[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3625 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3625

  To reauthorize and reform the program of block grants to States for 
    temporary assistance for needy families, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 24, 2002

 Mr. Cardin (for himself, Mr. Stark, Mr. Levin, Mr. McDermott, and Mr. 
   Doggett) introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
  To reauthorize and reform the program of block grants to States for 
    temporary assistance for needy families, and for other purposes.

    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 ``Next Step in Reforming Welfare 
Act''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents of this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Amendment of Social Security Act.
                TITLE I--CONTINUATION OF CERTAIN GRANTS

Sec. 101. Family assistance grants.
Sec. 102. Bonus to reward high performance States.
Sec. 103. Extension of supplemental grants.
Sec. 104. Additional grants for States with low Federal funding per 
                            poor child.
Sec. 105. Contingency fund.
                      TITLE II--POVERTY REDUCTION

Sec. 201. Additional purpose of TANF program.
Sec. 202. Child poverty reduction grants.
Sec. 203. Review and conciliation process.
Sec. 204. Replacement of caseload reduction credit with employment 
                            credit.
Sec. 205. Restoration of funding of the Social Services Block Grant.
                TITLE III--REQUIRING AND REWARDING WORK

Sec. 301. Effect of wage subsidies on 5-year limit.
Sec. 302. Child care.
Sec. 303. Competitive grants to improve access to various benefit 
                            programs.
Sec. 304. Assessments for TANF recipients.
     TITLE IV--HELPING WELFARE LEAVERS CLIMB THE EMPLOYMENT LADDER

Sec. 401. State plan requirement on employment advancement.
Sec. 402. Employment Advancement Fund.
Sec. 403. Elimination of limit on number of TANF recipients enrolled in 
                            vocational education or high school who may 
                            be counted towards the work participation 
                            requirement.
Sec. 404. Counting of up to 2 years of vocational and educational 
                            training as work activity.
Sec. 405. Limited counting of certain activities leading to employment 
                            as work activity.
Sec. 406. Clarification of authority of States to use TANF funds 
                            carried over from prior years to provide 
                            TANF benefits and services.
     TITLE V--PROMOTING FAMILY FORMATION AND RESPONSIBLE PARENTING

Sec. 501. Family Formation Fund.
Sec. 502. Distribution of child support collected by States on behalf 
                            of children receiving certain welfare 
                            benefits.
Sec. 503. Elimination of separate work participation rate for 2-parent 
                            families.
Sec. 504. Ban on imposition of stricter eligibility criteria for 2-
                            parent families; State opt-out.
          TITLE VI--RESTORING FAIRNESS FOR IMMIGRANT FAMILIES

Sec. 601. Treatment of aliens under the TANF program.
Sec. 602. Treatment of aliens under the SSI program.
Sec. 603. Effective date and applicability.
                TITLE VII--ENSURING STATE ACCOUNTABILITY

Sec. 701. Inflation adjustment of maintenance-of-effort requirement.
Sec. 702. Ban on using Federal TANF funds to replace State and local 
                            spending that does not meet the definition 
                            of qualified State expenditures.
  TITLE VIII--IMPROVING INFORMATION ABOUT TANF RECIPIENTS AND PROGRAMS

Sec. 801. Extension of funding of studies and demonstrations.
Sec. 802. Longitudinal studies of employment and earnings of TANF 
                            leavers.
Sec. 803. Inclusion of disability status in information States report 
                            about TANF families.
Sec. 804. Annual report to the Congress to include greater detail about 
                            State programs funded under TANF.
Sec. 805. Enhancement of understanding of the reasons individuals leave 
                            State TANF programs.
Sec. 806. Standardized State plans.
                        TITLE IX--EFFECTIVE DATE

Sec. 901. Effective date.

SEC. 3. AMENDMENT OF SOCIAL SECURITY ACT.

    Except as otherwise expressly provided, wherever in this Act an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the amendment or repeal shall be 
considered to be made to a section or other provision of the Social 
Security Act.

                TITLE I--CONTINUATION OF CERTAIN GRANTS

SEC. 101. FAMILY ASSISTANCE GRANTS.

    (a) In General.--Section 403(a)(1)(A) (42 U.S.C. 603(a)(1)(A)) is 
amended by striking ``1996'' and all that follows through ``2002'' and 
inserting ``2003 through 2007''.
    (b) Inflation Adjustment.--Section 403(a)(1) (42 U.S.C. 603(a)(1)) 
is amended--
            (1) in subparagraph (B)--
                    (A) by striking ``means the greatest of--'' and 
                inserting ``means, with respect to a fiscal year 
                specified in subparagraph (A) of this paragraph--
                            ``(i) the greatest of--'';
                    (B) by redesignating each of clauses (i), (ii)(I), 
                (ii)(II), and (iii) as subclauses (I), (II)(aa), 
                (II)(bb), and (III), respectively;
                    (C) by indenting each of the provisions specified 
                in subparagraph (B) of this paragraph 2 additional ems 
                to the right;
                    (D) by striking the period and inserting ``; 
                multiplied by''; and
                    (E) by adding at the end the following:
                            ``(ii) 1.00, plus the inflation percentage 
                        (as defined in subparagraph (F) of this 
                        paragraph) in effect for the fiscal year 
                        specified in subparagraph (A) of this 
                        paragraph.''; and
            (2) by adding at the end the following:
                    ``(F) Inflation percentage.--For purposes of 
                subparagraph (B) of this paragraph, the inflation 
                percentage applicable to a fiscal year is the 
                percentage (if any) by which--
                            ``(i) the average of the Consumer Price 
                        Index (as defined in section 1(f)(5) of the 
                        Internal Revenue Code of 1986) for the 12-month 
                        period ending on September 30 of the 
                        immediately preceding fiscal year; exceeds
                            ``(ii) the average of the Consumer Price 
                        Index (as so defined) for the 12-month period 
                        ending on September 30, 2001.''.

SEC. 102. BONUS TO REWARD HIGH PERFORMANCE STATES.

    Section 403(a)(4) (42 U.S.C. 603(a)(4)) is amended--
            (1) in subparagraph (D), by striking ``$1,000,000,000'' and 
        inserting ``$1,800,000,000'';
            (2) in subparagraph (E), by striking ``and 2003'' and 
        inserting ``2003, 2004, 2005, 2006, and 2007''; and
            (3) in subparagraph (F), by striking ``2003 
        $1,000,000,000'' and inserting ``2002 $800,000,000, and for 
        fiscal years 2003 through 2007 $1,000,000,000,''.

SEC. 103. EXTENSION OF SUPPLEMENTAL GRANTS.

    Section 403(a)(3) (42 U.S.C. 603(a)(3)) is amended--
            (1) in subparagraph (A)--
                    (A) by striking ``and'' at the end of clause (i);
                    (B) by striking the period at the end of clause 
                (ii) and inserting ``; and''; and
                    (C) by adding at the end the following:
                            ``(iii) for each of fiscal years 2003 
                        through 2007, a grant in an amount equal to the 
                        amount required to be paid to the State under 
                        this paragraph in fiscal year 2001.'';
            (2) in subparagraph (E), by striking ``1998'' and all that 
        follows and inserting ``2003 through 2007 $1,597,250,000 for 
        grants under this paragraph.''; and
            (3) by striking subparagraph (G).

SEC. 104. ADDITIONAL GRANTS FOR STATES WITH LOW FEDERAL FUNDING PER 
              POOR CHILD.

    Section 403(a) (42 U.S.C. 603(a)) is amended by adding at the end 
the following:
    ``(6) Additional grants for states with low federal funding per 
poor child.--
                    ``(A) In general.--The Secretary shall make a grant 
                pursuant to this paragraph to a State--
                            ``(i) for fiscal year 2003, if the State is 
                        an inadequately poverty-funded State for fiscal 
                        year 2002; and
                            ``(ii) for any of fiscal years 2004 through 
                        2007, if the State is an inadequately poverty-
                        funded State for any prior fiscal year after 
                        fiscal year 2002.
                    ``(B) Inadequately poverty-funded state.--For 
                purposes of this paragraph, a State is an inadequately 
                poverty-funded State for a particular fiscal year if--
                            ``(i) the total amount of the grants made 
                        to the State under paragraph (1), paragraph 
                        (3), and this paragraph for the particular 
                        fiscal year, divided by the number of children 
                        in poverty in the State with respect to the 
                        particular fiscal year is less than 75 percent 
                        of the total amount of grants made to all 
                        eligible States under paragraph (1), paragraph 
                        (3), and this paragraph for the particular 
                        fiscal year, divided by the total number of 
                        children living in poverty in all eligible 
                        States with respect to the particular fiscal 
                        year; and
                            ``(ii) the total of the amounts paid to the 
                        State under this subsection for all prior 
                        fiscal years that have not been expended by the 
                        State by the end of the preceding fiscal year 
                        is less than 50 percent of State family 
                        assistance grant for the particular fiscal 
                        year.
                    ``(C) Amount of grant.--The amount of the grant to 
                be made under this paragraph to a State for a 
                particular fiscal year shall be--
                            ``(i) if the particular fiscal year is 
                        fiscal year 2003, an amount equal to--
                                    ``(I) the number of children in 
                                poverty in the State for the then 
                                preceding fiscal year, divided by the 
                                total number of children in poverty in 
                                all States that are inadequately 
                                poverty-funded States for the then 
                                preceding fiscal year; multiplied by
                                    ``(II) the amount appropriated 
                                pursuant to subparagraph (G) for the 
                                particular fiscal year; or
                            ``(ii) if the particular fiscal year is any 
                        of fiscal years 2004 through 2007, an amount 
                        equal to--
                                    ``(I) the amount required to be 
                                paid to the State under this paragraph 
                                for the then preceding fiscal year; 
                                plus
                                    ``(II) if the State is an 
                                inadequately poverty-funded State for 
                                the then preceding fiscal year--
                                            ``(aa) the number of 
                                        children in poverty in the 
                                        State for the then preceding 
                                        fiscal year, divided by the 
                                        total number of children in 
                                        poverty in all States that are 
                                        inadequately poverty-funded 
                                        States for the then preceding 
                                        fiscal year; multiplied by
                                            ``(bb) the amount 
                                        appropriated pursuant to 
                                        subparagraph (G) for the 
                                        particular fiscal year.
                    ``(D) Use of grant.--A State to which a grant is 
                made under this paragraph shall use the grant for any 
                purpose for which a grant made under this part may be 
                used.
                    ``(E) Definitions.--In this paragraph:
                            ``(i) Children in poverty.--The term 
                        `children in poverty' means, with respect to a 
                        State and a fiscal year, the number of children 
                        residing in the State who had not attained 18 
                        years of age and whose family income was less 
                        than the poverty line then applicable to the 
                        family, as of the end of the fiscal year.
                            ``(ii) Poverty line.--The term `poverty 
                        line' has the meaning given the term in section 
                        673(2) of the Omnibus Budget Reconciliation Act 
                        of 1981, including any revision required by 
                        such section.
                    ``(F) Family income determinations.--For purposes 
                of this paragraph, family income includes cash income, 
                except cash benefits from means-tested public programs 
                and child support payments.
                    ``(G) Appropriations.--
                            ``(i) In general.--Out of any money in the 
                        Treasury of the United States not otherwise 
                        appropriated, there are appropriated for grants 
                        under this paragraph--
                                    ``(I) $65,000,000 for fiscal year 
                                2003;
                                    ``(II) $130,000,000 for fiscal year 
                                2004;
                                    ``(III) $195,000,000 for fiscal 
                                year 2005;
                                    ``(IV) $260,000,000 for fiscal year 
                                2006; and
                                    ``(V) $325,000,000 for fiscal year 
                                2007.
                            ``(ii) Availability.--Amounts made 
                        available under clause (i) shall remain 
                        available until expended.''.

SEC. 105. CONTINGENCY FUND.

    (a) In General.--Section 403(b) (42 U.S.C. 603(b)) is amended--
            (1) in paragraph (2), by striking ``1997'' and all that 
        follows and inserting ``2003 through 2007 such sums as are 
        necessary for payments under this subsection''; and
            (2) in paragraph (3), by striking subparagraph (C) and 
        inserting the following:
                    ``(C) Limitation on monthly payment to a state.--
                The total amount paid to a single State under 
                subparagraph (A) during a fiscal year shall not exceed 
                20 percent of the State family assistance grant.''.
    (b) Application of Regular Maintenance of Effort Requirement.--
Section 409(a)(10) (42 U.S.C. 609(a)(10)) is amended by striking ``100 
percent of historic State expenditures (as defined in paragraph 
(7)(B)(iii) of this subsection)'' and inserting ``the applicable 
percentage (as defined in paragraph (7)(B)(ii) of this subsection) of 
inflation-adjusted historic State expenditures (as defined in paragraph 
(7)(B)(vi) of this subsection)''.
    (c) Modification of Unemployment Test To Become Needy State.--
Section 403(b)(5)(A) (42 U.S.C. 603(b)(5)(A)) is amended to read as 
follows:
                    ``(A) the average rate of total unemployment in the 
                State (seasonally adjusted) for the period consisting 
                of the most recent 3 months for which data are 
                available has increased by the lesser of 1.5 percentage 
                points or by 50 percent over the corresponding 3-month 
                period in the preceding fiscal year; or''.
    (d) Modification of Food Stamp Test To Become Needy State.--Section 
403(b)(5)(B) (42 U.S.C. 603(b)(5)(B)) is amended to read as follows:
                    ``(B) as determined by the Secretary of 
                Agriculture, the monthly average number of households 
                (as of the last day of each month) that participated in 
                the food stamp program in the State in the then most 
                recently concluded 3-month period for which data are 
                available exceeds by at least 10 percent the monthly 
                average number of households (as of the last day of 
                each month) in the State that participated in the food 
                stamp program in the corresponding 3-month period in 
                the preceding fiscal year.''.
    (e) Simplification of Reconciliation Formula.--Section 403(b)(6) 
(42 U.S.C. 603(b)(6)) is amended to read as follows:
            ``(6) Annual reconciliation.--
                    ``(A) In general.--Notwithstanding paragraph (3), 
                if the Secretary makes a payment to a State under this 
                subsection in a fiscal year, then the State shall remit 
                to the Secretary, within 1 year after the end of the 
                first subsequent period of 3 consecutive months for 
                which the State is not a needy State, an amount equal 
                to the amount (if any) by which--
                            ``(i) the maintenance of effort level (as 
                        defined in subparagraph (B)(i) of this 
                        paragraph) for the fiscal year, plus the State 
                        contribution (as defined in subparagraph 
                        (B)(ii) of this paragraph) in the fiscal year; 
                        exceeds
                            ``(ii) the qualified State expenditures (as 
                        defined in section 409(a)(7)(B)(i)) in the 
                        fiscal year.
                    ``(B) Definitions.--In subparagraph (A):
                            ``(i) Maintenance of effort level.--The 
                        term ``maintenance of effort level'' means, 
                        with respect to a State and a fiscal year, an 
                        amount equal to the applicable percentage of 
                        historic State expenditures (as defined in 
                        section 409(a)(7)(B)) for the fiscal year.
                            ``(ii) State contribution.--The term `State 
                        contribution' means, with respect to a fiscal 
                        year--
                                    ``(I) the total amount paid to the 
                                State under this subsection in the 
                                fiscal year; multiplied by
                                    ``(II) 1 minus the greater of 75 
                                percent or the Federal medical 
                                assistance percentage for the State (as 
                                defined in section 1905(b)), divided by 
                                the greater of 75 percent or the 
                                Federal medical assistance percentage 
                                for the State (as defined in section 
                                1905(b)).''.
    (f) Increase in Number of Months for Which State May Qualify for 
Payments.--Section 403(b)(4) (42 U.S.C. 603(b)(4)) is amended by 
striking ``2-month'' and inserting ``3-month''.

                      TITLE II--POVERTY REDUCTION

SEC. 201. ADDITIONAL PURPOSE OF TANF PROGRAM.

    Section 401(a) (42 U.S.C. 601(a)) 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''; and
            (3) by adding at the end the following:
            ``(5) reduce the extent and severity of poverty and promote 
        self-sufficiency among families with children.''.

SEC. 202. CHILD POVERTY REDUCTION GRANTS.

    Section 403(a) (42 U.S.C. 603(a)) is further amended by adding at 
the end the following:
            ``(7) Bonus to reward states that reduce child poverty.--
                    ``(A) In general.--Beginning with fiscal year 2003, 
                the Secretary shall make a grant pursuant to this 
                paragraph to each State for each fiscal year for which 
                the State is a qualified child poverty reduction State.
                    ``(B) Amount of grant.--
                            ``(i) In general.--Subject to this 
                        subparagraph, the amount of the grant to be 
                        made to a qualified child poverty reduction 
                        State for a fiscal year shall be an amount 
                        equal to--
                                    ``(I) the number of children who 
                                had not attained 18 years of age by the 
                                end of the then most recently completed 
                                calendar year and who resided in the 
                                State as of the end of such calendar 
                                year, divided by the number of such 
                                children who resided in the United 
                                States as of the end of such calendar 
                                year; multiplied by
                                    ``(II) the amount appropriated 
                                pursuant to subparagraph (F) for the 
                                fiscal year.
                            ``(ii) Limitations.--
                                    ``(I) Minimum grant.--The amount of 
                                the grant to be made to a qualified 
                                child poverty reduction State for a 
                                fiscal year shall be not less than 
                                $1,000,000.
                                    ``(II) Maximum grant.--The amount 
                                of the grant to be made to a qualified 
                                child poverty reduction State for a 
                                fiscal year shall not exceed an amount 
                                equal to 5 percent of the State family 
                                assistance grant for the fiscal year.
                            ``(iii) Pro rata increase.--If the amount 
                        available for grants under this paragraph for a 
                        fiscal year is greater 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, subject 
                        to clause (ii)(II), be increased by such equal 
                        percentage as may be necessary to ensure that 
                        the total of the amounts payable for the fiscal 
                        year under this paragraph equals the amount 
                        available for the grants.
                            ``(iv) Pro rata reduction.--If the amount 
                        available for grants under 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, subject 
                        to clause (ii)(I), be reduced by such equal 
                        percentage as may be necessary to ensure that 
                        the total of the amounts payable for the fiscal 
                        year under this paragraph equals the amount 
                        available for the grants.
                    ``(C) Use of grant.--A State to which a grant is 
                made under this paragraph shall use the grant for any 
                purpose for which a grant made under this part may be 
                used.
                    ``(D) Definitions.--In this paragraph:
                            ``(i) Qualified child poverty reduction 
                        state.--The term `qualified child poverty 
                        reduction State' means, with respect to a 
                        fiscal year, a State if--
                                    ``(I) the child poverty rate 
                                achieved by the State for the then most 
                                recently completed calendar year for 
                                which such information is available is 
                                less than the lowest child poverty rate 
                                achieved by the State during the 
                                applicable period; and
                                    ``(II) the average depth of child 
                                poverty in the State for the then most 
                                recently completed calendar year for 
                                which such information is available is 
                                not greater than the average depth of 
                                child poverty in the State for the 
                                calendar year that precedes such then 
                                most recently completed calendar year.
                            ``(ii) Applicable period.--In clause (i), 
                        the term `applicable period' means, with 
                        respect to a State and the calendar year 
                        referred to in clause (i)(I), the period that--
                                    ``(I) begins with the calendar year 
                                that, as of October 1, 2002, precedes 
                                the then most recently completed 
                                calendar year for which such 
                                information is available; and
                                    ``(II) ends with the calendar year 
                                that precedes the calendar year 
                                referred to clause (i)(I).
                            ``(iii) Child poverty rate.--The term 
                        `child poverty rate' means, with respect to a 
                        State and a calendar year, the percentage of 
                        children residing in the State during the 
                        calendar year whose family income for the 
                        calendar year is less than the poverty line 
                        then applicable to the family.
                            ``(iv) Average depth of child poverty.--The 
                        term `average depth of child poverty' means 
                        with respect to a State and a calendar year, 
                        the average dollar amount by which family 
                        income is exceeded by the poverty line, among 
                        children in the State whose family income for 
                        the calendar year is less than the applicable 
                        poverty line.
                            ``(v) Poverty line.--The term `poverty 
                        line' has the meaning given the term in section 
                        673(2) of the Omnibus Budget Reconciliation Act 
                        of 1981, including any revision required by 
                        such section applicable to a family of the size 
                        involved.
                    ``(E) Family income determinations.--For purposes 
                of this paragraph, family income includes cash income, 
                child support payments, government cash payments, and 
                benefits under the Food Stamp Act of 1977 that are 
                received by any family member, and family income shall 
                be determined after payment of all taxes and receipt of 
                any tax refund or rebate by any family member.
                    ``(F) Appropriations.--
                            ``(i) In general.--Out of any money in the 
                        Treasury of the United States not otherwise 
                        appropriated, there are appropriated for each 
                        of fiscal years 2003 through 2007 $150,000,000 
                        for grants under this paragraph.
                            ``(ii) Availability.--Amounts made 
                        available under clause (i) shall remain 
                        available until expended.''.

SEC. 203. REVIEW AND CONCILIATION PROCESS.

    (a) Requirement.--Section 408(a) (42 U.S.C. 608(a)) is amended by 
adding at the end the following:
            ``(12) Review and conciliation process requirements.--A 
        State to which a grant is made under section 403 shall not 
        impose a sanction against a person under the State program 
        funded under this part, unless the State--
                    ``(A) has attempted at least twice (using at least 
                2 different methods) to notify the person of the 
                impending imposition of the sanction, the reason for 
                the proposed sanction, the amount of the sanction, the 
                length of time during which the proposed sanction would 
                be in effect, and the steps required to come into 
                compliance or to show good cause for noncompliance;
                    ``(B) has afforded the person an opportunity--
                            ``(i) to meet with the caseworker involved 
                        or another individual who has authority to 
                        determine whether to impose the sanction; and
                            ``(ii) to explain why the person did not 
                        comply with the requirement on the basis of 
                        which the sanction is to be imposed;
                    ``(C) has considered and taken any such explanation 
                into account in determining to impose the sanction;
                    ``(D) has specifically considered whether certain 
                conditions exist, such as a physical or mental 
                impairment, domestic violence, or limited proficiency 
                in English, that contributed to the noncompliance of 
                the person; and
                    ``(E) in determining whether to impose the 
                sanction, has used screening tools developed in 
                consultation with individuals or groups with expertise 
                in matters described in subparagraph (D).''.
    (b) Penalty.--Section 409(a) (42 U.S.C. 609(a)) is amended by 
adding at the end the following:
            ``(15) Penalty for failure of state to use review and 
        conciliation process.--
                    ``(A) In general.--If the Secretary determines that 
                a State to which a grant is made under section 403 for 
                a fiscal year has violated section 408(a)(12) during 
                the fiscal year, the Secretary shall reduce the grant 
                payable to the State under section 403(a)(1) for the 
                immediately succeeding fiscal year by an amount equal 
                to 5 percent of the State family assistance grant.
                    ``(B) Penalty based on severity of failure.--The 
                Secretary shall impose reductions under subparagraph 
                (A) with respect to a fiscal year based on the degree 
                of noncompliance.''.

SEC. 204. REPLACEMENT OF CASELOAD REDUCTION CREDIT WITH EMPLOYMENT 
              CREDIT.

    (a) Employment Credit to Reward States in Which Families Leave 
Welfare for Work; Additional Credit for Families With Higher 
Earnings.--Section 407(a) (42 U.S.C. 607(a)) is amended by adding at 
the end the following:
            ``(3) Employment credit.--
                    ``(A) In general.--The minimum participation rate 
                otherwise applicable to a State under this subsection 
                for a fiscal year shall be reduced by the number of 
                percentage points in the employment credit for the 
                State for the fiscal year.
                    ``(B) Calculation of credit.--
                            ``(i) In general.--The employment credit 
                        for a State for a fiscal year is an amount 
                        equal to--
                                    ``(I) twice the number of families 
                                that, during the estimating period, 
                                ceased to receive cash payments under 
                                the State program funded under this 
                                part, and that, during the employment 
                                period, had earnings; divided by
                                    ``(II) the average monthly number 
                                of families that include an adult who, 
                                during the estimating period, received 
                                cash payments under the State program 
                                funded under this part.
                            ``(ii) Definitions.--In clause (i):
                                    ``(I) Estimating period.--The term 
                                `estimating period' means, with respect 
                                to a fiscal year, the 1st quarter of 
                                the preceding fiscal year.
                                    ``(II) Employment period.--The term 
                                `employment period' means, with respect 
                                to a fiscal year, the 3rd quarter of 
                                the preceding fiscal year.
                            ``(iii) Special rule for former recipients 
                        with higher earnings.--In caculating the 
                        employment credit for a State for a fiscal 
                        year, a family that, during the employment 
                        period, earned more than 33 percent of the 
                        average wage in the State (determined on the 
                        basis of State unemployment data) shall be 
                        considered to be 1.5 families.
            ``(4) Transition rule.--Notwithstanding the preceding 
        provisions of this subsection, if the minimum participation 
        rate applicable to a State under this section for the preceding 
        fiscal year (determined as if paragraph (3) of subsection (b), 
        as in effect immediately before the effective date of this 
        paragraph, were still in effect) would be less than 50 percent, 
        the minimum participation rate applicable to the State under 
        this section for the fiscal year shall be the lesser of--
                    ``(A) 10 percentage points greater than the minimum 
                participation rate applicable to the State under this 
                section for the preceding fiscal year; or
                    ``(B) 50 percent.''.
    (b) Elimination of Caseload Reduction Credit.--Section 407(b) (42 
U.S.C. 607(b)(3)) is amended by striking paragraph (3) and 
redesignating paragraphs (4) and (5) as paragraphs (3) and (4), 
respectively.

SEC. 205. RESTORATION OF FUNDING OF THE SOCIAL SERVICES BLOCK GRANT.

    Section 2003(c) (42 U.S.C. 1379b(c)) is amended--
            (1) in paragraph (10), by striking ``and'';
            (2) in paragraph (11), by striking ``2001 and each fiscal 
        year thereafter.'' and inserting ``2001; and''; and
            (3) by adding at the end the following:
            ``(12) $2,800,000,000 for fiscal year 2003 and each 
        succeeding fiscal year.''.

                TITLE III--REQUIRING AND REWARDING WORK

SEC. 301. EFFECT OF WAGE SUBSIDIES ON 5-YEAR LIMIT.

    Section 408(a)(7) (42 U.S.C. 608(a)(7)) is amended by adding at the 
end the following:
                    ``(H) Limitation on meaning of `assistance' for 
                families with income from employment.--For purposes of 
                this paragraph, a benefit or service provided to a 
                family during a month under the State program funded 
                under this part shall not be considered assistance 
                under the program if, during the month, the family 
                includes an adult or a minor child head of household 
                who has received at least such amount of income from 
                employment as the State may establish.''.

SEC. 302. CHILD CARE.

    (a) Increase in Entitlement Funding.--Section 418(a)(3) (42 U.S.C. 
618(a)(3)) is amended--
            (1) by striking ``and'' at the end of subparagraph (E);
            (2) by striking the period at the end of subparagraph (F) 
        and inserting a semicolon; and
            (3) by adding at the end the following:
                    ``(G) $3,967,000,000 for fiscal year 2003;
                    ``(H) $4,467,000,000 for fiscal year 2004;
                    ``(I) $4,967,000,000 for fiscal year 2005;
                    ``(J) $5,467,000,000 for fiscal year 2006; and
                    ``(K) $5,967,000,000 for fiscal year 2007.''.
    (b) Increase in Set Aside for Child Care Quality.--Section 658G of 
the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
9858e) is amended by striking ``4 percent'' and inserting ``12 
percent''.
    (c) Applicability of State or Local Health and Safety Standards to 
Other TANF Child Care Spending.--Section 402(a) (42 U.S.C. 602(a)) is 
amended by adding at the end the following:
            ``(8) Certification of procedures to ensure that child care 
        providers comply with applicable state or local health and 
        safety standards.--A certification by the chief executive 
        officer of the State that procedures are in effect to ensure 
        that any child care provider in the State that provides 
        services for which assistance is provided under the State 
        program funded under this part complies with all applicable 
        State or local health and safety requirements as described in 
        section 658E(c)(2)(F) of the Child Care and Development Block 
        Grant Act of 1990.''.
    (d) Availability of Child Care for Parents Required to Work.--
Section 407(e)(2) (42 U.S.C. 607(e)(2)) is amended by striking ``6'' 
and inserting ``13''.

SEC. 303. COMPETITIVE GRANTS TO IMPROVE ACCESS TO VARIOUS BENEFIT 
              PROGRAMS.

    (a) Purposes.--The purposes of this section are to--
            (1) inform low-income families with children about programs 
        available to families leaving welfare and other programs to 
        support low-income families with children;
            (2) provide incentives to States and counties to improve 
        and coordinate application and renewal procedures for low-
        income family with children support programs; and
            (3) track the extent to which low-income families with 
        children receive the benefits and services for which they are 
        eligible.
    (b) Definitions.--In this section:
            (1) Locality.--The term locality means a municipality that 
        does not administer a temporary assistance for needy families 
        program funded under part A of title IV of the Social Security 
        Act (42 U.S.C. 601 et seq.) (in this section referred to as 
        ``TANF'').
            (2) Low-income family with children support program.--The 
        term ``low-income family with children support program'' means 
        a program designed to provide low-income families with 
        assistance or benefits to enable the family to become self-
        sufficient and includes--
                    (A) TANF;
                    (B) the food stamp program established under the 
                Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) (in this 
                section referred to as ``food stamps'');
                    (C) the medicaid program funded under title XIX of 
                the Social Security Act (42 U.S.C. 1396 et seq.);
                    (D) the State children's health insurance program 
                (SCHIP) funded under title XXI of the Social Security 
                Act (42 U.S.C. 1397aa et seq.);
                    (E) the child care program funded under the Child 
                Care Development Block Grant Act of 1990 (42 U.S.C. 
                9858 et seq.);
                    (F) the child support program funded under part D 
                of title IV of the Social Security Act (42 U.S.C. 651 
                et seq.);
                    (G) the earned income tax credit under section 32 
                of the Internal Revenue Code of 1986;
                    (H) the low-income home energy assistance program 
                (LIHEAP) established under the Low-Income Home Energy 
                Assistance Act of 1981 (42 U.S.C 8621 et seq.);
                    (I) the special supplemental nutrition program for 
                women, infants, and children (WIC) established under 
                section 17 of the Child Nutrition Act of 1966 (42 
                U.S.C. 1786);
                    (J) programs under the Workforce Investment Act of 
                1998 (29 U.S.C. 2801 et seq.); and
                    (K) any other Federal or State funded program 
                designed to provide family and work support to low-
                income families with children.
            (3) Nonprofit.--The term ``nonprofit'', as applied to a 
        school, agency, organization, or institution means a school, 
        agency, organization, or institution owned and operated by 1 or 
        more nonprofit corporations or associations, no part of the net 
        earnings of which inures, or may lawfully inure, to the benefit 
        of any private shareholder or individual.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (5) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, American Samoa, Guam, and the 
        United States Virgin Islands.
    (c) Authorization of Grants.--
            (1) States and counties.--
                    (A) In general.--The Secretary is authorized to 
                award grants to States and counties to pay the Federal 
                share of the costs involved in improving the 
                administration of low-income family with children 
                support programs, including simplifying application, 
                recertification, reporting, and verification rules, and 
                promoting participation in such programs.
                    (B) Federal share.--The Federal share shall be 80 
                percent.
            (2) Nonprofits and localities.--The Secretary is authorized 
        to award grants to nonprofits and localities to promote 
        participation in low-income family with children support 
        programs, and distribute information about and develop service 
        centers for low-income family with children support programs.
    (d) Grant Approval Criteria.--
            (1) In general.--The Secretary, in consultation with the 
        Secretary of Agriculture, shall establish criteria for approval 
        of an application for a grant under this section that include 
        consideration of--
                    (A) the extent to which the proposal, if funded, is 
                likely to result in improved service and higher 
                participation rates in low-income children's support 
                programs;
                    (B) an applicant's ability to reach hard-to-serve 
                populations;
                    (C) the level of innovation in the applicant's 
                grant proposal; and
                    (D) any partnerships between the public and private 
                sector in the applicant's grant proposal.
            (2) Separate criteria.--Separate criteria shall be 
        established for the grants authorized under paragraphs (1) and 
        (2) of subsection (c).
    (e) Uses of Funds.--
            (1) States and counties.--
                    (A) Improvements in programs.--Grants awarded to 
                States and counties under subsection (c)(1) shall be 
                used to--
                            (i) simplify low-income family with 
                        children support program application, 
                        recertification, reporting, and verification 
                        rules;
                            (ii) create uniformity in eligibility 
                        criteria for low-income family with children 
                        support programs;
                            (iii) develop options for families to apply 
                        for low-income family with children support 
                        programs through the telephone, mail, 
                        facsimile, Internet, or electronic mail, and 
                        submit any recertifications or reports required 
                        for such families through these options;
                            (iv) co-locate eligibility workers for 
                        various low-income family with children support 
                        programs at strategically located sites;
                            (v) develop or enhance one-stop service 
                        centers for low-income family with children 
                        support programs, including establishing 
                        evening and weekend hours at these centers; and
                            (vi) improve training of staff in low-
                        income families with children support programs 
                        to enhance their ability to enroll eligible 
                        applicants in low-income family with children 
                        support programs, provide case management, and 
                        refer eligible applicants to other appropriate 
                        programs.
                    (B) Customer surveys.--
                            (i) In general.--A grant awarded to a State 
                        or county under subsection (c)(1) shall be used 
                        to carry out a customer survey.
                            (ii) Model surveys.--The customer survey 
                        under clause (i) of this subparagraph shall be 
                        modeled after a form developed by the Secretary 
                        under subsection (g).
                            (iii) Reports to secretary.--Not later than 
                        1 year after a State or county is awarded a 
                        grant under subsection (c)(1), and annually 
                        thereafter, the State or county shall submit a 
                        report to the Secretary detailing the results 
                        of the customer survey carried out under clause 
                        (i) of this subparagraph.
                            (iv) Reports to public.--A State or county 
                        receiving a grant under subsection (c)(1) and 
                        the Secretary shall make the report required 
                        under clause (iii) of this subparagraph 
                        available to the public.
                            (v) Public comment.--A State or county 
                        receiving a grant under subsection (c)(1) shall 
                        accept public comments and hold public hearings 
                        on the report made available under clause (iv) 
                        of this subparagraph.
                    (C) Tracking systems.--
                            (i) In general.--A grant awarded to a State 
                        or county under subsection (c)(1) shall be used 
                        to implement a tracking system to determine the 
                        level of participation in low-income family 
                        with children support programs of the eligible 
                        population.
                            (ii) Reports.--Not later than 1 year after 
                        a State or county is awarded a grant under 
                        subsection (c)(1), and annually thereafter, the 
                        State or county shall submit a report to the 
                        Secretary detailing the effectiveness of the 
                        tracking system implemented under clause (i) of 
                        this subparagraph.
                    (D) In-person interviews.--A State or county 
                awarded a grant under subsection (c)(1) may expend 
                funds made available under the grant to provide for 
                reporting and recertification procedures through the 
                telephone, mail, facsimile, Internet, or electronic 
                mail.
                    (E) Jurisdiction-wide implementation.--
                            (i) In general.--A grant awarded to a State 
                        or county under subsection (c)(1) shall be used 
                        for activities throughout the jurisdiction.
                            (ii) Exception.--A State or county awarded 
                        a grant under subsection (c)(1) may use grant 
                        funds to develop one-stop service centers and 
                        telephone, mail, facsimile, Internet, or 
                        electronic mail application and renewal 
                        procedures for low-income family with children 
                        support programs without regard to the 
                        requirements of clause (i) of this 
                        subparagraph.
                    (F) Supplement not supplant.--Funds provided to a 
                State or county under a grant awarded under subsection 
                (c)(1) shall be used to supplement and not supplant 
                other State or county public funds expended to provide 
                support services for low-income families.
            (2) Nonprofits and localities.--A grant awarded to a 
        nonprofit or locality under subsection (c)(2) shall be used 
        to--
                    (A) develop one-stop service centers for low-income 
                family with children support programs in cooperation 
                with States and counties; or
                    (B) provide information about and referrals to low-
                income family with children support programs through 
                the dissemination of materials at strategic locations, 
                including schools, clinics, and shopping locations.
    (f) Application.--
            (1) In general.--Each applicant desiring a grant under 
        paragraph (1) or (2) of subsection (c) shall submit an 
        application to the Secretary at such time, in such manner, and 
        accompanied by such information as the Secretary may reasonably 
        require.
            (2) States and counties.--
                    (A) Non-federal share.--Each State or county 
                applicant shall provide assurances that the applicant 
                will pay the non-Federal share of the activities for 
                which a grant is sought.
                    (B) Partnerships.--Each State or county applicant 
                shall submit a memorandum of understanding 
                demonstrating that the applicant has entered into a 
                partnership to coordinate its efforts under the grant 
                with the efforts of other State and county agencies 
                that have responsibility for providing low-income 
                families with assistance or benefits.
    (g) Duties of the Secretary.--
            (1) Survey form.--The Secretary, in cooperation with other 
        relevant agencies, shall develop a customer survey form to 
        determine whether low-income families--
                    (A) encounter any impediments in applying for or 
                renewing their participation in low-income family with 
                children support programs; and
                    (B) are unaware of low-income family with children 
                support programs for which they are eligible.
            (2) Reports.--
                    (A) Annual reports.--Not later than 1 year after 
                the date of enactment of this Act, and annually 
                thereafter, the Secretary shall submit a report to 
                Congress describing the uses of grant funds awarded 
                under this section.
                    (B) Results of tracking systems and surveys.--The 
                Secretary shall submit a report to Congress detailing 
                the results of the tracking systems implemented and 
                customer surveys carried out by States and counties 
                under subsection (e) as the information becomes 
                available.
    (h) Miscellaneous.--
            (1) Matching funds.--Matching funds required from a State 
        or county awarded a grant under subsection (c)(1) of this 
        section may--
                    (A) include in-kind services and expenditures by 
                municipalities and private entities; and
                    (B) be considered a qualified State expenditure for 
                purposes of determining whether the State has satisfied 
                the maintenance of effort requirements of the temporary 
                assistance for needy families program under section 
                409(a)(7) of the Social Security Act (42 U.S.C. 
                609(a)(7)).
            (2) Limitation on expenditures.--Subject to paragraph (3) 
        of this subsection, not more than 20 percent of a grant awarded 
        under subsection (c) shall be expended on customer surveys or 
        tracking systems.
            (3) Reversion of funds.--Any funds not expended by a 
        grantee within 2 years after awarded a grant shall be available 
        for redistribution among other grantees in such manner and 
        amount as the Secretary may determine, unless the Secretary 
        extends by regulation the 2-year time period to expend funds.
            (4) Nonapportionment.--Notwithstanding any other provision 
        of law, a State, county, locality, or nonprofit awarded a grant 
        under subsection (c) is not required to apportion the costs of 
        providing information about low-income family with children 
        support programs among all low-income family with children 
        support programs.
            (5) Administrative costs of the secretary.--Not more than 5 
        percent of the funds appropriated to carry out this section 
        shall be expended on administrative costs of the Secretary.
    (i) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $500,000,000 for the period of 
fiscal years 2003 through 2007.

SEC. 304. ASSESSMENTS FOR TANF RECIPIENTS.

    Section 408(b) (42 U.S.C. 608(b)) is amended--
            (1) by striking paragraph (1) and inserting the following:
            ``(1) Assessment.--The State agency responsible for 
        administering the State program funded under this part shall, 
        for each recipient of assistance under the program who is a 
        head of household, make an initial assessment of the skills, 
        prior work experience, and circumstances related to the 
        employability of the recipient, including physical or mental 
        impairments, proficiency in English, child care needs, and 
        whether the recipient is a victim of domestic violence.''; and
            (2) by striking paragraph (4).

     TITLE IV--HELPING WELFARE LEAVERS CLIMB THE EMPLOYMENT LADDER

SEC. 401. STATE PLAN REQUIREMENT ON EMPLOYMENT ADVANCEMENT.

    (a) In General.--Section 402(a)(1)(A) (42 U.S.C. 602(a)(1)(A)) is 
amended by adding at the end the following:
                            ``(vii) Establish goals and take action to 
                        improve initial earnings, job advancement, and 
                        employment retention for individuals in and 
                        individuals leaving the program.''.
    (b) Inclusion in Annual Reports of Progress in Achieving Employment 
Advancement Goals.--Section 411(b) (42 U.S.C. 611(b)) 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'' ; and
            (3) by adding at the end the following:
            ``(5) in each report submitted after fiscal year 2003, the 
        progress made by the State in achieving the goals referred to 
        in section 402(a)(1)(A)(vii) in the most recent State plan 
        submitted pursuant to section 402(a).''.

SEC. 402. EMPLOYMENT ADVANCEMENT FUND.

    Section 403(a) (42 U.S.C. 603(a)) is further amended by adding at 
the end the following:
            ``(8) Employment advancement fund.--
                    ``(A) In general.--The Secretary shall provide 
                grants to States and localities for research, 
                evaluation, technical assistance, and demonstration 
                projects that focus on--
                            ``(i) improving wages for low-income 
                        workers, regardless of whether such workers are 
                        recipients of assistance under a State program 
                        funded under this part, through training and 
                        other services; and
                            ``(ii) enhancing employment prospects for 
                        recipients of such assistance with barriers to 
                        employment, such as a physical or mental 
                        impairment, a substance abuse problem, or 
                        limited proficiency in English.
                    ``(B) Administration.--
                            ``(i) Allocation of funds.--The Secretary 
                        shall allocate at least 40 percent of the funds 
                        made available pursuant to this paragraph for 
                        projects that focus on  the matters described 
in subparagraph (A)(i), and at least 40 percent of the funds for 
projects that focus on the matters described in subparagraph (A)(ii).
                            ``(ii) Diversity of projects.--The 
                        Secretary shall attempt to provide funds under 
                        this paragraph for diverse projects from 
                        geographically different areas.
                    ``(C) Aid under this paragraph not `assistance'.--A 
                benefit or service provided with funds made available 
                under this paragraph shall not, for any purpose, be 
                considered assistance under a State program funded 
                under this part.
                    ``(D) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for each of fiscal 
                years 2003 through 2007 $150,000,000 for grants under 
                this paragraph.''.

SEC. 403. ELIMINATION OF LIMIT ON NUMBER OF TANF RECIPIENTS ENROLLED IN 
              VOCATIONAL EDUCATION OR HIGH SCHOOL WHO MAY BE COUNTED 
              TOWARDS THE WORK PARTICIPATION REQUIREMENT.

    Section 407(c)(2) (42 U.S.C. 607(c)(2)) is amended by striking 
subparagraph (D).

SEC. 404. COUNTING OF UP TO 2 YEARS OF VOCATIONAL AND EDUCATIONAL 
              TRAINING AS WORK ACTIVITY.

    Section 407(d)(8) (42 U.S.C. 607(d)(8)) is amended--
            (1) by striking ``vocational educational training'' and 
        inserting ``vocational and educational training (including 
        postsecondary education)''; and
            (2) by striking ``12'' and inserting ``24''.

SEC. 405. LIMITED COUNTING OF CERTAIN ACTIVITIES LEADING TO EMPLOYMENT 
              AS WORK ACTIVITY.

    (a) In General.--Section 407(d) (42 U.S.C. 607(d)) is amended--
            (1) by striking ``and'' at the end of paragraph (11);
            (2) by striking the period at the end of paragraph (12) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(13) Up to 6 months of participation (as determined by 
        the State) in services designed to improve future employment 
        opportunities, including substance abuse treatment services, 
        services to address sexual or domestic violence, and physical 
        rehabilitation and mental health services.''.
    (b) Conforming Amendment.--Section 407(c)(1) (42 U.S.C. 607(c)(1)) 
is amended by striking ``and (12)'' each place it appears and inserting 
``(12), and (13)''.

SEC. 406. CLARIFICATION OF AUTHORITY OF STATES TO USE TANF FUNDS 
              CARRIED OVER FROM PRIOR YEARS TO PROVIDE TANF BENEFITS 
              AND SERVICES.

    Section 404(e) (42 U.S.C. 604(e)) is amended--
            (1) in the subsection heading, by striking ``Assistance'' 
        and inserting ``benefits or services''; and
            (2) after the heading, by striking ``assistance'' and 
        inserting ``any benefit or service that may be provided''.

     TITLE V--PROMOTING FAMILY FORMATION AND RESPONSIBLE PARENTING

SEC. 501. FAMILY FORMATION FUND.

    Section 403(a)(2) (42 U.S.C. 603(a)(2)) is amended to read as 
follows:
            ``(2) Family formation fund.--
                    ``(A) In general.--The Secretary shall provide 
                grants to States and localities for research, technical 
                assistance, and demonstration projects to promote and 
                fund best practices in the following areas:
                            ``(i) Promoting the formation of 2-parent 
                        families.
                            ``(ii) Reducing teenage pregnancies.
                            ``(iii) Increasing the ability of 
                        noncustodial parents to financially support and 
                        be involved with their children.
                    ``(B) Allocation of funds.--In making grants under 
                this paragraph, the Secretary shall ensure that not 
                less than 30 percent of the funds made available 
                pursuant to this paragraph for a fiscal year are used 
                in each of the areas described in subparagraph (A).
                    ``(C) Consideration of domestic violence impact.--
                In making grants under this paragraph, the Secretary 
                shall consider the potential impact of a project on the 
                incidence of domestic violence.
                    ``(D) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for each of fiscal 
                years 2003 through 2007 $100,000,000 for grants under 
                this paragraph.''.

SEC. 502. DISTRIBUTION OF CHILD SUPPORT COLLECTED BY STATES ON BEHALF 
              OF CHILDREN RECEIVING CERTAIN WELFARE BENEFITS.

    (a) Modification of Rule Requiring Assignment of Support Rights as 
a Condition of Receiving TANF.--Section 408(a)(3) (42 U.S.C. 608(a)(3)) 
is amended to read as follows:
            ``(3) No assistance for families not assigning certain 
        support rights to the state.--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 paid to the family under 
the program, which accrues during the period that the family receives 
assistance under the program.''.
    (b) Increasing Child Support Payments to Families and Simplifying 
Child Support Distribution Rules.--
            (1) Distribution rules.--
                    (A) In general.--Section 457(a) (42 U.S.C. 657(a)) 
                is amended to read as follows:
    ``(a) In General.--Subject to subsections (d) and (e), the amounts 
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 collected, subject to paragraph 
                (3)(A);
                    ``(B) retain, or pay to the family, the State share 
                of the amount collected, subject to paragraph (3)(B); 
                and
                    ``(C) pay to the family any remaining amount.
            ``(2) Families that formerly received assistance.--In the 
        case of a family that formerly received assistance from the 
        State:
                    ``(A) Current support.--To the extent that the 
                amount collected does not exceed the current support 
                amount, the State shall pay the amount to the family.
                    ``(B) Arrearages.--To the extent that the amount 
                collected exceeds the current support amount, the 
                State--
                            ``(i) shall first pay to the family the 
                        excess amount, to the extent necessary to 
                        satisfy support arrearages not assigned 
                        pursuant to section 408(a)(3);
                            ``(ii) if the amount collected exceeds the 
                        amount required to be paid to the family under 
                        clause (i), shall--
                                    ``(I) pay to the Federal 
                                Government, the Federal share of the 
                                excess amount described in this clause, 
                                subject to paragraph (3)(A); and
                                    ``(II) retain, or pay to the 
                                family, the State share of the excess 
                                amount described in this clause, 
                                subject to paragraph (3)(B); and
                            ``(iii) shall pay to the family any 
                        remaining amount.
            ``(3) Limitations.--
                    ``(A) Federal reimbursements.--The total of the 
                amounts paid by the State to the Federal Government 
                under paragraphs (1) and (2) of this subsection with 
                respect to a family shall not exceed the Federal share 
                of the amount assigned with respect to the family 
                pursuant to section 408(a)(3).
                    ``(B) State reimbursements.--The total of the 
                amounts retained by the State under paragraphs (1) and 
                (2) of this subsection with respect to a family shall 
                not exceed the State share of the amount assigned with 
                respect to the family pursuant to section 408(a)(3).
            ``(4) Families that never received assistance.--In the case 
        of any other family, the State shall pay the amount collected 
        to the family.
            ``(5) Families under certain agreements.--Notwithstanding 
        paragraphs (1) through (4), in the case of an amount collected 
        for a family in accordance with a cooperative agreement under 
        section 454(33), the State shall distribute the amount 
        collected pursuant to the terms of the agreement.
            ``(6) State financing options.--To the extent that the 
        State share of the amount payable to a family for a month 
        pursuant to paragraph (2)(B) of this subsection exceeds the 
        amount that the State estimates (under procedures approved by 
        the Secretary) would have been payable to the family for the 
        month pursuant to former section 457(a)(2) (as in effect for 
        the State immediately before the date this subsection first 
        applies to the State) if such former section had remained in 
        effect, the State may elect to use the grant made to the State 
        under section 403(a) to pay the amount, or to have the payment 
        considered a qualified State expenditure for purposes of 
        section 409(a)(7), but not both.
            ``(7) State option to pass through additional support with 
        federal financial participation.--
                    ``(A) In general.--Notwithstanding paragraphs (1) 
                and (2), a State shall not be required to pay to the 
                Federal Government the Federal share of an amount 
                collected on behalf of a family that is not a recipient 
                of assistance under the State program funded under part 
                A, to the extent that the State pays the amount to the 
                family.
                    ``(B) Recipients of tanf for less than 5 years.--
                Notwithstanding paragraphs (1) and (2), a State shall 
                not be required to pay to the Federal Government the 
                Federal share of an amount collected on behalf of a 
                family that is a recipient of assistance under the 
                State program funded under part A and that has received 
                the assistance for not more than 5 years after the date 
                of the enactment of this paragraph, to the extent that 
                the State pays the amount to the family.''.
                    (B) Approval of estimation procedures.--Not later 
                than October 1, 2002, the Secretary of Health and Human 
                Services, in consultation with the States (as defined 
                for purposes of part D of title IV of the Social 
                Security Act), shall establish the procedures to be  
used to make the estimate described in section 457(a)(6) of such Act.
            (2) Current support amount defined.--Section 457(c) (42 
        U.S.C. 657(c)) is amended by adding at the end the following:
            ``(5) Current support amount.--The term `current support 
        amount' means, with respect to amounts collected as support on 
        behalf of a family, the amount designated as the monthly 
        support obligation of the noncustodial parent in the order 
        requiring the support.''.
    (c) Ban on Recovery of Medicaid Costs for Certain Births.--Section 
454 (42 U.S.C. 654) is amended--
            (1) by striking ``and'' at the end of paragraph (32);
            (2) by striking the period at the end of paragraph (33) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (33) the following:
            ``(34) provide that the State shall not use the State 
        program operated under this part to collect any amount owed to 
        the State by reason of costs incurred under the State plan 
        approved under title XIX for the birth of a child for whom 
        support rights have been assigned pursuant to section 
        408(a)(3), 471(a)(17), or 1912.''.
    (d) State Option To Discontinue Certain Support Assignments.--
Section 457(b) (42 U.S.C. 657(b)) is amended by striking ``shall'' and 
inserting ``may''.
    (e) Conforming Amendments.--
            (1) Section 409(a)(7)(B)(i)(I)(aa) (42 U.S.C. 
        609(a)(7)(B)(i)(I)(aa)) is amended by striking ``457(a)(1)(B)'' 
        and inserting ``457(a)(1)''.
            (2) Section 404(a) (42 U.S.C. 604(a)) is amended--
                    (A) by striking ``or'' at the end of paragraph (1);
                    (B) by striking the period at the end of paragraph 
                (2) and inserting ``; or''; and
                    (C) by adding at the end the following:
            ``(3) to fund payment of an amount pursuant to clause (i) 
        or (ii) of section 457(a)(2)(B), but only to the extent that 
        the State properly elects under section 457(a)(6) to use the 
        grant to fund the payment.''.
            (3) Section 409(a)(7)(B)(i) (42 U.S.C. 609(a)(7)(B)(i)) is 
        amended by adding at the end the following:
                                    ``(V) Portions of certain child 
                                support payments collected on behalf of 
                                and distributed to families no longer 
                                receiving assistance.--Any amount paid 
                                by a State pursuant to clause (i) or 
                                (ii) of section 457(a)(2)(B), but only 
                                to the extent that the State properly 
                                elects under section 457(a)(6) to have 
                                the payment considered a qualified 
                                State expenditure.''.
    (f) Effective Date.--
            (1) In general.--Except as provided in paragraph (2) of 
        this subsection and section 901(b) of this Act, the amendments 
        made by this section shall take effect on October 1, 2006, and 
        shall apply to payments under parts A and D of title IV of the 
        Social Security Act for calendar quarters beginning on or after 
        such date, without regard to whether regulations to implement 
        the amendments are promulgated by such date.
            (2) State option to accelerate effective date.--A State may 
        elect to have the amendments made by this section apply to the 
        State and to amounts collected by the State, on and after such 
        date as the State may select that is after the date of the 
        enactment of this Act and before the effective date provided in 
        paragraph (1).

SEC. 503. ELIMINATION OF SEPARATE WORK PARTICIPATION RATE FOR 2-PARENT 
              FAMILIES.

    Section 407 (42 U.S.C. 607) is amended--
            (1) in subsection (a)--
                    (A) by striking ``(a) Participation Rate 
                Requirements.--'' and all that follows through ``A 
                State'' in paragraph (1) and inserting the following:
    ``(a) Participation Rate Requirement.--A State''; and
                    (B) by striking paragraph (2); and
            (2) in subsection (b)--
                    (A) by striking paragraphs (2) and (3);
                    (B) in paragraph (4), by striking ``paragraphs 
                (1)(B) and (2)(B)'' and inserting ``paragraph (1)(B)'';
                    (C) in paragraph (5), by striking ``rates'' and 
                inserting ``rate''; and
                    (D) by redesignating paragraphs (4) and (5) as 
                paragraphs (2) and (3), respectively.

SEC. 504. BAN ON IMPOSITION OF STRICTER ELIGIBILITY CRITERIA FOR 2-
              PARENT FAMILIES; STATE OPT-OUT.

    (a) Prohibition.--Section 408(a) (42 U.S.C. 608(a)) is further 
amended by adding at the end the following:
            ``(13) Ban on imposition of stricter eligibility criteria 
        for 2-parent families.--
                    ``(A) In general.--In determining the eligibility 
                of a 2-parent family for assistance under a State 
                program funded under this part, the State shall not 
                impose a requirement that does not apply in determining 
                the eligibility of a 1-parent family for such 
                assistance.
                    ``(B) State opt-out.--Subparagraph (A) shall not 
                apply to a State if the State legislature, by law, has 
                elected to make subparagraph (A) inapplicable to the 
                State.''.
    (b) Penalty.--Section 409(a) (42 U.S.C. 609(a)) is further amended 
by adding at the end the following:
            ``(16) Penalty for imposition of stricter eligibility 
        criteria for 2-parent families.--
                    ``(A) In general.--If the Secretary determines that 
                a State to which a grant is made under section 403 for 
                a fiscal year has violated section 408(a)(13) during 
                the fiscal year, the  Secretary shall reduce the grant 
payable to the State under section 403(a)(1) for the immediately 
succeeding fiscal year by an amount equal to 5 percent of the State 
family assistance grant.
                    ``(B) Penalty based on severity of failure.--The 
                Secretary shall impose reductions under subparagraph 
                (A) with respect to a fiscal year based on the degree 
                of noncompliance.''.

          TITLE VI--RESTORING FAIRNESS FOR IMMIGRANT FAMILIES

SEC. 601. TREATMENT OF ALIENS UNDER THE TANF PROGRAM.

    (a) Exception to 5-Year Ban for Qualified Aliens.--Section 
403(c)(2) of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (8 U.S.C. 1613(c)(2)) is amended by adding 
at the end the following:
                    ``(L) Benefits under the Temporary Assistance for 
                Needy Families program described in section 
                402(b)(3)(A).''.
    (b) Benefits Not Subject to Reimbursement.--Section 423(d) of the 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
(8 U.S.C. 1138a note) is amended by adding at the end the following:
            ``(12) Benefits under part A of title IV of the Social 
        Security Act except for cash assistance provided to a sponsored 
        alien who is subject to deeming pursuant to section 408(h) of 
        the Social Security Act.''.
    (c) Treatment of Aliens.--Section 408 (42 U.S.C. 608) is amended by 
adding at the end the following:
    ``(h) Special Rules Relating to the Treatment of 213A Aliens.--
            ``(1) In general.--In determining whether a 213A alien is 
        eligible for cash assistance under a State program funded under 
        this part, and in determining the amount or types of such 
        assistance to be provided to the alien, the State shall apply 
        the rules of paragraphs (1), (2), (3), (5), and (6) of 
        subsection (f) of this section by substituting `213A' for `non-
        213A' each place it appears, subject to section 421(e) of the 
        Personal Responsibility and Work Opportunity Reconcilation Act 
        of 1996, and subject to section 421(f) of such Act (which shall 
        be applied by substituting `section 408(h) of the Social 
        Security Act' for `subsection (a)').
            ``(2) 213A alien defined.--An alien is a 213A alien for 
        purposes of this subsection if the affidavit of support or 
        similar agreement with respect to the alien that was executed 
        by the sponsor of the alien's entry into the United States was 
        executed pursuant to section 213A of the Immigration and 
        Nationality Act.''.
    (d) Inclusion of Participation in English-As-A-Second-Language 
Program Among Permissible Work Activities.--Section 407(d) (42 U.S.C. 
607(d)) is further amended--
            (1) by striking ``and'' at the end of paragraph (11);
            (2) by striking the period at the end of paragraph (12) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(14) participation in an English-as-a-second-language 
        program.''.

SEC. 602. TREATMENT OF ALIENS UNDER THE SSI PROGRAM.

    (a) Eligibility of Qualified Aliens for Benefits.--
            (1) Elimination of prohibition.--Section 402(a) of the 
        Personal Responsibility and Work Opportunity Reconciliation Act 
        of 1996 (8 U.S.C. 1612(a)) is amended--
                    (A) by striking paragraph (3)(A); and
                    (B) in paragraph (2) by striking subparagraphs 
                (D)(i), (E), and (H).
            (2) Exception to 5-year ban.--Section 403(c)(2) of the 
        Personal Responsibility and Work Opportunity Reconciliation Act 
        of 1996 (8 U.S.C. 1613(c)(2)) is amended by adding at the end 
        the following:
                    ``(M) Assistance or benefits under 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 (commonly known as SSI).''.
    (b) Benefits Not Subject to Reimbursement.--Section 423(d) of the 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
(8 U.S.C. 1138a note) is further amended by adding at the end the 
following:
            ``(13) Assistance under the supplemental security income 
        program under title XVI of the Social Security Act, except 
        assistance provided to a sponsored alien who is subject to 
        deeming pursuant to section 1621 of the Social Security Act.''.
    (c) Conforming Amendments.--Section 402(b)(2)(F) of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 (8 
U.S.C. 1612(b)(2)(F)) is amended by striking ``program defined in 
subsection (a)(3)(A) (relating to the supplemental security income 
program)'' and inserting ``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''.
    (d) Period for Attribution of Sponsor's Income and Resources.--
Section 1621 (42 U.S.C. 1382j) is amended in each of subsections (a), 
(c), (d), and (e), by striking ``3'' and inserting ``5''.

SEC. 603. EFFECTIVE DATE AND APPLICABILITY.

    (a) Effective Date.--The amendments made by this title shall take 
effect October 1, 2002.
    (b) Applicability.--The amendments made by the provisions of this 
title apply to benefits provided on or after the effective date of this 
title.

                TITLE VII--ENSURING STATE ACCOUNTABILITY

SEC. 701. INFLATION ADJUSTMENT OF MAINTENANCE-OF-EFFORT REQUIREMENT.

    Section 409(a)(7) (42 U.S.C. 609(a)(7)) is amended--
            (1) in subparagraph (A), by inserting ``inflation-
        adjusted'' before ``historic State expenditures''; and
            (2) in subparagraph (B), by adding at the end the 
        following:
                            ``(vi) Inflation-adjusted historic state 
                        expenditures.--The term `inflation-adjusted 
                        historic State expenditures' means, with 
                        respect to a fiscal year, historic State 
                        expenditures with respect to the fiscal year, 
                        multiplied by the sum of 1.00 plus the 
                        inflation percentage (as defined in section 
                        403(a)(2)(F)) in effect for the fiscal year.''.

SEC. 702. BAN ON USING FEDERAL TANF FUNDS TO REPLACE STATE AND LOCAL 
              SPENDING THAT DOES NOT MEET THE DEFINITION OF QUALIFIED 
              STATE EXPENDITURES.

    (a) Prohibition.--Section 408(a) (42 U.S.C. 608(a)) is further 
amended by adding at the end the following:
            ``(14) Ban on using federal tanf funds to replace state or 
        local spending that does not meet the definition of qualified 
        state expenditures.--A State to which a grant is made under 
        section 403 and a sub-State entity that receives funds from 
        such a grant shall not expend any part of the grant funds to 
        supplant State or local spending for benefits or services which 
        are not qualified State expenditures (within the meaning of 
        section 409(a)(7)(B)(i)).''.
    (b) Penalty.--Section 409(a) (42 U.S.C. 609(a)) is further amended 
by adding at the end the following:
            ``(17) Penalty for using federal tanf funds to replace 
        state or local spending that does not meet the definition of 
        qualified state expenditures.--
                    ``(A) In general.--If the Secretary determines that 
                a State to which a grant is made under section 403 for 
                a fiscal year has violated section 408(a)(14) during 
                the fiscal year, the Secretary shall reduce the grant 
                payable to the State under section 403(a)(1) for the 
                immediately succeeding fiscal year by an amount equal 
                to 5 percent of the State family assistance grant.
                    ``(B) Penalty based on severity of failure.--The 
                Secretary shall impose reductions under subparagraph 
                (A) with respect to a fiscal year based on the degree 
                of noncompliance.''.

  TITLE VIII--IMPROVING INFORMATION ABOUT TANF RECIPIENTS AND PROGRAMS

SEC. 801. EXTENSION OF FUNDING OF STUDIES AND DEMONSTRATIONS.

    Section 413(h)(1) (42 U.S.C. 613(h)(1)) is amended by striking 
``2002'' and inserting ``2007''.

SEC. 802. LONGITUDINAL STUDIES OF EMPLOYMENT AND EARNINGS OF TANF 
              LEAVERS.

    Section 413 (42 U.S.C. 613) is amended--
            (1) in subsection (h)(1)--
                    (A) by striking ``and'' at the end of subparagraph 
                (C);
                    (B) by striking the period and inserting ``; and''; 
                and
                    (C) by adding at the end the following:
                    ``(E) the cost of conducting the studies described 
                in subsection (k).''; and
            (2) by adding at the end the following:
    ``(k) Longitudinal Studies of Employment and Earnings of TANF 
Leavers.--
            ``(1) In general.--The Secretary, directly or through 
        grants, contracts, or interagency agreements shall conduct a 
        study in each eligible State of a statistically relevant cohort 
        of individuals who leave the State program funded under this 
        part during fiscal year 2003 and individuals who leave the 
        program during fiscal year 2005, which uses State unemployment 
        insurance data to track the employment and earnings status of 
        the individuals during the 3-year period beginning at the time 
        the individuals leave the program.
            ``(2) Reports.--The Secretary shall annually publish the 
        findings of the studies conducted pursuant to paragraph (1) of 
        this subsection, and shall annually publish the earnings data 
        used in making determinations under section 407(b).''.

SEC. 803. INCLUSION OF DISABILITY STATUS IN INFORMATION STATES REPORT 
              ABOUT TANF FAMILIES.

    Section 411(a)(1)(A) (42 U.S.C. 611(a)(1)(A)) is amended by adding 
at the end the following:
                            ``(xviii) Whether the head of the family 
                        has a significant physical or mental 
                        impairment.

SEC. 804. ANNUAL REPORT TO THE CONGRESS TO INCLUDE GREATER DETAIL ABOUT 
              STATE PROGRAMS FUNDED UNDER TANF.

    Section 411(b)(3) (42 U.S.C. 611(b)(3)), as amended by section 
401(b)(1) of this Act, is amended to read as follows:
            ``(3) the characteristics of each State program funded 
        under this part, including, with respect to each program funded 
        with amounts provided under this part or with amounts the 
        expenditure of which is counted as a qualified State 
        expenditure for purposes of section 409(a)(7)--
                    ``(A) the name of the program;
                    ``(B) whether the program is authorized at a sub-
                State level (such as at the county level);
                    ``(C) the purpose of the program;
                    ``(D) the main activities of the program;
                    ``(E) the total amount received by the program from 
                amounts provided under this part;
                    ``(F) the total of the amounts received by the 
                program that are amounts the expenditure of which are 
                counted as qualified State expenditures for purposes of 
                section 409(a)(7);
                    ``(G) the total funding level of the program;
                    ``(H) the total number of individuals served by the 
                program, and the number of such individuals served 
                specifically with funds provided under this part or 
                with amounts the expenditure of which are counted as 
                qualified State expenditures for purposes of section 
                409(a)(7); and
                    ``(I) the eligibility criteria for participation in 
                the program;''.

SEC. 805. ENHANCEMENT OF UNDERSTANDING OF THE REASONS INDIVIDUALS LEAVE 
              STATE TANF PROGRAMS.

    (a) Development of Comprehensive List of Case Closure Reasons.--The 
Secretary of Health and Human Services shall develop, in consultation 
with States and policy experts, a comprehensive list of reasons why 
individuals leave State programs funded under this part. The list shall 
be aimed at substantially reducing the number of case closures under 
the programs for which a reason is not known.
    (b) Inclusion in Quarterly State Reports.--Section 
411(a)(1)(A)(xvi) (42 U.S.C. 611(a)(1)(A)(xvi)) is amended--
            (1) by striking ``or'' at the end of subclause (IV);
            (2) by striking the period at the end and inserting ``; 
        or''; or
            (3) by adding at the end the following:
                                    ``(VI) a reason specified in the 
                                list developed under section 805(a) of 
                                the Next Step in Reforming Welfare 
                                Act.''.

SEC. 806. STANDARDIZED STATE PLANS.

    Within 6 months after the date of the enactment of this Act, the 
Secretary of Health and Human Services, after consulting with the 
States, shall establish a standardized format which States shall use to 
submit plans under section 402(a) of the Social Security Act for fiscal 
year 2004 and thereafter.

                        TITLE IX--EFFECTIVE DATE

SEC. 901. EFFECTIVE DATE.

    (a) In General.--Except as provided in section 502(f) and in 
subsection (b) of this section, the amendments made by this Act shall 
take effect on October 1, 2002, and shall apply to payments under parts 
A and D of title IV of the Social Security Act for calendar quarters 
beginning on or after such date, without regard to whether regulations 
to implement the amendments are promulgated by such date.
    (b) Delay Permitted if State Legislation Required.--In the case of 
a State plan under section 402(a) or 454 of the Social Security Act 
which the Secretary of Health and Human Services determines requires 
State legislation (other than legislation appropriating funds) in order 
for the plan to meet the additional requirements imposed by the 
amendments made by this Act, the State plan shall not be regarded as 
failing to comply with the requirements of such section 402(a) or 454 
solely on the basis of the failure of the plan to meet such additional 
requirements before 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.
                                 <all>