provide information required
under subparagraph (A) on a timely basis, the
amount of the penalty shall be $10,000 for each
day in which such information has not been
provided and such amount shall be paid to the Treasury. If such
information is not reported within 90 days of the deadline imposed, the
agreement shall be suspended for services furnished after the end of
such 90-day period and until the date such information is reported (but
in no case shall such suspension be for a period of less than 30 days).
``(ii) False information.--Any manufacturer
which is subject to the master rebate
agreement, or a wholesaler or direct seller,
that knowingly provides false information under
subparagraph (A) or (B) is subject to a civil
money penalty in an amount not to exceed
$100,000 for each item of false information.
Any such civil money penalty shall be in
addition to other penalties as may be
prescribed by law. The provisions of section
1128A (other than subsections (a) and (b))
shall apply to a civil money penalty under this
subparagraph in the same manner as such
provisions apply to a penalty or proceeding
under section 1128A(a).
``(D) Confidentiality of information.--
Notwithstanding any other provision of law, information
disclosed by manufacturers or wholesalers under this
paragraph or under an agreement with the Secretary of
Veterans Affairs described in section 1513(f) is
confidential and shall not be disclosed by the
Secretary or the Secretary of Veterans Affairs or a
State agency (or contractor therewith) in a form which
discloses the identity of a specific manufacturer or
wholesaler or the prices charged for drugs by such
manufacturer or wholesaler, except--
``(i) as the Secretary determines to be
necessary to carry out this section,
``(ii) to permit the Comptroller General to
review the information provided, and
``(iii) to permit the Director of the
Congressional Budget Office to review the
information provided.
``(4) Length of agreement.--
``(A) In general.--The master rebate agreement
under this section shall be effective for an initial
period of not less than 1 year and shall be
automatically renewed for a period of not less than 1
year unless terminated under subparagraph (B).
``(B) Termination.--
``(i) By the secretary.--The Secretary may
provide for termination of the master rebate
agreement with respect to a manufacturer for
violation of the requirements of the agreement
or other good cause shown. Such termination
shall not be effective earlier than 60 days
after the date of notice of such termination.
The Secretary shall provide, upon request, a
manufacturer with a hearing concerning such a
termination, but such hearing shall not delay
the effective date of the termination. Failure
of a State to provide any advance notice of
such a termination as required by regulation
shall not affect the State's right to terminate
coverage of the drugs affected by such
termination as of the effective date of such
termination.
``(ii) By a manufacturer.--A manufacturer
may terminate its participation in the master
rebate agreement under this section for any
reason. Any such termination shall not be
effective until the calendar quarter beginning
at least 60 days after the date the
manufacturer provides notice to the Secretary.
``(iii) Effectiveness of termination.--Any
termination under this subparagraph shall not
affect rebates due under the agreement before
the effective date of its termination.
``(iv) Notice to states.--In the case of a
termination under this subparagraph, the
Secretary shall provide notice of such
termination to the States within not less than
30 days before the effective date of such
termination.
``(v) Application to terminations of other
agreements.--The provisions of this
subparagraph shall apply to the terminations of
master agreements described in section 8126(a)
of title 38, United States Code.
``(C) Delay before reentry.--In the case of any
rebate agreement with a manufacturer under this section
which is terminated, another such agreement with the
manufacturer (or a successor manufacturer) may not be
entered into until a period of 1 calendar quarter has
elapsed since the date of the termination, unless the
Secretary finds good cause for an earlier reinstatement
of such an agreement.
``(5) Settlement of disputes.--
``(A) Secretary.--The Secretary shall have the
authority to resolve, settle, and compromise disputes
regarding the amounts of rebates owed under this
section and section 1927.
``(B) State.--Each State, with respect to covered
outpatient drugs paid for under the State plan, shall
have authority, independent of the Secretary's
authority under subparagraph (A), to resolve, settle,
and compromise disputes regarding the amounts of
rebates owed under this section. Any such action shall
be deemed to comply with the requirements of this
title, and such covered outpatient drugs shall be
eligible for payment under the State plan under this
title.
``(C) Amount of rebate.--The Secretary shall limit
the amount of the rebate payable in any case in which
the Secretary determines that, because of unusual
circumstances or questionable data, the provisions of
subsection (c) result in a rebate amount that is
inequitable or otherwise inconsistent with the purposes
of this section.
``(c) Determination of Amount of Rebate.--
``(1) Basic rebate for single source drugs and innovator
multiple source drugs.--
``(A) In general.--Except as provided in paragraph
(2), the amount of the rebate specified in this
subsection with respect to a State participating in the
master rebate agreement for a rebate period (as defined
in subsection (i)(7)) with respect to each dosage form
and strength of a single source drug or an innovator
multiple source drug shall be equal to the product of--
``(i) the total number of units of each
dosage form and strength paid for under the
State plan in the rebate period (as reported by
the State); and
``(ii) the greater of--
``(I) the difference between the
average manufacturer price and the best
price (as defined in subparagraph (C))
for the dosage form and strength of the
drug, or
``(II) the minimum rebate
percentage (specified in subparagraph
(B)) of such average manufacturer
price,
for the rebate period.
``(B) Minimum rebate percentage.--For purposes of
subparagraph (A)(ii)(II), the `minimum rebate
percentage' is 15 percent.
``(C) Best price defined.--For purposes of this
section--
``(i) In general.--The term `best price'
means, with respect to a single source drug or
innovator multiple source drug of a
manufacturer, the lowest price available from
the manufacturer during the rebate period to
any wholesaler, retailer, provider, health
maintenance organization, nonprofit entity, or
governmental entity within the United States, excluding--
``(I) any prices charged on or
after October 1, 1992, to the Indian
Health Service, the Department of
Veterans Affairs, a State home
receiving funds under section 1741 of
title 38, United States Code, the
Department of Defense, the Public
Health Service, or a covered entity
described in section 340B(a)(4) of the
Public Health Service Act,
``(II) any prices charged under the
Federal Supply Schedule of the General
Services Administration,
``(III) any prices used under a
State pharmaceutical assistance
program, and
``(IV) any depot prices and single
award contract prices, as defined by
the Secretary, of any agency of the
Federal Government.
``(ii) Special rules.--The term `best
price'--
``(I) shall be inclusive of cash
discounts, free goods that are
contingent on any purchase requirement,
volume discounts, and rebates (other
than rebates under this section),
``(II) shall be determined without
regard to special packaging, labeling,
or identifiers on the dosage form or
product or package,
``(III) shall not take into account
prices that are merely nominal in
amount, and
``(IV) shall exclude rebates paid
under this section or any other rebates
paid to a State participating in the
master rebate agreement.
``(2) Additional rebate for single source and innovator
multiple source drugs.--
``(A) In general.--The amount of the rebate
specified in this subsection with respect to a State
participating in the master rebate agreement for a
rebate period, with respect to each dosage form and
strength of a single source drug or an innovator
multiple source drug, shall be increased by an amount
equal to the product of--
``(i) the total number of units of such
dosage form and strength dispensed after
December 31, 1990, for which payment was made
under the State plan for the rebate period; and
``(ii) the amount (if any) by which--
``(I) the average manufacturer
price for the dosage form and strength
of the drug for the period, exceeds
``(II) the average manufacturer
price for such dosage form and strength
for the calendar quarter beginning July
1, 1990 (without regard to whether or
not the drug has been sold or
transferred to an entity, including a
division or subsidiary of the
manufacturer, after the first day of
such quarter), increased by the
percentage by which the Consumer Price
Index for All Urban Consumers (United
States city average) for the month
before the month in which the rebate
period begins exceeds such index for
September 1990.
``(B) Treatment of subsequently approved drugs.--In
the case of a covered outpatient drug approved by the
Food and Drug Administration after October 1, 1990,
clause (ii)(II) of subparagraph (A) shall be applied by
substituting `the first full calendar quarter after the
day on which the drug was first marketed' for `the
calendar quarter beginning July 1, 1990' and `the month
prior to the first month of the first full calendar
quarter after the day on which the drug was first
marketed' for `September 1990'.
``(3) Rebate for other drugs.--
``(A) In general.--The amount of the rebate paid to
a State participating in the master rebate agreement
for a rebate period with respect to each dosage form and strength of
covered outpatient drugs (other than single source drugs and innovator
multiple source drugs) shall be equal to the product of--
``(i) the applicable percentage (as
described in subparagraph (B)) of the average
manufacturer price for the dosage form and
strength for the rebate period, and
``(ii) the total number of units of such
dosage form and strength dispensed after
December 31, 1990, for which payment was made
under the State plan for the rebate period.
``(B) Applicable percentage defined.--For purposes
of subparagraph (A)(i), the `applicable percentage' is
11 percent.
``(4) Limitation on amount of rebate to amounts paid for
certain drugs.--
``(A) In general.--Upon request of the manufacturer
of a covered outpatient drug, the Secretary shall
limit, in accordance with subparagraph (B), the amount
of the rebate under this subsection with respect to a
dosage form and strength of such drug if the majority
of the estimated number of units of such dosage form
and strength that are subject to rebates under this
section were dispensed to inpatients of nursing
facilities.
``(B) Amount of rebate.--In the case of a covered
outpatient drug subject to subparagraph (A), the amount
of the rebate specified in this subsection for a rebate
period, with respect to each dosage form and strength
of such drug, shall not exceed the amount paid under
the State plan with respect to such dosage form and
strength of the drug in the rebate period (without
consideration of any dispensing fees paid).
``(5) Supplemental rebates prohibited.--No rebates shall be
required to be paid by manufacturers with respect to covered
outpatient drugs furnished to individuals in any State that
provides for the collection of such rebates in excess of the
rebate amount payable under this section.
``(d) Limitations on Coverage of Drugs by States Participating in
Master Agreement.--
``(1) Permissible restrictions.--A State participating in
the master rebate agreement under this section may--
``(A) subject to prior authorization under its
State plan any covered outpatient drug so long as any
such prior authorization program complies with the
requirements of paragraph (5); and
``(B) exclude or otherwise restrict coverage under
its plan of a covered outpatient drug if--
``(i) the drug is contained in the list
referred to in paragraph (2);
``(ii) the drug is subject to such
restrictions pursuant to the master rebate
agreement or any agreement described in
subsection (a)(4); or
``(iii) the State has excluded coverage of
the drug from its formulary established in
accordance with paragraph (4).
``(2) List of drugs subject to restriction.--The following
drugs or classes of drugs, or their medical uses, may be
excluded from coverage or otherwise restricted by a State
participating in the master rebate agreement:
``(A) Agents when used for anorexia, weight loss,
or weight gain.
``(B) Agents when used to promote fertility.
``(C) Agents when used for cosmetic purposes or
hair growth.
``(D) Agents when used for the symptomatic relief
of cough and colds.
``(E) Agents when used to promote smoking
cessation.
``(F) Prescription vitamins and mineral products,
except prenatal vitamins and fluoride preparations.
``(G) Nonprescription drugs.
``(H) Covered outpatient drugs which the
manufacturer seeks to require as a condition of sale
that associated tests or monitoring services be
purchased exclusively from the manufacturer or its
designee.
``(I) Barbiturates.
``(J) Benzodiazepines.
``(3) Additions to drug listings.--The Secretary shall, by
regulation, periodically update the list of drugs or classes of
drugs described in paragraph (2), or their medical uses, which
the Secretary has determined to be subject to clinical abuse or
inappropriate use.
``(4) Requirements for formularies.--A State participating
in the master rebate agreement may establish a formulary if the
formulary meets the following requirements:
``(A) The formulary is developed by a committee
consisting of physicians, pharmacists, and other
appropriate individuals appointed by the Governor of
the State.
``(B) Except as provided in subparagraph (C), the
formulary includes the covered outpatient drugs of any
manufacturer which has entered into and complies with
the agreement under subsection (a) (other than any drug
excluded from coverage or otherwise restricted under
paragraph (2)).
``(C) A covered outpatient drug may be excluded
with respect to the treatment of a specific disease or
condition for an identified population (if any) only
if, based on the drug's labeling (or, in the case of a
drug the prescribed use of which is not approved under
the Federal Food, Drug, and Cosmetic Act but is a
medically accepted indication, based on information
from the appropriate compendia described in subsection
(i)(5)), the excluded drug does not have a significant,
clinically meaningful therapeutic advantage in terms of
safety, effectiveness, or clinical outcome of such
treatment for such population over other drugs included
in the formulary and there is a written explanation
(available to the public) of the basis for the
exclusion.
``(D) The State plan permits coverage of a drug
excluded from the formulary (other than any drug
excluded from coverage or otherwise restricted under
paragraph (2)) pursuant to a prior authorization
program that is consistent with paragraph (5).
``(E) The formulary meets such other requirements
as the Secretary may impose in order to achieve program
savings consistent with protecting the health of
program beneficiaries.
A prior authorization program established by a State under
paragraph (5) is not a formulary subject to the requirements of
this paragraph.
``(5) Requirements of prior authorization programs.--The
State plan of a State participating in the master rebate
agreement may require, as a condition of coverage or payment
for a covered outpatient drug for which Federal financial
participation is available in accordance with this section, the
approval of the drug before its dispensing for any medically
accepted indication (as defined in subsection (i)(5)) only if
the system providing for such approval--
``(A) provides response by telephone or other
telecommunication device within 24 hours of a request
for prior authorization, and
``(B) except with respect to the drugs on the list
referred to in paragraph (2), provides for the
dispensing of at least a 72-hour supply of a covered
outpatient prescription drug in an emergency situation
(as defined by the Secretary).
``(6) Other permissible restrictions.--A State
participating in the master rebate agreement may impose
limitations, with respect to all such drugs in a therapeutic
class, on the minimum or maximum quantities per prescription or
on the number of refills, if such limitations are necessary to
discourage waste, and may address instances of fraud or abuse
by individuals in any manner authorized under this Act.
``(e) Drug Use Review.--
``(1) In general.--A State participating in the master
rebate agreement may provide for a drug use review program to
educate physicians and pharmacists to identify and reduce the
frequency of patterns of fraud, abuse, gross overuse, or
inappropriate or medically unnecessary care, among physicians,
pharmacists, and patients, or associated with specific drugs or
groups of drugs, as well as potential and actual severe adverse
reactions to drugs.
``(2) Application of state standards.--A State with a drug
use review program under this subsection shall establish and
operate the program under such standards as it may establish.
``(f) Electronic Claims Management.--In accordance with chapter 35
of title 44, United States Code (relating to coordination of Federal
information policy), the Secretary shall encourage each State to
establish, as its principal means of processing claims for covered
outpatient drugs under its State plan, a point-of-sale electronic
claims management system, for the purpose of performing on-line, real
time eligibility verifications, claims data capture, adjudication of
claims, and assisting pharmacists (and other authorized persons) in
applying for and receiving payment.
``(g) Annual Report.--
``(1) In general.--Not later than May 1 of each year, the
Secretary shall transmit to the Committee on Finance of the
Senate, and the Committee on Commerce of the House of
Representatives, a report on the operation of this section in
the preceding fiscal year.
``(2) Details.--Each report shall include information on--
``(A) ingredient costs paid under this title for
single source drugs, multiple source drugs, and
nonprescription covered outpatient drugs,
``(B) the total value of rebates received and
number of manufacturers providing such rebates,
``(C) the effect of inflation on the value of
rebates required under this section,
``(D) trends in prices paid under this title for
covered outpatient drugs, and
``(E) Federal and State administrative costs
associated with compliance with the provisions of this
title.
``(h) Exemption for Capitated Health Care Organizations, Hospitals,
and Certain Nursing Facilities.--
``(1) In general.--Except as provided in paragraph (2), the
requirements of the master rebate agreement under this section
shall not apply with respect to covered outpatient drugs
dispensed by or through--
``(A) a capitated health care organization (as
defined in section 1504(d)(1)),
``(B) a hospital that dispenses covered outpatient
drugs using a drug formulary system and bills the State
no more than the hospital's purchasing costs for
covered outpatient drugs, or
``(C) a nursing facility which receives payment
under this title for health care services, including
prescription drugs, on a capitated basis or which
dispenses covered outpatient drugs using a drug
formulary system.
``(2) Construction in determining best price.--Nothing in
paragraph (1) shall be construed as excluding amounts paid by
the entities described in such paragraph for covered outpatient
drugs from the determination of the best price (as defined in
subsection (c)(1)(C)) for such drugs.
``(i) Definitions.--In the section--
``(1) Average manufacturer price.--The term `average
manufacturer price' means, with respect to a covered outpatient
drug of a manufacturer for a rebate period, the average price
paid to the manufacturer for the drug in the United States by
wholesalers for drugs distributed to the retail pharmacy class
of trade, after deducting customary prompt pay discounts.
``(2) Covered outpatient drug.--Subject to the exceptions
in paragraph (3), the term `covered outpatient drug' means--
``(A) of those drugs which are treated as
prescribed drugs for purposes of section 1571(a)(8), a
drug which may be dispensed only upon prescription
(except as provided in subparagraph (D)), and--
``(i) which is approved as a prescription
drug under section 505 or 507 of the Federal
Food, Drug, and Cosmetic Act;
``(ii)(I) which was commercially used or
sold in the United States before the date of
the enactment of the Drug Amendments of 1962 or
which is identical, similar, or related (within
the meaning of section 310.6(b)(1) of title 21
of the Code of Federal Regulations) to such a
drug, and (II) which has not been the subject
of a final determination by the Secretary that
it is a `new drug' (within the meaning of
section 201(p) of the Federal Food, Drug, and
Cosmetic Act) or an action brought by the
Secretary under section 301, 302(a), or 304(a)
of such Act to enforce section 502(f) or 505(a)
of such Act; or
``(iii)(I) which is described in section
107(c)(3) of the Drug Amendments of 1962 and
for which the Secretary has determined there is
a compelling justification for its medical
need, or is identical, similar, or related
(within the meaning of section 310.6(b)(1) of
title 21 of the Code of Federal Regulations) to
such a drug, and (II) for which the Secretary
has not issued a notice of an opportunity for a
hearing under section 505(e) of the Federal
Food, Drug, and Cosmetic Act on a proposed
order of the Secretary to withdraw approval of
an application for such drug under such section
because the Secretary has determined that the
drug is less than effective for some or all
conditions of use prescribed, recommended, or
suggested in its labeling;
``(B) a biological product, other than a vaccine
which--
``(i) may only be dispensed upon
prescription,
``(ii) is licensed under section 351 of the
Public Health Service Act, and
``(iii) is produced at an establishment
licensed under such section to produce such
product;
``(C) insulin certified under section 506 of the
Federal Food, Drug, and Cosmetic Act; and
``(D) a drug, including a biological product or
insulin, which may be sold without a prescription
(commonly referred to as an `over-the-counter drug'),
if the drug is prescribed by a physician (or other
person authorized to prescribe under State law).
``(3) Limiting definition.--The term `covered outpatient
drug' does not include any drug, biological product, or insulin
provided as part of, or as incident to and in the same setting
as, any of the following (and for which payment may be made
under a State plan as part of payment for the following and not
as direct reimbursement for the drug):
``(A) Inpatient hospital services.
``(B) Hospice services.
``(C) Dental services, except that drugs for which
the State plan authorizes direct reimbursement to the
dispensing dentist are covered outpatient drugs.
``(D) Physicians' services.
``(E) Outpatient hospital services.
``(F) Nursing facility services and services
provided by an intermediate care facility for the
mentally retarded.
``(G) Other laboratory and x-ray services.
``(H) Renal dialysis services.
Such term also does not include any such drug or product for
which a National Drug Code number is not required by the Food
and Drug Administration or a drug or biological product used
for a medical indication which is not a medically accepted
indication. Any drug, biological product, or insulin excluded
from the definition of such term as a result of this paragraph
shall be treated as a covered outpatient drug for purposes of
determining the best price (as defined in subsection (c)(1)(C))
for such drug, biological product, or insulin.
``(4) Manufacturer.--The term `manufacturer' means, with
respect to a covered outpatient drug, the entity holding legal
title to or possession of the National Drug Code number for
such drug.
``(5) Medically accepted indication.--The term `medically
accepted indication' means any use for a covered outpatient
drug which is approved under the Federal Food, Drug, and
Cosmetic Act, or the use of which is supported by one or more
citations included or approved for inclusion in any of the
following compendia:
``(A) American Hospital Formulary Service Drug
Information.
``(B) United States Pharmacopeia-Drug Information.
``(C) American Medical Association Drug
Evaluations.
``(D) The DRUGDEX Information System.
``(E) The peer-reviewed medical literature.
``(6) Multiple source drug; innovator multiple source drug;
noninnovator multiple source drug; single source drug.--
``(A) Defined.--
``(i) Multiple source drug.--The term
`multiple source drug' means, with respect to a
rebate period, a covered outpatient drug (not
including any drug described in paragraph
(2)(D)) for which there are 2 or more drug
products which--
``(I) are rated as therapeutically
equivalent (under the Food and Drug
Administration's most recent
publication of `Approved Drug Products
with Therapeutic Equivalence
Evaluations'),
``(II) except as provided in
subparagraph (B), are pharmaceutically
equivalent and bioequivalent, as
defined in subparagraph (C) and as
determined by the Food and Drug
Administration, and
``(III) are sold or marketed in the
State during the period.
``(ii) Innovator multiple source drug.--The
term `innovator multiple source drug' means a
multiple source drug that was originally
marketed under an original new drug application
or product licensing application approved by
the Food and Drug Administration.
``(iii) Noninnovator multiple source
drug.--The term `noninnovator multiple source
drug' means a multiple source drug that is not
an innovator multiple source drug.
``(iv) Single source drug.--The term
`single source drug' means a covered outpatient
drug (other than a drug described in paragraph
(2)(D)) which is produced or distributed under
an original new drug application approved by
the Food and Drug Administration, including a
drug product marketed by any cross-licensed
producers or distributors operating under the
new drug application or product licensing
application.
``(B) Exception.--Subparagraph (A)(i)(II) shall not
apply if the Food and Drug Administration changes by
regulation the requirement that, for purposes of the
publication described in subparagraph (A)(i)(I), in
order for drug products to be rated as therapeutically
equivalent, they must be pharmaceutically equivalent
and bioequivalent, as defined in subparagraph (C).
``(C) Definitions.--For purposes of this
paragraph--
``(i) drug products are pharmaceutically
equivalent if the products contain identical
amounts of the same active drug ingredient in
the same dosage form and meet compendial or
other applicable standards of strength,
quality, purity, and identity,
``(ii) drugs are bioequivalent if they do
not present a known or potential bioequivalence
problem, or, if they do present such a problem,
they are shown to meet an appropriate standard
of bioequivalence, and
``(iii) a drug product is considered to be
sold or marketed in a State if it appears in a
published national listing of average wholesale
prices selected by the Secretary, if the listed
product is generally available to the public
through retail pharmacies in that State.
``(7) Rebate period.--The term `rebate period' means, with
respect to an agreement under subsection (a), a calendar
quarter or other period specified by the Secretary with respect
to the payment of rebates under such agreement.''.
SEC. 2924. STATE ELECTION; TERMINATION OF CURRENT PROGRAM; AND
TRANSITION.
(a) Termination of Current Program; Limitation on Medicaid Payments
in Fiscal Year 1997.--
(1) Repeal of title.--Title XIX of the Social Security Act
is repealed effective October 1, 1997, except that the repeal
of section 1928 of such Act is effective on the date of the
enactment of this Act and the succeeding two sections of such
title shall be effective during fiscal year 1996 in the same
manner and to the same extent as such sections were effective
during fiscal year 1995.
(2) Limitation on obligation authority.--Notwithstanding
any other provision of such title--
(A) Fiscal year 1997.--Subject to subparagraph (B),
the Secretary of Health and Human Services (in this
section referred to as the ``Secretary'') may enter
into obligations under such title with any State (as
defined for purposes of such title) for expenses
incurred during fiscal year 1997, but not in excess of
the sum determined under clauses (i) and (ii) of
section 1511(a)(2)(A) of the Social Security Act (as
added by section 2) for that State for fiscal year
1997.
(B) None after effective date.--The Secretary is
not authorized to enter into any obligation with any
State under title XIX of such Act for expenses incurred
on or after the earlier of--
(i) October 1, 1997, or
(ii) the first day of the first quarter on
which the State plan under title XV of such Act
(as added by section 2) is first effective.
(C) Agreement.--A State's submission of claims for
payment under section 1903 of such Act on or after
October 1, 1996, is deemed to constitute the State's
acceptance of the obligation limitation under
subparagraph (A) (including the formula for computing
the amount of such obligation limitation).
(D) Effect on medical assistance.--Effective
October 1, 1996--
(i) except as provided in this paragraph,
the Federal Government has no obligation to
provide payment with respect to items and
services provided under title XIX of the Social
Security Act, and
(ii) such title and title XV of such Act
shall not be construed as providing for an
entitlement, under Federal law in relation to
the Federal Government, in an individual or
person (including any provider) at the time of
provision or receipt of services.
(3) Requirement for timely submittal of claims.--No payment
shall be made to a State under title XIX of such Act with
respect to an obligation incurred before October 1, 1996,
unless the State has submitted to the Secretary, by not later
than April 1, 1997, a claim for Federal financial participation
for expenses paid by the State with respect to such
obligations. Nothing in paragraph (2) shall be construed as
affecting the obligation of the Federal Government to pay
claims described in the previous sentence.
(b) Transition Provisions.--
(1) Notwithstanding any other provision of law, in the case
where payment has been made under section 1903(a) of the Social
Security Act to a State before March 1, 1996, and for which a
disallowance has not been taken as of such date (or, if so
taken, has not been completed, including judicial review, by
such date), the Secretary of Health and Human Services shall
discontinue the disallowance proceeding and, if such
disallowance has been taken as of the date of the enactment of
this Act, any payment reductions effected shall be rescinded
and the payments returned to the State.
(2) The repeal under subsection (a)(1) of section 1928 of
the Social Security Act shall not affect the distribution of
vaccines purchased and delivered to the States before the date
of the enactment of this Act. No vaccine may be purchased after
such date by the Federal Government or any State under any
contract under section 1928(d) of the Social Security Act.
(3) No judicial or administrative decision rendered
regarding requirements imposed under title XIX of the Social
Security Act with respect to a State shall have any application
to the State plan of the State under title XV of such Act. A
State may, pursuant to the previous sentence, seek the
abrogation or modification of any such decision after the date
of termination of the State medicaid plan under title XIX of such Act.
(4) No cause of action under title XIX of the Social
Security Act which seeks to require a State to establish or
maintain minimum payment rates under such title or claim which
seeks reimbursement for any period before the date of the
enactment of this Act based on the alleged failure of the State
to comply with such title and which has not become final as of
such date shall be brought or continued.
(5) Section 6408(a)(3) of the Omnibus Budget Reconciliation
Act of 1989 (as amended by section 13642 of the Omnibus Budget
Reconciliation Act of 1993) and section 2 of Public Law 102-276
(as amended by section 13644 of the Omnibus Budget
Reconciliation Act of 1993) are each amended by striking
``December 31, 1995'' and inserting ``October 1, 1997''.
(c) Anti-Fraud Provisions.--Section 1128(h)(1) of the Social
Security Act (42 U.S.C. 1320a-7(h)(1)) is amended by inserting ``or a
State plan under title XV'' after ``title XIX''.
(d) Technical and Conforming Amendments.--
(1) Secretarial submission of legislative proposal.--Not
later than 90 days after the date of the enactment of this Act,
the Secretary of Health and Human Services, in consultation, as
appropriate, with heads of other Federal agencies and the
States (as defined in section 1101(a)(8) of the Social Security
Act for purposes of title XIX of such Act), shall submit to the
appropriate committees of Congress a legislative proposal
providing for such technical and conforming amendments in the
law as are required by the provisions of, and amendments made
by, this subtitle.
(2) Transitional rule.--Any reference in any provision of
law to title XIX of the Social Security Act or any provision
thereof shall be deemed to be a reference to such title or
provision as in effect on the day before the date of the
enactment of this Act.
(3) Amendment to section 1115.--Section 1115(a) of the
Social Security Act (42 U.S.C. 1315(a)) is amended--
(A) in the matter preceding paragraph (1), by
striking ``or XIX'' and inserting ``XIX, or XV'';
(B) in paragraph (1), by inserting ``or of title
XV,'' after ``1902,''; and
(C) in paragraph (2), by inserting ``or under title
XV,'' after ``1903,''.
(4) Certification of christian science nursing
facilities.--
(A) In general.--Title XIX (42 U.S.C. 1396 et seq.)
is amended--
(i) in the matter following paragraph (62)
of section 1902(a) (42 U.S.C. 1396a(a)), by
striking ``the First Church of Christ,
Scientist, Boston, Massachusetts'' and
inserting ``The Commission for Accreditation of
Christian Science Nursing Organizations/
Facilities, Inc.''; and
(ii) in section 1908(e)(1) (the first place
it appears) (42 U.S.C. 1396g(1)(e)), by
striking ``the First Church of Christ,
Scientist, Boston, Massachusetts'' and
inserting ``The Commission for Accreditation of
Christian Science Nursing Organizations/
Facilities, Inc.''.
(B) Effective date.--The amendments made by
subparagraph (A) shall take effect on January 1, 1997.
SEC. 2925. INTEGRATION DEMONSTRATION PROJECT.
(a) Description of Projects.--
(1) In general.--The Secretary of Health and Human Services
(in this section referred to as the ``Secretary'') may waive
such requirements of titles XVIII and XV of the Social Security
Act as may be necessary for States to conduct demonstration
projects under this section. Such projects shall demonstrate
the manner in which States may use funds from the programs
under such titles to develop and implement innovative programs
for individuals dually eligible for benefits under both titles,
including such individuals who are chronically ill. The Secretary shall
grant waivers in a manner that permits States flexibility in
contracting with medicare risk providers and other providers for
services, oversight of contract administration and quality management,
and administration of a single enrollment process. Such a waiver may
restrict time period during which project participants may disenroll
without cause from capitated health plans under the medicare program.
(2) Voluntary participation.--A State may not require an
individual eligible to receive items and services under the
medicare and title XV programs to participate in a
demonstration project under this section.
(b) Budget Neutrality and Reinvestment of Savings.--
(1) Budget neutrality.--The Secretary shall not approve a
demonstration project under this section for a State unless the
State demonstrates that the amount of the Federal expenditures
under the program will not exceed the amount of the Federal
expenditures that would have been made if the project had not
been approved.
(2) Use of savings.--The Secretary shall permit a State to
retain any savings achieved under a project and to use such
savings for--
(A) expanding eligibility for low income medicare
beneficiaries who are risk of institutionalization and
who, if institutionalized, are likely to qualify for
benefits under title XV of the Social Security Act, and
(B) providing a scope of services under the project
that exceeds the scope of services normally covered
under such title.
(c) Limitation on Number of Projects.--Not more than 10
demonstration projects shall be conducted under this section.
(d) Duration.--
(1) In general.--Subject to paragraph (2), a demonstration
project conducted under this section shall be conducted for an
initial period of 5 years and, upon the request of a State and
a finding by the Secretary that the project has been
successful, shall be extended indefinitely.
(2) Termination.--The Secretary may, with 90 days' notice,
terminate any demonstration project conducted under this
section that is not in substantial compliance with the terms of
the application approved by the Secretary under this section.
(e) Applications.--Each State, or a coalition of States, desiring
to conduct a demonstration project under this section shall prepare and
submit to the Secretary an application at such time, in such manner,
and containing such information as the Secretary may require, including
an explanation of a plan for evaluating the project. The Secretary
shall approve or deny an application not later than 90 days after the
receipt of such application.
(f) Payments.--For each calendar quarter occurring during a
demonstration project conducted under this section, the Secretary shall
provide for payments to the State in a manner consistent with
subsection (b)(1).
(g) Oversight.--The Secretary shall establish quality standards for
evaluating and monitoring the demonstration projects conducted under
this section. Such quality standards shall include reporting
requirements which contain the following:
(1) A description of the demonstration project.
(2) An analysis of beneficiary satisfaction under such
project.
(3) An analysis of the quality of the services delivered
under the project.
(4) A description of the savings to the medicare and title
XV programs as a result of the demonstration project.
SEC. 2926. NATIONAL COMMISSION ON MEDICAID AND STATE-BASED HEALTH CARE
REFORM.
(a) Establishment of Commission.--
(1) In general.--There is established a commission to be
known as the National Commission on Medicaid and State-Based
Health Care Reform (in this section referred to as the
``Commission'').
(2) Composition.--The Commission shall be composed as
follows:
(A) 2 federal officials.--The President shall
appoint 2 Federal officials, one of whom the President
shall designate as Chair of the Commission.
(B) 4 members of the congress.--Four members of the
Congress shall be appointed as follows:
(i) The Speaker of the House of
Representatives shall appoint one Member of the
House.
(ii) The minority leader of the House of
Representatives shall appoint one Member of the
House.
(iii) The majority leader of the Senate
shall appoint one Member of the Senate.
(iv) The minority leader of the Senate
shall appoint one Member of the Senate.
(C) 5 state government representatives.--Five State
government representatives shall be appointed as
follows:
(i) The majority leaders of the House of
Representatives and the Senate shall jointly
appoint 3 individuals who are governors, State
legislators, or State medicaid officials.
(ii) The minority leaders of the House of
Representatives and the Senate shall jointly
appoint 2 individuals who are governors, State
legislators, or State medicaid officials.
(D) 6 experts.--Six experts shall be appointed as
follows:
(i) The majority leaders of the House of
Representatives and the Senate shall jointly
appoint 4 individuals, who are not officials of
the Federal or State governments, and who may
be consumers, or who are individuals who have
expertise in a health-related field, such as
medicine, public health, or delivery and
financing of health care services.
(ii) The President shall appoint 2
individuals who are not officials of the
Federal or State governments, and who may be
consumers, or who are individuals who have
expertise in a health-related field, such as
medicine, public health, or delivery and
financing of health care services.
(3) Initial appointment.--Members of the Commission shall
first be appointed by not later than 90 days after the date of
the enactment of this Act.
(4) Compensation and expenses.--
(A) Compensation.--Each member of the Commission
shall serve without compensation.
(B) Travel expenses.--Members of the Commission
shall be allowed travel expenses, including per diem in
lieu of subsistence, at rates authorized for employees
of agencies under subchapter I of chapter 57 of title
5, United States Code, while away from their homes or
regular places of business in the performance of
services for the Commission.
(b) Duties of Commission.--
(1) Study.--
(A) In general.--The Commission shall study and
make recommendations to the Congress, the President,
and the Secretary of Health and Human Services
regarding the program of medical assistance under title
XIX of the Social Security Act (or title XV of such
Act, if applicable) and modifications that may be made
to such program to improve the program and to encourage
further State health reform relating to access,
quality, and cost containment.
(B) Specific concerns.--The studies and
recommendations of the Commission shall specifically
address the following:
(i) The progress achieved with respect to
performance objectives relating to access and
quality.
(ii) Changes needed to ensure adequate
access to health care and long term care for
low-income individuals.
(iii) Promotion of quality care.
(iv) Deterrence of fraud and abuse.
(v) Providing each State with additional
flexibility in implementing the program of
medical assistance under title XIX of the
Social Security Act (or title XV of such Act,
if applicable), consistent with maintaining the
guarantee of coverage under such program.
(vi) Causes and strategies for limiting
Federal and State expenditures under such
program.
(vii) Enhancing the equity and fairness in
the distribution of Federal per beneficiary
expenditures and matching rates to the States.
(C) Consultation.--In addressing the issue
described in subparagraph (B)(vii), the Commission
shall consult with the Comptroller General of the
General Accounting Office and shall consider the
following:
(i) The rate of poverty in each State.
(ii) The total taxable resources in each
State.
(iii) Differences in the efficient
operation of the program of medical assistance
under title XIX of the Social Security Act (or
title XV of such Act, if applicable) among the
States.
(iv) Per capita income in each State.
(v) The relative health care case mix in
each State.
(vi) The wages of health care employees in
each State.
(vii) The cost of living in each State.
(2) Reports.--
(A) First report.--
(i) In general.--The Commission shall
submit a first report to the Congress by not
later than June 1, 1997.
(ii) Requirement.--The report submitted to
Congress under clause (i) shall include the
Commission's recommendation with respect to the
issue described in paragraph (1)(B)(vii) in the
form of a legislative proposal containing such
statutory provisions as the Commission may
determine are necessary or appropriate to
implement such recommendation.
(B) Subsequent reports.--The Commission shall issue
subsequent reports to the Congress by not later than
December 31, 1997, and December 31, 1998, respectively.
(c) Administration.--
(1) Appointment of staff.--
(A) Executive director.--The Commission shall have
an Executive Director who shall be appointed by the
Chair with the approval of the Commission. The
Executive Director shall be paid at a rate not to
exceed the rate of basic pay payable for level III of
the Executive Schedule.
(B) Staff.--With the approval of the Commission,
the Executive Director may appoint and determine the
compensation of such staff as may be necessary to carry
out the duties of the Commission. Such appointments and
compensation may be made without regard to the
provisions of title 5, United States Code, that govern
appointments in the competitive services, and the
provisions of chapter 51 and subchapter III of chapter
53 of such title that relate to classifications and the
General Schedule pay rates.
(C) Consultants.--The Commission may procure such
temporary and intermittent services of consultants
under section 3109(b) of title 5, United States Code,
as the Commission determines to be necessary to carry
out the duties of the Commission.
(2) Provision of administrative support services by hhs.--
Upon the request of the Commission, the Secretary of Health and
Human Services shall provide to the Commission on a
reimbursable basis such administrative support services as the
Commission may request.
(d) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section $4,000,000 for each of fiscal
years 1997 and 1998, and $2,000,000 for fiscal year 1999.
(e) Termination.--The Commission shall terminate on December 31,
1998.