SUMMARY OF WELFARE REFORMS MADE BY PUBLIC LAW 104-193 THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT AND ASSOCIATED LEGISLATION

[WPRT 104-15]
[From the U.S. Government Publishing Office]

[Ways and Means Committee Print WMCP: 104-15]
[Summary of Welfare Reforms Made by Public Law 104-193]
[From the U.S. Government Printing Office Online via GPO Access]

104th Congress WMCP:
2d Session COMMITTEE PRINT 104-15

_______________________________________________________________________

COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES

__________

SUMMARY OF WELFARE REFORMS MADE BY PUBLIC LAW 104-193

THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY
RECONCILIATION ACT
AND ASSOCIATED LEGISLATION

NOVEMBER 6, 1996

Prepared for the use of Members of the Committee on Ways and Means by
members of its staff. This document has not been officially approved by
the Committee and may not reflect the views of its Members

__________

U.S. GOVERNMENT PRINTING OFFICE
27-305 CC WASHINGTON: 1996

COMMITTEE ON WAYS AND MEANS

U.S. HOUSE OF REPRESENTATIVES

----------

ONE HUNDRED FOURTH CONGRESS

BILL ARCHER, Texas, Chairman

----------

Phillip D. Moseley, Chief of Staff

This document was prepared by the staff of the Committee of
Ways and Means and is issued under the authority of Chairman
Bill Archer. This document has not been reviewed or officially
approved by the Members of the Committee.

C O N T E N T S

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Page

SECTION 1. HISTORICAL BACKGROUND AND NEED FOR REFORM............. 1
SECTION 2. SUMMARY OF THE NEW WELFARE REFORM LAW BY TITLE........ 13
Title I. Block Grants to States for Temporary Assistance of
Needy Families (TANF)........................................ 14
Title II. Supplemental Security Income........................ 24
Title III. Child Support...................................... 27
Title IV. Restricting Welfare and Public Benefits for
Noncitizens.................................................. 34
Title V. Child Protection..................................... 40
Title VI. Child Care.......................................... 42
Title VII. Child Nutrition.................................... 48
Title VIII. Food Stamps and Commodity Distribution............ 60
Title IX. Miscellaneous....................................... 76

SECTION 3. STATE-BY-STATE ALLOCATION OF GRANTS FOR TEMPORARY
ASSISTANCE FOR NEEDY FAMILIES AND CHILD CARE................... 78

SECTION 4. SUMMARY OF EFFECTIVE DATES BY TITLE................... 96

SECTION 5. CONGRESSIONAL BUDGET OFFICE ESTIMATES................. 110

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SECTION 1.

HISTORICAL BACKGROUND

AND

NEED FOR REFORM

=======================================================================

SECTION 1. HISTORICAL BACKGROUND AND NEED FOR REFORM

Overview

The Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (Public Law 104-193) signed into law
on August 22, 1996, transforms large parts of the Nation's
welfare system. The most important change is that the
entitlement to cash welfare under title IV-A of the Social
Security Act is ended. In place of the entitlement concept, the
new law creates two block grants that provide States with the
funds necessary to help families escape welfare. In particular,
States are given a block grant to provide cash and other
benefits to help needy families support their children while
simultaneously requiring families to make verifiable efforts to
leave welfare for work and to avoid births outside marriage. In
addition, funds from the block grant can be used by States to
encourage the formation and maintenance of two-parent families.
The second block grant provides funds to States to help
them subsidize child care for families on welfare, families
leaving welfare, and low-income families whose precarious
financial status may result in future welfare spells.
The new law also limits the provision of welfare benefits
to several categories of recipients for whom the continued
provision of permanent entitlement benefits was viewed as
inappropriate. These groups include most noncitizens, families
that have been on welfare for more than 5 years, and children
who are judged to be disabled solely because of age-
inappropriate behavior. In earlier versions of the welfare
reform bill in the 104th Congress, the entitlement to cash
payments under the Supplemental Security Income Program for
drug addicts and alcoholics also was ended. Congress passed
this provision as part of Public Law 104-121, the Contract With
America Advancement Act.
The welfare reform law also contains major new policies
aimed at reducing the rate of nonmarital births as well as
substantial revisions in the Federal-State child support
enforcement program, in the food stamp and commodity
distribution programs, and in child nutrition programs. Taken
together, the provisions of this legislation constitute the
most far-reaching reform of the Nation's welfare system in
several decades.

Highlights of the New Law

Since creation of the first Federal welfare entitlements in
1935 to help States aid the needy who were aged, blind, or
children, the Federal Government has gradually expanded the
entitlement concept. As a result, the Nation's welfare system
now provides millions of families headed by able-bodied adults
with a package of guaranteed benefits. These entitlement
benefits include cash, medical care, and food stamps. The
combined value of this package of benefits in 1995 was about
$12,000 per year in the median State (about $8,300 of which was
paid with Federal funds). In addition to these entitlement
programs, scores of additional programs, most provided on a
nonentitlement basis, are available to poor and low-income
individuals and families (see table 1). In fiscal year 1994,
one-sixth of the Federal budget--about $246 billion--was spent
on means-tested aid (Burke, 1995).

TABLE 1.--NUMBER OF PROGRAMS IN EIGHT SOCIAL POLICY DOMAINS, 1994
------------------------------------------------------------------------
Social Policy Domain Number of Programs
------------------------------------------------------------------------
Cash Welfare 8 \1\
Child Welfare and Child Abuse 38 \2\
Child Care 46 \3\
Employment and Training 154 \4\
Social Services 30 \5\
Food and Nutrition 11 \1\
Housing 27 \6\
Health 22 \7\
------------------------------------------------------------------------
Note. Some programs counted as separate programs in this table are
actually part of larger programs; e.g., child care is a component of
both several job training programs and food and nutrition programs. In
addition, some programs may be counted in more than one of the eight
domains.
Sources: \1\ Burke (1995); \2\ Robinson & Forman (1994); \3\ Forman
(1994); \4\ U.S. General Accounting Office (1994); \5\ Robinson
(1994); \6\ Vanhorenbeck & Foote (1994); \7\ Klebe (1994).

Although roughly half the families that enter AFDC leave
the rolls within 1 year, most of them return. In fact, as
indicated in chart 1, of the 4.4 million families now on
welfare, about 65 percent or 2.9 million will eventually be on
welfare for 8 years or more (Ellwood, 1986). Research also
shows that despite the short welfare spells of some families,
the average length of stay on welfare, counting repeat spells,
for families enrolled at any given moment is 13 years (Pavetti,
1995).

CHART 1. LONG-TERM DEPENDENCY OF WELFARE RECIPIENTS

Source: Ellwood (1986).
The major goal of Public Law 104-193 is to reduce the
length of welfare spells by attacking dependency while
simultaneously preserving the function of welfare as a safety
net for families experiencing temporary financial problems.
Based on the view that the permanent guarantee of benefits
plays a major role in welfare dependency, Congress is
fundamentally altering the nature of the AFDC Program by making
cash welfare benefits temporary and provisional. Both food
stamps and Medicaid, however, continue as individual
entitlements.
Welfare under the new block grant is made temporary by
limiting the receipt of cash benefits from the block grant to 5
years (although the law allows States to exempt up to 20
percent of their caseload from this provision). Welfare under
the block grant is made contingent by requiring recipients to
work. All able-bodied adults who have been on welfare for 2
years must participate in some activity designed to help them
become self-supporting. In addition, the law establishes strict
work standards. When fully implemented, States are required to
have one-half of their recipients in work programs for 30 hours
per week.
To help States meet their participation standards while
encouraging adults to leave welfare for work, the legislation
also combines funds from several child care programs under
jurisdiction of the House Committees on Ways and Means and
Economic and Educational Opportunities to create a single child
care block grant. Money for the child care block grant is
increased by more than $4 billion over the amount of money
available under prior law. Equally important, States will have
great flexibility in using the child care money to meet the
needs of low-income parents for child care, thereby allowing
available funds to be used more efficiently.
In addition to repealing the entitlement to cash benefits
under the AFDC Program, the new law ends or modifies the
entitlement benefits of several other groups receiving welfare
benefits. Although the concept of entitlement has been the
focus of congressional debate for several years, Public Law
104-193 marks the first time that major welfare entitlement
benefits have been repealed or substantially altered.
The children's entitlement under the Supplemental Security
Income Program is also reformed by the act. The number of
children on SSI has increased substantially in recent years,
rising from about 300,000 in 1989 to nearly 900,000 in 1994, an
increase of 200 percent in just 5 years. If recent trends had
been allowed to continue, SSI enrollment could have reached 1.9
million by the year 2000, according to the U.S. General
Accounting Office (1995a).
The new law focuses on the ``Individualized Functional
Assessment'' (IFA) process that purports to detect whether a
child behaves in an age-inappropriate manner and therefore
qualifies for SSI. A recent U.S. General Accounting Office
report (1995b) concluded that there were fundamental flaws in
the IFA. The report stated that ``each step of the process
relies heavily on adjudicators' judgments, rather than
objective criteria from the Social Security Administration, to
assess the age-appropriateness of children's behavior. As a
result, the subjectivity of the process calls into question the
Social Security Administration's ability to assure reasonable
consistency in administering the SSI program'' (p. 2). By the
end of 1994, about 225,000 of the 890,000 children on SSI had
qualified under an IFA.
Public Law 104-193 ends the IFA process. Children who are
truly disabled continue to receive benefits through the
reformed program. Although the new approach prevents the
provision of benefits to about 235,000 children annually who
would have qualified under the IFA process, the number of
children receiving SSI will nonetheless grow from 995,000 to
1,089,000 between 1996 and 2002.
Another major area of entitlement reform taken up by the
Congress was welfare benefits for noncitizens. The reforms of
entitlement benefits for noncitizens include a broad ban on
benefits for illegal aliens that applies to most entitlement
and nonentitlement programs. The result is that, with the
exception of selected emergency benefits and benefits that
promote public health, illegal aliens no longer qualify for
most public benefits, including means-tested benefits.
Since Congress passed the first immigration law in 1882, it
has been a basic tenet of American immigration policy that
legal aliens should not be eligible for public aid. Immigration
officials are charged with being certain that immigrants will
be self-supporting before they can be admitted to the United
States. Moreover, for over 100 years, immigration law has
stated that becoming a public charge is cause for deportation.
Even so, welfare use among noncitizens has increased rapidly in
recent years. By 1995, the Federal Government was spending
about $8 billion annually on welfare for noncitizens, and
spending was increasing dramatically each year. In the
Supplemental Security Income Program, for example, the number
of noncitizens receiving benefits increased from over 244,000
in 1986 to almost 800,000 in 1996, an increase of about 230
percent (U.S. General Accounting Office, 1996). By 1995,
slightly more than one-half the SSI benefits provided to the
elderly were collected by noncitizens. GAO (1995a) has
estimated that if current policies had remained in place, by
the year 2000, nearly 2 million noncitizens would have been
receiving SSI benefits.
Given the expansion of welfare use by noncitizens, the
original welfare reform bill (H.R. 1157) reported by the House
Committee on Ways and Means on March 15, 1995, ended welfare
benefits for most noncitizens. The exact provisions were
modified several times during the course of congressional
debate, particularly by exempting from the ban military
veterans and families that had combined work histories of 10
years or more. In addition, several programs were exempted from
the ban, including education and training programs that
noncitizens could use to better prepare for work and public
health programs designed to protect public safety.
Thus, Public Law 104-193 returns American policy on welfare
for noncitizens to its roots by barring most noncitizens who
arrive in the future from receiving welfare benefits. Current
resident noncitizens face changes only in those programs
subject to abuse (SSI and food stamps) or with a significant
State financial commitment (cash welfare, Medicaid, and social
services).
In addition to welfare dependency and entitlements, another
major social problem addressed by this legislation is the high
rate of nonmarital births. In 1994, nearly one-third of the
Nation's children were born outside marriage; among black
Americans the rate was 70 percent (chart 2). In some inner-city
neighborhoods, 8 of 10 babies are born to single mothers.

CHART 2. ILLEGITIMACY RATE AS A PERCENTAGE OF LIVE BIRTHS

Source: National Center for Health Statistics (1977, 1988);
Ventura, et al. (1994, 1995).

There is substantial evidence that children reared without
the active involvement of two parents are at a substantial
disadvantage. These children are more likely to be abused, to
make poor grades in school, to quit school, to be unemployed as
adults, to be poor, to go on welfare, to have long welfare
spells, and to commit crimes (Maynard, 1996; Zill, 1996). In
addition, research shows that teens who give birth outside
marriage are very likely to use welfare. Within 5 years of a
nonmarital birth, more than 75 percent of teen mothers are or
have been on welfare (Adams & Williams, 1990). Nor are the
impacts of nonmarital births on welfare use confined to teen
mothers. Across all mothers who give birth outside marriage,
the percentage of those who have welfare spells of 10 years or
more is nearly 3 times greater than the percentage of divorced
mothers who have spells totaling 10 years or more (Ellwood,
1986).
Given the negative impacts of nonmarital births on mothers
and children, Public Law 104-193 contains several provisions
designed to reduce nonmarital births in general and teen
nonmarital births in particular. These measures include
requiring teen mothers to live at home or with a responsible
adult; requiring teen mothers to attend school; imposing a
mandatory 25 percent benefit reduction on unmarried mothers who
do not help establish paternity; providing entitlement funding
for abstinence education; requiring the Secretary of Health and
Human Services to annually rank States
on their performance in reducing nonmarital birth ratios;
providing $1 billion over 5 years for performance bonuses to
reward States that achieve the goals of the act, including
reduced nonmarital births and increased incidence of two-parent
families; and providing $400 million in bonus payments to
States that reduce their illegitimacy rates.
Finally, the new law addresses one of the most vexing
social problems faced by the Nation today; namely, the
remarkably low level of child support payments by noncustodial
parents. Some scholars have estimated that a highly effective
child support system could produce as much as $34 billion more
for children than the amount now collected (Sorensen, 1995).
The reformed child support program attacks this problem by
pursuing five major goals: automating many child support
enforcement procedures; establishing uniform tracking
procedures; strengthening interstate child support enforcement;
requiring States to adopt stronger measures to establish
paternity; and creating new and stronger enforcement tools to
increase actual child support collections. The law envisions a
child support system in which all States have similar child
support laws, all States share information through the Federal
child support office, mass processing of information is
routine, and interstate cases are handled expeditiously.

Spending

According to the Congressional Budget Office, total
spending over 6 years on all welfare programs affected by H.R.
104-193 will grow from $198 billion in 1996 to $296.6 billion
in 2002. As shown in chart 3, the budget impact of the act is
to reduce the rate of growth of welfare spending somewhat below
the rate of growth in prior law baseline spending, while still
providing for an increase in welfare spending of about 50
percent in 6 years. As shown by the budget projections in table
2, spending under nearly all the constituent programs grows
over the period. Across the 6 years covered by the act, total
spending under all the affected programs will be $1.509
trillion, as compared with $1.563 trillion under the prior-law
CBO baseline. Thus, the budget impact of the reforms is to
reduce the budget deficit by nearly $55 billion by moderating
the rate of welfare spending growth.

CHART 3. PUBLIC LAW 104-193 MODERATES THE GROWTH OF WELFARE SPENDING
WHILE SAVING $54.6 BILLION

Source: Congressional Budget Office.

TABLE 2--SPENDING ON WELFARE PROGRAMS AFFECTED BY PUBLIC LAW 104-193, 1996-2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year
Welfare Program ------------------------------------------------------------------------------------------- Total 1997-
1996 1997 1998 1999 2000 2001 2002 2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Under Prior Law Baseline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Family Support Payments......................... $18,371 $18,805 $19,307 $19,935 $20,557 $21,245 $21,937 $121,786
Supplemental Security Income.................... 24,017 27,904 30,210 32,576 37,995 34,515 40,348 203,548
Child Protection................................ 3,840 4,285 4,687 5,083 5,506 5,960 6,433 31,954
Child Nutrition................................. 8,428 8,898 9,450 10,012 10,580 11,166 11,767 61,873
Medicaid........................................ 95,786 105,081 115,438 126,366 138,154 151,512 166,444 802,995
Food Stamps..................................... 26,220 28,094 29,702 31,092 32,476 33,847 35,283 190,494
Social Services Block Grant..................... 2,880 3,010 3,050 3,000 2,920 2,870 2,840 17,690
Earned Income Credit............................ 18,440 20,191 20,894 21,691 22,586 23,412 24,157 132,931

-------------------------------------------------------------------------------------------------------
Total................................... 197,982 216,268 232,738 249,755 270,774 284,527 309,209 1,563,271
--------------------------------------------------------------------------------------------------------------------------------------------------------
Under Public Law 104-193
--------------------------------------------------------------------------------------------------------------------------------------------------------
Family Support Payments......................... 18,371 19,680 20,207 20,842 21,334 21,716 21,806 125,585
Supplemental Security Income.................... 24,017 27,111 26,284 28,296 33,171 30,171 35,390 180,823
Child Protection................................ 3,840 4,353 4,712 5,099 5,537 6,001 6,484 32,186
Child Nutrition................................. 8,428 8,770 9,047 9,518 10,027 10,561 11,097 59,020
Medicaid........................................ 95,786 105,043 114,924 125,799 137,573 150,564 165,011 978,914
Food Stamps..................................... 26,220 25,996 25,753 26,953 28,267 29,498 30,700 167,167
Social Services Block Grant..................... 2,880 2,635 2,630 2,580 2,500 2,450 2,420 15,215
Earned Income Credit............................ 18,440 19,746 20,438 21,228 22,106 22,919 23,642 130,079

References

Adams, G., & Williams, R.C. (1990). Targeting would-be long-
term recipients of AFDC (Department of Health and Human
Services Contract No. 100-84-0059). Princeton, NJ:
Mathematica Policy Research.
Burke, V. (1995, December 19). Cash and noncash benefits for
persons with limited income: Eligibility rules,
recipient and expenditure data, FYs 1992-1994 (96-159
EPW). Washington, DC: Congressional Research Service.
Ellwood, D.T. (1986, January). Targeting ``would-be'' long-term
recipients of AFDC (MPR No. 7617-953). Princeton, NJ:
Mathematica Policy Research.
Forman, M. (1994, October 20). Federal funding for child care
(Memorandum to the Committee on Ways and Means).
Washington, DC: Congressional Research Service.
Klebe, E.R. (1994, November 25). Health programs for low-income
persons (Memorandum to the Committee on Ways and
Means). Washington, DC: Congressional Research Service.
Maynard, R. (Ed.). (1996). Kids having kids. New York: Robin
Hood Foundation.
National Center for Health Statistics. (1977). Vital statistics
of the United States, 1973 (Vol. 1: Natality).
Washington, DC: U.S. Public Health Service.
National Center for Health Statistics. (1988). Vital statistics
of the United States, 1985 (Vol. 1: Natality).
Washington, DC: U.S. Public Health Service.
Pavetti, L. (1995, September). Questions and answers on welfare
dynamics. Washington, DC: Urban Institute.
Robinson, D. (1994, November 23). Comparison of selected
Federal social service programs (Memorandum to the
Committee on Ways and Means). Washington, DC:
Congressional Research Service.
Robinson, D. & Forman, M. (1994, November 8). Comparison of
selected Federal child welfare and child abuse programs
(Memorandum to the Committee on Ways and Means).
Washington, DC: Congressional Research Service.
Sorensen, E. (1995, April). The benefits of increased child
support enforcement (Welfare Reform Briefs, No. 2).
Washington, DC: Urban Institute.
U.S. General Accounting Office. (1994, January). Multiple
employment and training programs: Overlapping programs
can add unnecessary administrative costs (GAO/HEHS-94-
80). Washington, DC: Author.
U.S. General Accounting Office. (1995a, January 27).
Supplemental Security Income: Recent growth in rolls
raises fundamental program concerns (GAO/T-HEHS-95-67).
Washington, DC: Author.
U.S. General Accounting Office. (1995b, March). Social
Security: New functional assessments for children raise
eligibility questions (GAO/HEHS-95-66). Washington, DC:
Author.
U.S. General Accounting Office. (1996). Supplemental Security
Income: Noncitizen caseload continues to grow (GAO/T-
HEHS-96-149). Washington, DC: Author.
Vanhorenbeck, S. & Foote, B. (1994, November 22). Table of
authorizations and FY 1995 appropriations for housing
programs (Memorandum to the Committee on Ways and
Means). Washington, DC: Congressional Research Service.
Ventura, S.J., Martin, J.A., Taffel, S.M., Mathews, T.J., &
Clarke, S.C. (1994, October 25). Advance report of
final natality statistics, 1992. Monthly Vital
Statistics Report, 43(5). Washington, DC: U.S. Public
Health Service.
Ventura, S.J., Martin, J.A., Taffel, S.M., Mathews, T.J. &
Clarke, S.C. (1995, September 21). Advance report of
final natality statistics, 1993. Monthly Vital
Statistics Report, 44(3). Washington, DC: U.S. Public
Health Service.
Zill, N. (1996, March 12). Unmarried parenthood as a risk
factor for children. The causes of poverty, with a
focus on out-of-wedlock births: Hearing before the
Subcommittee on Human Resources of the Committee on
Ways and Means, U.S. House of Representatives, 104th
Congress, 2d Sess.

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SECTION 2.

SUMMARY OF THE NEW WELFARE

REFORM LAW BY TITLE

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SECTION 2. SUMMARY OF THE NEW WELFARE LAW BY TITLE

Title I: Block Grants to States for Temporary Assistance for Needy
Families (TANF)

Creation of the cash welfare block grant
The Personal Responsibility and Work Opportunity
Reconciliation Act creates a cash welfare block grant called
Temporary Assistance for Needy Families (TANF). Its purpose is
to increase State flexibility in providing assistance to needy
families so that children may be cared for at home; end the
dependence of needy parents on government benefits by promoting
job preparation, work, and marriage; prevent and reduce the
incidence of out-of-wedlock pregnancies; and encourage the
formation and maintenance of two-parent families. The TANF
block grant replaces four current cash welfare and related
programs: Aid to Families With Dependent Children (AFDC), AFDC
Administration, the Job Opportunities and Basic Skills Training
(JOBS) Program, and the Emergency Assistance Program. In
addition, a new block grant for child care replaces AFDC-
related child care, effective October 1, 1996. To allow States
the opportunity to pass legislation needed to implement
reformed welfare programs, the implementation date for the TANF
block grant is July 1, 1997, but States may begin their block
grant programs sooner.
Spending through the TANF block grant is capped and funded
at $16.4 billion per year, slightly above fiscal year 1995
Federal expenditures for the four component programs. Each year
between 1996 and 2002, the basic block grant provides each
State with the amount of Federal money it received for the four
constituent programs in fiscal year 1995, fiscal year 1994
(increased in some cases by higher Emergency Assistance
spending in fiscal year 1995), or the average of fiscal year
1992 through fiscal year 1994, whichever is highest.
To receive each year's full TANF block grant, a State must
spend in the previous year on behalf of TANF-eligible families
a sum equal to 75 percent of State funds used in fiscal year
1994 on the replaced programs (its ``historic'' level of
welfare expenditures). If a State fails to meet work
participation rates, its required ``maintenance of effort''
spending rises to 80 percent.
Over 6 years, the Congressional Budget Office (CBO)
estimates that Federal spending on family support payments (a
classification that includes cash welfare, work programs for
welfare recipients, and welfare-related child care) will be
$3.8 billion above projected spending under the superseded AFDC
law. This increased spending is due to several factors: (1)
States are eligible to receive a TANF block grant that matches
the highest of recent annual funding levels; (2) Federal
outlays under the new child care block grant are estimated by
CBO to be $3.5 billion higher than projected outlays under old
law; (3) States with above-average population growth or below-
average Federal welfare funding per poor person will qualify
for supplemental grants above their TANF block grant (out of a
total of $800 million provided over 4 years); (4) States that
attain a performance score (for achieving the goals of the TANF
block grant) that equals a threshold set by the HHS Secretary
will receive a high-performance bonus (out of a total of $1
billion provided over 5 years); and (5) up to 5 States will
receive bonuses for achieving the largest percentage reduction
in the number of out-of-wedlock births while also reducing the
rate of abortion (a total of $400 million is available over 4
years). In addition, States undergoing recession, as shown by
high and rising unemployment or rising food stamp caseloads,
may be eligible to receive up to $2 billion over 5 years in
matching ``contingency'' funds (CBO estimates Federal outlays
of contingency funds at more than $1 billion). Taken together,
these provisions are intended to ensure that States, even in
times of recession, have sufficient funds to operate welfare
programs that stress work instead of government dependence.
The new law earmarks some TANF funds (to be subtracted from
relevant State block grants) for direct administration by
applicant Indian tribes and Native Alaskan organizations. It
entitles Puerto Rico, Guam, and the Virgin Islands to TANF
grants plus reimbursement (at a 75 percent Federal rate) for
welfare outlays above the Federal block grant level, but below
new and enlarged funding ceilings. (For details of financing
and State TANF allocations, see appendix.)
The individual entitlement to cash welfare payments
currently provided under the Aid to Families With Dependent
Children Program is ended by the new law. TANF block grant
funds are guaranteed payments to States, but can be reduced if
States fail to meet specified requirements such as providing
data to the Federal Government, ensuring that funds are spent
on children and families, enforcing penalties against persons
who fail to cooperate in establishing paternity, maintaining
specified levels of State spending, and meeting work
participation requirements. State plans must set forth
objective criteria for the delivery of benefits and the
determination of eligibility and for fair and equitable
treatment, and must explain how States will provide
opportunities for appeal by adversely affected recipients.
Requiring work and rewarding States that conduct successful work
programs
The new law contains three provisions requiring work or
work preparation by adults in welfare families:
1. Adults receiving assistance through the block grant are
required to ``engage in work'' (as defined by the
State) after 2 years (or less at State option);
otherwise, their assistance under the block grant is
ended. Unless States opt out, adult recipients not
working must participate in community service
employment with hours and tasks set by the State after
receiving benefits for 2 months. This requirement does
not apply to single parents of a child under 6 who are
unable to obtain needed child care. Further, States may
exempt parents of a child under age 1 from this or any
other work requirement.
2. States are required to have a specific and gradually
increasing percentage of their caseload in work
activities. Work activities are tightly defined to
include actual work in the private or public sector
plus, to a limited degree, education, vocational
education training, and job search. (See below.) The
participation requirement begins at 25 percent in 1997
and increases by 5 percentage points a year to 50
percent in 2002. In calculating required participation
rates, States are given credit for reducing their
welfare rolls, provided the decrease is not due to
changed eligibility criteria (the required
participation rate is adjusted down one percentage
point for each percentage point that the State's
welfare caseload is below fiscal year 1995 levels). As
noted above, States may exempt single parents of a
child under age 1 from the work requirement. If they do
so, these families are omitted from the calculation of
work participation rates (for no more than a total of
12 months for any single family). At least one adult in
75 percent of two-parent families must be working in
1997 and 1998, as under previous law, but the rate
rises so that adults in at least 90 percent of two-
parent families on welfare must be working in 1999 and
thereafter. States not meeting these work participation
rates for single-parent or two-parent families face a
reduction in TANF block grant funds: 5 percent the
first year and then 7 percent, 9 percent, 11 percent
and so forth in subsequent consecutive years of
failure; the maximum penalty for failing to meet State
work requirements is the loss of 21 percent of the
State's block grant.
3. Cash payments and other benefits from the block grant are
forbidden for a family with a member who has received
aid as an adult for 5 years. States may set a shorter
time limit. The maximum time limit of 5 years requires
families to become independent of TANF block grant
assistance at that point (eligibility for other
programs such as food stamps and Medicaid would
continue, subject to program income limits). States may
make exceptions to the 5-year limit for up to 20
percent of their caseload if the State judges that
special circumstances (for example, family violence or
borderline disabilities) justify an extension of
benefits. In addition, States may use their own funds
to assist families made ineligible by the 5-year time
limit; States also may use title XX social services
block grant funds (including amounts transferred out of
the cash welfare block grant into the title XX block
grant) to provide assistance to these families.
For purposes of calculating State participation rates
described in (2) above, the new law defines 12 activities as
``work activities:'' unsubsidized employment; subsidized
private employment; subsidized public employment; work
experience; on-the-job training; job search and job readiness
assistance, for up to 6 weeks (12 weeks, if the State's
unemployment rate is 50 percent above the national average), of
which only 4 can be consecutive; community service programs;
vocational education training (for a maximum of 12 months);
provision of child care to TANF recipients participating in a
community service program; job skills training directly related
to employment; education directly related to employment (for
high school dropouts only); or satisfactory attendance at
secondary school or in a course of study leading to an
equivalency certificate (for high school dropouts only). Not
more than 20 percent of the required number of work
participants can qualify because they participated in
vocational training or were a teen head-of-household in
secondary school.
In order to count toward fulfilling a State's participation
rate, a recipient generally must engage in one of the first
nine activities above (that is, one other than job skills
training or education) for an average of 20 hours weekly. The
total number of required hours of work rises to 25 in fiscal
year 1999 and to a peak of 30 in fiscal year 2000. However,
required work hours of a single parent of a child under 6 do
not rise above 20, and a teen head of household (under age 20)
without a high school diploma is counted as a work participant
if she maintains secondary school attendance or, for the
required minimum number of hours, participates in education
directly related to employment.
Special rules apply to two-parent families. An adult in
these families must work an average of 35 hours weekly, with at
least 30 hours attributable to one of the first nine activities
cited above. Also, if the family receives federally funded
child care, the second parent, unless disabled or caring for a
disabled child, must make satisfactory progress for at least 20
hours weekly in employment, work experience, on-the-job
training, or community service.
Expressed as a percentage, work participation rates equal
the number of all recipient families in which an individual is
engaged in work activities for the month, divided by the number
of recipient families with an adult recipient, but excluding
families with children under 1 for up to a total of 12 months
per family, if the State exempts them from work, and excluding
families being sanctioned (for no more than 3 months within the
preceding 12 months) for refusal to work.
A TANF recipient may fill a vacant employment position in
order to engage in a work activity. However, no adult in a work
activity who receives Federal funds shall be employed or
assigned to a position when another person is on layoff from
the same or any substantially equivalent job. States must
establish and maintain a grievance procedure for resolving
complaints of alleged job displacement.
Adults who refuse to engage in required work will face at
least pro rata reductions in benefits. Thus, if a parent is
required to work 20 hours and works only 10, her benefit will
be reduced by at least 50 percent. States may not penalize
single parents with children under 6 if the parent proves her
inability to obtain needed child care for a specified reason.
States are encouraged to place the highest priority on
requiring adults in two-parent families and single parents with
school-age children (especially older school-age children) to
participate in work activities. Congressional committees are to
review the implementation of State work programs during fiscal
year 1999.
As noted before, States are required to maintain 75 percent
of their 1994 level of State spending on the replaced programs
for 6 years, fiscal year 1997 through 2002; however, States
that fail to meet required work participation rates must
maintain at least 80 percent of historic spending levels. In
addition, the law creates a $1 billion performance bonus to
provide cash rewards to States that succeed in meeting program
goals, as measured by a formula to be developed by the
Secretary in consultation with the National Governors'
Association and the American Public Welfare Association
The Secretary is required to annually rank the States in
order of their success in placing recipients of assistance in
long-term private sector jobs and in reducing the overall
caseload.

Providing Child Care for Recipients Who Work

The act repeals the child care guarantee for recipients of
cash aid who need it to work or study and, for up to 1 year,
for individuals who leave welfare bcause of employment. The act
also ends existing AFDC-related child care programs. It
entitles States to $13.9 billion for child care under title IV-
A of the Social Security Act for a period of over 6 years. This
amount is comprised of $1.2 billion annually in 100 percent
Federal grants (roughly equal to recent Federal spending for
AFDC-related child care) and an average of about $1.1 billion
yearly in matching grants, which are subject to maintenance-of-
effort spending rules. At least 70 percent of these entitlement
funds must be spent for services for TANF recipients or ex-
recipients or low-income working families at risk of TANF
eligibility. These welfare-related child care funds are
transferred to the lead agency under the Child Care and
Development Block Grant (CCDBG) and made subject to its rules.
For CCDBG, the law authorizes $1 billion annually in
discretionary funds. (For further information, see title VI:
Child Care, below.)

Combating Out-of-Wedlock Births and Promoting Paternity Establishment

The new law gives States wide flexibility along with added
funds to combat the rising number of out-of-wedlock births,
which increase welfare use and long-term dependency. For
example, unmarried teen parents must live at home or in another
adult-supervised setting and attend school in order to be
eligible for payments; States may end cash payments altogether
for teen parents who have children outside marriage. Further,
States may end the practice of providing extra Federal payments
to families that have an additional child while on welfare,
employing a policy sometimes called the ``family cap.''
The new law contains several provisions that encourage
marriage and family and discourage out-of-wedlock childbearing.
More specifically, the legislation:
1. Creates a $90 billion TANF block grant for States to use to
``prevent and reduce the incidence of out-of-wedlock
pregnancies,'' among other purposes;
2. Requires State plans to establish goals and take action to
prevent and reduce the incidence of out-of-wedlock
pregnancies, with special emphasis on teenage
pregnancies, and to establish numerical goals for
reducing the State illegitimacy ratio for 1996 through
2005;
3. Provides a total of $400 million in added grants (of up to
$25 million annually per State) for the five States
that are the most successful in reducing the number of
out-of-wedlock births while decreasing abortion rates;
4. Makes States that are successful in reducing illegitimacy,
strengthening families, and meeting other program goals
eligible for a share of a new $1 billion ``performance
bonus'' fund;
5. Provides $50 million in entitlement funding for abstinence
education for each of fiscal years 1998 through 2002;
6. Allows any State to establish a family cap policy ending
the practice of increasing Federal cash welfare
benefits when mothers on welfare have babies;
7. Allows States to limit or deny cash welfare for unmarried
teen parents;
8. Requires unwed teen parents to be in school and living at
home or with an adult in order to receive assistance;
States may use block grant funds to provide, or assist
in locating, adult-supervised living arrangements, such
as second-chance homes, for teen mothers;
9. Deters out-of-wedlock births, encourages paternity
establishment, and provides for the payment of child
support by: (1) requiring States to reduce cash welfare
payments by at least 25 percent for families that
include a parent who fails to cooperate in establishing
paternity or obtaining child support (States may end
benefits altogether); and (2) barring Federal funds for
families with a member who has not assigned support
rights to the State;
10. Requires the Secretary of HHS to implement, within 1 year,
a strategy for preventing teen pregnancies, assuring
that 25 percent of communities have prevention
programs;
11. Requires the Secretary of Health and Human Services to
annually rank all States according to out-of-wedlock
birth ratios and changes in ratios over time, and to
review the five highest and five lowest ranking States;
and
12. Includes numerous findings on the crisis posed by out-of-
wedlock births for children, families, and the Nation;
encourages States to adopt an effective strategy to
combat teen pregnancy by addressing the issue of male
responsibility, including statutory rape culpability
and prevention.

Providing Maximum State Flexibility

To increase State flexibility in the use of Federal funds,
States are allowed to transfer up to 30 percent of their
Temporary Assistance for Needy Families block grant into the
Child Care and Development Block Grant (CCDBG) and the title XX
social services block grant. However, States may shift no more
than one-third of the total amount transferred (that is, no
more than 10 percent of the TANF block grant) into the social
services block grant; funds transferred into the social
services block grant must be used only for programs and
services for children and families with incomes below 200
percent of the poverty level. The law explicitly permits use of
funds transferred into the Social Services Block Grant for
families who lose TANF eligibility because of the 5-year time
limit or because the State adopts a family cap.
To assist in recessions or other emergencies, States may:
(1) receive matching grants from the $2 billion contingency
fund described above; (2) borrow from a $1.7 billion Federal
loan fund; and (3) save an unlimited amount of their TANF block
grant funds for use in later years.
The new law also contains supplemental grants to assist
States with above average population growth and below average
Federal welfare funding per poor person (reflecting
historically low benefit levels). These grants will provide
eligible States with an additional $800 million in Federal
funds between fiscal year 1998 and 2001.
States may provide families on welfare moving into the
State with the same benefit they received in their former State
for a period of up to 12 months.
States shall not be prohibited by the Federal Government
from testing recipients for use of controlled substances nor
from sanctioning those who test positive.
To encourage work, States may use TANF block grant funds to
operate an employment placement program. States may not use
block grant funds to provide medical services (but may use them
for family planning) and may not spend more than 15 percent of
the block grant on administrative expenses. Spending for
information technology and computerization required to perform
case tracking and monitoring, however, is not counted toward
the 15 percent cap on administrative expenditures.
To encourage saving for specified purposes, States may use
block grant funds to help fund individual development accounts
(IDAs) for persons eligible for TANF, with no dollar limit.
In recognition of the fact that creating block grants and
increasing State control over program operation will lessen
Federal control, the law requires a reduction of 75 percent of
the full-time positions at the Department of Health and Human
Services that relate to any direct spending program, or program
funded through discretionary spending, that is converted into a
block grant program. The law specifies that the Secretary of
HHS must reduce the Federal welfare work force by 245 full-time
positions related to the AFDC Program and by 60 full-time
equivalent managerial positions.
To encourage States to involve religious and other private
organizations in the delivery of welfare services to the
greatest extent possible, States are specifically authorized to
administer and provide family assistance services through
contracts with charitable, religious, or private organizations
or through vouchers or certificates that may be redeemed for
services at charitable, religious, or private organizations.
To encourage States to adopt an electronic benefits
transfer (EBT) system for TANF, the new law permits use of TANF
funds for implementing EBT and limits State liability for lost/
stolen benefits distributed via EBT.
States will set TANF eligibility standards and benefit
levels. They may deny or offer aid to two-parent families or to
any group; however, as noted above, if States offer TANF to
unmarried teen parents they must require them to meet Federal
conditions concerning living arrangements and school.

Setting National Priorities

The new law gives States the widest possible latitude in
developing innovative programs that will get families off
welfare and into jobs. Nonetheless, a small set of principles
must be followed to ensure the nationwide success of welfare
reform. States therefore are prohibited from using Federal cash
welfare block grant funds to:
1. Pay benefits to parents who fail to participate in work or
a State-designed welfare-to-work program after 24
months (or a shorter period) of receiving cash welfare;
2. Provide cash or noncash TANF benefits to families in which
a member--as an adult--already has received assistance
through the block grant for 5 years (however, up to 20
percent of the State's caseload may receive an
exemption, and funds transferred to the title XX social
services block grant and State funds may aid these
families); and
3. Pay TANF benefits to noncitizens arriving after the date of
enactment during their first 5 years in the United
States (for details, see title IV: Restricting Welfare
and Public Benefits for Noncitizens).
In addition, only families with minor children and pregnant
women are eligible for assistance under the block grant. No
assistance can be provided to families that include a child who
has been absent from the home for more than 45 days, nor can
assistance be given to a parent or caretaker who fails to
report a missing child within 5 days.
Individuals convicted of fraudulently misrepresenting
residence to obtain Federal welfare benefits in two or more
States at the same time must be denied benefits for 10 years.
States are prohibited from providing assistance from the
Temporary Family Assistance Block Grant, food stamps, or
Supplemental Security Income to fugitive felons fleeing
prosecution or confinement or violating probation or parole.
State welfare agencies are required to share information on
fugitive felons with law enforcement officials under most
circumstances.
Unless a State ``opts out'' by enacting a new law, an
individual convicted after August 22, 1996, of a felony
involving the possession, use, or distribution of illegal drugs
shall not be eligible for cash welfare benefits or food stamps.
States may limit the period of ineligibility by passage of a
new law, and children in families that include an adult
affected by this prohibition would continue to be eligible to
receive benefits.

Ensuring Medical Coverage for Low-Income Families

States are required to provide Medicaid coverage to:
1. Families that become ineligible for cash welfare assistance
because of increased earnings from work (for 1 year--6
months of full Medicaid, 6 months of subsidized
Medicaid if family income is less than 185 percent of
the Federal poverty level);
2. Families that become ineligible for cash welfare assistance
because of increased earnings from child support (for 4
months); and
3. Families that would have been eligible for AFDC--and as a
result guaranteed Medicaid coverage--under program
income and resource standards in effect on July 16,
1996. States may reduce these standards to their May 1,
1988, level and may increase them by the rise in the
Consumer Price Index.
The first two provisions are designed to maintain current law
standards ensuring Medicaid coverage for families who move off
welfare. The third provision, by requiring Medicaid coverage
for families according to recent AFDC standards, assures
medical assistance to many families that might not qualify for
benefits under States' new TANF block grant programs. To
encourage work, however, States may end medical coverage for
parents who become ineligible for TANF benefits because of a
failure to work (children in these families would remain
eligible for medical assistance). The law also extends the
authorization of the first two provisions above until 2002.

Ensuring Compliance With National Priorities

In addition to the penalty of losing 5 percent or more of
the State's block grant for failing to meet required work
participation rates (see above), States are subject to several
other penalties if they fail to meet certain Federal standards:
1. If block grant funds are found by audit to have been
misspent, the State loses an equal amount from its next
block grant payment, and it must repay the misspent
amount using State funds (if the State cannot prove
that the misuse was unintentional, an additional 5
percent of its annual block grant will be deducted from
the next quarterly payment);
2. States that fail to submit required reports lose 4 percent
of their block grant;
3. States that fail to participate in the Income and
Eligibility Verification System (IEVS) lose up to 2
percent of their block grant;
4. States that fail to enforce penalties requested by the
child support agency against persons who do not
cooperate in establishing paternity or in establishing,
modifying, or enforcing a child support order lose up
to 5 percent of their block grant; States that do not
comply substantially with child support enforcement
program requirements face these penalties: 1 to 2
percent of the block grant for the first finding of
noncompliance; 2 to 3 percent for the second finding;
and 5 percent for the third or later finding;
5. States that fail to repay loans from the Federal loan fund
in a timely fashion have any outstanding loan plus
interest deducted from their next block grant payment;
6. States that fail to maintain 75 percent of historic State
spending in fiscal year 1998 through 2003 (or 80
percent in the case of States that fail to meet minimum
work participation rates) lose the difference between
what the State actually spent and the minimum required
level of spending from the following year's block
grant;
7. States that fail to comply with the 5-year limit on
assistance lose 5 percent of their block grant;
8. States that fail to maintain 100 percent of historic
spending levels during fiscal years in which the State
receives contingency funds have the amount of the
contingency funds subtracted from their following
year's block grant; and
9. States that penalize for failure to work single parents
with children under age 6 who have a demonstrated
inability to obtain child care lose up to 5 percent of
their block grant.
States must replace with State funds any block grant
amounts lost because of the above penalties. Except in the case
of failure to repay loan funds or failure to maintain 75 (or
80) percent of historic levels of State welfare spending, the
Secretary may opt not to impose the above penalties if she
determines that the State had reasonable cause not to comply.
States may enter into a corrective action plan upon being
notified of their failure to comply with any of the above
provisions; if the Secretary of Health and Human Services
accepts the plan and the State corrects the violation, no
penalty will be assessed. When penalties are assessed, total
penalties cannot exceed 25 percent of the block grant in any
single quarter. Penalties that exceed 25 percent are to be
assessed in subsequent quarters. With the exception of
penalties for the misuse of funds (and penalties that could
take effect only at later dates), States will not face
penalties for failing to comply with new Federal requirements
until the later of July 1, 1997, or the date that is 6 months
after the State submits its plan. Penalties will apply only to
conduct that occurs after these dates. Finally, States have the
right to appeal adverse decisions made by the Secretary.

Treatment of Waivers

State programs may include provisions granted by waivers
under section 1115 before enactment of the new law on August
22, 1996. On the other hand, States have the option of
terminating waiver projects before their scheduled expiration
date. States that elect to end ongoing waivers are held
harmless for accrued cost neutrality liabilities if the request
is submitted promptly. If States opt to continue a waiver, they
must bring their programs in line with the terms and conditions
of the revised block grant program once the waiver expires.
Waivers granted after the date of enactment may not
override provisions of the TANF law that concern mandatory work
requirements. For these postenactment waivers, a State must
demonstrate to the satisfaction of the Secretary that the
waiver will not result in increasing Federal welfare spending
above the TANF block grant level.

Data Reporting and Evaluation

To help Congress determine whether the purposes of this
legislation are being achieved, and to help Congress, the
States, scholars, and the American public learn whether the
reforms are producing positive results, States are required to
report a broad range of data and several studies are
authorized. States may fulfill the data collection and
reporting requirements by reporting data for their entire
caseload under the block grant or by use of statistical
sampling, on the condition that sampling methods must be
approved by the Secretary of HHS as scientifically acceptable.
The Census Bureau is provided with $10 million per year to
expand the ongoing Survey of Income and Program Participation
(SIPP) and to focus special data collection efforts on welfare
families. By studying a random sample of American families both
before and after implementation of this legislation, the Census
Bureau will provide useful and reliable information on whether
families were able to escape welfare, on the factors that
facilitate and impede movement off welfare, on the types of
jobs obtained by former welfare recipients, on the impact of
welfare reform on children, and on a host of other issues. The
study will pay particular attention to the issues of welfare
dependency, out-of-wedlock births, the beginning and end of
welfare spells, and causes of repeat welfare spells. The Census
Bureau also is directed to expand questions on the decennial
and the mid-decade census to distinguish the number of
households in which a grandparent is the primary care giver.
Within 6 months of enactment, the Secretary of Health and
Human Services must report to Congress on the ability of States
to employ automatic data processing systems capable of
gathering required information, limiting fraud and abuse, and
maintaining State progress in achieving the goals of this
legislation. States must comply with the new data reporting
requirements by July 1, 1997, and must continue to report
information according to current law requirements until that
date.
Beginning 3 years after the date of enactment, the
Secretary must submit annual reports to Congressional
committees on the impact of program changes on: (1) children in
families made ineligible for assistance by the 5-year time
limit, (2) children born to teenage parents, and (3) teenage
parents. States must annually submit to the Secretary a
statement of the child poverty rate in the State. If the child
poverty rate has increased by 5 percent or more in the
preceding year ``as a result of'' the TANF block grant program,
the State must submit a corrective action plan outlining how it
will reduce child poverty rates.
The Secretary may assist States in developing innovative
welfare approaches and shall evaluate them. States are eligible
to receive funding to evaluate their programs, but must
generally pay at least 10 percent of the cost.
The Secretary must submit to Congress by September 30,
1998, a study on ways to evaluate program success other than by
using minimum work participation rates. This study of
``alternative outcomes measures'' shall indicate whether the
measures should be applied nationally or on a State-by-State
basis.
The law limits Federal authority, providing that no officer
or employee of the Federal Government may regulate the conduct
of States under title IV-A of the Social Security Act (which
authorizes the TANF block grant program) or enforce any
provisions of title IV-A, except to the extent expressly
provided in title IV-A.

Title II: Supplemental Security Income

Ensuring that prisoners and other criminals do not receive SSI benefits
The new law provides for incentive payments from SSI
Program funds to State and local penal institutions for
furnishing information (date of confinement and certain other
identifying information) to the Social Security Administration
(SSA) that results in suspension of benefits (up to $400 for
information received within 30 days of confinement or up to
$200 for information received from 31 to 90 days after
confinement). The provision applies to individuals whose period
of confinement commences on or after March 1, 1997.
In order to facilitate the exchange of information, the SSI
reporting agreements under which incentive payments are made
are exempted from the Computer Matching and Privacy Protection
Act of 1988. SSA is authorized to provide, on a reimbursable
basis, information obtained pursuant to SSI reporting
agreements to any Federal or federally assisted cash, food, or
medical assistance program for eligibility purposes.
The Commissioner of the Social Security Administration is
required to study and report to Congress within 1 year of
enactment on the feasibility of information exchange on
prisoners, especially by electronic means, between SSA, the
courts, and correctional facilities. SSA also is required to
provide Congress not later than October 1, 1998, with a list of
institutions that are and are not providing information on SSI
recipients to SSA.
The law denies eligibility for SSI to individuals fleeing
prosecution, to fugitive felons, or to those violating a
condition of probation or parole imposed under State or Federal
law. SSA must provide, upon written request of any law
enforcement officer, the current address, Social Security
number, and photograph (if available) of any SSI recipient who:
is fleeing to avoid prosecution, custody, or confinement after
a felony conviction; is violating a condition of probation or
parole; or has information necessary for the officer to conduct
his official duties.
The law denies SSI benefits for a period of 10 years to an
individual convicted in Federal or State court of having made a
fraudulent statement with respect to his or her place of
residence in order to receive benefits simultaneously in two or
more States.
Reforming the disability determination process for children
The new law makes several changes designed to maintain the
SSI Program's goal of providing benefits for severely disabled
children while preventing children without serious impairments
from receiving benefits.
First, the act replaces the former law ``comparable
severity'' test with the following new definition of childhood
disability:

An individual under the age of 18 is considered disabled
under SSI if the child has a medically determinable physical or
mental impairment, which results in marked and severe
functional limitations, and which can be expected to result in
death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.

Second, the Commissioner of SSA is required to discontinue
use of the Individualized Functional Assessment (IFA), an
evaluation instrument that requires subjective judgment to
determine children's eligibility for SSI. The IFA is also the
source of many complaints about SSI providing cash benefits to
children who act up in school or demonstrate only mild
impairments.
Third, the Commissioner of SSA must eliminate references to
``maladaptive behavior'' in the Listings of Impairments (among
medical criteria for evaluation of mental and emotional
disorders in the domain of personal/behavioral function).
The provisions eliminating the use of the IFA and
eliminating references to maladaptive behavior in the listings
are effective for all new and pending applications upon
enactment. Current beneficiaries receiving benefits due to an
IFA or maladaptive behavior listing will receive notice no
later than January 1, 1997, that their benefits may end and
their case will be redetermined. The Commissioner will
redetermine eligibility of those currently receiving benefits
using the new eligibility criteria within 1 year from the date
of enactment. Should an individual be found ineligible for
benefits, his benefits will end July 1, 1997, or the date of
the redetermination, whichever is later.
At least once every 3 years, the Commissioner must conduct
continuing disability reviews (CDRs) of children receiving SSI
benefits. At the time of the CDR, the representative payee
(usually a parent or other family member) must provide evidence
demonstrating that the child is, and has been, receiving
treatment, if appropriate. If the representative payee refuses
to comply, an alternative representative payee will be found.
The eligibility of children qualifying for SSI benefits
must be redetermined under the adult criteria within 1 year
after the child turns 18. In addition, a CDR must be completed
12 months after the birth of a child who was allowed benefits
because of low birth weight.
The new law makes several other changes designed to improve
accountability in the SSI Program. First, the act requires lump
sum payments in excess of $2,820 to children under age 18
(effective with respect to payments made after the date of
enactment) to be paid into a dedicated savings account.
Spending from this account must be for allowable expenses and
must be monitored by the Commissioner. Allowable expenses
include personal needs assistance, education or job skills
training, special equipment, home modifications, medical
treatment, therapy or rehabilitation services, or other items
approved by the Commissioner so long as the expenses benefit
the child or are related to the child's disability.
Second, the act requires that past-due benefits (effective
with respect to past-due benefits payable after the third month
following the month of enactment) larger than $5,640 for an
individual and $8,460 for a couple be paid via three
installments in 6-month intervals. Installment limits may be
exceeded, however, to pay certain debts and expenses, and
certain other exceptions apply.
Finally, children in medical institutions with private
insurance currently receiving a full SSI benefit will have
their benefits reduced to a personal needs allowance of $30 per
month, the same amount that is given to children in
institutions for whom more than half the costs are paid by the
Medicaid Program. This provision is effective with respect to
benefits for months beginning 90 or more days after the date of
enactment.
New regulations implementing the changes related to
benefits for disabled children must be promulgated by SSA
within 3 months after the enactment date. These regulations
(with supporting documentation including a cost analysis,
workload impact, and caseload projections that will result from
the new regulations) must be provided to Congress at least 45
days before they are implemented.
Within 180 days of enactment, the Commissioner will send to
Congress a report on the progress made in implementing the
provisions of these amendments.
The act takes a number of steps to evaluate and improve the
disability determination process and to assess the effect of
changes on families and children:
1. The SSA Commissioner, not later than May 30 of each year,
must prepare and present an annual report to the
President and the Congress on the SSI Program; and
2. The General Accounting Office, not later than January 1,
1999, must study the impact of the reforms; the study
must include an examination of extra expenses (if any)
incurred by families of children receiving SSI benefits
that are not covered by other Federal, State, or local
programs.
The act authorizes the appropriation of an additional $150
million in fiscal year 1997 and $100 million in fiscal year
1998 for the costs of processing CDRs and redeterminations.
Other SSI changes
The new law provides that an individual's application for
SSI benefits would be effective on the first day of the month
following the date on which the application is filed, or on
which the individual first becomes eligible, whichever is
later. The law also permits the issuance of an emergency
advance payment to an individual who is presumptively eligible
and has a financial emergency in the month the application is
filed. The emergency advance payment must be repaid through
proportional reductions in benefits payable over a period of
not more than 6 months. These provisions are effective for
applications filed on or after the date of enactment.
A provision denying SSI or disability benefits to persons
disabled solely because of addictions became part of H.R. 3136,
the Contract With America Advancement Act (Public Law 104-121).

Title III: Child Support

The act contains nearly 50 changes, many of them major, to
current child support law. The summary below organizes these
changes into several major categories.
State obligation to provide services and distribution rules
The rules governing how child support collections are
distributed among the Federal Government, State governments,
and families that are on or have been on welfare are
substantially changed. The current passthrough of the first $50
in child support collections to families on welfare is no
longer a Federal requirement. Instead, payments to families
that leave welfare are more generous. By October 1, 1997,
States must distribute to the family current support and
arrears that accrue after the family leaves welfare before the
State is reimbursed for welfare costs. By October 1, 2000,
States must also distribute to the family arrears that accrued
before the family began receiving welfare before the State is
reimbursed. These new rules, however, do not apply to
collections made by intercepting tax refunds. The result of
these changes is that States are required to pay a higher
fraction of child support collections on arrearages to families
that have left welfare by making these payments to families
first (before the State). If this change in policy results in
States losing money relative to current law, the Federal
Government will reimburse States for any losses. This section
of the law also contains clarifications of the ``fill-the-gap''
policy so that States now operating those programs can continue
to do so, provides safeguards against unauthorized use of
paternity or child support information, requires States to
inform parents of proceedings in which child support might be
established or modified, and requires States to provide parents
with a copy of any changes in the child support order within 14
days.
Locate and case tracking
The Federal Government makes major new investments to help
States acquire, automate, and use information. First, States
must establish a registry of all IV-D cases and all other new
or modified child support cases in the State. The registry must
contain specified minimum data elements for all cases. For
cases enforced by the State child support enforcement (IV-D)
program, the registry must also contain a wide array of
information that is regularly updated, including the amount of
each order and a record of payments and arrearages. In the case
of orders that include withholding but are not in the IV-D
system, the State must also keep records of payments. In IV-D
cases, this information is used both to enforce and update
child support orders by conducting matches with information in
other State and Federal data systems and programs. Second,
States must create an automated disbursement unit to which
child support payments are paid and from which they are
distributed and that contains accurate records of child support
payments. This disbursement unit will handle payments in all
cases enforced by the IV-D program and in all cases in the
State with income withholding orders. In IV-D cases requiring
income withholding, within 2 days of receipt of information
about a support order and a parent's source of income, the
automated system must send a withholding notice to employers.
Third, States must require employers to send information on new
employees to a centralized State Directory of New Hires within
20 days of the date of hire; employers that report
electronically or by magnetic tape can file twice per month.
States must routinely match the new hire information, which
must be entered in the State data base within 5 days, against
the State Case Registry using Social Security numbers. In the
case of matches, within 2 days of entry of data in the
Registry, employers must be notified of the amount to be
withheld and where to send the money. Within 3 days, new
employee information must be reported by States to the National
Directory of New Hires. New hire information must also be
shared with State agencies administering unemployment, workers'
compensation, welfare, Medicaid, food stamp, and other
specified programs. States using private contractors may share
the new hire information with the private contractors, subject
to privacy safeguards.
States must have laws clarifying that child support orders
not subject to income withholding must immediately become
subject to income withholding without a hearing if arrearages
occur. The law includes rules that clarify how employers are to
accomplish income withholding in interstate cases and
establishes a uniform definition of income. Employers must
remit withheld income to the State Disbursement Unit within 7
days of the normal date of payment to the employee.
All State and Federal child support agencies must have
access to the motor vehicle and law enforcement locator systems
of all States.
The Federal Parent Locator Service (FPLS) is given several
new functions. The law clarifies that the purposes for which
the FPLS can be used include establishing parentage, setting,
modifying or enforcing support orders, and enforcing custody or
visitation orders. In addition to being the repository for
information from every State Case Registry and Directory of New
Hires (information on new hires must be entered in the FPLS
within 2 days of receipt), the FPLS must match information from
State case registries with information from State new hire
directories at least every 2 days and report matches to State
agencies within 2 days. All Federal agencies must also report
information, including wages, on all employees (except those
involved in security activities who might be compromised) to
the FPLS for use in matching against State child support cases.
State unemployment agencies must report quarterly wage and
unemployment compensation information to the FPLS. The
Secretary must ensure that FPLS information is shared with the
Social Security Administration, State child support agencies,
and other agencies authorized by law. However, the Secretary
must also ensure both that fees are established for agencies
that use FPLS information and that the information is used only
for authorized purposes.
The Secretaries of HHS and Labor must work together to
develop a cost-effective means of accessing information in the
various directories established by the law.
All States must have procedures for recording the Social
Security numbers of applicants on the application for
professional licenses, commercial drivers' licenses,
occupational licenses, and marriage licenses; States must also
record Social Security numbers in the records of divorce
decrees, child support orders, paternity orders, and death
certificates.
Streamlining and uniformity of procedures
All States must enact the Uniform Interstate Family Support
Act (UIFSA), including all amendments adopted by the National
Conference of Commissioners of Uniform State Laws before
January 1, 1998. Recent provisions recommended by the
Commissioners on procedures in interstate cases are included in
the law. States are not required to use UIFSA in all cases if
they determine that using other interstate procedures would be
more effective. The law also clarifies the definition of a
child's home State, makes several revisions to ensure that full
faith and credit laws can be applied consistently with UIFSA,
and clarifies the rules regarding which child support order
States must honor when there is more than one order.
States must have laws that permit them to send orders to
and receive orders from other States. Responding States must,
within 5 days of receiving a case from another State, match the
case against its data bases, take appropriate action if a match
occurs, and send any collections to the initiating State. The
Secretary must issue forms that States must use for withholding
income, imposing liens, and issuing administrative subpoenas in
interstate cases.
States must adopt laws that provide the child support
agency with the authority to initiate a series of expedited
procedures without the necessity of obtaining an order from any
other administrative or judicial tribunal. These actions
include: ordering genetic testing; issuing subpoenas; requiring
public and private employers and other entities to provide
information on employment, compensation, and benefits or be
subject to penalties; obtaining access to vital statistics,
State and local tax records, real and personal property
records, records of occupational and professional licenses,
business records, employment security and public assistance
records, motor vehicle records, corrections records, customer
records of utilities and cable TV companies pursuant to an
administrative subpoena, and records of financial institutions;
directing the obligor to make payments to the child support
agency in public assistance or income withholding cases;
ordering income withholding in IV-D cases; securing assets to
satisfy arrearages, including the seizure of lump sum payments,
judgments, and settlements; and increasing the monthly support
due to make payments on arrearages.
Paternity establishment
States are required to have laws that permit paternity
establishment until at least age 18 even in cases previously
dismissed because a shorter statute of limitations was in
effect. In contested paternity cases, except where barred by
State laws or where there is good cause not to cooperate, all
parties must submit to genetic testing at State expense; States
may recoup costs from the father if paternity is established.
States must take several actions to promote paternity
establishment including creating a simple civil process for
voluntary acknowledgment of paternity, maintaining a hospital-
based paternity acknowledgment program as well as programs in
other State agencies (including the birth record agency), and
issuing an affidavit of voluntary paternity acknowledgment
based on a form developed by the Secretary. When the child's
parents are unmarried, the father's name will not appear on the
birth certificate unless there is an acknowledgment or
adjudication of paternity. Signed paternity acknowledgments
must be considered a legal finding of paternity unless
rescinded within 60 days; thereafter, acknowledgments can be
challenged only on the basis of fraud, duress, or material
mistake of fact, with the burden of proof on the challenger.
Results of genetic testing must be admissible in court without
foundation or other testimony unless objection is made in
writing. State law must establish either a rebuttable or
conclusive presumption of paternity when genetic testing
indicates a threshold probability of paternity.
States must require issuance of temporary support orders if
paternity is indicated by genetic testing or other clear and
convincing evidence. Bills for pregnancy, childbirth, and
genetic testing must be admissible in judicial proceedings
without foundation testimony and must constitute prima facie
evidence of costs incurred for such services. Fathers must have
a reasonable opportunity to initiate a paternity action.
Voluntary acknowledgments of paternity and adjudications of
paternity must be filed with the State registry of birth
records for matches with the State Case Registry of Child
Support Orders and States must publicize the availability and
encourage the use of procedures for voluntary establishment of
paternity and child support.
Individuals who apply for public assistance must provide
specific identifying information about the noncustodial parent
and must appear at interviews, hearings, and other legal
proceedings. States must have good cause and other exceptions
from these requirements which take into account the best
interests of the child. Exceptions may be defined and applied
by the State child support, welfare, or Medicaid agencies.
Families that refuse to cooperate with these requirements must
have their grant reduced at least 25 percent.
Program administration and funding
The Secretary must develop a proposal for a new child
support incentive system and report the details to Congress by
March 1, 1997. States are given a new option for computing the
paternity establishment rate; in addition to the current
procedure of calculating the rate relative to the IV-D
caseload, States may calculate the rate relative to all out-of-
wedlock births in the State. The mandatory paternity
establishment rate of prior law is increased from 75 percent to
90 percent. States are allowed several years to reach the 90
percent standard, but must increase their establishment rate by
2 percentage points a year when the State rate is between 75
and 90 percent.
States must annually review and report to the Secretary
information adequate to determine the State's compliance with
Federal requirements for expedited procedures, timely case
processing, and improvement on the performance indicators. The
Secretary must establish, and States must use, uniform
definitions in complying with this requirement. The Secretary
must use this information to calculate incentive payments and
penalties as well as to review compliance with Federal
requirements. To determine the quality of data reported by
States for calculating performance indicators and to assess the
adequacy of financial management of the State program, the
Secretary must conduct an audit of every State at least once
every 3 years and more often if a State fails to meet Federal
requirements.
States must establish an automated data system that
maintains data necessary to meet Federal reporting
requirements, that calculates State performance for incentives
and penalties, and that ensures the completeness, reliability,
and accuracy of data. The system must also have privacy
safeguards. Data requirements enacted before or during 1988
must be met by October 1, 1997; funding that includes the 90
percent Federal match is made available (including retroactive
funding for amounts spent since October 1, 1995) to meet these
requirements. A total of $400 million, to be divided among the
States in a manner determined by the Secretary, is made
available for meeting the data requirements imposed by this
legislation; this money is made available to States at a
Federal match rate of 80 percent.
The Secretary can use 1 percent of the Federal share of
child support collections on behalf of welfare families to
provide technical assistance to the States; if needed, the
Secretary can use up to 2 percent of the Federal share to
operate the Federal Parent Locator Service.
The Secretary is required to provide several new pieces of
information to the Congress on an annual basis. This new
information includes the total amount of child support
collected, the costs to the State and Federal Governments of
furnishing child support services, and the total amount of
support due and collected as well as due and unpaid.
Establishment and modification of support orders
The mandatory 3-year review of child support orders is
slightly modified to permit States some flexibility in
determining which reviews of welfare cases should be pursued
and in choosing methods of review; States must review orders
every 3 years (or more often at State option) if either parent
or the State requests a review in welfare cases or if either
parent requests a review in nonwelfare IV-D cases. Consumer
credit agencies must release information on parents who owe
child support to child support agencies that follow several
requirements such as ensuring privacy. Financial institutions
are provided immunity from prosecution for providing
information to child support agencies; however, individuals who
knowingly make unauthorized disclosures of financial records
are subject to civil actions and a maximum penalty of $1,000
for each unauthorized disclosure.
Enforcement of support orders
Child support enforcement for Federal employees, including
retirees and military personnel, is substantially revamped and
strengthened. As under prior law, Federal employees are subject
to wage withholding and other actions taken against them by
State child support agencies. Every Federal agency is
responsible for responding to a State child support program as
if the Federal agency were a private business. The head of each
Federal agency must designate an agent, whose name and address
must be published annually in the Federal Register, to be
responsible for handling child support cases. The agent must
respond to withholding notices and other matters brought to her
attention by child support officials. The definition of income
for Federal employees is broadened to conform to the general
IV-D definition and child support claims are given priority in
the allocation of Federal employee income. The Secretary of
Defense must establish a central personnel locator service,
which must be updated on a regular basis, that permits location
of every member of the Armed Services. The Secretary of each
branch of the military service must grant leave to facilitate
attendance at child support hearings and other child support
proceedings. The Secretary of each branch must also withhold
support from retirement pay and forward it to State
disbursement units.
States must have laws that permit the voiding of any
transfers of income or property that were made to avoid paying
child support. State law must permit a court or administrative
process to issue an order requiring individuals owing past-due
support to either pay the amount due, follow a plan for
repayment, or participate in work activities. States must
periodically report to credit bureaus, after fulfilling due
process requirements, the names of parents owing past-due child
support. States must also have procedures under which liens
arise by operation of law against property for the amount of
overdue child support; States must grant full faith and credit
to the liens of other States. States also must have the
authority to withhold, suspend, or restrict the use of drivers'
licenses, professional and occupational licenses, and
recreational licenses of individuals owing past-due child
support. In addition, State child support agencies must enter
into agreements with financial institutions to develop and
operate a data match system in which the financial institution
supplies, on a quarterly basis, the name, address, and Social
Security number of parents identified by the State as owing
past-due child support. In response to a lien or levy from the
State, financial institutions must surrender or encumber assets
of the parent owing delinquent child support.
The Internal Revenue Code is amended so that no additional
fees can be assessed for adjustments to previously certified
amounts for the same obligor. In the case of individuals owing
child support arrearages in excess of $5,000, the Secretary of
HHS must request that the State Department deny, revoke,
restrict, or limit the individual's passport.
The Secretary of State, working with the Secretary of HHS,
is authorized to declare reciprocity with foreign countries for
the purposes of establishing and enforcing support orders. U.S.
residents must be able to access services, free of cost, in
nations with which the United States has reciprocal agreements;
these services should include establishing parentage,
establishing and enforcing support, and disbursing payments.
State plans for child support must include provision for
treating requests for services from other nations the same as
interstate cases.
The United States Bankruptcy Code is amended to ensure that
any child support debt that is owed to a State and that is
enforceable under the child support section of the Social
Security Act (title IV-D) cannot be discharged in bankruptcy
proceedings.
A State that has Indian country may enter into a
cooperative agreement with an Indian tribe if the tribe
demonstrates it has an established court system that can enter
child support and paternity orders; the Secretary may make
direct payments to tribes that have approved plans.
Medical support
The definition of ``medical child support order'' in the
Employee Retirement Income Security Act (ERISA) is expanded to
clarify that any judgment, decree, or order that is issued by a
court or by an administrative process has the force and effect
of law. All orders enforced by the State child support agency
must include a provision for health care coverage. If the
noncustodial parent changes jobs and the new employer provides
health coverage, the State must send notice of coverage to the
new employer; the notice must serve to enroll the child in the
health plan of the new employer.
Enhancing responsibility and opportunity for nonresidential parents
The act guarantees $10 million per year for funding grants
to States for access and visitation programs including
mediation, counseling, education, development of parenting
plans, and supervised visitation. A formula for dividing the
grant money among the States is included. States must monitor,
evaluate, and report on their program in accord with
regulations issued by the Secretary.

Title IV: Restricting Welfare and Public Benefits for Noncitizens

Overview
Title IV of the Personal Responsibility and Work
Opportunity Reconciliation Act makes significant changes in the
eligibility of noncitizens, both legal and illegal, for
Federal, State, and local benefits.
Regarding Federal programs, the act contains three new
restrictions on the eligibility of legal aliens for means-
tested benefits. The first of these is a bar on qualified
aliens, a term that includes legal immigrants, from
Supplemental Security Income (SSI) and food stamps. The second
is a bar of most qualified aliens arriving after August 22,
1996, from most means-tested programs during their first 5
years here. The third restriction, which applies to aliens in
the United States on August 22, 1996, and to new entrants after
their first 5 years, is a State option to deny qualified aliens
assistance under the following federally funded programs:
Temporary Assistance for Needy Families (TANF), which replaces
AFDC; social services block grants; and Medicaid (other than
emergency services). The new restrictions are not absolute, and
the exceptions to them are discussed below.
Additionally, the act expands sponsor-to-alien deeming,
which imputes the income and resources of a sponsor to an alien
who is applying for needs-based assistance. This expansion may
further affect eligibility for and the amount of needs-based
benefits for certain qualified aliens who arrive after the date
of enactment.
Separately, the act denies most Federal benefits,
regardless of whether they are means tested, to aliens who are
not qualified aliens--illegal aliens, aliens admitted
temporarily for a limited purpose (nonimmigrants), aliens
paroled into the United States by the Attorney General for
briefer than a year, and other aliens allowed to reside in the
United States (e.g., those granted deferred action status or
stay of deportation). This denial covers many programs whose
enabling statutes do not make citizenship or immigration status
a criterion for participation.
Regarding State benefits, States are given broad authority
to decide which noncitizens may participate in State and local
programs, including authority to mirror Federal sponsor-to-
alien deeming rules. However, the act initially denies illegal
aliens most State and local benefits, and illegal aliens may
qualify for those benefits only through newly enacted State
laws which explicitly extend eligibility for benefits to
illegal aliens.
While the act's new restrictions on the eligibility of
aliens for public benefits are extensive, they cease to apply
upon naturalization. Once an alien becomes a citizen, she
becomes eligible for benefits on the same basis as other
citizens.
Federal benefits
``Qualified'' aliens.-- Section 402 of the act restricts
eligibility for major programs for qualified aliens, including
legal permanent residents, aliens paroled into the United
States for at least 1 year, refugees, and aliens granted asylum
or certain similar relief. The restrictions include a direct
bar on eligibility for: (1) the Supplemental Security Income
(SSI) Program under title XVI of the Social Security Act,
including State supplementary payments paid through the Federal
Government; and (2) the Food Stamp Program. The restrictions
also include a State option to restrict the eligibility of some
or all qualified aliens under: (1) block grants to States for
Temporary Assistance for Needy Families (TANF); (2) block
grants to States for social services under title XX of the
Social Security Act; and (3) Medicaid, except that treatment
for emergency medical conditions (other than those related to
an organ transplant) may not be restricted.
The act contains three exceptions to the SSI/food stamp bar
and the State option for qualified aliens who meet other
eligibility requirements. The first is a time-limited exception
for humanitarian entrants. Under this exception, benefits may
not be restricted during the 5 years after an alien is admitted
as a refugee or is granted asylum or similar relief.
The second exception is based on service in the United
States Armed Forces. Honorably discharged veterans, active duty
service personnel (other than those on active duty for
training), and their spouses and unmarried dependent children
fall within the service-related exception. The third exception
is premised on working in the United States. The work-related
exception covers permanent resident aliens who have worked, or
may be credited with, at least 40 qualifying quarters of
employment for purposes of title II of the Social Security Act.
In applying this test, the alien may take into account
qualifying quarters of work performed by: (1) the alien; (2)
the alien's spouse after their marriage (but only if the alien
remains married to the spouse or the spouse is deceased); or
(3) the alien's parent before the alien reached age 18. At the
same time, no qualifying quarter beginning after 1996 may be
credited if the worker (be it the alien or the alien's spouse
or parent) received means-based Federal assistance during the
period.
Agencies that administer the SSI and Food Stamp Programs
are to redetermine the eligibility of recipients within 1 year
of enactment. The State option regarding TANF, social services
block grants, and Medicaid may not be exercised until January
1, 1997, for legal residents who were receiving benefits on the
date of enactment.
Five-year bar on new entrants.--With limited exception,
section 403 of the act makes qualified aliens who enter the
United States after enactment ineligible for Federal means-
tested benefits for 5 years after entry. Honorably discharged
veterans, active duty service personnel (other than those on
active duty for training), and their spouses and unmarried
dependent children are excepted from the 5-year bar, as are
refugees and aliens granted asylum or similar relief.
Several types of benefits are also excepted, including:
1. Treatment under Medicaid for emergency medical conditions
(other than those related to an organ transplant);
2. Short-term, in-kind emergency disaster relief;
3. Assistance under the National School Lunch Act or the Child
Nutrition Act of 1966;
4. Immunizations against diseases and testing for and
treatment of symptoms of communicable diseases;
5. Foster care and adoption assistance under title IV of the
Social Security Act, unless the foster parent or
adoptive parent is an alien other than a qualified
alien;
6. Education assistance under the Elementary and Secondary
Education Act of 1965, specified titles (IV, V, IX, and
X) of the Higher Education Act of 1965, or specified
titles (III, VII, and VIII) of the Public Health
Service Act;
7. Benefits under the Head Start Act;
8. Benefits under the Job Training Partnership Act; and
9. Services or assistance (such as soup kitchens, crisis
counseling and intervention, and short-term shelters)
designated by the Attorney General as: (i) delivering
in-kind services at the community level; (ii) providing
assistance without individual determinations of each
recipient's needs; and (iii) being necessary for the
protection of life and safety.
A separate exception is made for refugee and entrant
assistance under title IV of the Immigration and Nationality
Act and section 501 of the Refugee Education Assistance Act of
1980 provided to Cuban and Haitian entrants (as defined in
section 501 of the Refugee Education Assistance Act of 1980).
Once the initial 5-year period expires, an alien becomes
subject to other restrictions on alien eligibility for Federal
benefits in the act (i.e., the SSI/food stamp bar; the State
option for Medicaid, TANF, and social services block grants;
and sponsor-to-alien deeming) or, if those restrictions do not
pertain, to alienage restrictions in pertinent enabling
statutes or other applicable laws.
Aliens other than ``qualified'' aliens.--Section 401 of the
act makes ineligible for Federal public benefits aliens who are
not qualified aliens. These aliens include illegal aliens,
aliens in the United States without valid immigration documents
or other legal permission; nonimmigrant aliens, or aliens
admitted into the United States for a limited time for a
limited purpose (e.g., tourists, students, business visitors);
aliens paroled into the United States by the Attorney General
for briefer than 1 year; and other aliens allowed by the
Attorney General to reside in the United States (e.g., those
granted deferred action status or stay of deportation).
The Federal public benefits denied other aliens are broadly
defined to include: (1) grants, contracts, loans, and licenses
and (2) retirement, welfare, health, disability, housing, food,
unemployment, postsecondary education, and similar benefits.
Excepted programs include:
1. Treatment under Medicaid for emergency medical conditions
(other than those related to an organ transplant);
2. Short-term, in-kind emergency disaster relief;
3. Immunizations against immunizable diseases and testing for
and treatment of symptoms of communicable diseases;
4. Services or assistance (such as soup kitchens, crisis
counseling and intervention, and short-term shelters)
designated by the Attorney General as: (i) delivering
in-kind services at the community level; (ii) providing
assistance without individual determinations of each
recipient's needs; and (iii) being necessary for the
protection of life and safety; and
5. To the extent that an alien is receiving assistance on the
date of enactment, programs administered by the
Secretary for Housing and Urban Development, programs
under title V of the Housing Act of 1949, and
assistance under section 306C of the Consolidated Farm
and Rural Development Act.
Section 401 also excepts Old Age, Survivors, and Disability
Insurance benefits under title II of the Social Security Act
that are protected by that title or by treaty or that are paid
under applications made before enactment. Licenses and
contracts related to a nonimmigrant's lawful employment
activities also are excepted. Separately, section 742 of the
act states that individuals who are eligible for free public
education benefits under State and local law shall remain
eligible to receive school lunch and school breakfast benefits.
(The act itself does not address a State's obligation to grant
all aliens equal access to education in accordance with the
Supreme Court's decision in Plyler v. Doe.) Section 742 further
states that nothing shall prohibit or require a State to
provide aliens who are not qualified aliens other benefits
under the National School Lunch Act or the Child Nutrition Act
or under the Emergency Food Assistance Act, section 4 of the
Agriculture and Consumer Protection Act, or the food
distribution program on Indian reservations under the Food
Stamp Act.
Sponsor-to-alien deeming and affidavits of support.--The
Immigration and Nationality Act excludes from the United States
aliens who appear likely to become a public charge at any time.
Unless this ground for exclusion is waived, as it is in the
case of refugees and asylees, an alien seeking to become a
legal permanent resident must show adequate resources or job
prospects or, in their absence, must present one or more
affidavits of support signed by U.S. residents. Under sponsor-
to-alien deeming, the income and resources of an individual who
signed an affidavit (the ``sponsor'') and those of the
sponsor's spouse are added to the means of a sponsored alien
who applies for needs-based assistance during the applicable
``deeming period'' in determining whether the alien is
sufficiently needy to qualify for assistance.
Approximately one-half of the aliens who obtain permanent
resident status have had affidavits of support filed on their
behalf. Despite the frequency of their use, the pledges of
support contained in affidavits have not been regarded by the
courts to be legally enforceable. Section 423 of the Personal
Responsibility and Work Opportunity Reconciliation Act aims to
rectify this problem. Under the act, sponsors must sign
affidavits of support that allow sponsored aliens to seek
support. The affidavits also would permit government agencies
to obtain reimbursement of benefits provided to sponsored
aliens. Sponsors are not required to reimburse benefits made
available under those programs that are excepted from the 5-
year bar for new entrants, which are listed above. However, the
obligation to reimburse covered benefits applies to all
benefits provided before a sponsored alien becomes a citizen
even if sponsor-to-alien deeming has ended before then.
Section 421 of the act imposes additional sponsor-to-alien
deeming requirements on sponsored aliens who have had one of
the new, enforceable affidavits filed for them. Generally, if a
sponsor has executed an affidavit that complies with the act's
requirements, the income and resources of the sponsor and the
sponsor's spouse are added to those of the sponsored alien in
determining the eligibility of the alien under Federal needs-
based programs until the alien becomes a citizen. Nevertheless,
sponsor-to-alien deeming may end before the alien becomes a
citizen if the alien meets the 40 qualifying quarter test that
applies under the SSI/food stamp restrictions, described above.
The programs that are excepted from the 5-year bar for new
entrants, which are listed above, also are excepted from the
sponsor-to-alien deeming requirements.
Earned income credit.--The act conditions eligibility for
the earned income credit (EIC) on an individual's including his
or her Social Security number and that of the individual's
spouse on their tax return for the applicable taxable year.
This requirement is intended to disqualify illegal aliens and
other noncitizens who are not authorized to work in the United
States.
State benefits
Three sections of the Personal Responsibility and Work
Opportunity Reconciliation Act address alien eligibility for
State and local public benefits.
Section 411 of the act directly denies State and local
benefits to aliens who are not qualified aliens, nonimmigrant
aliens, aliens paroled into the United States for briefer than
1 year, or other aliens allowed by the Attorney General to
reside in the United States (e.g., those granted deferred
action stay or stay of deportation). State and local benefits
are broadly defined to include licenses, contracts, grants,
loans, and assistance, but State and local benefits do not
include those funded or provided in part by the Federal
Government. Also, exceptions from the bar on State and local
benefits are made for:
1. Treatment for emergency medical conditions (other than
those related to an organ transplant);
2. Short-term, in-kind emergency disaster relief;
3. Immunizations against diseases and testing for and
treatment of symptoms of communicable diseases; and
4. Services or assistance (such as soup kitchens, crisis
counseling and intervention, and short-term shelters)
designated by the Attorney General as: (i) delivering
in-kind services at the community level; (ii) providing
assistance without individual determinations of each
recipient's needs; and (iii) being necessary for the
protection of life and safety.
Additionally, section 433 states that nothing in the act is
to be construed as addressing eligibility for basic public
education. Notwithstanding its broad ban on State and local
benefits for illegal aliens, section 411 permits States to
provide illegal aliens with other barred benefits through
enactment of new State laws.
Section 412 of the act authorizes the States to determine
the eligibility for State and local benefits of qualified
aliens, nonimmigrant aliens, and aliens paroled into the United
States for briefer than 1 year. However, this authority cannot
be exercised with respect to a refugee during the 5 years
following admission nor with respect to an alien granted asylum
or similar relief during the 5 years following the granting of
relief. Also excepted are honorably discharged veterans, active
duty service personnel (other than those on active duty for
training), and their spouses and unmarried dependent children.
Finally, there is a 40 qualifying quarter exception to State
authority to deny State and local benefits that is similar to
the exception that applies to the State option regarding
Medicaid and designated block grants, described above. The
authority to deny State and local benefits under section 412
cannot be exercised until January 1997 with respect to aliens
who were receiving assistance on August 22, 1996.
Section 422 of the act allows States and their political
subdivisions to mirror Federal sponsor-to-alien deeming
requirements in their programs.
Verification and reporting
Under section 432 of the act, the Attorney General, in
consultation with the Secretary of Health and Human Services,
is required to adopt regulations within 18 months of enactment
on verifying immigration status for the purpose of implementing
the act's denial of Federal benefits to aliens who are not
qualified aliens. States that administer a program through
which a restricted federally assisted benefit is provided must
have a verification program that complies with these
regulations within 24 months of their adoption.
Section 404 of the act requires the following entities to
provide the Immigration and Naturalization Service (INS) at
least 4 times annually and at INS' request the name, address,
and other information they have regarding each individual whom
they know is in the United States unlawfully: (1) States
receiving block grants for Temporary Assistance for Needy
Families (TANF); (2) the Commissioner of Social Security; (3)
States operating under agreements for the payment of SSI State
supplements through the Federal Government; (4) the Secretary
of Housing and Urban Development; and (5) public housing
agencies operating under contracts for assistance under
sections 6 or 8 of the United States Housing Act of 1937.
Separately, section 434 of the act states that no State or
local entity may be prohibited or in any way restricted from
sending to or receiving from the INS information regarding an
individual's immigration status.
The alien eligibility rules were amended and supplemented
in the Illegal Immigration Reform and Immigrant Responsibility
Act of 1996. This immigration enforcement legislation, which
was enacted as Division C of H.R. 3610, Department of Defense
Appropriations for fiscal year 1997, the Omnibus Consolidated
Appropriations Act of 1997 Public Law 104-208, makes affidavits
of support mandatory for most family-sponsored immigrants. It
also sets a minimum means test of 125 percent of poverty level
for sponsors and requires sponsors to provide sponsored aliens
with a corresponding level of support. At the same time,
sponsorship is not limited to the person who is seeking
immigration preference for a relative, but rather an affidavit
of support may be cosigned by a third party who meets the
minimum income requirements.
Additionally, the new immigration law allows nonprofit
charitable organizations to provide a Federal public benefit
without having to verify the immigration status of the
recipients. In other ways, however, the law expands the alien
eligibility verification and reporting requirements of the
welfare bill. Regarding alien access to benefits, the
immigration law classifies certain alien battered spouses and
children as ``qualified aliens,'' delays the beginning of the
transition period for redetermination of food stamp eligibility
until April 1, 1997, and specifically prohibits payment of
Social Security benefits to aliens not lawfully present. It
puts certain housing restrictions in statute.

Title V: Child Protection

The Personal Responsibility and Work Opportunity
Reconciliation Act contains several amendments to prior law
governing child protection programs. However, unlike the House-
passed version of H.R. 3734 and earlier welfare reform
legislation in the 104th Congress, the final conference
agreement makes no significant changes in current programs.
Grants to States for child welfare services will continue
to be authorized under title IV-B of the Social Security Act as
a discretionary program. Likewise, grants to States for family
preservation and family support services will continue to be
authorized under title IV-B as a capped entitlement. The
existing open-ended entitlement under title IV-E for foster
care and adoption assistance maintenance payments,
administration and training is retained, as well as capped
entitlement grants to States for independent living services.
The new law makes no amendments to the existing Child Abuse
Prevention and Treatment Act (CAPTA) and related discretionary
programs.
Foster care payments to for-profit institutions
Under title IV-E, Federal foster care payments can be made
to licensed foster family homes and to licensed public or
private nonprofit child care institutions. The law deletes the
word ``nonprofit'' from the statute so that States may use the
services of any private institution that meets their standards,
regardless of whether the institution is operated for profit.
States remain responsible for establishing and enforcing
licensing standards and for ensuring that children are in safe
and reliable care.
Enhanced match for statewide automated child welfare information
systems
In 1986, Congress authorized a planning process that was
intended to result in a comprehensive, nationwide system for
collecting data on foster care and adoption. The Department of
Health and Human Services (HHS) published final regulations for
this new Adoption and Foster Care Analysis and Reporting System
(AFCARS) in December 1993, and the first transmission of data
was due May 1995. All States currently are participating in the
mandatory AFCARS system and HHS is analyzing the first data
sets transmitted by the States. The system is intended to
provide data on child welfare trends; to enable policymakers to
track children in foster care; and to learn why children enter
foster care, how long children stay in care, and what happens
to children during their foster care stay as well as after they
leave care.
Under title IV-E of the Social Security Act, States are
eligible to receive 50 percent Federal matching funds for these
data collection functions. However, in 1993, Congress
authorized enhanced Federal matching of 75 percent during
fiscal years 1994-96 to help States automate their data
collection systems. To receive these enhanced funds, State
systems must: meet AFCARS requirements; provide for electronic
data exchange within the State among related systems; provide
for automated data collection on all children in foster care
under State responsibility; collect information necessary to
deliver services and determine program eligibility; support
case management requirements; monitor case plan development and
other ongoing activities; and ensure confidentiality and
security of information.
Enhanced Federal matching for statewide Automated Child
Welfare Information Systems (SACWIS) is scheduled to expire at
the end of fiscal year 1996. Public Law 104-193 extends the 75
percent matching rate for one additional year, through fiscal
year 1997, to enable more States to complete their automation
process.
National random sample study of child welfare
The law provides the Secretary of HHS with $6 million in
entitlement funds for each of fiscal years 1996 through 2002 to
conduct a national random sample study of children who are at
risk of abuse or neglect, or who have been determined by States
to have been abused or neglected. The study must have a
longitudinal component and yield data that are reliable at the
State level for as many States as the Secretary determines is
feasible. The law states that the Secretary should carefully
consider selecting the sample from confirmed cases of abuse or
neglect, and to follow each case for several years.
Among other types of information to be collected, the law
states that the Secretary should collect information on the
type of abuse or neglect involved; the frequency of contact
with State or local agencies; whether the child had been
separated from the family and the circumstances of such
separation; the number, type and characteristics of out-of-home
placements for the child; and the average duration of each
placement. The Secretary is directed to prepare reports
summarizing the results of the study and to make them available
to the public.
Kinship care
The law amends title IV-E of the Social Security Act, which
specifies provisions that must be included in State foster care
and adoption assistance plans. The law adds a new plan element
by requiring that State plans provide that the State shall
consider giving preference to an adult relative over a
nonrelated care giver when determining a placement for a child,
as long as the relative care giver meets all relevant State
child protection standards.
Provision removing barriers to interethnic adoption
The provision to remove barriers to interethnic adoption
has an extensive legislative history. It was contained in the
Contract With America and was passed by the House as part of
H.R. 3286, the Adoption Promotion and Stability Act of 1996.
The interethnic adoption provision also passed the House as
part of welfare reform in H.R. 4, H.R. 2491, and subsequently,
H.R. 3734. The provision was deleted from the final Conference
Report accompanying H.R. 3734 because of a Senate parliamentary
rule that restricts provisions allowed on a reconciliation
bill. However, the provision was added to H.R. 3448, the Small
Business Job Protection Act of 1996, which was signed into law
by the President on August 20, 1996 (Public Law 104-188).
Many States require race matching foster or adoptive
parents with children either through regulation, statute,
policy or practice. The Howard M. Metzenbaum Multiethnic
Placement Act of 1994 (Public Law 103-382) was intended to end
the delays that children experience waiting for foster or
adoptive families because of race matching practices. Section
553 of the Metzenbaum Act, however, contained language that was
internally inconsistent with the purpose of the act (section
552); moreover, it lacked a strong enforcement provision. To
remedy these deficiencies, section 553 of the Metzenbaum Act
was repealed by Public Law 104-188.
In its place, section 1808 of the Small Business Job
Protection Act of 1996 amends the Social Security Act to
prohibit a State or other entity that receives Federal
assistance from denying to any person the opportunity to become
an adoptive or a foster parent on the basis of the race, color,
or national origin of the person or of the child involved.
Similarly, no State or other entity receiving Federal funds can
delay or deny the placement of a child for adoption or foster
care on the basis of the race, color, or national origin of the
adoptive or foster parent or of the child involved.
Violations of the act can be discovered as a result of a
review conducted under section 1123A of the Social Security Act
``or otherwise'' (that is, through the filing of a complaint by
an individual, a group of individuals, or an agency). If a
State is found to have violated the terms of this act, the
State must correct the violation within 6 months (or less, at
the Secretary's discretion); failure to do so will result in
the imposition of graduated penalties. States found to be in
violation would have their quarterly funds under title IV-E of
the Social Security Act reduced by 2 percent for the first
violation, by 3 percent for the second violation, and by 5
percent for the third or subsequent violation. The total amount
of penalties which can be applied in a fiscal year cannot
exceed 5 percent of a State's total IV-E grant.
Noncompliance with this provision is also deemed a
violation of title VI of the Civil Rights Act of 1964. The
Indian Child Welfare Act of 1978 is not affected by changes
made in this title.

Title VI: Child Care

The Personal Responsibility and Work Opportunity
Reconciliation Act combines four major child care programs for
low-income families into a single block grant to States. An
expanded Child Care and Development Block Grant (CCDBG) becomes
the primary Federal child care subsidy program and replaces
child care activities previously authorized under title IV-A of
the Social Security Act (AFDC Child Care, Transitional Child
Care for former AFDC recipients, and At-Risk Child Care for
low-income working families).
This consolidation eliminates conflicting provisions among
programs, including income eligibility standards, time limits
on the receipt of assistance, and work requirements. Under the
new system, Federal funds will follow the parent whether the
parent is receiving public cash assistance while participating
in a work-related activity or education program, has recently
left public assistance, or is working but very low income and
would be at risk of becoming dependent on welfare in the
absence of subsidized child care. This approach is intended to
eliminate the eligibility gaps, service disruptions, and
paperwork caused by having separate programs for each of these
groups of parents.
The law's child care provisions are structured as an
amendment to the Child Care and Development Block Grant Act.
Unless amended or repealed as described below, prior law under
the CCDBG remains in effect. At the Federal level, the program
is administered by the Department of Health and Human Services
(HHS).
Goals
The new law establishes five goals for the expanded CCDBG,
including: allowing States maximum flexibility in developing
their programs; promoting parental choice; encouraging States
to provide consumer education information to parents; helping
States provide child care to parents trying to become
independent of public assistance; and helping States implement
health, safety, licensing, and registration standards
established in State regulations.
Funding provisions
Discretionary funds.--The law provides both discretionary
and entitlement funding for child care services. Discretionary
funds are provided by reauthorization of the CCDBG through
fiscal year 2002, at an annual authorization level of $1
billion. These funds are allocated among States according to
the existing CCDBG formula, which is based on the number of
children in low-income families and State per capita income.
Territories will continue to receive one-half of 1 percent of
discretionary funds.
As under prior law, there is no requirement for States to
match these discretionary funds. The new law deletes a prior
law provision that required States to use CCDBG funds to
supplement, rather than supplant, other public funds available
for child care. The new law also amends prior law to require
States to obligate funds either in the year they are received
or in the subsequent fiscal year. Previously, States had 3
years and 1 day in which to expend their funds. Prior law
provisions that require the Secretary to reallocate unused
funds remain in effect.
Entitlement funds.--Entitlement funding is provided for
child care under the amended title IV-A of the Social Security
Act, which authorizes Temporary Assistance for Needy Families
(TANF). These entitlement funds are provided to the lead CCDBG
agency and spent subject to the requirements and limitations of
the CCDBG Act. The bill authorizes and appropriates the
following entitlement funds for child care: $2 billion in
fiscal year 1997; $2.1 billion in fiscal year 1998; $2.2
billion in fiscal year 1999; $2.4 billion in fiscal year 2000;
$2.6 billion in fiscal year 2001; and $2.7 billion in fiscal
year 2002.
When added together, discretionary and entitlement funding
for child care provided under the law equals $20 billion during
the 6-year period, fiscal years 1997-2002. (Earlier
descriptions have stated that the bill provides $22 billion
during the 7-year period, fiscal years 1996-2002; the $22
billion figure includes fiscal year 1996 spending.)
Of all funds appropriated for child care, both
discretionary and entitlement, the Secretary must reserve
between 1 and 2 percent for payments to Indian tribes and
tribal organizations. After funds are reserved for Indian
tribes, remaining entitlement funds are allocated to States in
two components. First, each State will receive a fixed amount
each year, equal to the funding received by the State under the
previous child care programs authorized by title IV-A (AFDC
Child Care, Transitional Child Care, and At-Risk Child Care) in
fiscal years 1994 or 1995, or the average of fiscal years 1992-
94, whichever is greatest. This amount is expected to equal
approximately $1.2 billion each year in fiscal years 1997-2002.
No State match is required for these funds, which will remain
available for expenditure by States with no fiscal year
limitation.
Second, remaining entitlement funds (up to the total dollar
amounts described above) are allocated to States according to
each State's share of children under age 13. States must meet
maintenance-of-effort and matching requirements to receive
these funds. States must spend all of their ``guaranteed''
Federal entitlement funds for child care described above, plus
100 percent of the amount they spent of their own funds in
fiscal years 1994 or 1995, whichever is higher, under the
previous child care programs under title IV-A. Further, States
must provide matching funds at the fiscal year 1995 Medicaid
matching rate to receive these additional entitlement funds for
child care. These remaining funds also are subject to
redistribution rules. If the Secretary determines that a State
will not spend its entire allotment for a given fiscal year,
then the unused amounts are redistributed among other States
which apply for the funds according to those States' share of
children under age 13.
Use of funds for certain populations
Of their total entitlement funds, States must use at least
70 percent to provide child care services to families that are
receiving public assistance under the new TANF Program,
families that are trying to become independent of public
assistance through work activities, and families that are at
risk of becoming dependent on public assistance. In their State
plans, States must demonstrate how they will meet the specific
child care needs of these families. Of their remaining child
care funds (including discretionary funds), States must ensure
that a substantial portion is used for child care services to
eligible families other than those described above. The
definition of ``eligible child'' is revised to increase the
maximum family income to 85 percent of State median, instead of
75 percent as contained in prior law.
State administration
As under prior law, States are required to designate a lead
agency for administration of Federal funds received for child
care. However, the new law allows the State lead agency to
administer the program directly or through an appropriate
public or private entity. The lead agency is required to
provide sufficient time and statewide notice of public hearings
to be held on development of the State plan.
The law establishes a limit of 5 percent on the States' use
of funds for administrative costs. This limit applies to all
funds received for child care, both discretionary and
entitlement. The law states that the term ``administrative
costs'' does not include the costs of providing services. The
conference agreement further states that the Secretary should
issue regulations that define administrative costs, and that
the following activities should not be considered
administrative costs: eligibility determination and
redetermination, preparation and participation in judicial
hearings, child care placement, recruitment, licensing,
inspection, reviews and supervision of child care placements,
rate setting, resource and referral services, training, and
establishment and maintenance of computerized child care
information.
Application and plan
Under the law, States are required to submit plans covering
a 2-year period. The new law amends prior law to require that
States ``certify'' rather than ``provide assurances'' with
regard to the plan components. As described below, State plans
must make several certifications regarding parental choice,
access, and complaints, consumer education information,
licensing and regulation, and health and safety requirements.
Parental choice, access and complaints.--Prior law
provisions that promote parental choice of providers, require
unlimited access by parents to their children while in care,
and require States to maintain and make available a record of
substantiated parent complaints about providers remain
unchanged, including the requirement that parents be offered
the option of receiving child care assistance through
certificates (vouchers) or cash. The law adds a new requirement
that State plans include a detailed description of how these
provisions are implemented.
The law also expands the definition of ``child care
certificate'' to allow its use as a deposit for child care
services, if such deposits are required of other children cared
for by the same provider. The definition of ``eligible child
care provider'' also is expanded to include individuals caring
for their great grandchild or sibling (if the sibling provider
lives in a separate residence). The prior law requirement that
relative care givers be registered is deleted; relatives are
required to comply with any ``applicable'' rather than
``State'' requirements.
Consumer education information.--States are required to
collect and disseminate, to parents of eligible children and to
the general public, consumer education information that
promotes informed child care choices. Previously, the CCDBG
required States to make information available regarding
licensing and regulatory requirements, complaint procedures,
and child care policies and practices within the State.
Licensing and regulation.--The law requires that States
have in effect licensing requirements applicable to child care
services provided within the State, and requires State plans to
include a detailed description of these requirements and how
they are effectively enforced. This provision shall not be
construed to require that licensing requirements be applied to
specific types of providers. The legislation is not intended to
either prohibit or require States to differentiate between
federally subsidized child care and nonsubsidized child care
with regard to the application of specific standards and
regulations.
The prior law provision that required unlicensed or
unregulated child care providers to register with the State is
deleted. Likewise, provisions that require States to notify HHS
of any reduction in their child care standards, and to conduct
a review of their licensing and regulatory requirements within
18 months of enactment of the CCDBG Act of 1990, also are
repealed.
Health and safety requirements.--The new law leaves intact
the requirement that States must have in effect, under State or
local law, health and safety requirements that are applicable
to child care providers, and that procedures are in effect to
ensure that subsidized child care providers comply with
applicable health and safety requirements. States must have
health and safety requirements in the following areas:
prevention and control of infectious diseases (including
immunization), building and physical premises safety, and
health and safety training.
Use of funds
Funds provided under the bill may be used for child care
services provided on a sliding fee scale basis, activities to
improve the quality or availability of child care, or any other
activity considered appropriate by the State to achieve the
goals described above.
Child care services.--As under prior law, States must
establish payment rates for child care services that are
sufficient to ensure equal access for eligible children to
comparable services provided to children whose parents are not
eligible for subsidies. The act eliminates the requirement that
payment rates must consider the variations in costs of serving
children in different settings, of different age groups, and
with special needs. The law adds a requirement that State plans
must include a summary of the facts relied upon by the State to
determine the sufficiency of payment rates to ensure equal
access.
Quality and availability improvement.--The law requires
States to spend no less than 4 percent of their total child
care funds each year (discretionary and entitlement) for
activities to provide comprehensive consumer education to
parents and the public, activities that increase parental
choice, and activities designed to improve the quality and
availability of child care (such as resource and referral
services).
The law deletes a former provision that reserved 25 percent
of discretionary CCDBG funds for two functions: activities to
improve the quality and availability of child care, and
expansion of before and afterschool child care and early
childhood development services.
Federal Enforcement
The law authorizes the Secretary, upon finding that a State
is out of compliance with the act or the State plan, to require
that the State reimburse the Federal Government for any
misspent funds, or to withhold the amount from the
administrative portion of the State's allotment for the next
fiscal year, or to take a combination of these steps. Prior law
required the Secretary to withhold any future payments to a
State until the compliance failure was corrected.
Data collection
Under the former CCDBG, States were required to submit
annual aggregate data reports to HHS on their child care
programs, and the Secretary was required to report annually to
Congress. The new law replaces these provisions with a
requirement that States submit disaggregated data on children
and families receiving assistance to HHS every quarter, and
aggregate data twice a year. The law further requires the
Secretary to submit a report to Congress once every 2 years.
Specifically, States must collect the following information
on each family unit receiving assistance, to be included in
quarterly reports: family income; county of residence; gender,
race, and age of children receiving assistance; whether the
family includes only one parent; sources of family income,
separately identified and including amounts; number of months
the family has received benefits; the type of child care
received; whether the child care provider was a relative; the
cost of child care; and the average hours per week of care.
Aggregate data to be reported every 6 months include: the
number of child care providers that receive funding under this
program, separately identified by type; the monthly cost of
child care services, and the portion that is subsidized by this
program, identified by type; the number of payments made by the
State through vouchers, contracts, cash, and disregards under
public benefit programs, identified by type of child care
provided; the manner in which consumer education information
was provided and the number of parents to whom it was provided;
and the total unduplicated number of children and families
served by this program.
Indian tribes and tribal organizations
As described earlier, the Secretary must reserve between 1
and 2 percent of all child care funds, both discretionary and
entitlement, for payments to Indian tribes and tribal
organizations. The law also requires the Secretary to
reallocate among other tribes and organizations any
discretionary funds that an Indian tribe or tribal organization
does not use in a manner consistent with the statute.
The Secretary, in consultation with the tribes and tribal
organizations, must develop minimum child care standards that
reflect tribal needs and available resources. These standards
apply to child care provided by Indian tribes and tribal
organizations in lieu of licensing and regulatory requirements
that would otherwise be applicable under State or local law.
Under prior law, CCDBG funds could not be used for
construction or renovation of facilities. However, the new law
allows Indian tribes or tribal organizations to submit a
request to the Secretary to use funds for these purposes. The
Secretary may approve the request after a determination that
adequate facilities are not otherwise available and that the
lack of such facilities will inhibit the operation of child
care programs in the future. The Secretary may not approve the
request if it will reduce the level of child care services
provided from the level provided by the tribe or organization
in the previous year.
Effective date
All amendments are effective on October 1, 1996, except for
the authorization of appropriations for the CCDBG, which
becomes effective upon enactment.

Title VII: Child Nutrition

Overview
The amendments made by title VII of the Personal
Responsibility and Work Opportunity Reconciliation Act are
intended to better target Federal child nutrition support on
low-income children, conform summer program subsidies more
closely to rates paid in other child nutrition programs, reduce
requirements for ``expanding'' child nutrition programs, and
return more program control to States and localities. Child
nutrition provisions:
1. Means test the family and group day care home component of
the child and adult care food program, reducing Federal
subsidies for meals and supplements (snacks) served by
eligible day care homes not located in low-income areas
or without a low-income provider;
2. Reduce subsidies for summer food service programs;
3. End special startup and expansion grants for school
breakfast and summer food service programs;
4. Change rounding rules applied to Federal subsidies for
meals/snacks served to children who pay ``full price''
in school lunch and breakfast programs and child care
centers (i.e., for meals/snacks served to children not
receiving free or reduced-price meals/snacks because of
their families' limited income); and
5. Remove numerous overly prescriptive Federal rules governing
operations of State and local child nutrition
providers, as well as over 20 out-of-date and redundant
provisions of the National School Lunch and Child
Nutrition Acts.
The new law also: (1) allows all schools that participate
under a provision of law (``provision 2'') that permits them to
collect applications for free and reduced-price meals less
frequently than once a year (in exchange for offering all meals
free) to participate under the terms of provision 2 for 5
years, rather than 3 years, without a redetermination of their
status; (2) eliminates subsidies for a fourth meal/snack each
day in summer camps, migrant service institutions, and child
care centers; (3) ends a requirement for advance payments to
participating child care institutions; (4) eliminates special
summer food service program rules for National Youth Sports
Program sponsors; (5) makes funding for the nutrition education
and training program a ``discretionary'' appropriation, rather
than ``mandatory'' spending; and (6) disqualifies stores
participating in the special supplemental nutrition program for
women, infants, and children (the WIC Program) if they are
disqualified for Food Stamp Program violations.
The Congressional Budget Office (CBO) estimates that these
changes in child nutrition law will reduce Federal outlays by
$2.853 billion for fiscal years 1997 through 2002, with savings
rising from $128 million in 1997 to $670 million in 2002. The
bulk of this spending reduction (85 percent) is the result of
restructured subsidies for day care homes.
Child and adult care food program: day care homes
The new act completely restructures the subsidies received
by family and group day care homes under the child and adult
care food program.\1\
---------------------------------------------------------------------------
\1\ Federal payments to day care centers under the child and adult
care food program are not currently affected by these changes. However,
changes to rounding rules and elimination of payments for a fourth
meal/snack each day will reduce some payments to day care centers. (See
below.)
---------------------------------------------------------------------------
Federal payments for homes.--Federal subsidy rates for
meals/snacks served to children in eligible day care homes are
not currently differentiated by the family income of the child,
unlike payments to day care centers (and schools).\2\ Standard
day care home rates are 7-15 percent lower (depending upon the
meal served) than those for free meals/snacks served to low-
income children by participating centers, but much higher (3 to
9 times more) than rates for meals/snacks served to nonpoor
children in centers. However, approximately two-thirds of the
spending for the day care home component of the child and adult
care food program goes to support meals/snacks served to
nonpoor children with family income above 185 percent of the
Federal poverty guidelines (the income ceiling for receipt of
free or reduced-price meals in other child nutrition programs).
For the July 1996 to June 1997 period, the subsidy rates for
day care homes are: $1.575 for each lunch/supper, 86.25 cents
for breakfasts, and 47 cents for snacks. Assuming a 3-percent
inflation adjustment in July 1997, the rates would rise to
about $1.62, 88 cents, and 48 cents, respectively, under former
rules.
---------------------------------------------------------------------------
\2\ Day care centers typically serve more than 40 children; homes
generally have 4-7 children.
---------------------------------------------------------------------------
In order to better target Federal support for day care
homes to low-income children, the new act divides participating
homes into two categories, or ``tiers,'' and bases their
Federal reimbursement on which tier they qualify for.
Tier I homes will be: (1) those located in low-income areas
(areas in which at least half of the children are in households
with income below 185 percent of the poverty guidelines, based
on Census data, or served by a school enrolling elementary
students in which at least half the children are certified
eligible to receive free or reduced-price school meals), and
(2) those operated by a provider whose income is verified by a
sponsor to be below 185 percent of the poverty guidelines.
These homes will receive payments very close to those provided
under preamendment rules, with two relatively minor
differences: beginning with the July 1997 annual inflation
adjustment: (1) adjustments for inflation will be based on
changes in the ``food at home'' component of the CPI-U, rather
than the ``food away from home'' component; and (2) after
adjusting for inflation, payment rates will be rounded down to
the nearest whole cent, rather than rounded to the nearest
quarter cent.\3\ The CBO estimates that about 35 percent of
meals/snacks served by day care homes will be subsidized at
tier I rates.
---------------------------------------------------------------------------
\3\ Although each payment rate is rounded down, the bases used for
the next adjustment will be the unrounded rates for the previous 12
months.
---------------------------------------------------------------------------
Tier II homes will be those that do not meet tier I low-
income standards. With the exception of tier II homes that take
advantage of a conditional option to receive the higher tier I
rates (see below), the act sets base rates for tier II homes at
95 cents for lunches/suppers, 27 cents for breakfasts, and 13
cents for supplements. These base rates will be indexed for
inflation on July 1, 1997 (the effective date for the new two-
tiered system), and, because of this, when the new system is
actually implemented, the initial subsidy rate for lunches/
suppers will be slightly higher. Assuming 3 percent inflation,
the July 1997 lunch/supper rate will probably be 97 cents.\4\
As with tier I rates, inflation adjustments applied to tier II
subsidies will be based on the CPI-U food at home component and
rounded down to the nearest whole cent.
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\4\ A 3-percent adjustment will not be large enough to affect
initial subsidy rates for breakfasts and snacks.
---------------------------------------------------------------------------
Following preamendment procedures, the new tier II rates
will be varied for Alaska and Hawaii (as will tier I rates),
and rules against subsidies for providers' children unless they
meet free or reduced-price income standards are retained.
The new legislation was designed to better target
assistance to day care homes, but not to impose too great an
administrative burden on homes and their sponsors by mandating
income-testing of individual children. However, tier II homes
will be able to elect to receive higher tier I subsidies for
meals/snacks served to children who are members of households
with income below 185 percent of the poverty guidelines if
their sponsor collects the necessary information and makes the
appropriate eligibility determination in accordance with
Federal rules. Tier II homes also will be able to opt to
receive tier I subsidies for meals/snacks served to children
(or children whose parents are) participating in, or subsidized
under, a federally or State-supported child care or other
benefit program with an income eligibility limit that does not
exceed 185 percent of the poverty guidelines. And they will be
allowed to restrict their claim for tier I reimbursement to
these ``program-eligible'' children if they choose not to
collect income statements from all parents/caretakers.
In determining homes' tier I or II status, the most current
available data (Census, enrollment, provider income) must be
used, and a determination that a home is located in a tier I
area will generally be effective for 3 years.
Federal payments for sponsors.--Basic Federal payments made
to day care home sponsoring organizations for administrative
costs (based on the number of homes sponsored) are not affected
by the new two-tier system. However, the act does make two
changes to the rules governing administrative funding sponsors
receive. It prohibits funding for sponsors that base payments
to employees on the number of homes ``recruited.'' And it
replaces existing permission for sponsors to use administrative
funds to conduct ``outreach'' to and ``recruitment'' of
unlicensed day care homes so that they may become licensed with
permission to use administrative funds to assist unlicensed
homes in becoming licensed.
New Federal and State responsibilities.--Under the new 2-
tier system for day care homes, the Agriculture Department will
have new responsibilities. It is required to provide Census
data necessary for determining homes' tier I/II status and will
establish minimum requirements for verifying children's family
income and program participation status when tier II homes
elect to claim tier I reimbursement rates. It also is required
to prescribe ``simplified'' meal counting and reporting
procedures for use when tier II homes elect to claim tier I
reimbursement for children meeting income or program
participation standards for low income. These procedures can
include: (1) setting an annual percentage of meals/snacks to be
subsidized at tier I rates based on the family income of
children enrolled in a specific month or other period; (2)
placing a home in a Federal reimbursement category based on its
percentage of children with household income below 185 percent
of the poverty guidelines; or (3) any other procedures judged
appropriate. In addition, States are required to provide school
enrollment data necessary to determine homes' tier I/II status.
Implementation grants.--In order to assist implementation
of the new 2-tier subsidy system for day care homes, the new
act requires that $5 million be reserved from fiscal year 1997
funding for the child and adult care food program and used to
make grants to States to aid homes and their sponsors in
putting the new system in place.\5\ The grants are to be used
to: (1) assist sponsors (and other appropriate organizations)
in securing and providing training, materials, automated data
processing, and other aid for sponsors' staff; and (2) provide
training and other implementation assistance to participating
homes. States may retain no more than 30 percent of their grant
for their use.
---------------------------------------------------------------------------
\5\ This $5 million is to be allocated among the States based on
the number of day care homes participating in fiscal year 1995, with a
minimum allocation of $30,000 for each State.
---------------------------------------------------------------------------
Study.--The Agriculture Department, in conjunction with the
Department of Health and Human Services, is required to
undertake a comprehensive study of the participation and
nutrition effects of the amendments restructuring day care home
reimbursements, due in August 1998. To facilitate the study,
States must submit participation and other data requested by
the Agriculture Department.
Implementation schedule.--The new two-tier subsidy system
is effective beginning July 1, 1997. However, the act directs
the Agriculture Department to issue interim regulations related
to the restructuring of subsidies for day care homes, provision
of data necessary to implement the new system, and changes to
rules governing sponsors' use of administrative funds by
January 1, 1997. Final regulations are required by July 1,
1997. The change affecting funding for sponsors basing payments
to employees on the number of homes recruited is effective on
August 22, 1996.
Child and adult care food program: additional amendments
Rounding rule.--As with day care home subsidies, the new
act requires that, when adjusted annually for inflation,
Federal subsidy rates for meals and snacks served by child and
adult care centers to participants that are not eligible for
free or reduced-price meals/snacks must be rounded down to the
nearest whole cent (rather than rounded to the nearest quarter
cent). Although the result of each annual inflation adjustment
will be rounded down to the nearest whole cent, the base for
the next adjustment will be the unrounded amount calculated for
the previous 12-month period.
Advance payments.--States must provide monthly advance
payments to approved day care institutions in an amount that
reflects the level of valid claims customarily received (or the
State's best estimate in the case of newly participating
institutions). The new act makes provision of advance payments
a State option.
Additional meals/snacks.--The act authorizes Federal
payments to day care centers for up to two meals and one snack
each day. Prior law allowed payment for two meals and two
snacks or three meals and one snack for children in child care
for 8 or more hours a day.
Paperwork, outreach, and administrative provisions.--The
Agriculture Department has a responsibility to act to
``expand'' child care food services, and States must take
affirmative action to expand the availability of child and
adult care food program benefits, including annual notification
to all nonparticipating day care homes. The Department also
must conduct demonstration projects to test approaches to
removing or reducing barriers to participation by homes; the
Department and the States must provide training and technical
assistance to day care home sponsors in reaching low-income
children; and States are required to provide information and
training about child health and development through sponsors.
The Department is further required to provide State agencies
with information about the WIC Program, and State agencies must
provide child care institutions with specific WIC materials,
annually update the materials, and ensure that, at least once a
year, the institutions provide parents with written information
about the WIC Program. Finally, the Department is required to
provide ``additional'' technical assistance to child care
institutions and sponsors that are having difficulty
maintaining compliance with nutrition requirements, and State
agencies must provide technical assistance to institutions
submitting incomplete applications.
The new act deletes all of these requirements on the
Department and the States and replaces them with a general
requirement that States provide sufficient training, technical
assistance, and monitoring to facilitate effective operation of
the child and adult care food program. Further, the Agriculture
Department must assist States in developing plans to do so. A
requirement that States and participating institutions make
accounts and records available at all times is changed to a
requirement that they be available at ``any reasonable time.''
Summer food service program
The new law makes five major substantive changes to the
summer food service program: lowering Federal subsidy rates,
changing the rounding rule, ending authority for reimbursements
for a fourth meal/snack each day, dropping special rules for
national youth sports program sponsors, and permitting some
summer sponsors to exercise an ``offer versus serve'' option.
In addition, it makes a number of administrative amendments to
delete unnecessary Federal requirements. With the exception of
the reduction in Federal subsidies (effective January 1, 1997,
for the summer of 1997), the summer food service program
amendments are effective on August 22, 1996.
Reduced Federal subsidies.--Federal operating cost subsidy
rates for meals/snacks served free by summer food service
providers are substantially higher than those for free meals/
snacks in other child nutrition programs. For the summer of
1996, the rates are: $2.1675 for each lunch/supper, $1.2075 for
breakfasts, and 57 cents for snacks. Assuming a 3 percent
inflation adjustment in January 1997 (for the summer of 1997),
they would rise to about $2.23, $1.24, and 58 cents,
respectively, under prior rules. By comparison, the basic July
1996 to June 1997 rate for free lunches in the school lunch
program (including commodity assistance) is $1.98, and the
basic July 1996 to June 1997 rate for free breakfasts in the
school breakfast program is $1.0175.
In order to more closely conform summer food service
program operating subsidies to those for free meals/snacks in
other child nutrition programs (while recognizing the higher
costs of summer sponsors), the act reduces summer program
reimbursement rates beginning with the summer of 1997. The new
base rates are set at $1.97 for lunches/suppers, $1.13 for
breakfasts, and 46 cents for snacks. However, these rates will
be indexed for inflation on January 1, 1997, and, because of
this, when they actually take effect in the summer of 1997,
they will be somewhat higher than the base rates laid out in
the new law. Assuming a 3 percent inflation adjustment, they
probably will be about $2.02, $1.16, and 47 cents,
respectively.
Summer food service program providers also receive
inflation-indexed administrative cost payments based on the
number of meals/snacks served. These amounts are not changed by
the new law.
Rounding rule.--When indexed annually for inflation, summer
program operating cost subsidy rates will be rounded down to
the nearest whole cent (rather than rounded to the nearest
quarter cent), beginning with the January 1997 adjustment.
Annual adjustments will be based on the unrounded rates for the
previous 12-month period.
Additional meals/snacks.--Payments to summer camps and
institutions serving migrants will be limited to the regular
three meals or two meals and a snack under the provisions of
the new act, rather than the four meals/snacks under prior law.
National Youth Sports Program.--Higher education
institutions operating programs under the National Youth Sports
Program (NYSP) may be summer program sponsors; several special
rules apply to them. They may receive payments for meals/snacks
served in months other than the normal program months of May
through September, and children and institutions are eligible
to participate ``without application.'' Their meal/snack
subsidy rates are different than other summer sponsors--lunches
and suppers are reimbursed at the school lunch program's free
lunch rate, and breakfasts and snacks are subsidized at the
school breakfast program's ``severe need'' rate. And they
operate under different meal pattern requirements than other
summer sponsors. The new act removes these special provisions
for NYSP sponsors.
``Offer versus serve.''--The new law authorizes school food
authorities participating as summer program sponsors to permit
children attending a site on school premises operated by the
authority to refuse 1 or more items of a meal without affecting
reimbursement for the meal--using rules the school uses for its
school meal programs.
Additional amendments.--The new law deletes certain
detailed mandates on the Department of Agriculture and State
agencies in administering the summer food service programs. The
Agriculture Department has a responsibility to ``expand'' the
summer food service program and provide ``additional''
technical assistance to summer program sponsors that are having
difficulty maintaining compliance with nutrition requirements.
The new act eliminates these provisions of law.
State agencies must establish and implement an ongoing
training and technical assistance program for private nonprofit
sponsors. They also must include in their State plans: (1) the
State's method of assessing need for the summer program; (2)
the State's best estimate of the number and character of
service institutions and sites to be approved (and children and
meals to be served), as well as the estimating methods used;
(3) the State's schedule for providing technical assistance and
training to service institutions; and (4) the State's plans and
schedule for informing service institutions of the availability
of the summer food service program. The new act drops these
requirements on States.
Under prior law, three advance payments to summer program
operators were required during any summer program. The second
of these may not be released to any service institution that
has not certified it has held training sessions for its own
personnel and site personnel. The act limits this condition for
receiving the second advance payment to nonschool providers. It
also replaces a requirement that service institutions'
contracts with food service management companies must require
that bacteria levels conform to standards applied by the local
health authority with a more general requirement that these
contracts conform to all standards set by local health
authorities. Finally, the new act revises a requirement that
States and summer program service institutions make accounts
and records available at all times to a requirement that they
be available ``at any reasonable time.''
Startup and expansion grants
Provisions in the Child Nutrition Act require the
Agriculture Department to use $5 million a year through fiscal
year 1997, $6 million in 1998, and $7 million in each
subsequent year to fund a program of competitively bid grants
to State education agencies for the purpose of initiating or
expanding the school breakfast and summer food service
programs. The act ends the requirement for these startup and
expansion grants, effective October 1, 1996.
Eligibility of aliens
Section 742 of the act modifies provisions of title IV that
would bar illegally present aliens from eligibility for
programs under the National School Lunch and Child Nutrition
Acts. The section provides that individuals eligible to receive
free public education benefits under State or local law will
not be made ineligible for benefits under the school lunch and
breakfast programs on the basis of citizenship, alienage, or
immigration status. In addition, nothing in the new act
(including the provisions of title IV) will ``prohibit or
require a State to provide'' other benefits under the National
School Lunch and Child Nutrition Acts to illegally present
aliens. This provision is effective on August 22, 1996.
School meal programs
In addition to provisions dealing with startup and
expansion grants for the school breakfast program and the
eligibility of illegal aliens (both noted above), the new law
makes one major substantive amendment affecting the school
lunch and breakfast programs. Effective with the next annual
inflation adjustment to school meal subsidy rates (July 1,
1997), it requires that the rates for ``full price'' lunches
and breakfasts be rounded down to the nearest whole cent
(rather than rounded to the nearest quarter cent).\6\ The new
law includes a number of administrative amendments dropping or
revising overly prescriptive provisions of law governing school
meal programs. More specifically, the new act removes:
---------------------------------------------------------------------------
\6\ As with other changes in rounding rules, annual adjustments
will be based on the unrounded rates for the previous 12-month period,
then rounded down.
---------------------------------------------------------------------------
1. A requirement that the Agriculture Department establish
``administrative procedures'' designed to diminish food
waste in schools;
2. A requirement that schools use commodities designated as
being in ``abundance;''
3. A prohibition against States imposing any requirement with
respect to teaching personnel, curriculum, and
instruction in any school when carrying out provisions
of the National School Lunch and Child Nutrition Acts
(a similar prohibition on the Federal Government is
retained);
4. With respect to waivers, requirements that: (1) waiver
applications describe ``management goals'' to be
achieved, a timetable for implementation, and the
process to be used for monitoring progress in
implementing the waiver (including cost implications);
(2) the Agriculture Department state in writing the
expected outcome of any approved waiver; (3) the
Agriculture Department's decision on any waiver be
disseminated through ``normal means of communication;''
(4) waivers may not exceed 3 years (unless extended);
(5) waivers relating to ``offer versus serve'' rules
are prohibited; and (6) service providers annually
submit reports describing the use of their waivers and
evaluating how the waiver contributed to improved
services (and that States submit a summary of these);
5. A requirement that the Agriculture Department provide
``additional'' technical assistance to schools that are
having difficulty maintaining compliance with nutrition
requirements; and
6. A requirement that the Agriculture Department and State
education agencies carry out information, promotion,
and outreach programs to expand the school breakfast
program, including the use of ``language-appropriate''
materials.
The new law also revises existing Federal requirements:
1. It makes clear that States can terminate or suspend
agreements with schools participating in school meal
programs;
2. It replaces existing mandates to notify children and
parents about the nutrition content of school meals and
their consistency with the Dietary Guidelines for
Americans with a requirement that schools serve meals
that are consistent with the Dietary Guidelines by the
beginning of the 1996-97 school year, unless a waiver
is granted by a State education agency. Meals must
provide, on average over each week, at least one-third
of the National Academy of Sciences' daily recommended
dietary allowances (in the case of lunches) or one-
quarter of the allowances (in the case of
breakfasts);\7\
---------------------------------------------------------------------------
\7\ This amendment does not affect provisions of law enacted
earlier this year (the Healthy Meals for Children Act; Public Law 104-
149) that provided that schools may use ``any reasonable approach'' to
meeting Federal nutrition standards for school meals.
---------------------------------------------------------------------------
3. It provides that school food authorities may not be
required to submit free and reduced-price ``policy
statements'' to State education agencies unless there
is a substantive change in policy. Routine changes
(e.g., adjusting income eligibility standards for
inflation) are not sufficient cause for requiring
submission of a policy statement;
4. Schools electing to serve all children free meals for three
successive years may be paid special assistance
payments for free and reduced-price meals based on the
number of meals served free or at a reduced price in
the first year (``provision 2''). Schools that elected
this option as of November 1994 are allowed to receive
a 2-year extension if it is determined that the income
level of the school's population has remained stable,
and schools receiving a 2-year extension are eligible
to receive subsequent 5-year extensions. The new law
allows all schools taking the provision two option to
qualify for extensions;
5. It removes a requirement that State education agencies
report each month the average number of children
receiving free and reduced price lunches in the
immediately preceding month and replaces it with a
provision to report this information at the Agriculture
Department's request; and
6. It revises a requirement that States, State education
agencies, and schools make accounts and records
available at all times to a requirement that they be
available at ``any reasonable time.''
Assistance for State administrative expenses
The new law makes two changes in rules governing Federal
aid for State child nutrition administrative expenses:
1. It eliminates a provision of law that authorizes the
Agriculture Department to withhold Federal funding for
State administrative expenses when a State fails to
agree to participate in a study or survey under the
National School Lunch or Child Nutrition Acts; and
2. It removes a requirement for annual plans for the use of
State administrative expense funds and replaces it with
a mandate to submit any substantive plan changes for
approval.
Commodity distribution
The new law includes four changes that affect commodity
distribution for child nutrition programs:
1. A requirement that cereal and shortening and oil products
be included among products donated to the school lunch
program is eliminated;
2. A mandate to purchase specific amounts of low-fat cheese
for school meal programs is ended;
3. The requirement for formal State advisory councils on
selection and distribution of commodities is replaced
with a requirement that State agencies meet with local
school food service personnel when making decisions
regarding commodities used in school meal programs; and
4. Authority for the Agriculture Department to prescribe the
terms and conditions under which donated commodities
will be used in schools and other participating
institutions is ended.
The WIC Program
The act adds a new major provision affecting operations of
the special supplemental food program for women, infants, and
children (WIC). Effective on enactment, WIC vendors that have
been disqualified from participation in the Food Stamp Program
will be disqualified as WIC vendors. The disqualification is
for the same period as the food stamp disqualification and will
not be subject to separate WIC Program administrative and
judicial review procedures. In addition, effective on
enactment, the new law contains a number of administrative
amendments removing or revising Federal requirements.
Detailed mandates and requirements that are eliminated by
the new act include:
1. A requirement that the Agriculture Department ``promote''
the WIC Program by producing and distributing
materials, including public service announcements in
English and other appropriate languages;
2. A requirement for a biennial report from the Agriculture
Department on the characteristics of WIC participants,
participation by migrants, and other matters;
3. A mandate that State agencies annually evaluate nutrition
education and breast feeding support and promotion
activities;
4. Specific permission for local WIC agencies to use ``master
files'' with regard to monitoring individuals required
to be included in group nutrition education classes;
5. A State plan requirement for an estimate of increased
participation when ``funds conversion'' authority is
opted for by a State;
6. Requirements as to how quickly State agencies must respond
to local agency applications to participate;
requirements as to the content of recipient suspension
and termination notices;
7. A directive for Federal administrative standards for
States, including staffing standards;
8. A provision that stipulates that products specifically
designed for pregnant, postpartum, and breastfeeding
women or infants, may be made available if they are
commercially available or are federally approved based
on clinical tests;
9. A provision specifically allowing States to adopt benefit
delivery methods that accommodate the special needs and
problems of incarcerated individuals;
10. A requirement for pilot projects to determine the
feasibility of using ``universal product codes'' to aid
vendors in providing the correct infant formula to WIC
participants;
11. Specific rules governing the Agriculture Department when it
solicits infant formula bids on behalf of States
(authority to do so is retained); \8\ and
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\8\ None of the amendments affecting procurement practices are to
affect contracts for infant formula in effect on August 22, 1996.
---------------------------------------------------------------------------
12. Requirements that the Agriculture Department ``promote''
the joint purchase of infant formula by States,
``encourage'' the purchase of items other than infant
formula under ``cost containment'' procedures, inform
States of the benefits of cost containment procedures,
and provide technical assistance related to cost
containment.
In other areas, the new legislation changes Federal rules
by:
1. Stipulating that, after 1 year in a temporary
accommodation, individuals will not be considered
``homeless;''
2. Removing requirements that State agencies ``ensure'' that:
(1) written information about food stamps and the AFDC
and child support enforcement programs is provided to
WIC applicants and participants; and (2) local agencies
maintain and make available a list of local resources
for substance abuse counselling and treatment. These
are replaced with: (1) authority for State agencies to
provide local agencies with materials describing other
programs for which WIC participants may be eligible;
and (2) a requirement that local agencies maintain and
make available lists of local substance abuse
counselling and treatment resources;
3. Revising a requirement for annual State plans to provide
that State agencies only be required to submit
substantive changes in their plan for Federal approval;
4. Removing State plan requirements for coordination with a
specific list of special counselling services and
programs and replacing them with a general directive to
coordinate WIC operations with other services and
programs;
5. Dropping requirements that State plans include an
explanation of how the State will provide WIC benefits
to unserved and underserved areas, those most in need,
and incarcerated persons, but retaining plan
requirements for improving access for the employed and
those in rural areas and reaching and enrolling
migrants and women in the early months of pregnancy;
6. Converting the requirement to provide WIC services and
materials in languages other than English from a
mandate to an option;
7. Revising authority for the Agriculture Department to ask
for such other information ``as may be required'' in a
State's plan to a stipulation that plans must include
only other information as may ``reasonably'' be
required;
8. Changing the requirement that State and local WIC agencies
make accounts and records available at all times to a
requirement that they be made available at ``any
reasonable time;''
9. Making it a local agency option whether to provide
information about other potential sources of food
assistance; and
10. Providing that the National Advisory Council on Maternal,
Infant, and Fetal Nutrition rather than the Secretary
of Agriculture, will select its Chairman and Vice
Chairman.
Nutrition education and training
The primary amendment made to provisions for the nutrition
education and training program converts it from a program for
which funding is ``mandatory'' (required and permanently
appropriated) to one for which funding is ``discretionary''
(dependent on decisions made with each year's appropriations).
State grants from the amount appropriated will be based on a
rate of 50 cents for each child enrolled in schools and
institutions participating in child nutrition programs, with a
minimum award of $75,000. If funds are insufficient to provide
grants based on the 50 cent/$75,000 rule, the amount of each
State's grant will be ratably reduced.
In addition to the funding amendment, the new law rewords
and simplifies the statute's provisions regarding the purpose
of the nutrition education and training program, revises a
requirement that State education agencies make accounts and
records available at all times to a directive that they be
available at ``any reasonable time,'' and, in the interest of
limiting Federal directives to States, eliminates specific
provisions of law directing how nutrition education and
training funds may be spent. The bill replaces the following
detailed list of purposes for which specific permission is
given with general authority for States to use nutrition,
education, and training funds for other ``appropriate
activities'' as determined by the State:
1. Funding a nutrition component in homemaking and health
education;
2. Instructing teachers and school staff on how to promote
better nutritional health and motivate children from a
variety of linguistic and cultural backgrounds to
practice sound eating habits;
3. Developing means of providing nutrition education in
``language-appropriate'' materials through afterschool
programs;
4. Training related to healthy and nutritious meals;
5. Creating instructional programming on the ``Food Guide
Pyramid'' (including language-appropriate materials);
6. Funding aspects of the ``Strategic Plan for Nutrition
Education;''
7. Encouraging public service advertisements to promote
healthy eating habits for children (including language-
appropriate materials and advertisements);
8. Coordinating and promoting nutrition education and training
activities in local school districts;
9. Contracting with public and private nonprofit education
institutions to conduct nutrition education and
training;
10. Increasing public awareness of the importance of
breakfasts; and
11. Coordinating and promoting nutrition education and training
activities that include the summer and child care food
programs.
The new legislation also: (1) ends planning and assessment
grants for nutrition education and training (and their
attendant comprehensive plans); and (2) eliminates specific
Federal requirements for State nutrition education
coordinators' assessment of the nutrition education and
training needs of the State.
Pilot projects
The act makes two changes affecting pilot project authority
under the National School Lunch Act:
1. It eliminates authorization for ``universal free lunch''
projects that are similar to ``provision 2'' authority
found elsewhere in law (separate, additional authority
for ``universal'' free meal projects is retained); and
2. It makes funding for pilot projects for grants to provide
meals and snacks to adolescents in programs outside
school hours optional and authorizes ``such sums as are
necessary'' for fiscal years 1997 and 1998.\9\
---------------------------------------------------------------------------
\9\ Under prior law, these projects were required to be funded at
$475,000 a year in fiscal years 1996 and 1997 and $525,000 in 1998.
---------------------------------------------------------------------------
Coordination
Finally, the new act requires the Agriculture Department to
develop proposed changes to regulations for the school lunch,
school breakfast, and summer food service programs in order to
simplify them and coordinate them into a comprehensive meal
program. The Department must consult with local, State, and
regional administrators in developing these proposed changes
and submit to Congress a report on them by November 1, 1997.

Title VIII: Food Stamps and Commodity Distribution

Overview
Subtitle A of title VIII of the Personal Responsibility and
Work Opportunity Reconciliation Act contains major and
extensive revisions to the Food Stamp Program, the most
substantial changes since the Food Stamp Act was rewritten in
1977. It greatly expands States' role in the program (helping
to broaden their authority over the welfare system, as with
other components of the act), adds to and strengthens work and
other nonfinancial eligibility requirements, controls future
spending increases, expands penalties for rules violations and
controls over food stamp trafficking, and encourages the
electronic delivery of benefits. It also authorizes food stamp
appropriations through fiscal year 2002, without specific
dollar limits on appropriations or spending. Separately, title
IV of the act bars food stamp eligibility for most legally
present aliens (illegal aliens are already ineligible for food
stamps), and provisions in title I disqualify those convicted
of drug-related felonies.
Subtitle B of title VIII amends various laws to combine the
emergency food assistance program with other commodity
distribution programs for soup kitchens and food banks. It also
requires that $100 million a year (through fiscal year 2002) be
used for purchasing commodities for the new combined emergency
food assistance program--drawn from food stamp appropriations.
Congressional Budget Office (CBO) estimates of the act's
spending effects indicate that changes made to the regular Food
Stamp Program by the amendments specific to the Food Stamp Act
itself will reduce projected spending growth under preamendment
law by $23.7 billion through fiscal year 2002.\10\ In addition,
denial of food stamp eligibility to legally resident aliens
will, it is estimated, bring on spending reductions totaling
$3.7 billion through 2002, for an overall total of $27.4
billion. However, net savings will be less than this amount.
The act includes a provision that requires new spending
(reducing savings) under the aegis of Food Stamp Act
appropriations: $600 million (through 2002) for the new
combined emergency food assistance program. And savings are
further lessened because of provisions in the new act that
significantly change the operations of other welfare programs
(e.g., approximately $3 billion in added food stamp costs
because of the act's SSI and TANF block grant provisions). As a
result, the net Federal food-stamp-related outlay savings under
the act are estimated at $23.3 billion through 2002.
---------------------------------------------------------------------------
\10\ This amount does not include some $345 million in fiscal year
1997 savings that the CBO has attributed to the fiscal year 1997
agriculture appropriations measure, which included an amendment
identical to one in the Personal Responsibility and Work Opportunity
Reconciliation Act (freezing the ``standard deduction'' for fiscal year
1997).
---------------------------------------------------------------------------
Expanding State control and options
State option for a simplified Food Stamp Program.--The new
act's primary change giving States more control over the Food
Stamp Program permits them to operate a ``simplified Food Stamp
Program'' under which they may determine food stamp benefits
for households in which all members receive TANF aid using TANF
rules and procedures, food stamp rules and procedures, or a
combination of both.\11\ In doing so, States may operate a
simplified program statewide or in regions of the State and may
standardize food stamp ``deductions.'' However, they must
comply with the following Federal food stamp rules:
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\11\ Households in which all members are TANF recipients are
automatically eligible for food stamps, but households may not receive
food stamp benefits under a simplified program unless the Agriculture
Department determines that any household with income above 130 percent
of the Federal poverty guidelines is ineligible for the program.
---------------------------------------------------------------------------
1. Requirements governing issuance procedures and the rule
that benefits be calculated by subtracting 30 percent
of household income (as determined under the simplified
program option by State-established, not Federal,
standards) from the maximum food stamp benefit;
2. Bars against counting food stamp benefits as income or
resources in other programs and for tax purposes and
against discrimination by reason of race, sex,
religious creed, national origin, or politics;
3. Requirements that State agencies assume responsibility for
eligibility certification and issuance of benefits and
keep records for inspection and audit;
4. Requirements related to submission and approval of State
plans of operation, and administration of the Food
Stamp Program on reservations;
5. Limits on the use and disclosure of information about food
stamp households;
6. Requirements for notice to and fair hearings for aggrieved
households (or comparable requirements established by
the State);
7. Requirements for submission of reports and other federally
required information;
8. The requirement to report illegally resident aliens to the
INS; and
9. Requirements to ensure that households are not receiving
duplicate benefits and that they provide Social
Security numbers as a condition of eligibility.
In addition, States' simplified programs may not increase
Federal food stamp costs. If the Agriculture Department
determines that a State's program has increased Federal costs
for any year (or portion of a year), it must notify the State
within 30 days.\12\ Within 90 days, the State must then submit,
for Federal approval, a corrective action plan designed to
prevent its simplified program from increasing Federal food
stamp costs. If the State does not submit or carry out a plan,
its simplified program will be terminated, and the State will
be ineligible to operate a simplified program in the future.
---------------------------------------------------------------------------
\12\ In carrying out this cost-neutrality requirement, States may
not be required to collect information on households not in their
simplified programs, and the Agriculture Department may approve
alternative (nonfiscal-year) accounting periods.
---------------------------------------------------------------------------
States opting for a simplified program must include in
their State plans the rules and procedures they will follow,
how they will address the needs of households with high shelter
costs, and a description of how they will carry out their Food
Stamp Program ``quality control'' system obligations (these
remain in place for opting States).
Finally, simplified programs may include households in
which members are not TANF recipients, if approved by the
Agriculture Department, and congressional conferees on the
measure encourage the Department to work with States to test
methods for applying a single set of rules and procedures to
households in which some, but not all, members receive cash
welfare benefits under State rules.

Food stamp treatment for violations of other programs'
rules.--The act makes three revisions in how food stamp
recipients are treated if they are penalized under another
public assistance program.

If an individual is disqualified for failure to perform an
action required under a Federal, State, or local law related to
means-tested public assistance, the State agency is permitted
to impose the same disqualification for food stamps, and, if
the disqualification is imposed under a TANF program's rules,
States may use TANF rules and procedures to impose the food
stamp disqualification.\13\ Individuals disqualified from food
stamps because of this new rule, are permitted to apply for
food stamps again as new applicants after the disqualification
period has expired, but prior disqualification under Food Stamp
Program work/training rules must be considered in reinstating
their eligibility.

\13\ State plans must include the guidelines used in carrying out
this new disqualification rule.
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A requirement that a cash welfare or unemployment insurance
program work requirement must be ``comparable'' to a food stamp
work requirement to bring on disqualification from food stamps
is eliminated.

Increased food stamp allotments are barred when nonfood-
stamp benefits to a household are reduced under a Federal,
State, or local means-tested public assistance program for
failure to perform a required action. In addition, States are
permitted to reduce a household's food stamp allotment by up to
25 percent in these cases, and, if the allotment reduction is
for failure to perform an action required under a TANF program,
the State may use TANF rules and procedures to do so.

Waivers of Federal rules.--Under prior law, Federal Food
Stamp Act requirements could be waived to conduct pilot/
demonstration projects, but, in general, no project could be
implemented that would lower or restrict benefits or
eligibility standards. The new legislation permits the
Agriculture Department to conduct pilots and demonstrations and
waive Food Stamp Act requirements to the extent necessary, with
a number of limitations and conditions that are, overall,
somewhat less restrictive than prior law.

1. Projects/demonstrations must be consistent with the Food
Stamp Program goal of providing food assistance to
raise levels of nutrition among low-income individuals
and must include an evaluation and be limited to a
specific time period.

2. Permissible projects are those that will improve
administration of the Food Stamp Program, increase
self-sufficiency of participants, test innovative
welfare reform strategies, or allow greater conformity
with the rules of other programs. However, if the
Agriculture Department finds that a project/
demonstration would require the reduction of benefits
by more than 20 percent, for more than 5 percent of the
households subject to the project/demonstration, the
project cannot include more than 15 percent of the
State's food stamp population and is limited to 5 years
(unless an extension is approved).\14\
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\14\ The 5-percent rule does not include those whose benefits would
be reduced because of a failure to comply with work or other conduct-
related requirements.
---------------------------------------------------------------------------
3. Waivers cannot be approved for projects that: (1) involve
the payment of food stamp allotments in cash (unless
approved prior to enactment); (2) have the effect of
transferring Food Stamp Program funds to services or
benefits provided through another public assistance
program; (3) have the effect of using Food Stamp
Program funds for any purpose other than the purchase
of food, program administration, or an employment and
training program; (4) have the effect of granting or
increasing shelter expense deductions to households
with either no out-of-pocket shelter expenses or
shelter expenses that represent a low percentage of
their income; or (5) have the effect of absolving the
State from acting with reasonable promptness on
substantial reported changes in income or household
size (other than changes related to deductions). In
addition, waivers of simplified Food Stamp Program
provisions are not allowed when carrying out a
simplified program.
4. Pilot/demonstration projects with waivers may not be
conducted if they are inconsistent with certain Food
Stamp Act requirements: (1) the bar against providing
benefits to those in institutions (with certain
exceptions); (2) the requirement to provide assistance
to all those eligible (so long as they have not failed
to comply with any food stamp or other program's work,
behavioral, or other ``conduct'' requirements); (3) the
gross income eligibility limit (130 percent of the
Federal poverty guidelines) for households without an
elderly or disabled member; (4) a rule that no parent/
caretaker of a dependent child under age 6 will be
subject to work/training requirements;\15\ (5) the rule
that the total hours of work required in an employment/
training or workfare program be limited to the
household's monthly allotment divided by the applicable
minimum wage; (6) the limit on the amount of
employment/training funding under the Food Stamp Act
that can be used for TANF recipients; (7) the
requirement that the value of food stamp benefits not
be considered income or resources for any other
purpose; (8) application and application processing
requirements (including the rule that benefits must be
provided within 30 days, but not including expedited
service requirements); (9) Federal-State cost-sharing
rules; (10) ``quality control'' requirements; and (11)
the waiver limits themselves.
---------------------------------------------------------------------------
\15\ Certain projects allowing this are permitted. See the
discussion of new work rules.
---------------------------------------------------------------------------
Moreover, the new law requires that, not later than 60 days
after receiving a demonstration/pilot project waiver request,
the Agriculture Department must (1) approve the request, (2)
deny it and explain any modifications needed for approval, (3)
deny it and explain the grounds for denial, or (4) ask for
clarification of the request. If a response is not forthcoming
in 60 days, the waiver is considered approved; if a waiver is
denied, the Agriculture Department must provide a copy of the
request and the grounds for denial to Congress.
Expedited service.--The new act: (1) requires that State
agencies provide ``expedited service'' to certain households
within 7 (rather than 5) days of application; (2) removes a
requirement for expedited service to ``homeless'' households
that do not otherwise meet criteria for severely limited income
and resources; and (3) for those entitled to expedited service
who apply after the 15th of the month, allows (rather than
requires) State agencies to provide an allotment that is the
aggregate of their initial (prorated) allotment and their first
regular allotment (as is the case with others applying after
the 15th of the month).
Collecting overissued benefits.--The new legislation
replaces overissuance collection rules that generally restrict
State agencies' collection efforts with provisions requiring
them to collect any overissued benefits by reducing future
benefits, withholding unemployment compensation, recovering
from Federal pay or income tax refunds, or any other means--
unless the State agency demonstrates that all of the means
available are not cost effective. Benefit reduction collections
(absent an intentional program violation) are limited to the
greater of 10 percent of the monthly allotment or $10 a month.
State agencies may collect overissued benefits in accordance
with State-established requirements for notice, electing a
means of payment, and setting a schedule for payment.
In addition, the new law changes the percentage of over
issuance collections that States may retain--from 50 percent of
collections in ``fraud'' cases and 25 percent of collections in
``nonfraud'' cases (other than those arising from State agency
error) to 35 and 20 percent, respectively.
Child support.--The amendments in the act give States the
option to disqualify individuals from food stamps when they do
not cooperate with child support agencies or are in arrears in
their child support.
Custodial parents of children under age 18 who have an
absent parent may be disqualified unless they cooperate with
the State child support enforcement agency in establishing the
child's paternity and obtaining support for themselves and the
child. Cooperation is not required if the State finds there is
good cause for the failure (in accordance with Federal
standards that take into account the child's best interest),
and fees or other costs for services may not be charged.
Noncustodial parents of children under 18 also may be
disqualified if they fail to cooperate with the State child
support enforcement agency in establishing paternity and
providing support for the child. The Agriculture and Health and
Human Services Departments must develop guidelines as to what
constitutes a refusal to cooperate in these instances, and
States must develop procedures (using these guidelines) for
determining whether there has been a refusal to cooperate. Fees
and other costs for services may not be charged, and States
must provide privacy safeguards.
Finally, States may disqualify individuals during any
period in which they are delinquent in any court-ordered child
support payment, unless the court is allowing a delay or they
are complying with a payment plan approved by the court or a
State child support agency.
Eligibility certification periods.--The new act replaces
provisions that limit State agencies' authority to establish
eligibility certification periods with a general requirement
that certification periods not exceed 12 months, or 24 months
if all adult household members are elderly or disabled.
However, State agencies must have at least 1 contact with each
certified household every 12 months.
Operation of food stamp offices and administrative rules.--
The new law changes State plan requirements as to the operation
of food stamp offices, removing numerous specific Federal rules
and replacing them with more general mandates. Moreover, it
amends a series of other Federal administrative rules
controlling State agency operations.
State plan requirements.--The specific State plan
provisions removed include requirements that States must:
1. Allow households contacting a food stamp office in person
during office hours to make an oral/written request for
aid and receive and file an application on the same
day;
2. Use a simplified, uniform, federally designed application,
unless a waiver is approved;
3. Include certain specific information in applications;
4. Waive in-person interviews under certain circumstances and
use telephone interviews or home visits instead;
5. Provide for telephone contact and mail application by
households with transportation or similar difficulties;
6. Assist households in obtaining verification and completing
applications;
7. Not require additional verification of currently verified
information (unless there is reason to believe that the
information is inaccurate, incomplete, or
inconsistent);
8. Not deny an application solely because a nonhousehold
member fails to cooperate and process applications if
the household meets cooperation requirements;
9. Give households a Statement of reporting responsibilities
at certification and recertification;
10. Provide a toll-free or local telephone number at which
households can reach State agency personnel;
11. Display and make available nutrition information; and
12. Use mail issuance in rural areas where low-income
households face substantial difficulties in obtaining
transportation.
In place of these provisions, the new law requires that
States:
1. Establish procedures governing the operation of food stamp
offices that they determine will best serve households
in the State, including those with special needs (such
as households with elderly or disabled members, those
in rural areas, the homeless, households residing on
reservations, and households speaking a language other
than English);
2. Provide timely, accurate, and fair service to applicants
and recipients; and
3. Permit applicants to apply and participate on the same day
they first contact a food stamp office during office
hours and consider an application filed on the date an
application is filed with the applicant's name,
address, and signature.
Additional State plan amendments include provisions that:
(1) permit States to establish operating procedures that vary
for local food stamp offices; and (2) make clear that nothing
in the Food Stamp Act prohibits electronic storage of
application and other information.
Other administrative rules.--Amendments made to
administrative rules by the new law also include provisions
that:
1. Drop requirements as to joint interviews and applications
for food stamps and public assistance and food stamp
determinations based on other public assistance program
information;
2. Permit State agencies to allow households to withdraw fair
hearing requests in writing or orally (if it is an oral
request, the State must provide written notice
confirming the request and give the household another
chance to ask for a fair hearing);
3. Make it a State option to use the Federal ``income and
eligibility verification systems'' established under
provisions of the Social Security Act (including a
system for verifying financial circumstances, ``IEVS,''
and a system for verifying alien status, ``SAVE''); and
4. In the case of substance abuse centers with food stamp
recipient residents, allow State agencies to: (1)
divide a month's food stamp benefits between the center
and a recipient who leaves the center; and (2) require
center residents to designate the center as their
``authorized representative.''
Calculating income.--The new act gives States greater
latitude in calculating the cost of producing self-employment
income and the income of households containing certain
ineligible aliens. It provides that the Agriculture Department
must establish procedures by which States may submit for
approval a method for determining reasonable estimates of the
cost of producing self-employment income (so long as the method
is designed not to increase Federal costs). Further, it gives
States the option to count all of the income and resources of
an alien who is ineligible for food stamps under provisions of
the Food Stamp Act as available to the remainder of the
household in which the alien lives (as opposed to counting the
alien's income and resources, less a pro rata share for the
alien).
Federal standards.--The new law eliminates certain Federal
standards governing State administration. It drops requirements
that the Agriculture Department establish standards for
efficient and effective administration (including standards for
review of food stamp office hours) and that States report on
administrative actions taken to meet the standards. Moreover,
it deletes a Federal requirement that States provide continuing
and comprehensive training for all certification personnel
(including provisions for intensive training of those
certifying farm households and training and assistance to
organizations offering outreach services and eligibility
screening).
Work and training
New work requirement.--The new act adds a new work
requirement for able-bodied adult food stamp recipients without
dependents.
The requirement.--No covered individual (see below for
exemptions) may be eligible for food stamps if, during the
preceding 36-month period, the individual received food stamp
benefits for any 3 months while not: (1) working at least 20
hours a week (averaged monthly); (2) participating in and
complying with a work program for at least 20 hours a week (as
determined by the State agency); or (3) participating in and
complying with a workfare program. A work program is defined as
a program under the Job Training Partnership Act (JTPA), a
Trade Adjustment Assistance Act Program, or a program of
employment and training operated or supervised by a State or
political subdivision that meets standards approved by the
Governor--including a Food Stamp Act employment and training
program, but not including job search or job search training
activities.
Individuals denied eligibility under the new work rule can
regain eligibility if, during a 30-day period, the individual:
(1) works 80 or more hours; (2) participates in and complies
with the requirements of a work program (as defined above) for
80 or more hours (as determined by the State agency); or (3)
participates in and complies with a workfare program. After
having met this 30-day work/training requirement, the
individual can remain eligible for a consecutive period of 3
months without working at least 20 hours a week or
participating in an employment/training or workfare program.
For example, if an individual works 20 hours a week for at
least 30 days and reenters the Food Stamp Program, but then
loses a job, the individual could retain food stamp eligibility
for 3 consecutive months without working or being in a
training/workfare program. But individuals cannot take
advantage of this provision for an additional 3 months of
eligibility (while not working or in an employment/training or
workfare program) for more than a single 3-month period in any
36 months. Individuals regaining eligibility also can remain
eligible for food stamps as long as they continue to meet
requirements as to working at least 20 hours a week or
participating in a training/workfare program.
Exemptions and waivers.--The new work rule does not apply
to: (1) those under 18 or over 50; (2) those who are medically
certified as physically or mentally unfit for employment; (3)
parents or other household members with the responsibility for
a dependent child; (4) pregnant women; and (5) those otherwise
exempt from any Food Stamp Program work requirement (e.g.,
those responsible for the care of an incapacitated person,
postsecondary students already meeting a similar work
requirement, residents of substance abuse treatment programs,
or those meeting unemployment compensation requirements).
In addition, on a State agency's request, the Agriculture
Department may waive application of the new work requirement to
any group of individuals if the Department determines that the
area where they reside (1) has an unemployment rate over 10
percent or (2) does not have a sufficient number of jobs to
provide them employment. The basis for any waiver must be
reported to Congress.
Receipt of food stamp benefits while exempt (including
participation under the additional 3-month eligibility
provision described above) or covered by a waiver will not
count toward an individual's basic 3-month eligibility period
under the new work rule.
Transition provision.--The 36-month period established by
the new work requirement will not include any period before the
earlier of the date the State notifies recipients about the new
rule (through individual notices or otherwise) or November 22,
1996.
Expansion of existing work/training requirements and
penalties.--In addition to establishing the new work
requirement for adults without dependents, the legislation
expands on prior work/training requirements and sets mandatory
minimum disqualification periods related to these and the prior
requirements.
The new act adds work-related eligibility conditions making
individuals ineligible if they: (1) refuse without good cause
to provide sufficient information to allow the State agency to
determine their employment status or job availability; or (2)
voluntarily and without good cause reduce work effort and
(after the reduction) are working less than 30 hours a week. It
also provides that all individuals (not just heads of
household) will be ineligible if they voluntarily quit a job
without good cause and removes lack of child care as an
explicit good cause exemption for refusal to participate in an
employment or training program.
New provisions as to the duration of ineligibility and
household (as opposed to individual) ineligibility are added.
Mandatory minimum disqualification periods are established for
individuals failing to comply with prior work requirements (as
expanded):
1. For the first violation, individuals are ineligible until
they fulfill work/training conditions, for 1 month, or
for a period (set by the State agency) not to exceed 3
months--whichever is later;
2. For the second violation, individuals are ineligible until
they fulfill work/training conditions, for 3 months, or
for a period (set by the State agency) not to exceed 6
months--whichever is later; and
3. For a third or subsequent violation, individuals are
ineligible until they fulfill work/training conditions,
for 6 months, until a date set by the State agency, or
(at State option) permanently, whichever is longer.
The new rule pertaining to the ineligibility of households
when an individual fails to comply with work/training
conditions is: if any individual who is head of household is
disqualified, the entire household is, at State option,
ineligible for a period not to exceed the duration of the
individual's ineligibility or 180 days, whichever is shorter.
Finally, the new law permits certain States to partially
limit an exemption from employment and training requirements
for parents and caretakers of children under age 6. States that
have requested a waiver to lower the age of a dependent child
that exempts the parent or caretaker, and had the waiver denied
as of August 1, 1996, may lower that age (to not under age 1)
for not more than 3 years.
Revision of requirements for employment and training
programs.--The new act changes the Federal rules governing
State-operated employment and training programs for food stamp
recipients. It:
1. Makes clear that work experience is a purpose of employment
and training programs and requires that each component
of an employment/training program be delivered through
a ``Statewide work force development system,'' where
available;
2. Expands the State option to apply work/training
requirements to applicants to include all requirements,
not only job search;
3. Removes specific Federal rules governing job search
components of State programs;
4. Drops provisions requiring that employment/training
components of State programs related to work experience
be in public service work and use recipients' prior
training/experience;
5. Removes specific Federal rules as to States' authority to
exempt persons form employment/training requirements,
giving them full latitude to determine exemptions;
6. Eliminates requirements for serving volunteers;
7. Drops a requirement for ``conciliation procedures'' for
resolving disputes involving participation in
employment/training programs; and
8. Removes provisions for Federal performance standards for
States' employment/training programs.
Funding for employment and training programs.--The new law
increases the base Federal funding level for employment and
training programs from $75 million a year to $79 million in
fiscal year 1997, $81 million in 1998, $84 million in 1999, $86
million in 2000, $88 million in 2001, and $90 million in 2002.
State allocations from these amounts are to be based on a
``reasonable formula'' (determined by the Agriculture
Department) that gives consideration to each State's population
of persons subject to the new work requirement (described
earlier). The existing 50-percent Federal match for costs above
each State's share of these basic grants is retained, and a
specific provision is included allowing these funds to be used
for case management/casework. Finally, the provisions of the
new act limit Food Stamp Program employment and training
funding for services to TANF recipients to the amount used by
the State for AFDC recipients in fiscal year 1995.
Work supplementation or support programs.--The new act
establishes an option for States to operate work
supplementation or support programs under which the value of
public assistance benefits, including food stamps, are provided
to employers who hire recipients and, in turn, use the benefits
to supplement the wages paid to the recipient. These programs
must adhere to standards set by the Agriculture Department, be
available for new employees only, and not displace employment
of those who are not supplemented/supported. The food stamp
benefit value of the supplement will not be considered income
for other purposes, and opting States must provide a
description of how recipients in their program will, within a
specific period of time, be moved to unsubsidized employment.
Employment initiatives program.--The new legislation
provides an option for a limited number of States (those with
not less than half their food stamp households receiving AFDC
benefits in 1993) to issue food stamps in cash to households
participating in both the State's TANF program and food
stamps--if a member of the household has been working for at
least 3 months and earns at least $350 a month in unsubsidized
employment. Those receiving cash payments may continue to
receive them after leaving a TANF program because of increased
earnings, and a household eligible to receive its allotment in
cash may choose food stamps instead. States opting for these
cash payments are required to increase food stamp benefits (and
pay for the increase) to compensate for any State/local sales
taxes on food purchases and must provide a written evaluation.
Benefits and eligibility
Limiting basic benefits.--The new act reduces basic
(maximum) food stamp monthly benefits from amounts equal to 103
percent of the cost of the Agriculture Department's ``Thrifty
Food Plan'' (its cheapest plan for purchasing a low-cost
nutritious diet) to 100 percent of cost of the plan. However,
benefits will not drop below current levels due to this change.
Basic benefits will continue to be indexed annually for food-
price inflation measured by the cost of the Thrifty Food Plan.
This change is effective October 1, 1996, and coincides with
the regular inflation increase in basic benefits. As a result,
food stamp benefits will rise, but by less than under prior law
because the 3-percent ``add-on'' will not be included.
Deductions from income.--When recipients' benefits are
calculated, their counted monthly income is reduced by several
``deductions,'' including (1) a ``standard deduction'' and (2)
a deduction for excessively high shelter expenses, thereby
raising food stamp allotments. The standard deduction normally
is inflation indexed every October, and a monthly dollar limit
on shelter expense deductions (applied to households without
elderly or disabled members) was, under prior law, scheduled to
be eliminated in January 1997.
The new act freezes the standard deduction at its current
level ($134 a month, with differing amounts for Alaska, Hawaii,
and outlying areas).\16\ It also repeals the scheduled end of
the limit on shelter expense deductions, replacing it with an
increase in the existing ceiling: the ``cap'' on shelter
expense deductions will rise, in 3 steps, from the current $247
a month to $300 beginning in fiscal year 2001.\17\
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\16\ The fiscal year 1996 appropriations measure for food stamps
(Public Law 104-37) stipulated that the normal October inflation
increase in the standard deduction not be implemented for fiscal year
1996; it would have risen to $138. Separately from this welfare reform
measure, the freeze on the amount of the standard deduction was
continued for fiscal year 1997 in the 1997 agriculture appropriations
measure (Public Law 104-180); it would have risen to $142. The
Congressional Budget Office attributes the 1997 Federal outlay savings
for this freeze (some $345 million) to the appropriations act.
\17\ The cap will first rise to $250 in January 1997, and then be
increased to $275 in October 1998 and $300 in October 2000. Concurrent
increases are included for the separate excess shelter expense
deduction ceilings for Alaska, Hawaii, and outlying areas.
---------------------------------------------------------------------------
In addition, the new legislation:
1. Permits States to make use of ``standard utility
allowances'' (as opposed to actual utility costs)
mandatory for all households when calculating the
amount of a household's shelter expenses (if the
Agriculture Department approves them and they will not
result in increased Federal costs);
2. Allows States not choosing to make standard utility
allowances mandatory to limit the extent to which
households may switch between claiming a standard
allowance and actual costs (i.e., only at certification
and recertification of eligibility;
3. Disallows ``earned income deductions'' (20 percent of any
earnings) for income not reported in a timely manner
and for the public assistance portion of income earned
under a work supplementation/support program (see
earlier discussion); and
4. Allows (rather than requires) States to develop and mandate
the use of a special ``homeless shelter allowance'' for
those not in free shelter throughout a month --as long
as it is not more than $143 a month (the former,
inflation-indexed maximum).
Energy assistance.--The new law requires that State and
local energy assistance be counted as income and mandates an
income disregard for one-time payments or allowances under a
Federal or State law for the costs of weatherization or
emergency repair/replacement of unsafe/inoperative furnaces or
heating/cooling devices. prior treatment of Federal energy
assistance (e.g., a disregard of assistance under the Low-
Income Home Energy Assistance Act) is not changed.
Vehicle allowance.--In determining a household's liquid
assets for food stamp eligibility purposes, a vehicle's fair
market value in excess of $4,600 is counted. Under prior law,
this threshold was scheduled to be increased (to $5,000) and
inflation indexed beginning in October 1996. The new act raises
it to $4,650 (effective October 1996), but provides for no
further increases.
Treatment of children living at home.--The new law requires
all children 21 years of age or younger who live with their
parents to apply together with their parents as a single food
stamp household--removing an exception for children living with
their parents who are themselves married or have children.
Student earnings.--The new legislation requires that the
earnings of secondary school students be counted for food stamp
purposes once they reach age 18--as opposed to age 22.
Benefits on recertification of eligibility.--For those who
do not complete all eligibility recertification requirements in
the last month of their certification period, but are then
determined to be eligible after their certification period has
expired, the new law requires that they receive reduced
benefits for the first month of the new certification period
(i.e., their first-month benefits will be pro-rated to the date
they met eligibility requirements). This eliminates a rule
giving these households a 1-month ``grace period'' to meet
eligibility requirements before their benefits are reduced.
Minimum allotments.--The new act drops a requirement that
minimum allotments for one- and two-person households (set at
$10 a month) be indexed for inflation.
Transitional housing.--The new law ends a rule disregarding
as income housing assistance paid by cash welfare programs on
behalf of households residing in ``transitional housing for the
homeless.''
Program integrity
Increased penalties for intentional violations and
trafficking.--The new act increases the Food Stamp Program
disqualification period for a first intentional violation of
program requirements from 6 months to 1 year, and the
disqualification penalty for a second intentional violation
(and the first involving a controlled substance) from 1 year to
2 years.\18\ It also adds a requirement for permanent
disqualification for persons convicted of trafficking in food
stamps where the benefits have a value of $500 or more.
---------------------------------------------------------------------------
\18\ Requirements for longer (including permanent) disqualification
are retained; e.g., permanent disqualification is required for a third
intentional violation, a second violation involving trading of a
controlled substance, and the first violation involving trading of
firearms, ammunition, or explosives.
---------------------------------------------------------------------------
Disqualification for receipt of multiple benefits.--The new
law adds a provision making individuals ineligible for food
stamps for 10 years if they are found to have made a fraudulent
Statement with respect to identity or residence in order to
receive food stamp benefits in multiple jurisdictions
simultaneously.
Disqualification of fleeing felons.--The legislation adds a
provision making individuals ineligible while they are fleeing
to avoid prosecution, custody, or confinement for a felony or
attempted felony (or violating a condition of probation or
parole).
Criminal forfeiture rules.--The new law establishes
``criminal forfeiture'' rules for those involved in food stamp
trafficking. In imposing sentence on those convicted of
trafficking, courts are required to order that the person
forfeit property to the United States. Property subject to
forfeiture includes all property (real and personal) used in a
transaction (or attempted transaction) to commit (or facilitate
the commission of) a trafficking violation other than a
misdemeanor. Proceeds traceable to the violation also are
subject to forfeiture, but an owner's property interest would
not be subject to forfeiture if the owner establishes that the
violation was committed without the owner's knowledge or
consent. The proceeds from any sale of forfeited property, and
any money forfeited, is required to be used to reimburse
Federal and State agencies for their investigative and
prosecutorial costs and, by the Agriculture Department, for
retailer/wholesaler monitoring activities.
Retailer/wholesaler disqualification related to the WIC
Program.--The legislation requires the Agriculture Department
to issue regulations providing criteria for disqualifying from
Food Stamp Program participation retailers/wholesalers that
have been disqualified from the WIC Program. Disqualification
must be for the same length of time, may begin at a later date,
and is not subject to separate food stamp administrative or
judicial review provisions.
Suspension of retailers and wholesalers.--The new act
requires that any permanent disqualification of a retailer or
wholesaler from the Food Stamp Program (i.e., disqualification
for a serious violation) be effective from the date of receipt
of notice of the disqualification determination, pending
administrative and judicial review. If the disqualification is
reversed through administrative/judicial review, the Federal
Government will not be liable for lost sales.
Authorization periods for retailers and wholesalers.--The
new law requires the Agriculture Department to establish
specific time periods during which retail food stores' and
wholesale food concerns' authorization to accept and redeem
food stamp benefits will be valid.
Waiting periods.--The law provides that retailers and
wholesalers that have failed to be approved for participation
in the Food Stamp Program may not submit a new application to
participate for at least 6 months. The Agriculture Department
may establish longer periods (including permanent
disqualification) that reflect the severity of the basis for
denial.
Falsified retailer/wholesaler applications.--The new act
requires disqualification for retailers and wholesalers that
knowingly submit an application to accept and redeem food stamp
benefits that contains false information about a substantive
matter--for a reasonable period of time determined by the
Agriculture Department (including permanent disqualification).
Verifying retailer/wholesaler eligibility to participate.--
The law permits: (1) the Agriculture Department to require that
retailers and wholesalers seeking approval to accept and redeem
food stamp benefits submit relevant income and sales tax filing
documents; and (2) Federal regulations requiring retailers and
wholesalers to provide written authorization for the
Agriculture Department to verify all relevant tax filings and
obtain corroborating documentation from other sources in order
to verify the accuracy of the information provided.
Evidence for retailer/wholesaler violations.--The new act
requires that Federal regulations provide criteria for the
finding of retailer/wholesaler violations on the basis of
evidence that may include facts established through onsite
investigations, inconsistent benefit redemption data, or
evidence obtained through electronic benefit transaction
reports.
Visits prior to approval.--The new law provides that no
food concerns (of a type determined by the Agriculture
Department based on factors including size, location, and types
of items sold) will be approved for participation unless
visited by an Agriculture Department employee, or, whenever
possible, a State or local government designee.
Electronic benefit transfer (EBT) systems
Regulation E.--The new act provides that the Federal
Reserve Board's ``Regulation E'' (dealing with certain
protections for consumers using cards to electronically access
their accounts) will not apply to any EBT system distributing
needs-tested benefits established or administered by State or
local governments. In addition, it incorporates language that
specifically provides that Regulation E will not apply to food
stamp benefits delivered through an EBT system.
Antitying restrictions.-- The new law stipulates that a
company may not sell or provide EBT services, or fix or vary
the consideration for these services, on the condition or
requirement that the customer obtain some additional point-of-
sale service from the company or any affiliate. The Agriculture
Department is required to consult with the Federal Reserve
before issuing regulations to carry out this provision against
tying of services. In effect, this applies the ``antitying''
restrictions of the Bank Holding Act amendments of 1970 to EBT
services offered by ``nonbanks.''
Other rules for EBT systems.--The new legislation also:
1. Deletes a requirement that EBT systems be cost neutral
compared to coupon-based systems in any given year;
2. Adds a requirement that regulations regarding the
replacement of benefits and liability for replacement
under an EBT system be similar to those in effect for a
paper coupon food stamp issuance system;
3. Permits State agencies to collect a charge for replacing
EBT cards by reducing food stamp allotments;
4. Provides that States must implement EBT systems (``on-
line'' or ``off-line'') before October 2002, unless a
waiver is granted;
5. Permits State agencies to procure and implement EBT systems
under the terms, conditions, and design they consider
appropriate--subject to Federal standards, which are
expanded to include procurement standards;
6. Adds a requirement for EBT standards that follow generally
accepted operating rules based on commercial
technology, the need to permit interstate operations
and law enforcement, and the need to permit monitoring
and investigations by law enforcement officials;
7. Adds requirements that Federal EBT standards include
measures to maximize security and (not later than
August 22, 1998) measures to permit EBT systems to
differentiate among food items; and
8. With certain conditions, permits State agencies to require
that EBT cards contain the photograph of 1 or more
household members.
Miscellaneous additional provisions
Federal cost sharing for outreach activities.--The new act
terminates any Federal cost sharing for ``recruitment
activities'' that are part of any State-option informational
(outreach) efforts.
Exchange of law enforcement information.--The legislation
requires State food stamp agencies to make available to law
enforcement officers the address, Social Security number, and
photograph (when available) of food stamp recipients if the
officer furnishes the recipient's name and notifies the agency
that the individual is fleeing to avoid prosecution, custody,
or confinement for a felony, is violating a condition of parole
or probation, or has information necessary for the officer to
conduct an official duty related to a felony/parole violation.
Definition of a homeless individual.--For purposes of the
Food Stamp Program, the new law provides that persons whose
primary nighttime residence is a temporary accommodation in the
home of another may be considered homeless only if the
accommodation is for no more than 90 days.
Definition of ``coupon.''--In order to ensure that all
forms of food stamp benefit delivery are covered by trafficking
restrictions and penalties, the new legislation expands the
definition of food stamp ``coupon'' to include authorization
cards, cash or checks issued in lieu of coupons, and ``access
devices'' (including electronic benefit transfer cards and
personal identification numbers).
Vitamins and minerals study.--The law requires that the
Agriculture Department, in consultation with the National
Academy of Sciences and Centers for Disease Control and
Prevention, conduct a study of the use of food stamp benefits
to purchase vitamins and minerals. A report is due to Congress
no later than December 15, 1998.
Commodity distribution
The new law establishes a single emergency food assistance
program to distribute federally donated commodities that
combines the preexisting emergency food assistance program, the
commodity distribution program for soup kitchens, and the
commodity distribution program for food banks. States will
receive Federal commodities under a formula allocation (based
on unemployment and other factors) and distribute them to
emergency feeding organizations, soup kitchens, food banks, and
other outlets under the terms of their State plans. Through
fiscal year 2002, an annual amount of $100 million (drawn from
Food Stamp Act appropriations) is required to be spent for
purchasing commodities for this new, combined emergency food
assistance program. Funding for administrative and distribution
costs continues to be authorized, not required.

Title IX: Miscellaneous

The Personal Responsibility and Work Opportunity
Reconciliation Act makes the following miscellaneous changes:
1. Funds from certain Federal block grants to the States must
be expended in accordance with the laws and procedures
applicable to the expenditure of the States' own
resources (i.e., appropriated through the State
legislature). This provision applies to block grants
for Temporary Assistance for Needy Families (TANF) and
child care (CCDBG). Thus, in the States in which the
Governor previously had control over Federal funds, the
State legislatures now would share control according to
State laws regarding State expenditures;
2. States must not be prohibited by the Federal Government
from sanctioning welfare recipients who test positive
for use of controlled substances;
3. Persons who are fleeing to avoid prosecution after
conviction for a crime, or attempt to commit a crime,
that is a felony where committed (or, in the case of
New Jersey, is a high misdemeanor), or who is violating
a condition of probation or parole, immediately lose
their eligibility for public housing and section 8
housing assistance. Specified public housing agencies
must furnish any Federal, State, or local law
enforcement officer, upon request by the officer, with
the current address, Social Security number, and
photograph (if applicable) of any SSI recipient, if the
officer furnishes the public housing agency with the
person's name and notifies the agency that the
recipient is a fugitive felon (or in the case of New
Jersey, a person fleeing because of a high misdemeanor)
or a probation or parole violator or that the person
has information that is necessary for the officer to
conduct his official duties. The location or
apprehension of the recipient must be within the
officer's official duties;
4. The law expresses the sense of the Senate that States
should pursue child support payments under all
circumstances even if the noncustodial parent is
unemployed or his whereabouts are unknown. States are
also encouraged to pursue pilot programs in which the
parents of a minor noncustodial parent who refuses or
is unable to pay child support contribute to the child
support owed;
5. The law requires the Secretary of HHS to establish and
implement by January 1, 1997, a strategy for reducing
out-of-wedlock teenage pregnancies while assuring that
at least 25 percent of U.S. communities have teenage
pregnancy programs in place. The Department of HHS is
required to report to Congress by June 30, 1998, on
progress made toward meeting these two goals;
6. State and local jurisdictions are encouraged to
aggressively enforce statutory rape laws;
7. The law exempts from Regulation E requirements (a
regulation issued under the authority of the Electronic
Funds Transfer Act that contains consumer protections
for those using electronic funds transfer systems) any
EBT program distributing means-tested benefits
established under State or local law or administered by
a State or local government;
8. For the fiscal years 1997 through 2002, the Social Services
block grant authorized by title XX of the Social
Security Act is reduced by 15 percent from its former
$2.8 billion annual level. In fiscal year 2003 and
thereafter the block grant is returned to $2.8 billion
per year;
9. The new law contains three modifications of the earned
income credit (EIC). One of these, the provision
requiring that returns that do not include the worker's
taxpayer identification number be treated by the
Internal Revenue Service as a mathematical or clerical
error, was described above as part of title IV. The
second provision expands the definition of disqualified
income to include capital gains net income and net
passive income other than self-employment income. This
provision also reduces the threshold for disqualified
income from $2,350 to $2,200 and indexes the threshold
for inflation. Third, the law modifies the definition
of adjusted gross income (AGI) for phasing out the
earned income credit by disregarding certain losses;
10. If a person's means-tested benefits from a Federal, State,
or local program are reduced because of an act of
fraud, his benefits from public or assisted housing
(and food stamps and AFDC or TANF) may not be increased
in response to the income loss caused by the penalty;
11. The law amends the Maternal and Child Health block grant
(title V of the Social Security Act) to directly
appropriate $50 million for each of fiscal years 1998
through 2002 to provide abstinence education and to
provide, at State option, mentoring, counseling, and
adult supervision to promote abstinence. Abstinence
programs must be directed at those groups most likely
to bear children outside marriage.

=======================================================================

SECTION 3.

STATE-BY-STATE ALLOCATION OF GRANTS

FOR TEMPORARY ASSISTANCE

FOR NEEDY FAMILIES AND CHILD CARE

=======================================================================

SECTION 3. STATE-BY-STATE ALLOCATION OF GRANTS FOR TEMPORARY ASSISTANCE
FOR NEEDY FAMILIES AND CHILD CARE \1\

Introduction
---------------------------------------------------------------------------

\1\ This section was prepared by the Congressional Research
Service.
---------------------------------------------------------------------------
The Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 ends Aid to Families With Dependent
Children (AFDC) and related programs and replaces them with a
new program of Temporary Assistance for Needy Families (TANF).
TANF provides capped Federal funding through fiscal year 2002
of $16.4 billion per year (plus supplemental grants--see
below). The new law also restructures and expands the Child
Care and Development Block Grant (CCDBG). Among other reforms,
the expanded block grant authorizes a total of $6 billion in
discretionary and $14 billion in entitlement child care funds
for the States and Indian tribes over the 6-year period fiscal
year 1997 through fiscal year 2002.

Temporary Assistance for Needy Families

TANF replaces AFDC, State and local administration of AFDC
and related programs, Emergency Assistance, and the Job
Opportunities and Basic Skills (JOBS) program. States must end
these programs and begin TANF by July 1, 1997, but can opt to
begin TANF sooner.
TANF creates a basic annual block grant for States as well
as several supplemental grants to serve special purposes. Each
grant is outlined in separate sections below.
Family assistance grant
TANF's basic block grant is the family assistance grant,
which entitles the 50 States and the District of Columbia to a
total of $16.4 billion annually through fiscal year 2002. TANF
is 100 percent federally funded, but would be reduced if a
State failed to meet a fiscal maintenance of effort
requirement. The family assistance grant must also be reduced
for other penalties levied against the State.
The family assistance grant is based on the Federal
payments to the States during recent fiscal years. States would
be entitled to the greatest of:
1. Average required Federal payments to the States for AFDC,
AFDC Administration, Emergency Assistance, and JOBS for
fiscal year 1992 through fiscal year 1994;
2. Required Federal payments to the States for these programs
for fiscal year 1994 (adjusted for higher 1995 EA
payments to States that amended their EA plans in
fiscal year 1994 or fiscal year 1995); or
3. Required Federal payments to the States for these programs
for fiscal year 1995.
Table 3 (all tables are located at the end of this section)
shows the basic family assistance grant for the 50 States and
the District of Columbia under TANF. The territories would also
operate temporary assistance programs, but they are treated
separately from the 50 States and the District of Columbia. The
grants shown in table 3 are before States pay the Federal
Government for its share of child support enforcement
collections for families receiving assistance payments. Under
current law, these collections are deducted from AFDC grants to
States.
The estimated payments to the States provided in table 3
are based on available State-reported financial data. For AFDC,
State and local administration (including the program for
enhanced payments for developing automated management
information systems), and Emergency Assistance, the financial
data represent the Federal share of total expenditures for the
programs as reported to the Department of Health and Human
Services (DHHS) by the States. The information is reported by
the States to DHHS on ACF Form 231 each quarter. The Federal
share of total expenditures are expenditures reported for the
current quarter plus or minus any adjustments for prior quarter
expenditures.
The Federal share of AFDC expenditures used in calculating
the family assistance grant is a gross amount, before
deductions for the Federal share of child support enforcement
collections. The State expenditure reports include both the
gross Federal share and a net Federal share of AFDC
expenditures. The net Federal share includes a deduction for
the Federal share of child support enforcement collections.
Reporting of the net Federal share of AFDC expenditures was
necessary because, under prior law, AFDC payments to the States
were reduced for a share of child support enforcement
collections for families receiving AFDC (above the $50 passed
through to the families). TANF grant allotments are not reduced
for the Federal share of child support enforcement collections,
though title IV-D continues the requirement that States remit
to the Federal Government a share of child support enforcement
collections.
Because States may revise their financial reports, section
403(a)(1) specifies that the Secretary use the data available
as of a certain date for each of the fiscal years. For JOBS,
the financial data represent grant awards, though for fiscal
year 1992 through fiscal year 1994 any adjustments for actual
State expenditures after the close of the fiscal year are
reflected in the data. The JOBS grant awards, rather than the
Federal share of expenditures, were used to compute the family
assistance grant because JOBS expenditure data are incomplete
far into subsequent fiscal years. States have 2 years in which
to expend JOBS funds. Therefore, States may expend fiscal year
1995 JOBS funds through September 30, 1996, making this
information incomplete for the purposes of computing the family
assistance grant.
Fiscal year 1995 payments are annualized data from the
first three quarters of the fiscal year for AFDC, State and
local administration, and Emergency Assistance plus the JOBS
grant awards as of October 5, 1996. The formula for the family
assistance grant dates back to that contained in the Balanced
Budget Act of 1995 (H.R. 2491), which passed Congress in
November 1995 but was vetoed by President Clinton. At that
time, only the first three quarters of expenditure information
on AFDC and related programs were available.
Grants to States that reduce out-of-wedlock births
Additional funds are provided to States that have lower
out-of-wedlock births and lower abortion rates than in fiscal
year 1995. The five States with the greatest decline in out-of-
wedlock births, and that also reduce their abortion rates,
receive a bonus of $20 million. If there are fewer than five
States eligible for these funds, the bonus would increase to
$25 million.
Supplemental grants to States with high population growth and/or low
grants per poor person
For fiscal year 1998 through fiscal year 2001, certain
States will qualify for supplemental funds based on their
population growth or their low Federal AFDC-related spending
per poor person. A total of $800 million is provided for these
States over the 4 years. Under this supplemental grant, certain
States qualify for supplemental funds automatically for each
year from fiscal year 1998 to fiscal year 2001. A State is
deemed to automatically qualify in all 4 years if it:
1. Had fiscal year 1994 Federal expenditures per poor person
(poverty count based on the 1990 census) for AFDC and
related programs below 35 percent of the national
average welfare spending per poor person; or
2. Had population growth in excess of 10 percent from April 1,
1990 to July 1, 1994.
Based on Congressional Research Service (CRS) calculations, 11
States would automatically qualify for supplemental funds--
Alabama, Arkansas, Louisiana, Mississippi, and Texas because
these States met the very low Federal expenditure per poor
person criterion in 1994, and Alaska, Arizona, Colorado, Idaho,
Nevada, and Utah because these States met the very high
population growth criterion in 1990-94.
To qualify otherwise, States must meet each of two
conditions:
1. Federal expenditures per poor person (poverty count based
on the 1990 census) for AFDC and related programs below
the fiscal year 1994 national average Federal
expenditures per poor person in AFDC and related
programs; and
2. A population growth rate that exceeds the rate of growth
for the Nation as a whole.
In order to qualify for supplemental funds on these dual
grounds, States must meet the qualification criteria in fiscal
year 1998. CRS estimates that nine additional States would
qualify on these grounds: Florida, Georgia, Montana, New
Mexico, North Carolina, South Carolina, Tennessee, Virginia,
and Wyoming. These estimates are based on forecasts of
population growth. The number of States that actually qualify
will be determined when the Census Bureau releases its
estimates of actual population growth between 1995 and 1996.
Census Bureau population estimates of actual population growth
are usually made available in December of each year.
For fiscal year 1998, the supplemental grant is computed as
2.5 percent of the amount required to be paid to the State
under AFDC and related programs in fiscal year 1994. In
subsequent years, it is computed as 2.5 percent of the sum of
fiscal year 1994 expenditures and the prior year's supplemental
grant.
Total supplemental grants are limited to $800 million for
the 4 years fiscal year 1998 through fiscal year 2001. If
funding is insufficient to pay the full supplemental amounts,
grants would be proportionately reduced for each qualifying
State so that the $800 million limit would not be breached.
Based on CRS estimates, the $800 million would be sufficient to
pay the full supplemental grant in fiscal year 1998 through
fiscal year 2000, but funding would be exhausted in fiscal year
2001, requiring a pro rata reduction in the supplemental
grants. No supplemental funds are provided in fiscal year 2002,
the last year of the TANF program. Table 4 shows CRS estimates
of supplemental grants for population growth and/or low grant
amounts per poor person for fiscal year 1998 through fiscal
year 2001.
Bonus to reward high-performance States
For fiscal year 1999 through fiscal year 2003, additional
funds are provided for States that are successful in meeting
the goals of the TANF program. Within 1 year of enactment, the
Secretary of DHHS, in consultation with the National Governors
Association and the American Public Welfare Association, is
required to develop a formula for measuring State performance
under the program. In developing the performance bonus formula,
the criteria for successful performance are the purposes of the
TANF block grant. More specifically, the criteria are providing
assistance to needy families so that children can be reared at
home or with relatives; ending the dependence of needy parents
on government benefits by promoting job preparation, work, and
marriage; preventing and reducing the incidence of out-of-
wedlock pregnancies and establishing numerical goals for
preventing and reducing these pregnancies; and encouraging the
formation and maintenance of two-parent families. The Secretary
is required to set a performance threshold that States must
meet in order to receive bonus payments. Total bonuses for the
5 years are set at $1 billion.
Contingency fund
TANF provides additional matching grants for States that
experience high and increasing unemployment rates or increased
food stamp caseloads. A total of $2 billion is appropriated for
fiscal year 1997 through fiscal year 2001.
To qualify for contingency funds, a State must expend from
its own funds on TANF an amount equal to at least 100 percent
of the amount it spent on AFDC, State and local administration,
Emergency Assistance, AFDC-related child care, and JOBS in
fiscal year 1994. It must also meet one of two need-based
criteria:
1. Its seasonally adjusted unemployment rate averaged over the
most recent 3-month period must be at least 6.5 percent
and at least 10 percent higher than the rate in the
corresponding 3-month period in either of the previous
2 years; or
2. Its food stamp caseload over the most recent 3-month period
must be at least 10 percent higher than the food stamp
caseload would have been, according to the Secretary of
Agriculture, in the corresponding 3-month period in
fiscal year 1994 or 1995 if Public Law 104-193 had been
in effect then.
The unemployment criteria are the same as the optional
criteria available to the States for triggering extended
benefits (EB) in the unemployment compensation program. The
information to determine whether a State qualifies for
contingency funds is available from the Department of Labor,
which issues weekly extended benefit trigger notices.
The Secretary of the Department of Agriculture determines
whether a State qualifies for contingency funds based on a rise
in food stamp caseloads. The Secretary is instructed to adjust
the fiscal year 1994 caseload data to determine what the
caseload would have been had the amendments made by the
Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 been in effect during that year.
The amount of contingency funds for a State is the Federal
Medical Assistance Percentage of a State's excess expenditures
in the TANF program. Excess expenditures are the difference
between a State's total TANF expenditures from its own funds
(plus expenditures financed from advances from the contingency
fund itself) minus an amount equal to fiscal year 1994 State
spending on AFDC, State and local administration, Emergency
Assistance, AFDC-related child care, and JOBS. If a State
receives matching funds for child care, any child expenditures
made under TANF are disregarded in the calculation and AFDC-
related child care spending also is subtracted from the fiscal
year 1994 base.
Contingency funds are capped at 20 percent of the State's
family assistance grant. A State may receive in each month that
it qualifies, up to one-twelfth of its maximum contingency
grant. States must remit any overpayments made under the
contingency fund at the end of the fiscal year. If a State
failed to meet the maintenance of effort requirement for
contingency funds, but received contingency money, its
subsequent year s family assistance grant would be reduced by
the amount of contingency funds it received.

Child Care

Under the reformed Child Care and Development Block Grant
(CCDBG), the Federal Government provides States with both
discretionary and entitlement funding for child care. Over the
6 years, fiscal year 1997 through fiscal year 2002, a maximum
of $19.9 billion would be provided for child care. Of this
amount, $6 billion are in discretionary funds, and hence actual
funding will be determined by annual appropriations. However, a
total of $13.9 billion is provided as entitlements to States
and Indian tribes. All Federal funds are consolidated under the
expanded CCDBG. More specifically:
1. Discretionary funds.--CCDBG discretionary funding is
authorized at $1 billion per year through fiscal year
2002. Actual funding would depend upon annual
appropriations. Up to 2 percent of appropriated funds,
but no less than 1 percent of the amount appropriated,
is reserved for Indian tribes;
2. Entitlements to the States.--The law provides $1.967
billion in entitlement funds for fiscal year 1997. The
annual entitlement amount then gradually rises to
$2.717 billion in fiscal year 2002. These funds are
divided as follows:
-- States would receive grants totaling $1.2 billion each
year based on Federal payments to the States for
AFDC-related child care programs in recent fiscal
years;
-- Indian tribes would be entitled to up to 2 percent, but
not less than 1 percent, of the amount of
entitlement funds provided for child care; and
-- Remaining funds would be available for matching grants to
the States.
Table 5 provides an estimate of the maximum potential
allocations to each State for child care for fiscal year 1997
through fiscal year 2002. The table assumes that: (1) Congress
appropriates the full $1 billion authorized each year for
discretionary child care funds; (2) all States receive the
maximum matching grant for child care; and (3) Indian tribes
receive their maximum 2 percent of child care funds.

Discretionary Funding

Discretionary funds are allocated to the States based on
the formula in the CCDBG which divides appropriated funds based
on each State's: (1) share of the population aged 5 and
younger; (2) share of children receiving free or reduced price
school lunches; and (3) per-capita income. State allotments are
determined after funds are set aside for Indian tribes and the
territories. Indian tribes will receive up to 2 percent, but no
less than 1 percent of appropriated funds. The territories of
Guam, the Virgin Islands, and the Northern Marianas are
eligible for one-half of 1 percent of appropriated funds
(Puerto Rico is treated as a State).
Table 6 provides estimated allocations to the States for
discretionary child care funds. For the 50 States, the District
of Columbia, and Puerto Rico, the estimates are from DHHS and
reflect the State shares based on preliminary fiscal year 1996
allocation. Territory allotments are based on estimated fiscal
year 1996 shares of the territory set-aside allotted to each of
the territories. It should be noted that changes in formula
factors over the fiscal year 1997 through fiscal year 2002
period may occur, and therefore each year's actual
discretionary allotments may differ from those based on fiscal
year 1997 shares. The estimates also assume that Indian tribes
receive the maximum set-aside of 2 percent and that DHHS
withholds one-fourth of 1 percent of State allotments for
technical assistance.

Mandatory Funding

States are also entitled to mandatory funding under the
CCDBG. These grants would replace the prior law title IV-A
child care programs of AFDC/JOBS, transitional, and at-risk
child care. Federal funds for child care provided under title
IV-A are transferred to the CCDBG, and are subject to the rules
and conditions that apply to the CCDBG.
Mandatory child care funding is divided into three parts.
First, States are entitled to a certain amount based on their
recent expenditures in the prior law title IV-A programs. These
recent expenditures are the greatest of the Federal share of
expenditures for title IV-A child care programs: (1) in fiscal
year 1995; (2) in fiscal year 1994; or (3) on average, over the
fiscal year 1992 to fiscal year 1994 period. The total of these
expenditures is $1.2 billion annually. This $1.2 billion is
referred to as the amount guaranteed to the States for child
care. Second, Indian tribes are entitled to up to 2 percent of
mandatory child care funding. Third, remaining funds are
available for matching grants. In order to qualify for matching
grants, a State must first expend on child care all of its
guaranteed child care grant (its share of the $1.2 billion a
year) plus an amount equal to what was spent from its own funds
on title IV-A child care in fiscal year 1994 or fiscal year
1995, whichever is higher. State matching grants are capped
based on a share of available funds. The State's share, in
turn, is based on its share of the population under age 13.
Table 7 shows the amount guaranteed to the States for each
year, fiscal year 1997 through fiscal year 2002. Table 8 shows
each State's estimated yearly maximum matching grant.

TABLE 3.--ANNUAL FAMILY ASSISTANCE GRANTS BY STATE,
FISCAL YEARS 1997-2002
[$ in thousands]
------------------------------------------------------------------------
Family Family
State assistance State assistance
grant grant
------------------------------------------------------------------------
Alabama...................... $93,006 Montana........ $45,534
Alaska....................... 63,609 Nebraska....... 58,029
Arizona...................... 222,420 Nevada......... 43,977
Arkansas..................... 56,733 New Hampshire.. 38,521
California................... 3,733,818 New Jersey..... 404,035
Colorado..................... 135,553 New Mexico..... 126,103
Connecticut.................. 266,788 New York....... 2,359,975
Delaware..................... 32,291 North Carolina. 302,240
District of Columbia......... 92,610 North Dakota... 25,888
Florida...................... 560,956 Ohio........... 727,968
Georgia...................... 330,742 Oklahoma....... 148,014
Hawaii....................... 98,905 Oregon......... 167,925
Idaho........................ 31,851 Pennsylvania... 719,499
Illinois..................... 585,057 Rhode Island... 95,022
Indiana...................... 206,799 South Carolina. 99,968
Iowa......................... 130,088 South Dakota... 21,894
Kansas....................... 101,931 Tennessee...... 189,788
Kentucky..................... 181,288 Texas.......... 486,257
Louisiana.................... 163,972 Utah........... 74,952
Maine........................ 78,121 Vermont........ 47,353
Maryland..................... 229,098 Virginia....... 158,285
Massachusetts................ 459,371 Washington..... 399,637
Michigan..................... 775,353 West Virginia.. 110,176
Minnesota.................... 266,398 Wisconsin...... 318,188
Mississippi.................. 86,768 Wyoming........ 21,781
Missouri..................... 214,582
------------------------------------------------------------------------
Total.......... 16,389,114
------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service based on
allocations from the U.S. Department of Health and Human Services.

TABLE 4.--ESTIMATED GRANTS TO STATES WITH HIGH POPULATION GROWTH AND/OR LOW WELFARE GRANTS PER POOR PERSON,
FISCAL YEARS 1998-2001
[$ in thousands]
----------------------------------------------------------------------------------------------------------------
Year
State -----------------------------------------------
1998 1999 2000 2001
----------------------------------------------------------------------------------------------------------------
Alabama......................................................... $2,671 $5,410 $8,216 $8,264
Alaska.......................................................... 1,659 3,359 5,102 5,131
Arizona......................................................... 5,762 11,667 17,720 17,822
Arkansas........................................................ 1,497 3,032 4,606 4,632
California...................................................... 0 0 0 0
Colorado........................................................ 3,268 6,617 10,051 10,108
Connecticut..................................................... 0 0 0 0
Delaware........................................................ 0 0 0 0
District of Columbia............................................ 0 0 0 0
Florida......................................................... 14,547 29,457 44,740 44,997
Georgia......................................................... 8,978 18,181 27,614 27,773
Hawaii.......................................................... 0 0 0 0
Idaho........................................................... 842 1,706 2,591 2,606
Illinois........................................................ 0 0 0 0
Indiana......................................................... 0 0 0 0
Iowa............................................................ 0 0 0 0
Kansas.......................................................... 0 0 0 0
Kentucky........................................................ 0 0 0 0
Louisiana....................................................... 4,100 8,303 12,611 12,684
Maine........................................................... 0 0 0 0
Maryland........................................................ 0 0 0 0
Massachusetts................................................... 0 0 0 0
Michigan........................................................ 0 0 0 0
Minnesota....................................................... 0 0 0 0
Mississippi..................................................... 2,176 4,406 6,692 6,731
Missouri........................................................ 0 0 0 0
Montana......................................................... 1,131 2,289 3,477 3,497
Nebraska........................................................ 0 0 0 0
Nevada.......................................................... 899 1,821 2,765 2,781
New Hampshire................................................... 0 0 0 0
New Jersey...................................................... 0 0 0 0
New Mexico...................................................... 3,246 6,573 9,983 10,041
New York........................................................ 0 0 0 0
North Carolina.................................................. 8,696 17,609 26,745 26,899
North Dakota.................................................... 0 0 0 0
Ohio............................................................ 0 0 0 0
Oklahoma........................................................ 0 0 0 0
Oregon.......................................................... 0 0 0 0
Pennsylvania.................................................... 0 0 0 0
Rhode Island.................................................... 0 0 0 0
South Carolina.................................................. 2,596 5,257 7,984 8,030
South Dakota.................................................... 0 0 0 0
Tennessee....................................................... 5,193 10,516 15,973 16,064
Texas........................................................... 12,693 25,703 39,039 39,263
Utah............................................................ 2,096 4,245 6,447 6,484
Vermont......................................................... 0 0 0 0
Virginia........................................................ 4,381 8,873 13,476 13,553
Washington...................................................... 0 0 0 0
West Virginia................................................... 0 0 0 0
Wisconsin....................................................... 0 0 0 0
Wyoming......................................................... 582 1,178 1,790 1,800
-----------------------------------------------
Annual total.................................................. 87,014 176,204 267,623 269,160
===============================================
Cumulative total.............................................. 87,014 263,218 530,840 800,000
----------------------------------------------------------------------------------------------------------------
Source: Table prepared by Congressional Research Service based on data from the Department of Health and Human
Services and the Bureau of the Census.

TABLE 5.--TOTAL FUNDING UNDER THE CHILD CARE AND DEVELOPMENT BLOCK GRANT, FISCAL YEARS 1997-2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year
State ------------------------------------------------------------------------------------------------ Total 1997-
1997 1998 1999 2000 2001 2002 2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama................................. $47,775 $49,936 $51,610 $54,896 $58,215 $60,764 $323,196
Alaska.................................. 7,480 7,953 8,279 8,912 9,555 10,053 52,233
Arizona................................. 51,166 52,071 53,808 57,194 60,601 63,196 338,036
Arkansas................................ 23,824 24,617 25,475 27,216 28,953 30,258 160,343
California.............................. 309,577 325,220 339,349 367,123 395,348 417,180 2,153,796
Colorado................................ 31,519 32,780 34,199 37,010 39,817 41,931 217,255
Connecticut............................. 34,522 35,566 36,628 38,786 40,893 42,391 228,785
Delaware................................ 9,191 9,479 9,745 10,273 10,800 11,197 60,685
District of Columbia.................... 7,987 7,929 8,024 8,256 8,484 8,646 49,325
Florida................................. 129,038 132,336 136,984 146,278 155,539 162,442 862,616
Georgia................................. 88,883 91,473 94,338 99,961 105,616 109,908 590,178
Hawaii.................................. 12,207 12,778 13,298 14,304 15,344 16,165 84,096
Idaho................................... 11,494 11,998 12,533 13,573 14,636 15,471 79,705
Illinois................................ 130,341 134,581 138,967 147,766 156,547 163,117 871,318
Indiana................................. 59,542 61,857 63,968 68,179 72,388 75,545 401,478
Iowa.................................... 25,406 26,520 27,434 29,332 31,216 32,605 172,513
Kansas.................................. 25,862 26,954 27,907 29,849 31,798 33,266 175,636
Kentucky................................ 44,508 45,938 47,272 49,952 52,634 54,636 294,939
Louisiana............................... 53,260 54,951 56,525 59,795 63,076 65,578 353,186
Maine................................... 10,126 10,479 10,815 11,542 12,252 12,752 67,966
Maryland................................ 50,172 52,689 54,687 58,619 62,545 65,486 344,196
Massachusetts........................... 74,745 76,331 78,138 81,852 85,442 87,934 484,443
Michigan................................ 87,517 91,905 95,473 102,626 109,756 115,048 602,325
Minnesota............................... 49,714 51,293 52,870 56,108 59,303 61,632 330,920
Mississippi............................. 31,409 32,273 33,237 35,218 37,203 38,710 208,050
Missouri................................ 57,153 58,830 60,577 64,182 67,741 70,370 378,853
Montana................................. 8,774 9,085 9,404 10,047 10,698 11,195 59,204
Nebraska................................ 21,415 22,042 22,610 23,786 24,961 25,834 140,648
Nevada.................................. 11,012 11,287 11,899 13,071 14,253 15,158 76,680
New Hampshire........................... 10,721 11,007 11,363 12,102 12,821 13,331 71,345
New Jersey.............................. 71,278 74,083 76,995 82,729 88,420 92,602 486,107
New Mexico.............................. 23,363 24,157 24,925 26,434 27,970 29,165 156,014
New York................................ 210,973 216,787 222,960 235,437 247,717 256,586 1,390,460
North Carolina.......................... 116,740 118,734 121,354 126,478 131,585 135,400 750,291
North Dakota............................ 6,572 6,748 6,929 7,328 7,719 8,004 43,300
Ohio.................................... 135,123 139,091 142,885 150,579 158,189 163,764 889,630
Oklahoma................................ 49,138 50,099 51,170 53,417 55,664 57,350 316,838
Oregon.................................. 37,571 38,935 40,143 42,529 44,951 46,827 250,958
Pennsylvania............................ 118,360 122,295 126,141 133,952 141,601 147,094 789,443
Rhode Island............................ 11,880 12,151 12,445 13,058 13,655 14,074 77,263
South Carolina.......................... 37,794 39,519 40,897 43,657 46,419 48,501 256,787
South Dakota............................ 6,961 7,295 7,575 8,144 8,718 9,147 47,840
Tennessee............................... 72,107 73,649 75,464 79,080 82,678 85,369 468,347
Texas................................... 209,799 216,455 224,252 239,766 255,444 267,471 1,413,186
Utah.................................... 28,824 29,895 30,918 32,944 35,039 36,700 194,320
Vermont................................. 7,381 7,585 7,771 8,155 8,532 8,804 48,229
Virginia................................ 57,639 60,439 62,867 67,660 72,435 75,998 397,038
Washington.............................. 72,671 75,324 77,553 81,918 86,348 89,761 483,575
West Virginia........................... 20,692 21,376 21,926 23,047 24,159 24,981 136,180
Wisconsin............................... 53,294 55,226 56,983 60,568 64,109 66,703 356,883
Wyoming................................. 5,789 6,034 6,219 6,602 6,998 7,313 38,954
Indian set-aside........................ 59,340 61,340 63,340 67,340 71,340 74,340 397,040
Puerto Rico \1\......................... 24,956 24,956 24,956 24,956 24,956 24,956 149,735
Guam \1\................................ 2,404 2,404 2,404 2,404 2,404 2,404 14,425
Virgin Islands \1\...................... 1,687 1,687 1,687 1,687 1,687 1,687 10,121
Northern Marianas \1\................... 909 909 909 909 909 909 5,454
===============================================================================================================
Totals................................ 2,959,583 3,059,333 3,159,083 3,358,583 3,558,083 3,707,708 19,802,370
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Funding in thousands. These allocations also reflect a regulatory provision that withholds 1/4 of 1 percent of State allotments for payment to
DHHS for technical assistance. This reduction in State allotments currently applies to discretionary CCDBG funds.
\1\ Discretionary amounts for the territories.
Source: Table prepared by the Congressional Research Service. Fiscal year 1997 allocations are from the Department of Health and Human Services.

TABLE 6.--STATE ANNUAL ALLOTMENTS OF DISCRETIONARY CHILD CARE FUNDS,
FISCAL YEARS 1997-2002
[$ in thousands]
------------------------------------------------------------------------
State Allotment Percent
------------------------------------------------------------------------
Alabama......................................... $20,236 2.03
Alaska.......................................... 1,907 0.19
Arizona......................................... 18,512 1.86
Arkansas........................................ 11,896 1.19
California...................................... 120,467 12.08
Colorado........................................ 11,060 1.11
Connecticut..................................... 7,225 0.72
Delaware........................................ 2,112 0.21
District of Columbia............................ 1,979 0.20
Florida......................................... 50,046 5.02
Georgia......................................... 32,158 3.22
Hawaii.......................................... 3,662 0.37
Idaho........................................... 5,134 0.51
Illinois........................................ 37,706 3.78
Indiana......................................... 18,065 1.81
Iowa............................................ 9,229 0.93
Kansas.......................................... 8,899 0.89
Kentucky........................................ 17,943 1.80
Louisiana....................................... 26,680 2.67
Maine........................................... 3,873 0.39
Maryland........................................ 13,203 1.32
Massachusetts................................... 14,395 1.44
Michigan........................................ 29,218 2.93
Minnesota....................................... 13,483 1.35
Mississippi..................................... 17,359 1.74
Missouri........................................ 18,227 1.83
Montana......................................... 3,213 0.32
Nebraska........................................ 5,537 0.56
Nevada.......................................... 4,134 0.41
New Hampshire................................... 2,567 0.26
New Jersey...................................... 18,640 1.87
New Mexico...................................... 9,447 0.95
New York........................................ 57,493 5.76
North Carolina.................................. 28,149 2.82
North Dakota.................................... 2,345 0.24
Ohio............................................ 35,119 3.52
Oklahoma........................................ 15,233 1.53
Oregon.......................................... 9,973 1.00
Pennsylvania.................................... 32,711 3.28
Rhode Island.................................... 2,721 0.27
South Carolina.................................. 18,121 1.82
South Dakota.................................... 3,155 0.32
Tennessee....................................... 20,849 2.09
Texas........................................... 92,921 9.32
Utah............................................ 9,396 0.94
Vermont......................................... 1,715 0.17
Virginia........................................ 19,258 1.93
Washington...................................... 15,905 1.59
West Virginia................................... 7,719 0.77
Wisconsin....................................... 14,924 1.50
Wyoming......................................... 1,627 0.16
Indian tribe set-aside.......................... 20,000 2.01
Puerto Rico..................................... 24,956 2.50
Guam............................................ 2,404 0.24
Virgin Islands.................................. 1,687 0.17
Northern Marianas............................... 909 0.09
-----------------------
Total......................................... 997,500 100.00
------------------------------------------------------------------------
Note: State allotments are based on the fiscal year 1996 State shares of
Child Care and Development Block Grant (CCDBG) funds. The shares may
change over time.

Source: Table prepared by the Congressional Research Service (CRS).
Allotments for the 50 States, District of Columbia, and Puerto Rico
are estimates from the Department of Health and Human Services based
on 1996 shares. Allotments for the territories are CRS estimates based
on each territory's share of the 0.5 percent set-aside for the
territories in fiscal year 1996 published in the Administration for
Children and Families appropriation justifications document for fiscal
year 1997.

TABLE 7.--STATE ANNUAL ALLOTMENTS OF GUARANTEED CHILD CARE FUNDING,
FISCAL YEARS 1997-2002
[in thousands]
------------------------------------------------------------------------
Guaranteed Guaranteed
State child care State child care
funds funds
------------------------------------------------------------------------
Alabama...................... $16,442 Montana........ $3,191
Alaska....................... 3,545 Nebraska....... 11,338
Arizona...................... 19,891 Nevada......... 2,580
Arkansas..................... 5,300 New Hampshire.. 5,052
California................... 92,946 New Jersey..... 31,663
Colorado..................... 10,174 New Mexico..... 8,703
Connecticut.................. 18,738 New York....... 104,894
Delaware..................... 5,179 North Carolina. 69,639
District of Columbia......... 4,721 North Dakota... 2,506
Florida...................... 43,027 Ohio........... 70,445
Georgia...................... 36,523 Oklahoma....... 24,910
Hawaii....................... 5,221 Oregon......... 19,409
Idaho........................ 2,868 Pennsylvania... 55,337
Illinois..................... 59,609 Rhode Island... 6,634
Indiana...................... 26,182 South Carolina. 9,867
Iowa......................... 8,878 South Dakota... 1,711
Kansas....................... 9,812 Tennessee...... 37,702
Kentucky..................... 16,702 Texas.......... 59,844
Louisiana.................... 13,865 Utah........... 12,592
Maine........................ 3,137 Vermont........ 4,148
Maryland..................... 23,301 Virginia....... 21,329
Massachusetts................ 44,973 Washington..... 41,948
Michigan..................... 32,082 West Virginia.. 8,841
Minnesota.................... 23,368 Wisconsin...... 24,511
Mississippi.................. 6,293 Wyoming........ 2,815
Missouri..................... 24,669
------------------------------------------------------------------------
Total.......... 1,199,051
------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service based on
allotments from the Department of Health and Human Services.

TABLE 8.--STATE ESTIMATED ALLOTMENTS UNDER THE ENTITLEMENT CHILD CARE MATCHING GRANTS, FISCAL YEARS 1997-2002
----------------------------------------------------------------------------------------------------------------
Year
State -----------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
Alabama..................... $11,097 $13,259 $14,932 $18,218 $21,537 $24,086
Alaska...................... 2,029 2,502 2,828 3,461 4,104 4,602
Arizona..................... 12,763 13,668 15,405 18,791 22,198 24,793
Arkansas.................... 6,628 7,421 8,278 10,019 11,757 13,062
California.................. 96,164 111,808 125,936 153,710 181,936 203,767
Colorado.................... 10,285 11,546 12,965 15,776 18,584 20,697
Connecticut................. 8,559 9,603 10,665 12,823 14,930 16,428
Delaware.................... 1,900 2,188 2,454 2,982 3,509 3,906
District of Columbia........ 1,287 1,229 1,324 1,556 1,784 1,946
Florida..................... 35,965 39,264 43,911 53,205 62,466 69,369
Georgia..................... 20,202 22,792 25,657 31,281 36,935 41,227
Hawaii...................... 3,324 3,895 4,415 5,421 6,461 7,282
Idaho....................... 3,492 3,997 4,532 5,571 6,635 7,470
Illinois.................... 33,026 37,266 41,652 50,451 59,232 65,802
Indiana..................... 15,294 17,609 19,721 23,932 28,140 31,297
Iowa........................ 7,299 8,413 9,327 11,225 13,109 14,498
Kansas...................... 7,151 8,243 9,197 11,138 13,088 14,556
Kentucky.................... 9,864 11,294 12,627 15,307 17,989 19,991
Louisiana................... 12,715 14,407 15,981 19,250 22,532 25,033
Maine....................... 3,116 3,468 3,804 4,532 5,242 5,742
Maryland.................... 13,667 16,184 18,182 22,115 26,040 28,981
Massachusetts............... 15,377 16,963 18,770 22,484 26,073 28,565
Michigan.................... 26,217 30,605 34,173 41,327 48,456 53,748
Minnesota................... 12,863 14,442 16,019 19,257 22,452 24,781
Mississippi................. 7,757 8,620 9,585 11,565 13,550 15,058
Missouri.................... 14,258 15,934 17,681 21,286 24,845 27,474
Montana..................... 2,371 2,682 3,001 3,644 4,295 4,792
Nebraska.................... 4,540 5,167 5,735 6,911 8,086 8,959
Nevada...................... 4,298 4,572 5,185 6,356 7,539 8,444
New Hampshire............... 3,102 3,389 3,744 4,483 5,203 5,713
New Jersey.................. 20,975 23,781 26,693 32,427 38,118 42,300
New Mexico.................. 5,213 6,007 6,776 8,285 9,821 11,016
New York.................... 48,587 54,400 60,573 73,051 85,331 94,200
North Carolina.............. 18,951 20,946 23,565 28,689 33,797 37,612
North Dakota................ 1,721 1,897 2,078 2,477 2,868 3,153
Ohio........................ 29,559 33,527 37,321 45,015 52,625 58,200
Oklahoma.................... 8,995 9,956 11,027 13,274 15,521 17,207
Oregon...................... 8,189 9,554 10,762 13,148 15,569 17,446
Pennsylvania................ 30,311 34,247 38,093 45,904 53,553 59,046
Rhode Island................ 2,525 2,797 3,091 3,703 4,301 4,719
South Carolina.............. 9,806 11,531 12,909 15,669 18,431 20,513
South Dakota................ 2,095 2,429 2,709 3,278 3,852 4,281
Tennessee................... 13,557 15,098 16,914 20,529 24,128 26,818
Texas....................... 57,034 63,690 71,487 87,001 102,679 114,706
Utah........................ 6,837 7,908 8,930 10,957 13,052 14,712
Vermont..................... 1,519 1,723 1,908 2,292 2,670 2,942
Virginia.................... 17,052 19,853 22,280 27,073 31,848 35,411
Washington.................. 14,818 17,470 19,700 24,065 28,495 31,907
West Virginia............... 4,132 4,816 5,366 6,487 7,599 8,421
Wisconsin................... 13,859 15,791 17,548 21,133 24,674 27,268
Wyoming..................... 1,347 1,592 1,777 2,160 2,556 2,871
-----------------------------------------------------------------------------------
Totals.................... 723,692 821,442 919,192 1,114,692 1,310,192 1,456,817
----------------------------------------------------------------------------------------------------------------
Note: Funding in thousands. These allocations assume a maximum 2 percent set-aside for Indians. They also
reflect a regulatory provision that withholds 1/4 of 1 percent of State allotments for payment to the
Department of Health and Human Services (DHHS) for technical assistance. This reduction in State allotments
currently applies to discretionary Child Care and Development Block Grant funds.
Source: Table prepared by the Congressional Research Service. Fiscal year 1997 allocations are from DHHS.

=======================================================================

SECTION 4.

SUMMARY OF EFFECTIVE DATES

BY TITLE

=======================================================================

SECTION 4.--SUMMARY OF EFFECTIVE DATES BY TITLE
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section Provision Effective date
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title I. Temporary Assistance for Needy Families Block Grant
--------------------------------------------------------------------------------------------------------------------------------------------------------
103a(402) \1\.................. State plan requirements July 1, 1997, or earlier at State option.
103a(403a1).................... Block grants to States July 1, 1997, or earlier at State option.
103a(403a2).................... Illegitimacy reduction bonus Oct. 1, 1998.
103a(403a3).................... Population growth fund Oct. 1, 1997.
103a(403a4).................... High performance bonus Oct. 1, 1998.
103a(403b)..................... Contingency fund Oct. 1, 1996.
103a(404)...................... Conditions on use of block grants to States July 1, 1997, or earlier at State option.
103a(405)...................... Administrative provisions July 1, 1997, or earlier at State option.
103a(406)...................... Federal loan fund Oct. 1, 1996.
103a(407a-h)................... Mandatory work requirements July 1, 1997, or earlier at State option. (annual work
participation rates apply to all of fiscal year 1997
regardless of when State begins operating its block grant
program; however, the penalty for failure to meet
participation rates does not take effect until the later
of July 1, 1997 or 6 months after plan submission and
shall apply only to conduct that occurs on that date or
later; see ``Penalties'' below).
103a(407i)..................... Review of implementation of work programs Between Oct. 1, 1998 and Sept. 30, 1999 (reviews by
Congressional committees must be conducted in fiscal year
1999).
103a(408)...................... Prohibitions, requirements July 1, 1997, or earlier at State option (prohibitions and
requirements take effect on the date the State begins
operating its block grant program; e.g., the 5-year time
limit for benefit eligibility, requirement that teenage
parents attend school, etc.).
103a(409)...................... Penalties For failure to repay loans and for failure to maintain
prior spending, Oct. 1, 1996; otherwise the later of July
1, 1997, or 6 months after the State submits its plan.
103a(410)...................... Appeal of adverse decision Follows penalty schedule above; requires timely notice of
adverse action; specifies time allowed for appeals
(administrative and Federal) and for administrative
decision on appeal.
103a(411)...................... Data collection and reporting Later of July 1, 1997, or 6 months after the State submits
its plan; the Secretary must send Congress a report by
Mar. 31, 1998, and annually thereafter, on whether States
are meeting major goals and on program characteristics.
103a(412)...................... Direct funding and administration by Indian tribes Oct. 1, 1996.
103a(413)...................... Research, evaluation, and national studies 1. Annual ranking of States on work and on illegitimacy:
July 1, 1997 (or earlier if State begins operating its
TANF block grant program sooner).
2. Reports by Secretary on children affected by changes:
Aug. 22, 1999.
3. States must submit annual reports of child poverty
rates beginning not later than Nov. 20, 1996.
103a(414)...................... Study by Census Bureau Aug. 22, 1996.
103a(415)...................... Waivers Aug. 22, 1996 (current waivers may continue to supersede
provisions of this law, including work requirements, for
the life of the waiver and for the area and issue of the
waiver only).
103a(416)...................... Administration July 1, 1997.
103a(417)...................... Limitation on Federal authority July 1, 1997 (earlier if State opts for TANF sooner).
103b........................... Grants to outlying areas (Puerto Rico, Virgin Islands, For increase in funding ceilings, Oct. 1, 1996; for the
American Samoa) start of the TANF block grant, July 1, 1997 (or earlier
at the option of the territory).
103c........................... Elimination of child care programs under the Social Oct. 1, 1996.
Security Act
104............................ Services provided by charitable, religious, or private July 1, 1997 (earlier if State opts for TANF sooner).
organizations
105............................ Census data on grandparents as primary care givers Not later than Nov. 20, 1996.
106............................ Report on data processing Not later than Feb. 22, 1997.
107............................ Study on alternative outcomes measures Secretary must consider alternatives to work requirements
(which begin Oct. 1, 1996) and must report findings to
Congress no later than Sept. 30, 1998.
108............................ Conforming amendments to the Social Security Act July 1, 1997 (except section 603 provisions about the new
child care entitlement in the Social Security Act, which
take effect Oct. 1, 1996).
109............................ Conforming amendments to the Food Stamp Act July 1, 1997.
110............................ Conforming amendments to other laws July 1, 1997.
111............................ Development of prototype of counterfeit-resistant Social Commissioner of Social Security must report to Congress by
Security card Aug. 22, 1997.
112............................ Modification of JOLI program July 1, 1997.
113............................ Secretarial submission of technical and conforming Secretary must submit proposal by Nov. 20, 1996.
amendments
114............................ Assuring Medicaid coverage July 1, 1997 (earlier if State opts for TANF sooner).
115............................ Denial of assistance for drug-related convictions July 1, 1997 (mandated restrictions, from which States
could ``opt-out,'' apply only to individuals convicted
after Aug. 22, 1996).
116a-b......................... Effective date, transition rule General effective date is July 1, 1997; special transition
rules apply for States opting to begin their block grant
programs earlier.
116c........................... Termination of individual entitlement to AFDC Oct. 1, 1996.
Title II. Supplemental Security Income (SSI)
--------------------------------------------------------------------------------------------------------------------------------------------------------
201............................ Denial of SSI benefits for 10 years to individuals found to Aug. 22, 1996.
have fraudulently misrepresented residence in order to
obtain benefits simultaneously in two or more States
202............................ Denial of SSI benefits for fugitive felons and probation Aug. 22, 1996.
and parole violators
203............................ Financial incentives for State or local penal institutions Applies to individuals whose period of confinement in an
to provide SSA information on prisoners receiving benefits institution commences on or after Mar. 1, 1997.
Study of other potential improvements in the collection of Aug. 22, 1996; results of the study are due Aug. 22, 1997.
information regarding public inmates
Institution compliance report Aug. 22, 1996; report due Oct. 1, 1998.
204............................ Effective date of application for benefits Applies to applications filed on or after Aug. 22, 1996.
211............................ New definition of childhood disability, elimination of Applies to new and pending applications on or after Aug.
references to maladaptive behavior and discontinuance of 22, 1996. Current beneficiaries must be notified by Jan.
the individualized functional assessment 1, 1997, and redeterminations are to be completed by Aug.
22, 1997. Current beneficiaries found ineligible upon
redetermination will continue to receive benefits until
July 1, 1997 or the date of their redetermination,
whichever is later.
Progress report on implementation to Congress Aug. 22, 1996; report due within 180 days.
Regulations submitted to Congress for review Aug. 22, 1996; regulations must be submitted for review
not later than 45 days before the effective date of the
regulations.
Authorization of additional funding Aug. 22, 1996.
212............................ Eligibility redeterminations and continuing disability Applies to benefits for the months beginning on or after
reviews Aug. 22, 1996.
213............................ Requirement to establish an account Applies to payments made after Aug. 22, 1996.
214............................ Reduction in cash benefits payable to institutionalized Applies to benefits beginning in Dec. 1996.
individuals whose medical costs are covered by private
insurance
215............................ Regulations Are required to be published by Nov. 22, 1996.
221............................ Installment payment of large past-due SSI benefits Effective with respect to past-due benefits payable after
Nov. 1996.
222............................ Regulations Are required to be published by Nov. 22, 1996.
231............................ Annual report on the SSI Program Aug. 22, 1996; report due not later than May 30 of each
year.
232............................ GAO study Aug. 22, 1996; report due not later than Jan. 1, 1999.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title III. Child Support
--------------------------------------------------------------------------------------------------------------------------------------------------------
302............................ Distribution of arrear ages that accrued after the family Oct. 1, 1997.
ceased to receive welfare
302............................ Distribution of arrear ages that accrued before the family Oct. 1, 2000.
received welfare
302............................ Study by Secretary on new rules of child support Oct. 1, 1998.
distribution
302............................ General effective date for distribution rules and ``gap'' Oct. 1, 1996, or earlier at State option.
payments
303............................ Privacy safeguards for all child support information Oct. 1, 1997.
304............................ Right to notification of hearing Oct. 1, 1997.
311............................ State Case Registry Oct. 1, 1998.
312............................ State Disbursement Unit Oct. 1, 1998.
313............................ Directory of New Hires Oct. 1, 1997 (but States that have a new hire system in
place may continue their system until Oct. 1, 1998).
313............................ Comparison of new hire information in State Case Registry May 1, 1998.
and other sources and sending information to the National
Directory of New Hires
314............................ Orders not subject to withholding must automatically be Oct. 1, 1996.
subject to withholding if arrearages occur
316............................ Expansion of Federal Parent Locator Service to include Oct. 1, 1998.
Federal Case Registry of Orders
316............................ Expansion of Federal Parent Locator Service to include the Oct. 1, 1997.
National Directory of New Hires
321............................ Adoption of Uniform Interstate Family Support Act (UIFSA) Jan. 1, 1998.
322............................ Improvements to full faith and credit for child support Aug. 22, 1996.
orders
324............................ Secretary promulgate forms to be used in interstate cases Oct. 1, 1996.
for use in withholding income, imposing liens, and issuing
administering subpoenas
324............................ States must use the forms promulgated by the Secretary for Mar. 1, 1997.
income withholding, liens and administrative subpoenas
341............................ Secretary's report on a new incentive system of child Mar. 1, 1997.
support financing
341............................ Implementation of revised incentive system Oct. 1, 1999.
341............................ State option for calculation of paternity establishment Aug. 22, 1996.
percentage
342............................ Federal and State reviews and audits First calendar quarter after Aug. 22, 1996.
343............................ Required reporting procedures Aug. 22, 1996.
344............................ Completion of automated data processing requirements in Oct. 1, 1997
effect on or before the enactment of the Family Support
Act of 1988
344............................ Completion of automated data processing enacted on or Oct. 1, 2000.
before Aug. 22, 1996
345............................ Technical assistance Aug. 22, 1996.
346............................ New requirements for Secretary's annual report to Congress Oct. 1, 1996.
352............................ Consumer reports Aug. 22, 1996.
353............................ Nonliability for financial institutions Aug. 22, 1996.
361............................ Fees for Internal Revenue Service collection of arrearages Oct. 1, 1997.
362............................ Reforms of Child Support Collections for Federal Employees Feb. 22, 1997.
(including military personnel)
363............................ Enforcement of child support obligations of military Aug. 22, 1996.
personnel
366............................ Definition of support order Aug. 22, 1996.
370............................ Denial of passports for nonpayment of child support Oct. 1, 1997.
371............................ International support enforcement Aug. 22, 1996.
374............................ Nondischargeability in bankruptcy Aug. 22, 1996.
381............................ Correction of ERISA definition of medical child support General effective date is Aug. 22, 1996, but if pension
order plan needs to be amended, first plan year after Jan. 1,
1997.
391............................ Grants to States for access and visitation programs Aug. 22, 1996.
395............................ General effective date Provisions of this act that require amendment of State
laws under section 466 of the Social Security Act, or
revision of State plans under section 454, are effective
on Oct. 1, 1996; all other provisions (except those with
special effective dates as outlined above) are effective
upon enactment; if States must amend State law to comply
with this act, the changes must be made no later than the
first day of the first quarter after the close of the
first regular session of the State legislature that
begins after enactment of this act. If States must amend
their constitution to comply with this act, the State is
not out of compliance until the earlier of 1 year after
the effective date of a State constitutional amendment or
Aug. 22, 2001.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title IV. Restricting Welfare and Public Benefits for Aliens
--------------------------------------------------------------------------------------------------------------------------------------------------------
401............................ Illegal aliens and nonimmigrants ineligible for most Aug. 22, 1996.
Federal benefits
402a........................... Legal noncitizens ineligible for SSI and food stamps Current recipients may remain eligible until as late as
Aug. 22, 1997; all others ineligible after Aug. 22, 1996.
402b........................... State option to provide AFDC/cash welfare, Medicaid, and State option after Aug. 22, 1996 (other than for future
social services to legal noncitizens entrants during their first 5 years--see below), but
current recipients remain eligible until Jan. 1, 1997.
403............................ 5-year limited eligibility for most Federal welfare Changes affect noncitizens arriving after Aug. 22, 1996,
benefits for future entrants for the individual's first 5 years in the U.S.
404............................ Agencies must inform the public and notify recipients After Aug. 22, 1996 (current recipients of SSI must be
affected by eligibility changes notified by Mar. 1, 1997).
411............................ Illegal aliens ineligible for most State benefits (with Aug. 22, 1996.
State ``opt-out'')
412............................ State authority to limit eligibility for most State welfare State option after Aug. 22, 1996, but current recipients
benefits for legal noncitizens remain eligible until Jan. 1, 1997.
421............................ Deeming of sponsor's income in determining noncitizen Changes apply only to individuals arriving under revised
eligibility for most Federal benefits sponsorship agreements (see below).
422............................ State authority to expand deeming to apply to most State Changes apply only to individuals arriving under revised
programs sponsorship agreements (see below).
423............................ Requirements for revised sponsorship agreements (affidavits Attorney General must formulate revised affidavits within
of support) 90 days of Aug. 22, 1996; the revised affidavits become
effective between 60 and 90 days after the Attorney
General has finalized the form.
432............................ Verification of eligibility for Federal public benefits By Feb. 22, 1998, the Attorney General must promulgate
regulations requiring verification of eligibility for
Federal benefits; States that administer programs
providing Federal public benefits have 24 months
following the promulgation of regulations to have
verification systems in effect.
435............................ No counting of quarters of work during which an alien Begins Jan. 1, 1997.
received welfare benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title V. Child Protection \2\

--------------------------------------------------------------------------------------------------------------------------------------------------------
Title VI. Child Care \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
603a........................... Authorization of appropriations and entitlement authority Authorization for discretionary grants to Child Care and
Development Block Grant (CCDBG): Aug. 22, 1996;
appropriation for new mandatory child care block grants,
Oct. 1, 1996.
612............................ Report by the Secretary Oct. 1, 1996 (first biennial report must be submitted no
later than Dec. 31, 1997).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title VII. Child Nutrition \4\
--------------------------------------------------------------------------------------------------------------------------------------------------------
704............................ Special assistance Aug. 22, 1996, except that new rounding rules will not
affect Federal subsidy rates until the regular July 1,
1997, inflation adjustment.
706............................ Summer food service program Aug. 22, 1996, except that reduced subsidies and new
rounding rules will not be effective until Jan. 1, 1997
(for the summer of 1997).
708............................ Child and adult care food program Aug. 22, 1996, except that the new restructured system for
day care home subsidies and new rounding rules will not
be effective until July 1, 1997, and interim regulations
governing the restructured system are due by Jan. 1,
1997.
723............................ School breakfast program authorization Aug. 22, 1996, except that termination of the requirement
for school breakfast and summer food service program
startup and expansion grants is effective Oct. 1, 1996.
731............................ Nutrition education and training Aug. 22, 1996, except that conversion of funding for the
nutrition education and training program from mandatory
to discretionary appropriations is effective Oct. 1,
1996.
741............................ Coordination of school lunch, school breakfast, and summer Aug. 22, 1996, with the report due Nov. 1, 1997.
food service programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title VIII. Food Stamps and Commodity Distribution \5\
--------------------------------------------------------------------------------------------------------------------------------------------------------
804............................ Adjustment of the thrifty food plan Oct. 1, 1996.
809............................ Deductions from income Aug. 22, 1996, except that the ceiling on excess shelter
expense deductions will rise on Jan. 1, 1997, Oct. 1,
1998, and Oct. 1, 2000.
810............................ Vehicle allowance Oct. 1, 1996.
824............................ Work requirement for able-bodied adults with dependents Aug. 22, 1996, except that transition provisions stipulate
that months before recipients are notified of the new
work requirement or 3 months after Aug. 22, 1996
(whichever is earlier) will not count toward the
requirement's time limit.
855............................ Study of the use of food stamps to purchase vitamins and Aug. 22, 1996, with the study due by Dec. 15, 1998.
minerals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title IX. Miscellaneous
--------------------------------------------------------------------------------------------------------------------------------------------------------
901............................ Appropriation by State legislatures July 1, 1997, or earlier at State option for TANF block
grants; Oct. 1, 1996, for Child Care and Development
Block Grant (CCDBG) funds.
902............................ Sanctioning for testing positive for controlled substances Aug. 22, 1996.
903............................ Elimination of housing assistance with respect to fugitive Aug. 22, 1996.
felons and probation and parole violators
905............................ Establishing national goals to prevent teenage pregnancies By Jan. 1, 1997, the Secretary of HHS must implement a
strategy for preventing out-of-wedlock pregnancies; by
June 30, 1998, she must report to Congress on progress in
meeting goals.
906............................ Sense of the Senate regarding enforcement of statutory rape By Jan. 1, 1997, the Attorney General must implement a
laws program that educates State and local law enforcement
officials on the prevention and prosecution of statutory
rape.
907............................ Provisions to encourage electronic benefit transfer systems Aug. 22, 1996.
908............................ Reduction of block grants to States for social services; Oct. 1, 1996 for reduction in grants; Aug. 22, 1996, for
use of vouchers authority to use funds for vouchers.
909............................ Rules relating to denial of earned income credit on basis In general, applies to taxable years beginning after Dec.
of disqualified income 31, 1995; for individuals who before June 26, 1996, had
in effect an earned income eligibility certificate for
taxable year 1996, applies to taxable years beginning
after Dec. 31, 1996.
910............................ Modification of adjusted gross income definition for earned Same as for section 909 above.
income credit
911............................ Fraud under means-tested welfare and public assistance Aug. 22, 1996.
programs
912............................ Abstinence education Oct. 1, 1997.
913............................ Change in reference Jan. 1, 1997.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Section numbers in parentheses are references to the Social Security Act.
\2\ All provisions of this title are effective upon enactment (Aug. 22, 1996).
\3\ With the exception of the following sections, all provisions of this title are effective Oct. 1, 1996.
\4\ With the exception of the following sections, all provisions of this title are effective upon enactment (Aug. 22, 1996).
\5\ The Food Stamp Program's quality control system will not penalize States for errors resulting from changes in food stamp law effective on enactment
until at least 150 days after enactment, and States are expected to implement new rules when households apply or are recertified. With the exception
of the following sections, all provisions of this title are effective upon enactment (Aug. 22, 1996).

=======================================================================

SECTION 5.

CONGRESSIONAL BUDGET OFFICE ESTIMATES

=======================================================================

Hon. Jacob J. Lew
Page 2

cc: Hon. Bill Archer
Chairman
House Committee on Ways and Means

Hon. Sam Gibbons
Ranking Minority Member
House Committee on Ways and Means

Hon. William V. Roth, Jr.
Chairman
Senate Committee on Finance

Hon. Daniel Patrick Moynihan
Ranking Minority Member
Senate Committee on Finance

Hon. Pete V. Domenici
Chairman
Senate Committee on the Budget

Hon. J. James Exon
Ranking Minority Member
Senate Committee on the Budget

Hon. John R. Kasich
Chairman
House Committee on the Budget

Hon. Martin Olav Sabo
Ranking Minority Member
House Committee on the Budget

Hon. Nancy Landon Kassebaum
Chairman
Senate Committee on Labor and Human Resources
Hon. Jacob J. Lew
Page 3

Hon. Edward M. Kennedy
Ranking Minority Member
Senate Committee on Labor and Human Resources

Hon. William F. Goodling
Chairman
House Committee on Economic and Educational Opportunities

Hon. William Clay
Ranking Minority Member
House Committee on Economic and Educational Opportunities

Hon. Thomas J. Bliley, Jr.
Chairman
House Committee on Commerce

Hon. John D. Dingell
Ranking Minority Member
House Committee on Commerce

Hon. Richard G. Lugar
Chairman
Senate Committee on Agriculture, Nutrition, and Forestry

Hon. Patrick J. Leahy
Ranking Minority Member
Senate Committee on Agriculture, Nutrition, and Forestry

Hon. Pat Roberts
Chairman
House Committee on Agriculture

Hon. E de la Garza
Ranking Minority Member
House Committee on Agriculture

FEDERAL BUDGETARY IMPLICATIONS OF H.R. 3734, THE PERSONAL
RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996

The Congressional Budget Office (CBO) has reviewed the
conference report on H.R. 3734, the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996. The bill would
replace Federal payments under the current Aid to Families With
Dependent Children Program with a block grant to States,
restrict the eligibility of legal aliens for welfare benefits,
modify the benefits and eligibility requirements in the Food
Stamp and Child Nutrition Programs, change the operation and
financing of the Federal and State child support enforcement
system, increase funding for child care programs, and tighten
the eligibility requirements for disabled children under the
Supplemental Security Income Program.
Although the estimate assumes that the bill will be enacted
by September 1, 1996, its impact on direct spending and
revenues in 1996 is estimated to be negligible. The bill would
reduce Federal spending by $2.9 billion in 1997 and by $54.2
billion over the 1997-2002 period, as well as increase revenues
by $60 million and $394 million over these respective periods.
Summary tables I and II present estimates of the bill's total
effects by program and by title, respectively. The underlying
assumptions and methodology are described below, and detailed
tables for each title of the bill appear at the end.

Title I: Temporary Assistance for Needy Families Block Grant

Title I would alter the method by which the Federal
Government shares in the cost of providing cash and training
assistance to low-income families with children. It would
combine several current entitlement programs--Aid to Families
with Dependent Children (AFDC), Emergency Assistance, and the
Job Opportunities and Basic Skills Training Program (JOBS)--
into a single block grant with a fixed funding level. Title I
would also repeal current child care funding for low-income
families. (Title VI establishes a new program to fund these
activities.) Finally, it would extend an existing Medicaid
benefit for families leaving public assistance and provide new
funding for determining eligibility for Medicaid.
In 1997, CBO projects that under current law the Federal
Government would spend $15.9 billion on AFDC benefits, AFDC
administration, AFDC emergency assistance and the JOBS Program,
or $0.7 billion less than the Federal Government would spend
under title I (excluding child care and Medicaid). By 2002,
projected spending under current law ($18.3 billion) would
exceed projected spending under title I (excluding child care
and Medicaid) by $0.3 billion (see table 1).
Effect of the block grant on cash and training
assistance.--The new Temporary Assistance for Needy Families
Block Grant (TANF) would replace Federal participation for AFDC
benefit payments, AFDC administrative costs, AFDC emergency
assistance benefits, and the JOBS Program. The bill would fix
the base level of the block grant at $16.4 billion annually
through 2002. Each State would be entitled to a portion of the
grant based on its recent spending in the AFDC and JOBS
Programs. States could operate under the current law AFDC and
JOBS Programs until July 1, 1997, but would be subject to the
financing limitations of the block grant as of October 1, 1996.
A State could qualify to receive more than the basic block
grant amount in four ways. First, a State that meets specified
criteria related to its poverty level and population growth
would receive a supplemental grant in 1998 equal to 2.5 percent
of Federal 1994 payments to the State for AFDC, Emergency
Assistance, and JOBS. In each successive year that the State
meets the criteria, the supplemental grant would increase.
Supplemental grants would be available from 1998 through 2001,
and the total amount of additional funding for these
supplemental grants would be capped at $800 million. A State
that did not meet the qualifying criteria in 1998 would not be
eligible to qualify in any later year. CBO estimates that 18
States would receive supplemental grants totaling $87 million
in 1998 growing to $278 million by 2001 (see table 1).
Second, up to five States could receive bonuses of $20-$25
million each year from 1999-2002 if the number of out-of-
wedlock births in the State for the prior 2 years decreased
compared to the number of out-of-wedlock births in the 2-year
period before that. A State would not be eligible for such a
grant in a year that its abortion rate is higher than its 1995
rate. CBO estimates that on average two States would qualify
each year at a Federal cost of $50 million each fiscal year.
Third, a State that meets criteria set by the Secretary of
Health and Human Services (HHS) for high performing States
could receive a bonus of up to 5 percent of its block grant
each year. High performance bonuses are capped at $200 million
each year for 1999-2003.
Fourth, the bill would establish a fund (called the
Contingency Fund for State Welfare Programs) of $2.0 billion
for use in fiscal years 1997-2001 by States with high and
increasing unemployment rates or growth in food stamp
caseloads.\1\ CBO assumes that the contingency fund would
continue in 2002 under the same terms. (The Balanced Budget and
Emergency Deficit Control Act of 1985 requires that mandatory
programs greater than $50 million are continued in the
baseline.) A State could receive an annual maximum of 20
percent of its block grant amount if it was an eligible State
in each month of the year. States would be required to match
Federal payments at the current-law Federal medical assistance
percentage. CBO estimates that States would draw down about
$100 million from the contingency fund in 1997 and would use a
little over $2 billion from the fund over the 1998-2002 period.
---------------------------------------------------------------------------
\1\ A State that experiences an unemployment rate for the most
recent quarter greater than or equal to 6.5 percent and 10 percent or
more higher than the unemployment rate for either of the corresponding
quarters in the 2 previous years would be eligible to draw from the
contingency fund. Also, a State that experiences an increase in
participation in the Food Stamp Program of at least 10 percent over the
1994 or 1995 participation (adjusted for the impact of this bill had it
been in effect in those years) would be eligible. A State would be
eligible in any month it meets these criteria and in the following
month.
---------------------------------------------------------------------------
The bill would authorize the Secretary of HHS to make loans
to States to use for welfare programs. States could borrow up
to 10 percent of their family assistance grant and would have
to repay borrowed amounts, with interest, within 3 years. Any
State could borrow from the loan fund in any year regardless of
particular economic circumstances. CBO estimates the creation
of the loan authority would not generate additional outlays.
Although up to $1.7 billion would be made available to States
for loans, CBO assumes that every State borrowing funds would
repay its loans with interest. The Secretary has the authority
to withhold any unpaid loan amount from future TANF block grant
payments. Therefore, the program would involve no long-run loss
to the Federal Government, and under the credit reform
provisions of the Congressional Budget Act, it would have no
cost.
The bill would provide additional Federal funds for a study
by the Census Bureau ($10 million per year), research,
evaluations, and national studies ($15 million per year), and
grants for Indian tribes that received JOBS funds in 1995 ($7.6
million per year). Also, the bill would allow States that are
operating demonstration projects under waivers to discontinue
those projects. The States would not be required to pay the
Federal Government for any accrued Federal costs of those
waivers. CBO estimates this would cost the Federal Government
$50 million in 1997. In addition, CBO has estimated that
penalties of $50 million for failure to meet the bill's work
participation requirements would be applied in each fiscal year
1999-2002. Finally, the bill would raise the amounts of money
available to territories for assistance programs and provide
greater flexibility in how the money is spent. The new $116
million cap on payments to the territories represents an
increase of about $10 million over current-law amounts.
The bill would maintain the current-law Medicaid
transitional benefits for individuals who would otherwise lose
coverage due to increased child support or due to increased
earnings from employment. The sunset date for the work
transition benefit was extended from 1998 to 2001. In general,
the bill retains categorical eligibility for Medicaid families
that meet the current eligibility criteria for AFDC despite
changes in welfare eligibility resulting from the new block
grant program. The bill provides up to $500 million over the
1997-2000 period for additional administrative expenses
associated with carrying out these eligibility determinations.
Criteria for State participation in the block grant.--To
participate in the block grant program, States would present an
assistance plan to the Department of Health and Human Services
and would ensure that block grant funds would be spent only on
needy families with minor children. States would be required to
continue to spend some of their own resources in order to
receive their full block grant allotment. The Federal grant
would be reduced $1 for every dollar that State spending fell
below 80 percent of historical State spending levels (75
percent of the historical level for any State that meets the
bill's work participation requirements). In addition, States
would have to satisfy other conditions. Notably, States would
be prohibited from providing Federal dollars to most families
who have received cash assistance for more than 5 years since
the effective date of the block grant program (July 1, 1997, or
earlier at State option). At their option, States could choose
a shorter time limit and could grant hardship exemptions for up
to 20 percent of all families. Although no family could
encounter a 5-year time limit until October 1, 2001, the
limit's effect on welfare participation could be noticed sooner
if recipients shortened their stays on welfare or delayed
childbearing in order to preserve access to the system in
future years. CBO estimates that the full effect of such a
limit would not be realized until 2004 or later. Eventually,
under current demographic assumptions, this provision could
reduce cash assistance rolls by 30 percent to 40 percent. The
actual effect of the time limit on families is uncertain,
however, because the bill would permit States and localities to
provide cash assistance to such groups using their own
resources. The inclusion of the time limit in the legislation
does not affect the CBO estimate of Federal costs because it
would not directly change the amount of block grant funds
disbursed to the States.
Work and training requirements under the block grant.--
Title I would require States to provide work and training
activities for an increasing percentage of recipients of
Temporary Assistance to Needy Families (TANF) or face penalties
of up to 5 percent of the State's share of the block grant.
States would face three separate requirements, each becoming
increasingly difficult to satisfy over time.
First, the bill requires that, in 1997, States have 25
percent of certain families receiving cash assistance in work
activities. The participation rates rise by 5 percentage points
a year through 2002. Participants would be required to work 20
hours a week through 1998, 25 hours in 1999, and 30 hours in
2000 and after. Families with no adult recipient or with a
recipient experiencing a sanction for nonparticipation (for up
to 3 months) are not included in the participation calculation.
Families in which the youngest child is less than 1 year old
would be exempt for up to 1 year at State option.
States would have to show on a monthly basis that
individuals in 50 percent of all nonexempt families are
participating in work activities in 2002. CBO estimates that
this would require participation of 1.7 million families. By
contrast, program data for 1994 indicate that, in an average
month, approximately 450,000 individuals participated in the
JOBS Program. (The bill limits the number of individuals in
education and training programs that could be counted as
participants, so many of these individuals would not qualify as
participants under the new program.) Most States would be
unlikely to satisfy this requirement for several reasons. The
costs of administering such a large scale work and training
program would be high, and Federal funding would be frozen at
historic levels. CBO estimates that States would need to invest
an additional $13 billion in 1997-2002 in order to administer
programs that would satisfy the requirements. Because the
payoff for such programs has been shown to be low in terms of
reductions in the welfare caseload, States may be reluctant to
commit their own funds to employment programs. Moreover,
although States may succeed in reducing their caseloads through
other measures, which would in turn free up Federal funds for
training, the requirements would still be difficult to meet
because the remaining caseload would likely consist of
individuals who would be the most difficult and expensive to
train.
Second, while tracking the work requirement for all
families, States simultaneously would track a separate
guideline for the smaller number of nonexempt families with two
parents participating in the AFDC-Unemployed Parent (AFDC-UP)
Program. By 2002, the bill would require that 90 percent of
such families have an adult participate in work-related
activities at least 35 hours per week. In addition, if the
family used Federal funds to pay for child care, the spouse
would have to participate in work activities at least 20 hours
per week. In 1994, States attempted to implement a requirement
that 40 percent of AFDC-UP families participate, and roughly 40
States failed the requirement.
Finally, States would have to ensure that all parents who
have received cash assistance for more than 2 years would
engage in work activities. CBO estimates that approximately 70
percent of all parents on the cash assistance rolls in 2002
would have received such assistance for 2 years or more since
the bill's effective date. The experience of the JOBS Program
to date suggests that such a requirement is well outside the
States' abilities to implement.
In sum, each work requirement would represent a significant
challenge to States. Given the costs and administrative
complexities involved, CBO assumes that most States would
simply accept penalties rather than implement the requirements.
Although the bill would authorize penalties of up to 5 percent
of the block grant amount, CBO assumes--consistent with current
practice--that the Secretary of Health and Human Services would
impose small penalties (less than one-half of 1 percent of the
block grant) on noncomplying States.
Effect of the block grant on the Food Stamp Program.--CBO
estimates that enactment of the block grant for family support
would result in families receiving lower average cash payments
relative to current law and consequently, higher food stamp
benefits. Under current rules, each dollar lost in cash would
increase a participating family's food stamp benefits by about
30 cents. CBO estimates the incomes of AFDC families would
decline relative to current projections by $2.3 billion in
2002, generating a food stamp cost in that year of nearly $700
million. By 2002, the block grant amount is 10 percent lower
than projections of Federal spending under current law on AFDC
and related programs. For the purposes of determining food
stamp costs, CBO assumes that by 2002 cash benefits funded by
the block grant would be 10 percent lower than under current
law. In addition, CBO assumes that by 2002 States--on average--
would spend 15 percent less of their own funds on cash benefits
than they would spend under current law. Should States decide
to spend more or less than this amount, the costs of the Food
Stamp Program would be smaller or greater than the estimate.
Effect of the block grant on the foster care program.--
Although the bill does not directly amend foster care
maintenance payments, which would remain an open-ended
entitlement with State expenditures matched by the Federal
Government, the bill could affect foster care spending. By
retaining the foster care benefits as a matched entitlement,
the bill would create an incentive for States to shift AFDC
children who are also eligible for foster care benefits into
the foster care program. AFDC administrative data for 1993
suggest that roughly 500,000 children (5 percent of all
children on AFDC) fall into this category because they live in
a household without a parent. CBO assumes a number of legal and
financial barriers would prevent States from transferring a
large share of such children and estimates States would collect
an additional $10 million in foster care payments in 1999,
rising to $45 million in 2002.
Effect of the block grant on the Medicaid Program.--In
general, the bill retains categorical eligibility for Medicaid
families that meet the eligibility criteria for AFDC as they
are in current law with some modifications. States must use
AFDC income and resource standards and methodologies in effect
on July 16, 1996, to determine Medicaid eligibility. As under
current law, States have the option to lower income standards
to May 1, 1988, levels or to increase income standards;
however, these increases are limited to the annual increase in
the Consumer Price Index (CPI). Unlike current law, States may
increase resource standards (by no more than the annual
increase in the CPI) and link eligibility to compliance with
work requirements under TANF. Overall, CBO judges that there
would be no significant budgetary effect of the block grant on
the Medicaid Program.

Title II: Supplemental Security Income

The bulk of the savings in title II would stem from
imposing tighter eligibility criteria for children seeking
disability benefits under the Supplemental Security Income
(SSI) Program. title II would also make a variety of other
changes. It would reduce the amount of the benefit in the first
month for new SSI applicants, require the disbursement of large
retroactive payments in installments rather than in a single
lump, and offer payments to prison officials who help to
identify ineligible SSI recipients in their institutions. Net
savings, which reflect additional food stamp spending, are
estimated to equal $2.0 billion in 2002 and $8.6 billion over
the 1997-2002 period (see table 2). A small amount of the
savings ($5 million in 1997, $10 million in 1998, and $85
million over the 6-year period) occurs in the Old-Age,
Survivors, and Disability Insurance Programs, and is excluded
from the pay-as-you-go totals.
Disabled children.--The SSI Program, run by the Social
Security Administration (SSA), pays benefits to certain low-
income aged and disabled people. The bill would revamp the SSI
Program for disabled children. Under current law, low-income
children can qualify for the SSI Program and its Federal cash
benefits of up to $470 a month in two ways. Their condition may
match one of the medical listings (a catalog of specific
impairments, with accompanying clinical findings), or they may
be evaluated under an individualized functional assessment
(IFA) that determines whether an unlisted impairment seriously
limits a child from performing activities normal for his or her
age. Both methods are spelled out in regulation. Until the
Supreme Court's decision in the Zebley case in 1990, the
medical listings were the sole path to eligibility for
children. Adults, in contrast, could receive an assessment of
their functional and vocational capacities even if they did not
meet the listings. The court ruled that sole reliance on the
listings did not satisfy the law's requirement to gauge whether
children's disorders were of ``comparable severity'' to
impairments that would disable adults.
The bill would eliminate childhood IFAs and their statutory
underpinning, the ``comparable severity'' rule, as a basis for
receipt of benefits. Many children on the rolls as a result of
an IFA (roughly a quarter of children now on SSI) would have
their benefits terminated, and future awards based on an IFA
would be barred. Thus, the program would be restricted to those
who met or equaled the listings. The bill would also remove the
reference to maladaptive behavior--behavior that is destructive
to oneself, others, property, or animals--from the personal/
behavioral domain of the medical regulations, thereby barring
its consideration as a basis for award.
Even as it repeals the ``comparable severity'' language,
the bill would create a new statutory definition of childhood
disability. It States that a child would be considered disabled
if he or she has ``a medically determinable physical or mental
impairment which results in marked and severe functional
limitations (and can be expected to last 12 months or lead to
death).'' That language is intended to preserve SSI eligibility
for some of the most severely impaired children who now qualify
by way of an IFA because they do not happen to match one of the
medical listings.
CBO estimated the savings from these changes by judging how
many child recipients would likely qualify under the old and
new criteria. CBO relied extensively on SSA program data and on
analyses conducted by the General Accounting Office and the
Inspector General of the Department of Health and Human
Services. Approximately 1 million children now collect SSI
benefits, and CBO projects that the number would reach 1.4
million in 2002 if policies were unchanged. CBO assumed that
most children who qualify through an IFA would be rendered
ineligible under the proposed criteria--specifically, those who
fail to rate a ``marked'' or ``extreme'' impairment in at least
two areas of functioning. CBO also assumes that the provisions
on maladaptive behavior would bar a small percentage of
children from eligibility for benefits. Overall, CBO judges
that approximately 22 percent of children who would collect
benefits under current law would be rendered ineligible.
CBO estimates the savings in cash benefits relative to
current law by multiplying the number of children assumed to
lose benefits by the average benefit. That average benefit was
about $430 a month in December 1995 and--because it is indexed
to inflation--would grow to an estimated $528 in 2002. New
awards would be affected immediately. Children already on the
rolls would be reviewed under the new criteria within 1 year of
enactment. Total savings in cash benefits would equal $0.1
billion in 1997 and $2 billion in 2002.
The proposed cutbacks in children's SSI benefits would
affect spending in two other Federal programs. Food stamp
outlays would automatically increase to replace a portion of
the cash income lost by the children's families. The extra food
stamp costs exceed $.2 billion a year after 1998. Under current
law, eligibility for SSI benefits generally confers eligibility
for Medicaid as well. Once the reviews of children currently on
the SSI rolls are finished, CBO estimates savings in Medicaid
of roughly $40 million to $60 million a year from the tighter
SSI criteria. That amount is relatively small, because most of
the children dropped from SSI would still qualify for Medicaid
based on meeting AFDC criteria or because of their poverty
status. No effects on the TANF Program are included in CBO's
estimate. Under current law, about half of the disabled
children losing SSI benefits would be likely to end up on the
AFDC Program; but because that program would be abolished in
title I and replaced by TANF, which is a fixed block grant to
the States, no extra Federal spending would result.
The bill would make several other changes to the SSI
Program for disabled children. One would set the benefit at $30
a month for children who are hospitalized and whose bill is
partly or fully covered by private insurance. A similar
provision already applies to SSI recipients who are
hospitalized and whose care is covered by Medicaid. CBO assumes
the proposal would trim benefits for about 10,000 children in a
typical month, with savings of $55 to $70 million a year after
1997. The bill would also make a number of changes in the
responsibility of representative payees (people who administer
benefits for children or other recipients who are incapable of
managing funds). CBO does not estimate significant budgetary
effects from any of those changes. The bill also mandates
several studies of disability issues.
SSA would face very heavy one-time costs for reviewing its
current caseload of disabled children under the new, tighter
criteria proposed in the bill. CBO estimates that SSA would
have to collect detailed medical and functional information for
300,000 to 400,000 disabled children on the rolls at enactment,
at a total cost of about $300 million. In addition, under
restrictions proposed in title IV, SSA would have to review the
continued eligibility of about 1.4 million recipients who are
recorded as aliens or whose citizenship is unknown. Most of the
cost would be incurred in 1997 and early 1998. For that reason,
the bill allows an adjustment to the discretionary spending
caps in the Balanced Budget Act to cover SSA's one-time costs.
Specifically, the caps will be increased by up to $150 million
in 1997 and $100 million in 1998 if the Congress passes
appropriations earmarked for these reviews. Because that total
adjustment of $250 million hinges on future appropriation
action, CBO does not include it as a cost in this bill.
Prorated benefits in month of application.--More than
800,000 people are newly awarded SSI benefits every year. Under
current law, they eventually receive a prorated benefit for
their month of application. A person who applied on the 15th of
the month, for example, could receive 2 weeks of benefits for
that month. (The typical applicant does not get that money
immediately, because it may take several months for SSA to
process his or her application.) The bill proposes instead to
compute benefits beginning on the first day of the month
following the date of application. CBO estimated the savings by
multiplying the annual volume of awards by an assumed loss of 2
weeks' benefits for the average person affected. The provision
would affect only applications filed after enactment, and
savings would equal $150 million a year or more when it is
fully effective.
Installment payments of retroactive benefits.--Another
provision of the bill would change the method for disbursing
large amounts of retroactive benefits. Under current law,
retroactive benefits--which occasionally amount to thousands of
dollars, if the period they cover is a long one--are paid all
at once. Under the bill, any retroactive payment that exceeded
12 times the maximum monthly benefit--about $5,600, in 1996
dollars--would be paid in installments at 6-month intervals,
with each installment equaling up to 12 times the maximum
benefit. Exemptions would be granted to recipients suffering
from terminal illnesses or other special hardships. The vast
majority of recipients would still get their retroactive
benefits in a single check, but a minority (chiefly those whose
awards were decided after long appeals) would get them in two
or three installments. The proposal would save money
principally in the first year. Based on the relatively small
number of people who get very large retroactive payments, CBO
estimated that about $200 million of payments would shift from
1997 into 1998. Savings after that would be much smaller.
Enforcement of restrictions on prisoners' benefits.--
Current law sets strict limits on payment of SSI benefits to
incarcerated people, and somewhat milder limits on such
payments in the Old-Age, Survivors, and Disability Insurance
(OASDI) Program. SSI recipients who are in prison for a full
month--regardless of whether they are convicted--are to have
their benefits suspended. OASDI recipients who have been
convicted of an offense carrying a maximum sentence of 1 year
or more are to have their benefits suspended. Those who are
convicted of lesser crimes, and those who are in jail while
awaiting trial, may still collect OASDI benefits. Currently,
those provisions are enforced chiefly by an exchange of
computerized data between the Social Security Administration
and the Federal Bureau of Prisons, State prisons, and some
county jails. According to SSA's Office of the Inspector
General, agreements now cover roughly 73 percent of inmates--
all Federal and State prisoners but only about 15 percent of
county prisoners. Those agreements are voluntary and involve no
payments to the institutions.
This bill proposes to compensate correctional institutions
that provide data to SSA. It proposes to provide correctional
institutions $400 if they report information to SSA that leads
to identification of an ineligible SSI recipient within 30 days
of incarceration, and $200 if they report within 30 to 90 days.
Information on prisoners who collect benefits is poor.
Inmates may know or suspect that their benefits are illegal and
thus hide them, and may misreport such crucial identifying
information as Social Security numbers. For its estimate, CBO
assumes that between 4 and 5 percent of inmates are collecting
OASDI or SSI when they enter prison. That figure appears in a
Justice Department survey of prisoners in 1991 and in a recent
report by SSA's Office of Inspector General. CBO assumes that
the recipient population consists roughly half-and-half of
OASDI and SSI recipients. At any one time, about 70 percent of
prisoners are in State or Federal prisons and the rest in
county jails, where spells of incarceration are much shorter
and turnover rates are very high.
The proposal would have two principal budgetary effects.
First, the payments to prison officials would spark greater
participation in matching agreements. CBO assumed that State
prison officials--who now often let matching agreements lapse
for several months at renewal--would renew them more promptly,
that a majority of counties would sign up, and that data would
be submitted with a shorter lag. From a budgetary standpoint,
those changes would lead to savings in benefit payments and
offsetting costs for the payments to penal institutions. The
bill proposes that payments be made only to those institutions
that assist in tagging ineligible SSI recipients. Nevertheless,
in the course of matching Social Security numbers and other
identifying information, SSA would find that some of the
inmates collect OASDI. Therefore, benefit savings in both
Programs--SSI and OASDI--would result. Second, the proposal
would add to the workload of SSA. Even if data are submitted
electronically, SSA must follow up manually when it appears
that an inmate may be receiving benefits. In many cases, SSA
may find that the Social Security number is inaccurate or the
inmate has already left the jail, leading to little or no
saving in benefits from that particular investigation.
Because these provisions would first apply to prisoners
whose periods of incarceration begin 7 months after enactment,
CBO assumed that the provision would yield little benefit
savings in fiscal year 1997. Thereafter, benefit savings would
take another year or two to be fully realized as word spread
among State and local correctional officials and as they became
more attuned to the specific information (such as accurate
Social Security numbers) they would need to provide. CBO
assumes that SSA would start making payments (averaging $300)
fairly soon to jurisdictions that already have matching
agreements, and later to new jurisdictions that sign up. Over
the 1997-2002 period, benefit savings are expected by CBO to
equal $130 million and payments to jurisdictions to cost $30
million, for a net savings of $100 million; the OASDI component
of the benefit savings is $85 million. SSA's extra
administrative costs--which, in contrast to those two items,
would require Congressional appropriation--are estimated at $70
million.

Title III: Child Support Enforcement

Title III would change many aspects of the operation and
financing of the Federal and State child support enforcement
system. CBO estimates that relative to current law these
changes would cost $25 million in fiscal year 1997 and $74
million in 2002 (see table 3). The key provisions of title III
would mandate the use of new enforcement techniques with a
potential to increase collections, eliminate a current $50
payment to welfare recipients for whom child support is
collected, allow former public assistance recipients to keep a
greater share of their child support collections, and authorize
new spending on automated systems.
New enforcement techniques.--Based on reports on the
performance of various enforcement strategies at the State
level, CBO estimates that child support collections received
for families on cash assistance in 2002 would increase under
the bill by roughly 18 percent over current projections (from
$3.6 billion to $4.2 billion). Most of the improvement would
result from the creation of a new-hire registry (designed to
speed the receipt of earnings information on noncustodial
parents) and provisions that would expedite the process by
which States seize the assets of noncustodial parents who are
delinquent in their child support payments. Some States have
already applied the proposed enforcement techniques, thereby
reducing the potential for improving collections further. CBO
projects that the additional collections would result in
savings of roughly $320 million in 2002 to the Federal
Government through shared child support collections, as well as
reduced spending in food stamps and Medicaid.
Lost AFDC collections due to reduced cases funded by the
block grant.-Similar to current law, the bill would require
that States share with the Federal Government child support
collected on behalf of families who receive cash assistance
through the Temporary Assistance for Needy Families block
grant. CBO assumes that by 2002, 20 percent of States would
significantly reduce the number of families served under the
block grant. CBO estimates that this reduction would reduce the
Federal share of child support collections by $224 million in
2002. States that reduce the number of families served under
the block grant may still provide benefits to those families
using their own resources.
Elimination of the $50 passthrough.--Additional Federal
savings would be generated by eliminating the current $50
passthrough. Under current law, amounts up to the first $50 in
monthly child support collected are paid to the family
receiving cash assistance without affecting the level of the
welfare benefit. Thus, families for whom noncustodial parents
contribute child support get as much as $50 more a month than
do otherwise identical families for whom such contributions are
not made. Under current law, eight States pay families on
public assistance on whose behalf the State receives child
support payments a supplemental payment (``gap payment'') based
on the amount of the support collected and a standard of need.
The proposal would give these States the option of continuing
to provide these additional benefits to families. CBO assumes
States providing half of the supplemental payments would
exercise the option. Eliminating the $50 child support
passthrough beginning in 1997 while excluding gap payments from
the new rules would save the Federal Government between $100
million and $165 million annually.
Distribution of additional child support to former AFDC
recipients.--The provision would require States to share more
child support collections with former recipients of public
assistance, reducing Federal and State recoupment of prior
benefit payments. When someone ceases to receive public
assistance, States continue to collect and enforce the family's
child support order. All amounts of child support collected on
time are sent directly to the family. If a State collects past-
due child support, however, it may either send the amount to
the family or use the collection to reimburse itself and the
Federal Government for past AFDC payments. The proposal would
require States to send a larger share of arrearage collections
to families. The new distribution rules would phase in starting
in 1998, and States would have the option of applying the new
distribution rules earlier. CBO estimates that this provision
would cost the Federal Government $51 million in 1998 and $150
million in 2002.
Hold States harmless for lower child support collections.--
A hold-harmless provision guarantees each State that its share
of child support collections will not fall below the amount it
retained in 1995. In general, CBO estimates that States would
experience increases in child support collections as a result
of this bill. The new distribution rule that allows former AFDC
families to keep more support is the only provision that would
reduce the States' share of support collections. However, the
States' share of collections is based on the collections on
behalf of families that receive assistance through the TANF
block grant. A State that has significantly fewer families
served under the block grant than were served under the AFDC
Program may experience lower collections. CBO assumes that 20
percent of States would make caseload reductions significant
enough to trigger the hold-harmless provision, at a Federal
cost of $29 million in 2002. States that reduce the number of
families served under the block grant may still provide
benefits to those families using their own resources.
Optional modification of support orders.--Under current
law, a State is required to review the child support orders of
recipients of public assistance every 3 years. If a review
shows a significant change in the financial circumstances of a
parent, the child support order is adjusted accordingly.
Evaluations of pilot programs testing similar review and
modification procedures found that such reviews raised both the
average amounts of support orders and the average payments
received. This bill makes review and modification a State
option unless the family requests such a review. CBO assumes
that 40 percent fewer reviews would be performed, resulting in
an administrative savings of $5 million in 1997 and a cost,
reflecting lower collections due to lower amounts of support
orders, of $20 million by 2002.
Additional provisions with budgetary implications.--The
bill would also increase Federal spending on several other
activities including development, operation, and maintenance of
automated data processing, technical assistance to States,
reviews and audits, and grants to States for visitation.
Federal spending for these other provisions would total $156
million in fiscal year 2002 and $1.2 billion over the 1997-2002
period.

Title IV: Noncitizens

Title IV would limit the eligibility of legal aliens for
public assistance programs. It would explicitly make most
immigrants ineligible for SSI and food stamp benefits.
Significant savings would also be realized in two other
programs--Medicaid and the earned income credit. Overall, the
provisions of title IV are estimated to reduce the deficit by
$1.2 billion in 1997 and by $5.1 billion in 2002 (see table 4).
Supplemental security income.--In general, legal aliens are
now eligible for SSI and other benefits administered by the
Federal Government. Few aliens, other than refugees, collect
SSI during their first few years in the United States, because
administrators must deem a portion of a sponsor's income to the
alien during that period when determining the alien's
eligibility. The bill would eliminate SSI benefits altogether
for most legal aliens. Exceptions would be made for groups that
together make up about one-quarter of aliens on the SSI rolls:
refugees who have been in the country for less than 5 years,
aliens who have a solid work history in the United States (as
evidenced by 40 or more quarters of employment covered by
Social Security), and veterans or active-duty members of the
U.S. military. All other legal aliens now on SSI would be
reviewed within 1 year and removed from the rolls.
CBO bases its estimate of savings on administrative records
for the SSI Program. Those data suggested that there were about
785,000 noncitizen beneficiaries in December 1995, or 13
percent of all recipients of Federal SSI payments in that
month, and that their numbers might be expected to climb in the
absence of a change in policy. Those records, though, are of
uncertain quality. They rarely reflect changes in citizenship
status (such as naturalization) that may have occurred since
the recipient first began collecting benefits. It has not been
important for government agencies to keep citizenship status up
to date so long as they have verified that the recipient is
legally eligible. That problem is thought to be common to all
programs but particularly acute for SSI, where some
beneficiaries identified as aliens have been on the rolls for
many years. Recognizing this problem, CBO assumes that 15
percent of SSI beneficiaries recorded as aliens are in fact
naturalized citizens.
CBO estimates the number of noncitizen recipients who would
be removed from the SSI rolls by projecting the future caseload
in the absence of policy change and subtracting the groups
(chiefly certain refugees and Social Security recipients)
exempted under the bill. CBO then assumes that some of the
remainder will be spurred to become naturalized. The rest,
estimated by CBO at approximately one-half million legal
aliens, would be cut from the SSI rolls. Multiplying by the
average benefits paid to such aliens--assumed to equal nearly
$400 a month in 1997, with subsequent cost-of-living
adjustments--yields annual Federal budgetary savings of between
$2 billion and $3 billion 1 year after 1997.
These estimates, and other CBO estimates concerning legal
aliens, are rife with uncertainties. First, administrative data
in all programs are of uncertain quality. Citizenship status is
not recorded at all for about 8 percent of SSI recipients,
and--as previously noted--some persons coded as aliens are
certainly naturalized citizens by now. Second, it is hard to
judge how many more noncitizens would react to the legislation
by becoming citizens. At least 80 percent of legal aliens now
on the SSI rolls are eligible to become citizens; the fact that
they have not been naturalized may be attributable, in part, to
the lack of a strong financial incentive. After all, legal
immigrants are not now barred from most jobs, from eligibility
for benefits, or from most other privileges except voting.
Because the naturalization process takes time and effort, CBO
assumes that only about one-third of those whose benefits would
otherwise be eliminated will become citizens by the year 2000.
Food stamps.--The bill proposes the same curbs on food
stamp payments to legal aliens as on SSI. Therefore, aliens
could not receive food stamps unless they fell in one of the
exempted groups--chiefly refugees who have been here for less
than 5 years or aliens with substantial work (defined as 40
quarters) in the United States.
CBO assumes that, under current policies, the number of
legal aliens receiving food stamp benefits would climb
gradually from about 1.8 million now to 2 million in 2002.
Around 800,000 would fall in one of the exempt categories. The
rest would lose benefits unless they became naturalized. Again,
CBO assumed that some of the aliens targeted for the cutoff
would be spurred to become citizens. Savings of about $0.6
billion to $0.7 billion 1 year after 1997 would result.
Medicaid.--Unlike SSI and food stamps, the bill does not
call for a mass cutoff of aliens from the Medicaid Program.
Instead, it calls for tight restrictions on the eligibility of
future immigrants for Medicaid for at least their first 5 years
in the United States, but it leaves the coverage of most aliens
already here to the option of the States.
The bill forbids States to provide regular Medicaid
coverage to future entrants (except refugees) for their first 5
years. New deeming requirements in all means-tested programs
would bar most future immigrants with financial sponsors from
Medicaid for even longer--until they work for 40 quarters or
until they are naturalized. Medicaid coverage for aliens
currently residing in the United States would be at the States'
option. CBO assumes that States would continue to cover many of
these immigrants, because they would otherwise lose Federal
Medicaid matching dollars for their care. The bill preserves
Medicaid coverage for emergency medical services for all legal
immigrants.
A number of legal immigrants currently residing in the
United States would lose Medicaid under the bill because they
have been eliminated from receiving SSI cash benefits and
cannot qualify for Medicaid under any other eligibility
category. However, CBO assumed that most disabled and about
half of the aged would retain Medicaid under State medically
needy programs. In total, CBO assumed that nearly 300,000
aliens would lose their eligibility for Medicaid in 1998 (when
the reviews of aliens on the SSI Program have been completed)
and that the number would more than double by 2002. CBO
estimated the resulting savings by multiplying the number of
people losing benefits times the assumed average benefit times
the Federal share. That per-capita Federal cost is assumed to
be more than $5,000 in 2002 for an average aged or disabled
alien, and between $1,000 and $2,000 for a child or a
nondisabled adult. CBO reduced the resulting savings by one-
third, because the bill explicitly continues coverage for
emergency medical care for legal aliens and because other
services for aliens may be covered through increases in
Medicaid's payments for uncompensated care. Total savings in
Federal Medicaid costs are estimated at $0.1 billion in 1997
and $1.5 billion in 2002.
Other direct spending programs.--The foster care program,
student loans for postsecondary students, and the child
nutrition program would be exempt from any of the restrictions
on benefits to legal aliens. title IV is silent on the
eligibility for child nutrition programs of schoolchildren who
are illegal aliens. However, another provision of the bill--
section 742 in title VII--specifically States that the school
breakfast and school lunch programs shall continue to
administered without regard to students' immigration or
citizenship status. Therefore, CBO estimates no savings from
restrictions on aliens' eligibility in any of these programs.
Earned income credit.--The bill would deny eligibility for
the earned income credit (EIC) to workers who are not
authorized to be employed in the United States. In practice,
that provision would require valid Social Security numbers
(SSNs) to be filed for the primary and secondary taxpayers on
returns that claim the EIC, and would permit the Internal
Revenue Service to apply the streamlined rules it already uses
for mathematical or clerical errors to claims that lack valid
SSNs. A similar provision was contained in President Clinton's
1997 budget proposal and in last fall's reconciliation bill.
The Joint Committee on Taxation (JCT) estimates that the
provision would reduce the deficit by approximately $0.3
billion a year.

Title V: Child Protection

Title V would extend the enhanced match for the purchase of
computer equipment for foster care data collection systems.
Under current law, the Federal match for these types of
purchases is 75 percent through the end of fiscal year 1996 and
will decrease to 50 percent beginning in fiscal year 1997. This
provision would continue the 75-percent match for one more year
through the end of fiscal year 1997. CBO estimates that this
change would increase budget authority by $80 million in fiscal
year 1997 and outlays by $66 million in 1997 and $14 million in
1998 (see table 5). This estimate was developed in consultation
with analysts at the Department of Health and Human Services
and is based on States' estimates of their expenditures under
current law and expectations of increased spending if the
higher match rate were extended.
title V would also appropriate $6 million a year for fiscal
years 1996 through 2002 for a national random sample study of
child welfare, increasing direct spending by $37 million over
that period. The study would be conducted by the Secretary of
Health and Human Services and would track abused or neglected
children as they move through States' child welfare systems.

Title VI: Child Care

Title VI would create a new mandatory block grant to States
for the provision of child care to low-income people.
Individual States would be entitled to the amount they received
for AFDC Work-Related Child Care, Transitional Child Care, and
At-Risk Child Care in 1994, 1995, or the average of 1992-94,
whichever is greatest. States that maintain the higher of their
1994 or 1995 spending on these programs would be able to draw
down an additional amount at the Medicaid match rate. Further,
the title would allow funds to be redistributed to States that
have higher child care needs.
The budget authority for this block grant, as Stated in the
bill, would be $1.967 billion in fiscal year 1997 and would
total $13.9 billion over the 1997-2002 period. CBO estimates
that States would not draw down all of this money and that
outlays for the 1997-2002 period would be $12.8 billion (see
table 6). CBO assumes that the block grant would not be
completely drawn down for several reasons. The block grant
levels are over $4 billion, or nearly 50 percent, higher than
what would be spent on the child care programs they are
replacing. Discussions with State officials and national
experts in the field, as well as an examination of how much
States would be able to increase spending on working poor
families, pointed to CBO's conclusion that States would not be
able to use all of the child care money.
The net impact of repealing current law child care programs
(in title I) and creating a new block grant under this title
would be to increase Federal outlays by $0.3 billion in 1997
and $3.5 billion over the 1997-2002 period.

Title VII: Child Nutrition Programs

CBO estimates that provisions in title VII that affect
child nutrition programs would lower Federal outlays by $128
million in fiscal year 1997, $670 million in fiscal year 2002,
and $2.85 billion over the 1997-2002 period relative to current
law (see table 7).
Special assistance.--The bill would allow all schools that
participate in the school lunch and breakfast programs under a
provision that allows them to offer all meals free in exchange
for collecting applications less frequently to participate for
5 years at a time without a redetermination rather than 3 years
at a time. Currently only schools that were participating at
the time of the 1994 reauthorization of the programs can
participate under these terms. CBO assumes that this change
would make participation under such terms slightly more
attractive to schools and would cost $1 million a year in each
of fiscal years 1999 through 2002.
Rounding rules.--The bill would also change the rounding
rules for annual inflation adjustments in the reimbursement
rates for meals served to children who pay full price in the
school lunch and breakfast programs and the center component of
the child and adult care food program. Under current law, the
rates are rounded to the nearest quarter cent. Under the bill,
the rates for paying children would be rounded down to the
nearest whole cent. The change would be effective on July 1,
1997. CBO estimates the provisions would lower Federal outlays
for child nutrition programs by $1 million in 1997 and $15
million in 2002.
Summer food service program for children.--Section 706
would reduce reimbursement rates for the summer food service
program to $1.97 for lunches, $1.13 for breakfasts, and $0.46
for supplements. These rates would be adjusted for inflation on
January 1, 1997, and would first become effective in the summer
of 1997. Rates would be rounded to the lower cent, rather than
the nearest quarter cent, in the calculation of the annual
adjustment for inflation. Under current law, CBO projects the
summer 1997 rates would be $2.22 for lunches, $1.24 for
breakfasts, and $0.58 for supplements. CBO estimates these
provisions would save $19 million in 1997 and $39 million in
2002.
Child and adult care food program.--Section 708 would
restructure the family day care home component of the child and
adult care food program and would thereby save $80 million in
1997 and $565 million in 2002. Currently, meals served in
family day care homes all receive the same reimbursement rates:
$1.575 for lunches, $0.8625 for breakfasts, and $0.470 for
supplements, from July 1996 to June 1997. The bill would create
two tiers of reimbursement rates. The first tier would apply to
homes that are located in an area in which at least 50 percent
of the children are from households whose incomes are below 130
percent of poverty, or are operated by a provider whose
household income is less than 130 percent of poverty. Rates for
tier I homes would be the same as current law rates, except the
rates would be rounded down each year to the lower cent, rather
than to the nearest quarter cent. All other homes would receive
a lower, tier II rate--$0.95 for lunch, $0.27 for breakfast,
and $0.13 for supplements. These rates would be adjusted
annually (beginning July 1, 1997) and rounded down to the lower
cent. Homes in tier II would be able to claim the tier I rates
for any children who are from families with incomes below 130
percent of poverty. CBO estimates that 35 percent of meals
would be reimbursed at the higher, tier I rates, and that
somewhat fewer meals would be served in the program because of
the reduction in rates for most meals. In addition, the bill
would provide grants to States in 1997 for training and other
assistance to sponsoring organizations and homes in
implementing the new provisions.
Section 708 would also limit to three the number of meals
that can be reimbursed in a given day in eligible child care
centers. CBO estimates savings of $10 million in 1997 and $20
million in 2002 from this change.
In total, CBO estimates savings of $90 million in 1997 and
$585 million in 2002 from changes in the child and adult care
food program.
School breakfast program authorization.--Section 723 of the
bill would eliminate funding for school breakfast startup
grants under the Child Nutrition Act starting in fiscal year
1997. Startup grants are currently funded at $5 million a year
through fiscal year 1997, $6 million in fiscal year 1998, and
$7 million in fiscal year 1999. Funds are to be used for
assisting schools and other institutions in initiating and
expanding school breakfast programs and summer food service
programs. In addition, CBO estimates that repealing the money
for startup grants would result in fewer meals served over the
period. The savings from fewer meals would be $3 million in
1997 and $22 million in 2002.
Nutrition education and training.--Section 731 would shift
funding for nutrition education and training to be a
discretionary appropriation rather than mandatory spending. CBO
estimates $10 million each year in direct spending savings
starting in fiscal year 1997.
Noncitizens served in child nutrition programs.--Section
742 provides that if an individual is eligible to receive
public education in a State, assistance under the National
School Lunch Act and the Child Nutrition Act shall not be
contingent on citizenship or immigration status. This section
conflicts with a general provision in title IV of the bill
which could eliminate eligibility for means-tested child
nutrition programs for undocumented noncitizens. CBO estimates
that there would be no savings from the provision of title IV
because this provision would supersede it.

Title VIII: Food Stamps and Commodity Distribution

CBO estimates that changes to food stamps in title VIII of
the bill would reduce Federal outlays by $1.8 billion in 1997,
$5.0 billion in 2002, and $23.1 billion over the 1997-2002
period relative to current law (see table 8). The following
paragraphs describe the savings attributable to specific
provisions.
Treatment of children living at home.--Under current law,
members of households who purchase food and prepare meals
together must generally participate in the program as part of
the same food stamp unit. In addition, certain people, such as
spouses who live together, are required to participate in the
same unit. The bill would change the definition of household by
removing the exception in current law that allows persons age
21 and under who are themselves parents or married, and who
live with a parent, to participates a separate household. This
change would lower food stamp benefits because income and
resources of the household members who are not now in the food
stamp unit would be counted. CBO estimates that the change
would affect about 150,000 current food stamp households and
would reduce food stamp outlays by $115 million in 1997 and
$290 million in 2002.
Adjustment of thrifty food plan.--Section 804 of the bill
would reduce the maximum food stamp benefit relative to current
law. Under current law, maximum benefits are set each October
at 103 percent of the cost of the thrifty food plan--a specific
low-cost diet for a family of four. For fiscal year 1996,
maximum benefits are $397 a month for a family of four. The
bill would set maximum benefits at 100 percent of the thrifty
food plan beginning with the October 1996 adjustment, but would
not allow the nominal maximum benefit to decline from fiscal
year 1996 to fiscal year 1997. The change would lower average
food stamp benefits (compared with current law) by about $3 per
person a month in 1997. CBO estimates that food stamp outlays
would decrease by $935 million in 1997 and $1.2 billion in 2002
as a result of this change.
Earnings of older students.--Under current law, earned
income of household members who are elementary or secondary
school students and are 21 years old or younger is disregarded
in the consideration of income for food stamps. Section 807
would lower the cutoff to age 17. CBO estimates that this
change would lower spending for food stamps by $10 million in
fiscal year 1997 and $15 million in 2002.
Energy assistance.--Under this legislation, energy
assistance from nonFederal sources would be counted as income
in determining food stamp benefits; currently, no energy
assistance is counted as income. A handful of States currently
provide part of their AFDC or General Assistance benefit as a
separate energy assistance payment, which is disregarded in the
calculation of food stamp benefits. CBO estimates that a $1
increase in countable income to a food stamp household results
in about a 30-cent reduction in food stamp benefits. In the 9
States that currently make separate energy assistance payments,
the payments range from about $15 a month to $120 a month. CBO
estimates that counting these State energy assistance payments
as income would save $125 million in food stamp benefits in
1997 and $180 million in 2002.
Deductions from income.--Section 809 of the bill would set
the standard deduction in most States at $134 for fiscal year
1997 and later years. Under current law, the standard deduction
is to be adjusted annually to reflect changes in the Consumer
Price Index (CPI). CBO estimates that the level of the standard
deduction would be $8 below current law in fiscal year 1997 and
$30 below current law in 2002. The corresponding savings from
the reduction in the standard deduction would be $345 million
in 1997, rising to $1.5 billion in 2002. This amount
corresponds to an average decrease in monthly benefits,
relative to current law, of $1 per person in 1997 and about $4
per person by 2002.
The 1997 Agriculture Appropriations Act froze the standard
deduction in food stamps for fiscal year 1997 at $134, the same
level as is set by this bill. Because that bill passed both
houses of Congress before the Personal Responsibility and Work
Opportunity Reconciliation Act, CBO does not include any
savings for fiscal year 1997 from the freeze of the standard
deduction in its estimate of this bill.
Section 809 would also retain the cap on the excess shelter
expense deduction. In determining food stamp benefits, shelter
costs are deducted to the extent that they exceed 50 percent of
net income after all other deductions. Under current law the
excess shelter deduction is capped at $247 through December
1996, when the cap expires. This bill would extend the cap at
$250 for the remainder of fiscal year 1997 and fiscal year
1998, $275 for fiscal years 1999 and 2000, and $300 for each
later fiscal year. CBO estimates savings of $350 million in
fiscal year 1997 and $500 to $550 million in each later year
from this change.
The bill would allow States to require the use of a
standard utility allowance for determining utility costs
counted toward the shelter deduction, rather than allowing
recipients to use actual utility costs, if higher, as under
current law. In States that do not require the use of a
standard utility allowance, households would be allowed to
change between the standard utility allowance and actual costs
only at recertification, rather than at one additional time
during a certification period. CBO estimates that States
representing half of total food stamp outlays would choose to
adopt a mandatory standard utility allowance. These provisions
would lower food stamp outlays by $35 million in 1997 and $85
million in 2002.
The bill also would require States to establish a standard
homeless shelter deduction of $143 or less per month for
homeless households that do not receive free shelter throughout
the month. Currently, homeless households claim a standard
shelter expense amount set by the State, or actual shelter
expenses, if higher. CBO estimates that the provision would
save $5 million a year by 2002.
Vehicle allowance.--Section 810 would freeze the vehicle
allowance at $4,650 for fiscal years beginning with fiscal year
1997. Under current law, the fair market value of vehicles is
counted as an asset in determining food stamp eligibility when
the value is more than $4,600. This figure is scheduled to
increase to an estimated $5,150 for fiscal year 1997 and to
increase in each succeeding year for inflation. CBO estimates
that freezing the vehicle allowance at $4,650 would reduce food
stamp outlays by $45 million in 1997 and $245 million in 2002.
Vendor payments for transitional housing counted as
income.--Housing assistance payments made to a third party on
behalf of a household that resides in transitional housing for
the homeless are not now counted as income. Section 811 would
delete this exclusion. CBO estimates savings of $10 million a
year as a result of the change.
Disqualification, comparable treatment for
disqualification, permanent disqualification for participating
in two or more States, and failure to comply with other welfare
and public assistance programs.--Four sections of the bill
would change the penalties associated with noncompliance with
public assistance requirements. Section 815 would increase the
penalties and revise sanctions for individuals and households
that fail to comply with work rules. CBO estimates the longer
periods of disqualification for people found to have not
complied with work requirements would save $5 million a year.
Section 819 would allow States to disqualify an individual
from food stamps if the individual is disqualified from another
public assistance program for failing to perform a required
action under that program. For example, if an individual is
disqualified from AFDC for failure to have a child immunized
under a State's welfare reform initiative, the individual could
also be disqualified from food stamps. CBO estimates that this
provision would save $20 million a year from 1997 through 2001
and $25 million in 2002.
Section 820 would permanently disqualify from food stamps
any individual who is found to have participated fraudulently
in the Food Stamp Program simultaneously in two or more States.
Under current law, an individual is disqualified from food
stamps permanently only after the third violation and faces
periods of ineligibility for the first and second violation.
CBO estimates that the provision would save approximately $5
million a year.
Section 829 would prohibit food stamp benefits from
increasing if benefits are reduced under another public
assistance program for the failure to perform an action
required under that program. In addition, the State agency
could reduce the food stamp allotment by up to 25 percent. CBO
estimates the provision would save $25 million a year.
Employment and training.--The 1996 farm bill (Public Law
104-127) provided funding for grants to States for food stamp
employment and training at $75 million for each fiscal year
through 2002. Section 817 would fund the program at higher
levels in each fiscal year. CBO estimates costs of $2 million
in fiscal year 1997 and $15 million in 2002 from the change.
Food stamp eligibility.--Under current law, if a household
has a member who is not eligible for food stamps on the basis
of his or her citizenship status, the income of that person is
prorated, and only a portion of it is counted toward the food
stamp benefit. Section 818 would give States the option to
count all of the ineligible person's income. CBO assumes that
one-quarter of the States would elect this option and that food
stamp spending would be lowered by $15 million in 1997 and $27
million in 2002.
Cooperation with child support agencies.--Two sections of
the bill would address the relationship between the child
support enforcement system and individuals who receive food
stamps. Section 822 would allow States to require custodial
parents to cooperate in child support enforcement as a
condition for food stamp eligibility. Requiring custodial
parents to participate in child support enforcement affects
only custodial parents who receive food stamps but not AFDC
because AFDC recipients are already required to comply with
child support enforcement. Based on a recent study published by
the Food and Consumer Service, CBO estimates that the Food
Stamp Program would save money because some recipients would
receive more income from child support, a few additional people
would choose not to participate in the program, and some
participants would have their benefits reduced for
noncompliance. Because of the administrative costs of finding
noncustodial parents and obtaining and enforcing child support
orders, much of the food stamp savings would be offset by costs
in the child support enforcement system. These costs are shared
by States and the Federal Government. In 2000, when the
provision would be fully implemented, CBO estimates that States
with 25 percent of the food stamp caseload would opt to
implement the provision, outlays for food stamps would be $20
million lower, and Federal outlays for child support
enforcement would be $15 million higher.
Section 823 would allow States to eliminate food stamp
eligibility for noncustodial parents who are delinquent in
payment of child support. CBO estimates that States with 50
percent of the caseload would choose to deny food stamp
eligibility to individuals in arrears on child support
payments. This change would eliminate 25,000 people from the
program and save $30 million annually by 2002.
Work requirement.--Section 824 would limit receipt of food
stamp benefits to a period of 3 months in any 36-month period
for able-bodied individuals who do not have dependent children
and who are not working or participating in an appropriate
training or work activity. Based on the Food Stamp Quality
Control (QC) data, the Survey of Income and Program
Participation (SIPP), and studies of caseload dynamics, CBO
estimates that approximately 1.1 million people would
potentially be subject to disqualification in an average month.
The bill allows for a number of waivers and exemptions from
the 3-month restriction. First, if the Secretary of Agriculture
determines that an area has an unemployment rate greater than
10 percent or has insufficient jobs, the area could receive a
waiver from the provision. CBO estimates that 2 percent of
people who would otherwise be disqualified because of the
provision would live in areas under a waiver. Second, an
individual could reestablish eligibility for another 3-month
period after a month of working or participating in an
allowable employment or training program. CBO estimates that
about 30,000 people in an average month would be in a
subsequent period of eligibility within the 36-month period.
Furthermore, CBO assumes that States would dedicate their food
stamp employment and training efforts toward people who would
otherwise be disqualified and would serve over 140,000
individuals in an average month. After these exclusions, the
provision would remove an estimated 800,000 individuals from
the rolls in an average month in fiscal year 1998 and up to 1
million individuals in an average month once the provision is
implemented fully, resulting in savings of $160 million in food
stamp benefits in 1997 and $1.1 billion in 2002.
Minimum allotment.--Food stamp households with one or two
persons who are eligible for less than $10 a month receive a
minimum allotment of $10. This minimum allotment is currently
adjusted each October to reflect the change in the cost of the
thrifty food plan, with the result rounded to the nearest $5.
Under CBO's economic forecast, the minimum benefit would rise
to $15 in 1998. Section 826 would remove the inflation
adjustment and keep the minimum benefit at $10. CBO estimates
that retaining a $10 minimum benefit would save $30 million in
each of fiscal years 1998 to 2000 and $35 million in 2001 and
2002.
Benefits on recertification.--Current law allows food stamp
households that fail to complete recertification requirements
in the last month of a certification period to receive full
benefits in the following month if they are certified eligible
by the end of the first month of the subsequent certification
period. Section 827 would prorate benefits for the first month
of the new certification period based on the date on which the
household is determined to be eligible. CBO estimates this
change would save $25 million a year in 1997 through 2000 and
$30 million in 2001 and 2002.
Income, eligibility, and immigration status verification
systems.--Section 840 would grant States a greater degree of
flexibility in the types of verification systems they use,
resulting in $5 million a year in estimated savings.
Collection of overissuances.--Section 844 would amend the
procedures for collecting claims and would save money in four
ways. First, CBO estimates savings of $5 million a year from
mandating States to use the Internal Revenue Service tax offset
procedures. Second, allowing States to recoup benefits to
collect overpayments resulting from errors by State agencies
would save another $5 million a year. Third, allowing for
garnishing of Federal pay in instances of food stamp
overissuance would save $1 million a year once it is fully
implemented but $5 million in fiscal years 1998 and 1999
because the provision would affect a backlog of overissuances.
Fourth, the bill would change claims retention rates to
allow States to retain 35 percent of all claims collected from
overissuances due to fraud and 20 percent for other types of
collections, except for collections from claims resulting from
State agency error. Under this policy the Federal Government
would receive a larger portion of claims collections and States
would retain less. This change would result in additional
estimated savings to the Federal Government of about $15
million in 1997 through 2001 and $20 million in 2002.
Limitation of Federal match for optional information
activities.--Section 847 would end the Federal match of
administrative funds spent on informational activities. Based
on information from the Food and Consumer Service, CBO
estimates that $2 million a year would otherwise be spent on
these activities.
Work supplementation or support program.--Section 849 would
allow States to use the amount of food stamp benefits that
would otherwise be provided to a household to subsidize
employers in hiring and employing public assistance recipients
for up to 1 year for any given recipient. CBO estimates that
the Federal Government would incur additional costs from this
provision, because research has demonstrated that persons
participating in grant diversion programs receive public
assistance for longer periods of time. Based on the interest of
States in work supplementation programs in the JOBS Program,
CBO assumes that about 20,000 additional people would
participate in a work supplementation program in any given
month once the provision is implemented fully. CBO estimates
that food stamp outlays would be higher by $30 million in 2000,
when the programs would be fully implemented.
Employment initiatives program.--Section 852 would allow
States where half or more of the food stamp households in the
summer of 1993 were also AFDC recipients to pay benefits in
cash to households that also receive benefits from AFDC or
Temporary Assistance for Needy Families and have a member who
is employed. Based on recent studies of cash-out
demonstrations, CBO estimates that issuing food stamps as cash
saves about $1 a month relative to coupon issuance.
Furthermore, based on QC data, CBO estimates that 10 States
would be eligible to participate based on the proportion of
their caseload that was also receiving AFDC benefits in the
summer of 1993, and that these States would have about 300,000
households eligible for cash benefits under the policy. CBO
anticipates that States with half of the households eligible
for cash benefits would choose to provide benefits in cash, and
that total savings would be $2 million a year once the
provision is phased in.
Simplified Food Stamp Program. Section 854 would give
States the option of simplifying Food Stamp Program rules,
within certain limits, for families that receive assistance
under AFDC or TANF. The bill stipulates that the Secretary of
Agriculture could approve a State plan for a simplified program
only if the State documents that the plan would not increase
Federal costs. CBO cannot determine how many States would apply
to use simplified rules or what the Secretary's criteria for
approving such plans would be. Because there is no mechanism
for States to reimburse the Federal Government if costs are
higher than under current rules, and because there is a lag
between when such costs occur and when corrective action is
taken, CBO estimates that the provision would entail some
costs. CBO estimates higher food stamp outlays of $5 million in
fiscal year 1998 and $25 million in fiscal year 2002.
Emergency Food Assistance Program.--The Emergency Food
Assistance Program is currently subject to annual
appropriation. Section 871 of the bill would create an
entitlement to States for their portion of the program and
would fund it at $100 million a year.
Interactions among provisions.--The estimates of individual
provisions shown in table 8 do not reflect the effects of other
provisions in the title. If the bill were enacted, total
savings would be less than the sum of the estimates of
individual provisions. For example, savings attributed to lower
maximum benefits, a lower standard deduction, and the
reinStatement of the cap on the excess shelter deduction--which
are estimated based on food stamp participation under current
law--would not be achieved for people who would lose their
benefits because of the work requirements. CBO estimates that
the interactions among overlapping provisions in title VIII
would reduce savings relative to the sum of the independent
estimates by $20 million in 1997 and $166 million in 2002.

Title IX: Miscellaneous

This title of the bill includes reductions in the Social
Services Block Grant and the earned income credit to achieve
total budget savings (including the revenue effect) of $0.6
billion in 1997 and $3.9 billion during the 1997-2002 period
(see table 9).
Reduction in Social Services Block Grant.--Under title XX
of the Social Security Act, funds in the form of a block grant
are made available to States for them to provide a variety of
social services to low-income families and individuals. Among
the services covered are home-based services (such as
homemaker, home health, and home maintenance), day care for
children and adults, special services for the disabled, social
support, prevention and intervention services, family planning,
as well as many other services. The Social Services Block Grant
has a permanent authorization of $2.8 billion. title IX would
reduce this amount by 15 percent, resulting in outlay savings
of $375 million in 1997 and $2.5 billion over 6 years.
Earned Income Credit.--The earned income credit (EIC) is a
refundable tax credit directed toward low-income workers. The
refundable portion of the credit has estimated outlays of $18.4
billion in 1996. Under current law, income tax filers with two
or more children are eligible for an EIC of 40 percent of
earnings in 1996 with a maximum credit of $3,556. The credit is
phased out based on the maximum of earnings or adjusted gross
income over the range from $11,610 to $28,495. The maximum
credit for a return with one child is $2,152, and it is phased
out at incomes between $11,610 and $25,078. Finally, a maximum
credit of $323 is available for filers without children and is
phased out over the $5,280-$9,500 range. title IX contains two
changes to the EIC.
Section 909 would require that the EIC be denied in cases
where the tax filer had disqualified income. Under current law,
tax filers with more than $2,350 in taxable investment income
are disqualified from the use of the EIC. The bill would lower
the limit to $2,200 and would expand the definition of
investment income to include positive capital gains and passive
income. This change, which would be effective for tax years
beginning after December 31, 1995, would reduce outlays by $170
million in 1997 and $947 million over the 1997-2002 period. The
corresponding revenue increases are $26 million and $151
million, respectively.
Section 910 would modify the definition of adjusted gross
income (AGI) for the calculation of the EIC. Certain losses--
such as from nonbusiness rent and royalties, capital losses,
and other business or investment losses--would not be allowed
in modified AGI for the calculation of the EIC. Outlays for the
refundable component of the EIC would be reduced by $98 million
in 1997 and $704 million over 6 years. Revenues would be higher
by $15 million in 1997 and by $128 million over the 1997-2002
period.
Because of interactions between the various EIC provisions,
including those in title IV and title IX, the total estimated
effects of the changes to the EIC differs from the sum of the
individual estimates over 6 years.
Abstinence Education.--Subtitle D of title IX would amend
the Social Security Act to authorize grants to States for the
purpose of providing abstinence education, which is defined as
an educational or motivational program which ``has as its
exclusive purpose, teaching the social, psychological, and
health gains to be realized by abstaining from sexual
activity.'' The bill would provide $50 million in budget
authority for these activities in each of the fiscal years 1998
through 2002. The funds would be distributed among the States
according to the proportion of children in each State. CBO
estimates that outlays of $18 million in 1998 and $203 million
through 2002 would result.

SUMMARY TABLE I.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY
RECONCILIATION ACT OF 1996; As passed by the Congress
Assumes enactment by September 1, 1996
[By fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
7-year
1995 1996 1997 1998 1999 2000 2001 2002 total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected Direct Spending Under Current Law:
Family Support Payments \1\........................ $18,086 $18,371 $18,805 $19,307 $19,935 $20,557 $21,245 $21,937
Food Stamp Program \2\............................. 25,554 26,220 28,094 29,702 31,092 32,476 33,847 35,283
Supplemental Security Income....................... 24,510 24,017 27,904 30,210 32,576 37,995 34,515 40,348
Medicaid........................................... 89,070 95,786 105,081 115,438 126,366 138,154 151,512 166,444
Child Nutrition \3\................................ 7,899 8,428 8,898 9,450 10,012 10,580 11,166 11,767
Old-Age, Survivors and Disability Insurance........ 333,273 348,186 365,403 383,402 402,351 422,412 444,081 466,767
Foster Care \4\.................................... 3,282 3,840 4,285 4,687 5,083 5,506 5,960 6,433
Social Services Block Grant........................ 2,797 2,880 3,010 3,050 3,000 2,920 2,870 2,840
Earned Income Credit............................... 15,244 18,440 20,191 20,894 21,691 22,586 23,412 24,157
Maternal and Child Health.......................... 0 0 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------
Total........................................ 519,715 546,168 581,671 616,140 652,106 693,186 728,608 775,976
==================================================================================================
Proposed Changes:
Family Support Payments \1\........................ 0 * 875 900 907 777 471 -131 3,800
Food Stamp Program \2\............................. 0 * -2,098 -3,949 -4,139 -4,209 -4,349 -4,583 -23,330
Supplemental Security Income....................... 0 * -793 -3,526 -4,280 -4,824 -4,344 -4,958 -22,725
Medicaid........................................... 0 0 -38 -514 -567 -581 -948 -1,433 -4,082
Child Nutrition \3\................................ 0 * -128 -403 -494 -553 -605 -670 -2,853
Old-Age, Survivors and Disability Insurance........ 0 0 -5 -10 -15 -15 -20 -20 -85
Foster Care \4\.................................... 0 * 68 25 16 31 41 51 232
Social Services Block Grant........................ 0 0 -375 -420 -420 -420 -420 -420 -2,475
Earned Income Credit............................... 0 0 -445 -456 -463 -480 -493 -515 -2,852
Maternal and Child Health.......................... 0 0 0 18 35 50 50 50 203
--------------------------------------------------------------------------------------------------
Total........................................ 0 * -2,939 -8,335 -9,419 -10,224 -10,618 -12,630 -54,167
==================================================================================================
Revenues:
Earned Income Credit............................... 0 * 60 61 62 65 68 78 394
Net Deficit Effect................................... 0 * -2,999 -8,396 -9,481 -10,289 -10,686 -12,708 -54,561
Projected Direct Spending Under Proposal:
Family Support Payments \1\........................ 18,086 18,371 19,680 20,207 20,842 21,334 21,716 21,806
Food Stamp Program \2\............................. 25,554 26,220 25,996 25,753 26,953 28,267 29,498 30,700
Supplemental Security Income....................... 24,510 24,017 27,111 26,684 28,296 33,171 30,171 35,390
Medicaid........................................... 89,070 95,786 105,043 114,924 125,799 137,573 150,564 165,011
Child Nutrition \3\................................ 7,899 8,428 8,770 9,047 9,518 10,027 10,561 11,097
Old-Age, Survivors and Disability Insurance........ 333,273 348,186 365,398 383,392 402,336 422,397 444,061 466,747
Foster Care \4\.................................... 3,282 3,840 4,353 4,712 5,099 5,537 6,001 6,484
Social Services Block Grant........................ 2,797 2,880 2,635 2,630 2,580 2,500 2,450 2,420
Earned Income Credit............................... 15,244 18,440 19,746 20,438 21,228 22,106 22,919 23,642
Maternal and Child Health.......................... 0 0 0 18 35 50 50 50
==================================================================================================
Total........................................ 519,715 546,168 578,732 607,805 642,686 682,962 717,991 763,347
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Details may not add to totals because of rounding.
* Denotes less than $500,000.
\1\ Under current law, Family Support Payments includes spending on Aid to Families With Dependent Children (AFDC), AFDC-related child care,
administrative costs for child support enforcement, net Federal savings from child support collections, and the Job Opportunities and Basic Skills
Training Program (JOBS). Under proposed law, Family Support Payments would include spending on the Temporary Assistance for Needy Families Block
Grant, administrative costs for child support enforcement, the Child Care Block Grant, and net Federal savings from child support collections.
\2\ Food Stamps includes Nutrition Assistance for Puerto Rico under both current law and proposed law, and the Emergency Food Assistance Program under
proposed law.
\3\ Child Nutrition Programs refer to direct spending authorized by the National School Lunch Act and the Child Nutrition Act.
\4\ Under current law, Foster Care includes Foster Care, Adoption Assistance, Independent Living, and Family Preservation and Support. Under proposed
law, Foster Care includes these programs plus the National Random Sample Study of Child Welfare.

SUMMARY TABLE II.--FEDERAL BUDGET EFFECTS OF H.R. 3734,
THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996
As passed by the Congress
Assumes enactment by September 1, 1996
[By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
7-year
1996 1997 1998 1999 2000 2001 2002 total
----------------------------------------------------------------------------------------------------------------
Direct Spending:
Title I: Temporary
Assistance For Needy
Families Block Grant
Budget Authority........ $10 $-212 $-1,125 $-989 $-837 $-1,109 $-1,839 $-6,100
Outlays................. * -569 -937 -819 -667 -1,054 -1,814 -5,859
Title II: Supplemental
Security Income
Budget Authority........ * -408 -1,031 -1,525 -1,869 -1,729 -2,048 -8,610
Outlays................. * -408 -1,031 -1,525 -1,869 -1,729 -2,048 -8,610
Title III: Child Support
Enforcement
Budget Authority........ 88 -21 144 168 183 110 74 746
Outlays................. * 25 148 172 184 110 74 712
Title IV: Restricting
Welfare And Public Benefits
For Aliens
Budget Authority........ * -1,174 -3,947 -4,311 -4,662 -4,525 -5,036 -23,655
Outlays................. * -1,174 -3,947 -4,311 -4,662 -4,525 -5,036 -23,655
Title V: Child Protection
Budget Authority........ 6 86 6 6 6 6 6 122
Outlays................. * 68 25 6 6 6 6 117
Title VI: Child Care
Budget Authority........ * 1,967 2,067 2,167 2,367 2,567 2,717 13,852
Outlays................. * 1,635 1,975 2,082 2,227 2,377 2,482 12,778
Title VII: Child Nutrition
Programs
Budget Authority........ * -151 -449 -505 -563 -615 -680 -2,963
Outlays................. * -128 -403 -494 -553 -605 -670 -2,853
Title VIII: Food Stamps And
Commodity Distribution
Budget Authority........ * -1,792 -3,539 -3,918 -4,282 -4,580 -4,990 -23,103
Outlays................. * -1,792 -3,539 -3,918 -4,282 -4,580 -4,990 -23,103
Title IX: Miscellaneous
Budget Authority........ 0 -641 -594 -597 -608 -618 -634 -3,692
Outlays................. 0 -596 -626 -612 -608 -618 -634 -3,694
===================================================================================
Total, Direct Spending
Budget Authority........ 104 -2,346 -8,468 -9,504 -10,265 -10,493 -12,430 -53,403
Outlays................. * -2,939 -8,335 -9,420 -10,223 -10,618 -12,630 -54,167
----------------------------------------------------------------------------------------------------------------
* Denotes less than $500.000.

TABLE 1.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996
TITLE I--TEMPORARY ASSISTANCE FOR NEEDY FAMILIES BLOCK GRANT; As Passed by the Congress
Assumed to be enacted by September 1, 1996
[By fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 7-year total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Spending:
Repeal AFDC, Emergency Assistance, and JOBS
Family Support Payments
Budget Authority................................ * $-8,021 $-16,550 $-17,003 $-17,439 $-17,893 $-18,342 $-95,247
Outlays......................................... * -7,925 -16,510 -16,973 -17,409 -17,863 -18,322 -95,001
Repeal of Child Care Programs \1\
Family Support Payments
Budget Authority................................ 0 -1,405 -1,480 -1,540 -1,595 -1,655 -1,715 -9,390
Outlays......................................... 0 -1,345 -1,475 -1,535 -1,590 -1,650 -1,710 -9,305
Authorize Temporary Family Assistance Block Grant
\1\
Family Support Payments
Budget Authority................................ * 8,368 16,389 16,389 16,389 16,389 16,389 90,314
Outlays......................................... * 8,300 16,389 16,389 16,389 16,389 16,389 90,246
Supplemental Grants related to Population Growth and
Poverty Level
Family Support Payments
Budget Authority................................ 0 0 87 174 261 278 0 800
Outlays......................................... 0 0 87 174 261 278 0 800
Food Stamp Program
Budget Authority................................ 0 0 -5 -10 -15 -15 0 -45
Outlays......................................... 0 0 -5 -10 -15 -15 0 -45
Grants to States that Reduce Out-of-Wedlock Births
Family Support Payments
Budget Authority................................ 0 0 0 50 50 50 50 200
Outlays......................................... 0 0 0 50 50 50 50 200
Bonus to Reward High Performance States
Family Support Payments
Budget Authority................................ 0 0 0 200 200 200 200 800
Outlays......................................... 0 0 0 200 200 200 200 800
Contingency Fund \3\
Family Support Payments
Budget Authority................................ 0 107 210 313 393 473 565 2,061
Outlays......................................... 0 107 210 313 393 473 565 2,061
Food Stamp Program
Budget Authority................................ 0 -5 -15 -20 -25 -30 -35 -130
Outlays......................................... 0 -5 -15 -20 -25 -30 -35 -130
Loans to States for Welfare Programs
Family Support Payments
Budget Authority................................ 0 0 0 0 0 0 0 0
Outlays......................................... 0 0 0 0 0 0 0 0
Study by the Bureau of the Census
Family Support Payments
Budget Authority................................ $10 10 10 10 10 10 10 70
Outlays......................................... * 4 18 10 10 10 10 62
Research, Evaluations, and National Studies
Family Support Payments
Budget Authority................................ 0 15 15 15 15 15 15 90
Outlays......................................... 0 3 15 15 15 15 15 78
Grants to Indian Tribes that received JOBS Funds in
1995
Family Support Payments
Budget Authority................................ 0 8 8 8 8 8 8 46
Outlays......................................... 0 6 8 8 8 8 8 44
Hold States Harmless for Cost-Neutrality Liabilities
Family Support Payments
Budget Authority................................ 0 50 0 0 0 0 0 50
Outlays......................................... 0 50 0 0 0 0 0 50
Penalties for State Failure to Meet Work
Requirements
Family Support Payments
Budget Authority................................ 0 0 0 -50 50 -50 -50 -200
Outlays......................................... 0 0 0 -50 -50 -50 -50 -200
Grants to Territories
Family Support Payments
Budget Authority................................ 0 116 116 116 116 116 116 696
Outlays......................................... 0 116 116 116 116 116 116 696
Extension of Transitional Medicaid Benefits
Medicaid
Budget Authority................................ 0 0 0 180 390 400 210 1,180
Outlays......................................... 0 0 0 180 390 400 210 1,180
Increased Medicaid Administrative Payment
Medicaid
Budget Authority................................ 0 500 0 0 0 0 0 500
Outlays......................................... 0 75 135 135 135 20 0 500
Effect of the Temporary Assistance Block Grant on
the Food Stamp Program
Food Stamp Program
Budget Authority................................ 0 45 90 170 430 560 695 1,990
Outlays......................................... 0 45 90 170 430 560 695 1,990
Effect of the Temporary Assistance Block Grant on
the Foster Care Program
Foster Care Program
Budget Authority................................ 0 0 0 10 25 35 45 115
Outlays......................................... 0 0 0 10 25 35 45 115
Effect of the Temporary Assistance Block Grant on
the Medicaid Program \4\
Medicaid
Budget Authority................................ 0 0 0 0 0 0 0 0
Outlays......................................... 0 0 0 0 0 0 0 0
Total Direct Spending, Title I, By Account:
Family Support Payments
Budget Authority................................ 10 -752 -1,195 -1,319 -1,642 -2,059 -2,754 -9,710
Outlays......................................... 0 -684 -1,142 -1,284 -1,607 -2,024 -2,729 -9,469
Food Stamp Program
Budget Authority................................ 0 40 70 140 390 515 660 1,815
Outlays......................................... 0 40 70 140 390 515 660 1,815
Foster Care Program
Budget Authority................................ 0 0 0 10 25 35 45 115
Outlays......................................... 0 0 0 10 25 35 45 115
Medicaid
Budget Authority................................ 0 500 0 180 390 400 210 1,680
Outlays......................................... 0 75 135 315 525 420 210 1,680
Direct Spending total, All Accounts--Title I:
Budget Authority................................ 10 -212 -1,125 -989 -837 -1,109 -1,839 -6,100
Outlays......................................... 0 -569 -937 -819 -667 -1,054 -1,814 -5,859
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Denotes less than $500,000.
\1\ Funds for existing child care programs are repealed by this title, but equal or greater funding for similar activities is restored in title VI.
\2\ States have the option to begin to operate under the Temporary Assistance for Needy Families Block Grant any time between the enactment date and
July 1, 1997. A few States may opt to do so in FY 1996 creating small savings in the AFDC, Emergency Assistance, and JOBS Programs and small costs in
the TANF Program.
\3\ The bill appropriates $2 billion for the contingency fund for use in years 1997-2001. The estimate shows costs of the contingency fund in 2002
because section 257(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985 requires that the baseline shall assume that mandatory
programs greater than $50 million dollars are continued.
\4\ The bill retains categorical eligibility for Medicaid for families that meet the eligibility criteria for Aid to Families with Dependent Children as
they are in current law.

TABLE 2.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION
ACT OF 1996
TITLE II--SUPPLEMENTAL SECURITY INCOME; As passed by the Congress
Assumed to be enacted by September 1, 1996
[By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
7-year
1996 1997 1998 1999 2000 2001 2002 total
----------------------------------------------------------------------------------------------------------------
Direct Spending:
SSI Benefits to Certain
Children:
Supplemental Security
Income:
Budget Authority........ * $-125 $-925 $-1,450 $-1,800 $-1,675 $-2,000 $-7,975
Outlays................. * -125 -925 -1,450 -1,800 -1,675 -2,000 -7,975
Family Support Payments:
Budget Authority........ * \1\ \1\ \1\ \1\ \1\ \1\ \1\
Outlays................. * \1\ \1\ \1\ \1\ \1\ \1\ \1\
Food stamps \2\
Budget Authority........ * 20 130 210 240 265 290 1,155
Outlays................. * 20 130 210 240 265 290 1,155
Medicaid:
Budget Authority........ * -5 -25 -40 -45 -55 -60 -230
Outlays................. * -5 -25 -40 -45 -55 -60 -230
-----------------------------------------------------------------------------------
Subtotal, provision:
Budget Authority........ * -110 -820 -1,280 -1,605 -1,465 -1,770 -7,050
Outlays................. * -110 -820 -1,280 -1,605 -1,465 -1,770 -7,050
Reduction in SSI Benefits to
Certain Hospitalized
Children With Private
Insurance:
Supplemental Security
Income:
Budget Authority........ 0 -40 -55 -60 -70 -60 -65 -350
Outlays................. 0 -40 -55 -60 -70 -60 -65 -350
Funding for Cost of Reviews:
\2\
Supplemental Security
Income:
Budget Authority........ 0 \3\ \3\ 0 0 0 0 0
Outlays................. 0 \3\ \3\ 0 0 0 0 0
End Payment of Prorated
Benefits for Month of
Application:
Supplemental Security
Income;
Budget Authority........ * -55 -130 -150 -160 -165 -175 -835
Outlays................. * -55 -130 -150 -160 -165 -175 -835
Pay Large Retroactive
Benefit Amounts in
Installments:
Supplemental Security
Income:
Budget Authority........ 0 -200 -15 -15 -15 -15 -15 -275
Outlays................. 0 -200 -15 -15 -15 -15 -15 -275
Make Payments to Penal
Institutions That Report
Ineligible SSI Recipients:
Old-Age, Survivors and
Disability Insurance--
benefits saved: \4\
Budget Authority........ 0 -5 -10 -15 -15 -20 -20 -85
Outlays................. 0 -5 -10 -15 -15 -20 -20 -85
Supplemental Security
Income--benefits saved:
Budget Authority........ 0 -* -5 -10 -10 -10 -10 -45
Outlays................. 0 -* -5 -10 -10 -10 -10 -45
Old-Age, Survivors and
Disability Insurance--
payments to prison
officials:
Budget Authority........ 0 0 0 0 0 0 0 0
Outlays................. 0 0 0 0 0 0 0 0
Supplemental Security
Income--payments to prison
officials:
Budget Authority........ 0 2 4 5 6 6 7 30
Outlays................. 0 2 4 5 6 6 7 30
-----------------------------------------------------------------------------------
Subtotal, provision:
Budget Authority........ 0 -3 -11 -20 -19 -24 -23 -100
Outlays................. 0 -3 -11 -20 -19 -24 -23 -100
Total Direct Spending:
Supplemental Security
Income:
Budget Authority........ * -418 -1,126 -1,680 -2,049 -1,919 -2,258 -9,450
Outlays................. * -418 -1,126 -1,680 -2,049 -1,919 -2,258 -9,450
Food Stamps: \2\
Budget Authority........ * 20 130 210 240 265 290 1,155
Outlays................. * 20 130 210 240 265 290 1,155
Medicaid:
Budget Authority........ * -5 -25 -40 -45 -55 -60 -230
Outlays................. * -5 -25 -40 -45 -55 -60 -230
Family Support Payments:
Budget Authority........ * \1\ \1\ \1\ \1\ \1\ \1\ \1\
Outlays................. * \1\ \1\ \1\ \1\ \1\ \1\ \1\
Old-Age, Survivors and
Disability Insurance:
Budget Authority........ 0 -5 -10 -15 -15 -20 -20 -85
Outlays................. 0 -5 -10 -15 -15 -20 -20 -85
===================================================================================
Total, All Accounts:
Budget Authority........ * -408 -1,031 -1,525 -1,869 -1,729 -2,048 -8,610
Outlays................. * -408 -1,031 -1,525 -1,869 -1,729 -2,048 -8,610
----------------------------------------------------------------------------------------------------------------
* Denotes less than $500,000.
\1\ Proposed to be block-granted elsewhere in the bill.
\2\ Includes interactions with other food stamp provisions of the bill.
\3\ The bill proposes an adjustment to the discretionary spending caps of $150 million in 1997 and $100 million
in 1998 to cover the costs of reviewing 300,000 to 400,000 children on the SSI rolls under the new, tighter
criteria. The bill does not, however, directly appropriate that money. Its availability remains contingent on
future appropriation action. In addition to those one-time costs of $250 million or more, the bill would
require that most disabled children who qualify even under the tighter eligibility criteria be reviewed every
3 years to see if their medical condition has improved. That cost, which CBO estimates at about $100 million a
year beginning in 1998, could be met by raising the caps on discretionary spending as permitted in P.L. 104-
121. The cap adjustment in that law, however, was designed to cover periodic reviews and not the heavy volume
of one-time reviews that would be mandated in 1997 by this legislation.
\4\ The provision would encourage prison officials to exchange data with SSA by paying them up to $400 for
providing information that helps to identify each inmate who receives SSI and whose benefits should therefore
be suspended. In the course of checking that information, SSA would find that some inmates collect OASDI.
Therefore, although the language makes no mention of OASDI, savings in that program would result.

TABLE 3.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996
TITLE III--CHILD SUPPORT ENFORCEMENT; As Passed by the Congress
Assumed to be enacted by September 1, 1996
[Outlays by fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
7-year
1996 1997 1998 1999 2000 2001 2002 total
--------------------------------------------------------------------------------------------------------------------------------------------------------
New Enforcement Techniques:
State directory of new hires
Family support payments................................... 0 0 $-1 $-4 $-6 $-9 $-10 $-30
Food stamp program........................................ 0 0 -1 -7 -12 -18 -21 -59
Medicaid.................................................. 0 0 -3 -11 -20 -31 -38 -102
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 0 -5 -21 -38 -58 -70 -192
State laws providing expedited enforcement of child support:
Family support payments................................... 0 0 0 -17 -35 -55 -77 -185
Food stamp program........................................ 0 0 0 -6 -13 -21 -30 -70
Medicaid.................................................. 0 0 0 -5 -11 -18 -26 -59
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 0 0 -28 -59 -94 -133 -314
State laws concerning paternity:
Family support payments................................... 0 $-16 -18 -20 -22 -24 -26 -127
Food stamp program........................................ 0 -3 -3 -4 -4 -4 -5 -23
Medicaid.................................................. 0 -2 -2 -2 -3 -3 -3 -15
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 -21 -23 -26 -28 -31 -34 -164
Suspend Drivers' Licenses:
Family support payments................................... 0 -4 -9 -14 -19 -20 -21 -88
Food stamp program........................................ 0 -2 -5 -8 -12 -12 -13 -52
Medicaid.................................................. 0 -1 -3 -5 -7 -8 -9 -35
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 -8 -17 -27 -38 -41 -43 -175
Adoption of uniform state laws:
Family support payments................................... 0 10 2 -7 -11 -15 -21 -41
Food stamp program........................................ 0 0 -1 -3 -4 -6 -9 -24
Medicaid.................................................. 0 0 -2 -3 -6 -8 -11 -30
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 10 -1 -13 -21 -30 -41 -95

Subtotal, New Enforcement............................. 0 -19 -46 -115 -185 -254 -322 -940
Lost AFDC Collections due to Reduced Cases Funded by Block
Grant Funds:
Family support payments................................... 0 0 29 63 142 200 224 658
Food stamp program........................................ 0 0 0 0 0 0 0 0
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 0 29 63 142 200 224 658
Eliminate $50 Passthrough and Exclude Gap Payments from
Distribution Rules at State Option:
Family support payments................................... 0 -222 -236 -260 -285 -311 -336 -1,650
Food stamp program........................................ 0 114 122 139 147 164 171 858
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 -108 -114 -121 -139 -147 -165 -793
Distribute Child Support Arrears to Former AFDC Families
First:
Family support payments................................... 0 0 62 69 76 148 183 539
Food stamp program........................................ 0 0 -11 -12 -14 -27 -33 -96
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 0 51 57 63 122 150 442
Hold States Harmless for Lower Child Support Collections:
Family support payments................................... 0 0 17 29 34 39 29 148
Food stamp program........................................ 0 0 0 0 0 0 0 0
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 0 17 29 34 39 29 148
Optional Modification of Support Orders:
Family support payments................................... 0 -5 0 10 15 15 20 55
Food stamp program........................................ 0 0 0 0 0 0 0 0
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 -5 0 10 15 15 20 55

Other Provisions with Budgetary Implications:
Automated data processing development........................
Family support payments................................... * 83 91 129 129 8 0 440
Food stamp program........................................ 0 0 0 0 0 0 0 0
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. * 83 91 129 129 8 0 440
Automated data processing operation and maintenance:.........
Family support payments................................... 0 12 55 52 52 46 40 257
Food stamp program........................................ 0 0 0 0 0 0 0 0
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 12 55 52 52 46 40 257
Technical assistance to state programs:......................
Family support payments................................... * 48 51 50 48 47 45 290
Food stamp program........................................ 0 0 0 0 0 0 0 0
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. * 48 51 50 48 47 45 290
State obligation to provide services:........................
Family support payments................................... 0 0 0 3 11 22 39 75
Food stamp program........................................ 0 0 0 0 0 0 0 0
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 0 0 3 11 22 39 75
Federal and state reviews and audits:........................
Family support payments................................... 0 3 3 3 3 3 3 20
Food stamp program........................................ 0 0 0 0 0 0 0 0
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. 0 3 3 3 3 3 3 20
Grants to States for Visitation:.............................
Family support payments................................... * 10 10 10 10 10 10 60
Food stamp program........................................ 0 0 0 0 0 0 0 0
Medicaid.................................................. 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Subtotal.............................................. * 10 10 10 10 10 10 60
Subtotal, Other provisions............................ * 156 210 248 254 136 137 1,197
=========================================================================================

Total, by account:
Family support payments................................... * -81 57 99 142 103 101 421
Food stamp program........................................ 0 109 100 99 88 76 62 533
Medicaid.................................................. 0 -3 -9 -27 -46 -68 -88 -242
=========================================================================================
Total................................................. * 25 148 172 184 110 74 712

Family support payments: Budget Authority: **
Automated data processing development........................ 42 42 91 129 129 8 0 440
Technical assistance to state programs....................... 36 44 47 46 48 47 45 314
Grants to States for Visitation.............................. 10 10 10 10 10 10 10 70
All other Provisions......................................... 0 -222 -95 -91 -45 38 45 -369
=========================================================================================
Total................................................. 88 -127 53 95 142 103 101 455
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Denotes less than $500,000.
** Budget Authority is generally equal to the Outlays shown in this table. Where this is not the case, Budget Authority is shown here.

TABLE 4.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996
TITLE IV--RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS; As passed by the Congress
Assumed to be enacted by September 1, 1996
[By fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
7-year
1996 1997 1998 1999 2000 2001 2002 total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Spending:
Supplemental Security Income
Budget Authority.......................................... * $-375 $-2,400 $-2,600 $-2,775 $-2,425 $-2,700 $-13,275
Outlays................................................... * -375 -2,400 -2,600 -2,775 -2,425 -2,700 -13,275
Food Stamps \1\
Budget Authority.......................................... * -470 -700 -660 -630 -610 -590 -3,660
Outlays................................................... * -470 -700 -660 -630 -610 -590 -3,660
Medicaid
Budget Authority.......................................... * -105 -615 -815 -1,015 -1,245 -1,495 -5,290
Outlays................................................... * -105 -615 -815 -1,015 -1,245 -1,495 -5,290
Family support payments
Budget Authority.......................................... 0 \2\ \2\ \2\ \2\ \2\ \2\ \2\
Outlays................................................... 0 \2\ \2\ \2\ \2\ \2\ \2\ \2\
Child nutrition \3\
Budget Authority.......................................... 0 0 0 0 0 0 0 0
Outlays................................................... 0 0 0 0 0 0 0 0
Earned income credit
Budget Authority.......................................... 0 -224 -232 -236 -242 -245 -251 -1,430
Outlays................................................... 0 -224 -232 -236 -242 -245 -251 -1,430
Total Direct Spending:
Budget Authority.......................................... 0 -1,174 -3,947 -4,311 -4,662 -4,525 -5,036 -23,655
Outlays................................................... 0 -1,174 -3,947 -4,311 -4,662 -4,525 -5,036 -23,655
Revenues:
Earned income credit 0 28 29 29 30 30 31 177
Deficit Effect................................................ * -1,202 -3,976 -4,340 -4,692 -4,555 -5,067 -23,832
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The CBO estimate assumes that the proposed exemption for public health programs that provide immunizations will be interpreted to permit continued
Medicaid funding for pediatric vaccines.
* Denotes less than $500,000.
\1\ Includes interactions with other food stamp provisions of the bill.
\2\ Proposed to be block-granted elsewhere in the bill.
\3\ Section 742 of the bill, in title VII, specifically states that benefits under the school breakfast and school lunch programs shall not be
contingent on students' immigration or citizenship status. Therefore, CBO estimates no savings in the child nutrition program from the general
restrictions contained in title IV on immigrants' eligibility for Federal benefits.

TABLE 5.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION
ACT OF 1996
TITLE V--CHILD PROTECTION; As passed by the Congress
Assumes enactment by September 1, 1996
[By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 1996-2002
----------------------------------------------------------------------------------------------------------------
Direct Spending:
Extend Enhanced Match Rate for Computer Purchases
for Foster Care Data Collection:
Budget Authority................................ 0 $80 0 0 0 0 0 $80
Outlays......................................... 0 66 $14 0 0 0 0 80
National Random Sample Study of Child Welfare:
Budget Authority................................ $6 6 6 $6 $6 $6 6 42
Outlays......................................... * 2 11 6 6 6 6 37
===========================================================
Total Direct Spending:
Foster Care:
Budget Authority................................ 6 86 6 6 6 6 6 122
Outlays......................................... * 68 25 6 6 6 6 117
----------------------------------------------------------------------------------------------------------------
* Denotes less than $500,000.

TABLE 6.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION
ACT OF 1996
TITLE VI--CHILD CARE; As passed by the Congress
Assumes enactment by September 1, 1996
[By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 1996-2002
----------------------------------------------------------------------------------------------------------------
Direct Spending:
New Child Care Block Grant
Budget Authority........ 0 $1,967 $2,067 $2,167 $2,367 $2,567 $2,717 $13,852
Outlays................. 0 1,635 1,975 2,082 2,227 2,377 2,482 12,778
----------------------------------------------------------------------------------------------------------------
Note: For States to draw down the child care block grant remainder, this subtitle requires them to maintain the
greater of fiscal year 1994 or 1995 spending.

TABLE 7.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION
ACT OF 1996
TITLE VII--CHILD NUTRITION PROGRAMS; As passed by the Congress
Assumes enactment by September 1, 1996
[Outlays by fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
1996-
Section 1996 1997 1998 1999 2000 2001 2002 2002
----------------------------------------------------------------------------------------------------------------
Direct Spending:
704 Special assistance
Extension of payment period
Budget Authority......... 0 * * $1 $1 $1 $1 $4
Outlays.................. 0 * * 1 1 1 1 4
Rounding rules for lunch,
breakfast, and supplement
rates
Budget Authority......... 0 $-2 $-15 -15 -15 -15 -15 -77
Outlays.................. 0 -1 -10 -15 -15 -15 -15 -71
706 Summer food service
program for children
Budget Authority......... 0 -24 -29 -29 -34 -34 -39 -189
Outlays.................. 0 -19 -29 -29 -34 -34 -39 -184
708 Child and adult care food
program
Budget Authority......... 0 -105 -380 -430 -480 -535 -595 -2,525
Outlays.................. 0 -90 -340 -420 -470 -525 -585 -2,430
723 School breakfast program
authorization
Budget Authority......... 0 -10 -15 -22 -25 -22 -22 -116
Outlays.................. 0 -8 -14 -21 -25 -22 -22 -112
731 Nutrition education and
training programs
Budget Authority......... 0 -10 -10 -10 -10 -10 -10 -60
Outlays.................. 0 -10 -10 -10 -10 -10 -10 -60
==================================================================================

Total, Child Nutrition
Programs:
Direct Spending
Budget Authority......... 0 -151 -449 -505 -563 -615 -680 -2,963
Outlays.................. 0 -128 -403 -494 -553 -605 -670 -2,853
----------------------------------------------------------------------------------------------------------------
* Denotes less than $500,000.
Details may not add to totals because of rounding.

TABLE 8.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996
TITLE VIII--FOOD STAMPS AND COMMODITY DISTRIBUTION; As passed by the Congress
Assumes enactment by September 1, 1996
[Outlays by fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
1996-
Section 1996 1997 1998 1999 2000 2001 2002 2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
801 Definition of certification period............................ 0 0 0 0 0 0 0 0
802 Definition of coupon.......................................... 0 0 0 0 0 0 0 0
803 Treatment of children living at home.......................... 0 $-115 $-245 $-255 $-265 $-280 $-290 $-1,450
804 Adjustment of thrifty food plan............................... 0 -935 -980 -1,025 -1,070 -1,115 -1,155 -6,280
805 Definition of homeless individual............................. 0 -* -* -* -* -* -* -*
806 State option for eligibility standards........................ 0 0 0 0 0 0 0 0
807 Earnings of students.......................................... 0 -10 -10 -10 -10 -15 -15 -70
808 Energy assistance............................................. 0 -125 -170 -175 -175 -180 -180 -1,005
809 Deductions from income:
Standard deduction at $134 each year \1\....................... 0 0 -555 -770 -990 -1,220 -1,465 -5,000
Homeless shelter allowance..................................... 0 -1 -1 -2 -3 -3 -5 -15
Cap excess shelter deduction at $247 through 12/31/96, $250
from 1/1/97 through FY98, $275 in FY99 and FY00, and $300 in
each later fiscal year......................................... 0 -350 -570 -505 -565 -490 -550 -3,030
State option for mandatory standard utility allowance and
otherwise allow change between SUA and actual costs only at
recertification................................................ 0 -35 -70 -75 -80 -80 -85 -425
810 Vehicle Allowance at $4,650 FY97-2002......................... 0 -45 -140 -175 -200 -225 -245 -1,030
811 Vendor payments for transitional housing counted as income.... 0 -10 -10 -10 -10 -10 -10 -60
812 Simplified calculation of income for the self-employed........ 0 0 0 0 0 0 0 0
813 Doubled penalties for violating Food Stamp Program
requirements..................................................... 0 -* -* -* -* -* -* -*
814 Disqualification of convicted individuals..................... 0 -* -* -* -* -* -* -*
815 Disqualification.............................................. 0 -5 -5 -5 -5 -5 -5 -30
816 Caretaker exemption........................................... 0 0 0 0 0 0 0 0
817 Employment and training....................................... 0 2 6 9 11 13 15 56
818 Food stamp eligibility........................................ 0 -15 -21 -27 -27 -27 -27 -145
819 Comparable treatment for disqualification..................... 0 -20 -20 -20 -20 -20 -25 -125
820 Disqualification for receipt of multiple food stamp benefits.. 0 -5 -5 -5 -5 -5 -5 -30
821 Disqualification of fleeing felons............................ 0 -* -* -* -* -* -* -*
822 Cooperation with child support agencies:
Option to require custodial parent cooperation
Food Stamps................................................... 0 -5 -10 -15 -20 -20 -20 -90
Family support payments....................................... 0 5 10 10 15 15 15 70
823 Disqualification relating to child support arrears............ 0 -5 -15 -25 -25 -30 -30 -130
824 Work requirement.............................................. 0 -160 -830 -960 -1,010 -1,050 -1,100 -5,110
825 Encourage electronic benefit transfer systems................. 0 * * * * * * *
826 Value of minimum allotment.................................... 0 0 -30 -30 -30 -35 -35 -160
827 Benefits on recertification................................... 0 -25 -25 -25 -25 -30 -30 -160
828 Optional combined allotment for expedited households.......... 0 0 0 0 0 0 0 0
829 Failure to comply with other means-tested public assistance
programs......................................................... 0 -25 -25 -25 -25 -25 -25 -150
830 Allotments for households residing in centers................. 0 * * * * * * *
831 Condition precedent for approval of retail stores and
wholesale food concerns.......................................... 0 0 0 0 0 0 0 0
832 Authority to establish authorization periods.................. 0 0 0 0 0 0 0 0
833 Information for verifying eligibility for authorization....... 0 0 0 0 0 0 0 0
834 Waiting period for stores that fail to meet authorization
criteria......................................................... 0 0 0 0 0 0 0 0
835 Operation of food stamp offices............................... 0 0 0 0 0 0 0 0
836 State employee and training standards......................... 0 0 0 0 0 0 0 0
837 Exchange of law enforcement information....................... 0 0 0 0 0 0 0 0
838 Expedited coupon service...................................... 0 0 0 0 0 0 0 0
839 Withdrawing fair hearing requests............................. 0 0 0 0 0 0 0 0
840 Income, eligibility, and immigration status verification
systems.......................................................... 0 -5 -5 -5 -5 -5 -5 -30
841 Investigations................................................ 0 0 0 0 0 0 0 0
842 Disqualification of retailers who intentionally submit
falsified applications........................................... 0 0 0 0 0 0 0 0
843 Disqualification of retailers who are disqualified under the
WIC program...................................................... 0 0 0 0 0 0 0 0
844 Collection of overissuances................................... 0 -25 -30 -30 -25 -25 -30 -165
845 Authority to suspend stores violating program requirements
pending administrative and judicial review....................... 0 0 0 0 0 0 0 0
846 Expanded criminal forfeiture for violations................... 0 \2\ \2\ \2\ \2\ \2\ \2\ \2\
847 Limitation of Federal match................................... 0 -2 -2 -2 -2 -2 -2 -12
848 Standards for administration.................................. 0 0 0 0 0 0 0 0
849 Work supplementation or support program....................... 0 5 15 20 30 30 30 130
850 Waiver authority.............................................. 0 0 0 0 0 0 0 0
851 Response to waivers........................................... 0 0 0 0 0 0 0 0
852 Employment initiatives program................................ 0 -1 -2 -2 -2 -2 -2 -11
853 Reauthorization............................................... 0 0 0 0 0 0 0 0
854 Simplified Food Stamp Program................................. 0 0 5 10 20 20 25 80
855 A study of the use of food stamps to purchase vitamins and
minerals......................................................... 0 0 0 0 0 0 0 0
856 Deficit reduction............................................. 0 0 0 0 0 0 0 0
871 Emergency Food Assistance Program............................. 0 100 100 100 100 100 100 600
872 Food bank demonstration project............................... 0 0 0 0 0 0 0 0
873 Hunger prevention programs.................................... 0 0 0 0 0 0 0 0
874 Report on entitlement commodity processing.................... 0 0 0 0 0 0 0 0
891 Provisions to encourage electronic benefit systems \3\........ 0 0 0 0 0 0 0 0
Interactions among provisions.................................. 0 20 101 111 136 141 166 674
Direct Spending:
Food stamp program
Budget Authority.............................................. 0 -1,797 -3,549 -3,928 -4,297 -4,595 -5,005 -23,173
Outlays....................................................... 0 -1,797 -3,549 -3,928 -4,297 -4,595 -5,005 -23,173
Family support payments
Budget Authority.............................................. 0 5 10 10 15 15 15 70
Outlays....................................................... 0 5 10 10 15 15 15 70
Total Direct Spending:
Budget Authority.............................................. 0 -1,792 -3,539 -3,918 -4,282 -4,580 -4,990 -23,103
Outlays....................................................... 0 -1,792 -3,539 -3,918 -4,282 -4,580 -4,990 -23,103
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Details may not add to totals because of rounding.
* Denotes less than $500,000
\1\ No savings are shown in fiscal year 1997 for setting the standard deduction at $134 because the fiscal year 1997 Agriculture Appropriations Act,
which cleared the Congress before this bill cleared, contained a similar provision.
\2\ Any proceeds from this provision would be used to reimburse law enforcement agencies or for retail compliance investigations. Thus, CBO estimates no
net effect on the Federal budget, though funds could be received in 1 year and not spent until a later year.
\3\ This provision is included elsewhere in the bill. If the exemption from Regulation ``e'' were not enacted, there likely would be costs to the
Federal Government. CBO estimates these costs would be small.

TABLE 9.--FEDERAL BUDGET EFFECTS OF THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996
TITLE IX--MISCELLANEOUS; As passed by the Congress
Assumes enactment by September 1, 1996
[By fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 1996 1997 1998 1999 2000 2001 2002 1996-2002
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Direct Spending and Revenues:
908 Reduction in block grants to states for social services
Social Services Block Grant
Budget Authority.............................................. 0 $-420 $-420 $-420 $-420 $-420 $-420 $-2,520
Outlays....................................................... 0 -375 -420 -420 -420 -420 -420 -2,475

909 Denial of earned income credit on basis of disqualified
income \1\
Budget Authority.............................................. 0 -170 -168 -151 -146 -152 -160 -947
Outlays....................................................... 0 -170 -168 -151 -146 -152 -160 -947
Revenue....................................................... 0 26 27 27 23 23 25 151
Net Deficit Effect............................................ 0 -196 -195 -178 -169 -175 -185 -1,098

910 Modification of adjusted gross income definition for earned
income credit \1\
Budget Authority.............................................. 0 -98 -106 -112 -120 -129 -138 -704
Outlays....................................................... 0 -98 -106 -112 -120 -129 -138 -704
Revenue....................................................... 0 15 18 20 22 25 28 128
Net Deficit Effect............................................ 0 -113 -125 -133 -141 -154 -166 -832

911 Abstinence Education
Budget Authority.............................................. 0 0 50 50 50 50 50 250
Outlays....................................................... 0 0 18 35 50 50 50 203
Interactions among revenue provisions........................
Budget Authority.............................................. 0 47 50 36 28 33 34 229
Outlays....................................................... 0 47 50 36 28 33 34 229
Revenue....................................................... 0 -9 -13 -14 -10 -10 -6 -62
Net Deficit Effect............................................ 0 56 63 50 38 43 40 291

Total, Miscellaneous--Title IX:
Direct Spending
Social Services Block Grant
Budget Authority.............................................. 0 -420 -420 -420 -420 -420 -420 -2,520
Outlays....................................................... 0 -375 -420 -420 -420 -420 -420 -2,475
Earned Income Credit
Budget Authority.............................................. 0 -221 -224 -227 -238 -248 -264 -1,422
Outlays....................................................... 0 -221 -224 -227 -238 -248 -264 -1,422
Maternal and Child Health Services Block Grant
Budget Authority.............................................. 0 0 50 50 50 50 50 250
Outlays....................................................... 0 0 18 35 50 50 50 203
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Total, All Accounts:......................................
Budget Authority.............................................. 0 -641 -594 -597 -608 -618 -634 -3,692
Outlays....................................................... 0 -596 -626 -612 -608 -618 -634 -3,694

Revenues:
Revenues \1\.................................................. 0 32 32 33 35 38 47 217
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\1\ Estimates provided by the Joint Committee on Taxation. Components may not sum to totals because of rounding.